The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1913-04-16
BANKERS SEEK
TAX DEPOSITS
Clearing House Association
Committee to Discuss the
Matter with McAdoo.
S., 900, 900 IS INVOLVED
High-grade Local Bonds May Be Ac.
cepted As Securities for
the Money.
100000 IS INVOLVED
BY I. A. FLEMING.

A committee OF the Washington Clear
ing House Association consisting of Mil
ton Z. Allies, of the Riggs NATIONAL Ash
ton G.. Clapham, of the Commercial Ma
tional, and Robert n. Harper. of the
District National Bank, will wait on the
Secretary of the Treasury this afternoon
for consideration of the matter of the
deposit of tax money in the national
banks of the city, in conformity with
the prevailing practice for the last seven
years.
In May practically ss,ooO,ooo will be
taken out of the banks and trust COM
panies of the District. in payment of
taxes and pass over to the government,
to be dsbursed as District needs de-
mand.
During the last seven years 1t has been
the practice for the Treasury Depart
ment to deposit part of this tax money
in the national bank, repayments being
made 20 per cent in July, 20 per cent In
August, and 10 per cent monthly there-
after until entirely paid.
This relieves the banks of any string
ency that would be caused by the with
drawal of this six millions of cash; the
government Is assured of safety through
the deposit of sufficient securities ana
the banks in addition pay per cent in
terest on the funds.
During the last seven years $3,00OoO
of tax money has been placed in the
banks each year with the exception OF
twice, when 100000 was deposited.
Because of the change in administra-
ton the clearing house committee con-
sidered it the part OF wisdom to make
plain the reasons that have led to the
deposits Of money in the past feeling
assured that in the interest of the Dis
trict the practice will be continued.
Practice in Other Cities.
In all the larger cities tax moneys are
deposited in the banks and drawn on as
required by the municipality. but be-
cause Of the fact that the governemnt is
the disbursing agent this practice cannot
be carried out here, and repayments by
the banks direct are necessary.
When the necessities or the Treasury
Department are urgent, the deposit OF
tax money has been less liberal than at
other times. At this time the Treasury
is flush The banks would feel the strain
of the Withdrawals of cash to the extent
of s6,0O0.O00.
The clearing house committee will ask
also a modification of the ruling regard
ing securing the government for the tax
money replaced in banks. 1t has been
the ruling Of the department that securi-
banks of New England States and gov
eminent bonds. Porto Rico. and Philip
pine bonds will be acceptable security.
These issues are becoming more and
more scarce, being held by investors
closely, while the banlss- of the country
give up their government bonds and in
sular issues for other government
moneys
The committee will therefore ask that
L. ted 20 hn
extent of 10 per cent of the market value
in lieu of the issues heretofore exacted.
There are few issues safer than those
of the local corporations, and for these
there is always a market right here In
Washington.
Capital Traction IS were quoted yes
terday at 100 ga bid; Washington Gas 5s
los 1-2 bid; Potomac Electric First Mort
gage 5s 1o4 "a bid; Riggs. Realty 5s
102 rs: bid; Washington Railway 4s Sl2
bid, and Chesapeake and Potomac Tele-
phone IS 1O4s4, with a number of other
high grade bonds varying from to per
cent interest at 100 to 1G5 IA.
These are the bonds that the banks
hold in greater amount, as investments
for surplus funds, bonds that they ad-
wise investors to buy and for which
there is always demand.
Another concession that the clearing
house committee will ask will be that
the Treasury Department shall not re-
quest such heavy initial proponents as
in former years.
The repayment Of 40 percent in July
and August is deemed hardship, and
the Secretary will be asked to give his
consent to the repayment in ten equal
installments of 10 per cent each
1t is probable that Assistant Secretary
John Shelton Williams will be designated
TO meet the committee and will be en-
trusted with answering the committee.