The Columbia herald. [volume] (Columbia, Tenn.) 18??-1935, 1913-05-02
NATIONAL BANKS TO
PAY INTEREST FOR
UNCLE SAM DEPOSITS
RADICAL CHANGE MADE IN THE
TREASURY MANAGEMENT BY
MADOO.
Two PER CENT. The CHARGE
Security Is Made Broader and Ia Not
Confined to Gilt Edge Banks Here
after, and Millions of Idle Cash in
Treasury Will Be Loosened.

| WASHINGTON, May 1.-The fiscal
system of the United States govern
ing deposits of federal funds in ma
tional banks was revolutionized today
iby Secretary McAdoo OF the treasu-
! ry department with an announcement
that all government depositaries.
| whether active or inactive, would be
required to pay interest at the rate
of 2 per cent per annum beginning
June l upon deposits of the govern,
ments.
Simultaneously with this action
the secretary authorized an Lnmedi.
ate increase of $10,000,000 in govern
ment deposits in the national banks,
making the total $52,649,964 from
which the federal treasury will earn
under the new interest order $1,053,.
900 annually. There are indications
that Secretary McAdoo intends to re-
lease still more surplus money from
the treasury vaults and place il in
general circulation through increased
deposits with the national banks.
Mr. McAdoo also announced a radi-
cal change in the character OF -secu-
rites which the treasury department
would accept for government dcpos-
its. Instead of requiring that the ma.
tional banks secure treasury deposits
exclusively with United States or
provincial government bonds, they
will be Above in future to secure 70
percent in government bonds and
the remaining 30 per cent with high
class state, city and county bonds ae-
ceptable to the secretary of the treas
Jury, to be taken as security at IS per
cent of their market value but not
to exceed par.
| This is the first time in history that
the treasury department has called
upon the banks to pay interest on
what are known as active deposits,
| or accepted except in periods Of f.
nancial stress security other than
government bonds. Active deposit
taries are those which conduct
checking account for the government,
cashing checks of the disbursing Of
ficers and replenish,ng their Jluthor-
lied government deposits from Gus
toms and internal revenue receipts
deposited with them. There are 900
inactive depositaries, each holding
81 900 of government funds. Upon
these deposits, which are not disturb
ed by checking accounts, the govern
ment has drawn 2 per cent interest
for the past FIVE years. These are the
only government accounts which ev-
er have earned interest.
! For years there has been agitation
| in and out OF congress to assess the
national banks interest on their gov
eminent deposits. This invariably
has been resisted by previous admin
istrations on the theory that the
banks with active accounts perform
ed much clerical work for the gov
eminent The house committee on
expenditures in the treasury depart
ment at the last session investigated
the question and recommended that
! the secretary of the treasury lie re-
CURED to charge interest for the use
of the governments money.
Secretary McAdoo tonight declar-
ed he did not anticipate any serious
resistance on the part of the banks
to the new policy. II any bank was
disposed to surrender it's accoun. by
reason of the order, he said, there
were many others willing to take II
up. s..- =, - .a-
The s10.OO0,00O today ordered
transferred from the treasury vaults