The Irish standard., 1913-05-03
DEP0S|7AR|ES MUST
PAY U. 5. INTEREST
AFTER JUNE I TAX OF PER- CENT
WILL BE REQUIRED ON
FEDERAL FUNDS.
TO DISTRIBUTE MORE MONEY
Secretary McAdoo Announces Change
High Glass State, City Or
County Bonds Now
Good as Security.

Washington. May 1.-The fiscal sys.
tenn Of the United States governing
deposits of federal funds in national
banks was revolutionized by Secre-
tary McAdoo of the treasury depart
ment with an announcement that all
government depositaries. whether &C.
tive or inactive, would be required
to pay interest at the rate of two per
cent per annum, beginning June l.
upon deposits OF the government
Increase is Authorized.
Simultaneously with this action the
secretary authorized an immediate in
crease of 100000 in government de-
posits in the national banks. making
the total $52,649.964, from which the
federal treasury will earn, under the
new interest order, $1,053,000 annu-
ally.
There are indications that Secretary
McAdoo intends to release still more
surplus money from the treasury
vaults and place it in general circula.
ton through increased deposits with
the national banks. In a statement,
he said:
With the banks paying interest on
government deposits the secretary
may be justified in keeping larger bal.
ances in the national banks, thereby
increasing the volume of money in
circulation, and to that extent reduc.
Ing the amount locked up in the treas.
nry."
Radical Change Announced.
Mr.. McAdoo also announced a radi.
cal change in the character of securi-
ties which the treasury department
would accept for government deposits
Instead Of requiring that the nation
al banks secure treasury deposits ex-
r!usively with United States or pro-
vincial government bonds, they will
be allowed in future to secure 20 per
cent with government bonds and the
remaining so per cent with high class
state. city and county bonds, accept.
able to the secretary Of the treasury.
to he taken as security at IS per cent
Of their market value, but not to ex-
coed par.
This is the first time in historv that
.'tarestreasuF~ department has called tip.
on hanks to pay interest on what are
known as active deposits. or accept.
stress, security other than govern.
nent bonds.
Active pepcsitaries.
Active depositaries are those which
conduct checking account for the
government. cashing checks Of the
tlsbursins officers and replenishng
their authorized government deposits
from customs and internal revenue
receipts deposited with them.
There are 900 inactive depositaries
each holding $1,000 of government
funds. Upon these deposits, which
are not disturbed by checking &C.
counts. the government has drawn
two per cent. interes: for the past
Eve years. These are the only gov.
eminent accounts which ever 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 administra
tions of the treasury on the theor,
that the banks with active accounts
performed much clerical work for the
government.
The two per cent. interest charge
will be based upon the average month
~ balances of the governments &C
count in each depostary, payable
January 1 and July ! Of each year
The s10.0oO.oo0 yesterday ordered
transferred from the treasury vaults
to the national banks will be distrib
uted over the country.