The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1913-05-03
- INTEREST on DEPOSITS.
MCADOO DEMANDS INTEREST
ON GOVERNMENT FUNDS.
Banks That Have Heretofore Had use
OF Treasury Ftrds Without Inter.
est Required TO Pay Two Per Cent
Per Annum-Democratic Adminis-
tration Gradually Cutting on Spe.
cial Privileges.

Washington, April 30.-The fiscal
system Of the United States governing
deposits OF federal funds in national
banks was revolutionized today by
secretary McAdoo Of the treasury de-
P""ument with he announcement thai
? All government depositaries, whether
active or inactive, would be required
to pay interest at the rate of pe-
cent per annum beginning June l
on deposits Of the government.
simultaneously with this action the
secretary authorized an immediate in
crease of s1O,OOO.OOO in government
deposits in the national banks max
ing the total $52.649,964, from which
the federal treasury will earn. under
the new interest order, s1,O53, 900 an
nua!Iy. There are indications that
secretary McAdoo intends to release
/ still more surplus money from the
treasury vaults and place it in general
circulation through increased deposits
with the national banks. In a state
ment tonight he said:
with the banks paying interest on
government deposits the secretary
lmay 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
ury"
Mr. McAdOo also announced q rad
ical change in the character of securi-
ties which the treasury department.
would accept for government deposits.
Instead of requiring that the national
banks secure treasury deposits exciu-
sively with United States OF pro.
vincial government bonds, L ey will
be allowed in future TO securp 20 per
cent with government bonds and the
remaining 80 per cent with high class
State, city and county bonds, accep-
table to the secretary Of the treasury,
to be taken as security at rs per cent
of their market value, but not to ex-
ceed 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 OF
accepted, except in periods of financial
stress. security other than government
bonds. Active depositaries are those
which conduct checking account for
the government, cashing checks of the
disbursing officers and replenishing
their authorized government desopits
from customs and internal Eevenue re-
ceipts deposited with them There are
800 inactive depositaries, each holding
$1,000 of government funds Upon
these deposits, which are not disturbed
the government has drawn 2 per cent
interest for the past five years.
These are the only government ac.
counts which ever have earned in
terest.
For years there has been agitation
in and out of congress to assess the
national banks interest on their gov
ernment deposits. This Invariably has
been resisted by previous administra-
tions on the theory that the banks
with active accounts performed much
clerical prk f"r Ihc government. The
hcufr c"nlnltt"" uIs expenditures, -
tho treasury ucparlmen, at the lsst
a"ss'"r investigated The question: auI
recommended tna' ia. .e,lctarv. a., ia,
orrasur, h" required 10 Charge inter
5. for the usr II th- Governments
money
Secretary McAdoo tonight declares
he did not anticiapte any serious re-
slstance on the part Of the banks to
the new policy. If any bank was dis
posed to surrender its account by rea-
son of the order he said, there were
many others willing TO take il up.
The per cent interest charge will
be based upon the average monthly
balance of the governments account
in each depositary. payable January
and July Of each year. The s10.-
100000 today ordered transferred
from the treasury vaults to the na
tional banks will be distributed over
the country.
The free balance in the general
fund, including money in ihe phiIin-
pine treasury and In the national bank
depositaries, amounted. at tho begin
ming of the business today, to Sl4l.-
O2S. 1868. OF this s72,79I.405, which
VIII now be decreased by $4,000, ,Oes
constituted money dying idle i'm the
; vaults Of the treasury or subtreasurieg
Treasury experts estimate that the
. minimum upon which the government
can transact Its daily business is tl5.-
600 600 and fhnf c.,A