Weekly independent. [volume] (Elko, Nev.) 1887-1914, 1913-05-16
WASHINGTON LETTER

banks after June LIST must pay two
per cent interest on government
deposits is the start of what ~ill
eventually be a great saving to
the American people.
The e.ier follows closely the
Recommendations of a special
House Committee which investigat.
ed the government repositories
last year. This committee, domi-
mated By Democrats and headed b,
Representative J. Henry Cooke Of
Ohio, reported to Congress fragrant
examples of special privileges in
the distribution of federal funds
among banks.
The report vas available to the
Taft Republican administration
several months before it went out
Of office, yet Secretary MacVeagh
paid no attention to it.
The report sho ed that in 1908
the number Of federal repositories
had grown to 1896. These banks
were divided into two classes
about 1000 of them temporary de-
posituries. the rest regular deposit
tories
Both sorts of repositories were
created arbitrarily by the Secre-
tary OF the Treasury. In the
temporary depository the govern
nent usually placed the sum of
$1,000. The Treasury department
never disturbed this sum. Before
1908 the temporary repositories
we're not required to pay interest.
In 1912 they were required to pay
two per cent
Having this $1,000 on deposit,
the bank was permitted to print
Government Depository" on its
window its stationery and sdver-
Using matter. In other words the
Republican administration entered
into an advertising scheme pure
and simple with favored banks.
For this gilt edged advertising the
favored bank paid two per cent on
$1,000 or $50 per year.
All the revenue the nent
got out of it in four years was
$68s, 407.26.
On the other hand, in the 400 or
or regular repositories, the govern
ment has kept funds which have
totaled as high as sl8S, OOO, 900
On this vast sum the Treasury has
never collected a dollar of inter-
est. And the Secretary of the
Treasury could give the money to
whatever bank he chose to favor.
The committee estimated that in
&c years the government. by not
collecting two per cent on this
money, lost $50, 500, 1923
Moreover, the Republicans have
always kept in the treasury a
sum far in excess Of the amount
needed for a working balance. At
times this excess has equaled $685.
000, 900. Had this excess been out
earning two per cent it would
have brought s47.61O,6O to the
Treasury in 26 years.
Thus this single instance of Re-
publican favoritism and special
privilege has cost the people over
$50, 600, 900.
Secretary MacAdoo has taken
the first step in correcting a great
abuse of power. But his order will
be only "a beginning. Representa-
tive Cooke comes from Ohio where
there is a compulsory depository
law. The state treasurer, instead
VI uolIlH Ills O"D ulsCTSliOU, III
designating banks to receive public
money, advertises for bids, and
the money is deposited with banks
willing to pay the highest rates of
interest on it, giving small country
banks opportunity to use these
funds.
Under this law Ohio is getting
an average Of 80 per cent interest
on state deposits.
Mr. Cooke has introduced in the
House a similar compulsory and
competitive law. The action of
Secretary McAdoo in going TO his
legal limit in following the recon.
mendatiop of the committee indi.
cate that he will favor the passage
OF a federal compulsory depository
law. Such a law will be a great
revenue producer, will end fav-
oritism and will give all banks, the