Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1913-05-01
Treasury Funds Are to Draw
Interest at Rate Of Two Per
Cent on Monthly Balances
Secretary McAdoo'S Order
SECURITY PROVISIONS
MUCH MORE LIBERAL
State and Municipal Bonds Ac-
cepted Under Safe ReguIa-
tions in Lieu Of United
States Bonds as Formerly
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Washington, April 20.--The fiscal
system of the United states. govern
ing deposits of federal funds IN ma
tional banks. was rcvolniionized to-
aav hv Secretary McAdoo Of the treas
mr., acnartment with an announce.
ment that all government repositories
whether active or inactive, would be
required to pay interest at the rate
of 2 per cent per annum. beglnh'hS
June lst. upon deposits Of the gov
crnment. simultaneously with this nc
,on The secretary authorized an inn
mediate increase of Sl000o00O ~
Government deposits in national
banks which makes a total of $o2'-
cf096t. from which the federal treas
ury viii earn. under the new interest
order $1.O53, 200 annually. There are
Indications that Secretary McAdoo in
tends to release still more surplus
money from the treasury vaults ana
place II in general circulation
through increased deposits with the
national banks. In a statement tonight
he said.
with the banks paying interest on
government deposits, the secretary
may be justified IN keeping large
balances In the national banks, there-
hv increasing the volume Of money IN
CIRCULATION, aud to .hdt eNtcdt. ie-
ducing the amount locked mp IN the
treasury"
Mr.. McAdoo also announced a rad
ical change In the character OF Sc
curities which the treasury depart
mcnt would accept for government
denosits. Instead Of requiring that the
national banks secure treasury de-
nosits exclusively with United States
or provincial government bonds, they
will be allowed in future TO secure
20 per cent with government bonds
and the remaining 80 per cent with
high class state. city and county
bonds. acceptable to the secretary OF
the treasury TO he 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 banks to pay interest in what
are known as active deposits, or ac-
eepted, except in periods of financial
stress. security other than govern
ment bonds Active repositories are
those which conduct a checking ac-
count for the government, cashing
checks Of the disburslng officers and
repenishing their authorized govern
ment deposits from customs and in
tornal revenue receipts deposited with
them. There are 900 inactive deposi-
tories each holding $1,000 of gov
ernment funds. Upon these deposits
which arc not disturbed by checking
accounts, the government has drawn
2 per cent interest for the last hVe
years. These are the only government
accounts 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 adminlstra-
tions Of the treasury on the theory
that the banks with active accounts
performed much clerical work for tlit
government The house committee on
expenditures in the treasury depart
ment at the last session investigated
the situation and recommended that
the secretary of the treasury be re-
CURED to charge interest for the use
of the governments money.
Secretary McAdoo declared tonight
he did not anticipate any serious re-
sistance on the part of the banks to
the new policy. II any bank was dis
posed to surrender its account by rea-
son Of the order he said there were
many others willing to take 1t up.
The two per cent interest charge
will be based upon the average
monthly balances Of the governments
account in each depository. payable
January and July !, Of each year.
The $i0,000.000 today ordered trans
ferred from the treasury vaults to the
national banks will be distributed over
the country.
The free balance in the general
fund, including money in the Philip
pine treasury and in the national
bank repositories, amounted at the
beginning of business today to Sal
025.26s. OF this. S72.791.4 405, which
will now be decreased by 100000 900,
constituted the working balance of the
government, or money lying idle in
the vaults OF the treasury or sub
treasures Treasury experts estimate
that tie minimum upon which the
government can transact its daily
business is Sis 1000, 600 and that a sub
stantlai portion Of the working bal
ance an with ease be deposited.