Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1913-05-02
FISCAL SYSTEM CHANGED
Secretary MeAdoo Demands Interest
on leposits.

on Deposits.
The fiscal system of the United
States, governing deposits Of Federal
funds In national banks, was revolu-
tionized last Wednesday by Secretary
McAdoo Of the treasury department
with an announcement that all govern
ment Gepositaries, whether active OF
inactive, would be required to pay in
terest at the rate Of 2 per cent per an
mum beginning June upon deposits OF
the government.
The secretary ordered an immediate
increase of S10,000,000 in government
deposits in the national banks making
the total S52,649,964, from which the
Federal treasury will earn under the
new interest order $1,053,000 annually
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 statement Wed
nesday night he said:
with the banks paying interest OH
government deposits the secretary may
be justified in keeping larger balances
in the national banks, thereby increas-
ing the volume Of money in circulation
and to that extent reducing the amount
locked up in the treasury"
Secretary McAdoo also recommended
q radical change in the character Of Sc
curities which the treasury department
would accept for government deposits
Instead Of requiring that the nationa
barks secure treasury deposits with
United States bonds or provincial gov
ernment bonds they will be allowed II
future to secure 20 per cent with gov
ernment bonds and the remaining 80
~ t<rn ole ,fo 70 Otf ora n
county bonds, acceptable to the secre-
tary Of the treasury, to be taken as Sc
curity at rs 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 accept
ed, except in periods Of financial stress
security other than government bonds
Active depositaries are those which
conduct a checking account for the
government, cashing checks Of the dis
bursting officers and replenishing their
authorized government deposits from
customs and internal revenue receipts
deposited with them. There are SOC
inactive depositaries, each holding ST.
900 of government funds. Upon these
deposits which are not disturbed by
checking accounts the government has
drawn per cent interest for the past
five years. These are the only govern
ment 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
ernment deposits. This invariably has
been requested by previous administra-
tions on the theory that banks with ac-
counts performed much clerical work
for the government. The house COM
mittee on expenditures in the treasury
department at the last session investi-
gated the question and recommended
that the secretary Of the treasury be
required to charge interest for the use
Of the governments money.
Secretary McAdoo said he did not
anticipate any, serious resistance on
the part Of the banks to the new poll
cy. If, any bank was disposed to sur
render its account by reason Of the or
der, he said there were many others
willing to take it up. ... .....
The 2 per cent interest charge will
be based upon the average monthly
balances of the governments account
in each depository, payable January
and July l Of each year. The s10,-
900, 900 last Wednesday ordered trans
lclIcu lilC W lhS
national banks will be distributed over
the country.
+ The free balance in the general fund
including money in the Philippine
treasury and in the national bank de-
positories, amounted at the beginning
of business Wednesday to $141,025,263
OF this $72,7s1, ,405, which will now be
decreased by s10,000,000, constituted
money lying idle in the vaults Of the
treasury or subtreasuries. Treasury ex-
perts estimate that the minimum upon
which the government can transact its
daily business Is S15,000,000 and that q
substantial portion Of the working bal
ance could with ease be deposited.