The chronicle=news., 1913-05-01
Revolution IN
FISCAL METHODS
Of ]. s.

Ut U. J.
The ruling by Secretary McAdOo
yesterday will in no manner affect
the local banks. since none have been
designated as government deposit
taries. The local banks are entrust-
ed with postal savings bank deposits
but for this they are required to pay
Interest.
Washington. May 1.-The fiscal
Wy stem OF the United States govern
Ing deposits OF federal funds In ma
terday by Secretary McAdoo OF the
Treasury department with AN an
nouncement that all government de-
positarics. whether active or inac-
tive. would be required to pay inter
est at the rate OF two per cent per
aRnum beginning June | upon dcpos-
It's OF the government. Simultnn-
eously with this action the Sccrc-
tary authorized an Immediate addi-
ton Of ten million dollars In govern
mcnt deposits In the national banks.
making the total 35:.6is.?6t. from
which the federal treasury will earn.
under the new Interest order. ST.
O33.VOO annually. There are indica.
tions that Secretary McAdoo intends
to release still more surplus money
from tn. Treasury vaults aud place II
La f.l @tr Ia In.
creased deposits with the national
banks. In u statement ias, night he
said:
with tn. banks paying Interest
on government deposits. the Secre-
tnry may b. justified Ia keeping
larger balances In the national banks
thereby increasing the volume of
money In circulation. aud TO that .x-
tent reducing tn. amount locked up
In The treasury.
Mr.. McAdoo also announced a rad
ical change In the character OF re-
curitl"s which the treasury depart
mcni would accept for government
deposits. Unsteady Of requiring that
the national banks sccur. treasury
deposits exclusively with United
States or provincial government
bonds they will be allowed In fu,ur"
To s.cur. seventy per cent with gov
rrnmcnt bonds aud tn" rcmainin; ~
per cent with high class sia,.. ci;y
and county bonds. acceptable tn the
Secretary Of tn. Treasury TO he taken
as security NJ - per cent Of th.lr
fnarkc; value.
This !s the nr., time IN history
that the treasury department has
called upon the banks TO pay later
est In what arc known as active de-
posi'-. or accepted. except In periods
OF financial stress. security Other
than xovcrnmcn, bonds. Active de-
posiiaricr are those which conduct u
checking account for the govern
ment. cashing cheeks OF the disburs-
Ing offices and rcpicnishing their
authorized government deposits from
customs and Internal rcvcnu" re-
ccipis deposited with them. There
are 500 Inactive dcpo-itarics each
holding $l.O"" OF government funds. |
Upon ,h.sc deposits which are not
has drawn two per cent
Interest for the last five years. These |
are the only government accounts
when ever have earned interest.
For years there has been nSitn-
tion In and out Of congress to assess
the national banks interest on their
deposits. This invariah-
ly has been resisted by previous adj
OF tho treasury on the |
theory that the banks with active ac- |
counts performed much clerical work
for the government. The house rom-
mittcc on expenditures In the treas
ury department. at the last session
investigated the question and recon-
that the Secretary OF the
Trcaaury bc required to charge In
,crcst for the use of the governments
money. Y. ..s
Secretary McAdOo declared to-
nj ;ht he did not anticipate any ser
ious rcsistance on the part of the
banks to the new policy. II any
bank was disposed to surrender It's
account by reason OF the order he
said there were many others willing
to take II up.
The two per cent Interest charge
will be based upon average monthly
balances OF the governments account
in each depositury payable January
and July OF each year. The S1o.-
900 900 yesterday ordered trausfcr-
red from the treasury vaults to the
national banks will he distributed
over the country.
fund. including money in the Phil
ippinc treasury and In the national
bank dcpositaris-. amounted at the
beginning OF business yesterday to
$1ll.O25.ad3 or this $T2.791. .i05.