The Washington times., 1915-05-15

lSOj. MI, Allies res gned his position as
Assistant Secretary of the Treasury,
of office as a director OF the plaintiff
bank. and then became, as / am inform
ed, it's vice president.
"On April H. 1903 (lvc days before
his resignation and at tine when his
arrangements with the plaintiff bank
had presumably been effe tcdl. he de-
posted with the plaintiff bank funds Of
tho United States Government to the
amount of s2.90O,O0o, which. together
with 100000 thRt was then on deposit
WITH tho plaintiff bank. made total
deDostt of Government funds OF $1,000
200. all without interest. as was the then
custom. Said deposit of s3,000,O00 re-
naming In the bnrk undisturbcd until
the following February, and was then
only slightly reduced. as appears from
Exhibit D. The tota! depos'ts OF the
plaintiff bank. exclusive of Government
funds. on April ., 1893 were npproxi-
mately S.Ss1 .9l2.2o. The proportion of
Government fuods to total DEPOSITS and
to the then capital and surplus OF the
bank 1890 OoM was grossly abnormal
and unprecedented"
Deposit of s2.sOO,OOO.
Secretary McAdoo adds:
Il an informed and believe that the
deposit of s2.9oO.OOO or the greater part
thereof was immed ately transferred
by the plaintiff bank to the National
City Bank of New York, which fur
nished the plaintiff bank the bonds re-
quired to secure said deposit and pre-
sumably paid to the plaintiff bank In
terest on said deposit.
During the time there were eleven
national banks in the city OF WASH
ington, and the deposits OF the plaintlf
bank averaged not exceeding 80 per
cent of the total average dcpos, is of
said national banks. The total de.
posits of Government funds in all of
the remaining national banks OF Wash
ington during said per Cd averaged ap-
proximately &IS,S4. The average bal
ance of Government funds on deposit
with the plaintiff bank from the time
the bank in April, 1903. until March.
1907, was s2.ols,9 ,957.
AT the time Mr.. Allies became vice
president OF the plaintiff bank he also
became and has ever since remained
the salaried representative OF the Ma
t'onal City Bank of New York-in Wash
ington. During all Of said period and
until ! assumed office the regular Gov
ernment deposits were carried In ma
tional banks without interest. FROM
1899 to 1908. the average daily deposits $
OF Government funds In all the national
banks of the United States was Sl3,-
10, ,20S and the average capital and
surplus Of all such banks was S.b6o,-
459, 1854. as appears from the accom-. m.
panying table marked Exhibit FL.
which Is hereby embodied in this andaNlt
as a part thereof
Denies Ill Will.
Concerning the Withdrawal Of Panama
canal funds from Riggs Bank, the Sec
retary denies the charge OF malice or
i'll will. but says that II was his duty
to advise with other departments OF the
having the custody of its
funds and that he was informed by the
Comptroller that the Riggs National
and its officers. had been or were con-
Quoting a stock brokerage business
within the bank, contrary to the ma
tional banking act. and by evasive
means; that a large part of its re-
sources was being employed IN carry
Ing speculative accounts secured by
stocks and bonds and that II had also
been conducting dealings In real estate
OF law: that 1t was doing a far smaller
of commercial business COM
pared to its deposits and resources, than
any other national bank in Washington.
although its deposits were the largest.
The Secretary points out that 1t has
tribute the deposits of Government
funds as to give them to banks which
would use them In furthering the gen
eral commercial interests. He did not
believe the, Riggs National used its
Accordingly he determined. early in
1914. to postpone the deposit OF tax
funds in the riggs National pending
further investigation. and distributed
only part OF the tax money among
the Washington hanks.
About this time. Secretary McAdoo
says. he called mp the Comptroller OF
the Currency for a more complete re-
port on the Riggs National. and IN
reply the Comptroller sent him letter
from which the following are extracts;
Saw No Stringency.
Prom an analysis of this report II
would not appear that the commission 10
redeposit with tho Kisgs National Rank
the tax funds would OCCASION the slight
est strngency or Inconvenience in the
local money market.
Their statement shows that OF the
total loans reported OF s7,S59, $50, the
amount which this bank was lending on
demand on stocks bonds. and other Sc
curities was $5.17l.3s2. In addition 10
this. they were lending on time on
stocks. bonds, and other securities
!nearly all due in ninety days or less)
$70343
In other words, nearly 50 per cent OF
all their loans were on stocks and bonds
not on commercial paper, indicating that
the Riggs National Bank Is really very
far from what we would call COM
mercial bank.
"turtncrmcre J desire to call your at
tention to the fact that from their
sworn statement submitted on March 1s
1914. showing the locality of the loans
made by the bank In their January 18th
1914 statement, this bank was lending
on outside paper; that is to say. to non.
customers Of their bank, etc, on bought
paper, stoCk-eXChange collateral, etc.
50, J26. 900, and of this amount 81. l65. eco was
being loaned out in New York.
Deposited In New York.
AT the same time that the bank wal
making these large loans In New York
In January last II had about three
quarters OF a million dollars cash II
different New York national banks
about two-thirds of which was with tn,
National City Bank. The March 4ti
statement shows that it's cash in New
York city had increased up to that datt
to about 81. 000. more than 100000 o.
which was with the National City Bank
In addition to the cash in New
York. the Riggs National Bank reported
ca sh on hand in its own vaults on Marcel
amounting to 81, ,067, 900.
as 1t therefore appears that the banl
at a recent date had outside paper, ap
parently principally secured by stocks
and bonds. and payable on demand, anC
cash on hand, and Its own vaults
tRNex