Evening star., 1915-05-19

submarine fighters, riding majestfcally
the great Atlantic feet, Just revievve
Bank was the largest lender Of money
on the stock exchange on call loans In
the country; that that was large part
of it's business. Now, what did he f1nd
"Will your honor look at the table at
tached to Mr.. McAdoo's affidavit? 1t is
on page %. He found that in 1897 the
now president of the National City
Bank. who became vice president in
1897 or 1898, resigned as assistant sec
retary OF the Treasury; in 1898. think
1t was"
.,; You are talking about M IN. MI Frank "a ss
it:?" Mr. Hogan asked.
Mr.. Untermeyer replied: II am speak
ing Of Mr.. vanderlip. He found that
in 1898. 1899. 1900. 1901. 1902 and 1903
the National City Bank was receiving
without the payment of interest to an
amount that was abnormal and unpre-
cedented; that it was in fact receiving
from one-fifth and at times from one
ments funds of the United States
Treasury. Although there were seven
thousand and odd banks in the United
States, and although the total capital
and surplus of all those banks was over
five billions of dollars, and the pro rata
share Of the City Bank would have
been something like twenty or thirty
thousand dollars of deposits 1t was
getting anywhere from twelve to eight
cen million dollars of government
ence to the next page a statement of
all the Treasury funds that were in all
the banks, and you will see that in
1899, the first year stated. the total
L. II R4. {vS
the various banks were SIS 1000. and
that as much as 20 per cent-tn fact, 2b
per cent-of all those funds were at
times deposited in this one bank from
the time Mr.. Vanderlip went out OF the
Treasury Department and Mr.. Allies
came in up to the time Mr.. Allies ceased
to be connected with tho Secretary's
ofice.'
Interruption by Mr.. Hogan.
Mr.. Hogan interrupted at that time to
say: IT do not want to interrupt yo0
Mr.. Untermeyer. but just to get your
dates clear right there on the record
you have referred to 1898 and 1899 as
the time when these things that you
are speaking about happened. and tina,
that occurred when Mr.. Vanderlip was
! in the National City Bank and Mr.
Allies assistant secretary OF the Treas
| ury. That Is what you said. Is II not!
That is not quite what 1 have said.
replied Mr.. Cntermeyer have said
| that as the result of the association OF
| these men with the Treasury Depart.
| ment, and while they were there. and
after they left there. and while Mr.. Allies
was the representative Of the National
City Bank In Washington. there were
| these enormous deposits OF money with
the National City Bank"
II thought you said that remarked
Mr.. Hogan. TT will startle you to know
| that Mr.. Vanderlip did not leave the
Treasury Department until 1901.
| Mr.. Untermeyer replied: L know that
and that is just the significance of this
situation as shown by the exhibits. He
did not leave until 1901. and then he
was succeeded by Mr.. Allies. but he
went directly from the Treasury De-
partment into the City Bank. and while
ne was in the Treasury Department, ir
| charge Of the distribution of these
| funds, those great deposits were made
| there. When he left there. and Mr
Allies succeeded him. these depositi
continued in this enormous amount, ant
| during Mr.. Allies administration they
| continued. When Mr.. Allies left there
the department was under the contro
of a Secretary of the Treasury and
down to 1908. both Of whom were Dor.
rowing Of this band. and this pipe line
between the Riggs National Bank ant
the national government and the Ma
tional City Bank was maintained. ane
one of the purposes of Mr.. McAdot
when he made the investigation was te
sever that pipe line between the gov
I ernment and the great organization In
| New York that represented the cal
money market on Wall street
! ut was a laudable purpose, and IT if
one for which in course of time he will
receive the highest praise; but 1t bore
upon the exercise OF his discretion
when 1t came to the question of max.
tn, q w
they would not be used for the purpose
Of stimulating speculation. but would
be used to conserve the commercial
needs of the country"
Deposits in Riggs Bank.
That is not all that happened" con-
tinued Mr.. Untermeyer. That is not
all that the Secretary OF the Treasury
found when he went into office. He
| found that Mr.. Allies, on the 18th OF
| April, 1903, resigned as assistant sec.
retary of the Treasury in charge Of fis-
cal bureaus, having control of these
moneys; and that on the l1th Of April
four days before he resigned. the Ma
| tional city Bank then having hfteer
million dollars. over 10 per cent of al
the deposits available for the Treasury
Mr. Allies had taken that governmen,
money and put $2.900000 Of 1t into the
| Riggs National Bank. in addition to the
500, 900 deposit which the Riggs Ma.
tional Bank ordinarily had. That a.
900, 900 was about 40 per cent of the
| total deposits of the Riggs Bank, and
that transaction took place certainly
| when Mr.. Allies must have known that
he was going to resign. because 1t was
| four days before he took office in the
Riggs Bank, and certainly when he
knew he was going to become vice
president of the Riggs Bank.
Until Mr.. McAdoo became Secretary
| of the Treasury the government re-
| ceived no interest whatever upon these
vast deposits in the national banks. ex.
| cept that under the act of 1908. the Al.
drich-Vreeland act. 1t was provided
| be an allowance of interest of not less
| than l per cent. The special deposits
| however, were trifling. the amount was
nothing, as compared to the genera
deposits There was no provision In
the Aldrich- -Vreeland act with respect
| to general deposits. but there was nc
rea son, and has been none at any time
why the national banks should not have
| paid interest upon deposit balances
But not until MIR. McAdoo took Office
| was any such requirement made, and
his affidayit shows that In the first year
| of his administration the government
| has received by way OF revenue from
this interest item alone one miilon mn nc eMs iss
hundred and odd thousand dollars which
~ had never received under previous
Communications. There could be nc
more eloquent tribute. to the unselhsh-
ness and the devotion to public duty OF
fhis man than the fact that he was
willing to incur the hostility OF tne
| whole banking community by exactinE
interest on government deposits. They
| were ali paying 2 per cent interest upon
the balances Of their correspondents.