The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-05-16

beCa me ana mas ever since renamed, tnS
salaried representative Of the National
City Bank OF New York I'm Washington
During all laid period and until I as
sumed Office the regular Government
deposits were carried In national banks
without interest. From 1893 to 1905
the average daily deposits OF Severn
ment funds In all the national banks II
the United States were s113.170.20S. and
the average capital and surplus of all
such banks were 1855, ib9. 1896. 81"
Secretary McAdoo gives The average
daily balances Of Government funds in
the National City Ban from 1895 t.
1904. when Mr.. Vanderlip and Mr.. Allies
were assistant secretaries. as follows:
1898, s10.497.000 1899, s14.244.00G ;
1900. s15.e77.o00: 1901. s14.714,009;
1902, s15,ss7. 900; 1908, 1885,. 900. and
1904, S10.573,00O
"Mr. vandelip." he adds. was AS
s!stant Secretary OF the Treasury from
Jun 1. 1897. to March 5, 1901. when he
entered the National City Bank as vice.
president. being succeeded As Assist
asst Secretary OF the Treasury by Mr..
Allies. who remained in that position
until April Is. 1908"
Sets Forth His Policy.
Secretary McAdoo sets forth his
policy In regard to Government de-
posits in the following paragraph:
"Since I assumed Office ] have adopted
the uniform policy Of using Govern
ment funds to assist In supplying the
needs Of legitimate commerce instead
Of having them employed by depoeiting
them in the financial institutions in the
central reserve cities, In aid Of stock
speculation
Il V always regarded the domi-
nant purpose in the creation and adj
ministratios OF the national bank act
TO be the announcement OF banks to
aid in the development of commercial
business. One OF the evils OF the sys-
tenn has been the accommodating OF
money In the reserve cities and In the
central reserve cities-particularly In
the city Of New York-whcre 1t has
been used In the call money market to
assist stock speculation.
THE only Justification for the deposit
OF the District OF Columbia tax funds
In the local national banks Of Washing
ton was to prevent the commercial In
terests OF that community from suffer-
ing by their withdrawal into the vaults
OF the Treasury.
"a bank that does not use these funds
TO aid such interests. In my judgment.
falls TO discharge its implied obligation
TO the department and its duty to the
NVihi'suh''ss hSit tutH ~ bdUk uSfS
Government funds that are supposed to
be deposited for commercial to
assist In carrying speculative accounts
created through a brokerage firm con-
sisting OF officers OF the bank %conductlrg
n stock brokerage business within the
bank itself. IL is in my judgment not
only acting In bad faith toward the de-
partment In so using the funds COM
miited to 1t. but Is violating the spirit IL
not the letter of the national bank act.
why He Held Tax Funds.
II accordingly determined shortly prior
to May /. 1914. to postpone the deposit
Of al funds In the plaintiff bank in
1914. pending 4 further investigation of
the matters that had been brought to
my attention by the Comptroller and
his report thereon.
Meantime I distributed only a part
of the tax moneys among the Washing
ton banks. viz: sl3s.o0O instead II
$4,000. 600 a. deposited In 1919. The
total amount Of District tax funds re-
ceived for the yca 1914 on account
Of the general fund WAS s7.329. o10.2 90"
The Secretary calls attention to the
fact that the Riggs Bank In Its state
ment to the Comptroller on Marcn 4,
1914. showed only slightly in EXCESS OF
IS per cent. OF its funds as loaned on
commercial paper. while approximately
10 per cent. Of It's loans were made on
bonds and stocks. The Commercial Ma
, tional Bank. the next largest bank in
the city of Washington. had SO per
cent. oaned on commercial paper and
about ~ per cent. on bonds and stocks.
The Secretary submits n table show.
Ing the ratio of loans secured by stocks
and bonds to total loans reported by
the Riggs Bank compared with ratios
reported by national banks in WASH
ington tother than Nggs). other reserve
cities. country banks and total United
States from 1895 to 1914. These figures
show that such loans In the Riggs Bank
for the period named ranged from cost
per cont. to s1.61 per cent. Of its total
loans. In other National banks In
Washington the percentage ranged from
1857 to 45.99: In reserve cities, 80 Is
! to 46.7l: In country banks. 24.ss TO
! 1886. and in the total Omitted States).
33.41 to 1850.
Williams Gives Report.
Comptroller williams gives the fol.
lowing resume OF the results OF his in.
vestigation OF the bank
From the time of its organization. or
~thereabout, until after the calls for
special reports by me. the plaintif bank
has steadily. persistently and notwith.
standing repeated admonitions and in.
structions from preceding Comptroller
of the Currency engaged in business be-
yond the powers OF a national bank
when objection was made TO certain Of
its practices, the plaintiff bank adopted
devices AZ hereinafter specified by mean,
Of which the same unlawful businesses
were carried on and the bank continued
to profit thersfrom.
Throughout Its existence the plaintiff
bank has engaged in the business OF
lending its money on real estate security
and In lending on commission the money
Of others on such security. and has con-
~tinuously conducted a large and extern
sive stock brokerage business and has
bought and sold stocks and other securi-
ties both for Itself and on commission
for others Immediately after its organ
ization these businesses were carried or
directly In the name OF the bank ther
they were partly conducted In the name
OF the firm OF Glover. Hyde. Johnston
and others, composed of five OF the sin
stockholders of the bank. who at tina
time together owned three-fifths Of lis
capital stock : that later the entire bust
ness was carried o. in the name of the
bank and finally In the names of certain
officers Of the bank but except durine
the existence OF the Arm mentioned al
profits from these businesses with the
exception hereinafter stated went to the
bank itself. and the plan OF doing bust
napa IL, tha 80 ~. zAlna., 500, a