Evening star., 1915-05-15

THE
utes after Mr. Allies. Mr.. Flather. Mr..
| Williams and Mr.. Elliott had gone
i Deposits of District Tax Funds.
In connection with his action in not
deposting the tax funds of the District
of Columbia in the Riggs Bank in 1914,
the Secretary says the matter was entirely
in the discretion if the Secretary of the
Treasury The affidavit points out gross
discrimination" in favor of the Riggs
Bank in the distribution of this money in
the past.
The custom of deposting these funds in
the national banks of Washington began
May s. 1905. when four banks. despite
the fact there were thirteen national banks
in Washington at that time. were the de-
positaries for the entire tax money. All
though the Riggs Bank received about
i two-thirds of these moneys that year, its
deposits were only 33.7S per cent of the
total deposits in all the national banks
in Washington
Takes Place With Bank.
| Milton f. Allies was formerly and from
| March s. 1901. to April Is. 1903, an as
sistant secretary of the Treasury in
charge of the fiscal bureau. having to
do with the distribution of government
deposits. having in that position sue
ceeded Frank 4. Vanderlip, who held
the place from June I. 1897. to March >.
! 901. anl>who went from there into
| the vice presidency of the National
| City Bank of New York." continues the
| affidavit "On April Is, 1903 Mr.. Allies
resigned his position as assistant sec
retary of the Treasury and on the next
day he took the oath of office as a
director of the plaintiff bank. and then
became, as | am informed. it's vice
president.
| ION April II. 1909 Give days before
! his resignation and at a time when his
| arrangements with the plaintiff bank
had presumably been effected)\ he de
| posted with the plaintiff bank funds
Of the United States government to the
amount of S2.9oo.0o0. which. together
with 100000 that was then on deposit
| with the plaintiff bank. made a total
deposit of government funds Of $1,000
! 900. all without interest. was then
custom. Said deposit of S3.oou.o00 re-
/ manned in that bank undisturbed until
the following February. and was then
| only slightly reduced. The total de
! posits Of the plaintiff bank. exclusive
| of government funds. on April ., 1898.
| We're approximately S1,3S1.912.20. The
| proportion OF government funds to
| total deposits and to the then capital
and surplus of the bank tS900.00O) was
| grossly abnormal and unprecedented
Believes Funds Transferred.
! Il am informed. and believe. that the
said deposit of 81. 900. 900. or the greater
part thereof. was Immediately trans
ferred by the plaintiff bank to the Ma
! tional City Bank of New York. which
| furnished the plaintiff bank the bonds
required to secure said deposit and
! presumably paid to the plaintiff bank
| interest OH said deposit.
| During that time there were eleven
national banks in the city of Washing
ton. and the deposits of the plaintiff
bank averaged not exceeding 80 per
| cent of the total average deposits of
said national banks. The total de-
posits of government funds in all of
| the remaining national banks of Wash
| ington during said period averaged ap-
IproNimately s27S.S74. The average bal
with the plaintiff bank from the time
| the said Allies became connected with
the bank. in April. 1908. until March.
| 1907, was S2,01S,?5s.
Panama Canal Deposits.
| Regarding Panama canal deposits.
| the Secretary says that in due course
| and in the performance of his duty as
| the chief fiscal officer of the govern
| ment he advised the Secretary OF War
| in June. 1914, against making further
| deposits OF these 1undS With tHe pldlH-
| tiff bank. He continues
| Il had been informed by the control
! ler Of the currency prior to May ! that
| the bank and it's officers had been or
1 were conducting stock brokerage
| business within the bank, contrary 70
| the national banking act. and by eva
| sive means. that large part of its re-
| sources We're being employed in carry
| ing speculative accounts secured by
stocks and bonds and that it had also
| been conducting the business of deal
| ing in real estate mortgages under
1 cover and in violation of law that it
was doing far smaller proportion of
| commercial business. compared to its
| deposits and resources. than any other
| ma ational bank in Washington, although
us deposits were the largest.
! Since l assumed office ! have adopted
the uniform policy of using the gov
| ernment funds to assist in supplying
| the needs of legitimate commerce in
stead of having them employed by de-
positing them in the financial institu-
| tions in the central reserve cities. in
aid of stock speculation. ! have always
| regarded the dominant purpose in the
creation and administration of the ma
tioual bank act to be the encourage
| ment of banks to aid in the develop
| ment of commercial business. one of
| the evils of the system has been the
| accumulation of money III the reserve
| cities and in the central reserve cities
particularly in the city of New York
J where il has been used in the call
! money market to assist stock Specula- :
| tjon. The only justification for the
| redeposit of the District of Columbia
tax funds III the local national banks
l Of Washington was to prevent the com
| nercial interests of that community
! from suffering by their Withdrawal INTO
the vaults of the Treasury.
Il accordingly determined, shortly
prior to May l. 1914. to postpone the
deposii of tax funds III the plaintiff
| bank in 1914. pending further inves-
I tigation of the matters that mad peeH
brought to my attention by the con-
troller and his report thereon. Mean
/, time distributed only part of the
4 tax moneys among the ashington
banks viz s3.i3S.oo instead of $4,000
900 as deposited in 1913. The total
amount OF District lax funds received
! for the year 1914, account Of the
! general fund. was s1.3290lo2"
Ceased Deposits June II. 1914.
/ The controller reported 10 the Secre-
tary May IA. 1911. and June 3. 1914.
| showing the large proportion OF loans
of the bank on the security of stocks
and bonds and the stock market opera
lions OF its officers. The Secretary calls
attention to the fact that the bank in
It's statement to the controller March