The Manning times. [volume] (Manning, Clarendon County, S.C.) 1884-current, 1920-02-04
DRASTIC CHANGE IN
FINANCIAL POLICY
Hundreds of Banks Barred From Gov.
ernment Deposits
INACTIVE ACCOUNTS CUT
Drain on Treasury Due to War Acti-
vities Given as Reason For
Chaneg.


washington, Feb. 1.-Drastic reduc-
tion in the number of national banks
designed as government repositories
is being made by the Treasury Depart
ment, with the result that less
than 400 of the 1881 such institutions
holding federal funds on June 80, 1919
arc expected to survive the pruning
knife.
Changes in the governments finan-
cial situation, brought about by the
wars fiscal operations it was said of
ficially today, have made it necessary
to abolish hundreds of the deposi-
tories and revise the plan for distri-
button of government moneys among
banks employed since prior to 1912.
While the Treasury is cutting off
the inactive accounts, it is also re-
ducing the balances carried by many
other banksLin all, in fact, where
government transactions do not. re-
quire the use of large sums.
Scientific apportionment,' it is said,
will be basis in the future for dispo-
sition of surplus funds. Officials ex-
planned the new policy as to deposi-
tories would operate so that each
bank will be able to realize equal re-
turns on a basis Of business done for
the government.
Included in the list of national
banks struck off are 566 banks which
had ACCOUNTS Of 81, 900 and which were
designated as government repositories
during the administration of Franklin
McVeagh as Secretary of the Treas
ury for President Taft.
Practically half of the banks to be
deprived of government balances al
ready have been eliminated from the
rolls and outstanding balances thus
have been reduced from $52 900 900 to
SGT 900, 900. Other banks will be taken
off Of the official list of repositories
and other accounts will be reduced
until by the end of the calendar year
it is expected the new policy will be
fully completed. Officials were re-
tlcent today as to the geographical 10
cation of the repositories cancelled.
The new policy of the Treasury does
not contemplate disturbance of this
present system of special repositories
which was created as an emergency
measure during the war. These was
total of $3.50 Of these institutions at
the first of the year. Such deposi
tories automatically will cease. to
function when the period of their use
fulness terminates, but so long as il
is necessary to employ eXtraneous fis
cal policies and so long as the way
program of financing "hangs over" it
is understood the government accounts
will be retained in the specially
chosen banks.
The monetary operations of the
government were conuucted' entirely
through the subtrcasuries and ma
tlonal bank repositories prior to the
creation of the federal reserve system.
With the establishment of the federal
reserve banks and branches, govern
ment payments have been made more
and more through them an dthus abol-
lshment of the national bank dcposi-
tories therefore represents a further
leaning Of the Treasury on the re-
serve banks in carrying on the ma
tion's business.
Deposits in the national banks paw
the government only 2 per cent, but
wnile there was a surplus of money
IN the Treasury, a wide distribution
OF government funds proved an in
Vcstmcnt. With the war came the
great bond and indebtedness certifi-
cate issues on which the government
is paying from 3H to AZ per cent
interest. In withdrawing the dcpos-
its from inactive account and in re-
ducfng the balances in all banks. in
order to meet actual requirements, the
government officials pointed out, is
saving the difference in interest
Since the Treasury began analylinp
the question of repositories and since
government accounts have been with
drawn one by one, officials have be-
gun TO receive many inquiries and
naturally some protests concerning
the new policy. There still are in
Congress many Senators and Repre-
Nt,,t