New-York tribune., 1920-02-02
u. S. to Reduce
by
Nearly 1000
Drastic Cut i'm Number
Of National Banks Hold
ing Government Funds
Planned by Treasury
$50 Already Off List
Federal Reserve System
to Care for Business;
War Causes New Policy

WASHINGTON, Feb. 1.-Drastic re
ductlon in the number Of National
Banks designated as government de-
posltories is being made by the Treas
ury Department with the resul. that
less than 400 Of the 1881 such insti-
tutlons holding Federal funds on.June
50, 1919, are expected to survive the
pruning knife.
Changes in the governments tinan-
cial situation brought about bv wars
fiscal operations, it was said officially
Today, have made it necessarv. TO
abolish hundreds of the repositories
ana revise the plan for distribution
OF government moneys among banks
employed since prior to 1912.
While the Treasury is cutting off
me inactive accounts it also is rednc-
'ng the balances carried by many other
oanks-n all, in fact, where govern
ment transactions do not require the
ase of large sums.
Scientific Apportionment
Scientific apportionment.v it is said.
VII be the basis in the future for dis
position of surplus funds" officials
explained that the new policy as to de-
positories would operate so that each
bank viii be able to realize equal re-
turns on basis Of business done for
the government.
Inc luded in the list Of national bank 8
@Ireacy struck off are 566 banks which
mad accounts Of only 81 900, and which
were designated as government DEPOSIT
1ofics during the administration Of
= y rrahkiln McNeagh as Secretary of the
treasury for President Taft.
Practically haH of the banks IT'D be
deprived OF government balances al
ready have been eliminated from the
rolls, and outstanding balances .bns
nave been reduced from $52 900 600 to
s. 100000. Other banks will be
taken off the Official list Of deposit tories
and other accounts will be reduced
untli hy the end OF the calendar wear
~ IS expected the new policy wifi be
luily completed Officials were retic cnt
yo-a"y as to the geographical location
OF the repositories cancelled.
Not to Disturb Present system
Ihe new policy Of the Treasury does
EoV contemplate disturbance of the
pteseh' system OF special repositories.
nacn was created as an emergency
measure during the war There Was y
tota of $3.50 Of these institutions y
the first of the year. Such depositorias
AUTOMATICALLY will cease to funct;on
"hen the period OF their usefulness
terminates, but so long as it is neces-
.ary TO employ cxtraneous fiscal nol-
iIies ana SO long as the war program
"l financing hangs over il * under
sIooa the government accounts will he
fe,alAed IN The specially chosen hanks
ne monetary operations Of the gov.
81 eminent were conducted ont;relv
onfoush the sub-treasurics and nay
'iohal bank repositories prior 70 tho
creation Of the Federal Reserve svs-
Yem. with the establishment Of the
+ ieoeTai reserve banks and branches
= .'oSe'"ment payments have been made
more and more through them. and
aooiISAment OF the national bank de-
oos.. ..o'les' therefore, represents a
~ 1lef ,eaning OF the Treasury on the
reserve banks in CARRYING ont tho MO- na
tlon's business
deposits In the national banks nav
the government only 2 per cent M bn4
whlle there was surplus of MONEY in
She fcasury wide distributor of GOV.
ernment 81. funds proved an investment
" ltn the war came the great bond and
ih,debfedness certificate issues on wbich
me me government is paying from 3la "a
4s per cent interest. In wjthdran.ine y
the deposits from inactive accounts ana
IN reducing the balances in ali banl. NJ
IN order to meet actual requjremonts
one government, officials pointed out. Is
savlng the difference in interest. .