Arizona republican., 1920-02-02
TREASURY DEPT. LIMITS NUMBER
 OF DEPOS|TAR|ES
Many National Banks, Hold ing Government Accounts Will Be Eliminated Un- der New Policy of Cutting off Inactive Accounts and Limiting Balances
IRepubIican A. p. Leased Wire1

WASHINGTON. Feb. 1-DraStic re- duction in the number of national banks. designated as government de- positaries, is being made by the treas ury department with the result that less than 400 of the 1881 such institu- tions holding federal funds on June 90, 1919, are expected to escape the pruning knife.
 Changes in the governments finan- ciaI situation, brought. about by wars fiscal operations, iSwas said officially today, have made it necessary to ahoi- ish hundreds of the depositaries and revise the plan for distribution of gov ernment moneys among banks em- ployed since prior to 1912.
 Also Reducing Balances
 While the treasury is cutting off the inactive accounts it is also reducing the balances carried by many other banks-in all in fact. where govern ment transactions do not require the use of large sums.
 Scientific apportionment. 1t is said. will be the basis in the future for dis position of surplus funds. Officials explained the new policy as to de- positaries would operate so that each turns on a basis of business done for the government.
 Included in the list of national banks already struck off are 566 banks which had accounts of only s1,o00 and which were designated as government de- positaries during the administration of Franklin. McVeagh as secretary of the treasury for President Taft. . Practically half of the banks to be deprived of government balances all ready have been eliminated from the rolls and outstanding balances thus have been reduced from S52. 100000 to s27, ,O00, 900. Officials were reticient to- day as to the geographical location of the depositaries cancelled.
 Depositary System Not Disturbed
 The new policy of the traSury does not contemplate disturbance of the present system of special depositaries which was created as an emergency measure during the war There was a i total of 9,550 of these institutions at the first Of the year. Such deposita = ries automatically will cease to func- 1 ton when the period of their usefulness ! terminates, but so long as it is neces- sary to employe extraneous fiscal policies and so long as the war pro- gram Of financing hangs over, it is understood the government accounts will be retained in the specially chosen banks.
 1 With the establishments of the federal reserve banks and branches, govern ment payments have been made more l through them and thus abolishment of 1 the national bank depositaries there
 
 1 treasury on the reserve banks in car- rying on the nations business.
 Saving Much Tn Interest Deposits in the national banks pay the government only two per cent but while there was a surplus of money II
 the treasury, a wide distribution O.
 government funds proved an invest
 ment. With the war came the grea bond and indebtedness certificate is sues on which the government is pay ing from 31a to "A per cent cent in
 terest. In withdrawing the deposits
 from inactive accounts and in reduc ing the balance in all banks in order l.
 meet actual requirements the govern
 ment, officials points out, is saving th' difference in interest.
 Since the treasury began analyzins
 the question of depositarieS and since
 government accounts have been with drawn one by one, officials have be gun to receive many inquiries and nat
 urally some protests concerning thu
 new policies. There are in congress
 many senators and representative
 upon whose recommendations the de
 positaries were designated these ar' very solicitious about the banks baci home,' treasury officials said. Ther also has come from scores of state of ficials inquiries as to the significanc } of the withdrawal of accounts iron , banks in various sections of tn l country.