THE GOVERNMENT DEPOSITS.
1. The sub-treasuries.
2. Deposits in the national banks.
3. Shall the system be changed? 4. The Government ought to keep a reserve.
5. The excess of revenue might be deposited with the banks.
6. The amount that ought to be kept in the sub-treasuries may be easily determined.
1. The Government has a large amount of money, and different methods have been adopted for keeping it.' After the creation of the first United States bank in 1790, it was kept with that institution during its existence of twenty years. When the second United States Bank was organized in 1816, the same policy was adopted. In 1835 the deposits were withdrawn and kept with State institutions. After the failure of many of these, soon afterward, the independent treasury system was adopted. Nine assistant treasurers were appointed, who, after giv ing bonds for the faithful performance of their duties, were intrusted with the public moneys. The principal treasury, though not containing the largest amount, ex cept of silver, is at Washington, under the direct charge of the treasurer. Besides this there are nine sub-treas uries, so called, in the cities of Boston, New York, Phila delphia, Baltimore, San Francisco, Chicago, New Orleans, St. Louis and Cincinnat1. The assistant treasurers serve for four years, and receive annual salaries ranging from $4,000 to $8,000.
2. Most of the public moneys are now deposited with them for safe-keeping. At times, considerable sums col lected by internal revenue collectors have been deposited with the National banks. They are required to keep Government bonds, with the United States Treasurer as security for the full amount of deposits intrusted to their keeping.
3. The question has often been asked, Shall the public moneys be kept in this manner, or be deposited with the banks, they giving proper security? The principal ob jection to keeping deposits in the treasury is their with drawal from business. At times, the amounts that flow into the treasury reservoir and remain there have been enough to startle those classes especially who are always looking for spooks, or for causes to frighten others. The crucial question is not very difficult—Shall the Govern ment keep a reserve, or not? If it ought to keep one, then the proper place is its own vaults ; for if its deposits were put in the custody of banks they would not long remain there if they could be used ; and if they could not be, the banks would not want them. If they were used,
of course they would no longer exist. It is very diffi cult to make some people believe that they cannot eat their cake and still keep it, and especially some members of the banking world. If a deposit is in use, in no sense can it any longer form part of a reserve. It is quite time to put this truth into operation. Now, if the Govern ment is to keep a real reserve, this money may as well be kept in its own vaults as in those banks, for, to repeat, they have no use for it ; indeed, would decline to act as custodian if they were obliged to keep it on hand to answer the demands of the Government. The question, then, assumes this form, Ought the Government to keep any reserve, or only a fixed sum, or varying sums at different times depending on the amount of payments that must be made? 4. That the Government ought to keep some reserve, must be obvious to all. No time need be spent in strengthening this assertion.
5. Any excess beyond its ordinary needs might be de posited in banks on receiving proper security, without danger of embarrassing the Government, and with the view of responding, as far as possible, to the demands of business. By such a policy, the operations of the Gov ernment would create no monetary disturbance.
6. Lastly, the amount kept by the Government might vary to some extent with its payments. As most of these are fixed—the interest on the debt, salaries and the like—it would be easy to determine how much ought to be reserved for these purposes, and how much could be permitted to run out of the treasury reservoir and flow into the banks.
Prof. David Kinley's History, Organization and Influ ence of the Independent Treasury. This work refers to some authorities; A. C. Gordon's Cong. Currency, Ch. 3, Independent Treasury System; H. G. Cannon's article N. Am. Rev., Feb., 1895; Money and the Sub-Treasury, 38 Banker's Mag., 321.