Professional Documents
Culture Documents
1471
pounded or may be impounded in the Tl'eusury so that the end- - Deposits of post-office funds direct and indirect.
Deposits on account of 5 pcr cent redemption fund.
less chain of wIthdrawing' gold from the Treasury may be Deposits of interest on public deposits.
stopped, That is not a danger in existence now; it has been Deposits of funds belonging to disbursing officers.
obviated. Funds dcposited for transfer to some other point through a payment
by a Subtreasury located thcreat. .
I have not any desire to antagonize the Senator's suggestion Encashment of checks warrants, and drafts drawn against the 'l;rens-
of an amendment, but it occurs to me that before we make it 11I"er of the United Stafes and presented at the .Subtreasury for pay-
we ought to be sure that the Federal reserve banks are Iu a po- ment.
The payment of United States coupons and interest checks.
sition to perform all the functions of the Tl·easury.. In addition to the foregoing the Subtreasuries haYe the custody of a
1I1r. OVERMAN .. Mr. President, I mel'ely want to read along large part of the reserve and trust funds, conSisting of the gold coin
the line the Senator mentions exactly what is stated in the re- and bullion and silver dollars deposited to secure gold and sllyer cer·
tificates and greenbacks.
port of the Secretary of the Treasury. He says: The receiving of deposits and payment of checks has been as~ume<l
Since the Federal reserve bani,s are, as I have already stated, pri· to a large extent since the establishment of the Federal Reserve System
vate corporations, just as are the national banks, the duty of providing by the designation of Federal reserve banks as Government depositaries
the necessary storage vaults and of assuming the custody and control In those Subtreasury cities where Federal reserve banks are located.
of these trust funds could not be imposed upon the Federal reserve l~edernl reserve banks are located in the Subtreasury cities of Boston,
banks by legislation. It could only be accomplished by negotiation and New York, Philadelphia, Chicago, St. Louis, and San Francisco. New
agreement, involving, necessarily, compensation for the service per- Orleans luL~ a hrancil of the Federal . reserve bank of Atlanta, while
formed. Whether or not arrangements could be made with Federal' neither Baltimore nor Cincinnati has a Federal reserve bank,
reserve banks, or any private institutions, for the cnstody of these It has always been deemed advisable to deposit the gold reserve and
trust funds upon terms and ~lllder conditions satisfactory to the Gov· trUBt funds of the Government in sevel'al places rather than to concen-
ernment, and at a saving in cost over the Subtreasury methods, while trate them in one, for reasons of security as well as public conyenience.
at the same time providing all of the conveniences in hnndling these The Federal reserve act docs not expressly, .or by implication, con-
funds and the same measure of security as now a.ft'orded by the Sub· tcmplate the substitution of the Federal reserve banks .for the Sub-
treaRury system, is a matter upon which 1 am unable to express an treasul"les, nor would it, in my opinion, be possible, or adYisable if
opinion. possible, to attempt such a substitution. While the general o:r current
fund of the Treasury may, in the discretion of the Secretary, be de-
He says he Iws $152,079,000 gold in the Subtreasuries. He. posited In the b'cderaJ reserve banks, the resen'c and trust 'funds 0[
adds: the Government, viz, gold coin and bullion and silver dollars held In
t.l'U8t by tile Government against outstanding gold und sliver certificates
I desire to repeat, however. my earnest conyiction that it wouM b(' und greenbacks, nrc not included in this authorization. ',rile gold eoln
unwise to commit the custody of these trust funds to any prh·ate and bullion held against gold certificates, amounting at present to
Institution or Instlttltions. more than $2,000,000,000. a considerable part of which is deposited
In the Subtreasuries, should not, in my opinion... be committed to the
It is a long report. I believe I will have it printed in tbe custody of any private corporations-and the l"ederal reserve bunks'
RECOllD. 'Vhen this matter was before the Senate committee it are private corporations-but should be in the phYSical control of the
was our disposition to take some action in r~gard to the Sub· Government itself. 'rills applies with equul force to the $1(;2,979,025
of gold reserve held against United States notes and Treasury notes of
trea.':mries. We did not InlOW anything about tlle necessity for 1890 and the silver dollars held against silver certificates. If, )IOW-
them, and we began to inquire and had this report sent. to us. ever, it silould be deemed advisable to transfer the custody of these
We made inquiries of the Treasury Department as to whether trust fllniIB to l?ederlll reserve banks or to any other private corpora-
tion or corporations, it would be necessary to make a special deposit of
they could not be dispensed with. The Secretary of the Treasury s. uch funds in vaults espeCially constructed for the purpose and ,to
says finally in this report: maintain a Ji'ederal guard or some form of adequate Goyernment con-
trol oyer such I'aults. . .
I am of the opinion that It woul,l be inadvisable at this time to . Since the Federal reserve banks are, as I have already stated, pri-
nbolish all, or. any, of the Subtrcusuri'!8. It is an important matter vate corporations, just as are the national bani,s,. the duty of providing
and ~hould be considered deliberately. With the test of further experi- the necessnry storage vaults and of assuming the custody and control
ence it may develop that the tunctions of the Subtt·easurles, or some ot of these trust {undH could not he imposed upon the ],"ederal reserve
them, may be tranSferred to Wa.~hington or to some other agency, .but ban Its by legislation It could ,only be accomplished by negotiation and
action should not be taken bastily or inadvisedly. agreement. involving. ne~ssarily, compensation for the service per-
Therefore, as the Senator fl·Olll Arlmnsas [Mr. llOBINSON] has formeil. Whether or not arrangements could be made with Federal re-
serve banks, or any private institutions, for the custody of these trust
stated, In order to get all the information before us so ru; to funds upon terms and under conditions satisfactory to the Government.
understand the matter thoroughly we have provided in the bill and at a saving in cost over the subtreasury methods, while, at the
an appropriation for the purpose of investigating the subject so same time,. proviclinr; all of the conveulences In handllng these funds
and the .same mcasure of security as now afforded by the subtreasury
tllat we can act intelligently upon it at the next session of Con- system, IS. a matter upon which I am unable to express an opinion. I
gress. desire to repellt, however. my earnest conviction that it would be un·
I ask that the report of the Secretary of the Treasury be wise to commit the custody of these trust funds to nny private Instl-
.tution 01' institutions. The custody of these trust fundS, their mnin-
printed in the llECORD, tenance, direction, control, and administration are distinctly a gov-
The PRESIDENT pro tempore. Without objection, the report ernmental function and should be exercised only by the Government.
will be printed in the R':COIlD. Aside from the custody of the trust funds of the Government, the
Subtreasuries perform a highly useful service to the public in' making
The report of the Secretury of the Tl"er~sury refelTed to is as exchanges of money, supplying money and coin where needed, and
follows: . reducing the cost anl1 el(pense of ·shipments of money and coin from
TREASuay DEPARTMENT, a common center. It Is necessary to maintain the facllities and con-
OFFICE OF TIlE SECIIEXARY, veniences proyliled by the Suhtreasurles in the large centers of hus!·
Wa8hington, December lG, 101G. ness in the country, such as tbe cities in which the Subtreasuries are
now located. J';v8n If these particular functions could be transferrell
The SPEAKER OF THE HOUSE OF REPllESE~X,ITIVES. to Federal reserve lianks where they exist, the services rendered by
SIR: In the legislative, executive. and judicial appropriation act the substituted agencies would ha,·e to lie compensated for. This
approved May 10, 191G, it is provided thnt- . woulcl inyolye cl(penses to the Government, while, at the same time,
.. l'he Secretary of the Treasury is authorized a'od directel1 to report the faemtirs provide(1 might not be as thorough and satisfactory as
to Congress at the beginning of its next session which of the Subtreas- those supplied by the Subtreasuries themselves.
uries. if any. should be continued after the end of tile fiscal year 1017, It. has ueen suggested that the Subtreasuries are merely conyCn-
lIml !Y. In his opinion, any should be continued the reasons In full for lences and not necessities, and that their duties might be performed
such continuance; also, If any or all of said Subtreasuries may be dis- entirely by the 'rreasury in Washington. This is in a sense true,
continued, what legislation will he necessary in oruer to transfer the!r but the cost of hanrlling all tbe business from a common center. in
duties and functions to some other branch of the public service or to a country so extensive as the Unltell States, might be greater than
the Federal reserve banks." . the expense of the SUbtreasury system, whereas the delays anr} in-
In accordance with the above authorization and direction, I have the conveniences which the public woulcl haye to suITer might prove a very
honor to report as follows: serious handicap upon business. It could with equal force be argued
. There arc nine Subtrpasuries located, respectively,' in the cities of that internal-revenue ofilces throughout the United States could be
Boston. Mass.; New York City. N. Y.; Philadelphia, Pa.; Baltimore, abolished and all of the work done at Washington, and, In lilte mauner,
Md.; Cincinnati, Ohio; Chicago. Ill.; St. Louis, Mo.; New Orleans, that many of the customs omees throughout the country could be
La.; and San Fl·ant!sco, Cal. The Subtreasury system was authorized aboliShed and all of the work done from Washington. It Is the auty
by the act of August G, 184G. and subsequent acts amendatory thereof. of the Government to provide adequate facil1tles to meet the COD-
The duties and functions of the Subtreasuries may be stated generally venience and necessities of the pulllie In all parts of the country. nnd
as follows: the problem must be consillered as a whole anll not merely in detail.
Issue of gold order certificates on gold deposits. It Illay be possiule to reduce the expense of admin!stration of some,
Acceptance of gold coins for exchange. or all, of tile Subtreasuries. It has been only one year since the Fed-
Acceptance of standard silver dollars for exchange. eral reserve banks were lilllde Government depOSitaries and fisc;tl
Acceptance of fractional silver for redemption. agencies ana the current or general funds of the Government In such
Acceptance of minor coins for redemption. cities transferred to Federal reserve banks. About that· time I ap-
Acceptauce of United States notes for redemption. pointed au impl'Q,'ement committee (llescribed in my ·annual report of
Acceptance of l'reasury notes for redemption. 1(15) to mak" a careful study of departmental methods in all (lirec-
Ac(:eptnnce of gold and silYer certificates for redemption. tion" and to report upon the best means of improving the general ad-
Cancellation (befpre shipment to Washington) of unfit currency. ministration <'f the Treasury service in its various important branches.
Lllundering of unfit eurrencv which permits of this process. 'l'he adminiRtra rlon of the Subtreasuries is one of the subjects for In·
EXcbange of various kinds' of money for other kin(Js that muy be vestigation, und I sincerely hope that within another year It lllay .be
requested. . found possible to reduce the expense of operating these institutlons
Rmnittances from United States depositary banks of their surplns in SOIlle, if not in all, of the cities where they are now located.
dpposits of internal-rel-enlle, customs, moncy-ortler, posta1, nnd similar The amount of the Government funds in each SubtreasUl'y, the
fun(ls. yolume of the toml transactions annually performed by them, and
D"posits of postal-saving_ funfls direct. the eost of maintaining these institutions arc set forth in the follow-
Dl'posits of money-order' funds direct and indIrect. Ing table: