the Metropolitan National Bank across Fifteenth street, whether in Philadelphia on Chestnut street or at Frankfort, to accommodate the United States arsenal there, which is within the city limits, but as far away from the subtreasury as Hyattsville from the Treasury; all that is a matter of administrative expediency to be regulated entirely by the Secretary's discretion.

George B. Cortelyou is the first Secretary of the Treasury in over sixty years who has had the power to deposit public moneys of all kinds (including customs receipts) in bank depositaries. Let us see what is being done by the Department in subtreasury cities.

At Baltimore in 1906 collectors received $6,636,000 of internal revenue and deposited only $28,000 of it in the subtreasury, all the rest in banks. Not a dollar of these bank deposits was drawn out in checks. The whole $6,600,000 was gradually carried by the banks to the subtreasury under general orders, and checked against there. This is what Secretary McCulloch in 1866 officially called "the useless and expensive form of first transferring public money from such places of deposit to the office of the Treasurer or an assistant treasurer."

The Baltimore banks ask to have these funds drawn and transferred from them by the usual modes of transfer, that is, by checks, into the hands of disbursing officers, who shall, in turn, open disbursing accounts with the banks and check out the money to public creditors. Such a request can not, in reason, be refused.

In 1906 disbursing officers paid out $10,000,000 at Baltimore, not including $2,266,000 of post-office disbursements. If permitted to draw bank checks, they would have drawn out all the internal-revenue receipts, and $5,145,000 of customs receipts, if the latter had been deposited in banks. In addition, the Treasurer or assistant treasurer paid out nearly $6,000,000 by warrants and checks. Altogether they disbursed more than the entire customs, internal-revenue, and miscellaneous receipts of Baltimore, bringing in moneys by transfers from other subtreasuries to make up the balance. Consequently, there is no excuse for transferring current receipts in Baltimore from the banks to the subtreasury, as the deposits would be needed to pay checks against them, if allowed to remain in the banks until disbursed.

In Washington and each of the nine subtreasury cities this "useless and expensive form" of transferring moneys from the banks to the Treasury or subtreasury before disbursement has given rise to peculiar unbusinesslike usages.

A return to business methods after their violation for seventy years will be a brilliant achievement, a pledge of national progress, a promise of new life and wisdom pure in the management of our finances. It will mean the continuance of prosperity. Our country needs assurance of discretion in the conduct of affairs.

Very respectfully,

JAMES C. HALLOCK.

LETTER OF MR. JAS. M. BECK, ATTORNEY FOR CITIZENS' CENTRAL NATIONAL BANK.

Hon. SERENO E. PAYNE,

NEW YORK, April 16, 1908.

Chairman Ways and Means Committee, Washington, D. C.

MY DEAR SIR: I represent the Citizens' Central National Bank, of this city. I am informed that at a hearing before the Ways and Means Committee on the 8th instant, a Mr. Kaufmann, who was giving his views to the committee as to the merits of a proposed act which was introduced in Congress by Mr. Hill, stated to the committee, in substance, that he, then being a depositor of the Citizens' Central National Bank, was obliged to pay a premium to the bank to obtain gold which he needed to pay customs duties at other ports than the port of New York.

I do not understand that Mr. Kaufmann said this with any intention of reflecting upon the bank in question, but, that, on the contrary, he stated, that the banks only charged a premium for gold which they furnished their depositors when they were obliged to buy the gold themselves.

Nevertheless, I understand that Mr. Kaufmann's statement was made the subject of some further questions, which seem to reflect upon the bank which I have the honor to represent, and it authorizes me, therefore, to write you in order that your committee may, if the facts be pertinent to any inquiry now pending before you, know the facts fully.

This bank is located in the wholesale district of New York, where the depositors make their deposits chiefly in checks. During the currency panic, which culminated in the action of the New York clearing house of October 26, 1907, in authorizing the

issue of loan certificates, exceptional demands were made upon it for currency and gold. Such demands were greatly in excess of any currency or gold that had been deposited with it, and as the bank was unable to receive its credit balances from the clearing house in either currency or gold, it found it necessary, to meet the reasonable demands of its depositors and customers, to import gold and to increase its. circulation, both measures of relief being at a great cost to the bank, as hereinafter stated. The condition was abnormal and required unusual precautions to protect the bank's reserve in the interest of all depositors.

This bank therefore requested its depositors to pay by check wherever possible, and its request in this respect was so reasonable that its depositors, including Mr. Kaufmann, who fully recognized the exceptional nature of the circumstances, fully acquiesced in the propriety of this and other measures to protect the bank's reserves. To further meet the reasonable demands for currency this bank increased its circulation, and to do so was obliged to purchase United States bonds at abnormal prices. It further bought gold amounting to $4,376,747.01, for which the bank paid a premium of $52,761.60. Of this cost it received but a small part in return from the customers for whose benefit it had been imported. In a few instances (including Mr. Kaufmann's case), where the demand was of an unusual character, such as the payment of customs duties at other ports than that of New York, the bank did charge its customers the premium, but the aggregate of these premiums was only $5,352.09, and thus its importation of gold, which was for the benefit of the bank's depositors and customers, cost this bank, after deducting the premiums which it received, the sum of $47,409.51. It will thus be seen that the bank's importation of gold was not a profit to the bank. The bank imported the gold at great expense, as a matter of business prudence and public spirit and as a contribution on its part to save an exceptionally dangerous general situation. If the bank had made any profit out of its importations of gold, at the expense of its customers, it might be open to criticism. But, as stated, these importations of gold were at a net cost to the bank of over $47,000. Referring to the incident referred to by Mr. Kaufmann, no demand was made upon the bank by the firm of which he is a member, either for gold or currency, in the instances to which he referred. Mr. Kaufmann's firm needed gold to pay customs duties in other ports than those of New York, and voluntarily offered to buy the gold if the bank would supply their requirements in New York. At its request and for its accommodation, the bank purchased gold and charged it the same, or a less premium than it had paid for its importation.

In this connection I may add that the bank in no case charged a customer a greater premium than it had to pav, and in many cases it charged a less premium, and, as previously stated, the premiums received were about one-tenth of the total cost to this bank of the importations of gold.

If your committee prefers that the bank should send a representative to make a formal statement of these facts, it will cheerfully do so, but I trust that this letter of explanation will answer the purposes of your committee and convince its members that the Citizens' Central National Bank is not justly subject to any criticism by reason of the incident to which Mr. Kaufmann referred.

Nothing in this letter, however, must be construed as a reflection upon Mr. Kauf

mann.

I have the honor to remain, very respectfully,

JAMES M. BECK, Counsel for Citizens' Central National Bank.