This situation was aggravated by the operations of the United States Treasury in its clumsy method of making collections and disbursements. At certain seasons of the year government receipts from customs and internal revenues are heavy and large sums of money are withdrawn from the channels of trade, thus lowering bank reserves, curtailing loans, and frequently causing acute monetary stringency. This is in striking contrast to the practice of foreign countries where a central bank acts as fiscal agent of the government and facilitates rather than hinders the normal operations of credit and the flow of currency.
In recent years the Treasury Department has resorted to various expedients to correct these disturbances. Surplus receipts of public money, and recently daily receipts as well, have been deposited in designated national banks, but the Treasury required the banks receiving these deposits to give security by depositing bonds, and also required the banks to pay interest on the deposits. The Treasury has sometimes come to the relief of the money market by increasing these public deposits with the banks. It has also anticipated the payment of interest on United States bonds, and has even purchased the bonds themselves, in order to put cash into circulation. By a recent ruling of the Treasury Department, importers having customs duties to pay may do so by certified check instead of in gold.
The Federal Reserve Act provides that all government funds, except those held for the redemption of national bank notes and Federal reserve notes, may be deposited in Federal reserve banks, and though it is left, to the discretion of the Secretary of the Treasury whether such funds shall be kept in the Treasury, the national banks, or Federal reserve banks, the latter will probably have the bulk of them.