The Secretary of the Treasury is authorized to appoint any national bank as a "depository" for the moneys of the United States Government. This is a method which the Government adopts in order that a portion, at least, of the large sums of money which it often accumulates may get into use. It is conceivable that the Government receipts might be so large that an enormous amount of money could go into its hands and thus out of circulation, making such a contraction that there would be a scarcity of money for actual use, and it is to prevent such contingencies to even a small degree that this plan has been adopted.
The Government does employ national banks as depositories for other reasons than the above. It has what are called "permanent depositories," in localities where the principal offices of internal revenue collectors are located, or where sales of public lands occur, for the purpose of receiving the proceeds of such collections or sales; also " special depositories " in which post-office money-orders and United States Court funds are kept.
The Secretary of the Treasury at one time construed the law as permitting him, at his discretion, to accept other than Government bonds, which may, in his judgment, furnish sufficient security. There is an impression among many leading financiers that this is a bad precedent, and might, sometime, lead to an abuse of the privilege.1