"When the independent Treasury system was established the idea was that all the funds of the Government should be stored in the Treasury vaults in the form of money, just as the mediæval war lords kept their treasures in strong boxes. The independent Treasury system was established in troublesome financial days, when the State banks were not the safest places for the deposit of money. The people decided that the public funds must be kept in Government vaults for safety. "In this country, with our rigid laws fixing the minimum reserves the banks must hold, any loss of cash by the banks means an instant contraction of their loaning power. If the banks of New York and Chicago lose $100,000,000 cash, they must at once reduce their liabilities by $400,000,000. This means that they must reduce by that amount their loans to the business community. "With the volume of bank credit moving in the reserve cities four times as fast as the volume of cash, and throughout the country ten times as fast as the volume of cash, it is plain that the machinery of credit is extremely sensitive to variations in the amount of cash held by the banks. For this reason, an institution like the United States Treasury, alternately accumulating and disbursing many millions of cash, is likely to create widespread disturbance in the money market. "The funds held by the great European Governments vary from $25,000,000 to $50,000,000. The coin, bullion, and paper money held as assets in the United States Treasury during the present Administration has varied from $300,000,000 to $350,000,000. In other words, nearly one-tenth of all the money in the country is held idle in the Treasury vaults. If this money were all deposited in the banks it would increase their reserves 20 per cent. "The receipts and disbursements of the Treasury are most irregular. The Treasury receipts in 1907 exceeded the disbursements by $91,000,000. Two years later the disbursements exceeded the receipts by $118,000,000. For the past two years receipts have again exceeded disbursements. The general fund in the Treasury was $272,000,000 in 1907; three years later it had fallen to $106,000,000. Under our present system of keeping a large surplus Government fund idle in the Treasury these wide variations in the yearly balance not only seriously disturb the money market and the business of the country, but force the Secretary of the Treasury to enter actively into the money market as a paternal overseer of the machinery of credit.