"It not infrequently happens that surplus revenues accumulate in the Treasury just at a time when the banks are straining their resources to grant all the credits needed to finance a business boom. The Treasury then takes money out of the banks and hoards it just at the time when the country most needs it. If the business boom goes so far as to strain credit to the breaking point, then the Treasury must come 'to the relief of the situation,' by depositing some of its hoarded cash in the banks. In recent years the Treasury has been carrying a large surplus, and it has been in a position to relieve financial tension by depositing funds in the banks. In December, 1907, following the money panic, the special deposits in the banks by the Treasury had reached $256,000,000. Three years later they were reduced to $4,000,000. In the fiscal year 1908-1909, the Treasury withdrew $100,000,000 from the banks. "This state of affairs places in the hands of the Secretary of the Treasury a power greater than any American should have. The power of the Secretary to influence the money market by deposits or withdrawals of public funds is always dangerous. No Government officer should have this power. It has been a great burden, I believe, on the shoulders of every recent Secretary of the Treasury Department. "If the people realized how dangerous is the power in the hands of the Secretary of the Treasury, they would insist that the Treasury be at once taken out of the banking business. Accustomed as we are to Government interference with the money market, few of us realize how the Treasury in the past few years has exercised the central-bank function of regulating the discount rate. The Treasury, by alternate deposits and withdrawals of the public money in the banks, as well as by other devices, has attempted to regulate the discount rate. "The Treasury Department should be divorced from the money market and from the banking business, and the way to effect the reform is plain. We should have in this country a quasi-public institution not only to hold the ultimate cash reserves of the banks and to regulate the rate of discount, but to act as the fiscal agent of the Government. Such an institution would hold the Government balances as deposits, and the Government could check against them just as any large business concern checks against its balances in bank. With the Government balances deposited in such an institution the business of the country would never be disturbed by the Treasury hoarding up cash, and the Secretary of the Treasury would no longer be forced to meddle in the money market.