Definition of Independent Treasury system

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TeachMeFinance.com - explain Independent Treasury system




historic definition...

Independent Treasury system -- After the removal of the funds of the Federal government from the Bank of the United States in 1833 public moneys were deposited in selected state banks (called "pet banks" by the opponents of the administration). The results were entirely unsatisfactory. Large losses were suffered by the government and both political and business chaos followed. Finally, in 1840, an act was passed making the government the actual custodian of its own moneys. Vaults and safes were provided for the Treasury at Washington, Sub-Treasuries were established in several of the larger cities and mints and branch mints were made places of deposit. The law was repealed in 1841 and reenacted in 1846. In the interim the funds were handled under the independent Treasury system without the authority of law. From 1846 the system was exclusively in operation until 1863 when the national banking act was passed. This law did not change the principle of the system, which is still in operation, but modified it to the extent that national banks could become depositories of public funds upon supplying United States bonds as security in the full amount of the money deposited with them.



About the author

Mark McCracken

Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".


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