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the  discretion  granted  him  by  the  law,  would  deposit ­
  his  funds  in  a  large  and  increasing  degree  in
federal  reserve  banks.”  •  The  practice  of  the
Treasury  tended  in  this  direction  up  to  the  entrance
of  the  United  States  into  the  war.  The  actual
course  of  events  has  been  lately  described  with  great
clearness  by  the  Governor  of  the  Federal  Reserve
Bank  of  New  York: 14
“  The  first  deposit  of  government  funds  made  by  the
treasury  with  the  federal  reserve  banks  was  on  September ­
  4,  1915,  when  certain  special  deposits  were  made  in
a  number  of  banks.  Later,  arrangements  were  made  to
have  the  collectors  of  customs  and  collectors  of  internal
revenues  in  the  twelve  federal  reserve  bank  cities  deposit
all  of  their  funds  in  the  federal  reserve  banks  and  as  a
matter  of  fact,  for  a  long  period  prior  to  the  passage  of
the  bond  act  of  April  24,  1917,  which  altered  the  status
of  public  deposits,  the  federal  reserve  banks  had  been
receiving  the  principal  revenues  of  the  Government  outside
of  postal  funds  and  had  been  paying  a  very  large  proportion ­
  of  government  checks  and  warrants.  The  limitation
of  this  fiscal  agency  service  in  the  collection  of  revenues
and  payment  of  checks  to  the  twelve  federal  reserve  bank
cities  was,  of  course,  due  to  the  inconvenience  of  extending ­
  these  operations  to  places  where  federal  reserve  banks
had  not  yet  established  branches.  The  plan  therefore  of
actively  employing  the  federal  reserve  banks  as  fiscal
agents  had  been  put  into  operation  some  time  before
the  first  bond  bill  was  passed  and  was  an  important  and
very  active  part  of  the  work  of  the  reserve  banks  almost
immediately  after  the  arrangement  was  established.”
A  clause  of  the  First  Liberty  Loan  act  contained ­
  the  important  proviso  that  all  existing  statutes ­
  with  reference  to  the  reserve  required  to  be

14  Ibid.,  pp.  85-6.