"The proposition is favored by the banks generally, and it is believed that the representation of the treasury department in the clearing house will facilitate the transaction of business between the department and the banks, and I therefore respectfully suggest that application be made for the admission of the assistant treasurer in New York to the Clearing House Association, provided it shall be found that there is no legal objection thereto."
General Hillhouse also was strongly in favor of the plan proposed.
He said:
"The plan of going into the clearing house was proposed in correspondence with the department several years ago, as a remedy for the risk incurred in the collection of checks, and if there are no legal impediments in the way, it would very much simplify the business of the office if it could be adopted. The effect in connection with resumption would also, I think, be good, as it would place the banks and the treasury on the same footing with respect to the use of United States notes in settlements, and thus aid in maintaining them at par with gold in all the vast transactions connected with our internal trade and commerce. I have not given the question sufficient thought to speak with confidence, but it seems to me a very important one, and well worthy of careful consideration."
A committee of the clearing house called upon me and the subject was thoroughly considered. Mr. Gilfillan wrote to General Hillhouse as follows:
"Treasury of the United States.} "Washington, November 9, 1878. } "Sir:—By direction of the secretary, I have the honor to request that you will submit to the Clearing House Association of the banks of your city the following propositions, and, upon obtaining the assent of the association to them and communicating that fact to the department, you are expected to act in conformity with them.
"First. Hereafter, drafts drawn upon any bank represented in the Clearing House Association in the city of New York, received by the assistant treasurer in that city, may be presented to such bank at the clearing house for payment.
"Second. Hereafter, drafts drawn on the assistant treasurer at
New York may be adjusted by him at the clearing house, and the
balances due from the United States may be paid at his office in
United States notes or clearing house certificates.
"Third. After the 1st of January next, payment of checks presented to the assistant treasurer by any bank connected with the clearing house may be made by him in United States notes.
"Very respectfully,
"James Gilfillan, Treasurer United States.
"Hon. Thomas Hillhouse, Assistant Treasurer United States, New
York."
General Hillhouse, on the 12th of November, advised me of the receipt of this letter, and that the propositions of the treasurer were referred to the Clearing House Association, that a meeting would be held and there was little doubt but that they would be accepted.