SUBTREASURY

After President Andrew Jackson vetoed (July 10, 1832) the bill to recharter the Second Bank of the United States, the deposits were removed and placed in state banks that came to be called Jackson's "pets." This process was accomplished by the President only with great difficulty, for there was grave doubt as to its constitutionality (see McLane, Louis; Duane, William John; Taney, Roger Brooke). The situation remained somewhat in suspension and debate until a subtreasury system, as such, was established (July 4, 1840) with the act to set up the Independent Treasury System. This act, never strictly carried out, was repealed (Aug. 13, 1841) by the Whigs. In 1846 the Independent Treasury was finally and rigidly established and with it the subtreasury system. Public funds were not to be deposited in any bank but either kept in coin in the Treasury or subtreasuries or retained by the public officers receiving them until paid out on proper authority. No banknotes were to be received in payments to the government. The subtreasuries were maintained, chiefly through political influence, until the passage of the General Appropriation Act (May 29, 1920) and the transfer of their functions to the Treasury, the mints and assay offices, and the Federal Reserve banks, which was completed in 1921.

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