The Birmingham age-herald., 1902-10-01
His Statement About Bank Re-
 serves Was Misunderstood
IS PLAN 10 EXTEND CREDIT
Prominent Bankers and Flnanelers Generally Say the Secretary's Ae- ton Is Very commendable and
 Helped to Bring Relief.

 New York, September sO.-secretary Shaw gave out the following statement today:
 ''The department is in receipt of vari- ous requests from the various banks of the country clearly showing that the statement given out last night was mis- understood or rather that 1t was not carefully read. That there may be no misunderstanding the following state : ment is made:
 ''No new deposits will be made on any : security other than government bonds so long as government bonds can be se- cured. For the present banks seem tc be able to obtain, frequently by borrow : ing, bonds other than per cent coDsols . They can obtain the use of these bonds , for a limited period and they are as de- sirable any security for deposits. They are not as desirable as security for cir culation. for the reason that circulation based thereon is taxable at 1 per cent, while circulation based on the per cent consols is taxable at only one-half of l per cent. The banks cannot obtain, ex- cept by purchase. any bonds as basis
 
 for circulation they cannot be released until the circulation is retired, and it may take a year before the circulation can be retired, and the price of bonds is SO high that bank circulation is main- tained at considerable loss to the banks. They must be encouraged or circulation constantly contracts. Therefore, the de- partment has decided to release for such banks as have deposits and are not main- taining their limit of circulation, DOT tion of the bonds now held by the gov ernment, taking in lieu thereof other sat- islactory security. on condition always that the bonds released will be used for the immediate issue of additional circu- lation."
 Does Not Apply to Some.
 This provision does not apply to those banks that already have their maximum circulation, neither does 1t apply to 7 banks that do not have any deposits. q The sole purpose of the offer is to in- 8 crease circulation that is already printed and ready to be issued and by banks that already have the bonds on deposit These deposits being scattered through A the entire country the relief offered, it is believed will be national rather than , local for 1t applies to all sections of the country and to every state in the union. . That the secretary has intended all along that the relief snoiId be general, and for the west as well as New York , was shown by a remark he made in ex- blaming how the effect would be inn , mediate in New York. He explained i, again how relieving the banks of the ne cessity of carrying reserve immediately gave them opportunity to extend credits to four times the reserve released. You see," he continued, your New York ! banks do not care anything for cash, credits. Their loans and deposits are in the form of checks and bookkeeping and all they want of cash Is to maintain their reserves"
 Then what Is the use of increasing circulation," was asked.
 "Oh," replied the secretary your banks here do not do all the business. When 1t comes to the western banks when they want to make a loan for the purpose of paying for cattle or grain they have got to pay out the actual currency They don't do so much of their business on books. That Is where the cash is needed and they call on the banks here for it. D
 Visits the Sub-Treasury.
 Secretary Shaw visited the ub-treasury today. He came to the financial district for the purpose of discussing the situa- ton with bankers His callers included
 
 tional bank F. L. Heine, vice-president of taht bank, and Vice President Wander | lip of the National City bank; w. A. | Nash, president of the Corn Exchange Bank of Commerce; w. H. Perkins presi- dent of the Bank of America President O. c. Williams of the Chemical National bank, and President Delafield of the Ns- tional Park bank.
 H. w. Cannon, president of the Chase National bank and United States Sena- tor John Kean of New Jersey spent a brief time with the secretary who is re- ported to have requested the bankers to increase their circulation without delay Several of them it is understood, prom ised that they would do so. Chairman E. H. Gary of the United States Steel corporation and James Sull- man of the National City Bank called ir the early afternoon.
 "I simply called to congratulate the secretary" said MT Gary. Tn my opin- ion he has shown good judgement and 1 firmly believe his plan will go a great way toward easing the situation
 Mir. Stillman remained with the seere- tary for some time Upon taking leave he said:
 A Very commendabIe Act.
 q think the secretary's act is very commendable."
 Comptroller of the Treasury Ridgely met the secretary at the sub-treasury.
 Secretary Shaw during the afternoon received a number of telegrams from a number of banks of various sections of the country commenting his action.
 Ex-Secretary of the Treasury Fairchild was one of those who met Ms. Shaw. Their talk was in private. Before going to the sub-treasury MT. Fairchild had been asked his opinion of Secretary Shaw's action.
 Tt is a radical departure from prece- dent he said, out it is a good thing; it was just what was needed in the pres ent circumstances.
 The represent atives of two leading bond houses also conferred with the sec retary. In an interview the secretary said that all saving banks securities ac- cepted by the treasury department in place of government bonds would be of the highest class panic proof and as good in London as in New York. IIsino Sidewalks for EIrei