Evening star., 1902-08-23
TREASURY SURPLUS
Secretary Shaw Has Not De-
fined His Policy.
NO BOND PURCHASE
AT LEAST NOT FOR THE PRES
ENT.
Various Methods That Might Be Used
to Relieve a Tense Money
Market.
70 BOND PURCHASE

Inc constantly recurring question, under
the inelastic currency system of this coun-
try as to what action, if any, the Secretary
Of the Treasury is likely to take. to relieve
pressure in the money market by getting
surplus funds of the government into the
channels of trade, has again arisen. The
financial world is evidently giving earlier
attention to it than Secretary Shaw He is
now on his vacation, except as interrupted
by an occasional campaign speech, and
these interests are now chief in his mind
Although he is expected back in Washing
ton on Monday it will be but for only a few
days, and those devoted to treasury routine
l. is his present opinion that nothing needs
to be done right away, and so would prob
ably be no nearer an announcement of
definite policy for the fall months were he
in the city and regularly at his desk 1t is
an old-time maxim that the treasury never
1GstlheS an interference in the money mar
ket unless it considers itself the deranging
f. actOr
Not Proposed to Buy Bonds.
Secretary Shaw, in all his latest conversa-
tions on this subject has not hesitated to
say that it was not his present purpose to
buy bonds on the sinking fund account
There are many reasons for this conclusion
For one, it has leaked out that the section
of the recently enacted isthmian canal bill
relating to the issue of bonds for the great
er part of the cost of that enterprise, con-
tains defect which might make the bonds
unmarketable at par. No provision was
made for reducing the tax on the national
pank circulation which might be based on
these bonds to one-half of one per cent as
was done in the law authorizing the regu-
lar refundng twos. AS the law now stands
national banks buying the Panama twos
would have TO pay the old l per cent tax
q nir lott
might prove very serious handicap Sec
retary Shaw, accordingly, hopes to secure
from Congress a prompt modification of the
law, but there are always many uncer-
talntes when the United States Senate
comes to dealing with gold bonds, that he
prefers TO keep the treasury surplus well
III hand until action is finally obtained.
Possible New Bank Legislation
Secretary Shaw is moreover watching
the possibility of some new banking legis-
latlon which might modify the treasury
situation. He has some uncertainty also as
to now the reduction which was made in
federal taxation by the last Congress- in
the face of the present tremendous expend-
lures, will turn out. The general feeling
is hopeful. Not treasury official can be
found to predict that the cut in the reve-
nue. VIII prove mistake, and yet eXpe-
rience has many times shown that the
first two months of new law affords little
indication of its long distance working.
These and other considerations each one
small in itself are doubtless largely re-
sponsible for the Secretarys present pur-
pose not to buy bonds, though their price
is-rather reasonable today as compared
with recent periods. The government has
paid 40 for long fours within year They
are now quoted at about 1924. At 14O ma
turing in 1925, they yielded an interest re-
turn to the holder of 10 per cent, and
that they were the most profitable bonds
fnr. thn TO h,,y- Tha
threes. short fours and fives yielded to the
private investor, who had to pay the pre-
MUM, return in many instances of less
than > per cent.
1t will be recalled that Mr.. Shaw stopped
tie purchase of bonds on sinking fund
account soon after he became Secretary of
the Treasury, but increased very literally
the deposits in the national banks. This
doubtless foreshadows in a general way his
policy this fall in case the demands of the
outside market for relief become urgent.
There are now deposits of about Sis, S,OOO-
900 in national banks to the credit of the
United States treasury. Many banks
throughout the country are still desrous
of qualifying as depositors, and there will
be no dearth of applca tions If the Secre-
tary chooses to increase the account.
Anticipating Interest Payments.
There is always the possibility of slight
relief through anticipating interest pay
ments, for a year or less, subject to re-
bate, and such an arrangement would be
very welcome in tight money market.
There is, too, the possibility of continuing
refundng operations. Secretary Shaw
might refund the three's, four's and (ive's,
except the long four's, which are, by law,
especially excepted from refundng opera
tions into 2 per cent bonds. In the Nc
Kinley administration, the department paid
out in premiums. in round numbers, $44,
600, 600, making a saving in future interest
payments of about 550OO,CO0, or net saw
ing of about S11 100000, besides reducing
the treasury surplus and relieving the fu-
ture burden of the public debt.
Another practicable way of meeting the
situation is by hurrying up the expendi-
lures on the large pending accounts. This
is often matter of bookkeeping. There
are always ways Of pressing to early set
tlement accounts for which appropriations
have been made. The whole subject Of re-
lief of the money market is, however, one
that rests with the Secretary of the Treas
ury personally; 1t is his policy. and not any
thing delegated to subordinates, and so in
his absence there is one authorized to
speak definitely as to his plans, If, indeed
he is prepared TO do himself.
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