The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1902-09-30
Banks No Longer Required to Carry
Reserve Against Government
Deposits
THIS Is IN CASES WHERE
SECURED BY BONDS
BY This Action the Banks Will Be
Able to Increase Their Volume Of
Business $4,000 ,ooo-severe Shake
Up of the Stock Market, Losses in
Some Instances Reaching 10 Per Cent.

| NEW YORK, Sept 2S-Secretary of
the Treasury Shaw, who was in New
York tonight, has issued a statement
in which he says that the banks will
hereafter not be required to carry a
reserve against government deposits
secured by government bonds. This
will make available tomorrow over
| $50, 100000.
Secretary Shaw declined to discuss
the financial situation further than to
say that the treasury would cooperate
as far as possible with the banks, both
East and West. in their effort to sup
ply the necessary credit to do the un-
precedented amount of business that is
taxing railroads and steamship lines as
well as banks to the utmost.
No Reserve Necessary.
Mr.. Shaw said he had never seen any
good reason why banks holding gov
ernment deposits secured by govern
ment bonds should be required to carry
reserve against it. First. 1t is a de-
posit not likely to be called in a time
of Stringency, and second, If called,
the collateral will always sci; for cash
and in excess of the deposit He has,
since he took control of the treasury.
contemplated relieving the banks OF
this burden.
The comptroller of the currency
agrees with the secretary, and there
fore it is announced that hereafter
banks will not be required to carry
a reserve against government deposits
secured by government bonds.
The treasury has on deposit with va
rious banks scattered throughout the
country from Maine to California and
from Minnesota to New Orleans, in
rounds numbers, $13O,OOO,O0O, against
which they have heretofore been COM
PEELED to hold more than S30,000,000 Of
gold or its equivalent. This decision
will release that much reserve and
$30,000,000 additional credit.
Only Good Securities Acceptable.
The secretary said he would con-
tinue to make deposit of internal reve-
nue. and miscellaneous receipts Gall
available for that purpose), practically
100000 per day, as long as the Situa-
ton required, and if banks were una
bic to obtain government bonds to Sc
cure the same he would accept the
same general class Of securities, mu-
nicipal bonds, etc., as are made avail
BILE by the laws of the several states
for savings banks. By this 1t is not
intended to loan in excess of 65 per
cent of the par value, and nothing will
be accepted that has not been panic
tried and proved saleable for cash on
call. He said he should, of course, de-
termine each case by itself
The secretary further said he would
nf
above for a portion of the deposit held
by each bank now holding a govern
ment deposit, and release enough 2 per
cent consols to cover any increased
currency that the bank may desire to
issue. He has recognized the possibil-
fly Of present conditions, and there
fore as early as last July commenced
printing currency preparatory to the
needs of the banks to handle the in
creased business Of the fall trade, and
has on hand ready to be delivered an
aggregate of about $25,000.00O.
Five Million a Day.
This can be sent out at the probable
rate of $5,000000 a day, If the banks
desire, to substitute the other securi-
ties above designated for the release
of the consols. The secretary's ad-
ditional relief, therefore, may be
summed as follows:
!
S30,000,000 reserve, which will permit
the banks to increase their volume of
business $130,000,000.
Second-The substitution of other
security for consols now held by the
government on condition that the
same shall be used as basis for in
creased circulation, which, If accepted
crease the volume about $25,000,000,
and will add thereto lie needed
Third--The continuation of the de-
posits to the limit allowed by law, ac-
cepting, if necessary, security other
than government bonds.
Shake Up in Stocks.
NEW YORK, Sept 29.-With call
up to 35 per cent and number
of other adverse circumstances, today's
stock market received very severe
shake-up, net losses in many active is
sues ranging from Q to 10 per cent. The
greatest loss was sustained by Louis
vile e. Nashville. Disappointment re-
garding the probable disposition of the
road as much as anything else Is sup
posed to have caused the break.
Other features that combined to un-
settle the market were disquieting re-
ports concerning the presidents condi-
tion, the prolongation Of the coal strike
and the indubitable fact that London
and the continent are unloading
Americans" in large blocks.
Banks Stand AIoof.
Practically all the money loaned on
call today came from trust companies
and out of town corporation and pri-
vate individuals. The banks of the
Clearing House association stood aloof