Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1902-01-15
Problem Facing New Secretary
OF the Treasury is Seri.
Gus One.
Bank Note Circulation Rapidly
Declining on Account Of
Bond Redemption.
Limit Fixed For Deposits ia
Withdraw Circulation AL.
ready Fully Covered.


ward plunge of the national bank note
circulation secured by bonds seems
to be following the law of accelerat-
ing velocity. Not only has the s3.000,-
900 limit fixed by law for the deposit
of lawful money to withdraw circula
ton been fully covered for December
and January, but advance applications
are on file for the whole of February,
and other applications to the amount
of $4,000 for the month of March.
These applications alone will reduce
the live circulation secured by bonds
to about s31s,OOO,ooo. What this
means may be judged from the fact
that the amount Of this circulation
stood on September 80 last at $685.
845,067. 1t fell to $32S,19S,614 for Oc-
tober. $328,212. 1856 for November, $780,
009,3o6 for December and s322,614 ,295
for the first eleven days Of January
ending with Saturday last. At this
rate the circulation at the close of
September next, at the height of the
crop moving season, will have fallen
to about $500. 100000, and a large per-
centage of the increase under the gold
standard law will have been wiped
out.
Fortunately for the maintenance of
the bank circulation there is no limit
of law upon the increase of note is
sues, but there is a limit Of 100000
upon the reduction of circulation.
Hence it is not possible to wipe out
the increasein bond secured circulation
as rapidly as it occurred, but at the
present prices of bonds the decline will
be steady and rapid. The gross cir
culation has not yet felt seriously the
effect of this downward movement,
but notes are constantly being re-
ceived at the treasury against which
lawful money has been deposited and
when so received are Cancelled and re-
tired. These deposits of lawful money
actually on hand, without counting the
amounts paid out for the redemption
of notes, have increased from $685.
4S1 on September 80 to $35,2S0.420 on
December 81 and $36,s11.20o on Satur-
day last. Already the total circulation
has fallen from $360,2S9,726 on De-
cember 81 to $359,425,495 on Saturday.
and it is only question of time when
it will tend to fall to the amount of
the bonds deposited to secure the
notes. The bonds pledged to secure
circulation stood on September 80 at
$3.50, $50, but fell to s326,2S0,2S0 on
December 81 and to $324.52Sy2S0 on
Saturday last. 1t Is a significant fact
that the loss of about s6,00O,000 since
September has fallen almost entirely
upon the new 2 per cents, which are
the most profitable basis of circula-
ton. These bonds constituted $751;
S54,150 of the entire amount pledged
on September 80, and had fallen to
1911 .505,700 at the close of the week.
The gold 2 per cents were very largely
awaited of to increase circulation i'm
mediately after the refunding pro-
visions of the gold standard law which
authorized their issue. They have ev
identity proved somewhat disappoint-
ing to the banks and have been with
drawn and thrown upon the market
under the stimulus of recent high
prices. The upward tendency of
prices has not apparently been check
ed by the transfer of s6,0O0,000 to the
open market, because much greater
amount In bonds of other classes has
been withdrawn from the market by
the policy of debt reduction which has
been pursued by Secretary Gage. The
principal of the bonds redeemed since
November has reached $1S,67S,080,
and with premiums and interest am
bunting to to s4,699.s7O, the total dis
bursements In these bond purchased
have been $23.372.93O. The largest
purchases of bonds have been the
long term as. maturing in 1925, OF
which $9,047,1 100 have been acquired
at a cost of s12,612,ssO. and the short
term As, maturing in 1907, of which
s7,S40,950 have been acquired at cost
of $s.s51,07S.
Extravagant as may seem the policy
of paying such high premiums for un-
matured bonds. in order to prevent tho
Of money from the open
market, the net annual cost is less on
the long term bonds than the short
term bonds. The point is being APP
however, where the treas
ury can not we'll continue to follow the
market price of the bonds without in
viting serious criticism. For this rea-
son the project of Representative
lI