Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1902-02-04
RELIEF 0F TREASURY
The Repeal of the War Tax Will
Help Solve Surplus
Problem.
Marked Increase in Bank Note
Currency and Its Causes
Bond Purchases.
A New Condition Created by
Cages Method Of Reliev.
ing Treasury.

ing Treasury.
Washington. Feb. Awhile Mr.. Les
lie NJ. Shaw, the new secretary of the
treasury, has not indicated his polio!
touching any of the methods for the
| Regulation of the circulation and the
disposition of the treasury surplus
there are some features of the present
financial situation that are attracting
the attention of the administration fl
nanciers and the members of the senate
committee on finance and the house
committee on banking and currency
There is nothing alarming about the
situation, and nothing that can not be
easily regulated, but the method of &C
complshing the relief is a subject OF
discussion and some difference of opin-
ion
The diminution of bank note curren-
cy has been SO marked within the last
four or five months as to call attention
of the government financiers to the
causes for this decrease and methods
of checking it. The cause of the decline
is not difficult to locate. In the closing
months of 1901 Mr.. Gage then secretary
of the treasury, faced a peculiar flnan-
cial complication. The treasury was
burdened with a surplus, which was in
creasing at an unprecedented rate,
while the commercial interests of the
country were clamoring for more mon
ey. There was a demand for an i'm
mense volume of money for the moving
of crops, particularly in the west and
southwest, and Wall street was unable
to supply this demand without risks OF
financial shortage on the speculative
market. Call rates advanced sharply,
and the tightness of the foreign money
market served to add to the complfca-
ton. In that emergency, in response to
appeals from the banking interests of
the country. Secretary Gage began a
system of liberal bond purchases. using
the surplus in the treasury to retire
bonds purchased for the sinking fund.
The result of Mr.. Cages bond purchas-
es had the desired effect of easing the
commercial money market, by placing
portion of the treasury surplus in cir
culation, but II produced another con-
dition that is the cause of study and
consideration by the financiers and will
have to be settled by the new treasurer.
The purchase of bonds by the govern
ment, to keep down the treasury sur
plus, had such stimulating effect on
the bond market that the national
banks of the country can make, more
money by selling their bonds ~ depos
1t in Washington to secure cifhS lAtion
than they can by loaning their bank
notes, based on these bonds This fact
has been brought to the attention of the
treasury officials and students of finan-
cia conditions with somewhat startling
emphasis. The comparative statement
of the governments receipts and ex-
penditures, issued yesterday. shows a
decrease of circulation, based on gov
eminent bonds. for the month of Janu-
airy Of s2,73O,915.
Under the national banking law the
Withdrawals of circulation by national
banks are limited to 100000 a month.
and the statistics of the treasury de-
partment show that this limit has been
reached for November. December and
January and almost exhausted for
March Applications for Withdrawals
for March have nearby reached the 3d.,
100000 mark and applications for April
Withdrawals are now being filed. On
Dec 81 the circulation secured by bond
deposits was s325,0o7 .306 This dropped
to s32227S,391 on Jan. 81, decrease of
nearly s3.000.000, altho the increase for
the year was $6,566,so2. The increase
was all gained in the earlier months of
the year, before the treasury began the
purchase of bonds and made 1t profita-
BILE for the national bankers to with
draw their notes from circulation and
sell their bonds which had been held on
deposit to secure the circulation of the
bank currency. The bank note circula-
ton which stood at $32S.S45,06 in Sep
tember is certain to drop on account of
withdrawals for five months. to about
100000 at the end of March.
The first suggestion for the relief of
this condition Is naturally that the new
secretary of the treasury should cease
the purchase of bonds for the sinking
fund Mr.. Shaw has been unofficially
quoted as having stated his purpose of
temporarily continuing the policy of
Mr.. Gage in this respect. The prospec-
tive repeal of the war revenue taxes, If
enacted into law, would to great de-
gree obviate the necessity for continue
ing the bond purchases in order to pre-
vent the accumulation of an idle sur
plus in the treasury. A reduction of
more than s15,000,000 in the govern
ment's annual receipts, which would re-
suit from the enactment of the war rev.
enue repeal, would act at once as re-
lief to the commercial demand for
available money and. make eXtraordi-
nary bond purchases unnecessary.