The Montgomery advertiser., 1902-10-01
SHAW'S PLAN PRAISED
ADMITTED TO BE RADICAL DE-
 RAPTURE FROM PRECEDENT.
The Secretary of the Treasury Pays Wall Street and Talks to Bankers-Makes Addi-
 tional Statement.

New York, Sept. 30.-Secretary Shaw gave out the following statement today:
 "The department is in receipt of a large number of requests from various banks in the country, clearly showing that the statement given out last night was misunderstood. or rather that it 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 secur- ed. For the present banks seem to be able to obtain, freq lently by borrowing, bonds other than per cent. consols. They can obtain the use of these bonds for a limited period and they are as de- sirable as any security for deposits. They are not as desirable as security for cir culation fort he reason that circulation based thereoni 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 except by purchase any bonds as basis for circu- lation, because when deposited for circu- lation they cannot be released until the circulation is retired and it may take years before their circulation can be re- tired and price of bonds is SO high that bank circulation IS maintained at con- siderable loss to the banks. They must be encouraged or circulation constantly contracts. Therefore the department has decided to release, for such banks as have deposits and are not maintaining their limit of circulation, portion of the bonds now held by the government, talk ing in lieu thereof other satisfactory se- curity, on condition always that the bonds released will be used for the i'm mediate issue of additional circulation.
 This provision does not apply to those banks that already have their maximum circulation; neither does it apply to banks that do not have any deposits. The sole purpose of the offer is to increase circu- lation that Is already printed and ready to be issued and by banks that already have the bonds on deposit These depos- its being scattered throughout 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 should be general, and for the West as we'll as New York, was shown by remark he made in ex- blaming how the effect would be imme- diate in New York. He explained again how relieving the banks of the necessity of carrying the reserves immediately gave them the opportunity to extend cred it's to four times the reserve released.
 You see,' he continued, "your New York banks do not care anything for cash; they do their business by means of credits. Their loans and deposits are in the form of check and book keeping 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, ''youl banks here do not do all the business When 1t comes to the western banks when they want to make a loan for tn, | purpose of paying for cattie or grain the, have to pay out the actual currency They do not do so much of their bust ness on books. That Is where the casl | is needed, and they call on the bank! | here for it.
 Secretary Shaw visited the sub-treasury today. He came to the financial distric for the purpose of discussing the situa tion with bankers. His callers included President G. F. Baker of the Firs National Bank, F. L. Hine, vice-presidenr | of that bank, and vice e-president Wander lip of the National City Bank; W. A Nash. president of the Corn Exchange Bank and Chairman of the Clearing House Committee; J. c. Hendrix, presI dent of the National Bank of Commerce W. H. Perkins, president of the Bank oi America: President O. G. Williams of the Chemical National Bank and President Delafield of the National Park Bank. nP he 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 with out delay Several of them, it is understood, promis- ed that they would do so.
 Chairman E. H. Gary of the United States Steel Corporation and James Still man of the National City Bank called in the early afternoon.
 "I simply called to congratulate the Secretary, said MT. Gary. Tn my opinion he has shown good judgement and I firmly believe his plan will go 6 great way toward easing the situation. '
 Mr. Stillman remained with the Secre- tary for some time. Upon taking leave very commendable."
 Comptroller of the Currency Ridgely met the Secretary at the sub-treasury
 Secretary Shaw during the afternoon received a number of telegrams from a number of bankers of various sections of the country, commenting his action.
 Ex-Secretary of the Treasury Fairchild was one of those who met Mir. 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 radical departure from precedent" said he, but it is a good thing--it was just what was needed in the present circumstances.
 The representatives of two leading bond houses also conferred with the Secretary.
 In an interview the Secretary said that all saving banks securities accepted by the Treasury Ddepartment in place Of government bonds would be of the highest class. panic-proof and as good in London in NaW York