Evening star. [volume] (Washington, D.C.) 1854-1972, 1902-09-11
DEMAND FOR MONEY
SECRETARY SHAW STUDYING
THE SITUATION.
National Banks Asked to Increase
Their Observation-Disclosures
to Purchase Bonds.

Secretary Shaw went to New York last
night and is in that city today. While he !s
there on several official matters 1t Is be-
iieved here that he is investigating the con-
dibton OF the money market to ascertain
whether there is the likelihood Of any
stringency in financial circles. Secretary
Shaw does not propose to be aiding financial
circles unless there is a genuine stringency
at any time. and up to this time he has re-
Trained from increasing the deposits OF
government money in national banks. or
taking any steps for relieving alleged
scarcity Of money except by ask ng some
of the national banks in larger cities to in
crease their circulation. The s. cretary
made suggestion to a number of national
banks that they stand ready to incre
their circulation should there be a demand
for more money in the transaction CT bu l.
ness of the country. Some of the banks re-
sponded by requesting that currency be
printed for them. In this way it was hoped
to expand the circulation Of the country to
a considerable amount and do away with
the nece ss!ty Of putting out deposits, pur-
chasing bonds or taking similar steps by
the Treasury Department. 1t is doubtful
whether the increase by the banks will be
sufficient to meet the needs of the country,
and the chances are that Secretary Shaw is
studying the outlook for himself in New
York today. Money is accommodating IN the
treasury daily, and the Secretary could
ca SLY spare considerable amount De
placed with national banks. or to purchase
bonds, just as he sees fit.
Reluctant to Buy Bonds.
As he is inclined not to purchase bonds
because of the large purchases made by
Secretary Gage before the latter went out.
the probability is that he will make add
tional deposits whenever, in his judgment,
the situation demands it. The Secretary
hat fha hos Of
the prices of government securities up to
a high point. AS these securities the
means of national bank circulation in the
country the high price has serious effect
on the increase of circulation. During the
bond purchases Of Secretary Gage and later.
while Secretary Shaw was making deposits
in national banks, bonds sold so well on
the market as to cause national banks to
decrease their circulation rapidly. For six
or eight months the limit allowed by law
for retirement of circulation, S3,000,000
month. was reached. This kept up right
along until Secretary Shaw, in May and
June, had to threaten the bankers that in
the future he would place deposits with
those banks that were not retiring circula-
ton.
Increase in Circulation.
During August, and so far this month,
tional banks throughout the country have
been increasing their circulation They be-
gan this before Secretary Shaw wrote any
letters to large banks suggesting that they
stand ready to assist in an expansion of
circulation. The market for government
bonds was down six weeks ago, but there
has been a steady rise in anticipation of
a demand for bonds as basis of circula-
ton or security for deposits that may
be made by the Treasury Department.
Should the market go much higher the dis
position of small banks might again be in
the direction Of retiring circulation that they
might dispose of their bonds at a good
price.