New-York tribune., 1902-03-14
PRICES OF BONDS TOO HIGH
SECRETARY SHAW TO STOP PURCHASES
AT PRESENT FIGURES.
TBY TELEGRAPH TO THE TRIBUNE.


Washington, March 13-From unquestionable
1t learned to-day that the Secretary of
the Treasury will longer purchase government
bonds al the present high premium demanded for
them by brokers. In the last year more than $50
100000 worth of government bonds different issues
have been purchased by the Treasury Department
According to the recent quotations the average rate
of premium is Is per cent. Obviously this
figure is many times the percentage of interest paid
e the bondholders. To continue to be bull in
the market. which caIS only result in Indefinitely
maintaining the unprecedentedly high price OF gov
ernment securities. officials beginning to re-
gard unnecessary waste of funds. United
States regular As. of the issue payable in 1926
sell in the market at 1879, which gives to the seller
a premium of SO cents on every dollar invested
United States Is of 1890 sold a nine points
above par: United States 3s of 1905 nine
points above par, and the per cent bonds payable
in 1904, have market value of S106.
With heathful bank conditions ali over the
country. reflected in the answers to the last call
of the Controller of the Currency a hourishing
port trade, and expecting the authorization of
heavy expenditures by Congress. officials of the
Treasury look forward to a continued easy money
market. Secretary Shaw has asserted that when
money is easy throughout the commercial world
ii is unnecessary to disturb the elements which
control the desirable conditions. At this time it is
not regarded possible that ceasing to purchase
can prove Injurious the money circula ting
in trade. In view of these considerations, among
other things if bondholders continue to demand
present prices ii would not be surprising II formal
action were taken by the Treasury Department
closing its vaults to all bond sellers. or course
whether bonds disposed OF at any price except
in years when they redeemabe by law is a
matter which lies wholly within the option of the
owner
II is significant that national banks OF every
State in the UnIor have been vying with each
other to obtain permission from the United States
Treasurer withdraw bonds deposited to secure
national bank since early last fall. Under the
oIru1 ulG nf
CT deposits limited to 100000 month The
maximum allowance has been Withdrawn on the
receipt of equal amount of national bank note
currency for the last seven months. From offclal
records to-day 1t is learned that the March limit
has been exhausted. and options have been granted
to bankers for the exchange OF bank notes for
bonds. which include the 100000 limit for April
ard one-sixth of the aXimum allowance for May.
Such Withdrawals due TO the high premium at
which the bond securities are sold. Though bank
notes are. under usual circumstances, profitable
credits. when from to 80 per cent permum can
be obtained for bonds. II is economical for bankers
to reduce the circulation in order to dispose
encourage the present of things officials say.
at the OF So 900 5000 a month bonds would be
Withdrawn and national bank currency would be
steadily reduced until the security vaults of the
Treasury gradually became empty, and the bank
note would become a great rarity. The bank note
circulation is over $3.50, 100000.
United bonds of par value of $3.50 500 were
redeemed at the Sub-Treasury yesterday. S2s.23S
being paid for them. There have been few bonds
offered lately.