Evening star., 1902-01-06
PROBLEM FOR GOV. SHAW

SUGGESTIONS FROM THE RETIRING
TO INCOMING SECRETARY.
the Treasury-.A Plan Not
Yet Tried.
The problems which will confront Gov
ernor Shaw when he. relieves Secretary
Gage at the Treasury Department three
| weeks hence were discussed very frankly
between them at their conference at the
Treasury Department on Saturday. The
! most pressing preblem Of the immediate
future is one which results from prosper
ity rather than adversely, but it threatens
to be none the less serious during the next
six months. Secretary Gage pointed out
to Governor Shaw the manner In which
the surplus of ordinary receipts was pilng
up and the necessity for taking some meas
ure to keep money at the disposal of the
! market He described the measures which
he had taken during the past summer to
keep money from congesting in the treas
ury by applying 1t to the purchase of un-
matured bonds. but frankly admitted that
presentation of bonds to the treasury for
redemption, even at the liberal premium
which has been paid, has been steadily di-
minishing and promises soon to come to
an end. The principal of the amounts pur-
chased since November l has been SlS,-
2iO,41O, but of this amount S11 ,613,37O was
purchased during November, making the
purchases for December and a part of jan
uary little more than half those Of No
vember. The amount disbursed by these
| purchases has included $3.50, 1876 for pre-
miums and accrued interest, and has raised
the total payment to. 2,S59,o JAG. These
payments have had remarkable influence
in keeping the cash balance down to
manageable figure. The amount on Satur-
at nearly S205, 900, 600 but for the bond pur-
chases since the beginning Of November.
| The balance would have stood above $780,
100000 if there had been no bond purchases
since the beginning of the fiscal year on
July ]. The gu. stion whether these pur-
chases could be continued some other
| means Of getting rid of surplus funds
should be adopted excited the keen interest
| Of Governor Shaw and he listened atten-
lively to the suggestions Of Secretary
Gage.
Reduction of Deposits.
One Of the measures for keeping down
| the surplus which has been more or less
| considered but not yet adopted, is the re-
/ duction of the large deposits Of public
funds in the national banks. These depos-
| it's stood on Saturday. at $l12,770, 7S2, in
Guiding s1O6, ,5O7 ,591 of what may be called
permanent deposits, and $6.263,171 In bal
| ances to the credit of disbursing officers
| 1t was pointed out by Secretary Gage to
| Gov. Shaw that if these deposits were
| called in an influence might be brought to
| bear upon the banks to increase their cir
! culation. They have pledged for the Sc
| curity of these deposits about $110S44, $50
! in United States bonds. If the withdrawal
Of deposits enabled them to receive back
| these bonds they might employ the bonds
| to take out additional bank note circulation.
| Even If some of the banks threw their
bonds upon the market the tendency would
| be to depress their price, make them more
| profitable as basis of circulation, and
| perhaps lead other banks to buy in the
| bonds for the purpose Of Increasing circu-,
| lation. The withdrawal of money in this
way from the market would reduce the
| supply of money on its face, but this re-
| duction would be offset by the increase in
| bank-note circulation based upon the bonds.
The effect would be beneficial to the treas
| ury IN an important respect, because 1t
| would bring back the public funds into the
| treasury under conditions of business pros
| perity, when it might be found very diff
| cut to bring back the public funds in a
| time Of business depression accompanied
| at once by strngency at the banks and by
| a decline in treasury receipts, which would
| make the money necessary to the govern
| ment.
Disposition to Retire Circulation.
A policy which would depress the price
of bonds sufficiently to make bank-note cir
culation more attractive to the banks would
probably have an important effect upon the
disposition which the banks are showing to
retire their circulation. The total circula-
tion on Saturday stood at 359,997 1872,
| which is only little below the maximum
| of recent months. This gross figure does
| not, however, reveal the real state of the
| case. Banks have been depositing lawful
fn.. fba n a a
| a rate coming absolutely up to the legal
limit of $3,000,000 per month. Such depos-
| its this month have already reached s., ,J0O,-
OO0 and applications are pending for per-
| mission to withdraw the remaining sum of
| $1,5OO,OOO. The result of these movements
is to cover by lawful money the circulation
In process Of retirement, while delay takes
| place in the actual reception Of the notes
| at the treasury and their cancellation. The
! deposits of lawful money for retiring cir
culatfon have risen from 500, ,9S5, ,4S1 on Sep
| tember 30 to $36, ,626, 366 on Saturday last.
| The difference, moreover, is not the gross
increase in lawful money deposits, but the
| net result after the amounts are deducted
which have been paid for notes when pre-
| sented for redemption. The circulation
based on bonds has fallen since September
| 30 from $32S, ,S45 .067 to &S23, ,37O, ,S25 on Sat
| urday last This downward movement has
taken place in spite Of some deposits of
bonds by new banks required to make the
| minimum deposit of one-duarter Of their
capital The bonds on deposit to secure
circulation fell from $780, 721, $50 on Septem-
Der 80 to 1924, ,946. $50 at the close of last
week, 1t is a significant fact that the
whole of this loss has fallen upon the new
2 per cent bonds which are supposed to be
the most profitable basis Of circulation
The amount of these on deposit fell from
$317 ,S54,15O on September 80 to $311. 1888 700
on Saturday last. This reduction has un-
doubtedly been caused by the high price Of
the bonds. making It profitable to unload
them In the open market, and this influence
| would be Checked n call "a hop plrc
for the surrender of their large holdings of
public money.
j PEACE POLICY HAS FAILED.