Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1902-10-01
Head Of the Treasury Depart.
men; Makes a Statement
For the Banks
TO RELIEVE THE sTR,heENcY
The Secretary of the Treasury Makes
Some Matters Plain That Appear to
Have Been Misunderstood OBJ
jeet of His Offer to Banks is to In
crease Circulation.


gave out the following statement last
evening:
'rhe department Is in receipt of a
large number of requests from various
banks In the country clearly showing
that the statement given out Monday
right was misunderstood, or rather that
it was not carefully read. That there
may be no misunderstanding the fol-
lowing statement is made:
mo new deposits will be made on any
security other than government bonds
so long as government bonds can be Sc
cured. For the present, banks seem to
be able to obtain frequently by borrow
ing bonds other than 2 per cent consols.
They can obtain the use of these bonds
for limited period, and they are as de-
sirable as any for security for deposits.
They are not as desirable as security
for circulation, for the reason that cir
culation based thereon is taxable at l
per cent, while circulation based on the
? per cent consols is taxable at only
cne-half of l per cent. The banks can
not obtain except by purchase any
bonds as basis for circulation, be-
cause when deposited for circulation
they can not be released until the Cir
culation is retired, and 1t may take a
year before their circulation can be re-
tired, and the price of bonds is SO high
that bank circulation is maintained at
loss to the banks. There
fore, the department has decided to re-
lease, for such banks as have deposits
and are not maintaining their limit of
a portion OF tie bonds now
held by the government, taking in lieu,
thereof other satisfactory security, on
condition always that the bonds re-
leased will be used for the Immediate
issue of additional circulation. This
provision does not apply to those banks
that already have their maximum cir
culation. neither does IT apply to banks
that do not have any deposits. The sole
purpose of the offer is to increase cir
culation that is already printed and
already have the bonds on deposit.
These deposits being scattered turnout
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
planning how the effect would be i'm
mediate In New York. He explained
again how relieving the banks of the
necessity Of carrying a reserve immedi-
ately gave them the opportunity to ex-
tend credits to four times the reserve
"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 checks md bookkeeping
and all they want Of cash is to main
tain their reserves
Then what is the use of increasing
the circulation?" was asked.
oh, replied the secretary instantly,
your banks here do not do all the bust
ness. When it comes to the western
banks, when they want to make loan
for the purpose of paying for cattle or
3 1llll ivy navy SON W pay O0l Vic AT.
ual currency. They don't do so much
of their business on books. That is
where the cash is needed, and they call
on the banks here for it.
Secretary Shaw during the afternoon
received number of kilograms from a
Of bankers. from various sec
tons of the country, commencing his
action
Ex-secretary Of the Treasury Fair
child was one of those who met Mr.
Shaw Their talk was in private.
Before going to the subtreasury Mr..
Fairchild had been asked his opinion of
Secretary Shaw's action.
1T is radical departure from prece-
dent" said he, "but it is good thing
It is just what was needed in the pres
ent circumstances