Omaha daily bee., 1902-10-01
MARKET MAKES RECOVERY
CONTINUED from First Page.)

remit the requirements OF banks to main.
tain a cash reserve against government de-
posits which are secured by government
bonds, and TO accept other securities than
government bonds for government deposits,
where It would release . per cent bonds
and would require the taking out Of addi-
tional bank notes.
Authoritative statements from Mr.. Nor
gan relieved the fears OF a miscarriage Of
the plan for transfers OF control Of ths
Louisville & Nashville.
Secretary Shaw today gave out the fol-
lowing statement:
The department is in receipt Of a num-
Der OF requests from various banks in the
country. clearly showing that the state
ment given out last night was misunder-
stood, or rather that II was not clearly
read. That there may be no misunder-
standing, the following statement is made:
No new deposits will be made on any
security other than government bonds so
long as government bonds can be secured.
obtain frequently by borrowing bonds
other than ? per cent consols. They can
obtain the use OF these bonds for a limited
for security for deposits. They are not as
desirable as security for circulation for
the reason that circulation based thereon
Is taxable at per cent, while circulation
based on the ? per cent consols is taxable
at only IL per cent. The banks cannot
basis for circulation, because when de-
posted for circulation they cannot be re-
II may take a year before their circulation
can be retired and price of bonds is so high
that bank circulation is maintained at con-
siderable loss to the banks They must he
tracts.
Therefore the department has decided to
release. for such banks as have deposits
and are not maintaining their limit Of ctr
culation, a portion Of the bonds now held
by the government, taking in lieu thereof
other satisfactory security on condition al
WAYS that the bonds released will be used
for the immediate issue of additional cir
culation. This provision does not apply to
those banks that already have their maxi
mum circulation, neither does IL apply TO
banks that do not have any deposits.
Purpose of the Oner.
The sole purpose Of this offer is to in
crease circulation that is already printed
and ready to be issued aud held by banks
who have the bonds on deposit. These de-
posts being scattered throughout the
entire country, the relief offered. 1t is be-
lieved. will be national rather than local,
for it applies to all sections 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 a remark be made
in explaining how the effect would be i'm
AtAhoAC IA NJ" AOAhs ~ NAHlsAhCu aheAA
how relieving the banks Of the necessity
Of carrying reserve gave them the oppor-
tunity to extend credits 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 checks and bookkeeping. and all they
want Of cash is to maintain their reserves. -
Then what Is the use OF increasing cir
culation ?" 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 a loan for the
purpose Of paying for cattle or grain they
have got 10 pay out the actual currency.
They don't do as 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 re-
ceived a number Of kilograms from a mum
her Of bankers from various sections Of the
country commencing his action.
EX-Secretary Fairehild was one Of those
who met Mr.. Shaw. Their talk was in
private. Before going 10 the subtreasury
Mr. Fairchild had been asked his opinion
OF Secretary Shaw's action.
at is a. radical departure from precedent
but il is a good thing. II is Just what il
needed IN the present circumstances"