Evening star., 1902-03-14
PURCHASE OF BONDS
WILL BE DISCONTINUED BY
TREASURY TOMORROW.
Secretary Shaw Issues Order as the
Result Of Conference With
the President.

Immediately after Secretary Shaw re
turned to the Treasury Department thi
afternoon from the cabinet meeting he is
sued the following notice disseminating tn,
purchases of bonds Of the United State:
after tomorrow afternoon:
The Secretary of the Treasury announce:
that he will discontinue for the present tn.
purchase of United States bonds Of the
per cent loan Of 1904, the per cent funded
lean of 1907, the 3 per cent loan of 1908
1918 and the per cent loan Of 1925 suci
discontinuance to take effect at the close
Of business Saturday. the 10th instant
1t was understood at the Treasury De-
partment late yesterday afternoon, after
he had been in conference with the Presi-
dent, that Secretary Shaw would likely
take this action.
Averse to Encouraging Bull Market.
Secretary Shaw, it is said, contends that
bonds are too high and he is averse to en-
couraging a bull market. The market Is SO
high that national banks are reducing their
circulation as fast as possible every month
and selling the bonds in the market, the
sale of the bonds being more profitable than
the circulation based on them.
The Secretary has been watching this
to continue a situation that will encourage
the banks to persist in reducing their cir
culation 1t is believed that hereafter the
banks will seek to increase their circulation.
Ever since November last the banks have
Withdrawn the maximum amount of cir
culation allowed by law each MONTH
5000, o,ooo-and already for the month Of
April the applications have more than
reached the $3OOO.OOO limit.
The same state Of affairs has never be-
fore been known in the Treasury Depart
ment Some banks have Increased their
been reducing. But the increases have nv
no means kept pace with the decrease and
so the circulation Throughout the country
has been gradually diminishing.
Waiting for Congress.
Secretary Shaw has also taken the posi-
tton, it is said, that he does not care to re-
duce the basis of the circulation Of cur
rency in this country until he knows what
Congress is going to do about currency leg
islation. He thinks it likely that Congress
will cut down the surplus and adjourn with
out providing for what Is known as asset
currency, which would greatly extend the
power of the banks to Increase their cir
culating medium in times of money neces-
stiles.
Without such legislation the banks will
have to fall back upon, the time -honored
United States bonds as a basis for increas-
ing thelr paper money. If the bonds are
hlgh in the markets, oTzings to scarcity. the
lnducement to increase viii not be suffi-
clent to cause much to be done.
Of course, by buying in bonds the treas
ury is reducing the basis of circulation all
the time. On the other hand, 1t is pointed
out that the sales of bonds to the govern
ment have been comparatively few and far
between for months.
Secretary Gage began the purchase of
bonds In April of that year and during
the fiscal year 1901 bought total of sl4,-
3a0,32O, for which the treasury paid $16-
2a1,92S. The bond purchases during the
present fiscal year have amounted to SOL, :
I,2lO, for which the disbursements were
*to. .415625. The offers of bonds before the
Treasury closes tomorrow afternoon NAV
be SO large as to run the total up con-
siderable amount. The amount available
Tor the sinking fund this fiscal year is
so4.OU.ooo. This sum has nearly been
reaehed, but any purchases over that
amount could be Cancelled.
Inc following statement was made at
the treasury this afternoon:
Inc Secretary believes that the price of
bonds is unreasonably high, and that the
eHeet OF the government being permanently
in the market stimulates and helps to main
tam TINS price to the prejudice of national
bank circulation. 1t Is well-known fact
that the banks are retiring circulation as
rapidly as possible, presumably for the
purpose of selling the bonds now on deposit
at present prices, or for the purpose of
using them with the treasury as security
Tor government deposits. In making gov
eminent deposits the Secretary is disposed
TO discriminate In favor of such banks as
maintain their circulation. and by these two
methods hopes to overcome the tendency to
retlfe national bank circulation"