The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1902-10-01
SHOWS WHEREIN HIS STATE.
MENT AS TO BONDS WAS NOT
UNDERSTOOD
SECRETARY SEEKS TO MAKE
THE RELIEF GENERAL
Explains That the West Must Uss
Much Real Money, While New York
Can Get Along With Bookkeeping
and the Exchange of Checks to
Large Extent.

NEW YORK. Sept. so.-secretary
Shaw has given out the following
| statement:
"The department Is in receipt of
large number Of requests from various
banks In the country, clearly showing
that the statement given out last night
was misunderstood, or rather that il
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 secured. For the present banks
| seem to be able to obtain, frequently
by borrowing, bonds other than 2 per
cent consols. They can obtain the use
of these bonds for limited period,
and they are as desirable as any for
security for deposits. They are not as
desirable as security for circulation
for the reason that circulation based
thereon is taxable at 1 per cent, while
circulation based on the per cent con-
soils, is taxable at only one-half of per
cent.
Must Get Bonds by Purchase.
| purchase any bond as a basis for cir
culation, because when deposited for
circulation they cannot be released I'M
til the circulation is retired, and it
| may take a year before their circula-
ton can be retired. and price of bonds
is so high that bank circulation is
maintined at considerable loss to the
banks. They must be encouraged or
circulation constantly contract. There
fore the department has de-
cided to release, for such
banks as have deposits and are not
maintaining their limit of circulation,
a portion of the bonds now held by the
| government, taking in lieu thereof 9TH
| er satisfactory security, on condition
always that the bonds released will be
used for the immediate issue of addi-
| ditional circulation.
| 'This provision does not apply to
those banks that already have their
maximum circulation, neither does II
| apply to banks that do not have any
| deposits. The sole purpose of the offer
| is to increase the circulation that is
already printed and ready to be issued
and by banks that already have the
bonds on deposit. These deposits be-
| ing scattered throughout the entire
country, the relief offered it is believ-
ed will be national, rather than local,
for it applies to all sections of the
country and to every state in the
Union"
Wants the Relief General.
That the secretary has intended all
along that the relief should be gen.
nd hn ad
York, was shown by a remark he made
in explaining how the effect would be
immediate in New York. He explain
ed again how relieving the banks of
the necessity of carrying reserve I'M
mediately gave them the opportunity
to extend credits to four times the re-
serve released. you see," he con-
tinued 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 re-
serves"
"Then what Is the use of increasing
the circulation" was asked.
"Oh," replied the secretary, instant
ly, your banks here do not do all the
business. When it comes to the West
ern banks when they want to make a
loan for the purpose of paying for cat
tie or grain, they have got to pay out
actual 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 after
noon, received a number of kilograms
from bankers from various sections 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 Be-
fore going to the subtreasury Mr..
Fairchild had been asked his opinion
of Secretary Shaw's action.
"It is radical departure from prec-
edent," said he, "but it is a good thing
it is just what was needed in the
present circumstances"