Deseret evening news. [volume] (Great Salt Lake City [Utah]) 1867-1920, 1902-10-01
No Deposits Except on Government
Bonds Where They Can be Had.
WHAT TREASURY WILL Dc
TO Banks Not Maintaining Limits OF
Circulation VIII Release n Por-
don OF Their HoDds,

New York, Sept. 3O,--secy Shaw gave
out the following statement today:
"The department IS in receipI Of a large
number of requests from various banks
in the county, clearly showing that the
statement given out last night was mis-
understood, or rather, that il was not
carefully read That there may be no
misunderstanding, the following state
ment 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 bor-
rowing, bonds other than per cent
cOns0ls. They can obtain the use OF
these bonds for a limited period and
they are as desirable as any for secur-
ity for deposits, They are not as de-
sirable as security Tor circulation. tor
the reason that circulation based there
on is taxable at | per cent, while cir
culatlon based on the per cent con-
soils is taxable at only one-half OF | per
cent.
The banks cannot obtain except by
purchase any bonds w basis for Circu-
lation, because when deposited for cir
culati0n they cannot be released until
their circulation Is retired and II may
take year before their circulation can
be retired and the price Of bonds is so
high that bank circulation Is main
tained at considerable loss 70 the banks
They must be encouraged or circulation
constantly contracts,
Therefore the department has decid-
ed 10 release, for such banks as have
deposits and are not maintaining their
limits Of circulation, a portion OF the
bonds now held by the government, tax
ing In lieu thereof other satisfactory Sc
curlty on condition always that the
bonds released will be used for the inn
mediate issue of additional circulation
This provision does not apply to those
bonds that already have their maximum
circulation, neither does 1t apply to
banks that do not have any deposits.
THE sole purpose of the offer is TO
increase circulation that Is already
printed and ready TO be issued and by
banks that have already the bonds on
deposit, These deposits being scattered
throughout the entire country, the re-
lief offered. II Is believed will be ma
tional rather than local for II applies 10
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 well as New York,
was shown by a remark he made in eX-
planning how the effect would De inn
mediate In New York. He explained
again how relieving the banks OF the
necessity Of carrying reserve mmedi-
ately gave them the opportunity TO ex-
tend credit to four times the reserve re-
leased.
"You see" he continued, "your New
York banks do not care anything Tor
cash-they do their business by means
of credits. The loans and deposits are
In the form OF checks and bookkeeping,
and all they want Of cash Is 10 main
tain their reserves"
Then what Is the use of increasing
circulation was asked
ooh" replied the secretary. Instant
ly, your banks here do not do all the
business. When II comes TO the vest
ern banks when they want to make
loan for the purpose OF paying for cat
tie or grain, they have got 70 pay out
the actual currency. They do not do
so much Of their business on books.
That is where the cash is needed, and
they call on the banks here for IT.
secy. Shaw during the afternoon re-
ceived number Of kilograms from a
number Of bankers from various sec
lions Of the country, commencing his
action
Ex-Secy. Of the Treasury Fslrchild
was one OF those who met Mir. Shaw.
Their talk was in private. Before go
ing to the ub-treasury Mr. Fairchild
had been asked HIS opinion Of Secy.
Shaw's action. 1T Is radical de-
parture from precedent" said he. hut
II is a good thing it's just what was
needed in the present clrcumsI noes