Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1903-09-10
Object of Increasing the Depos-
it's In the National Banks
May Be Defeated
BANKS ATTEMPT TO PROFIT
Hasten to Retire Circulation in Or
der to Realize Profits From the Ad
vance in the Price of Bonds-Effect
of Deposits Will Be Less Benef
cial.

Washington. Sept 10.-Secretary
Shaw's plan of largely increasing the
deposits of public money in the depos-
tory national banks. has already had
two effects, either of which separately,
or both of which combined, seem likely
to defeat in a. measure the object
which the secretary hoped to accom-
plish The market price of government
bonds have advanced sharply the OBJ
vious cause being Mr.. Shaw's an
nouncement regarding the federal de-
posts, since the bonds are required
by the treasury under the law as Sc
curity for those deposits. Simultan-
eously with this rise in bond prices, ap-
plications in large numbers from ma
tional banks have come to the comp
troller of the currency for the retire
ment of circulation.
The high prices of bonds in the open
market have evidently been very
tempting to the national bank associa-
tions, who see the advantage in re-
firing large amounts Of their circulat-
ing notes, regaining possession of the
bonds which they had deposited as Sc
curity for circulation, and selling them
al good profit over the price originally
paid for them.
Thus. while the volume of circulation
thruout the country is being increased
+, In lann ftc Of fs.j ars,
In the banks. as Secretary Shaw de-
sired, this advantage is being offset by
the retirement of national bank notes.
The same condition was presented to
the secretary of the treasury last fall,
when he made large deposits of inter-
nal revenue receipts In the banks and
the retirement of national bank notes
continued active for several months.
At the time however, he announced
that no federal deposits would be given
to those banks who retired their cir
culation. This year the retirement of
circulation has begun more actively.
Up to the close Of business yesterday,
the applications for September retire
ment aggre gated nearly $3,OOO00O, the
limit allowed by law. Yesterdays APP
plications alone footed up just about
100000.
Until Secretary Shaw's announce
ment Of increased deposits was made.
the banks had been retiring much less
circulation, each month, than was the
case last fall and winter. In the whole
month Of August the receipt Of national
bank notes for current retirement at
the office OF the comptroller of the
RI n
The rise in the market price of gov
eminent bonds has attracted serious at
tention at the treasury department.
On Aug. 81, before Secretary Shaw had
made any deposits OF federal money,
and before it was officially known THAI
he would do so, United States per
cent registered bonds, were quoted al
106A, although 107 was asked. Tues
day the quotation for the same bonds
was 1885, bid. 109h asked During
the same eight day period, the quoted
price OF 2 per cent coupon bonds In
creased from 1861 to 109; of per cent
registered bonds, from 1861 to los.
and of 8 per cent coupon bonds, from
1061a to 10S.
That the rise in prices is due to the
plans for depositing government money
In the. banks is shown pretty plainly by
the fact that the per cent bonds,
which on account of their investment
value are not usually used as security
for deposits, have risen in price only
a fraction of point during the last ten
days.
Secretary Shaw hoped that the mar
ket price of government bonds would
not be so seriously affected, for he be-
liaved that his decision to accept ap-
proved state and municipal bonds also
as security for federal deposits would
make the demand for government
bonds In the open market less keen.
The ST. Louis banks to which secre-
tary Shaw gave $2,5O0,0o0 in deposits
several days ago, decided, however, not
to put up state or municipal securities.
but government bonds.
rANac Mead MEATH