The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1903-03-27
Government to Share in Profits of Exchange
by Placing Premium of Two Per Cent
on Bonds to Be Issued.
New Issue as Basis for Cir
culation to Expand Bank
Currency and Relieve
Stringency of the Money
Market.

a statement has been issued BY As
sistant Secretary Allies CT the Treasury
Department. for the information and
guidance OF national banks and others
desiring to avail themselves OF the pro-
visions Of the act OF March IA. 1900. un-
der which Secretary Shaw yesterday is
sued circular proposing the exchange
Of certain classes OF outstanding bonds
for the new per cent bonds provided
for by section II OF the act men
toned.
In Secretary Shaw's circular is used
the expression present worth TO yield
an income OF 2I4 per centum per an
mum. which means such a price as
would yield 10 the investor "a return
Of his money at the maturity OF the
bond. with interest on the sum in
vested b. HIN at the rate OF pa per
eentum per annum realized ia quarterly
payments
table has been prepared by the
Government actuary and this Is used
in Mr. Allies explanatory statement.
Value of Bonds
To take advantage Of the offer il viii
be necessary for banks owning bonds
lodged with the Treasurer OF the United
States as security for circulation 10 sur
render duplicate receipts representing
such bonds before the exchange FOR tae
new > per cents IS made In the state
ment which is given below money is as
sumed TO be worth per cent II a high-
er rate is assumed the profit will be
tribe smaller than indicated
a baak exchanging its bends on ADriI
1. 1903. FOR consoIs OF 1880 VIII receive
AS follows For $4,000 bond Of 1905.
Sz25f2 cash and a S10.000 per cent
bond; for $1,000 bond or 1907. s5o7 40
cash and -7lo.oeo . per cent bond-thar
=. the value OF the old boua upon =
~ per cent basis April j 1903 Is. Loan
OF '1s0S. $I0i2572: funded loan OF 1897.
SIO7O74o.
These bonds. when exchanged. are
paid for in new per cent bond val
ned at, for refunding purposes. I02 Tho
balance being paid in cash. II the bank
purchases these bonds at a price above
these figures. il is paying an additional
premium for the consols OF 1890.
Relief TO Money Market.
The plan advanced BY Secretary shaw.
IL IS hoped. Will result IN relief to the
money market before next fall. The cir
eular announ- -es that he will receive for
refunding, bonds OF the per cent fund
ed loan OF 1907 and OF the per cent
funded loan Of 1908. 10 an amount nor
exceeding 500 COO. 600.
The object is 10 get an additional
amount OF per cent bonds. which can
be used as the basis OF circulation. II The
expectation or the Secretary is realized
and S1eo 600 600 in bonds are refunded in
, per cents the national bank currency
can be expanded sufficiently TO relieve
any stringency that may come in the
late summer and fall when the crop
moving season arrives.
Government Shares in Profit.
In order that the Government NAV
share in the profit OF this exchange a
premium OF per cent has been decided
TO be placed upon the bonds 70 be is
sued II the new bonds were TO be is
sued at par, there would be a profit to
the owner OF the bonds. taking the pres
ent market valuation basis OF about
4 per cent for the per cent bonds sur
rendered, and about 5lz for the As OF
1907 The per cent bonds are the most
desirable on which 10 issue circu Iation.
as the tax on them is only one-half OF
! per cent