The Washington times., 1903-09-23
Announces Resumption
of Refundlng 2 Per
Cent ConSols.
REDEEMS FIVES OF 1904
Checks Withdrawal of Cir
culation and Provides
Against Stringency.

Secretary Shaw early this morning au-
thorized the statement that because OF
the scarcity OF per cent bonds. both
for circulation and as security for Gov
ernment deposits. he would resume re-
funding operations TO the extent OF
s20. 900 900. The refunding will proceed
in accordance with the circular issued
by the department under date of March
z6- The Treasury already holds for
circulation and for deposits $4S0,o00. 900
of the $4,000. 900 OF ? per cent bonds
Secretary Shaw also authorizes the
statement that he will redeem the 5 per
cent bonds maturing February /. 1904.
paying interest to maturity Formal in
strLctions to the several subtreasuries
authorizing them to redeem on presenta-
tion will be issued today The banks
that have had on file with the Treasurer.
for thirty days or more. 5 per cent
viii 5e permitted to substitute approved
State and municipal bonds. therefor.
which will be accepted at rs per cent
OF their par value.
Surprise to Bankers
The announcement came as q surprise
in financial circles. and there was a gen.
eral rush to telegraph Offices and long
distsnce phones by agents here 70 get
into touch with their houses in New
York and elsewhere. The action OF the
Secretary means a pouring into the
money market OF many millions OF dol
lars and the warding OF OF anything like
a money stringeucy.
The redemption OF the per cent
tonds alone viii throw about $50 600 coo
into the money market There are about
SIS. 900 900 OF the per cents. and their
value. with interest to maturity. will
probably exceed $4,000. 600. The refund
ing CT the other bonds TO which the
statement refers will also have a ten
dency in the same direction
The announcement is of the greatest
Importance to holders of the 2 per cent
bonds. Since September 1. owing to the
demand for ? per cent bonds. as securi-
ty for deposits OF public moneys. there
has been an advance of three points in
the price OF these bonds. The renewal
OF refunding operations viii unquestion-
ably mean sudden decline in tns
prices OF these securities
Terms of March Circular.
The previous circular issued by the
Treasury Department, under date Of
March 26, gives notice to the owners Of
United States registered and coupon
bonds of the per cent consols OF 1901.
and the per cent loan of 1908. that the
Secretary of the Treasury would on
and after April 1, receive any OF the
bonds In amounts not to exceed 500. 900. =
coo. However, the entire amount wa9
not refunded. About four-ffths of the
amount named in the circular, OF sSe,-
000, eco. was received.
1t is the belief in xeII-informed cir
cles that it will be found impossible to
obtain the entire twenty millions IN this
instance. Regardless of this. the effect
on the bond market win be the sans
and the price of ? per cents win de-
cline. this accomplishing what IL is plain
Secretary Shaw has in mind--the releas-
ing of the per cent securities from tha
grasp OF those holding them at high
figures In order 10 take advantage os
the demand for these bonds for pur-
poses of securing public deposits and cir
culation.
Will Cheaper Bonds.
That the action is likely to result In
putting a stop TO the movement foE
Withdrawals OF bonds deposited TO Sc
cure circulation is apparent.
The circular of March 26 provided that
the bonds OF the two loans included in
| the refunding operations would be re-
eeived at valuation equal to their pres
ent worth to yield an income of "a pei
cent per annum. "and like amounts OF
United States registered or coupon bonds
bearing interest at the rate OF pei
centum Per annum will be issued In ex.
change therefor at premium of pei
centum"
In the circular OF March %, notice wei
given that the bonds of the per cent
loan OF 1904 would not be received foI
refunding, but would be reserved for re.
dcmption on or before their maturity
February ,. 1904.
A prominent broker this morning said
IL the entire $50. coo. coo were refunded
liz would mean that SO ,o0o. eco or 81. 600 .o0i
IN premium would accrue to the holder
of per cents and per cents Thl
premium with the sum thrown into thi
money market by the paying OF of tn
5 per cents, would mean that from S2S.
coo. 900 to S24. 600. 600 would be put L
Circulation. He commended the actio
. of Secretary Shaw as practical an.
/. itimely-
! Flynn's Business College, sth and K