Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1903-12-26
ADMINISTERING SURPLUS
Secretary Shaw's Financial Pre-
dicament.
GALL IN LOANS OR ISSUE BONDS ?

National Banks VIII Have to Return
Borrowed Money So That Uncle sam
May Pay For Panama Canal or
Bonds VIII Have to Be Issued to
Raise the Funds.
The astounding revelations of Secre-
tary Shaw in his annual report pre-
sent the financial situation of the
country in a more unfortunate condi-
ton than the most dolorOus pessimist
could have pictured ii. He informs the
president, the congress and the voters
that the enormous and inconceivable
shrinkage" in securities that are dealt
in on the Stock Exchange and else
where has caused q loss to the people
ESTIMATED far in excess of the cost of
four years devastating civil war" But
Secretary Shaw rises to The occasion,
and, Notwithstanding the losses TO the
people of thousands of millions, he de-
clares, There now exists scant reason
for apprehension-certain no occa-
sion for alarm" He acknowledges
there has been a slight curtailment in
business enterprises, but Ito all APP
pearances the crisis is passed"
Secretary Shaw is a regular Mark
TapIey He looks at the disastrous
condition that he so vividly describes
as one that could be infinitely worse
and that Ito all appearances the crisis
is passed" This comforting assur-
ance from the highest official authori-
ty on financial affairs is somewhat
qualified by his estimates for the two
coming fiscal years of the receipts and
expenditures of the government dur
ing that period. For the present fiscal
year the estimate he gives shows a
surplus of $14,000,000, but for 1904-05
there will be a deficit of $23. 002, 14G.07.
Such deficit would necessitate one
of two important happenings for the
taxpayers. The present congress will
have to either reduce the scale of APP
preparations or devise by law a means
for raising more money. There is OF
course another way to escape the dilem-
ma by the secretary of the treasury
calling upon the national banks to re-
turn what is needed from the S15S,-
GA. 157S7 loaned to them and upon
which enormous sum they pay no in
terest, as the extraordinary payment
for the Panama canal to the French
company and the new republic of Pan
anna and further disbursements for the
work of digging the canal will require
either the fund deposited with the ma
tional banks to be drawn on or bonds
will have TO be issued to meet the eX-
penditurcs. To withdraw from the ma
tional banks nj this time such large
amount would compel them to reduce
their loans, and that would in all prob
ability result in another upheaval in
the stock market and might precipi-
tate Il panic The financial condition
in Wall street is none too sound even
with the extraordinary aid rendered by
loaning the banks all the available re-
sources of the government.
The report of the cash in the United
States treasury in the statement issued
Dec. 3 gives the available cash bal
ance of 1929, 454,013 But, although
Secretary Shaw calls that large sur
plus available, when the items that
compose it are examined it is found
that it melts into but $43, 1O1 600 OF
the canal.
This will be seen by the following fig
ures taken from the treasury state
ment:
Loaned to national banks. $15S. GA. 757
To credit of disbursing officers
in United Statcs..-............... 9,419,10o
In treasury of Philippine Islands 4,O4S.53S
Awaiting reimbursement ......... 7S.032
Subsidy silver and minor coin... S. ,351
Total Observation-Disclosures $3.50. So. SSs
If that amount is deducted from
what Secretary Shaw calls the avail
able cash balance it leaves but $43,-
1O1 $50
1t is admitted the money loaned to
the national banks is not available, the
money to the credit of the disbursing
officers in this country and the Philip
pines is virtually already used, and the
subsidiary silver and minor coins are
only useful when especially called for.
1t will be seen, therefore. that there
is not sufficient cash in the treasury to
pay for the Panama canal if the new
treaty with Panama is ratified by the
senate. No wonder even the optimistic
secretary of the treasury could only
say there is ''scant reason for appre-
hension."
1t will soon be up to the administra-
ton to declare it's policy by either call
Ing upon the national banks to disgorge
or to issue more bonds.
The DiIetfante Socfetx