Ottumwa semi-weekly courier. [volume] (Ottumwa, Iowa) 1899-1903, 1903-07-07
SECRETARY sHAW's SEEMINGLY
IMPOSSIBLE BANKING FEAT.
ADDS TO AMOUNT OF LOANABLE MONEY
Is Able to Report to President Roose-
welt That He Has Refunded Into z
Per Cent Bonds Practically sso,ooo,-
600 of United States 3's and as.
CRANK j. sTILLMAN.)

(FRANk. j. STlLDMAN.l
Washington, d. c., July 2.-(Speclai
Correspondence.)- Before President
Roosevelt departed for Oyster BAY,
last Saturday, Secretary Shaw haa .ne
pleasure of informing his chief that
practically $80,000,000 OF the 8 anu
per cent bonds had been refunded INTO
a like amount of per cents, an accom-
plishment the ablest eastern hnanc!ers
deemed simply impossible at the tlme
Secretary Shaw made public the re-
funding proposition.
This exploit vindicates his judgment
and when all the details are made pup
lie il. will be looked upon as one OF the
most brilliant of achievements OF thls
character. In addition to that 1T mas
revealed the fine capacity for real
banking genius of Secretary Shaw, not
only to grasp but to discover opportu-
mites which from most eyes, even IN
the banking world, were hidden.
This refunding proposition must IN
eyitably be compared with PROPOSE
ton somewhat similar in character I'M
dertaken by the greatest OF Industrial
combinations. The finely spun and
apparently !, beautifully symmetrical
proposition drafted by George w. Per-
kins, by means of which it was eX-
pected that 5000, 100000 nG fns> prefer
red stock of the steel corporation scar
Ing Z per cent interest," were to be re-
funded, so to speak, INTO like amount
of bonds bearing per cent interest
was declared legal by the highest
court of New Jersey in the same week
that the secretary of the treasury
made public his willingness to ex-
change 8 and per cent bonds for 2
per cents, limiting the amount that he
would thus refund to $100,000,00O, al
though not committing himself abso-
lutely to the acceptance of as much as
that.
Here, then, were two colossal re-
funding propositions submitted TO
the public at about the same time, one
representing the interests of incorpo-
rated capital, the other the interest of
the United States, and of those who
were disposed to invest some part OF
their wealth in government obligations.
throughout the country, with appa-
rently few exceptions, the proposition
of the secretary of the treasury was
spoken Of with more criticism than
was that which Mr.. Perkins worked
put and the steel corporation offered
to the public. 1t was often said here
that Secretary Shaw should know that
It is one thing to refund bonds whose
time limit has been reached and an
altogether different undertaking to re-
fund at lower rate of interest bonds
which still have some years to
run.
1t is a reasonable inference that the
secretary Of the treasury conceived
and formulated this refunding propo-
sition Immediately after the blockad-
ing of the so-called Aldrich bill in the
final hours Of the congress that expir-
ed on March last. That measure, adj
mittedly temporary expedient to be
perfected by amendment at the first
session Of the new congress, was re-
ported and advocated by Senator AL
arich chiefly for the purpose of provid-
Ing one measure of relief against the
time wnen the money stringency of
next fall should begin. The measure
was favored, and, 1t is understood,
was drafted in the rough by Secretary
Shaw.
AS he is man of statesmanlike
qualities, uninfiuenced by petty weak
nesses of human nature so that he
, did not sulk or become Indifferent be-
cause the bill was blockaded in the
senate, Secretary Shaw Immediately
began to consider several plans that
had been more or less definitely for
mllated in his mind, and one having
refunding in view seemed to him
worthy Of most careful consideration.
What Secretary Shaw had in mind
81 was the providing of method of in
creasing the currency of this country
so that there may be secured before
next fall such an enlargement of it as
would tend to relieve the stringency
which everyone feels is sure to come.
Therefore, he proposed by this refund
ing operation to secure for the nation
al banks an increase in the amount of
2 per cent bonds by as much as $780,
100000. With these bonds the banks
will be able to take out new circula.
ton, and upon the terms of Secretary
Shaw offers to do that, without the
restrictions or profit destroying obli-
cations which are involved in an issue
of bank circulation based upon the
bonds bearing higher rate of inter.
est. The market price for these 8 and
per cent bonds is of itself practically
prohibitive of the use of them for ma.
tional bank circulation.
Exactly what Secretary Shaw dared
to believe would be the case has hap.
pened, and once more his Judgment ex.
ercised in a courageous manner and
without timid subseryiency to the pre-.
cedents has been indicated.
1t Is reasonable to predict an in.
crease in national bank circulation by
the time Of the crop movement Of from
$35,000,000 or S40,00O,000, an increase
that would not have been possible but
for this piece of financing.
But to this narration there is to be
added a history that is sure to become
traditional 1t is that of one of the fin
re exploits of banking. If any of the
younger men who have ambition to
succeed greatly as financiers or as
bankers had conceived and worked out
this proposition he could have COM.
manded any salary Mr.. Morgan
would have been glad to have named
him as president of the proposed con.
solfdated Bank of Commerce and
Western National and the directors OF
I one or two trust institutions who are
1N< Ii ~