Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-04-08
WORK OF REFUNO|NG A FREE GOVERNMENT
Operations Under Secretary Porto Rcos Condition Ideal
Shaw's Proposition. Says J. s. Harlan.
DAILY APPLICATIONS MONEY AND NO DEBTS
MILLIONS. WITHOUT TAXING WASHINGTON
for Exchanged is
World.
Operations Under Secretary
Shaw's Proposition.
DAILY APPLICATIONS
AVERAGE BETWEEN ONE AND
TWO MILLIONS.
Whether the Full 500, 600, 900 Called
for Will Be Exchanged is
Not Known

The surrender of 4 and per cent gov
eminent bonds into per cents, under the
refunding proposition issued by Secretary
Shaw about ten days ago, continues at the
Treasury Department. Applications come
in at the rate of one to two millions a
day. There is no limit for the expiration
of the refunding plan except that the ex--
changes will be made, to the amount of
s1OO0OOOOO. 1t will probably be a long
time before that amount is reached. at the
present rate of exchange, and before 1t is
reached Secretary Shaw may see fit to
stop the refunding. although he is hopeful
that the entire amount of $1O0.0O000O will
be exchanged that the new per cents
may become the basis for additional cir
culation this fall and winter at a time
when the money situa ton, owing to strtn-
gency. always becomes acute. Last fall
Secretary Shaw had to resort to number
of exDedients to relieve the situation. and
by various plans managed to tide over the
worst phases in the financial market. The
? per cent bonds. owing to the fact that
the tax on national bank circula ton based
upon them is less than on any other class
of bonds. are more desirable than all other
classes for circulation purposes. There has
already been an appreciate increase in the
circulation of national banks by reason Of
the prospective increase in the amount of
per cents on the market.
Refunding Operations.
The applications for refunding at the
close of business yesterday amounted to
,OcO, of which 81, 500 were per
cents and the remainder SIS. Tho total
amount of 3s originally issued during the
Spanish war was sos, 792, $50. but more
than half of these were refunded On
March 81 there were outstanding Y7,515,-
600. A considerable portion of these bonds
are alredON pledged at the Treasury De-
partment either security for circulation
or for deposits of public money, so that
the amount of these to be refunded will
probably not be nearly as large of the
per cents Pledged security for cir
cu1ation of national banks are 81 500, 400 Of
the 3s and as security for public deposits
Si,g120oo or more than s15,0oO00o OF the
original issue of per cents put out to the
amount of $40. 25,1i0 in 1ST7-1S79 the total
now outstanding is 1928 179 200 OF this
amount S5,5S6,9J0 is held by the treasurer
as security for circulation and $40, s44 $50
for deposits. The enormous remainder is
that from which the exchange to per
cents will be made. This remainder Is held
all over the country for investment pur-
poses. being widely scattered. National
banks hold much of it. AS the exchange
for the Is is attractive. especially to banks,
there is no known reason at the treasury
why a big part of the S1C0 OOO,O is not
likely to be refunded.
Attractiveness Of the Per Cents.
ne dttTdCllNeneSS or the per cent
bond as a security for both deposits and
public moneys is observable in the regular
weekly statement of bonds held by the
treasury in trust for national banks. OF
the total of s342 612 $40 United States bonds
held to secure the circulation of the ma
uonal banks of the country 1927 $50 ESQ are
In per cent cOnSolS. AS security for pub
lie deposits the amount of bonds held IS
Sl53,3IS,9I0, of which So. 500. 700 is in 2 per
cents. OF the remainder SIS 464 400 is in
state and municipal bonds. Secretary
Shaw SOME time ago made public request
that the state and municipal bonds be
withdrawn and government bonds resub-
sttuted therefor. This class of securities
had never been accepted by the Treasury
Department until last fall. The financial
stringency then led Secretary Shaw to an
nounce that he would accept approved
state and city bonds as security for de-
posts II put up in place Of government
bonds that were Immediately used to in
crease circulation, and which were then
held as security for deposits. AS result
OF this offer the treasury soon held more
than s20,OOoOoO other than government
bonds The Redistribution asked for by
Secretary Shaw has been somewhat slow
and the likelihood is that it will not be ar
ranged by next August, the time set. The
cause of this is that many of the banks
that substituted state and municipal bonds
borrowed the latter or arranged for them
for period of one year. Secretary Shaw
VIII not be disposed to insist on resubstitu-
tlOn unuer tneSe circumstances. Since his
request, however, banks have been reduc-
Ing their circulation somewhat heavily each
month. For two months or more the
100000 limit for the reduction of circu-
lation has been reached. and the applica-
tons for the present month reach In the
neighborhood Of half the limit. A portion
of the bonds withdrawn are used to SUBJ
stitute for state and municipal .Hecuritie.,
but the amount Of these boIE still held
by the treasurer is about s1SZ64 900, show
ing that the reduction for circulation is not
as much on account of reconstruction as
Secretary Shaw could wish