The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1904-02-24
General Financial News.

General monetary conditions at this time point
to lower prices for United States bonds The re-
lease of about $50 600 600 of government bonds by
the withdrawal of 20 per cent. of the govern
ment deposits held by the national banks will
be of the contributing conditions causing
decreasing quotations Cor these securities Says
the Wall-street Journal:
Not much has been said regarding the effect
of this large financial operation upon the prices
of government bonds. The 1857 900. 900 of govern
ment deposits in the national banks are mostly
secured by United States bonds. the amount Sc
cured by the state and city bonds being only
trife in excess of S23 OOO. OOO The deposits which
may be withdrawn by the secretary of the
treasury to provide for the Panama canal pay
ment will. therefore liberate a corresponding
amount of the United States bonds This will
increase the floating supply of these securities
and an increase in the supply means lower
prices. OF the bonds deposited to secure public
deposits. Sill 900 600 the per cents of 1880
1t is fair to assume. therefore. that most of the
bonds which will be liberated by the withdrawal
of deposits will be of this class. The release of
many of these bonds ought to have the eff
feet of increasing the bank note circulation, in
which case the effect the market price OF the
bonds would be greatly diminished AS to the
outlook for an increase in circulation there is
much TO be said both sides. The outstanding
circulation on Feb. l. was S426. 81. 600 There was
an increase in circulation during January OF
nearly 81 700 COO Notwithstanding the fact that
many banks retiring circulation. the allow
able limit of retirement. $1,000 900. having been
reached in January, with applications for the
retirement Of the full $4,000, 00) being made for
February. This is the time of the year when the
cash accumulates in the banks and when the
demand for bank notes falls off, the movement
Of the harvesting and the of the
crops having been fully financed. New York
banks especially find ii difficult TO keep their
bank notes in circulation at such time as this
when the movement OF currency is towards this
center. Nevertheless. the decline in the price Of
the per cents make them very attractive as
a basis for circulation. there is consider
able proht on the present basis. The National
city Bank, in its February circular. calls atten-
ton TO the fact that many OF the national
banks acting as government repositories in
no position TO avail themselves of the bonds re-
leased by withdrawal OF public deposits the
basis of new circulation. IL says that OF the $40
government repositories. 400 have circulation
equal TO their capital. and. therefore cannot in
crease il. These 400 banks hold over So 900 900
of the government deposits. that many bonds
will be released which cannot be used by the
banks owning them. II follows that II they
are 10 be used for circulation. they must be
used by other banks As the capital of all IA
tional banks is S75S 000000 there is a capacity
for expansion amounting 20 1891. O0O.O00 1t has
been long time since so large an amount OF
honda available for profitable circulation