Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-08-17
MONEY FOR THE CANAL
Present State of the Appro-
priation.
BALANCE OF S6,OOo,000
WILL LAST UNTIL LATE IN DE-
GENDER.
Spooner Bill Provides for Issue Of
Bonds, but Congressional Action
Required to Put Them Above Par.

There remains Of the S10.000,O00 appro-
priated by Congress for the beginning OF
work on the Panama canal a sufficient
balance to carry on the work until late In
December, by which time Congress Is ex-
pected to take some action providing Tor
more funds. Prompt action will be neees-
sary too, to prevent some embarrassment
in the pushing Of the construction.
The Spooner bill, under which the work
up to date has been carried on, and as to
the legality of which there has been doubt,
provided for the expenditure OF $1O.ooo,ooo
in cash out OF the treasury and the issue
Of $135, 900 900 in per cent bonds. When
Mr.. Shonts was placed at the head OF the
canal commission he appointed commit
tee to examine the status Of the cash at the
demands of the commission. 1t was found
that there was balance Of about 100000
on hand. Chairman Shonts ordered that
this be so divided as to run until Congress
had met, and his instructions have been
carried out. Owing to much additional
work and the furnishing Of new machinery
and material the balance has been reduced
until there Is comparatively little left. but
1t Is proposed to make this run to the time
fixed.
Bonds Could Be Issued.
According to the provisions Of the Spoon
er bill bonds, could be issued at once, but
there Is no desire to do this, for several
reasons. The main one is that If the bonds
were issued directed in the bill they
would bring less than par, and 1t Is desired
to make them bring above par, If possible.
The present per cent securities of the
government sell at about 104, but this is
due to the fact that when they are used as
the basis for national bank circulation the
bank pays only one-half of per cent as
tax, whereas circulation secured by any
other class of government security must
pay l per cent taxation. The difference OF
one-half of l per cent Is sufficient to send
the bonds above par, as the greater part of
the outstanding Is are used as security
for circulation. OF total of S479 1907 go
of bonds pledged to secure national bank
circulation the amount of IS is $456 800.
More than half of the amount of bonds
pledged to secure government money de-
posted with banks is in IS also.
1t Is the superstition that Congress in
tends to give the canal 2 per cents the same
advantage as to circulation the existing
per cents. and this can be done by suit
able bill reported by the finance committees
and duly passed Without this advantage
the bonds will sell, 1t is declared, for be-
low par, " Eich would not be desirable.
What Congress May Do.
There have been suggestions in a good
many quarters that Congress may withhold
bond issue for several years to come and
use some OF the money on deposit with ma
tional banks, hut this now looks improbable
in view Of the fact that the governments
balance with the banks has been gradually
dwindling for nearly two years. until it is
now down to about S5T 100000. In view Of
the fact that this year promises another
large deficit, 1t is regarded as certain that
Secretary Shaw will have to call on the
banks for return of more money to carry
on the business of the government, which
would not leave a great deal for use on the
canal. Even in years of hard times 1t has
been customary for the treasury to have
something like SAC, 100000 on deposit with
cy and likewise to oblige some banks that
go out of their own to handle business for
the government. Without some deposits
these banks would not handle the unsatiS-
factory and improbable business of de-
posts by collectors Of internal revenue and
others.
The idea has been that Congress would
not consent to Issuing bonds and paying
interest on them when there is money with
the banks that could be used-at least
goodly sum. With this money, however,
used to meet the deficit that IS promised
this fiscal year, there will not be much to
spare for canal work, and the probabili
ties seem to be that Congress will put the
canal bonds on the same footing as the
existing Is and let them be issued to pro-
vide the funds that will be needed imme
date after Congress gets down to its regu-
lar session.
There is no intention on the part of Sec
rotary Shaw, II the details Of the issue of
the bonds is left to him, to put the entire
$135,O00,0OO on the market. That would be
foolish in that the government would have
to pay interest which it would
merely be holding in its vaults and keeping
out of trade channels. The bonds will be
put the market in sums that seem to
offer the best inducements to probable pur
chasers, say from S10,OOO,OO0 to s25,0OO,0OO
in a batch. AS more money is needed by
thu canal commission. more bonds will be
sold.