Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-08-04
LARGE WORKING BALANCE
Could Spend $50, ooo, 900 in Retiring
Bonds.
OVER REFUHDING


The Treasury Department is unusually
well prepared to give financial assistance
In the event of money stringency next
fall and winter. It has been good many
years since the treasury was SO well fixed
with working balance.
The fact Is that apart from deposits with
national banks now being made Secretary
Shaw will have working balance In the
treasury of over $4,000 o0 As this work.
ing balance has several times in recent
years gone down to close to $50 600 900, 1t
Is easily seen that there Is practically $780,
100000 that could be used to meet mone-
tary stringency in the business world This
is proceeding upon the assumption that
after the first month or two Of the present
fiscal year the receipts will run well up
with the expenditures. Should the receipts
fall greatly behind expenditures the work
ing balance will be lessened in accordance
with the deficit
At any rate there is in sight $40, OO0, 600 or
100000 of government money that can be
furnished to the relief of the business world
In pinch. and Secretary Shaw has let 1t
be known that he intends to see no money
panic II 1t Is within the power of the Treas
ury to give aid.
Possible Retirement Of As.
There is good deal of speculation as to
just what form the Treasury relief would
take. Heretofore the custom of Secretary
Shaw has been to give deposits of govern
ment money to the banks, accepting various
bonds as security IL there was a scarcity Of
bonds and the prices were high. There Is
now pretty strong belief that Secretary
Shaw will change his methods and will buy
per cent bonds for the sinking fund. In
less than year number Of millions OF 4
per cent bonds mature. II he saw fit Sec
rotary Shaw could refund these into per
cents, but the effect Of this would not be to
put much money into circulation unless he
followed this with deposits with banks.
thereby furnishing a good quantity of per
cent bonds that could be used as security
for the deposits.
Instead of this course the Secretary can
spend $30.O00.O00 or s40OO0.0O0 in retiring
the per cents, leaving the rest to be re-
funded eight or nine months from now.
The price at which he would purchase the
bonds would of couse. have much to do
with whether the holders would sell or pre-
ferred to await the regular period for re-
dernotion.
Secretary Gage was believer in retiring
bonds by purchase at the same time aiding
the money market in times of pinch. One
result Is to reduce the interest-bearing In
debtedness of the government and the in
terest charges of the government.
It is pointed out that the policy of Secre-
tary Shaw will probably be in the direction
Of bond purchases next fail and winter,
rather than In making deposits, because II
he puts the surplus money out in deposits
and refunds the As into 2 per cents the eff
feet will be to greatly reduce the price
Of 2 per cents at a time when he Will. be
getting ready to put on the market another
issue of Panama bonds to carry on the
work on the canal. Altogether, the pros
poets favor the purchase of the As.
Will Give Confidence.
The fact that the government is prepared
to give aid will give a confidence to busi-
ness that will be felt in many directions.
The country Is growing so fast and its
business increasing so rapidly that there is
not q similar increase in the amount of
money necessary to carry on things. Ma
tional banks have for the last few years
increased their circulation at the rate of
about $50 600 600 a year, and they are still
increasing, although at this time the good
price for per cent bonds is inducing some
of them to retire their circulation that they
may sell their bonds at profit. This. 1t
is believed, will not keep up any longer than
the price of per cents remain around the
present figure. When these bonds drop
in price the banks will again increase their
circulation at the rate of the last few
years.