Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-11-21
BIG HOUSES HOLD OFF
Desire to Prevent Leak as to Rate of
Proposals.
COUNTRY BANKS HOARD CASH
Said to Be Carrying Larger Reserve
Than Is Required-Provision for
. Curtailing Circulation.

large offers are not expected until just be-
fore the date for closing the bids. 1t Is
never customary to receive signed and
sealed orders from large banking houses
until the last moment. Such houses have
two motives for Withholding bids-the de
sire to act under market conditions at the
last possible moment before fixing the
rate of their bids, and the desire to pre-
may be offered. 1t was the fact with the
great popular loan of 1896, as it is with
bids on private contracts. in many cases,
that important bids were handed in just
before the stroke of the clock closing the
competition. Unofficial information as to
subscriptions by the big New York banks
and from other sources is naturally reach
ing the Treasury Department. but the
formal, written offers for the Panama
bonds are not expected until near the
close of nexttweeks
The fact that the Secretary has stated
that he would not be able to see callers
today until after o'clock this a-ternoon
swas assumed to mean that he would de-
vote the most of the day to making allot-
ments of certificates among those who
have applied. 1t Is understood tnat the
Secretary will give great care to this mat
ter of making allotments, his determine
ton being to place the certificates where
they will do the most good in the way of
bringing about a speedy return to normal
currency conditions.
Accused of Hoarding Cash.
The attitude of the New York banks in
furnishing currency to country corre-
spondents in such amounts as they can
spare without impair.ng their reserves
unduly has not been the subject Of official
criticism either at the White House or the
Treasury Department
1t is felt that If criticism lies against
any institutions for boarding cash 1t Is
the country banks rather than those or
to have rejected demands for currency
from country banks where they knew
EthatsAthe applicants already had much
larger reserve than is required by law,
and in many cases larger than the %
per cent required in reserve cities. The
weekly statement Of the New York banks
speaks for itself as to the reserve held
held there and indicates the heavy drafts
which have been met from country banks
1t is hoped by the administration that the
entire policy of boarding will come to an
end when the government receives the
large amounts of money which are ex-
pected from the sale Of the Panama bonds
and the one-year certificates. Arrange
ments will be made to return as much of
this money Immediately to the banks as
can be spared from the Treasury balance
Qualification was felt today that the
Bank of England made no further ad-
vance in its discount rate of Z per cent
There is some disappointment that the
premium on currency has not entirely
disappeared under the reassuring words
Of President Roosevelt last Monday, and
it is hoped that the demand upon Europe
for gold will be checked by the same in
fiuences, in accordance with the desire ex-
pressed in London dispatches.
Withdrawal Of Circulation.
One Of the questions which is causing
some inquiries at the Treasury Depart
ment relates to the ability of the banks to
withdraw circulation based upon the new
securities when the need for it has passed
Down to last March the law limited the
amount of lawful money which could be
deposited for the withdrawal of banknote
circulation to $4,000. 600 per month for all
the national banks of the country. The
result of this low limit was that even in
ordinary times there were applications on
flle from banks for several months ahead
for leave to retire their circulation and
withdraw tier bonds This limit of re-
neInent was increased to s., 600. 600 per
| month eJ an act approved March f. 1907
SO That witn!n Year 1t would be possible
to withdraw 100000 of circulation, if
| the amount should prove redundant.
fnsIe are, however, two other provisions
Cf Jaw which will obviate any difficulty
!.' retiring circulation as rapidly as may
he dcsirau. One of these is the sweep
ing clause, THAT the provisions of this
section shall net apply to bonds called
for Redemption by the Secretary of the
Treasury, Hor to withdrawal of circulat-
ing Totes in consequence thereof"
AS all the one-year certificates will be
called for redemption at the expiration of
the term fixed by law, the notes issued
against them will fall entirely outside the
provision fixing limit Of $9,OOO,OcO per
month. In this respect the short-term
the Panama bonds. There is another
method, however. by which the banks
can gradually curtail their circulation
outstanding without regard to the legal
limit. This method is not entirely in their
control, since 1t Is governed by the amount
of the notes of<each bank presented to
the Treasury for redemption. When notes
are thus redeemed, they are paid by the
Treasury in lawful money from the cur
rent redemption fund, which each bank
per cent Of its circulation. 1t is optional
with the bank whether to restore the re-
demption fund and receive it's notes back
or permit them to be Cancelled and re-
tired
This process becomes operative, how
ever, only to the amount of notes pre-
sented for redemption. Such redemp-
tions are rather slow under the ma
organized, but usually approximate
about so per cent of the total bank cir
culation in the course Of a year. A ma
tional bank. therefore. finding it's cir
culation redundant. would be able. by
directing the cancellation of all notes
redeemed, to gradually get rid of a
considerable proportion in the course
of a number of months.
Provision Believed to Be Ample.
With these two provisions in oper-
alton, therefore, the ability to retire
all notes issued against the year
| certificates at the maturity of the lat
ter. and the ability to gradually wipe
| out notes redeemed which are issued
against long-term bonds, 1t is believed
that no bank need be deterie.i from
| taking out additional circulation at the
| present time by the fear that it will
| have left on its hands an unwieldy note
liability after the demand for notes has
| diminished.
| There would have been some hesita
ton on the part Of the administration
| to issue the new securities, permitting
a considerable imitation of bank notes
" the means had not existeA Tor re-