Los Angeles herald., 1907-11-29
$4,000, 900
is LIMIT OF
CERTIFICATE
Permanent INITIATION Is
AVOIDED
$10o,0oo,ooo WILL BE WORKING
BALANCE IN SPRING
Policy Of Treasury involves Elimina-
ton of Bank Notel Circulation
Based on One Year
Paper
By Associated Press.

By Associated Press.
WASHINGTON, Nov, 2s-The an
.nouncement by Secretary Cortelyou las
night that further subscriptions to the
one-year treasury certificates would MOI
be received is regarded here as indicating
that the secretary considers the crls's
In the money market to be practlcali!
ever
Official figures have not yet been glven
out at the treasury of the amount OF the
certificates allotted, nor has 1t beer
stated whether further allotments wouio
b. made for bids already received. Inc
amount of the allotments made now
ever, is said to be about $S5,OOeoOo aho
this is probably the limit unless strong
reasons are presented from banks which
have already made reasons why aliol'
ments should be made to them
All Individual applications have peen
rejected. It is estimated that nearly the
whole of the S35, 100000 allotted Will pe
,,sed To secure new issues of bank notes.
30 these issues will be retired Wlthin
less than a year, they will not constitute
imitation of the bank note circulation
The effect of the new loans upon tne
receiving attention at the treasury de-
-.srtment and in banking circles. FROM
rresent sources the amount nomlnaily
added to the cash balance of the treasury
will be about SS5,0000O0, of which $oo'oOO
COO will represent the two per cent IA
mama bonds, and 600 will represent
the one-year certificates which nave p~esn ~
allotted This amount would increase t!ie
present nominal balance from about $zfi.-
-+o
tie more than 1925 100000. small al
d,tional amount will be derived from the
premium on the Panama bonds, but even
If this should average as high as psr
cent, 1t would amount to only Sz,oVo'VVV
Actual Balance $6,5oo,ooo :,
with a nominal balance, however, Of
more than 325.0OO,OOO the treasurS Mnl W.,
rot have anything like that amount I'M
,,bad;atelv available This is because OF
dcnosits in national banks and other de-
,,oeit items. These items amounted yes
,ardav to s345, 900. .000 leaving an actuai
working balance of $6,463,62 62S; 90
rThe secretary has announced that W
rer cent of the payments for PanaIla
honds will be left in the CUSTODY OIL tnS
,,ational banks purchasing the bonds ana
,ho,,t 75 ner cent of the payments for the
&C. .vear certificates will be left with tne
hanks. The effect of these changes III
tha treasury balance sheet upon the
ha sis Of issues of both classes OF secur-
tiles to the amount of $S50oO,OOO VIII p9
IN increase the amount In panks "
.,bout $500. 900, 900 and the working balance
n about S22, 600, ,000 The increases OF Slf'-
900 600 in ethe working balance VIII pe
d,,e IN the retention in the treasury OF
e. ooo ooo or 10 per cent, of the principal
oT the Panama payments and about 70.
oSn Ooo or % per cent, of the principal Oh
coz OoO 600 in treasury certificates.
Tbis condition of the treasury hnances
Mill he changed materially in the spring
if Secretary Cortelyou Is able TO carry
ont the program of retiring consider
able portion of the one-year certlilcates
before maturity. He twill have no dlni-
Guilty in doing this and saving consul
cradle proportion OIL the lnterest ~ ".
nad on them If the agreements to be
made with banks to this effect can pc
carried out under the condition OF the
yoonev market existing in the spring.
If s3O0OO,OOO of the certificates can be
tben Maid off, the cash balance Will rail-
70 about $295, ZOO. .000 deposits in banks Will
Secline by $25, 100000, or to $2I5,fOo'ooo' anu
tbe cash balance will fall to about $lo,-
onn n0o The loss in the cash balance Will
tve'GI ,,e dme TO taking from the treasury cash
2s per cent of the amount paid for the
retirement of the certificates
caIIsUnusual
If seems probable, however that
money market conditions will be such
that the secretary will feel Justified IN
calling upon the banks for considerably
more cash than comes to them In pay
ment for the treasury certificates Whlch
are called and surrendered.
Under these circumstances, while the
general balance would remain the same
deposlts in banks would be reduced and
the actual working balance would be in.
creased.
II is not only considered highly desira-
HE to reduce deposits in the banks as
soon as money market conditions permit,
hnt If is believed that there will be little
difficult3 in doing so. If the treasury
can reduce these deposits to the neigh
borhood of szJ0,O 600 in the course of the
spring, it will then have at its command
about $780, 900 as working balance,
from which deposits could be made from
time to time to aid in the crop movement
in the autumn, if they were required.
From the standpoint Of circulation,
there will be an increase whose maximum
limit would be $S5. 900, 900 if all the new Sc
curities were used to secure bank note
Various causes are likely to
reduce this maximum very considerably,
hut it would not be surprising if several
million in new circulation were taken
out In the next two weeks, after the al
of the new securities. OF the to-
tai new money, so to speak. aggregating
s4OO, 100 thus put at the command of
the banks within year. not all repre-
sents positive addition to the circula-
ton, since it has passed through the
hands of t..e bank at different times, and
much of it was already in existence. The
net increase in circulation, however, will
not be less than $2OO,OOOO0O, adm this, it is
believed by bankers, will be abundant,
and necessary. by spring
The policy of the treasury therefore in
providing for the redemption of the one
year certificates within a shorter term
than one year, will involve the elimina-
(Coutinued ON Page Two.I