The Mankato free press., 1907-11-22
AT CABINET MEETING
Communications Approving Re-
lief Measures Discussed.
SOME IMPORTANT QUESTIONS
Raised in Connection With the Issue
of the New Certificates of Indebted
ness-Treasury Officials Careful in
Defining Their Positions.

Defining Their Positions.
Washington, Nov. 20-The COM
| munications which have come to the
treasury department approving the
financial policy adopted by the presi-
dent and Secretary Cortelyou and the
subscriptions which have been re-
ceived for the Panama bonds and one
year certificates were the subject of
discussion at the meeting of the cabi-
net and afforded general qualification.
While details regarding subscriptions
seems to be the feeling at the treas
ury that both loans will be over-sub-
scribed, as was the case with the pop
ular loan Of $1O0,OO0,0O0 issued by the
Cleveland administration in 1896. The
decline in the stock market is regard
ed as only a symptom of hesitation un,
til the effect of the failure or success
of the measures are proved by the
opening of the bids. Several impor-
tant questions are being raised in COM
munications addressed to the treasury,
but the treasury officials are eXercis-
ing an unusual amount of care in de-
fining their positions.
One of these questions, upon which
no official information has yet been
given, is whether the new one-year
certificates will be available for bank
reserves. The law on the subject
seems to be sufficiently clear, that
they are not available for this purpose,
but it is possible that the presence
of a few of them i'll reserves under
present critical conditions would be
winked at. just as in the case of clear
ing house certificates.
1t is prescribed by Section 5191 of
the revised statutes, that banking re-
serves shall be Gin lawful money Of
the United States" This can only
mean gold and silver coin, coin certif-
Gates and legal tender notes The law
does not even permit bank notes,
which circulate as currency, to be
counted as reserves, although small
amounts are occasionally included in
the same packages with lawful money.
Depends Upon Amount Held.
Whether the new certificates should
be counted as reserve money would
be, under present conditions, a more
or less academic question, because
they are legitimate investments Of
banking funds and the question of re-
serve turns only upon the amount
held. AS large portion of national
banks are now being permitted to do
business with their reserves consid-
erab1y reduced below the legal limit,
the question whether the proposed
treasury certificates shall be counted
as reserves or investments is prac-
tically only a matter of bookkeeping.
The law is framed, however, to re-
Guire actual money to be held in re-
serve and those familiar with the cur
rency systems of other solvent coun-
tries declare that it would be entirely
contrary to sound policy to count an
interest-bearing certificate of debt as
the equivalent of money under normal
conditions.
A policy of reserve is being pursued
by Comptroller Ridgley, apparently for
the purpose of avoiding any unfavor-
able impressions among, the bankers
or misunderstanding by the public
pending the opening of bids for the
new securities. If the certificates are
redeemed at the end of one year, ac-
cording to their terms, it is believed
at the treasury that there will be no
difficulty in withdrawing money from
the banks for the purpose at that time,
because money usually accumulates
rapidly in the banks after the first
furry of crisis has been passed and
as general business and speculation
become curtailed.
The possibility is attracting some at
tention that the issue of the one-year
certificates will be criticised in con-
gress in much the same manner as the
sale of bonds to the Morgan syndicate
to protect the gold reserve in 1895.
The fact that Republican member
of the house committee on banking,
Mr.. Prince of Illinois, has been quoted
as declaring the issue mot justifiable
under existing conditions" is consid-
cred a symptom of the attitude which
may be taken by a few members of
congress.