The Birmingham age-herald., 1907-11-29
CERTIFICATES WILL IlD
 BANK NOTE CIRCULATION
1t Is the Intention of the Secretary of the Treasury To Issue Only About one-Third of the Proposed
 Issue to the Banks.


 nouncement by Secretary Cortelyou last night that further subscriptions to the one year treasury certificates would not be received is regarded here as indi- eating that the secretary considers the crisis in the money market to be prac- tically over. Official figures have not yet been given out at the treasury of the amount of certificates allotted. The amount of the allotments made however, is to be about S35, ,000,000, and this is prob ably the limit. All individual subscrip- tions have been rejected and it is an- nounced that the whole of the SS5OO 900 allotted will be used to help new issues of bank notes.
 As these issues will be retired within less than a year, they will not constitute permanent imitation of the bank note circulation.
 The effect of the new loans on the fu- ture of the treasury resources and of the money Is already receiving attention at the treasury and in banking circles. From present sources of information the amount nominally added to the cash bal ance of the treasury will be about $S5.- o0o,000 of which s5o,0000o0 will represent the per cent Panama bonds, and s35.0oo,- GOO will represent the one year certificates which have been allotted. This amount would increase the present nominal bal ance from about $241, ,393,217, where 1t stood yesterday, to a little more than $325, 900. A small additional amount will be derived from the premium on the Panama bonds, but even if this should total as high as , per cent 1t would only amount to s500,000 ..l
 Amount Available.
 With a nominal balance however, of more than $S25.ooooOo, the treasury will not have anything like that amount inl- mediately available. This is because of deposits in national banks and other deposit items. These items amounted yesterday to $294. 395s9. leaving an actual working balance of s6, ,4s3,62S. The sec retary had announced that 20 per cent of the payments for Panama bonds will be left in the custody of the national banks purchasing the bonds; and about I'd per cent of the payments for one year certificates will be left with the banks. This changes the treasury balance sheet which upon the basis of issues of both classes of securities to the amounls $S5,000,000 will increase the amounts in banks to about $500, 600 and the work ing balance to about $22, ,000,0O0. The in- crease of 100000 in the working balance will be due to retention in the treasury of S5,0O0000, or 10 per cent of the prin- cipal of the payments, and about $9,O00.- 0oo or 25 per cent of the principal of sS5.- 000,0O0 in treasury certificates.
 Looking to the Future.
 This condition of the treasury finances will be changed materially in the spring if the secretary is able to carry out the programme of retiring a considerable portion of the one-year certificates before maturity. If $30,000,000 of the certificates can then be paid off the cash balance will fall to about $2s5, 100000 and deposits fin banks will decline by three-quarters of the amount paid off or to $277 500,O 900 Ax.1 pl, 1zaIa e,It s15.00o,0o0. The loss in the cash balance will be due to taking from the treasury cash 25 per cent of the amount paid for the retirement of the certificates. It 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 payment for the treasury certificates which are called and surrendered.
 Deposits Are Too Large.
 It is not only considered highly desir- able to reduce deposits in the banks as soon as money market conditions per- init, but it is believed that there will be little difficulty in doing so. If the treas- ury can reduce these deposits to the neighborhood of $200,000.000 in the course of the spring, it will then have at it's command about s1O0,0OO.000 as a 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.
 The history of previous crises has shown that money tends to accumulate rapidly in the banks, after the worst of tho crisis is over. The policy of the treasury in providing for the redemption of the one-year certificates within a shorter term than one year will involve the elimination of the bank note circu- lation based upon these certificates and a considerable withdrawal of cash from the banks into the treasury. The fact that the limit of s9.000,000 per month is imposed upon retirement of bank note circulation, does not apply to notes based upon securities which have been called for redemption, removes any ob- stacle to the prompt retirement of ex- cessive bank note issues by the pay ment of lawful money into the treasury as soon as the securities are called and paid. From present indications the treasury Will not only have ample cash at de- mand during the spring. but it is believed by bankers that the currency famine of the moment will be turned into glut i which only foresight on the part of the treasury will prevent from developing into 1 unnecessary imitation.