The evening star and Newark advertiser. [volume] (Newark, N.J.) 1907-1908, 1908-01-29

security for additional bank note .;rcu-
lation.
After the issue of Panama bonds and
one-year treasury certificates, the bank
note circulation began to increase, un u
it stood on December 81 $500, 1870. S95, as
against s607, 11S, 742 on October 10. On
January is. 1908, the issue had reached
$685.. 927, S06.
THE announcement of the issues of
new securities by the treasury" says
Mr.. Cortelyou, marked in some degree
the turning point of the panic. No
further steps were considered neces-
sary except to continue the deposit of
public moneys for a time where they
were available. and early in December
it became possible to replenish the cash
in the treasury by the withdrawal of
about Sc, 900, 900 from national banks in
New York city. This was followed on
January % by another call for $40, 900, =
600 from New York banks. This will
be followed soon by a call on outside
banks, based upon local conditions
rather than upon a fixed percentage of
their holdings of public money"
The amount of currency which dis
appeared from circulation from the
time of the suspension of the Knicker-
booker Trust Company until confidence
was practically restored, In December,
.is stated as approximately 1926, 900, 900.
This amounted substantially to one
tenth of the entire estimated money in
circulation in the United States.
Secretary Cortelyou defends the issue
of Panama bonds and treasury certfh-
Gates by saying that it was advisable
to take some strong and resolute step
which would convince the public, both
at home and abroad that the govern
ment was thoroughly alive to the stu
alton and determined to give it's aid In
every possible legal and proper form.
Concerning the allotment Of the new
issues Of securities he says:
Their character was such that it
was anticipated most of the subscrip-
tons would come from national banks;
that the , per cent. bonds afforded such
privileges 10 national banks as a basis
Of note circulation thai tho Il there mere - Were we're
bid private investors, who would find IN
the bonds nothing more than the best
form of security paying only 2 per cent.
per annurn and that II was expected
and this expectation was fultilled-that
the bonds would be used chiefly as a
basis for additional bank note %circula-
tioh, and that such circulation would
IN ~ 10 80
acute pressure for currency which
existed throughout the country.
The legal right of the department
TO make allotments of the bonds and
securities to such persons and banks
and in such amounts as it might see
fit, can hardly be called in question
in view of the fact that the circular
offering the Panama bonds contained
this distinct provision:
TIL department also reserves the
right to reject any or all bids If deemed
IN no IN fba iptpractS Of the Tinted
States so to do
obviously, so far as the offer of Sc
curities was Influenced by the desire TO
prevent distress in the money market
it would have failed of this purpose If
awards had been made, even to bona
fide bidders, which would have resulted
in large drafts upon the reserve money
of the banks and would not have aided
in drawing money from private boards,
1t was, therefore, decided In the case
of the Panama bonds to make no
awards to individuals in excess of $l0,-
900. IT was also decided to accept the
highest bids of national banks for the
remainder of the issue, after these
minimum allotments to individuals.
The total bids for the Panama Canal
bonds, continues the Secretary. amounted
to S2,2eO, 6O4, $50. or more than forty-four
times the amount offered. This fact, not
heretofore made public, would have
stamped the loan as an even more re-
markable success than 1t was, II all these
bids could have been regarded as made In
good fai h by responsible parties.
Examination of the bids showed, how
ever, that many of them were not only
speculative in character, but that they
were made in many cases for very large
amounts by those who were personally ir-
responsible and incapable of having made
even the smallest preliminary payment If
such payment had been required.
There was less margin for speculation
In the case of the 8 per cent. certificates
because, as the report says their term of
one year did not allow for any consider
able premium without extinguishing the
amount OF the interest. They were issued
at par. and this made them Immediately
available. as it was not necessary to Sc
cure bids, as In the case of the Panama
bonds. Tney, therefore, afforded n con
venient means to the banks at once to In
crease their circulation. For this reason the
Secretary of the Treasury thought proper
to announce at an early date that offers
from individuals would no longer be re-
ceived, and it was ultimately decided to
Aake no al'otments except to national
banks. The issue of these securities was
suspended, therefore, before the date first
named for closing the receipt of subscrip-
lions. the total amount of the subscriptions
having reached S6S, 1853, 800.
On the subject OF remedial legislation the
Secretary says that IN every measure OF
relief the Treasury has taken he has felt
that he was bound, under our existing fiscal
and monetary system, to have regard not
simply to the operations of the Treasury
burt to their effect upon the financial condi-
ton Of the country.
He has not assumed this obligation
willingly and would be glad to be relieved
of it, at least in part, by suitable legisla-
ton, and IL recent events should lead &c
intelligent legislation tending to adapt the
movement OF currency more nearly auto.
matically to the requirements Of business
1t would be a source OF qualification to tbs
Secretary and would greatly diminish Tho
sense OF responsibilities which must weigh
heavily upon any occupant OF the office
under conditions such as those Of the re-
cent crisis.