The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1908-01-29
uation and determined to give its aid
IL every possible legal and proper form
Allotment of Securities


concerning the allotment of the new
issues OF securities he says:
Ihelr character was such that it
was anticipated most of the subscrip-
lions would come from national
banks, that the two per cent bonds
aIoToeo such privileges to national
banks as a basis of note circulation:
uhat there were strong Inducements to
the banks outside private investors.
who would find in the bonds nothing
more than the best form of security
paying only per cent per annum
sl mat IT was expected-and that
th1s expectation was fulflled-that
the bonds would be used chiefly as a
basis for additional note circulation
and that such circulation would con-
tribute Its share to relieving the acute
pressure OF currency which existed
throughout the country. Even if
there had been no other justification
Tor limiting subscriptions to national
banks, this considera on-that the
bonds would be used to meet the pres
sure for currency-would, in the
opinion of the department have JUS
awards.
'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
Mt can hardly be called in question in
view of the fact that the circular of
fering the Panama bonds contained
this distinct provision:
The department also reserves the
right to reject any or all bids, if
deemed to be to the interests of the
United States to do
obviously, so far as the offer of
securities was Influenced by the de-
sire to prevent distress in the money
market, 1t would have failed of this
purpose If awards had been made,
even to bonaf1de 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 hordes. 1t was
therefore, decided in the case of the
Panama bonds to make no awards to
individuals in excess Of $4,000. It
was also decided to accept the highest
bids of national banks for the re-
mainder of the issue, after these
minimum allOtmentS to individuals"
Bids Forty -four Times the Offers.
The total bids for the Panama canal
bonds, continues the secretary, amount
ed to 1920, 604, $50 OF more than A times
the amount offered. This fact not here
tofore made public, would have stamp
ed the loan as an even more remarkable
success than it was, If all these bids
could have been regarded as made in
good faith by responsible parties. Elk
animation of the bids showed, however,
that many Of them were not only spec
u1ative in character but that they were
made in many cases for very large
amounts by those who were both per-
sonally irresponsible and incapable of
having made even the smallest prelim-
mary payment if such payment had
been required. When the awards were
made therefore, the bonds were award
ed without hesitation to national banks
in those cases where the prices offered
were 102A or higher, and where the bid
appeared in other respects to be MADE IN
good faith and with full capacity on
the part of the bidder to execute his
contract The amount thus awarded
to national banks was $24, 299,040. The
awards made to individuals were limit
ed to those cases where the amounts
subscribed for were for $4,000 or less,
because such bids had at least prtma
facie appearance OF good faltn. Even
upon this basis, the payments made
after the allotment of the bonds show
ed that a considerable portion of these
small bids were speculative s
The Per Cents.
There was less margin 70 speculation
in the case of the per cent certificates,
as the report says their term of one
year did not allow for any considerable
premium without extinguishing the
amount of interest.
Thew were issued at par and this
made them Immediately available as 1t
was not necessary to secure bids as In
the case of Panama bonds. They there
fore afforded a convenient means to the
banks at once to increase their circula-
ton. For, this reason the secretary OF
the treasury thought proper to announce
at an early date that offers from fndi-
vidua1s would no longer be received and
it was ultimately decided to make no
alIotments except to national banks.
This decision was dictated by two con-
siderations-frst, the desire to stimu-
late the issue Of bank note circulation
for a period which would relieve the
crisis; and, second. the fact that the
announcement of the issue of the new
to issue more than fraction Of the full
amount. The issue of these securities
was suspended therefore before the
date first named for closing the receipt
of subscriptions, the total amount of
the subscriptions having reached $685.
GAG, 500 The amount issued was only
SIS, 436, 500. All of these were regis
tered and issued to national banks with
the understanding that they should be
used as a basis for increasing their cir
culation or to secure public deposits.
They are all on deposit with the treas
urer Of the United States for these pur-
poses.
While the awards of per cent
bonds were made primarily to the
highest bidders among national banks,
the effect Of the awards was to dis
tribute the bonds among banks in
forty. of the 46 states of the Union.
The one-year certificates were dis
| tributed less widely but were taken.
however, by institutions in at least Is
states.
Anticipated an early Need.
| The issue Of the Panama bonds
| would have been required in any case
| within a short time to meet the ex-
penses of constructing the canal and
| the secretary of the treasury, it is
argued, could hardly be held respon-
| sible for the effect Of such issues on
| the volume Of bank note circulation
| whatever might be his opinion as to
the desirability of the imitation which
might result. Practically therefore,
| the responsibility resting upon him
relates only to the $15.5 500 in the