Evening star. [volume] (Washington, D.C.) 1854-1972, 1908-07-16
Will CONTINUE BONDS
CerteIyou Decides Not to. Re-
deem or Refund.
REASONS FOR HIS ACTION
Criticism by the Democratic Cam
paign Managers Expected.
TREASURY WORKING BALANCE
Deficit for the First Fifteen Days OF
the Fiscal Year Over
$4,000, 600.
TREASURY WORKING BALANCE

Secretary Cortelyou has gone to his
summer home near Huntington. L. L..
after having left behind him a probable
issue in the coming presidential contest.
Tha Secretary has decided. it is an
nounced on good authority, that he will
not redeem the 3 per cent Spanish war
bonds when they come due August l, but
that he will let them run along for some
time before redeeming or refunding them
into per cent bonds. He has given
long consideration to the question and
has come to the conclusion that they
cannot be refunded to good advantage
at this time: that he does not consider
it advisable to purchase them for the
sinking fund. and that he will continue
them at per cent until such time as he
cares to handle them.
There are about $85 OoO, 900 of the bonds
outstanding, q total Of nearly $500. 600, 900
war to run ten years. with the privilege
of a ten years extension. Most Of the
bonds are in the hands of the treasurer
Of the United States in trust as security
for the circulation Of national banks. To
continue them after August 1 will neces-
year In interest. Converted into 2 per
cent bonds. the annual interest charge
would be 81 100000. Paid off altogether
the government, of course, would be saved
further interest.
It is regarded as practically a GER
tainty that the democratic campaign man.
agerent. probably Mr.. Bryan himself. will
criticise the failure to pay off the bonds.
if they should be left outstanding after
August l.. Secretary Cortelyou's reasons
be numerous. but the democratic criti-
cism will be based upon the plain allega-
ton that the government has plenty of
cash on hand to pay them off. thus re-
they are continued for the benefit of
the national banks.
Treasury Working Balance.
The working balance Of the Treasury at
this time is S64. 600 600. That is. the vaults
contain that much money not in use ex-
cept to meet daily expenditures. which
are at present largely in excess of reve-
nues. The deficit for the first fifteen days
of the present fiscal year is over $4,000
OGa. For the same time in the previous
fiscal year the receipts ceeded expendi-
lures about $a.50O.000. The $64, 900 600
Will meet deficits for many weeks to come,
as we'll as many months. But the Treas
ury has large available cash balance in
national bank repositories. These insti-
tutians now hold $13s, TT. 462 of govern
ment money. besides another $11 900 600
as balances for disbursing officers The
banks could be called upon without Sc
rious detriment at this time. it is pointed
out for SUFFICIENT money to pay off the
per cents. If refunding was not consid-
cred.
One reason given for not redeeming the
bonds is that as most of them are on de-
post as security for circulation of banks
the government really pays out only 21s
per cent interest. because the banks must
pay per- cent charge upon circulation
based upon them, when Their circulation
upon 2 per cent bond would, under the
law. cost them only onehalf of per cent.
The banks, however. do not object. as
they draw l per cent more interest upon
bond soon to be worth only par than
they do upon a per cent bond. Where
the same bonds are used as security for
public deposits the banks still find them
valuable.
Objection to Refunding.
AS to the refunding Of the 3 per cent
bonds. Mr.. Cortelyou is said to see no
reason to put $65.OOO.OoO additional > per
cents upon the market, although 1t has
been suggested to him that he refund
part of the total and rede ,m the other
part The currency bill put through in
the closing hours of Congress will lessen
the demand for , per cent bonds in the
future. it is held, as emergencies In the
financial world can be met by an issue of
circulation based upon something else
than government bonds. Heretofore cir
culation could not be stimulated in times
Of stringency without sharply advancing
the price of 2 per cent bonds or resorting
to makeshifts. Secretary Cortelyou will
also issue more Panama bonds at any
time he considers that 1t is best to put
them upon the market. Such action would
be twofold. 1t would turn sh ready cash
to a diminishing working balance and
add per cent bonds to market in need
of them. Every day the Treasury is MAX
ing advances out Of its cash to the Pan
anna canal and 1t is simply a question of
waiting for a propitious occasion before
putting more Panama bonds upon the
market to meet the balance due and to
provide funds for continuing work.