Evening star., 1908-01-29
MR., CONTIGUOUS
| RESPONSE TO SENATE
His Statement as to Financial
Condition of Country.
PUBLIC MONEY ON DEPOSIT
Why Changes in Amount and ,Loca-
tion Were Made.
BONDS AND CERTIFICATES
Proposals for Both and the Allot-
ments Made to Relieve the
Money Panic Last Fall.
Why Changes in Amount and Loca-
tion Were Made.
|NDS AND CERTIFICATES

In response to a resolution agreed 10
by the Senate December j., 1907, the
Secretary of the Treasury today trans
mitted to that body detailed statements
concerning the award of Panama bonds
and per cent certificates, together with
other recent financial transactions of the
government, and also embodying informa-
ton as to the general state OF the ma
tons finances during the closing months
of 13O7-the period over which the recent
financial panic extended.
The report, which is accompanied by a
long letter from Secretary Cortelyou to
the president of the Senate embraces a
list of depositaries and the amount OF
money placed on deposit therein at vari-
Gus dates; a list of other banks with
the amounts of national deposits. and the
securities held therefor; statements show
ing the condition Of banks August %
1907, and December 3, 1907. and the
amount of bank notes outstanding at
various periods; lists of banks and IN
dividuals who received Panama canal
bonds and lists of those who bid for the
bonds without receiving an allotment;
allotments and subscriptions OF per
cent certificates of Indebtedness; data
sued during the panic, and a budget o.
circulars, press announcements and cor
respondence relating to government
financial transactions that took place dur
ing the period mentioned in the resolu-
ton.
Financial Occurrences.
Secretary Cortelyou. before analyzing
the crisis and setting forth his official ac-
tions In regard to it, gives a summary Of
-~{% cio1
world from the time he assumed charge
as Secretary of the Treasury until the
time the special report was compiled. He
states that business conditions were be-
coming unsettled when he became f1nan-
cial member of the cabinet In March. 1907.
Various stringencieS occurred prior to
August, which were promptly relieved. A
plan of weekly deposits OF government
funds in various banks was begun on
August %. BY October IA these deposits
had reached a total of $2S.OOO,OOO. In Oc-
tober occurred the stirring events In New
York which eliminated in the closing OF
the Knickerbocker Trust Company and the
decision of New York banks to issue clear
ing house certificates. The Treasury trans
ferred to national banks within few
days the sum Of $35. 0.0OO. and trans
mitted tos New York within three days
about $36, 100000 in small bills. In New
York city alone. the report shows, clear
ing house certificates were issued In ex-
cess of $1OO 600, 600 BY the middle Of No
vember the Treasury had met the demand
for relief to the extent that the working
balance was reduced to approximately $5,-
OOO,UOO. 1t being apparent that no further
deposits could safely be made, banks were
permitted to substitute bonds suitable for
savings bank investments for government
bonds which were held as securities
against public deposits. Governments
were thus released as security for addi-
tional bank note circulation.
After the issue of Panama bonds anC
one-year Treasury certificates. the bank
note circulation began to increase until It
stood. on December 81, $3.50. 13O. sos, as
against $6O7 ,11S, ,742 on October Is. On
January Is, 1908, the issue had reached
$695,927, $685.
Turning Point of Panic.
THE announcement of the issues Of new
securities by the Treasury" says Mr..
turning point of the panic. No further
steps we're considered necessary, 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 $6.OOO,OOO from
national banks In New York city. This
was followed January q by another call
for $1O.OOO,OOO from New York banks.
InlS Will De followed SOOH Uy call ou
outside banks based upon local condi-
tions rather than upon a fixed percentage
of their holdings of public money
The amount Of currency which disapi
peared from circulation from the time of
the suspension of the knickerbocker
tically restored in December. Is stated as
approximately $296. 600. .O0O. This amounted
substantially to one-tenth of the entire
estimated money in circulation in the
United States.
The Secretary of the Treasury touches
upon the gravity Of the situation abroad.
as well as in this country, and gives fig
ures concerning the export OF merchan-'
disc to show the energy with which the
economic resources of the country were
devoted to the relief of the situation, the
excess of exports over imports rising
from 81, ,464 4O4 in August, 1907, to S114,-
800 t65 in December, 1907.
Secretary Cortelyou defends the issue Of
Panama bonds and Treasury certificates
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 government was
thoroughly alive to the situation and de-
termined to give it's aid in every possible
legal and proper form.
New Issues of Securities.
Concerning the allotment of the new is
sues of securities, he says their character
was such that it was anticipated most of
the subscriptions would come from ma
tional banks: that the , per cent bonds
afforded such privileges to national banks
as a basis of note circulation that there
were strong inducements to the banks to
outbid private investors. who would find
in the bonds nothing more than the best
form of security, paying only per cent
per annum, and that 1t was expected
and this expectation was fulfilled-tnat the
bonds would be used chiefly as basis for
additional bank note circulation and that
such circulation would contribute its share
to relieving the acute pressure for cur
rency which existed throughout the coun-
try Even IL there had been no other jus
tification for limiting subscriptions to ma
a The next boMe6 T.