Los Angeles herald., 1908-01-14
CORTEL YOU
rs GRULED
IN SENATE
HIS METHODS IN AWARD OF
BONDS DENOUNCED
BANKS APPEAR TO HAVE PROF.
TIED HANDSOMELY
TlIIman, Bailey and Others Discuss
Secretarys Flnanciering-He
Is Called Lpon to
Explain
By Associated Press.

WASHINGTON, Jan. 13.-After short
discussion in the senate concerning the
recent bond issue of the treasury de-
partment, 1t was agreed today before
taking up the question in detail to await
report from the secretar:' of the treas
ury which Senator Aldrich assured the
senators would be before them on next
Thursday
Mr. Gray of Georgia asked whether the
secretary would be required to make a
report of these facts by law. MIR. AL
drich replied that ne believed he was so
required, but there was no provision of
law stipulating how the report should be
made.
Mr.. Culberson insisted that the duty Of
the secretary under the law was to make
such a statement on or before January l.,
for the preceding year, concerning DC
posits of public money. He said he had
not seen any such tatement.
Mr.. Tlllman referred to two resolutions
by him which had remained on the Gala
endar since December calling for in
formation concerning clearing house GER
tificates and the bond issues, and said he
thought it would be best to let them go
to the committee on finance without at
tempting to pass them without refer
ence to that committee.
He said he wished to lay some cor
respondence on this subject before the
committee, and read from the vice presi-
dents desk a letter from George II. Kloe-
bers of Wilmington, Del, stating that he
had bid an average of 104is for $4,000 Of
Panama bonds and had not been awarded
any of Them although they had been sold
for 1921.
TilIman Wants to Know
Mr. Tnlman wanted to know how it
happened that the bonds had been sold TO
the banks at lower price and denied
to citizens who bid higher for them.
He also read a letter from Assistant
Secretary ]. E. Edwards of the treasury
department to 4-f. k1oeters as follows.
In reply your inquiry of the 18th
inst. you are ir formed that individual
bidders whose bids were greater than $40,
600 were not allowed any bonds"
He also read another letter from cor
respondent in Augusta, Ga, who wanted
TO know how 1t had happened that the
secretary places vast currency in New
York banks to relieve the financial
stringency while these banks charge
Ia per cent premium on this money to
southern banks.
''The stringency seems to be a source
of profit to some one," Mr.. Tillman's s
correspondent added.
Mr. Bailey of Texas wanted to know
whether Mr. Tillman's Delaware corre-
spondent was the man who hat instituted
a suit against the secretary of the treas
ury in the matter of the award of these
bonds.
Mr.. Tillman did not know whether the
injunction suit had been brought by his
correspondent.
'As some courts have been so glad to
issue injunctions," said Mr.. Bailey, II
think they would be glad of an oppor-
tunity in this case. I think this course
on the part of tn. secretary all the more
remarkable In view of the fact that the
purpose was to attract money that was
hiding. They might attract 1t from
places where citizens had 1t but not
from the banks. A part of the under
standing urder which these bonds were
issued was that 80 per cent of the money
received from their sale would be left
or deposit with the banks.
Got Big Per Cent
'If that be true" he declared, 1.-The
banks received from the government in
terest at the rate of 80 per cent per an
num-
Continuing Mr.. Bailey said "The gov
ernment sold these bonds at 1021s and de-
posted in the banks 80 per cent Of the
purchase price, so that the $40 paid on
each bond actually drew interest at the
rate of 30 per cent per annum. 1t was
not intended that this money should be
used for the Panama canal, but 1T was
to relieve the financial pressure.
Under that plan, with that profession
on his lips, the secretary seems to nave
declined the money which individual citi-
zens were willing to take from their
trunks or other places of hiding and
turned the bonds over to the banks at &c
per cent per anrum.'
Mr.. Tillman remarked that he would
wait for the secretary's reply.
Mr.. Ti.lman's resolutions were referred
to the committee on finance and the dis
cusson of the financial question was sus-
pended waiting Secretary Cortelyou's re-
eranl,sn "a e..,n "a i,c..li....