The Detroit times., 1908-01-29
CORTELYOU GIVES
REASONS FOR STEP
TAKEN IN PANIC


-'Wr-~ - $500
afford such privileges to national
banks as basis OF note circulation,
that there are 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.
1t was expected--and this expecta-
ton was fulfilled--that the bonds
would be used chiefly as a basis for
additional bank note circulation and
/ that such circulation would contribute
its share to relieving the acute pres
sure for currency which existed
throughout the country. Even IL there
had been no other justification for linn
iting subscriptions TO national banks,
this considera tion--that the bonds
would be used 10 meet the pressure
for currency--would, In the opinion OF
tire department., have Justified sff-ttb-
solute restriction Of the awards to
national banks.
Would Cause More Withdrawals.
After careful analysis OF the bids
eceived. the conclusion was reached
by the department that II bids were
w iiuAff III tof ~ 'tthNf
II would have the tendency 10 cause
still further Withdrawals OF money
from the savings banks. which usually
carry relatively small reserves In cur
rency. and In case of heavy demands
upon them wanld have been compelled
/ to draw upon the national banks and
! trust companies. II was. therefore,
decided In the case of the Panama
bonds 10 make no awards 10 individ-
uals In excess of $4,000. IL was also
decided 80 accept tAe- highest-hids OF
national banks for the remainder OF
the issue, after these minimum allot-
ments 10 individuals.
There was another consideration
however, which II was felt cast aaore
or less suspicion on offers for the
bonds coming from individuals. This
was the fact that the low rate OF In
terest paid upon the bonds and their
obvious advantages To the national
banks made IL probable that individual
offers would be made for speculative
purposes--in other words, for the pur-
pose OF selling the right OF subscrip-
lions as promptly as possible to banks
| III there were any doubt or the correct
ness of this anticipation II is removed
by the character and amounts of the
bids which were received.
Canal Bond Bids.
THE total bids for the Panama
canal bonds amounted to s2,220,6O4,-
| $50, or more than "A times the amount
offered, This fact, not heretofore
made public. would have stamped the
| loan as an even more remarkable sue
cess than II was. II all these bids could
have been regarded as made In good
faith by responsible parties. Examina-
ton OF the bids shows. however mat
many OF them were not only specula-
tive In character, but that they were
made I'm many cases for very large
amounts by those who were personally
irresponsible, and incapable OF having
made even the smallest preliminary
payment. II such payment had been re.
uuired. When the awards were made,
therefore. the bonds were awarded
without hesitation to national banks
! In theses cases where the prices offer
ed were 1O2 IS or higher, and where
| the bid appeared in other respects to
he made In good faith and with full
lcapacity on their part to fulfill the
contracts. The amount thus awarded
! 20 national banks was S24.99S.O40,
'sIf new legislation does not relieve
the secretary OF the treasury from the
obligation which has tacitly arisen IN
der our existing fiscal and currency
system, To- exercise guardianship
lover the money market. then still an.
other factor must be kept constantly
in view This is the ability TO relieve
the money market by making deposits
of public FUNDS during the autumn, the
I season when the demand for money
Ia usually eseaieSt- The department.
considers 81 OF the highest degree OF
importance under the existing sytem
ito reduce the present volume OF De
] poSitS OF public moneFs In the- banks
! Cor this purpose alone eFefsV apart
from the accumulation In the treasury
of adequate funds for the redemption