The Washington herald., 1908-06-21

Within the next six weeks the Treasury
must provide FOR the maturity Of S63,sf5, 400
3 per-cent bonds outstanding Of the $lsS,-
791 co issue put cut under the act OF June
l3. lS9S. TO provide for the Spanish war
expenditures.
Secretary Cortelyou has not Indicated
his intentions In the matter. and there is
I great interest manifested in the Treas
ury's probable policy.
The government can redeem the bonds
In cash. continue the issue al a lower
rate Of interest or refund the bonds into
/ . per cent consols under the act OF March
Il. 1900 II the loan should be converted
/ into 2s the government would save about
S6}9t00 a year in interest charges. and
should it be paid of In cash the annual
1 interest payments would be reduced about
I 81. 10000 What is the government likely
20 do?
If it should call on the banks for the en-
tire sum- public deposits would be reduced
20 S9o00l.001 and the Treasury would still
have "a working balance Of S73.O00.OG0 10
care for government expenses and pro-
vide for the payment on November l Of
| the Sl4lS6.5G0 issue Of one-year certificates
/ sold during the panic disturbances.
would Not Cripple Banks.
such a demand could impose no hard
ship upon the banks. since what was paid
/ in would be Immediately paid out by the
government, so that no money would be
permanently withdrawn from circulation.
Aside from this. the countrys national
banks hold Sl69,Oo0,0O0 more cash than
they showed a year ago, and their loans
| are SlO2. 100000 less. But tho Treasury may
not care 20 so draw down its bank de-
/ posits. and for that reason it is quite
probable that Secretary Cortelyou will re-
/ peat the operation Of last year in Offering
10 refund a portion Of the loan and 10 re-
/ deem the balance,
OF the $50, i29. 80 OF the is Of 1907 that
were redeemlble on July l last, so. .3O7, 500
/ were refunded into 2 per cent consols, be
tween April 2S and May 81. and S36.121, 45C
were paid off in cash withdrawn from the
| banks under the call of June y.
Comparison with 1903.
When the Treasury anticipated payment
on September q. 1903. Of the Sl7. $50. .1O1
outstanding is Of 1904 it did it 10 relieve a
money market that was eagerly bidding
81 per cent for sixty-day loans
Secretary Foster. in providing for the
maturity OF the $50, 900 Az per cent
bonds Of 1891. continued at 2 per cent
! SIS. 1864 800 Of the issue and redeemed In
cash 1S.009. 800 the balance not having
| been turned in Tor redemption for several
years. There is abundant precedent,
therefore. for adopting both methods OF
! settlement II the government cares to
/ do so.
! Only S17,6S6,640 OF the maturing IS are
] in the possession Of the banks. 50. 430 44C
Of the amount being pledged for circula-
ton and $S.2O6. 200 as collateral for public
| deposits.
What Was Done Last Yenr.
In caring for the per cents last year
the government refunded the bonds on
the basis Of lO3 for the 2s of 1880 taking
the old bonds on a 24 per cent invest
ment basis. The Is are now selling at IO4
so that the Treasury may modify its offer
| OF otherwise change the terms Of, the
! conversion proposal. OF the S546. 80. l5C
! outstanding 2s OF 1890. 1858. $685. $50 are
! pledged by the banks TO secure circula-
tion and $4S,956lOO are held for public de-
posits, so that virtually the entire issue Is
in the possession of nadonal banks
Whichever course the Treasury pursues
will probably necessitate a further cal
upon the banks, which are abundantly
able to surrender $50. $1,000 or $4,000, 600 OF
the $l50OO0,OOO public deposits they now
hold If called upon to do so.