Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1908-01-30
GREAT DEMAND FOR BONDS
Secretary Cortelyou Makes Delayed
Report to Senate.
INSIDE INCIDENTS OF FURRY
story of the way in which Banks
Were Enabled 60 Get Better of
situation Through Cow
ernment Aid.

December II. 1897. the secretary Of the
treasury today transmitted TO that body
detailed statements concerning the award
Of Panama bonds and per cent certin-
Gates. together with recent financial
transactions of the government, and also
embodying information as to the general
state OF the nations finances during the
closing months OF 1907, the period over
which the recent financial panic extended.
The report. which Is accompanied by
long letter from Secretary Cortelyou TO
the president Of the senate. embraces
list of repositories and the amount Of
money placed on deposit therein at va
rious dates; a list OF the banks. with the
amounts of national deposits and the Sc
curities held therefor; statements showing
the condition OF banks on August y, 1907
and December 5. 1907. and the amount of
bank notes outstanding at various periods;
lists of banks and individuals 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 concerning clearing house certificates
issued during the panic, and budget~of
circulars press announcements and cor
respondence relating 30 government finan-
cial transactions that took place during
the period mentioned in the resolution.
situation Analysed.
Secretary Cortelyou. before analyzing the
crisis and setting forth his official actions
in regard TO 1t, gives a summary OF oc-
currences in the United States financial
world from the time he assumed charge
as secretary of the treasury until the time
the special report was compiled. lie states
that business conditions were becoming un-
settled when he became a financial mem
Der of the cabinet in March, 1897. 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 2S.
BY October IA these deposits had reached
a total of S2s. 100000 In October occurred
the stirring events in New York which
eliminated in the closing of the Knicker-
booker Trust company and the decision Of
New York banks to issue clearing house
certificates.
The treasury transferred to national
banks within a few days the sum of $35-
100000, and transmitted to New York within
three days about $36.O0OO0O in small bills.
In New York City alone. the report shows,
clearing house certificates were issued In
excess of 500 100000. 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
100000. It being apparent that no fur
ther deposits could safely he madc. hanks
were permitted To substitute bonds suit
able for savings bank investments for gov
ernment bonds which were held as Sc
curity against public deposits Govern
ment bonds were thus released as security
for additional bank note circulation.
Circulation on Increase.
After the issue of Panama bonds and
one-year treasury certificates, the bank
note circulation began to Increase until it
stood on December 81, $3.50. 13O,s95, against
s6O7 l1S.7i2 on October Is. On January Is,
1908 the issue had reached $685., ,927, sos.
"The announcement of the issues of new
securities by the treasury" says Mr..
Cortelyou marked in some degree the
turning point of the panic. No further
steps were considered necessary except to
continue the deposit OF public moneys for
a time where they were available, and
early in December II became possible to
replenish the cash in the treasury by the
withdrawal of about $6,OOO,OO0 from national
banks in New York city. This was fol-
lowed on January % by another call fer
$40, 10000 from New York banks This will
be followed soon by call on outside banks
upon a fixed percentage Of their holdings
OF public money"
The amount of currency which disap-
peared from circulation from tho time OF
the suspension of the Knickerbocker Trust
company untf confidence was practically
restored in December is stated as ap-
proximateIy $296, 10000 This amounted sub
stantially to one-tenth of the entire esti-
mated money in circulation in the United
States.
Exports on Increase.
The secretary of the treasury touches
upon the gravity of the situation abroad
as we'll al in this country and gives fig
ures concerning the export OF merchandise
TO show the energy with which the econo-
mic resources of the country We're devoted
to the relief OF the situation, the excess
of exports over imports rising from s., ,i64, 4Ol
in August, 1907, to Sll4,s9O,665 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 steps which would con-
vince the public, both at home and abroad
that the government was thoroughly alive
to the situation and determined to give
it's aid in every possible legal and proper
form.
Concerning the allotment Of the new is
sues OF securities. he says
Their character was such that II was
anticipated most Of the subscriptions would
come from national banks; that the 2
per cent bonds afforded such privileges to
national banks as a basis OF note cirCu-
lation; 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
2 per cent per annum, and that II was eX-
pected-and this expectation was fulfilled
that the bonds would be used chiefly as
basis for additional bank note circulation
and that such circulation would contT butte
its share 10 relieving the acute pressure for
currency which existed throughout the
justification for limiting subscriptions TO
national banks, this consideration-that the
bonds would be used TO meet the pressure
for currency-would. in the opinion OF the
department. have justified an absolute re-
striction OF the awards 10 national banks.
Legal Rights Preserved.
The legal right Of the department to
make allotments OF the bonds ~and seCuri-
ties TO such persons and banks and In such
amounts as IL might see fit can hardly
be called in question, In view Of the fact
that the circular offering the Panama
bonds contained this distinct provision.
''The department also reserves the right
20 reject any or all bids, II deemed to be
to the interests OF the United States so
10 do"
ties vas influenced by the desire 10 pre-
vent distress In the money market il wouli
have failed OF this purpose IL awards had
bf made. hua Hde bidders