Evening star., 1908-01-29

tional banks, this consideration-that the
bonds would be used to meet the pres
sure for curTency-would, in the opinion
of the department.. have justified an alb
solute restriction OF the awards to ma
tional banks
Tho legal right OF the department to
make allotments Of the bonds and secuH-
ties to such persons and banks and in
such amounts as 1t might see fit can
hardly be called in question, says the
circulqr offering the Panama bonds con-
tained this distinct provision: That the
department reserved the right to reject
any or all bids, II deemed to be to the
interests of the United States sosto do.
Continuing, Mr.. Cortelyou says:
obviously. so far as the offer Of Sc
curities was Influenced by the desire to
prevent distress in the money market, 1t
would have failed of this purpose II
awards had been made, even to bona f1de
large drafts upon the reserve money OF
the banks and would not have aided in
drawing money from private boards. 1t
was, therefore, decided in the case OF the
Panama bonds to make no awards to in
diyiduals in excess Of $4,000. 1t was
also decided to accept the highest bids of
national banks for the remainder Of the
issue. after these minimum allotments to
individuals"
Bids for Panama Bonds.
The total bids for the Panama canal
bonds amounted to g, 200. 6O4 $50. or more
than forty-four times the amount Of
fered. This fact, not heretofore made
public. would have stamped the loan as
an even more remarkable success than
1t was, 1t is pointed out, IL all these bids
could have been regarded as made In
good faith by responsible parties. Ex-
animation of the bids showed. however,
that many Of them were not only specu-
lative in character. but that they were
amounts by those who were personally ir-
responsible and incapable of having made
even the smallest preliminary payment, II
such payment had been required. When
the awards were made. therefore, the
bonds were awarded without hesitation to
national banks in those cases where the
prices offered were 1929 or higher. and
where the bid appea ared in other respects
to be made in good faith and with full
capacity on the part of the bidder to
execute his contract. The amount thus
awarded to national banks was $24, $685. :
O4O.
Awards to individuals.
The awards made to individuals were
limited to those cases where the amounts
subscribed for were for $4,000 or less,
because such bids had at least prima
+.ac
upon this modest basis the payments
made after the allotment Of the bonds
showed that a considerable portion OF
these small bids were speculative.
There was less margin for speculation
in the case OF the 3 per cent certificates.
because, as the report says. their term of
one year, did not allow for any consid-
cradle premium without extinguishing the
amount Of the interest. They were is
sued at par. and this made them imme-
diately available. as 1t was not neces-
sary to SECURE bids as in the case OF the
Panama bonds. They therefore afforded
q convenient means to the banks at once
to increase their circulation. For this
reason the Secretary OF the Treasury
thought proper to announce at an early
date that offers from individuals would
no longer be received. and 1t was ulti-
mately decided to make no allotments ex-
cept to national banks.
Two Considerations.
This decision was dictated by two con-
siderations-hrst, the desire to stimulate
the issue Of banknote circulation for a
period (which would relieve the crisis: and,
second, the fact that the announcement of
the issue Of the new securities had al
ready to a large extent accomplished its
intended purpose and had made it un-
necessary to issue more than q fraction
OF the full amount. The issue Of these
securities was suspended. therefore, be-
fore the date first named for closing the
receipt OF subscriptions, the total amount
Of the subscriptions having reached $685.
$50. 800 The amount issued was only
SIS, 436, 500 AS all of these were regis
tered and issued to national banks with
the understanding that they should be
used as a basis for increasing their circu-
lation, or to secure public deposits. they
are all on deposit with the treasurer OF
the United States for these purposes.
While the awards OF 2 per cent bonds
were made primarily to the highest bid
ders among national banks, the effect Of
the awards was to distribute the bonds
among banks In forty OF the forty~six
states OF the Union. The one-year certif-
Gates were distributed less widely. but
were taken. however. by institutions In at
least eighteen states.
The issue of the Panama bonds would
have been required in any case within z
short time to meet the expenses OF con-