The Nevada County picayune. (Prescott, Ark.) 190?-current, 1908-02-06
CORIAYOUIS STATEMENT
JUSTIFlES BOND SALE AND GER
TIFlCATE ISSUE TO AVOID
DISASTER.
DENIES FAVORITISM SHOWN
Fight Was Primarily to Keep Coun'
try's Currency in Circulation-No
Surplus Created - Panama
Bonds Oversubscribed.

Washington, Jan. 20. = Secretary
Cortelyous reply to the resolution
calling upon him for a statement COW
erng his departments action pre-
vious to and during the recent imam
cial crisis, was presented to the Sen
ate Wednesday. The communication
embodes one of the most elaborate
statements of Government financial
conditions and operations ever made.
The Secretary first summarizes the
operations of the Treasury for the
past few months, and follows with
detailed statement of the methods and
reasons for some of the steps taken.
while the action of the depart
ment," he says. "in placing large sums
In the national banks in New York
was subjected to some criticism IT
was amply justified by the conditions
as they then existed, and as they have
been disclosed in the light of subse-
quent events"
Prompt action was necessary, he de-
clares, because of the disappearance
in six weeks after the suspension of
the Knickerbocker Trust Company, in
October. of $296125, 400, amounting
substantially, he says, to ene-tenth or
the entire money in circulation in the
United States, of which burden more
than two-thirds fell upon New York.
He says that the gravity of the stu
,r+I NH nv a
fact that pressure upon the money
market was not localized in the United
States. 1t was then, after enormous
public deposits had failed to check
the adverse current, that the Secre-
tary says he decided upon the issue
If Panama Canal bonds and certifi-
Gates of Indebtedness. He continues
THE fact that the national banks
were eXerting themselves to increase
circulation and that the treasury by
these new issues placed at their com
mand means of doing so, undoubtedly
had a moral effect which tended to
check the panic and reduce the pre-
MUM on currency The banks were
hampered, however, before the an.
nouncement of the new Government
issues, by the rapid advance In the
price of per cent bonds. These
bonds sold as high as 40, and even
at this price the supply in the mar
ket obtainable by national banks was
extremely limited in quantity.
1T was with view to relieving this
situation and counteraeting the pre-
MUM on currency which was itself a
stimulus TO boarding and which prac-
tically interrupted exchanges between
different cities, that 1t was decided, on
Nov. II, to receive applications for
subscriptions for $50.0O0.00O in Pan
anna Canal bonds. under the act OF
June %, 1902, and $l0O,000000 in
per cent certificates of Indebtedness
under the act of June 10, 1898. One
OF the direct effects of these issues
was TO afford to the banks the means
Of increasing their circulation If the
proceeds of these issues had been re-
tanned in entirety in the treasury, the
increase in bank circulation would
have been offset by the amount paid
by the banks for the bonds. BY pro.
viding, however, for the transfer to
the banks Of part of the purchase
money as an addition to their hold
ings of public deposits at the time a
very considerable net increase in cir
culation became possible"
The report concludes with this state
ment:
I'm every measure taken the Secre-
tary felt that he was bound to have
regard. not simply to the operations
of the treasury. but their effect upon
the financial condition of the country.
The present head of the department
has not assumed this obligation will |
ingly and would be glad to be relieved
Of 1t, at least in part, by suitable leg
tslation"