The Washington herald., 1909-08-07

New York. Aug Cit has been an
nounced In banking circles that the Treas
ury will issue short-term notes TO finance
its necessities until the revenue to be de-
rived from the new tariff bill Is aseer-
tained
Authority for issuing this form OF gov
ernment obligation is found in section 40
OF the new tariff law, which empowers
the Secretary OF the Treasury to borrow
such sums as may be necessary to meet
public expenditures, not in excess OF $780,
100000. upon certificates Of Indebtedness
running not longer than a year and bear
ing interest at not more than 3 per cent.
WOuId Protect Present Bonds.
1t was learned that the intention to
finance the government in this way orig
mated primarily from a desire on the
part OF the Treasury officials 10 protect
the existing issues OF per cent bonds.
OF these Is there are at present outstand-
ing SsSoSS2,000, $640,524.0O0 being held as
security for circulation and paying a cir
culation tax OF One-half per cent.
The new tariff bill gives the Secretary
Of the Treasury authority 20 issue $500
$4,000 additional Panama bonds at 3 per
cent, equally available as a basis FOR na-
| tional bank note circulation. These bonds
are also available for circulation, and un-
less some means Is taken 20 equalize the
interest yield upon them when so used
with the present yield Of the IS. their
ftotatiOn at this time would result in q
marked depreciation Of the earlier fota-
tions.
Until some legislation Is enacted by
which the circulation tax is so adjusted
or other means adopted 70 destroy the
Interest diferential on the two classes
Of bonds when used for circulation pur-
poses. the Secretary Of the Treasury. II
Is said, has definitely made up his mind
70 hold of as long as possible from Is
suing the new bonds.
within His Legal Rights.
In thus delaying the new issues. the
Secretary would be within his legal rights,
as the authorization leaves the issuance
Of the new bonds 70 his discretion, while
the authorization OF the certificates OF
Indebtedness would put the Treasury. De
partment in such a fiscal position as 70
permit OF its waiting for the additional
legislation.
Aside from the policy OF protecting the
? per cent outstanding bonds. the Sec
reary OF the Treasury desires 70 arrive
at some adequate idea OF tho volume OF
revenue which he can expect from the
new tariff law before issuing permanent
obligations against the credit OF the gov
ernment, and he Is understood 20 think
the execution OF such interim financing
as may he necessary comes nj a pecul-
iarly opportune time
WOuId Aid Crop Movement.
BY issuing these short-term notes dur
/ ing, or just prior 70 the crop moving
season. he anticipates that the banks by
using them as the basis OF additional
/ circulation. VIII be enabled 20 relieve the
money stringency 70 an appreciable ex-
tent while at the same time the maturity
OF the notes themselves may be so rec
koned as to provide the retirement OF
the additional currency at a season OF
the year when money is likely again 10
become redundant.
While 6hOrt-term notes are used from
time 10 time IN Europe under the title
OF exchequer bills, 20 provide for tenn
porary deficiencies. they have never come
INTO any extensive use IN JnlS country.
That section OF the tariff bill conferring
this power upon the Secretary Of the
Treasury is an amendment OF section
%. OF the act OF 1S9S. which authorized
the Secretary Of the Treasury TO borrow
on short-term paper up 10 $lO0,O00.00O
This power was used but once. when
Secretary Cortelyou issued $15.OO0.GO0 s.
per cent notes during the panic 20 be
used as the basis Of additional circula-
ton. His action was at that time severe
ly criticised on the ground that the au-
thorization was originally given as a war
measure and the notes were withdrawn
at the earliest opportunity.