New-York tribune., 1909-12-23
NAY ISSUE BONDS
PAYMENTS FOR CANAL
DRAIN TREASURY.
President. MacTeagh and
-4ldnch Discuss Financial
Situation.
rrrcm The Tribune Rurssul

Washington. Dec. 22-Fresident Taft,
Secretary MacVeagh and senator Al
dr!ch held an important conference this
afternoon on the increasing necessity OF
taking some steps 10 recoup the Treas
ury because of the constant drain pre-
sented by the expenditures for the Pan
anna Canal. The entire situation was
reviewed. including the sdvisahility of
issuing Treasury certificates and Pan
ANA bonds. respectively.
The working balance in the Treasury
et the close Of business to-day amounted
90 So. 10000. whereas IL Is regarded as
desirable not 30 permit this funo 20 fall
below Ss5.ocoooo. snd the general fund
now amounts 20 SIS, s,sSo.eDo. while "
should be siaoeeoeo0 That the work
ing balance should have fallen 20 slight
" mere than So. 100000 is not regarded
az az all alarming. in view OF the fact
that in the panic a. fell 10 SSesoeo IL
is considered wise, however, 10 take some
steps 20 correct the present situation.
The difficulties in the situation which
oonfronts the Secretary of the Treasury
are due 10 the fact that Congress. IN
arranging the fiscal programme Tor the
current vesr. contemplated the reim-
bursement of the Treasury by the
amount expended on the Panama Canal
through an issue Of bonds. The Payne
tariff bin authorized the issue of PAN
ana bonds 70 the amount OF s2eaoos'-
0s0. bringing the total authorization up
20 sS75 600 eeo the estimated cost Of the
canal Congress failed. however. 70
a. Fa-. hank
circulation secured by bonds, so that az
the statute nov reads. the tax on cir
oulstion secured by 3 per cent bonds is
per cent. while y per cent is the
.sx on circulation secured by , per cent
bonds
Immediately following the adjourn
ment Of Congress Secretary MscNeash
called attention 20 the fact that per
cent bonds would, therefore, be superior
20 the , per cents. and an issue Of IS
would result In discrimination against
IN. 2s He declared that he felt IL 20 be
his duty 10 So. thst the = per cents en-
soyed the protection Of q parity, and he
~,ouid therefore, n compelled 20 bor-
row. issue only Treasury certificates.
which Congress had authorized 20 an
amount not exceeding S2oooeoea.
DISBURSEMENTS FOR CANAL
Thus far Secretary MacVesgh has
avoided the necessity of issuing either
bonds or o.rtifcstes. but the Panama
Canal constitutes steady drain an the
Treasury which Congress did not con
template would he met out - the ordi-
nary receipts Approximately Si"oep
has been invested in the canal over and
above the proceeds ~ canal bonds thus
far sold The disburseIpents for the
canal since July ]. 1909. have amounted
- SIG .2as sos. those for the current
month having been slightly more than
81 o00
The serious obstacle 20 issuing Panama
bonds. as contemplated by Congress. is
the inequslitv of taxation or circulation
secured on them. The difficulty 81 main
tanning the price of the . per cents has
been clearly demonstrated.
Another possible deterrent censiders-
fion. however, is the probability that the
Asoal system soon 20 be reported by the
National Monetary Commission. and pre-
sumsbly 20 be adopted by Congress. may
dispense with bond secured currency.
The problems which Secrstsry Mae
VssRh submitted 20 Senator Aldrich.
therefore, were. first. would n not he
wiser for Congress 10 adjust the tax on
bond secured circulation 50 that the
Treasury could be reimbursed ny Panama
bonds instead 81 issuing Treasury GER
tlhobtes. and. second, whether II would
hs wise 90 sol more low interest bear
ine bonds in vieV 30 the prospective re-
oHssniEstion of the monetary system.
10 decision Wss reached on these points
81 to-dsy'a conference. which viii prob
shv hs followed by another meeting Of
no same persons in the near future.
Secretary MscVesgh told the presi-
dent and Mr.. Aldrich that ne could cas-
ily tide over tho situstion until Congress
should hsve time 20 eQualize the circuls-
tion tsN but that in his sudFment some
deanite policy should he adopted as soon
- practicable. This view was concurred
IN by the President and the Senator from
Rhode Isisnd. although Mr. Aldrich
acknowledged that. simply ss the prob
lem could he stated. its solution involved
senae serious difficulties
The Secretary made il plain that were
n not for tho demands ~ canal con
structicn the administration would be
confronted by no necessity Of issuing
either bonds or Treasury certificates
The excess 90 disbursements over re-
ceirts since July ] amounts 60 ss7.sOe. 600,
ene fer this month 90 slightly more than
81 ooo 600. hut the deficit for this wear
tneludes more than $4,000 600 put into
wsrd of 100000 out 81 the Treasury
this month.
Were the current expenses 81 the canal
cefrsyeS and the Treasury reimbursed
Tor past canal eNpenses in excess % the
proceeds from canal bonds. there is iittle
reason 80 believe that any necessity for
O bond issue would arise.