The commercial. (Union City, Tenn.) 190?-193?, 1909-11-12
TARIFF BILL A FAILURE.
Treasury Must Issue U~ertiiicattes Of
Indebtedness.

Indebtedness.
Washington, Nov. Treasury Of
tcials who a few weeks ago declared
that the issue Of certificates of indebt-
edness was unlikely, and were inclined
to expressions of felicity upon the her
pleasing prospect, are constrained to
change their tune. The failure of the
Aldrich-Payne tariff bill as a sufficient
revenue producer means that the adj
ministration will soon be forced to issue
certificates Of Indebtedness, owing to
the continued growth of the treasury
deficit and the steady decline in the
working balance in the treasury.
Such an issue is now certain, but the
administration will try to put it off, as
we'll as the issue of new Panama bonds,
until Congress has an opportunity to
provide for the usual discount for the
certificates when used as a deposit for
securing national bank circulation, and
thus protect the holders of outstanding
2 per cent. bonds from further loss by
depreciation of their holdings.
Another disturbing factor in the situ-
alton, as viewed by treasury officials, is
the fact that the bid for Panama bonds
in New York has fallen below par.
WORKING BALANCE LOW.
These bonds would fall off still fur
ther with the definite announcement that
the government would sell certificates
Of Indebtedness. These securities draw
3 per cent. interest, and if deposited to
secure national bank circulation, will be
subject to the full l per cent. taxation,
instead of one-half of l per cent, as in
the case of Panama and other 2 per
cent. bonds.
Congress ignored the Recommended
ton of the treasury that the usual dis
count for circulation be allowed to GER
tiicatss of Indebtedness. This has had
the effect of prejudicing the 2 per cent.
bonds in the eyes of investors and
banks, with the natural effect that their
value has been steadily declining.
Officials OF the treasury realize that
this slumping condition will be aggra-
waited by an issue of new securities
bearing a higher rate of interest than
the old bonds. Consequently they are
DESTROYS of making no move until Con-
gress can protect the holders of out
standing bonds by special legislation.
However, the general fund in the treas
ury is sinking at an alarming rate and
at the same time the working cash bal
ance is falling low.
ASK BANKS FoR FUNDS.
The Payne-Aldrich tariff law is not
yielding the revenues predicted by its
trainers. There is a deficit for the four
months of this fiscal year of nearly
$24, 600, 900. The total balance in the
general fund is only $SS, 000, 900. OF
this amount only 500, 600, 900 is actu-
ally in The treasury offices. National
banks hold $50, 900, 900, and SO, DOC, 900
is in the Philippine Islands.
Consequently, it is not possible for the
government to come to the aid of the
banks by making more deposits. On
the other hand, it is more likely that
the government will be calling on the
banks for funds. There are now $685.
$50, 900 2 per cent. bonds in the treas
ury as security for bank circulation.
Should these bonds fall below par it
would be the duty of the controller of
the currency, under section 5167, United
States Revised Statutes, to call for adj
ditional deposits of United States bonds.
If this should be done it is certain
to cause great embarrassment in bank
ing circles.