The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1909-11-08
GOVERNMENT BONDS
WORRYING OFFICIALS
Sales Below Par One of
Several Facts Causing
Anxiety.

Sales Of Government bonds below par
IN the last day or two are giving Treas
ury officials no little anxiety. The drop
ping of bonds below par is one Of sew
eral facts surrounding the Treasury
situation which Is calculated 10 give
these officials worriment.
Sales Of Panama , per cent bonds have
been made lately at s95s, while the 2
per cents Of 1890 got down yesterday to
100 Lie. Not since 1879 has a United
states Government bond changed hands
for less lhan its face value until this
week.
It appears that heavy sales of blocks
OF bonds by national banks have forced
down the price. The fall in price Of
the bonds has caused much Of stir in
financial circles. and inquiries have
reached the Treasury as to what is go
ing 70 be done about It. The Treasury
has resorted to various expedients IN
the past for strengthening the market
for Government bonds, and financiers
have got into the habit of looking 20
the Treasury Ia every such emergency.
Up To MacVeagh
Secretary OF the Treasury MacVeagh
will return to Washington next week.
It will be up TO him to say whether
anything shall be done about the bond
situation. Thus far there is no indica-
ton he viii DO anything about II. He
is not much in favor Of ''paternalism"
on the part of the Treasury However,
the bond situation, together with the
fact the Treasury Is accommodating a
good-sized deficit and IS steadily running
behind. with a rather small available
cash balance. are features OF the fiscal
situation calculated 10 make the Secre-
tary sit up nights.
What he Is hoping for IS that as soon
as Congress meets It viii take action
10 equalize the tax on circulation based
on 2 per cent bonds and per cent bonds,
and then he VIII offer an issue
of 8 per cent Panama bonds. He does
not want to issue certificates of in
debtedness before Congress meets, or at
all, but may be compelled 70. If he
can woTry along he trusts for prompt
action by congress when it gets together
IN December.
No Action Contemplated.
At the Treasury It was said today no
action was contemplated by reason Of
the low price Of bonds. At the Office
OF the Comptroller. when attention was
directed 10 the fact that under the ma
tional banking law the Comptroller is
authorized, if the value OF Government
bonds deposited to secure circulation
falls below par, TO require banks 70
make up the depreciation, II was said
there was no necessity for resorting to
this. The law has never been made
use OF, and 1t was pointed out the Gov
eminent was fully protected and had no
thought OF taking such step.
The low price of the ? per cents raises
the question whether the Government
will not find il difficult to dispose to
advantage of the 3 per cent bonds which
IL is expected TO issue carly IN the win
ter. It Is supposed, however, that pri-
vate persons viii snap them up readily
enough IL the banks are not disposed
70 pay a fair price for them
One Explanation.
This movement OF the per cent
bonds TO a low level is looked on in
some quarters as part OF a scheme Of
large banking interests TO drive the
Government out of the business Of is
suing per cent bonds, forcing II 10
oner bonds OF higher interest rate
II is pointed out that IL the central
bank plan obtains and the bond-secured
circulation is abolished. il viii be use
less for the banks to hold bonds bearing
only per cent interest. Banks nat
urally would want the rate Of 8 per
cent or higher established
Talk was heard in the special session
OF a movement 10 depTeciate the 2 per
cents and drive the Government 20
bonds OF per cent or higher. The new
Panama bonds authorized are per
cents. The question Is how far the de-
preston IN 2s now IS due 10 such a
scheme. Treasury officials today would
not discuss it.