The Birmingham age-herald., 1911-01-30

oulation privilege on these bonds, off cias of the treasury department, who act as MT. MacVeagh's financial cabinet say there is no reason to finance the Panama canal out of the general funds of the government.
 Hence there is no connection between the expenditure of funds to pay for the canal and the country's circulating medium. Currency, it is pointed out, is already too redundant as indicated by rising prices the world over.
 Too Much Gold Produced
 The general rise in prices throughout Europe and In this country, according to information obtainable by financial ex- perts and statisticians, is due to large in- c1eases in gold production, and in the increased circulation of currency notes in the United States. The immense increases in gold production have added a great deal of additional wealth to the money supply, hence in this country and to a much less extent abroad, the money sup ply cannot be controlled. Unnecessary additions to the currency of a nation can be controlled, however. if a wise admin istration of the finances is exercised by the government, says Secretary Mac Veagh
 To accomplish these results, Secretary MacVeagh wants Congress to give him the necessary authority to issue cer- tain amount of Panama bonds as an OK pertinent. and if if Shn,tIJ ho to place the whole issue before the pub lie in the same manner This necessarily means that the Secretary will have to take the responsibility of floating a big loan, which, if met by the Investigating public and financial interests of the coun- try, would stamp MT. MacVeagh as one of the leading fnanciers of the admin istration and add considerable prestige 10 the republican cause in the next presf- dential campaign
 The national monetary commission, of which Senator Aldrich is chairman. will, it is said propose a plan to Congress looking to the reorganization of the bank note issue, pending issue of bonds and other methods of finance for the better rlent of the financial system One of the principal recommendations it is expected to make is said to be issuance of bonds
 
 their earning power solely, and without regard to circulation privileges.
 Interest Too Low
 One of the principal offsets to the idea suggested by Secretary MacVeagh is the fact that It is considered doubtful whether there is an investment market in the United States for 2k per cent bonds. when the bonds of European govern ments, such as England, France or Ger many. yield per cent Because of these facts the treasury department has been conducting an investigation of the selling prices and earning powers of the leading bond issue; of other countries and inter- viewing and corresponding with busi- ness men and bankers throughout this country with idea of finding the proper rate at which United States bonds could be issued and absorbed for in vestment purposes, without regard to cir culation privileges.
 The bonds of the District of Columbia. direct obligation of the United States, which was issued at an authorized rate of 3.65 per cent, have been absorbed almost entirely by investors within the district and none of them are used to secure circulation.
 It is considered, therefore, that if an issue of such bonds is absorbed in such a small city as Washington, an issue which contemplates the entire country and would extend abroad, would meet with like success. It is pointed out that there should be no opposition to the plan of issuing bonds without the circulation privilege, as it has been tried and found successful in other countries and in com ,nd'ities in this country. Some municipal bonds of American cities have been financed in this way, and according to Secretary MacVeagh there should not be opposition from Congress to the idea if the federal government should take ad- vantage of plan that has been tried numbers of times and found highly sue eessful.
 Example of Finance District of Columbia bonds are listed | on the market at 105L, and at this price | bring a return rate of interest at 3in per cent per annum. According to ex- rerts of the treasury, who point to this example of finance as ar argument s1:b s'atiating Secretary MacVeagh's attitude in regard to the Panama issue this indi- cates that the credit of the ITnted states, when divorced from the fictitious 1 appearances due to the circulation priy- iiege, would not permit the issuance of a bond yielding less than per cent. Hence the Panama bonds which are a direct | ooiSatoh oi the government, should be listed so they can bear the same interest l rate.
 For the purpose of testing this plan MT MacVeagh probably will ask Congress for authority at this session to issue s50,- | 00O,Oco of Panama canal bonds without the circulation privileges
 | If issued the bonds will be of small de- nominations, so that many investors will have chance to obtain a few hundred dollars worth of the bonds. The bonds will also be smaller in size. and not as fancful as other bonds that have been issued by the government in the past.
 It is expected by Secretary MacVcagh that the bond issue can be placed on the