Norwich bulletin., 1913-08-01
Federal Funds
 To Move Crops
MILLIONS TO BE DEPOSITED
 BY GOVERNMENT
IN WEST AND SOUTH
McAdoo to Adopt Policy Directly
 Opposite to That of McVeaeh-U. s. Bonds Accepted at Par as Security.

Washington, July 31.-Twenty five to fifty million dollars of government funds will be deposited in the national banks of the south and west at once by Secretary McAdoo to facilitate the movement of crops. Federal, state and municipal bonds and prime collateral paper will be accepted as security for the money, upon which the banks will pay two per cent. interest.
 To Prevent Money Stringency.
 The motive of Secretary McAdoo in establishing this new policy is to an- ticipate the money stringency in the late summer and fall which invariably accompanies the marketing and move meat of crops especially when the crops are unusually large, as the har- vest now beginning forecasts. He in tends to take time by the forelock and prevent or minimize the usual tight ness of money.
 U. s. Bon : Accepted at Par.
 In a statement tonight the secretary made the significant announcement that government bonds would be ac- cepted at par as security for the new deposits and that the additional money would be placed only with banks which have taken out at least 40 per cent. of their authorized circulation The United States two per cent. bonds serving as security for most of the na- tionat bank circulation, have been de- pressed recently to new low market records, dropping to 95 34 during the past few days. The secretary's will ingness to accept these bonds at par as security for the 25 to 50 millions of promised deposits and the inducement to the national banks to increase their circulation up to the 40 per cent. limit is expected to help in restoring the parity of the depressed twos by creat-
 
 Commercial Paper Accepted as Se-
 curity.
 For the first time in history the gov ernment will accept prime commercial paper as security for deposits. This privilege will be granted, announced the secretary, in order to make these special deposits available to the banks as securities readily within their reach.
 '@The commercial paper submitted, added MT. McAdoo, shall first be passed upon and approved by the clearing house committees of the cities in which the banks offering such paper may be located. All commercial paper and bonds must finally be passed upon and accepted by the secretary.
 Approved commercial paper will be accepted as security for the deposits of 65 per cent of it's face value, and high class state municipal and other bonds, exclusive of government bonds, at 75 per cent of their market value
 Large Cities to Get Deposits.
 The additional deposits will be placed with the national banks in the two or three principal cities in each o4 the states where harvesting is now in progress and where the demand f01 money for moving the crops most con- Veniently can be met. The secretary said it would not be practicable te scatter the deposits among the smaller cities, especially in view of the charac- ter Of securities necessary.
 The banks will be required to return the money to the public treasury when the crops have been moved. The pres ent suggestion is. Mr. McAdoo said that 15 per cent, be repaid in Decem- Der, 30 per cent. in January, 30 pel cent. in February and 25 per cent, in March next
 Directly Opposite of MacVeagh's
 Course.
 Steps are now being taken to carry out the pian,'' added the secretary, "se that the funds may be promptly avail able for the movement of the crops The names of the banks to receive the deposits and other details of the ar engagement will be announced later
 This new policy IS the anttthesis o' that adopted by former Secretary oI the Treasury MacVeaghs who 8 yeaz ago declined to make government de- positS to relieve the tight money mar ket on the ground that moderate sur plus federal funds at that time should be held as reserve to be utilized al some possible critical stage.