The Prescott daily news., 1913-08-02
GOVERNMENT TO DEPOSIT ENoR- NOUS SUMS OF MONEY IN BANKS OF SOUTH AND
 WEST.
2'S WILL BE ACCEPTED
 AT PAR AS SECURITY
Secretary McAdoo, Anticipating Strin- gency, Will Accept Federal, State and Munipical Bonds to Pre-
 vent or Minimize Trouble.

Washington, Aug 2.-Twenty-fve to fifty million dollars of government funds will be deposited in the na- uonal banks of the south and west at once by Secretary McAdoo to fa- cilitate the movement of crops.
 Federal, state and municipal bonds and prime commercial paper will be accepted as security for the money, upon which the banks will pay ? per cent interest
 The motive of Secretary McAdoo in establishing this policy is to antici- pate the money stringency in the late summer and fall, which invariably ac- companies the marketing and move ment of crops, especially when they are unusually large, as the harvest now beginning forecasts. He intends to take time by the fore lock and prevent or minimize the usu- al tightness of money.
 In a statement issued 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 circu- lation.
 Bonds Reach New Low Record.
 The United States per cent bonds, serving as security for most of the national bank circulation, have been depressed recently to new low market records, dropping to 95A during the last few days.
 The secretary's willingness to &C., cept these bonds at par as security for the twenty-five to fifty millions of promised deposits, and the induce ment to the national banks to in- crease their circulation up to the 40 per cent limit, are expected to help in restoring the parity of the de- pressed 2s by creating a new market for them.
 For the first time in history the gov ernment will accept prime conner cial paper as security for deposits. This privilege will be granted, an nounced the secretary, in order to make those special deposits available to banks on securities readily within their reach.
 "The commercial paper subNitted,' added Mir. 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 com mercial paper and bonds must finally be passed upon and accepted by the secretary
 Approved commercial paper will be accepted as security for the deposits at 65 per cent of its face value, and high class state, municipal and other bonds, exclusive of government bonds, at 75 per cent of their market value. Money to Be Placed in Large Cities.
 The additional deposits will be placed with the national banks in the two or three principal cities in each of the states where harvesting IS now in progress and where the demand for money for moving the crops most con- veniently can be met.
 The secretary said it would not be practicable to scatter the deposits among the smaller cities, especially in view of the character of securities necessary.
 The banks will be required to re- turn the money to the public treasury when the crops have been moved. The present suggestion, MT. McAdoo said, is that 15 per cent be repaid in De cember, 30 per cent in January, 30 per cent in February, and 25 per cent in March next.
 Steps are now being taken to carry out the plan" added the secre- tary, "so that the funds may be