The sun. [volume] (New York [N.Y.]) 1833-1916, 1913-07-29
Charges They Have Depressed 9
Per Cents. to Help De-
feat Currency Bill.
Az INQUIRY MAY FOLLOW
Treasury Chief Certain Measure
Will Not Be Disastrous
to Securities.

wAsHrNGroN, July 2s.--Secretary OF the
Treasury william q. McAdoo charged to-
day that influential New York city banks
are In a conspiracy to defeat the Admin
,s,ra,ion currency bill He contended that
the depreciation OF the 2 per cent. United
states bonds below par Is a result Of con-
Cer.ed effort on the part Of these banks
and is intended to help them In their cam
paisn against the currency measure.
The Secretary. In a formal statement.
charged further that the intention OF these
big New York financial institutions Is to
incite the country banks. which hold about
.vo-thrds OF the per cents. into oppos-
ing the Administration bill on the ground
tina, IT will injure the bonds. and so cause
large losses to the banks. The Secretary
hinged his statement to an answer to an
inquiry which had been made as to
whether 1t was his purpose to call on the
national banks for additional security be-
cause OF the depreciation Of the IS. He
said 1t was not his intention to take such
action at this time and expressed the hope
tha, the banks would not so "depress' the
value Of their security as to necessitate It.
statement Causes stir.
The issuance OF Mr.. McAdoos blast
against the New York banks caused stir
IN official circles here tonight. In many
quarters the belief was entertained that
the step was taken by Mr.. McAdOO as an
official OF the Wilson Administration de-
Tending the currency measure for which
the Administration stands sponsor. rather
no
Department.
There was strong tendency here to
regard the Mc.Adoo statement as having
been issued very much in the same spirit
as was President Wilson's statement on
the lobby, which resulted in the investi-
cation BY "A committee OF the Senate and
many disclosures The President made
his attack on the lobby frankly for the
purpose Of causing backfire against the
forces which were opposing the Admins
,ration tariff bill and with "a view to
a-ousing the sentiment Of the country to
the support OF the measure. AS the lobby
Investigation has progressed. friends OF
the Administration have become convinced
that it has had a very salutary effect on
ths.-sssta -A1l- They attribute to II. In
large measure. the apparent Sc with
which the bill has gone forward thus far.
II is believed that Mr.. McAdoO Issued
his statement for the purpose OF damn
ing" in advance the campaign which he
believes tho New York banks have begun
against the currency measure and OF In
spring in the people Of the country the
belief that the Interests are fighting the
measure which President Wilson Is trying
10 force through Congress. 1t Is likely
TO lead to a Congressional inquiry into the
alleged conspiracy. Here is the McAdoo
statement:
The Secretary has been asked II 1t Is
the purpose OF the Department to call on
the national banks for additional security
because the 2 per cent. bonds are selling
below par.
Banks Blamed for Decline.
The Secretary said that while the law
conferred that discretionary power on the
Comptroller Of the Currency. 1t Is not his
intention to require the banks to charge
on the present nominal depreciation below
par Of the per cent. bonds. 30 far as
the Department Is concerned the banks
may continue to return the per cent
bonds at par In the statements they make
to the Comptroller. This policy will con-
tinue unless some material change In con-
d.tions should compel the adoption OF an
other course.
The Secretary said that the 2 per cent
bonds are worth par Notwithstanding their
decline in the New York market-a de-
cline due not to any impairment OF their
intrinsic value but almost wholly to what
appears to be a campaign waged with
every Indication OF concerted action on the
par, Of number Of influential New York
city banks to cause apprehension and un-
easness about these bonds In order to
help them in their efforts to defeat the
currency bill.
The idea seems to be that the country
banks. which hold about two-thirds OF the
? per cent. bonds and use them as the
basis for their circulating notes. may be
induced to unite with the New York city
banks in opposition to the bill II they can
be made to believe that the proposed cur
Iency measure Is going to inJure these
bonds and cause losses TO the oahks
This is 4 course unfOunded.
Meantime the Secretary said that 1t Is
folly FOR any bank to sell Government ?s
at a sacrifice because Of any apprehended
LEGISLATION adverse to Government bonds,
as no such legislation will result. In the
.2i Years Of its existence the Government
has kept faith scrupulOusly with its credi-
tors and 1t Is not going to change It's
honorable character now.
Nalue Of Bonds UnimpaireS.
III the necessities OF any bank obllge
II 10 sell bonds at depressed prices that
Of course, Is another matter-a matter
solely for the bank to determine.
The Secretary said that not only had
nothing occurred to impair the value Of
the per cent bonds. but that the
amendment already adopted by the Bank
INK and Currency Committee Of the House
enhances their intrinsic worth.
First, because the banks and all other
holders Of 2 per cent. bonds are given
privilege not now possessed Of exchanE-
ing the IS for 3s without the circulating
rights at the rate OF 6 per cent. per an
mum OF their holdings present or hereafter
erquired. So long as they do not make
the exchange they may retain or sell
AID buy the 2 per cent bonds and exer-
Csc the circulation privilege attached
thereto
Second at the end Of twenty years
Continued on Fourth Pose.