Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1913-07-29
TUESDAY, JULY ae, 1913.
MeADoo IS ON
Secretary Of the Treasury Calls Trick
of New York Banks.


Secretary Of the Treasury Calls Trick
of New York Banks.
Chairman McAdoo issued state
ment last night fatty charging that
the decline Of government two per
cent bonds to 95s, new low record.
was due almost wholly to what ap-
pears to be campaign waged with
every indication Of concerted action
on the part of number Of infuen-
tial New York city banks to cause ap-'
prehension .Crand uneasiness about
these bonds in order to help them in
their efforts to defeat the currency
bill.
Banks throughout the country own
almost entirely $730,Ss2,1s0 of the
two per cents, Their market value
today was approximately $4,000, 900
less than when the banks bought
them. Almost the entire issue Is
used as security for national bank
notes. At the present time, however.
the discrepancy between the market
value and the issues Of notes against
the bonds is covered by what is
known as the five per cent redemption
fund, deposited by the banks with the
treasury to care for retirements OF
national bank notes.
/ Secretary McAdoo announced II was
not his intention to require the banks
to charge Off the present depreciation
below par, but that the banks might
continue to put in the bonds at par
in their statements to the comptroller
of the currency at least until some
material change in conditions should
compel the adoption Of another
course" ~ "e.
In his statement, Secretary McAdoo
declared two per cents were worth
Notwithstanding their decline in
the New York market and continu-
led: H.b F pi 9
"The idea seems to be that the
thirds Of the two per cent bonds, and
use them as the basis for their cir
culating notes, may be induced to
unite with the New York city banks
In opposition to the bill IL they can
be made to believe that the proposed
currency measure Is going to injure
these bonds, and cause losses to the
banks. This, OF course, Is unfounded.
Meantime. It Is folly for any bank
to sell government two's at sacri-
fee because Of any apprehended legis-
lation adverse to government bonds.
as no. such legislation will result. In
the 124 years Of Its existence, the gov
ernment has kept faith scrupulously
|xryfk tko L.
to change It's honorable character
now. II the necessities of any bank
oblige It to sell bonds at depressed
prices, that, OF course, is another mat
ter-a matter solely for the bank to
determine" tI 5.sa III
The secretary said that not only
had nothing occurred to impair the
value OF the two per cent bonds, but
that the amendment already adopted
by the banking and currency COM
mittee Of the house enhances their
intrinsic value.
81. Because the banks and all
other holders Of two per cent bonds
are given q privilege, not now pos
sessed, Of exchanging the two's for
three's without the circulation rights,
mum OF their holdings, present or
hereafter acquired. So long as they
| do not make the exchange, they may
retain or sell and buy the two per
cent bonds and exercise the circula-
ton privilege attached thereto.
"2. At the end Of 20 years, the
government will pay at par and in
terest all two per cent bonds, which
at that time, remain outstanding. In
view of the fact that the two's have
no due date, and are payable after
1880 only at the option Of the gov
ernment, the definite promise of pay
ment at the end of 20 years, Is dis
tinctly beneficial to the holders Of the
two per cent bonds"
The secretary spoke with = amuse-
ment Of the grave statements sent
out from New York to the effect that
II the currency bill shall pass and
government deposits are put In the
Federal reserve banks, the two per
cent bonds now used to secure de-
posits will be thrown on the mar
ket and their value thereby impaired.
AS only $13, ,900,0 of the two's out
ofaa total Of s7So,SS2, ,130 are used
TO secure government deposits, 1t can
readily be seen how trivial this Is. II
these bonds are not used to secure
deposits they can be used for ad-
ditional circulation.
Nearly all Of the price Is marked
by the banks. II the price Is marked
down, 1t is because the banks them
selves are putting pressure on the
market and depressing the value Of
their securities. The fault is their
own. It would seem the part Of
good sense and good business not to
do it, The secretary expressed the
hope that the process IL continued,
will be carried to a point where the
department will have to take action.
There is and always has been, a
narrow market for the two per cent
just as there is for many inactive, al
though high-grade corporation bonds,
and everyone knows how easy IL Is
to put up or down the quotations for
such bonds .i, l. d5 ls-
"The department has, because Of
its relation to the banks and its nec-
essarily important part In the finan-
cial affairs of the country, a deep
interest in the welfare Of the banks.
In the stability of the financial situa-
ton and in the continuance of the
prosperity now being experienced by
the agricultural and industrial enter
prises and general business" For
these reasons the secretary, said he
had hoped that the banks would not
consider a suggestion from him Inn
pertinent. -
In conclusion the secretary said
that there is not going to be any
financial trouble and that the large
crops now in prospect are going to
be moved without difficulty: and that
the powers Of the department will
be exercised in their greatest ampli-
tude for the protection Of the busi-
ness interests Of the country.
McLaurin in Anderson.--In a private
letter to an Anderson friend, Senator