Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1913-07-31
CHARGES BANKS
WITH CONSPIRACY
Secretary McAdoo Lays Decline
of Government Bonds to
Concerted Action.
CURRENCY BILL THE CAUSE
Folly for Country Institutions
to Sell at a Loss--NO Adj
verse Legislation Is
Planned.
CURRENCY BILL THE CAUSE

Washington. July 2S.-Sccrotary McAdoo
issued a statement tonight fatty charg-
ing that the decline of government two
per cent. bonds to ninety-hvo and half,
now low record was due almost
wholly to what appears to be a campaign
waEcd with every indication of concerted
action on tho part of number Of innu-
cntial New York city banks to cause APP
prchcnsion and uncasucss about these
bonds in order to help them in their
Efforts to defeat the currency bill"
Banks throughout tho country own al
most entirely s730Ss2,1SO Of tho two per
cents. Their market value to-day was
approximately $4,000 600 less than when
tho banks bought them Almost all the
entire issue is used as security for ma
tonal bank notes. At the present price
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. redemp-
ton funds, deposited by tho banks with
the treasury to care for retlrements of
national bank notes.
Secretary McAdoo announced 1t was not
charge off the present depreciation below
par, but that the banks might continue to
put in the bonds at par in their state
nents to the comptroller Of the currency.
at least "until some material change in
conditions should compel the adoption Of
another course"
In his statement, Secretary McAdoo de-
clared tho two per cents. were worth par,
Notwithstanding their decline in the New
York money market, and continued:
The idea seems to he that .he country
banks which hold about two-thirds Of the
two per cent. bonds and Use them "a the
basis for their circulating notes may be
induced to unite with the New York city
banks IN opposition to the bill # tho can
he made to believe that the proposed cur
rencv measure is going to iniure these
bonds and cause losses to the banks
This IS, of course unfounded
Meantime It is folly FOR any bank to
sell government 20 al a sacrifice because
of any apprehended legislation adverse
to government bonds, as no such legisla-
ton Will result"
The secretary said that not only had
nothing occurred to impair the value of
the two per cent bonds hut that the
amendment already adopted by the bank
ing and currency committee of the House
enhances their intrinsic worth.
'1-Because the banks and all other
holders of two per cent bonds are given
a privilege not now possessed. Of ex-
changing the - for IS without the circu-
lation rights at the rate of five per cent.
per annum of their holdings, present or
J., 10
not mako the exchange, they may retain
or sell and buy the IS and exercise the
circulation privilege attached thereto.
"2--At tho end Of n wears the govern
ment will pay at par and interest all two
per cent bonds which at that time remain
outstanding In view Of the fact that the
2s have no due date and are payable
after io2o only at tho option OF the gov
eminent, the definite promise of payment
at the end of 20 years Is distinctly bene-
flcal to the holders Of the two per cent.
bonds"
Tho secretary spoke with amusement Of
the grave statements sent out from New
York to the effect that il the currency
bill Shall pass and government deposits
are put in the federal reserve banks the
two per cent. bonds now used to secure
deposits will DO thrown on the market
and their value thereby impaired.
"As only $40, 9m.nn OF a. 0ut of total
of $3.50 So, 100 are used to secure govern
ment deposits" he said 1T can be readily
seen how trivial this IS. If these bond s
are not used to secure deposits, they can
be used for additional circulation.
Nearly all OF the 2's are owned by the
banks. If the price Is marked down, 1t Is
because the banks themselves are put
ting pressure on the market and depress-
ing the value OF their securities The
fault is their own. II would seem the
part of good sense and good business not
to do it,"