New-York tribune., 1913-07-29
Treasury Head Asserts There's
Nothing to Warrant Alarm
Over Government Is,
Which Declined TO
9518 Yesterday.
S3O,OOo,OO0 FALLING OFF
Federal Securities Intrinsically Worth
Par, Says Cabinet Financier--
He Asserts That Fears
of Coming Panic
Are Croundless.
From The Tribune Bureau

|
Washington, July 2S.-Apropos OF the
decline to 95ia to-day of the market
price Of United States 2s, the Secretary
Of the Treasury issued tonight a state-
ment that is certain to attract vide in
terest ard extensive comment.
Secretary McAdoo flatly charged that
this decline was due TO a conspiracy on
the part Of Influential New York City
/ banks" to depress government bonds to
defeat the administration currency bill.
Mr.. McAdoo further intimated that
| il this alleged conspiracy continued
"the department would have to take
action although he did not indicate
the nature Of the course he had in
mind.
The Secretary insisted that there had
been no decline in the intrinsic value
of the government - and that there
was nothing in the administration
measure 70 warrant apprehension re-
garding their future usefulness. In
| fact. he said their value was enhanced
by an amendment now being consid-
cred.
Banks throughout the country own
almost entirely s73o,sS2, 80 Of the 2 per
cents. Their market value to-day IS
approximately s3o,oooooo less than
all the entire issue is used as security
/ for national 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 ) per cent redemption fund de-
posited by the banks with the Treas
ury to care for retirements OF national
bank notes.
! Secretary McAdoo announced II was
NOT his intention to require the banks
70 charge off the present depreciation
below par, but that the banks might
continue to put the bonds at par In
their statements to the Controller or
the currency. at least until some ma
terial change in conditions should
compel the adoption OF another
! course
II is evident throughout the Secre-
tarv's statement that the adminlstra-
ton is decidedly irr:tated and not
little concerned by the recent decline
in the value OF this class Of federal
! securities.
Bid for Rural Allies.
After declaring that the TWO per
cents we're worth par, notwithstand-
ing their decline in the New York
market. Secretary McAdoos state
ment. which was given out in inter-
view form continued:
The idea seems to he that the coun-
try 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 70 the
bill if they can be made TO belleNe
that the proposed currency measure is
going 10 injure these bonds and cause
losses 10 the banks. This is, Of course,
unfounded.
Meantime, il is folly for any bank
to sell government rs at sacrifice BE-
cause Of any apprehended legislation
/ adverse TO government bonds, as no
} such legislation will result.
"ln the 124 years Of its existence, the
oovernment has kept faith scrupulous-
Iy with its creditors, and II is not going
% chanae its honorable character now.
/ II the necessities of any bank obIise u
70 sell bonds at depressed prices, that,
/ of course, is another natter-a matter
| soIely 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 Banking and Currency Commit
/ tee of the House enhanced their in
/ trinsic worth.
"First-Because the banks and all
other holders of per cent bonds are
given a privilege. not now possessed,
of exchanging the IS for IS, without
the circulation rights. at the rate OK
per cent per annum Of their hold
ings. present or hereafter acquired.
So long as they do not make the ex-
change, they may retain or sell and
buy the IS and exercise the circula-
tion privilege attached thereto
"Second-At the end of twenty years
the government will pay at par and
interest all per cent bonds which at
that time remain outstanding In view
Of the fact that the IS have no due
date and are payable after 1890 only
at the option # the government. the
definite promise Of payment at the end