The Manning times. [volume] (Manning, Clarendon County, S.C.) 1884-current, 1913-08-06
BANKS HURT BONDS
SECRETARY OF The TREASURE
M'ADOO ISSUES STATEMENT
PROTECTS SMALL BANKS

rnUlLGlO 0MALL DAlNnJ
Declares That Decline of Government
Two Per Cents. is Due to Campaign
Waged by New York Banks to
Cause Cneasiness About Securities
in Order to Defeat Currency Bill.
Secretary McAdoo issued state
ment Monday fatty charging that the
decline Of government two per cent.
bonds to 95 and a half-a new low
record-was due almost wholly to
what appea $ to be a campaign wag-
ed with every indication Of concerted
action on the part Of number Of in
1uential New York city banks to
cause apprehension and uneasiness
about these bonds in order to help
them in their efforts to defeat the
currency BILL
Banks throughout the country own
alEost entirely s730,SS2,130 Of the 2
per cents. Their market value to-
day was approximately s30,000,Ooo
less than when the banks bought
them. Almost 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 five per cent. redemp-
ton found, deposited by the banks
with the treasury to care for retire
ments of national bank notes.
Secretary McAdoo announced it
was not his intention to require the
banks to charge off the present depre-
citation below par, but that the banks
might continue to put in the bonds at
par in their statements to the comp
troller of the currency, at least "un-
til some material change in condi-
tions should compel the adoption OF
another course.
In his statement Secretary McAdoo
declared two per cent. were worth
par-notwithstanding their decline
in the New York market, and con-
tinued:
1.-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 circu-
lating notes, may be induced to unite
with the New York city banks in op-
position to the bill if they can be
made to believe that the proposed
currency measure is going to tnjure
tthese bonds and cause losses to the
banks. This Is, Of course, unfound-
ed.
Meantime, it Is folly for any bank
to sell government 2's at sacrifice
because of any apprehended legisla-
ition adverse to government bonds. as
no such legislation will result. In
the 124 years Of its existence the
government has kept faith scrupu-
lously with it's creditors, and it is not
going to change its honorable char
acter now. If the necessities Of any
bank oblige it to sell bonds at de-
pressed prices, that, of course, is an
other 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 amendr ,nt already adopted
by the banking and currency COM
mittee Of the House enhances their
intrinsic worth:
"1. Because the banks and all
other holders Of 2 per cent. bonds
are given a privilege, not now pos
sessed, Of exchanging the 2's for 3's
without the circulation rights at the
rate of per cent. per annum of their
holdings, present or hereafter acquir-
ed. So long as they do not make the
exchange, they may retain or sell and
buy the 2 per cent. bonds and exer-
else the circulation privilege attach
ed thereto.
"2. 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 2's have no
due date, and are payable after 1880
only at the option Of the government,
the definite promise OF payment at
the end of twenty years is distinctly
beneficial to the holders Of the 2 per
cent. bonds"
The secretary spoke with amuse-
ment Of the grave statements sent
out from New York to the effect that
if the currency bill shall pass and
government deposits are put in the
federal reserve banks, the 2 per cent.
bonds now used to secure deposits
will be thrown on the market and
their value thereby impaired. AS
only s13.9O0,000 Of the rs out of a
total Of s7s0.sS2,130 are used to Sc
cure 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, it is because the banks them
selves are putting the pressure on the
market and depressing the value Of
their securities. The fault Is their
| own. It would seem that part OF
| good sense and good business not to
do it, The secretary expressed the
hope that the process, II continued,
will not be carried to point where
the department will have to take &C
ton.
"There is and always has been