Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-08-01
Secretary McAdoo's Motive.

The motive of the Secretary of the
Treasury in establishing this new policy
is to anticipate the money stringency in
the later summer and fall, which invari-
ably accompanies the marketing and
movement Of crops, especially when the
crops are unusually large, as the harvest
now beginning forecasts. He intends to
take time by the forelock and prevent or
minimize the usual tightness of money.
In a statement announcing the plan
Secretary McAdoo made the significant
announcement that government bonds
would be accepted at par as security for
the new deposits, and that the additional
| money would be placed only with banks
which have taken out at least 40 per
| cent Of their authorized circulation. The
United States per cent bonds. striving
| as security for most of the national
bank circulation, have been depressed re-
Gently to new low market records, drop
| ping to 95A during the past few days.
The willingness of the Secretary or the
| Treasury to accept these bonds at par as
| security for the twenty-five to fifty mil
| lions of promised deposits, and the in
| ducement to the national banks to In
| crease their circulation up to the 40 per
| cent limit, is expected to help In re-
storing the parity of the depressed Is by
creating new market for them.
Approval of Commercial Paper.
| Tho commercial paper submitted"
| added Mr. McAdoo shall first be passed
upon and approved by the clearing house
committees of the cities in which the
banks offering such paper may be To-
Gated. All commercial paper and bonds
must finally be passed upon and accept
ed by the Secretary"
| Approved commercial paper Will be ac-
copied as security for the deposits at %
per cent Of its face value, and high-class
state, municipal and other bonds. exclu-
sive of government bonds, at 70 per cent
Of their market value.
The additional deposits will be placed
with the national banks in the two or
three principal cities in each OF the states
where harvesting Is now in progress and
where the demand for money Tor moving
the crops most conveniently can be met.
| The Secretary said 1t would not De prac-
ticable to scatter the deposits among the
smaller cities, especially in view of the
character Of securities necessary.
| The banks. will be required to return the
money to the Treasury when the crops
have been moved The present suggestion
| is, Mr. McAdoo said, that Is per cent be
| repaid in December: 30 per cent In Janu-
ary: 30 per cent in February, and rs per
cent next March.
Banks and Details Announced Later.
"steps are now being taken to carry
out the plan.'' added the Secretary. so
4
able for the movement Of the crops" The
names of the banks to receive the de-
posts and other details Of the arrange
ment will be announced later.
This new policy Is the antithesis OF that
adopted by former Secretary MacVeagh
of the Treasury Department. who year
| ago declined to make government deposits
| to relieve the tight money market on
the ground that the moderate surplus
| federal funds at that time should be held
as n reservoir to be utilized at some pos
sible critical stage.
With the net balance in the general
fund TODAY amounting to nearly $132. Co.,
COO Secretary McAdoo has taken the
| stand that the government should an
| ticipate the situation by placing deposits
| where and at the time they are needed.
II the full $5O,OOOOOo Is depositeo. TINS
| step will temporarily nearly double the
| governments deposits with the banks
which at the present time hold $5S.OOO.OOO
| of federal funds.
Just as Secretary McAdoo was an
| noIncing his plan, Senator Illlman OF
| South Carolina was issuing a statement
| declaring that unless Congress acted
| Quickly to provide an emergency cur
| rency the cotton planters OF the south
| would lose hundred million dollars
through inability to get money to move
their crops.
Senator Tillman's Statement.
Senator Tillman of South Carolina
issued statement last night. urging
Congress to take quick action for the re-
lief of the southern cotton planters. He
said:
secretary McAdoo is well informed as
to the business conditions in the United
states, and I am willing to leave 1t to
his good judgment as to. what collateral
shall be required" said the senator.