Gage to Buy Bonds

GOVERNMENT SURPLUS TO BE CIRCULATED.
——
SECRETARY WILL EXPEND $20,000,000 IN REDEMPTION—
INTERNAL REVENUE TO DEPOSITORY BANKS.

     The Secretary of the Treasury yesterday responded favorably to the request of the New-York Clearing House committee that he take some steps for replacing part of the government surplus in circulation, and the announcement of his co-operation added much to the strength of the market. His plan of relief is outlined in the following dispatch, received from him by F. D. Tappen, chairman of the Clearing House committee:

     Recognizing the unfavorable influence upon general business affairs of a continued absorption into the public treasury of revenue beyond expenditure, I have directed that incoming internal revenue receipts be placed with national bank depositaries until a balance with each is equal to the par value of the bonds held as security from such depositaries. This will divert about $5,000,000 from the Treasury vaults. The Secretary will to-day invite proposals for the sale to the Government of $20,000,000 United States bonds other than the new twos. It is believed that these steps will obviate the otherwise possible embarrassments which are pointed out in your telegram of yesterday.

     The bonds which the Secretary will buy, if offered at prices satisfactory to him, are those described in this dispatch, received yesterday afternoon from Secretary Gage by Assistant Treasurer Jordan:

     The Secretary of the Treasury hereby gives notice that he will receive and consider proposals for the sale to the government, on account of the sinking fund, of United States 3 per cent bonds, loan of 1908-’18; 4 per cent bonds, funded loan of 1907; 4 per cent bonds, loan of 1925, and 5 per cent bonds, loan of 1904, to an amount no exceeding $20,000,000.
     Proposals should be submitted to the Secretary by letter or telegraph, not later than Thursday, the 12th instant.
     Any bonds accepted to be promptly delivered at the United States Sub-Treasury in New-York, or to the Treasury Department at Washington. The right to reject any or all proposals is expressly reserved.

     It will be noticed that no price is set by the Secretary for any of these classes of bonds, and much doubt is expressed in the Street as to the probability of any large amount of bonds being offered at prices which he would be inclined to accept. For many months the Treasury Department has been buying bonds at prices varying slightly from day to day and figured to realize an annual interest of 1.726 per cent. The Treasury rate for yesterday, for example, was for the 3 per cents 108.5868; for the 4s, 113.3110, and for the 5s, 108.1971. The purchases of bonds for the five months from April 1 to August 28, on the 1.726 per cent basis, aggregated more than $21,000,000, of which more than $16,000,000 were purchased here. One tender of $1,000,000 bonds at the regular price was made yesterday in this city.
     Government bonds were strong yesterday. The 4s of 1925 advanced ½ per cent, as did also the 2 per cents. It was said in some quarters that the invitation of the Secretary was not inspired by recent local money conditions, but that it had been under contemplation for some time.
     Leaving out of the question the peril to the market involved in the possibility of an unfavorable turn in the President’s condition, it is pointed out that the continued absorption by the Treasury of money in circulation is now being supplemented by large withdrawals of funds from this centre for moving the crops, the money market thus having for some time been tending toward a condition of dangerous stringency.
     The increase of about $5,000,000 in bank deposits of public moneys, mentioned in the Secretary’s dispatch to Mr. Tappen, will be effected by increasing from 95 per cent to par the amount of public funds which the depositary banks are allowed to hold against the 2 and 3 per cent bonds deposited by them as collateral.
     No meeting of the Clearing House committee was held yesterday, and the feeling of the members seemed to be that danger of serious trouble was past. Early dealings in the stock market reflected conflicting opinions. Despite the excellent news from Buffalo and in the face of other favorable conditions, initial transactions gave indications of apprehension in certain quarters. There were gains here and there in the list, but with few exceptions these advances were fractional.
     By the end of the first half hour, however, the market showed considerable improvement all around, with St. Paul the central figure. Secretary Gage’s action had a stimulating effect upon the market, although it was not universally commended.
     Call money declined to 3½ per cent in the last hour, and the market at that time was generally strong, with St. Paul once more the feature, on rumors of an extra dividend, in spite of determined opposition by room traders, who later [covered?] at a considerable loss.
     It developed that the reason for the spirited movement in the steel stocks in the last hour was the unconfirmed reports that the strike had been finally settled.
     The temper of the market in the final operations reflected more than anything else the effect of heavy profit taking bought on Saturday and Monday, when the big interests sent in supporting orders.
     Money closed at 3 per cent, the lowest rate of the day.