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
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
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
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
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.