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The Commoner
VOL. 13, NO. 28
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Secretary McAdoo's Charge
to Banking Interests
An Associated Press dispatch from
Washington, under date of July 28,
follows:
Secretary McAdoo issued a state
ment Hatly charging that the decline
of government two per cent bonds
to 95, a now low record, was duo
"almost wholly to what appeared to
1)0 a campaign waged with ovory In
dication of concerted action on tho
part of a numbor"of influential New
Yorlc city banks to cause apprehen
sion and uneasinef-s about these
bonds in order to help them in their
offorts to defeat tho currency bill."
Banks throughout tho country own
almost entirely $730,882,130 of tho
two per cent bonds. Their market
valuo today was approximately $30,
000,000 less than when the banks
bought them. Almost rll tho entire
Issue is used as security for national
bank notes. At the present price,
however, tho discrepancy between
the market value and the Issue of
notes against tho bonds is covered by
what is known as the five per cent
redemption fund, deposited by the
banks with tho treasury to care for
retirements of national bank notes.
Secretary McAdoo announced that
It was not his intention to require the
banks to charge off tho present de
preciation below par, but that the
banks might continue to put in the
bonds at par in their statements to
the comptroller of the currency, at
least "until some material change in
conditions should compel tho adop
tion of another course."
In his statement Secretary McAdoo
declared that two per centi were
worth par, notwithstanding their de
cline In the Now York market, and
continued:
"The idea seems to be that the
country banks, which hold about two
thirds of the two per cent bonds, and
uqe them as the basis '-r their cir
culating notes, may be induced to
unite with tho New York city banks
in opposition to the bill, if they can
be made to believe that tho currency
measure is going to injure these
bonds and cause losses to the banks.
That is, of course, unfounded.
Meantime It is folly for any bank
to sell government two 'per cents at
a sacriflco because of any apprehend
ed legislation adverse to government
b6nds, as no such legislation will re
sult. In tho 124 years of its exis
tence, the government has kept faith
scrupulously with its creditors, and
it is not going to change its honorable
character now. If the necessities of
any bank oblige it to sell bonds at
depressed prices, that, of course, is
another matter a matter solely for
the bank to determine."
The secretary said that not only
had nothing occuirod to impair tho
value of the two per cent bonds, but
that the amendment already adopted
by the banking and currency commit
tee of tho house enhances their in
trinsic worth.
First Because the bank and all
other holders of two per cent bonds
are given a privilege, not possessed,
of exchanging tho twos for the
throes without the circulation rights.
promise of payment at the end of
twenty years is distinctly beneficial to
the holders of the two per cent bonds.
Tho secretary spoke with amuse
ment of the gravo statements sent out
from Now York to tho effect that if
tho currency bill shall lass and gov
ernment deposits are put in the fed
oral reserve banks, tho two per cent
bonds, now used to secure deposits,
will bo thrown on tho market and
their value thereby impaired. As
only $13,900,000 of the twos out of
a total of $730,882,130 are used to
secure government deposits, it can
bo readily seen how trivial this is. If
the bonds are not used to secure de
posits they can be used for additional
circulation.
"Nearly all of the twos are owned
by the banks. If the price is marked
down, it is because the banks them
selves are putting pressure on the
markot and depressing ihe value of
their securities. The fault is their
own. It would seem the part of good
sense and good business not to do it.
Tho secretary expressed 41io hope that
the process, if continued, will not be
carried to a point where the depart
ment will have to take action.
"There is and always has been a
narrow market for the two per cent
bonds, just as there is for many in
active, although high grade corpora
tion bonds and everyone knows how
easy it is to put up or down the quo
tations for such bonds, especially
when a favoring state of mind has
been skillfully created.
"The department, because of its re
lation to tho banks and its neces
sarily important part in the financial
affairs of the country, has a deep in
terest in the welfare of the banks, in.
tlfe stability of the financial situation,
and in a continuance of the prosper
ity now attaching to agricultural and
industrial enterprises and general
business.
For these reasons the secretary
said that he hoped thrt the banks
would not consider a suggestion from
him as impertinent. In many quar
ters there is a disposition on the part
of the banks to restrict legitimate
credits. There is nothing in the sit
uation to warrant such a course. The
banks should not put undue restraint
on business. Should any unusual
stringency appear, the secretary said
that it could easily be met through
rosort to the $500,000,000 emer
gency currency, now held in reserve,
which can be issued if the banks need
it or by use of the resources of the
treasury department, or both.
In conclusion the secretary said,
with emphasis, "that there is not go
ing to be any financial trouble, and
that large crops now in progress are
going to be moved without difficulty
and that the powers of the depart
ment will be exercised in their great
est amplitude, for the protection of
the business interests of the coun
try."
CAUGHT IN THE ACT
(From the Denver News.)
case. He has had his chance and
failed.
If the administration is a success
nobody will have to explain anything.
The people can understand success,
but they cannot always comprehend
failure.
The president should have his way
untrammeled as far as the general
principles of his program is con
corned. As to the details he himself
is not disposed to be arbitrary.
He has Indicated what he wants
done and laid down the keel of the
work. The superstructure he insists
shall correspond symmetrically and
effectively, and it is not an unreason
able insistence.
Congress will have a wide latitude
on the banking and currency bill just
as it has on the tariff bill. The pres
ident is a stickler only for results.
Whatever will produce the satisfac
tory kind is agreeable to him.
South Bend (Ind.) News-Times.
there is no possible suspicion that
he has any ulterior motive or inter
est whatever. There has been alto
gether too much of "-at kind of in
terest in Mexico. Washington
Times.
AN OLD NURSE
Persuaded Doctor to Drink Postnm
WHY NOT?
Well, why shouldn't President
Wilson demand that the .democratic
caucus shall stand behind his bank
at the rate of five per cent per an- ing and currency reform plan or any
num of their holdings, present or
hereafter acquired, so long as they
do not make tho exchange, they may
retain or sell and buy the two per
cent bonds, and exorcise the circula
tion privileges attached thereto.
Second At tho end of twenty
years, tho government will pay at
par and interest all two per cent
bonds which at that time remain out
standing. In view of the fact that
the twos have no due date, and are
payable after 1930, only at tho op
tion of the government, tho definite
other measure that promises relief
from present national ills?
President Wilson is the- respon
sible party and he is shirking noth
ing. If the reforms he advocates and
wliich he is pledged to introduce fail,
if his administration falls r.hort of
what the country expects of it he will
nave to bear the bru it of the blame.
Congressmen can go to their con
stituents and say, "We have deferred
to the president's wishes, we have
done tho best wo could." Nothing
the president can say will help his
A QUESTION OF QUALIFICATIONS
Some protest is heard against se
lection of John Lind as special en
voy to Mexico. It is said he has al
ways lived just as far as possible
from Mexico, and knows just as, lit
tle as possible about it. Ergo, he is
not equipped for his present mission
Perhaps it is opined that a man
with a million acres of grazing land
in Mexico would see with a clearer
vision.
Or one with a lot of mining con
cessions and an ardent desire for
peace at any price, that he might
develop them.
Or somebody with a lot of petro
leum lights granted by Diaz and a
haunting fear that a new regime
might take them away from him.
Perhaps Henry W. Taft, who was
of all Americans the most feared by
Mexican progressives because he was
deep in Mexican enterprises and the
influential brother to the president
of this republic perhaps Henry W.
Taft would suit the critics of John
Lind. He knows plenty about
Mexico. .
It would be very easy to get a man
for this mission who knows too much
about Mexico.
It isn't necessary in this juncture
to send an expert in Mexican institu
tions, history, finance, concessions,
and intrigue. Mr. Lind will com
mand the more confidence because
An old faithful nurse and an ex
perienced doctor are a pretty strong
combination in favor of Postuin, in
stead of tea and coffee.
The doctor said:
"I began to drink Postum live
years ago on the advice of an old
nurse.
"During an unusually busy winter,
between coffee, tea and overwork, I
became a victim of insomnia. In a
month after beginning Postum, in
place of tea and coffee, I could eat
anything and sleep as soundly as a
baby.
"In- three months I had gained
twenty pounds in weight. I now use
Postum altogether instead of tea
and coffee; even at bedtime with a
soda cracker or some other tasty
biscuit.
"Having a little tendency to Dia
betes, I. used a small quantity of
saccharine inatead of sugar, to sweet
en with. I may add that today tea
or coffee are never present in our
house and very many patients, on
my advice, have adopted Postum as
their regular beverage.
"In conclusion I can assure any
one that, as a refreshing nourishing
and nerve-strengthening beverage,
there is nothing equal to Postum.
Name given by Postum Co., Battle
Creek, Mich. Write for booklet, "The
Road to Wellville."
Postum comes in two forms.
Regular (must be boiled )
Instant Postum doesn't require
boiling but is prepared instantly by
stirring a level teaspoonful in an or
dinary cup of hot water, wnicu wu
it right for most pel sons.
A big cup requires more and some
people who like strong things put
in a heaping spoonful and temper
it with a large supply of cream.
Experiment until you know tne
amount that pleases your palate ana
have it served that way in the futuie.
"There's a Reason" for Postum,