The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1866-01-11
The Fall in Gold.

from We HCTto.
The funding bill drawn by Secretary McCul-
loch and reported in the House by Mr.. Morrill,
contains nothing which ought to produce any
immediate and marked effect on the price of
gold The fact that gold Immediately fell under
its influence is merely an addition to the innu-
merable illustrations of the tendency of Wall
street 10 eXaggerate everything tending to affect
the price of securities. Wall street thrives by
sudden fluctuations. Steadiness of values or
even steadiuess in the rate of appreciation de-
cline Is the bane of speculation. When anything
occurs OF which the tendency is 10 depress prices,
1t is for the interest OF those who five by fluctua-
tions 10 eXaggeraJe the tendency and lower prices
to such q degree that there must be rebound.
BY buying at the lowest point OF depression and
selling again after the reaction, profit may be
realized; and even the bulls find it for their in
terest to favor the eXaggeration witch view to
the subsequent rebound, inasmuch as the return
ing pendulum does not stop at the middle point
but swings to the other side.
Those who hold Government securities for
other than speculative purposes, and are under
no immediate necessity TO sell, will find nothing
in the new bill to alarm their apprehersions.
The same remark will apply to the holders of
other descriptions of property.
There Is very large amount OF public indebt
edness which may be funded in long loans before
the finances can reach settled and satisfactory
condition. Besides the greenbacks, certificates
oil indebtedness, and interest bearing legal tender
notes, there is an enormous amount of seven
thirty bonds which Will soon begin to mature,
and all of which will fall due within the ensuing
three years. Nobody supposeS that any Consi-
derable portion of this debtcan be speedily paid
nor has anybody suggested any other practica.
BILE mode of meeting it than by funding it in
long bonds. 1t is maturing with such rapiditY
as to demand the adoption of immediate mea
sures 10 this end.
The necessity of measure similar in SUBJ
stance to that embodied in this bill is too
lU lpgrti in1af ia
points of criticism relate to the details. Whether
the proposed rate OF interest is too high, OF the
bonds have too long TO run, or the Secretary is
clothed with too much discretion, are fair topics
OF inquiry; but as regards the main feature of
the bill, there is no ground for difference Of
opinion. The proposed rate OF interest is GER
tainly high: but under the circumstances, if the
bill made it lower, it would, as a practical mea-
sure be futile and imperative. The amount of
debt yet to be funded is enormous; and the Sc
cretary of the Treasury cannot expect to thwarS
the laws OF trade end dispose of twelve hundred
millions of bonds at as favorable rates as he
could OF few hundred thousand
The law of supply and demand will prevail
here as in all other transactions. Since neces-
sity exists for putting vast amounts OF bonds
upon the market within a short period, they
must be offered at favorable rates or the market
cannot absorb them. The discretion permitted
to the Secretary can be exercised only on the
safe side. He cannot offer more than six per
cent, but II is IN his option to Otfer less. He
cannot extend the bonds beyond forty years; but
he can issue them for a shorter period. He can
make the interest on some of them payable in
foreign countries, but IN that case the interest is
one per cent. less.
The only power conferred on the Secretary
which IS susceptible of abuse, is the unlimited
discretion proposed to be given him as TO the
amount OF bonds hemay put upon the market
at any one time. But nothing could be more
absurd than to tie him down to fixed rule. He
must be IN a position to take advantage of
favorable turns in the market. The process Of
funding must 90 on, or the Government will
soon be deluged with an unmanageable mass of
overdue obligations. To say nothing of the
certificates OF indebtedness, the maturing seven
! thirtles will III year or two, come in like an
inundation.
Those not funded must be paid in currency;
and so far from there being danger that funding
! will proceed with Injurious rapldity, the danger
! is that the Secretary VIII be Obliged to redeem
! so large portion OF the seven-tnirties in green
backss as to keep the currency at its present IN
! haion. He can contract the currency only by
! the aid OF enormous loans; and if he makes a
! precpita'e contraction he thwarts his own pur.
] poses by creating a strineency In the money
market which would render loans impossible.
! His discretion is, therefore, limited by laws oil
greater efficiency than any which Congress can
! enact
There is, therefore, nothing in this bill which
7 should cause apprehension or disturbance, OF
have any immediate effect on values. True, the
Secretary aims at contraction but the natural
obstacles TO contraction are so great that biz
success must for long time, be moderate.