The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1866-12-12
FINANC1ERING ExrRAoRD1NARY

FINANCIERING EXTRAORDINARY
How McCullOch's Gold Policy Oper.
ateS"''An Article for Business Men.
From the Philadelphia North American.
The subjoined extract from the New
York Commercial Advertiser calls at
tention to strange state of facts which
ought to be pondered over by thinking
men:
"The statement of the public debt
Tor November does not exhibit the large
decrease of the total shown in the re-
turns OF late months, the reduction
amounting I TO oni y Sl,67S, ,767. The de-
tails, however, show some important
fluctuations. The amount Of five
twenties outstanding has been increased
$37,7O5, 800. AS, however, only S24 ,OOO.-
600 OF this increase is attributable to
the conversion of seven-thirties, there
remains nearly Sl4, 100000 of this new
issue 10 be accounted for in other WAYS,
"A decrease of 81, ,l25, 900 of compound
notes IS due principally to the Treasury
having accepted those securities in paw
ment of transfer drafts during the late
Crisis IN the money market; and it
thereby cannot be supposed that any
part OF the fve-Lwenties have been is
sued in exchange for these notes. The
matured debt not presented for paV-
ment has been reduced Sl4, ,3S3, IFS; and
as this amount corresponds with the
issue of tive-twentieS in excess of con-
versions of seven-thirtieS, it is to be
presumed that the bonds have been
sold TO retire corresponding amount
OF the temporary loan, of which the
'matured debt not presented for pay
ment chiefly consists. If this coriclu-
sion be correct, it only confirms the
general impression that the Secretary
mas been in too great haste in dis
continuing the whole OF the temporary
loan-has, in fact, offered to pay it off
before he had the means. There is
still 81, ,6O5, ,79i of this loan outstanding
and readyto be called in at any moment;
ana from the close condition of the
| treasury, with respect to currency, it
may happen that more five-twenties
have to be issued for payment. This
substitution of six per cent gold bond
for currency loans bearing four to five
per cent interest, has doubtless arisen
from anxiety to make large show of
reduction in the total of the debt; but it
cannot be pronounced good financier-
ing
"The Secretary has availed himself
OF the legal authorization for cOntrac-
ton, the amount of United States notes
having been reduced, by destruction,
III, 153, ,936-one of the causes which led
to the calling in of deposits from the
national banks during the month, with
a consequent serious arrangement of
the money market. This amount of
currency might have been appropriated
for liquidating portion of the tempo
rary loan; but the Secretary was pre-
pared to issue a fve-twenty bond,
increasing the interest liabilities of the
government, and sacrificing its reve-
nues to the mistaken policy of con-
traction"
Our own sentiments on the peculiar
policy of Mr.. McCulloch are we'll
known, and we are glad to find such
organs as the Commercial and Financial
ChrOnicte, the Dry Goods ReDorteI' and
the Commercial AdVertiSer agreeing
with US on the subject. 1t would, in
deed, be strange If such preposterous
management as the Commercial has
commented upon in the above extract,
could escape condemnation. But the
exposure made by the Commercial, re-
markable as it is, does not tell the whole
truth against the Secretary. The Dry
Goods Reporter thus alludes to a feature
of Mr.. McCulloch's management omit
ted by the Commercial:
"Nor has it been clear to the public
why such immense balances should
have been permitted to lie in the ma
tional bank repositories, to be used by
them in loans, when the Treasury could
have used the money in the liquidation
of debt upon which it was paying in
terest. Nor has it appeared to many
obviously good management that the
premium on gold should be kept un-
naturally high through boarding i'm
mense sums in the Treasury, with no
specific purpose calculated to counter
act the effects of dearth of COIN"
Let US elucidate this by calling atten-
ton to facts. The November Treasury
statement showed the amount of coin
in the Treasury to be 500, ,413 ,01S 55, and
of currency $50, 1892 OF, making to-
gether total balance of $3.50, ,326, $50 62.
whole amount of the remainder of the
temporary loan, SGT, 1856, ,9O9 26, and the
accruing interest on the gold bearing
bonds, and for the redemption of what
ever compound interest notes that
might be offered. But instead OF do
ing this, Mr.. McCulloch deliberately
cancelled 81, ,T33, 1886 of legal tender
notes bearing no interest, funded SI4,-
SS3, 115 of the temporary loan in six per
cent gold bearing bonds, and came out
at the end of the month in his Decem-
ber statement with n balance in the
Treasury of S95, ,l6S, ,Sl6 15 in coin, and
$40, l95, ,S2l OF in currency, or in the ag-
gregate $135, ,637 %.
Until the advent of Mr.. McCulloch it
had never been the policy of the de-
partment to maintain such enormous
balances idle in the Treasury. Tho de-
posites were everywhere drawn down
closely, SO as to leave no room for the
banks to increase the imitation of credit
by discounting on Government funds,
and the governing policy was to put the
money to some active use as fast as it
became available. Public sentiment
compelled Mr.. McCulloch to attempt to
pay off the temporary loan, but his
boarding of money in the Treasury has
driven him to pursue the worst possible
mode of paying the loan. While max
ing a fine show of reducing the princi-
pal of our debt, he is really keeping up
the load of interest without any iustifi-
cation whatever. The public would
easily see this if the interest account
were published every month, but it
was discontinued with the advent OF
Mr.. McCulloch.
Another fact deserves to be borne in
mind in this connection. This premi-
um on gold depends on the supply of
gold in the market. By boarding near
" a hundred millions of itin the Treas
ury we keep up the market price, and
as all other prices are regulated by the
price of gold, the people must suffer in
consequence. Ifthe gold in the Treas
ury on the 1st of December were sold, (,
1t would bring, in currency, SlSl 49,, ,966,
at IS premium, which, with the balance
in currency in the Treasury, would give
an available total of Sl71, ,52S, ,7S7, or
more than enough to pay of both the
nomnnunH jnfoPeat nOfaa and tha tam