New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1869-07-27
IN SPECIE PAYMENTS.

| We have intimations from Washin gton OF
offers from German bankers to negotiate heavy
loans for us at five per cent; assurances OF the
| Secretary,s confidence that within year
we can borrow all the money we want
| at four and a half or even at four per cent !;
promises that the next debt statement
will show still further reduction below the
last. Such signs may well be taken as OF
good omen for the policy of the Treasury De-
partment, whereat Wall-st. has so often
protested but whereby the Government
is thus seen to profit. But after all
what stronger proof of the wisdom of the
course recently pursued by Secretary Boutwell,
could be furnished than that given by the
present condition of the market for Govern
ment securities and by the price of gOldR Bonds
have been steadily advancing, and gold de-
clining, while in Europe we have quotation
of S3t for Five-Twenties, equal to Oh in specie
at 10 per cent exchange. Not only has this
result been attained but movement in the
current of valuations has commenced, which
bids fair to bring bonds and gold to an equal
ity and that within a short space of time, if
the Secretary has the courage to persevere in
the policy now working so admirably. With
the present accumulation of gold and cur
rency, and with the excess sure to be in
creased by an economical administration OF
Government, the Secretary will find 1t an easy
matter to buy from ten to twelve millions OF
dollars per month without causing the slightest
arrangement in the business affairs of the
country, until bonds advance not only to the
currency valuation of gold, but until they
range far above 1T.
The effect of purchases thus far has been de-
cided, but q neutralizing influence no doubt
comes from the prevalent belief that the present
policy is but temporary, and that, when the Sec
rotary ceases to be larger buyer, prices will de-
cline. Under this impression, speculation runs
against the bonds, and large holders are tempted
to part with them, in the expectation of being
able to replace at lower prices At the same
time bankers speculate for the fall, and thus
create large short interest, which gives the APP
pearance of a supply much greater than would
naturally come upon the market A banker for
example, having concluded that within week or
two the Secretary must change the present policy
and greatly reduce his purchases, finds no diff
ficulty in borrowing bonds of large holders by
furnishing money for them during the time
they are borrowed, and then sells TO the Secre-
tary feeling confident that when the large pur-
chases cease he can buy in ut a profit and
return them. This has already been done to a
large extent Besides, we have reason TO believe
that many of the bids made are either for the
purpose of advertising the bidders or to create
the impression that q large amount Of bonds
| is pressing for sale. In some instances these
| "bOgus bids" happening, to the surprise OF tho
| bidders, to be accepted, they have been obliged
| to resort to some of the large banking houses
to make the deliveries for them. In this way
an influence against the bonds has been felt,
which will disappear whenever it is discovered
that the Secretary's policy OF constantly reduc-
ing the public debt with the surplus revenues
of the Government is permanent and not
temporary one.
Suppose that on the first Of August, the Sec
rotary finds the Treasury in good condition TO
continue purchases at the rate of three millions
per week, and then announces his purpose OF
doing so. First we have a scrambling among
the shorts to replace borrowed bonds but,
second, and more important, an active demand
from those who have been tempted to sell,
with the idea of repurchasing at lower prices.
Thus the spectators against the credit of
Government find themselves bafled and de-
feated, and the continued purchases rapidly
carry bonds toward par with gold. Every week
and month, therefore, that the Secretary per-
sists in converting surplus gold into bonds, he
is advancing steadily and swiftly to me-
tallic payments. The path lies straight and
plain before him. To follow it is but to hold
on as we have begun yet to follow it is to
resume!