The New York herald., 1879-08-28
THE CALLED" BONDS.

WHY THE TREASURY RECEIVED THEM IN LIEU
OF BANK DEPOSITS SECRETARY SHERMAN S
EXPLANATION PREVENTING sTRINGENcY IN
THE MONEY MARKET
CIScISSArI Ohio. August 81. 1879.
Secretary Sherman visited the Merchants Ex-
change to-day. and after being introduced by Vice
President Cunningham. spoke as follows:-
EXPLAINING FINAScIAL STEP.
GENTLEMEN-l am deeply grateful to you for your
kind reception in this busy mart OF commerce. and
know there is but little time, except for the ex-
change of %sh
lating to matter In which you. in
common with other business men. are interested.
Complaint has been made of the recent order of the
Treasury Department extending somewhat the time
for the withdrawal from national bank repositories
of proceeds Of the sale of four per cent bonds
am firmly OF the opinion that If had not done SO
serious injury to business would have been the
result The refunding operations OF the government
have been uniformly conducted as to interfere as
little possible with the money market or with
private business. The object has been to make the
exchange of four per cent bonds. either directly
by credit. through national bank repositories
or na tn ss
cent bonds would not be called for until needed
to pay called bonds, which could only be
paid when presented after the ninety days notice
required by law. When. however. the refunding
operation ceased the 21st OF july 1t was the de-
sire of the Treasury Department to close the
loan accounts as soon as practicable. Believ-
ing that the called bonds would be presented
by the 1st of September directed the treasurer
to draw upon the depository banks for the money
fast needed to meet the called bonds ana at all
events to close these accounts from September to
the 10th. and he was acting on this order when l
returned from the North carly in August and under
it 5000 900 called bonds paid for but
the called bonds had not been presented as antci-
pated. On the 18th of September the amount of
called bonds outstanding wa Was about sGSo9oooo;
dsaos With nasioas bank
Over 900 in excess OF the sum wanted to meet
the payment of called bonds had been withdrawn
into the Treasury from the market. with view to
closing the loan accounts. At the time stated gen.
era complaint made that this operation was in
juriously affecting business. was advancing the rate
OF interest and necessarily draining legal tenders
from the market.
CALLED BONDS IN LIEU OF CASH.
To eet this condition OF affairs, upon the advice
of the Treasurer at Washington and the Assistant
Treasurer at New York issued this order:-
TREASURY DEPARrxENv. August IL. 1879
Hon JAMES GLFLLAN Treasurer Of the United States
% s ssw OF with II as Sanh the 5
loan seeounts wssoI, of .as
from the business. You viii, please receive
from such s in % called bonds to be
viii require from such depesitories sufficient money Ia
for the payment Of the called bonds so as to insure the
I OBJ sss a he
March " Is m0d'hsa sHsKMAE SECRETARY
FALSE STATEMENTS
The statements that this was done to relieve the
banks or TO help any one or that ever had been or
false and made without any foundation excuse.
but as political sensation. The reason why
the unsettled accounts with the First
Commerce. OF New York. is because the
Bank Of Commerce made the $40. 900. 900 subscrip-
tion closing the ve-twenties and the First National
Bank made the subscription OF $12l 600 OOe, closing
the ten-forties and these. being the last subscrp-
tions, naturally the last drawn upon.
have received statement of the balances on
the evening Of Saturday last. showing that the
amount of outstanding called bonds unpaid was
then 1862. 253 61 The amount of deposits with
national banks, the proceeds Of bonds sold, was
$32 947 613 81. For all of this the government is
cured by deposit of large amount of United States
bonds. Where four per cent bonds are taken as Sc
curity. additional margin OF five per cent is re-
quired About $4,000 900 of these bonds held
by Mr.. Conant, the United States agent in London,
for exchange ami are daily being paid by the trans
mission OF called bonds in the ordinary course of
business. None Of the outstanding bonds bear in
terest.
EMPTY CLAMOR.
submit to you whether on the 18th Of August 1t
would have been advisable for me to have continued
to drain the money market of legal tenders and
hoard them in the Treasury to await the presenta
ton of the called bonds. II this course had been
adopted the clamor would have been much louder
and much more just. did exactly right in the or
OF the 18th of August. and stand by it, and no
under it the loan accounts are being quietly and
rapidly closed without any disturbance in the money
marset. II this clamor will only induce the holders
of the called bonds to send them In for payment
would be greatly rejoiced.