Daily globe. [volume] (St. Paul, Minn.) 1878-1884, 1880-05-04
BOND PURCHASES.
TO THE FINANCE coMMrTTEE.


WASHINGTON, May 3,-The following letter
has been sent by the secretary of the treasury
to Hon. Thomas F. Bsyard, chairman, of the
finance committee of the United States Senate:
Sir: / have the honor to acknowledge the
receipt of your letter of the Goth inst.
transmitting Senate bill to define the amount
and manner of purchases of public loans to be
made by the secretary of the treasury, and re-
questing my views IN regard thereto. The bill
in question requires the II secretary of the
treasury to purchase outstanding obligations
of the United States, bearing interest at six per
cent. per annum, to the amount of not less
than five million dollars in each week until he
shall have purchased aud extinguished
all such outstanding obligations, these pur-
chases to be made in addition to and iniepen-
dent of any purchases of outstanding obliga-
tions of the United States made by the secre-
tary on account of the sinking fund.
The bill also provides that all purchases of
bonds hereafter made shall be advertised in the
public press Monday of each week and the pur-
chase of the amounts thus advertised for shall
be made by the treasury on Wednesday of each
week.
In reply have to state that the amount of
per cent. obligations now outstanding is
about two hundred and fifty millions which,
under the provisions of this act, the treasury
would be obliged TO purchase within the next
fifty weeks. To accomplish this purpose the
surplus revenues within that period must
amount to the face of the bond and premium
paid thereon at the present rate, which is
about per cent. on the reserve in the treasury
accumulated for redemption purposes, must be
made or resort be had to increased taxation.
The surplus revenues since the 1st of Jan
uary, though larger than was expected or can
be expected in the future. have been only
about SIC, 900, 900 a month. But should they
continue at the same rate they would provide
for payment within the next fifty weeks, of less
than one-half the bonds which this bill re-
quires to be purchased. With the deficiency
bills now pending in Congress, and which will
soon become law, and the probable appropria-
tions for the next year, there is no probability
of having such large amount of surplus rev
enues as stated.
There is at present, of cash in tho treasury,
almost $152, 600 above all matured liabili-
ties, except United States notes. OF this
amount there is of fractional silver coins and
of nickle and miner coins abont $23 ,OG0. .O0O.
which would not be available for the purchase
of bonds, these coins being legal tender
only in small amounts. This would leave of
available cash in the treasury about $29, ,000,-
| 600, which amount has accumulated to large
extent by the sale of bonds for RESUMPTION of
specie payments, and is little less than forty
per cent. of the amount of outstanding notes.
Neither the law nor sound public policy
seems to permit any eDcroachment on this fund.
There would seem, therefore, to be no method
! of carrying out the provisions of the bill ex-
cept by resort to increased taxation, and the
propriety of such increase for this purpose must
be determined by congress.
l deem the matter of advertising in advance
| the amount of bonds to be purchased as mad
visable. Such course would only enable
bankers and brokers to advance the price of
| bonds, and to dictate terms to the treasury.
| Under the existing method OF making purchases
| it is understood by all that the surplus of the
government will be paid ont from week to week
| in the purchase of bonds, bids for which will
| be received up to noon of each Wednesday, at
the sub-treasury of New York. The amount of
| bonds to be purchased is not made public until
after all the bids are in, thus preventing any
combination TO compel the treasury to pay ex-
horbitant rates for bonds. 1t is well
understood that the department reserves
the right to reject all bids, should
prices be considered nnduly high, right
which would be surrendered under the pro-
posed bill. l know of no reaoon for making
any purchases of bonds beyond the amount OF
surplus revenues and for this purpose the
! treasury already has sufficient authority, while
| the present method of making purchases il
| probably as advantageous to the government
as any that can be devised.
am very respectfully, JOHN SHERMAN,
Secretary.