New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1881-03-10

THE TREASURY And THE MONEY MARKET
The first indication of the financial policy of
the new Administration was given yesterday.
The Secretary of the Treasury purchased
St, 600, 900 Of the six per cent bonds at
price not varying far from the market rate.
AS these bends cannot be disturbed without
consent of holders until July 1, and will earn
per cent interest in that time, while the
other bonds of the Government will earn IN
the same time little more than 1 per cent on
their market price, it is to the advantage OF
the Government TO pay as high as 1O1 and
interest already accrued. The purchase Is
significant because it proves beyond all ques-
tion that the Department is not only disposed
but able to make the money market as easy
as is desirable. The offers of bonds amounted
to more than $14,000,000, though bids for
only $5,OO0,OO0 were invited. Thus it be-
comes clear that the Treasury can obtain all
the bonds that are needful, in order to pre-
vent any stringency in the market. and at
prices which it is willing to pay. 1t has
already been announced that, accord
ing to estimates of the Department,
there will be a surplus of $37,OOO.OOO
before July l. which can be used in the pur-
chase of bonds for cancellation. AS the dan
ger of inconvenient stringency in the market
is greater now than it will be after the month
of April, it may be presumed that the Treas
iry will anticipate by speedy purchases its
surplus revenues of May and June. so far as
may be necessary to keep the money market
beyond the control of speculative cliques.
Large, purchases of bonds by the Depart
ment will remove all anxiety in New York as
to the immediate future of the money market.
Another shipment of gold from Europe was
announced yesterday, and the course of for
eign trade continues such that gold must be
forwarded to meet some balance OF merehan-
disc account, and in addition to pay for any
American securities purchased by foreign in
vestors. Recent purchases of that kind have
been large, and the remarkable statements
which many of the companies are now
making have tendency to stimu-
late foreign buyers. The dividends de-
clared by the Union Pacific and the West
ern Union yesterday, and Others which have
recently been declared, appear very entlcing
to foreign capitalists who have been searching
in vain for sound investments which yield more
than per cent on the money invested. 1t is
not probable that there will be much scarcity Of
money in this country, so long as leading
companies continue to make statements and
to pay dividends which render foreign invest
ors eager to send their money hither.
The question in regard to the revocation of
orders for the retirement of bank circulation,
therefore, may be considered apart from
its immediate bearing upon the money mar
ket. Money enough for all legitimate SEES
there is already. and will be unless the policy
of the Treasury Department should be changed
A refusal to permit the banks to revoke their
recent orders will not cause any stringeDcy.
But it will cause distinct and considerable
imitation of the currency. The banks now
have in ba:si the United States bonds
mon which about $17,00O,000 Of new
circulation can be taken out. The Con-
troller states that he has already printed and
nearly ready for issue at any time, about
$40, 00O, 900 of bank-notes, so that any de-
mand by the banks can be met promptly.
If the banks which have ordered circulation
retired cannot countermand those orders. they
will deposit bonds and take out new circula-
tion But the old notes. though in the course of
gradual redemption, are still In use, and most
of them will remain outstanding for months
or years. The practical effect of decision
adverse to the request of the banks, therefore,
is to add about $17,000,000 of new notes to
the currency. Meanwhile, the gold which the
Treasury has received is coming out. over
S11, 600, 900 having already been disburs ed
in the purchase of bonds.
No initiation Of the paper currency at this
time is needed. AS the banks do not desire
it, and as money is easy enough without any
expansion of the circulation. and IS likely to
be easy enough If the Treasury continues to
apply it's surplus revenue to the purchase
of bonds, it would be better in O financial
point of view to permit the banks to resume
30 much of their former circulation as has not
already been redeemed. Their reserves would
then be placed in strong and healthy condition
for the approaching April payments, and the
volume of currency in circulation would not
be unnecessarily inflated
The objection that the banks ought not to
have the power to contract and afterward to
initiate the circulation at will is not o sound
one That power necessarily exists as vital
and unavoidable feature of any banking system
whatever. The safety of the country lies in
the fact. demonstrated by twenty years of ex-
perience, that the banks never can be induced
to exercise that power by refusing loans to
safe borrowers, except when their very exist
ence is threatened, as it was by the Carlisle
bill. Nor is this power peculiar TO banks of
issue, nor to banks of any kind. A single
capitalist is lending to-day more than
SIC, 100000 He can absolutely contract the
circulation to that extent in a single day by
refusing to extend his loans, or to make any
other use of the money. The only safeguard
against frequent and most destructive use OF
such power by private lenders, who have gil
gantic speculatIens to promote, is to leave
the associated capital in banking institutions
entirely free to expand or contract as the