New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1882-10-07
THE TREASURY AND WALL STREET.

The stringency in the money market which
caused some trouble last week, did not come
by accident Yet it cannot be supposed that
the Secretary of the Treasury intended to bring
about such result. On the contrary, it is evil
dent that he was especially Jealous to prevent
any unwholesome pressure in the market. He
took measures supposed, not only by him but
by some experienced business men, to be album
dainty sufficient to that end Nevertheless, the
difficulty comes as the consequence OF mistaken
steps taken to avoid it. OF course, there were
causes tending to severe pressure at this time,
which were pointed out by TIE TRIBUNE
months ago. But it was entirely i'll the power
of the Treasury so to arrange its operations as
to prevent that pressure Undoubtedly the
Secretary took what he ,nsdered good advice
as TO the means to be used. But the proof of the
pudding is in the eating and the advice which
he took has brought the money market into IA
condition of greater stringency, measured by
rates on frst-class commercial paper, than 1t
has seen since the panic of 1873 Had bust
ness been unsOund, or speculation rife, dlsas-
irons consequences mil ht ere this have resulted
from the very measures chosen to prevent dis
aster.
RELYING upon the calling of bonds as means
of releasing a surplus in the Treasury, at a
time when, on account of the exchange of three
and half for three per cents, frequent calls
for bonds were rendered impossible 1t is not
here intended to crticise his decision that it
was best not to purchase four or four and n
half per cents that decision, whether sound or
not did not necessarily contribute to cause
monetary stringency. But it was possible to
purchase the three and half per cent bonds,
rs well as to call them, and the current market
price has been such that these bonds at least
could have been purchased without paying IL
high premium. In redeeming without rebate
the three and a half per cents taken last week,
the Secretary virtually gave a premium
equal to three months interest, or seven-eighths
of one per cent, in order to induce early
delivery of the bonds. At no time last week
did the extended fves sell for more than par
and fve-eighths per cent until Saturday, and
then only three-quarters was bid. Since
that time they have dropped to 100l4 and
are offered at that price. 1t may be pre-
sumed that, had the Secretary invited offers
to sell any of the three and half per cents,
instead of those only that had been called he
would have been able to buy $5,OO0,OOO in a
day mt any time when the market was stringent.
Nor would this have prevented his issuing calls
mt any time, if the offers to sell were not salts
factory.
But, second, the Secretary appears to have
entirely overlooked the fact that the bonds
which were held at this and other commercial
centres, and which might therefore be brought
in carly nv an offer to nav without rebate II of
early numbers, were mainly exchanged for the
new three per cents or locked up by PROPOSE
tons to exchange them. The three and a half
per cents remaining OF early numbers were
mainly held, it may be presumed, by persons and
institutions not at the commercial centres, and
having no such relations with the Wall Street
money market that the chance of getting high
rate OF interest here would be at all attractive.
AS the call necessarily touched only the bonds
of early numbers, 1t did not give any opportu-
nifty to those holders who, being at commercial
centres, might have been inclined to use money
rather than bonds, and was therefore almost q
complete failure as a means of getting out the
surplus in the Treasury.
Nevertheless the call has virtually locked up
about 22,000,O00 of money in the Treasury,
since the surplus that may accrue during the
next three months must now be applied, not to
other measures OF relief, but to the redemption
of the very bonds embraced in the call. Until
it Is plain that the surplus prior to December %
will exceed that sum, the Secretary cannot
now use money In buying, and he can so use
money, within the next three months, only to
the extent OF snah excess as may appear certuin