The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1886-02-24
THE TREASURY SURPLUS.
Hewitt Presents an Argument Against
Reducing the Sum to s1OO,OOO,OOO,
As Is Proposed in the Resolution Recently In
troduced by Mr.. Morrison-Wby Such
Action Would Be UnWise and Unsafe.

ana means, to-day submitted report on MI.
Morrisons bill, directing the payment Of
the surplus in the Treasury exceeding
$100,0O0000. in liquidation Of the pub
lie debt. ''The effect of the resolution
says the report. ''f enacted into law, will be to
reduce the balance in the Treasury available for
the payment of its current indebtedness and for
the redemption of legal tender notes. to 800,
100000. It makes no provision for replenish
ing the Treasury when the available balance
shall fall below $100O0O00O The question thus
presented is whether in view of the obligations
and functions of the Treasury as now defined
by law, the proposed limitation on the balances
now held for meeting the liabilities payable on de-
mand is prudent and safe, in view C the pledge Of
the United States to redeem all it's indebtedness
in coin or its equivalent. am led to believe that
such limitation would be unwise, dangerous,
and at variance alike with the experience of
solvent nations and of sound financial institu-
tions. The ordinary disbursements of the Treas
ury may be roughly stated to amount to $1,000
900 day. To meet this disbursement it is nee
essary that reasonable working balance should
be left on hand, because at times the current
expenditures largely exceed the daily receipts.
Careful business firms usually carry a
balance equal to one months disburse-
ments. Measured by this standard-and
a lower one could not safely be adopted. because
the Secretary of the Treasury has no power to
make temporary loans-the working balance in
the Treasury should be about $30,000,0 900. That
this amount is not too large will be apparent
from the fact that in the Pension Bureau alone
drafts for $40 000 900 will be made on the LIST of
March, and that the amount of the probable
payment under the arrears act cannot be fixed
for any specified date. But beside the current
expenditures provided for by law, the United
States has a totally distinct obligation to pro-
vide fora debt payable on demand in the shape
OF 1916, 0l6 of legal-tender notes. These
notes form about onehalf of the paper cur
rency. They constitute final means of pay
ment between individuals and of settlement in
all the transactions of business. 1t is absolutely
necessary. therefore, that the ability to redeem
these notes in coin should be at all times assured
The only question is as to the amount which
Will constitute reasonable and adequate re-
serve. AT the present time, under q practice
OF the Treasury, claimed to be in accord
with the bank act of 1882, $780, 0OO 900 in gold
coin is set apart for the redemption of the legal
tender notes, being rather less than 20 per cent
This reserve would be regarded by prudent
bankers as the minimum amount in an easy
money market, but, if the financial prospects
that it be enlarged and strengthened. The prac-
tice OF the Treasury under Secretary Sherman
who put the resumption act in operation. was
not to allow the reserve to fall below 40 per
cent figure consistent with absolute safety.
If this rate should be adopted the amount of the
reserve in coin would be $133, 000 000 Adding
this amount to the amount heretofore stated as
reasonable working balance, we have the sum of
$l65, DOC. 600 as the minimum balance which the
Treasury should carry in order to be in condi-
M arCn and afoty nth
clusion is at variance with the lessons of expert
ence and the well-established rules for the safe
conduct of business The main argument urged
for infringing on this balance must be the saw
ing of interest the $685. 600 900 which, after al
lowing for the tax on bank calculations, is q per
cent per annum, amounting to ST. 700, 900 an
nually. But it is to be remembered that the de-
mand debt of the United States represented by
the legal tender notes, bears interest and that
the gain in interest between the total amount
and proper reserve is over 81 600. 900 per an-
mum. So that the government could we'll afford
the outlay required to keep its finances in the
strongest possible condition, and should certain
ly never approach the point whore, under the
law, 1t may become necessary to sell United
States bonds in order to preserve specie pay
ments Such contingency would not be an ed
flying spectacle to people whose proud boast is,
that within twenty years from the close of the
public debt and reduced the burden of interest
to one-thrd of its original amount
Certainly policy so humliating
would be condemned by the people
when it's effects should be made apparent. The
Treasury is practically engaged in the banking
business, not only in the issue of currency but
in adapting its operations to the general re-
quirements of trade. Dangerous AS this sys
tenn is, it was the outgrowth of necessity, and
until some other security besides the bonded
debt Of the United States is devised for the
issue of bank currency, the power to come to
the relief Of the money market in times of
stringency must rest with the Treasury. Then,
other consideration may be presented as facto
argumentum against the restriction of the
Treasury balance to 800, 900. The ability
of spectators to reduce this balance below
500, 900, 900 by presenting demand notes for
payment is obvious and unless the expedient of
replacing the amount by the sale of bonds be re-
sorted to, the money market can be so manipu
lated as to impair confidence and bring about
general disaster by which the operators for
fall would reap abundant profit at
the expense of the legitimate business of the
country. The undersigned, being clearly of
opinion that the proposed resolution will neither
be economical, so far as the government is con-
cerned, nor advantageous to the interests of the
country, but, in fact, extremely dangerous in
times of recurring stringencies in the money
market, recommend that it be laid upon the
table,"
The report is signed by Mr.. Hewitt
Messrs. Reed, Hscock. Browne and Mckinley,
while agreeing with Mr.. Hewitt that the resolu-
ton should not pass, and differing as to some
points of his argument attach che following to his
report: 1.-The undersigned deem that 800. 600, 600
at least are needed for the retirement of legal
tender notes, and think the security ought not to
be impaired. They think, also, sufficient
working reserve for the business of the gov
eminent ought to be retained in the Treasury in
addition to the legal tender redemption fund.
The bill provided by the committee, in our opin-
ion, ignores these conditions, and, in our judg
ment, will shake public confidence in the stabil-
ity of our currency in such a way that the saving
of interest which the bill will cause will be but
trife compared with the injury threatened"
Obituary.
Special to the Indianapolis journal.
PERU, Ind. Feb %. George Il. Dart, an old
and respected citizen of this city, died this
morning after lingering illness. He was
seventy two years of age and has been a resi-
dant Gftu YEARS He was instrunoontal r. CO