New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1889-08-24
THE MONEY MARKET AND THE SECRETARY

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Secretary Window has been appealed to in
vain. by many brokers and bankers for some
time past to alter his policy with regard to
the purchase of bonds. In quarters not UNI
connected with speculation he has been sharp
" blamed because he has not seen tit to pay
for outstanding bonds more than he judged
they we're worth to the Government, IN order
to relieve business interests. The statement
has even been made that the recent failures of
large manufacturing establishments might have
been avoided if the Secretary had consented to
pay the prices demanded by those who held
several millions of United States bonds for
speculation. 1t seems proper to consider, with
reference to the interests of the public and
not of spectators only, whether the course OF
the Secretary has been wise.
First-Plainly the Secretary has been en-
tirey indicated by events as respects his
belief that larger offers Of bonds, at the price
he was willing to pay, would enable him to
reduce the surplus whenever there should be
any important advance in the lending rates
for money. The offers have of late increased,
and the Secretary has been able to purchase
largely this week without departing from his
policy. So far it is evident that the Secretary
has been right in his judgment Of the situa-
ton, and has under stood the market better
than his critics He has thus saved some
money for the Government and the people by
declining to depart from his policy. He knew,
and the public also knew that the prices de-
manded by spectators holding bonds for
rise would have been advanced as fast as the
price he was willing to pay had been advanced
int rnt or
did not choose to allow the Government to be
cornered and so far events have justified his
refusal.
Second-The Secretary's conduct has been
INDICATED in another respect. 1t was his be-
lief that large amount of funds was available
in the money market, at any time when rates
might rise above those obtainable in foreign
markets Immense reserves of unemployed
capital exist in Europe, and have repeatedly
sought in vain investments at lower rates OF
interest than are now Obtainable here. Tho
ocean no longer divides nations or money mar
kets Lombard Street and Wall Street are no
longer separated by days, or even by hours.
The amount of money foreign houses here, or
American houses having connections in Lon
don, can obtain at an hours notice for use in
only by the amount of such securities offered.
Accordingly it has been seen that strong for
eign houses have offered money here in very
large amounts not always on stocks such as
some spectators desire to hold, but on such
securities as sensible bankers consider sound.
Third-lt has also appeared that the market
for commercial paper can only be helped in n
very limited degree by the purchase Of bonds.
Yet the Secretary has no other mode of using
the surplus revenue, beyond this and the an
tcipation of interest, under the laws which
Democratic Congress has seen fit to make, and
in holding that deposits Of public money with
banks were an undesirable use of the re-
serve the Secretary has been entirely in ac
ccrdance with his Democratic predecessors and
with every competent tinancier, though none
will deny the practicabilty or propriety of re-
sorting to such a step as temporary eXpedi-
ent, if a sufficient emergency arises. Buying
bonds, it has appeared, only adds more money
to the supply which is naturally absorbed first
in speculative markets, and is certain to be sub
SantialIy taken up there by a rise in the value
of stocks or products, or by an increase in the
amount of stocks issued to be carried by the
markets The amount of securities held by the
New DIX UdIhcb anu ". bnOSc constantly
dealing here is at least $500, 900, 900. A rise
of % per cent in the value of these securities
would call for an increase Of $50, OOO,OO in
the amount of money employed in carrying
such securities. Yet an advance of more than
per cent has repeatedly been caused by an
addition of not more than 81 Q, 200, 900 to the
supply of loanable funds in New-York.
Fomth-The remedy for existing difficulties
was in the hands of Congress. But Congress
refused to act and for partisan reasons. Had
Democratic House assented to a large reduc-
ton Of revenue such as the Republican Senate
voted for there would have been but little
uplus since July to be restored to the chan
nels Of commerce. The primary cause Of all
financial difficulty connected with the surplus
therefore, is the partisan refusal of Democrats
in Congress to take any patriotic step not
prompted by their partisan interests.
The World is alarmed at the open alliance
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