New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1889-07-24
SECRETARY WIyDOMS POLICY,


The opinion of Harvey Fisk & Sons that
Government ought to buy in four per cents
with its surplus as long as they can be had al
less than SO. is published in a circular, en-
titled a Grave Question" The obvious re-
Election that the firm would like to have the
Government bull bonds and might make money
if it should put up the price from to per
cent, need not prevent fair consideration OF
any reasons which may be offered. In recent
interview Secretary Window maintained that
the current price 1873, was about as high as
the Treasury ought to pay, at least under cir
cumstances now existing or likely to arise, and
he showed that the money markets were every
where well supplied and comparatively easy,
notwithstanding the large exports of gold with
in the last two months. If convincing reasons
to the contrary can be offered, doubtless the
Secretary would be glad to hear them.
The circular in question begins with par
ticulary unfortunate error. 1t reckons the
surplus in the Treasury July at $685. $50,
whereas therein is included the minor and frac-
tional coin not available for any purpose, in
amount So 5, 354 .808 The Treasury surplus
shown by the official report OF July was but
S71.484. O42, and even of this sum Si1 A b.
377 was already in actual use and circulation,
being deposited with National banks and only
technically held by the Treasury. That actual
" left only S24OOO,OO0 for use, and this
amount must be still further reduced. Nearly
81 coo, 600 of National bank notes were reck-
oned as assets, but were in process Of redemp-
ton. and will cease to be money for any use
as soon as formaities are completed. Over
L oil
held in addition to the usual and sufficient sup
ply of silver bullion for coinage Thus If the
Treasury had paid out in July the comparative
" insignificant sum Of S14 900, 600 for bonds,
it would have had no available surplus remain
ing for that purpose, excepting bank notes IN
process of redemption trade-dOllar bullion and
fractional coin not available for any purpose,
and money already in circulation through the
bank deposits. The argument Of MesSrS. Fisk
IL Sons is that the Treasury has been ac-
cumuating cash. But the official report shows
that the cash on hand increased from April q,
when gold exports began, to July 20, only
about $500, 600. Either by purchase of bonds
or in other ways the entire surplus revenue
had been expended and returned to circulation.
Next, as to the propriety of buying bonds at
high figures, at a time when the money markets
are in no need whatever of larger supplies,
there are few conservative bankers who will
agree with the advice given in the circular.
Experience proves that if the Secretary .pur-
chaSeS bonds at rising prices, large part OF the
bonds obtained come from those already held
to cover Treasury deposits in banks or to cover
bank circulation. In the one case the money
technically paid out for bonds would in the
main be simply return Of deposits, and would
add little TO the circulation, and in the other
case it would mainly 60 for the redemption of
bank circulation which banks willing to sell
bonds at a large profit would surrender. If
any emergency should arise in the markets
bond, of a different class would be offered more
largely, and at lower prices, and then the
Treasury would not only save money for the
people by getting the bonds cheaper, but would
put larger proportion of money into circula-
ton by its purchases.
Secretary Window has been managing affairs
prudently, and in the judgment of most iinan-
cieS with wise conservatism. The money to
sustain all legitimate business at present is now
in circulation and use. Any addition TO the
circulation now would only be driven into spec
ulative markets TO seek employment, and so
would enhance prices, and increase the amount
Of money required for legitimate business That
would do no good but much harm. On the
other hand, an available reserve in the Treas
uly is needed for the time when the demands
Of legitimate business may suddenly increase
and exceed the supply. Then money discussed
will find its ready employment in non-spec-
ulative uses where it will not do harm. Tho
advice given by the circular of MesSrS. Fisk &
Sons therefore appears to be in the interest Of
speculation, but not for the advantage of the
Treasury Department, nor for the good of pro-
ductive industries or legitimate trade.