Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1891-09-07
FICTION IN FINANCE.
Public Debt Statements Manipulated
So as to Look Pretty.
SENTIMENT AMONG THE BANKERS.
The Clumsiness of Gold in Settling Interna-
tional Balances.
A METHOD THAT WOULD SAVE TROUBLE

ESPECIAL TELEGRAM TO THE DIsPArcu.l
NEW YORK, Sept. 6.-Matthew Marshall
reviews the financial and speculative situa-
tion for tomorrow Sun as follows:
confess to little satisfaction at the
failure of the scheme for forming syndi-
cate of national banks to purchase S., ,OO0,-
600 of the maturing ~ per cent Govern
ment bonds, and, after extending them at
per cent, to take out circulation against
them. 1 do not claim that the expression
of my views on the question last Monday
had any influence in bringing about the
failure, for the arguments l adduced were
such as would naturally present themselves
to any intelligent mind
In fact, as 1 said, all measures for infat-
ing the currency, and thereby raising prices,
are so popular that was not prepared to
see sufficient number of bank presidents
carried away by this one, and its defeat was
an agreeable surprise to me. But, as if to
prove that my foreboding was not altogether
uniusti6ed, the officers of the Fourth
National Bank, since the So, 600, 900 syndi-
cate was abandoned, have taken a step,
which proves either their weakness as
to popular prejudice
LOAN OF A MILLION.
For the purpose Of stimulating the return
to this country of at least a part of the
S5,0O0,O 900 in gold which we have exported
to Europe since January 1, they have agreed
to lend the equivalent of 81, 200, 900 of it to
its importers free of interest from the time
of its shipment to the time of its arrival
here. In other words, they pay premium
on the gold equal to interest upon it for
week or more.
AS a matter of business this is throwing
away just so much money; as matter of
sentiment it may be not only justifable, but
good policy. In fact, the legitimate effect
of the presence and the absence of gold in
a country is so complicated with the work
ings of mems imaginations that it is difficult
not to yield occasionally to sentimental con-
siderations in dealing with the metal.
There is story of clergyman who, sew
eral times running, borrowed $40 bill from
one of his congregation every Saturday and
returned the identical bill the following
Monday. Finally the lender was curious
enough to ask for an explanation of the
transaction, and got this: ''Oh, I can preach
ever so much better with little money in
my pocket"
JUST LIKE THE PREACHER.
1t made no difference that the money was
borrowed; it was enough that the borrower
had it in his possession for the time being.
So, my Fourth National Bank friends are
not concerned as to the means adopted to
bring gold across the ocean, provided it
gets here somehow. Knowing that its COM
ing under normal conditions indicates
flow of capital to this country, and know
ing that the public so long as they see it
arriving, will assume that it is sent in the
natural course of trade, they set to work to
produce the result artifcially, with the
well-grounded expectation that it will have
the same effect as if it had been due to un-
assisted causes.
Their success, indeed, has been greater
than they expected The amount of the
shipment they have aided has been doubled
by being reported, not only when it was
engaged, but also when it was put on board
the steamer, and, probably, when it arrives
it will be counted third time. Like the
supernumeraries in play, the same 81 ,0OO,-
900 will be marched across the stage again
ard again until it creates to the spectator
the illusion of being 100000 or S3,OOO,-
600, and perhaps more.
CLUMsINEss OF GOLD.
By the way, how is il that in these days
of labor-saving contrivances in finance as in
other departments of human activity, with
checks and drafts for the settlement of
home balances; with gold certificates and
silver certificates freely used in the place of
coin and with bank clearing houses at all
our great money centers, we still continue
to settle international balances by the
clumsy, costly and risky transportation of
actual gold?
1t is counted and weighed out, packed in
boxes and kegs, carted to steamers, stored
away in their holds, then shaken and rolled
about on the ocean for week or more to
its great detriment by wear, and finally I'M
loaded again and carted to its.destination
after paving roundly for freight and insur-
ance. All this could be avoided if the great
financial institutions of the world would
only establish a common gold warehouse
and use the receipts of its custodian in
place of the actual coin or bars. Tie
United States Government performs this
function for this country. Its gold certif-
Gates pass from bank to bank the same as
coin, and, years ago, the banks of this city
made the Bank of America their common
storehouse for gold, and employed its re-
ceipts in settling balances between them
selves.
WOULD SAVE TROUBLE.
If, in the same way, the Bank of Eng
land, the Bank of France, the Bank of
Germany, the United States Treasury
would each agree to accept certificates of
gold deposits issued by the others as the
gold ITSELF there would be an end of the ex-
pense, risk and delay which now attend the
transfer of gold to and fro across the ocean.
Of course, it would have to be q matter of
honor all around not to issue phantom GER
tifcates, and would have to be stipulated
that in case of war the actual gold should
be delivered, but these are not insuperable |
obstacles.
To return, however, to this subject of SEN
timent in finance, and to the power of the |
imagination in financial affairs Just in the |
same way that the S., 900, 600 bond syndicate
was planned, avowedly to influence public |
opinion and to toll along other purchasers
for the maturing AIS, and just as the |
Fourth National Bank is artifcially stimu- |
lating gold imports for the purpose of in |
spring confidence in the financial future, |
so, see, the Secretary of the Treasury is !
his monthly statements to |
make them look pretty.
THE CLEVELAND METHOD.
When the Cleveland administration came
in, the surplus was uncomfortably large, |
and every cxpedient was employed to di-
minish its apparent bulk. First, 500, ,000,-
900 i'll gold was subtracted from the cash on
hand and set aside, without warrant of law,
as fund unavailable for any purpose but
the redemption of the greenbacks. Then
the fractional coin in the Treasury, amount
ing to $50, ,000, 900, was declared to be use
less for the payment of the nations cred
itors, and, thirdly, but very properly, when
q check was given out the amount of it was