The morning call., 1893-04-24
GOLD is SCARCE.
Local Bankers Distrust
the Treasury.
THE FLUCTUATING RESERVE.
Apprehensions of Cariisle's Possible
Methods Deter the Banks From
Aiding the United States.


to do as they think best with their own, but
he regards them as blind to their ultimate
interests.
The trouble all arises from the present
scarcity of gold in the United States Treas
ury, orcasioned by continued heavy exports
of The precious metal to Europe.
10 this awkward fix Secretary Carlisle
intimated that to relieve the stringency the
Government would consent to receive gold
at ali of the nine sub-treasures, extending
from New Orleans to San Francisco, and
redeem treasury notes for the same in cur
rency in New York.
Tie invitation was on its face TEN 7tng
one to bankers and big firms doing bus-
ness at New York from distant centers of
trade tributary TO the various sub-treas-
urieS. By availing I'll, mSelves of this on
portunty they could escape the charge of
exchange and transfer gold TO New YORK
by what is known as Tree exchange
that is. if their treasury demands were re-
deemed in gold.
But right here is where the insidious rep
tile of DOUBT erept in. Would the treasury
redeem in gold?
The terms of its invitation merely said
currency" and. as everybody knows, cur
rency IS what Will pay debts, ana may in
clude silver. Such a redemption as the lat
ter would sadly dim the lusteT Of the bril-
liant opportunity.
80 the Western banks are holding off
Assistant United States Treasurer John
7. Jack son, speaking of the matter yester-
day, said he bad received q large amount OF
gold from local sources, but not us much as
he had hoped to receive.
The Government" said he, us bound to
keep mp its gold reserve of COCO. eco. AS
a matter Of fact there is S2lS 100000
in the tTeasnry-Sll6,C00 representing
gold certificates, Sl00,000.0O0 reserve and
100000 free. Bus it is popularity known
as the 100000, 600 gold reserve.
10 keep this reserve fund intact the Gov
eminent has to regulate the receipts and
expenditure at all the sub-treasurles. Tor
this gold reserve is distributed among these
sub-treasurles.
Just now there is a drain OF gold-and
there Is likely TO be a continued drain-on
the New York sub-treasury, so the reserve
is being kept up by inviting banks else
where to deposit gold in the various sub
treasures in their midst
But, as | say, the banks do not seem to
rise TO tie occasion. | think, though, they
would do veil to respond from patriotic
and also polite point of view. | will state
three reasons why, in my opinion. they
should meet the invitation Of the Govern
ment:
First, out OF gratitude. In the failure Of
the Barring Bros, three years ago, the Gov
eminent saved American bankers from a
very bad black Friday The Rothschids
hHbCAtlOh " Suppolb lut DdtIIBN, BuI uS-
manded their securities, and the first to be
redeemed were American securities. The
latter were received at New York, and the
bankers were called upon to meet an Instant
demand for many millions. In their dis
tress they appea led TO the Government, and
Secretary Window responded by laging
open tie doors Of the treasury for a period
OF 100 days. until the stringency WAS re-
lieved. so much for the gratitude point Of
view.
.,'Vba- 7 hoIfo,-, a., I,,,,t-. .t.,,5 49,. -
in order TO fortify themselves against the
future. 1t Is good policy for them to be in
touch with the Government. Times of
stringency have been before and will be
again. l have had men coming to me in
former years and begging me to receive gold
here when was not authorized to receive
II. Now, here is an opportunity for the
local banks to put the Government under
an obligation and confirm the good under
standing between them.
But the bankers are timiG; they fear to
lose by not being paid in gold in New York.
don't think they have any right to be
tlmld. The reserve, as | explained, is all
right, and although | am only authorized to
promise redemption in currency still / see
by the dispatches that the Government is
meeting it, obligations in gold. A a mat
ter Of fact am afraid there Is very little
patriotism in money; it Is the hardest thing
into which to inject sentiment. But the
Invitation OF the Government remains open
anu ipI Tue reasons nave given IL might
be well for holders OF gold to avail them
selves Of this rare opportunity"
Speaking about the reserve in the treas
uTy, MI. Jack or reverted to the $4,000 600
held there against geld certificates, and said
Secretary Carlisle had q right To suppose
that his offer 10 redeem certificates would be
responded 10 by holders of those particular
certificates. Evidently this had not proved
the case, and the reserve would be main
tanned by receiving gold on basis Of free
exchange. At any rate it seemed as If the
parity of gold and silver would be main
tanned al all hazards, Judging by the latest
dispatches, In the meeting of certificates.
The future action of the banks is un-
certain. Patriotism may prevail but in the
absence of any definite promise on the part
Of Secretary Carlisle it is thought likely
that they Will refuse 70 furnish lie Govern
ment with any very large amount without
bond issue.
But the point remains that at present
gold can be transferred to New York free
OF charge as long as certificates on the Sub
Treasury there are paid in gold.
Several merchants here have taken adj
vantage OF this point, and instead of ship
ping their gold and paying freight and five
days Interest on it, have astutely used the
Government as a cheap medium. TO be
sure, they have taken chances on the "cur-
rency" redemption, but so far their judg-
meni as far-stghted spectators has been
justified by tie event. The Government
has proved a perfect accommodation and
business astuten, SIS once more vindicates
its name uuGer the guise of patriotism
This statement about the Government
touching the gold reserve is all bush," said
a prominent financier yesterday.
"Secretary Carlisle has not drawn from it
and will not do So, because it would be con-
izarv to law 10 do so.
THE published accounts show that the
writers have very hazy ideas on the subject
Of the famous Sl00 000, eco gold reserve, and
have little understanding as TO how it is
controlled.
Under the law the Government must
have $780, eco in gold in reserve as it
represents that amount of notes issued
This sum cannot be touched, and no Secre-
tary of the Treasury is going to do so. Now
this S100.0O00O0 in gold is not all locked up
in the vaults at Washington. In fact Ii is
scattered in the sub-treasuries all over the
cOuntry-at Boston, New York, Philadel-
phia. Chicago, San Francisco and New Or
leans. The amount of the reserve at these
different places varies according to the
wishes and policy OF the Government. But
there must always be S100, 100000 on hand
in the aggregate. Sometimes there is $50
000.000 in one place, and sometimes the
amount is reduced to $1,000 600 and some
times to nothing But in proportion to tie
depletion Of the reserve In one place it Is
increased in the same ratio in another.
Still the entire fund is always held intact
This VIII enable you to understand the
financial situation of the last week and TO
comprehend how Secretary Carlisle drew
down 100000 more out of the reserve fund
in the East than he apparently ought to.
which gave rise 10 the hue and cry that he
had attacked tie fund by drawing on it.
LAS / told You the reserve fund only ex-
lists in figures, which can be changed readily
by increasing or decreasing the amount Of
the fund in different localities. Secretary
Carlisle. in looking over the field, saw that
the drain on the funds in the East had been
very heavy, would continue to be so, and
there was a probability of the amount CO.
ing beyond the limit Of that portion of the
reserve Is ich was on deposit in Washing
ton and New York. He said that according
to the proposed shipments this was inevita
| BILE. The reserve fund would be depleted,
that is that portion in the East. Now how
nj ba oF ba Itn