New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1893-03-10
A RESERVE FOR USE.

Our valued contemporary, "The Newly ork
Herald has ascertained that reserve express
" raised for the redemption OF notes can be
legally used for that purpose. and gravcly dc-
clarcs that there is no further danger OF
financial panic" If this is so, the only danger
that has at any time existed spiang from the
absurd representation that the Treasury would
be bankrupt, and that a panic would be pre-
cipitatrd if any part Of the 100000, 600 re-
serve should be used for the purpose for which
il was created.
1t seems that a legal opinion was given by
Solicitor General Adrich that "therc is no
,sifivc provision of the law requiring that the
81 OO, 600. 900 reserve shall be kept intact. Ii
is also true under the law, a | understand it,
that all Icgaltcnder notes may be redeemed
in coin" This opinion. it is stated by Inc
Herald" the new Administration fully accepts
and that journal adds: This disclosure Is
accountable for the air Of compOsurc and Ie-
lance which has pcrvadcd the recent actions
Of the incoming Officers" Yet it is also adj
miitcd that this same opinion was given So
carly that it guided the actions of President
Harrison and Secretary Foster in their refusal
to meet the demands of Wall Street and the
East for new bonds Thus the disclosure that
a reserve for redemption Of notes could be used
for redemption Of notes was really made weeks
ago. and has governed the actions Of two Ad-
mini>,raions for seine time.
Probably there can be N doubt that the
Solicitor-Gcncral is quite right IN his opinion,
and the fact is indeed so obvious that 1t ought
to have been received by everybody at the OUT
set But il is an Error 10 say that any dis
coycIy Of this fact. whether recent or remote,
puts an end to the danger OF panic. The real
danger wa. not that the reserve could net be
legally used. but that the public might take
alarm if it should be used, or any part OF 1t.
Sober consideration has shown that this dan
gor was altogether manufactured by bankers
who were in haste to get bonds issued, and
that they only, and not the public held the
notion that Government could not properly or
safely redeem notes with reserve expressly
kcIt for their redemption.
Now that this scare has been dissipated by
the calm good sense Of two Admini>t; atoms. ii
may be proper to call attention to another fact
namely, that the opinion Of the Solicitor
General also states, rs The TRIBUNE has
stated. that NJ bonds can be issued under ex-
is;ing laws that are payable in gold only, or
with interest payable in gold only. The only
law authorizing an issue of bonds provides that
the principal and interest shall be payable IN
standard coin of the United States. The silver
dollar though at that date no longer coined,
was nevertheless in circulation to some extent,
and was indi,puiably a coin of the United states
then, as it is now. Bonds issued under the
existing laws, therefore, must be payable in
coin, and no pledge can now be given by any
Administration with authority Of law that such
bonds may not be paid with the interest upon
them. in silver dollars This defect OF the ex
isting laws was observed some time ago by
THE TRIBUNE and it doubtless had much to
do with the decision Of the Administration not
To issue bonds, since the opinion Of the So
licitor-Gencal was given some time ago. lct
the fact does not appear to have been detected
at all by the Ncw-l York bankers who were SO
eager for an issue of bonds Of the United States
for $50. 900, 900, and who professed to be SO
ready TO take such bonds without any consd
Grafton Of their terms.
The speculative nature of this demand is now
better understood. But it is also perceived
that, although an immediate effect favorable to
SPECTATORS might have been produced in the
markets for day or two, the attempt to issue
bonds payable in coin, and their actual sale
if they were taken either by American or for
eign purchasers, would have been decidedly ad-
verse to the interests of those who camored so
loudly for their issue. The whole story is ono
by no means crcditable to the intelligence or
the sober conservatism OF the bankers who par
ticpated in the frantic appeal to Secretary
Foster.