Evening star. [volume] (Washington, D.C.) 1854-1972, 1893-02-11
THAT BOND ISSUE STORY.
A Treasury Official Explains Bow the Mis-
apprehension Occurred.


A prominent treasury official, thoroughly con-
versart with the financial administration of
that department. said TO a STAR reporter today
that the report that the government has decided
to issue bonds to replenish' its stock of gold
probably originated from the efforts now
being made by the department. with the assist
ance of number of banks, 10 keep
the legal tender reserve of 800. oOO. 900
intact. As he explained the situation
number of the largest banks and those hold
ing the greatest amount of specie had decided
TO turn part of their gold reserve over to the
tender notes, which are equally good for re-
serve purposes. The movement originated
with the banks and Secretary Foster was not
advised OF il until it was well under way.
THE FIRST STEP TAKEN.
The first step was taken last week, when three
of the leading New York banks offered the assist
anttreasurer at that city 81 900 900 in gold in
change for legal tender notes. The offer WIS
accepted with proEptness Since then the
movement has spread. owing principally to the
efforts of those who started il and the co-opera-
tive action of the United States treasurer who is
using every legitimate effort to increase the
supply Of legal tender notes for use in these
transactions. The principal portion of the
notes now being redeemed by the department
are legal tenders and preference is given to
that form of currency in the redemption divis-
ion. All sorts of government issues including
coin certificates, national bank notes and silver
certificates in various stages of mutila-
tion and DETACHMENT. have reached the treasury
IN large amounts for redemption during the
past month. Special attention, however. has
been directed to the legal tender notes. and
most of the money redeemed has been of that
character. The reason that nearly all the
n la has han,, -,
legal tender notes IS in order that they may be
utilized by the government in obtaining gold
from the banks.
THE ARGUMENT OF THE BANK OFFICERS
The argument Of the bank officials. who have
committed themselves to this policy, is that
legal tender notes are good for the purpose
of reserve as the gold they part with. and that
for all practical purposes they would as soon
hold an obligation OF the government as the
coin from its mints If for any special reason
they should require gold, they argue that the
government is pledged to give it to them upon
presentation of the notes, and they have not
the slightest doubt of its ability to fulfill all
It's contracts. In some way or other the CAPT.
talists of Wall street have acquired the notion
that when the so-called free old in the
treasury is reduced to a poin- near the
500 ,OO0. 600 legal tender reserve bass crisis
is inevitable. The fact seems to be over ,oked.
however, that this amount is held specia ly for
the redemption of legal tender notes and that
large part of the gold exported recently has
been obtained upon presentation of these notes.
THE SECRETARY NOT APPREHENsIvE.
Secretary Foster said to STAR reporter yes
terday that he was not all apprehensive over
the situation and is confident of the ability of
tho Treasury Department to withstand all at
tacks on its gold balance. He admitted
frankly that he was doing all in his power
tn EaQ layo tam ar 80 mn
intact. but that no new or extreme measures
have been resorted to. He had not, he said.
issued any new bonds, and had no present pur-
pose of doing So