Evening star. [volume] (Washington, D.C.) 1854-1972, 1894-01-25
THE BOND ISSUE.
Will the Actual Net Gold Reserve
Be Built Up,
OR THE CURRENCY BALANCE INCREASED
In Case the Bonds Are Not Paid
for in Coin?
W H AT WILL BE DONE

Interest in Treasury Department circles
now centers in the question whether or not
the actual net gold reserve of the treasury
Will be materially built UP by the disposal
of the S50,OOO,O0O of bonds which Secretary
Carlisle has announced it to be his inten-
ton to sell on February 1. What doubt
now exists on this question Is furnished by
the fact that concerted movement on the
part of the bankers and other investors in
the bonds might be made by which payment
FOR the bonds could be brought about in
directly through the medium Of legal ten
der notes and treasury notes, and which,
while increasing the treasury net balance
would not build up the gold reserve in the
least. 1t must be admitted, however that
little genuine fear exists in this connection,
as there is not believed to be any desire on
the part of the public to hoard gold, but
should it desire to do SO, and prevent the
accumulation of the yellow metal in the
treasury, 1t is within the power Of the pub
lie to prevent such accumulation.
Gold or Gold Certificates.
Secretary Carlisle has announced in effect
that the bonds may be paid for in either
gold coin or gold certificates. He thus re-
moved any doubt that may have existed as
to whether he would accept gold certificates
Tor bonds, his original circular Offering to
sell bonds. specifying that they were to be
paid for In coin. There are now about ST.
100000 in gold certificates in circulation
against which there is deposited an equal
amount of gold bullion in the treasury.
The use of any large amount Of these
notes in payment for bonds will result in
realizing proportionate degree of gold
held to redeem them. and thus add to the
net gold reserve. The use Of gold certifi-
Ia nf do hny- a
the same practical effect, therefore, as the
use Of gold coin itself, except that there
would be corresponding decrease in the
circulation Of gold certificates.
What Might Happen.
The treasury notes under the Sherman act
of 1880 are redeemable In coin upon presen-
tation. II the holder desires. BY the use in
directly of a large number of these notes in
the purchase of bonds, the currency balance
and not the gold reserve of the treasury
would be increased to the extent to which
they are used. Depositors can go to their
bankers and ask for their money in treas
ury notes. then repair to the sub-treasury,
where gold can be obtained for them, and
they can then use the latter In the pur-
chase OF saonds. The effect Of this will be-
an amount of gold will be taken from the
treasury equal to that paid in. The result
would be material increase Of the cur
rency balance. leaving the gold balance in
its present condition. The treasury notes
are, however, reissued, so no embarrass-
ment of any kind would be felt unless the
government was called upon to redeem at
one time vast quantity Of coin obligations,
a contingency which no one expects to hap
pen.
The s346,0OO.OOO legal tender notes are also
redeemable in gold. and can be used in the
purchase Of bonds precisely as the treas
ury notes of 1890 can be used They are
reissued when redeemed and the currency
balance Will be increased just to the ex-
tent to which they may be made ayaila Bile
indirectly in buying bonds.
What the Treasury Would Do.
Should the possibilities indicated become
actual happenings. the treasury will use the
accumulated balance in meeting current
obligations and retain the gold until the
currency balance became exhausted. Mean
while, however, the gold will increase, as
this is said to be the natural tendency of
affairs, especially as all customs dues are
paid In the yellow metal The Treasury
Department frequently receives offers OF
gold in exchange for currency as the latter
money is much easier and safer to handle
but of late 1t has been in the predicament
of not having the currency with which to
meet such offers.