The Yale expositor., 1895-12-13

terms conferred on him by refusing to
pay gold on these notes when demanded,
because by such discrimination In favor
of the gold dollar the so-called parity of
tho two metals would be destroyed and
grave and dangerous consequences would
be precipitated by affirming or accentua-
ting the constantly widening disparity be-
tween their actual values under the ex-
listing ratio. IL thus resulted that the
treasury notes issued in payment OF silver
purchases under the law OF 1880 were
necessarily treated as gold obligations, at
the option of the holders. These notes on
the 1st day of November, 1SS3 when the
law compelling the monthly purchase OF
s,iVer was n d nepeasSn atns az this Sescrin,
tion now outstanding. added to the United
States notes still undiminished by redemp-
tion or cancellation, constitute volume
$500, 900. These obligations are the IN
struments which, ever since we have had
n gold reserve, have been used 10 deplete
It. This reserve, as has been stated, had
fallen in April, 1893. to S97,0ll ,33O. 1t has
from that time to the present, with very
steadily decreased, except as 1t has been
temporarily replenished by tho sale Oh
bonds.
FORM shrinkage in this fund may be mem
toned the great falling off OF exports M MuneSr
the operation OF the tariff law until recently
in force, which crippled our exchange OF COM
moditles with foreign nations and necessitatea
to gome extent the payment or our balances
in gold; the unnatural infusion OF silver into
our currency, and the increasing aEltatlon LOT
It's free and unlimited coinage, WHICH nave
created apprehension as 20 our disposition or
ability 20 continue gold payments; the eonse-
Quent boarding Of gold at home ana the STOP p,
as the return OF our securities already sold
abroad; and the high rate OF foreign exchahge,
which induced the shipment OF our sold 10 De
withdrawn against, as n matter OF specula-
tion. in consequence OF these conditions the
Was Was reduced to s65. .fss ST7 having lost more
than $51 900 600 during the preceding nine
months or since April, 1898. Its replenish-
beiuR
accomplishing II being possible, resort was hau
tbs re resnmption act of 1875. Fifty millions OF
these bonds sold. yielding sos. S.t33, 2Oo.dl,
which was added TO the reserve fund OF gold
then on hand. As result of this operation
this reserve, which had suffered constant ana
large Withdrawals in the meantime. stood on
slO7 446 s02 Its depletion was. however. Inn
mediately thereafter accelerated that ON the
025, thus losing by Withdrawals more than
$42. .000, 900 in FIVE months, and dropping sIightiZ
below it's situation when the sale OF SJO,OOO,cOO
in bonds was effected for its repenishment
This depressed condition grew worse, and on
s serve ea BEING reduced To- s57 $50 7Oi, IL became
necessary TO again strengthen II. rms was
done by another sale OF bonds amounting s,tS 20
S5s, ,53s 500 with which the fund was increased
to Sill. OH on the 4th day OF December
Again disappointment awaited the anxious
hope for relief There was not even lull In
the exasperating Withdrawals OF gold. On the
contrary. they grew larger and more persistent
than ever. Between the 4th day Of December,
1894, and early in February, 1895. period OF
scarcely more than two months after the second
reinforcement Of our gold reserve bX the sale
Of bonds. IL had lost by such Withdrawals more
than $50 900 600 and had fallen to Sal, $40 ISL.
Nearly Si3, 600, 900 had been withdrawn within
the months Immediately preceding this situa,
had on the 2sth day Of January. 1895 addressed
a communication to the congress- fully setting
and earnestly recommended that authority be
given the secretary OF the treasury TO Issue
bonds bearing low rate OF interest, payable
by their terms in gold. for the purpose OF main
tanning a sufscient gold reserve and also for
the redemption and cancellation OF outstand-
ins United States notes and the treasury notes
issued for the purchase Of silver under the law
OF 1870. This Recommendation DID not, now
ever meet with legislative approval In teo-
ruary, 1S95. therefore, the situation was ex-
ceedngly critical. With a reserve perilousy
low and refusal OF congressional aid, every
thing indicated that the end OF gold payments
by the government was imminent. The results
OF prior bond issues had been exceedingly un-
satisfactory and the large Withdrawals OF gold
Immediately succeeding their public sale in open
market gave rise to a reasonable suspicion that a
large part OF the gold paid into the treasury
upon such sales was promptly drawn out again
by the presentation OF United States notes or
treasury notes. and found its way into the
hands of those who had only temporarily parted
with It in the purchase OF bonds. In this
emergency and in view OF its surrounding per-
pleXities. II became entirely apparent 20 those
upon whom the struggle for safety was de-
volyed, not only that our gold reserve must.
for the third time in less than thirteen months
be restored by another issue and sale Of bonds
suited to the purpose but that plaa must
be adopted for their disposition promising bet
ter results than those realized on previous sales
An agreement was therefore made with a num-
Der OF hnanciers and bankers whereby II was
stipulated that bonds described in the resump-
tion act OF 1879, payable I'm coin thirty years
after their date. bearing interest at the rate OF
do per ~ cent per annun, ana smouhtlng 10 Soz.-
able by weight, amounting TO a little more than
s65, 900 900. This gold was to be delivered in
such installments would complete its de-
livery within about six months from the date
OF contract. and at least e-half Of the amount
was to be furnished from abroad. 1t was also
agreed by those supplying this gold that dur
Ing the continuance OF the contract they would.
ernment against gold Withdrawals. The con-
tract also provided that II congress would
authorize their issue. bonds payable by their
terms in gold and bearing interest at the rate
or per cent per annum within ten days
h ,hnisht i ee snpsututed at par Tor the per cent
this contract was made it's terms were COM
municated to congress by special executive
than SIC 900, 900 would be saved to the govern
ment IL gold bonds bearing per cent Interest
mentioned in the contract The congress hav-
ing declined to grant the necessary authority
was carried out resulting in n gold reserve
amounting to $l07.57i,23o on the sth day OF
The performance OF this contract not only re-
stored the reserve. but checked for a time the
witndrawals Of gold and brought on period
In business circles were OF the greatest poss-
bic value to every interest that effects peo-
pie. have never had the slightest misgiving
concerning the wisdom and propriety of this ar
rcngement and am quite Willing to answer for
my full share OF responsibility for its promo
tion. believe 1t averted dryasfer, the immi-
nence or which was fortunately not at time
generally understood by people.
Though the contract mentioned stayed for a
time the tide of gold withdrawal. its goods re-
suits could not be permanent. Recent with
drawals have reduced the reserve from $i07,-
bI1,230 on the Sth day OF July 1895. to S79,-
333. .oG0. How long IL will remain large enough
to render its Increase unnecessary, Is on.y a
matter Of conjecture. though quite large with,
drawals for shipment in the Immediate future
are predicted in well-informed quarters. About
SIG. 900. 600 has been withdrawn during the
month OF November
The foregoing statement OF events and condi-
tions develops the fact that, after increasing
our interest bearing bonded indebtedness more
than Si62 600 900 to save our gold reserve, we
nearly where started. having now I'm
such reserve $40 333 966 against S65, ABS 377
In February, 1894, when the first bonds were
issued.
Though the amount OF gold drawn from the
from the facts and figures herein presented, II
actually was much larger. considerable sums
having been acquired by the treasury within
the several periods stated without the issue OF
bonds. on the 2sth OF January. 1895. II was
reported by the secretary OF the treasury that
more than Sl72. 900. 900 of gold had been with
drawn for boarding or shipment during the
year preceding. He now reports that from