Evening star., 1895-10-14
The BOND PROBLEM
A New Issue to Be Postponed
Until Midwinter.
WHAT TREASURY OFFICIALS EXPECT
Conditions Will Be Different From
Those Last February.
THE GOLD PRODUCTION

THE GOLD PR ODU CTION
The problem Of Issuing more bonds to
maintain the gold reserve Is considered at
the Treasury Department to have been
definitely postponed until midwinter. The
present state of foreign exchange and the
experience of previous years justify the
belief that the tide Of gold will be towards
this country, or at any rate not away from
1t, until the close Of December. If exports
then set in in large amount and the gold
reserve has not been substantially built up
In the meantime the problem of a bond
Issue will again become a pressing one.
There is strong expectation. which can
not yet be said to have become firm con-
vict1on. that the business situation may be
so favorable that no new bond issue will be
required. One of the moving causes of the
export Of gold during the summer was the
steady pressure of the masses of idle paper
currency issued under the legal tender laws
and piled up in the New York bank re-
serves. The fact that the bank reserves in
all the large commercial cities show de-
cided reduction, according to the latest re-
ports to the controller. is an indication that
the masses of idle money are being alb
sorbed by the expansion of business and
that this cause of gold exports has ceased
to operate. Gold imports are expected
during the next few weeks, and while they
may not be covered directly into the treas
ury. 1t Is believed that they will tend to
increase the treasury reserve. The mere
reduction of bank reserves is expected to
bring gold into the treasury which is now
held by interior banks in order to obtain
currency. The gold Is less easy to handle
than notes and certificates, and is likely to
be unloaded by the banks as their margin
OF paper money is reduced.
Under Different Conditions.
If bond issue becomes necessary to
maintain the gold reserve it will be made
under very different conditions from those
of last February. 1t will be made before
the reserve has dropped materially below
SSo.OOOO00, and the treasury will be in a
position to obtain the favorable terms
which the restoration of the public credit
5tsstifies. The former bond syndicate or
any other purchasers will probably be will
ing to pay very near the market price Of
the new per cents. which now hovers
around 123. The government will no longer
be at the mercy of aEy body of bidders for
the bonds. as was the case last winter
When 1T was necessary to borrow the gold
coin held in trust against outstanding gold
certificates. 1t Is believed that an OFFER
of the i.onds for public bids, with some
safeguard to prevent dra wing gold from
the treasury, would bring the yellow metal
into the hands of the government from the
Interior banks, which now hold more than
their usual share. 1t might easily happen
than bids would be made which would
eEaE1e the treasury to distribute some of
the bonds at home and others abroad in
such way as to obtain q block of foreign
gold In addition to what was ATTAINED at
hcme. An issue of only $35OOO.OOO. raising
the aggregate issues since February /
1871. to S20O,O0O.OOO would swell the gold
reserve to nearly $3.50. 900, Geo. in the conii-
ton in which 1t will probably be found on
January l, and would put the treasury in
a strong position to treat with the New
1olk banks FOR the resumption of gold pay
ments through the clearing house. This is
step which the treasury officials have
long been anxious to see taken, ard which
would establish a healthy flow of gold back
ana 1orfh through the channels of circula-
ton In New York. Assurances have been
given that the leaders of the bond syndicate
will exert their influence to secure the re-
sumption of gold payments when they are
Guhvineeo Gn tnat the time Is appropriate.
They do not think 1t advisable to make the
EFFORT while the gold reserve is below $780,
100000 ard the New York banks are not
overstocked with gold If the gold reserve
1t would be in a position to suffer occasional
ADVERSE balances at the clearing house
without danger, and the treasury would
possess degree of strength which would
W
ments were to be maintained and that ii
was not necessary to accumulate gold.
Foreign Gold May Be Desirable.
1t might be desirable on some grounds to
bring $25,OO0,G00 or $4,000, 600 in foreign
gold direct to the United States and pay for
1t in government bonds, which would be
permanently held abroad. If this could be
done without exciting alarm at the Bank of
England, and resulting in tho advance in
the discount rate there to attract gold from
this country, it would tend to restore to the
United States part of her share in the
gold production of the last ten years. 1t is
remarkable proof of the evil effects of
the Sherman law that the gold in circula-
tion or in the treasury of the United States
is less now, in spite of the growth of the
country in population and volume of busi-
ness. than it was five years ago. The esti-
mated gold stock of the country on October
last was s644.317574, while on December
81, 1890. it was s704,100.S11. The production
of the world in the meantime has been
about 81 0O,OOO,00O, and the production of
the United States has been more than
$3.50 100000. The gold supply on January
of the past six years, the production of
gold in the United States and the total
production of the world for the preceding
years are shown In the following table:
Gold stock of Production nj Production Of