The enterprise. [volume] (Wellington, Ohio) 188?-1899, 1895-12-04

sountry 80 ciaT ut the 'loSe CT szJ ycnr 1879
Mey amoCzJsd 20 1881 ,9taGaL
1lnmenately af,er lhaO date. ant5in Jannnryr
1915. law was passed psoviding nbf the re-
Sumption of specie payments, by %1sch the
secretary OF the treasury was requtrto, when
ever additionnai circulation vas issSBd to ma
uonsd banks to- retro United Statss notes
equal IN amouarpD ~ per cent Of suehi sddi-
tonal bank circula ton until 3Gch notes, we're
reduced TO 100000 coo
TnislGw further provided 5ltat on aGa5fter
the lst day OF Jauiary. ls7e, thy United Sbs5ss
notes then outstanding should be redeemed in
coin, anCinordeK 10 provide and prepErfsfnr
such redemption, the secretary ct the treasury
was auth srized not ONLY. to uss any surplus
revenues OF the Rovernplent, but 80 issue bonds
Of the Unihed States and dispose of them for
9oln, and ta' use thNpfOceedS for tho purl ll0SaS'
contemplated blythe statute.
In May, lSfS and before the date thus Ipa-
Pointed for the redemption and retirement OF
tlnese notes another statute was passed forbid
ding their further cancellation and retirement,
Some of them had. however, been previously
reoeemed and cancelled upon the iSeue OF addl.-
tional national bank circulation as permitted
by bhe law of ISIS, so thatthe amountOutstand-
ing % the time Of the passage of the act for
riddAnS their future retirement was 1916 .6Sl,00
The law of.lS78 did not stop at d!stinct pro-
hibitdon, but contained III addition the follow
ing express prcvfsion And when aHyof said
notes may be redeemed or be received into the
treasury under 5nylaw from any source what
ever, and shall belong to the United States,
stroyed, but they. shall he re-issued aRa paid
out again and kept incirriUation."
This was the sendition Of AFFAIRS onrthe lst
day OF January 1879 which lad been aXed
upon fGnr years Egfore as tne date for e1serinS
upon the redenption and retiremoat f all
these notes and for which such ab@usant
means And bcen provided.
The government was pct in the ANONYMOUS
situation of owing TO the koIders OF its notes
debts Issyablo in gnid on demand which could
neither be retired by receiTing such notes in
discharge of obligations dee the government.
nor cancelled by actual payment in gold hwas
forced te0 redeem without Tede emption a1KA to-
pay VIII Aout acquitlunce.
There had been issned gnd sold S95 500Go0 Of
the bonds authorized bythe resumption sact OF
1875, the proceeds oi'vhtch- together with other
gold in the treasury, createGa gold fund deeaned
sufficient to meet the demands which mitgEttbo
made upon 1t for the redemption Of thsOut-
standing United States notes. This fund.- to-
gether with such other gold as might be from
time to time in the treasury available forthe
same purpose, has been stDcG called our gold
reserve, and 5000 00D hGs been regarded us
an adequate amount 10 accomplish its oh1ect.
This fund amounted onithe first day Of January
1872 to sl4, l93,3G0, and. though thereafter con-
stantly tluctuating, 1t Gid not fall below that
sum until July. 1872.
In April 1873, for the-ffrst time since iGsos--
tablishment this reser 70 amounted to lesSthan
Sl00OO0 0e, containing ~ that date only S910lii--
$50.
In the meantime, and in July, 1890 an acs had
been passed directing larger governmental
monthly purchases of silver than had beenuc-
qui,ed under previous .GWs, and providing that
in payment for sueh silver treasury notes OF the
United States should be issued payable on de-
mand in gold or silver coin at the discretion Of
the secretary of the treasury 1t was, however;
declared in the act to,be the established policy
ofthe United States to maintain the two met
ais on parity with each other upon the present
legal ratio, on such ratin Us may be provid2d.hy
INV"
Tn ,,io, nj +lib finn a. 1ync M. lao,,,ed
permissible for the secretary Of the treasury
TO exercise the discretion in terms conferred
on him by refusing to pay gold on these notes
when demanded because by such discrimination.
in favor OF the gold dollars the So-called parity
OF the two metals wolIld be destroyed and grave
and dangerous conSequenceS would be pre-
eipitated by Affirming or accentuating the con-
stantly widening disparity between theiractnal
| values under the existing ratio.
It thus resulted that the treasury notes.
issued in payment OF silver purchases underthe
| law OF 1879 were necessarily treated as gold
| obligations at the option OF the holder Those
! notes on the first 99 day OF November, 1893,
| when the lawcompelling monthly the purchase
| Of silver was repealed, amounted to more than
! S15j, ,00D.0O0 The notes OF this description now
| out standing added to the United States notes
| still undiminished bgredemption or cancellation
! constitute q volume Of gold obligations amount
| ing to nearly 500 100000. These obligations
| are the instruments which. ever since we have
had a gold reserve. have been used to deplete
| It,
This reserve. as has been stated had fallen
| in April, 1898. to s91 ,0loSS0. II has from that
| time to the present, with very few and unim-
| portant upward movements, steadily decreased
| except as 1t has been temporarily repleniShed
| by the sale OF bonds. Among the causes for
| thisc onstantandunform shrinkage in this fund
may be mentioned the general falling of OF eX-
| ports under the operation of the tariff law.
| In consequence of these conditions the gold
| reserve on the first day Of February, 1894 was
| reduced to s61, ASS, ,3T. having lost moro than
| $yl 900 00l during the preceding nine months, or
| since April, 1893 Its replenshment being nee
| essary, and no other manner OF accomplishing
It being possible, resort was had TO the issue
| and sale OF bonds provided for by the roSump-
| tion act OF 1875.
i Fifty millions Of these bonds were sold,
i yielding $58. .633 295.71, which was added to the
reserve fund Of gold then on hand. AS q result
Of this operation this reserve, which had suf-
| fered constant and large Withdrawals in the
meantime, stood on the 9TH day OF March. 1894.
at the sum of Sl07, 1880. Its depletion was
however, Immediately thereafter SO accelcr-
nted that on the 30th day Of June, 1894, 1t had
fallen TO $64.87302 02j, thus losing by Withdrawals
| more than S42, ono, 900 in five months and drop
ping slightly below its situation when the sale
OF $5O,0O9,0OO In bonds was effected for its re-
plenishment.
This depressed condition grew worse, and on
the oath day Of November. 1894, our gold reserve
being reduced to S6 ,6sg lOl it became necessary
to again strengthen 1t. This was done by another
sale of bonds amounting TO S5O,O0OtO), from
which there was realized $50 i3S, $40. with which
the fund was increased to Sill i202l on the 4th
day Of December, 1891.
Again disappointment awaited the anxious
hope for relief There was not even q lull in
the exasperaling Withdrawals of gold. On the
contrary they grew larger and more persistent
than ever. Between the 4th day Of December
1884, and early In February, 1893, period OF
scarcely more than two months after the second
reinforcement of our gold reserve by tho sale
OF bonds, il had lost by such Withdrawals more
than 500 900 and had fallen to 4l $40, ,lSl.
Nearly S43 900 900 had been withdrawn within
the month Immediately preceding this situa-
tlon. In anticipation of impending trouble.
he'd on the 28th day OF January, 1875, addressed
O communication to the congress fully setting
forth our difficulties and dangerous position
and earnestly recommending that authority bt
given the secretary Of the treasury to iSSu
bonds bearing q low rate of interest payable b,
their terms in gold, for the purpose Of main
taiuing sufilcierK gold reserve, and also 70
| United States notes and the treasury notes is
sued for the purchase OF silver under the LAY
, OF $780, This recommendation did not, however
i meet with legislative approval
In February, 1895 therefore, the situation wa
! exceedingly critical With reserve perilous
) ly low and refusal Of congressional aid, every
thing indicated that the end OF gold payment
4 by the government was imminent. The result
OF prior bond issues had been exceedingly III
a satisfactory, and the large Withdrawals Of gol
a Immediately succeeding their public sale
I open market gave rise to u reasonable susp
I cion that o large part OF the gold paid into II
treasury upon such sales was promptly draw
a out again by the presentation Of United STATE
Z notes or treasury notes and found its way
\ the hands OF those who had only temporaril
y | parted with 1t In the purchase Of bonds.
4 In this emergency, and In view OF its su
a rounding perplexities 1t became entirely al
!: parent to those upon whom the struggle Il
q safety was devolvea not only that our gold r.
serve must, for the third time in less this
! thirteen months, be restored by another iss,
= and sale Of bonds bearing high rate OF int
4 est and badly suited to the purpose, but that
: plan must be adopted for their dispostiC
] promising better results than those realized {
/, previous sales. An agreement was thereto
y made with number OF financiers and banke
y whereby 1t was stipulated that bonds describ,
. In the resumption oct Of 1875, payable in co
thirtv rears nftar their date hearing lntere