The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1895-11-08
THE BOND PROBLEM.
= NEW ISSUE TO BE POSTPONED
UNTIL MIDWINTER.

lions Will He Different From Those OF
Last February-Chance. However. That
Business May Not Require an Issue.
The problem of issuing more bonds to
maintain the gold reserve is considered
Mt 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 toward this country, or at any
rate not away from it, 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 bond issue
will again become a pressing one.
There is strong expectation, which
cannot yet be said to have become
firm conviction, that the business situa-
tion 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 cur
rency 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
q decided reduction, according to the
latest reports to the comptroller, is an
indication that the masses Of idle money
are being absorbed by the expansion Of
business and that this cause Of gold ex-
ports has ceased to operate.
Gold imports are expected during the
next few weeks, and while they may
not be covered directly into the treasury
il is believed that they will tend to in
crease 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.
II 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 $50, 900, 900, and the
treasury will be in a position to obtain
the favorable terms which the restora-
tion Of the public credit justifies. The
former bond syndicate or any other pur
chasers will probably be willing to pay
very near the market price Of the new 4
per cents, which now hovers around
1873. The government will no longer be
at the mercy of any body of bidders for
the bonds, as was the case last winter,
when it was necessary to borrow the
gold coin held in trust against outstand-
ing gold certificates.
1t is believed that an offer of the
bonds for public bids, with some safe
guard to prevent drawing 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. It might
easily happen that bids would be made
which would enable the treasury to dis
tribute some of the bonds at home and
others abroad in such way as to OBJ
tain block of foreign gold in addition
to what was obtained at home. An issue
Of only $35, 900, 900, raising the aggre-
gate issues since Feb. I, 1894, to $780,
900, 900, would swell the gold reserve
to nearly $3.50, 900, 900, in the condition
in which it will probably be found on
Jan. /, and would put the treasury in
strong position to treat with the New
York banks for the resumption of gold
payments through the clearing house.
This is a step which the treasury Off
Gals have long been anxious to see taken
and which would establish healthy
flow of gold back and forth through the
channels of circulation in New York.
Assurances have been given that the
leaders of the bond syndicate will exert
their influence to secure the resumption
of gold payments when they are con-
WINGED that the time is appropriate.
They do not think il advisable TO make
the effort while the gold reserve is be-
low 800, 900, 900, and the New York
banks are not overstocked with gold.
If the gold reserve should be restored
to 1925, 10000 or more, it 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 be q
pledge to the banks that gold payments
were to be maintained and that it was
not necessary to accumulate gold.
Washington Star