The Scranton tribune. [volume] (Scranton, Pa.) 1891-1910, 1896-06-10
CARLISLE TALKS
ON BOND ISSUES
Sscretary's Statement to the Senate
Subcommittee on Finance.
HISTORY OF TIE BOND SALES
Drainage Of Gold to Meet the Re.
quiremcnts of Foreign Purchases
Are the Cause of the Troublc.. The
Indifference Of Congress.

Washington, June 9.-The reply Of
Hon. John q. Carlisle, secretary of the
treasury. to the inquiries of the sub
committee on finance of the United
States senate, charged with the inves-
t.gation of the sale of bonds of the
United States in the years 1S9i-5-6, was
made public today.
The secretary traced the beginning Of
the trouble back to the closing year Of
President Harrison's administration
and brings the history down to Mr..
Cleveland's first issue of bonds in the
following statement:
Largely on account of ap rehensions
in this country and abroad as to the
ability Of the government Of the United
States to continue the current redemp-
ton of its notes in gold coin, and MAIN
tain the parity of the two metals, the
exports Of gold during the fiscal year
1888. which closed June 30. 1898, reached
the unprecedented amount of $1OS, $780,
S44, nearly all of which was withdrawn
from the public treasury by the pres
entation of notes for redemption. TN
the Slst day of December, 1892. the free
gold in the treasury amounted to $l2l,-
2e6, ,662.29 but by January 81, 1893, 1t had
been reduced to $l0S, ,lSl, 1883, and on
the 2sth of February it had fallen to
SlO3. .2S4 81. or only sS2Si,21S.9l In ex-
cess of the lawful reserve. The reserve
fund would have fallen below 100000
QtH before March l, 1898, if my prede-
cessor In office had not effected ar.angs-
ments in January and February by
which the sum IF about sS,25o, 900 in gold
was procured from certair bankers al
| New York In exchange for United States
notes and otherwise.
Notwithstanding the most strenu-
Gus efforts by the department to main
| tain the $l00, 600 900 reserve intact. the
presentation of notes for redemption 10
procure gold for shipment abroad con-
| tinued to such an extent that. on the
22d day of April 1893, for the first time
since the fund was established. it be-
came necessary to use a part of 1t for
redemption purposes. and II was re-
! duced to s95, 432 1857; but 1t was after
wards increased by exchanges Of oth,I
forms OF currency for gold, so that or
the tenth day OF August 1t had been
fully restored. and there was on hand
| $1O3. .6S3. 900 in free gold; but by Decem.
! Der 30. 1898. It had fallen to $50, ,S61 60l. 13
and was reduced on the 18th day of Jan.
uary, 1894, to the sum OF $69, Isl, 1921. The
cash balance in the treasury excluding
the current liabilities. but including the
gold reserve and all subsidiary ant
minor coin. was only $S3.9Gl .4O2. Very
little gold was being received on ac-
count of dues to the government and II
was therefore impossibl, to increase tn;
reserve without resorting to the issue
and sale of bonds, under the authority
conferred by the act of January IA
1875. commonly known as the resump'
tion act. At this date there was no fret
gold coin In the treasury, all the coir
certificates. The $50 ISL, 1921 then held a:
free gold was in the form Of bullion"
THE FIRST BIDS.
Quoting the provisions of law which
authorized this course to be taken, Mr.
Carlisle proceeds to state than on Jan
II, 1894, bids were invited for fifty mil
lions of per cent. bonds on not to ex
ceed a 3 Der cent. basis. The proceed!
of this sale amounted to the sum O
SIS, ,660, ,917.63, which was paid into th'
treasury in gold coin and gold certifi
Gates. The circumstances which led t.
the next issue are then described ant
the result of this proposition was tina
1856 bids were received, amounting t,
SITS. .S36. .05O nearly all Of which were a
rates which would yield to the investor
per cent or less upon the sums award
ed to them. One bid for the whole sun
Of $50, ,O00. 900 all or none, upon the basi
of 2.S7S per cent. being the most ad
vantageous offer for the government
that was made, was accepted, and tn
proceeds of the sale, $5S, 53S, 500, wer
paid into the treasury according to tn
terms of sale. The payments into tn
treasury on account Of this sale wer
not entirely completed until the Dec.
1894, and 1t soon became evident tina
the trersaction had not been effectua
to stop Withdrawals of gold and by Fet
S, 1S9J the reserve had been reduced t
s41. $40, 1S1, and several millions NOR
had been demanded
These large Withdrawals We're du
almost entirely so far as could be as
certained to feeling of apprehensio
in the public mind, especially amon
the holders of our securities abroad
which increased in intensity from da
to day until it reached the proportion
Of panic in the financial centers, an
II was evident to all who were familia
with the situation that unless effectua
steps were promptly taken to check tn
growing distrust, the government
would be compelled within few days t
suspend gold payments and drop to
silver and paper standard. The situa
ton was SO grave that the attention G
congress was called to the subject b
a special message from the president G
the United States on Jan. 2S, 1896"
CONGRESS INDIFFERENT.
Congress" Mr.. Carlisle says, "faile,
to pass any measure for the relief of tn
treasury, or to take any action calcu
lated to a4lay the serious apprehension
then existing In the public mind an
consequently a contract was entere
into by the secretary of the treasury o.
the eighth day Of February. 1895, wit
August Belmont & Co., Of Ne,
York. on behalf of themselves, an
, Messrs. n. NJ. Rothschids l. Son, O
London, and ]. p. Morgan & Co
. Of New York. on behalf Of them
elves, and j. s. Morgan & Co., G
London. for the purchase of 3,5OO,0O
ounces Of standard gold, at the price G
s17,s04.41 per ounce, to be paid for by tn
delivery OF United States bonds havin
: thirty years to run and bearing fou
per cent. interest, and the gold to be de
posted at the United States sub treas