The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1896-08-15
The Patriotic Bankers.
From the New York Journal.

The banks have come to the relief of the
Treasury, giving it gold in exchange for
legal tenders, in order to spare it the neces-
sity of issuing more bonds before election.
That is kind of them, but their action
suggests few "reminiscences.
For eleven years before the passage of
the Sherman act, in 1890, the redeem
ability in gold of our s346, 900, 900 of
greenbacks had been maintained without
friction or inconvenience to the Govern
ment The Treasury had a legal right to
pay its notes in either gold or silver, but
the demands for redemption were so small
that no embarrassment was caused by al
lowing the holders to choose the kind of
coin they preferred.
The Sherman act added new element
to the currency-about $3.50, 900, 600 of
notes issued in payment for silver bullion
and redeemable in coin 1t was expected
by Congress that these notes would be
coined for that purpose But the Harrison
Administration decided that this bullion
should be treated as junk, and that the
notes should be paid in gold on demand.
This policy increased the gold obligations
of the Government by about forty per cent,
while failing revenues and increasing ex-
penditures were diminishing its ability to
meet them.
Soon after the passage of the Sherman
act the banks seem to have decided that
the time had come for a systematic and
prolonged ''object lesson" that would not
only scare the country into stopping silver
purchases, but would induce it definitely to
adopt the gold standard. Up to that time
the great bulk of the customs revenues had
been paid in gold. The first Sherman
notes were issued in August, 1890. At
the end of that month there were only
SO, 609, 900 of them outstanding, and of
these S454, 541 had been gathered up and
paid into the Custom House at New York
for duties. At the end of the next month
there were SO, 069, 900 in Sherman notes
outstanding, of which 81, 734, ,4O4 had
been paid in for customs at New York.
In two months the proportion of custom
duties paid in gold at New York had fallen
from 95. 4 to $50 per cent, and the pro-
portion paid in Sherman notes had risen to
II per cent. The next month the pay
ments in Sherman notes increased to 1916
per cent, while those in gold declined to
811. In June, 1893, not single cent
was paid in gold, while 35 per cent of the
total payments were in Sherman notes.
This object lesson was successful, with
the help of the closing of the Indian mints
and heavy demands on the Treasury for
the redemption of both greenbacks and
Sherman notes in gold, in securing the
stoppage of silver purchases. But there
still remained the definite adoption of the
gold standard and the retirement of the
greenbacks The Sherman note scarecrow,
having served its turn, was promptly
dropped. The customs payments in such
notes at New York fell off to l.. Z per cent
in September, 1895, or less than one-half
as much when there were SAB, 666, 280
of such notes outstanding as in the very
first month of the law, when only So, ,609,
600 of them had been issued. 1t was now
the turn of the greenbacks to serve as the
object lesson. In February, 1894 (the
month of the first bond issue), they consti-
tuted 90 5 per cent of the customs pay
ments at New York; in November of the
same year (the month of the second bond
issue), 80 per cent; in February, 1895
(the month of the syndicate loan), SO. l
per cent, and in September Of the same
year, 78. l per cent. And still Congress
did not retire them.
Meanwhile the gold which the importers
had ceased to pay into the Treasury the
bankers were rapidly drawing out. In
February, 1894, the month of the first
bond issue, they drew S19, 1913, 354 by
presenting greenbacks and Treasury notes
and demanding gold OF this they ex-
ported 81 068, 335, and stacked the other
eighteen millions away. In November,
1894, the month of the second bond issue,
they drew 81, 799, TAI, all of which they
kept, importing 81, ,507, 388 in addition.
That whetted their appetites, and in the
next two months they had depleted the
Treasury of S77, O24, 959 of the gold which
they had just lent it. They sent S34, :
122, 928 of this to Europe, and kept about
forty-three millions in their vaults. Then
the Belmonts, Rothschads and Morgans
saved the Treasury by buying s62, 315, :
400 of bonds at 1041, the same bonds
selling in the market at from 1874 to 12411
as soon as they were offered to the public.
The process has continued steadily until
the present time When we were buying
silver under the Sherman act we were told
that if those purchases were stopped the
drain on the Treasury stock of gold would
be relieved The purchases were stopped,
and the banks have drawn more gold out
of the Treasury since than they had done
before in the whole period since the re-
sumption of specie payments
Now they are becoming alarmed at their
own work. The ''object lesson is not
working as they expected, and they are
patriotically returning to the Treasury some
of the gold they took out. But note the
process, The metal was Withdrawn by
presenting legal tender notes and demand
ing their payment in gold. The gold is
now returned in exchange for the same
notes. But under the policy initiated by
Harrison and Foster, and continued by
Cleveland and Carlisle, the Government
simply holds that gold on deposit for the
holders of those notes. They can withdraw
it again whenever they choose. And what
would they be likely to choose in the event
of Mr.. Hanna election to the Presidency?
They have shown that their appetite for
bonds is Unsuitable. Only the necessity of
pandering to public opinion in the crisis of
this campaign restrains them from forcing
new bond issue now Elect Hanna, and
public opinion viii cease to be formidable.
The sight orders on the Treasury's gold
now held by the bankers can then be pre-
| scented with safety.