The L'Anse sentinel. (L'Anse, L.S., Mich.) 18??-current, 1896-10-24
NO TRIckERY IN 1T.
The Outflow of Gold Explained by .
Treasury Omcial.


Treasury Omcial.
Assistant Secretary William Il. Cur
lis, of the treasury department, has
written letter under date of October
Is. to Assistant Secretary Dabney, of
the department of agriculture, in
which hs defends the New York bank
ers from the allegations often made
that they are interested in the with
drawal of gold from the treasury. Fol-
lowing is the letter:
Hon. Charles w. Dabney. Jr.. Assistant
Secretary of Agriculture-My Dear Sir:
Referring to your letter and our converse
ton of the other day, concerning the cam
paign attacks upon the bankers or New
York In their relations with the gold re-
serve, desire to submit the following con-
sIderations. The term raids by bankers
at New York upon the treasury is one ire
Quently used by writers and speakers VINO
have no accurate knowledge OF the method
by which notes are presented Tor reuemp-
ton at the subtreasury In New YORK, or
the character or number of persons making
such presentations.
1.-THE term banker seems 10 be assumed
In most cases to cover a class OF men who
are apparently engaged In withdrawing
gold from the governments reserve and
putting 1t away in their private vaults
for their own selfish purposes, and TO ac-
complish certain alleged improper objects.
The facts in the case are so different from
these fancifu statements. that II seems
worth while to call attention to them.
''Ry operation of certain natural COM
mercial laws, without the interference or
LEGISLATION, New York has come TO be the
settling place of almost all contracts Tor
the sale of our products abroad ana IN 'hat
market the bills of exchange which repre-
sent products exported arc offered for sale
AT the same time, people desiring TO remit
money abroad to pay obligations or TO buy
merchandise, are in the same marker, ana
in order to pay their obligations purchase
these bills of exchange to remit to their
creditors abroad.
When Price OF Exchange Rises.
"I,arge amounts of coffee, silk, rice, tea,
sugar and other foreign products con-
sumed here have to be purchased with
foreign credits and paid for in New York
with foreign exchange. The natural result
IS that, when we are selling more GOODS
abroad there are more bills of exchange
in the market than there is demand for,
which is the case at present, the price of
exchange falls. On the other hand. when
we are not selling as much abroad, and are
buying more or are paying our debts to
greater extent abroad, the price of ex-
change rises.
.'The people engaged In the banking bust
classes: First. the officers of the regular
banks of deposit or issue, including the ma
tional banks: second, the dealers In securi-
ties, some Of whom have foreign connec-
lions through whom they market large
amount of securities and upon whom they
draw a corresponding amount of exchange
in payment for securities sold abroad and
TO whom they remit exchange or gold in
payment for securities sold here; third,
agencies. or branches of foreign houses.
who are perhaps also dealers in securities:
but whose main business is buying and
selling exchange on Europe, for the profit
which can be made in the operation itself
The first class are especially interested in
the general prosperity of the country and
in keeping up the value of securities, be-
cause IL there is fall in securities held
by them as collateral they are compelled
to call in their outstanding loans, which
their lines of credit, diminishes
their profits, restricts mercantile and in
dustrial enterprises, and in the end creates
failures in business and general financial
and commercial distress.
THE second class are directly inter
ested in keeping up the value of securities
in this country which they have largely
sold abroad, and their interests are to
avoid gold exports and the public apprehen-
sion arising from reduction of the gold
reserve. The third class buy or sell ex-
change whenever an opportunity for profit
offers
Gold Exporters Few in Number.
IF there are few commercial bills to be
had in the market and the demand by re-
mitters is great, exchange rates rise, and
If dealers having credit abroad find that
they can sell their bills at a higher price
than the probable cost to them of with
drawing gold from the treasury and ship
ping 1t abroad to meet their bills at ma
turity they do SO. thus making a profit on
the transaction. The leading members of
the third class in New York can be nurp-
bered on the fingers OF both hands, and. |
IN fact, three or four do almost all OF the |
of gold for export purposes, |
as will be seen by an examination of the |
list of parties exporting gold to Europe, |
published in the daily press during its con- |
tinuance
Each shipment made usually represents |
In the aggregate large number OF single |
transactions. One concern may sell a mil |
lion dollars of exchange in one day, hut |
il may be represented by $50 to $50 differ
ert bills, running from Cleo upward. and |
they pay these bills abroad by shipping |
gold for that purpose, which they draw |
out of the treasury in one sum and send |
in one shipment.
III will thus be seen that great ma,
tority of bankers are pecuniarily interest |
ed in keeping the reserve up to its fun |
amount, and for this reason they have |
b''H "hiiiS III the past ana are sun |
willing to make considerable sacrifices. |
and In order 10 prevent shipments OF gold |
have contributed large amounts OF money |
to pay the dealers in foreign exchange |
the profit they would have made by such |
shipments. This was notably the case in |
the operations of the so-called syndicate |
which bought the bonds of the govern |
nent under the contract of February S, |
1928, and again in the early part of this |
summer.
Although Withdrawals for export have |
been going on for several years, it is only |
within two years that an apprehension |
that the government might be unable to re- |
1eem It's obligations in gold has caused |
for any other purpose, and |
nt no time has there been any evidence |
that Withdrawals of gold from the treas |,
my were made for the purpose of affecting |
the markets.
Why Gold Does Not Circulate.
THE fact that the banks were able TO |
all the gold required for export |
up to the middle OF the summer OF 1892,
ard did so, was because large amounts of |
sold were being paid to them and by them
into the treasury and paid out again in