The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1896-06-10
CARLIsLE'S REPLY.
WHY 1T WAS NECESSARY TO ISSUE
BONDS.
Prices Received Were as High as it
Was Possible to Obtain Under the
Circumstances Then Existing.

WASHINGTON, June 9.-Secretary
Carlisle's reply to the subcommittee
of the senate finance committee, charg-
ed with the investigation of the sale
of United States bonds during the
years 1894, 1895 and 1896 was made
public today. The statement is dated
June l. Reviewing the conditions
which led to the bond issues the sec
rotary says:
Largely on account of the appre-
henson incurred as 70 the ability of
the government to continue the cur
rent REDEMPTION of its notes in gold
coin and maintain the parity OF the
two metals, the exports Of gold during
the fiscal year 1898 reached the I'M
precedented amount of sos 6S0,S44
nearly all of which was Withdrawn
from the public treasury by the
presentation of notes for redemption.
Notwithstanding the most strenu-
Gus efforts by the department to main
the 22d day of April, 1893, it became
necessary to use a part of it
FOR REDEMPTION PURPOSES.
very little gold was being received on
account of revenue duties to the gov
eminent and it was, therefore, impos-
sible to increase the reserve without
resorting to the issue and sale of bonds
under the authority conferred by the
resumption act"
The secretary then refers to the bond
call of January II. 1894, which Melted
the government S5S,660,917 From that
date to November IA, 1894 when the
free gold in the treasury was $61, S7S,-
hn mt h1If
The secretary continues: I'm the
meantime, the frequent presenta ton of
notes for redemption in gold by indi-
vidauls and Institutions not desiring it
for eXportaton clearly indicated the
EXISTENCE OF UNEASINESS
in the public mind, while foreign ex-
change was almost constantly at, or
near a. rate which made it necessary
to export gold to pay bills at their ma
turify and consequently Withdrawals
for shipment were daily threatened. AS
the season approached when large e&-
ports nearly always occur it was con-
sidered absolutely necessary for the
maintenance Of the public credit and
the continued execution of the none
tary policy declared by congress in the
act of July IA, 1890, and repeated in the
act of November t. 1893, to resort again
to the issue Of bonds.
The terms and result of the second
bond issue is then stated. Secretary
Carlisle says:
TT soon became evident that the
transaction had not been effectual to
stop the withdrawals of gold. These
large Withdrawals were due almost
entirely, so far as could be ascertained,
to a feeling of apprehension in the
public mind, especially among the
holders of
OUR SECURITIES ABROAD
which increased in intensity from day
to day until it reached the proportions
of panic in the financial centers and
it was evident that unless effectual
steps were promptly taken to check
the growing distrust. the government
would become compelled within a few
days to suspend gold payments and to
drop to silver and paper standard. The
situation was so grave that the atten-
tion of congress was called to the sub
ject on the 2Sth of January, 1895"
After freely quoting from this mes
sage the secretary says, the congress
having failed to pass any measure fol
the relief of the treasury, a. contrac
was entered into on February 8, 1885
with August Belmont & Co., of New
London, and P. ]. Morgan & Co, for ths
purchase of $500, 900 ounces of standard
gold at the price of $17SO441 per ounce
to be paid for in United States thirty
year per cent. bonds. Not less thar
one half of the gold was to be procured
abroad and the parties agreed, so fal
as lay in their power, to exert any
financial influence to make
ALL LEGITIMATE EFFORTS
to protect the treasury against thu
Withdrawal pending the complete per
formance of the contract
The secretary quotes from the pres
ident's message sent to congress imme
diately on the execution of the con
tract. in which he again calls attention
to the financial condition. The agree
ment to protect the treasury gold, tn
secretary says, was faithfully carried
out. and he adds;
After a large part of the gold hat
been Furnished from abroad, the secre
tar-y, in order to prevent disturbance
in the rates of foreign exchange ant
create a condition that would fore
gold exports and consequent with
drawalS
ACQUIESCED IN A DEPARTURE
from the literal terms of the contrac
requiring one-half to be procure.
abroad and accepted deposits of gol,
then held in this country to complet
the delivery"
on December 2, 1895. the presiden
again sent message to congress ask
ing remedial legislation, but none wa
enacted, and on January s. 1896. a cir
cular was issued asking for subscrip
tions for 500 900, 600 per cent. bonds
The secretary says:
My opinion is that the prices re
ceiyed by the government for bonds i
1894, 1895 and 1896 were as high as
was possible to obtain under the cir
cumstances existing at the times wne
the sales were made. The fact that tn
bonds are offered for sale by the gov
eminent only at times when the al
fairs of the country are greatly dis
turbed and the market more on les
depressed on account of the bushes
situation and the
FEELING OF INSECURITY
which always prevails at such period
among investors, necessarily prevent
the realization of as good prices a
might be procured If advantage coul
be taken Of the most favorable oppor
tunitiss for effecting the sales. TIL
same conditions which make the issu
of bonds necessary also depress TIL
price of such securities in all the maj
kets of the world, and consequent
the government is compelled to max
its sales under the most unfavorabl
circumstances.
In relation to the part of the resi-
tuition which directs the committee t
investigate and report what effect tn
bond sales had on the credit and bus.
ness of the people of the United States