New-York tribune., 1896-01-04
THE BORROWING PROBLEU.

The experienced bankers VINO are UNDERTAKING
10 rais, SlUu uOOOuUO for Government bonus are
we'll awar, that they have some "pS'hr"s ~
overcome They are eminent IN th'W p"s"'S'
but cannot ALWAYS forcsec events else tue "''"
ing REORGANIZATION might not have been hnhch'i
inst when ii was. II they make contract VIII"
,hc Government. the risk of changes III ih'''-
national relations changes IN CongreS>iona'
action. changes in the money market mas 10
hp met hv them ana not by the Treasury Apart
from th, question whether Government ought
:, harrow money ar all at this time Tie uues-
tim whether il can borrow in the way II pro
uo>.s without raising mischief needs con>idcra-
ton.
This +, not a proposal 10 obtain part or '"e
,,It which The millions have hidden In stock
ir.s 4 lt,lr premium ON gold would only hre
.u,l, holI,r. with the expectation Of the greater
nremium for which they have been looking ana
inspire them to lock up their stockings ana 'h'
contents more closely They might take bonds
If obtanablc in small amounts for each peIso"'
and a. The price at which Government sells.
But they are precisely not the people 10 open
,h.r hoor1s in order to pay sundry bankers 10
u,r cen, profit in a month On the price asked by
Government. Bankers. capitalists and specu-
i, will have to come on, of known stocks at
financial centres. Now the bankS ana o'"e'
financial institutions cannot raise all 'he Hoh'!
n, once even II they are willing to leave thehi-
selves without defence in case or any ,hterha-
tional difficulty. They need not craw u from
the Treasury. though ii Is Impossible ior 'he
Treasury 10 know whether gold drawn '"-u'!
for export and sold 10 men because premium
can he obtained slightly better than The proht
in oxporting. is the same gold which somebody
rls,. offers for bonds the next day.
+, may he taken for granted. In the light OF
evuerirnce. that foreign bids for bonds mean
IN exchange Of American stocks ana i"lroau
securities for governments. Europe was selling
r,pidly on Thursday and no one was surpflseu'
The bankers who bid for bonds may not person
ally sell a share. but il generally happens mat
,h.v h,ve friends or customers who desire about
,h,, ,imo In realize ON their American secIri-
Tins How Is lie Government to know how
much of the gold II may receive VIII nrs' pe
drawn from il to pay for stocks sold by European
holders? With all the prestige and innnence oi
the Morgan-ItohSchild syndicate it could not
keen in Europe any c"nsiderhbic part ol '"e
bonds placed there last spring. Later II not
sooner. the Treasury furnished the gold I" pay
for the bonds II sold. Nor is II necessary 10
cross the ocean t. 90 through the same perform
,uce Unless the Treasury Is actually taking III
more money than it is paying ont. and unless me
royenne law reduces imports below exports of
merchundis-. gold paid for bonds tends 10 get
ont Il the Treasury with much rapidi'y bor-
rowing by the Treasury only accelcra'rs 'ha'
tendency. and the more IL bOrrows the NOR"
people want IFS gold
Taking S1UVOVl.OOO gold within few days
ont Of the financial centres means some DIS
,,,rhpnrc The shrewdest banker will not deny
H. The gold is part Of the reserve against when
hanks are lending Contraction Of the reserve
involves a larger contraction ~ loans. Tlsh'
money makes the profits Of Il bond transaction
lnok less attractive There would be no dim
,ul,y whatever In raising the money bv different
methods without disturbance and without donp'
I, can lac raised whether disturbance comes or
mo-, But the idea tha, borrowing money Is
stride toward prosperity. and that prices ought
,n 90 M and business revive and more whe'ls
,o revolye because Government has absorbed
for unproductve uses part Of the money OF 'he
country. and requires the industries ana the
people to pay interest on 1t, IS worthy or
Nfcawber