The San Francisco call., 1896-06-10

policy declared by Congress in the act OF
July IA, 1890, and repealed in the act OF
Novemb Der l, 1898, to resort again to an
issue of bonds. The result of this PROPOSE
ton was that 4S6 bids were received,
amounting to SITS, 8,836,05O. nearly all OF
which were at rates which would yield to
the investors per cent or less upon the
sums awarded to them.
"One bid for the whole sum OF 0,OOO,-
600, all or none upon the basis of 2.S76
per cent, being the most advantageous
offer for the Government that was made,
was accepted, and the proceeds OF the sale,
Soo,538, 500, were paid into the treasury ae-
cordlng to the terms of sale. The pay
ments into the treasury on account OF this
sale Were not entirely completed until
after the first day of December, 1894, and 1t
soon became evident that the transaction
had not been effectual to cope with
Withdrawals of gold. In that month
Withdrawals amounted to $31, ,SO7, 221,
and during the next January. 1889
they amounted to $45, ,117,73S, and they
continued without diminution until the
early days of February, until on the 0th
OF that month the reserve had been re-
duced to $41, $40, 1S1 and several millions
more had been demanded, part OF which
was taken out and afterward returned to
the treasury on account of the temporary
restoration of confidence resulting from
the fact that it became generally known to
the public that measures were about to be
taken for the replenishment OF the re-
serve.
"Ihese large Withdrawals were due al
most entirely, so far as could be ascer-
tanned, to feeling of apprehension in the
public mind, especially among the holders
OF our securities abroad, which increased
In intensity from day to day until 1t
reached the proportions of panic in the
financial centers, and it was evident to all
who were familiar with the situation that
unless effectuai steps were promptly taken
to check the growing distrust the Govern
ment would be compelled within few
days to suspend payment and drop to
silver and paper standard: More
than $43.000,0O0 of the amount with
drawn during the brief period last
mentioned was not demanded for export,
but was taken out by people who had be-
come seriously alarmed on account OF The
critical condition of the treasury IN It's
relations TO the currency of the country.
The situation was so grave that the atteH-
ton of Congress was called to this subject
by special message from the President
on the 2Sth day of January, 1896"
Mr.. Carlisle quotes from President
Cleveland's message, in which he recon-
mended that the Secretary of the Treasury
should be authorized to issue sufficient
bonds to maintain the gold reserve and to
redeem and cancel the legal tender and
treasury notes.
Congress, Mr.. Carlisle says, "failed to
pass measure for the relief of the trea-
sury or to take any action calculated to
allay the serious spprehensions then exist
ing in the public mind, and consequently
a contract was entered into by the Secre-
tarv of the Treasury on the Sth day of
February, 1895. with August Belmont 81
Co. of New York, on behalf OF themselves
and n. NJ. Rothschild & Sons of London
and j. P Morgan & Co. of New
York. on behalf of themselves
and J. S. Morgan & Co. of London,
for the purchase of 3,500000 ounces of
standard gold at the price of $17.S44l per
ounce, to be paid by the delivery of United
States bonds having thirty years tc run
and bearing per cent interest and the
gold to be deposited at the United States
sub-treasuries. By the terms of this con-
tract not less than one-half of the gold was
to be procured abroad and the parties
with whom it was made stipulated that
they would, as far as lay in their power,
exert all financial influence and make all
legitimate efforts to protect the Treasury
1f lo Tnir Cfofa
drawals of gold, pending the complete
performance of the contract. One ounce
of standard gold was worth $1860465. and
the difference between that sum and the
contract price ($17.8441) represented the
premium received by the Government on
the bonds, making the price at which the
bonds were accepted $104. 1916. at this
price they would yield to the investor .75
per cent per annum."
In order that Congress might be afforded
the earliest possible opportunity to take
such action on the subject as it might con-
slider most beneficial to the public interest,
the President of the United States on the
same day and Immediately upon the ex-
ecution of the contract transmitted a
special message asking Congress to
Speclucally proVlue LOT D per csbI Solu
bond, which would effect a saving of over
SIG, 900, ,000 to the Government.
A bill was introduced in the House to
authorize the substitution of 3 per cent
bonds payable in gold for the A per cent
bonds described in the contract, but it
failed to pass, and consequently the parties
proceeded to complete the transaction by
the exchange of gold for 4 per cent thirty
year bonds, according to the terms of the
contract.
The agreement by the parties of the
second part that they would as far as in
their power make all legitimate efforts to
protect the treasury of the United States
against Withdrawals of gold pending the
performance of the contract was faithfully
and efficiently carried out, and no gold
was taken rom the treasury to be used in
paying for the bonds, as had been done in
the two previous sales. nor was any with
drawn for shipment until after the delivery
OF the gold in exchange for the bonds had
been completed under the contract. After
a large part of the gold had been furnished
from abroad the Secretary, in order to pre-
vent disturbances in the rates OF foreign
ol. ri,Nd md q