The Austin weekly statesman. (Austin, Tex.) 1883-1898, 1896-10-22
CAUSE Of GOLD SHIPMENTS
WILLIAM L. CURTIS OF THE
TREASURY DEPARTMENT
MAKES IT PLAIN.
new YORK BANKERS HEAVY LOSERS
When the Gold Reserve Is Threatened
With Depletion-When the Balance
of Trade Is in Our Favor Gold
Comes Back.

Washington, Oct. 15.-Assistant Sec
rotary William Il. Curtis of the treas
ury department has written n letter to
Assistant Secretary Dabney in the de-
partment of agriculture in which he de-
tends the New York bankers from the
allegations so often made that they are
interested in the Withdrawals of gold
from the treasury. Following is the let
ter:
Hon. Charles w. Dabney, Jr., Assistant
Secretary of Agriculture:
Referring to your letter and your con-
versaton of yesterday concerning the
campaign attacks upon the bankers of
New York in their relations with the gold
reserve, | desire to submit the following
considerations.
The term, raid by bankers at New
York upon the treasury" is one fire.
quently used by writer's and speakers
who have no accurate knowledge of the
method by which notes are presented
for redemption at the sub-trcasury in
New York, or the character or number
of persons making such presentation.
The term banker seems to be assumed in
most cases to cover Il class of men who
are apparently engaged in Withdrawing
the gold from the governments reserve
and putting it away i'll private vaults
for their own selfish purposes and to ac-
complish certain alleged improper OBJ
jects. The facts in the case are so diff
fcrcnt from these fanciful statements
hill
ton to them.
BY operation of certain natural COM
mercial laws. without the interference of
legislation, New York has come to be
the settling place of most all contracts
for the sale of our products abroad, and
in that market the bills of exchange,
which represent products exported, are
offered for sale. At the same time peO-
pie desiring to remit money abroad TO
pay obligations or to buy merchandise
are in the same market, and III order to
pay their obligations purchase these bills
of exchange TO remit TO their creditors
abroad. Large amounts of coffee, silk,
rice. tea. sugar and other foreign pro-
duets consumed here have to be pur-
chased with foreign credits and paid for
in New York with foreign exchange.
The natural result is that when we
are selling more goods abroad and there
are more bills of exchange in the market
than there is demand for, which is the
case ut present. the price of exchange
falls. On the other hand. when we are
not selling as much abroad and are buy
ing more or are paying our debts to Il
greater extent abroad, the price of cN-
change rises,
The people engaged in the banking
business i'll New York may he put into
three classes First, the officers of the
regular banks of deposit OF issue, includ-
ing the national banks: second. the deal
ers in securities, some of whom have
foreign connections through whom they
market a large amount of securities. and
upon whom they draw conditionally, and
to whom they remit exchange or gold III
payment for securities sold here; third.
agencies or branches of foreign houses
who are perhaps also dealers in sccurl-
ties. but whose main business is buying
and selling exchange on Europe for the
profit which can be made i'll the opera
ton.
The first class are especially interested
in the general prosperity III the country
and in keeping up the value of securities,
because if there is a fall in securities held
by them as collateral they are compelled
to call in their outstanding loans. which
reduces their lines of credit, dimlnlsheS
their profits. prevents them from discount
ing commercial paper, restricts mercantile
and industrial enterprise and in the end
creates failures in business and general
financial ad commercial distress. The
second class are directly interested III
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 apprehension
arising from a reduction of the gold re-
serve. The third class buy and sell eN-
change whenever an opportunity for proht
offers. If there are few commercial bills
TO be had in the market and the demand
by remittcrs is great, exchange rates rise.
If dealers having credits abroad find that
they can sell bills at higher price than
tine probable cost of them. they DO So
fhus making profit on the transaction.
The leading members of the third class
in New York can be numbered on the
fingers of both hands, and. III fact, three |
or four do almost all the withdrawing of
the list of the parties exporting gold to
Europe. published in the daily press dur
ing its continuance. Each shipment |
made usually represents III the aggregate |
n large number of single transactions. One |
concern may sell $1,000,00O in exchange |
in one day. but it may be represented by |
$50 to $50 different bills, ranging from
lOU pounds STERLING, upWaTuS anu tne!
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 1t will thus be seen that a |
great majority of the bankers are pecu-
niarily interested in keeping the gold re-
serve up to its full amount. and for this |
reason they have been willing in the past |
and are still willing to make considerable |
sacrifices in order to prevent shipments |
of gold and have contributed large |
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 government under the con-
tract of 1895, and again in the early part |
of this summer.
Although Withdrawals for export have
been going OH for several years, it is only
within two years that an apprehension
that the government might be unable to
redeem its obligations in gold has caused
for any other purpose and
1T no time has there been any evidence