The Providence news. (Providence [R.I.]) 1891-1906, 1896-02-08
THE BONDS AND THE RESERVE.

IhL DcNDS AM <HE Af<S<HsE
Gratifying as wks the result OF the new
bond ocer which brought bids to the
number OF nearly 800, or an amount ag-
gregating SONS 5000, 600, oOo, how far the
''porular" lean scheme may prove OF adj
vantage TO the so-called gold reserve, over
and above the advantage OF the method
adopted Of disposing of the next previous
issue, may be stil said to be an open
question. This fact that the bidders were
not and are not pledged TO purchase the
bonds with gold seeur, d elsewhere ;ysan
from tue reserve may result in only set
ting running again the ''endloss chain"
that so erie res the President. How much
gold trat is plid into the treasury for the
bonds may first have bsen drawn out of
the reserve cannot be estimated. The
syndicate agreement covering the last
issue OF bonds imposed upon the bankers
engaged N it the task of supporting
the reserve SIS well as the obligation to
take the bonds. Tbs agreement
was carried u with that good faith
and practical benefit TO the
reserve aad TO the credit of the treasury
that characterize the spoken or written
contracts of men who make a business OF
finance. The result of tho last bond issue
was remarkably long maintenance OF the
reserve intlct despite tho balance of
trade and exchange aaeint u. Under the
provisions of the new loan the purpose to
increase and maintain for any length OF
time the goli resources must depend in a
considerable measure upon the disposition
OF the SUGGEST ui bidders. The bond syn
dictate drew its gold from sources other
than the United States Treasury. To the
gold in the treasury at the time OF the
loan was guaranteed an addition of a
clean 800, 600, 900 in new gold, and for a
known period the reservs was maintained
intact and the syndicate drew on their
profits for such maintenance. How much
OF the replenishment under the new issue
will be simply an exchange Of greenbacks
is an open question.
OF course, all this treats OF an artificial
condition, handled after methods OF
financiering rather than Of business
strictly. The maintenance of the gold re-
serve is considered as distinct from the
maintenance of gold in the treasury. To
make up for unhealthful business con-
ditions all this financiering, this schem-
ing and planning are necessary that the
credit of government may be artihcially
bolstered up BY securing and keeping in
the amount OF 500, Ooo, 900. The business,
the credit, of the country is in no wise
permanently bettered by such scheming
however gratifying may be the demon
stration of the confidence and resources
Of this nation of go, 600. 900 people because
of the splendid response to the bond call.
What the government needs is no artif-
cially supported gold reserve, but revenue
sufficient to at least pay expenses. Under
conditions as they were prior to the
CLEVELAND administration the gold re-
serve took care of itself because the Gov
ernment's income was sufficient to take
care of il. Violation Of fundamental
business principles is at the bottom OF
the trouble over the so-called gold re-
serve. II the balance of trade is restored
in our favor the gold reserve will take
care of Itself. SO far as the length of
time the new issue will be successful to
maintain the reserve, pending a restor-
ation Of the balance OF trade in our favor,
will depend upon any other circumstances
that will result in replenishing the
treasury from Europe or the bank vaults
or the stockings. II we shortly begin to
export gold again the gold reserve will as
shortly begin to drind!e once more and
nothing can keep 1t up and the new issue
will be of only the most temporary effect.