The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1896-10-16
Asst Sec'y Curtis UphOlds Thu
New York Bankers.
He Tries to Show How ssRaids''
Are Natural.
THEN CONTRADICTORY
For He Admits Reserve Was
Replenished Artflcially.
Brokers With Foreign Connec-
ton Do Most Shipping.

Washington, Oct IS - Assistant
Secretly w. Z. Curtis Of the treasury
department has written a letter to as
sistant secretary of the agricultural de-
partment in which ne defends the New
York bankers from the allegations oft
en- made that they are interested in the
withdrawal of gold from the treasury.
The letter.
Charles w Dabney, Jr.. Assistant Sec
rotary Of Agriculture:
Referring to your letter and our con-
versation Of yesterday concerning the
campaign attacks upon the bankers OF
New York in their relations with the
gold reserve, desire to submit the
following consideration:
The term raids 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-treasury 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 a class of men
who are apparently engaged in with
drawing the gold from the govern
ment's reserve and putting it away in
their private vaults for their own self
ish purposes and to accomplish certain
alleged improper objects. The facts in
the case are 50 different from these
fanciful statements that it seems worth
while to call attention to them.
By operation of certain natural com
mercial laws, without the Interference
Of legislation, New York has come to
be a place for the sale of our products
abroad, and in that market the bills Of
exchange which represent products ex-
ported are offered for sale. At the
same time, people desiring to remit
money abroad to pay obligations or to
buy merchandise are in the same mar
ket and in order to pay their obliga-
lions, purchase these bills of exchange
to remit to their creditors abroad. The
large amounts of coffee, silk. rice, tea.
sugar and other foreign products CON
sumed here have to be purchased with
foreign credits and paid for in New
York with foreign exchange. The nat
ural result is that when we send more
goods abroad and there are more bills
Of exchange in the market than there
is a demand for, which is the case at
present, the price of exchange falls On
the other hand. when we are not sell
more or paying our debts to a greater
extent abroad. the price of exchange
rises.
The people engaged in the banking
business in New York may be divided
into three classes. First. the officers
of the regular banks of deposit or is
sue including the national banks; sec
ond, the dealers in securities. some OF
whom have foreign connections through
whom they make a large market Of
sureties and upon whom they draw a
corresponding amount of exchange in
payment for securities abroad and to
whom they remit exchange or gold in
payment for securities sold here;
third, agencies or branches of foreign
houses who are perhaps also dealers in
securities, but whose main business is
buying and selling exchange on Europe
for the profit which can be made.
The first class are especially inter-
ested in the general prosperity Of the
country and in keeping up the
value of securities, because, if there is a
fall in securities held by them as col
lateral, they are compelled to call in
their outstanding loans, which reduces
their lines Of credit, diminishes their
profits, prevents them from discounting
commercial paper, restricts mercantile
and industrial enterprises, and In the
end. creates failures in business and
general financial and commercial dis
tress.
The second class are directly interest
ed in 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 ap-
prehension arising from reduction OF
the gold reserve.
The third class buy or sell exchange
whenever an opportunity for profit Of
fers. If there are few commercial bills
to be had in the market and the de
mand by RENTERS is great, exchange
"a ties rise. and if dealers having credit
broad find that they can sell their
1,f at n ha a7sf10.
able cost to them of Withdrawing gold
from the treasury and shipping it
it abroad to meet their bills at matur-
ity, they do so. thus making a profit on
the transaction. The leading members
of the third class in New FORK can be
mum ered on the fingers of both hands,
and in fact three or four do almost all
Of the withdrawing Of gold for export
purposes a viii be seen by an examin-
alton Of the list of parties exporting
gold to Europe published in the daily
press during its continuance
Each shipment usually represents IN
the aggregate a large mum Der of single
transactions One concern may sell
million dollars of exchange in one day,
but it may be represented by $50 to 200
or more different bills, running from
100 pounds sterling up. and they pay
their bills abroad by shipping gold for
that purpose which they draw out OF
the treasury in sum ana send IA one
shipment 1T viii thus De seen that q
great maj ority of bankers are pecuniar-
lily Interested in keeping the reserve up
to its full amount, and for this reason
they have been willing in the past ana
are still willing to make copSlGeFab bic
sacrifices. and in order TO prevent ship
ments Of gold have contributed large
amounts of money to pay the dealers
in foreign exchange the profit they
would have made by such shipments.
This was notably the case III the oper-
alton of the s0-called syndicate which
bought the bonds Of the government
-G aIa ar ar