The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1896-06-10
Appointed to Investigate the
Various Bond Sales
AND THEWHY
A Brazen Recital of a Disgrace :
full History,
With Little Attempt to Palliate
or Excuse 1t.

the investigation of the sale Of bonds,
during the years 1894. 1895 and 1896 has
been made public. The statement is
dated June 1.
Reviewing the conditions which led
to the bond issues the secretary says:
Largely on account of apprehension
incurred as to the ability of the govern
ment to continue the current redemp-
ton Of its notes in gold coin and main
tain the parity Of the two metals. the
exports of gold during the fiscal year
1898 reached the unprecedented amount
of sos. $50, 844, nearly all of which was
drawn from the public treasury by the
presentation of notes for redemption.
Notwithstanding the most strenu-
Gus efforts by the department to main
tain the $1,000 600 reserve intact, on
the 22nd day of April 1893. it became
necessary to use a part Of it for re-
dempti0n purposes.
Very little gold was being received
and it was therefore impossible to in
crease the reserve without resorting to
the issue of bonds under the authority
conferred by the resumption act"
The secretary then refers to the bond
call OF January II. 1894. which netted
the government SIS. $50, 917- From that
date to November IA, 1884, when the
free gold in the treasury was SCI, 87S, 374,
the amount varied but little.
The secretary continues: IN the
meantime the frequent presentation of
notes for redemption in gold by indi-
Viduals, and institutions not desiring
it for export, clearly indicated the ex-
istence of uneasiness in the public mind
while foreign exchange was almost
constantly at or near a rate which
made it necessary to accept gold to pay
Of hal a
ly Withdrawals for shipment were daily
threatened. AS the season approached
when large exports nearly always oc-
cur. it was considered absolutely neces-
sary for the maintenance Of the public
credit and the continued execution of
the monetary policy declared by con-
gress in the act of July IA, 1890, and re-
pealed in the act Of November 1, 1893, to
resort again to the issue of bands"
The terms and results of the second
issue are then stated.
Secretary Carlisle says: TT soon be-
came evident that the transaction had
not been effectua1 to stop the with
draw walls of gold.
These large Withdrawals were due
almost entirely, 50 far as could be as
certained, to q feeling of apprehension
in the public mind, especially among
the holders Of our securities abroad
which increased in intensity from day
to day until it reached the proportions
of panic in the financial centers and
it was evident that unless efectual
steps were promptly taken to check the
growing distrust, the government would
become compelled within a few days to
suspend gold payments and to drop to
a silver and paper standard The sit
uatiOn was 50 grave that the ATTENTION
of congress was called to the subject
on the 28th of January, 1895
After freely quoting from this mess
age the secretary says the congress
having failed to pass any measure for
the relief of the treasury, contract
was entered into on February 9, 1875,
with August Belmont & Co of New
York. N NJ RothschiIds & Sons of Lon
and j. p. Morgan & Co. for the pur-
chase of 3. 500 GOO ounces of standard
gold at the standard price of ST SO44l
per ounce, to be paid for in United
/ States 80 year per cent bonds. Not
less than One-half of the gold was to
be procured abroad and the parties
/ agreed so far as laid in their power
to exert any financial influence they
had to make all legitimate efforts to
l protect the treasury against the with
draWals pending the complete perform
ance of the contract"
The secretary quotes from the presi-
dents message sent to congress on the
execution of the contract, in which he
again called attention to the financial
condition. The agreement to protect
/ the treasury gold. the secretary says,
was faithfully carried out and he adds;
After a large part Of the gold had been
furnished from abroad the secretary,
in order to prevent disturbances in the
Z rates OF foreign exchange anu create a
condition that would force gold eX-
ports and consequently Withdrawals,
/ acquiesced in a departure from the lit
eral terms Of the contract requiring
One-half to be procured abroad and ac-
cepted deposits of gold then held in this
country to complete the delivery.
Withdrawals of gold again set in and
on December ?, 1895 the president again
( sent message to congress asking rem
/ edial legislation. but none was enacted,
and on January 6. 1896. circular was
| issued. asking for subscriptions for
800 600 600 4 per cent bonds The result
/ finally is given. The secretary says:
MY opinion is that the prices receiv-
cd nv the government for bonds in 1894,
1895 and 1896 were as high as it were
possible to obtain under the clrcurn-
stances existing at the times when the
sales were made. The fact that the
bonds are offered for sale by the govern
nent only at times when the financial
affairs of the country are greatly dis
turbed. and the market more or less de-
I pressed on account of the business sit
uation and the feeling of insecurity
which always prevails at such periods
among investors, necessarily prevents
the realization of as good prices as
might be procured If advantage could
be taken of the most favorable OppOrtu-
mites for erecting the sales. The same
conditions which make the issue of
bonds necessary. also depress the price
of such securities in all the markets
I of the world. and consequently the gov
! eminent is compelled TO make the sales
! under unfavorable circumstances.
IN relation to the part of the resOlu-
ton which directs the committee to in
I vestigate and report what effect the
I bond sales had on the credit and bust
/ ness of the people of the United States
/ have the honor to say that in my
/ opinion the sales were necessary for
! government and the security of the
/ business interests of the people, and