The sun., 1896-10-16
THE MOVEMENT OF GOLD.
,ss1sTlST sECRLTARY CURTIS EX-
PLAINS THE RECENT IMPORTS.


the New York Bankers Have Done.
WASHINGTON, Oct. 10. Assistant Secretary
" r. Curtis of tho Treasury Department,
whose duties have brought him into frequent
communication with tho shippers OF gold to
and from New York, to-day gave out for publ
cation the following ofi,ial letter, addressed
20 Secretary Morton's clief assistant;
TREASURY DEPARTMENT
wAsHtSoToN, ID. c.. Oct. Ia. lsso'
Hon, charkk. W. paO"ev' Jr' ASSISTANT secretary ="
My DEAR SIR: Referring to your letter and
onr conversation Of yesterday concerning tho
campaign attacks upon the bankers OF New
yort in their relations with the gold reserve.
7 Iosire to submit the following considera-
tons:
The term raids by bankers at New York
rnon the Treasury" Is one frequently used by
writer's and speakers who havo no accurate
knowledge OF the method from which notcs
ara presented for redemption at tho Sub. Treas
rrv IN New York. or the character Of the num-
her Of person, making such presentations. The
term banker seems to be assumed in most cases
10 cover class OF mon who are apparently en-
eared in withdrawing the gold from the Gov
ernmcnts reserve and putting IL away in their
private vaults for their own selfish purposes.
and to accomplish certain alleged improper OBJ
1ccts The facts In the case are 80 different
from these fanciful.statemeLts that Il seems
wcrth while TO call attention to them.
By operation of certain natural commercial
laws. without the interference Of legislation,
New Tor has come to be the settling place
OF almost all contracts for the sale of our
products abroad, and in that market the bills
OF exchange, which represent products ex-
ported. offered Tor sale. At the same time,
people desiring to remit money abroad to pay
obligations or to buy merchandise are In the
same market and in order to pay their obli-
cations purchase these bills of exchange TO
remit to their creditors abroad. Large amounts
of coffee, silk, rice, tea, sugar, and other for
eign products consumed here have to be pur-
chased with foreign credits. ard paid for in
New York with foreign exchange. The natu-
raj result is that when we are selling more
goods abroad and there are more bills Of ex-
change in the market than there is demand
for, which 10 the case at present, the price OF
exchange falls. On the other hand. while we
are not selling as much abroad and are buying
more. or are paying our debts TO u great ex-
tent abroad, the price of exchange rises.
The peo pie engaged in the banking business
In New York may be divided into three classes
first, the officers of the regular.banks of de-
posit or issue, including the national banks
second, the dealers In securities, some of
whom have foreign connections through whom
they market n large amount OF securities. and
upon whom they draw n corresponding amount
of exchange in payment for securities sold
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 in the operation itself.
The first class are cspecially-interested in
the general prosperity OF the country and in
keeping UP the value OF securities because il
there is n fall in securities held by them as
outstanding loans. winch reduces their lines
of credit, diminish-s their profits, prevents
then, from discount Ill s-GommeTcial paper re-
and in th4end creates failures in business aud
general financial and commercial distress.
keeping up the value OF securities in this coun-
try. which they have largely sold abroad, and
the public apprehension arising from a reduc-
ton of the gold reserve. The third class buy
or sell exchange whenever TN opportunity for
bills to BE- had in the market. and the demand
by remitters is great, exchange rates rise. and
can s.ll their bills at a higher price than the the
probable. cost to them OF Withdrawing gold
from the Treasury and shipping it ahroad to
meet their bills at maturity. they do so, thus
making a profit on the transaction.
:. The leading members OF the third class in
New York can be numbered on the fingers of
both.hanis, and in fact three four do al
most all OF the withdrawing of gold for export
purposes, as will be seen by an examination
OF the list OF parties exporting gold to Europe
published IN the daily press during its con-
tnuRnce.
Each shipment made usually represents in
the aggregate large number of single tran
sactiOns. One concern may sell million dol
lars OF exchange il. one day. but 1t may be rep
resented by loo TO $50 different bills. running
from klOO sterling upward, and they pay their
bills abroad by shipping gold or that purpose,
which they draw out OF the Treasury in one
Sum and send in one shipment. IL will thus be
seen that great majority of the bankers are
pecuniarilY interested in keeping the gold re-
son they nave been willing in the past and are
still willing to make considerable sacrifices.
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 in the operations OF
the so-called syndicate which bought the bonds
OF the Goyernment under the contract OF Feb.
4, 1893, and aGan in the early part Of this
summer.
Although Withdrawals for export have b.en
going on Tor sc eral years, IL is only within two
years that an apprehension that the Govern
ment might be unable to redeem its obliga-
tions in gold has caused Withdrawals for any
otner on pHrpose and at no time has there been
the Treasury were made for the purpose of
affecting the markets.
The fact that the hanks were able to furnish
al the gold required for export up to the mid
die OF the summer OF 1892. and d d so, was be-
cause large amounts OF god were being paid TO
them. and by them into the Treasury. and paid
out again in the course OF business. and IL had
not begun to be disp aced by the silver issues,
the amount OF which had not Ep to that time
reached such volume as TO form an import
ant portion or the ordinary commercial tran
factions in the New York market.
During the past few weeks and at present,
AND for the first time in this Administration,
various factors in combination which
have produced low rates OF foreign exchange
and consequent importations OF gold. The
principal ones are the favorable trade bal
hnce. the reduction in the volume OF currency
outstanding and in active circulation. and
tfe continued high rate of interest for all
loans at New York, this latter condition being
partl result of the preceding situation. The
low rates for foreign exchange cause inporta.
uohs ~ gold from London and other foreign
CITES because ht those points exchange on New
iotk II scanty and rules ut very high rates.
ahd The dealers and drawers here and their as
soclalcs across the ocean find profit In the diff
ierehce or price AT which gold can be obtained
aprO@u and at which IL can be used here.
4. IN other words. these foreign markets are In
we same condition that the United States
nnas been In at various times du-ing the last
no years. IL is true that gold has been inn
prtrl p"rl upon one or two occasions lately when
purthases OF Government bonds were being
iIale' nut for this premium was paid, and
~ ~, wa- pnrchased and shipped like cotton or