The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1896-01-05
BONDS AND THE GOLD RESERVE.

offer to take the bonuS III a ioNFNA 49,
of interest? What is the reason given
by the administration for such course.
INQUIRER.
The administration friends state
that if first issued bonds and sold them
ia any aud all bidders. They issued
a second batch Of bonds in the same
way. 1t was dicovered that the pur-
chasers OF the bonds obtained treas
nry notes and drew the gold from the
Treasury to pay for the bonds. rms
afforded the Treasury no rellet what
ever, aud the increase in the pnohc
debt brought no corresponding oehe-
III Ia the Government. When it be-
came necessary to issue more oohus'
Mr.. Cleveland and Mr.. Carlisle made
n contract with the Morgan syndicate
nv which the syndicate obligated 1t
self to pay for the bonds with gold not
drawn from the Treasury, and they
also agreed to protect the gold reserve
in the Treasury for a given time II
they had to import the gold to do IT,
Pad as this was, ii was better than
continuing the endless chain bond
issue and withdrawal of gold.
The root of the whole trouble lies
in the absurd fiction that the govern
ment is going to the bow-wows unless
there * n cold reserve of one hundred
million dollars in the Treasury. There
is no law for it and no need of IT. MI
sherman started it as one OF his meas
ures of Strengthening the pubic
credit" Instead of Strengthening,
IL has weakened the public credit. II
is n constant invitation to gold specu-
lators and to those who want TO put
their investments in United States
bonds, so as to escape taxation
WHY then it may be asked is this
endless chain process working such
evil now? Why didn't its weakness
develop sooner" This is pertinent
inquiry. There are two reasons:
1. Until the passage OF the Mckinley
law and the extravaganza of the Reed
Congress, there was always "a large
surplus in the Treasury. The presence
of this large surplus made raids on
the geld reserve impracticable. But
when the Reed Congress spent more
than the two hundred million surplus
left by Cleveland, and the taxes levied
by the Mckinley act vent into the
rockets Of the favored classes instead
of in the public Treasury, the surplus
was not only gone but deficit was
turned over to Mr.. Cleveland in 1898.
This deficit or narrow margin made the
gold reserve the easy prey Of the gold
spectators and they were not slow III
taking advantage Of the opportunity
presented.
2 But, while having power 10 with
draw much OF the gold from the Treas
ugy. the gold spectators could not
make continuously large success
ful raid without the assistance Of
the men Of large wealth. They had
control Of most Of the Treasury notes
and used them to make up the reserve
required 10 be kept on hand by the
banks. Under "a special act. these
Treasury notes were not taxable AMI
the banks aud individuals could eyade
taxation by holding these Treasury
notes as their reserve. There are more
than three hundred million dollars of
these notes, and this use OF them en-
abled their holders TO escape taxation.
One of fiaa. first acts of the Democratic
administration was TO repeal the act
tae1apting those notes from taxation.
They we're right in believing it unjust
TO gise the holders Of any particular
kind OF money immunity from taxa
ton, and they repealed the exemption
The holders of these notes then began
to convert them into gold. This is the
second reason Why the run upon the
gold surplus has been SO active during
the past year.
TO sum it all up: Very many of the
very rich men in the United States are
resolved that in one way or another
they .ill escape taxation AS long as
they could corner" the Treasury
notes, they did not take the method of
undermining the credit of the govern
mcnt in order TO compel a bond issue.
But as soon az the administration
took away this specia' exemption, they
joined hands with the gold specula-
tors for the purpose Of securing way
To invest their fortunes without pay
ing tax to the government. New
bonds offered the only method Of nom
taxable investment. Steady drains on
the Treasury were necessary 10 secure
new bond issues, and these drains
have not been wanting.
There is no use abusing the Presi-