Evening star. [volume] (Washington, D.C.) 1854-1972, 1896-04-13
NATIONAL FINANCES
Opinion of Treasury officials as to
the Bond Sale Results.
THEORY. OF ADMINISTRATION EN.
European Investors Distrust Legal
Tender Financial Systems.
T H E GOLD RES We

The results Of the recent bond sale con-
tinue to be viewed with reasonable salts
faction at the Treasury Department, but
grave doubt exists in administration cir
cles whether these results will be perma-
nent or will restore business activity. The
conviction Is growing at the treasury that
the steady withdrawal of foleign capital
cannot be arrested until the United States
remodel their currency system. the rumor
has been in circulation for some days that
President Cleveland would not permit Con-
gress to adjourn without sending to them
ELother special message. urging that some
steps should be taken toward the abolition
of government paper money, or at least a
more permanent and effective STRENGTHENING
OF the hands Of the Secretary of the Treas
ury In protecting the gold reserve.
The Administration Theory.
The theory which appears to be gaining
ground among friends of the administra-
ton Is that European investors distrust
countries whose financial system rests upon
legal tender paper money, and that some
assurance Of its Abortion is required, such
as was given by Austria in 1892 in order
to restore confidence in our credit and SOL
vency. AS the treasury stands today. while
the gold reserve is sufficient for present
needs and will probably enable the present
administration to refrain from another is
sue OF bonds, it is felt that currency
troubles are likely to continue. and to prove
disturbing factor under the next admin
lstration. 1t will be an embarrassing prob
lem, 1t Is claimed, for the republican nomi-
nee, If he becomes President, to have to con.
slider within month of his Inauguration
whether he shall direct another issue of
ponds under existing law, or shall supanely
permit the country to go again to a paper
oasis business anxiety would be intensi-
ned II there were any doubt which course
the new President might take and repeti-
ton OF the panic of 1873 might occur II there
were any apparent hesitation on the part
OF the administration. These Considers
tlons may be urged by President Cleveland
IN such way as to constitute a strong
motive with his political opponents to do
something during the present Congress to
require the cancellation of paper money
redeemed In gold. or to permit the issue of
gold bonds upon more favorable terms than
coin Donos can be issued under existing law.
Foreign Confidence Not Restored.
The proof that foreign confidence In our
credit has not been restored is found In the
fact that high rates for money in New
York failed to attract foreign capital or
even to hold in this country sums due
abroad which, under normal conditions.
would be left here to earn the higher rate
OF interest which IS paid. The effect of the
withdrawal OF legal tender paper from cir
c0latlon by the bond issue is thought to
have been beneficial in contracting the cir
culation and the presentation of notes at
the New York subtreasury for redemption
In coin has been materially reduced. These
redemptions were $16,S3S, 641 during Janu-
airy, 81 .OG3. 1872 in February $7StS]G6I in
March and s1,74O.s59 during the first nine
days OF April. The total for April at this
ratio will not much exceed s., 10000 These
figures are not so favorable as those of the
first months under the Morgan contract,
for recemptions then ran for four success
sive months-March. April. May and June
below 81, 24OOOO per month. The rate of
Withdrawals during the present month,
however. is not such as to cause serious
alarm. for the treasury gains gold from
time to time through deposits at the assay
offices. even since it has practically lost
any gold income from customs. The re-
demptions for other purposes than export
are likely to fall to a minimum upon the
completion Of the payments for the bonds.
The Gold Reserve Stationary.
The gold reserve of the treasury has re-
maine'1 nearly stationary since it was rails
ed above $125 100000 by the heavy pay
ments for the bonds by means of gold OBJ
tained outside the treasury. The fact that
subsequent payments have not increased
the net reserve indicates that the gold for
making them has been obtained from the
taiEed in most cases directly by the SUBJ
scribers for the bonds, but has been drawn
by brokers or Intermediates to replace
gold which they may have furnished for
mains to be paid for the bonds. The
amount paid at the close of the week was
S1O7. 2S7 200. of which $96. 1891, $50 has been
on account of the principal, SO. 1874 .S79 on
Nf
crred interest. 1t will not be surprising so
far as domestic demands are concerned, If
the completion OF the payments is followed
by diminished redemptions, without any
effect upon the treasury.
National Bank Circulation.
The government has allowed only $15-
S49,676 Of the money paid for the bonds to
remain in the hands of national banks
The amount originally paid into the banks
On deposit for the government was $31 ,eO6-
156. but Of this only $5.612, 1853 in gold and
$lO2s7,51S in currency is still in their
hands. considerable number of the
banks which hope to obtain the new bonds
and to use them as a basis of circulation
have notified Controller Eckels that they
failed to obtain the bonds upon the original
allotment and have not found 1t profitable
to buy them in the market. This being the
case, they will not take out the circulation
which they ordered early in the year. 1t
Is estimated that about 100000 of new
notes will thus remain uniss,,ed for the
present. Letters were addressed recently
to some forty bar.ks instructing them that
notes were ready III compliance with their
orders. and inquiring why they did. not
take them. The circulation during April
will probably not increase much over
81 10000. which will carry the national
bank-note circulation at the end of the
month to $222. 5OO,OO This will represent
an increase Of about $4,000, 600 since jan
uary 81, before the new bonds were avail
able as basis of circulation Some Of