Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1897-05-04
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THE GOLD MOVEMENT.

The gold exports from New York last
week amounted to 100000. The New
York Journal OF Commerce explains that
this drain does not, of itself, necessarily
imply permanent decrease in the coun-
try's stock Of yellow metal, seeing that
the shipments were Immediately due TO
the pending tariff legislation, and large
" anticipatory of settlements that would.
i'm the ordinary course OF business, have
to come later. Nevertheless, our New
York contemporary gives some facts
connected with the gold movement that
constitute a striking commentary upon
our financial system, and the opportu-
nifty 1t affords the New York financiers
TO squeeze the government.
Although the associated banks OF New
York held something like S55,Oo0,00o in
gold, and were the repositories Of the
funds Of the firms that needed the gold
for export, none of the s6,5p,OOO shipped
came. ii is SAID out of the banks. The
banks gave their customers legal-tender
notes, which the customers exchanged
for gold at the Sub-Treasury. That Is,
the banks held their supply OF yellow
metal intact, took advantage of the grip
the self-assumed obligation of the gov
eminent 10 meet the demand for gold
gave them, and raided the gold reserve
in the Treasury to the extent Of $,5W,COo
As the New York Journal of Com
merce says, the demand for gold for ex-
port last week was purely commercial
demand: the means of procuring 1t had
to be furnished by institutions which ex-
listed for commercial ends, and which
conducted their operations chiefly through
the floating balances of the commercial
community; according, therefore, to the
rules of business fitness, the gold should
have come from the banks. The institu-
ton that actually supplied it is, how
ever, adds our contemporary, in no sense
or degree commercial one. 1t is
purely a fiscal agency, the cash office Of
the government for receiving and dis
bursting its revenues, whose legitimate
functions should wholly isolate ii from
the foreign exchanges.
In other words. the banks made the
Treasury perform the functions they
were organized and chartered 10 perform,
and which the Journal Of Commerce
very properly says our men OF finance
should see that they perform fully and
completely.
However, the Journal of Commerce Is
none the less an apologist for the banks.
1t says that the present situation leaves
the banks no recourse but TO hold the
limited supply of gold that comes into
their hands as sound reserve against
the contingencies which modern tenden-
cies have too plainly threatened, and
attributes the necessity the banks are
under in this respect to the action OF
the government five years ago IN sus-
pending gold settlements at the New
York Clearing House. On this point The
Journal of Commerce makes a fairly
good argument from its standpoint, but
it admits that the suspension was we'll
intended precautlon. and gives US no
sound reason for assuming that. under
our present banking and currency sys-
TEN. the conditions tina; led TO that pre-
cautions being taken might not arise
again The plain truth is that with or
without the feature of gold settlements
at the New York Clearing House, our
monetary system puts 1t In the power
of the New York banks and Wall street
to squeeze, not only the government, but
the country at large, whenever they
choose so 10 do. Until there is Il reform
in that system it win be useless TO ex-
pect either the banks of New York or
the national banks in general to per-
form, to quote our New York contem-
porary, 1.-THE most important service for
which the law authorized their exist
ence." Until the people settle down TO
that conviction, and force the necessary
reform, IL win be useless to expect per-
manent restoration of confidence and
real and lasting revival of prosperity.