The herald., 1897-05-14
DEFICITS IND BOND ISSUES
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Chairman Dingley Of the ways and
means committee. in his interview pre-
pared for the Examiner, reiterates the
charge frequently made by the Repub-
licans during the past four years
namely. that the bonds were issued be-
cause Of a deficit in revenues, and he
holds out the hope that the drain upon
the gold reserve will cease when the
deficit ceases.
do not believe that his theory will
explain the drain upon the gold reeerve
nor do think that his hopes are well
founded. While it Is true that large
part OF the money received from the
sale of the bonds was used in making
good the deficit in revenues. yet at no
time did the deficit cause an issue OF
bonds.
Instead of being an injury, the deficit
was, during that period. a benefit.
because the money which accumulated
from the eale of the bonds could not
have returned into the channels of COM
merce but for the deficit. If, as IL prob
able, gold would have been drawn out
even If the revenues Of the government
had equaled its expenses, then that
money would have been held in the
treasury, and business would have been
crippled more than it was.
The fact that gold Withdrawals began
before there was deficit and ceased
while the deficit was increasing shows
that there is no necessity or intimate te
connection between revenues and with
drawals. If gold is needed for export
1t will be drawn out, no matter whether
there is current deficit or surplus, so
long as the treasury stands ready to
furnish gold on demand. The recent
Withdrawals of gold took place just at
the time when, for the first time in sew
eral years, the revenues exceeded ex-
penditures.
The press dispatches did not attribute =
the late Withdrawals to the deficit nor
did they attribute them to the loss Of
confidence. The reason given was that
a new demand for gold had sprung up in
Japan and Austria. If gold is desired
for boarding or for the purpose of fore
ing an issue of bonds it will be with
drawn whether there is a surplus or
deficit unless the secretary protects the
government by exercising his option
and redeeming in silver.
That New York f1nanciers have used
their power to discredit government pa
per is evident from the fact that when an
attempt was being made to repeal the
Sherman law they presented treasury
notes for redemption. When they de-
sired to force the retire ment of green
backs they presented greenbacks for
redemption. So long as the secretary OF
the treasury surrenders to the holders of
government paper the right to choose
the coin in which payment is to be made.
so long will it be possible for financiers
to present either treasury notes or
greenbacks and draw out the gold.
Mr.. Dingley is in error in supposing
that the redemption of fifty millions Of
|greenbacks or treasury notes would
make such a scarcity of small notes as
to prevent further Withdrawals of gold.
We have sometimes had during the last
four years considerably more than $50.
100000 Of these notes locked up, and yet
gold has been withdrawn.
There has been a well-founded sus-
picion that much of the gold drawn out
| by the presentation of greenbacks and
| treasury notes was drawn out for thu
purpose of forcing the retirement of all
government paper. If financiers con-
clude to bring their influence to bear
upon the present administration. as they
did upon the last, they will have no diff
Guilty in forcing an issue of bonds, unless
the new secretary of the treasury shows
more power of resistance than the last
one.
If national banks succeed in securing
law which they have advocated for
some years. namely, a law permitting
the issue of bank notes up to par and re-
ducing the tax on circulation from l per
cent to quarter of per cent, they may
become interested in having more bonds
issued to furnish a basis for bank notes.
If they do the process Is very easy All
| they have to do is to present greenbacks
and treasury notes and draw down the
gold reserve, then raise an alarm AMI
proclaim our credit Is in danger.
| From the present indications, the Re.
publicans intend to appoint commits
sion to consider the currency question
and then push through, If possible, bill
providing for the retirement of green
backs after a commission of eminent
financiers" selected for the purpose have
reported in favor of such a plan.-W. j.
Bryan in San Francisco Examiner.