Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1898-10-13
THREATENS GRAVE RESULTS
Contraction of Currency by the Great
PilinE Up OF Gold I'm the Ma
tional Treasury.


war revenue bill was pending has come
to pass. There has come piling up of
currency in the treasury such as has
so contracted our currency as to
threaten grave consequences. The
squeeze falling, however, upon the
speculative rather than the producing
interests, upon the New York banks
rather than the country banks, Mr..
Gage has come to the rescue as far as
within his power. So long as the pro-
ducing classes are squeezed by con-
traction and falling prices and the
speculative cliques get off untouched,
those of Mr.. Cages school seem to
think it a good thing and to be encour-
aged. It makes prices lower and sal
aries buy more. But when the specu-
lative cliques are touched then II il
time to give government aid to stop the
squeeze.
Since the passage of the war revenue
bill more than $100,000,o0o has been
taken out of circulation and piled up
in the treasury. That is, that much
more money has been received by the
government than has been spent and
there are still large installments due
on the bond issue. And of this 500, 00o,-
600 half has been taken out of the New
York banks. As a result their re-
serves have been cut down from $243,.
600, 900 on July IA, the day when pay.
ments into the treasury on account Of
the bond sale and the piling up process
began, to about $190,000,o00 the other
day. And their large surplus reserve,
~ ? a l. =
of IS per cent. of their deposits, has
been cut down to almost nothing. In
deed, a recent bank statement
showed that the reserves of "a of the
banks associated in the New York
clearing house did not equal % per
cent. of their deposits or were below
the reserves they are required TO keep
under the provisions of the national
bank act. Being below the limit, these
banks are forbidden to make new loans
or discounts, forbidden to do any new
business while their reserves remain
impaired. They are forbidden by the
national bank act. Consequently, such
banks are taken out of the market as
sources of loans and an increased de-
mand falls upon the other banks. But
the surplus reserves of all the banks are
low. Hence it is with increased diff
Guilty that loans on stock exchange Sc
curities are placed in New York. In
deed, many brokers called upon to pay
loans and finding 1t impossible to re-
place such loans have been obliged to
sell the securities. The result has
been a heavy stock market, a shrink
ing of prices. And meanwhile interest
rates have ben marked up. OF course,
the owners of stock exchange securi.
ties suffer loss. And 1t is piling up off
money in the treasury, consequent
contraction and shrinkage of prices,
that causes the loss. The speculative
cliques are suffering loss at the hands
of the treasury and suffering loss from
the bond issue they insisted should be
made. And greater loss threatens
them.
But the treasury comes to their res
cue. Secretary Gage orders the pay
ment of the interest due on the public
debt October 1 and amounting to S..
100000 in anticipation and he orders
the treasury to redeem at once, at q
rebate of one-half of one per cent,
the $14,oO0,0 600 of currency skies is
sued in aid of the construction of the
Pacific railroads and falling due Janu-
airy 1. Thus Mr.. Gage seeks to pay out
SIS, 000, 900 in way greatly to the
profit of the bondholders. BY forego-
ing what amounts to about 1% per
cent. interest on their bonds up
to January / the holders of the
currency skies can get their bonds
paid at once and have the proceeds to
loan in a market where money is
worth on time paper three times the
interest they remit to the government
to get their bonds redeemed at once.
In other words, the government is vir-
tually Offering to the holders of these
bonds If they will accept Az per cent.
interest on their bonds between now
and January / instead of per cent.
to give them the opportunity to loan
the face value of the bonds between
now and January 1 at per cent. and
so earn 9l per cent. instead of 8.
Thus in effect the government is Of
fering bounty to those holders of
currency skies who will present them
for redemption at once.-Philadelphia
American.