The age-herald. [volume] (Birmingham, Ala.) 1897-1902, 1899-04-15
HOW THE $2O,OOO,OOO
WILL BE PAID


Much curiosity is being expressed in
downtown financial circles as to the pay
ment by this country of the s2O, 5000 to
Spain agreed to under the terms of peace.
Incidentally there seems to be much mis-
information afloat on the subject For in
stance, it was gravely stated day or two
ago that it was generally believed that the
payment would result in a Tightening of
the money market. As a matter of fact,
every banker believes just the opposite,
and it is asserted that the knowledge that
the payment is shortly to be made, has
already had the effect of easing the money
market. There is only one way, bankers
said today in WHICH the payment could be
made, so as to produce a stringeney ON the
money market, and that would be by draw
ing it out of the governments deposits in
the banks, and this, it is declared Mr..
Gage, the secretary of the treasury with
his practical knowledge, will not do 1t is
not his desire to upset even temporarily
or even to cause stringency in the money
market and it is considered certain, there
fore, that, as has been already announced
the $20,O00,000 will be drawn directly out of
the treasury. Later, or perhaps beginning
at the same time, drafts will be made grad
ually against the governments deposits in
the banks to restore the treasury to its
present condition, but that would not result
in any sudden stringency in the market
and, as matter of fact, would increase the
net surplus reserve by reducing the amount
to be carried by the banks
With reference to the actual payment to
Spain it was generally agreed by foreign
haulxprc bat far No
actual steps had been taken toward pre-
pairing for that payment. 1t is assumed
that the government will hand a draft for
the amount to the Spanish representative.
In this case he would probably be the
French minister, who has acted for Spain
during the interruption of diplomatic rela-
lions between this country and SPAIN The
fiscal agents for France in this country are
August Belmont & Co. as the agents for
the Rothschilds. If Messrs. Belmont & Co.
collect the draft they would presumably
deposit it in the National Park bank. That
would make the sub-treasury a debtor for
that amount and no doubt little more the
next morning at the clearing house, The
payment to the clearing house (and through
that institution to the National Park bank
would be made in gold, which would nave
to be carted from the ub-treasury. Messrs.
Belmont & Co. would then have to remit
the $40 600 to their principals in Paris or
London. That is to say Spain would at
once have a credit in Paris or London or
anywhere she might desire Cor her credit
ors, France, principally might desire) of
the equivalent of $40, coo, Oo0 How Messrs.
Belmont & Co. would cover that credit is
their own business. Naturally they will do
it by buying sterling exchange. They may
have alreauy bought the necessary ex-
change. 1t would not be necessary to shin
gold to Europe to cover the payment I'M
less sterling exchange should advance, to
say s4.SSR or $3.50, which is not considered
at all likely. At any rate below that it
would be cheaper, that is more profitable,
to cover the payment with bills. 1t is be-
lieved that the recent strength of the ster-
ling exchange market was due in part
either to the knowledge that purchases of
bill had to be made on account of the pay
ment to Spain or to actual purchases by
Messrs. Belmont & Co. or some one repre-
senting that firm.
ELLIS II. Roberts, treasurer of the United
States, was in town today He said he
knew nothing more about the expected pay
ment to Spain than he had already stated.
He had not yet drawn the check for the
money. The check, when 1t is drawn, will
be q record breaker" In many respects,
and of course very unique document.