Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1901-04-01
SECRETARY GAGE
Sees No Harm in Having Good
Treasury Surplus
Will Not Reduce It by Buying Bonds
at Artificial Price.
N.ither Will Nc Increase Public Money Uc
posts With The Banks.

Washington. March 3l.-Sccretary
Gage was questioned. today. as to ms
probable action with respect to the
cash accumulations in the treasury
and particularly as to whether he con-
tc,nplated buying bonds for the SINKING
fund.
THE country would like to know, IL
, was stated to the secretary. Whether
the accumulation Of money IN tne
treasury which seems to be going on.
will not operate to the prejudice OF
general business affairs. Your estimate
is that there will be surplus or re-
cc.pts over expenditures for the .isca
year ending June 80 next, of about
$50. 600 900
The secretary says:
1.-The estimates you speak of were
made before the last session Of Con-
grcss and have been modified by events
and By Congressional action. IL Is now
contemplated that the years surplus
will be over $50 600. 900 a falling off in
receipts or large disbursements that
have been estimated for may also fur
Their modify the effect to which you
poin.'
then it seems that the cash holdings
of the treasury will he increased by
some So. 900. 600 between now and Jane
SEQ
The Secretary: There are only two
methods open to get surplus funds out
Of tie treasury vaults. One IL to in
crease treasury deposits in national
bank depositories: the other Is to buy
United States bonds The latter is more
consistent with government interests
than the former. hence in buying bonds
Interest, on the public debt is By SO
much stonned.
THE department. however. would
not feel justified in buying bonds 9TH
or than those which will mature aud
become subject to payment within the
next seven years. At n proper price IT
would NJ doubt be willing to buy these
and thus relieve the treasury from 4
surplus which. rs you assume might
under some conditions be prejudicial
70 general business affairs.
AT the present quoted rates for the
short bonds. do not think the s"cre-
tary would he justified in buying
bonds. The SIS Mt the price yield an in
vcstment return Of only los per cent,
the snort A. l.6l per cent. the per
e nts Of 1908 i3i per cent. while the
new per cents. at their present rricc
yield a higher investment return, viz:
l.1G per cent.
Now. il is A well-knov:n and nc
knawlcdged fact that long time GOV
eminent bond. everything else being
equal. Is worth relatively more than q
short time bond. The present disparity
to the contrary is. therefore. illogical
if not artificial, and al their present
price the secretary Will not buy them. "
Question: AS an alternative. would
YOU not increase the deposit OF public
moneys with the banks"
The secretary: NO: that would aC
Grava.e in some particulars the situa-
ton to which | have just referred. To
qualify as repositories. the banks
would have t. buy and deposit bonds.
The effect would be to set up oompe-
tiiion by the aid of the government.
against the government in the pur-
chaso of the securities, already abnor-
mally high. We are now advancing to-
ward the period of the year when there
| is apt to be n money plethora instead
of n money scarcity, so | do not sec
| that it will do any particular harm II
money accumulates in the treasury.
The reduction in taxation will. when
| il becomes operative. partially or
wholly cure the present tendency to-
ward a congestion in the treasury. To
put the matter in nutshell:
| IF it be choice between buying
| bonds at an artificial price and lettinf.
funds accumulate in the treasury. the
latter will occur. nor will the depart
ment advertise for offerings of bonds.
To do so I am satisfied would he fruit :
less of results. If. however. the de-
partment can from time to time buy
short bonds at an investment rate real
| liable to the investor who buys the
new 2 per cents. it will not hesitate to
do so. should the present market price
for the new rs remain about on the
present basis"