The times., 1901-04-01
THE TREASURY SURPLUS.
Secretary Gnec Discusses Methods
for Its Reduction.

In view of the reports that the Gov
ernment might buy bonds to reduce the
prospective large accumulation of surplus
funds in the Treasury between now ana
June 30 next, Secretary Gage discussed at
some length yesterday the alternatives OF
purchasing bonds, or Of allowing large
amount of money to accumulate IN the
Treasury vaults to the possible detrimeht
of business interests. He was asked IL
this accumulation would not operate 10
the prejudice of business affairs ana ms
attention was called to the estimate mace
last year of an SS0O00,O00 surplus at the
close OF the present fiscal year. Replying
TO these questions. Mr.. Gage said:
The estimates you speak of were MADE
before the last session of Congress, ana
have been modified by events and by Con-
gressional action. 1t is not now cohtem-
plated that the years surplus VIII be over
sixty millions. A falling off in receipts
of larger disbursements than have been
estimated for may also further modlty the
effect to which you point.
In reply to a suggestion that this later
estimate meant an increase of about S2O'-
OOO. 900 in the present surplus between now
and June 80. and upon being asked for
statement whether or not the Treasury
terests should they be adversely affected
by tie-up of money In the Treasury, the
Secretary said
There are only two methods open to
get surplus funds out of the Treasury
vaults One is to increase Treasury funds
in national bank depositaries, the other
is to buy United States bonds. The lat
ter is more consistent with Government
interests than the former, since in buy
ing bonds interest on the public debt Is
by so much estopped. The Department.
however. would not feel justified In buy
ing bonds other than those which viii
mature and become subject TO payment
within the next seven years. At prop
er price 1t would no doubt be willing to
buy these and thus relieve the Treasury
from q surplus which might. under some
conditions, be preJudicial to general busi-
ness affairs.
AT the present quoted rates for the
short bonds l do not think the Secretary
would be justified in buying bonds, The
SIS at the price yield an investment re-
turn of only LOS per cent, the short As,
1.61 per cent; the 3 per cents of 1903, 1.34
per cent, while the new per cents at their
present price yield a higher investment re-
turn, viz, 173 per cent Now 1t Is a we'll
time Government bond. everything else
being equal, Is worth relatively more than
short time bond The present disparity
to the contrary is therefore illogical If not
artificial, and at their present price the
Secretary Will not buy them.
LAS an alternative would you not In
crease the deposit of public moneys with
the banks?' the reporter asked.
mo, that would aggravate In some
particulars the situation to which | have
just referred. To qualify as depositaries
the banks would have TO buy and de-
poslt bonds. The effect would be to set
up a competition, by the aid of the Gov
ernment, in the purchase of the securi-
ties already abnOrmally high. We are
now advancing toward the period of the
year when there is apt to be a money
plethora instead of a money scarcity so
/ do not see that ii will do any particular
harm IL money accumulates in the
Treasury.
THE reduction in taxation will when
it becomes operative. partially or wholly
cure the present tendency toward a con-
gestion In the Treasury.
TO put the matter IN nutshell: If
it be a choice between buying bonds at
q. artificial pfIce- and letting funds ac-
cumuiate In the Treasury, the htrter WI
occur. Nor will the department adver-
tise for offerings of bonds. To do so
/ am satisfied would be fruitIess in re-
suits. If, however the department can
from time to time buy the short bonds
at an investment rate, realizable to the
investor, who buys the new per cents,
it will not hesitate to do so, should the
present market price for the new 2s
remain about on the present basis"