The Savannah morning news. (Savannah, Ga.) 1900-current, 1901-04-01
OUR Big SURPLUS
TOO MUCH MONEY AcCuMULATING
IN TREASURY.
Mr.. GAGE IS INTERVIEWED.
HE ADMITS a POSSIBLE SURPLUS OF
&6O,0O0, 900.

he Nay Let Money Accumulate IN
Treasury in Preference TO Buying
Bonds or DepOsiting in National
Bnnks-WuI Buy short Term Bonds
IL They Can BE Had at Fair Prices,
but Not Otherwise-Had River aud
Harbor Bill Not Been Defeated Ii
Would Have Exactly Met the
Amount of the Surplus.
Washington. March S1.-Secretary Gage
was questioned to-day as TO his probable
action with respect to the cash accumu-
lations in the treasury. and particularly
as to whether he contemplated buying
bonds for the sinking fund.
The country would like to know" it
was stated to the Secretary. whether
the accumulation of money In the treas
ury, which seems to be going on. will
not operate 20 the prejudice of general
business affairs. Your estimate is that
there will be a surplus of receipts over
expenditures for the fiscal year, ending
June 30 next. of about eighty million
dollars. Your statement published yes
terday shows that some forty millions of
that sum already has been realized. This
would indicate that within the next three
months forty millions more of cash will
be gathered into the treasury from the
general money market"
The Secretary: THE estimates you
speak of were made before the last ses-
sion of Congress and have been modified
by events and by congressional action. 1t
is not now contemplated that the year s
surplus will be over 5000 000 A falling
off in receipts. or larger disbursements
than have been estimated for, may also
further modify the effect to which you
point"
We'll, Mr.. Secretary, even then It seems
that the cash holdings of the treasury
would be increased by some $40, 100000 be-
tween now and June 30. Are you willing
TO state whether you would or could do
anything to relieve general affairs should
they be adversely affected by the tie-up
of money in the treasury"
The Two Methods Discussed,
The Secretary: There are only two
methods open TO get surplus funds out
OF the treasury vaults. One is to increase
treasury deposits in national bank depos-
itorieS, the other lis TO buy United States
bonds. The latter is more consistent with
government interests than the former,
since in buying bonds, interest on the pub
lie debt is by so much stopped. The
department. however would not feel JUS
tified in buying bonds other than those
which Will mature and become subject
to payment within the next seven years
At a proper price 1t would no doubt be
will to buy these, and thus relieve
the treasury from surplus
which. as you assume. might, under
VIII Not Increase the Deposits.
some conditions be prejudicia to general
business affairs. At the present quoted
rates for the short bonds | do not think
the Secretary would be justified in buy
ing bonds. The SIS at the price yield an
investment return of only 1.03 per cent. ::
the short As. 1.0S1 per cent; the 3 per
cents. of 1908 1.34 per cent, while the
new per cents at their present price
yield a higher investment return, viz,
LIB per cent. Now it is a well known
and acknowledged fact that a long time
government bond everything else being
equal, is worth relatively more than
short-tirne bond The present disparity
to the contrary is, therefore, Illogical, IL
not artificial, and at their present price
the Secretary will not buy them
"As an alternative. would you not in
crease the deposit of public moneys with
the banks?" Mr.. Gage was asked.
The Secretary: mo. that would aggra-
vate in some particulars the situation TO
which i have just referred. To qualify
as repositories. the banks would have to
buy and deposit bonds. The effect would
be to set up competition, by the aid
of the government, against the govern
ment in the purchase of the securities,
already abnormaly high. We are now
advancing toward the period of the year
when there is apt 10 be a money ple-
thora instead Of a money scarcity, so I
do not see that 1t will do any particular
harm if money accumulates in the treas
ury.
THE reduction In taxation will, when 1t
becomes operative, partially or wholly.
cure the present tendency towards con-
gestion in the treasury.
May Buy Short bonds.
ITO put the matter in a nutshell: If
Il be a choice between buying bonds at
an artificial price and letting funds accum-
ulate in the treasury, the latter will oc-
cur, nor will the department advertise
for offerings of bonds. To do so / am
satisfied would be fruitless IN results II.
however, the department can, from time
to time. buy the short bonds at an in
vestment rate realizabie to the investor
who buys the new per cepts. It viii
not hesitate to do so, should the present
market price for the new rs remain about