New-York tribune., 1901-04-01
GAGE ON USE OF SURPLUS
PURCHASE OF GOVERNMENT BONDS
OUT OF EXTRA FUNDS DISCUSSED.

Washington. March S1-secretary Gage was
asked to-day regarding his probable action with
respect the cash accumulation in the Treasury,
and particularly as 70 whether he contemplated
buying bonds for the sinking fund.
The country would like 20 know" it was stated
to the Secretary. whether the accumulation of
money in the Treasury which seems to be going on
will operate to the prejudice of general bust
ness affairs Your estimate is that there will be a
surplus of receipts expenditures for the fiscal
year ending June 81 next OF about ss000o,Od0- Your
statement published yesterday shows that some
$40OO0O0O of that sum already has been realized.
This would indicate that within the next three
months S0OOOOO more of cash will be gathered into
the Treasury from the general money market"
Mr.. Gage said:
The estimates you speak Of were made before the
last session of Congress. and have been modified by
Contemplated that the years surplus will be over
$1,000 4 falling ing of in receipts or larger dis dis,
further modify the effect to which you point.
We'll. Mr. Secretary. even then it seems that the
cash holdings of the Treasury will be increased by
some s2oOo0.0O0 between now and June 80. a ou
willing TO state whether you would or could dc any
thing TO relieve general affairs should they be ad-
verseIy affected by the teup Of money in the Treas
ury?'
There only two methods open 10 get surplus
funds OF the Treasury vaults" replied Mr. Gage
One is TO increase Treasury deposits in national
bank depositares the other is 70 buy United States
bonds. The latter is more consistent with govern
nent interests than the former. since in buying
bonds interest the public debt is by so much
stopped The department, however. would not feel
justified in buying bonds other than those which
will mature and become subject 70 payment within
the next seven years. At proper price Il would
doubt be willing to buy these. and thus relieve
the Treasury from a surplus which. you assume
might under conditions be preiudieiaI 10 gem
eral business affairs Al the present quoted rates
for the short bonds. do not think the Secretary
would oe 1usuhed In buying bonds The IS al the
price yield investment return OF only LOB per
eeat; the short As In per cent the per cents of
1908 134 per cent, while the per their
present price yield higher investment retUrn-l73
per cent. Now IL is a well known and acknowl-
edged fact that long time government bond.
more than short time bond. The present disparity
70 the contrary is, therefore Illogical il not arti-
hcia and at their present price the Secretary will
Q-As an alternative. would YOU not increase the
deposit OF public moneys with the banks?
some particulars the situation which have tust
referred To qualify as depositares the banks
would nave TO buy and deposit bonds. The effect
government against the government in the pur-
chase or the securities already abnormalIy high
We are now advancing toward the period Of the
year When there Is likely TO De a money plethora
instead OF money scarcity, do not see that il
In the Treasury.
The reduction in taxation will when il becomes
operative, partially or wholly the present ten
deney toward congestion in the Treasury
10 put Jhe matter in nutshell: If II be choice
petWeen nqylnS bonds at an artificial price and
IettnS tunGs accumulate in the Treasury the latter
VIII occur. nor Will the department advertise for
offerings OF bonds. To do so, I am satisfied would
be fruitless in results IT, however the department
can from time 20 time buy the short bonds az an
Investment rate reaizable 70 the investor who buys
should the present market price for the new D.
remain ABOUT on the present basis.