The times. [volume] (Washington [D.C.]) 1897-1901, 1901-04-01
THE TREASURY SURPLUS.
Secretary Gnse Discusses Methods
for It's 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 a large
amount of money to accumulate in the
Treasury vaults to the possible detriment
of business interests He was asked IL
this accumulation would not operate to
the prejudice of business affairs and his
attention was called to the estimate made
last year of an SS0,000000 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 o: Congress. ana
have been modified by events and by Con-
gressional action. 1t Is not now contem-
plated that the years surplus Will be over
sixty millions. A falling off In receipts
of larger disbursements than have been
estimated for may also further modify the
effect to which you point
In reply to suggestion that this later
estimate meant an Increase of about w.
200. 900 in the present surplus between now
and June 30. and upon being asked for a
statement whether or not the Treasury
could do anything to relieve business in
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 will
mature and become subject to payment
within the next seven years. At a prop
er price it would no doubt be willing to
buy these and thus relieve the Treasury
from surplus which might. under some
conditions. be preJudicial to general bust
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 IS.
1.6l per cent: the 3 per cents of 1909. LA
per cent, while the new per cents at their
present price yield higher investment re-
known and acknowledged fact that a long
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"
iAs 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
eminent, 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 1t will do any particular
harm II money accumulates in the
Treasury.
THE reduction I'm taxation will, when
it becomes operative. partially or wholly
cure the present tendency toward con-
gestion In the Treasury.
ITO put the matter In a nutshell; If
Il be choice between buying bonds at
al artificial pHIce- and letting funds &C
In the Treasury. the latter VII
occur. Nor will the department adver-
tise for offerings of bonds. To do so
am satisfied would be fruitless In re-
suits. II, however, the department can
from time to time buy the short bonds
at an investment rate. realizabIe to the
Investor, who buys the new per cents,
It will not hesitate to do so, should tie
present market price for the new rs
remain about on the present basis"