The age-herald., 1901-04-01
T|E-UP IF MONEY
 IN HE TREASURY
Secretary Gage is Questioned as to Disposition of Surplus
MERE ARE ONLY TWO WAYS
One is to Increase Treasury Deposits In National Banks and the Other is to Buy United States Bonds.
 The Latter Preferable.

Washington, March 31-Secrtary Gage was questioned today as to his probable action with respect to the cash accumu- lations in the treasury, and particularly as to what he contemplated buying in the bond class for the sinking fund.
 The country would like to know" 1t was stated. to the secretary, whether the accumulation of money in the treasury, which seems to be going on, will not op- crate to the prejudice of general busi- ness affairs. Your estimate is that there will be a surplus of receipts over expen- ditures for the fiscal year ending June 30 next of about eighty million dollars. Your statement published yesterday 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 said, "The estimates you speak of were made before the last ses- sion of Congress and have been modified by events and by Congressional action. It is not now contemplated that the year S surplus will be over sixty millions. A falling off in receipts, or larger dfsburse- ments than have been estimated for May also further modify the effect to which you point"
 Question-''Well, MT. Secretary, even then 1t seems that the cash holdings of the treasury will be increased by some twenty millions between now and June 3o 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"
 Only Two Methods.
 The Secretary-''There are only two methods open to get surplus funs out of the treasury vaults One. is to in- crease treasury deposits in national bank depositaries: the other Is to buy United States bonds. The latter Is more con- sistent with government interests than the former, since in buying bonds interest on 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 to payment within the next seven years. ht d pIOPcT PIGc IL WOulu llU QOuUt DS willing to buy these and thus relieve the treasury from surplus, which, to as- sume, might, under some conditions, be prejudiciai to general business affairs. At the present quoted rates for the short bonds, don't think the secretary would be justified in buying bonds. The 5s at the price yield at an investment return, Nf i A2 mai ant Rhnrf 1G1 per cent; the 3s of 1908, % per cent, while the new per cents. at their present price yield higher investment return, viz, 17s per cent Now 1t IS we'll known and acknowledged fact that a longtime government bond, everything else being equal is worth relatively more than a 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" Bank Deposits.
 Question-"As an alternative, would you not increase the deposit of public moneys with the banks7"
 The Secretary-"No that would aggra- vate in some particulars the situation to which have just referred. To qualify as depositaries the banks would have to buy and deposit bonds. The effect would be to set up a competition, by the aid Of the government against the government in the purchase of the securities, already abnormally high. We are now advancing toward the period of the year when there is apt to be money plethora instead of a money scarcity 50 I do not see that 1t will do any particular harm if money accumuiates in the treasury.
 '"rhe reduction in taxation will, when it becomes operative. partially or wholly cure the present tendency toward con- gestion in the treasury.
 'aro put the matter in a nut -sheli-if it be choice between buying bonds at an artificial price and letting funds accumu- late in the treasury, the latter will oc- cur, nor will the department advertise for offerings of bonds. To do so. am satis- fed would be fruitless in results. If. how ever, the department can from time to time buy the short bonds at an invest ment rate, realiable to the investor who buys the new per cents, will not hes itate to do SO, should the present market price for the new 2s remain on the pres ent basis"
 Elections in Michigan.