The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1901-04-01
Surplus VIII Remain in the Treasury
Until Conditions Warrant In
crease of sinking Fund.
ESTIMATES MODIFIED
RECEIPTS MAY NOT EXCEED En-
PENDITUREs SIXTY MILLIONS.
Falling on in Revenue May Cause
as Estimated Last December.

WASHINGTON March 31-Secretary
Gage was questioned to-day as to his prob
able action with respect to the cash accu-
mutations in the treasury, and particularly
as to whether he contemplated buying bonds
for the sinking fund. 1.-The country would
like TO know" it was stated 10 the secre-
tary, whether the accumulation of money
in the treasury which seems to be going on
will not operate TO the prejudice of general
business affairs. Your estimate is that
there will be a surplus of receipts over eX-
penditures for the fiscal year ending June
30 next of about 100000. Your statement
published yesterday shows that some S4O.-
600 900 of that sum already has been real
lied. This would indicate that within the
next three months s40OOO.OO0 more of cash
will be gathered into the treasury from
the general money market"
The secretary replied: 1.-The estimates you
speak of were made before the last session
Of Congress and have been modified by
events and by congressional action. 1t Is
not now contemplated that the years sur
plus will be over $50, 900. A falling off in
receipts, or larger disbursements than have
been estimated for may also further modify
the effect to which you point"
=
that the cash holdings of the treasury will
be increased by some $50, O00,0 900 between now
and June 80. Are you willing to state
whether you would or could do anything TO
relieve general affairs should they be ad-
versely affected by the te-up of money in
| the treasury"
There are only two methods open to get
surplus funds out of the treasury vaults. .
said the secretary. "One is to increase
| treasury deposits in national bank deposit
| taries; the other is to buy United States
| bonds. The latter is more consistent with
government interests than the former, since
| in buying bonds interest on the public
| debt is by so much stopped. The depart
| ment, however would not be justified in
| buying bonds other than those which will
mature and become subject to payment
| within the next seven years. At a proper
price it would, no doubt, be willing to buy
| these and thus relieve the treasury from a
surplus which, as you assume, might, under
some conditions, be prejudicial to general
business affairs At the present quoted
rates for the short bonds, L do not think
the secretary would be justified in buying
bonds. The fives at the price yield an in
vestment return of only LOS per cent; the
4
cents of 1905 ia per cent, while the new
two-per-cents at their present price yield a
higher investment return, namely 173 per
cent. Now, it is a well-Known and acknowl-
edged 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
I he
| buy them"
"As an alternative, would you not increase
| the deposit of public moneys with the
| banks?" the secretary was asked.
mo; that would aggravate i'm some par
ticulars the situation to which L have just
referred" said Mr.. Gage ITO 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 abnor-
mally 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 1 do not see that it will do any
particular harm if money accumulates in
| the treasury.
| THE reduction in taxation WILL when II
becomes operative, partially or wholly cure
! the present tendency toward congestion IN
the treasury. To put the matter in a nut
| shell: If ii be a choice between buying
bonds at an artificial price and letting funds
| accumulate in the treasury, the latter will
occur, nor will the department advertise
tor offerings of bonds. To do so, am salts
| fed, would be fruitless in results. If how
ever, the department can from time to
time buy the short bonds at an investment
rate realizable to the investor who buys
the new two-per-cents, it will not hesitate
to do so should the present market price
Tor the new fours remain on the presen,
| basis"