Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-12-01
PAN ANA PAYMENTS
CASH TO BE TURNED OVER WITH
OUT SHOCKING MARKET.
Can the Remittance Be Made From the
Treasury. Vaults?-Financ-
ing the Deal.

From the New York Evening Post.
This weeks early rise in sterling ex-
change, with the violent fluctuations later.
has given rise to vigorous discussion and
widely conflicting opinions respecting the
approaching Panama canal payment and
the means used by our government in ef-
fecting the $50 ZOO remittance. Although
this transfer may not be made for several
months yet. the situation this week has
been made doubly interesting by the heavy
purchases of sterling bills for the purpose
of speculation, and. in the case of import
ing houses, as a protection against rise
in exchange next January, when they have
large remittances to make.
Three distinct Impressions have prevailed
In the public mind respecting the way in
which the payment would be financed.
Some bankers have believed that the whole
amount would be shipped in gold taken out
of the depositary banks. resulting, perhaps
in serious money market disturbance; 9TH
ers have felt that while gold might not be
exported at once 1t would probably go
within two or three months, just when the
money market was strained to meet the To-
cal demands; while still others have con-
tended that the transaction would be
financial without money market disturb
ance Of any sort, the government using
the treasury's working balance for the pur-
pose of making the payment.
Money in Treasury
The third of these opinions is the one
which appears to be entertained just now
by the New York bankers 1t has 'rplex-
ed other people, however. The treasury,
1t is true, reported yesterday an available
cash balance Of S217, S63, 600. But this sum
was made up of S144O $4,000, actual cash
on hand, plus STA, 53S, 600 deposited In bank
less 9976i,000 demand liabilities. Now.
the supposition OF the bankers theory re-
ferred TO is that the money is not to be
taken from the banks; therefore, the real
fund apparently available by the treasury
is S144 0S9,000, less 500, 764 600 or S44, 325,-
ooo And this is, in fact. what the treas
ury's bureau officers call the working bal
ance." But If this 50 1926 900 is the only
sum available. outside the bank deposit
taries, 1t would appear, on the face of
things, as If the S50.000OO0 Panama pay
ment could not be thus provided for even
If the entire working balance" were used
for it.
"Disbursing Officers Balances"
The answer of the bankers is that the
800, 764 600 current liabilities of the treas
ury include some S65 ,Os0, 600 "disbursfng Of
ficers' balances" that this liability is need
lessly large, and that 1t could with pro-
priety be reduced, thus enlarging the actual
cash balance. Probably this is true The
account referred to Is merely a general
credit, opened on the treasury's books to
government officers charged with disburs-
ing the public funds under the various ap-
preparations. No such sum as $65 ,OOO, 600 is
needed Immediately and most of that sum
remains untouched for months. Until some
four or five years ago, the "disbursing Off
GERS balances item used to be much
smaller In November, $780, 1t was onIy
29.312,OOO; In November, 1894, SIT S8S 600:
In November. 1896. $25, 10 600 The entry
never rose, in fact above these figures until
tha SyNnV oh, ry~t.@
once expanded on the books to 5O.OOO. OOO
and remained there. The inference drawn
by the bankers is that perhaps one-half of
the present $63,0oOOO0 credit could be
transferred back, on the books to the item
Of cash in hand. thus raising the working
balance" say, to S74 900, 600.
This is undoubtedly the basis for the re-
curing rumors that the money market will
actually be helped by the Panama payment,
the double theory in this matter being
first. that the treasury would turn over to
New York institutions the cash required
to purchase the $50, 900 600 remittance to
Europe: and second, that the bankers
charged with RENTING the drafts on Lon
don would be able so to arrange matters
that shipment of cash from New York to
Paris might be deferred This could be
done by borrowing the requisite sum from
European banks, and paying the Panama
interests with the proceeds.
Cannot Add to American Reserves.
But this would, of course. be only post
ponement. But bankers take seriously the
suggestion that, even with this supposed
modus operandi, the local money market
could be permanently helped by the Pana-
ma payment. That payment must be made
in Paris, presumably at once on the rati-
fication of the treaty. A credit must be es-
tablished there to draw upon, and it is
wholly probable that gold covering most of
the sum will be exported within three or
four months after the payment is made.
This was done in 1899. when the $780, 1000
Philippine indemnity was paid to Spain