r
6 Conservative.
HISTORY OP THIS GOLD STANDARD.
fAcldrcss by Mr. Horace White , Editor of
The New York Evening Post , nt the Na
tional Currency Convention , Onmlm. Neb. ,
September lath , 1898. ]
( Conclmtrd ) .
meet its obligations , or if it could bo
coerced when it is not willing. But
we have seen that in a most critical time
the government was neither prudent
nor willing , and that it could not be
coerced.
SECOND $50,000,000 BOND ISSUE.
The $58,000,000 paid in by the banks
carried the government along for six
months. In August , 1894 , the gold re
serve was down to § 52,000,000 , and al
though the balance of trade was largely
in our favor , gold was going out of the
country rapidly. Foreigners who had
capital invested here were calling it
homo as fast as they could. They had
become thoroughly frightened by the
prospect of depreciation of the currency.
The deficit was running on , and the
gold was running out. Secretary Carl
isle again procured $15,000,000 gold from
the banks in exchange for legal-tender
notes , but that was a mere trifle.
Another sale of bonds became necessary ,
and it was forced upon the Now York
city banks in the month of November to
the amount of § 50,000,000 , which real
ized $58,000,000.
This second loan , far from allaying
the excitement , increased it. The pub
lic , on both sides of the water , wore now
thoroughly alarmed. They believed
that the government would not bo able
to continue payments long , and so they
rushed to the Treasury to got gold
while the supply lasted. They began to
draw it out by the presentation of notes ,
at the rate of § 1,000,000 per day. It
soon rose to § 53,000,000 per day. By the
1st of February , 1895 , the reserve was
down to the lowest point it had ever
reached , being a little more than $40-
000,000. It was commonly expected
that the Treasury would suspend with
in a day or two , and while everybody
was waiting with bated breath for that
event , news came from "Washington
that the president had made an arrange
ment with a syndicate of American and
foreign bankers to provide the Treasury
with 8,500,000 ounces of gold coin , equal
to § 65,117,500 ; that at least one-half of
this gold should bo brought from Eu
rope at the rate of 800,000 ounces per
month , and that the- syndicate should
"exert all financial influence and make
all legitimate efforts to protect the
Treasury of the United States against
the withdrawals of gold pending the
complete performance of this contract. "
The bond deliveries were to bo made
pari passu with the payments , and the
terms of the contract allowed six
months for its entire fulfillment. This
signified that besides replenishing the
Treasury the syndicate had undertaken
to stop the .export of gold for six months ,
or to use all their financial powers to
that end. This was a very strange un
dertaking , but the public believed that
the syndicate could do it.
THE BOND SYNDICATE TUANSACTION.
I believe that the secret history of the
transaction is something like this. The
president was told that another sale of
bonds by advertisement , supposing that
it could bo effected at all , would require
at least two weeks' public notice , and
that , meantime , the Treasury would
have suspended payments with all the
frightful consequences implied thereby.
The assistant treasurer in New York
had , in fact , notified the secretary that
he could not hold out more than two
days longer as things were then going.
President Cleveland did not believe that
he had legal authority to sell bonds in
any other way than in pursuance of
public advertisement and competing
bids , and he so announced to all who
talked with him. Just as the last con
ference on the subject was on the point
of breaking up somebody drew attention
to a clause of the revised statutes which
reads as follows :
"The secretary of the treasury may
purchase coin with any bonds or notes
of the United States authorized by law ,
at such rates and upon such terms as he
may deem most advantageous to the
public interest. "
This law had been passed in 1S62 dur
ing the Civil War. It had been reenacted -
enacted as a part of the revised statutes
in 1874. So there could be no doubt of
its continued validity. The secretary
of the treasury as good a lawyer per
haps as the country contains was as
much surprised as anybody when this
statute was placed before his eyes. He
was not long in coming to the conclus
ion that public advertisement of bonds
was not an absolute requirement , and
that he had full authority to execute
such a contract as ho doomed advan
tageous to the public interests. Never
theless the attorney-general was called
in , and when his opinion was found to
coincide with that of Mr. Carlisle , the
president declared that his scruples were
removed and that the bond syndicate's
proposal might bo accepted. The pro
posal was an alternative one. A 8 per
cent bond would bo taken at par if
made payable in gold ; otherwise the
rate would bo S % per cent. As congress
declined the former offer the latter was
accepted. There was much objurgation
among public men and editors who desired -
sired that the government should sus
pend payments , and also among those
who did not so desire , but who hoped ,
for partisan reasons , to bring discredit
upon the Cleveland administration.
But wo will leave those bygones to
take care of themselves.
The bond syndicate managed to pro
tect the Treasury and prevent the with
drawal of gold from it during the term
of their contract. They oven contri
buted $20,000,000 in gold in exchange
for legal-tender notes , after the termin
ation of their contract , but the drain
upon the Treasury was soon resumed ,
although not in any large amount until
December , 1895 , when President Cleve
land sent his Venezuela message to con
gress. A panic ensued , the exportation
of gold was resumed on a large scale ,
and a new issue of bonds became neces
sary. This time the amount was $100 ,
000,000 and the sale was effected in Jan
uary , 189G. The amount realized was
$111,166,282.
NET CASH RESULTS OF GREENBAOKISM.
Thus , ill the short space of two years
the government increased its bonded
debt by the sum of $202,815,400 , in order
to keep good its promise to redeem its
legal-tender notes. It had previously
issued $100,000,000 of 4 per cents for the
same purpose. As the greenbacks are
only § 846,000,000 in amount , it appears
that the government has incurred an
interest-bearing debt on account of
them $16,000,000 larger then the whole
sum outstanding , and still owes them ,
besides throwing the whole business of
the country into blind staggers in the
operation. If the trouble had been
merely a shortage of revenue , congress
would have applied the remedy
promptly. It was precisely because the
currency question , and the standard of
value , and party interests were involved
in it that members of congress would do
nothing except embarrass the executive ,
bandy words with each other , and let
the treasury go to smash.
Now let us see what has been the net
cost of the greenbacks to the govern
ment , since specie payments were re
sumed in 1879. If at that time the gov
ernment had issued § 846,000,000 of 5
per cent ton-year bonds at par , as it
might easily have done , and had re
deemed the greenbacks with the pro
ceeds , it would have paid in interest up
to their maturity the sum of $178,000-
000. The principal of the bonds being
the same as that of the greenbacks , and
both being debts of the government , the
one balances the other. Now lot us see
what the government has actually paid
or obligated itself to pay.
Interest on $100,000,000 at 4
per cent for thirty years , § 120,000,000
On $50,000,000 at 5 % for 10
years. . . . . 25,000,000
On $50,000,000 at 5 % for 9
years 22,500,000
On $62,815,400 at 4 % for 80
years 74,778,480
On § 100,000,000 for 80 years , 120,000,000
$862,278,480
Deduct interest on § 846,000-
000 as above. . 178,000,000
Net loss on greenbacks. . $189,278,480
But that is not the entire balance against
greonbackism. The principal of the
bonded debt incurred on account of
them is § 862,000,000or16,000,000 larger
than their entire Bum , which , added to