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to continue to meet its obligations in gold, and exports of the yellow metal fell away sharply.

By April 1 the Treasury reserves had fallen off about $400,000, but during that month they suffered from a revival of gold exports, from two to three millions a week going out during the second and third weeks, about $9,500,000 in all, bringing the total down almost to the $100,000,000 mark by May 1.

This was the year following the late panic, the period in which great restriction, shrinkage and economy in business makes itself felt. Continued withholding of Europe from American investments, further sales of American securities which had been held abroad, and a reduced volume of foreign trade resulted in four months of very heavy exports of gold, and another and still worse depletion of the Treasury reserves. In May the reserves again dropped below the $100,000,000 mark, the loss being $21,500,000, net, between May 1 and June 1, leaving the total, which had been $106,500,000 on March 1, only $78,700,000 on June 1. The ensuing month brought the Treasury gold down $13,900,000, or to $64,800,000, continued heavy exports of the same serving to excite talk of the necessity for another bond issue.

Some notion of the strain may be gathered by recalling that New York banks volunteered to furnish the Treasury with gold from their vaults, and actually did transfer some $9,000,000. The mere fact, also, that the President (June 25) declared his appreciation of the action of the banks and reiterated the determination of the administration to protect the national credit at all hazards, is further evidence of the inroads made on the confidence of the general public in the ability of the Government to redeem its obligations in gold. The month of July brought further heavy foreign shipments of gold, and by August 1 reserves in the Treasury had fallen to $54,975,607 and by August 8 to $52,189,500, the lowest point they had reached since the resumption of specie payments in 1879. The passage of the tariff bill in August, coming as it did after an extraordinary delay and conse. quent aggravation of commercial and industrial interests, served to revive general trade. Merchants and manufacturers had been delaying purchases and


production until the tariff was so far settled as to enable them to calculate with some degree of accuracy on questions involving probable amount of sales, cost and competition, and now appeared a moderate but distinct revival of business, accompanied by a cessation of gold exports and a slight expansion of the Treasury gold balance, more than $3,100,000 during the latter two-thirds of the month, as the total on September 1 was $55,200,000. A natural outcome of the enlarged home and foreign trade was an increasing volume of Government revenues, heavily expanded during the period under discussion because of the rush of importers to take goods out of bond, pay the new and in many instances smaller duties and get the merchandise into the market promptly.

This improvement continued during September, during which month the Treasury gold balance increased a little more than in August, about $3,700,000, with a weak or declining market for foreign exchange during the whole of the period. There was even talk of importing gold. But the Treasury statement was somewhat disappointing at the close of the month,

the revenues falling below those for August. The gold reserve on October 1 was $58,875,317.

October showed plainly that the stimulus to trade due to the final disposition of the tariff bill in Congress was short lived and former conditions were quick to reassert themselves. Foreign exchange rates had advanced rapidly to the point at which it is profitable to export gold. There was much uneasiness manifested in financial circles, and as the expenses of the Government remained heavy and revenues relatively small, available cash in the national Treasury continued to run down, the gold reserves on November 1 being $61,300,000, about $2,400,000 less than on October 1.


The results of the national election in November, 1894, were hardly made known when another issue of Government bonds was suggested to replenish the By this time the reduced total plainly showed the necessity for such action, and a Treasury circular was issued on November 13, inviting proposals for another block of $50,000,000 ten year 5 per cent. bonds.

The bid of what has been called the Stewart-KingDrexel, Morgan syndicate, nearly forty private, national and savings banks, insurance and trust companies, and individuals and firms, for the bond issue of November 24, 1894, was signed by John A. Stewart, president of the United States Trust Company; Drexel, Morgan & Co. (now J. P. Morgan & Co.), bankers; Edward King, president of the Union Trust Company, and by Harvey Fisk & Sons, bankers, for the First National Bank, the price paid being $1,170.70 and accrued interest, the amount being $50,000,000, the time ten years and the rate of interest 5 per cent., pointing to a net interest rate to the syndicate of 2.878 per cent. The loan was regarded as a great success, fully four hundred and eighty-seven bids being received aggregating $178,341,150, the Treasury receiving $58,500,000 in gold. Prior to the receipt of the proceeds the lowest point reached by the gold balance was $57,800,000. On December 5 the reserves had been expanded to $111,142,021 and the Treasury cash balance, which had dropped to $99,606,765 early in November, had advanced to $156,424,066.

The few sales of gold at a premium just prior to this second loan had no significance, and the immediate effect of the bond issue on general trade was good, money dropping within a week from 3 to 1 per cent. at New York. But this was not to last long, for not only was gold exported again, but it was withdrawn from the Treasury on legal tenders in order to return gold borrowed with which to buy the bonds.

December brought a hurried revival of almost all the preceding unfavorable features, the single exception being the Government revenues, which held up well. Before the syndicate had placed that share of the bonds which it was expected to offer the public the new currency scheme of the Secretary of the Treasury was brought forward and attracted a great deal of attention both in and out of Congress. As it proposed in part to cause banks to sell bonds

given as security for circulation, and as it was proposed at the time to push the question of currency reform in Congress, the price of and demand for the last issue of bonds was weakened, and on December 27 the syndicate announced its dissolution with some bonds unsold.

The President's message and the report of the Secretary of the Treasury to the LIII Congress, December, 1894, leave no doubt of the firm hold questions involving the payment of Government obligations in gold, bank circulation and its basis and the retirement of the legal tenders had taken on the public mind. The declaration of the President, for the

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second time within a year, that all the power of the Government would be used to maintain gold payments was timely, and had a visible but only a brief effect in stimulating quotations for securities. But the month and year ended with an outward rush of gold and a downward turn of quotations generally.

The opening month of the current year brought out all the remedies of the financial specialists, and in and out of Congress discussion appeared to centre about currency reform and the gold reserve, First came the Springer substitute for the Carlisle currency bill, which was finally killed, and then Senator Sherman's futile proposition for a low rate bond certificate of indebtedness for a redemption fund with which to meet deficiencies in the revenue, which included the privilege to banks to issue circulating notes up to the par value of the bonds deposited to secure them, but

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which did not provide for retiring redeemed legal tender notes. Exports of gold were quite heavy during January, but withdrawals of gold from the Treasury by presenting legal tenders for redemption, as in December, 1894, were not all made to supply the foreign demand for gold. That the last like the first of the two special bond issues had failed to accomplish its purpose was becomming more and more evident. It was like trying to stop the leak in a dam with one's finger at best the relief, the check to the outflow, is only temporary. Many drew gold and locked it in vaults of deposit or other safe places, knowing well that unless prompt measures of relief were taken by the Treasury that gold would go to a premium. Between January 1 and 18 $12,000,000 were withdrawn from the Treasury and in the following week the total drawn out was in excess of $11,000,000.

The Treasury gold reserve, which on December 5 had risen to $111,000,000, had fallen to $86,200,000 by January 2, 1895, to $70.000.000 by January 18 and to $60,000,000 by the 25th of that month. It was, therefore, not surprising that within 60 days after the bond issue of November, 1894, there was something more than talk of the necessity for the Treasury to resort to the loan market again. The position of the

Government at that time was lamentable. Considerable sums of the gold received on the last issue of bonds were of worn coin; very large withdrawals were made by presenting legal tenders, some for export and some for storage, no less than $11,000,000 in the week ending January 26.

It was declared by those familiar with financial affairs that after the outcome of the preceding bond issue it would be a matter of great difficulty to float another $50,000,000 worth of 3 per cent. bonds unless their repayment in gold was authorized by Congress. Meanwhile gold was continuing to go abroad, the Treasury reserve falling to $41,000,000 on February 1. There were more frequent evidences of hoarding gold, notably offers of a premium for a "call" on gold.


President Cleveland sent a message informing Congress of the necessity for improving the public credit as made plain by the financial condition of the Government and the apprehension and anxiety in business circles, and to that end he proposed to maintain an adequate and safe gold reserve in the Treasury, particularly in view of the critical situation in trade circles and the unpromising outlook for remedial legislation. He had made an arrangement "with parties abundantly able to fulfill their undertaking," to float $62,317,500 worth of 4 per cent., thirty year bonds, for the purchase of $65,117,500 worth of gold (under the act of July 14, 1875), at such a premium as to make the rate of interest 3 per cent. per annum. Not the least favorable feature was that at least one-half the gold to be obtained was to be supplied from abroad, but the most significant provision of the contract was the privilege reserved to the Government to substitute at par, within ten days, similar bonds made payable in gold bearing only 3 per cent. interest (promising a saving within the life of the bonds of $16,174,770) "if the issue of the same should in the meantime be authorized by Congress." The effort in Congress to comply with the suggestion of the President and authorize the substitution of a 3 per cent. "gold" for a 34 per cent. coin" bond was unsuccessful, "a decisive majority of the House" adopting a minority committee (Ways and Means) report that there was no necessity for a depleted gold reserve beyond the preference of the administration to translate "coin" to mean gold; in short, if there was not gold enough to pay out the administration had the option of using silver and it was explicitly declared the holder of legal tenders could not elect to receive gold.*


*On the attempt to save this sum of money by merely declaring officially that payment in "coin" meant "gold," as it thus far has meant in our practice. the Financial Chronicle said (February 9, 1895): "The wish in desiring a security promising gold in payment was to improve the Government credit, to establish the fact beyond the reach of future doubt that our currency, gold and silver, should be kept convertible."



The special message of the President, January 28, 1895, set forth clearly and forcibly the reasons for the passage of the bill "to authorize the Secretary of the Treasury to issue bonds to maintain a sufficient gold reserve and to redeem and retire United States notes and for other purposes "(H. R. 8705), and Mr. Springer, from the majority of the Committee on Banking and Currency, reported the bill on February 1.

The report of Mr. Wilson, from the Committee on Ways and Means, February 13, 1895, on a proposed issue of gold bonds to meet a provision of the Government's contract with the Belmont-Rothschild-Morgan syndicate, and save some $16,000,000 to the Treasury, was accompanied, as was the Banking and Currency Committee report, by a dissenting opinion from the minority of the committee, and as may be easily recalled, Congress refused to co-operate with the President and the Secretary of the Treasury.

It is of more than passing interest to know who were the members of both Houses who led in this struggle. The majority report of the Committee on Banking and Currency was presented by Hon. William M. Springer, of Springfield, Illinois, from whose views Hon. J. C. C. Black, of Augusta, Georgia, dissented in less than a dozen words. In the interest of truth it must be added that Hon. Thomas B. Reed, exSpeaker of the House and reputed candidate for the Republican nomination for the Presidency, did more to embarrass the friends of the movement to issue gold bonds than any other member of the House with his substitute for the bill reported by the Committee on Banking and Currency, to issue currency or lawful money 3 per cent. bonds; for, by insisting on this measure, he succeeded in holding a large Republican vote away from the friends of gold bonds. The opinion has been expressed by those in position to know that had Mr. Reed co-operated to secure an issue of gold bonds such a one could have been authorized, and about $16,000,000 saved the Government. Of this there can be no doubt in view of Mr. Reed's intimation to friends of the bill (H. R. 8705) that if his (Reed's) substitute were accepted a sufficient number of Republican votes would be cast for it to pass it.

In opposition to the majority report from the Committee on Ways and Means, presented by Hon. William L. Wilson, of Charleston, West Virginia, was an equally extended minority report signed by Hon. William J. Bryan, of Lincoln, Nebraska, and Justin R. Whiting, of St. Clair, Michigan. Hon. Benton McMillan, of Carthage, Tennessee, and Hon. Joseph Wheeler, of Wheeler, Alabama, while dissenting from the majority, reserved their views until they should have opportunity to speak in the House.

Other of the more active Congressional opponents of the three emergency Government bond issues, from January-February, 1894, to February, 1895, include Hon. Messrs. Richard P. Bland, of Lebanon, Missouri; Nicholas N. Cox, of Franklin, Tennessee; James E. Cobb, of Tuskegee, Alabama; Alexander M. Dockery, of Gallatin (?), Missouri; Joseph D. Sayers, of Bastrop, Texas; George W. Fithian, of Newton, and James R. Williams. of Carmi, Illinois-all Democrats. Conspicuous among the Populist antagonists were Hon. Messrs. William A. McKeighan, of Red Cloud, Nebraska; Jerry Simpson, of Medicine Lodge, Kansas, and Lafe Pence, of Denver, Colorado. Aside from the opposition of Mr. Reed, referred to, that from Hon. Albert J. Hopkins, of Aurora, and J. G. Cannon, of Danville, Illinois; Hon. William P. Hepburn, of Clarinda, Iowa; Hon. Chas. H. Grosvenor, Athens, Ohio, and Hon. Nelson Dingley, Jr., Lewiston, Maine, Republicans, was noteworthy.

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of Vicksburg, Mississippi; Josiah Patterson, Memphis, and Joseph E. Washington of Cedar Hill, Tennessee; William D. Bynum of Indianapolis, Indiana; Alexander B. Montgomery of Elizabethtown, and James B. McCreary, of Richmond, Kentucky; Richard H. Clarke of Mobile, and George P. Harrison of Opelika, Alabama; Thomas B. Cabaniss of Forsyth, and Henry G. Turner of Quitman, Georgia; Seth W. Cobb of St. Louis; Joseph H. O'Neil of Boston; Joseph O. Pendleton of Wheeling, West Virginia; Adolph Meyer of New Orleans; Michael D. Harter of Mansfield; Albert J. Pearson of Woodfield, and Joseph H. Outhwaite of Columbus, Ohio; John C. Tarsney of Kansas City, Mo., Walter Gresham of Galveston, and Thomas M. Paschal of Castroville, Texas, and Lewis Sperry, Hartford, Conn.

On the Republican side of the House the list of leaders in the active support of various measures brought forward to sustain public credit in an hour of impending disaster is not long, but the names of Hon. William F. Draper of Hopedale, Massachusetts, and Marriott Brosius of Pennslyvania deserve mention. It should be added, with respect to the attitude of Mr. Reed toward the measures proposed for relief of the Treasury, that he finally voted for the bill (H. R. 8705) on the second roll call, after the entire vote had been polled and it was known the bill was defeated.

In the Upper House the administration was ably supported by Senators Vilas of Wisconsin, Gray of Delaware, Palmer of Illinois, Lindsay of Kentucky, Gordon of Georgia, Ransom of North Carolina, and Hill of New York-all Democrats, and by John Sherman of Ohio. Opposition was conspicuous from Senators Vest and Cockrell of Missouri, Mills of Texas, Jones of Arkansas, Voorhees of Indiana, Harris of Tennessee, and Pugh and Morgan of Alabama-all Democrats; Senators Wolcott and Teller, Colorado, and Dubois, Idaho, Republicans, and from Senators Stewart of Nevada, Peffer of Kansas, Allen of Nebraska and Kyle of South Dakota, Populists.

No list of the more conspicuous friends and opponents of the various Government bond issues of the last eighteen months would be complete without some reference to the personnel of the better known among subscribers to those issues. Some have been mentioned and of others it may be said they represent not only Wall Street proper, including important foreign banking houses, but financial interests centred at every city of prominence in the country. The names of subscribers to the bonds issued in February and in November, 1894, the latter known as the StewartKing-Drexel, Morgan syndicate (the former acting individually in making subscriptions) have been made public. The total net worth of firms, institutions and individuals subscribing to the bond issue of February, 1894, was in round numbers $100,000,000. The share secured by Wall Street amounted to about 80 per cent. of the whole. The syndicate which took the bonds issued in November last included about forty members, whose aggregate worth was not less than $200,

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self, in addition to furnishing gold as already explained, to bring one-half of it from Europe, at its own expense, and to "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 the contract, until October next, when business is expected to be reviving and revenues increasing; for it was also provided that should the Secretary of the Treasury desire to offer or sell any more bonds of the United States on or before October 1, 1895, he should first offer them to this syndicate. The contract was signed by Secretary of the Treasury J. G. Carlisle of the first part, by August Belmont & Co. on behalf of Messrs. N. M. Rothschild & Sons, London, and themselves, and by J. P. Morgan & Co. on behalf of Messrs. J. S. Morgan & Co. of London, and themselves, on the second part, and attested by W. E. Curtis, Assistant Secretary of the Treasury and by Francis Lynde Stetson, formerly law partner of the President, who drew up the contract between a department of the Government and four firms representing a net active cap

*In commenting. Bradstreet's (February 3) said: "The action of the New York institutions is of importance not only by reason of the actual subscriptions placed there, but also because of the effect which the attitude of the financiers of the metropolis will have throughout the country."

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