RESUMPTION. The resumption act was approved January 14, 1875; it directed the Secretary of the Treasury to prepare and provide for the redemption of United States notes in coin, on and after January 1, 1879, and it authorized him to use the surplus revenues for that purpose, from time to time, and to sell and dispose of, at not less than par in coin, either of the descriptions of bonds described in the refunding acts above mentioned. In pursuance of this authority $95,500,000 of the 41⁄2 and 4 per cent bonds were sold for redemption purposes, and the proceeds ($96,000,000 in gold) were placed in the Treasury as a fund for such redemption. In time this fund became known as the "gold reserve," and in the bank act, approved July 12, 1882, in a section providing for the issue of gold certificates, the sum of $100,000,000 was prescribed by Congress as the limit to which the gold reserve might be reduced without affecting the issue of gold certificates. The presentation of United States notes for redemption prior to 1893 was not great enough to reduce the reserve fund below $100,000,000. During the operation of the Wilson bill the revenues of the Government from customs fell off rapidly, the deficiencies for the four years of the Cleveland Administration amounting to $155,864,183. The excess of expenditures over revenues thus existing was supplied from cash in the Treasury ($162,807,577); so that in April, 1893, the minimum of the gold reserve was reached, and the fund became so low that in February, 1894, an issue of bonds became necessary, ostensibly to enable the Government to restore the gold reserve and redeem the obligations of the United States. Accordingly, popular subscriptions were invited for an issue of $50,000,000 of ten-year 5 per cent bonds, which were dated February 1, 1894, and realized to the Government $58,633,295.71 in gold. In November, 1894, another issue of $50,000,000 of the same class of bonds was necessary, the sum realized being $58,538,500. In February, 1895, the Government was again obliged to replenish the gold reserve, which it did by the purchase, under contract, of 3,500,000 ounces of gold coin, which were paid for with United States 4 per cent thirty-year bonds, amounting to $62,315,400. Another sale of $100,000,000 of 4 per cent thirty-year bonds was made through popular subscriptions, invited in January, 1896. The total amount of bonds thus issued since 1893 to protect the gold reserve was $262,315,400, and the total proceeds thereof, in gold coin, was $293,454,286.74. The amount of United States bonds outstanding April 30, 1898, was as follows: 42 per cent bonds continued at 2 per cent. 4 per cent bonds of 1907... $25,364,500 559,644,950 5 per cent bonds of 1904.. per cent bonds of 1925.. $100,000,000 162,315,400 847,324,850 Total All these bonds were sold at not less than par for gold coin, or its equivalent; they are all redeemable in coin of the standard value of July 14, 1870, which was the date of the first of the refunding acts. The standard weights and fineness for coins at that date were the same as at present, the gold unit being a dollar of the standard weight of 25.8 grains and the silver unit being the silver dollar of the standard weight of 412 grains. The interest on all these bonds is payable quarterly in coin of the same standard. The Government has never issued any bonds payable, by their terms, either principal or interest, in gold coin or in silver coin. Before the war, the obligations of the Government contained no statement as to the kind of money in which they should be paid, and none of the war obligations contained any such provision, except the certificates of temporary loan and the 7-30 notes of 1864 and 1865, which were all payable, by their terms, in lawful money. BONDS. Republican Economy Demonstrated by Comparison with Under the Cleveland Administration this Government was compelled to sell $262,315,400 in bonds. The issues were made as follows: The interest on this amount of bonds for ten years is $114,926,160, or nearly $11,500,000 per annum. Now, let us see what these bonds would have cost, premium barred, if issued under the same terms as those authorized by a Republican Congress to raise revenues to conduct the war with Spain. These bonds were sold for 3 per cent, instead of 4 and 5. Reduced to a mathematical form, the problem stands as follows: Total amount of bonds (Cleveland Administration).... $262,315,400 Rate of interest authorized under McKinley.. .03 7,869,462.00 It will thus be seen that if the bonds issued under the Cleveland Administration had been floated at the low rate of interest authorized under the McKinley Administration: Cleveland annual interest. McKinley annual interest... It would have saved the people... 11,492,616 7,869,462 .$3,623,154 or $36,231,540 in ten years, and $108,694,620 in thirty years. And how easy it was to float a 3 per cent bond was shown by the extraordinary demand of the public for the $200,000,000 placed in small sums last July at that rate. The bids exceeded a round billion. Nothing demonstrates better than these two financiering feats the difference between the economic administration of the Republican party and the blundering policy of the Democrats in national affairs, especially if we consider, as we certainly should do, that the Democrats floated their loan in time of peace, while the Republicans floated $200,000,000 bonds-$62,315,400 less than under Cleveland-in the midst of war, at a relative saving to the country of $3,623,154 per annum. BOND ISSUE OF 1898 TO DEFRAY WAR COSTS-HOW THE BONDS WERE PLACED. On June 13, 1898, the Treasury Department called for subscriptions to $200,000,000 of the $400,000,000 bonds authorized by the war-revenue act to provide ways and means for carrying on the war with Spain. Subscriptions were received at par for a period of thirty-two days, closing July 14. The bonds were issued in denominations of $20, $100, $500, and $1,000, so that every mechanic and wage worker had an opportunity to invest in these Government securities. The response was enormous. By the time the subscriptions were closed upward of a billion dollars had been offered, or more than six times the amount of the bonds. To prevent them from falling into the hands of syndicates, as under the late Democratic Administration, they were not only offered in small amounts, but Secretary Gage inserted in his circular setting forth the conditions of the sale the following clause: The law authorizing this issue of bonds provides that in allotting said bonds the several subscriptions of individuals shall be first accepted, and the subscriptions of the lowest amounts shall be first allotted. In accordance with that provision, allotments to all individual subscribers will be made before any bonds will be allotted to other than individuals. All individual subscriptions for $500 or less will be allotted in full as they are received, and such subscriptions must be paid in full at the time the subscription is made. If the total sum subscribed for in amounts of $500 or less should exceed $200,000,000, the allotments will be made according to the priority of the receipt of the subscriptions. Allotments on subscriptions for over $500 will not be made until after the subscription closes, July 14, and will then be made inversely according to the size of the subscription, the smallest subscription being first allotted, then the next in size next, and so on, preference being given to individual subscriptions. Persons subscribing for more than $500 must send in cash or certified checks to the amount of 2 per cent of the sum subscribed for, such deposit to constitute a partial payment and to be forfeited to the United States in the event of failure on the subscriber's part to make full payment for his subscription, according to the terms of the circular. Allotments to subscribers for more than $500 will be made as soon as possible after the subscription closes. It is impossible as this book goes to press to give the allotment of bonds by amounts, or to present more than a general statement of the result of the sale. At the proper time the Treasury Department will give a statement to the public showing in detail the amount of bonds allotted by denominations, in pursuance of the plan defined in Secretary Gage's circular. The total number of bids received, including offers made by syndicates, which were not considered, amounted to $1,325,000,000, or over six times the amount of the issue. Over four hundred clerks were required to handle the work entailed by the enormous correspondence. In an interview regarding the sale, Assistant Secretary Vanderlip, of the Treasury Department, a few hours after the bids closed made the following statement: "It is, of course, impossible to give final figures at this hour. The Department received to-day just under 25,000 letters, and yesterday 24,300. The mass of applications must be put through a detailed operation before a total can be arrived at and the exact line at which allotments will be made announced. My estimate at this hour is that it will be around $5,000; that is to say, that all applications for a smaller amount than that figure will be allotted in full, while all applications for larger amounts will receive nothing. At this hour there has actually been listed $84,300,000 of the $500 and smaller subscriptions, and the amount now on the tables will carry that probably just above $90,000,000. "The amount scheduled and totaled in the subscriptions larger than $500 is at this hour $690,610,840, and I estimate it will reach $735,000,000. Thus the total subscription, including the $500,000,000 syndicate bids, will reach $1,325,000,000. We have held out cases ere there were doubts as to the bona fide character of sub scriptions amounting, in the subscriptions for $500 and under alone, to $19,494,740. The total number of subscriptions for $500 and under that has now passed the stampers is 228,000, and that figure will be somewhat further increased. The total of larger subscriptions numbered is 65,800, and there are still several thousand of these larger subscriptions to be listed. In the last nineteen days the Department received 255,800 subscriptions, an average of 13,262 a day. The last letter was opened within two hours after the subscription closed. We have had at the close of the work 400 employees, working from 9 in the morning until 10.30 at night. The fact that there are at this hour out of nearly 300,000 subscriptions received only 71 cases held up because of some irregularity, such as a misplaced remittance or informality of subscription, is some indication of the thoroughness of the work." GREENBACKS OR BONDS?-WHICH POLICY IS THE MOST PATRIOTIC? Under the head of "Money," in another part of this handbook, is a brief history of the issue, value, etc., of our paper money from 1862 to 1878. Supplementary to that information, the attention of the reader is called to the attempt of the Democrats in the Fifty-fifth Congress to substitute an issue of $150,000,000 of greenbacks for bonds bearing 3 per cent interest, as proposed by the Republicans, and as finally adopted by both Houses, which is now the law. A great to-do was made by the Democrats over the bond issue, and in the House Representative Champ Clark, of Missouri, threatened to read out of the party the six Democrats who voted for the war-revenue bill and against the proposition of their colleagues to tie the hands of the Government in its conduct of the war. In their arguments against bonds the Democrats and their allies did all in their power to create the impression that an issue of greenbacks was vastly preferable to bonds, because it is a noninterest-bearing debt, while the bonds draw 3 per cent. A glance at the history of our experience with the greenbacks will show the fallacy of this argument. Having no intrinsic value, the value of all paper currency must depend upon the power of the government to keep it at par with the best metallic coin, which was gold during the war of secession and was still gold during the war with Spain. In another place will be found a table showing the premium on gold and gold value of United States legal-tender notes from 1862 to January 1, 1879. It shows that these notes fell in value to 49.2 cents in 1864, so that any person working for wages or a farmer receiving pay |