t.
"Hon. John Sherman."

He again wrote on the 30th of August:

"On Tuesday last a further amount of gold (L130,000) was withdrawn
from the Bank of England for shipment to the United States, and
for the purpose of protecting its stock of bullion the bank
immediately advanced its rate to three per cent., and also increased
the price of American eagles.

"Great Britain must obtain from us this season a large supply of
breadstuffs and grain, larger than has been required in any one
year during several years past, and at higher prices than those
heretofore paid, and, in the present condition of trade between
the two countries, gold, to quite an extent, will have to be sent
over in payment for these articles. Therefore, advancing the rate
of interest may check for a time, but will not stop altogether,
the shipment of bullion, but it may attract here some of the gold
held by the Bank of France. The bank rate does not govern the
street rate, and a further advance by the bank, which it is very
likely may be made, is not to be considered as indicating that we
are to have a dearer money market. I inquired to-day of Mr. Morgan
and the Messrs. Rothschild what they thought of the prospects of
making any sales during next month, and their answer was: 'Wait
patiently for the market to recuperate.' I am satisfied that good
investment securities are scarce here; that they have been cleared
from the market, and that as soon as the question of cheap or dear
money is settled, sales of the four per cent. consols will be
resumed. The amount of the sales will of course depend upon which
way the question is settled. There were times during the placing
of the five per cent. and four and a half per cent. bonds when, as
you are aware, operations were suspended for quite a time, the
condition of the market being such as to prevent anything being
done. From semi-official accounts it appears that the famine in
India is a very serious affair, and it is quite possible that large
sums of money will be required from here with which to purchase
supplies."

My experience thus far convinced me that it was bad public policy
to continue the sale of bonds for refunding purposes through a
syndicate of bankers, the chief of whom resided in London. I could
see no reason why this function could not be performed by national
banks, better than by bankers at home or abroad. A question arose
whether the Secretary of the Treasury had the power to desi