WASHINGTON, July 30 (UPI) -- A nearly bankrupt U.S. government in years past turned to an odd source for a bailout: financier J.P. Morgan.
The idea of the government turning to one individual for a bailout today -- or, more pointedly, on Aug. 2, when the Treasury Department says it will have hit the nation's $14.3 trillion debt ceiling and no longer afford to pay some of its bills -- is patently absurd. Or is it?
The Los Angeles Time reported Saturday that corporations are sitting on such huge piles of cash that one company, the world's second largest by market value, has more cash on hand than the U.S. Treasury Department.
Temporarily, while the Treasury Department spends down to the wire, Apple Inc., which has $76 billion in cash in the bank, has a larger balance than the $74 billion the Treasury Department has available to it.
If the budget debate in Washington reaches a bipartisan compromise and the debt ceiling is raised, Apple will still have to earn a living. The Treasury Department has the luxury of legislatively snapping its fingers to increase its available cash balance.
If no compromise is reached, however, the government will continue to spend down and it will find itself under-financed on Aug. 2, the Treasury has warned. After that, having more cash than the government might become more commonplace.
In the 19th Century, President Grover Cleveland, after the financial crisis of 1893, turned to J.P. Morgan for help and the financier responded with a pledge of $60 million in gold, which comes to $1.5 billion by today's standards.
"The fact that Morgan had become a cosigner on the federal debt was what impressed the markets. Within days the Treasury's condition stabilized; within weeks the dollar's danger had passed," historian H.W. Brands wrote in "The Upside-Down Bailout," the Times reported.