The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-08-28
Exchanging Five PEI Cent Bonds for Ma
tiOnal Bank Certificates Of Deposit.
The Cost Of Placing the New Lean OffSeitlns
Tie Saving by Reduction Of lnt'rsst.
Has Mr.. Boutwell, Beea Guilty Of
Violation Of Lawg
His Present Dilemma - Which
Horn Will He Take?
The Law and Facts Of the Case
Clearly Stated.

Clearly Stated.
WAsHIN GTON, August &c. 1871,
The Information relating to tho new loan given
out at the Treasury Department to representatives
OF the press for publication is always clothed with
30 much ambiguity that the real truth cannot be
obtained without q vast deal Of labor. Messrs
Cooke Boutwell, & Co.'s bulletins announce enor-
NOUS subscriptions by the Syndicate" to the new
loan.
Years ago the HERALD was the first and only
newspaper that undertook to expose and probe the
inside operations Of the st0ck-jobbug rings In Wall
street. long time afterwards the Treasury ring at
Washington received the same treatment, imme-
dlately upon Its first organizations; and now the
great
comes forward for It's share. There Is desire on
the part Of the taxpayers to know the Syndicate
actually purchase the bonds or only take them, as
agents. to dispose of on commission 1t Is asked If
this Syndicate business Is only another scheme to
make money out OF manipulating the debt over
again AZ the expense OF the people, or bona .fde
sale OF a portion OF the new loan. And, the
Syndicate are only agents, Is 1t going TO cost more
to place The than aotu be sGued in The nert
three gears bv the proposed reduction OF INTEREST,"
Is the present burden OF taxation to be reduced or
loudly sounded throughout the length and breadth
OF the land9 Is 1t true given out on the 18th
instant for publication, that Governor H. ID. Cooke
paid into the Treasury to-day, on behalf OF the
European syndicate, fifteen millions SUBSCRIPTION
on account OF the loan, did he only hand In
acertincate Of deposit for the amount by the First
National Bank OF Washington, Of which he is Presi-
dentP
In other words, Is not Secretary Boutwell, swap.
0,,a
est payable quarterly, for national bank certificates
OF deposit bearing no interestY Does not he agree
to hold the certificates three months and permit the
Syndicate to hold the bonds and draw the interest
the same length OF timer Does not this brilliant
financial transaction net the Syndicate one and one
fourth per cent clear profit besides the onehalf OF
one per cent appropriated by the funaing bills Is
not Secretary Boutwell, paying the Syndicate SIX
times as much for mere preliminary transactions as
he oneied the old agents for the entire work. Are
items prepared for press" at the First National
Bank Of Washington and sent over to the Treasury
Department to be there given out for publications
il there
scHExE IN THE BACKGROUND
by witch the pronts Of the Syndicate are 10 be In
creased three per cent making the eatire cost to
the people, Of converting the loaa three and one,
amount Of subscriptions Is constantly raraded butthe
expense OF the business Is srudiousy suppressed
iacta As tersely Stated in the HERALD OF the sd
Instant, four people are generous and liberal IN
accomplished, rM readily yield NE COMMISSIONS
and charges dccruing to DE sp,dcaie, p,or.ded
there 70 no exceeding the germs red OF tee tdtc"
LOCALIZED swINDLEs.
Tho profits OF the Syndicate ring will be at least
three not 1 six times greater Than was plainly
times greater than was offered by the Sec
rotary Of the Treasury to the old agents;
wl Increase rather than reduce the peoples bur-
den Of taxation. Secretary Boutwell, is certainly
guilty Of violating NE spirit of the laws Of Congress
authorizing the Tefunding OF she national debt, aI
proved July IA, $780, and January 20 1871. Tue Ian.
Guags OF these laws 80 far as relates TO compensa'
ton u agents for conversion Is found III section q
IN tho following words:-"Anda sum MOI elGes9tsg
oneAnQ one per cent Of the bonds herein author
preparing, issuing advertising and dsposlng OF tte
same" Whether the strict letter OF the law has
been violated or not remains 10 be seen. Mr. Bout
Wen attempts to ind Justification OF his course III
an OLD law OF Congress authorizing the Secretary OF
the Treasury TO designate certain national banks aS
inc wckedness or tins old law was exposed by
the HERALD as long ago as 1867, and shortly after
wards the national House OF Representatives
passed a bill repeating 1t almost unanimously; hut
the report Of bank PRESIDENT, who held both q
seat In that committee and deposit OF about quar-
Ter OF million VI dollars Of pubic money In his
bank.
the investigation had at the time disclosed tho
astounding fact that while the government was
borrowing large sums OF money al six per cent IN.
terest In gold over S2 000, 900 OF that very money
for which the government was paying such high
iav0rte designated national banks that paid no in
terest Whatever on the sums so deposited.
These avortc banks had the use or this S25 600 900,
sometimes as much as $50 90 200, year after year
without paying a cent Of interest,". IL coud nos DC
pretended tina! the money was thus deposited for
Gonal Bank OF Washington, IL. ID. Cooke, Of Jay
Cooke & Co., President holding at one time gov
ated just across tue street. opposite tue United
states Treasury, aud many OF the most favored ones
were within stones throw Of United States Sub.
THE WAY TO DO IT.
the syndica,te,s national BANKS are made deslg-
bearing no interest, are taken by the Secretary
exchange Tor bonds bearing five per cent m
mences when The certificates ore delivered.
Tho government practically guarantees thai
the Syndicate banks shall not be called upon
to redeem their certificates Tor "ninety darsn dur
ing which time they may draw interest on the bonds
for which the ceruncates are exchanged. by this
neat operation one and 0ne-quartcr per cent clean
profit Is realized. TO THIS must be added one-quarter
tary under the Funding bill, after deduciing the ex-
pense Of printing and issuing the bonds: This
brings the profits OF the Treasury ring -Syndicato
should have said--up 10 one and one.half per cent
sure. " Is PLAIN that the syndicate may mold the
new bonds ninety days, drawing interest," before
being obliged to pay over the gold or old bonds.
CHANCE FOR ANOTHER PROFIT
Secretary Boutweils Official circular OF tho 10th
Inst to national banks contains inc following
given OF the redemption OF an amount OF bonds
equal TO the amount VI subscr IONS In coin for the
preceding month, interest TO cease IN n.sety ddys
rom ne date or such not oe."
1t has already Teen limited that In ADDITION 10 the
one and one.haf per cent profit already provided
for the syndicate be permitted to hold the Old
bouds 'nnety days. before turning them into { he
Treasury for cancellation. one and onehalf per
cent can be netted by such an operation. THIS
would make the total cost Of conversion three anu
onequar er per centequal TO more than three years
saving OF interest Ny the END OF three years Q
scheme for another manipulation could DO devised.
PLAIN VIOLATIONS or THE LAW OF CONGRESS-.
IL Is impossible now to see how Secretary Bout
well will clear himself from the charge OF wilfolly
violating clearly expressed law OF Congress. 1t
was clearly the Intention OF Congress that the new
loan should be exchanged for the old. There is an
old bond outstanding for each Lew one authorized.
was clearly intended that the interest on the Old
ponds should stop Oh the very day and hour that
the new ones commenced.
THE SECRETARY OF THB TREASURY Is EXPRESSLY
PRoH1BlTED
uoiu increasing the bonded debt or the nation, In
any way, py putting out the new bonds before CALI
ing IN inc Old, or 0therMise. The law IA cxnlicIt