New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1872-12-30

a "callr on the United States Govern
ment for s135,OOO,OoO of FIVE per cent bonds
at 0Si, plus small fraction, incidental
expenses connected with the printing and
delivery of tho bonds. A "cali," we
may explain, is the privilege of receiving
within specified time a specified stock or
security at q specified price. III that price Is
above the market value. and remains above
it, the purchaser, of course never avails MN
self of his privilege. If the figures named In
the contract should come to be below the
market price during the interval over which
the contract extends, il is to the interest OF
the purchaser to take the stock from the
seller of the call and dispose of 1T in the
market. The consideration accepted by Messrs.
Boutwell, and Richardson in return for this
privilege was an agreement on the part Oh
the Syndicate to take $1O,OO0000 of the new
loan at 0sl at once, and $5,0O0OOO monthly
until the tst of April or $45,OOO,OOO in all.
That ia to say, the Syndicate in return gave
Mr.. Boutwell, "put," which is simply the
reverse Of "call," for S35. 100000 of the new
loan at 0Si. If the operation turned out profit
able, as it did, the Syndicate were at liberty
to avail themselves of the whole Sl35OOO,OOO.
If anything should happen to make 1t I'M
profitable they were free to stop with the
$45,OOO,OO0
We now proceed to show how the Syndicate
could and in all probability did protect them
selves from loss on their side on account OF
the "put." For this a comparison OF dates
and prices of United States bonds is neces-
sary, and we regret that Secretary Boutwell,
Il 70 Congress-
the exact date when the final negotiations
were consummated. The United States 1O-4O
five per cent bonds were o security which the
experienced bankers who composed the Syn
dictate rightly judged to be less desirable and
consequently less valuable than would be the
fves of the new loan. The price of the 10-4Os
might therefore be taken as little less than tho
price at which the new fives could be disposed
! of. During the whole month of July the net
price of 1O-40s ranged in London at but
fraction above two per cent less than that OF
| the $50 six per cents, which were receivable
| by the United States Government at par In
settlement of the contract with the Syndicate.
| The Syndicate had only to buy such $50 six
per cent bonds as they needed to protect
themselves, while they had the unerring guide
of the market price to inform them of the
amount which could be realized on the new
bonds which they were to receive in exchange.
Assistant Secretary Richardson was in London
during the whole month of July, in treaty
with the Syndicate. During that month 5-20s
advanced from 0Si to 1Ol. We do not abso-
lutely know that the Syndicate were buying,
but we suspect that they were. On the 9th
of August the public were informed OF
the complete success Of the new loan"
On the 10Th of August, 1871, the loan was adver-
tised in The London Times, the bonds to be de-
livered and paid for on the 1st of December, and
before the end of the month the whole amount
was subscribed for at par; such was the an
nouncement at the time, and there is no ques-
ton as to the price received, but Mr. Cooke
now says that about S5,0O0,00O remained un-
taken. We suspect that no small portion OF
the profits Of the Syndicate accrued to them
in the months of July and August, 1e1i, 10y
operations in the bond market under the aus
pces of Assistant Secretary Richardson.
In his hearing before the Committee of
Ways and Means Secretary Boutwell, made it
tolerably plain that no money was paid into
the United States Treasury, or any old bonds
given in exchange for new, until the list of
December, after the three months interest on
the five-twenties, ostensibly exchanged for the
new bonds on the 1st of September, had &C.
crued for tho benefit of the Syndicate. Yet
on the 9th of August, Jay Cooke a. Co. caused
to be published in the daily papers that "not
"less than $2O0OOOO0 to $50 900 900 will be placed
"to the credit OF the Treasury on before the
"25th instr This, of course, was q sham. 1t
meant only that they we're prepared to make
good their agreement. or "put," with Mr..
Boutwell, for S35,0000O0 of the new. loan, less
the legal one-half per cent commission and the
illegal bonus Of three months interest. The
question also arises, where were the new bonds
during the interval from the list Of September
to the time the Syndicate completed their pay
ments7 Mr.. Boutwell, gives us to understand
in q general way that they were in his posses
sion as security for deposits of public money
placed in the national banks, the said money
being the same which was received in pay
1lent for the new loan. This was a legal fc-
ton, made necessary to excuse the payment
of double interest In reality no money was
received in payment, and the bonds, within
the meaning of the statute, were still the prop
erty of the Government. Ii Mr.. Boutwell, had
power to sell them on three months credit he
might have sold them on twelve months credit,
and thus bond for which he was forbidden
to accept less than par might have been sold
for 95. But he finally tells us that Mr.. Rich
ardson had the bonds in iron safes in Lon
don for tho convenience Of the Syndicate.
Precisely what Mr.. Richardson did with them
is not certain, but Mr.. Boutwell, says his in
structions not to deliver without receiving
cash in hand or other bonds in exchange were
invariably followed, $50 far as L knoU." We