, 1873-01-04
THE PROPOSED NEW SYNDICATE.

| Mf. 6ecfetafy HoutWcll las been before tho
Committee Of Ways and Means Of tic uouHe Of
Representatives explaining his celebrated syntli-
cato operation, and asking Congress for authority
to oropeat tho operation on 1argor scalo. nlr.
Boutwell,, in hia testimony, frankly acknowledged
the ilogality of his proceeding, and as frankly
stated that 1t had cost tho country 81, 950, 900.
The proceeding was substantially as follows !:
| Lilo was authorized by law to iasuo now & nor
cents, which lo might sell for cash or exchange
! at par for outstanding G per conts. To faeili-
| tato tho exchange, lie was allowed to give notice
| to tho holdora OF my specified por cent bonds
TINT, in ninety daya from such notice, intorcut
thereon would coaso, aud said bonds would bo
paid On presentation. IIo was prohibited,
howoyor, from in any way increasing
tho amount Of the public dobt, and
tho whole allowance for printing, advor-
tising, and othcr expenses was limited to
Il Of per cent, or about 100000. no first
mado tho National Banks agents for tho OK
change Of tho now bonds, allowing thom Il of
/ per cont commission. Tho banks took so0,~
100000 Of the loan On their own account Ho
then rcRortcd to his celebrated Syndicate. This
Syndicate, consisting Of Jay Cooke l. Co.. Henry
Clews Co., and others, subscribed for $3.50, ,oo0,-
600 Of the new loan, giving their own checks On
themselves for tho full sum. Tho Secretary
thoroupon dopoHitod with those bankers their
own checks, and iaauod to tllom now bonds
hoaring per cont intorcBt, giving thom 90
days in which to deliYor ut tho Treasury the 9
per cont bonds to an equal amount. At tho end
Of tho 90 days tho exchango waa completed,
tho Syndicate drawing three month"; intor-
eat oh the per conta and throo months
intorcst on tho 6 por conts, or ut tho ratio Of II
por cent Tor throo months. Tho oxcoBs Of in
torost thus paid was 81 $50 900 in addition to tho
100000 allowed by lay for tho expense Of nogo-
tiuting tho loan. This transaction has Beyoral
faccB. In tho ono caso 1t was nh inoreaso Of the
public dobt to tho amount Of $3.50, 1000, 900 for
throo months, without any consideration; or. 1t
waa tho payment Of II per cont interest on tho
samo amount for tho same time; or. 1t was n
loan Of tho snmo amount to tho Syndicate with
out interest; or, 1t WAS IN additional compensa-
tion to tho brokers for making tho exchange. In
whatoyor aspect 1t may be regarded, it was not
only without authority Of Inv, but was posi-
tivcly prohibited by law, kir. Boutwell,,
in lis Defence claims that lo was
not ablo to mako tho exchange in any othor way.
II tlis woro true, and ii thoro was any law re-
quiring him to mako tho exchange, this plca
would bo entitled to moro respect; but thoro
was no lam requiring him to mako tho exchange
at all; tho Inv Of 1870 merely authorized him to
mako tho exchange it tho condition Of the
money market should onablo him to do 30 at
par or with no creator expense than n Of
/ per cont. lie, however, claims that Aia viola
tion Of the expressed prohibitions Of tho law
waa juatifled by tho roau1t-that tho ond sane
titled the moanH. IIo shows That the aaving Of
per cont yoar In tho d!foronco of interest will,
III n year nud q llalf, balance tito illegal bonus
OF $l,050,000 given to tho synlicato. This
species OF defouco, II tolerated at al, Ia capable
OF being carried much further. II instead OF
giving them ~ por cont gratuity ho had gvcn
tAom 3 per cent, tho saving in intorost would
make 1t good in throo years; and 1t Instead Of
giving tholn 900 lo had giyon thom
a1o,600,0o0, tho dilfcronco botwoon and por
cont would offaot that aum in Aftoon years.
Had hlr. Boutwell, given thom oven 20 per cont
or 100000 commission for exchanging
e1s0,000,0 ,0Uo tho difference In the interest would
pay tho commisaion In twenty yoars, and,
to uac Mr. DoutwollH phrase, "the country
would mako money by tho operation"
Mr. Boutwell, now propoHos to mako Homo moro
money for tho country through tho synlioato.
Mr. CLOVIS and Mr.. Cuoko anl Tho other meln-
bela Of tho Syndicate aro prepared to furnish