New-York tribune., 1873-01-20
MIR, BoUTWELL'S SYNDICATE.

nIRECTIY WITH THE tEOIlE-rONbiNN Ahb
DIRT IN LONG BONDS AT Low RATE OF
INTEREST THE BETTER PLAN.
The following is the statement made by
Ioseuh Patterson Philadelphia before the Ways and
Means Committee OF the House Of Representatives, jan
a in regard to the fundisg of the remainder OF tne
sspoeooooo loan MI. Patterson was examined immeof
aely after Mr. Duncan of the firm OF Duncan sherman
90. Of this city, report OF whose statement was P"o
nshed exclusively in THE TRIBUNE. Jan. 10,
The Chairman--Mr. Patterson, assuming that you uh
derstand the character Of the proceedings oF "hou
t9O0OOOo Of per cent bonds have been negotiated we
would like to inquire Of you what your VIC" Vi
u is and whether you can suggest any pe'
ter way Of proceeding win the p~i"nce VI
the s per cents. We would ike information
ON three popts: First your views, under the existing
law as 10 the mode adopted by the Secretary OF the
Treasury OF course do not make this inquiry with
view OF critosng the Secretary for what he has done
INT in respect to the future second, whether you can
suggest any better method Of proceeding at once with
the funding OF the loan; and third, whether IN your
opnion IL is advisable to proceed at all and, first would
like 10 INQUIRE what you think OF the method adopted Oy
the Secretary of the Treasury under the existing awi
Mr. Patterson-Ilthnk that the negotiation or funding
of United States by the method referred TO is ex
posed 10 objections, Mr.. Duncan has Just said
IL tends place the bonds with more limited number
of investors than had previously held them and this by
reason of the special arrangement TO deferred pay
ment, with a gain of interest TO the subscribers
or purchasers. Such inducements would naturally
lie offered 70 large capitalists and bankers IN
preference smaller investors the public and these
would be taken much for permanent holding as
for distribution smaller investors. and with view 10
profit in that way ] understand the conditions on
which the loan referred TO placed in the market 10
have been theseE That the Secretary first appointed
numerous agents this country and IN Europe for the
purpose of selling funding the loan The terms nm,
which they we're authorized TO do TINS were the
sale OF the bends at par tor "a v"S5, ~ eIuii eiaiiinS
per cent aud lOs were selling below par and the sale
of these bonds, although having longer tlne 10
done under that appointment II mat agency ha1 peGh
successful it would nave dihused tle loan Inore Ken Ken
Ras subsequently resorted TO. Tue appointment Oi
these agencies Vas roc"nsU Sd;eate "u on fhsse
terms: that the syndicate had the option
10 sell the new United states bonds at par gold, and
mai fbe purchaser or subscriber to the would not
he called for payment until the expiration of ~ days
the interest running the time the bonds sub
scribed The delivery OF the bonds was not To DC maze
nntil the bonds were paid for -, ga,
MI Boutwel-Ihe first condition was that the synG-
subscribe Sl000O00 in the month OF ssptel,
eer aud $4,000 iSf every C963 aS46na aeFS1a TSea as to
the holding Of the bonds we were TO hold the bonds SUB
scrbed for unless other Government bonds, o equal
value, were substituted for thein
BETTER To DEAL DIRECTLY WITH THE PEOPLE.
Mr.. Paterson-The Government acted very wisely ana
with commendabe caution in retaining the bonds until
ureceved payment. exchange of other United states
bonds for them; but the application wish TO make Of
rs
more advantageous than those offered to the rst
named agents. to the extent at least Of u per cent IN
boVe attended, Inc first method if IL lad been continued
~ ~ not known that 1t would not because the terms
favorable; and difference of II OF one per cent may
make that a marketable bond which otherwise would not
IL appears 10 also, that IN the sale or e&
change Of United States bonds, II Is better that the Gov
ernme1t come as Ear as possible, a5ecty IN cIge se
the loan, and attracts more general attention 10 ~
may say think that the Secretary rendered
aid the or the syndicate
negotiation and that It was chiefly dependent on that
aud other action Of Department for its success, when
ne called In the matured six per cents by giving the
requisite three months notice TO pay After that call
made there was impending over the market large
Of money seeking investment and this stimu-
sale Oi the bonds and aided IN the funding
Inc ChaiIman-Beore passing 10 the 0tner questions
would like TO make another inquiry, whether you ap-
proved the method adopted by the Secretary TO ne
gotae these bonds through agents OF the Government
at the rate Of a quarter OF one per oentf =, g, ,.u
that II would have been success; would not now ap-
The CRairmal~suppooe that you had practical proof
that could negotiate in that way more thdu 800,
oooCO5 would that modify your Of the method sub
Mr.. Fatterson-I think would then have come
10 the conclusion that the market not at that time
condition 10 take the remaining bonds ON the terms
and pnce prescribed by law; and would nave waited
until the market came TO the requisite eonuiuoh OF lhe
Tne Chairnan-It you have said all that you desire
70 say on the nrst point would Ike 10 Inquire from
You what alterations OF existing laws occur 10 you wise
Tor Ills Committee 10 recommend assuming that IL is
wise TO negotiate lOan2
Mr Pauerson-BefOre you proposed the question was
about dNuAuS tuol ldlSt ulVncycu hduo"SnVbo Va
government made through intermediate parties not
onieiay related the Government with great powers
capital, however respectable or eminent sneh parties
ray be, are liable 10 this with Other"ODJectOns;
Tncy have powerful and predomin NJ motive,
controlling them, which is 10 make that
nartcuar transaction a success and thereby promote
the interests Of such persons and with the wide range Of
information locality Of the bonds and OF causes a
fecting ioregn exchange and of capital
they may be- encouraged 10 make conditions favorable
10 the accomplishment OF the MAN OpJecl, al
the expense of great disturbances and varia;
tiOns OF the gOd and money markets, and
affecting unfavOraOy the business Of the country do
say that this necessary consequence OF so great
power given by the Government TO parties outside OF IT.
but think 1t is nevertheless subject TO that risk and
trOl large amounts of money or credit may pro-
duce consequences as unfavorabe as any intentional
Mr.. Kerr would like to ask yOu whether you think
that the negotiation OF the loan in London by the synd
cate had any effect in producing the late financial stn
geney tnat prevailed heret
Mr. PatteTson-l am not aware that IL had The nego-
1iaJon took the form naturally and as IL would more
certainly If the Treasury Department to act directly
parties held the old bonds might not renves IN the
g. they would sell OF collect the ealedn bonds and
proceeds OF the sale Of five per cents would be a
piled 70 the purchase and pay yment OF the od slxes.
these bonds Of any financial reyusion, II the operation
controlled by judicious and intelligent parties
The Chairman-Assumingi IL TO be the purpose OF the
Government negotiate this loan the best possible
terms for the Government consistent with its duty 70
the public, what alterations in the existing laws woui
you suggest .
Mr.. Patterson-I do not know that am thoroughly
informed in regard 10 the requirements OF the existing
Law the subject.
The Chalrman-Assuming that the syndicate opera
tiOns were consistent with the exsting law what alter
sOns that would you think 1t advisable for
this Committee TO rOcommendf
Mr.. PattersOn-I would make the law define more
fully power gives II it be in conformity with the
existing law then law is not very precise IN regard
the extent which the Secretary may go because
,he authority which Will give 90 days IN which TO
pay the subscribed bonds could WELL IL seems TO
me, give six months or longer time
Mr.. KerT-MhePe there rs no limitation in the lawf
Mr.. Pstterson-Where there limitation Of the
authority ~ time.
Mr. PATTERsoSs RECOMMENDATIONS.
The (bairmau-Whaf legislafion WOuld yOu recon-