Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1877-08-08
The RefundIng Monopoly.

The following from the Commercial Bul-
ieiin so exactly accords with our ideas of the
useless expense attending our syndicate,
that, at the request of one of the most pro.
minent bankers and capitalists in the state,
we gladly copy it
awe have more than once referred to 0ge
gigantic syndicate monopoly which exaots
tribute out of every transaction in the re-
funding of the national debt, a tribute
amounting in the aggregate to millions of
dollars for work which could be more expe-
ditiously, more economically, and better
done through the free competition of all
bankers and capitalists. The existence of
the syndicate is standing reminder and ex-
emplification of the weakness and inferior
capacity shown in the administration of f.
nancial matters at Washington during the
past eight or ten years. 1t is high time that
this device of hiring clique of bankers,
through fat commissions to do work which
the nations servants at Washington are paid
for doing should be done away with.
"The subject has received fresh interest
from the extraordinary success of the popu-
lar subscription to the new four per cent.
loan, success achieved in spite of the lin
tied time in which notice was given previous
TO the subscriptions, as well as the short
subscription PERIOD and in spite of the apa-
thy and positive hostility of the syndicate
to the whole operation, because it saved for
the people hundreds Of thousands of dollars
that would otherwise have gone into their
pockets. The San Francisco bulletin, in a
well-considered article, which has attracted
much attention in financial circles, calls at
| tention to some features of the new loan
that reflect very little credit upon the highly
respected members of the refunding syndi-
cate. Boston bankers who are thoroughly
conversant with the whole matter vouch TO
us for the truth of the bulletins statements.
"A single subscription of twenty million
dollars, offered by the Bank of Nevada, of
| San Francisco, has been defeated by the re-
fusal of the syndicate to concede out of the
commission paid them by the government
the usual one-eightb of one per cent. Gus
tomarily allowed between banks and bankers
on this class of transactions. In this case
the San Francisco bank offered to agree not
to resell the bonds within the term covered
by the syndicates contract; that is it agreed
not to enter the market against the syndi-
cate as competitor. The proposed sub
scription was intended as a permanent in
vestment on the part of certain wealthy cti
zens and by the terms of their offer they
bound themselves to treat it as such.
at isnot easy to believe that the American
members of the syndicate would have will
lingly laid themselves open to the just re
proach of dealing illiberaly with the loan
Doubtless their excuse will be, says the Sar
Francisco paper, that their operations are
controlled from London. The London Roths
childs may have been of opinion that they
could work off the loan and secure the whole
of the accruing commission. The govern
ment was powerless to act in the case being
bound by Mr.. Sherman's contract with tn,
syndicate to allow the legal commission t.
that body exclusively.
"a proposition to join the syndicate il
handling the new loan was submitted by on,
of its members to leading American banl
whose extensive cash resources would hav,
been useful to them. The bank in question
declined, except on the condition that tn
loan should be offered to popular subscrip
ton. That bank believed that the LOAF
would be a success on these terms. Tn
other members of the syndicate though
otherwise, and declined to undertake hand
ling the loan subject to this condition
The suggestion came necessarily to the at
tention of Secretary Sherman, who acte'
upon it so far as to insist that the loal
should be open to the public for one month
The result is before the country.
"The prediction of the Bulletin that tin
popular subscription for this single mont
will not be equalled by the additional sub
scriptions under syndicate management dur
ing the next three months, already bids fai
TO be verified, as the syndicate is not sellinl
a single bond now 1t may be added tina
had the loan been offered for popular sub
scription, without any special contract what
ever, single institution stood ready TO Sc
its name at the head of the list for one hun
bred million dollars
"These facts afford much food for reflection
1t is to be hoped that their dissemination
will lead to an agitation that will end in tn
downfall of the whole system of syndicates.