Daily globe. [volume] (St. Paul, Minn.) 1878-1884, 1878-05-30
SHERMAN'S SYNDICS.
A Piratical Arrangement by Which Certain
Bankers Were to Grab the Profits While
the Government Took the Risk in a Thirty
Million Dollar Speculation.

the Government Took the Risk in a Thirty
Million Dollar Speculation.
Washington Post.
just previous to the meeting of the Forty
fifth Congress, Colonel Samuel Thompson,
late president of the First National, and
now president of the Chase National bank of
New York City, and his father, Mr.. John
Thompson, vice-president of the same bank,
discovered, while examining the books of
that institution, that it was subscriber for
nearly $3O,O00,OOO of the new per cent.
loan, and that certified check had been Civ
en- for the usual margin to guarantee the
subscription. This discovery caused them
great alarm, as by any sudden decline of 5
or 10 per cent. in government securities, not
only the capital of the bank, but their own
private fortunes would be suddenly swept
away. On questioning the Messrs.
Fahnestock and Baker, who were direc-
tors III the bank Baker being the
cashier), for an explanations, the Thomp-
sons were informed by Mr.. Fahnestock, who
formerly conducted the confidential relations
of Jay Cooke e Co. with the treasury de-
partment, that it was all right, that they
had an understanding with the secretary of
the treasury; that if anything occurred,
such asa sudden advance in the price of
gold, OF sudden decline in price of securi :
ties, he Cthe secretary was not to demand
gold for the subscription, but would call in
and accept other bonds in it's stead, or let
them out Of the subscriL ton altogether, and
return the check. The expl anation not
being satisfactory to the Messrs. Thompson,
they arranged at once for their withdrawal
from the First National, and after selling to
| the Fahnestocks, established the Chase
bank. In this connection and corro-
borative of this incident, il should be re-
membered that Secretary Sherman Cancelled
ten millions of the subscriptions to the four
per cents. when their sales became unprofit-
able. By these statements it seems clear
that an understanding did exist between
Secretary Sherman and Messrs. Fahnestock
and Baker, that if the venture proved sue
cess, several hundred thousand dollars would
have been divided among some of the parties
thereto; while if it failed, all were to be pro-
tected by the special favor to be shown by
the secretary of the treasury. The intimacy
between MIR. Sherman and the Fahnestocks
is of long standing, dating back to the time
when Sherman was chairman of the Senate
finance committee and the elder Fahnestock
was the confidential partner of Jay Cooke.
At the first blush transaction involving
bank to the extent of $780, 100000, without
the knowledge of either the president or
vice president of the institution, but resting
upon simple private understanding between
certain of the directors and the party of the
second part, would strike the average citizen
as a 41rlaa0 .tttcae case of conspiracy We
have all along commended that the power and
discretion enjoyed by Mr.. Sherman in ne
gotiating the loans of the Government. is
altogether too absolute and arbitrary. It
would be highly Objectionable and contrary
to the spirit of our institutions under the
best of conditions. but when such power is
| lodged in the hands of man who is dis
trusted by nine-tenths of the people, and
known to be tricky and grasping, it becomes
intolerable. We have repeatedly charged
Mr.. Sherman with secret and sub
terraneous financial practices with
cherishing and carrying out settled
purpose to divert the financial transactions
of the government from popular channels
into the hands of cliques, rings and mono,
poles, manifestly for his own aggrandize-
ment as silent partner in the same. We
think we can provo by competent evidence,
documentary and otherwise, that he has
made a secret bargain with favored bankers,
as set forth above. by the terms of which the
government was to incur all the risks and
favored bankers to reap all the profits.
| This is what we call malyersation of public
trusts. For fear that we may not be clearly
understood, we assert that Mr.. Sherman has
entered into contract, not warranted by
law, for the purpose Of aggrandizing himself
and his friends at the risk of the interests of
the government: that he did the same secret
ly and surreptitiously, and that if any com
mittee of Congress will assume jurisdiction
in the premises they can easily prove the al
| legations, and great deal more.