Savannah morning news. [volume] (Savannah) 1868-1887, 1886-05-15
GEORGIA BONDS ALL soLD.
History of the Negotiations-Fine Rec
ord for Georgia.
Fro" t'0 Af1a''I (Ga.j Constitution.

ueman anu oecretarH rainier, OIL the Tx
ecutive Department, have returned from
New York, whittier they had been sent by
Governor Mcdaniel to complete the de-
livery Of the AZ per cent. bonds. will re-
mind the people of the most successful
financial transaction in the history OF the
State. We present the details as a matter
of interest to our readers:
The Legislature, Dec. 3, 1884. empow-
cred the Governor to issue ana sell 3,445,-
OOO bonds, bearing not exceeding 3 per
cent. interest, to pay principal of per
cent, per cent, and per cent. bonds of
State, maturing in 1885 and 1886; about
100000 of this amount being per cent.
maturing July 1, 1886. On account of the
State University having some OF the per
cent. bonds funded under a previous
statute, the amount actually issued was
1892, 900. The act authorized public sale
by competitive bidding. and the rejection
Of all bids, and sale by private negotia-
ton in other words, either public or pri-
vate sale.
Governor Mcdaniel advertised for bids
on per cent. bonds, deliverable in in
stallments to meet maturing bonds. The
general opinion in Georgia was that it
would be inn possible to float bonds at par
bearing lower rate of interest. The bids
were opened April 10, 1885, and amounted
in the aggregate to nearly $lS,000,000.
Two bids, regular in all respects for the
entire issue, came from New York-one
from John II. lnman at 1917, the other
from Moses Taylor & Co., at 104. Fred
Wolfe & Co. bid for the whole amount In
AZ per cent. bonds at par, but the bid
was irregular in several particulars. AL
bert Meter, representing Cincinnati cap
italists, put In an informal offer for the
entire issue of Al per cent. at par.
The aggregate of Georgia bids was
$l,01 1000, ranging from 1915 to 50 for 8
per cent. bonds, and making an average
of about 1885. The average of all the
bios was about 1921. The Wolfe bid
was the highest, and was for the whole is
sue. But he demanded deliveries earlier
than was necessary to pay maturing bonds
viz: $1,500,0OO July l, 1885, and the bal
ance in October and January thereafter
This would have entailed loss of about
500, 600 ia interest, while the money was
idle in the Treasury, and in the meantime
the State would have had two sets of
bonds outstanding.
The next highest bid for the entire issue
was from Moses Taylor Il Co.: 104 for
per cent. bonds. The bid was regular in
every respect, and tiatterng TO the credit
of the State, proposing to take the bonds
just as the Governor had advertised he
would deliver them. BUTT was decidedly
lower than WoltIe's bid, and its accept
loss of more than 100000 OF interest in
the thirty years the bonds will be out
standing. Besides this, tine Governor ad
bids from Georgians for enough to meet
immediate necessities that were higher
than the Taylor g. Co. bid. and nearly as
high as the Wolfe bid.
He therefore decided to reject all the
bids, exercising the privilege provided in
the statute and reserved in the advertise
q rni no Of
Tor & Co. because of its lower price, and
the Wolfe bid because of its irregularity,
and the Georgia bids because the highest
was lower in price than the Wolfe bid.
w hen the rejection OF all the bids was
announced, many business men thought
the Governor had committed a grave mis-
take, and that he would never negotiate
its bonds on as favorable terms as he had
rejected. He was firm, however, in his
conviction that the state could do better,
and boldly exercised the discretion vested
in him.
After the announcement that all the bids
had been rejected there was considerable
correspondence and flattering bids for
portions or all OF the bonds on a basis of
par for AZ per cent. bonds. Some of these
came IRON New York. others from Geor-
gians. Messrs. Wolfe g. Co. advanced
their offer from par to SIG per cent. pre-
MUM for AZ per cent. bonds, deliverable
at the time specified in the Governors ad-
vertisement, viz: 100000 July |, 1885,
$3.50, 600 Jan. !. 1886. and So, 042, 600 May l,
1886 This was the highest bid made by
any body for any part or all of the issue.
The premium amounts to more than S10,-
900 and Is sufficient to more than cover
all the cost of engraving, exchanges and
other incidental expenses, there being no
com mission paid to anybody. To secure
com pliance with their contract, Wolfe a.
Co. and the Guarantee Trust and Safe
Deposit Company of Philadelphia depos-
tied in the treasury $172756 30 to be held
as security until the last bond was deliY-
cred and paid for, and to be forfeited if
the contract was not complied with in
every particular. The State reserved the
right to use this sum as temporary loan
pending the fulfllment OF the contract.
An important stipulation provided that
the purchasers might demand any part of
the last delivery at any time after July
l, 1885, upon presenting maturing bonds
and paying the premium IN cash. the
State paying the difference in inter-
est at maturity between the
per cent. and the Al per cent. bonds.
Every bond taken in exchange under this
was Cancelled aud the trans
action was complete, without possibility
of loss to the State in handling the money.
At the same time 1t increased the per
centum or the security. 1t may be added
here that under this clause in the contract,
nearly $500. 000of the bonds have been de-
liyered and Cancelled. Upon the an
nOuncement Of this sale OF the bonds TO
Wolfe aud his associates, predictions
were freely made Ia New York, Georgia,
and else where that the contract could not
be carried out by the purchasers. Fierce
attacks were made by Henry Clews and
other Northern capitalists upon the credit
Of the State. The press OF the North lent
itself extensively TO the circulation of
ISLANDERS upon the financial history OF
Georgia.
No effort was spared to cripple the
credit OF the State, so as TO make it inn
possible for Wolfe aud his associates 10
sell the bonds 10 investors. In spite Of
these efforts, however, the early deliveries
sold at a fair premium, and the transact
ton had an appreclable effect upon all
southern securities, state and municipal.
To illustrate: On April 10, 1883, Atlanta
per cent. bonds could have been bought
below 30. Recently the city OF Atlanta
sold over 500, 0004% per cent. bonds at par,
showing an enormous Improvement In the
credit OF the city. which is largely attribu-
table to this sale OF NJ per cent. State
bonds at "A premium. No State In the
South has. since the period OF reconstruct
ton, sold any such amount of bonds for
cash. MANY Uaraoua think H. heat