The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1895-08-02
THE BANKS BIGGER THAN THE
GOVERNMENT.

in regard to the condition of the United
States Treasury, and asks what syndi-
cate is referred to as protecting the
United States Treasury:
''The Treasury officials have no appre-
hension of any considerable Withdrawals
of gold for export. They have absolute
confidence in the ability and determine
ton of the syndicate to protect the
Treasury and so far have seen nothing
that indicates to them purpose TO WITH
draw their protection"
The above question can only be pro-
perly answered by recalling the cendi-
tons under which Secretary Carlisle ex-
ecuted the famous contract with the
bond syndicate above referred to.
On January II, 1894, the Secretary OF
the Treasury called for proposals for
100000 ten-year per cent. bonds,
the sale of which netted the Treasury
$5s, $780, OH. On November Is, a similar
call resulted in the sale of $50, 000,O00
more bonds, netting $58, 444, 900, and
on February 8, 1895, sale of $6s,
500 thirty year, per cent. bonds was
made to J. P. Morgan & Co., and Au-
gust Belmont & Co., of New York, and
J. S. Morgan & Co., and the Messrs.
Rothschilds, of London, netting $685.
1850. The first two issues were taken
by American bankers, principally of
New York City. OF the third issue
$50, 500, 900 was taken in Europe, and
this is part of the contract with the
bond syndicate above referred to.
After the first two issues of bonds had
been sold and the gold reserve still con-
tinued to diminish until commercial
crisis was threatening the country, the
President and Secretary of the Treasury
decided upon this third issue OF bonds.
They purchased for the Treasury $685.
1T, 500 gold, and paid for the same in
thirty-year per cent. bonds at 1.O4 1-2,
yielding "a per cent. to the investors.
The right to substitute 3 per cent. gold
bond at par was reserved, but Congress
refused the power to issue the same.
In order to bring gold from Europe
the export of gold must first be stopped.
A contract was therefore signed with the
New York banking firms of J. P. Nor
gan IL Co. and August Belmont & Go.
providing that sat least one-half of all
the coin deliverable hereinunder shall be
obtained in and shipped from Europe"
The fifth provision of the contract reads:
"In consideration of the purchase of
such coin, the parties of the second part,
and their associates hereunder, assume
and will bear all the expense and newt
able loss of bringing gold from Europe
hereunder; and, as far as lies in their
power, will exert all financial influence
and will make all legitimate efforts to
protect the Treasury of the United States
against the Withdrawals of gold pending
the complete performance of this con-
tract" That is up to the first of October
next.
The European portion of the bonds
1882, 500, 00O) were paid for in gold
shipped from Europe. The American
portion of them, purchased at 1.04 IL,
we're sold At LIZ 12 to second syndi
cate composed largely of banking houses
engaged in the export of gold, who, as
part consideration for their allotment,
pledged themselves not to export gold,
and to do all they could to prevent the
same during the tendency of said con-
tract. 1t should be mentioned also that
the Morgan-Belmont syndicate were
finally released from its obligation to i'm
port one half the gold in payment for
the bonds taken in Europa balance of
$40, 1913, 4O3 AZ being thus released.
Thus 1t was that a syndicate Of bank
ers were called in to protect the United
States Treasury, and they have put mil
lions of dollars in their pockets by the
transaction. They praise.their patriotism
very highly, saying that they came to
the relief of the Treasury in time of
trouble. Such patriotism would be
on the par with that of a doctor
who, having, by virtue of his
position, thrown his patient into con-
vulsions, comes in to administer opiates
only when he is guaranteed fee out
of proportion to the value of the services
and which he EFFORTS under duress. The
financial doctors who have been doctor
ing the Treasury have secuted all radical
treatment and confined themselves to an
oplate for a limited time. On October
the first their contract to preserve the
gold in the Treasury expires. They win
then proceed to resort to the old
fashioned method of bleeding and
will draw out the very gold they
have been keeping in the Treasury. And,
unless all signs fail, they will continue