The progressive farmer. [volume] (Winston, N.C.) 1886-1904, 1895-11-05

The Bankers Syndicate Saved the Credit
Of Government ct the Rate Of Fiji
teen Fer Cent.--It Didn't Need
Saving, Either.

teen Fer Cent.--It Didn't Need
Saving, Either.
A New York special to the Washing
ton Post says: Tue great gold syndi.
cate which undertook t % preserve the
integrity of the United States has dis
solved, and the profits have been di-
vided by Messrs. j. p. Morgan & Co.
Each of the q bankers end
banks participating in the syndi-
cate has received q check r
senting its share Of the profits with a
note of explanation and q statement of
the transaction. But perfect secrecy
has been preserved regarding the allot-
ment Of bonds, which no member Of
the syndicate knows what other mem
bers received.
It will be remembered that during
the desperate emergency that con
tronted the treasury last spring. MassFs. =
Morgan and Belmont entered into q
contract with Secretary Carlisle under
which they agreed to furnish the gov
eminent 3 100000 ounces Of gold, and
as much o as might be necessary
at the rate Of $17 903 per ounce, taking
in payment therefor 4 per cent. thirty
year bonds to the amount of 500, S17,-
500. AS the government price for gold
is $18 603 per ounce, the difference of
80 cents amounted to 50, 400, 0O0, which
was the premium paid by the syndicate
for the bonds, so that the total proceeds
of the loan to the government were
sos, 117, 500.
In other words the syndicate pur-
chased bonds to that amount at the
rate of $104 48, although the price of
the same securities in the open market
at that time was about $119, and q
L nipni1n~ AmNNar~4 -NSo1nA AA+-~ 49, Ill
to the public at that rate If they had
been offered by the treasury. But this
sacrifice was made by the President,
and the bonds furnished to the
syndicate at a price nearly 10 per cent.
below the market rate as a c0nsidera-
ton for their services in manipulating
exchange so az to prevent the export Of
gold and protect the treasury. 1t was
q very costly piece of fnanCiering, but
was successful, and the coin which
those bankers deposited in the treasury
remains there still. They have per-
formed their part of the contract faith
fully, and r entitled to the enormous
profits they enjoy. They would have
eXacted q similar percentage IL they
had undertaken q similar duty in ordi-
nary business transactions with cor
porations or private individuals.
Under the terms of their contract the
bankers were required to import at
least one half of the 8, 500, 600 ounces Of
gold from Europe. They thereupon
invited the cooperation of nearly all
the large banking houses in New York
which have connections abroad and q
number of purely American bankers,
who agreed to take such a share of the
bonds as might be allotted to them.
Mr. A~v0oA 10000 - h1.- &hA NaA12 -
u Quired for payment in foreign markets.
The latter were allowed to use the coin
stored in their vaults. As q matter of
fact, however, only $15, 75O, 900 i'm gold
was actually imported, and that came
through the ROthschilds from the Bank
of England. 1t is a significant fact
that exchange was stimulated to such
a degree that it was necessary tocom-
ply with the conditions of the contract.
The syndicate of twenty seven banks
and bankers, which was organized by
Messrs. Morgan and Belmont, applied
for the bonds with such eageFness
that it was impossible to meet their de-
mands, and an allotment was made by
those gentlemen-in such an impartial
manner that no complaints have been
heard, although the actual amount re-
ceived by the several institutions is
not known, VI to their associates.
AS has been stated, the bonds,
amounting in value to sos, liz, 500,
were purchased from the government
at $104 4S, or q premium of "a 48 above
: par. They were sold to the syndicate
at $112 Is. an advance of 81 n on each
bond of 800. At that rate they yielded
Messrs. Morgan and Belmont 500, 949,-
O75, or a profitof "a, 831. SIS This profit,
however, was not retained by those
gentlemen, They simply retained
three fourths of 1 per cent. as commits
sion for their trouble, or the sum Of
$488, 372, and divided the remainder,
s which amounted to 81. 344 428, among
t their associates in the syndicate, which
g is equal to a profit of 6 672 per cent.
They also received IL per cent. interest
which accrued upon the bonds before
they were finally distributed. That
makes a total profit of 8 422 per cent
g upon every dollar they furnished. AS
:, their money was tied up for about siz
b months the transaction Melted them al
the rate of 16. "a per cent. per year.
:. It was this amoUnt, namely, S4, 344,
428 that Meesrs. Morgan & Co. distriO
uted among the members of the syndi
g cate the other day. The principal
houses participating WereJ P. Morgan
6 Co.. Belmont &Co., Norton Bliss &
Co, Kuhn, Loeb& Co, Lazard Freres,
Heidleback & Co, I~ckelhefmer 6 Co.
and the Chase, First, Fourth, Hanover,
City, Commerce and Gallatin national
} banks.
But the members Of the syndicate, If
they were 30 disposed, were enabled to
double their profits By selling the bonds
thus acquired, and many of them have
already done 30. There is always an
active demand for government securi
ties, and the market rate at the pres
ent writing for this issue is $22 They
secured their bonds at $104 4s, with
|, the commission of Messrs Morgan &