The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1895-07-03

MOTIVE OF THE SUDDEN FULFIL
MENT OF R0THSCHILD CONTRACT.

Charged that the Gold Syndicate Contract
was Closed SO as to Leave the Way Open
for Another Issue of Bonds and q New
English Grip on the United States Gov
ernment-Lawyer Stetson, President
Cleveland's Law Partner, Knows all
About it but just at this Time He is not
Talking.
New York. July 2.-The New York
Mercury (silver) gives the following on
the syndicate's deal on the last bond
issue:
After the contract was signed, the
right was reserved to the treasury de-
partment, under the third section of the
compact, to substitute any bonds of the
United States bearing 8 per cent inter
est, payable in gold. The president at
once communicate to congress the
terms of the contract, at the same time
asking for the passage of a law author
izing the issue of 3 per cent gold bonds,
but the authority was not given ana
the contract went into full effect Feb
ruary is. Two days thereafter it was
announced, with much circumstance l-
ity, that the syndicate had then paid
into the treasury So, 558, $3.50 gold for
the American half Of the bonds.
Immediately upon the signing of the
contract there was an earnest desire on
the part of the American bankers and
capitalists to get in. Application was
made to the syndicate and the appli-
cants Were let in. But under this slip
ulation: All who were admitted were
required to unite in practical under
writing of the issue of bonds. That is
to say, as one-half of the bonds were re-
served for Americans, as these sub
scribers Were required to deposit with
the syndicate gold coin, not obtained
from the treasury to double the amount
of their subscriptions, which gold was
TO be placed under the absolute control
of Messrs, Morgan and Belmont, to be
used by them as they saw proper. The
subscriptions came from every quarter.
and it was stated by the syndicate that
they were so large that no more than
so per cent could be awarded. The
bonds Were offered in New York at 122A
and in London at f227 per $1,000 bond,
equal, with exchange K $3.50, 1l1-23-
The subscribers agreed to the stlPula-
ton of the syndicate, and, therefore,
these bankers were enabled promptly to
make full payment for the bonds imIne-
diately after the closing OF the books.
But the gold so paid did not go into
the treasury, though it was credited IN
the treasury accounts, for as late as
June Il S6,S56, 1884 gold was trans
fered to the treasury from one or more
of the banks selected by the syndicate
as the depository of their money.
GOLD FROM EUROPE.
Immediately upon the signing of the
contract it was announced that f1,6S5,-
600 gold had been bought in London for
the syndicate, and on the 2lst of Feb
ruary' they paid over to the treasury
49, 10202 ounces of gold on foreign ac-
count.
Not all of the American bankers who
subscribed for the bonds paid in full
their quota of gold until some time in
May, and then the full amount due from
them was collected and then was turn
ed over to the treasury on June 8,
$l0,449, 1920 and credited on foreign
bond account. AS at that time $14,545
972.67 had been imported there remain
ed to be paid 1852, 702.13. The Cam
pania arrived on Saturday of last week
with about sSS0,OOO gold for the syndi-
cate, leaving sS,6So,621.79 due, and this
amount was announced at the treas
ury yesterday as having been paid,
thus closing the contract.
But the terms of the agreement were
not literally complied with by this
payment, and it is inferred that either
the president or the secretary of the
treasury waived that proposition of the
contract which required that one-half
of the gold should be imported from
Europe. This however is a matter
which the administration will have to
explain to the people some day, and
most likely the explanation will hi re
to be made to Congress at the next
session.
The American subscribers to the bond
issue who practically underworld the
whole issue Were admitted to partic-
ipation with the syndicate in the prof
Its of the contract. and, therefore they
were only too willing to submit to the
exactionS of these bankers. Not ouly
were these contributors admitted 10
participation but the leading foreign
bankers in this city were invited to
Join, for it was evident that a contract
requiring the Importation Of l.750.00
ounces of gold. with exchange likely to
rule at or near the gold exporting point,
could not be fulfilled without the CO.
operation of the other foreign bankers,
and these gentlemen agreed that they
would, so far as possible, prevent the
export of gold during the tendency of
the agreement.
THE EXCHANGE MARKET.
On the announcement of the contract
exchange became unsettled and lower,
chiefly because the plans of the s,-"1i-
gate We're not then disclosed. Soon
after. however. the market grew more
settled, and influenced by a natural re-
action rates advanced, and when the
first fl .0000 600 gold was bought in Lon
don for shipment to New York sterling
was a fraction below the gold export
ing point, and consequently the i'm
portation was made at a loss Of fully
per cent per pound sterling. But
the syndicate was then operating
against its credit in Europe. and tech
ncally the shipment of gold was a mer-
chandise and not an exchange transac-
ton.
Then followed adroit Manipulation of
the exchange market in the direction
of higher prices for exchange, in order
that the syndicate bankers might sell
bills. drawn agains> their credit, ar
abe highest possible figures. so that
when they covered these drafts their
profits would be enhanced Gradually
the rates for exchange moved upward
and early IN March they were al 81 Sal,
for sixty day and $780, for sight. But
though these figures were above the
normal gold exporting point no gold
was shipped because such was the CON
.trol which the syndicate held of th,.
European markests that the price Of
gold in London was uncertain. and.
moreover, if any banker had desired 10
ship he could not have obtained fun
weight coin for the purpose. for he
would have been indirectly supplied by
the syndicate. Therefore there was
really no profit which could be safely