The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1895-10-31
PROFITS FOR BANKERS
MANY MILLIONS MADE BY THF
MEMBERS OF THE BOND
SYNDICATE.
CARRIED OUT THEIR CONTRACT

The sum of sf,344, 42s Distributed b.
Messrs Morgan * Co. Among the
WALL Street Men who Gave PrOtec-
ton to the Treasury Gold Reserves
Handsome Profits in Addition Have
Doubtless Been Realized Upon the
Sale of the Bonds.
Special to the Washington Post,
NEW YORK, Oct 90 The great gold
syndicate which undertook to preserve
the integrity of the Treasury of the
United States has dissolved, and the
profits have been divided by Messrs. J.
P. Morgan & Co. The greatest care has
been exercised to prevent publicity, and
it is difficult to obtain all Of the facts.
Each of the twenty seven bankers and
banks participating in the syndicate has
received check representing its share
of the profits with a note of explanation
and a statement of the transaction. But
perfect secrecy has been preserved re-
gardipg the allotment of bonds, and no
member Of the syndicate knows what
other members received.
1t Will oe remembered that during tn
desperate energy that confronted t
Treasury las spring, Messrs. Morgan
and Belmont entered into a contract
with Secretary Carlisle under which they
agreed to furnish the government 3d.,
500 900 ounces of gold, and as much
more as might be necessary at the rate
of SIT so 70 per ounce, taking in pay
ment therefore 4 per cent thirty year
bonds to the amount of $50 81, 500 As
the government price Tor gold Is
S18 so Ia per ounce, the difference OF
so cents amounted to So, 400 900, which
was the premium paid by the syndicate
for the bonds, so that the total proceeds
of the loan to the government were $780,
III 500
In other words thesyndicate purchased
bonds to that amount at the rate OF
SfO4.4 although The price of the same
securities IN the open market at that
time was about $119, and similar
amount might have been sold to the pub
lie at that rate if they had been off red
by the Treasury. But this sacrifice was
made by the President, and the bonds
were furnished to the syndicate at
price nearly Is per cent. below the mar
ket rate as a consideration for their ser
vices in manipulating exchange so as to
prevent the export of gold and protect
the Treasury.
Only si5.75O, 900 of Gold Imported.
Under he terms of their contract the
bankers were required to import at least
one-half of the $4,000 ounces of gold
from Europe They thereupon in tied
the cooperation of nearly all the large
banking houses in New York which have
connect ons abroad and a number OF
purely American bankers, who agr ed to
take su h share of the bonds as might
be allotted to them. The former agreed
to buy the gold required for repayment IN
foreign markets, The latter were allow
ed to use the coin stored in their vaults.
AS a ma ter of fact, however, $15, 75O,
900 in gold was actually imported, and
that can through the Rothschilds fir m
the Bank of England. 1t is significant
fact that exchsng was stimulated to
such a degree that it was not necess airy
to comply with the conditions OF the
contract.
AS has been 81 ated, the bonds amount
ing in value to 500, lit, 900, were pur-
chased from the government at $lO4. AZ,
or premium of 81 48 above par. They
were sold to the syndicate $11225 an
advance of ~ n on each bond OF 800.
At that rate they yielded Messrs Morgan
and Belmont 500, $40, 075, or profit of
s4,631, 575. This profit, however, was
not retained by those gentlemen. They
simply retained three fourths of 1 per
cent. as commission for their trouble, or
the sum of $488, 372, End divided the re-
mainder, which amounted to "a, 344 42S,
among their associates in the syndicate,
which is equal to profit of 6.672 per
cent. They also received / "a per cent.
interest which accrued upon the bonds
before they were finally distributed
That makes a total profit OF Az per
cent. upon every dollar they furnished.
As their money was tied up for ABOUT
six months, the transaction netted them
at the rate of 1854 per cent per year.
Profits Doubled in Sale OF Bonds.
But the members of the syndicate, if
they were so disposed, were enabled to
double their profits by selling the bonds
thus acqaired, and many of them have
already done so. There is always an
active demand for government secur'-
ties, and the market rate at the present
writing for this issue is 1922. They
secured their bonds at $1C4.48, with the
commission of Messrs. Morgan d Bel
mont, which was threefourths Of / pei
cent. added, or $105.23 gross; and have
sold them or may sell them al
1922, an advance of $l6.77 on
each bond Of 800, so that, as
Stunning that all OF the bonds are 80 d
the total profits enjoyed by the members
of the syndicate is $l2, 494, 1884 This
divided among twenty seven partici
pants, gives All average Of about $46O.
900 to each.
But the bonds were not evenly app0r
toned While the facts are not known
outside fba Immediate circle in which