The Providence news. (Providence [R.I.]) 1891-1906, 1895-11-11
PROFIT FOR BANKERS,
MILLIONS MADE BY MEMBERS OF TIL
BOND SYNDICATE.

The Sum of ss.34s,4es Distributed by
Messrs. Morgan & Co. Among Wall Street
Me~n-Contract Carried Out-Handsome
Profits In Addition Probably Realized.
The great gold syndicate which under
took 10 preserve the integrity of the treas
ury of the United States has dissolved, and
the profits have boon divided by Messrs. j.
u. Morgan & Co. The greatest care has
been exercised to prevent publicity, and it
Is difficult TO obtain all Of tho facts. Each
of the 81 bankers and banks participating
In the syndicate has received n check rep
resenting It's share of the profits with a
motto of explanation and a statement OF the
transaction. But perfect secrecy has been
preserved regarding the allotment of
bonds, and no member of the syndicate
knows what other members received.
1t will be remembered that during tho
desperate emergency that confronted the
treasury last spring Messrs. Morgan and
Belmont entered into n contract with Sec
rotary Carlisle under which they agreed TO
furnish the government 3, 500, 900 ounces
Of gold and as much more as might be
necessary at the rate Of az. s01s per ounce,
taking In payment therefor 4 per cent 30
year bonds to the amount of s62, 3l7, 500.
AS the government price for gold is
Sis. 60H per ounce, the difference Of 80
cents amounted to 80, 400, 600, which was
tho premium paid by tho syndicate for the
bonds. sc that the total proceeds Of the
loan TO the government were SOS, III, 500.
In other words, the syndicate purchased
bonds to that amount at tho rate of S104.-
As, although the price of the same securi-
ties in the open market at that time was
about S1l9, and u similar amount might
have been sold TO tho public at that rate IL
they had been offered by tho treasury, But
this sacrifice was made by the president,
and tho bonds were furnished to the syn
dicatc at q price nearly 10 per cent below
tho market ratio as O consideration for
their services in manipulating exchange so
as to prevent tho export OF gold and pro-
tect tho treasury. II was a very costly
piece of fnanciering, but was successful,
and the coin which those bankers deposited
in the treasury remains there still. They
have performed their part of the contract
faithfully and are entitled to tho onor-
nous profits they enjoy.
Under the terms Of their contract the
bankers were required to import at least
one-half of the 3, 500, 600 ounces Of gold
lEOhl EuIOHt. Lucy hitAOlPOh VIZ
the cooperation OF nearly all the large
banking houses in New York which have
connections abroa. and q number of pure
ly American bankers, who agreed 10 take
such n share OF the bonds as might he al
lotted to them. AS a matter Of fact, how
ever, only els, ESQ, 900 in gold was actually
imported, and that came through the
Rothschilds from the Bank of England. II
gg an ctD,,iHcant fapt that axchanoa xVae
stimulated to such adogrec that 1t was not
necessary to comply with tho conditions OF
the contract.
AS has been stated, the bonds, amount
ing in value to S65, III, 500, wero purchased
from tho government at s104. As, or u pro.
MUM Of "a. As above par. They were SON
to the syndicate at sfie. e5, an advance OF
e7.77 on each bond Of 800. At that rate
they yielded Messrs. Morgan and Belmont
500, 940, 075, or a profit of 81, S8l, 575. This
profit, however, was not retained by those
gentlemen. They simply retained three
fourths OF I per cent as commission for
their trouble, or the sum- of s4SS, 372, and
divided tho remainder. which amounted to
"a, 844,428, among their associates in the
syndicate, which Is equal TO a profit OF
6.672 per cent. They also received ~ per
cont interest which accrued upon the bonds
before they werc finally distributed. That
makes n total profit of 8. 422 per cent upon
every dollar they furnished. AS their
money was tied up for about six months,
the transaction Noted them at the rate of
10. "a per cent per year.
1t was this ainount-naInely, 81, 344, 42s
that Messrs. Morgan a. Co. distributed
among the members of tho syndicate the
other day.
But the mombers OF tho syndicate, II
they wero so disposed, wero enabled TO
double their profits by selling the bonds
thus acquired. and many Of them have al
ready done so. There Is always an active
demand for government securities, and tho
market rate ut the present writing for this
issue IL si22. They secured their bonds
at si0i. 4s, with tho commission Of Messrs.
Morgan and Belmont, which was three
fourths of l per cent added, or si05.2 3
gross, and have sold them or may sell
them mt tl23, IN advance fof sl6.17 on
zach bond of 800, so that, assuming that
all of the bonds are sold, the total profits
enjoyed by the mcmbors of the syndicate
Is Si2, 4O4, 1854. This, divided among "a
participants, gives an average Of about
&460, 600 10 each.
But the bonds were not evenly nppor.
toned. While tho facts are not known
outside the Immediate circle In which the
managers move, Il Is generally understood
that J. II. Morgan & Co. and Belmont &
Co. reserved for themselves about one-half,
or $50, 600, coo Of tho total. IL this Is
true, their reward amounts to something
like so. 900, 600.
IL should be said, however, that the
management Of this deal required the very