The herald., 1896-02-18
FLOATING THE BONDS

iously. That it was a great success in de-
veloping the presence of large quantities oi
gold in the country and confidence on the
part OF the people in the stability of the
present monetary standard goes without
saying. But is its wholesome influence tC
stop there: Is it to be failure SO far as
the practical object in view is concerned?
Some of the officials of the treasury fear
such will prove to be the case. They point
to the withdrawal of nearly two and half
millions of gold from the New \ ork sub
treasury yesterday, and of another million
today for confirmation of their suspicious.
They mention also the remarkable scene
which was presented in the sub-treasury
yesterday. when broker drew gold at one
window and parceled it out among his GUS
toners right in the building, these custom
ers then presenting the metal at another
window in payment for the government
bonds. If an object lesson were wanted
OF the absurdity of the system which con.
gress insists shall be maintained it is found
in this incident.
The recent loan, despite it's impressive
ness and popular features, was unscientific
and clumsy. Any one could bid, whether
he had gold or not. 1t is pretty certain that
millions we're bid by persons who had
scarcely a gold dollar to their names.
These we're speculative bids. and they are
of course to be transferred to banks or
other institutions which have gold or the
means of getting it. The result is that
gold is practically at premium in New
York and Boston. 1t is a small premium,
but just enough to tempt the cupidity of
many men who have bid for bonds. If
they find they must pay all eighth for gold
at bank or brokers', but can get it with
out premium at the sub-treasury, where
carriage expense may be avoided by simply
carrying the stuff from the pay to the re
ceiving window, where are they going TO
get it? Human nature is human nature,
and no one has as yet discovered that it is
any less human among bankers, brokers
and bond spectators than it is among
other people.
These bonds have oeen bought by all sorts
of people. and without any other require
melts than that they deliver gold accord
ing to contract. They are under no obliga-
tions to import gold from abroad or to take
it from private vaults. Nothing but senti-
ment, patriotic motive, or pride, prevents
them drawing it from the government
stock. Members of the administration had
all along feared the later payments for
these bonds would in large part be drawn
from the treasury, but they had hoped the
would be clear gain. Now it looks as if
even the first payment was to be paid in
large part by simply a pro.
cess of carrying from window to window in
the sub-treasury, from one of Uncle Sans
pockets to the other-the endless chain,
indeed.
Perhaps we are all too fast in concluding
that the success of this public loan indl-
Gated the government would never again
replenish its reserve by private contract.
have talked today with prominent off,
cials of the administration who believe the
method employed in floating this loan was
a mistake; that it would have been better
to sell the bonds through d syndicate that
would have made itself responsible for re-
sulis and which would have agreed not to
draw gold from the treasury. 1t is feared
the loan will not be success as a means
of protecting the reserve; that its specula-
tive fea urs will break down the fine point
of honor which has prevented large houses
working the chain. and that, in the end, by
the time the bonds are paid for, the gov
ernment will find itself possessed of not
more than S50,000,000 more gold than it
had to start with.
In this connection am able to give some
secret history that is very interesting. Five
weeks ago the administration wanted to
place this loan with Mr.. Morgan and his
syndicate under conditions that would
protect the reserve. Mr. Morgan was will
ing to undertake the task, but he declined
to pay more than 105. The adninistra-
ton offered him the whole lot at 100,
which was equal to 81 per cent interest.
Mr.. Morgan persisted, despite pressure, in
adherence to this figure. and then the pres
ident decided upon public loan. The
bowls OF certain newspapers, and the
speeches of senators in congress, denounc-
ing private loans, had nothing whatever
to do with the presidents change from a
private contract to public competitive
loan. Mr.. Morgan's refusal TO pay 100
determined that. 1t was some satisfaction
to the president to force Morgan to come
up with an offer. not alone of 100. but of
nearly Ill, but he would be better satis-
fled had he assurances that the sale at l IL
was going to protect the reserve and make
another loan unnecessary before the presi-
dental election.
The newspaper writer's who prate Of Pier
pont Morgan as the favorte fnancier of
the administration do not know what they
are talking about. President Cleveland is
out OF patience with MIR. Morgan. If any
f1nancier may be regarded as the favorte
of the administration it is John A. Stewart
of the United States Trust company. After
the president had rejected Mr.. Morgan 8
terms of lO3 a month ago Mr.. Stewart
was asked to take hold and help make the
public loan a success. lie did so, and to
his efforts and influence more than those
of any other man is due the success of the
recent loan.
And yet Mr.. Stewart was outmaneuvered
by Mr.. Morgan as a bidder for bonds. This
was because Mr.. Morgan had friend in
the syndicate which MIR. Stewart had or
ganized for the purpose of insuring the
success of the issue. With this iuforma-
ton in hand, it was easy for Morgan to
outbid Stewart, If Mr.. Stewart bad been
guided by the advice Of Washington
banker. one OF his friends. lie would have
beaten Morgan. Last Wednesday morn
ing this banker became satisfied Morgan
was going to bid nearly ! | and he wired
Mr.. Stewart to this effect, not once but
thrice. Still Stewart refused to change his
bid. At the last moment the Washington
banker filled out bids for half million on
his own account at | and "a little under,
and reached the treasury at Just five min
utes OF noon. His bids went in, he gets his
bonds. and makes S25 900 or $50. 900 for
his quickness. Stewart lost the chance to
make million or Two.
The Stewart bids for bonds, all al
11O.OIo, we're put in the hands of treasury
officials about twenty five minutes before
noon. The Morgan bid of l10.6S77 was
put in five minutes later. The Stewart
bids had not been opened when the Morgan
bids came in, and the Stewart bids were
not in the hands of the treasury officials
sealed in the office of banker two b osks
from the treasury building. The difference
between llO.O15 and 110.GS77 rerr.'
sented the loss of a chance to make for
tune. but how eilly and reckless the
charge that there was collllson in the