The herald., 1896-01-16
1HE SYNDICATE DISSOLVED
Its Members Released From
Their Agreement
J.P. MORGAN & CO.'S LETTER
To the Financiers Who Hoped to Buy
Bonds
The Syndicate Was Ready With Bullion, But
the Administration Evidently Pre-
ferred a Popular Loan.
J.P. MORGAN & CO.'S LETTER
Associated Press Special Wire

NEW YORK, Jan. l5.-MemDers OF tue
government bond syndicate received in the
mail this morning circular letter from j.
P. Morgan & Co., releasing them from
committing them to furnish their pro rata
of SlOO,OOO,OOO gold and a second $780,
100000 if desirable, taking payment in
per cent government bonds. son the 23d
of December" Morgan says, II was invit-
ed to Washington for conference. Dur
ing my visit there nc negotiations for
loan were even suggested. nor was there
any agreement or request that L should
take any steps preparatory to making
contract. came, however, to the cOnclu-
sion that the president and the secretary of
the treasury would use every power at
their command to maintain the gold re-
serve; that no steps would be taken until
il was ascertained what congress would do;
that the executive department would pre-
fer to secure 5000, 100000 gold and it was
certain TO relief could be obtained from
congress. Upon my return, appreciating
the gravity OF the situation, and in order
that might be prepared to act promptly,
/ took steps to ascertain to what extent it
would be possible to secure the co-opera-
ton of capitalists in forming a syndicate
which would agree to sell the United States
government $20O,0OO,000 in gold coin.
The contract prepared and signed by par
Elephants did not stpulate whether the pur-
chase would be by private contract or pub
lie offer.
''The only provision in addition to the
important one that no gold should be with
drawn from the treasury was that the mln-
mum amount of contract should be $780,
100000. the maximum not over $780,
100000. The applications far exceeded
my expectations. AT the end of three or
a. @l,o +of, xOn0 nAn
changed and had the full authority which
would enable me, whenever and however
the executive might decide to act, to Sc
cure that amount of gold for the treasury
reserve in exchange for United States
bonds. The participants may be divided
prepared to ship gold to this side; institu-
tions in the United States in possession of
gold coin who wanted the bonds either for
Investment or a basis for national
bank circulation; third, banks in
various cities willing to exchange
gold for bonds, expecting. afterward
to sell them on the market; fourth,
institutions and firms not having gold, but
which would get it at whatever cost, pro-
vided the contract was put in force. The
participation was about equally divided be-
tween the four classes. Having completed
the syndicate, entered into negotiations
in Europe and places other than London,
where the market is closed to us, and
through the Dutch bank and Messrs. Nor
gan, Harlies q Co., negotiations were prac-
tically concluded.
ssOn January 4th, realizing the tension
was growing daily and had become serious,
I addressed a letter to the president calling
his attention to the situation and repre-
senting that the most important step was
the restoration of the government credit by
replenishing the supply of gold. Details of
what was proposed were given and assur-
ances offered that the utmost efforts would
be made to procure for the treasury H.
100000 ounces of gold"
The letter to the president to which the
circular alludes follows:
NEW YORK, 219 Madison Avenue
January 4. 1896.
To the President, Washington, d. c.:
Sir-It is with great hesitation that
venture to address you in relation to the
present financial situation.
AS you are doubtless we'll aware, finan-
cial affairs are approaching serious crisis
and the tension today is extreme, and
whilst TO outward evidence has developed,
we are likely at any moment to reach the
point and consequences which it will then
be too late to remedy. The gravity of the
situation must be my excuse. The most
important step at the moment is the restor-
alton of government credit by placing the
gold reserve IN the treasury beyond ques-
ton. This much accomplished, confidence
both home and abroad in the stability of
our currency will be restored.
After my recent visit to Washington,
became convinced that any legislative
action to improve the methods at the dis
posal of the executive was unlikely; in
fact impossible. therefore took steps to
ascertain whether IL would be possible to
obtain the cooperation of parties at home
and abroad to an extent that would enable
me to negotiate contract with the gov
ernment for the sale of l l 100000 ounces
of gold, approximating $2OO,O00,OOO on
about the basis of the contract of February
8, 1898. In this effort L have been sue
cessful, and am now in a position to make
such contract for the full amount.
] do not hesitate to affirm; in fact, urge,
that such contract would in every way be
for the best interests of the government
and the people, and would be followed by
less arrangement of the money market, of
trade; in fact. of all interests, including
foreign exchanges, all of which, until re-
Gently, were in such an increasingly pros
porous condition, and urge your serious
consideration of such contract. At the
same time recognize the effect of legisla-
ton which has been proposed, and the dis
cussions thereupon in both houses of con-
gress, which might lead you to hesitate TO
make private contract, and conseuuent-
ly, in view of the gravity of the situation, I
feel bound to say thatif such conference,
in which can more fully lay the matter
before you and without expressing any
confidence in such a mode of procedure in
face of previous failures of similar at
tempts.
But recognizing as 1 do that the respon-
sibility of the decision lies with you,
pledge to you every influence and effort in
my power to assist the government in it's
endeavor to make a successful negotiation
by public advertisement, which shall re-
suit in the sale to the treasury of IL ,5OO.-
900 ounces of United States gold coin
($2OO.OOO,0 O,00O) and further, will, so far
as possibly can, take such steps as will
enable the syndicate which represent to
join in making the negotiations successful
10 its full amount.
Awaiting the indications of your pleas
hre, remain respectfully yours,
j. PIERPONT MORGAN.
SURPRISE IS CAUSED.
WASHINGTON, Jan. 15.-The announce
ment that the bond syndicate had been dis
solved was received here with some sur
prise, although among officials conversant
with the changed situation no other course
his seemed open to Mr.. Morgan and his
associates. The reason given for the dis
solution is accepted as the true one, since