The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1896-01-15
The Morgan Bond Syndicate
Formally Dissolved
,Bv J. Piermont Morgan, Him
self, Today.
He TELLS THE STORY
Of It's Formation and Inside
Facts.
His Letter Of January 4 to
President Cleveland.

L
cate has been dissolved. Members of
the government bond syndicate received
in their mail this morning a circular let
ter from J. P. Morgan & Co., releasing
them from their commitments TO furnish
their pro rata of sI0O,OOOO,OOO in gold
and a second 100000, 900, if desirable,
taking their payment therefor IN 4 per
cent government bond.
Accompanying this letter was cir
cular explaining why the syndicate was
formed. what action was taken on its be-
half and why it is now dissolved
son the 23rd of December Mr.. Nor
gan saws, Il was invited 10 Washington
for conference. During my visit there
no negotiations for loan were even sug
gesied, nor was there then, nCr since, any
agreement or request that | should take
any steps preparatory 10 making a con-
tract l came, however, 10 the cOncIu-
sion that the president and secretary of
the treasury would use every power at
their command 10 restore and maintain
the gold reserve; that no steps would be
taken, until 1t was ascertained what con-
gress would do, that the executive de-
partment would prefer to secure $780,,
O0O 900 of gold and that it was certain
that no relief could be obtained from con-
gress.
Upon my return, appreciating the
gravity of the situation, and in order that
l might be prepared to act promptly, l
took steps to ascertain to what extent it
would be possible to secure the co-ope-
ration of capitalists in forming a syndi-
cate which would agree to sell to the
United States government $780, 100000
of gold coin. The contract prepared and
signed by the participants did not stipu-
late whether the purchase would be by
private contract or by public offer.
"The only provision in addition TO the
important one that no gold should be
Withdrawn from the treasury was that
the minimum cf the contract should he
$100,000.O0O, the maximum not over
$20O,O00050. The applications far ex-
ceedsd my expectations.
SAT the end of three or four days the
total of $500, 000, 900 was reached and l
had full authority which would enable
me, whenever and however the execu-
tive might decide to act, to secure that
amount of gold for the treasury reserve
in exchange for United States bonds.
''The participants may be divided into
four classes; people in Europe who
were prepared to ship gold to this side;
institutions in the United States in pos
session of gold coin who wanted bonds
either for Investment or as a basis for
national bank circulation; banks in var
ious cities who were willing to exchange
their gold for bonds expecting after
wards to sell them in the market; institu-
tions and firms not having gold. but
which would get it at whatever cost pro-
viding the cost was put in force. Partic-
ipations were about equally divided be-
tween the four classes.
Having completed the syndicate l
entered into negotiations in Europe and
in places other than London whero the
market was closed to US, and through
the Deutsche bank and Messrs. Morgan,
Harjes s. Co. Negotiations were prac-
ticalIy concluded for public sub riptions
in Germany, France, and Holland, which
would have resulted in large amount
of bonds being placed in those coun-
tries
"On January 4, realizing that the ten
sion was growing daily, and had be-
come serious, l addressed a letter to
the president, calling his attention to the
situation, and representing that the most
important step was the restoration of the
government credit by replenishing the
stock of gold. Details of what was pro-
posed were given, and assurances offered
that the utmost efforts would be made to
procure for the treasury II, 100000 ounces
of gold"
The reason given for the dissolution of
the syndicate is that the syndicate con-
tract called for a bid of "all or none"
and therefore Mr.. Morgan was unwilling
TO make a bid under the present circum-
stances as he might seem to present for
consideration by the secretary of the |
treasury, the throwing out of smaller |
bids made in good faith under the public |
call. The only emergency in Mr.. Nor
gan's judgment, which would justify
such course would be the failure of the
public to respond to the call of the gov
ernment, 1t has been necessary to
delay the dissolving of the syndicate up
to the present time every financial in |
terest required protection offered |
Dy the knowledge that the syndicate was |
In existence, prepared to make the loan |
q success under any circumstances.
The circular concludes: 81 feel per-
fectly satisfied that there is no question |
as 70 the success of the loan"
Inc following is the text of Mr.. Nor
gan's letter to President Cleveland:
NEW YORK, Jan. 4. 1896.
To the President, Washington. d G
"SIR:-It is with great hesitation that
I venture to address. yo1 in relation tn
the present financial situation.
'As you are doubtless well aware
financial affairs are approaching Sc
riOus crisis. and the tension TODAY is ex-
treme; and whilst no outward evidences
have developed, we are likely at auv mo-
ment to rsoch the point and couse.
quences which it will then be too late to
remedy. The gravity of the situation |
must be my excuse
1.-The most important step at the mo-
ment is the restoration of government |
credit by replacing the gold in the treas
ury beyond question. This once accom- |
Dllshed. cOnfidence both at homa and |