Evening star. [volume] (Washington, D.C.) 1854-1972, 1896-01-15
NO MORE SYNDICATE
]. Pierpont Morgan Relates How It
Was Organized.
faO HUNDRED MILLIONS OF GOLD
Secured Pledges for It in a Few
Days.
HUNDRED MILLIONS OF GOLD
LETTER TO THE PRESIDENT

Members of the syndicate received in
their mail this morning a circular letter
from j. P. Morgan & Co. releasing them
from their commitments to furnish their
f. pro rata of S1OO,OOO,OOO in gold and a sec
ond $1OO,OOO.0OO il desirable, taking their
payment therefor in 4 per cent govern
ment bond. Accompanying this letter was
a circular explaining why the syndicate
was formed, what action was taken on its
behalf and why it is now dissolved.
''On the 23d of December" Mr.. Morgan
says. 'I was invited to Washington for a
conference During my visit there no
negotiations for a loan were even suggest
ed, nor was there then, nor since, any
agreement or request that I should take
, any steps preparatory to making a con-
tract. came, however, to the conclusion
that the President and Secretary of the
Treasury would use every power al their
command to restore and maintain Tie gold
reserve; that no steps would be taken until
IL was ascertained what Congress would
do; that the executive department would
prefer to secure s2OO,OCb.0oo OF gold, and
that 1t was certain that nc relief could be
obtaiEed from Congress
Forming the Syndicate.
Upon my return, approaching the grav-
fly OF the situation and in order that I
might be prepared to act promptly, I took
be possible to secure the cooperation of
capitalists In forming i syndicate which
would agree to sell the United States gov
ernment 500, 100000 of gold coin. The
contract prepared and signed by the par
ticipants did not stipulate 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 with
drawn from the treasury was that the
minimum amount of the contract should
be sloO,GOO,OO0, the maximum not over $780,
100000 The applicat ations far exceeded my
expectations. At the end of three or four
days the total of s2O0,00OOO0 was reached
and had full authority which would en-
able me whenever, and however, the ex-
ecutive might decide, to act to secure tfat
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, institu-
tions in tine United States in possession of
gold coin who wanted bonds either for
Investment or as basis for national bank
circulation: third, banks in various cities
VINO were willing to exchange their gold
for bonds, expecting afterward to sell them
in the market; fourth, institutions and
films not having gold, but which would
get 1t at whatever cost. provided The con-
tract was put in force. Partictpations
we're about equally divided between the
four classes.
Getting the Gold.
Having completed the syndicate, 1 en-
tered into negotiations in Europe, and in
places other thar London, where the mar
ket was closed to us, and through the
Deutsche Bank and Messrs. Morgan, Harjes
&c Company negotiations were practically
COZ cluded for public subscriptions in Ger
many, France and Holland, which would
have resulted in large amount of bonds
being placed in those countries.
'On January 4, realizing that the ten
sion was growing daily and serious, l ad-
dressed letter to the President calling
his attention to the situation, and repre-
stnting that the most important step was
the restoration of the government credit
by replenishing it's stock of gold Details
or what was proposed were given, and the
assurances offered that the utmost efforts
would be made to procure for the treasury
i,JO,UU ounces of gold"
Reason for Dissolution.
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 circuni-
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 public call.
The only emergency. in Mr.. Morgan's
Judgment, which would justify such a
course would be the failure of the public
to respond to the call of the government.
II has been necessary to delay the dis
solving of tie syndicate up to the present
time, as every financial interest required
the protection afforded by the knowledge
that the syndicate was in existence pre-
pared to make the loan success under
any circumstances. The circular concludes:
Il feel perfectly satisfied that there is no
question as to the success of the ioan."
Mr.. Morgan to the President.
The following is the text of Mr.. Morgan's
letter to President Cleveland:
NEW YORK, 2l9 Madison avenue.
January 4, 1896.
To the President, Washington, D. c.
Sir: 1t is with great hesitation that 1
venture to address you in relation to the
present financial situation.
AS you are doubtless we'll aware financial
affairs are approaching a serious crisis
and the tension today is extreme; and
whilst no outward evidences have deyel-
. ored, We are likely at any moment to
reach the point and consequences which it
will then be too late to remedy. The grav-
ity of the situation must be my excuse.
The most important step at this moment
replacing the gold reserve in the treasury
beyond question. This once accomplished
confidence, both at home and abroad, in the
stability of our currency will be restored.
After my recent visit to Washington l
became convinced that any legislative ac-
tion to improve the methods at the disposal
OF the executive was unlikely; in fact, i'm
possible. / therefore took steps to ascer-
tain whether it would be possible to obtain
TIE cooperation of parties at home and
abroad to an extent that would enable me
TO negotiate contract with the govern
nlent for a sale of 11,5D0,O00 ounces of
gold, approximating GDO00U,O 600 of dollars
on about the basis of the contract of Feb
II ary 8, 1S9o In the effort / have been
= successful, and now 1 am able to make
such contract for the full amount
L DO lot hesitate to affirm, in fact to
urge that such a contract would in every
way be for the hest interests of the gov
ernmenE and the people, and would be fol-
lowed by less arrangement of the money
market, Of trade, in fact, of all intteres in
Guiding foreign exchanges, all of winch un-
I'll recently were in such an increasingly
prosperous condition. and / urge your Sc
rlouS consideration of such contract At
the same time / recognize the effect of the
legislation which has been proposed, and
the discussions tnereupon iii both houses
OF Congress, all of which might lead YOU
TO hesitate to make private contract
HEd, consequently, in view of the gravity
Of the situation, feel hound to say that
, nter a conference, in which can mora