Evening journal., 1912-04-18
NEW NEWS OF YESTERDAY
A Bond for $ls,5OO,OOO
By Holland.

hOnb III TIC Onllcu Claltb VINO knew
that one Government bond was once
issued by the Treasury Department
for Sl5,50O,000; and l am inclined to
think that l am the only man now li1-
ing who knows OF that bond and why
it was issued" said the late John
Jay Knox, who for many years was
Comptroller Of the Treasury at Wash
ington, having first been appointed
deputy comptroller by Salmon p.
Chase when he was Secretary of the
Treasury. Mr.. Knox's death occurred
in 1892
"One morning in the spring of 1873
II had then been comptroller for sew
eral months called upon Secretary
of the Treasury William A Richard
son upon some official matter. The
business was soon finished, and, as
started to go, Judge Richardson asked
me to wait a minute.
" Knox he said, i have been
thinking very earnestly for the past
three or four weeks over a matter
which ! think is of very great import
ance You know that by the terms Of
the award made by the Geneva Arbi-
tration Tribunal. Great Britain is re-
uuired to pay to the United States
S15,500.000 on account Of damages in
flicted upon our shipping by the Ala
bama and other Confederate priya-
teers, and payment must be made by
September Of this year.
Now. by the terms of that award
Great Britain must pay that money to
us in gold coin ] have sent over to
the Director of the Mint to find out
from him how much $i5,500, 900 in
gold coin viii weigh He tells me that
II win weigh about % tons II will cost
a considerable sum to ship that gold
coin. to pay boxing, freight and insur-
ance charges. However. that is an
Insignificant matter in comparison
with another
I have had good many talks
with bankers and they tell me that
there may be serious disturbances in
the money market, and some import
ant and unfavorable effects upon our
own commerce with Great Britain, in
case as much gold as that is shipped
from Great Britain TO the United
States, In view of the fact that il is
not to pay for commodities that Great
Britain has brought but for damages
to American ships. So / have been
wondering whether II cannot be ar
ranged that we utilize the refunding
operations we are now carrying on in
such way as to make the actual de-
livery of the gold TO the United States
unnecessary
In an instant said Mr. Knox. II
saw exactly what the Secretary Of the
Treasury was trying to get at He was.
at that time engaged in refunding the
6 per cent. bonds, commonly known as
5-20s, through an issue OF per cent.
bonds I asked him how many Of the
s per cent. coupon bonds were held in
Great Britain, and he told me that
the majority Of that issue was owned
either in London or upon the Contin-
ent
Il then said that II we could secure
the cooperation Of the British Govern.
ment, England would furnish the gold
with which to buy these per cent
bonds-S15.500. worth Of them
and, by an arrangement with a finan.
cial syndicate. the whole matter coult
be so financed that the bonds thus
bought of foreign investors through
the aid ii British gold could be re-
funded into our own SIS.
Yes. yes, I see that said Secre,
tary Richardson, but / don't quite
know how 20 work out the machiner,
by which it can be done
We'll, il is a long story how W,
worked out a feasible plan" Mr.. Kno,
continued, and the details would onl,
be understood by bankers. Richardson
however, did call for 100000 of tn,
6 per cent. bonds, knowing 2erfectl,
we'll that he could easily get S15,500.
600 Of them in London In effect W.
paid the British holders of per cent
bonds with the money our agents II
London received from Great Britain
That kept the gold In London, and /
was done through a complicated ar
ranement entered into with the Brit
ish financiers. AT last we received tn
Sl5.5OO.000 6 per cent bonds. whicl
had been redeemed in this way, ant
thoy we're converted by Secretar
Richardson into s15.O00,O0O per cent
bonds.
But, as this was a special trans
action, It was thought best TO put tn
whole amount into a single bond o
course, no bond for that amount ha
been engraved. so we had to call q
the services of an expert pcnman. Tn
hond was denominated special. mum
Der l, and there has never been
number ?. II was then turned over {
the Secretary OF State to be kept b
him until Congress could decide /
what way payment to the American
who had suffered by the Alabama dc
prcdations should be made
The whole transaction was q beau
tiful piece Of financing. II occasione
not a ripple in the money market an
there were very few persons VIII
knew what was going on. do nc
think any more clever and yet delicat
and difficult piece Of financing tha
this was ever done by the Treasur
Departmental least. since the ma
tional banking act was adopted"
Copyright 1912. by r. Edward
All rights reserved)
Tomorrow Mr. Edwards will tell
How Grant Selected His First Seer
tary Of the Treasury"