Year: 1873

THE OPERATIONS OF TliE SlNplCAIE .Vf


SUCH A NATURE AS TO MAKE THE REDuC-


TION OF THE RATE OF INTEREST on THE


DEBr MORE DIFFICULT IN FUTURE-rHE


Observation-Disclosures OF FOREIGN EX-
- CHANGE QUOTATIONS.


The following is a full report of tho statements
made by Mr.. William B. Duncan Of the firm of Dun-
can, Sherman g. Co.. bankers of this city, before the
WAYS and Means Committee at Washington, on
Jan. s:


The Chairman Cfr. Dawes) stated the object of the
Committee in requesting the gentlemen TO appear before
It, IL was that the Committee might be fortified in any
conclusions t should by little broader confer
than 1t would have II it were only to consult with
those who had been Interested the former transactions
OF refunding the loan The Committee desired to know
whether IL sruckother uancors in the same way that
81 those who had been interested 1t was solely
for that purpose that the Committee had invited Messrs
duncan aud Patterson representatives in two great
money centers to express their views


Addressing Mr. Duncan, the Charmansaid; Mr.. Dun
can OF course you that what by the name
OF the Syndicate engaged in the operation OF ex
changing six per cent bonds into FIVE per cent bonds
The Committee desires 20 inquire Of you what are your
views IN reference 70 that transaction, and whether
there yOu any better method Of eectng the
loan prescribed by the statute Of July H. 1870


M Duncan-I am free TO confess that from my point
Of the effort TO place the loan through the syndi-
Cate was entire mistake. The funding law, as I'M
dcrsand IT, authorized the issue Of various amounts at
various rates Of interest, having various conditions at
taohed TO each class which variety seemed
10 ne 20 be very Objectionable. The con-
dition OF the United States Treasury
not such rs mako It absolutely necessary to negotiate
new loan. 1t was not borrowing money, but rather
paying of Its indebtedness, although there be some
question to the policy Of paying of tho Indebtedness
I'm the manner in which IL has been done. The per
cent loan Of the Government prior to this ISSUE as
well placed as any loan could possibly bel mean by
that was permanently placed, held by small investors
ia ali parts ofthe world and held in such manner as
be liable TO be forced upon the market by tempo
rary panica The effort TO put per cent bond upon
tc market having especial advantages over the pre-
vious form Of bond, changed the character Of the
holders OF the per cent 20 such an extent as IN
my Judgment 10 upset permanent character Of the
inyestIbcnt For instance, Germany would hold per
naneutly and without constant disturbance, large
amount OF bonds bearing six per cent interest whhe
bonds M Eve per cent OF less rate OF interest would
nave nd another location, and so to that extent the
holders Of the six per cent bonds were very much dis
turbod have always felt that. while it de-
srable thing OF course reduce the interest OF the
Government debt whenever change should take place
70 should be done In way rather 10 benefit than to
damage the position Of the credit OF the Government
reduce the rate OF interest upon the debt
OF he United Estates It seemed TO that it was abso-
luey necessary either to offer to the holders OF the
per cent bonds something better something cheaper
To induce them make the exchange. In Offering them



dltions the previous bond although having st. ten
years 10 run before It could be in exactly the shape
bond taken up, the Government did not offer any
especil benefit to the holders. had no part in the
Syndicate and know nothing except by hearsay Of the
cement ormanipulaons OF 1t. but my impression
from that hearsay that it very doubtful Oper-
alton as % its success that there periods during
The psndcncy Of the Syndicate when it exceedingly
doubtful whether it could be carried a successful
termination. / not one OF those VINO believe that
Mossrs Jay Cooke a Co. while undoubtedly they
pected TO make reasonable profit upon the operation,
as they certainly entitled TO do) did actually
make profit the thing itself to anything like the
amount that is accredited to them anything like the
amount thoy had n right 20 expect and doubt very
whether in the present condition OF the markets
Of world another effort in the direction would
De as nearly successful that has been. With all
respect the action OF the Secretary Of the Treas
ury had tho power TO determine what to DO in the
premises t 10 that with the views have TO
the form and mode Of refuuding the debt,
would have exhausted the power which Congress gave
10y ealing upon the public for subscriptions. pre-
sciibed bT the act. under the original terms of which
SOoOOJ Of the loan taken by the banks should
ceTtau have applauded his course If he had reported
% Congress he had done AL that he had been called
upon to by the and that he did not think it wise
ls should not have thought it wise TO have continued
efforts ia the same direction.
The Chairmai-Taking the law as it exists can you
suggest better method for the Secretary to proceed
tha1li tue way he tooki


Mr.. Duncau-No better method, except TO avoid pro-
ceeding az AL.


The Chairman-No better method than to stop at the
point where he had negotiated that s65OOOO and to ask
for n cnanse in the law 2


Mr. Duucau-Yes, Sir.


SUGGESTIONS AsTo THE FUTURt.


Tho Chairmau-what change in tho law would you
suggest


Mr Duncau-I would suggest the issuing Of bond
having a specifed time run, covering the whole
amount OF the debt which intended 20 refund; and,
whenever fitting opportunity came for the transposing
of the SIX per cent bonds into said bonds the
Treasury should avail itself of IL, and that until such
time did come until circumstance should arise
which would naDle the Secretary OF the Treasury with
out gorng the credit OF the Government TO make
change OF portion the whole OF the debt he should
rest on think he had better high rate OF
interest be constantly disturbing the condition
OF the credit OF the United States.


The Chaiman-WOuld you resort to call upon the
holders OF the bonds relieve them in given time,
would you wait the interest Of such holder in that
speoti


Nj Duncan-Sfy own view on that subject is that the
power which the Government has Of calling in those
bonds at any a great power, and that it pro-
tcs the Government from any serious trouble in avail
ing Itself Of favorable time for decreasing its burdens
have thought that IL error 20 make so large
call was made time. 1t made for sOOOOOOOO.
because there one chance in thousand that tho
would be placed at the end Of the 90 days
n the position uf being obliged TO meet Its thus maured
Obligations and that the parties who had agreed TO pro-
vide the Government with the of doing. how
good they might be- might. by some extraordinary
circumstance, he prevented from furnishing SAID means,
and GA not think that the Independent position OF
the credit OF the United States that that chance in
thousand ought 10 be run.


The Chairman-Would you call in small amounts, or
would you trust entirely 10 the advantage OF the hold
err the Government being ready to pay whenever the