Year: 1873

price axed In addition 10 this wonld wlth the present
and nTobaple Treasury receipts call IN few millions
moi ss tnan $5Ooo monthly Of the due bonds so long
as they cannot De bought at par IN tie market ana de
nend on the receipts OF the Treasury OF tue sale of bonds
Ii necessary TO do this. | believe that M adj
dton TO the European market Tor our bonds;
he a large field for them in tins country There are
questions pressing on the attention OF Congress which
are tending to great changes Ia our financial system. IL
appears 20 that public sentiment in tins country Is
tending toward demand for system of Tree banking,
under certain limitations aud restrictions Long bonds
at low rates OF interest would be used and neid per
manently In the organization OF banks-l mean
as deposit TO secure circulation-and TINS
would absorb large amount They would he desirable
for trust estates and trust companies and other uses
With long bonds at low ratesof interest and the credit
of the Government sustained ana the causes now oper
atng in this country and Earope their market would be
wide civilization. For these reasons do not see
the necessity Of pressing the conversion OF the due


per ,,e cents & into 10 years, p per ,ns cent? ns
bonds condition Of affairs may, and probably WILL ex
ist by which the debt could be funded at much lower
rate of interest and the Tefundng OF the DEBT Dy
means OF Syndicate costs much as the difference be-
tween ana per cent for years would wait to take
the chances Of the next two years and think that the
Government would gain by It,


The Chairman-Do you think it desirable on any par
timei


Mr.. Patterson-If the purpose is not to include any
part Of the a per cents In the negotiation bnt 10
conflne il to the 5per cents alone, should thnk Ina


the saving OF per cent per annum Tor SNORT Ine Goe
not appear 10 he sufficient motive for surrender o
the advantage OF the probability OF 1unung at lo"ei
rate Of interest before the maturity OF the ne ponds
The Chairman-Taking everything into conslderatoh
what would you suggest to the Committee as The BEST
| thing for II to recommends


| A CONSOLIDATION OF TIE DEBT INTO LONG BoNDsl


Mr.. PattersonWithout repeating what said before
would recommend consolidation of the debt into long
bonds OF uniform andlow rate OF interest," ana open
10 public competition in their sale OF exchange at the
| The ChairInan-In the process of funding the debt
how much expenditure would you authorize the secre
Mr. Patterson@I think that IL the Treasury Depart
ment should do it's business directly, very small ex
-pendture would be sufficient. With the wisdom ana
| experience OF the Secretary 10 WOuld De Wen uOhe
without the employment Of intermediate agencies.


intervention of agencies but to how much money you
would authorize the Secretary OF the Treasury to e1pend


Mr.. Patterson-That cannot answer. would leave leave
it to the Secretary Judgement as to the estimate o cost


The Charman-YOu mean!so FAR as the present lncuin
! bent is cOncernedi


MIR. Patterson-I know no other.


| The Charman-Would you recommend the same dls
creuon to be left TO any incumbent Of the Treasury De


Mr. Patterson-I do not mean to say that would leave
| it without limitation as TO expenditure


| The Chairman-What limitation would you make
Mr. Pstterson-I think that onehalf Of one per cent
would be sufficient 1t is Impossible TO express an opn
ion with confidence TO the cost OF working depart
ment, the machinery Of which am not familiar with


The Chairman-Do understand you TO say that your
press the funding Of the debt beyond what the Treasury
Department itself afford by an expenditure not eA


Mr. Patterson-It is impossible for me 10 estimate with
precision what the cost Will be, but believe that Will
ment would attract largely the confidence OF the country
that method of dong business and would attract the



| eminent. European bankin g-hOuses have agents or
partners resident in NewYork in almost daily CORE
| spondence. aside 10 MI DuncdnI-AnA Ao' 0oiie'"
| Mr.. Duncan-Yes. Sir.


| Mr.. Patterson-Ther correspondence is constant py
| means OF mail or cable. .
| Mr. Duncan-By means Of cable almost entirely.
| Dir. PattersDn-And the money markets OF London
| and New-YOrk are very near and in quick sympathy.


Mr.. Kerr ito Mr. Patterson)-l have listened with very
great pleasure what you have been saying and there
two questions which have been suggested to
| my mind you have been going along. VIII you first
| sta te II Judgment
this III the matter OF detail TO put the loan on
the market so as TO bring il into advantageous
co1pection with the people and with actual and per-
manent investors You say TINS mode OF syndicate or
ganization is calculated to the Government
somewhat from sufficiently close relations with in
| MT Patterson-The terms and conditions made with
the Syndicate not known TO the general public at
the time the negotiation was made. do not suppose
that those who desired TO be investors in United States
bonds were advised extensively generally that tney
could buy per cents or convert old bonds INTO
that information being confined to limited number the
market of course limited, so far as the terms made


The Chairman-If that matter had been known en-
tirey, would it not have affected the success OF the
Mr. Patterson-I am of opinion that it would have
affected IL seriously 10 was because large buyers sup
posed they getting the bonds at less than their
value at the the sales made and hence 1t


Mr. Kerr-Then it sicorrecty inferred from what You
have that you think the Government should effect
this directly, through its owns officers opening It's
policy TO the whole world so that all people should see
its entire practical wOrkingf


Mr. Patterson-I think That it would be more


sIent with the dignity as well as with the interest OF
the country To do am not prepared TO say that
believe that large transactions would immediately fol-
low. do not think that any loss wonld be sustained II
developing in Europe Will attract attention TO our coun-
try more and more, and that our credit VIII DC rsDg
The Chalrman-Do you think now that all the
dton of the Syndicate are known that The operations
could De TePe1ee even Win ~ .e se G @ or 'e G and
under similar arrangements as to payments
FREE BANKING.


MI Kelley-You made point that the offer TO the
home market preceding the Syndicate arrangement did
not involve the three months interest do you suppose
that If the option given TO our banks and our
citizens with that element distinctly announced, any
considerable home market could now be found for our
per cent bOndsl


Mr. Patterson-The movements Of money affairs
sometimes very uncertain and eccentric, and we are
affected by conditions and relations which you must
necessarily take into consideration in order to pronounce
opinion that at all trastWorthy IOu are speaking
now of the existing banksf


MIR. Keiey-Yes; submitting to the American people
the option take this loan, and making II clear to their
minds that they, too, shall have the three months IN
our home market that might take advantage OF such
| proposition. mean the banks


Mr Patterson-Not the existing banks, for they have
more profitable for their money, and deferred pay
ment would not present as strong an inducement TO
! small investors as to large banking houses as it
is generally money on hand the former wish 10 in-
vest but IL the inducenent OF reduced price Tor the
bon3s eon o the value of the interest say for 90 days.
was offered they Iwoud understand 1t better, and IL
would be attractive think that there is no ne
cessity 10 press the loan now. would limit the
market TO tins country. The indications everywhere
that the credit OF our Government is rsngIa over the
world and we should take the best advantage OF 10.


Mr. Beck-Tell us how far you think, were We TO allow
free banking this country the bonds OF the United
states would be taken that way-he i've per cent
OF four per cent bonds.


Mr. Patterson-I think it would be unsafe to
thOrize free banking unless under certain limitations
and restrictions connected with IT, But II you establish


system of free banking requiring the deposit OF United
bonds TO circulation at low rates OF inter
certainly less than five cent, and with long time
| TO run, guarded by strict system OF redemption
In the Eastern cities (which think would be essenaD,
you would have banks organized just as the necessities
| not much more than that because they would have
great in the low rates OF interest merely 20
make profit from circulation and while it is impossible