People's Pilot, Volume 5, Number 32, Rensselaer, Jasper County, 13 February 1896 — TO BOND SUBSCRIBERS [ARTICLE]

TO BOND SUBSCRIBERS

LETTER OF MORGAN A CO. DISSOLVING THE SYNDICATE. Explanation of Why ThU Action la Taken —Commaniratlcn to Cleveland Sngrseatiag the New Loan —Received with Snrprlfe at Washington. New York, Jan. 15. —Members of the government bond syndicate received in their mail this morning a circular letter from J. P. Morgan & Co., releasing them from their commitments to furnish their pro rata of $100,000,000 in gold and a second $100,000,000 if desirable, taking their payment therefor in a 4 per cent government bond. Accompanying this letter was a circular explaining why the syndicate was formed, what action was taken on its behalf and why it was now dissolved. “On the 23d of December,” Mr. Morgan says, “I was invited to Washington for a conference. During my visit there no negotiations ter a loan were even suggested, nor was there then nor since any agreement or request that I should take any steps preparatory to making a contract. I came, however, to the conclusion that the president and secretary of the treasury would use every power at their command to restore and maintain the gold reserve; that no steps would be taken until it was ascertained what Congress would do; that* the executive department would prefer to secure $200,000,000 of gold and that it was certain no relief could be obtained from Congress. “Upon my return, -rppreciating the gravity of the situation, and in order that I might be nrepared to act promptly, I took steps to ascertain to what extent it. would be possible to secure the co-operation of capitalists in forming a syndicate' which would agree to sell to the United States government $200,000,000 of gold coin. The contract prepared and signed by the participants did not stipulate whether the purchase would be by private or by public offer. The only provision, in addition to the important one that, no gold should b« withdrawn from the treasury, was that the minimum amount of the contract should be $100,000,000, the maximum not over $200,000,000. The applications far exceeded my expectations. At the end of three or four days the total $200,000,000 was reached, and I had full authority which would enable me, whenever and however the executive might decide to act, to secure that amount of gold for the treasury reserve in exchange for United States bond*. “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 possession of gold coin who wanted bonds either for investment or as a basis of national circulation; third, banks in various cities who were willing to exchange their gold for bonds, expecting afterwards to sell them in th*> markets; fourth, institutions add firms not having gold, but which would get it at whatever cos*, provided the contract was put in force. Participants werfl about evenly divided between the foot classes.

“Having completed the syndicate, l entered into negotiations in Europe and in places other than London, where the market was closed to us, and through the Deutsche Bank and Messrs. Morgan, Harjes & Co., negotiations went practically concluded in Germany France and Holland which would have resulted in a large amount of bonds being placed in those countries. “On Jan. 4, realizing that the tension was growing daily and had became serious, I 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 proposed were given, and assurances offered that the utmost efforts would be made to procure for the treasury 11,500,000 ounces of gold." The reason given for the dissolution of the syndicate is that the syndicate contract called for a bid u£ “all or none,” and therefore Mr. Morgan was unwilling to make a bid in dor the ©resent "’rcumstancf'might seem to present for consideration by the secretary of the treasury the throwing out or smaller bids made in good faith under the public oall. 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.

It has been necessary to delay the dissolving of the syndicate up to the present time, as every financial interest required protection offered by the knowledge that syndicate was in existence, prepared to make the loan a success under any circumstances. The circular concludes: “I feel perfectly satisfied that there is no question as to the success of the loan.” MORGAN'S LETTFR TO CLEVELAND. The following is the text of Mr. Morgan’s letter to President Cleveland: “New York. 219 Madison avenue, Jan. 4, 1896. -To the President, Washington. D. C.: Sir—lt is with great hesitation that I venture to addreas you in relation f c 'he present financial situation: As <">u are doubtless financial affairs are approaching a serious erisis, and the tension today ie extreme; and while no outward evidences have developed, we are likely at any moment to reach the point and consequences which it will then be too late to remedy. The gravity of the situation must be my excuse, rr ’h" most importaut step at this moment is the restoration of government ;radit by replacing the gold reserve in the tr: ’eury beyond questioy. This onc° accomplished, confidence both at home and abroad in the stability of our currency will be restored

“After my recent visit to Washington I became convinced that any legislative action to improve the methods at the disposal of the executive was unlikely—in fact, impossible. I therefore took steps to ascertain whether it would be possible to obtain the co-operation of parties at home and abroad to an extent that would enable me to negotiate a contract with the government for the sale of 11,500,000 ounces of gold, approximating $200,000,000, on about thg has' - of the contract of Feb. 8,1895. In this effort I have been successful, and am now in a position to make such contract for the full amount. Ido not hesitate to affirm—in fact, urge—that such a contract would in every way be for the best interests of the government and the people, and would be followed by less derangement of the money market, of trade—in fact, of all interests, including foreign exchanges, all of which, until recently, were in such an increasingly prosperous condition—and I urge your serious consideration of such a contract.

“At the same time, I recognize the effect of legislation which has been proposed and the discussions thereupon in both houses of Congress, all of which might lead you to hesitate to make a private contract, and, consequently, in view of the gravity of the situation, I feel bound to say that if, after a conference, in which I can more fully lay the matter before you, and without expressing any confidence in such a mode of procedure, in face of previous failures of similar attempts, hut recognizing, as I do, that the responsibility of decision lies with you, should you decide upon a public issue, I pledge to you every influence and effort in my power to assist the government in its endeavor to make a successful negotiation by public advertisement, which shall result in the sale to the treasury of 11,500,000 ounces United States gold coin ($200,000,000); and,further, I will so far as I possibly can, take such steps as will enable the syndicate which I represent to join, in making the negotiation successful to its full amount. “Awaiting the indications of your pleasure, I remain, respectfully yours, “J. PIERPONT MORGAN.”

A majority of men in public office are making more money than they could make at anything else, which is to say that they are receiving more than their services are worth. One man who will stand up for principle and right is more to be honored than a political party that deserts its principles for offices and boodle.

When the two old parties are struck at the next election by the political lightning now accumulating, they will realize that the bond issue is not such a “popular loan’’ as it was recommended to be.

The difference the two old parties is the same as that between the two pigs that got into the potato patch; they tore up the ground and —eat the potatoes. If that British flying squadron cornea over here putting on airs it ought to b* made to fly the other way. The Populist senators are handling the truth like a two-edged sword. They are in fine shape to put the two old parties on record and they have the courage to do it.

Secretary Carlisle’s circular explaining how to make bids for the,pending bonds would be more compjete’if it told the dear people where to get the gold to pay for them.