Reminiscences of Sixty Years in Public Affairs, Vol. 2

by George S. Boutwell

TREASURY DEPARTMENT.
OFFICE OF THE TREASURER,
WASHINGTON, D. C.
January 25, 1900.

HONORABLE GEORGE S. BOUTWELL,
Boston, Massachusetts.

My Dear Mr. Secretary: It gives me pleasure to enclose to you a table showing by classes of bonds the percentage of interest paid by checks. The interest on all registered bonds is now so paid. Only the coupon bonds, by their nature, are differently treated.

Your plan has worked admirably, and the drift is slowly from the coupon to the registered form, and so to an increase of the payment of interest by checks.

With kind regards, Yours very truly, (Signed) ELLIS H. ROBERTS, Treasurer of the United States.

The plan has been adopted by corporations that are borrowers of large sums of money upon an issue of bonds, and the use of the system is very general in the United States.

In my report to Congress in December, 1869, I made recommendation of the Funding Bill, and I placed copies of the bill that I had prepared in the hands of the Finance Committee of the Senate, and in the hands of the Committee of Ways and Means of the House of Representatives.

When the bill became a law, the authorized issue of five per cent bonds was limited to two hundred million dollars, and the issue of four per cent was raised to twelve hundred million. Simultaneously with the passage of the Funding Bill of July, 1870, the war between France and Prussia opened, and the opportunity for negotiations was postponed until the early months of the year 1871. In these later years, when bonds of the United States have been sold upon the basis of their par value at two per cent income, it is difficult to realize that in 1869 the six per cent bonds of the United States were worth in gold only 83-5/10 cents to the dollar. The first attempt to dispose of the five per cent bonds was made by the Treasury Department through an invitation to the public to subscribe for the bonds, payment to be made in the currency of the country, or by an exchange of outstanding five-twenty bonds which bore interest at the rate of six per cent. The subscriptions reached the sum of sixty-six million dollars, of which the national banks were subscribers to the amount of sixty-four million, leaving two million only as the loan to the general public. A portion of the amount taken by the banks was for the account of patrons and clients. This experience justified the opinion that future efforts with the general public would be unsuccessful, while the credit of the country was not established and placed beyond the influence of cavilers and doubters.

It was under such circumstances that the aid of banks and bankers became important for the furtherance of subscriptions, in view of the fact that they could give personal service of a nature not possible in the case of salaried officers of the Government, nor compatible with their daily duties.

It is not easy, in this age of comparative freedom and power in financial affairs, to comprehend that in the year 1871 the long established bankers of New York, Amsterdam, and London, either declined or neglected the opportunity to negotiate the five per cent coin bonds of the United States upon the basis of their par value. It may not be out of place for me to mention Mr. Morton, of the house of Morton, Bliss & Co., as an exception, to the bankers of Europe and the United States.