I then asked Mr. Vail and Mr. Vermilye whether, if a proposition was made to me by bankers of acknowledged credit and responsibility of 101 for four and a half per cent. bonds, payable in installments and with the usual option, in their opinion, it was my duty to accept it.
They both said decidedly, yes; that such an arrangement would be far more advantageous than the acceptance of their proposition, and besides, if they took the bonds, it might impair to some extent their power to render the usual facilities to their commercial customers.
The proposition submitted by Messrs. Vail and Vermilye, in behalf of the national banks, was as follows:
"If the secretary will intimate his willingness to receive a proposition from the national banks in New York, Boston, Philadelphia and Baltimore for the negotiation of fifty millions four and a half per cent. bonds at par in gold, for resumption purposes, we will recommend our associates to unite in making it, with the belief on our part that it can be accomplished as suggested. This special loan to be the only bonds of this character offered, unless the same parties have the option on any further sums required."
Afterwards, on the same day, I again met the members of the syndicate at the sub-treasury, and said that I would sell only $50,000,000 four and a half per cent. bonds; that these must be paid for in gold coin, for resumption purposes; that I would sell them for 101½, allowing one-half of one per cent. commission, the syndicate to pay all expenses; but before signing the contract wished to communicate with the President.
These terms were accepted by the syndicate upon condition that their associates in London would consent, they reserving the right to cable to London for such consent; and the meeting adjourned until 1:30 o'clock, when, I having received a telegram from the President, the details of the contract were then discussed, and signature was delayed for an answer to the cable of the syndicate.
On the following day we again met at the sub-treasury, and Mr.
Lucke, of Belmont & Co., informed me that the English parties had
authorized them to close the contract, and it was therefore signed.
It was as follows:
"This agreement, entered into the 11th day of April, 1878, between the Secretary of the Treasury of the United States, of the first part, and August Belmont & Co., of New York, on behalf of N. M. Rothschild & Sons, of London, England, and their associates and themselves; Drexel, Morgan & Co., of New York, on behalf of J. S. Morgan & Co., of London, and themselves; J. & W. Seligman & Co., of New York, on behalf of Seligman Bros. of London, and themselves; Morton, Bliss & Co., of New York, on behalf of Morton, Rose & Co. of London, and themselves; and the First National Bank of the city of New York, witnesseth: That said August Belmont & Co., on behalf of N. M. Rothschild & Sons, and their associates and themselves, hereby agree to purchase from the Secretary of the Treasury $4,125,000 of the four and one half per cent. bonds of the United States, issued under the acts of July 14, 1870, January 20, 1871, and January 14, 1875, and that Drexel, Morgan & Co., on behalf of J. S. Morgan & Co., and themselves, agree to purchase $1,625,000 of said bonds, and that J. & W. Seligman & Co., on behalf of Seligman Bros., and themselves, agree to purchase $1,625,000 of said bonds, and that Morton, Bliss & Co., on behalf of Morton, Rose & Co., and themselves, agree to purchase $1,625,000 of said bonds, and that the First National Bank of the city of New York agrees to purchase $1,000,000 of said bonds; making a total aggregate of $10,000,000 of said bonds on the terms and conditions following:
"First. The bonds covered by this contract shall be sold for resumption purposes.
"Second. The parties of the second part shall have the exclusive right to subscribe in the same proportion of each of the subscribers for the remainder of the $50,000,000 of the four and a half per cent. bonds of the United States authorized to be issued by the acts of Congress aforesaid; but the amount to be so subscribed shall not be less than $5,000,000 for each and every month after the present month of April.