"January 10, 1879. "H. C. Fahnestock, Esq., "Vice President First National Bank, New York. "Sir:—Your unofficial letter of the 9th inst., suggesting the danger that may arise from the very large and rapid subscriptions to the four per cent. bonds, is received.
"The danger is apparent enough to all, and certainly to those who purchase without ability to pay at the time stipulated, but it is not one that the government can guard against, except only by taking care to have ample security for each subscription.
"In the face of the advertisement now outstanding, I could not withdraw the money from deposit with subscribing banks, until at or near the time of the maturity of the call, when they must be prepared to pay. It is not the interest of the government to force subscriptions beyond the ability of investors, but we cannot check subscriptions by any violation of the public advertisement or any public caution against the danger that is open to everyone.
"Very truly yours,
"John Sherman."
"Washington, D. C., January 13, 1879.
"George Kerr, Esq., Janesville, Bremer Co., Iowa.
"Sir:—I have received your letter of the 6th instant inclosing a slip cut from the Bremer County 'Independent,' a weekly paper published in Waverly, containing a statement to the effect that the First National of New York is enjoying, from the department, special privileges in the matter of holding public money on account of subscriptions to the four per cent. consols of 1907, and receiving from the government unusual commissions on subscription.
"It is needless to say to you that the statement is entirely erroneous from beginning to end.
"In the department's circular of the first instant, a copy of which is hereby inclosed for your information, all national banks are invited to become financial agents, and depositaries of public moneys received on account of the sale of these bonds, and the commissions allowed on subscriptions are plainly stated therein. Over one hundred (100) national banks have been thus designated as depositaries for the purpose mentioned, and all are treated precisely alike, both as to commissions allowed and balances held.
"The First National Bank of New York enjoys, as a United States depositary, no special privileges whatever from the department. It has, however, thus far, subscribed for a larger amount of four per cent. bonds than any other bank, and has, consequently, received a larger amount for commissions. But any other bank subscribing for the same amount of bonds would, of course, receive the same amount for commissions.
"Very respectfully,
"John Sherman, Secretary."