"and—
'Have cabled Conant to extend option, if desired, to April 8.'
"contents of which we have communicated to our London friends.
"Yours, very respectfully,
"Pro August Belmont & Co.
"W. Suttgen.
"W. Beuter."
The explanation of these cablegrams is given in the following letter:
"New Court, St. Swithin's Lane, } "London, E. C., England, March 29, 1879.} "Dear Mr. Secretary:—On the 27th instant I had the honor to make an inquiry of you by cable dispatch, as follows: 'Would be pleased to know if subscriptions to be settled during April can be effected without disturbing market in New York.' The constant decline in the price of all descriptions of our bonds in New York, the strenuous efforts being made by certain parties to sell American bonds here at low rates on home account, particularly the four and four and a half per cent. stock, the advancing rates of interest, and the condition of the exchanges, together with the rumors concerning scarcity of money in New Orleans and elsewhere, gave rise to apprehension, in the minds of many, that refunding operations had been carried to too great an extent; that too many bonds had been subscribed for on speculative account, and that any forced settlement of the subscriptions falling due in April would produce a panic. Private telegrams sent here conveyed information to the effect that arrangements would be made between yourself and the banks, by which the deposits in them would not be drawn upon until absolutely necessary. The answer, however, which I received from you a few hours later was highly gratifying and reassuring, and I gave it as much publicity as possible without, of course, publishing it. It reads as follows: 'Entirely confident subscriptions during the next month will be settled without disturbing the market. Order treasury department yesterday will facilitate greatly.'
"The question of obligation to make a subscription on the 1st day of April to continue the contract has been under consideration by the syndicate during the past week, and in fact ever since the beginning of the decline in the price of the four per cent. stock. The associates claim that they are only required to take five millions of the bonds during the month of April, and that having already taken three-fifths of the amount in advance, they should, in view of the impossibility of disposing of the stock at present prices, be allowed the balance of the month in which to subscribe for the remaining two millions. They argue that it cannot be expected that they can afford to take the bonds and pay the government one and a half per cent. above the market prices, and they add that they do not think you would wish to have them do so. They also say that if they wanted the bonds for speculative purposes only they should give up the contract and purchase in the open market; but their policy is to keep the price at par and not to buy or sell when it is below par. Bonds will sell more rapidly when they are at par than when below it. It is the speculators and not the investors, as a rule, who deal in stocks when they are cheap. If the price of the bonds had remained at par, I have no doubt but that all the bonds I have here would already have been disposed of, and that the parties would have been ready and willing to make the subscription for five millions on April 1.
"The Messrs. Rothschild say that, owing to the high price which they were compelled to pay for called bonds, and the reduced price at which they were compelled to part with a portion of the four per cent. bonds, they have made a slight loss on their transactions so far. They like to have business relations and connections with governments, and I think that that disposition on their part is paramount to the question of profits. The matter of the subscription was discussed again yesterday, and deferred until Monday for further consideration, and I was asked to send the following cable message to you:
'Rothschild & Sons request me to say they do not consider contract of January 21, 1879, requires subscription $2,000,000 to be made April 1. On account of market price below par at the present time, they desire delay subscription a few days. Hope you will consent.'
"I hoped you would consent, because I think it quite important, for many reasons, that we should dispose of bonds on this side of the water. They take the place of actual gold in settling exchanges, and thereby prevent the disturbances in the money market which always result from the moving of bullion. I have no doubt but that the use of these bonds in this manner has stimulated purchases of grain and produce from us which would never have left our shores if payment for the same could only have been made in bullion. I received this morning your cable message in answer to the one I sent yesterday, as follows: