'I think contract of January 21, 1879, very plain. Subscriptions should be made April 1; but, if they desire, time will be extended to April 8.'

"With great respect, I remain, yours truly, "Chas. F. Conant.

"Hon. John Sherman."

I have set out in full this correspondence with Rothschild and his a.s.sociates and with Conant, to show that on the eve of complete success they were discouraged and asked for a postponement of, to them, the small subscription of $1,000,000, and did not even think of taking the option of $10,000,000 of bonds subsequently claimed.

With the 1st of April all stringency disappeared. Accounts were settled without difficulty. The amount of four per cent. consols sold to March 31, inclusive, was $473,443,400.

On the 4th of April, while attending a meeting of the cabinet, I was handed the following telegram:

"New York, April 4, 1879.

"Hon. John Sherman, Secretary of the Treasury, Washington, D. C.

"National Bank of Commerce in New York subscribes for forty million dollars four per cent. bonds. Particulars and certificates by mail.

"Henry F. Vail, President."

I thought the amount was a mistake, that four instead of forty was meant. I replied as follows:

"Henry F. Vail, President National Bank of Commerce, New York.

"Before making call I prefer you repeat your subscription."

A few moments after sending this telegram I received the following from Mr. Vail:

"I sent you telegram to-day, which from its importance I beg you will telegraph me acknowledgment of its receipt."

I replied:

"Your telegram is received, and I have asked repet.i.tion of it before making call."

The following telegraphic correspondence then occurred:

"Hon. John Sherman.

"Please enter to-day for us a subscription for ten million dollars four per cents. making, however, no announcement until we see you to-morrow.

"G. F. Baker, President First National Bank, New York.

"Hon. John Sherman.

"We have taken two million subscriptions to-day thus far, and more to follow.

"E. D. Randolph, "President Continental National Bank, New York."

"New York, April 4, 1879.

"Hon. John Sherman.

"Your two telegrams received. I hereby confirm my telegram of to- day, subscribing, in name of National Bank of Commerce in New York, for forty million dollars four per cent. bonds.

"Henry F. Vail, President."

"Henry F. Vail, President National Bank of Commerce, New York.

"Your subscription for forty million four per cent. bonds, having been repeated by telegram, is accepted. A call will issue to-day for the balance of the sixty-sevens and to-morrow a call will issue for the whole of the sixty-eights.

"John Sherman, Secretary."

"E. D. Randolph, President, etc., New York.

"Your two million subscription received and accepted, but can accept no more. All 5-20's are covered.

"John Sherman, Secretary."

"New York, April 4, 18979.

"Hon. John Sherman.

"We subscribe for three millions more, making five in all.

"F. Taylor, Cashier Continental National Bank."

"Treasury Department, April 4, 1879.

"F. Taylor, Cashier Continental National Bank, New York.

"Your subscription for three millions arrived too late; all the 5- 20's have been covered by previous subscriptions.

"John Sherman, Secretary."

A similar telegram was sent to the Continental National Bank of New York, which subscribed $25,000,000 additional, the Hanover National Bank of New York, $25,000,000, and the New York National Banking a.s.sociation, $2,000,000.

I then telegraphed to Mr. Conant as follows:

"Subscriptions have been made covering all 5-20 bonds (consols of 1867 and consols of 1868) outstanding, reserving for contracting parties the one million not subscribed for.

"Inform the contracting parties and accept no new subscriptions."

On the 4th of April, 1879, I had the satisfaction of issuing the 95th and 96th calls for 5-20 bonds, covering all the bonds outstanding issued under the act of March 3, 1865, and the last of the United States 5-20 bonds. The early twenty year bonds, issued during the first two years of the Civil War, were not yet due or redeemable, and, therefore, could not be called for payment. This was a practical ill.u.s.tration of the importance, in issuing government securities, of reserving the right to redeem them before maturity.

The rapid and irregular subscriptions made on the 4th of April involved the department in serious difficulty in determining who of the many subscribers were ent.i.tled to the bonds. The aggregate of subscriptions was more than double the amount of 5-20 bonds outstanding. By adopting a rule of accepting bids made before a fixed hour of that day, and by voluntary arrangements among the bidders, a distribution was made.

The only serious controversy in respect to this distribution was upon the claim of the Rothschilds that they had option extending to the 30th of June for ten millions of bonds, and for one million extended from April 1 to April 8. The latter was allowed, but the department held that the option for ten millions June 30 was dependent upon whether the bonds were previously sold, and this occurred on the 4th of April. This gave rise to a controversy which was settled by the voluntary transfer, by the National Bank of Commerce, of ten millions of the forty millions bonds subscribed for by it. Rothschild, the head of the house, would not accept this offer, but, with some show of resentment, declined to receive his share of the bonds, but they were eagerly taken by his a.s.sociates.