Reminiscences of Sixty Years in Public Affairs Volume II Part 15

Now I hereby declare that said amount and deposits, present and future, are official and belong to the Government of the United States, and not to me personally that the moneys so deposited are the proceeds of the sale of five per cent bonds of the "Funded Loan"; that whatever money I may at any time have in said Bank under said account, will be the property of the United States Government, held by me officially as a.s.sistant Secretary of the Treasury, acting under orders from the Secretary; that the same is, and will continue to be subject to the draft, order, and control of the Secretary of the Treasury, independently of, and superior to my authority, whenever he so elects, and that upon his a.s.suming control thereof, my power over the same will wholly cease. In case of my decease before said account is closed, the money on deposit will not belong to my estate, but to the Government of the United States.

Witness my hand and seal, (Signed) WILLIAM A. RICHARDSON, _a.s.sistant Secretary of the Treasury, U. S. A._ LONDON, ENGLAND, _December_ 28, 1871.

_Witnesses:_ JNO. P. BIGELOW, E. W. BOWEN, GEO. L. WARREN.

_(b)_ JUDGE RICHARDSON TO JOHN P. BIGELOW

41 LOMBARD ST., LONDON, ENGLAND, _December_ 28, 1871.

_To_ JOHN P. BIGELOW, _Chief of the Loan Division, Secretary's Office, Treasury Department, U. S. A._

I have this day deposited in the Bank of England, in my name as a.s.sistant Secretary of the Treasury, two million five hundred and fifty thousand pounds sterling money, belonging to the United States, received in payment of five per cent bonds of the Funded Loan delivered here in London.

All money hereafter received for future delivery of bonds will be deposited to the same account.

Herewith I hand you a declaration of trust signed by me declaring that said account and moneys belong to the United States, and not to me personally, also the Deposit Book and a book of blank checks numbered from 35,101 to 35,150, both inclusive, received from said Bank, all of which you will take into your custody and carefully keep in one of the iron safes sent here from the department in the same manner as the books are kept.

This money, and all the money deposited in said bank on the account aforesaid, will be drawn and used only in accordance with the orders of the Secretary of the Treasury to redeem or purchase five-twenty bonds and matured coupons, or such other and further orders as he may make in relation thereto.

When money is to be drawn to pay for bonds or coupons, it must be drawn only by filling up a check from the book of checks above referred to, and you will open an account in which you will enter the amount of all deposits, the number and amount of each check drawn, specifying also to whom the same is made payable and on what account it is drawn.

The checks will be filled up by Mr. Prentiss of the Register's Office, who will place his check mark on the upper left corner, and will enter the same in the book. You will then carefully examine the check, see that it is correctly drawn for the amount actually payable for bonds or coupons received and properly recorded, and you will, when found correct, place your check mark on the right hand upper corner before the same is signed by me. All checks will be signed by me with my full name as a.s.sistant Secretary of the Treasury, as this is signed.

(Signed) WILLIAM A. RICHARDSON, _a.s.sistant Secretary of the Treasury, U. S. A._

_(c)_ MR. FORBES TO JUDGE RICHARDSON

BANK OF ENGLAND, E. C., _January_ 4, 1872.

HON. W. A. RICHARDSON, _a.s.sistant Secretary of the Treasury of the United States_, 41, _Lombard Street_.

_Sir:_ To preclude any possible misunderstanding hereafter as to the character of the drawing account opened in your name, I am instructed by the Governors to communicate to you in writing that, in conformity with the rule of the Bank, the account is considered a personal one; that the Governors have admitted the words appended to your name merely as an honorary designation; and the bank take no cognizance of, or responsibility with reference to the real ownership, or intended application of the sums deposited to the credit of the account.

I am, sir, Your obedient servant, (Signed) GEORGE FORBES, _Chief Cashier_.

_(d)_ JUDGE RICHARDSON TO MR. LYALL

41 LOMBARD STREET, LONDON, ENGLAND, _January_ 15, 1872.

GEORGE LYALL, ESQ., _Governor of the Bank of England._

_Dear Sir:_ Referring to the several conversations which I have had with you, and with your princ.i.p.al cashier, Mr. Forbes, relative to the manner and form of keeping the account which I desire to have in the bank, I beg leave to renew in writing my request heretofore made orally, that the account of money deposited by me may stand in the name of Hon. George S. Boutwell, Secretary of the Treasury, U. S. A., and myself, a.s.sistant Secretary, jointly and severally, so as to be subject to a several draft of either, and of the survivor, in the case of death of either one.

I suppose I must regard the letter of Mr. Forbes to me, dated January 4, 1872, and written under instructions from the Governors of the Bank as expressing your final conclusion that the account in whatever form it may be kept, must be considered a personal one.

You know my anxiety to have by deposits received by the Bank, and entered in such way that in case of my death the balance may be drawn at once by the Secretary of the Treasury or some other officer of the Government, and although you are unwilling to regard the account as an official one, I hope that on further consideration you will allow it to be opened in the name of Mr. Boutwell and myself jointly and severally as above stated. I am, sir, Your obedient servant, (Signed) WILLIAM A. RICHARDSON, _a.s.sistant Secretary of the United States Treasury Department._

_(e)_ MR. FORBES TO JUDGE RICHARDSON

BANK OF ENGLAND, E. C.

_January_ 17, 1872.

HON. W. A. RICHARDSON, _a.s.sistant Secretary of the Treasury of the United States_, 41, _Lombard St._ _Sir:_ I am directed by the Governor to acknowledge the receipt of your letter of the 15th inst., requesting that the account of money deposited by you in the Bank may stand in the name of the Hon. George S. Boutwell, Secretary of the Treasury, U. S. A., and yourself, the a.s.sistant Secretary, jointly and severally, so as to be subject to the several draft of either, and of the survivor in case of death of either one.

I am to inform you that the Bank is prepared to open an account in this form, as a personal account; but it is essential that Mr. Boutwell should join in the request and concur in the conditions proposed before each party can in that case draw upon the account. I am, sir, Your obedient servant, (Signed) GEORGE FORBES, _Chief Cashier._

_(f)_ JUDGE RICHARDSON'S REPORT

41, LOMBARD STREET, LONDON, _January_ 25, 1872.

HON. GEORGE S. BOUTWELL, _Secretary of the Treasury._

_Dear Sir:_ It is my purpose in this letter to give you an account of the way in which I have kept the money arising from the sale of the Funded Loan, and the manner in which it has been drawn from time to time to pay for bonds purchased and redeemed.

Immediately after the first of December, 1871, the money began to acc.u.mulate very rapidly. Up to the first of December no money whatever had been received, all bonds delivered having been paid for by the called bonds and coupons or secured by deposit of other bonds; but on the second day of that month nearly two and a half millions of dollars cash were paid to me; then on the fourth, nearly five millions of dollars more; and on the fifth, above three millions, and so on in different sums till the present time.

Of course it was wholly impracticable to receive, handle, count and keep on hand such large amounts of gold coin, weighing between a ton and three quarters and two tons to each million of dollars. At one time my account showed more than sixteen millions of dollars on hand, and to have withdrawn from circulation that amount of coin would have produced a panic in the London market; and the risk in having it h.o.a.rded in any place within my reach would have been immense, especially as it would have soon been known where it was.

I ascertained that there would be some difficulty in keeping an official Government account in the Bank of England, and I did not feel authorized, or justified in my own judgment, in entrusting so much money to any other banking inst.i.tution in this city. I found, also, that the Bank of England never issues certificates of deposit, as do our banks in the United States. But it issues "post notes," which are very nearly like its ordinary demand notes, but _payable to order,_ and on seven days' time, thus differing only in the matter of time from certificates of deposit. Availing myself of this custom of the Bank of England, I put all the money into post notes, and locked them up in one of the safes from which the bonds had been taken. This I regarded as a safe method of keeping the funds, and I antic.i.p.ated no further difficulty.

But when the Bank made its next monthly or weekly return of its condition, and published it in all of the newspapers as usual, the attention of all the financial agents, bankers, and financial writers of the daily money articles in the journals was immediately attracted to the sudden increase of the "post notes" outstanding, and the unusually large amount of them, so many times greater than had ever been known before. They were immensely alarmed lest the notes should come in for redemption in a few days, and the coin therefor should be withdrawn from London and taken to a foreign country; and lest there should be a panic on account thereof. Some of the financial writers said they belonged to Germany, and that they represented coin which must soon be transmitted to Berlin. The Bank officers themselves, although they knew very well that these notes belonged to the United States, were not less alarmed because they feared that I would withdraw the money to send it to New York, which they knew would make trouble in the London Exchange. Money, which for a short time before had been at the high rate of interest, for this place, of five per cent, had become abundant, and the people were demanding of the Bank a reduction in the rate; but so timid were they about these post notes that they did not change the rate until I took measures to allay their fears. This I did because I thought it would be injurious and prejudicial to the Funded Loan to have a panic in London, in which the market price of the new loan would drop considerably below par just at a time when its price and popularity were gradually rising, and just as it was coming into great favor with a new cla.s.s of investors in England, the immensely rich but timid conservatives.

I determined to open a deposit account with the Bank of England, and in doing so experienced the difficulties which I antic.i.p.ated. I a.s.sured the officers that the money was Government (U. S.) money, which I did not intend, and was not instructed to take home with me; but which I should use in London in redeeming bonds and coupons, and should leave in the bank on deposit unless by the peculiarity of their rules, I should be obliged to withdraw it. They objected to taking the money as a Government deposit, or as an official deposit in my name, having some vague idea that if they took it and opened an official Government account they should be liable for the appropriation of the money unless doc.u.ments from the United States were filed with them taking away that liability, but they could not tell me exactly what doc.u.ments they wanted nor from whom they must come. They did, however, agree to open an account with me, and that was the best I could do. In signing my name to their book, I added my official t.i.tle, and when, some time after, I came to drawing checks, I signed in the same way. This brought from the officers a letter which I annex hereto, saying that my deposit would be regarded as a private and personal one.

What I was most anxious to provide for was the power in some United States officer to draw the money in case of my death (knowing the uncertainty of life), without the delay, expense, and trouble which must necessarily arise, if it stood wholly to my personal credit. I asked the officers to allow it to stand in your name as Secretary and mine as a.s.sistant Secretary, jointly and severally, so as to be drawn upon the several check of either, and by the survivor in case of the death of either one. I suggested other arrangements which would have had the same result, but they said their rules prevented their agreeing to my requests, that they were conservative and did not like to introduce anything new into their customs.

On the 15th day of January, 1872, I renewed my request in writing, after having had several conversations with the officers on the subject, and received an answer which, with the letter of request, is hereto annexed.

In this, their most recent communication, they express a willingness to enter the account in our joint names as I suggested, regarding it, however, as a "personal account" and requiring that you should "join in the request and concur in the conditions proposed before either party can in that case draw upon the account."

As I must now almost daily draw from the account for money with which to pay bonds, I cannot join your name therein until you have sent me a written compliance with the conditions which they set forth, because to do so would shut me out from the account altogether for several weeks.

Besides, having no instruction from you on the subject, I don't know that you would care to give written directions as to the deposit. I know very well that, in case of my sudden decease, you would be glad enough to find that you could at once avail yourself of the whole amount of money here on deposit, and so I should have joined your name as I have stated. Now you can do as you please. I have taken every possible precaution within my power, and have no fear that the arrangements are insufficient to protect the Government in any contingency whatever. With the correspondence which has pa.s.sed between the officers of the Bank and myself, and our conversation together, the account is sufficiently well known to them as a U. S. Government deposit, and is fully enough stamped with that character, as I intended it should be, however much they may ignore it now.

But for still greater caution, I made the written declaration of trust on the very day of the first deposit, signed and sealed by me, declaring the money and account as belonging to our Government, and not to me, a copy of which is hereto annexed.

I also gave written instruction to Messrs. Bigelow and Prentiss to draw all the checks, and how to draw them and keep an account thereof.

As I make all my purchases through Jay Cooke, McCullough & Co., every check is in fact payable to that house, so that the account is easily kept, and the transactions cannot be mingled with others, for there are no others. I annex a copy of these instructions.

This, I believe, will give you a pretty correct idea of the difficulties which have been presented to me in the matter of taking, keeping, and paying out the money arising from the sale of the bonds, and the manner in which I have met them.

I may add that when the officers of the Bank were satisfied that I was not to withdraw the money and take it to New York, they reduced the rate of interest and there has been an easy market ever since.