security for such deposits.

The necessary effort of the deposit of large amount involved in
refunding operations was to create a stringency in the money market.
I early called the attention of Congress to this difficulty, but
had doubts whether the government would be justified in repealing
the law requiring ninety days' notice. This provision was a part
of the contract between the government and the bondholder, and
could only be changed by the consent of both parties. Congress
failed to act upon my suggestion. The interest accruing for ninety
days at six per cent., or one and a half per cent. on the great
sums involved, was a loss to the government but a gain to the banks
or bankers that sold the bonds. The syndicate of bankers engaged
in the sale of bonds chose the First National Bank of New York as
their depositary. The department was indifferent where the deposits
were made so that they were amply secured. Other banks and bankers
engaged in the sale of bonds chose their own depositaries, and thus
an active competition was created in which the department took no
part or interest.

This struggle led to charges of favoritism on the part of the
department, but they were without the slightest foundation. Every
order, ruling and letter was fully discussed and considered by the
Secretary and other chief officers of the treasury, and also by
General Hillhouse, assistant treasurer at New York, and is in the
printed report of the letters, contracts, circulars and accounts
relating to resumption and refunding made to Congress on the 2nd
of December, 1879.

The charge was especially made that favor was shown the First
National Bank of New York, of which George F. Baker was president
and H. C. Fahnestock was vice president. It was said that I was
a stockholder in that bank, and that I was interested in the
syndicate. It is scarcely necessary for me to say, as I do, that
these charges and imputations were absolutely false. This bank
and the associated bankers sold larger amounts of four per cent.
bonds than any others and received a corresponding commission, but,
instead of being favored, they were constantly complaining of the
severity of the treasury restrictions. Rothschild, the head of
the great banking house in London and the chief of the syndicate,
especially complained of what he called the "stinginess" of the
treasury department. I can say for all the officers of the treasury
that not one of them was int