631 NIVERS/A 5 I i I o I i I S i I o5 > ^ .? S 1 ^? KA 5!% II II I i i I I i I s ? = 1 ^ ^ 5 v JIVER% ^ r-s u- e 5 -\V\E -UNIVEBS//; ^ 1 g 1 1 nojo^ ^Utoim-sfl I 1 < 03 ^lOSAKCElf.r, ^IIBRARYQ, a 1 I S tte | I RECEIPT AND INVESTMENT GENEVA AWARD MONEY. RECEIPT AND INVESTMENT GENEVA AWARD MONEY. Stack Annex 5 03$ RECEIPT AND INVESTMENT OF THE GENEVA AWARD MONEY. fail WASHINGTON, June 17, 1882. Mr DEAR JUDGE : By the terms of the award of the Tribunal of Arbi- tration at Geneva, and in conformity with the provisions of the seventh article of the Treaty of Washington, the Government of Great Britain, in 1873, was required to pay to our Government, in gold coin, at Wash- ington, the sum of fifteen and a half million dollars. The duty of receiving this large amount of coin into the Treasury, and investing it in bonds, without deranging the business of the country, fell to you as Secretary of the Treasury. You were kind enough in a late conversation to explain to me how you solved the problem. The public have a right to be told this, now that the Geneva award has passed into history. If you see no objec- tion, and can command the leisure to give me the details, I beg you to do so in the form of a reply to this note. I am preparing for publication a brief survey of the legislation of Congress providing for the distribution of the proceeds of the award.* An explanation from you as to how the transfer of the money was effected will be of interest to the public, and will preserve in an au- thentic form the details of an important historical event. I am cordially yours, FRANK W. HACKETT. Hon. WM. A. RICHARDSON, Qourt of Claims. CHAMBERS OF THE COURT OF CLAIMS, Washington, D. C., June 22, 1882. MY DEAR SIR : The circumstances connected with the payment of the Geneva award by Great Britain to the United States and the in- vestment of the money received, about which you inquire in your letter *Mr. Hackett's volume, entitled "The Geneva Award Acts, with notes and refer- ences to Decisions of the Court of Commissioners of Alabama Claims," is published by Little, Brown & Co., Boston, Mass. of the 17th instant, are quite fresh in my memory, although they took place nearly nine years ago. The importance of the transaction, and the interest manifested by the public at the time, as to how the transfer from London to Washington of $15,500,000 in gold coin, weighing more than twenty-eight and a half tons, was to be accomplished, and its probable effect upon business, served to impress the details upon my mind. It was provided by the treaty that, "In case the tribunal find that Great Britain has failed to fulfil any duty or duties as aforesaid, it [the tribunal] may, if it think proper, proceed to award a sum in gross to be paid by Great Britain to the United States for all the claims re- ferred to it; and in such case the gross sum so awarded shall be paid in coin fty the Government of Great Britain to the Government of the United States, at Washington, within twelve mouths after the date of the award." (17 Stat. at Large, 866.) In September, 1872, the Arbitrators awarded " to the United States a sum of $15,500,000 in gold, as the indemnity to be paid by Great Britain to the United States, for the satisfaction of all the claims re- ferred to the consideration of the tribunal, conformably to the pro- visions contained in Article VII of the aforesaid treaty." The amount awarded became payable in September, 1873. By act of March 3, 1873, (17 Stat. at Large, 601,) Congress provided that " im- mediately upon the payment of the sum of money awarded to the United States by the Tribunal of Arbitration at Geneva, to be paid by the Government of Great Britain, the same shall be paid into the Treasury, and used to redeem, so far as it may, the public debt of the United States. And the amount equal to the debt so redeemed shall be inA'ested in the five per cent, registered bonds of the United States to be held subject to the future disposition of Congress." During the spring and summer of that year, there was manifested through the public press, and otherwise, much anxiety among the bankers and business men of the country, especially in the great financial and commercial centre, New York city, lest the transfer at one time of so large an amount of gold might seriously affect and dis- turb, temporarily, the exchanges and other business relations between this country and Europe. To avoid this anticipated difficulty was a matter of serious consideration. A plan was adopted and successfully carried out, through which the whole amount was paid and invested without making the slightest impression upon the money market or the business of either of the two countries concerned, for a single day. At that time the Treasury Department was engaged in calling in for 5 redemption the six per cent, bonds of the United States, and investing the proce eds, by purchase or exchange, in the five per cent, bonds of the funded loan, under the act of July 14, 1870, (16 Stat. at Large, 272.) For that purpose it had an agency in London, conducted exclusively by officers of the Department who had been sent out from Washington. This agency was made use of to facilitate the receipt and investment of the Geneva Award money. On June 6, 1873, a call was issued by the Secretary of the Treasury, for the /redemption of twenty million five-twenty six per cent, bonds of the loan of 1862. It was the fifth call for the redemption of bonds, and matured September 6, 1873, three months from the date of its issue, in accordance with the terms of the act of July 14, 1870. Four and a half million bonds beyond the amount required for investment of the award money were called, because it had been found by experience, that many bonds of every call were not sent in promptly for redemption, but were held by the owners, through want of information or other- wise, until long after maturity of the call. It was thought that of twenty million the fifteen and a half million would be redeemed within the three months. Most of the coupon bonds of that loan were held in Europe and could be purchased in or through the London market. On the day of the issue of this call, instructions were forwarded to the Treasury agents in London, that if parties desired to deposit with them called bonds, or matured coupons, (which were practically the same as coin,) to the credit of persons in this country, to be applied in payment of money payable to the United States on or after the time of the maturity of the call of that date, they might receive the same, and telegraph, from time to time, the amount so received and the names of the parties to whose credit the deposits were made. The bonds and coupons were to be cancelled and forwarded to the Treasury Department at Wash- ington at the earliest possible moment after receipt. The account was not to be mingled in any way with that of the receipt of bonds and coupons in connection with other funding operations. The amounts payable on account of such deposits were to be accounted for and set- tled by the Treasurer of the United States, at Washington. At the same time, the parties who were understood to be employed by the British Government to make the transfer of the Geneva Award money were notified of these instructions, as were also the public through the journals of the day. Thereupon those parties commenced buying called bonds and matured coupons and turning them over to the Treasury agents in London. Before the expiration of three months, when the 6 award money became payable, they had deposited in the United States Treasury, either directly or through the London agency, the whole fifteen and a half million dollars, and had taken coin certificates for the payment of the same, in different sums, from time to time, as the deposits were made, instead of drawing the coin from the Treasury in payment of their bonds and coupons. On September 9, 1873, all these certificates were returned and can- celled, and one coin certificate for the full amount was issued to the depositors, and made payable to their order. This they indorsed " to the joint order of H. B. M. Minister or Charge d'Affaires at Washington, and Acting Cousul-General at New York." Those officers, Sir Edward Thornton, Minister, and Mr. Archibald, Consul-General, indorsed the same to the Honorable Hamilton Fish, Secretary of State, at the State t Department in Washington, in payment of the Geneva Award; and payment was thus consummated. Mr. Secretary Fish then indorsed and delivered this certificate to the Secretary of the Treasury, who issued to him therefor one five per cent, registered bond of the funded loan for the whole amount. There were no engraved bonds of that denomination, of course, and the one de- livered was elegantly written out with a pen, in exact similitude, orna- mentation and all, with the engraved bonds of the same loan. This bond has been photographed at the Treasury Department, and many copies have been called for and furnished to persons who desired to preserve them as curiosities connected with a great historical event the settlement of the "Alabama Claims."* Thus you will see that the whole business was done without the pay- ment of actual coin into the Treasury. The bonds and coupons in Europe were bought up with money paid there, not by the United States Government, and, together with those deposited here, were re- deemed without the payment of money, but by the issue of coin certi- ficates, which were paid or redeemed in a bond of the funded loan. The transaction was carried on so gradually, extending over a period of three months, that its effect upon exchange or business was too insignificant to attract notice of any kind, if, indeed, it had any effect whatever upon either the one or the other. As to the arrangements between the British Government and the parties whom it employed to make the transfer of the money from London to Washington, or among those parties themselves, the Treas- ury Department here had no concern and no knowledge. The United States employed nobody in the business outside of their own officers, * Copies of this bond aud the certificate of deposit, with the indorsements thereon, are given in Mr. Hackett's book. and they paid nothing to any one on account of it. They profited by the operation in funding fifteen and a half million dollars of bonds drawing six per cent, interest into a bond drawing only five per cent, interest, and this they did without paying commissions or incurring any expenses whatever. All these facts are matters of record in the Treasury Department, and I have stated only what can be found there by diligent search among the immense archives of that great Department. I am very respectfully and truly yours, &c., WILLIAM A. RICHARDSON. FRANK W. HACKETT, Esq., Washington, D. C. s a s i I 1 <&HIBRARY0 X % i c 1 1 fe a?f = 3 I s 3 S | 5 ^ -< rri . ^:lOS-ANCElfX> ^HIBRARY^ I! ^rflura^ 9