This company had already bid for $5,000,000 of bonds and had been awarded $2,000,000 of bonds at a higher price than the bid of Morgan & Co., and had paid for the bonds and received them. They were entirely responsible and able to carry out the bid which they had made, and yet the Secretary of the Treasury chose to refuse a bid of 1141⁄2 cents on the dollar for this four and a half million of bonds and turned them over to the Morgan syndicate for 110.7, thus apparently, openly, intentionally, taking out of the pockets of the people $190,000 to turn over to this syndicate of bankers already enormously enriched at the expense of the people.

MR. HILL: Will the Senator allow me? What would the Senator have had the Secretary of the Treasury do after the forfeiture of Graves's bid?

MR. PETTIGREW: I would have had him do what any individual would have done.

MR. HILL: What is that?

MR. PETTIGREW: I would have sold them at the highest attainable price.

MR. HILL: Would you have advertised them, or would you have accepted a private bid?

MR. PETTIGREW: He should properly advertise them, and if he did not advertise them he should have accepted the best bid which he could get.

MR. HILL: And not accept any of the bids already in?

MR. PETTIGREW: No, sir; he should have done exactly what an individual would have done, and he would have protected the Treasury thereby.

MR. HILL: The Senator, then, would not have accepted the next highest bid?

MR. PETTIGREW: No, sir.

MR. HILL: The Senator knows the fact, does he not, that the bid of Morgan & Co. was the next highest bid?

MR. PETTIGREW: I think likely the bid of Morgan & Co. was the next highest bid.

MR. HILL: Is there any doubt about it in the Senator's mind?

MR. PETTIGREW: I have this to say in regard to that point:

If their bid was the next highest bid, the Secretary of the Treasury was not bound to give the bonds to them, nor would they have accepted the bonds if the price in the market that day had been below 110.7. They would have laughed at the Secretary of the Treasury if he had offered the bonds to them if the market price on that day had been lower than their bid. But with a profit of $190,000 in the transaction, of course Morgan & Co. took the bonds.

MR. HILL: What would the Senator have said as to this state of facts, which might or might not have occurred, depending on the market: If, after the forfeiture of Graves's bid, the bonds had gone down and the government had refused to accept the bid of Morgan & Co. and had placed the bonds on the market again and the bonds had not realized the amount of the Morgan bid? Where, then, would the Secretary of the Treasury have been placed?

If the bonds had gone below 110.7 in the market the Morgan syndicate would have refused to accept them, and would have said that their contract was closed when they received the $33,000,000 of bonds. The Senator knows that very well.

If the market price of the bonds had gone below Morgan's bid on the date when Graves defaulted, and Morgan was still anxious to take them at his price, of course it would have been the duty of the Secretary to have accepted it, for that would be carrying out what I believe proper-that the Secretary should have obtained the best possible price for the bonds in order to protect the interests of the people of the United States, whose servant he was.

MR. STEWART: In the proposal the Secretary reserved. the right to reject any and all bids, and he had a perfect right to sell the bonds as he pleased under that reservation. He was not bound when he was offered 114 to take 110 or III. Certainly not, because he had the absolute power reserved to himself.

MR. PETTIGREW: This seems to have been a transaction where there was a partnership as to profit between the Secretary and a syndicate of bankers and the interest of the people of the United States was entirely left out of the reckoning. That seems to have been the sum and substance and gist of the whole transaction, rotten and dishonest and corrupt to the core. It seems to me it is entirely proper and timely for the Senate of the United States thoroughly to investigate the transaction.

Here is a telegram from the Morgan syndicate sent on the 21st day of December to the President and Secretary of the Treasury, telling the government officials that the gold cannot be procured in Europe because the credit of the United States is so bad and that if their bid of 10434 is not accepted at once they will withdraw the bid and refuse to furnish the gold in the United States; knowing as they did, and as the Secretary knew, that all the gold not already in the Treasury had been thoroughly cornered by Morgan and the banks associated with him.

The Secretary of the Treasury could not have been ignorant of what Morgan was doing, because Morgan came to Washington—he says on the invitation of the President, which the President denies, but admits the interview when the negotiation with the syndicate took place. Morgan immediately after that interview formed his syndicate, described the bonds as running twenty-nine years, and assumed that the price would be 10434. The arrangements that Morgan was making with the syndicate were public, and it was understood at the time that the gold in the country had been pooled or cornered for the purpose of purchasing the $100,000,000 of bonds by the syndicate. Under these circumstances the threat that they would deprive the government of the means of obtaining gold was most significant.

MR. HILL: I understood the Senator to speak of what Morgan & Co. would have done if the bonds had diminished in market value. I understood the Senator to say that they would

not then have insisted upon them taking the bonds under their bid. Is that correct?

Of course I am not authorized to speak for Morgan & Co., and I assume the Senator from South Dakota is not authorized to speak for them. Therefore I ask him whether his argument comes down to this, that whether the Secretary of the Treasury should have given the Graves bonds to the next highest bidder depends upon the fact as to what the market value of the bonds was. In other words, if the market value the next day was way below the bid, then he should have insisted upon Morgan & Co. taking the bonds, but if it was higher, then he should not have let them have the bonds. That is what I complain of.

MR. PETTIGREW: The Senator from New York seems determined-I do not know that he is trying to misrepresent me—not to understand what I say. I simply say the Secretary of the Treasury was bound to get the best price he could get for the bonds after they were not taken by the original bidders, and that Morgan & Co. were not bound in law to take them. Their transaction was closed. They had taken the bonds that were not awarded to other people.

MR. HILL: Then let me see if I understand the Senator, for I am endeavoring to do so in good faith.

In case the bonds decreased in value, the Senator says that the Secretary of the Treasury was not bound in law, and of course, then, he was not bound in fact, to compel Morgan & Co. to take the bonds. Now, what would he have done in case the bonds went up in value?

MR. PETTIGREW: I said I would have sold the bonds at the highest obtainable price. It is possible

MR. HILL: Then, in either event, no matter whether the bonds went below the Morgan bid or beyond and higher than the Morgan bid, the Senator would have sold them to the highest bidder. He would have made a new advertisement.

MR. PETTIGREW: I will say further, in reply to the Sena

CHAPTER XIX

THE TRUSTS

The Senate, as in Committee of the Whole, having under consideration the bill (H. R. 379) to provide revenue for the Government and to encourage the industries of the United States

MR

R. PRESIDENT:1 I do not care to address myself to the pending amendment, but I wish to submit some remarks in regard to the amendment which I offered on the 25th of May, providing that all articles the subject of a trust shall be admitted free of duty.

Mr. President, our civilization is founded upon the theory of evolution, upon the doctrine of the survival of the fittest, upon the law of competition, and is opposed to socialism. We say, as far as is consistent with the existence of protection under the law, Let man, untrammeled and unrestrained, work out his destiny. The result of this theory in the past was feudalism, or the supremacy of brute strength and physical courage, and its resulting paternalism. But feudalism, by the operation of the law of competition and evolution, destroyed itself by the subjugation of the weaker by the stronger and the creation of monarchical forms of government in its place.

To-day, under the operation of this law of competition. we are drifting toward socialism on the one side and plutocracy on the other. It is for us to say whether we will stop the march of events in their course, and make this again a gov ernment of the people, by the people, and for the people, or allow the present to crystallize and thus continue to be what we now are a government of the trusts, by the trusts, and for the trusts a plutocracy of artificial persons, sustained by bribery. In the past all plutocracies have been of natural 1. Speech in the Senate June 14-15, 1899.