Write an essay about what you believe the profits from the Treasury bailout could have been used to finance.

timer Asked: Oct 21st, 2018
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Question Description

The United States Treasury was facing collapse as European banks exchanged U.S. paper money for gold during the Panic of 1893. John P. Morgan, a New York investment banker, came up with a plan to use an old Civil War statute that allowed Morgan and the various Rothchilds banks in Europe to sell 3.5 million ounces of gold directly to the U.S. Treasury in exchange for a 30-year bond issue. At that time the various Rothschild banks in Europe held the largest private fortune in the world.

On February 20, 1895, President Cleveland agreed to Morgan’s plan. The government would buy the gold coin from Morgan’s investment group at $17.80 per ounce, in exchange for $62.3 million worth of 30 year bonds paying 4%. Under the terms of the deal, Morgan and Rothschild purchased the bonds at $104.50. The bonds could be resold immediately. Morgan sold the bonds between $112.25 to $120.00 earning a profit of between $6 and $7 million. So strong was the demand for the bonds that they sold out in 22 minutes. What portion of the profit went to the Rothschilds is not known.
The price of gold at that time was around $18.60 per ounce. The Treasury enjoyed an immediate $3 million dollar profit by buying the gold at the discounted price offered by Morgan.

Research what the Rothschilds were involved with internationally at that time. Write an essay about what you believe the profits from the Treasury bailout could have been used to finance. Your essay needs to be in the 5-paragragh format.

Tutor Answer

School: University of Maryland


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