The defeat at Bull Run put a very serious strain on the credit of the United States, and the forced sale of securities in a foreign market would have been disastrous to the future conduct of the war. In the dilemma in which he was placed, Secretary Chase paid a visit to New York, where Cisco, the assistant treasurer, invited the prominent financial authorities to meet him for consultation. Chase frankly stated the serious nature of the situation, and requested assistance and advice. From the standpoint of policy this was a wise measure, since previous to this time the New York bankers had held somewhat aloof from the operations of the federal treasury. Their prompt support at this crisis is to their perpetual credit, for although they largely profited in the end by this government connection, at the time of the operation the transactions were of daring boldness. The banks realized that without a firm government their own operations were imperiled, and thus they risked their all to support the government in its crisis.
At the first conference George E. Coe, president of the Exchange Bank, proposed an association to subscribe for the government loan. A committee appointed to develop a plan reported on August 15 for thirty-nine New York banks. Representatives from Boston and Philadelphia were likewise present, and the loan was apportioned among the three cities in accordance with the bank capital of each; that is, seventy per cent was to come from New York, twenty per cent from Boston, and ten per cent from Philadelphia. The association thus formed agreed to take immediately $50,000,000 of treasury bonds payable in three years with interest at seven and three-tenths per cent. This rate, representing a payment of two cents a day on each one hundred dollars loaned, had been adopted by Secretary Chase in the hope of popularizing the bonds with the people. The banks composing the association were to pay over to the sub-treasuries of the three cities in specie ten per cent of the amount subscribed; the remainder was to be placed to the credit of the United States upon the books of the subscribing institutions. Meanwhile the bonds were to be offered to the people, both by the banks and the sub-treasurers, and no other United States securities were to be sold, except in Europe, while these subscriptions were being solicited. The associated banks also agreed to float a similar loan of $50,000,000 in October--if it had not by that time been taken by popular subscription--and another $50,000,000 in December.