The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1854-07-31

upon IL Tor support It's CIRCULATION AZ present
exceeds fifty Thousand, and its subscribers are
TO be found in every part Of the world.
DsfAlcstions In wall Street.
The recent deve'opements Of defalcations and
frauds in those institutions which have their offices
in Wall street, naturally lead to inquiries respect
ing sim lar transactions In that noted locality In
former times. We are, therefore, induced to refer
TO the HIes Of the HERALD, and to draw upon our
own memories and other of information, for
the purpose Of presenting some notices Of the losses
and endorsements which the community have sus-
tanned, In consequence Of the indiscreton and bad
conduct Of those who have been entrusted with the
management Of our moneyed institutions, or have
abused the confidence placed in them by the public
or individuals in conducting financial operations
There can DO NO doubt that the secret history Of
our banks and other moneyed institutions, from
their first establishment to the present tine'
wonld reveal many scenes Of iniquity which
have been concealed from the public eye.
but which, from the lapse Of time and
other circumstances, must remain for ever IN.
knaxn. Enough, however, has been developed
frornthe exposure Of defalcations AMI failures Of
individuals, the misconduct Of officers Of corpora
tions, and the explosion of banks and other COM
panies from time to time, to form dark pic
ture In the financial and commercial history
of the city and State. However instructive or
interesting might be the lessons derived from afal
history Of even such facts a. have been made
known on this subject, 1t is not probable that any
one will attempt the task Of revivins "reminiscences
which must always be unpleasant many sufferers
by the events referred to.
Our object at present 10 to give sketch Of some
Of the defalcations and finafcial difficulties which
have occurred from time to time since the great era
ofspecuaton in the year 1886, and to show that the
transactions which have been considered most dis
graceful to the financial character Of Wall street,
were caused not 10 much from tho misfor.
tunes Of individuals in public trusts, as from
their own misconduct and violation ofthe confidence
placed in them, sometimes unwisely and improper
ly, by those having charge Of public institutions.
The spirit Of speculation which pervaded the
United States, TO degree before unparalleled in
the annals Of the country in 1885 and 1885. reached
its climax IN the autumn of 1886. The first indi-
cations Of rsvulsion were the circumstances which
attended the failure Of Rathbun, at Buffalo. His
speculations and operations had been carried on
for series Of years on scale Of magnitude which
had attracted Universal attention. and were brought
to close BY tho discovery, In the fall Of 1885, Of
an astounding system Of forgeries and frauds, the
losses by which tell in 3 great proportion on
individuals and banks in this city. From
that time check took place on specula-
ton, and confidence was gradually Withdrawn by
capitalists from those who had been engaged
in operations In real estate, Stocks and merchan-
disc. There was an immense debt due from this
country 10 Europe for excessive importations, and
the shipments Of specie during the winter Of 1867,
were large to meet balances. The money market
was tight during that winter, and it was evident
that great commercial crisis was approaching.
The crash commenced by the failure Of Herman &
Co., and other large houses in New Orleans, in the
months Of March and April, 1887. In two days the
failures in New Orleans amounted to more than
twentyseven millions Of dollars. These first fail.
ures were followed by the failure In Wall street Of
the Messrs. Joeephs then doing the largest foreign
and Southern exchange business Of any honse in
Wall street. Their failure was announced on the
18th March, and it was remarkable circumstance
that the walls Of their new banking house, then in
the course Of construction, had fallen only four
days before. Great alarm swas felt among the
financial and commercial n19h Of this city at the
threatening aspect Of ahArs, and at their request
Mr.. Biddle, (who was then President Of the United
States Bank, which had in 1886 received . charter
from the State Of Pennsylvania, with It's original
capital Of thirtyve millions,) cane to this city to
devise some plan Of relief to the money market.
Mr. Bidde agreed to send one million Of dollars 10
London, the New York banks to send the same
amount, on which to draw bills Of exchange The
United States Bank, through it's President, also
agreed to Issue bonds and post notes, payable In
Philadelphia ct nine and twelve months, in ex.
change for the notes Of our merchants. The Bank
Of America and Morris Canal Company also agreed
to issue their bonds, payable in London, for i've
millions Of dollars. But all these expedients proved
and series Of banking and commercial
failures followed that Of the Josephs in rapid sue
cession. The number Of heavy houses that failed
from the date Of their suspension until the Sd Of
May, was stated at two hundred and sixty, to say
nothing Of smaller ones. The Journal Of Commerce
stated the aggregate liabilities of the suspended
houses in April at more than fifty millions. On the
Sd and 4th Of May forty-two mercantile houses sus
ton, from November l, 1856, to May 10, 1887, was
one hundred and sixty eight.
During the first week in May, 1887, the Mechanics
Bank in this city was stated to be IN trouble and
on the 4h Of May the sudden death of the President
Of that institution, Mr.. Fleming, being announced,
q panic occurred among the billholders and depo-
sitors, causing quite run upon the bank. This
was soon quoted by the election Of Jacob Loriard,
large capitalist and stockholder as President Of
the bank, he offering to pledge his whole fortune to
redeem the bills of the bank. This affair was fol-
lowed BY run upon the Dry Dock Bank, and the
other city banks refusing to sustain that institution
1t was shut mp by decree Of the Vice Chancellor
on the Sth Of May. This circumstance, with the
stoppage Of three banks in BunAlo, caused general
run on all the city banks; and on the 10th, the
banks, by common consent, stopped payment In
zpccie. The example was followed by every bank
in the United States and in Canada. On the 10th
Of May the Legislature Of New York, then in ses
eiou named an act suthdriEin1 the suAneuginn Of