The Leavenworth weekly times. [volume] (Leavenworth, Kan.) 1870-1880, 1873-10-02
PHILADELPHIA.
Immediate Causes of Jay Cooke &
Co.'S Failure.
Something About. Northern Pa
cific Bonds.
PHILADELPHIA, Sept. %, 1873.

PHILADELPHIA, Sept. %, 1873.
EdiO, Tams:
"Ail Is now quiet along the Barbary
coast" and business has again settled down
into lis regular channel. The banking
house Of Jay Cooke & Co. remains closed
tight to outsiders, while the clerks on the in
side are busy engaged in the labor of bling
ing order out of chaos. The failure, it IL
now generally understood, comes from large
advances made On the North Pacific Rail-
road bonds and other securities not immedi-
ately marketable. The firm forgot that
trading legitimately on the credit Of the
United States was quite different thing
from building railroad through a wilder
Ness on the credit Of private firm. 1t was
one thing to sell United States 5-2O's and
1905 and quite another to dispose of North
ern Paciics on the grand scale they had un-
dertaken to do. Ye. it is we'll known that
Mr.. Jay Cooke has been the life OF this en-
terprise, and his zeal. his efforts and his
pledge of payment have kept it alive and
given to its securities all the credit that they
have obtained. Bv the steady sale of its
bonds he has been able to borrow most,
If no. all the means necessary to
NEE, the interest as it has periodically
accrued. The incomplete road has not been
in condition 10 earn much, and the land sales
have not realized any very considerable sum
above expenses. All that the bonded credi-
tors have received in interest has come from
their own money, paid in on the purchase Of
their bonds. In the absence Of earnings
credit has been maintained and interest paid
from further borrowings. In the failure OF
the firm having the bonds and the debt arts
ing from them in charge, further direct bor-
rowing Of money and further sales of bonds
at former prices, if al any price, is at an end,
and it is greatly to be lamen,ed that their
srea. patron il without power or credit to
give them the least vitality. The next semi
annual period for the payment of the cOu-
pons on the bones of the North Pacific Rail-
road Company will lie on the lat Of Janu-
airy. Twenty-Five millions of these bonds
have Teen sold. They are largely in the
hands Of comparatively poor people, ard the
80 per cent. annual interest on them has
beea SO positively promised as TO be by most
holders confidently relied upon.
1t is known the house always carried a
large line OF deposits. but at present the
amount held at all the branches, New York,
Philadelphia, and Washington, it il estimat-
Ell, is considerably within five millions OF
dollars. 1t is hardly likely the famous
house will ever again command the prestige
it once enjoyed. All the waters n the ocean
will not wash out from the ,.-cu'cheon of the
firm the stain of suspension. A great pow
er in the land had become the house of Jay
Cooke e. Co., ard when it went down last
Thursday, there fell financial giant.
While the excitement in reference TO the
suspension of Jay Cooke G Co. was at its
height, it was announced that the well
known house of +. W. Clark & Co had sus-
pended, in consequence, as it was avowed,
of unsusual demand made upon them for the
return of deposits The head Of this house
was also Vice President of the Fidelity
Truat Company, and borrower of its funds
to the amour, OF 100000. Jay Cooke was
also borrower to the tune of S25 900. But
both cases ample collateral security was de-
posted to secure the repayment anu protect
the company from the possible
ity OF loss. These facts be-
coming known were sufficient TO cause
a run on the Fidelity Insurance, Trust and
Safe Deposit Company" This company
has general capital of 81 ,O00, 600 full paid,
and also a trust capital of the same amount
subscribed. and S2.5 900 paid in. The run
on the institution continued all day Friday,
and $500, 600 in cash and $3.50, 900 in specie
deposits were Withdrawn. On Saturday,
$500. 900 more cash was paid ont. Yet the
run upon the Fidelity company i, without
serious results. The officers have been put
10 some inconvenience, but nobody has lest
4 dollar, and now that the furry il over the
creditors are further assured nv the evidence
furnished of the compsny's strength, and
will be all the better satisfied for the future.
The Union Banking Company. and the
Citizens Bank, have closed their doors, or
were not trsnsacting business yesterday or
to-day. They are small State institutions
simply Offices of discount and deposit. and
whether they pay or not il OF little conse-
guerce rs affecting general credit.
During the Two days excitement, some
hall dozen private bankers and okers sus-
pended. They were all more or less dealers
in railroad bonds, some of them Of the Wild
cat order. TIE most of them gave notice of
early resumption, and that they have no in
,en;ion OF going into bankruptcy. The
matter may not he entirely optional with
themselves. Judge DIummOnd, of the
United States Circuit Court Of Illinois, has
decided that any man who, without any le-
gal reason, refuses payment on his paper for
two weeks, may be, under the law, adiudeed
bankrupt. He must satisfy the court that
he is justified ia Withholding payment. His
mere caprice or unwillingness to pay will
not prevent his being sdjudged insolvent if
the refusal TO honor his promise to redeem
extends over fourteen davs.
Yours,