The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1873-09-19
Suspension OF jay Cooke & Co.-Ex-
element in Wall Street.

banking house of Jay Cooke and Company
In the circular issued by the firm it is stated
that the suspension was caused by advances
having been made to the Philadelphia
house OF the company and from
heavy drain on the deposits here
This, it is said, was the immediate
cause. But what was the remote cause, should
1t be more than a temporary suspension?
Temporary or not, however, the probability is
that there are causes of general character,
and dating back some time, affecting oil the
establishments, branches and business of the
Cookies. The despatch from Washington an
nouncing, Immediately after the suspension Of
the bank here, that the banking house of
Henry d. Cooke & Co. had closed doors and
suspended at noon, gives q serious aspect to
the matter, and leads to the inference that
previous circumstances have been operating
to produce the catastrophe. The pressure
must have been great to have caused such
instant action of the First National Bank of
Washington; for, as the despatch says, parties
were at the counter drawing out funds when
the order was given to close the doors and
action after the short run upon the bank
indicated that the firm was in bad condition.
The Treasury Department, if not alarmed,
has taken the precaution to prevent losses or
discredt from its connection with the Cooke
houses The United States Treasurer has
ordered the payment of gold drafts on Jay
Cooke McCulloch & Co., London, to be
stopped. 1t is to be hoped the government is
not in any way involved and will not sustain
any loss. We are aware that the Cooke firm
in this country and Cooke & McCulloch,
Of London, have had the handling of
vast amounts of government money and
securities. They have, as the famous Syndi-
cate, or the most important part of it, had
great deal to do with negotiating the loans, as
they are called, for the funding Of the new
five per cents of the national debt; have had
hand, also, it is said, in the fifteen million
five hundred thousand Alabama claims pay
ment by England, and have been the financial
agents or medium of the Treasury Depart
ment in other important transactions. If,
therefore, the government should escape
loss in this tremendous crash it will
be fortunate. That we have yet
to learn Or if the London house can stand
the shock that will be as gratifying as sur
prising 1t is but fair to say that the firm
here asserts that the house of jay Cooke,
McCulloch l. Co. In London is entirely sep
arate from the houses in this country, that it
is thoroughly solvent and that it has large
cash surplus on hand. We hope it is SO, but |
must not forget either the business relations
existing between that firm and those here,
or the motive to put forth the most rose
colored view possible of the situation of affairs
More satisfactory than anything the suspended
banks may say is the authorized announcement,
according to the Washington dispatches,
of the Treasury Department that the banking
house of Jay Cooke, McCulloch & Co., does
not owe the government q cent but that, on
the contrary, it overpaid in the last settlement
This statement is made only as to the house
abroad, and 80 far ought to prevent any ill
effect upon the credit of the government or
government securities. We hope it may turn
out that neither the city of Washington, with
the finances and government of which Henry
d. Cooke had so much to do, nor the Treasury |
Department, may suffer from the suspension of
the houses at home
Many rumors are afloat as to the |
amount of the liabilities of the Cooke |
banks, some stating them to be twenty
millions. some more, and others less. 1t
is known their transactions were on large |
scale, but how much they owe or will be able |
to pay is not yet ascertained. Hopes are held
out, IS usual in such cases, to depositors and |
other creditors. Though one of their banks
may say it was compelled to suspend in
consequence of the demands of another
upon it, there is no doubt they were all mixed |
up in the same difficulty, and that was prin-
cipally the embarrassment caused by the
Northern Pacific Railroad. 1t was apparent
to shrewd fnanciers that the long continued
and widespread advertisements of the bonds
of that railroad, without the expected result,
would impose such load upon the shoulders
of these bankers as would be difficult to bear.
This Northern Pacific Railroad was stipend
Gus speculation. The Cookies were either short
sighted in not seeing the doubtful character
of the enterprise and the burden they would
have to bear, or they calculated upon tempt |
ing the market and public to take the load off
their hands by extensive advertising and the
prestige of their financial standing. AS to
the disturbances of the stock or money market,
or the alleged unusual drafts Of the
depositors, having much to do with
their suspension, seems to us doubtful.
There has been no such crisis calculated to
shake any great, substantial and well man
aged bank. How far these suspensions will
affect other banks, stock-jobbing firms or the
market, we have yet to see. The panic re-
sulting from them, as on all such like occa-
sions, has Frustrated some spectators and
firms. Richard Schell was one of the
,r;n4;.na and the firm of Robinson Il