New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-08-12
MANUFACTURED ACCOMMODATION PAPER

BILLS DRAWN BY A CONFIDENTIAL CLERK AND SOLD
BY THIRD PERsONs-opI>iDNs Os PROMINENT
BANKERS on THE OPERATION.
Certain financial and legal circles were conslera-
bly, agated yesterday by rumor which prevailed
during business hours relative to some OF the trans
actions of the late firm Of Duncan, Sherman " 20.
The story was of such n remarkable character
that few merchants and bankers accepted 1t az
true and il with difficulty it could be fully cor
roborated. Finally application to the persons im-
mediately concerned was made, and the story was
confirmed; but it will be seen the firm and ifs
agents look upon the transactions III dlherehs
light from that in which bankers generally regard II.
The story as il reached The TRIBUNE was to tho
following effect: For long time past the condition
of Duncan, Sherman d Co. has been SO involved
that the firm has been forced to raise large loans
upon accommodation paper" some of Which was
apparently of the hmsiest character. The term
accommodation paper" is usually applied 10 paper
in the shape Of drafts drawn by reputable house
upon another for the benefit of either, although the
acceptOr is usually looked upon az the one who -
finally to pay it. But instead of making such
paper through the aid of friendly honses, Duncan,
Sherman & Co. resorted to the simpler expe'lient
of having drafts made upon them by one of their
confidential clerks. which they accepted and sold
through third persons. The clerk who was thus em-
pOyed was A. l.. Burgess and he IL still IN the en-
poymcnt of the house, OF rather of its Receiver 10
was reported that the drafts were drawn under va
rious dates as from Southern cities, and were not
in all cases dated in Ncw-York. No confirmation
of this report could be obtained, and It
il probably untrue, since Mr. Duncan and Mr.
BURGESS both claim that there was no deception
practiced in the matter. The note brokers through
whom the acceptances were negotiated at various
banks were reported to be o. NJ. Bogart " Go. of
No. 3 Nassau-st.; and on inquiry this statement was
found be correct The names Of the several banks
which held this paper were also given 10 IHs
TRIBUNE, and were visited by reporters,
but the officers in each instance declined
to admit that the rumors were true IL
was ascertained however, that the Fourfh
National held about $50 900 Of the paper, but it 10
known that the bank has been secured together
with the Bank of the State of NewYork. Ii was
generally understood, although there is no proof
that either Duncan Sherman d Co. or o. NJ Bcgart
e. Co. so represented that these drafts were drawn
against consignments of cotton, and III buying tho
paper the banks labored under this deiusion
Bankers and merchants of tie highest standing,
of whom inquiry was made yesterday, were naturally
reluctant to characterize The transactions AZ they
were detailed to them; and none OF those VINO
spoke freely were willing TO have their names pub
lshed in criticism of their fallen neighbors, foR
whom great sympathy is felt by the street lead
ing banker whose house stands high in public
credit, and who had heard of the report said he
could hardly suppose such transaction possible on
the part of firm of any standing. lie did noe
credit that such transaction could be traced
TO Duncan Sherman Il Co., for it was, he did not
hesitate 10 add the sharpest kind OF sharp galne
lie added further that in all cases acceptances OF the
kind described were supposed TO be on account OK
some consignments generally from shippers in the
South OF West OF at a distance and paper
in that form was bought on the as
sumption that it represented some regular
mercantile transaction. Advances To shippers
in such cases are made daily by the best banks.
Where the person making the draft Is not well
known a bill of ladng is required TO be shown as
voucher for the regularity OF the transaction, but
with regular correspondents business houses in dis
tant cities which are well known and considered
responsible the hill of lading is sometimes omitted
IL the person OF firm accepting the draft 10
not able or does not wish to advance
tbe amount il is sold on the street otherwise dis
posed Of While the purchasers of such acceptances
look principally to the indorser for their security.
vet no one would think Of buying such paper If It
were known that it had been manufactured for the
occasion.
The Presidents Of several prominent banks who
were called upon did not Observation-Disclosures
their reluctance to criticise Duncan, Sherman Co.
TO declare the transaction to be irregular, and
some expressed the opinion that If the dates were
fictitious or representations had been made that the
drafts covered shipments OF cotton, gram, or OIL
then the negotiation was fraudulent.
The statement was invariably made by the bank
ers referred TO that they had never heard that Dun
4 =, b,1 r.ran cd mar for ~ IN
ket in this way and that bankers would not
delay a moment in refusing to purchase tue OBJ
legations of any firm that resOrted 10 such
means of raising money.
The President of the Fourth National Bank stated
that his bank had had no direct transactions with
the firm Of Duncan, Sherman n Co., and that's
was not now holding $4,000 Of that firms paper as
had been stated, but he declined TO say what
amount the bank did hold. While he had no
positive information upon the subject OF Duncan.
Sherman Il Co.'s liabilities, he said he thought
that the paper held by their creditors IN this city
would amount to about S1.OOO,OOO. He had no
knowledge of their ever having issued acceptances
manufactured in their Office by their clerks and
could not realize that such was the fact
Information was obtained last evening from .
prominent banker in this city that it became known
to two or three persons who had been in the habitof
buying the acceptances Of Duncan, Sherman & Co.,
that the paper Of tho firm was being manufactured
with the assistance Of clerk and these persons at
once declined to have anything more to do with the
paper, not regarding it as safe nor the transac-
ton az legitimate. This gentleman also stated
that o large amount Of these acceptsnces had been
sold in Providence r. L. the agent there represent
ing that they were based upon merchandise con.
signed to the firm in New-York. As the family OF
Mr.. Duncan has been long and favorahP