The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1875-07-28

house of Duncan, Sherman 4 Co., yesterday,
created great deal of surprise and some dis
may. 1t was an event entirely unexpected.
Up to the hour when the doors of the house
were closed there had been scarcely a whis-
per Of impending misfortune. Not only was
the solvency Of the bankers unquestioned, but
SO great was the public faith in their ability
to meet oil their obligations that they are
justified in their boast of an unexampled credit
that was unimpaired up to the very moment
when they felt compelled to go into liquida-
ton. In spite of this unusual confidence
and of credit that could only be fifty
described as unexampled, suspension was In
evitable. Although it came as surprise to the
public its necessity was not SO sudden shock
to the principals, if We may judge from their
published card. "a careful examination OF
our business and AFFAIRS" they say, 'shows
us most unexpectedly, through losses
and misfortunes, our available assets
are SO much reduced that we are
compelled to go into liquidation But
they had time TO arrange everything for the
evil day that, sooner or later, was destined to
| overtake them, and this was accomplished
with secrecy that has no parallel in fnan-
cal history. All this adds painful and pc
culiar interest to misfortune that all will
unite in regretting, and lifts the failure out of
the ordinary category of commercial disas-
ters.
When we look about us for the cause of the
downfall Of this house we find the subject to
be one of unusual difficulty. In this country
our business prospects had only begun to
brighten. prolific yield at home and the
promise Of an active demand abroad were
teaching US to expect from our wheat crop a
revival of trade. The corn and cotton crops
also give excellent promise There is no I'M
usual stringency in the money market
and 70 fears have been entertained
of commercial crisis. In Europe,
however, and especially in England, business
has lately presented gloomy outlook. Many
Of the banks and some of the greatest COM
mercisl houses have been overtrading. The
depression in the iron trade caused the
downfall of the Aberdare Company. Another
class of mistortunes led to the suspension of
Alexander Collie & Co., and many houses al
most as prominent were dragged down with
them. The banks narrowly escaped, and
escaped only on the ground of their
ability to withstand misfortune. 1t
is now believed that the difficulties
in their affairs and all the real dangers of the
situation have been successfully tided over.
Yesterday, however, there was story of the
failure of the Union Bank, of London. Had
hoap frua hov hoG in
ready explanation of the suspension Of Dun
can, Sherman & Co. With heavy advances
made upon both grain and cotton, and with
immense liabilities constantly pressing them
from all parts of the world, it would be simply |
impossible for the New York house to go on
in the face of the London disaster 1t
is fortunate for the commercial world that
story which received universal credence early
in the day yesterday is proved to be without
foundation; but had it been true it would not
only have fully explained the event we now
deplore, but disarmed criticism for the sus-
pended bankers. AS it is we cannot look
upon their misfortune with entire COM
plscency. In any event, or from whatever
the cause, the failure of house like that
of Duncan, Sherman & Co. is to be deplored.
If overtrading is the cause of the disaster the
event is one to be regretted especially on that
account This was a banking house that
was eminently credit house. Their
drafts were cash all over the world, and Amer
lean tourists and travellers carried their let
tiers of credit everywhere. Their boast of
unexampled credit was true only because
Iol, tbok
such q house to indulge in overtrading in any
direction 1t was not expected that they
could be slong" or "short" in anything, or
that their dealings either at home or abroad,
could affect their solvency. The fact of their
failure in itself apparently tells a different
story. Their losses and misfortunes which
came to them SO Unexpectedly could have
come in no other way than through
speculation. 1t is because Of this fact, neces-
sary upon every hypothesis except that they
were dragged down by the ruin of their cor
respondents, that the failure is 60 complete
surprise, and the wonder is all the greater be-
cause the crash came at q time of business
serenity, when the prospects for the future
were not only bright but Frightening. In
this respect, however, their story is only the
old, sad story common TO business misfor-
tune in every age and country, and we can
scarcely expect that the lesson of their failure
will be less true or more regarded in the fu-
ture than it has been in the past.
The effect of the failure is problem not
less difficult than its cause. AS it came
almost without pre- monition, SO we trust it
will not be productive of any widespread
alarm or other evil consequences. The banks,
feeble as they are in themselves, cannot be
impaired by the downfall Of these bankers.
! Duncan, Sherman & Co. in no way assisted
in sustaining the great fabric of the national
credit except as all reputable American