New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1878-01-01
DETAILS OF BONNER'S TRANSACTIONS.

DETAILS OF BONNERS TRANSACTIONS.
INDIGNATION AND EXCITEMENT IN THE STREET
OVER THE RE-HYPOTHECATION OF SECURITIES
EyTENT AND METHODS OF TIE LOANS-BoNNERS
FLIGHT.
Wall Street was excited yesterday morning by the
announcement, soon after 10 o'clock, that John
Bonner & Co., bankers and brokers, at No. 81
Broad-st had failed. The statement which was
sent TO the president of the Stock Exchange soon
after it opened was as follows:
NEw-YoRK Dec. 81. l877-lO o'clock. n. m
To ne Tres,deth and Members OF me STOCK ETchdige,
GENTLEMrS: We regret to announce our inability 70
meet our engagements We have appointed Mr.. Burr W.
Griswold the lrm Oh Blachiord, seward, 'iriswod
DaCosta assignee who Is preDarinG statement or
our affairs. Yours, respectfully, JOIN BONNER " CO.
The signature of the firm was in the handwriting
of Mr.. Scweil, Mr. Bonner's partner. and 1t was
soon learned that Bonner hal not visited his office
during the morning. Mr. Bonner bad been lead
ing lender of money on the Stock Exchange ana
his office was quickly thronged by anxious brokers
seeking information To the condition OF their
securities. Mr. GIiSwold was IN charge assisted by
his partner and counsel in the case. Clarence A.
Seward. These gentlemen slated that there were
no assets on hand and that the securities had
been re hypothccated for loans to Bonner
q Co. II was in other words the Nctter 60.
case over again in an aggravated form. A. this be
Tins wa. intense. Mr. Bonner had been
well known for years to the members oi the Stock
Exchange. AID of late he had male
a speciality OF accommodating borrowers. IN most
cases loaning sums ranging from $1,000 To $4,000.
In this way he secured large quantity oi STOCKS
and bonds on wide margins, which he repcdGed for
larrcr sums-in numerous instances for nearly the
full market yaac OF the securities
News Of Bonner & Co.'S faUrc was followed IN a
short time bv the announcement that the Bankers
and Brokers Association. at 20. IS Broad-st, had
suspended. NJ. Bonner was the president. and the
principal owner of the stock. H. controlled the as
ISOLATION entirely
Before l o'clock sales at the stock Exchange be-
gan to be- made under the rule and Turing the
morning there were thus bought in for the account
Of John Bonner Il Co., =, 900 sharesDcawArc, Lack
awanna and Western, 900 Lake Shore, 100 Morris
! and Essex. 100 Panama and 100 Pacific Mail, and
| there were sold ont in the same way 600 western
Union l. oC / ~, Shor.. 100 Northwest preferred
! 600 Ncw-Yorll Ce tIal, 900 Michigan Central, 300
| Northwest common, 200 81 Paul common, and 2,lOO
shares II. Paul preferred,
At the Office OF the firm it was stated that II W ala
| be impossible to giye the names of tie brokers
whose securities had been taken and replaced by
! Bonner. The amount Of these securities, MI
! seward SAID. from tin best information that he
| had been able to obtain. would not exceed
! - 0OO.OJO, aaG he thought 1t woad he
| somewhat less chan thaf sum- The loss
/ 10 The brokers' would not exceed 500, 0oO. Bonner
/ {. Co. hal not given any orders on the persons
holding tnc coatcrll- before they ma lie their assign
| mrnt and consequently return OF Che securities
could be made to the original owEcrs uil after he
accounts had been examined and Che assignee had
made report. In this way large amoun, OF secu-
! rites j. temporarily locked up.
Bonner bought all the stock recently offered of the
| Bankers and Brokers Association, bidding up the
| price to ~. This stock WAS paid for ont OF tie
| funds OF the Association, ana then the stock W az
mixed with other securities, and the whole
! placed among the banks and trust companies
| a. cnlatrrals for new loans to Bonner.
! With only one or two EXCEPTIONS winch
| were investigated yesterday, more or less
of thc Associations stock was found hyputhc, ated
| at about 10 with each corporation and person from
whom Bonner obtained loans 1t appears to have
been Bonncrs object to secure, If possible, the full
,auc of the coacTas obtained from other brokers,
using 'c associations stock ~ margin. As tie loans
to brokers were often much less than the market value
of the securities pledged the nsc Of larger SUN OF
/ money was thus obtained ley this method. In some
cases il is stated Bonner rrplcdsed the securities
! for the amount originally loaned, the transaction
being made apparently for the purpose OF creating
the impression that he controlled large amount OF
! capital.
The Banker and Brokers' ASso aion was organ
| lied in sG7 by members OF the Stock Exchange ~
! a clearing house Ii was conducted IN this manner
! for about two years. The charter was very com
| prehcnsiyo. The Associat ion had the pow
| crs of clearing house, bank and
a trust company. and could also do any
thing that an individual Ilay do in business, and
charge any rate of percentage. Its capital was
| 5000. Co., all paid up, each member of the stock
Exchange taking - 900. One clause OF Tie chart,r
+ provided that the stockholders OF sad ASs0"ia-
tioa shall To- Severely liable for all dents
| and liabilities OF said Association to amount
| email to the amount of stock held
| and Owned by ,hem respectively, which liabilities
shall Ice in addition to their liabilities to pay in full
tie stock subscribed for or purchased by theL' The
incorporators were David Groe,heck, Osslan ID. Ash
| ley. Gavin H. Watson and Jonn Simpkns.
After abont two years il wa found that the Ass0
| ciation AZ a clearing house cumbrous and 1t
was feared that II would become anagOnlstIc to the
| interests Of the Stock Exchange. Ii then
passed into the hands Of private persons John
| Bonner became of the trustees, and was
finally elected president. The rules of the Associa
ton provided for nine eleven trustees. Ii was
| ported TO have been conducted on the principles of
| the charter until Black Friday. After that John
| Bonner is said to have managed the Association for
| his own personal interests. lie used the name
of the Association to support his credit and II vas
source of great strength to him long after 1t ceased
10 be what the public considered it. The secretary.
| j. L. Brow nell retired from the Association four
years ago. While connected with 1t he never did
| more than to sign certificates of stock and other
papers presented by the president OF the real work
| Ipgs of the Association he knew nothing.
| Al the Office No. 10 Broad-st., yesterday. the