Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1890-06-08
A BIG CRASH OF '73.
Story of the Once Powerful Banking
House of Jay Cooke & Co.
FINAL SETTLEMENT THIS MONTH.
ALI the Members of the Firm Have Since
Made Themselves Rich.
HOW Mr.. COOKE WON A NEW FORTUNE
rwR1rrEN FOR THE DISPATCH.

banking mouse OF Jay Oooke ~ So' VIII
soon be obliterated. For 16 years the sue
cessive trustees of the estate in bankruptcy
have nursed the property, and from time TO
time sold off portions and declared dlVl-
dend, and the final sale will soon be held and
the final dividend declared. j. Horace
Harding, the present trustee, Will sell at
auction at Thomas auction rooms, In PnIIa-
delphia, on June 10 and 20, all the remain
ing assets of the estate. These are some
$4,000 acres of land in North Dakota, some
iron land on Lake Champlain, detached
pieces of real estate in Minnesota, Nebraska
and other States and q fine collection of
stocks and bonds of defunct railroads and
other corporations. The whole property
NAV realize 500, 900 or $3.50. 600, which will
be distributed among the 200 creditors of
the estate, and then the books will be closed
and the accounts finally audited and settled
by the court.
In the history of banking in this country
there never was a house whose interests
were so vast and whose ramlhcations were
80 extensive as the firm of Jay Cooke & Go.
The parent house was in Philadelphia, with
branches in New York and Washington,
and an allied firm, Jay Cooke, McCulloch
& Co., in London. The firm had 2, 200
agents and correspondents in this country,
almost every village being represented.
During the war over 81, 900, 900, 900 OF Gov
ernment bonds were sold bv the firm, and
the head OF the house possessed the entire
confidence of the President and his Cabinet.
USING GOVERNMENT FUNDS.
So profound was this faith that the Secre-
tary of the Treasury went to lengths with
MIR. Cooke which no secretary before or
since ever ventured, and gave a citizen au-
u 4laf funds of fhe limited States
in the bond market. Early on the morning
after the assassination of President Lincoln
Mr.. Cooke telegraphed to the Secretary that
Government bonds must be sustained In the
market at all hazards, and he desired the
financial support of the United States in
keeping up the price. The Secretary tele-
graphed back the desired authority, and
Mr. Cooke sent word to all his agents
throughout the country to take all the Gov
ernments that were offered at e above the
closing price the previous night. He bought
millions of bonds that day, and drew money
from the New York and Philadelphia sub
treasures to pay for them at night. The
next day the price was advanced another
eighth, and more bonds were bought, but
the third day the runswas over.
It was the Franco-Prusslan war, and not
the panic OF 1873, that broke the house of
jay Cooke & Co. After our War OF the
Rebellion the firm became interested in the
Northern Pacific Railroad and undertook
10 build the road on bonds. The original
subscription books of the Northern Pacific
Railroad Company show that member OF
the pool received seven-thirty bonds for the
iull amount of his subscription, while the
stock was thrown in as a bonus. With the
wonderful machinery he had built up to
foat the Government loans still in exist
euce. Mr. Cooke found no difficulty in
bringing the Northern Pacific project be-
fore the people and getting them to SUBJ
scribe.
TRIED TO FLOAT BONDS HIMSELF.
He also entered into negotiations with
foreign bankers and had concluded arrange
ments with the Rothschilds to take in con-
nection with his own firm $50, ,0O0, 900 OF the
bonds. The arrangements were verbal, and
were made three days before France de-
clared war. While the formal papers were
being drawn up the war cloud burst, and, of
course the plan collapsed. Mr.. Cooke then
undertook to float $50. .000, 900 of the loan
himself, and it proved his ruin. He actually
sold S23 900, 600 of the bonds at par up to
that fatal September day in 1873, when the
magnificent structure he had reared
crumbled in an hour. During the early
mart of 1873 the sales of Northern Pacific
bonds were bade with increasing difficulty.
The revulsion from the great excitement
and expansion of the war was at hand
and prices of stocks, lands and everything
else were shrinking almost daily. The
Northern Pacific was then in course o.
construction, and the company was drawing
on Jay Cook & Co. daily for from $50, 900 tc
500. 600. To supply this money bond salel
were relied upon, but the bonds were NJ
longer as salable as they were. Gradually
the firms advances to the road grew larger
until on the morning of September Is tn,
company was a debtor to the amount o
$i,167, ,433, of which fully one-half was
simple overdraft on the firms books, witt
not a bond as collateral.
CLOSING THE DOORS.
Besides the financial straits referred to tn,
members of the firm were not Unit on TIN
question of the Northern Pacific Road. Mr.
Cooke thought it could be built on the pro
ceeds OF the bonds; others did not think SO
At auy rate it was suddenly decided, on tn,
morning OF September Is, to suspend pay
ment, and at IL o'clock the doors were shut
The panic that followed was the widest
since the South Sea bubble burst in Lon.
don. The lew days succeeding the failur,
were employed in circulating a papel
among the creditors for signatures, allowing
jay Cooke to continue the business fol
them, but this could not be carried through
and formal bankruptcy followed. Th,
creditors were asked to decide whether
trustee should be appointed to nurse the as
sets and distribute them equitably, o.
whether an assignee should be appointed Il
sell of everything and wind up the estate il
q short time. A trustee was decided upon
and the late Edwin NJ. Lewis, President o.
the Farmers and Mechanics Bank of Phil
adelphia, was made the first trustee. Tn
creditors elected committee of five to lool
after their interests, Messrs. John Clayton
Isaac Norris, Robert Shoemaker, Charles P
Helfenstein and Joseph Brown.
The members Of the firm surrendered al
their property Of every kind to the trustee
The claims against the estate, filed bv 3, 20
creditors, aggregated $40, ,SO4, ,S4S IS
Against these claims were assets whicl
seven wears later were valued at $50, 900, 90
and which are now believed to be wort
over SAC, ,O00, ,OO0 Some of the claims wer
contested and others were compromised b.
the trustee with the consent of the Commit
tee OF Creditors, so that when matters wer
finally adjusted the claims unsettled aggrt
gated about Sc, 500, 900.
PAYING OFF THE CREDITORS.
For the satisfaction of this sum the firm
estate was devoted. -Four dividends hav
been paid on shis sum. The first was
January, 1875, when the creditors receive
Tor each 81 900 of their claim the following
$50 {
Northern Pacific r. r. preferred
stock. .-........--.............s snaIe
Oregon Steam Navigation Co. stock 81 share
st. Paul and Duluth r K. common
stock. ................-.......... IL snare
. h11.. Il ! a. .4s.A IL