The Portland daily press., 1899-11-03
Conditions That May
Have Caused Failure.
All Interested Parties Are Very
Reticent.

Inc announcement In yeeterday' o
PRESS that the well-known banking
| firm of Woodbury. & Moulton had made
an assignment. ocoasioned much interest.
There are q large number Of depositors
who are painfully Interested In the news.
many Of them having all their savings
deposited there. Moreover the prominent
place which the firm have held In busi-
ness orioles, MS we'll Gas the social promi-
nenoe Of the partners individually, made
their troubles matter Of friendly inter-
est to large number Of people.
The brief announcement made In the
PRESS yesterday conveyed probably all
the Information that eau bs known def.
nitely for some time. 1t was impossible
last evening to obtain from either Mr..
Theodore G. Woodbury. or Mr.. Edward
II. York any statement Ms TO the affairs
OF the firm. The asslgnees, Messrs. Will
liam N. Bradley and Harry II. verrill
weres engaged yesterday and until late
last night In making preliminary ex-
animation of the affairs of the firm. No
statement could be obtained from them.
as they did not know anything definite.
The statement was made yesterday that
the liabilities of the firm were likely to
be $780, and that the assets would he
nothing. This statement is regarded by
we'll Informed 6nauciers as very wide OF
the mark. 1t might be that the firm
could pile up liabilities of 800, 600. BY
investing a relatively small capital In
securities, by plsdging those securities
20 hy tha&
pledging the investment, and so on, 1t
| would be easy to pile up liabiliitse to a
large amount. But the pledged collateral
would be assets to offset against these
liabilities. There seems no reason to be-
lieye that such q process of acquiring
liabilities has been pursued to any great
extent in this case.
1t seems probable that the money de-
posted with the firm by individuals has
amounted to as much as 500. 200 or $3.50,
90. These deposits constituted without
much doubt. large part, perhaps nearly
all. OF the capital on which the firm did
its banking business. The fact that an
assignment has been made indicates that
this deposit money has been used up. or
nearly 50. The rate Of interest raid for
deposits has been four per cent More
conservative banks have paid but or So
per cent.
The natural business of a private bank
of that surt is dealing In bonds and
stocks. 1t is cot understood that Mess-s
Woodbury. & Moultcn have discounted
notes Ut In fact loaned much money any
way. They would naturally invest their
money in bonds and stocks, selling them
to their customers as some profit. II they
bought stocks in tie New York market
on margin, their sales would be In that
market also. and whatever they gained
or lost by the transactions would go to
swell or diminish their stock of cash.
1t Is not understood that they have
dealt largely In tonds Of late. In the past
they have put on the market various
GLASSES of bonds like Western Water bonds
which promised well at the time; but
which in the end have not proved 40
sound. When these were sold to custom
ers, the less fell upon the customers. Any
residue unsoId remained in the hands OF
Messrs. Woodbury. 81 Moulton, and the
loss has Teen theirs There are some signs
indicating that they had . considers BILE
amount Of such bonds, and that they have
pledged some Of these In various banks
for cash loans. 1t is believed that at
least one Portland National bank has
made such loan. and 1t is quite possible
that some banks through the state may
have done the same. Probably the collat-
eral was made large enough in these cases
to make up for any impairment OF its
value.
II seemed to be pretty well understood,
yesterday, also. that the firm had under
written large amount of the bonds of
the American Writing Paper company.
This company is one Of the trusts. and Its
securities were considered very desirable,
and are still thought to be of .undoubted,
though somewhat fluotuating, value.
Underwriting Is often very profitable for
bankers, but 1t also has its risky side.
When a company has a large amount OF
securities to put ON the market Ii goes
to certain bankers and gets them to make
an offer for the securities, say 95 on
100. The bank offers 95 say, for q Ger
tain proportion OF the issue, but the I'M
derstsnding is that 1t shall not be re-
quired to take this proportion unless the
public fails to buy the securities at a
higher rate. II the public buys the Sc
curties the underwriting bank receives
the difference between the figure at which
1t has underwritten and the figure which
the public pays. Thus If the public buys
well. the bank reaps fine profit with.
out trouble. II the public fails. on the
other hand, the bank has to step up and
take the bonds. Now the sales of these
industrial securities had been very good
and the underwriting banks had reapsd