14207. Newark bank (Newark, NJ)

Bank Information

Episode Type: Suspension → Closure
Bank Type: national
Start Date: November 1, 1881
Location: Newark, New Jersey (40.736, -74.172)

Metadata

Model: gpt-5-mini
Short Digest: a04b938f

Response Measures

None

Description

Contemporary articles report the Newark bank suspended/failed after large embezzlement/misapplication by its cashier (Baldwin) and that a receiver was placed in charge. There is no clear description of a depositor run on this bank in the articles; other banks fortified against a possible run, but deposits running is not reported. Thus this is a suspension that led to receivership/closure. OCRed names/dates corrected where obvious (e.g., cashier Baldwin, Nugent & Co., receiver Frelinghuysen).

Events (3)

1. November 1, 1881 Other

Newspaper Excerpt: The receiver is in charge of the Mechanics' National to-day. A Newark dispatch reports all quiet in banking circles. No runs have been made upon other banks.
Source: newspapers

2. November 1, 1881 Suspension

Cause: Bank Specific Adverse Info
Cause Details: Suspension followed discovery of large embezzlement/misapplication of funds by the cashier (Baldwin); heavy deficits and false statements in bank books and large improper advances to Nugent & Co. were reported.
Newspaper Excerpt: THE NEWS IN WALL STREET. The news of the bank's suspension was received in Wall Street early in the day
Source: newspapers

3. March 14, 1882 Receivership

Newspaper Excerpt: Receiver Frelinghuysen has filed with the assignee of Nugent & Co. a claim of over two million dollars against Nugent. This amount is what is claimed the bank lost through misapplication of its funds to pay notes and drafts of Nugent & Co.
Source: newspapers

Newspaper Articles (7)

1. November 1, 1881 New-York Tribune New York, NY

Article from New-York Tribune, November 1, 1881

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In the trade the liabilities of the firm are reported as high as $500,000, but no definite information is accessible. The firm generally carried an insurance $ $600,000. It is composed of Christopher Nugent and James Nugent. They succeeded Nugent, Kelly Co. in January, 1872, Mr. C. Nugent purchasing and the interests of James Kelly, Thomas Hughes B. Moran. THE NEWS IN WALL STREET. The news of the bank's suspension was received in WallStreet early in the day, and it spread with marvellous rapidity. But the truth was so stupendous that even the most credulous doubted the accuracy of the reports in regard to the amount of the embezzlement. and it was not long before it was asserted and currently believed that the sum was $200,000 instead of $2,000,000. A few of the more cautious a bank officers said that it must be bad failure and that the amount must exceed the smaller sum, but they based their opinlons only on the supposed condition of the bank and the known wealth of its directors. It was not until late in the afternoon that it began to be generally believed that the first reports had been correct. The astonishment was great and the ntmost anxiety was manifested to know what had become of the funds of the institution, and how the deficit had been concealed from its own directors and from the Bank Examiner. The event was admitted to be the most startling that had occurred in many years. especially because the magnitude of the deficit was likely to shake public confidence in other banking institutions. Rumors were quickly in circulation in the street that the Mechanics' National Bank and the Chemical National Bank, of this city, were large losers by the failure. So great at one time was the uncertainty in Wall Street that the suggestion that it was the Mechanics' National Bank of this city that had failed passed unchallenged. The names of one or two Stock Exchange firms were mentioned also as large losers, and the results of the suspensien, it was feared, would be wide and disas rous. Later reports, which did not fail to confirm the amount of the deficit, served to allay apprehension. It was found that generally the losses would fall on persons able to sustain them, and that the New-York banks and firms would not be hurt by their losses. The greatest injury that would result to New-York would be, it was admitted, the shock to financial confidence and business credit. That a national bank could be carried on after its capital, surplus and a large part of its deposits had been absorbed, and that large business house that had enjoyed good credit, and, according to commercial opinion, had been making money for several years. was absolutely bankrupt, were facts that tended to shake the confidence of the business world. The stock market felt the force of the blow, and, sensitive to all rumors, it was feverish and drooping all day. THE NEWARK BANK'S CORRESPONDENT HERE. The Mechanics' National Bank of this city, of which Benjamin B. Sherman is president, has been the New-York correspondent of the Newark bank for more than forty years. At times the Newark bank has had large sums to its credit in the NewYork bank, and, at other times, it has borrowed of it large sums, for which it gave collateral security. No question of the solvency of the New-Jersey bank or the honesty of its cashier ever rose to mar business relations of the banks. Some of the methods of the Newark bank were not fully approved. but they were explained by the peculiar position of the institution in having the accounts of large insurance and mercantile companies. The eashier of the bank, Mr. Baldwin, occasionally X. plained the necessity of borrow ing large sums from the New-York correspondent on this ground. He represented that the heavy customers of the bank had been forced to make large payments in the course of their business, and had reduced, therefore, their deposits. All these explanations, which agreed with the known facts, were plansibly made and accepted unhesitatingly. No little of the confidence felt in the bank was owing to the high character and acknowledged wealth of directors. Shortly after the last statement of the Newark bank was published. a peculiarity in it attracted the attention of the officers of the Mechanics' National Bank of this city. It had been observed at once officers of other banks at Newark who wondered at the statement, but could not prove it false. This peculiar feature was the large amount due from reserve agents, nearly $1,500,000. The officers of the correspondent bank in NewYork, to which the Newark bank was then indebted about $300,000, sought an explanation of this item from its cashier. Mr. Baldwin's explanation was that the money belonged to the Mutual Benefit Life Insurance Company, of Newark: that the bank was paying a small rate of interest on it, and was loaning it to two New-York banksat a considerably higher rate. The transaction, according to Mr. Baldwin, was productive of a handsome profit to his corporation, which therefore was interested in not disturbing the loans. There was nothing in this to arouse suspicion: but when the cashier, in reply to the natural question, asked to be excused from naming the New-York banks to which he had lent the money, the officers of the New-York bank became somewhat alarmed, and determined to ascertain the correctness of Mr. Baldwin's statements. They were not quick enough, however, and the failure of the Newark bank came before they had les ned that the representations of its cashier were false. CULMINATION OF THE CASHIER'S DIFFICULTIES. Mr. Baldwin's difficulties eulminated on Saturday. In preparing for an examination of his bank he made a last effort to deceive the National Bank Examiner. He called at the Mechanics' National Bank in this city, which held $444,000 in paper collateral security for a loan of over $300,000. The absence of so large an amount of its bills receivable would be fatal to his passing the examination, especially when he was forced to represent a still larger sum as being due from its New-York correspondent. Stepping into the New-York bank he suggested that he would like to exchange the collateral securities which that bank held. He wished, he remarked. to make some comparisons of the paper with his books. was informed that none of the notes would mature for at least thirty days. and some of them not for two or three months. He was reminded also of his bank must show plainly a the notes of which he had a is understood to have Mr. record that Baldwin the of books been have full still urged list. anxious it But to make the exchange, and to on

2. November 1, 1881 New-York Tribune New York, NY

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on Sunday and contessed to them could no longer continue its business. COLLATERAL SECURITY. THE by the NewThe notes held as collateral security York bank to be mainly legitimate business The most of them are for given in the natural course paper. apparently appear small of amounts, business. All of these are double-name notes of persons lieved to be able to them. A few of pay but the all notes be- of may be accommodation paper, them bear the indorsements of responsible men. It is believed by officers of the bank that the security is ample to protect it from loss. The face value of the paper is $144,000, and the amount the of the loan is something over $300,000. Some of paper is that of C. Nugent Co. AN EXTRAORDINARY AFFAIR. A bank officer, whose relations with the Newark bank were such as to compel him to make some in of its said last vestigation affairs, evening: A bank "It is all true and more than true. that stood and a was above are to-day both a Saturday reproach, preeminent, bank ruined. cashier could who Such not swamping of the funds of a happen except under extraordinary conditions. Mr. Baldwin must have had some aid within the bank. and that was given by his brother, who was paying teller. Together they were all the bank. The president is eightysix years old, and only visited the office every week or two. He had the utmost confidence in his cashier, whose fall has completely broken him down. President Halsey esteemed Mr. Baldwin so highly that he made him one of his executors. He had only one son, and he told me to-day that he thought as much of Baldwin as he did of that son. William Clark, of George A. Clark & Brother, who one of the directors of the bank, told me that he had been perfectly stupefied by the cashier's acknowledgment. Mr. Clark signed the October statement of the bank, but of course without making any personal examination of its items. He said that he did not doubt Mr. Baldwin's assertions about the amount in the hands of the New-York bank. "I have been myself an intimate friend I of Mr. Baldwin's for many years, but never saw anything in him or his course of living that caused me to doubt his honesty. He lived I plainly and never apparently beyond his means am amazed and grieved, If the punishment could fall on Mr. Baldwin alone I should be satisfied: but the weight of the crime falls with almost equal force on his wife and about for an explanation In easting children." of the could manner have so large an amount of money persons expressed that Mr. Baldwin must in been terday which lost, many have their speculated belief yesterday yeslargely in Wall Street. Inquiry made failed to discover any good foundation for this opinion. Enos Runyon, of the Stock Exchange firm of Martin & Ranyon, which has a branch office in Newark, said yesterday and have been intimate with Mr. I stopped at his house told me that the bank would not open toand I live Baldwin. he in Newark, this if morning he had told me briefly the reasons, and me with a knife he would not me I do not lose a dollar by the bank. but do lose a day. so stabbed the much, He friend." have failure hurt of "Did Mr. Baldwin speculate in stocks?" "So far as my firm is concerned only very slightly. and all his ventures in that way have been profitable. He has never lost a cent through us. am sure too that he has neither speculated nor lost heavily in stocks. He told me so this very morning. and am certain that he told the truth. What- Street ever the reports may be, I know that Wall apeculation was not the cause of this ruin." Another friend of Mr. Baldwin's gave an equally emphatic denial to the rumors of this kind. he remarked gloomily, that money never here. I believe Mr. was No," lost Baldwin's statement that the money has all gone to pay the he liabilities of the leather firm which was sustaining. I am positive, too, that the advancesto Nugent & Co. began at least eight years ago. I think Baldw become involved innocently enough at first in the affairs of this firm, and that in then he has been obliged to furnish money to himself. The firm has for the last few years and has been to especially since the since order credit be making protect money. been failure reported in good of ago. a large rival house in Philadelphia several years the have had occasion to know something about firm, and I presume that Mr. Baldwia lived in debt. expectation that it would eventually cancel the The notes of the firm were all made payable at the bank. and Mr. Baldwin paid them as they fell due, whether the firm had money to its credit or not." TALKS WITH DEPOSITORS. L. Spencer Goble, the State agent of the Mutual Benefit Life Insurance Company for Southern NewYork and Northern New-Jersey, has an office at No. 137 Broadway in this city. The intelligence of the failure caused much commotion in the offi e, and Mr. Goble started promptly for as he said, a passenger on a train to the place to learn the facts. hurryin crowded Newark. afternoon, with When being. people Mr. Goble returned to this city in the TRIBUNE reporter called on him. He said: "I don't think you or anybody will learn the real condition of affairs before a week or ten days, when the commissioners will have finished their investigation. I went there and heard dozens of stories from people W ho professed to know, and they that all differed so widely that finally I concladed nobody knew anything more about it than did. of As understand it. the failure is for two millions dollars. It is asserted that the bank has the same amount on deposit in correspondent banks, and of a of $500,000, besides its Now, if the deposits which $500,000. surplus capital they depositors stock claim in the banks, of course wait their money, only they'll are will really get all the have bad to for it. don't believe the failure can be as office as rumored. I I am a depositor personally ; our here reports directly to the home office, and we Benefit had no account with the bank. The Mutual Company probably had a small amount on deposit but if in the bank (it deposits in five or six banks). affect so the amount was very small and will not brothers the company in the least. I both the of Baldwin but did not speak to them." A.W. Dimock & Co., brokers, of Exchange-court. had with the bank in Newark, and amount of money on said yesterday afternoon of the failure on his private he considerable did first W. business Dimock deposit that there. telephone he had A. the morning. All the succeeded in getting had come its wire had heard in information pretty question which directly from the bank, and he saw no reason to on It put very bad aspect

3. November 2, 1881 Evening Star Washington, DC

Article from Evening Star, November 2, 1881

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Is the Newark bank collapse the beginning of another financial panic, as was the failure of Jay Cooke & Co., eight years ago? A good many people think so; and as the present is largely a speculative era, with prices for many things nearly up to the high mark of war times, many of the conditions for a general break down may be said to be already existing. With speculators at such a time it is much as with a row of bricks set on end. It only needs a starter to bring down the whole line.

4. November 2, 1881 National Republican Washington, DC

Article from National Republican, November 2, 1881

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NEW YORK, Nov. 1, 10 a. .-The more conservative 'bankers at the Windsor said last night they thought the effect of the Newark bank failure was of less importance than many imagined, and the depression in stocks was more directly chargeable to the natural stringency in money for the November settlements than to anything else. A good many loans were consequently called in and a considerable quantity of funds had gone into the city treasury for taxes, and about $17,000,000 is to be disbursed here today. It was reported that the defaulting cashier of the Newark bank had lost most of the bank's money in discounting notes, a great deal of It having been paid to Nugent & Co., who were endeavoring to sell down all the other morocco manufacturers in the United States. A portion of the funds was lost, however, in bearing the Chicago grain market. Little or none was lost in Wall street. The other Newark banks fortified themselves against a possible run today. The Fourth National of this city sent one of these institutions $50,000 in notes last night for this purpose. Seligman & Co. report great improvement In affairs in Paris, and, although there is still great inflation in values, matters look much better. Sterling is down to 21% francs, against 25 francs. Money has loaned there as high as 24 per cent. per annum on good stocks. The Gould-Sage-Metropolitan Elevated Railroad faction were before the Stock Exchange list committee yesterday afternoon with an application to have the assented stock admitted. The opposition, representing 40,000 shares, 1 opposed the admission, and the chances are against the stamped securities being allowed on the list. The brokers say that the largest room traders have apparently sold out their long stocks and have switched over to the bear side; also that the street was decidedly bearish late in the day. The bears insist that there was good selling of stocks from noon until three o'clock, and that the bull movement has culminated. The story was reported last night that Sammy Tilden had sold out the last of his Union Paf cific, but the bulls in it declare that the investment demand from the Astors and their friends has absorbed very much of it. The new fast palace-car train over the New York Central. with dining-room cars attached, will begin orun on Monday or Wednesday next, leaving here at half-past five p. m. one day and arriving at Chicago at six p. m. the next. The Vanderbilt railroad people insist that the war is by no means settled, notwithstanding the advanced rates, and if the Baltimore and Ohio, Pennsylvania Central, or Erie cut the new figures orders have been given to the Lake Shore, Michigan Central, and New York Central Railroad Companies to meet them at once. They also say that, while Mr. Vanderbilt has not recently been buying any stocks, he certainly has sold none, and he has not advised his friends to sell short. Mr. Chase, the principal owner 1 of the celebrated Jumel estate, denies that this ; property has been sold. but is willing to dispose of it. r There are over 100 lots, and $1,000,000 is bid for the whole property. It will probably fetch $1,500,000. Mr. Sage said last night he thought the full effect of the ewark bank disaster had been discounted yesterday, and the market would be strong and higher all around this afternoon. There is a new and powerful bull party in Texas Pacific for 60 this week. *11:30 a. m.-A Philadelphia telegram says: "The rains have proved of great value to the coal interests, and collieries that were stopped for want of wat are now resuming, so that most of the roads will probably be ably to increase their tonnage to the figures of last year.' A Newark dispatch reports all quiet in bankIng circles. No runs have been made upon other banks. The receiver is in charge of the Mechanics' National to-day. p. m.-A Columbus (Ohio) dispatch says: "The Supreme Court this morning granted to the Vanderbilt party permission to file a petition in error in the railroad contest to the order of Franklin County court of October 22, appointing a receiver. A supersedeas was also granted staying all proceedings in Judge Greene's court upon filing a bond of $50,000. The hearing upon the quo warranto and upon the petition in error will not be had for some weeks.

5. November 7, 1881 Public Ledger Memphis, TN

Article from Public Ledger, November 7, 1881

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ANOTHER FAILURE Resulting from the Newark Bank Suspension. NEWARK, N. J., November 7.Another failure occurred to-day resulting from the bank failure. Hanson & Van Winkle, wholesale dealers in chemicals and having their office at 92 Liberty street, New York, notify their creditors that they are unable to meet their obligations and will soon offer terms of a compromise. The United;States Court besides ordering a rule to show the cause why a receiver

6. November 9, 1881 Alexandria Gazette Alexandria, VA

Article from Alexandria Gazette, November 9, 1881

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FROM WASHINGTON. Special Correspondence of the Alexa. Gazette. WASHINGTON, D. O., Nev. 9, 1881. The gaies the democrate made in early sil the Northern States in which elections were held posterday is of ocursa very gratifying 10 them. and with regard to such gaios in New York the repullcans here seem to be equally satisfied, saying the result is what they hoped for, and that they trust half-breceists there bee been killed effectually. With regard to the 10 sul. in Virginia up to one o'olock this afternoon every thing is in doubt. though sagguine denoerats who have compared the returns so far received with those of last fail's election express themselves on perfectly confident that both Daniel and a democratic is gislature have been elected. Every republican and negro is the city who. by any tacans, could vote in Viigiois yesterday, was error there to do so, and all the incident expenses paid with money collected from federal office-holders. The auxiety of the democrats to have their hopes of Virgicia 000firreed is great, and they would willingly relieguish all their gainsie the North for a substantial victory in the Old Domision. General Raum, Commissioner of Internal Revenue, has received is di patch from Colonel Brady. chairman of the radical repudiating ocsition in Virgiaia, stating that the democrate stuffed the ballet boxes as the election in Ports. mouth yesterday. This is supposed to indicate that the Mahomeites, being airsid that they are defeated, are preparing 10 attributo their defeat to integioray democratic fraud or to atterapt to throw out certain democratic maprintes and this achieve, by faul what they failed 10 get by fair, MOEDS. to the Criminal Court lay Warden Creek or, of the int. swere 1 sst Gatteau had never gives him any letters or papers for other parties that be had turned OPEN to Corkhill. The examination about these papers was then about to cearisus with the permission of the court when Outtonu's counsel put 8 step 10 it by say ing that the tial of his client had not yet CORIN meneed. Sixty per cent. of the depositors' losses by the Newark bank failure line boon secured by the assetts of the bank, and Commisioner Knox. of the Treasure, DRIVE that if the property of Nugent, the outeido man implicated in the swindleg, can be obtained, of which there is 5 fair prospect, the whole lone will be made good. In the Star route GRSO Mr. Totion, of counsel for the defence, made MD argument in favor of quashing the information. 15 IN immored that the aggiment 00 that point of the CARD will be closed to day. Owing to the continued provaleces of bad weather. the !all TAGES that were 10 have begun here to-day have been postponed until next Tuesday. Many curimen were in attendance, but have gone away. James A. Gosider, recently commissioned as postmaster at Shackelford's, King and Queen county, Vs. has dealined to accept the office. and has returned his commission to the Department. Assigned reason The funders will not give him a place to open the mail, being determined to retain the old incumbent. Robert N. Bruss was to-day commissioned 98 postmaster at Sperryville, Roppahanneck county, Va. The Navy people here are very much dissatisfied with the sotion of the Naval Commission in making two separate and different rates respecting plans for the proposed DOW Davy. and say that Congress will be likely to apprcpriate nothing toward the construction of a non asvy if navy men themselves cannot agree upon what port of 2 pasty should be built. Is is understood that the committee appointod by the Stnate to investigato the crookedness in the Treasury under Mr. Sherman's control of that department will depote the first month of the regular session to that subject. The work of reclaiming the flats of the Potemao has been commenced. Dradges have bezun clearing cut and deepening the channel, but BY the care to run 00 the new tranway and carry the mud to the centre of the flats 810 eut ready, the mud is taken by 800WS and deposited 86 fat on the flats as it is possible to push them.

7. March 15, 1882 The Portland Daily Press Portland, ME

Article from The Portland Daily Press, March 15, 1882

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That Newark Bank Again. NEWARK, March14.-Receiver Frelinghuysen has filed with the assignee of Nugent & Co, , a claim of over two million dollars against Nugent. This amount is what is claimed the bank lost through misapplication of its funds to pay notes and drafts of Nugent & Co.