Another Big Wall Street Firm Topples, June 17, 1923

Wall Street Is Hard Hit by Another Failure. . . One of the Great Wall Street Firms Toppled With Crash. . . In the Midst of a Great Clean-Up Campaign “The Street” Is Startled by the Crash of an Exchange members Which Had Weathered the Storms for 70 Years—Investigation Being Made

By Associated Press

New York, June 16—Wall street, in the midst of a many sided clean-up campaign directed primarily at bucket shops, was hit today by another failure—that of Knauth, Nachod & Kuhne, a member of the New York Stock Exchange and of the New York Curb Market.

Boasting a record of 70 years in the street, 28 of them as members of the stock exchange, the supposedly powerful house, with strong German connections, was forced into receivership with $11 million liabilities.

A statement of the firm, however, declared its assets were simple to meet its obligations, provided they were administered wisely, though it was admitted a large portion of them were “slow assets.”

The failure was the first involving a stock exchange house in more than six months although there have been a string of curb and consolidated exchange failures.

Unlike most of the recent failures there appeared no suspicion on the part of the authorities that the firm had engaged in the popular business of bucketing orders. Their failure, it was indicated, was due primarily to unsuccessful oil promotions and in a lesser degree to the falling market for German marks in which they were heavy dealers.

Besides stock broking and dealing in foreign exchange, the firm did a large international banking business. It was admitted that a number of travelers abroad had put their funds into letters of credit issued by the company, and it was feared these travelers would find themselves embarrassed for funds and European banks would no longer honor the letters. Just how many such cases there were could not be ascertained.

District Attorney Banton rushed three of his staff to the firm as soon as the news of the filing of a bankruptcy petition reached him and they obtained assurance from the receiver that he would make no stipulations with the firm that would prevent disclosure of their books for scrutiny. The firm issued a statement declaring they had nothing to conceal.

From the front page of The New Bernian, Sunday, June 17, 1923. You and I know that the stock market and Wall Street is going to crash in 1929, ushering in the Great Depression. Also on the front page:

Testify at Fuller Trial

Left—Ex-Sheriff Thomas Foley (at right), Tammany politician and crony of Charles A. Stonham, and his counsel, Attorney Edward E. McCall, leaving the referee’s office in New York after having testified at the bankruptcy proceedings of E.M. Fuller & co., the broker house of which the head, Edward M. Fuller, went to trial today for the fourth time on charges of “bucketing.” Foley and Charles A. Stoneham (right) owner of the Giants, loaned money to Fuller just before the crash, it is alleged.

From the front page of The New Bernian, Sunday, June 17, 1923.