SENSATION IN WALL STREET.

Auckland Star, Volume LVI, Issue 192, 15 August 1925, Page 11

SENSATION IN WALL STREET.

HUGE BUSINESS FAILURE. GRAIN SPECULATION. | A business failure of unusual magni- ■ tude was notified on the New York Stock ' Exchange on July 3,. when Dean, Onativia and Co., a firm of brokers and grain dealers, failed, with assets estimated at 35,000,000 dollars and liabilities at 36*000,000 dollars. The immediate cause of the bankruptcy was the failure of the firm to find collateral demanded by Chicago banks. Dean, Onativia and Co. had lodged as security 45,000 shares in the Roeenbaum Stock Corporation, at a valuation of 50 dollars a share, whereas the bank claimed that these were only worth 5 dollars a share. The Rosen'baum Stock Corporation, it should be stated, was a subsidiary of a cooperative marketing organisation known as the Grain Marketing Co. Under the laws of the State of niinois it was necessary that 51 per cent of the stock of this company—being co-operative— had to be sold by July 1, and this had not been done. Although E. F. Rosenbaum and other promoters of the Grain Marketing Co. announce that k was designed to solve the problem of distributing farmers' products without all the profita going to middlemen, and that farmers would save 3,000,000 dollars aniiuaiy by it, the farmers and j farm organisations did not take to the project. This fact and the approach of July 28, the end of its first year, when it was to pay 4,000,000 dollars to the leased companies, are said to have been the chief reasons which led the Chicago bankers to decide that the collateral value of the Rosenbaum stock was only 5 dollars a share.