Fall of Pynchon

Trading on the New York Stock Exchange was sloppy. Prices floundered about aimlessly. Slowly the ticker printed out its daily 2:15 message: DELIVERY TIME. The hum of trading became slightly louder.

In the Exchange's visitors' gallery a member of the big firm of Pynchon & Co. was showing a guest the usual sights. That crowd of brokers, he explained, was dealing in United States Steel; the Big Board with its continuously flapping little number cards was the method by which brokers are called to the telephone; the little gallery below the Board was known as the President's Rostrum; that day the president, Richard Whitney, was in Philadelphia making a speech on "Business Honesty," but few visitors ever see the president for only on the most important occasions does he take the Rostrum during trading. . . .

Seven minutes after Delivery Time, the visitor and his host from Pynchon & Co. were startled by the great electric gong which calls the Exchange to order. They saw Vice President Allen Ledyard Lindley standing on the Rostrum, grave and silent. The hum of trading dwindled to awful silence. A moment later the ticker flashed to the ends of the country the message: PYNCHON & CO SUSPENDED FOR INSOLVENCY.

Surprise? Asked whether or not Pynchon's failure was a surprise, last week Wall Streeters were hard put for an answer. As long ago as last September when tides of rumor were at a height, many things were said about the condition of Pynchon & Co. Widely known was the fact that Chase National Bank, perhaps assisted by another institution, had seen the firm through heavy trouble with loans estimated at from $10,000,000 to $20,000,000. Early last week the old rumor again leapt forth. Heavy selling came into those securities of which Pynchon & Co. and its customers have been fond. Yet many people thought that the Chase would not desert Pynchon & Co. And even the day of the suspension it was known that arrangements had been made to carry the firm along. Aid had been promised by a Chicago tycoon, the Stock Exchange had a stenographic copy of a long distance telephone conversation in which this aid was promised. On the strength of this promise, which satisfied the Exchange governors that morning before the market opened, Pynchon & Co. had done business as usual. But cash, not promises, is essential when solvency is threatened, and the aid from Chicago never materialized. Thus the fall of the House of Pynchon was a surprise in the sense that it was believed to have been forestalled.

Biggest. With eleven branch offices, with membership on 16 stock and commodity exchanges, with offices in London, Liverpool and Paris, Pynchon & Co. formed an important unit in the U. S. investment structure. It came into existence 36 years ago in Chicago as Raymond, Pynchon & Co., a Board of Trade house and moved to New York the same year. Once thought to be its prize customer was Benjamin F. ("Old Hutch") Hutchinson, greatest of the grain manipulators, who cornered wheat in 1888. Perhaps one reason for the move to Manhattan was that at that time potent Chicago speculators, including John W. ("Bet-a-Million") Gates and Col. John Adams Drake, were transferring activity to Wall Street. Later the firm played a big part in James R. Keene's operations in United States Steel. Broker for some big Hartford insurance companies. Pynchon became intrenched in New England. Legend has it that James Goodwin Batterson Jr., son of the founder of Travelers Insurance, once cleared $1,000,000 in a year's operations through the firm.

In 1917 the firm became Pynchon & Co. Its senior partner is George Mallory Pynchon, whose great hobby is yachting. He lives near the water in Greenwich, Conn., has never ceased active participation in his firm's business. The day of the suspension he was in his office. So was his aviation-conscious son George Jr.

In recent years Pynchon & Co. entered the field of issuing securities. It has sponsored Utilities Power & Light of which Harley Clarke is president, also General Theatres Equipment. Inc. another Clarke-managed company. The recent decline in the shares of these two companies and of Fox Film Corp. are thought to have brought Pynchon & Co. to the breaking point. Other companies with which its name is associated include Consolidated Aircraft, American States Public Service, American Brown Boveri, Servel. As usual, Pynchon & Co. gave hope to creditors that not one cent would be lost, that even at present prices assets can meet liabilities. The extent of the money tied up is estimated at $40,000,000, establishing the failure as the biggest yet on the New York Stock Exchange.

West 6 Co. Three days after the Pynchon failure, there was another announcement from the President's Rostrum. West & Co., a member of the New York Stock Exchange with its main office in Philadelphia, was suspended for insolvency. Although West & Co. was not considered a major firm, it was well-entrenched in Pennsylvania with offices in nine cities. The firm had been interested in several of the same amusement and utility shares whose decline previously embarrassed Pynchon, hence its difficulties were easy to explain.

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