Adirondack Company bond payout

Longtime contributor BB sent this inquiry by email on August 1, 2015

Quick question, I purchased a ADI-100-B-40 Adirondack Company today at a flea market and noticed the payment marker stamped on the front for $30.82, 10 years after the certificate was issued in 1872. What is strange is that the coupons pay $35 in Gold. So was it a partial payment on the principle or a partial coupon payment?

Another interesting fact was the vignette at the top is attributed to Manhattan Engraving Co. New York. yet the certificate is listed as being printed by the Continental Bank Note Co. New York. So, is this an instance where Continental used artwork from Manhattan? This is a first for me.

My answer -------

The Adirondack Company printed and issued 6,000 bonds in 1872, but was essentially insolvent from the beginning. It failed to make any payments on any coupons and was forced into receivership on December 15, 1874. The court appointed Thomas Clark Durant (yes, THAT Thomas C. Durant of Union Pacific and Credit Mobilier fame!) After some period of time, the company was sold and reorganized under the same name for some undisclosed amount. The proceeds of that sale were apparently quite meager and seemingly amounted to only $30.82 per $1,000 bond. Theoretically, (based upon 6,000 bonds being issued) after all liabilities were paid, the company’s entire assets were worth only $184,920, or LESS THAN THE VALUE OF A SINGLE COUPON.

Please note that I mentioned Thomas C. Durant was the receiver of the Adirondack Company. With the possible exception of Durant himself, I don’t think anyone during his lifetime — or since — has held him up as a shining beacon of propriety. Regardless of what the defunct company might have truly been worth at the time, it seems clear that only $30.82 was ever paid to any owner of these Adirondack $1,000 bonds. If Durant proved nothing else in his life, he showed that he could manipulate finances in companies like the Union Pacific and Credit Mobilier for his own benefit.

On the other matter of two engraving company names appearing on this bond, I could find no solid evidence of a relationship between the two companies. It appears that Manhattan Engraving Co. was often on the financial edge. I can find evidence of bankruptcies in 1871, 1882 and seemingly another around 1902 or 1903. I cannot tell whether those three incarnations of the company succeeded each other in business or that they were three separate companies with the same name.

I cannot remember ever seeing two unrelated engraving company names on the same certificate, I definitely cannot recall ever seeing an engraving company name featured so prominently on a vignette. Lacking access to better records, I will suggest a couple of possibilities.

Perhaps Continental bought the steel plate for this vignette during Manhattan's first bankruptcy. In a company like Manhattan, its assets would have been presses, plates, on-hand supplies and outstanding contracts. Continental would not have needed presses or supplies, but it might have wanted to add to its inventory of plates. The problem with that logic, though, is that there would have been no reason to post Manhattan's name on this bond at all, let alone so prominently.

An alternative thought is that Manhattan had contracted to supply 6,000 bonds to the Adirondack Company in 1871, but ran out of operating funds before it could complete its job. Perhaps the receiver for the Manhattan Engraving Company sub-contracted with Continental Bank Note Company to complete the Adirondack job and possibly others. In that case, the insertion of Manhattan's name under the vignette would have made promotional sense.

It is interesting to note that Stacks sold a steel plate engraving of Robert E. Lee in 2006 that also bore the imprints of two companies: the National Bank Note Company and the Manhattan Engraving Company. The date of the engraving was probably unknown because it was not reported in the sale catalog. However, considering Lee died in 1870, it is possible that the plate dated from the same period as the Adirondack bond.