The San Francisco Call. Newspaper, November 1, 1898, Page 1

This Paper not an from i The £ LY SAN FRANCISCO, TUESDAY, NOVEMBER 1, 1898. PRICE FIVE CENTS. E GIGANTIC CONSPIRAGCY THAT WRECKED THE McDONALD BANKS artling . Revelations in the Secret Records of the Institutions Falsification of the Books to Conceal Robbery. Documents That Tell a New Story of a Great Crime. The Call is in a position this morning to begin an expose of most startling rtance to this city and State. flve years the secret history that culminated in the de- of the Pacific Bank and the Savings Bank has been The doca- ublic view espondence that would v the gigantic conspira fe of scheming gamblers ax | ipled thieves were stolen before 1 could secure them. rce will now be given the co: ors may ts and the robbed de- ors of both 'banks may recover - of their property that was stolen n by the dishonest bankers + parasitc schemers, This new history respect a revelation and the story will divide itself natur- into three great departments. It first be the province of The Call to se the men and the measures that i the institution; to describe the ures into which the McDon- rust themselves and were encour- y financial manipulators. When s of thousands of dollars of the of the Pacific Bank had ‘been and almost a million of dol- ed in a golden stream from k to give life to the de- the Pacific, the wreck- antic endeavor in g tempts to floa worthless securiti world were without g honest c« gull the and ti spirators bery th of the! ruin of the This re- markab! which The Call will publish will prove the dis- honesty of at least one public offi the blackmail of a schemers and the s of men who accepted abuse it. In the long but inte: interestin 1 the public will r the crimi tion and recrimination of sharpers who feared each other while seeking the favor of the McDonalds. There will be a story of wild and absurd am- bitions, petty love entanglements, gross and persistent flattery and political ambitions that were never to be real- ized. The Call Intends to show that the conspiracy that ruined the Pacific Bank and the People’s Home Bank was the most gigantic that was ever plotted and carried to a successful con- clusion in the history of financial in- stitutions in this country. It will show what never before to-day was- made publie, proof t the McDonalds were not the only w cers of the two banks. In the tremendous scheme to filch mil- lions of money from the public of San Francisco The Call will prove that D. 8. Dorn, M. H. Sherman, A. F. Johns, ‘W. H. Eastiand, O. T. Dyer and many others were interested to the degree of encouraging, Inducing, cajoling and threatening the McDonalds and their bank on to financial ruin and personal dishonor. SHERMAN'S GIGANTIC SCHEME AND iTS RESULTS. While the sons of Dr. McDonald had involved t}. great banks in crazy finan- cial schemes and wild ventures it was not until M. H. Sherman became a di- rector of the Pacific Bank, in January, 1891, that the real conspiracy to ruin began. From that moment M. H. Sher- man, speculator, manipulator and achemer, led the McDonalds on until the money of the Pacific Bank was dis- sipated and the funds of the People’s Home Savings Bank were stolen under the thin guise of financial technicali- ties. Sherman concocted the scheme of bailding an electric road in Los Ange- les. He had nothing but his wit to as- sist him and the credulity and foolish finanejal notions of the McDonalds to spur him on. Frank McDonald par- ticularly proved easy game. Bherman’s craft was equal to the task of flatter- es were ic, but the save then te rob- in something fty onesty trust to | | of the ruin of these | ) prevent the crash | Z. very effort | out of the | | | | I | | 2P 7z 7 'lil"""ll'iwlll i L nv | [$44 4444444444444 4444444144444 444444+ f The Ruined Banks and the Men E : Responsible for the Ruin. z ‘ 76 B e e o o o o e d ing the young banker and the brilliant idea of having the Pacific Bank organ- ize, build and control a great street railroad in Los Angeles became a seri- ous fact. The Call intends to prove, | over thé signature of M. H. Sherman himself, that the McDonalds were in- veigied into giving up over $600,000 for the ‘building of that road. From that moment the Pacific Bank had started on its road to ruin. In this plot Sher- man had the absolute co-operation of D. 8. Dorn, who was the attorney for the Pacific Bank and the People’s Bank and the confidential and bad adviser of the McDonalds. As soon as Sherman had accom- plished his purpose to make the Pa- cific Bank and its foollsh managers supporters of his scheme the Los Ange- les manipulator determined to secure a W ) g o & \:‘ phrd it o, footing also in the People’s Home Sav- | ing Bank. This institution had been established “ by the McDonald family | purely as a feeder for the Pacific Bank. | The Call will prove by the secret cor- | respondence of the conspirators that | the People’s Bank was used simply for | purposes of deliberate robbery. The | money that thirteen thousand poor de- positors placed in the vaults of the Peo- | ple’s Bank was carted away into the Pacific Bank and' there dissipated by the men who first flattered and cajoled the McDonalds and then took them by the throat. 3 Sherman had no sooner become a di- rector of the Pacific Bunk than he de- termined, as already indicated, to se. | cure control in the People’s Home Sav- ings Bank. Through his influence with Dr. R, H. McDonald, exercised by sy- | Thievery of the Managers and Satellites at Last Established / U Z AL, > SR ey —— D s b o b b o e e e o o b b S S b b S b o o o g e+t cophancy and flattery, Sherman made J. E. Farnum manager of the People’s Home Savings Bank. Farnum was Sherman’s cousin and a son-in-law of Knight, who was at that time one of the Bank Commissioners and an inti- mate friend of the Los Angeles schemer. The Call will show in the handwriting of M. H. Sherman himself that this man with his electric road scheme profesged to contr.l absolutely the officlal acts of this Bank Commis- sioner.’ Sherman dined at Knight's house, and on more than one occasion Farnum was expected to warn the managers of both banks and prepare them for the investigations of the Com- missioners. The Call will show that M. H. Sherman for over two years and a half played upon the credulity and the dishonesty of the McDonalds, flood- | Chief Actors in San Francisco’s Great Tragedy of Finance. 3} 3 D R R e e e + + + ing them with his almost worthless bonds, dragging from them the money of the banks and seduced them into new ventures that subsequently brought disaster to the two institutions. ‘When this manipulator, who until now has escaped criticism and expo- sure, found that he had won the con- fidence of financial dolts, he sprung new schemes. The Call makes no as- sertion that is not based upon the very signatures of the man himiself. He or- ganized a phantom electric railway in Phoenix and the McDonalds, in ex- change for the money of their deposi- tors, took the worthless bonds. One of the conspirators with almost exact truth declared that the railroad had no beginning and no end. Stimulated by his tremendous success in flattering the absurd managers and owners of the Pa- Crafty Manipulation of the Funds by Sherman. ‘How Dorn and Johns Led McDonald’s Sons to Ruin. | eific and People’s banks, Sherman led | the McDonalds into another scheme, the Phoenix Water Works. Dr. Mec- Donald was tickled by the flatterer into accepting $142,000 in bonds of this con- cern and both his sons had to commit a crime to relieve him of the debt. The Call has in its possession the records to prove the origin, the development and the conclusion of this affair even to the crime of the three McDonalds, father and sons. But Sherman was not satisfied to hold the favor of the McDonalds; he be- came their confidential agent. He was at their beck and call, flattering, ca- joling and seducing into new chimeri- cal projects. His brain conceived a magnificent scheme of floating $5,000,~ 000 in bends, while at.the very same moment he knew that the bonds al- ready out and in the vaults of the Pa- cific-and People’s banks were utterly unavailable, and not worth one-fourth their face value. But this brilllant dream of the Los Angeles manipulator cost the depositors of the two wretched banks many more thousands of dollars, and then Sherman saw that his flat- tery and his sycophancy had raised him from his knees and he could take the '* McDonalds by the throat. The banks were almost ruined. TbO. dull eyes of the McDonalds began tu see. Disaster to their institutions was impending, and they placed on the} ™ shoulders of M. H. Sherman the re- sponsibility of the wreck that soon fsl- lowed. This phase of the story which The Call intends to publish will cer- tainly not be uninteresting to the many thousands of people who will have the proofs now that their money was caried out of the back doors of the Peopie’s Bank into the vaults of the Pacific, and M. H. Sherman, J. E. Farnum and their coconspirators then fiiched it into their own coffers, leaving behind the worthless records of chimerical pro- jects and valueless bonds of wild schemes. 3 D. S. DORN'S IRON CLUTCH UPON THE McDONALD BANKS. But M. H. Sherman was not the only favorite of the McDonalds. They had many of them. One of them was D. S. Dorn, the attorney of this city. Dorn was the attorney for the Pacific and the People’s banks. He was a director and an owner of stock in the Los An- geles Blectric Railroad. He was one of ‘the moving spirits of the John Brown colony. He was interested in the affairs of the Pacific Bank and the Riverside Motor Rallroad. He was president of the Mohawk Canal and Improvement Company. He was a di rector and manipulator in the People’s Home Savings Bank. Wherever there was a dollar controlled by the McDon- alds or a wild scheme suggested by their diseased financial brain D. 8. Dorn was involved. When Frank McDonald wished to float some new chimerical scheme D. 8. Dorn drafted the r~vers. When the elder McDonald wished to place his property beyond the reach of his credi- tors and to evade the consequences of his own foolishness and the dishonesty of himself and sons, D. S. Dorn pre- pared the legal documents:, When the egotistic brain of Richard McDonald Jr. conceived the idea that its posses- sor should bé Governor of California, D. S. Dorn attempted to manipulate the machinery of one of the great par- ties of this State. The Call makes these assertions with a full under- standing of what they mean. This pa- per has. the proof in its possession. Throughout the long period of wild speculation, disastrous investment and culminating ruin, D. 8. Dorn was the confidential adviser and friend of the McDonalds. He deluded them into the belief that the School Department of this city could be captured and that upon the shoulders of the instructors in the public schools Dick McDonald could leap into the Governor’s chair. The conspiracy of the lawyer and the flattered banker went so far as to make nominees out of two of the other con- spirators who, in 1892, asked the suf- frages of the people of this city. The Call will show that flattesy was sime