The San Francisco Call. Newspaper, November 14, 1898, Page 3

THE SAN FRANCISCO CALL, MONDAY, NOVEMBER 14, 1898. DORN, SHERMAN AND FARNUM CONCEIVED A CRAFTY SCHEME TO “FIX” THE BOARD OF BANK COMMISSIONERS The Official Investigators Were Placed Under Obligations by the Wrec kers. The Conspirators Boasted That Hellman, Brown and White Did Not Dare Let the Pacific Bank Go Down. D. S. Dorn, ‘A. F. Johns and M. H.| Sherman were not only in the busi- ness of silencing some dishonest news- papers, but of corruptly Bank Commissioners in the great plot to ruin the Pacific Bank and the Peo- le’s Home Savings Bank. The let- of Sherman that are published Over ters this morning prove the charge. his own signature M. H. Sherman has confessed that he schemed to influ- ence the official action of Bank Com- missioners W. H. Knight and Charles Dunsmore. plot was one of the in the whole history of the conspiracy. Two nonths before the crash came Sher- man and his confederates thoroughly most understood that any honest investiga- tion of the condition of the banks | would result in the closing of the in- | stitutions. They therefore plotted to | procure a fav ble report. othing could be done by the dishonest manip- ulators to influence the official actio Gerberd:. =, who was president at t time of the Bank Commission. wreckers could not fight Mr. Ger- influencing | not dare allow the Pacific Bank to go down, as the ruin of that concern would provoke a run on the other banks and |in a period of financial uncertainty such as existed in 1893 the crash of one bank would destroy the existence of the | others. Sherman counseled, therefore, |if the worst came to the worst, that | Frank McDonald and J. E. Farnum should o to the other bankers and not ask but demand their assistance. This s not unlike an offense on the highway. | Intermingled with these letters of Sher- | man are other plots and plans in which the great manipulator with untruthful reports and dishonest sentiments suc- ceeded in maintaining his clutch upon | the McDonalds. SHERMAN'S ABSURD ADVENTURE ON THE WAY T0 NEW YORK. Sherman very seldom wrote any- thing more serious than nonsense. He had been sent st to use desperate measures to relieve the McDonalds and their bank from the desperate situation in which he had placed them. Upon his energies more than upon those of any | other man depended the existence of ling and they could not corrupt him. contrived therefore to deceive | him if possible. | This dishonest task was assigned to | D. S. Dorn, and he was so successtul in | -tting Mr. Gerberding out of the | that Sherman congratulated him efforts. Sherman also shows in kable letters that the judg- Bank Commissioner Duns- r h his re ment of ould be influenced by the fact Du; nore’s ‘' brother-in-law employment by Sher- mmissioner Knight wa close personal friend of Sherman, who craftily remarks in one of his Jetters that at a very critical time in the history of the tottering institutions he had dined at the ho of Mr. Knight in Oakland. The schemer also took oc- that had b casion to thank J. E. Farnum, the manager of the People’s Bank, for warning the bank wreckers of the coming of the Commissioners. Far- | num, who is now the manager of the defunct Pacific Bank, was a son-in-law of Bank Commissioner Knight, and | through that relationship secured the information that was so valuable to | the conspirators. The warning was given in time to permit the dishonest bankers to fix up their affairs with some semblance of honesty. The letters of Sherman | that give these revelations to the pub- lic are of great importance, and prove | the accusation of The Call that Moses H. Sherman was not only the chief agent in ruining the Pacific Bank and the People’s Home Savings Bank, but | knew it, and was as dishonest in his transactions at that time as were the | MecDonalds. Not only was Sherman in- teres in the Phoenix wildeat schemes and his gigantic Los Angele deal, but he was very deeply involved in assisting other manipulators to keep up their drain on the banks. In one of telegrams he hysterically begs Dick for God’ ake not to dis his two great banks and the safety of the public’s money. Sherman had inspired the road. He knew its possibilities and he knew that the Pacific Bank was tot- tering on its foundation. Dick McDon- ald was crying for help in this city when Sherman went East, and one of the most important letters that M. H. !Sherman wrote to R. H. McDonald Jr., indicating what progress had been made in the awful struggle for money, contained the information that Mr. Sherman had stopped at some way sta- tion, missed his train and lost his bag- | gage. This startling information must have been a relief to R. H. McDonald Jr. The letter is characteristic and is {as follows: NEW YORK CITY, Saturday, Oct. 29, 1892, My Dear Friend: Here 1 am in old New York. It seems like old times. The rush and h hurry. You would laugh if you could see the shape I'm in. At 3uffalo I got out to get something to nd the train went off and left me. k my two bags. 1 left them in sleep and hat, ete., ete, Well, I had to catch another train, but I wired the conductor to care for my things and to bring them here. Thus far T have not been able to get the % But I go to Jersey City soon to what I can do in the matter. Thus far I have seen no one, but I have written a note to F. V., also one to Johns, and sent same by messenger be 1 am anxious to know what F. and the others have done. I sup- write you every day here. vill all continue to do our seems strange that I do not from you. Have found Mr. J. and have m my check for $100 to go ank and get me some money. No baggage and broke. One can hardly help laughing. Hope the next mail will bring long letter from you and I will write you what I learn from those here.¢ Hope yvou are well and not working too hard. M. H. “ANY DISASTER AT THIS TIME WILL RUIN US ALL.” When anything threatened to inter- rupt the flow of gold from the Pacific Bank to M. H. Sherman or to cut off the future supply of money for the honor the checks of O. T. Dyer. In an- | other he assu Dick that they must all stand together, for any disaster at that time would ruin them all and | their banks. [ In this assertion Moses H. Sherman very clearly indicates that he consid- | ered the dishonest institutions as much his property as they were that of the McDonalds. There is possibly no more interesting letter than one which published this morning to show the re- markable audacity of Sherman and his confederates. In this epistle Sherman declares that the other bankers of this | city, such as L W. Hellman, Lovell White, Thomas Brown and others, did | is southern manipulator he had something more important to tell than the loss of his hat. A few days after the fore- going letter was written, R. H. McDon- ald Jr. had come to the conclusion that he would take a desperate step to sav himself from being bled any further by the Dyers and their Riverside bank. The situation of Dick in this city was becoming unendurable. ceiving from the | sense and false his He was re- East words of non- encouragement, while field was becoming smaller and aller and he saw himself being cor- i like a rat in a trap. To save himself he decided to dis- honor any check that the Dyers made upon the Pacific Bank, and he so0 in- formed the conspirators in New York. This meant that the Riverside bank n [ | THE BALDWIN SAN FRANGISCO. CAL. Moses H. Sherman was never In ignorance of the fact Sherman knew that the banks would not be allowt Sherman undertook this task. took to Influence Commissioners W. H. Knight and Charles Dunsmore. to the dishonest schemes of the McDonalds, out of the way. J. E. Farnum, manager of the commission and warn them to prepare. mission. simile. That the plot worked successfully is prove . THE GREAT PLOT TO CONTROL THE BANK COMMISSION. that his schemes and those of his confederates were ruining the Pacific Bank and the People’s Bank. ed to continue unless something was done to influence the judgment and control the action of the Bank Com- When the examination of the People’s Bank was to be made, a few weeks before the final crash, Sherman under- D. S. Dorn’s task was to get Bank Commissioner A. Gerberding, who was no party f the People’'s Bank, was to notify the bank wreckers of the coming of d by the shameless confession of M. H. Sherman given above in fac- must close and consternation ruled in New York. Sherman came to the front with a startling telegram that contained an encouragement that Sherman knew he had Bo right to give. as follows: In this emergency M. H. The telegram is NEW YORK, Nov. 3, 1892. R, H. McDonald Jr, Vice President Pacific Bank, San Francisco: For God's sake pay all D. checks for thirty’ days. Everything depends on this And keeping all_quiet. We will surely close deal, getting you quarter million cash now and balance soon. Relatives and friends of D. here put- ting up part of this money. iso Chicago friends. " 1 go to Chicago to- night, returning here _soon. cKee still with us; helping. D. must be kept here working this deal with us. A"f’ disaster at this time will ruin us all. Enemies already on our track, but everything encouraging here. Keep ™ No. 168. This Company TRANSIITSand DELIY ERS messages ooly on conditinns himitin el 2:zammst 001y by re roeitize 1€ Bl o waTh The Comiam UNEFIPATED MESSAGE and THOS T ECKERT General Manager 1< habil 3 nrssaze Wack (9 Hie —nding 131100 for conpInson al S hech hate borD asseted o by § 0t e Coupany 1 04 hold 1tsell habhe 1 1hereon, Bof 0 ADY « 45 S hore ¢ vered by request nf the setvlr nudet he ~ODAINIODS DAMed 4D THE WESTERN UNION TELEGRAPH COMPANY. 21,000 OFFICES IN AMERICA. _CABLE SERVICE TO ALL THE WORLD. sender of the e 41418 15 BOF presented W NOR g ¢ FB ) h ECEIVED at 8an Francisco, Cala. Dated R To } vICE ‘FOR GODS SAKE P DEPENDS ON THIS GETT ING Y0U QUARTER AD FRIENDS OF D HERE MA NEW YORK 100 coLL 8-35 AM M Standard Time. 3 MC FRiST JR B AWK DONALD P ACIF 1C H SANFRANC 15C0 MILL ION CASH purT ING UP PRI OF THI S CHICAGO FRIENDS I GO CHICAGO MCKEE STILL WITH US HELPING D MUST BE : THIS DEAL WITH US ANY DISASTER AT THIS TIME WL ENEMIES ALRE 2OY ON KEEP MUM WE KEEPING auflflpéms HERE “ANY DISASTER NOW WILL RUIN US ALL’ OUR TRACK BUT EVERYTHING 830 am AY ALL D CHE(KS FOR NEXT THIRTY DAYS EVERVIHING, AND KEEPING ALL QUIET WE WILL SURELY Cu 0S€ DEAL. NOW AND BALANCE SOON RELATIVES MONEY ALSO TONIGHT RETURNING HERE SOON KERE HIRE WORKING L RUIN US AL ENCOURAGING HERE, STRICTLY SECRET FROM ALL. . ‘While Sherman and his assoclates were in New York trying to negotiate the worthless securities of the Pacific Bank, R. H. McDonald Jr. was in this city on the verge of desperation. ally increasing his enormous overdraft and rapidly driving Dick to the wall. came so severe that Dick determined to dighonor all future checks made by Dyer. 0. T. Dyer, manager of the Riverside Bank, was continu- This drain of the Riverside Bank had be- This information was telegraphed to the conspirators in New York and called forth a hysterical telegram, which is given in fac-simile above. mum. We are keeping our g}ans here strictly secret from all. . H. 8. MAINTAINING THE TREMENDOUS . FLOW OF MONEY BY FLATTERY. Another lying telegram was sent by Sherman with the purpose of keeping Dick in line. Day after day went by and nothing but words came from the East. Not a cent of money was ob- tained and hundreds of thousands were needed. Sherman knew his game and made flattery take the place of cash. The following telegram was sent to tickle Dick into sflence: December 3, 1892, R. H. McDonald Jr., V. P. Pacific Bank, San Francisco: Return from Boston first of week. Your beautiful letters all received. Am toiling con- stantly. Hope close up deal very soon. J. is working night and day with us. Don’t_see how we could do without him. We well appreciate that we must g:t you this money quickly. Please patient, for you will surely be the winner in the end as a reward for your faithfulness to us all. M. H. PLACING BANK COMMISSIONER DUNSHORE UNDER OBLIGATIONS. On April 30, 1893, M. H. Sherman wrote an exceptionally important let- ter, indicating that he had placed Bank Commissioner Dunsmore under such obligations to him that the Commis- sioner seemed very anxious to please Sherman in every possible way. The Commissioners has just finished their examination of the Pacific and the People’s banks. Less than two months of life remained for the institution and Sherman in writing to Frank McDon- ald did so to Indicate his pleasure that the ordeal of examination had passed so successfully. Sherman had re- turned from his foolish trip to the East and as a matter of fact had done noth- ing, except to be busy. His letters were written simply to flatter R. H. McDonald Jr. into inactivity. All of the epistles were of the same kind and had no special meaning, except the one indicated. The letter that relates to the Bank Commissioners is as follows: Sundav morning, April 30, 1893. The Baldwin, San neisco, Cal.— My Dear F. V.: 1 go south ‘to-day. ‘Would have gone before only it seemed best to all that I walt here until after the Bank Commissioners were through. The Commissioner, whose home is in Los Angeles, is under obliga- tions to us for favors there; also his brother-in-law is in our em- ploy there. Dunsmore’s brother- in-law and Mr. D. seem very anx- ious to please us in every way pos- sible. They praised the improvement in the bank’s condition, only criti- cizing the matter of too much money having been put in of late in the Mohawk canal and a few things like that. In the other matters your brother tells me he has written you. I asked him to please not do so until he (himself) and myself had made up our minds for sure that we wanted to do anything, because it was useless to spend a whole lot of time writing letters and sending telegrams and then not doing anything. As the matter now stands it is decided that when I reached Chlmdgo I am to run over to New York and see you and talk mat- ters all over to you there and we see what is best. Really, I am not so particular about it. One day I think one way and one day another. Mur- hy is still in London. He sent us orty thousand dollars the other day and dullest times are there. He thinks he is going to surely make a go vet of the whole business. Murphy has been there a year now. Slxfierely. THE GREAT PLOT OF THE WRECK- ERS T0 MUZZLE THE BANK COMMISSIONERS. It {s probable that M. H. Sherman never wrote in his life a letter of great- er public interest than the one he ad- dressed to Frank V. McDonald on April 26, 1893, in this city. In this letter Sherman shows that the conspirators who ruined the Pacific and People’s banks not only tried to deceive the Bank Commissioners but to bribe them. As Sherman tells the story in his letter the wreckers outlined a certain and a very definite plan of action. According to this plan D. S. Dorn was to get Bank Commissioner A. Gerberding out of the way. Gy;rberdlng had always been a thorn in the sides of the schemers. Every epithet their tongues could command was applied to him for his vigilance in watching the affairs of the two banks and demanding from the bank robbers a strict accounting for their action. ‘Whenever Gerberding appeared the wreckers trembled and Sherman, in the letter that will follow, declares that D. S. Dorn did clever work in getting Ger- berding out of the way. Dorn’s suc- cess was, however, only part of the tremendous task that these men had undertaken. J. E. Farnum, the mana- ger of the People’s Home Savings Bank, was to warn the conspirators in time and to let them know when the Bank Commissioners might be expected, so that these manipulators who were de- liberately wrecking two great institu- tions might make their necessary prep- arations for the visit of the official in- vestigators. It should not be forgotten that J. BE. Farnum was the son-in-law of Bank Commissioner Knight. Sherman con- gratulates Farnum for having done his part of the work. The other details of the plot were left to Sherman h! IR As already explained he declared that he had placed Bank Commissioner Dunsmore under obligations to him for personal favors received and for having placed Dunsmore's brother-in-law in the Los Angeles Bank. Sherman was also a close friend of Bank Commis- sioner Knight and declared that he had done his duty when he dined at the home of Bank Commissioner Knight. This in outline was M. H. Sherman’s confession of the plot that the bank wreckers concocted to prevent an hon- est criticism of the institutions that they were ruining. The result of the plot is described by M. H. Sherman in the following letter that was written on April 26, 1893: THE BALDWIN, San Francisco, Cal., Wednesday. My Dear F. V.: I wculd have been away from here two or three days ago but for the ex- aminers examining P. B. We are all very anxious that the examiners praise us and that they help us., I think it will do good. I was at Mr. K.’s (Oak- land) to dinner last evening and am invited there this evening. Your brother tells me that the board seems very kindly disposed so far. D. S. helped manage it so that Mr. G. did not come to the bank with the others (only two). Mr. Farnum is just as good and kind as he can be and found out (in advance) that they were com- ing and let us all know, so get ready. He and your brother seem to be get- ting on finely now and there seems no frictién of any kind. D. 8. is going off on his vacation soon. Everything seems as usual. There seems to be a kind of quarrel or something between our brother and Mr. Norton of Yuma. our brother has ordered him to sto; expense there and refuses to sen money down. This. so I am told, seems to have made Norton an, and he is kicking. I have been appealed to to say what you agreed to do when you was there. I refuse to talk or ¥et mixed up. The fact is R. H. Jr. is trying to economize. You know Norton is a fine man, but he seems to think you have no end of millions for him to draw on. I understood your brother to_say that he was going to gend Dr. J. down there and pay off things and have expense shut off. I have tuker:wfrent pains—you see I hap- {!eln to be with you and heard some of e conversation—not in any way llngffl:dm when appealed to as to what eard. We don’t want it to appear to outsiders that we are quarreling among ourselves at this critical time. Perhaps it 18 no harm t . J. gBTEmL e T et D best what to do. Please do not oW think I am mixing up in what 1s none of my business. ‘I only want to help harmonize things if I can. Veridtrfily, SHERMAN SCHEMES AGAIN T DE- CEIVE THE BANK EX- AMINERS. On May 20, 1893, M. H. Sherman wrote Frank McDonald another letter deceiving the young banker In refer- ence to affairs in Los Angeles, and ex- plaining, also, how the Bank Commis- sioners had been imposed on by the transfer of Phoenix bonds. Excerpts from the letter are as follows: LOS ANGELES, May 20, 1893. My Dear F. V.: 1 fully realize the situation East. My hair has stood on end for the past two months, as every morning I take up the daily newspa- per and look over the condition of financial affairs in the East. Referring to the Phoenix matter I suppose that others have written you fully about it. I was not so particular in re- gard to it, but the way matters stood it seemed almost impera- tively necessary that certain of the securities should be trans- ferred to the P. H. B., and as at that time the B. C. were giving us much annoyance and were de- manding certain things it seemed the only thing to do. They made me sign a guarantes which was as binding as a promissory note and made me make certain agreements with regard to the com- pletion of the plant at an early day, etc., ete. This Phoenix proposition is all right and the present bond issue there, cov- ering, as it does, much more than the old issue did, is really a much more conservative and safer bond issue than is the one here from Los Ange- «les. The S. P. is spending an enor- mous amount of money at Santa Monica,and their larze ocean steamers are now loading and unloading freight at their new wharves there. Hoping to see you soom, 1 am, very truly, H. SHERMAN. “BROWN AND HELLMAN DO NOT DARE LET ANYTHING HAP- PEN T0 OUR BANKS.” The astounding audacity of M. H. Sherman was shown in a letter that he wrote to Frank V. McDonald on May 21, 1893, a month and a day be- fore the Pacific Bank and its feeder, the People’s Bank, went down with a crash. Frank McDonald had written to Sherman telling him of the precari- ous condition of the institution and begging for some assistance. Sher- man’s_electric road and his Phoenix and Mohawk ventures had absorbed enough money from the two banks to ruin them. Sherman had traveled East to deceive the McDonalds into a be- lief that he was trying to negotiate bonds which he knew were not nego- tiable. The end was approaching, and Frank asked for his advice. Sherman had preyed upon the McDonald banks for over two years, and the advice he sent back was most extraordinary. He declared that the other banks of San Francisco would not dare let the Paci- fic Bank go down, and could be forced or in other words threatened to supply the Pacific Bank with money. Sher- man declared that the ruin of the Me- Donalds would create a panic in the State, and that Hellman, Brown and other local bankers would put up the funds rather than see the McDonalds go under. Having given this advice, Sherman made another play for more money for his Phoenix venture. The letter is most interesting, and is as follows: LOS ANGELES, May 21, 1893. My Dear F. V.: It is such a busy tife. No rest, but toil, toil all the time, and F. V. we do try, oh, so hard. It has sometimes seemed that the con- stant worry, work and annoyance would just kill me, but when it seems that my life was hard, then I think of you and of all you are .going through. Well, the good Lord knows why. I suppose we must have this discipline. Then I think of San Fran- cisco so much. F. V., those men, Brown, Hell- man and the others don’t dare, that is the way it seems to me, let any- thing happen to our banks. The memory of the Bank of California failure must be green in their memory. That failure brought down others. If it should go abroad in this State that anything had had happened to the rich McDon- alds think of what a panic it would cause among depositors generally and the other banks would have to look out. No, F. V. And 1f vyou find you know all about the situation, T know nothing about the inside of things; I never ask only where I can help; the banks are ever in a hole. You must let us know in time and Farnum and your brother—Farnum is on very friendly terms with many of those men—must go and see the other San Francisco men. My idea is that Mr. White would help. He has a pile of money idle I am told and get help in season. Of course, we must not do this unless absolutely From what your brother tells me things-are improving much. I have never felt quite sure if he told me these things to encourage me or {f really things were getting so much better in fact. Well, you know what is best, better than I can tell you. Forgive me for seeming to mix up in affairs as I may have seemed to do in this letter. And now a word as to the Phoenix Water Company. We should have levied an assessment long ago, but Hine would not agree to it. But the city has been growing so and so much has had to be put in in extensions that this is absolutely necessary now. Finally he has agreed to it, i. e., to a $6000 assessment, $2000 each. The in- terest on_the bonds comes due in nine days. We must be prompt in it, it hurts so to have any delay. If you will wire me that you will ga{ in $2000, then I will pay in $2000 an will see that Hine does the same. Let's have it fireed that the. $6000 is paid into P. H. necessary. S. B. to be used to pay interest, i.'e., pay coupons and for nutbxi;f else, eh. gincerely, A The plots of M. H. Sherman did not end with his boast of ability to core rupt Bank Commissioners and te “stand up’ reputable citizens who were fearful of the methods he employ- ed. The Call will show to-morrow that Mr. Sherman was also an adept, or assumed to be such, in influencing Legislatures through the assistance of his great ally, the Southern Pacific Company. PARRICIDE AND SUICIDE. Drunken Desperation of a Reading (Pa.) Youth. READING, Pa., Nov. 13.—Morris J. Lutz, aged-44 years, a shoemaker, was shot_and fatally wounded to-day by _his son Harvey, aged about 18. Young Lutz came home intoxicated, and his father reprimanded him. This angered the boy, and he fired two shots tnrough his fath- er’s head. The boy then committed suicide by cutting his throat. He had the reputa= tion of being a desperate young fellow. Fell Under the Wheels. STOCKTON, Nov. 13.—Eugene Fields, a well-known resident, 60 years old, received robably fatal infuries this afternoon at Llhrop. He attempted to swing aboard 2 moving train and fell under the wheels. One arm was ground to a pulp. He was brought here and the arm amputated, but owing to his advanced age little hope is entertained. 2 el Li Hung Chang Shelved. PEKING, Nov. 13.—Li Hung Chang has been ordered to proceed to Tse Nan, capi- tal of the province of Shan Tung, to con- cert measures with the Viceroy of Shan Tung to prevent future inundations of the Yellow River (Hoang Ho). This appoini- ment is regarded as virtually shelving Prince L1