New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1893-11-05
MISRULE AT IT'S WORST.
HOW THE DEMOCRATIC RING LOOTED THE
MADISON SQUARE BANK.


ING HIGH STATE OFFICIALS IN THE
SCHEME TO GET MONEY FROM THE
HELPLESS DErosIToRs-THE PARTY
TRYING TO pERPETUATE ITS
CORRUPT METHODS
There are no people who better citizens than
those who have bank accounts. There are ho
people who have a greater interest in pure gov
eminent than those who have bank accounts
There people who have stronger reaso"'
for voting against the candidates OF the De"o
cratic machine politicians of this State than those
who have bank accounts. Indeed, every thrifty
man who has a vote. whether he has bank ae-
count or not, who works hard. earns honestly
and wishes TO have his savings preserved tor MN
invioste, will do well to consider, on this eve vi
election whether he dare trust his savings ""ie"
he has put aside for his support in his old age 10
provide for his family in case OF MS death VI "
educate and start his children in life-whether ne
dare trust the guardianship OF his proper" !"
the ring of Democratic politicians now IN coh'Io'
of this State, who have been convicted OF 'he
most fragrant inefficiency dishonesty and preach Oh
trust during the last three months
Perhaps a good Democratic voter may say ION,
we'll 1t may be that the present leaders OF the
party to which / belong are unprinclpieo. ihere
are unprnciped everywhere ana IN every
organization These leaders may msgoVerh sohe
what but truth and right. though crushed TO
earth are sure to rise again, and it is better to
submit to bad government for a time than TO allow
my party opponents to be elected AT the worst
the Democratic leaders can reach me only IN
directly and my lands and my bank account are
safely beyond their reach" Ii is probable that
some such argument as this Is gone througo Win
by many an homes. who has always been
Democrat. Such man does not understand or ne
does not stop to think. in how many points the
government of a State OF city touches MS lie
and possessions. and how great the Office o. the
ting bad
prey of what is his
There has been no better objec; lesson on this
point than the fraudulent failure of the Madison
Square Bank, of this city, which was looted by an
unscrupulous president and its depositors defrauoe
OF he greater part of their money, an act when
could not have been possible except for the con-
yenient blindness. to say connvance OF the
officials who's, duty il to watch for dishonesty
and TO expose il il the interest OF creditors anu
depositors In fact. men of great influence IN the
Democratic party, including the State treasurer
himself becam. parties 10 the 1rauo anu nau
the benefit Of II.
The history of the Madison Square Bank Is 100
well known 10 require more than a Driet re-
view The bank was organized about fifteen
years ago by DR. Joseph A Main lis busi-
ness along without special incident until IL
came into The hands of w. Wetmore Crydei. uhuer
whom its affairs sank so low that a reorganization
became necessary. That was about three years
ago. Joseph f. Blaut came forward as the reof-
ganizer and with his appearance the story OF the
present dishonest dealings begins Blauts history
is instructive. showing what sort OF men may
get into places OF trust. and how much damage
they can do unless checked in their criminal career
by honest and competent State officials.
JOSEPH T. BLAUTS RISE TO POWER.
Joseph T. Blaut began his career in this city
as waiter in a Thrd-ave restaurant, OF which
he was part owner. His partners were Mr.. and
Mrs David Minzeshemer. Mr. Minzesheimer was
the head Of the firm. Baut had charge of the
service. Blau, remained with the Minzesneiiners
unit, 1875 when he went into the real estate bus-
ness with an office in Pine-st. He made his first
large profit il handling the lease and charter or
the Mechanics and Traders Bank. at the time of
the reorganization of that institution. 1t is said
that he made 500 600 the transaction. With the
added capital thus gained Blaut increased his field
of Cd rations in both the real estate and note
brokerage business His success in the deals when
he made suggested to him the idea of going into
banking. The opportunity came when the Madison
Square Bank needed reorganiza ton. Despite his
success Blaut did have strong financial
backing and he was forced at the outset to enter
into transactions such finally proved the ruin
of the bank
One Of his first and worst deals made with
r. T Mcdonald Mcdonald lives at the Hoffman
lIouss. He is intimate friend of Edward >.
Stokes and of many of the Democratic politicians
who make that hotel their headquarters in this
city. His business is that of promoter He has
promoted many enterprises in the South and West,
and has spent much of his time with promo
tons" of various sorts at Albany when the Leg
stature is in session. He has also been fairly sue
cessful in promoting the interests of r. T. Nc
Donald One of McDonalds schemes was the con-
solidation of all the electric street railroads of
New-Oreans into company called the New-Or-
leans Street Railway Company. The company was
bonded in an enormous figure, ana Mcdonald I'M
dertook TO place the bonds Blaut was exactly the
man he wanted. and he exactly the man
Baut wanted. and they entered into the following
scheme 10 feather their own nests: Mcdonald was
to obtain loan of $4,000 in the banks stock from
the Madison Square Bank. depositing therefor, as
securities bonds of the New-Orleans Street Rail-
way Company. BY a secret agreement with Blaut,
the notes which he gave TO the bank were not 10
be paid until the bonds of the New-Orleans Street
Railway Company could be doomed up TO 80. This
acted in the nature of perpetual loan. as the
bonds not likely ever to reach 80. The bank
stock which he received first made out to
him. as trustee for the Fort Wayne Electric Light
Company OF Indiana. another enterprise in which
TO himself personally. The secret agreement con-
,ae noe were a snd placed
the banks assets as negotiable paper. out of this
transaction Blaut got an apparent subscription of
$4,000 to the stock Of the bank. besides probably
private bonus Mcdonald got possession of $50
less bonds OF the New-orleans Street Railway
Company; and the bank suffered an impairment
OF its capital 10 almost the entire extent OF Nc
Donald's loans.
Mcdonald was elected a director Of the bank in
which position he borrowed from the bank, at
various times $4,000 $1,000 for the Fort Wayne
Electric Company. Mcdonald became Of the
most active managers Of the bank, and unques-
tionably knew and approved the frauds and ir-
regularitts which Of constant occurrence.
When the failure of the bank could no longer pc
averted the eve of its suspension in fact, Nc
Donald took his notes and changed the character
of the Enforcement upon them, writing upon the
back the terms OF the agreement TO which they
subject. This Is forgery under the laws of
NewYork. and on the charge OF forgery Mcdonald
was arrested. ana Is now under bonds furnished
By his friend. Edward :. Stokes, to answer the
charge in court. Thus much for the connection of
Bank
THE BOYS GET A CHANCE AT GOOD THING.
So good thing Mcdonald had to
be kept from the boys" The possibilities of
personal profit explained TO certain other
Democratic politicians who accustomed TO
thar IL he tfraaI, and IcIl1 q >.