The Portland daily press., 1893-09-19
NEW ENGLANDERs sWINDLED.
The Northwestern Guaranty Loan Com
pany's Collapse.

|
New York, September1S. The Herald
prints the following:
When the Northwestern Guaranty
Loan company of Minneapolis passed into
the hands of receiver,on May 90 last, il
came as a blow to the banking and in
vestment world of New York, which
would have been increased a thousand
fold had the actual condition of the COM
pany been known. s. IN
| From the date of its organization the
| company never missed a dividend. On
January 1st, last, it declared semi
annual dividend of per cent mailing
checks to the stockholders so that they
| reached them on that date
| Four months and twenty days later it
closed its doors owing more than So, 600,
| O00 Of this amount 50, 300, 600 is fraudu4
lent notes absolutely worthless The
assets can best be suggested by an inter
rogation point 4.
For more than two years certainly, and
probably for a longer time, this COM
pany had been rotten to the core. It's ex--
istence made possible system of wild
cat financiering which is unparalleled in
this country.
Its history is a part of the history of
one man, who brought it into being,
made the great power it became, and
who finally wrecked it. This man is
Louis f. Menage. He made it a clearing
house through which he could float his
magnificent chfmeras.
The Northwestern Guaranty Loan COM
pany was incorporated under the laws of
Minnesota on May /, 1884, with an au-
thorized capital of $40, 900, 900. The paid
up capital at that time was $500, 900.
For the first two years Mr.. Menage
held practically all the checks The list
of officers and directors of the company
were probably. the strongest that could
have been made up in Minneapolis. This
is most Important.
1t advertised widely It selected CAPT
talists from the East-New York, Boston
and the interior Of New England-who
made up party to visit the company's
home in Minneapolis, and they were then
taken through the loaning fields Of the
Northwest. That scheme, which was
carried out in 1880, was a master stroke
of advertising.
The visitors thought they knew exacly
upon what properties money was loaned
and the amount loaned. They could see
the property themselves and the officers
of the company could tell them how
much the property was worth and how
much was loaned upon it.
Up 10 tHaG Gllnc tue CoIupduy udu
placed upward of ST., 600, 900 in securities
In 1889 the paid up stock was in
creased to 81, 000,0 900 and later to 81, $780,
0O0
AS far back as 1886 a guaranteed fund
of 300, 600, which in 1889 was Increased
to $780, 600 for the better protection of
the holders of securities was placed with
of Boston and the Industrial Trust COM
pany of Providence, the latter holding
$50, 900 of the total amount.
The Maine Trust and Banking company
of Gardiner, Me-, was also trustee.
Among the principal Eastern. agents
were the Industrial Trust company of
Providence, F. H. Fisher OF Burlington,
VT. the Chapman Banking company of
Portland; H. Austin of Barton Land
ing, VT, and H.W. Allen of st. Johns
bury In addition to these there were
agents in almost all the little towns
throughout New England. The Eastern
banking business was done through the
American National bank, at 1873 Broad
way. All the commercial paper was
made payable there. 4s3s
After the opening of this year of. panic
and hard times thousands upon thou
sands of dollars worth of commercial pa
per fell due at the New York bank of the
house, and it was paid the instant 1t was
presented. No man was ever more care
full in paying interest and dividends
and in meeting payments the moment
they became due than was Louis F.
Menage.
Then there came a time when the cash
balatces of the Northwestern Guaranty
Loan Company became low. Notes
came due with alarming rapidity and in
enormous amount
On the 18th day of May it was known
that the company could not make good
re fr11ar fead of arnin1 IT
could not sell other commercial paper
that it had ready. There was nothing
left to do but to place it in the hands of
a receiver.
The Minneapolis Trust company, of
which Samuel Hill is the president, and
]. NJ. Hill, the president of the Great
Northern railway, is the principal stock
holder, was made the receiver. Then
began the unraveling of the gigantic
fraud. The receivers were confident that
the losses to the creditors would be
slight, but when they came to look into
the matter they were dumbfounded.
They found that property had been
some instances ten times its value and
the mortgages sold.
But the most astounding discovery was
made in connection with the comm ercial
paper which the company had guaran-
teed and Sold. Directly after the an
OF the appointments OF the
attorneys in Minneapolis began
to receive notes from all over the country
for collection.
The lawyers hustled about to find the
makers of these notes. They could not
find them for the most part. i
Out Of the sixty makers of notes
whose signatures were affixed to notes
which came to one Minneapolis firm of
lawyers alone, they were able to find but
four men. Not one of these men has in
a commercial sense business existence.
These notes continued to pour in until
at the present time it is known that the
Northwestern Guarantee Loan company
sold s2,300,000 worth of commercial
paper signed by these irresponsible people
and which is absolutely worthless.
The greatest sufferers from this class
of paper are in New England. The little
town OF St. Johnsbury, VT, alone holds
SIS, 900 worth of this company's bad
paper and worthless stock. In Vermont
$3.50, 900 worth was placed, nearly all of
it by Mr.. Streeter.
Less than $1,000 Of the Sc, 900, O0C indebt- |
edness of the company is in Minneapolis.
When the storm broke Menage fed the |
country and is now believed to be in |
Central or South America. 4
A Story Which Is Not Believed II