The morning call., 1894-03-29
SOME OF IT'S INSIDE HISTORY.
The Loot Began More Than
Three Years Ago.
FRANK v. McDoNALD's BONUSES.
Given Stock for Investing Nearly a
Million of Pacific Bank Money
in Bonds.

At this meeting some startling develop
ments will take place. There will be a re-
vival of the contest to control the directory
of the bank If r. ii. Mcdonald Jr. can
secure his fathers proxy he will be able to
regain the position of vantage which he
lost at the recent election of directors.
which resulted in victory for Captain j..
M. Mcdonald, but which was in reality a
victory for NJ. II. Sherman, president of
the Los Angeles Consolidated Railway
Company, who. as director of the bank,
has been inimical to r. 81. Mcdonald Jr..
Sherman had the support of Dunno aid
McPike and of Sawyer and Burnett. The
faction which Dick Med maid leads is
supported by Dorm and Dorm & Frank
NJ. Stone. Each side has a number OF
lesser adhereBts.
In the meantime decision is awaited
from the Supreme Court on Judge Heb
bard's decree restraining the Bank Com
missioners.
If the Bank Commissioners should be
found to have an administrative power. as
well as an advisory function. the victory
of neither faction at the April meeting
would for the present prove more than
nominal one, for whichever won would
not secure the control, which both are
seeking.
The inside history of the Pacific Bank
has not been written. Some portions of 1t
may never become known, but recent de-
velopments in the squabble for control of
that institution have brought to light GER
tain facts which show what Frank V. Nc
Donald had to do in the wreckinR of what
was once deemed one Of the most solvent
Institutions on the coast.
The beginning of the downfall of the
Pacific Bank was prior to January 1, 1891,
and before r. h. Mcdonald Jr. was re-
stored TO the management
The first speculation of Frank Y. Nc
Donald with the funds of the Pacific Bank,
so far as known by those who have inyesti-
gated the affairs of that institution. was in
1890, in connection with the Creosote
Pilipg Company. Frank Y. Mcdonald
invested in this concern some 5000 of
the banks money. This company had a
plant on the water front. Subsequently
the company went to pieces. The loan
proved total loss and was charged up to
the banks profit and loss account.
Not content with his first disastrous
speculation, Frank Mcdonald plunged
furiously into other and more expensive, if
not more disastrous. investments. He had
q purpose in his wild inanciering. There
were personal considerations in a majority
of the transactions in which the banks
money became tied up. There were bo-
muses. in the way of stock in the concerns
in which the banks funds were invested.
Frank Mcdonald received these bonuses.
The next plunge before the remem-
brance of the deal with the Creoso.e Piling
Company had had time to dim was into
Arizona securities. The first investment
was in the Phoenix Water Works, In
which Mcdonald became a partner Of NJ.
II. Sherman, Hines and others. The bank
put up the money. Frank Y. Mcdonald
secured one-third of his stock of the Water
Works Company, Sherman controlling the
other two-thirds. The treasury of the
Pacific Bank yielded up $1Oc. 600 on this
proposition.
Next came the Mohawk Canal and In
provement Company, the proprletors of
which gave glittering pictures of what
could be accomplished on the desert east
of Yuma by diyerting the waters Of the
lower Gila upon the arid lands. This was
also a private deal of Frank McDonald's
hn which $4,000 of the banks money
was invested.
During these early negotiations the re-
latives of NJ. 81. Sherman, with the Nc
Donalds. was of pleasanter nature than
those of recent date. There were fire.
quent conferences between Sherman and
young Mcdonald. Sherman was a con-
stant visitor at the latter's house. They
dned together. Presents were made to
Franks family
At this time Dick Mcdonald was en-
gagged IN securing divorce from his wife
following the Seneca Swain scandal and
his domestic affairs kept him away from
the bank and out of it officially.
While these love feasts between Di-
rector Sherman of the bank and Cashier
Mcdonald were in progress the gigantic
proposition of building a system of electric
street railways for Los Angeles was con-
ceived and began to assume form. The
arrangement was finally consummated,
which drew $500, 200 of money out of the
bank to be invested in electric railway
bonds and this withdrawal of capital
plunged the bank so far into the depths OF
disaster that it never afterward recovered
its prestige.
OhOoC WV JOdlb VI UUUu IuVeSL-
ments almost the entire capital of the bank
had been withdrawn. The money had
been absorbed by investments in unre-
muneralive securities and had been
diverted from the natural lines OF invest
ment. which the city customers of The
bank had reason to think should have been
followed. OF the banks total capital OF
Sl,00000O nearly 100000 had been rem.
dered unavailable by their investments.
Frank V. Mcdonald is now in Yoko.
hama writing volume of poems. Those
familiar with the banks affairs say thai
be will not return to this city. He has
incurred the illwill OF his father. DIR. r
H. Mcdonald, who has stated that he will
have othing more to do with his son.
Before all these transactions had been
ompleted the same line of action with
reference to the money of the People's
Home Savings Bank began to be adopted
Sherman found the investments and Frank
V. Mcdonald found the banks money
Manager Young of the Peoples Home
Savings Bank proved an obstacle to the
plans formed. SO be was quietly requested
to take subordinats position and did So
o. B. Carr was placed at the head of the