The San Francisco call., 1898-11-29
Part the Examiner and Chronicle Played in the War of Bankers
 and Local Capitalists.

franchise to operate on certain streets of Los Angeles. In the meantime. cer- tain bankers of Los Angeles had op- tained a franchise for another road that was to parallel the road of the Topeka Rapid Transit Company. These bankers intended seriously to enter the neld as competitors to the Topeka people.
 When the competing franchise was obtained a contract was made With the Pacific Rolling Mills of this city to build the road. Sherman in some way discovered this fact and then began his great manipulations to destroy all rail- road competition in Los Angeles and to control the local situation as far as transportation facilities were concern ed. Sherman played the rolling mill against the bankers and succeeded in frightening both. The franchises which had been obtained by the bank CTS were turned over to Sherman, who then obtained new franchises from the City Council of Los Angeles. The manipulators always contended that he
 had been forced to bribe the Council for these franchises, but there Is abso- lutely no evidence to show that he told the truth The town, as already de-
 scribed, was at that time enjoying a boom and people residing In the outside districts were eager to give encourage ment to any scheme that would ad- vance the value of outside property. Sherman had entered the field with a new idea-that of an electric road
 which. he maintained, could be ope-
 rated for one third less than it cost to
 run a cable road. His argument on 1 r-ir ha bankers and the Pacific Rolling Mill ! people Agents were sent to Oregon and Washington and to other northern ! places to ascertain what it cost to ope- rate an electric road These reports
 showed that Sherman was perfectly correct in his assumptions The fran ehises. therefore, that had been obtained
 by the bankers were turned over to Sherman, who had thus become, even at this early stage, master of the situa- tion.
 In the cable railroad, however. he had a most formidable competitor. which 1t was absolutely indispensable for him to crush. At that time Will liam Alvord, L. D. Benchley, the Pa cific Rolling Mills, Thomas Brown and the Bank of California were very much interested in the cable road of Los An
 geles. They held hundreds of thou sands of dollars of bonds of this road
 and necessarily for their own security
 wished to see 1t a permanent success. Sherman, however, succeeded in win ming the confidence of the managers and directors Of the Pacific Rolling
 Mills and induced them to build a com
 peting electric railroad in Los Angeles
 hot fov
 able to Moses H. Sherman.
 In the agreement of the Pacific Roll ing Mills to construct the road the local corporation declared that 1t would ac- cept the price of construction in a cer- | tain way. The money was to be paid one third in cash and for the remain der the Pacific Rolling Mills agreed to take two-thirds of the bonds of the new
 electric railroad. Under the terms of the agreement the Pacific Rolling Mills promised not only to construct the road itself and to build the cars. but to erect the powerhouse. This promise was one of the most extraordinary business transactions ever undertaken in Cali fornia. The Pacific Rolling Mills, as was already indicated, was vtally interested In the success of the cable railroad. The
 rolling mills held hundreds of thou
 sands of dollars of the bonds of this road, yet, notwithstanding this fact. it entered into an agreement to build a
 competing road and thus become a great factor in injuring the value of the bonds 1t already possessed.
 The managers of the cable road nat urally became very fearful. The dom mating spirit in the cable road of Los Angeles at that time was J. F. Crank, who represented and showed clearly to his principals in this city what they were doing. These principals were deaf to Cranks arguments, and 1t was de- cided to carry out the agreement with Sherman. When the terms of this com pact were made Sherman promised to obtain his share of one-third in cash. This cash was to be supplied by the
 Pacific Bank under certain conditions that are still of vital moment and which
 will be exploited by The Call at the proper time Sherman, as a matter of course. was not venturing any money of his own, and in order to obtain the coin from the Pacific Bank he entered into A secret compact with that insti- tuition.
 As soon as he had established a busi- ness relationship with the Pacific Roll ing Mills Sherman saw the tremendous sdvantage of enlarging his field of op- erations and he sought new franchises from the city government of Los Ange- les. These privileges to operate cleo tric railroads were most unusually
 generous. and Sherman, after he had concluded, had the power, if he wished to exercise 1t, of literally cobwebbing inc town with electric roads. He claimed that it was absolutely neces- sary for him in order to obtain these franchises to bribe the City Council of Los Angeles His assertion was never a public one, as a matter of course, and was accepted by the men with whom sherman dealt as the truth. It was
 known by those who were interested that Sherman had in his .manipuiations obtained the very valuable assistance of certain men very high in authority in the Southern Pacific Company. The ai- legged fact of bribery, therefore, was accepted without question.
 The situation had now become most