The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1898-11-27

the Pacific Bank.
As already indicated in The Call the
association Of Mr.. Farnum with the
McDonalds began through Moses ii.
Sherman. 1t was through the agency
of Sherman that Farnum was placed in
the bank as a servant and willing
tool of the McDonalds. Before the as
sociatfons were closed Farnum became
one Of the most uneompromising con-
spirators, who forced from the McDon-
aids the remaining funds of the banks.
Late in 1892 and early in 1898 the Pa
cif1c Bank was soFeIy in need of funds
and was depending solely upon the
Peoples Home Savings Bank for its
resources. Sherman's schemes had al
ready made the banks fnsoIvent, but
the deluded people of this city were still
pouring their money into the Peoples
Home Savings Bank This institution
was nothing more or less than sieve
through which the savings of deposit
tors dropped into the vaults of the Pa
cific Bank to be dissipated in their wild
speculations. Farnum knew the situa-
ton thoroughly and knew what was
expected of him. He knew that as soon
as money came into the Peoples Home
Savings Bank it was to be sent to the
Pacific Bank and he carried out his
contract to the letter.
One Of his first important letters in
reference to this proposition was writ
ten early in 1893 and is as follows:
SAN FRANCISCO, January T. 1893.
Mr.. R. H. Mcdonald Jr., vice-presi-
dent Pacific Bank, San Francisco,
Cal.-Dear Sir: 1 send per our mes
senger this morning twenty thousand
(s20,00O dollars in coin.
We have on hand a little more than
we think we will need in payment of
recent dividends. Besides, loans are
not being applied for to any great ex-
tent, and we cannot afford to keep
the cash on hand without getting any
interest thereon.
A year ago our board of directors
decided to have the rate of interest
changed which your bank allowed us
from six per cent to four and half
per cent. with the expectation that the
money would be available for loans
and investments within six months
thereafter.
While we have gradually drawn
down our balance, still it is of such a
sum as not to be of moment to US; and
if your bank can now allow us from the
first Of January five per cent on our
daily balances [. know 1t would be
greatly appreciated by our directors.
Please let me know If that meets
with your favor, and 1 will be glad to
bring the matter up before our board
at their next meeting. Yours truly,
]. E. FARNUM, Secretary.
The foregoing letter, which was writ
ten by Farnum in January, 1893, was in
measure somewhat formal. A month
and a week afterward Mr.. Farnum
wrote another letter In which he
showed clearly how the Peoples Home
Savings Bank was being bled to sus-
tain the dying energies of the Pacific
Bank. The Call promised to prove that
the Peoples Home Savings Bank was
simply a feeder for the Pacific Bank,
and in the following letter of John e.
Farnum that promise is kept:
SAN FRANCISCO, Feb. Is, 1893
R. Fl. Mcdonald Jr., Pacific Bank
Dear Sir: Yours at hand, and in reply
permit me to say that the r. Coal
Company paid only a portion Of their
loan yesterday, but I expect to col
Iect in all of it this week if possible.
I send you $4,000 coin this a. m, and
will continue to send our surplus
money for our credit with you. Your
apprehension as per your letter may
be we'll founded, but I do not look for
anything of that nature, although it
| is well enough to be prepared.
do not know what your ideas are,
| but 1 presume there is to be limit
to the amount that you expect to re-
ceive from us and a time beyond which
| the special deposits are expected to
| cease. Please let me know about that
and oblige, yours truly.
J. E. FARNUM
Two months later affairs in the Peo-
pies Home Savings Bank and the Pa
\ cific Bank were becoming critical. The
enormous debt of the Pacific Bank was
rapidly approaching $1,00o,000, and,
Notwithstanding the compliance Of the
Bank Commissioners, 1t was imperative
something should be done. Farnum
and Frank Mcdonald understood thor
oughly that it was impossible to con-
tinue the depredations upon the Peoples
| Bank any longer, and a series of tele-
grams passed between the conspirators.
These kilograms show how clearly the
| bank wreckers understood that they
would have to settle their accounts in
kthe Peoples Bank. This, however was
! impossible, and affairs had drifted to
| such a stage that Farnum himself took
the reins and forced upon the dishonest
bankers the concluding outrages Of
| Sherman. He not only insisted that
Sherman should be tolerated In his dis
honest manipuiations, but he planned
to foist upon the banks several more Of
| Shermans worthless loans. The chief
of these loans was in reference to the
Electric Railroad of Phoenix, Ariz
This road, as The Call has already
shown, was built at an expense not ex-
| ceeding $35, 900. With this investment
| Sherman fioated bond issue of $780,
900. These bonds the Los Angeles and
Phoenix manipulation foisted upon the
Pacific Bank and the Peoples Home
| Savings Bank. These two institutions
as far as money was concerned were
| one. Sherman had Frank Mcdonald
absolutely under his control and he
| had had his relative, John E. Farnum,
4 In the Peoples Bank. The McDonalds
had already given $4,000 for the bonds
of the Phoenix Railroad, which was
subsequently known as the Valley
Street Electric Railroad. Sherman's
| agents, who happened to be dishonest