The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1898-11-06
What the Guaranty Loan Was.

"S5N SAAbl IAlCy Will SCI 1VO.
What the Guaranty Loan Was.
To The St. Paul Globe:
Although l have been resident and a
voter in Minnesota during the past three
years, l am not SO familiar with the facts
concerning the Guaranty Loan association,
of Minneapolis, as some who have lived here
longer. In a general way | recall the fact
OF the huge swindle; but on reading The
G b e this morning / was surprised to see
that 50 many Eastern banks were involved.
If 1t would not take too much of your val
liable space l would be glad to have you in
form me, first, when the company organized;
second what its purposes were; third, how
much it was capitalized for; fourth, what the
character of the business was; fifth, how
so many banks of the country became credi-
tors
AS understand it. Mr. Eustis was not
stakeholder but allowed the use of his name
as a director Some of the newspapers say
that his name was used against his Will,
while others say he attended the meetings.
l have asked several persons. but some say
one thing and some another. would IKE
the facts and believe others besides myself
would be enlightened by any statement you
might make. An UNIFORMED voter.
st. Paul. Nov. 5. 1885,
l. The Northwestern Guaranty Loan
company was incorporated in April,
1884. It's chief promoter was Louis
Francois Menage, a French Canadian,
who had previously been in the real
estate business in Minneapolis. Among
the inco1porators were Col. Robert S.
Innes, Benjamin S. Bull, L. P. Chan
nell and Julius E. Miner.
.. The ostensible object Of the COM
pany was to place loans on real estate
ard for consideration, to guarantee
the payment of principle and interest.
3. The original amount Of the capital
stock was 100000.
4. The character OF the business, If
the management had adhered strictly
to the legal functions provided under
the charter, is indicated in reply to
your second interrogatory It was
period when Minneapolis real estate
was booming, capital was being at
tracted to the place and high rates Of
interest were offered and paid. At
different times the list Of directors
comprised such well known names as
Thomas Lowry, E. w. Herrick George
A. Pillsbury, w. H. Washburn, WILL
LIAM H EUSTIS, j. S. Pillsbury,
Loren Fletcher, Clinton Morrison and
others almost equally prominent An
these men had large acquaintance and
extended influence. Their names as
ISOLATED with the concern attracted
capital from all sections. That is what
they were in the directory for. BY and
by money began pouring into the hands
OF Menage, who was its president, in
such volume that it became difficult
to find use for it. Then the scheme
was devised by Menage to manufac-
ture fraudulent mortgages. Debenture
bonds We're issued by the company as
security for the loans, and these were
regarded as 'gilt-edged" wherever they
were offered. This brings US to your
last interrogatory
5. With these securities in hand,
investors in the Guaranty Loan COM
pany residing in the East and other
distant points could readily secure
loans from their home banks with the
bends of the Minneapolis company and
the paper of Menage as collateral It
was by this process that the banks
became involved
AS to your general and concluding
inquiry, respecting the connection of
Mr.. Eustis with the company, it is not
claimed that he was a stakeholder.
He was, however, a we'll known citi-
zen and capitalist of Minneapolis, and,
at the time of the failure, mayor of
that city. He was first elected di-
rector Feb. IA, 1888; reelected May 7,
1883; May %, 1889; May 5, 1890; May 4,
1891; May 2, 1892, and May 1, 1893. In
addition to being a director, Mr.. Eustis
was, from Jan. 1 to May p, 1893, when
the company failed, inspector and loan
examiner, and as such was, from the
standpoint Of business honor, morally
responsible to the victims of the swim
die.
The records of the company show
that he was certainly present at
special meeting of the directors jan.
ID, 1891; also on Jan. g. 1891, and Jan.
20, 1891. At the meeting Jan. % he was
appointed chairman of a committee Of
six to investigate the condition of the
company's affairs. Their unanimous
report in approval of the management
of the companys affairs was submit
ted the following day. At the meet
ing of Jan. % Mr.. Eustis and three
others, one being the Hon. Loren
Fletcher, now a representative in con-
gress and candidate for reelection,
were appointed an examining commit
tee to examine all loans thereafter
made by the corporation. This posi-
ton Mr.. Eustis occupied at the date
Of the collapse of the institution in
May, 1893 with liabilities ranging be-
tween $6,O00,0OO and s9,O0O,oOO and as
sets, according to the statement of the
receiver, of the nominal value of about
$780, O0O
The Dufv NJ Cit;1ansh;o