The San Francisco call., 1898-11-29
How the Great Manipulation Made Profit From the Consolidation Of the
 Roads.


 terests. The Pacific Rolling Mills had nearly $2OO,OOO in the cable railroad of Los Angeles. The rolling mills had a very large overdraft in the Bank of California. James G. Fair was not long in becoming aware of this sttua- tion. He saw that the construction of the electric railroad would cost a vast sum of money and he determined to take a hand in the game himself. He demanded a thorough investigation and asked why 1t was that the Pacific Roll ing Mills, of which William Alvord was then president, and in which James G. Fair was deeply interested, had tried to kill the cable bonds 1t owned by con- structing a competing electric line and accepting for the cost of construction the bonds of the new electric railroad.
 There was about that time series of very important changes made in the di- rectory and management of the Pacific Rolling Mills. William Alvord was re- tired as president and James G. Fair succeeded him. L. D. Benchley gave up his position as manager and Patrick Noble took his place. Fair considered the time opportune to demand from Moses H. Sherman and Frank V. Me Donald a strict accounting of the af- fairs of the Los Angeles electric rail- road The Pacific Rolling Mills had al ready expended a vast amount of mon ey and material in the construction of the road, and Fair demanded to know where and how the money had been spent.
 As a matter of necessity Moses H. Sherman had handled much of these funds. Fairs secretary, Bresse, smade the investigation and submitted his re- port There was in the item of ex- penses a sum aggregating several thou sands of dollars which created some discussion. Sherman declared then in making his accounting that he had been forced to expend a large sum Of money in bribing the City Council of Los An geles to obtain necessary franchises for the electric railroad. Fair made abso- lutely no objection to this item and accepted it as an ordinary expense. On incidental matters of construction, however, he fought over items no larger than a hundred dollars. In matters of absolutely honest business he was con- servative even to the point of parsi-, mony, but In "greasing affairs, as Sherman termed them, Fair had no comment to make.
 The Los Angeles electric railroad had already issued $1.480,000 in bonds. This issue was divided up among the various interests. The Pacific Bank accepted 586 bonds at an average cost of 50 cents. Several of Sherman'S personal friends had accepted the bonds and the Pacific Rolling Mills, as already described, had agreed to accept two-thirds of the amount of money it expended in the construction of the road in bonds.
 After Sherman and Frank Mcdonald made their accounting to James G. Fair the actual plot to ruin the cable railroad of Los Angeles began. Sher- man is authority for the statement that any dishonorable transaction was per sonally legitimate in this scheme to ruin the cable road. This concern at that time had nearly s1 900 issued in bonds It had received a grace of six months in which to pay it's interest on these bonds. When this period of grace had expired the managers of the cable company were unable to meet their ob- legations. Sherman had used every ar tifice to discover the secrets of the cable company and he employed agent after agent to spy into his competitors af- fairs J. H. Woodland, who subsequent ly became Sherman's uncompromising enemy, was employed to betray the cable company.
 When the cable railroad defaulted in the payment of it's interest. and J. F, Crank, the manager of the road, knew that Sherman and the managers of the Pacific Bank, and incidentally the di- I1p- Co, Bank, were scheming against him, he came to this city. Shortly after his ar rival he was in earnest conversation with some of the heaviest holders of the cable bonds He went to Thomas Brown of the Bank of California and Lowell White of the San Francisco Saw ings Union. Whatever practical re- suits came from these consultations the public never knew.
 A few days after the arrival of Crank, however, a most extraordinary incident startled the town. Two of the morning papers of this city-the Chronicle and the Examiner-published an article on the same morning In ref erence to the Los Angeles Electric Railroad bonds, and particularly to the fact that the Pacific Bank and the People t1Onle SaVlnSS Bank nelQ large quantities of these bonds. These articles, published on the same morning, contained the same facts. They were as far as their statements were concerned, absolutely identical. To a casual ob- server 1t might have seemed that both articles were written by the same man. The result of the publication of these articles was a run on the Peoples Home Savings Bank. This was In June. 1891, and was the first practical result of the tremendous war between the cable railroad and the electric rail- road of Los Angeles, with Sherman and the Pacific Bank on one side and Crank, Tom Brown of the Bank of California and the San Francisco Saw ings Union on the other. The McDon- aids were in the greatest consternation when they learned there was a run on the Peoples Home Savings Bank. It so happened that at that time there was in the vaults of the Pacific Bank a large sum of money. The McDonaIds +Lof. n rapto hfrad oyoraSc Ixyo cOnc