The San Francisco call., 1898-11-28
The Wnv Scene of Los Angeles Forced From the McDondds Fortune and Mas Then Protected From Restitution by
 His Relative, ], [, Farnum

Donalds did not dare sacrifice their in terests in the Los Angeles Electric
 Railroad Company. While they were crying frantically for some tangible return on their investment, Sherman was plotting to throw them deeper into the scheme.
 He went to Mcdonald and assured him that it was absolutely necessary for the bank to give up fifty thousand dollars more. Frank Mcdonald pleaded and begged for mercy, but Sherman
 was inflexible. and said if the money
 was not forthcoming the McDonalds would have to abide by the result. At that time 1t was absolutely impossible | for the McDonalds to take any more money out of their banks. The funds
 were not there. The Bank Commission 1 CTS for a variety of reasons were tn- 1 sisting upon immediate rehabilitation
 of the bank Frank Mcdonald explain 1 ed this condition of affairs to Sherman, who understood 1t as thoroughly as the bankers themselves, but the unscrupu- lous Los Angeles manipulator demand ed the monev and suggested scheme by which it could be obtained.
 It should be remembered that at that time the Pacific Bank was considered to he one of the safest and most con
 servative banks on the Pacific Coast.
 The true condition of its affairs was
 not known to the nublic, and any of It's
 guarantees or promises to pay was ac- cepted absolutely without comment and with perfect confidence. The cer- tif1cates of the bank were accepted by the general financial public as if they 'e the contracts of the National Gov ernment Itself. No one, except those of the little cotorie of conspiratOrs. knew how rapidly the Pacific Bank was then nearing the dishonora ble close of its existence. Sherman suggested. there fore. to Frank V. Mcdonald that the Pacific Bank issue fifty thousand dol
 lars in coupon certificates.
 This paper, the willy manipulation of Los Angeles assured Frank, could be hypothecated as readily as if 1t rep resented the currency of thu Govern ment. Sherman told his dupe that he could hypothecate the paper, secure the fifty thousand dollars, or very near
 that sum, and place the money to the
 credit of the Los Angeles Electric Rail
 road and use 1t for the necessities of that
 road. Frank Mcdonald. as already de
 scribed, pleaded for mercy, but Sher- man was uncompromising, and de- clared that the very existence of the bank depended on this money.
 It should not be forgotten that cou- pon certificates of the Pacific Bank were at that time as good as gold. Af- ter Sherman had concluded his argu- ment, his hysterical pleadings and his threats, Frank Mcdonald decided to
 issue coupon certificates of the Pacific
 Bank to the extent of S50000. Even
 such a fool as Frank Mcdonald did
 rot dare make this transaction any
 thing but ostensibly legal. He knew that if there were the slightest flaw III the transaction 1t would be vitiated and destroyed in the courts.
 He was forced, therefore. to give some security for the $50,000 that Frank Mcdonald decided to give up. This se- curity was given in the shape of pledges on some of the Phoenix property of Moses H. Sherman. This property Is not even now worth one-third of what Sherman claimed it to be. The willy schemer from Los Angeles, however, determined not even to give up this property in consideration of the enor- nous sum of money he was to receive from the Pacific Bank. It was impos- sible for Sherman and his dupe to con- summate this transaction abOveboard. Sherman's relations with the Pacific
 Bank at that time were very well known.
 Public comment would have been created If the schemer had received this money in the ordinary routine of flnan- cial transactions. He was forced, there fore, to resort to new financial trickery, and another officer of the bank. who was then in New York, was pressed into service Frank Mcdonald issued the coupon certificates of the Pacific Bank to the amount of $50,000. These certificates were signed by Dr. R. H. Mcdonald as president of the bank and by Frank " Mcdonald as cashier. As soon as these signatures were obtained the certificates were as good as cur rency. When the deluded and dis honest bankers placed their names upon these certificates Moses H. Sherman had received $50,000 from the bank he had already ruined.
 The certificates were placed in the financial market and as the credit of the Pacific Bank was then good the paper passed practically with the same validity as currency.
 Sherman was compelled, however, to