The San Francisco call., 1898-11-11
The Struggle to Crush the Los Angeles Cable Railway System Forced Bankers
 Into Conflict.
Managers of the Pacific Bank Warned to Retire From the Electric Road Deal Or Repeat
 RaEtOn'S Crash.

The Call begins this morning its ex pose of the secret manipulations tha led the Pacific Bank and it's feeder, thu Peoples Home Savings Bank, into tht tremendous speculation of the Los An geles electric railroad. This projec practically cost the Pacific Bank anC its feeder their existence. The scheme was conceived in the brain of Moses H Sherman, who trapped the bankers o1 Pine and Sansome streets into sup port of his tremendous venture. Sher- man, as already indicated, first at tained prominence in Arizona, where he hoated several financial themes and in support of them won the confidence and with 1t the money of Frank " Mcdonald. Having found Frank Mo Donald an easy game Sherman went to Los Angeles, surveyed the field and de termined to build a great electric road system Tn competition to the cable road that was then in operation.
 Sherman had no money, but through the confidence of Frank Mcdonald he had the Pacific Bank behind him. Be- fore Sherman conceived the idea of an electric road in Los Angeles he had foisted upon the Pacific Bank through Frank Mcdonald his vastly overesti- mated properties in Phoenix and in diff ferent parts of Arizona. His state ments in reference to these holdings were mendaciOus to the last degree. What he owned was not worth the sup port that the Pacific Bank gave, but Frank Mcdonald was a willing listener to flattery, and when Sherman asked him to visit Los Angeles and consider @1 young man readily obeyed. Sherman exploited the advantages of competi- tion to the cable road then in operation under the supervision of J. F. Crank.
 The willy manipulation showed the young banker how an electric railroad could be operated for two-thirds the cost of a cable system. Frank took the bait and with it hook that subse- Quently killed the institution of which he was cashier. The Los Angeles cable system had been hoated in San Fran cisco and Chicago under the direction of Crank The first mortgage amount ed to one million five hundred thousand dollars. and was taken in this city by capitalists and commercial and say ings banks. The second mortgage of one million five hundred thousand dol lars was taken by capitalists, banks and trust companies of Chicago. It was Sherman's deliberate scheme to wreck this road so that he might control it and build the great electric system. His scheme cost the Peoples and Pa cific banks their existence.
 Under the f1attering suggestion of Sherman Frank Mcdonald believed that the bonds of the electric road could be fioated as readily as those of the cable system. He found out his mistake too late to save his banks and the honor of his family. Under Sher- mans direction a corporation was formed, stock was printed and M. H. Sherman was made president of the system. The Pacific Bank built the road, supplying $6O0,0 Sherman, as might have been expected. did not con- tribute a cent, violating his promise to supply one-half the cost. Through a series of combinations and manipula- tions he deluded the cashier of the Pa cifc Bank and made that institution become a security for his own portion of the cost. Having secured such a tre- mendOus position of advantage Sher- man had the Pacific Bank and its feeder, the Peoples Bank, just where he wanted them.
 They had to follow his lead and sup port his schemes or face public cen sure for the loss of a tremendous sum of money, The expose of such a loss would have inevitably resulted In a run on the bank The McDonaIds ac- cepted the inevitable. They tried first to drag Sherman, J. D. Farnum and their clique of censpirators out of the bank with an idea of operating the road themselves. They failed in this and then attempted to float the bonds of the electric system. Again failure came to them and the eliminating crash. When the Pacific bankers attempted to gain control of the electric road sys- tenn Sherman in anticipation of such an effort determined to secure control of the cable roads of Los Angeles. This move brought J. F. Crank and the holders of three million dollars in bonds to the front
 The struggle became a determined contest between the two great roads. The capitalists and banks of this city that held the cable bonds arrayed themselves for q contest against the Pacific and the Peoples banks, which held the electric road bonds. In this struggle Sherman had nothing to lose and everything to gain. As he argued the situation he could not lose whoever won in the contest. If the Pacific Bank lost Sherman remained as the only powerful manipulator left in the cleo tric road 10 deal with the winners If the Pacific Bank won and the cable system of Los Angeles was wrecked Sherman would continue to be. the president and manager of the electric railroad and owner. of a great part of the wrecked cable system.
 This struggle, the secret hiLtory of which has never before become public