The Collapse of a Great Western Land Empire
A Minneapolis financier’s ambitious plan to build a 'manufacturing town' north of Seattle implodes, revealing a labyrinth of fake mortgages and hollow companies.
The story, cleaned up
A cleaned-up reading of the newspaper page: spelling and layout repaired, one story lifted off a crowded page. It follows the original closely but it is not a transcription. The original page is below; read it if a detail matters.
The appointment of a receiver for the Northwestern Guaranty Loan Company of Minneapolis has shed light on its extensive holdings on the Sound, explaining the failure and the departure of its president, L. F. Menage, for Chile. Mr. Menage began investing here three or four years ago with the ambition of founding a town. He purchased 1,200 acres between Ballard and Richmond Beach, extending west of Green Lake and as far north as McAleer Lake. He incorporated the North Seattle Company to hold this property and the Puget Sound Iron Company to develop iron claims near Hamilton. His plan involved an electric railway from Seattle through Ballard to the site of his operations, but franchise troubles stalled the project. To fund his ventures, he layered his properties with multiple mortgages, often by deeding land to individuals who were represented as unmarried, who then executed mortgages to subsidiary corporations. These securities, guaranteed by the Northwestern Guaranty Loan Company, were sold in the East as 'safe Western mortgages.' Investigations now reveal that the total mortgage debt on the North Seattle tract is seven times the cost of the land, with the majority of the mortgagors nowhere to be found, as they were likely just names used to facilitate the scheme in Minneapolis.
“He cost on an average $10 an acre and is mortgaged at the rate of $70 an acre, without improvements sufficient to make up more than a fraction of the difference.”
This 1893 financial scandal highlights the cyclical nature of speculative real estate bubbles in Seattle, where ambitious 'town-founding' schemes and shell companies often precede a local crash. Today’s concerns over inflated real estate valuations and opaque ownership structures echo these same 19th-century anxieties about outside capital shaping the city's growth.
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