On September 12, 1893, the day after the Seattle Post-Intelligencer alleges problems with City finances, Seattle Treasurer Adolph Krug (1856-1904) is discovered missing along with approximately $125,000 in City funds. He is observed later that day crossing into Canada, and is arrested in St. Paul, Minnesota, six days later as he is about to board a train to New York. On October 31, 1893, Krug and five prominent Seattle businessmen are indicted for "using public money in a manner not authorized by law." Named as co-defendants with Krug are David T. Denny (1832-1903), Luther H. Griffith (1861-1925), Henry Fuhrman (1844-1907), Fred E. Sander (1854-1921), and L. D. Ross (1872-1939).
A native of Germany, Krug came to Baltimore at the age of 22. He moved to Seattle in 1883 to join his brother-in-law in the bakery business. Krug prospered and he enjoyed immense personal popularity.
Good Hearted, Not Hard Hearted
According to the Post-Intelligencer, "In an evil moment," some well-meaning members of his own Democratic Party convinced him to run for City Council in 1891 and for City Treasurer in 1892. Almost immediately after Krug assumed office, "unscrupulous politicians and personal friends of the good hearted and easily influenced treasurer had simply borrowed everything in sight" (Post-Intelligencer).
Banks which received loans failed during the Panic of 1893.
Krug was tried and convicted in March 1894, of one count of using $10,000 for profit (the jury deliberated 18 minutes) and he was eventually sentenced to seven years at hard labor. Fuhrman was acquitted at trial, and the other cases were dismissed. Krug remained free as he appealed his conviction all the way to the U.S. Supreme Court, without success. He had just started an appeal through the federal courts in 1897, when the sheriff took him into custody to serve his sentence.
Krug and Tacoma City Treasurer George W. Boggs (convicted of an almost identical offense) were paroled by the governor on July 1, 1899, under a new law allowing for the early release of selected convicts. Prominent citizens of both major political parties wrote letters in support of Krug.
Krug returned to Seattle and with the assistance of a local brewery, he purchased a saloon.
The City eventually recovered its losses from the debtors through the sale of building lots offered as collateral.