“On Rather Hard Terms”: News of a Loan to the Temple and Workman Bank, November 1875

by Paul R. Spitzzeri

As recounted in a blog post here on 1 September, the private bank of F.P.F. Temple and William Workman, one of two commercial institutions in Los Angeles, was rocked by a panic that erupted in San Francisco in late August 1875 and then spread southward by telegraph.

Depositors flocked to the bank, located in one of the several buildings in the Temple Block, at the junction of Main, Spring and Temple streets, demanding their money.  The problem was that the bank heavily invested in a wide range of business projects during its four-year history, including oil, real estate, railroads and others.  Their simply was not enough cash in the vault to satisfy the demands of jittery customers.

So, on 1 September, Temple worked out a deal with John G. Downey, former California governor and the president of the other commercial bank in town, Farmers and Merchants, to suspend business at both institutions for 30 days to try to calm the waters.  When Farmers and Merchants managing cashier, Isaias W. Hellman, heard of the deal while on vacation in Europe, he cut his jaunt short and rushed back to Los Angeles, making a stop in New York to borrow cash.  Hellman quickly reopened his bank and restored confidence to his depositors.

F.P.F. Temple (1822-1880), president of the Temple and Workman bank, in a studio portrait in Los Angeles, circa early to mid 1870s.  A widely admired figure, Temple was elected county treasurer on 1 September 1875, the day his bank suspended business during an economic panic that rocked California.  He spent many weeks in San Francisco seeking a loan after the suspension and election.

As for Temple, who was elected county treasurer the day of the suspension, he spent a great deal of time in coming months in San Francisco, hat in hand, seeking a loan to keep his stricken institution afloat.  The panic, however, forced most of the wealthy capitalists in the city from lending money to anyone, much less a banker whose reputation for loose lending was well known.  There was, though, an exception.

Elias J. “Lucky” Baldwin made his fortune in mining, real estate and other ventures.  His nickname was derived from a startling accident.  He went on a vacation having instructed his business manager to sell Virginia City silver mine stocks once they hit a certain price.  When that happened, however, the sale could not happen because Baldwin kept the key to his strongbox where the stocke were located with him.  Upon his return to San Francisco, however, the stock values went much higher and then he sold, reaping a large fortune.

This 1872 stereoscopic photo from the Homestead collection shows the Temple Block from the east side of Main Street, where that thoroughfare met Spring Street, at the far right, and Temple Street, which began out of view on the right.  The Temple and Workman bank was in the first floor office to the right on the side facing the photographer, who was Henry T. Payne.  Two other buildings in the block are in view.  This site is now Los Angeles City Hall.

In early 1875, “Lucky” began to invest in greater Los Angeles real estate, purchasing the Rancho Santa Anita in the San Gabriel Valley, where Arcadia, Monrovia and other cities are now, for $200,000, then a record for regional real estate.

He considered investing in the Los Angeles and Independence Railroad, which F.P.F. Temple launched in 1874 as a project to tap silver mine transport from Inyo County in eastern California to Los Angeles.  Nevada senator John P. Jones became the majority investory and replaced Temple (who became treasurer) as president of the railroad and Baldwin refrained from joining the enterprise.

But, “Lucky” did notice that Temple and his father-in-law Workman were the biggest landowners in Los Angeles County.  When their bank suspended, Baldwin, as shrewd a businessman as there was, smelled an opportunity when Temple came to him desperately seeking a loan for his bank.

The first page of a 20 November 1875 letter from F.P.F. Temple to William Workman.  Written from San Francisco, where Temple spent many weeks trying to get a loan for the bank, the missive informed Workman that a loan had been agreed upon with Elias J. “Lucky” Baldwin, but “on rather hard terms.”  The letter is on loan to the Homestead from Josette Temple, a great-granddaughter of F.P.F. 

Finally, near Thanksgiving 1875, a deal was struck.  Baldwin agreed to loan the Temple and Workman bank the funds to continue its operation.  The details were still to be worked out, but, on 20 November, Temple wrote Workman from San Francisco to tell him the news:

You will please pardon me for not writing you before, my business here has been of a disagreeable nature, and have had nothing very encouraging to write until now.  I have made arrangements to get money so that we can go on with our business, although on rather hard terms—of the two evils we must Choose the least,—we shall come out all right in the end, the idea will be to collect in [as] fast as possible the amounts owing [owed to] us, and pay our depositors.

It has been very unpleasant for me to be away from home so long a time but under the circumstances I could not avoid it, Mr. Baldwin lets us have the money, we have to secure him.

“To secure him” meant to put up vast landholdings owned by Temple and Workman as collateral for the loan.  As importantly, when Temple referred to “the two evils” and indicated that borrowing was “the least,” the unmentioned other evil was bankruptcy.

If the two men had agreed to go that direction, it would have meant going into “assignment”, in which there would be an inventory of assets and liabilities, and then a sale of the former to pay off the latter.  Their reputations would have been ruined, or at least, severely affected, but their properties would almost certainly have been more than enough to satisfy creditors and leave the two substantial amounts remaining to be more than comfortable.

Page two of the letter from Temple to Workman, including the conclusion “trusting that everything will go on prosperously hereafter . . .”

There was, however, the matter of pride and prestige.  It was, clearly, unthinkable to Temple (we don’t know what Workman’s thoughts were) to submit to the humiliation of being a bankrupt, perhaps even more so after his election as county treasurer (he was to assume office in March 1876).  Taking Baldwin’s offer was the only real option in his mind.

As the old cliche goes: the devil is in the details.  In the days after the letter was written, the nitty-gritty of negotiations hammered out the specifics of what Baldwin required of Temple and Workman if the deal was to proceed.  Next week, a post will deal with those details, which was “on rather hard terms” indeed!


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