by Paul R. Spitzzeri
As discussed here in posts over the last several months, the bank owned by William Workman and his son-in-law, F.P.F. Temple, was rocked by a financial panic that broke out in late August 1875. After a run by panicked depositors, Temple and Workman suspended business for thirty days on 1 September, the day Temple was elected Los Angeles County treasurer, hoping to ride out the storm.
During that month, Temple spent much of his time in San Francisco seeking a loan to keep the bank going, but found little encouragement until Elias J. “Lucky” Baldwin, who had been investing in greater Los Angeles real estate and knew that Temple and Workman were major landowners in the region, agreed to negotiate.
Finally, towards the end of November, a deal was reached and the bank opened in early December with cash sent south by Baldwin. A celebratory banquet to fete Temple and Baldwin gave the appearance of stability returning to the bank and the local economy and little appeared in the press about the institution’s condition as 1875 came to a close and the new year ensued.
Then, suddenly, the Los Angeles Express, the only of the three major daily newspapers in town, reported in its edition of 13 January 1876 that the bank had a card placed on its doors at 10 a.m. announcing that it would not open.
As the article stated, this was not unexpected and “that difficulties were expected” and that the town’s bankers held a meeting the previous evening “to consider the situation,” though details of the confab were not provided.
The Express continued that, unlike the turmoil of late August, the second suspension of the bank brought not “the least appearance of excitement.” Still, the paper decided to seek out principals of the other banks in Los Angeles to get their views. M.S. Patrick, who had just come to town from Chicago to run the Los Angeles Commercial Bank, which opened at the beginning of 1875, was the first to be interviewed.
Patrick stated that the effect of the bank’s closing “will be slight” noting that, while Temple was thought highly of by his contemporaries, the closure “was anticipated.” Some property would have to be sold to pay off creditors, but Patrick assumed the air of someone unconcerned with major consequences.
Isaias W. Hellman, former partner of Temple and Workman from 1868 to 1871 in the bank of Hellman, Temple and Company, had much the same to say as Patrick, offering that the closure of his rivals would “create some temporary inconvenience” but would not be widespread in the community “because Mr. Temple’s depositors have been mainly rich people.” Moreover, the co-owner, with ex-governor John Downey, of Farmers and Merchans Bank, went on, “the poorer classes of depositors anticipated the suspension, I think, and were prepared for it.” Presumably, he meant that they closed their accounts and withdrew money loaned by Baldwin (and many likely went to open an account at Hellman’s bank.)
Notably, when asked by the paper if he thought Temple and Workman had enough assets could pay off their depositors, Hellman answered, “if prudently managed, I think they certainly are.” He added that there was no reason for panic because, at his bank, there was “the formidable array of coin as an evidence that we have been preparing and are prepared for any contingency.”
The last banker to be queried was Jonathan S. Slauson, president of the Los Angeles County Bank. Slauson largely echoed his contemporaries with respect to the effect of the closure, stating that “I think people are prepared for it, and that some few individuals will be inconvenienced, and that that will be all.” He heard that there were several hundred depositors, but that Temple’s liabilities (note that Workman was never mentioned, as he was a silent partner with no active role in the bank’s affairs) “will be a comparatively small matter.”
Slauson opined that “I don’t think any business man will be likely to go up on the strength of the bank’s suspension.” Unlike Patrick and Hellman, however, when asked about the ability of Temple and Workman to pay creditors, Slauson answered that he knew nothing about it from a personal standpoint “and can therefore express no opinion.”
This last point and Hellman’s about “prudently managed” assets were, in fact, the essential issues. As we’ll see in upcoming posts, as the bank was put into assignment and an inventory of assets and liabilities, the matter of determining who would be most affected would take on central importance.
For the time being, the press and others would repeat the statement of the Express that Temple, a man with high honor and esteem in Los Angeles for more than three decades, “has the sympathy of a large majority of our people.” Events in coming weeks, even as Temple was poised in March to assume the office of county treasurer, would change that view.
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