by Paul R. Spitzzeri
One of the core components of Los Angeles’ first boom, which took place from the late 1860s through the middle of the following decade, was the availability of capital for investing in real estate, transportation and commerce through the introduction of banking, which had a checkered (!) history in the United States.
California law established after the American seizure of the Mexican territory prevented anyone from issuing notes as currency and did not allow corporate banks, though individual or partnerships could act in that capacity. In 1857, two years after a financial crisis in San Francisco included the collapse of Adams and Company, a banking concern, the state allowed charters to banks under a general corporation law.
As the City of Angels got to the point where banking became part of its development, as mentioned in part one, former Governor John G. Downey and his young partner, James A. Hayward, opened the doors to their institution early in 1868, followed months later by that of Isaias W. Hellman, F.P.F. Temple and William Workman, among whose employees were future Los Angeles mayors James R. Toberman and Thomas E. Rowan, the latter also county treasurer from 1871 to 1875 and who ran against Temple for that office in 1873 and 1875.
In the course of the brief existence of the bank, there were surprisingly few references to it in the local press. Within weeks of its opening and, as the 1868 presidential campaign approached, the dominant Democrats held a torchlight rally in the diminutive downtown, headed by former sheriff Tomás Sánchez and Workman’s nephew (and another future chief executive) William H. as marshals.
Up to 600 men, walking and on horseback, with half as many torches, including up to 100 Union Army veterans of the recent Civil War who declared their distaste for Republican candidate, General Ulysses S. Grant in favor of Democrat, former New York Governor Horatio Seymour, participated. Among the banners were those linking Grant to overindulgence in alcohol, his alleged treatment of defeated Southerners, “Viva la Democracia,” and references to Grant expelling Jews from his military district during the war.
During what was called “the grandest display ever made in this city” with bonfires along the route of procession, many houses and businesses were illuminated, including those of Dr. John S. Griffin, a strong Confederate booster during the war, Jewish merchant Ephraim Greenbaum, the United States Hotel, the Bella Union Hotel (a stronghold of secessionist supporters) and “Hellman’s Bank.” It should be noted that William Workman was a Democrat, though not in favor of disunion and F.P.F. Temple was a Union supporter and Republican.
Occasionally, there were advertisements for sales of land conducted through the Hellman, Temple and Company office, with Hellman the agent for properties at the Rancho Cucamonga, which he acquired during this period, and the northern edge of Rancho San Pedro known as the Temple and Gibson Tract because F.P.F. and El Monte resident Fielding W. Gibson acquired the land in 1865—this soon became the town of Compton.
In October 1870, a group of individuals and businesses took out an ad calling for a meeting at the court house (situated in Jonathan Temple’s Market House, which he built in 1859) and asking for the attendance of “the farmers, agriculturists, horticulturists and all residents of Los Angeles who favor the organization of a District Agricultural Society” and the choosing of delegates for an organizing convention.
Along with Downey, Griffin, J.J. Warner and Ozro W. Childs, the three organizations were the store of Caswell, Ellis and Wright, the wholesale merchandising firm of Harris Newmark and Company, and Hellman, Temple and Company. Temple was a major figure at the convention and fairs held during the Seventies by the Southern District Agricultural Association at Agricultural (Exposition) Park were precursors of our current Los Angeles County Fair.
It may have seemed to most outside observers that Hellman, Temple and Company was a prosperous, well-managed and harmoniously owned concern. The Los Angeles News of 11 June 1870 published a list of Los Angeles incomes and the largest figure on the list was that of the bank at a nice, neat $100,000—by contrast, Hayward and Company, the other bank in town, was shown as earning 35% less. Workman’s personal income was $5,000, Hellman’s, third highest on the list, was pegged at $6,200, and Temple was at second position at just a shade below $9,000—the largest income was that of Downey at above $13,500.
A few months earlier, the Star of 5 March, briefly reported that:
The banking house of Messrs. Hellman, Temple & Co. has had an elegant new counter put in this week. The panels are of California laurel; it is elaborately ornamented. It is a beautiful piece of substantial work. Perry & Woodworth were the builders.
Such a project could only be undertaken (and mentioned in the paper) with a clear intent to impress customers and the community broadly, signifying not only substantiality, but business success and financial strength. Yet, behind those counters, within the massive vault and behind the closed office doors, trouble was brewing.
Frank B. Putnam (1895-1962), who worked at Hellman’s successor institution, Farmers’ and Merchants’, from 1912 to its merger with Security First National Bank in 1956 and continued as historian for another four years, wrote a posthumously published book with historian Robert Glass Cleland on Hellman and his bank, as well as contributed, upon the merger, articles to the Security First National News.
Putnam found in old Hellman, Temple and Company files (who knows what happened to those in the last seven decades?) that the opening day of the institution, 8 September 1868, yielded deposits of well north of $38,000. Among the those who placed funds in the institution on that day were William H. Workman, and Rancho La Puente foreman Frederick Lambourn, Henry D. Barrows, Manuel Coronel, Diego Sepúlveda and the owner of the building in which the bank was housed, ex-Governor Don Pío Pico.
Putnam recorded, however, that loans were just shy of $63,000—it should be noted that Temple and Workman each ponied up $50,000 and Hellman half that as start-up capital—an indication that conditions were ripe for such opportunities, though we don’t know how much of the borrowed money was for commercial as opposed to personal purposes.
When 1868 came to a close, the period basically being a quarter and a third, loans approached nearly $150,000, while deposits were almost $94,000. The first year’s ledger, presumably meaning the period from September 1868 to the same month in 1869, there were 495 personal and commercial accounts on the books.
That matter of having more money going out than coming in continued unabated. For 1869, loans totaled not quite $210,000 and deposits were $117,000, while, for 1870, the figures were $258,000 and $141,000. Putnam found that, from September 1869 until the opening of Farmers’ and Merchants’ on 8 April 1871, a total of 690 loans comprising $788,000, an average of about $1,140 each, were made by the bank.
The Putnam and Cleland book rather sanguinely noted that, in the course of that brief two years and nearly four months, there were fundamental philosophical differences between Hellman and Temple about management, but, most particularly, about loaning policy. They commented, “Workman and Temple held the naïve heresy that the bank should lend to anyone in need,” though it should be noted that Workman was almost certainly a silent partner with no known involvement whatever in the bank’s operations—moreover, he signed over total power of attorney to Temple the year they bank was formed.
For his part, the authors, continued, Hellman, within the orthodoxy of the industry, “believed that loans should be made only to those who gave satisfactory evidence of an ability and willingness to repay.” Remi Nadeau, whose family had a long history in Los Angeles and whose 1948 book, City Makers, is still a standard history of Los Angeles during this first boom period, included Temple as one of the titular figures in that era, published a quote from Hellman that, whether true or not is still very telling:
Mr. Temple’s only qualification in a borrower was that he must be poor. I saw that doing a banking business on that basis would soon leave me poor also, so I dissolved the partnership.
Who knows how long Hellman fomented his plans, but, on 2 February 1871, public notices were taken out in the papers, bearing the date of 31 January, announcing the dissolution of the co-partnership among the three bankers “by mutual consent.” An adjoining notice by Hellman added “having purchased the entire interest of Messrs. William Workman and F.P.F. Temple in our former business, I shall continue the same as heretofore, under the name and style of HELLMAN & CO.”
The next day’s edition of the News continued the story, reporting that “at an informal meeting of capitalists held on the evening of the 1st inst., it was resolved to organize a new banking institution to be known as the Bank of Los Angeles.” It continued that “the respective banks of Governor Downey and Mr. Hellman will be consolidated to form the nucleus of the new concern” with capital of a half-million dollars, of which about three-quarters was already subscribed.
The paper went on to note that “the advantage of such an institution is obvious” and of benefit to the commercial and financial sectors of the growing city (“and indirectly the whole public”) under Hellman’s sure hand, so that the enterprise “cannot fail to be productive of vast benefit,” The News concluded:
The establishment of such a bank would not only enable financial operations to be carried on upon a larger and more metropolitan scale than heretofore, but would tend to foster manufactures and new enterprises of every kind in our midst, and to the lasting advantage of our people. May the undertaking succeed.
That it certainly would, with Hellman at the helm. As for Temple and Workman, they waited only a short time before deciding to launch their own bank in direct competition with Hellman, Downey and the other capitalists that comprised what soon became known as Farmers’ and Merchants’.
Some thirty years ago, a surprise visit to the Homestead revealed some important history of the recently dissolved Hellman, Temple and Company. Charles and Margaret Coker arrived with F.P.F. Temple’s well-worn metal deed box, which was stuffed with a great many documents, including receipts, invoices, and Temple’s copies of the papers that brought that bank to a close. It turned out that Coker was a descendant of William W. Jenkins, briefly executor of Temple’s estate after F.P.F. died in 1880.
While Jenkins was soon removed from that position, he retained the box, though he was not supposed to do so, and it remained in his family’s hands for well over a century. The Homestead was permitted to make copies of all of the items in the box (these having apparently been sold to dealers over the three decades since), including the Hellman, Temple and Company documents.
The agreement to sever the partnership noted
It is agreed mutually and by each and all of the above named parties that the copartnership heretofore existing between them under the firm name and style of Hellman, Temple & Co. is dissolved—and the same partnership is dissolved except as so far as it may be necessary to continue the same for the final liquidation and settlement of the business thereof . . . but for no other purpose—and for no longer time than is reasonable . . .
Hellman was to assume and accounts, credits, debts and dues and any demands on or liabilities of the business were to be handled only by him. Moreover, it was recorded that “in consideration of various and sundry sums of money heretofore paid and advanced,” along with promissory notes of some bank customers, by Hellman to Temple and Workman,” the latter gave up all interest in the “assets, credits, claims, promissory notes, mortgages, dues, books, accounts, furniture, stocks of all kinds—and all other property . . . including also the lease of the Banking house lately and now occupied as the Banking house of Hellman, Temple & Co.” in Pico’s building to Hellman, who held his former partners harmless from any liabilities and demands.
A pair of memoranda included one that recorded Hellman promising to pay Temple and Workman more than $24,000 by the first of October 1872 with 1% monthly interest with collateral put up for the loan. These included notes from six men totaling not quite $10,000 as well as 88 shares of Hellman-held stock in the Los Angeles Gas Company, with the last item considered a mortgage and not affecting his role with the operations of that firm. The other concerned two more Hellman-issued note for not quite $17,000, payable in August and December and further secured by collateral that included 400 shares in the Los Angeles City Water Company.
A schedule of payments and transfers to his former partners included Christmas Eve transactions of over $34,000 to Temple and $18,000 to Workman and another nearly $6,000 to the former made in the month following. Another $33,000 in notes were assigned to them with two being from Pico (totaling $25,000) and Workman’s La Puente co-owner John Rowland and his son William. Lastly, Hellman issued his own set of notes to Temple and Workman, each carrying 1% monthly interest and due in March, August and December 1871, these totaling about $26,000, and another more than $24,000 due in October 1872. In all, the value of these instruments was $142,000—or more than 40% the original investment in the institution by the two.
Lastly, a letter from Hellman to Temple, also from the last day of January, contained the notable statement,
As a matter of convenience to us both and to aid you in your designs as to future buildings in this city I propose to anticipate the payment of two of the promissory notes which I gave to you & Mr. Workman as part consideration for the purchase of your interests in the partnership assets of the late firm of Hellman, Temple & Co.
One of those structures built by Temple in 1871 was the fourth and final portion of the Temple Block, which was the core of the commercial section of the expanding city. In November, the Temple and Workman bank opened, but, as prior posts here have noted, Hellman’s financial skill assured his continued stratospheric growth and remarkable success, while his former partners failed with a half-decade.
We are fortunate the Cokers made those Hellman, Temple and Company and other documents from Temple’s deed box available to us all those years ago, as they have been important in helping us better understand the technical details of the dissolution and tell the story, such as in this post, of the second bank formed in Los Angeles.
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