by Paul R. Spitzzeri
Following the 26 August 1875 crash of the Bank of California, the Golden State’s largest and most powerful financial institution, and the almost immediate death of its managing cashier, William C. Ralston, a dominant figure in San Francisco after years of controlling most of the silver production at the Comstock Lode in northwestern Nevada, there were rumors that he committed suicide, though the accident, occurring during his routine swim in the Bay, was later ruled the result of a stroke.
Telegraphic dispatches from the north to Los Angeles and printed in the Los Angeles Express of the 29th stated that, “from the convulsive jerkings of the limbs and frothing from the mouth and other symptoms usual in case of poison,” it was assumed that was how Ralston decided to take his life as he swam far enough from shore so that he could not be revived.
The news meant that “the excitement over Ralston’s death . . . was intense” and “the streets were crowded with people discussing his tragic end.” As so often is the case, “now that he is dead people remember his good qualities and forgive his faults.” Because some blamed the San Francisco newspapers, the Bulletin and Call for relentless attacks on Ralston, “threats were made to mob both offices,” though members of the military were deployed to defuse tensions. At one point, “an indiscreet policeman attempt to secure a wild steer by shooting twice” which raised emotions, but calmer heads soon prevailed.
The same day’s edition of the Los Angeles Herald, of which F.P.F. Temple, president of the Temple and Workman bank was recently a stockholder, commented on concerns expressed by some relating to the upcoming Los Angeles County elections, held on 1 September and with Temple as an Independent (Republican) candidate for treasurer. He ran for that office in 1873 and lost narrowly to Thomas E. Rowan, a cashier of rival The Farmers’ and Merchants’ Bank of Los Angeles, and the two were engaged in a rematch.
The paper remarked,
We heard an Independent remark yesterday that MR. TEMPLE only wanted the Treasurer’s office for the money he could make out of the county’s funds. We presume this is true, but we think the people had better keep their money in the hands of a man who has hands on it each month when the officer of the law call[s] to count it. TEMPLE AND WORKMAN agreed with the City Council to pay a stated interest on the city funds and though it is generally understood that the money is in their bank and they are using it, they have never paid a cent of interest and do not intend to. ROWAN has proved an honest custodian of the county funds, and if the people are wise they will retain a tried and faithful servant.
The hotly contested campaign took on new resonance with the financial crisis, though it was not quite yet realized how would evolve. While noting was cited as to how exactly Temple planned to benefit from the county’s coffers, the reference to the money of the City of Los Angeles is notable, as its $23,000 kitty (yes, that was the total of its resources!) was placed on deposit at his bank with the promise of 7% interest, a higher amount than was offered at the other commercial bank in town, Farmers’ and Merchants’. It is also unclear when a rift emerged between the Herald and its stockholder.
Comments were made that led the Los Angeles Express of the 30th to inform its readers that, “an absurd rumor has been industriously circulated in the distant portions of the county to the effect Mr. Temple had withdrawn from the canvass,” that is, dropped out of the race. The paper admonished those who were “circulating such canards” and added that “men who have brains to think” would understand that, if the claim was true, “the official announcement would fly as quickly as the manufactured falsehood” and it pointed readers to another column.
There, Temple took out “A Card. To the Public” in which he addressed the remarks by “untruthful and malicious persons” that he was leaving the race (an Independent Party rally was held that evening outside F.P.F.’s Temple Block complex of commercial buildings, where City Hall now stands) and rejoined that “I deem it only necessary to say that the report is without the slightest foundation” and that “I am in the field, and shall be to the end.” Rowan, moreover, took out his own notice that discountenanced these claims by his friends and that he had “no hesitation to contradict the rumor,” having done so “several times before this.”
Notably, however, Temple’s bank issued a card, as well, which remarked:
The undersigned, learning that rumors have been circulated to the effect that we furnished coin to keep the Farmers’ and Merchants’ Bank from closing on Friday last [the 27th], now take pleasure in contradicting the rumor, and freely admit that the officers of [that institution] generously offered us their kindness and assistance on that day, and that most friendly relations exist between the banks.
In part one, it was mentioned that, following the crash, the continued operation of Farmers’ and Merchants’ and Temple and Workman was predicated on what San Francisco banks would do. The Express, again of the 30th, explained that “a thunderbolt has dropped from a clear sky in San Francisco, and it is necessary for all our banks to take their bearings. The Los Angeles County Bank, being a savings, and not a commercial, institution and with depositors required to give much advance notice (typical, was 10-30 days) before being able to withdraw funds, would remain open.
For the commercial banks, “surplus money has, of course, been invested on business principles, and it is impossible to call these sums in in a day” and it was asserted that “any of our bank are good for four times their liabilities,” but there was clearly panicking among enough depositors that the paper announced, clearly trying to do its part to calm turbulent financial waters,
The Farmers’ and Merchants’ and Temple & Workman’s banks, at the request of the immense majority of the business men of Los Angeles, have resolved to remain closed until after the election [on Wednesday]. They will re-open on Thursday. There are no more solvent and secure banks in California than these . . . The prudent management of our local banks has always been remarked in the State at large . . . We are glad to report that there is the utmost harmony amongst our banks and that the utmost confidence exists amongst the people of Los Angeles.
Separately, the Express called to task those Angelenos “who are in the habit of allowing themselves to be disquieted in a time like the present” and commented that deposits in the two commercial institutions probably amounted to some $200,000. Moreover, their presidents, Temple and ex-Governor John G. Downey owned property, including their respective commercial blocks, worth a half-million dollars each beside other holdings “invested in other directions.” The paper expressed “the utmost confidence in the people of Los Angeles, and are certain that one and all desire to buttress our banks instead of weakening them.”
It also took the opportunity to score the Herald for “a very unhandsome paragraph about Mr. Temple,” and, while being sure to clarify the wealth should certainly not be a prerequisite for holding public office, it noted that “no one in this community would be wild enough to state Mr. Temple’s private means at less than a half-million dollars,” while Rowan probably had no more than $20,000 to his name. It concluded its harangue of the Herald with:
In view of this fact, with Mr. Temple’s known integrity and residence of thirty-five years in Los Angeles county, it is simply an outrage to insinuate that the county moneys would be less safe in his hands than in those of Mr. Rowan. Our people in Mr. Temple would have, in addition to his bond, the guarantee of his large and honorably acquired private fortune.
The Express also editorialized that the panic in California “is in every sense an artificial one” as it remarked that the losses would fall heaviest on wealthy stockholders in the Bank of California and “not a single poor man is hurt” though it was allowed that pain would be felt “in the lack of general confidence and the momentary suspension of manufactures and other enterprises.” Despite the continuing malaise of the panic of 1873 in the East, which led to the Long Depression spanning the rest of the decade, it was claimed that California was in better shape because “here our money . . . is solid gold” not greenback dollars and there was no susceptible system of credit, either.
The paper insisted that “a genuine panic here is impossible” and the current temporary aberration bore “no resemblance to the convulsion of 1873 in the East.” The Golden State was never better off than currently, through successes in agriculture, manufacturing and mining and it advised that Angelenos be patient for a couple of weeks, averring,
Los Angeles is particularly prosperous, and the best place in the State for investment. Our banks are sound to the core . . . we should not be surprised at a large movement in Los Angeles real estate on the part of those San Francisco capitalists who have taken on a deep disgust at banks and the stockboard. Meanwhile, our business here is to keep cool and self-possessed . . . every man who attempts to disturb the well grounded confidence of the people of Los Angeles in their banks, should be looked upon as a public enemy. Every man who has a hoard of coin should pour it into the banks, and we are happy to say that many of them have been doing so for the past two or three days.
In San Francisco, while the Board of Supervisors, which governed the city and county, comprising the same area, passed a resolution, with one naysayer, in Ralston’s memory, it was reported that he allowed “a lot of bills receivable from irresponsible parties, aggregating in the neighborhood of a million dollars, with no collaterals” to ensure payment. It was planned by the Bank of California’s directorate to seek explanations by the late cashier over his management, while other debts, contracted against bank stock, would not likely be paid because “the stock of the Bank can’t be given away at present.”
In its number on the last day of the month, the Express printed from San Francisco sources that up to $3.5 million was “but very recently abstracted without the knowledge of the Directors” by Ralston, but it was unclear how this was transacted. An unnamed director told the press that “Mr. Ralston appropriated the funds of the bank largely to his own uses” and, when asked about fraud, replied “Mr. Ralston got into a snap and used the bank to help him out.” The official added that it was likely that the institution would reopen, though it and others remained closed for the time being.
The Herald of the same day, however, opined that “this dead man whose faults are now marshaled before the public gaze was a public benefactor; no charitable request left him empty handed; no public enterprise was left unaided by him; no industrial pursuit applied to him in vain” while “he listened to all and aided all.” Moreover, rhapsodized the Angel City sheet, “he was one of the most generous, whole souled men that ever gladened [sic] the heart of the widow, lightened the task of the toiler and assisted the manufacturer to successful business.”
The paper claimed that there were thousands of wealthy San Franciscans “whose private moral character is ten times worse than that of MR. RALSTON,” so it advised “now that he is dead let us through the mantle of charity over his faults.” It even suggested that “the death of RALSTON was a fit termination of a life so full of greatness, splendor and power” and it worked itself into a lather about how his stroke and drowning was a sort of apotheosis as “he breathed out his soul in the great Bay” and, as “the great metropolis shook to its centre and reverberated with the crash of the giant bank, his soul took its flight.”
Otherwise, it insisted, if he lived, Ralston, “sitting in sorrow amid the ruins of his empire . . . would have been the victim of scorn and calumny and his tortures only equaled the terrors of Hell,” but, now, residents of San Francisco would pass his grave and “remember only his virtues and achievements.” The Herald asserted that “ordinary humanity” could not understand what Ralston would have gone through, being “so successful and haughty” if he was forced to endure those torturous times as a failed banker, so it closed by remarking the disaster “ought to soften our hearts with pity if it does not excuse the act of self-destruction.”
In an article about the economic crash, the paper asserted that, “the leading cause of the panic we confidently affirm has been speculation” and it added “the banks have extended themselves too far” as well as “fostered overtrading and inflation of values” in Comstock Lode stocks.” There was, however, “our consolation” in that “we have a sound currency” while any “shrinkage” in business “will inure to the benefit of the people at large because if mining stock returned to a reasonable and sustainable value “they become the object of legitimate investment and cease to be deadfalls for the unwary.” A decline in farmland value would be good for the immigrant seeking such property and, if speculators were curtailed, interest rates would be “more healthy” and, with the “legitimate borrower” having access to money, real wealth could be generated.
The Herald welcomed a better class of settlers, instead of “croakers” and “mushrooms” employing “chicanery” and the replacement of the latter by the former could only mean that “Fortune will drag from their lofty thrones many of those she has so capriciously elevated.” It, in conclusion, forecasted, with plenteous purple prose:
There is good to come out of the evil. The lightning which has riven the edifice will purify the atmosphere; the earthquake which has shaken more than princely thrones is letting out the gases which confined and accumulated would tear asunder the rocky ribs of the globe.
On a less ethereal plane and on more practical, solid ground, the Los Angeles Star reiterated the news that the two Los Angeles commercial banks would stay closed until after the outcome of the next day’s election and it reminded readers that election day was a business holiday. It, too, expressed the view that “the absolute safety of our banking institutions is a potent fact and it is unnecessary to dilate upon that branch of the subject.”
It repeated that the owners of Farmers’ and Merchants’ and Workman and Temple “are good for many times the liability” and the values of the Downey and Temple blocks “worth probably doubly the amount of the present deposits.” It echoed the rosy prospects of the Express by ending its review with,
Day after to-morrow all the banks will resume business, and we may state, as a pleasant fact connected therewith, that it is well understood that they will work harmoniously together and be well seconded by the people.
Except, the pair of institutions did not reopen as intended and, instead, agreed to remain closed for all of September, purported to cool the heated tensions in the Angel City. When Isaias W. Hellman, managing cashier of Farmers’ and Merchants’, heard of Downey’s agreement with Temple, he was understandably furious and headed home from a European vacation as fast as he could, stopping in New York City to borrow gold coin to bolster confidence in his bank, which reopened without issue and rose to great heights of success under Hellman’s sagacious management—Downey, in turn, was deposed as president for his unwise decision.
Temple and Workman could not reopen at the end of September. Despite frequent trips to San Francisco, F.P.F. Temple and his managing cashier, Henry S. Ledyard, found no one willing to loan them funds to reopen their stricken institution—until, that is, they were desperate enough to agree on “rather hard terms” with the demands of Elias J. “Lucky” Baldwin, who clearly coveted the large landholdings of the bank’s owners. As oft-noted here, the bank reopened with his loan, but more was added as confidence remained low and jittery depositors closed their accounts (and, in many instances, went to Hellman’s bank.)
On 13 January 1876, Temple and Workman, refused further funds, closed for good and the resulting inventory showed an unmitigated mess in management under Ledyard’s daily supervision but also Temple’s presidency. Despite the disaster, Temple, winner of the country treasurer race, was allowed to take office, a full half-year later, as was standard practice, though he was, essentially, a figurehead during his two-year term, with a deputy conducting day-to-day operations.
William Workman, bewildered and bereft, took his life on 17 May and Temple was hit by a series of strokes, not doubt due largely to the stress and strain of his regional empire’s ruination. On 27 April 1880, another stroke snuffed out his life. In some ways, Temple was, indeed, the “Ralston of Los Angeles.” He had grand plans for his place in the growth of the Angel City and environs during its first boom, which stretched from the late 1860s to the mid-1870s, and his bank was an engine for financing all manner of business enterprises.
Like Ralston, Temple was immensely popular and widely praised for his generosity and kindness, though sometimes ridiculed for his amiability going too far to support those unlikely to pay him back. And, like the San Francisco financier, it was found that Temple too easily mixed business with personal endeavor, while also being much to willing to loan to those lacking proper collateral to satisfy debts if the money was called in.
All of this was on a much smaller scale, as the Angel City was only a fraction of the population and wealth of California’s paramount metropolis, and the comparisons are not exact. Temple did not have a grand estate like Ralston’s Belmont, he did not control large portions of a Comstock Lode or comparable example, he was not as ruthless as his counterpart in developing, asserting and maintaining a grip on a business empire. Still, similarities were sufficient enough for the comparisons to bear some scrutiny and both men were remembered for their many sterling qualities, but, eventually, for their substantial faults that were intertwined with the spectacular financial collapse of 1875-1876 during America’s Long Depression.