USA > California > San Francisco County > San Francisco > A history of the city of San Francisco; and incidentally of the state of California > Part 25
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question whether with a field so extensive as that over which the diamonds had been found, and their abun- dance, as shown by the fact that for the time employed, without any facilities for washing, the value of the dia- monds obtained was one hundred dollars for every hour of each person, the price would not fall to a trifle when working should be commenced on a large scale with every needful preparation. The capitalists interested believed the report, and the stock of the diamond com- pany, which was not to be put upon the market until all doubt of any mistake had been removed, was nearly ready to be offered to a highly excited public, when the exposure came. Information of the situation and char- acter of the diamond diggings had been sent to Clarence King, who, under order of the federal government, had made a hasty geological survey of the country along the fortieth parallel of latitude, including the diamond region, and as he had seen none of the diamond-bear- ing rock formation there, he suspected a fraud, visited the place without delay, and after a brief examination satisfied himself that the ground had been salted. He found diamonds where the ground had been dug, es- pecially about large stones that served as marks, but none elsewhere. Some of the Colorado diamonds hav- ing been previously shipped to London, were there recognized as African stones. The story of the pur- chases of African and Brazilian diamonds months be- fore was published. The exposure coming almost sim- ultaneously from two sources threw a chill upon the excitement, and the fraud came to an end before the
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general public could be victimized. Those who suf- fered were nearly all rich men. It was so managed that there was no judicial investigation of the affair ; but three or four prominent mining speculators had the credit with the general public of being parties to the plot, though they protested that they had been deceived.
SEC. 204. 1873. The transfer of the residence of the Californian directors of the Central Pacific rail- road from Sacramento to San Francisco, the expendi- ture of a large sum for filling in the railroad terminal lands in Mission cove, and the construction of a large boat to transport laden freight cars across the bay, were accepted as conclusive evidences that the appre- hensions previously entertained for years, of hostility on the part of the directors to the metropolis, were greatly exaggerated, if not baseless. The men who owned a controlling interest in the twelve hundred miles of railroad having become citizens of San Fran- cisco, their interests were considered as identified with those of the city. A large part of the opposition shown by the officials and press of the city towards them had been the result of distrust; a natural effect of ignorance of the men, perhaps not unmixed with chagrin that such an immense enterprise had fallen into the hands of residents of a provincial town, while the capitalists of the metropolis had refused to take any part in it, and had predicted ruin for those en- gaged in it.
Five years had now elapsed since the completion of
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the road, and the fears of the friends of San Fran- cisco, and the predictions of ruin by its enemies, had made no progress towards fulfillment. The city never grew more rapidly. According to Langley's estimates, there was an average gain of about eight per cent. a year in the population; bnt no reference to statistics was necessary to get conclusive evidence of the gen- eral prosperity. New buildings, larger and more costly than any before erected were numerous. Though some of the outside land could not be sold for the prices paid in 1868, yet lots in the leading business streets and in the preferred residence districts commanded higher figures than ever before. While San Francis- co thus flourished, the towns for which rivalry had been claimed gained no metropolitan character. Val- lejo, Benicia, and Saucelito, lost the importance gained in public estimation by a brief excitement among a portion of the community. Oakland grew rapidly, but its business was suburban, though many of its property holders did not give up the hope of an inde- pendent traffic, to come with the completion of their artificial harbor.
SEC. 205. Oakland Harbor. The protest of San Francisco against the grant of Goat Island to the rail- road company was so einphatic that the bill, after adoption in the lower house of congress, was aban- doned in the senate. For the purpose of providing a terminus without sending the cars across the bay in a boat, congress ordered a survey of San Antonio creek at Oakland, to ascertain whether a deep harbor could
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be constructed there. The army engineers made a favorable report, and submitted a plan for an artificial harbor three miles long, three hundred yards wide, and about twenty-five feet deep, and this project then adopted has since then advanced far towards comple- tion, appropriations having been made for it nearly every year out of the federal treasury.
SEC. 206. Dolly Varden. The approaching elec- tion of another federal senator to succeed Cornelius Cole, whose term was to expire in March, 1875, gave an additional interest to the political canvass of 1873, when all the assemblymen and half the senators were to be chosen. The republican leaders committed blunders similar to those of 1867, when the state went over to the democrats; but the result now was the triumph of a third party, self-styled Independent, and nicknamed the Dolly Varden, which promised to protect the state against monopolies, to regulate the fares and freights on railroads, to establish a state system of irrigation, and to manage the government for the benefit of the people. The new organization received much aid from the secret order of grangers or patrons of husbandry which, though almost un- known before suddenly spread through the agricul- tural districts; and notwithstanding its denial of parti- san purposes and its exclusion of partisan subjects from the proceedings of its lodges, became indirectly the source of a strong political influence. The inde- pendent party proved to be stronger than either of the others in San Francisco, and the state generally;
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but failing to get complete control of the state govern- ment, could not carry out its favorite reforms, and two years later it finally dissolved, leaving its members to return to the national parties with which they had previously associated. It succeeded in electing Newton Booth, its most eloquent speaker, to the federal sen- atorship.
SEC. 207. 1874. The year 1874 was marked by a large immigration from the East; by the opening up of the consolidated Virginia bonanza in the Comstock lode; by a stock excitement that surpassed those of 1863 and 1872; by the publication of James Lick's deed giving nearly all his property for public pur- poses; by the removal to San Francisco of the chief offices of the Central Pacific railroad company from Sacramento; and by the commencement of work on the Palace Hotel. Among the minor events of the twelvemonth were the discovery of serious and dis- graceful frauds in the offices of the license collector, coronor, public administrator, and assessor, and the increase of the police force from one hundred to one hundred and fifty men.
SEC. 208. Large Immigration. The gain of the Pacific states and territories by immigration was forty-six thousand-eleven thousand more than in 1873 or 1868, when the number of passengers had been greater than in any year since 1852. The main causes of this throng were the depression of business on the Atlantic slope, the stimulus given to industry in California by the large production of silver in
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Nevada, and the favorable condition of agriculture. Such prostration of business in the eastern states had never before been suffered. Thousands of manufac- turing establishments had closed or discharged some of their workmen ; the construction of railroads had almost ceased; wages had fallen; the supply of labor far exceeded the demand at the current rates ; the market price of land had declined greatly; and there had been a decrease of one third in the immigration from Europe. On the other hand, California was in the midst of exceptional prosperity. Within three years there had been an increase of nearly one half in the area under cultivation. The extension of the railroad to the southern end of the San Joaquin valley had given facilities for transporting to market the products of a large region practically inaccessible before; and farmers were now convinced that good crops of grain could be grown on large areas previ- ously supposed to be almost worthless. The winter of 1873-74 brought a good supply of rain, and was followed by an abundant wheat harvest. With the help of this stimulus, one hundred and forty miles of railroad were built in this year.
SEC. 209. Consolidated Virginia Bonanza. The Gold Hill bonanza had now reached the height of its splendor, and the Crown Point and Belcher were pay- ing immense dividends. In three years and a half the two mines had taken out more than forty million dol- lars, a result previously unapproached in the experi- ence of Washoe. While they were still at the flood
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tide of their prosperity, the still greater bonanza of the Consolidated Virginia was found near the northern end of the lode, and in May it began monthly div- idends of three hundred thousand dollars. Every week brought news from the advancing drifts, cross- cuts and winzes, and proved the ore body to be larger and richer. Experienced miners, who were repre- sented as trustworthy experts, expressed the belief that the ore in sight would yield fifteen hundred million dollars. The excitement was intense; the ag- gregate value of the Comstock shares, as indicated by the quotations of the market, rose at the rate of a million dollars a day for nearly two months, and the year closed when this fever or frenzy of speculation was near its culmination.
SEC. 210. Flood and O'Brien. The sudden rise of the firm of Flood & O'Brien to great wealth, was one of those events which could scarcely occur out of San Francisco. J. C. Flood and W. S. O'Brien, had for many years kept a saloon, patronized by mer- chants and brokers. A good lunch was spread with- out charge in the middle of the day for customers; and the partners, men of respectable intelligence, character and manners, attended in person behind the bar. Thus they had lived for ten or fifteen years, when they obtained a small interest in a mine at Vir- ginia city. Having been introduced to the market, customers familiar with the management of the min- ing companies gave them good advice, they began to make a profit on stock operations and formed a part-
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nership with J. W. Mackey and J. G. Fair, who re- sided at Virginia city, and were miners by occupa- tion. Mackey had worked as a blaster for four dollars a day. The firm, the name of which continued to be Flood & O'Brien after the admission of the two new partners, obtained possession of most of the stock of the Consolidated Virginia mine, at a time when the shares were worth only nine dollars-for some they paid only four dollars; and as there were only 10,700 shares, the whole mine was then worth less than $100,000. Its length was 1310 feet, so the cost to them was less than $100 a lineal foot; and that ap- peared enough to people who considered that, though more than a quarter of a million dollars had been spent on the property in the previous ten years, it had never returned a cent of dividend; that no ore worthy of notice had ever been found within its limits; and that if it had any ore, the fact could not be ascertained without an additional expenditure that might run into the hundreds of thousands. The future proved that $212,000 were required in assess- ments before there was any return.
Instead of continuing the sinking of the old shaft that had reached a depth of only 400 feet in the Con- solidated Virginia ground, Flood and O'Brien took the cheaper and more expeditious course of running a drift from the Gould and Curry shaft, only 800 feet from their line and 1800 feet deep. This drift, 1200 feet below the surface, led to the discovery of the bonanza extending the whole length of their mine.
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The property, after having 10,700 shares in 1871, was divided into two mines, the Consolidated Virginia and California, each of which has now 540,000 shares. The two mines, at the prices paid in January, 1874, were together worth $150,000,000, equivalent to a profit of more than 3000 fold upon the shares for which four dollars a share had been paid in 1871. The limits of this bonanza, or ore deposit, have not yet been found, and it is impossible to predict how much longer this wonderful stream of treasure shall pour into the pockets of San Francisco, though it has already yielded more than $100,000,000.
SEC. 211. James Lick. The publication of the deed in which James Lick conveyed nearly all his property, estimated to be worth several millions, to trustees, for the benefit of the people of San Francisco and California, was received with general satisfaction. The gifts were distributed, with much knowledge and judgment, for the advancement of astronomy, the es- tablishment of a mechanical arts school, a free bath- house, an old ladies' home, other institutions for the relief of suffering indigence, and the erection of various works of art; and after the payment of the specific appropriation, including some to his relatives, the res- iduc of the estate was to be equally divided between the San Francisco Academy of Sciences, and the soci- cty of California Pioneers. Regret was felt that the sum allowed to the relatives was not greater, only twenty-six thousand dollars being given in all to his son, his sister, his two half-brothers, his two nieces and
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a nephew, all of whom needed his bounty and had good claims upon it. Though the deed was absolute in form, it was changed in the following year.
SEC. 212. 1875. The year 1875 was eventful for San Francisco. It brought the culmination of the stock excitement that began in the previous summer; a new deed from James Lick, giving his estate to the people in a new form; the defeat of the Calaveras water scheme; the failure of the bank of California; the death of Mr. Ralston; the destruction of Virginia City by fire; the completion of the Palace hotel; the establishment of the bank of Nevada; the opening of Montgomery avenue; the advancement of Market street near Third to a rivalry with Kearny as a fash- ionable promenade; and an immigration larger than any since 1850.
Many circumstances concurred to stimulate immi- gration to the Pacific states, and among these the con- tinued prostration of nearly all kinds of business on the Atlantic side was prominent. Myriads of families who had never known want before were now pinched for the ordinary comforts of life. The young men, seeing no satisfactory future before them in their old homes, when looking for new ones were dazzled by the account of the marvelous production of the Comstock lode, the rapid growth and accumulation of wealth at San Francisco, the recent extension of railroads into large districts of fertile soil previously inaccessible, and the successful establishment in California of various branches of industry not practicable in other parts of
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the United States, on account of adverse climatic conditions. Under such influences, one hundred and seven thousand people came to California in 1875, leaving a net gain of sixty-four thousand.
SEC. 213. Calaveras Water Scheme. On account of general, or at least very loud complaint, in several influential newspapers, that the prices of the Spring Valley company, which furnished all the water dis- tributed through the city by pipes, were oppressive and extortionate, the legislature had passed an act authorizing the municipal administration to provide a supply of water, and an elaborate report was made upon the sources from which it could be obtained. Calaveras valley, situated between two ridges of the Coast mountains, in Santa Clara and Alameda coun- ties, had been bought up by speculators, and was offered to the city for ten million dollars, of which nearly half would have been profit to them. The scheme was defeated by the board of supervisors, and that was the end of it.
While the Calaveras scheme was under considera- tion, and when it was supposed that a majority of the officials who were to decide upon it were disposed to favor it, the daily " Call " and "Bulletin," in the course of their opposition, asserted that W. C. Ral- ston, president of the bank of California, was the head of the scheme to force the bad purchase on the city treasury. This charge, not supported at the time by any evidence that could be verified by the public, gave much offense, provoked angry recrimination, and
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was followed by other attacks upon Ralston, who was accused of having abused his position at the head of the leading bank of the state to exercise a corrupt in- fluence in political affairs. In many respects Mr. Ralston was personally popular, especially with the merchants and capitalists generally, and nothing but strong confidence of other classes in the good motives of the editorial management of the offending journals could have saved them from ruin, so fierce was the ani- mosity provoked against them.
SEC. 214. Bank of California. On the twenty-sixth of August, the city was about noon astonished by the news that the Bank of California had closed its doors. So strong was the confidence in its wealth, that peo- ple said its only trouble was a temporary scarcity of cash which would end so soon as the mint could coin the bars of bullion in its vaults. Even when Mr. Ralston said the bank had failed completely, and could never re-open its doors, credence was denied to him. Ac- cording to the reports made not long before, it had a capital of five million dollars, and deposits amounting to as much more, besides almost unlimited credit. It had regularly paid its dividends of about one per cent. a month. The public, even the capitalists, who were its customers and directors, had not heard of any seri- ous losses; failure under such circumstances appeared impossible.
+. When the directors met after the closing to examine the situation, they were dissatisfied with Ralston, and requested him to resign his position as president. They
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found that the financial condition of the bank was not what they had supposed it to be, nor what he repre- sented it to be. They had the fullest confidence in his capacity and honesty; they knew that he had made large sums by speculations and investments with different friends before he became president of the bank in 1872 (these were the only great financial suc- cesses of his life); they did not know that in company with less reputable men, he had afterwards lost all his individual fortune, and much more; and they supposed that his great wealth placed him above the reach of any temptation to defraud the bank. He had been president three years; the business, the records, and the clerks were under his control; and at the meetings he submitted false statements, and exhibited money borrowed for the occasions, as property of the bank. The executive committee being large stockholders, had much to lose and nothing to gain by a failure to discover his systematic frauds; but suspecting noth- ing, they did not employ detectives, and without such help they could not have discovered anything. When they found that the bank was insolvent, that the president had used millions of its money in his personal speculations, and had made an over-issue of stock, thus committing a number of felonious offenses, they could not do less than immediately request him to resign. By any other course, they would have made themselves morally, perhaps legally, responsible for his misdeeds. Nor did he dare to refuse.
In the afternoon of the same day, in accordance
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with his usual custom, he took a bath in the bay at North Beach, and while swimming out into the chan- nel, seemed to be taken with a fit, and commenced to flounder about in the water. A boatman not far off rescued him and took him to theshore, while still warm and breathing, but he was unconscious, and soon died. It was generally supposed that he committed suicide, but a chemical analysis of the contents of his stomach discovered no poison, and the post mortem examination of his body indicated congestion of the lungs and brain; so it was officially declared that death was the result of his entrance while very warm into the cold water. The coroner's jury rendered a verdict in ac- cordance with that supposition; and the life insurance companies, which might have saved a considerable sum to themselves if they could have proved that he committed suicide, made no contest. Death was most opportune. His frauds were numerous, and the proof, though then known to only a few individuals, conclu- sive; the punishment would inevitably be severe, as the failure of the bank and the consequent panic had caused serious loss to the community, and had des- troyed many fortunes in and out of San Francisco ; he was so extensively known, that under the circum- stances it would be almost impossible for him to escape alive ; and his great pride would not permit him to submit to the degradation from the highest social honor to the state prison. There was no other se- cure refuge, save death. It came to his relief at the right moment, and common opinion assumed that it
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did not come by mere accident, though there has been no satisfactory explanation how it did come.
SEC. 215. Ralston. Mr. Ralston, a native of Ohio, born in 1825, received a good common school educa- tion, worked for several years at the trade of ship- carpenter in building river steamboats, and left that occupation when nineteen years of age to become clerk in a Mississippi steamer. In 1850 he started for California, but stopped at Panama, having found profitable business there. He became the agent of Garrison & Morgan, owners of a line of steamships connecting New York with San Francisco; filled that place for several years, and was in 1853 promoted to San Francisco, where he was agent for the same firm, which then had the steamers " Winfield Scott," "Yan- kee Blade " and " Uncle Sam," on the Pacific side. His employers were so well satisfied with him that, when they opened a bank with Mr. Fretz, they took him also as a partner, and all the names appeared in the firm of Garrison, Morgan, Fretz and Ralston. After a lapse of a year the first two drew out, leaving the firm of Fretz & Ralston. This house had been in existence a very brief time, when a panic came and brought embarrassment upon a bank in which many leading merchants made their deposits, and to which they looked for advances. This business was beset by serious risks, and the house which had held it re- fused to continue in that line. Most of the bankers would not face the danger, and others could not com- mand the confidence. The position was a difficult
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one in a city in which there was so much speculation and excitement; rare courage, tact, decision and knowledge of men and business were needed. Rals- ton had them; and the merchants discovered that he had. Soon he had the bulk of the mercantile busi- ness, and the more they observed him the stronger was their trust in him.
The firm changed to Donohoe, Ralston & Co. in 1858, and in 1864 Ralston, with others, planned and organized the Bank of California, which immediately took rank as the chief bank of San Francisco, and one of the leading financial institutions of the United States and of the world, for its fame and credit ex- tended to Europe and to the commercial cities of Asia. It was supposed that he was fairly entitled to the office of president, and could have obtained it without difficulty, but he gave his influence to elect D. O. Mills, whose reputation, experience, capital and influence were not unworthy of the place. Mr. Mills being a very reserved man, Ralston had the credit of being the leading man in the institution. It was a magnificent success from the start, possessing the un- limited confidence of the community, and doing an immense business. It paid dividends of one per cent. per month or more, and its stock was in great de- mand among capitalists. Among its stockholders were a number of millionaires. Their wealth and enterprise, the efforts which they made to protect their property, and the competition into which they were often brought with others by their undertakings
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