USA > California > History of California, Volume V > Part 26
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files of the departmental assembly until 1847 when California passed under the power of the United States. Nothing was ever done by the Mexican authorities up to that time. But both grants were presented to the board of land commissioners for confirmation under the act of congress of 1851. They were both confirmed. Thereupon hostilities broke out anew. An action was brought in the district court for Los Angeles county, in which the lands are situated to solve and settle the question of title. It was finally decided in favor of the defendants in 1873. Thus we see that the time occupied by these proceedings from their inception under the provisional grant to Sepúlveda, under whom the plaintiffs claimed, to their termina- tion by the final judgment of the supreme court of California, was exactly fifty-five years.
Another example of the invocation of the judicial powers of the governor may be seen in the case of Nieto v. Carpenter (21 Cal. 485). In that case, the title of the ancestor of the plaintiffs arose out of a license to enter upon and graze cattle on a tract of land in the county of Los Angeles containing thirty-three leagues. Manuel Nieto lived upon the premises until his death in 1804. He left four children, three sons and one daughter. They entered into and remained in posses- sion of the premises until 1833, when the governor upon their petition granted to each of the children a specific portion in severalty. Afterwards the specific tract of land granted to Josefa Cota, widow of Antonio Maria Nieto, son of Manuel, was sold to the defendant Carpenter, under authority derived from the governor.
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In an action subsequently brought by a person claiming directly under the original license it was held, that he had no title and could not recover; that the governor had the power to declare his estate in the premises forfeited or non-existent, and to grant the same property, or specific portions thereof to his children, and to authorize the sale of such tracts for the reasons given to the defendant. This latter was certainly the exercise of judicial functions. This contest lasted from 1834 to 1857. There was also a rancho situated in the Jolon valley in Monterey county. There was some contest of some kind over the rancho which lasted for years. For this reason the rancho was called "El Pleyto," which means in Eng- lish "The Lawsuit." All litigation about this rancho began and ended under the Mexican government. No litigation concerning it was ever had in any American court.
Up to the year 1866 there was no legislation by the United States upon the subject of gold mines in Cali- fornia. No title, and no means whereby a title could be obtained from the United States, existed prior to that time. The legislature of California took cogni- zance of this subject in its characteristic pioneer way. We have seen the result of its work. Finally in 1866 the congress of the United States passed the first law providing for the acquisition of the legal title to mines of any description. And this provision for the granting of title to mines was hidden away in a statute professedly passed for the purpose of granting the right of way to ditch-owners. In other sections it provided for acquiring the title of the United States
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to claims in veins or lodes of quartz bearing gold, silver, cinnabar, or copper, the possessory right to which had been acquired "under the customs and rules of miners."
From this we learn one great fact that there never was any statutory law from 1848 to 1866, under which the primary legal title of the United States could be acquired to a vein or lode containing gold, silver, cinnabar, or copper. During that period all that the miner had or could obtain was the possessory title, depending upon discovery and appropriation, and further, upon constant work of exploration and devel- opment. This law of 1866 was availed of in a few instances. Its defect was that a lode only could be granted, which must be specifically described. The practical result of this legislation was, to use a phrase common among miners in California and Nevada, that a man was as well off without a patent as with it. In addition to all this, the rights of owners of placer claims were not mentioned or even hinted at. In six years the defects of the system initiated by the Act of 1866 had become apparent. Congress to heal its defects passed the Act of May 10, 1872, which was carried into the Revised Statutes, and now forms Sections 2318-2352 of the same, comprising chapter six, on the mineral lands and mining resources of the United States. This, with trifling amendments has remained the law of the United States until the present day.
The principal change made in the common law of miners by the Act of May 10, 1872, was the substitution of a new scheme of appropriation. Formerly the miner
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took up and appropriated a lode. After the passage of the Act of 1872, he took up a piece of land fifteen hundred feet in length by six hundred feet in width, supposed to contain or in fact containing a lode. Proceedings were provided for in the act upon compli- ance with which he became entitled to a patent. Provision was made by the act for the assertion and proof of adverse claims. Upon the trial of such adverse claims in a local court of competent jurisdiction a patent was to be granted according to and in pursu- ance of the judgment in such case. The force and effect of a patent has been defined in numberless instances by the supreme court of the United States and the state courts. A patent according to those decisions constitutes conclusive evidence of the title of the patentee. It is conclusive of the location and appropriation of the claim, and of the performance of the annual labor thereon required by local laws, customs, or regulations. The issuance of a patent dispenses with actual possession of the claim, and the performance of the annual work or labor required by the miners' laws. Any possession taken of patented ground must be notoriously open and hostile and must continue for five years before the title of the patentee enures to the benefit of the adverse claimant. In other words a patented mining claim becomes real property and the law concerning the sale, conveyance or devolution of title to the claim is the same as that which governs the sale, conveyance, or devolution of title to a man's house and lot.
There is also a question of supreme importance which has arisen in California at the same time with the law
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concerning mines. We refer to the law concerning the appropriation and possession of water. The rights to the possession and use of water had their origin at the same time with the discovery and use of mines. To the ownership and working of mines, the appropriation and use of water were indispensable. Water was necessary for washing placers and to supply power for crushing ores from veins. It is not strange that the appropriation of both to private ownership should have proceeded simultaneously. Accordingly we find actions concerning mines, and concerning water for the use of mines reported in the California Reports in the same volumes since the beginning.
In England and the eastern states, where almost all lands had been reduced to private ownership, and titles in fee had been obtained to them, the law of riparian ownership prevailed. That is, that the owner of one or both banks of a running stream had title to the use of the waters of the stream. But in Cali- fornia titles in fee did not exist, except as to the lands covered by Spanish and Mexican grants. Those grants were usually located in the valleys, far from the mines which were usually found in the hilly or mountainous sections, rarely ever contained any mines or minerals. In all the California Reports from 1851 to the present day there can only be found four cases in which mines found in Mexican grants were the subjects of litigation. And of these four cases two arose upon one grant. I refer to the cases of Boggs v. Merced Mining Company (14 Cal. 255) and Fremont v. Flower (17 Cal. 199) which both grew out of the same grant,
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that of Las Mariposas, issued to Juan B. Alvarado, and by him conveyed to John C. Frémont in 1847. The other was the case of Moore v. Smaw (reported in 17 Cal. 199). That case concerned the ownership of a ranch in Butte County, granted to Dionisio Z. Fernandez et. al., and by the grantees conveyed to Moore, the plaintiff. A fourth case was that of Henshaw v. Clark (14 Cal. 460). These are the only Mexican grants containing mines of gold and silver in California, which have come to my knowledge.
Suffice it to say that there was no title in fee or riparian ownership of lands containing or embracing bodies of water at the time. A new plan of ownership of the waters so indispensably necessary to successful mining operations had to be conceived and worked out. And it was so conceived and worked out under and by virtue of the doctrine of prior appropriation. A very lucid description of the system is given by the late Justice Field of the supreme court of the United States in his opinion in the case of Jennison v. Kirk (8 Otto, 98 U. S. 453-462). From his opinion I quote as follows:
"The discovery of gold in California was followed, as is well known, by an immense immigration into the state, which increased its population within three or four years from a few thousand to several hundred thousand. The lands in which the precious metals were found belonged to the United States, and were un- surveyed, and not open by law, to occupation and settlement. Little was known of them, further than that they were situated in the Sierra Nevada mountains. Into these mountains the emigrants in vast numbers penetrated, occupying the ravines, gulches and cañons, and probing the earth in all directions for the precious metals. Wherever they went, they carried with
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them the love of order and system and of fair dealing which are the prominent characteristics of our people. In every district which they occupied, they framed certain rules for their government by which the extent of ground which they could severally hold for mining was designated, their possessory right to such ground secured and enforced, and contests between them either avoided or determined. These rules bore a marked similarity, varying according to the several districts only according to the extent and character of the mines, distinct provisions being made for different kinds of mining, quartz mining and mining in drifts or tunnels. They all recognized discovery followed by appropria- tion, as the foundation of the possessor's title, and development by working as the condition of its retention. And they were so framed as to secure to all comers, within practicable limits, absolute equality of right and privilege in working the mines. Nothing but such equality would have been tolerated by the miners, who were emphatically the law-makers as respects mining upon the public lands in the state. The first appropriator was everywhere held to have within certain well defined limits, a better right than others to the claims taken up; and in all con- troversies except as against the government, he was regarded as the original owner, from whom title was to be traced. But the mines could not be worked without water. Without water the gold would remain forever buried in the earth or rock. To carry water to mining localities, where they were not upon the banks of a stream or lake, became therefore an important and necessary business in carrying on mining. Here also the first appropriator of water to be conveyed to such localities for mining or other beneficial purposes, was recognized as having, to the extent of actual use, the better right. The doctrines of the common law respecting the rights of riparian proprietors were not considered as applicable, or only in a very limited degree, to the condition of miners in the mountains. The waters of rivers and lakes were consequently carried great distances in ditches and flumes, constructed with vast labor and enormous expenditures of money, along the sides of mountains and through cañons and ravines to supply communities engaged in mining, as well as for agricul-
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turists and ordinary consumption. Numerous regulations were adopted or were assumed to exist, from the obvious justness, for the security of these ditches and flumes, and for the protection of rights to water, not only between different appropriators, but between them and the holders of mining claims. These regulations and customs were appealed to in controversies in the state courts and received their sanction; and properties to the extent of many millions rested upon them. For eighteen years from 1848 to 1866 the regulations and customs of miners, as enforced and moulded by the courts and sanctioned by the legislation of the state, constituted the law, governing property in mines and water, upon the public mineral lands. Until 1866 no legislation was had looking to a sale of the mineral lands. The policy of the country had previously been, as shown by the legislation of congress, to exempt such lands from sale. In that year the act, the 9th section of which we have quoted, was passed. In the Ist section it was declared that the mineral lands of the United States were free and open to exploration and occupation by citizens of the United States and those who had declared their intention to become citizens, subject to such regulations as might be prescribed by law, and the local regulations and customs of miners in the several mining districts, so far as the same were not in conflict with the laws of the United States. From California the system of appropriation of mines and water spread to the adjoining states. In process of time the California system was adopted as the common law of miners in all the territory west of the Missouri River. In many cases the salient features of the system have been adopted by express legislation. The whole system whether adopted by legislative act or not furnishes a complete example of the growth of the common law upon the subject. First, the customs of the people in regard to the subject; second, the ex- pansion of those customs in regard to lode claims; third, the legislative adoption and the digesting of customs and usages into a compact code of statutes; fourth and last, legislation by the United States providing for a grant of titles in fee to the mines by the government of the United States."
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It is not often that the customs and usages of a people in regard to a certain kind of property have had their origin, development, successful operation and final adoption by the legislature, both state and federal, within the lifetime of a single individual. But such has been the case with the writer of these lines.
BANKING IN CALIFORNIA
U NDER the rule of Spain trade was absolutely forbidden in California; but by the beginning of the nineteenth century American ships had begun to visit the Pacific coast of North America for skins of sea otter and other fur bearing animals. These vessels carried goods for trade and landed their wares whenever opportunity offered, tak- ing the chances of arrest and confiscation. After Mexico achieved her independence trade regulations were relaxed, a custom house was established at Mon- terey, and mission and ranchero were alike permitted to sell their furs, hides, and tallow, and to receive in return such goods as they required. No bonds or notes were taken for goods delivered and none were expected. A trading ship sold its goods along the coast and returning in twelve or eighteen months would receive in hides and tallow payment for goods sold the previous year. This custom was universal and there is no record of the repudiation of a debt.
After the American occupation and the discovery of gold, a long and bitter warfare was waged in the con- stitutional convention over the provisions of the article providing for the forming of corporations, and the sentiment of the members was unanimous against the establishment of a banking system. For two days the convention in committee of the whole strug- gled with the problem of how to prohibit the formation of banks of issue without hampering the transaction of business. It was held that if corporations were formed for the purpose of receiving deposits of gold and silver, the prohibition against the creation of paper to circulate as money would fail because such
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corporations would necessarily issue certificates of deposit which could and probably would be circulated as money. Several members insisted on forbidding the formation of banks of deposit, holding that this was the most objectionable of all forms of banking corpo- rations. Such banks could issue certificates of deposit payable to bearer, thus making them bank paper, and circulate them as money, with none of the usual guards of the banking system attached to them. Others held that there was no need whatever for corporate banks; that if there were to be banks in the country, "let us have private bankers, who, if they abuse the confidence of the people, can be punished by the law." Stephen Girard was held up as an example of a safe banker in the United States, and the Rothschilds, Barings, Browns, and others, in Europe. The misery, ruin, and destruction to the citizens, and prostration of the public credit following the banking era of 1834, '35, '36 and '37, was described in support of the motion to forbid banking corporations.
The section, as finally adopted, was as follows:
"The legislature shall have no power to pass any act granting any charter for banking purposes; but associations may be formed under general laws, for the deposit of gold and silver, but no such association shall make, issue or put into circulation, any bill, check, ticket, certificate, promissory note, or other paper, or the paper of any bank, to circulate as money."
Thus early did California take a firm stand for sound currency; a stand from which it has never receded .* With a soil that was pouring into the avenues of trade two hundred and fifty thousand dollars per day of
*The issuance of $13,040,000 clearing house loan certificates in 1907 may be considered an exception to this statement.
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metal for coining the money of ultimate redemption, the members of the convention did not see the necessity for any other currency and were not disposed to leave a loophole through which any form of the detested paper money might creep in and sting them, as one member expressed it. The debate was long drawn out and was participated in by some of the ablest men in the convention, notably, Gwin, Jones, Botts, Price, Lippitt, Halleck, Hastings, Sherwood, and others.
Owing to the great volume of business transactions caused by the sudden influx of a large number of people, there was a scarcity of money, notwithstanding the product of the mines and the specie brought into the country by immigrants and imported from Mexico and the Hawaiian Islands. Like other commodities in California, the price of gold was subject to violent fluctuations. It sold at the mines in 1848 and 1849 at from four to nine dollars an ounce and the Indians who mined much of it in those years, would sell it for any- thing they happened to want at the time. The price was ultimately fixed at sixteen dollars an ounce and all stores, saloons, banks, and dealers were equipped with gold scales. The military governor received gold for custom dues and released the goods to merchants but he only took it on deposit, redeemable in three and six months, at a rate low enough to insure its redemption. Permission was secured for private firms to issue gold coins, and five, ten, twenty, and fifty dollar pieces were coined. In addition to the gold dust and the American coins, were Spanish doubloons, Mexican silver dollars, pesetas, reals, rupees, and some German coins; all of the foreign silver coins circulated much
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above their worth until the bankers decided to accept them at their bullion value. The establishment of a branch of the United States mint in San Francisco in April, 1854, brought relief to the business community and put an end to the makeshift circulation.
The danger of building up a moneyed oligarchy to which the people of the state would be exposed was so real to the members of the convention and to those whom they represented, that it was many years before corporations having banking privileges were formed. Almost any reputable merchant who had a safe in a well protected building was made a depositary of gold dust, and many of them combined banking with their mercantile business. The express companies, too, did a banking business, and as they penetrated the mining camps, they had superior facilities for such business and would take gold at the point of production and issue their drafts in exchange for it.
On January 9, 1849, Henry M. Naglee, who came to California in 1847 as captain of company D, Stevenson's regiment, and Richard H. Sinton, who came on the line-of-battle ship Ohio as acting paymaster, established the first bank in California, under the firm name of Naglee and Sinton. They received deposits and sold exchange in an office in the Parker House on Kearny street, fronting the plaza, now the site of the Hall of Justice. Sinton soon withdrew, and after the destruc- tion of the Parker House by fire, the business was con- tinued on the corner of Montgomery and Merchant streets, under the name of H. M. Naglee and Company until closed by a run, September 7, 1850. The next bank in San Francisco was that of Burgoyne and
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Company (John V. Plume was the partner), which opened for business, June 5, 1849, on the southwest corner of Montgomery and Washington streets. Then followed B. Davidson, on Clay between Montgomery and Kearny streets. Davidson remained in business for many years. He was agent for the Rothschilds, and Mount Davidson at Virginia City, Nevada, was named for him. Thomas G. Wells, doing business under the firm name of Wells and Company began in October, 1849, and failed October 3, 1851. James King of William began business as a banker on the corner of Montgomery and Commercial streets Decem- ber 5, 1849. His bank failed in 1854 and he became cashier of Adams and Company. In February, 1850, Drury J. Tallant opened his banking house on the corner of Montgomery and Clay streets. Judge Wilde afterward associated himself with him and the firm became Tallant and Wilde. Later it was Tallant and Company; was incorporated in 1881 as Tallant Bank- ing Company and absorbed by the Crocker, Woolworth Bank in 1898. Page, Bacon, and Company (express company) and F. Argenti and Company, began bank- ing business in June, 1850, on the south side of Clay street between Kearny and Dupont, and were followed by Adams and Company, Palmer, Cook, and Company, Drexel, Sather, and Church, Robinson and Company, Sanders and Brenham, Carothers, Anderson, and Com- pany, and in 1853, Lucas, Turner, and Company, of which General William T. Sherman was the resident partner and manager. The firm of Drexel, Sather, and Church became Sather and Company on the retire- ment of Drexel and Church. It was incorporated in
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1887 as the Sather Banking Company; was nationalized December, 1, 1897, as the San Francisco National Bank, and in July, 1910, was absorbed by the Bank of California. Robinson and Company had a savings bank and Dr. A. S. Wright opened a savings bank on the northwest corner of Washington and Kearny streets, known as Wright's Miners' Exchange and Savings Bank, where he paid eighteen per cent per annum for deposits. In 1852 the express company of Wells, Fargo, and Company entered the field and added a banking depart- ment to its express business. Other early bankers were Delessert, Cordier, and Company, Joseph W. Gregory, Robert Rogers, Abel Guy, and a few others in San Francisco, and D. O. Mills in Sacramento, who turned his mercantile business of 1849 into a bank in 1850, under the firm name of D. O. Mills and Company, Mills' partner being E. J. Townsend. In 1852 Town- send retired and Edgar Mills and Henry Miller were taken into the firm. In 1872 the bank took a national charter as the National Gold Bank of D. O. Mills and Company. B. F. Hastings also had a private bank in Sacramento and all the express companies had agen- cies there as well as in the mining towns, where they opened deposit accounts with their patrons. The con- fidence of the people in their bankers received a rude shock when on February 17, 1855, the mail steamer brought news of the failure of Page, Bacon, and Com- pany of St. Louis, and though the statement was at once made that there was no connection between the St. Louis and San Francisco houses, a run was started on the San Francisco concern which had, with its
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