USA > California > San Francisco County > San Francisco > San Francisco, a history of the Pacific coast metropolis, Volume I > Part 39
Note: The text from this book was generated using artificial intelligence so there may be some errors. The full pages can be found on Archive.org (link on the Part 1 page).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16 | Part 17 | Part 18 | Part 19 | Part 20 | Part 21 | Part 22 | Part 23 | Part 24 | Part 25 | Part 26 | Part 27 | Part 28 | Part 29 | Part 30 | Part 31 | Part 32 | Part 33 | Part 34 | Part 35 | Part 36 | Part 37 | Part 38 | Part 39 | Part 40 | Part 41 | Part 42 | Part 43 | Part 44 | Part 45 | Part 46 | Part 47 | Part 48 | Part 49 | Part 50 | Part 51 | Part 52 | Part 53 | Part 54 | Part 55 | Part 56 | Part 57 | Part 58 | Part 59 | Part 60 | Part 61 | Part 62 | Part 63 | Part 64
An attempt was made in the fall of 1849 to organize a Merchants' Exchange, but while there were several subscribers to the project the hurly burly of the times prevented the consummation of the idea. Everybody was too busy to attend meet- ings, and those engaged in trade apparently were disposed to ignore methods prevalent in older communities. A reading room established by E. E. Dunbar, however, was much resorted to by men in business, and to some extent served the purpose for which exchanges are devised. The best of organization would not have materially improved the condition. The world knew that vast quantities of gold were being taken out, and just at that time the complaint of overproduction of manufactured articles was general, hence all sought to get their surplus com- modities to the place where they could be exchanged for the gold. The desire of the local dealers to get rich quickly cooperated with the eagerness to unload, and the consequence was that San Francisco merchants were heavily overstocked. and in the spring of 1850 they were compelled to make great reductions in prices to realize, a course which saved some but resulted in many bankruptcies.
One of the effects of this overstocking was the creation of an auction business which survived many years in San Francisco, and was at one time so flourishing that the legislature, always on the lookout for opportunities to draw revenue from the City, sought to impose on it a special form of taxation. It first came into prominence through the necessity of speedily getting rid of the stocks of debtors, but later it was made use of by consignees to dispose of cargoes shipped by them without special knowledge of the needs of the market, a practice which tended to demoralize the regular conduct of business.
Despite these drawbacks merchandizing up to 1854 does not appear to have been an extra hazardous occupation. At least there was no perceptible diminution of the volume of trade. There were great fluctuations in prices and incautious operators occasionally went to the wall, but on the whole, owing to the high range of profits, there were relatively fewer fatalities than in many places in the At- lantic states where business was carried on in a conservative fashion. In 1853 there was a repetition of the earlier trouble of overstocking due to the practice of
Eager Traders
Unorganized Mercantilism
Auction Business
Early Trade Depressions
282
SAN FRANCISCO
consignees flooding the market, and it became necessary to ship goods back to New York in order to relieve the glut. This depression passed away, and there were hopes of a complete recovery of business in 1854 which were disappointed, trading during that year being generally unprofitable.
The Panic of 1855
In 1855 as the result of bad banking methods several financial institutions failed, and the business community suffered severely. There were 197 failures with liabilities amounting to $8,000,000. The disaster had its origin in the indis- cretion of a banking concern with its headquarters in St. Louis and a branch in San Francisco. The parent house had invested heavily in the Ohio and Mississippi Railroad and was drawing upon Page, Bacon & Co. of San Francisco for funds to meet demands upon it when it failed. At the time of the failure there was a million dollars worth of gold dust in transit to St. Louis, which successfully eluded the depositors of the San Francisco bank who tried to get it into their possession. The obligations of Page, Bacon & Co. in the City reached two millions, and the firm closed the doors of their establishment after paying out about $600,000. An attempt was made to sustain Page, Bacon & Co., but the manager of the bank, Henry Haight, was unable to make a satisfactory showing and the effort had to be abandoned. Adams & Co., another of the larger institutions, anticipated an expected run by putting up its shutters. A receiver was appointed, and there was a continuous legal battle which in the end dissipated all the funds of the depositors who received little of the money deposited by them.
Cause of Banking Troubles
The banking trouble of this period was largely attributed to the failure of the State to exercise a proper surveillance over the operations of financial concerns. Owing to the distrust of corporations which was excessive at the time of the adop- tion of the first constitution the state was prohibited granting charters for banking purposes, or of the issuance and circulation of bank notes; but there was no inhi- bition of the privilege of creating banks of deposit which exercised nearly all the functions of a chartered bank, such as receiving deposits, making loans, selling drafts and buying bullion, and between 1849 and 1852 five companies doing what was called an express banking business were in existence. They were S. F. Adams & Co., Page, Bacon & Co., Palmer, Cook & Co., Todd & Co., and Wells, Fargo & Co., and they all did a flourishing business, handling the bulk of the gold dust and bullion passing through San Francisco. There were also private banks and for some time mercantile houses possessing safes acted as depositaries.
First San Francisco Banks
Outside of the express companies the principal private banking firms in 1849 were those of Henry M. Naglee, Burgoyne & Co., B. Davidson, Thomas G. Wells and James King of William. Naglee in company with a man named Linton, established the first bank on the coast on Jan. 9, 1849. In April, 1854, this num- ber had increased to a round dozen, the banks in operation being those of Burgoyne & Co., B. Davidson, James King of William, Tallant & Wilde, Page, Bacon & Co., Adams & Co., Palmer, Cook & Co., Drexel, Sailer & Church, Robinson & Co., Sanders & Brenham, Carothers, Anderson & Co., Lucas Turner & Co.
Gold in Plenty but no Money
Although California in the first year after the discovery of gold produced over ten million dollars worth of that metal, and in 1850 $41,273,106, the annual out- put increasing to $81,294,700 in 1852, it actually suffered from a dearth of money, and various expedients had to be resorted to in order to secure a medium for the transaction of business. Large quantities of foreign coin were in circulation and passed without much attention being paid to its real worth. Pieces which approxi-
283
SAN FRANCISCO
mated in size to those of a familiar American coin were accepted without demur as an equivalent of the coin they resembled, and in a land of gold, over which the Stars and Stripes floated, for quite a period about the only gold coins obtainable were English sovereigns.
This neglect of the government at Washington was partly remedied by the establishment of private assay offices where coins were minted of various denomi- nations. Ingots varying in size, stamped by an assayer appointed by the state under authority of an act passed by the legislature April 20, 1850, were the nearest approach to a legal money until the secretary of the treasury made a con- tract with the firm of Curtiss, Perry & Ward to commence the assaying of gold. Coins were emitted by this firm, and although they were not recognized by the government they circulated commercially, as did those put out by firms wholly unauthorized to coin money.
There was considerable profit in this private coinage, and although it might easily have lent itself to serious abuses there do not appear to have been ·any frauds of consequence perpetrated. Fifty dollar pieces called "slugs" were issued with the stamp of the United States assayer. They were octagonal in form and somewhat thicker than a double eagle. There were also twenty-five dollar and twenty, ten and five dollar pieces. Although not a legal tender they were freely received, and no objection was made to the fact that they were as a rule worth less than their face value. With his customary disregard of small things the argo- naut was quite ready to permit those who furnished him with a convenient medium of exchange, for which there was urgent need, to make a liberal profit, and he never thought it worth his while to challenge what was unmistakably an invasion of a governmental function most jealously guarded by other nations than the United States.
There was much looseness of thought concerning the rights of buyer and seller of gold dust and bullion which may be attributed to the carelessness of the miner as much as to the greed of those with whom he dealt. Until the branch mint began to supply legal tender coins it was the custom to make purchases with dust and scales were a part of the paraphernalia of every store. As a rule bargaining was not indulged in, and if the miner happened to be particularly flush he was more apt to give the storekeeper the benefit of overweight than to exact an advantage from him. Large sums of money were made by firms making a specialty of buying gold dust, and a scandal of considerable magnitude was raised by a charge against Page, Bacon & Co., that they had improperly "cleaned up" about $100,000, the implication being that they had cheated their customers by manipulating the scales and undervaluing the fineness of the metal.
On this latter score there was ample ground for complaint against the negligence of the government which not only failed to act promptly in the matter of supplying a convenient medium of exchange, but took advantage of its own laches to compel importers to settle customs duties on a basis which involved a loss to the merchant in many instances. In July, 1848, the government consented to receive gold dust in payment of duties at a very low figure, permitting the payer the right of redemption which was kept open for one hundred and eighty days. In December of the same year gold dust was dull of sale at $10.50 an ounce, although the price had been fixed at a public meeting held in the previous September at $16 an ounce. In view of the fact that the importers of coin made profits ranging from fourteen
Private Coinage
Profits of the Private Coiner
Buying and Seiling Gold Dust
Governmental Incapacity
284
SAN FRANCISCO
to thirty per cent, that coins worth 19 cents circulated at 25 cents, Spanish reals of 121/2 cents were valued at 15 cents, that the owner of gold dust was compelled to sacrifice heavily in selling owing to the uncertainties attending its quality, and that interest on loans made in coin soared heavenward, the pioneer may justly claim that he was the victim of governmental incompetency at a time when it was universally acknowledged that the stream of gold he was pouring into the channels of trade was exerting a revivifying influence and starting the world anew on a career of progress.
Business Highly Speculative
The modern sensitiveness concerning the quality of money apparently did not trouble the argonauts whose chief concern was to gather gold and secure a circu- lating medium of some sort, but there is little room for doubt that the crudity of the banking and monetary systems of the early Fifties contributed largely to the business troubles of the period by converting what should have been ordinary transactions into speculative ventures. All speculation not forbidden by law may be regarded as legitimate, but there was little commerce of the sort we now term "legitimate" in California up to the crash of 1855. There was no certainty that the intelligent application of knowledge and the exertion of energy in any given enterprise would produce reasonable returns; everyday commercial affairs were invested with the same elements of uncertainty as the hunting of gold which might or might not be rewarded with success. It was largely a question of luck, because the practical isolation of the City and coast made the business men of San Francisco dependent on the caprice and judgment of outsiders who rushed in goods without any knowledge of the requirements of the people they were serving.
It is astonishing that so many men proved their ability by weathering commer- cial storms more numerous and violent than those encountered elsewhere. The fact that they did so can only be explained by the enormous output of gold which aggre- gated $345,950,117 up to the close of 1854, and reached the enormous sum of $639,191,997 at the close of the decade. This permitted the taking of profits which under any other condition would have been regarded as abnormal, and they pro- vided a margin for contingencies which were frequently occurring, and many that were of a character which could not be foreseen by the most sagacious. Hence we are not surprised that even as early as 1853 there were instances of success in business which warranted the writer of the "Annals" in asserting that many who had resorted to mercantile pursuits had become "merchant princes." While the term was not pure hyperbole, for there were merchants who had amassed suf- ficient wealth to attain to influential positions in the community, it must not be taken too literally, or as connoting all that we now attach to the designation. Things are to be regarded relatively, and when the pioneer tells us that there were fine stores and as big and varied stocks in San Francisco in the early Fifties as there are now, we must weigh the assertion with the qualification "in proportion to population." There were big stores with big stocks of goods, and curiously enough they were conducted on lines very similar to those of a modern department store, but they bore no nearer resemblance to the great modern marts of trade than a large country store of today does to one of those institutions.
Display of Merchandise
In no particular has merchandizing changed more than in the mode of display- ing goods. That is wholly a modern development and owes its growth as much to the improvement in the production of plate glass as to increased competition. When the hundreds of vessels which entered the harbor in 1849 and 1850 and 1851,
Early Merchant Princes
285
SAN FRANCISCO
and disgorged their cargoes into the mercantile establishments of the City, there were goods in abundance, and the enthusiastic annalist was warranted in speaking of the stocks as covering the range of human desire, but that range was limited, comparatively speaking. A merchant whose career in San Francisco began in the early Fifties, and who still actively pursues his calling declares, that a thoroughly equipped modern store probably carries fifty times as great a variety of articles as the biggest establishment did in 1854, and that the present method of conducting business would have seemed absurdly complex to the pioneer merchant; and that most of the devices now resorted to in order to tempt customers and promote trade would have been scorned by them in the early days when simplicity and directness of dealing were the rule.
The interior of a big store in San Francisco in the early Fifties presented a picture of profusion rather than variety, and in no case was there any serious effort made by employers or clerks to impress by display. Goods were piled where it was found convenient to bestow them rather than with reference to attracting tbe attention of customers to their existence. The staple articles, now usually hidden in warerooms to be brought forward when demanded, were most in evidence. Big piles of flannel shirts, and other garments which the customer could not help being aware were to be had, were as often as not in the foreground, while articles of luxury were concealed in parts of the store only penetrated by the inquisitive. Mountains of barrels were kept in sight, but the bijoutre and other luxuries had to be dragged forth when demanded. Window displays were so uncommon as to be almost unknown, and other means of advertising were equally neglected. The trained clerk was a rarity, the salesmen and accountants being principally re- cruited from the ranks of unsuccessful gold seekers, and very often the employer was as ignorant of the selling art as his employee.
It is perhaps to this latter fact that the long persistence of a custom of col- lecting bi-monthly, which grew out of the necessity of making remittances on the sailing days of steamers is owing. When the line established by the Pacific Mail Steamship Company succeeded in making its schedules of departures for Panama perfectly dependable, the 1st and 16th of each month were fixed as collection days, and every business house sent out men to dun customers. The practice was not abandoned when other facilities for remitting were provided, and still endures despite the fact that numerous mails are daily dispatched to the Atlantic states. It never met with adverse criticism until very recent years, and is still defended as a useful custom on the ground that it keeps debtors in mind of their obligations.
The conservatism implied by the long endurance of a business device of this char- acter contrasts forcibly with the intensely speculative character of pioneer trading days, and when investigated discloses the cause of some of the anomalies which have puzzled students of early Californian peculiarities. Accepting the warning which the evil results of wildcat banking at the East held out, the framers of the first constitution deliberately hedged about the business of banking with obstacles which made a safe system impossible. The people became obsessed by the idea that no representative of money was safe, and insisted that only the precious metals should be used as a medium of exchange. They deemed it impossible to devise a scheme by which a representative of the metals could be made absolutely safe, because they ignored the fact that the underlying cause of wildcat banking in the East was the scarcity of basic money. They did not see that the abundance of gold in Cali-
A Big Store in Early Days
Credit System and Collection Days
Some Odd Contradictions
286
SAN FRANCISCO
fornia made the creation of reserves possible, and that proper laws under the con- ditions created by successful placer mining would have enabled them to obtain and maintain an absolutely safe circulation.
The attitude of the commercial element of San Francisco, and the people gen- erally, towards paper money after the outbreak of the Civil war was in seeming contradiction to the earnest efforts inaugurated at an early day to bring the coast in closer touch with the states on the other side of the Rocky Mountains. It is some- times assumed that the need for a transcontinental railroad was first felt when the slaveholder rebellion threatened to sever California from the Union, but that is an error. Although California by her specific contract act appeared to advertise to the world that she had no confidence in the integrity of the government's green- backs, her refusal to receive them had no such significance. Long before · 1861 California was earnestly seeking closer financial relations with the Atlantic states, and the necessity of linking the country together, so as to lessen the drawbacks of an isolation which every observant person clearly perceived, was generally recognized.
Early Ideas Concerning Railroads
The spontaneity with which ocean transportation was provided after the dis- covery of gold no wise weakened the belief that California would be vastly bene- fited by land connection with all other parts of the Union. The Pacific Mail and other transportation companies speedily furnished facilities which undoubtedly for a considerable period made an overland project seem visionary rather than practical, but the multiplication of sea lines did not divert attention from the possi- bilities of a more direct and rapid transit. It is interesting to note that when this possibility was first discussed the scope of desire was very modest. There were some who had visions of more than one transcontinental railroad, but usually the talk revolved about "a railroad." In his retiring message in 1851 Governor McDougal spoke of the railroad that had already been started in western Missouri and expressed the hope that congress would aid in forwarding the gigantic project to completion. He pointed out that the government owned immense bodies of fertile lands which lay waste and untenanted and said that by granting those por- tions lying along the line of communication the value of the remainder of the public domain would be greatly enhanced.
Railroad Talk in 1854
In 1854 a writer in discussing the question of routes declared that whichever one was selected San Francisco would be "the chief terminus on the Pacific," but a little later he sounded a warning note and said that Puget Sound offered com- mercial advantages nearly as great as those of the Bay of San Francisco, and that it would be unfortunate if the northern section got the start as the result would be to divert immigration from California. "Later," he added, "let through lines terminate where they will; only let our City have the first one." In the same year on April 10, Governor Isaac J. Stevens of Washington territory, lectured in San Francisco on "The Great Interoceanic Highway," and pointed out what would be accomplished "when the long talked of Atlantic and Pacific Railroad was fin- ished." Three routes were spoken of at that time. The first was the Southern. It seemed to be the favorite, probably because it appeared to be the one best calcu- lated to advance the interests of the South; and the general impression was that it had the best show of receiving aid on that account. It would have traversed Texas, New Mexico and Arizona, and San Diego bay would have been its terminus. The second was the Middle route, which starting in Missouri was to have ended at
-
Getting in Touch with the East
BELLA UNION.
VERANDAH
OHN PIPER. LALER .. YAUITS
PORTSMOUTH SQUARE AS IT APPEARED IN 1856 Bella Union Theater at left; City Hall, formerly Jenny Lind Theater, on the right
-
287
SAN FRANCISCO
some place on the Sacramento river, and the third was the Northern which would connect the basin of the St. Lawrence river with Puget Sound, passing along the lines of the Upper Missouri and Columbia rivers.
All of these projects were finally consummated, but not until many years after their enthusiastic advocates began talking of their possible accomplishment. The last spike of the first completed line which connected the Missouri river with Sacramento by rail was not driven until 1869, and not until after the scheme for its building had been made the battledore and shuttlecock of the politicians. The pro-slavery element was determined upon securing a line which would run south of the thirty-sixth parallel of latitude, and made it clear that unless that was con- ceded there should be no line at all. At no time was there any doubt expressed concerning the propriety of extending aid in the way of land grants. Northerners and Southerners were equally disposed to be liberal in that regard, the only hitch between them grew out of the choice of route.
That California had not as yet taken strong hold of the affections of the people of the state may be inferred from the fact that an important section of the com- munity was quite ready to deprive the coast of the benefits of transcontinental com- munication rather than make any concessions which they thought would militate against the interests of the slaveholders. In the congress of 1858 lines were sharply drawn, and Broderick, who advocated the Central route was antagonized by Senator Gwin, who throughout the contest exhibited a far greater desire to advance the fortunes of the South than of the state he was chosen to represent. Perhaps the Southern contingent found some warrant for their action in the reso- lution passed at the first democratic meeting held in San Francisco on the 25th of October, 1849, which required candidates to vote for "an Atlantic and Pacific rail- road through United States territory in preference to any other." Compliance with this demand would have necessitated adherence to the plan of Thomas H. Benton, but years afterward, when the situation had been completely changed by the purchase of the land comprising the present states of Arizona and New Mexico, the proviso lost its force, and the chief struggle was between the adherents of a route along the thirty-second parallel and those advocating a terminus at Sacramento.
Although discussion of transcontinental railway plans absorbed a great deal of public attention the people of San Francisco and the rest of the state did not concentrate all their hopes upon overland communication but were active supporters of schemes designed to put them in touch with the rest of the Pacific coast. They early appreciated the benefits to be derived from roads that would link the different sections of the coast together, and promoted enterprises which presented great difficulties owing to the vast distances intervening between the different nuclei of population. In 1848 when the news of the gold discovery reached Oregon, Burnett the first governor of California, organized a party which traveled overland from Oregon City to the Sacramento valley. The initial trip was attended with some difficulty, but the result was the mapping out of a road which was subsequently developed. In 1855 the legislature passed an act to build a wagon road over the Sierra, but it exceeded the debt limit provision in the organic law and was declared unconstitutional in 1857. Meanwhile, however, considerable work was done on the road, and obligations were incurred which the people by the decisive vote of
Need help finding more records? Try our genealogical records directory which has more than 1 million sources to help you more easily locate the available records.