SHARON, TOO, BECOMES ASSOCIATE OF FAMOUS PIONEER; THIS CHAPTER
TELLS HOW GREAT PANIC WAS AVERTED.
_Ralston Lays Foundation for Huge Fortune of D. O. Mills by Making Him
a Bank President_
Ralston had two business associates--I might almost call them
familiars--William Sharon and D. O. Mills. D. O. Mills was a man of
some fortune, worth perhaps half a million dollars. He was about to
leave for the East to settle down somewhere under his own vine and
fig tree, when Ralston took him up. The latter was just organizing
the Bank of California, had no ambition for titular dignities, and
offered Mills the place of president. He promised that the job would
be a sinecure--that he would do all the work. Mills accepted. That
was the foundation of his huge fortune. But he was a mighty cautious
speculator in those days. He tried his hand at a number of ventures,
sometime invested large sums, but always required a guaranty against
loss. Strangely enough, this used to be given him often, because of
the conservatism associated with his name. That, however, did not
last long. He became a bold, ambitious, original operator on his own
account. He had fine personal habits, but was just the opposite of
Ralston--unemotional, cool-headed and austere.
[Illustration: D. O. MILLS
First President Bank of California, a financier of national repute]
Sharon was quite a different character. He was from the same part of
the Northwest as J. D. Fry, an uncle of Mrs. Ralston, and so received
a favorable introduction to the famous financier. Ralston sent Sharon
to Virginia City during the early flush times as an agent for his
mining interests, and when the Bank of California was organized and a
branch located on the Comstock Lode, Sharon became manager, a position
of great prominence and power. He was a daring, spectacular plunger,
though a very shrewd one, made big money from the outset and with his
general foreknowledge of conditions really took no chance at all on
great stock market deals. With unexampled rapidity, he accumulated
a fortune of millions. Having no pet hobbies to interfere with
accumulating money, before the ’60s were over both Mills and Sharon
probably possessed larger fortunes than their chief.
As I have said Sharon’s personality was very different from that of
Mills in many ways. He had some habits that an anchorite might not
approve. Among other things he was devoted to the great national
pastime--draw-poker. Many legends of his prowess, of his bewildering
bluffs and high-class technique were long fragrant memories of the
Comstock Lode. It is related that a friend of Ralston with a moral turn
warned him that his agent at Virginia was a notorious, abandoned and
dissolute poker player. The banker listened with absorbed interest.
“Does he win or lose?” he asked.
“My information,” said the informer, “is that he almost always wins.”
“Good,” said Ralston. “He’s the very man I want.” The three were
associated in many enterprises of the first magnitude. They had
combined resources, speaking very conservatively, of not less than
thirty-five millions, which is a big bunch of money even today. They
formed an irresistible power in California, until the railroad dynasty
succeeded them. Still I have reason to believe that Ralston never gave
these associates his full confidence, and that the relation became
irksome, if not oppressive.
I judge the former from an unrecorded incident that ought to be
remembered in financial history--an incident that just prevented a
crisis far more terrible than that of 1907.
[Illustration: WM. SHARON
A leading Comstock figure, former U. S. Senator]
It was in the year 1869. Ralston had loaned the railroad people some
months before $3,000,000, with which they pushed their line to Ogden,
adding a hundred miles to the Central Pacific in its cross-country race
with the Union Pacific for mileage. This large sum had gone out of the
State absolutely. Also two millions had taken wing for South America to
finance an investment there. Things were already a trifle tight when in
July, 1869, Jay Gould’s famous “gold corner” raised the yellow metal to
a huge premium and the gold coin of California was drained eastward, as
through a sieve. The banks always carried a large amount of gold bars,
but this was not available as coin, for the mint happened to be shut
down pending a change of administration.
The situation need not have been serious, for tucked away in the United
States sub-treasury were $14,000,000 in gold coin. It seemed the
most legitimate transaction in the world to deposit gold bars in the
Treasury and carry away an equal value in coin. But President Grant,
who was rather new on the job, for some unaccountable reason absolutely
refused to sanction the transfer, although the bankers almost burned up
the wires with their appeals. An uneasy feeling was over the town, the
overcharged atmosphere of panic, apt to break loose at any moment into
a resistless storm.
While the tension was at its height I called at the Bank of California
one afternoon and was ushered into the private office of Mr. Ralston.
To tell the truth, I was feeling the pinch myself, and wanted to know
something of the outlook.
The banker said I was just the man he wanted to see. “If things go
on as they are,” he said, “every bank will be closed by tomorrow
afternoon. Not one of us can stand a half day’s run, and all will go
down in a heap. Then look out for hell in general to break loose. This
will happen if I don’t get a million dollars in coin in the vaults
tonight. But I intend to get it, and want you and Maurice Dore to help.
Be at the bank at 1 o’clock tonight, and put on an old suit of clothes,
for you will have plenty of hard work to do.”
Dore and myself met by appointment shortly after midnight. We were
utterly mystified. Together we tramped through the deserted, dimly
lighted streets. It seemed just like old times--the time we boarded
the Chapman to become privateers. We found Ralston at the bank
with one of its trusty officials, still alive and prominent in San
Francisco. The financier was in high spirits, but counseled caution. We
walked noiselessly to the United States Sub-Treasury, then located on
Montgomery between Sacramento and California streets, where the Selby
offices afterward stood. A dim light was burning within. Mr. Ralston
asked us to halt a few paces from the entrance; then to our great
surprise he opened the door of the Sub-Treasury, without challenge of
any kind, and closed it after him as he stepped inside. Presently he
emerged with several sacks of coin. “Take that to the bank,” he said.
“The gentleman there will give you something to bring back.”
The party at the bank received the cash, tallied it and handed us gold
bars for the same value. These we took to the Sub-Treasury, where we
found Mr. Ralston smilingly awaiting us with a new cargo of sacks on
the sidewalk. We turned over the bars and made another journey to the
bank.
Thus, at dead of night, passing to and fro, we transferred in actual
weight, between the Sub-Treasury and the bank nearly five tons of gold.
We did not get quite as much as Ralston wanted, before the light began
to break. It was a heart-breaking job from a physical standpoint. I was
young and athletic and stood my end of it in good shape. But Maurice
Dore was of sedentary habit, soft as mush, and he was on the verge of
collapse. He was nearly chest foundered and had a swayback appearance
for a month. During all this time, not a person passed to interrupt us.
This was doubtless due to a prearrangement with the policeman on the
beat.
When the Bank of California opened the next morning a rather ominous
looking crowd was in waiting. Lines began to form behind the paying
tellers’ windows. It wasn’t a “run,” but a “near-run.” Ralston appeared
on the scene and looked annoyed, as he said, “Why are you making so
many of our customers wait on a busy day? Put more tellers on the
windows and have your coin on hand.” More tellers went to the windows.
Porters brought tray after tray from the vaults. It was amazing how
the crowd changed their minds about wanting their money and melted
away. And all over the troubled city the report spread that the Bank of
California had coin to burn, and the news caused a general relief.
Nevertheless, a serious run started on one of the leading banks.
Ralston hurried to the spot, mounted a dry goods box and addressed
the crowd. He told them they were doing the bank and the city a great
injustice. He declared that the bank was absolutely sound--which was
the truth. He further told the crowd that they need not wait for a
line-up. Just bring their books to the Bank of California and they
would be accommodated with the cash there. Again, the crowd slunk away
abashed.
Thus a tremendous panic, the consequences of which might have been
world-wide, was averted by a bold front, a nervy bluff backed by a
million in cash. Three days later, President Grant reversed himself
and allowed gold to be exchanged at the Sub-Treasury for cash, which
settled all anxiety. This was brought about through the agency of Jesse
Seligman, the New York banker, who gave the President a banquet and
then showed him his mistake.
But neither Mills nor Sharon, who were leading officers of the bank,
ever knew how Ralston gathered in nearly a million dollars after
banking hours that day. All the satisfaction they ever got was that a
kind friend had come to the bank’s assistance.