William Ralston's father, Robert Ralston, was born on August 18, 1797, near Canonsburg in western Pennsylvania. In 1814 his family homesteaded in Ohio. On December 14, 1824, he married Mary Chapman, a native of Cumberland, Virginia. Mary and Robert established a small farm just outside of Plymouth, Ohio. On January 12, 1826, their first son was born - William Chapman Ralston. A second son, Samuel, was born on March 24, 1832. Soon thereafter they moved to Wellsville on the Mississippi River. Two more sons were born in Wellsville: Andrew Jackson on April 25, 1833, and James Alpheus on March 7, 1835. Mary died on April 25, 1835, of complications arising from the birth of James. In 1836 Robert Ralston married Harriet Herford, the daughter of a Wellsville judge. Robert and Harriet had three more children.
William attended school in Wellsville and proved to be a good student. He left school in 1840 to work in a local grocery store. In 1842 he went to work as an assistant clerk on a small steamboat plying the Mississippi River between Wheeling and Chicago. After a short time he transferred to a ship that his father had built - the Dominion. Almost immediately after he joined the crew, the Dominion ran into trouble in rapids made difficult by high water and sank. William distinguished himself in working through the calamity and soon thereafter joined the crew of the Constitution, another ship built by his father. Late in 1846 he transferred to the larger Convoy owned by Cornelius Kingsland Garrison of St. Louis. In February, 1849, the Convoy caught fire at Natchez and was destroyed. Gold had just been discovered in California in 1848 and so Garrison and Ralston decided to reestablish themselves on the West Coast rather than continue to battle increased competition on the Mississippi.
Ralston traveled from New Orleans to Chagres by ship arriving there in July 1849. He crossed the Isthmus and joined the small bank that Garrison and Ralph Fretz had just established in Panama City. Garrison's brothers had a successful boat factory in St. Louis and Fretz's brothers had an equally successful mercantile business in New Orleans. These connections served as the necessary stateside correspondents for the new bank in Panama City. Ralston travelled to the United States frequently on bank business and, by 1850, was also serving as an agent for various ocean steamship lines. Rivalry between the competing lines was fierce and two competing routes evolved. One through Panama and one through Nicaragua. Cornelius Vanderbuilt was active in promoting the Nicaragua route and, in 1851, Ralston was in New York to discuss business with Vanderbuilt. There he met and fell in love with one of Vanderbuilt's granddaughters - Louisa Thorne. They were subsequently engaged to be married but Louisa died before the marriage could take place.
During his years in Panama, Ralston rose in importance in Garrison and Fretz's various business dealings and even captained a ship on an 1851 round trip voyage from Panama to San Francisco during one of the many emergencies that he was forced to deal with on an ongoing basis. In February, 1853, Garrison accepted the post of manager of Vanderbuilt's West Coast operations with his office in San Francisco. At the same time he remained as a principal in Garrison and Fretz, but the name was changed to Garrison, Fretz, and Company and Ralston's name was added to the list of the company's principals. Later that same year Garrison and Charles Morgan staged a coup against Vanderbuilt and fired him from the Nicaragua Transit Company. Vanderbuilt was furious and vowed to ruin both men. In November 1853 Garrison was elected mayor of San Francisco. In 1854 Vanderbuilt reestablished his West Coast shipping interests and Ralston and Fretz assisted him in so doing. At Vanderbuilt's request, Ralston and Fretz agreed to become his west coast agents and they moved their offices from Panama City to San Francisco.
In October 1854 Vanderbuilt sold out his interest in the West Coast shipping business and left Ralston and Fretz high and dry in San Francisco. Early in 1855, with Charles Morgan's assistance, the bank of Garrison, Morgan, Fretz & Ralston was organized to open in San Francisco. The Bank of Charles Morgan & Company was simultaneously to be established in New York with the idea that the two banks would work closely together and would represent each other's interests on the two coasts. On February 17, 1885, word reached San Francisco of the failure of Page, Bacon & Company, a prestigious banking firm located in St. Louis. The San Francisco branch of Page, Bacon & Company managed to remain open until February 22, 1885, when it was finally forced to close its doors. A financial panic and general run on all banks in California ensued and a number of the state's banks were unable to satisfy the demainds of their depositors. Simultaneously Garrison was charged with illegal financial dealings during his term as mayor and, to make matters worse, his interests in Nicaragua were becoming entangled in William Walker's attempt to seize the country. It was decided that the opening of the new bank should be delayed.
Ralston became personally involved in protecting the firm's interests in Nicaragua during the most turbulent period of the Walker Affair, but had no interest in remaining involved in Garrison's adventures in Central America. His primary interest was the new bank in San Francisco. It opened for business on January 2, 1856 with Ralston and four employees. Garrison was tied up with other affairs, Fretz was ill, and Morgan was in New York. Ralston had day-to-day responsibility for bank operations. The economy of San Francisco was still recovering from the panic of 1855 and lawlessness was rife. Ralston supported the Vigilante Committee of 1856 led by a friend, William T. Coleman. San Francisco was purged of some of the worst of the lawless element but business was still depressed. Many bankers decided to leave the field in San Francisco. On July 14, 1857, the Bank of Garrison, Morgan, Fretz & Ralston was formally dissolved and on the very next day the Bank of Fretz and Ralston was established. Ralston quickly became involved with numerous business dealings throughout the state. In December 1857 he was named a director of the Sacramento Valley Railroad. In December 1858 he served as a director of the California Steam Navigation Company. In politics he associated himself with the Chivalery wing of the Democratic Party.
On May 21, 1858, Ralston married Elizabeth Fry, the adopted daughter of John D. Fry, a sheriff in Illinois prior to joining in the rush to California in 1849. At the time of the wedding Fry was a special agent for the Post Office Department. The newly-weds honeymooned in Yosemite and then established their residence on Rincon Hill in San Francisco. On March 4, 1859, their first son was born and christened Samuel Fry Ralston. Late in 1859 word reached San Francisco of the Washoe strike in western Utah (today Nevada). On April 12, 1860, the Ophir Silver Mining Company was incorporated in San Francisco and Ralston was named Treasurer. Ralston subsequently invested in several Comstock mines and made a fortune buying and selling mine shares on the stock market. On August 2, 1860, Elizabeth gave birth to a daughter who was named Edna Louisa, (Ralston's first love had been Louisa Vanderbuilt.) Late in 1860 Ralston was named a director of the California State Telegraph Company. In June, 1860, The Bank of Donohoe, Ralston & Company was opened in San Francisco. The principals were Joseph Donohoe, William Ralston, Eugene Kelley and Ralph Fretz. Eugene Kelley & Company in New York would serve as the East Coast representative.