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Biographical Notes
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William Ralston
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On April 24, 1861, San Francisco learned that Confederate forces had attacked Fort Sumpter. Ralston came out publicly and vigorously in support of President Lincoln and helped organize the May 11, 1861, Public Rally which elected him Chairman of "The Committee of Thirty Four." The duties of this committee was to detect and suppress treasonable activities against the Union in California. The committee worked to elect the Republican candidate, Leland Stanford, Governor. Ralston's daughter, Edna Louisa, died in March, 1862. On April 25, 1863, their second son was born - William Chapman Jr. In 1863 Ralston was selected to be a director of the Pacific Insurance Company. On June 13, 1864, The Bank of California was incorporated and the Bank of Donohoe, Ralston & Company was dissolved. The president of the new bank was Darius Ogden Mills, a respected Sacramento banker, with Ralston named as Cashier. It opened for business on July 5, 1864. On July 20, 1864, The Bank of California was named as the bank of deposit for all funds payable to the Bureau of Internal Revenue. Branch offices were soon opened in Gold Hill and Virginia City, Nevada. William Sharon was selected to manage the Nevada operations. (Sharon had accompanied Ralston's father-in-law, John D. Fry, in the wagon train that brought them both to California in 1849.) 1864 also saw Mills broker a compromise between the owners of the Central Pacific Railroad and the San Francisco financial community which cleared the way for the construction of the railroad over the Sierra Mountains.
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On July 26, 1865, a second daughter was born and named Emelita Thorne Ralston. During the war years Ralston profited greatly from his investments in the Comstock mines and from his association with increased agricultural and industrial production in California. He also profited from the relationship of California gold to Government "greenbacks." The requirements of the Civil War required the government to issue large amounts of paper money. Californians refused to accept paper money and insisted on gold. Where paper money was offered in the state Californian banks purchased it at a discount and then used it to pay debts in the East. In May, 1866, The Bank of California announced that paid-in capital totaled $5 million in gold and that it had recorded $1.2 million in profits since its opening two years earlier. In July, 1867, The Bank of California moved to a newly constructed building on California Street. It was then considered to be one of the finest in the city and Ralston was recognized as one of the most important men in the western United States. He and his bank was heavily involved in virtually every major financial deal in any of the western states and territories. In 1868 he was elected to be one of the regents and treasurer of the newly founded University of California.
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Ralston invested in San Francisco real estate and did much to shape the growth of the city. In 1868 he built the West Coast's first giant dry dock at Hunter's Point and launched a plan to redevelop the area south of Market Street. The New Montgomery Street Real Estate Company was incorporated on December 24, 1868. The earthquake of 1868, had shaken the confidence of the business community and local newspapers attacked the plan as being too grandiose for the times. Initial marketing efforts did not produce the level of sales that had been expected, but Ralston pushed ahead with his plans to build a new hotel to be the center of the new development, a new theater to be the finest on the west coast, and a new residence suitable to entertain the rich and famous of the world. The general economy in the state was depressed and Ralston was seem by many to be indulging in wasteful extravagances. Relations between Ralston and his wife were strained and she began taking trips to the East Coast and Europe without him. The residence at Belmont south of the city was completed in stages and was the showcase that Ralston had planned. The California Theater was opened on January 18, 1869, and was heralded as a great success. It was sold out for 300 performances in its first year of operation. The construction of the hotel dragged on and was costing a great deal more than had been anticipated.
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On April 7,1869, a deadly fire destroyed the Comstock's Yellow Jacket Mine. It killed between 34 and 45 persons (accounts vary) and shut down operations in itself and other mines close by. Ralston's income flow was adversely impacted at a time when he was spending heavily on several major projects. Ralston did everything that he could to raise the capital that he needed for himself and for his bank, but times were hard and there was an inadequate supply of gold in the financial system to meet all of the demands placed upon it. Both Ralston and The Bank of California were badly overextended. In 1871 he was taken in by a swindle that touted a non-existant diamond mine somewhere in the Southwest. In addition he supported with his own and his bank's resources a number of other schemes involving a railroad, a cigar factory, a carriage manufacturing plant, a woolen mill, and an extensive system of canals which were to redistribute water from the San Juaquin River. All of this in addition to his faltering real estate operations south of Market, his new residence, his theater, and his hotel,.
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In the Fall of 1870 a new bonanza was located in the Comstock, deep in the Crown Point Mine. The men who made the find were able to keep it a secret. Stock in the mine was then selling for two dollars a share. They were able to purchase enough stock to control the mine before anyone outside their circle learned of the new bonanza. The existence of the new ore created a renewed interest in Comstock mines and a great deal of maneuvering took place with shares in various mines being traded back and forth. In the process Ralston and the Bank of California were able to obtain some much needed cash, but were also forced to give up some of their favored position in the Nevada mines. The newly formed Merchant's Exchange Bank gained the ground lost. In December 1872 Ralston fell gravely ill and was bedridden. While Ralston was ill the directors of the Bank of California inspected the books and learned that Ralston's companies were their principal debtors and that the bank was close to collapse. Ralston's father-in-law, John D. Fry loaned him $3.4 million dollars and Ralston was able to maintain control of the bank. Ralston and Fry's remaining investments in the Comstock began paying dividends and money was once again flowing adequately to meet all obligations.
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In July 1873 Darius Mills resigned as president of the Bank of California and Ralston succeeded him. Because he had to be in San Francisco much of the time he decided to build a residence in the city in addition to his country home in Belmont. It turned into a luxurious townhouse at the corner of Pine and Leavenworth Streets. Also in 1873 Ralston lost a reported eight million dollars in the stock market. In May 1875 Ralston attempted to sell the Spring Valley Water Company to the City of San Francisco for fifteen million dollars. The city's newspapers opposed the deal and attacked Ralston vigorously. Simultaneously the depression that had started in the East in 1873 hit California with full force. Gold once again became scarce and banks began having trouble meeting the daily demands of their clients who continued to refuse to accept paper money. In July, 1873, for the first time ever, the value of the bank's stock began to slip as investors began to worry. Ralston was forced to begin selling all of his assets and even to resort to illegal procedures to keep the bank open. On August 26, 1875, the stock market crashed and a run developed on the Bank of California. The bank did not have adequate reserves and had to close its doors.
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On August 27, 1875, Ralston attended a meeting of the bank's directors in which he argued that given time he could straighten things out. The directors did not believe him and forced him to rewrite his will so that William Sharon would inherit all of his assets and debts. After he had signed the new will they asked him to leave the room. They then forced him to resign his position as president of the bank. Ralston left the bank and decided to go for a swim in San Francisco Bay. He was a strong swimmer, but unfamiliar with the tides in the bay. He swam from Neptune Beach out toward Alcatraz. People watching from the beach saw that he was in trouble and a boat was sent out to help him. By the time that the boat reached him he was dead. A rumor circulated that he had taken committed suicide by taking poison before entering the water. An autopsy did not find poison and concluded that he had a stroke. Public opinion immediately rallied to the defense of Ralston's reputation and his funeral procession included an estimated 50,000 people. William Sharon and the directors of The Bank of California saved the bank from collapse but it was never again to hold the dominate position that it had held under William Ralston's leadership. On October 14, 1875, the Palace Hotel that Ralston had dreamed of was finally completed and Sharon made a speech honoring Ralston at the grand opening.
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