SPECULATION IN THE FAR WEST.
THE pace of life is curiously related to geographical facts. If we take as normal the rate of the social pulse-beat in our own country, the life of societies in Central Europe seems intolerably slow, while that of communities beyond the Atlantic is painfully fast. These, however, are medial instances. If we look, on the one side, at China, we perceive utter stagna- tion; if, on the other side, we glance at the seething activity of the more distant States of the American Union, we are dazzled by the quick and whirling currents of the stream. California is so far removed from England that we have little direct intercourse with Californian business. Few, probably, in this country knew anything of the conditions of speculation on the Pacific Coast, when the news came of the sudden stoppage of the Bank of California and the resulting panic. Nor, although the crisis has affected some important monetary interests, is it as a fact in the speculative world that this failure deserves notice. Banking failures are always serious, but we should not think of calling attention to this one, if it did not involve the dramatic ending of a typical career. The collapse of the Bank of California was at once followed by the suicide of the Presi- dent, or, as we should say, the Managing Director, Mr. William C. Ralston, for many years celebrated as the wealthiest man west of the Rocky Mountains, and the most munificent host— Royal personages not excepted—in the whole world.
The Banking business of California, and of that whole section of the United States which is known in America as the "Pacific Slope," is conducted under very peculiar conditions. California produces gold, and like all gold-producing countries, sternly rejects an inconvertible paper currency. But by her geographical position California is separated from the countries that habitually do their business in specie by many thousands of miles of land and sea. The interval is filled by an agglomeration of energetic communities habitually employing paper in all their business transactions and in times of pres- sure creating an unexpected and entirely immeasurable drain of gold. When such a drain occurs concurrently with the demand for cash on the part of depositors, a bank compelled habitually to use specie, whether by law or by unwritten but irreversible usage, is certain to be placed in a difficulty. Only a very careful adherence to sound and strict principles of banking can save such a concern in such a crisis ; but sound banking principles, as we understand them in these old countries, would in California be despised as the very pedantry of prudence. At any rate, the man who was at the head of the Bank of California was not one who was likely to show deference to traditions which stood in the way of his purposes. Mr. Ralston, who was barely forty-seven years of age when he ended his life by his own act the other day, was by birth a Western man, and began life, it is said, as a " hand " on a Mississippi steamer. It is certain that he afterwards served on the steamship route from New York to San Fran- cisco by Aspinwall and Panama. But in 1852, or thereabouts, he established himself permanently in the great Californian seaport, and in a dozen years acquired an immense popular influence, which he used to promote the interests of the Bank of California, established under his auspices in 1865. This institution was energised by Ralston's unswerving faith in the destinies of the Pacific Coast, and in this faith he was ardently supported by the people. He and they believed that almost anything could be done with California if the capital needed were forthcoming, and Ralston, with unhesi- tating confidence, applied the funds which accumulated in his Bank in reproductive enterprises' with the full con- sent of the vast majority of the people who dealt with him. One result was that he amassed an enormous fortune, which a couple of years ago was estimated at four millions sterling. But in addition to this, he acquired a power in the Pacific States such as few men in a private station have ever wielded. He and his partners ruled the Nevada silver mines, and had an influence over nearly all the great speculative enterprises of the Far West. Ralston came to be looked upon as almost omni- potent in business. With a wave of his wand he could open a mine, construct a railway, and almost create a province. His hospitalities were well-nigh as enormous as his wealth, and as untiring as his energy in business. All the week he worked ceaselessly at a thousand undertakings, and on Sunday his splendid mansion at Belmont, some twenty miles from San Francisco, was open to a constantly recruited gather- ing of guests. This palace, as one who seems to have known him personally tells us, "had sleeping-rooms for 90 persons, and here it was a common thing for him to entertain 75 guests at breakfast, 150 at dinner, and then to give a ball to 500 on the same evening !" His commercial supremacy was the foundation of a vast political power, and both combined to excite the passionate and relentless envy that was the instrument of his downfall.
Since the collapse of the bank and the suicide of Mr. Ralston his memory has been assailed with savage calumny, but so far as our present information enables us to judge, there is little or no ground for imputing to Mr. Ralston or his associates any worse offence—though this, according to the code of commer- cial morality accepted in Europe, is a very serious offence—than that of conducting banking business upon speculative principles. To an English banker, the conduct of Mr. Ralston in flinging the capital of his bank into " reproductive " undertakings, such as mines, railways, canals, irrigation works, hotel- building, and so forth, must appear not only immoral,
but insane. But there are two considerations which may diminish the severity of the condemnation that we must in any case pass upon Mr. Ralston's policy. In the first place, the people of the State of California who were depositors and shareholders in the Bank cordially approved and sustained what may appear to us the reckless action of the President. But, further, he and they appeared to be justified in their confidence by an experience of financial methods which, though condemned by European maxims of business, had already brought in an abundant harvest of gain, both to the individual speculators and to the community. They failed to perceive that as society in California became organised, enterprises which were .moderately safe under a simpler system, or which, at all events, were justified by commercial necessities, passed into the category of reckless speculations, and should have been stamped with the disapproval of all moderate and prudent men. The merchants of San Francisco who, in the height of the gold-fever, en- couraged the policy of "developing the,resources of the State" without counting the cost, and who subsequently backed Mr. Ralston's enthusiasm for Californian progress with heaps of hard money, have grown, it is said, "conservative." The margin of profit in commercial dealings has become narrower, and traders are compelled to look more carefully at the conditions under which their unused capital is held by banks of deposit. The Bank of California, under Mr. Ralston's government, pro- fessed to hold money at call, yet the capital it held was in- vested in enterprises, many of which could not possibly return a profit or pay back their loans for years. Those of the San Francisco merchants and capitalists who had grown conservative quietly withdrew from these risks, and the consequent decline of legitimate business forced the Bank more and more into purely speculative courses. The position that Mr. Ralston had attained in the State, commercially, politically, and even socially, had made him many enemies, and these, according to the most intelligible version of the recent transactions, taking advantage of the drain of gold and of the ordinary demands of the harvest-time, organised a run upon the house which compelled a suspension of payments. The fact that Mr. Ralston took refuge in suicide from the thronging pressure of his troubles has been interpreted as an evidence of his guilt, but it seems more pro- bable that nothing worse than gross imprudence will be proved against his memory, and that the true motive of his rash and miserable ending will be shown to be the disappointment of ambitious hopes, neither base nor selfish, which beguiled a powerful, though ill-regulated mind.
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