The Homestead Blog

On This Day, 1 September 1875: Banking Panic on Election Day!

by Paul R. Spitzzeri

For about seven years, from 1868 to 1875, greater Los Angeles was in its first boom period.  The population grew dramatically, land was available for new settlers from carved-up Spanish and Mexican era ranchos, transportation projects with railroads and the harbor at San Pedro were proceeding, and new towns like Artesia, Pomona, Santa Ana and San Fernando were springing up.

Of course, all booms eventually go bust and the hammer came down on 24 August 1875, when the ticking telegraph relayed the news that California’s largest bank, San Francisco’s Bank of California, had gone belly up.  The main reason was that over-speculation in stock from silver mining firms doing work in Virginia City, Nevada led to a collapse.

California had also seemed, more or less, immune to the effects of the national depression that erupted two years prior, mainly because of the huge economic boon of Virginia City’s silver bonanza.  Los Angeles, too, had its own miniaturized version of Virginia City with Cerro Gordo and other locales in Inyo County on the state’s eastern desert flank.

Ore from those mines were sent by 40-mule teams the 200 or so miles to Los Angeles, but, in 1874, F.P.F. Temple, who had his hand in all kinds of economic “pies” in those days, found some local partners willing to promote a railroad to that part of the state.  Known as the Los Angeles and Independence (the latter is the county seat of Inyo), the railroad was largely intended as a (much) faster way to get silver ore shipped to Los Angeles, but also to be a future connector to the transcontinental railroad at Ogden, Utah.

When local capital proved to be insufficient to get the job done, Nevada Senator John P. Jones came in to front a substantial financial investment and then replaced Temple as president of the railroad (the latter settled for treasurer through his Temple and Workman bank, headquartered in Los Angeles.)

workman passbook

The passbook of William Workman for the Temple and Workman bank, which he co-owned with his son-in-law, F.P.F. Temple.  The original, which is the Homestead’s collection, is displayed in the Workman House.

Jones had existing plans to develop a seaside resort town west of Los Angeles and the railroad’s plans were altered to get a line built first to his new project, called Santa Monica. As someone with mining interests, though, the eastern California terminus also had appeal for the senator.

By the end of August, the first leg of the LA & I to and from Santa Monica was rapidly moving towards completion and a depot south of downtown Los Angeles was in the works.  After some competition with the behemoth Southern Pacific Railroad Company over access to Cajon Pass leading up towards Cerro Gordo, the LA & I outmaneuvered the SP to get its surveying done first and claim the pass as its own.

Temple was also the president of the Cerro Gordo Water and Mining Company, which tapped Miller Springs, about eleven miles northwest of Cerro Gordo, and ran a flume down to the mining areas for hydraulic operations.  This was a substantial investment of resources in what seemed a limitless supply of water–that is, until the springs dried up in spring 1875.

Moreover, Temple was heavily invested in early oil drilling enterprises up in what is now the Santa Clarita area, north of Los Angeles.  His Los Angeles Petroleum and Refining Company was actively drilling in a canyon west of what is now Interstate 5 and, according to sources, actually producing some crude oil that was refined and taken to Los Angeles for sale in lighting.

Besides that, he was, in 1874 and 1875, actively promoting real estate subdivisions at Centinela (near today’s Inglewood and Los Angeles International Airport) and Lake Vineyard (modern Alhambra and San Marino).  There were many other projects, as well, and a good deal of his work was funded through the Temple and Workman bank, co-owned by his largely silent partner, William Workman.

F. P. F. Temple 1870s

F.P.F. Temple (1822-1880) in a studio portrait from the 1870s.  On, 1 September 1875, the day he suspended his bank for thirty days during an economic panic, he won election as Los Angeles County Treasurer.

Then came the shocking news from San Francisco, followed by reports of the death of the Bank of California’s president, William Ralston, who was found floating in San Francisco Bay the day after the closure of his bank.  Temple, who was known as the “Ralston of Los Angeles” for his active involvement in business enterprises and for being almost universally well-liked, suddenly found his bank swarmed with depositors clamoring for their funds.

This was probably due both to the general panic and the knowledge that Temple and Workman was not as solidly managed as the other commercial bank in town, Farmers and Merchants, whose Isaias W. Hellman, was a banking partner of Temple and Workman until 1871.  In any case, Hellman was in Europe at the time of the panic and his fellow owner, former governor John G. Downey, also faced a run from depositors.

Matters calmed after the initial uproar, but on 1 September, Downey and Temple, who were friends, met and decided to jointly suspend banking operations for their respective institutions for thirty days to allow the panic to subside.  When Hellman received the news in his homeland in Bavaria by telegram, he was furious and rushed back (well, it took two weeks by ship and train) to take control of his bank, fortified by cash borrowed from connections in New York.

The other main event of the 1st was the county elections.  Temple, who was Los Angeles city treasurer in 1851-52, on the first county Board of Supervisors in 1852, and then had failed campaigns for supervisor in 1863 and 1871, ran for county treasurer in 1873 against the respected Thomas Rowan, who was involved with Farmers and Merchants.  Rowan narrowly won that campaign, so, in 1875, Temple challenged again.

For a Republican (well he ran, technically, as an independent) in a still Democrat-dominated region, Temple pulled off a major upset by being the only of his party to win a major office in the campaign, winning the treasurer’s seat by a small margin over Rowan.  The victory, however, would prove to be more than problematic, as future posts here will discuss as we carry the story along from November through the early part of 2017!

To close, though, think about the bizarre circumstances of the president of a suspended bank winning election as steward of the county funds!  More to come later.

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