Memoirs of General W.T. Sherman

Text to Speech

my letters from the St. Louis house, that the bank of Page, Bacon &

Co. was in trouble, growing out of their relations to the Ohio &

Mississippi Railroad, to the contractors for building which they

had made large advances, to secure which they had been compelled to

take, as it were, an assignment of the contract itself, and finally

to assume all the liabilities of the contractors. Then they had to

borrow money in New York, and raise other money from time to time,

in the purchase of iron and materials for the road, and to pay the

hands. The firm in St. Louis and that in San Francisco were

different, having different partners, and the St. Louis house

naturally pressed the San Francisco firm to ship largely of

"gold-dust," which gave them a great name; also to keep as large a

balance as possible in New York to sustain their credit. Mr. Page

was a very wealthy man, but his wealth consisted mostly of land and

property in St. Louis. He was an old man, and a good one; had been

a baker, and knew little of banking as a business. This part of

his general business was managed exclusively by his son-in-law,

Henry D. Bacon, who was young, handsome, and generally popular.

How he was drawn into that affair of the Ohio & Mississippi road I

have no means of knowing, except by hearsay. Their business in New

York was done through the American Exchange Bank, and through

Duncan, Sherman & Co. As we were rival houses, the St. Louis

partners removed our account from the American Exchange Bank to the

Metropolitan Bank; and, as Wadsworth & Sheldon had failed, I was

instructed to deal in time bills, and in European exchange, with

Schnchardt & Gebhard, bankers in Nassau Street.

In California the house of Page, Bacon & Co. was composed of the

same partners as in St. Louis, with the addition of Henry Haight,

Judge Chambers, and young Frank Page. The latter had charge of the

"branch" in Sacramento. Haight was the real head-man, but he was

too fond of lager-beer to be in trusted with so large a business.

Beyond all comparison, Page, Bacon & Co. were the most prominent

bankers in California in 1853-'55. Though I had notice of danger

in that quarter, from our partners in St. Louis, nobody in

California doubted their wealth and stability. They must have had,

during that winter, an average deposit account of nearly two

million dollars, of which seven hundred thousand dollars was in

"certificates of deposit," the most stable of all accounts in a

bank. Thousands of miners invested their earnings in such

certificates, which they converted into drafts on New York, when

they were ready to go home or wanted to send their "pile" to their

families. Adams & Co. were next in order, because of their

numerous offices scattered throughout the mining country. A

gentleman named Haskell had been in charge of Adams & Co. in San

Francisco, but in the winter of 1854-'55 some changes were made,

and the banking department had been transferred to a magnificent

office in Halleck's new Metropolitan Block. James King of Wm. had

discontinued business on his own account, and been employed by

Adams & Co. as their cashier and banker, and Isaiah C. Wood had

succeeded Haskell in chief control of the express department.

Wells, Fargo & Co. were also bankers as well as expressmen, and

William J. Pardee was the resident partner.

As the mail-steamer came in on February 17, 1855, according to her

custom, she ran close to the Long Wharf (Meiggs's) on North Beach,

to throw ashore the express-parcels of news for speedy delivery.

Some passenger on deck called to a man of his acquaintance standing

on the wharf, that Page & Bacon had failed in New York. The news

spread like wild-fire, but soon it was met by the newspaper

accounts to the effect that some particular acceptances of Page &

Bacon, of St. Louis, in the hands of Duncan, Sherman & Co., in New

York, had gone to protest. All who had balances at Page, Bacon &

Co.'s, or held certificates of deposit, were more or less alarmed,

wanted to secure their money, and a general excitement pervaded the

whole community. Word was soon passed round that the matter

admitted of explanation, viz., that the two houses were distinct

and separate concerns, that every draft of the California house had

been paid in New York, and would continue to be paid. It was

expected that this assertion would quiet the fears of the

California creditors, but for the next three days there was a

steady "run" on that bank. Page, Bacon & Co. stood the first day's

run very well, and, as I afterward learned, paid out about six

hundred thousand dollars in gold coin. On the 20th of February

Henry Height came to our bank, to see what help we were willing to

give him; but I was out, and Nisbet could not answer positively for

the firm. Our condition was then very strong. The deposit account

was about six hundred thousand dollars, and we had in our vault

about five hundred thousand dollars in coin and bullion, besides an

equal amount of good bills receivable. Still I did not like to

weaken ourselves to help others; but in a most friendly spirit,

that night after bank-hours, I went down to Page, Bacon & Co., and

entered their office from the rear. I found in the cashier's room

Folsom, Parrott, Dewey and Payne, Captain Ritchie, Donohue, and

others, citizens and friends of the house, who had been called in

for consultation. Passing into the main office, where all the

book-keepers, tellers, etc., with gas-lights, were busy writing up

the day's work, I found Mr. Page, Henry Height, and Judge Chambers.

I spoke to Height, saying that I was sorry I had been out when he

called at our bank, and had now come to see him in the most

friendly spirit. Height had evidently been drinking, and said

abruptly that "all the banks would break," that "no bank could

instantly pay all its obligations," etc. I answered he could speak

for himself, but not for me; that I had come to offer to buy with

cash a fair proportion of his bullion, notes, and bills; but, if

they were going to fail, I would not be drawn in. Height's manner

was extremely offensive, but Mr. Page tried to smooth it over,

saying they had had a bad day's run, and could not answer for the

result till their books were written up.

I passed back again into the room where the before-named gentlemen

were discussing some paper which lay before them, and was going to

pass out, when Captain Folsom, who was an officer of the army, a

class-mate and intimate friend of mine, handed me the paper the

contents of which they were discussing. It was very short, and in

Henry Haight's handwriting, pretty much in these terms: "We, the

undersigned property-holders of San Francisco, having personally

examined the books, papers, etc., of Page, Bacon & Co., do hereby

certify that the house is solvent and able to pay all its debts,"

etc. Height had drawn up and asked them to sign this paper, with

the intention to publish it in the next morning's papers, for

effect. While I was talking with Captain Folsom, Height came into

the room to listen. I admitted that the effect of such a

publication would surely be good, and would probably stave off

immediate demand till their assets could be in part converted or

realized; but I naturally inquired of Folsom, "Have you personally

examined the accounts, as herein recited, and the assets, enough to

warrant your signature to this paper?" for, "thereby you in effect

become indorsers." Folsom said they had not, when Height turned

on me rudely and said, "Do you think the affairs of such a house as

Page, Bacon & Co. can be critically examined in an hour?" I

answered: "These gentlemen can do what they please, but they have

twelve hours before the bank will open on the morrow, and if the

ledger is written up" (as I believed it was or could be by

midnight), "they can (by counting the coin, bullion on hand, and

notes or stocks of immediate realization) approximate near enough

for them to indorse for the remainder." But Height pooh-poohed me,

and I left. Folsom followed me out, told me he could not afford to

imperil all he had, and asked my advice. I explained to him that

my partner Nisbet had been educated and trained in that very house

of Page, Bacon & Co.; that we kept our books exactly as they did;

that every day the ledger was written up, so that from it one could

see exactly how much actual money was due the depositors and

certificates; and then by counting the money in the vault,

estimating the bullion on hand, which, though not actual money,

could easily be converted into coin, and supplementing these

amounts by "bills receivable," they ought to arrive at an

approximate-result. After Folsom had left me, John Parrott also

stopped and talked with me to the same effect. Next morning I

looked out for the notice, but no such notice appeared in the

morning papers, and I afterward learned that, on Parrott and Folsom

demanding an actual count of the money in the vault, Haight angrily

refused unless they would accept his word for it, when one after

the other declined to sign his paper.

The run on Page, Bacon & Co. therefore continued throughout the

21st, and I expected all day to get an invitation to close our bank

for the next day, February 22, which we could have made a holiday

by concerted action; but each banker waited for Page, Bacon & Co.

to ask for it, and, no such circular coming, in the then state of

feeling no other banker was willing to take the initiative. On the

morning of February 22, 1855, everybody was startled by receiving a

small slip of paper, delivered at all the houses, on which was

printed a short notice that, for "want of coin," Page, Bacon & Co.

found it necessary to close their bank for a short time. Of

course, we all knew the consequences, and that every other bank in

San Francisco would be tried. During the 22d we all kept open, and

watched our depositors closely; but the day was generally observed

by the people as a holiday, and the firemen paraded the streets of

San Francisco in unusual strength. But, on writing up our books

that night, we found that our deposit account had diminished about

sixty-five thousand dollars. Still, there was no run on us, or any

other of the banks, that day; yet, observing little knots of men on

the street, discussing the state of the banks generally, and

overhearing Haight's expression quoted, that, in case of the

failure of Page, Bacon & Co., "all the other banks would break," I

deemed it prudent to make ready. For some days we had refused all

loans and renewals, and we tried, without, success, some of our

call-loans; but, like Hotspur's spirits, they would not come.

Our financial condition on that day (February 22, 1855) was: Due

depositors and demand certificates, five hundred and twenty

thousand dollars; to meet which, we had in the vault: coin, three

hundred and eighty thousand dollars; bullion, seventy-five thousand

dollars; and bills receivable, about six hundred thousand dollars.

Of these, at least one hundred thousand dollars were on demand,

with stock collaterals. Therefore, for the extent of our business,

we were stronger than the Bank of England, or any bank in New York


Before daylight next morning, our door-bell was rung, and I was

called down-stairs by E. Casserly, Esq. (an eminent lawyer of the

day, since United States Senator), who informed me he had just come

up from the office of Adams & Co., to tell me that their affairs

were in such condition that they would not open that morning at

all; and that this, added to the suspension of Page, Bacon & Co.,

announced the day before, would surely cause a general run on all

the banks. I informed him that I expected as much, and was

prepared for it.

In going down to the bank that morning, I found Montgomery Street

full; but, punctually to the minute, the bank opened, and in rushed

the crowd. As usual, the most noisy and clamorous were men and

women who held small certificates; still, others with larger

accounts were in the crowd, pushing forward for their balances.

All were promptly met and paid. Several gentlemen of my personal

acquaintance merely asked my word of honor that their money was

safe, and went away; others, who had large balances, and no

immediate use for coin, gladly accepted gold-bars, whereby we paid

out the seventy-five thousand dollars of bullion, relieving the

coin to that amount.

Meantime, rumors from the street came pouring in that Wright & Co.

had failed; then Wells, Fargo & Co.; then Palmer, Cook & Co., and

indeed all, or nearly all, the banks of the city; and I was told

that parties on the street were betting high, first, that we would

close our doors at eleven o'clock; then twelve, and so on; but we

did not, till the usual hour that night. We had paid every demand,

and still had a respectable amount left.

This run on the bank (the only one I ever experienced) presented

all the features, serious and comical, usual to such occasions. At

our counter happened that identical case, narrated of others, of

the Frenchman, who was nearly squeezed to death in getting to the

counter, and, when he received his money, did not know what to do

with it. "If you got the money, I no want him; but if you no got

him, I want it like the devil!"

Toward the close of the day, some of our customers deposited,

rather ostentatiously, small amounts, not aggregating more than

eight or ten thousand dollars. Book-keepers and tellers were kept

at work to write up the books; and these showed:

Due depositors and certificates, about one hundred and twenty

thousand dollars, for which remained of coin about fifty thousand

dollars. I resolved not to sleep until I had collected from those

owing the bank a part of their debts; for I was angry with them

that they had stood back and allowed the panic to fall on the banks

alone. Among these were Captain Folsom, who owed us twenty-five

thousand dollars, secured by a mortgage on the American Theatre and

Tehama Hotel; James Smiley, contractor for building the Custom-

House, who owed us two notes of twenty thousand and sixteen

thousand dollars, for which we held, as collateral, two acceptances

of the collector of the port, Major R. P. Hammond, for twenty

thousand dollars each; besides other private parties that I need

not name. The acceptances given to Smiley were for work done on

the Custom-House, but could not be paid until the work was actually

laid in the walls, and certified by Major Tower, United States

Engineers; but Smiley had an immense amount of granite, brick,

iron, etc., on the ground, in advance of construction, and these

acceptances were given him expressly that he might raise money

thereon for the payment of such materials.

Therefore, as soon as I got my dinner, I took my saddle-horse, and

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