The Infamous King Of The Comstock: William Sharon And The Gilded Age In The West

Chapter Nine: Rebirth

 Chapter Nine REBIRTH B   on the Comstock closed their doors along with the mother bank, D. O. Mills sent word to H.M. Yerington to open a Virginia & Truckee Railroad account with Wells Fargo. A week later, the railroad announced: “The affairs of the Virginia and Truckee Railroad are in no way embarrassed by the suspension of the Bank of California and everything connected therewith is moving on as usual.” Mills also informed Yerington that Sharon’s business affairs appeared to be in order.1 That Mills checked on Sharon was prudent. He was about to follow him into an unprecedented enterprise. When the Bank of California directors began meeting again, Mills and attorney Samuel Wilson took the lead. The situation was dire; there seemed to be no way to resolve it but to declare bankruptcy.“There would be a dead halt in all operations of Pacific Coast finance.” Half of California ’s circulating capital would be paralyzed,perhaps for many months.2 Ralston’s attorney, W. H. L. Barnes, now took action. He advised the directors that if they attempted to file for bankruptcy, he would bring suit against each of them personally. They were guilty of neglecting their oversight duties—the bank had been insolvent for months. Moreover, it was a felony for corporation directors to collect unearned dividends.Their dividends , adding up to  million over ten years, continued after February , when Ralston’s . million debt virtually bankrupted the bank.3 At the same time attorney Reuben Lloyd, representing Lucky Baldwin, the bank’s largest creditor,told Sharon what Barnes told the others: “If some-     thing is not done,I shall have to attach every piece of property you have in the world, and hold you personally responsible.”4 Other problems confronted Sharon. The money he had made rushing the stock market was needed. The Palace Hotel was nearing completion, and Sharon needed to pay the workers. He also directed the manager to continue hiring personnel,including the first staff of African Americans to serve as waiters, porters, and chambermaids in San Francisco.5 On Sunday,August th,the San Francisco Alta, attempting to assuage the public, announced: “The panic is over.” The newspaper said confidence was being restored, pointing to diminished agitation in the streets. At the same time a Bulletin editorial predicted that the Bank of California would now disappear, creating financial trouble for many. That night, the Bulletin’s perception was closer to the truth. Bell reported: “Sunday intervening, gave the Board time to consider the dreadful effects of bankruptcy .”6 Sharon was in the most precarious position. Although Sharon denied that a contract existed,the Ralston-Sharon partnership in mining and real estate was common knowledge. Mills later commented that either one or both of them told him they owned a lot of bank stock jointly as well.7 By any measure, Sharon was Ralston’s partner. He was also a bank stockholder and Ralston’s assignee. A writer for the San Francisco Examiner first used an oft-quoted metaphor : “[Sharon’s] mind was like a battery, constantly radiating energy. . . . No scheme was too large for his wonderful mind to grasp, no detail too small for his memory to carry.”8 Now, amid the public frenzy and the directors’ bewilderment, Sharon was formulating a plan. He listened to Lloyd argue that he and the others needed to “put [their] shoulders to the wheel, come in and put this thing on its feet again.” Sharon balked,noting that he had contributed  million to his former partner’s losing schemes.9 But he had little choice. Liquidating the estate and letting the bank fail meant that Sharon’s wealth would be attached. The daunting task of reestablishing the bank would require three things: millions of dollars to pay creditors and restore its capital; the offic-   ers,directors,and stockholders remaining in their positions so the institution could maintain stability; and positive publicity to rebuild public faith. D. O. Mills would be crucial to fulfilling the first two requirements. To raise the required capital, Sharon thought to form a syndicate, calling on the city’s prominent men to subscribe. Could Mills be talked into resuming the bank presidency and taking a lead role in forming the syndicate? He would lend credibility to the project and reintroduce a sense of security in the bank. Sharon asked Mills to join him in subscribing  million each in order...