The New York herald., 1875-08-28
rhe ereat calirornia Fnilure.

the simultaneous failure of the great sugar
house of Ahrens K Co, of Baltimore, is so
dwarfed and eclipsed that it was hardly
talked about yesterday, although, had it oc-
CURED alone, it would have been the leading
topic in business circles The other San
Francisco suspensions which followed in the
train of the great bank of the Pacific slope
are also dwarfed into insignifcance
by the catastrophe which shakes
and convulses every commercial and mining
interest west of the Rocky Mountains The
Bank of California has been for several
years the grand pivot ON which the rising
business of that important region has re-
volved The local shock is like that which
would attend the failure of the Bank of Eng
land in the British islands, the blind con-
fdence Of our Pacific States in the Bank of
California resembling the enlightened con-
fdence of the British public in the sound
ness and solidity of its central institution.
1t is easy to show after the event how egregi-
ously this confidence was misplaced, but no
wisdom is so worthless as that of people who
are ''wise behind time"
1t is perhaps idle to trace the moral which
results from this stupendous failure, because
its chief lesson is one which those most in
terested may be trusted to draw for them
selves. 1t concerns, first of all, the banking
interest of the country-an interest which is
too intelligent to need any assistance in de-
ducing the proper moral This great failure,
like a recent failure nearer home, is an impress
sive warning against the folly and danger of
speculations by banking house outside its
legitimate business. The Bank of California
which would have been strong institution
within its appropriate sphere, plunged up to
its neck in all sorts of mining and other local
/ speculations, and the engulfng tide has swept
/ over its head It's greatest misfortune was
to have an able, scheming man, like Mr.. Raj
ston with talent enough to make himself the
banking autocrat of the Pacific slope, in its
management. The other directors fancied
that everything he touched would turn into
gold and their intoxicated admiration of his
abilities enabled him to ruin an institu-
ton of great wealth and resources. There is
no kind of speculation in which Mr.. Ralston
did not dabble. He involved himself
and his bank in the waterworks of San Fran
cisco, in the affairs of the Central Pacific
Railroad in the big bonanzas of mining
speculations, in the politics of California,
which he attempted to control in the in
terest of his financial schemes, and in the
journalism of the State, which he tried to
control in furtherance of his political and
financial projects. Social extravaganza, taxi
ing the form of lavish, ostentatious hospi-
tality, which every Eastern visitor to San
Francisco of any note has shared, was one of
his favorite instruments for diffusing an idea
of boundless wealth and maintaining facti-
tious credit. BY such appliances he dis
tended the gorgeous bubble until it has
suddenly burst His downfall has been
hastened by dictatorial arrogance
which provoked resentment and created a
vigorous opposition to his autocratic control.
The ''bank crowd" as it was called, consist
ing of Mr.. Ralston, Senator Sharon and their
associates and agents in California and
Nevada, have been foiled in their operations
for more than a year past by the new
''crowd" of Flood, O'Brien & Co., set of
mushroom fnanciers who were keepers of
drinking saloons seven years ago and by
lucky speculations in mining stocks acquired
the means of coming into the field against
the 'bank crowd" and have become finan-
cially and therefore politically, potent in
California The strategy and intrigues of the
new ''crowd" proved strong enough to Grip
pie the Ralston ''bank crowd" at every step,
which was not difficult task when the latter
were staggering under load of ill-jud ged
speculations in period of declining values
throughout the world. An unlucky turn in
politics. the fierce attacks of the independent
press and the necessity of propping up
sinking speculations, fastened and COM
pleted the ruin of Ralston and his misman-
aged Bank of California. For more than
year they have been riding dead horse"
! 1t is superluous to warn other banks
/ against such fatal outside operations, but a
coniding and deluded community cannot
take the lesson of this failure too seriously to
heart. Such specializing schemes and such
spendthrift extravaganza Of living are carried
on at the expense of depositors, who are
gulled by n deceitful outside show of pros
perity to trust their money with rotten in
stitutions There will be reckless bankers
so long as there is gullible public. The
customers of bank should unhesitatingly
withdraw their deposits as soon rs there
is evidence that it or any per-
son connected with its management
is engaged in any sort of speculation,
whether in commodities, the shares of COM
panies, real estate, corporate bonds, or any
thino else All such hanks are on the biob
way to ruin, and however moderately they
may begin at first they deserve no conf
dence from the moment they step outside
the sphere of legitimate banking. Profuse
social display and ostentation by bankers is
always a suspicious circumstance, since it
L.. Till c.r II .orLinir...