The morning news. [volume] (Savannah, Ga.) 1887-1900, 1890-01-02
a BANKERS REVENGE
The Collapse at Los Angeles and San
DieRosi in 1887.
Chicago Herald San Francisco letter


Carolina, which reached az great nights
and went to pieces as suddenly as Laws
South sea bubbles; but no one has ever
gwen the real and immediate cause of the
disaster which swept away the fictitious
fortunes Of thousands OF enthusiastic
spectators in a few DAYS. No real
estate boom at the east. not even
that IN Kansas City, ever ''slumpedD
| so quickly. There was absolutely no time to
stand from under, and every one who had
bought land on margin was involved in the
general crash. In August, 1887, the boom
was at its hight. No one in Los Angeles
talked of anything but buying and selling
corner lots and acre property in the suburbs
and the boom towns which sprang up like
magic for twenty miles around. Even
women caught the fever, and in street cars
one would hear them discussing the
| chances of a cable road going through
a certain street, or the extension of
artificial stone sidewalks into a suburb
where the natural sticky adobe soil had
hitherto been the only walk for men or
horses. Every one deyoured eagerly the
auetiOneers' dodgers, in which the delights
OF Miramonte, Bella Vista, San Jacinto,
and other boom locations of poetic name
were described and the terms of sale of lots
at auction set forth. In the real estate
agents shops women crowded and elbowed
their way to the wall maps, which showed
the location OF the eligible tracts that were
TO be offered for a song to those who yearned
for suburban villas
The Los Angeles men all had the fever in
its most aggravated FORM They all talked
as man does who has had a good dinner,
and has absorbed the best part of two bot
ties of champagne. Brown-Sequard's elixir
hadn't been heard of then, but they all
rushed around as though they had had a
fresh injection Of some very stimulating
fluid that made it impossible to keep tongue,
arms, or legs quiet.
A certain real estate firm did large
business, but neither party was satisfied
with the handsome commissions on sales
Each was specializing up to the full limit of
his means and taking desperate chances,
founded entirely on he stability of the real
estate market and the speedy increase in
the already high price of property. There
was much to admire in Los Angeles; many
very costly residences, finished in the latest
architectural designs, an enormous amount
of street work, huge hills cut through for
the passage Of cable roads, two electric
roads, the first built on this coast; in a word,
everywhere the evidence of feverish in
dustry that seemed TO find ten working
hours altogether too short for the labor
that had to be done. In the suburbs the
1fSN~eeANAO y
other block was being graded by men and
teams with large scrapers, and signs posted
up announced that a sale of lots would be
held in a week or two. Real estate agents
were as thick as flies around butcher shop
in August. Nearly all had solid-looking
capitalists in tow, and the way their
tongues ran would have made mill-wheel
envious. Every one encountered had a
brand new scheme to tell--the biggest thing
IF hn- an, 4 ho
his friends wanted to get in son the ground
tioor' no time was to be lost, as another
day would see every chance gobbled up
On a commanding hill could be seen the
picturesque boom city, and far away the
flashing line of foam that marked where
the blue sky met the deeper blue of
the Pacific. 1t was noble prospect,
and when it had been enjoyed to the full
ittlo stakes driven at certain intervals
on the crown of the bill could be
seen. This was a syndicates ten acres
In one corner was what looked like a
very bad black bog. as the ground gave
under ones foot. In mysterious whis-
per the Information was offered that this
was bitumen or asphaltum bed, which an
expert had estimated could be DEVELOPED so
as to furnish msterisl for paving and side
walking all Los Angeles. The owner had
no idea of the extent Of this valuable de-
post, which would pay for the land ten
times over. The price was only $1,000
an acre, and each of the ten mem
bers of the syndicate would have
to put up only $1,000 in all, and
only 50, 500 down. 1t looked SO plausible,
there was such intense activity manifested
everywhere, the pr aspect of thousands of
people coming into Los Angeles the coming
winter was 50 sure, that it required great
self-control to avoid beipg swept off ones
feet with the general tide of enthusiasm. 1t
was only when one escaped from the town
and its seductive surroundings that COM
mon sense could once more regain its usual
hold.
Just one mouth later the crash came
There is no question that the boom would
have continued through the winter of
1SS7-'S8 if it had not been for the jealousy
of one man-Isaac n. Holman, banker
of Los Angeles 1t was due directly to
him that this glorious boom structure
toppled and fell so suddenly that no oae
had chance to escape. Holman had
enjoyed the privilege of being the Gus
todian of the city funds, the use of which
was very valuable to him when money
frequently commanded as high an interest
rate as per cent. month, and when regu-
lar term loans were made at II and - per
cent year. When the new officers went
in in 1887 they decided to withdraw the
city moneys from Helnan's Golfers and
give them to a banker who had shown
greater liberality. When Holman heard of
this action he was furious, and swore a
mighty oath by the boards Of all the patri-
archs that if this was done he would break
the boom. This was reported TO the city
authorities, but they thought the old man
was Numbering; tnat anger had robbed
him of his usual strong sense. so the order
was issued and the coin was taken away
from Helmau'S vaults to those of his bust
ness rival. Then this Los Angeles banker,
to whom ducats were SO dear, began whet
ting his knife for revenge. His first blow,
near the heart, was to issue general order
that no man who INDUCED IN real estate
speculation or who loaned money to specu-
lators should have further credit at his
bank. The paralyzing effect OF this
edict may be understood when it is stated
that money was very hard to get just then,
and that Helmanis bail was the only one
which had any available surplus of loans.
san Francisco bankers wouldn't loan on
Los Angeles real estate at that time any
more than on Comstook mining shares. So
Holman had the boomers in the hole. They
focked to his place and appealed TO him to
give more time before he put tae edict into
effect. Among the chief pleaders were the
men who had just been Instrumental IN
removing the city's moneys.
But the enraged banker remained firm.
He declared, and very justly, that he mad
given them fair warning. Now It was MS
inning. As nine-tenths of all real estate
contracts were made ON a margin of only
ahort ono tanth down in nash and the re-