Background
William Chapman Ralston was born on June 12, 1826 in Wellsville, Ohio, the son of Robert and Mary (Chapman) Ralston.
William Chapman Ralston was born on June 12, 1826 in Wellsville, Ohio, the son of Robert and Mary (Chapman) Ralston.
His formal education did not extend beyond the common schools.
Dissatisfied with economic conditions in Ohio in his father's sawmill, he became a clerk on a Mississippi River steamboat in 1842. His efficiency and industry attracted favorable attention, and in 1850 he was appointed agent at Panama City of the steamship company of Garrison and Morgan. In 1854 he removed to San Francisco, his demonstrated ability having won him a partnership in the enterprise.
He quickly realized the importance of San Francisco as a financial and trading center and was instrumental in the establishment in 1856 of the banking firm of Garrison, Morgan, Fretz, and Ralston, of which he was the directing force.
During the panic of 1857 his courage and decision won him the complete confidence of the business and commercial interests of the city. The institution was successfully managed and was regarded as reliable and conservative in policy.
In 1864 Ralston and D. O. Mills organized the Bank of California, which soon became the leading financial institution of the Far West. Ralston brought to the bank his extensive business connections and the philosophy of the speculative capitalist. His quick and often sagacious decisions, his audacity, and his impetuosity were frequently mistaken for financial genius. As cashier, however, he was checked and guided by his directors. The bank symbolized to the public mind the wise and beneficent use of its resources to advance the progress of the city and state, and "the farmer, the mechanic, the miner, and the capitalist found in the Bank of California a friend in need".
In 1872 he became president of the institution, a position easily demanding his exclusive attention, but only an item in the multiplicity of his affairs. Included in his vast plans of imperial expansion and control were railroads, steamship lines, woolen and silk mills, irrigation projects, hotels, theatres, and important mining interests. He used the resources of the bank to aid these enterprises, some of an extremely dubious character, in which he was personally interested.
By 1874 Ralston was completely enmeshed in a complicated net-work of financial and political interests. The officers of the bank and the public seemed to have unbounded faith in him. He lived in almost oriental splendor and extravagance, spending more than he earned, dispensing lavish hospitality in a lavish period, and donating generous amounts of money to civic and charitable causes of every sort.
He liked to regard himself as a benevolent despot, the leader in the development of California. It seems probable that he promoted unwarranted speculative schemes with the bank's funds, and he doubtless made many injudicious and unauthorized loans on inflated values. It is alleged that by false statements he withheld both from directors and from examiners the true condition of affairs. In many of his projects political assistance was essential, and he was active for years in California and in Nevada politics, seeking franchises, concessions, and favors.
Accusations were frequently made that he had attempted corruptly to influence public officials. During the middle seventies he became increasingly secretive and dogmatic while his speculations in real estate and in mines were conducted on a colossal scale. The bank was the exclusive agent of all business relating to the Comstock Lode and to the milling of the ores, while his personal holdings in this mine gave him a profit of four million dollars. His mills and railroads also yielded large dividends, but the enormous profits were absorbed by recurring losses sustained in new speculations in San Francisco.
He endeavored to regain financial security by the purchase in 1875, with associates, of additional Nevada mines, imagined bonanzas. The market broke, however, with a loss of millions. Meanwhile, the bank, which had survived the panic of 1873, was in a desperate struggle for existence. Dividends were paid with depositors' funds, the directors being deceived by Ralston.
In August 1875 the two leading newspapers of the city attacked him and made grave charges concerning the management and condition of the bank. The collapse soon came when it suspended payment to depositors. The bewildered directors closed its doors and requested his resignation on August 27. He was drowned that day under painful and peculiar circumstances. Investigations revealed that he owed the bank several million dollars.
His wife, Elizabeth Fry, whom he married on May 20, 1858, and four children survived him.
