CHAPTER XXXVII. Testimony of Eye-witnesses and Experts Refutes Story That Wm. C. Ralston Took His Own Life. Ruined Financier Had Deeded His Property to William Sharon, Who Forces Widow to Accept USD250,000 as Payment in Full.

Among the common traditions of William C. Ralston’s death is the story that he committed suicide to escape exposure. Notwithstanding the fact that a coroner’s jury found on ample expert evidence that he died from a cerebral attack, and the further incident that a life insurance company promptly paid a policy of $50,000 to his widow—a policy void by express terms in the event of suicide—this impression seems to persist to-day.

When I came to California for first-hand information concerning my old friend’s tragic end, my earliest business was to investigate the question of self-destruction; for if it were a fact that he made away with himself at a time when much explanation was needed, it would have had assuredly an ugly look. The evidence was all fresh and so overwhelmingly conclusive of death from natural causes that I cannot see on what basis a theory of suicide was reached, unless it were suggested by ulterior motives. The testimony of eye-witnesses was that the swimmer suddenly collapsed and floated with the tide. The lungs were inflated with air, not with water, as in cases of drowning; otherwise the body would have sunk. The features had not the ghastly pallor that follows water suffocation; on the contrary, they were suffused and livid as when death ensues from a bursting blood vessel in the brain. To this physicians gave further testimony. The sad facts were plain enough. For many days Mr. Ralston had suffered a mental strain against which the human machinery is not often proof. It reached the crisis when he was excluded from the meeting of the bank’s trustees. Then something snapped. Perhaps the plunge in the cold waters of the bay hurried on the catastrophe. But the baseless story of Mr. Ralston’s suicide ought to be finally set at rest.

The inside history of the failure of the Bank of California in 1875 has never been told. About the only definite statement ever made was that its capital stock of $5,000,000 had been exhausted, although the institution had resources sufficient to protect depositors. It was rehabilitated by an assessment of $100 a share which was paid by the stockholders, giving a new capital of $3,000,000. Five weeks after the failure it reopened its doors, with almost undiminished prestige, and with all the many ups and downs of finance has maintained its position as the leading commercial bank west of the Missouri River.

There is no doubt that Mr. Ralston owed large sums of money to the bank, growing out of many investments, some of which were disastrous. In those days, whatever may be said of the practice, it was the commonest thing for bank officers to make loans to themselves. Not only that, but the practice was in full swing down to the time of the failure of the Safe Deposit Company’s Bank. With vast visible personal resources as security for loans, Mr. Ralston’s unlimited credit never seems to have been questioned by the directors of the Bank of California. Among his assets were a half interest in the Palace Hotel; a half interest in the Montgomery Street Land Company, which he and I organized, including the Grand Hotel, and most of the frontage on New Montgomery street; one-half of the capital stock of the Spring Valley Water Works; one-half interest in the Union Milling and Mining Company, which controlled the reduction of ores on the Comstock Lode with enormous profits, and one-third of the stock of the Virginia and Truckee Railroad, which holds the record of earning more per mile than any railroad in the world before or since. I should say that a conservative estimate of these properties alone was not less than $15,000,000. Besides, he had numberless industrial investments, residences and immense acreages of real estate in various parts of California.

After I left San Francisco in the early part of 1873, Mr. Ralston engaged in many costly projects. One of these was the purchase of the Catholic Church property on Market street, and the construction of the Palace Hotel thereon by himself and William Sharon. This alone tied up $3,000,000 of ready money on his account. It is known that he lost heavily on a large purchase of stock in the Ophir Mining Company, upon false information that the great Flood and O’Brien bonanza extended into its territory. Several months before the failure he saw that he was deeply involved. Mr. Ralston realized too late that he had gone too far, that he was beyond his depth. He made efforts to secure money on his great holdings. But for evident reason he was compelled to go slow. The spectacle of Ralston as a borrower would have started suspicion at once. Loans were attempted through outside agents, but the door of accommodation was closed. Rumor has attributed this to the manipulation of the Bonanza firm, but a much better reason can be given than that. Nearly all the ready capital on the Pacific Coast was tied up in the wild Comstock speculation, still at its height. There was no money available for legitimate investments or loans of any kind. On top of this came the withdrawal of many large accounts. On the day of the failure more than $1,000,000 were unexpectedly checked out. Under this last blow the bank went down. So far as the Bonanza firm was involved, its members were personal friends of Ralston, though not of William Sharon.

Four days before the failure Mr. Ralston made a deed to William Sharon, conveying “all and singular my real and personal property situated in the City and County of San Francisco and the County of San Mateo and elsewhere and wheresoever and howsoever situated, to be managed, sold and otherwise disposed of for our joint and several interests.”

What was the disposition of this vast property? No one will ever know. Was part of it used to repay any indebtedness of Mr. Ralston to the bank? Again the record is silent.

Some years later Mr. Ralston’s widow, who is still living, brought a suit against William Sharon for an accounting under the deed of her deceased husband. After some delay, Mr. Sharon filed a general answer to the effect that the property coming from Mr. Ralston into his hands was worth about a million dollars less than nothing. But he offered $250,000 in full settlement, and to avoid the endless delay of litigation and expenses that she did not have the means to meet, this adjustment was accepted by Mrs. Ralston.

Never in the whole history of finance has such a mystery attached as surrounds the failure of the Bank of California and the disappearance of Ralston’s fortune. My own firm belief is that had his life been spared another month, he would have emerged from all his difficulties with a clean sheet. James R. Keene, a trustee of the Bank of California and the only one who seemed inclined to speak, made a printed statement that upon an examination of Mr. Ralston’s assets he was justified in stating that they were sufficient to pay all his debts of every kind and leave a balance of $3,000,000 to his family; and it is worthy of remark that Keene had a very clear business head.

No one seemed anxious to know the facts. Quite the contrary was the case. When I proceeded to gather information of a most important character, J.D. Fry, uncle of Mrs. Ralston, commanded me in the name of the family to cease. To this I had to bow. But Mrs. Ralston is here to say whether her kinsman was her faithful friend or not.

Even Mr. Ralston’s private papers and personal accounts were seized, and disappeared. In some ways he was a secretive man. Once he asked me to send a check to A.A. Cohen for $5,000 each month until ordered discontinued. I followed instructions till the total amounted to over $100,000, yet I never had an inkling what the payments were for. Thus, it was currently believed that he had many interests in other people’s names. Mrs. Ralston well remembers that her husband took her to inspect a fine business block in process of completion, which he told her was his. After his death the title to this same property stood in the name of another, and in that family name it stands to-day.

There were many wild rumors of wrongdoing that followed the failure of the Bank of California. The only one deserving notice is this: that Mr. Ralston over-issued and marketed stock of the Bank of California. Without any evidence to support it that would be received in any court, this unfounded charge has received an astonishing credence, for I can find nothing to support it except absolutely irresponsible hearsay. Besides, it is contradicted by unquestioned facts.

Mr. Ralston had no reason to over-issue any stock. He had oceans of prime securities. What he needed was cash, not certificates of shares. His 50,000 shares of Spring Valley alone had a selling market value at that time of $5,000,000, nearly twice as much as the bank started business with later on. The money simply wasn’t in the town to realize on even that splendid security. That’s how Ralston and the bank went down.

In a way, my acquaintance with Mr. Ralston was somewhat tragic. With the best intent on either side, something always went wrong. It changed the whole character and purpose of my life. But I only recall him as a most loyal, consistent friend, a financier with a very nice sense of honor and an exemplar of candid courtesy. It seems to me the time has come when tardy justice should be done to the memory of one of California’s most illustrious pioneers, who loved his State as no man of station has loved it since, and to whom the present generation owes much.

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