From the Publisher
“Visionary financier Isaias Hellman was the Warren Buffett and Alan Greenspan of early California rolled into one. He arrived in L.A. as a practically penniless, 16-year-old German Jew when there were only 300 other Europeans in town. Three decades later, he controlled much of the booming city's capital, land, and public works--then he acquired Wells Fargo Bank in San Francisco through a merger, earning headlines as the West's richest man. Hellman starred in so many aspects of the state's phoenixlike rise between the Civil War and the Depression that he became our Zelig, only with a really thick portfolio. The banker's bonds with the financial elite--fellow Jews like Meyer Lehman (his brotherin- law), gentiles like Collis Huntington--made skittish pioneer depositors in both cities less prone to panic. Still, this giant figure had been lost to history until local journalist Frances Dinkelspiel, Hellman's great-great-granddaughter (and the sister of this magazine's president), stumbled onto his papers at the California Historical Society. Eureka! Many underappreciated developments in California's astonishing adolescence--the emergence of SoCal, the UC system, post-1906 San Francisco, Hiram Johnson, Lake Tahoe, Southern Pacific Railroad, Hetch Hetchy, U.S. Zionism, you name it--are recovered here in elegantly restrained prose. A-” San Francisco Magazine
“Impressively researched and engagingly told...Dinkelspiel does an excellent job of tracing Hellman's career as a financier, and sketches in a crisp portrait into the glittering San Francisco Jewish community into which he and his family ultimately settled. [A] compelling account of Hellman the giant of finance.” The Los Angeles Times
“Carefully researched and superbly written memoir...Dinkelspiel's biography not only brings to life the transformation of California into the state with the strongest economy in the nation, and the outside personalities that forged it, but rescues from the proverbial dustbin of history the remarkable life and achievements of a man whose energy, creativity, resourcefulness and love for his adopted country had been all but forgotten. A marvelous resource, a dramatic slice of Western history and a splendid read.” The San Francisco Chronicle
“Journalist Dinkelspiel has filled a notable gap in California's history by writing a much-needed biography of her remarkable great-great grandfather Isaias Wolf Hellman (1842-1920). As one of California's pioneer financiers and an advocate of modern banking methods, Hellman became founder, president, or director of 17 banks, including Wells Fargo Bank, Nevada Bank of San Francisco, and the Farmers and Merchants Bank. He is attributed with stabilizing the financial panic of 1893 in Los Angeles by stacking $500,000 worth of gold coins on the counter of the Farmers and Merchants Bank in plain public view, hence the title of this book. The author personalizes Hellman's life by recounting his emigration from Bavaria to California in 1859 and comparing the vastly different social acceptance of Jews in those places. Many details of his family history are provided, along with insights into his relations with a broad swath of other early legendary California business families. Recommended for public and academic libraries with interests in early California financial and Judaic history.” Library Journal
“Towers of Gold is a vivid portrait of the financier who changed California forever. Attempted stagecoach robberies, an assassination attempt, bank runs, the 1906 earthquake -- it's all here in Frances Dinkelspiel's meticulously researched and masterly crafted biography. After reading Towers of Gold, you'll never see downtown Los Angeles of San Francisco's financial district in quite the same way again.” Julia Flynn Siler, author of the New York Times bestseller, The House of Mondavi
Journalist Dinkelspiel has filled a notable gap in California's history by writing a much-needed biography of her remarkable great-great grandfather Isaias Wolf Hellman (1842-1920). As one of California's pioneer financiers and an advocate of modern banking methods, Hellman became founder, president, or director of 17 banks, including Wells Fargo Bank, Nevada Bank of San Francisco, and the Farmers and Merchants Bank. He is attributed with stabilizing the financial panic of 1893 in Los Angeles by stacking $500,000 worth of gold coins on the counter of the Farmers and Merchants Bank in plain public view, hence the title of this book. The author personalizes Hellman's life by recounting his emigration from Bavaria to California in 1859 and comparing the vastly different social acceptance of Jews in those places. Many details of his family history are provided, along with insights into his relations with a broad swath of other early legendary California business families. Recommended for public and academic libraries with interests in early California financial and Judaic history.
Nathan E. Bender
Dull, pollyannaish family history of greed and general financial grubbiness in post-Gold Rush California. Freelance journalist Dinkelspiel, great-great granddaughter of Isaias Hellman (1842-1920), discovered a trove of his papers at the California Historical Society and spent eight years digging through them and visiting collections elsewhere to reconstruct the life of her financier forefather. After a brief personal introduction and an equally brief account of Hellman's quick move to abort a run on his Farmers and Merchants bank in Los Angeles during the Panic of 1893, the author commences a chronological journey through his life. Hellman arrived fairly penniless in Los Angeles (population under 5,000) in 1859 but soon began an archetypal soaring ascension into the stratospheres of wealth. He boasted a mansion, a summer home in Lake Tahoe, successful children and a finger in just about every pie in the California sky: trolleys, oil, water, land, newspapers, higher education and, principally, banking. He consorted with Levi Strauss and competed with the Huntingtons; near the end, he testified repeatedly before grand juries in graft and corruption cases. The author, who often begins chapters with a weather report ("the air was crisp and cold"), offers scant analysis or criticism of her ancestor; the book often reads like a report prepared and delivered by an earnest middle-schooler during Family History Week. She does not consider in any serious, systematic way the deleterious effects Hellman's greed might have had on employees, small businessmen and farmers. (One unappreciative guy took a couple of shots at him but missed.) As she sees it, all was for the greater good of California; itjust so happens that her ancestor got exceedingly rich in the process. A well-fed dog with no bark or bite. Agent: Michael Carlisle/Inkwell Management
Read an Excerpt
The mood was ebullient in the California Pavilion at the 1893 Chicago Exposition. The mission-style building, rumored to have cost $100,000, was finally set to open. Scores of California boosters sporting grizzly-bear-shaped badges clustered in the massive structure, eager to hear their governor, Henry Markham, extol the virtues of their state.
Examples of California’s bounty lay everywhere. The hall, lavishly decorated with flowers and flags, was landscaped with ancient date palms and other semitropical plants. A fountain sprayed red wine, and mounds of raisins glistened in bowls. No display was more showstopping than the thirty-five-foot-tower built entirely of oranges. Laborers had worked for days to carefully layer the 18,873 pieces of fruit on top of one another, creating a bright orange column that sent a delicious fragrance floating through the air. The only other exhibit that rivaled the orange tower was a life-sized knight built entirely of prunes.
Millions of people from around the world were expected to visit the exposition, and California had spared no expense to show them that it was a state rich in land, crops, and innovation. While officials were proud that the gold rush had generated hundreds of millions of dollars in ore, they wanted people to know that the state was also an agricultural powerhouse, an important trader with the Far East, and a good place to do business. As Governor Markham snipped the ribbon that opened the pavilion, he boasted to the crowd that fruit production generated $3 million a year alone for the state. Wheat, grapes, and wine brought in millions more, creating a robust economy. California’s population was growing rapidly, and its financial institutions were “in splendid condition,” he enthused.
As Markham delivered his sunny remarks, he had no idea that Los Angeles’s financial condition was rapidly disintegrating.
Few could have predicted that Los Angeles was about to be plunged into a crisis. The weather in the waning days of spring had been glorious, hot and sunny without a cloud in the sky, typical of the region’s blessed climate. In 1876, just seventeen years earlier, Los Angeles had been a speck of an outpost on the edge of a continent, but now it boasted amenities as modern as those of any American city. Streets that were once notorious for their thick dust in the summer and heavy mud in the winter were now covered with asphalt. Wooden sidewalks had given way to stone, while electric lights illuminated the newly erected buildings in the downtown.
As the sun rose on June 20, Los Angeles residents dressed for work and school, thinking perhaps only of the day ahead. Few were focused on the ongoing debate in faraway Washington, D.C., as to whether to remain on the gold standard or tie America’s currency to silver. More likely, they were absorbed by news from the Chicago Exposition or by the debate about the advisability of widening First Street.
European investors, however, were so worried about the uncertainty of the U.S. monetary system that they had been steadily withdrawing their gold for the last few months. The exodus of capital had sent stock prices plunging, and suddenly all the financial machinations of the last twenty-five years—the massive expansion of railroads, the mismanagement of those companies, rampant stock manipulation, and monopolistic practices—came to an abrupt halt. By June, gold was scarce—and that meant everyone wanted some. Unstable banks began to fail at an alarming rate.
Los Angeles had always considered itself protected from the country’s financial vicissitudes. The last major upheaval in the U.S. economy had been twenty years earlier, and its effects had taken two years to travel the three thousand miles west from New York. Even after two banks in nearby San Bernardino shut their doors, the Los Angeles Times reassured readers that the city’s banks were strong, routinely handling 66 percent more funds in 1893 than they had three years earlier. “Los Angeles has her financial house in good order and has no reason to fear contagion from the prevailing epidemic,” said a June 19 article. “To use an expressive phrase of the day, ‘Los Angeles is all right!’ ”
But the soothing words of the newspaper did no good. On the day after Governor Markham gave his speech on the glories of California, Los Angeles investors developed an irrational, almost unexplainable, fear that their local banks were running out of gold coin. No one event triggered the panic, but all of a sudden hundreds of people became convinced they might lose their savings unless they immediately withdrew their money from the town’s vaults.
They rushed in frenzy toward the junction of Temple, Spring, and Main streets, home to most of the city’s financial institutions. They surged into the banks, desperate to hold their cash and make sure it was safe. The First National Bank had recently installed a curved mahogany counter that let tellers serve several customers at a time. What had seemed like a business innovation in good times was a detriment now, as the clerks doled out pile after pile of $20 gold pieces at a rate that threatened to deplete the bank’s money supply.
Nearby, so many worried depositors had swarmed the City Bank that its president posted a sign saying it would “temporarily suspend” paying depositors. An hour later, the University Bank drew curtains across its windows and posted a notice: “Bank closed. Depositors will be paid in full.”
By dawn the next day, scores of men in dark suits and bowler hats and women in mutton-sleeve dresses were lined up along Main Street, jostling one another as they tightly clutched their bank books and watched for signs that the banks would open. Within a few hours the crowd was so thick there was no room to walk on the sidewalk. Blue-suited police officers herded clusters of people against a bank building, where many peered anxiously through the arched windows to see if there was any activity inside. The clock on the wall of the nearby Nadeau Building tolled ten o’clock, but the banks remained ominously closed.
It seemed like most of Los Angeles’s fifty thousand residents had come to the financial district either to withdraw their life savings or to gawk at desperate faces. “It was not the usual morning-go-to-work crowd, but a strange race of people who seemed to have taken possession of the city,” one paper commented.
The doors of the City Bank and the University Bank remained shut. When the president of the Los Angeles National Bank opened the bank’s iron gates, he was met by a cheer, but the joy was short-lived. Moments after he went back inside, a clerk slapped a sign on the front door announcing that those wishing to withdraw their money would get only a portion of what they were owed. The Farmers and Merchants Bank, the city’s oldest and biggest bank, on the corner of Main and Commercial streets, opened on time, but so many people crowded inside that the bank paid out $400,000 by noon, leaving just $43,000 in its vaults. By the early afternoon, customers had taken $3 million out of the city’s nineteen banks, forcing six to shut their doors as demand was outstripping supply.
Around one o’clock, just as it seemed the frenzy would only escalate, a rumor began to spread downtown that Isaias Hellman, one of the founders of the Farmers and Merchants Bank, was coming to Los Angeles. Hellman’s reputation in Los Angeles was legendary. He had gotten his start as a clerk in a dry-goods store back in the days when Los Angeles was more Mexican pueblo than American city, and had risen to be California’s richest and most influential financier. He was now the president of the Nevada Bank in San Francisco and had investments in water, gas, and rail lines up and down the state. Most important, his reputation as a conservative banker, one who insisted on keeping large gold reserves on hand at all times, was impeccable. Old-timers still remembered how Hellman had smoothed over the last bank panic back in 1875.
“Hellman is in town, Hellman is in town!” people shouted as they streamed toward the San Fernando Depot, just a few blocks from downtown. As they reached the train station, they encountered a most unusual scene. Hellman, a short, austere-looking Jewish man with gold-rimmed glasses and a dark Vandyke beard, dressed in a black frock coat and a top hat, stood by the tracks. A cadre of guards surrounded an armored rail car and watched carefully as workers heaved bags of gold into a Wells Fargo Express wagon.
The wagon laden with gold lurched forward and started its trip to the Farmers and Merchants Bank just a few blocks away. Isaias and his brother Herman, the bank’s vice president, rode ahead, their grim faces reflecting the seriousness of their mission. Shortly after the bags were brought inside the bank, the two men started to heap mounds of gold coin on the mahogany counter, in plain sight of the worried customers. Hellman had brought more than $500,000 from his personal account in San Francisco (about $11 million in 2006 dollars), and all that coin soon became towers of gold stacked on the counter, a testament to the financial strength of the Farmers and Merchants Bank.
The sight of that shiny metal was a tonic. As the frantic crowd watched the golden towers grow, its panic subsided. Many customers redeposited the funds they had withdrawn in such frenzy. By the end of the day, Farmers and Merchants’ coffers were replenished; in fact, deposits were up by $100,000.
As the word of Hellman’s gesture spread, frightened customers at other banks calmed down. It soon became clear that the crunch was just temporary and that there really was enough money to go around. The panic ended.
Never before had the California economy depended so much on the actions of one man. It would not be the last time.
Excerpted from Towers of Gold by .
Copyright © 2009 by Mia Edwards.
Published in January 2010 by St. Martin’s Griffin.
All rights reserved. This work is protected under copyright laws and reproduction is strictly prohibited. Permission to reproduce the material in any manner or medium must be secured from the Publisher.