CALIFORNIA'S FINANCIAL SYSTEM 



ON A Solid Foundation. 



BENJAMIN C. WRIGHT. 



CALIFORNIA'S financial history is both unique and interesting. Though 

 thirty States had preceded her into the Union, with varied financial 

 systems, she preferred one of her own making, and there is no hesi- 

 tation in saying that the one adopted has served her purpose better 

 than any other one could have done. The dominant feature of this 

 system is an honest dollar — a dollar that means one hundred cents 

 for every transaction and for every day in the year In every part of the 

 world. Providence favored her in the adoption of this system by providing 

 her an abundance of the raw material out of which these honest dollars 

 might be coined. Up to that time no other section of the country had been 

 thus favored — at least, to the same extent. It is true, gold had been found 

 in small quantities in Georgia and elsewhere, but not in sufficient amount 

 to justify such action. It remained for California alone to first apply the 

 principle of extending patronage to home products in an entirely new field — 

 that of making its own money from its own mines. 



It is no wonder that with such an important agency right at its own 

 feet it should have stood erect as a man, even in its infancy, and declared 

 for a money standard the equal of the best in the world, and superior to that 

 of other sections in this country, as weil as the prevailing system in some 

 foreign countries at that time. This system was practically adopted before 

 California was admitted into the Union, and even before there was enough 

 coin money of American manufacture to meet the ordinary wants of the 

 limited volume of business at that pioneer period. We had the "stuff" out 

 of which the world's best money has ever been made, and in the absence 

 of sufficient coin money, it was weighed out at so much per ounce and 

 passed over the counter in the settlement of balances. As a temporary 

 auxiliary along this line, pending Congressional action for the establishment 

 of a Government Mint, the private manufacture of gold coins was allowed, 

 and some of these coins are still to be found in private collections. These 

 coins were just as honest in weight and fineness as those made at the 

 Philadelphia Mint. Some of them were worth $50, the largest ever made 

 in this country. 



The principle involved in these early monetary customs was subse- 

 quently enacted into law. The first Constitution of the State declared in 

 favor of the coin standard by forbidding the authorization of any banks of 

 issue. This was considered a bold step, as at that time all the States on the 

 other side of the country allowed their banks to issue paper money, and 

 some of them apparently without much regard to the security for the ulti- 

 mate redemption of the same. 



Among the pioneer banking institutions of the State, the savings bank 

 was prominent. The earliest of this character were also private concerns. 

 The first savings bank to incorporate was the Savings and Loan Society of 

 San Francisco, which obtained Its charter in July, 1857. This bank is still 

 in existence, and is the oldest of that character In the State. Since then 

 many others have come into existence, most of which are still in operation. 

 The influence of these banks on the character building of the State has 

 been good and only good, which is also equally the case in other States 

 where they have prospered. The savings banks of California rank very high. 

 The next most serious financial troubles occurred in 1875, the effects 

 of which were felt for three years afterwards. This was largely due to un- 

 healthy mining stock operations. The great financial panic which swept the 



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