Authors: Bruce Chadwick
He then explained when other friends arrived mid-morning, loudly enough for all in the crowd to hear, that he had more than enough money to cover all withdrawals. That seemed to quiet the swelling crowd, which surged out of the bank lobby and into the middle of Montgomery Street. Next, he asked the army friends whose money he held—trusted colleagues such as Don Carlos Buell, Joseph Hooker, John Bell Hood, Braxton Bragg, Henry Halleck, and George Thomas—to keep their money, over $130,000, in the vault. They agreed. He then borrowed $40,000 to serve as a reserve. Finally, late in the afternoon, he asked friends to actually deposit money in the bank the next morning to show confidence in the bank. They agreed.
When the Lucas and Turner bank closed its doors at the end of business hours at four in the afternoon that day, there was still money in the vault, money in the drawers of the tellers, and a smile on the face of its president. He had survived the run and in the morning, as promised, people who had faith in him deposited nearly $120,000. The bank remained solvent.
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A very relieved Sherman wrote Turner, “So the battle is over and we are not dead by a d—d sight.” He depicted his success in the terms that a military commander would describe a successful battle, “We weathered it [the run] by excessive caution, by scattering risks, and by not having too many sinking friends to bolster up.”
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Sherman’s actions in the banking crisis were singular. Page and Bacon floundered and closed its doors. So did several of the other large and influential financial institutions in the city, including some of the oldest. Of the city’s nineteen banks, seven went out of business that week, decimated by runs by their depositors.
Instead of applauding the dramatic, steely action of her husband, Ellen Sherman sighed that she had actually hoped that Lucas and Turner had gone bankrupt so that she and the family would be forced to move back to Ohio. She unnerved Sherman, who wrote that “I’d blow this house [bank] into atoms and squeeze dollars out of brickbats rather than let our affairs pass into the hands of a rascally receiver or more rascally sheriff.”
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One month later, Sherman suffered the worst asthma attack of his life. Ellen tried to convince him to return to Ohio for his health, but he refused. She left anyway, leaving the two children with him for childrearing, for an extended visit with no set date for her return to California. She wrote Sherman letters pledging her eternal love for him, but making it clear that she much preferred life at home with her parents than the life she had complained about so bitterly and so often in San Francisco.
Ellen did come back to San Francisco in December, nine months later. During that time, left to his own resources as a father and bank president, Sherman had thrived. He devoted every spare minute to his children and, perhaps for the first time in his life, genuinely enjoyed parenthood. He took firm steps to shore up his bank, increasing deposits, maintaining a high reserve of cash, and forbidding merchants from writing overdrafts on their accounts, a practice that had helped to bring on the February run across the city.
Sherman never looked well. He was thin, pale, and his body was continually wracked by asthma attacks. One of his clerks wrote, “You would have thought he was an invalid to look at his build and peculiarly pinched look about his mouth.”
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Yet these same clerks, and anyone who met him, marveled at the high energy he maintained and his ability to complete dozens of tasks each day, at the same time caring for his two children as a single parent.
His wife seemed happier upon her return, even though she left Minnie back in Ohio with the Ewings. Sherman hired extra help to assist her in running the house, which she appreciated. And she had her pictures. Ellen had brought photos of the Ewings and daughter Minnie to California with her, framed them and hung them throughout the house. Each day, Ellen and the two children looked at the photos and held lengthy conversations with them, a practice that annoyed Sherman.
What angered Sherman more was the lawlessness that plagued San Francisco. The dramatic population boom of the gold rush had brought thousands of unsavory characters to the city and it was quickly nicknamed “the Barbary Coast.” The gunplay, fights, and ever-increasing criminal activity were far too overwhelming for the civil authorities. By 1851, vigilante groups were formed to mete out justice. Sherman, as an army man, was opposed to vigilantes, but he also sided with them on occasion following revelations of pervasive corruption in the city’s government. In 1856, Sherman was pulled into a vigilante dispute that might have cost him his life and brought him face to face with deciding whether rebels who believed that their way of life was being threatened had the right to take up arms and declare war against the established government.
A newspaper editor, James King of William (his actual name), was shot dead by another editor, James Casey, whom Sherman detested because of his negative stories about the banking industry during the financial collapse of the previous winter. Casey was held in jail, but the ever-growing vigilante groups in San Francisco wanted him hanged immediately, without benefit of trial.
Sherman had been made the head of the San Francisco militia a few months earlier, a job that he did not think would cause him much trouble. Suddenly, he found himself defending the city jail with several hundred militia against an armed vigilante mob whose size reporters estimated at close to seven thousand men. Sherman, the mayor, and the governor watched from a rooftop as the vigilantes descended on the city prison. He wrote of the raucous scene he observed from the rooftop of the hotel, “Parties of armed men, in good order, were marching by platoons in the same direction and formed in line along Broadway, facing the jail door.”
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The feeble militia could do nothing to halt the vigilante mob, and they surrendered Casey. The vigilantes hung him following a sham trial several days later.
Worse, the vigilantes, emboldened by their success at seizing the prisoner and the size of their army, decided to completely ignore civilian authority and run the city of San Francisco themselves. “It soon became manifest that the vigilante committee had no intention to surrender the power thus usurped. They took a building on City Street, near Front Street, fortified it, employed guards and armed sentinels sat in midnight council, issued writs of arrest and banishment, and utterly ignored all authority but their own. A good many men were banished and force to leave the country…Yankee Sullivan, a prisoner in their custody, committed suicide, and a feeling of general insecurity pervaded the city.”
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An alarmed Sherman attempted to crush the vigilantes. The state had promised him cannon and guns and more men for his militia. In a bold and dangerous maneuver, Sherman planned to take control of an artillery battery that overlooked the place where the vigilantes had set up headquarters and shell it as his troops assaulted the neighborhood. He then asked David Farragut, the California area’s U.S. Navy commander, to give him command of a warship in the harbor to fire at the vigilante’s headquarters at the same time his cannon opened up on them from the hilltop. Farragut reminded Sherman that the U.S. Navy could not do that. State officials then informed him that the promised weapons and ammunition would not be forthcoming. Unable to fight, a frustrated Sherman resigned from his position as head of the militia. He used his influence as a banker to work behind the scenes with others to restore peace to San Francisco, which came about within six weeks when the vigilantes, under growing pressure from the governor, state assembly, and the press, finally gave up control of the city.
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Sherman had resigned primarily because his role as head of the militia might hurt his bank business, which was true, and because he found himself in an unwinnable situation. His wife had also pressured him to resign after his life—and those of his wife and children—were threatened several times by the vigilantes.
It was a sign to Sherman, the military man, that large groups of Americans were becoming increasingly unhappy with national, state, and local governments, and were starting to rise up in violent episodes to impose their will on them.
Sherman had little time to ruminate over the future of the vigilantes in California, though, because his bank decided to close its San Francisco office in 1857 and transfer him to New York. After four years on the West Coast, Sherman had been sent to New York to open up Lucas and Turner’s new branch there, but the panic of 1857 struck the nation in August, crippling the new bank, along with hundreds of other financial institutions in New York and across the country.
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No one blamed Sherman for the collapse of the New York or California bank, but Sherman did. It seemed that everything that had gone wrong in his life had been his fault, so why not the bank failures? Sherman cursed his lack of good fortune in the banking business and, as always, lamented his decision to leave the army, the only place he ever felt comfortable. He wrote of finance and his poor luck in 1858 that “banking and gambling are synonymous terms.”
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Sherman moved back to St. Louis, with his wife Ellen and their children, to sort out of his future following the panic and bank closures. He conferred with his foster father, the influential Ohio businessman and politician Thomas Ewing Jr., who had raised him since he was young, and then started to think about what he would do with his life.
Sherman, like all bankers, knew that the panic was one of the worst financial setbacks in the nation’s history. He wrote, “The panic grew worse and worse and about the end of September there was a general suspension of the banks of New York, and a money crisis extended all over the country.” Sherman was pleased, though, that his bank had survived it. He wrote with pride, “No man lost a cent by either of the banking firms of Lucas Turner & Co. of San Francisco or New York.”
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Sherman had failed to collect significant loans or foreclose on property in California and he left for the return trip to St. Louis deflated about his business skills. “I am utterly disqualified for business,” he wrote Turner. “My experience here has completely destroyed all confidence in myself and everybody else.”
He had never enjoyed banking. He wrote when the panic began, “Of all lives on earth, a banker’s is the worst, and no wonder they are disbarred from heaven. Bound at any and every moment to produce the very dollar deposited, compelled to keep up an expensive outshow, and yet compelled to lend the money on chance, and depending on that chance for profit!” And he hated losing people’s funds. “I can lose my own money and property without feeling much, but to lose what is confided to me by others I can’t stand…”
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He was even blunter in a letter to his wife. “You can easily imagine me here, far away from you, far away from the children, with hope almost gone of ever again being able to regain what little self-respect or composure I ever possessed. I wish I could, like most men, harden my conscience and say I could not help the downfall of this country [California] or avoid the consequences thereof, than to have dodged a cannon ball, or escape an earthquake. You know I worked as hard as anybody could, that my whole thoughts, too much so, were engrossed in this business, which kept getting worse and worse from the time Page and Bacon broke, till we got away. What I did and what dangers I avoided are of the past and must be forgotten. What I failed to do, and the bad debts that now stare me in the face, must stand forever as a monument of my want to sense and sagacity. I envy… the non-chalance of business men generally, who wipe out these old sums, like the marks on a slate, and begin anew with no feeling or regrets for the past…”
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That view was reflected in all of his letters and memoirs, and in all of them he always concluded about his days as a businessman, “I regret I ever left the army.”
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Turner told him he had done his best and urged him to return to St. Louis to accept some kind of reassignment from the bank. At the same time, Thomas Ewing, who had bailed him out all of his life, wrote Sherman and offered him a job managing his salt wells and coal mines near Lancaster, a job that he knew was charity so he could collect paychecks, pay his bills, and attempt to care for his family.
Sherman did not want to go back to Lancaster to manage the salt or coal companies and he certainly did not want to work for his foster father again. He shrugged his shoulders and went, though, because he had nowhere else to go—and no confidence in himself. He wrote Turner dejectedly that, “When I leave here I shall accept some post at the salt wells or coal mines of Mr. Ewing, where at least I can do no harm if I can’t do good.”
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Just before he went, though, he demanded that Lucas and Turner send him back to San Francisco to make certain that their depositors, especially his army friends, either had their money returned or reinvested with other reputable banks. His army friends kept their savings during the crisis, and were always thankful to Sherman for his diligence.
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Ellen was against even that short trip and stayed home in Lancaster. She told him she was “heart sick and distressed,” and that “I am entirely unwilling for you to go out there at all. I don’t care what Mr. Lucas has at stake, your life is worth more and you are not to risk it. But I suppose no opposition of mine can keep you now.”
And then, knowing what was on his mind, what was always on his mind, she finished the letter curtly, telling her husband, “Please do not mention the army to me again unless you have made up your mind that we are not worth working for.”
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His wife’s admonishments not to mention the army fell on deaf ears. As he prepared to go back to Lancaster, his banking days over, Sherman again wrote his wife forlornly, “I regret I ever left the army.”
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In another letter home, he wrote Ellen, “I ought to have had sense enough to know that I was fit for the army but nothing else.”