Banking starts in California

California’s constitution, enacted in 1849, prohibited the granting of any charter for banking purposes as well as the creation, issue or circulation of bank notes or any other kind of paper that could be used as money. It did allow what are commonly known as banks of deposit, those banks could exercise the powers of exchange and loan therefore all the new banks in the state fell into this category and banks notes were unknown.

Portsmouth Square 1849

But even before the adoption of the constitution there had been several banks of exchange in operation. The first was the Exchange and Deposit Office opened by Henry Naglee and Richard Sinton January 9, 1849 on Kearny across from Portsmouth Square in the Parker House building. Before that time deposits had been made with large mercantile houses that possessed safes. The merchants could only do a limited amount of banking and when the Exchange and Deposit Office began it attracted a lot of business.

Bank of James King of William

Sinton retired in July and left Naglee to continue running the bank alone but competition had already begun. On June 5th the bank of Burgoyne and Co. began operations, B. Davidson followed in September, then in October Wells and Co. was started by Thomas G. Wells, and on December 5 James King, who called himself James King of William, became the last of the 1849 banking houses to open its doors.

 

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