Soon after Alfred A. Cohen was appointed as receiver for Adams & Co., creditors had sued the company demanding more than enough to exhaust the funds on hand. The court then declared the company insolvent and this allowed these funds to be administered for the benefit of all who had filed suit. Cohen was removed as receiver but at a meeting of the creditors Cohen, Richard Roman, and Edward Jones were elected assignees. Cohen, at the order of the court, transferred all assets under his control to the banking house of Palmer, Cook & Co. where Jones was a partner. Cohen then asked the court for permission to go New York for three months and left all the assets, books and papers of Adams & Co. in the hands of Palmer, Cook & Co. and Edward Jones, his co-assignee.
Palmer, Cook & Co.
Lawsuits continued to be filed against the assets of Adams & Co. and now totaled far more than the funds in the safe at Palmer, Cook & Co. Delos Lake, the judge of the fourth district who had presided over these affairs and before whom all proceedings had taken place, resigned and John S. Hager was named to replace him. Hager took a different view of the situation and held that a bank could not go into insolvency. He therefore declared the Adams insolvency void, revoked the order granting Cohen his release as receiver, then removed Cohen as receiver and appointed Henry M. Naglee in his place. Naglee demanded the assets from Palmer, Cook & Co. who refused to give them up, saying they had a right to keep them for their own protection. They also said that the controversy over the receivership was designed to delay and then defeat creditors. When Cohen returned from New York he faced the same demands and replied in a similar manner.
John S. Hager
Naglee filed suit against Cohen, Roman and Jones and obtained a court order against all of them for two hundred and sixty-nine thousand dollars, the amount of Adams & Co. assets they supposedly held. When they refused to pay they were cited for contempt. On January 5, 1856, Cohen, who had left his family in New York, made an attempt to leave California to see them. To avoid detection due to the continuing controversy he was embroiled in he hid in the hold of the steamship Uncle Sam soon bound for Nicaragua. But deputy sheriff John Harrison, warrant in hand, found Cohen, promptly arrested him and threw him into prison for disobeying a court order. Jones was also soon arrested and jailed.
Very interesting reading your recent posts about the Black Friday of 1855 and the run on the banks in San Francisco. Did this cause a recession and if so, how long did it last? Cheers!
Michelle, you ask a great question. One of the great lures of the gold rush was that government didn’t meddle so much in the affairs of men and business. The depression that happened was really quite short. When Henry Meiggs ran out on a massive amount of debt, real estate prices tumbled but recovered quickly. After the bank run a lot of people lost everything but in those days you could lose a fortune one day and get it back the next. The banks that survived, like Wells Fargo, were stronger than ever. And the principlal industry in California was gold mining. Even though the placer gold was played out the hard rock mines were just hitting their stride and the product of a gold mine is money.
However the political corruption was certainly up to today’s levels and it took some time and the second coming of the Committee of Vigilance to get rid of the crooks in power. It was a truly interesting period with many parallels to today, a real estate scandal with Henry Meiggs, a banking scandal with Adams & Co. a corrupt political machine buying votes and selling public offices. It took a while to clean up the mess. Unfortunately it seems we didn’t learn our lessons very well.
Amazing! Did this have anything to do with the “Panic of 1857”? Doing my research for the Fraser River gold rush I was under the impression that the economy in California was still in a recession in 1858 when the gold rush was declared on the Fraser River.
Michelle, huge changes were under way in California in the 1850s. Not only was there a financial crisis but the easy to mine placer gold was almost gone. In the beginning practically everything from food to clothes came into San Francisco by ship. This created highly volatile markets. Prices went up or down on a particular commodity depending on the how large or small the supply was in relation to the demand. Fortunes were made or lost over night. But the average miner could almost always earn his keep by working the placer deposits. Now mining required a large amount of investment funds for equipment, labor, supplies. Mining became a rich man’s business and the small placer miners either got a job or suffered along as best they could.
The tremendous growing potential of the central valley was just being recognized, too. California could now grow its own food. And because of the Panama Railroad wives and sweethearts were coming to California to join their men, and those men were settling down. But it was the old time placer miners, people we would call sourdoughs now, who continued to scratch for gold in worn out claims who rushed to the Fraser River when the rumors hit. The same thing had happened at Kern River and Gold Bluff earlier.
Overall, I think prices came down some from the highs of the boom years, but grain grown in California should be a lot cheaper than grain shipped around Cape Horn, and the same with beef and pork, chicken and eggs. There was a time when San Francisco’s dirty laundry was sent to China for washing. I wonder how much that would cost now. But the combination of the industrialization of gold mining and a population that was permanent had a positive effect on the state as a whole. I suppose some might call it a recession but I look at it more as a reorganization, a settling down to the normal patterns of a healthy society.