Even amid the fanfare in San Francisco over the opening of the Panama Railroad, and the improvements it made in the transportation of mail to the west and payments of gold to creditors in the east, the natural effect of the bank failures of 1855 was to throw everything in the city, and indeed the whole of California, into a state of confusion. And so, in spite of the advance in communication with the east and business affairs that even under these peculiar circumstances had reached a high level, there still did not exist the connection between monetary and mercantile matters on both coasts that could prevent, or even much ease, the financial problems that had broken out in San Francisco.
San Francisco 1855
While these troubles were for the most part only local, Californians had brought them on themselves, or, as some had said, they had allowed them to occur through their own carelessness. Financial ruin, which had already destroyed many, seemed to stare into the face of all. No one felt any confidence or showed faith in anyone or any institution. There were no intelligent steps taken to repair the evils that had beset them nor were any actions underway to defray those that were yet to come. A violent storm had rolled over California and nothing was done, or perhaps could be done, but to let it blow itself out on the economic prosperity of the population.
Financial depressions do take a terrible toll. The 1873 crisis was off set in Colorado Springs due to W.S. Jackson opening a bank that took on the debt of the failed one. It spared a lot of people and businesses.
The 1855 in California bears further research on my part. (Partly due to the nature of the depressions and the gold strikes in CO. that seemed to off set them somewhat)
California had little besides gold in 1855 so when production went down and an eastern bank failed all coupled with the rampant corruption, things did take a nose dive. Fortunately the government did not try to fix the problem so things came back into balance fairly quickly, unlike our recent depression which still wallows along. Oh, but we do call them recessions now don’t we.