Henry Wells
The wealthy investors on the east coast watched the news of gold in California carefully. A booming economy fueled by gold and a flood of emigrants presented incredible opportunities for savvy businessmen. One of whom was Henry Wells, a former freight agent for the Erie Canal who had formed his own company and competed successfully against the US Post Office by carrying mail at less than the government rate. In 1850 Wells joined two of his chief competitors, John Butterfield and William Fargo in the American Express Company. Immediately Wells, as president, and Fargo, as vice-president, pushed for expansion of the company into California but the board of directors balked, fearful that the Adams and Company, already in California, would acquire a monopoly. But on March 18, 1852 they organized Wells, Fargo and Co. with a $300,000 capitalization.
American Express Shipping Receipt 1853
Business began on May 20, 1852 with an announcement in the New York Times followed on July 3 with another in San Francisco’s Alta California paper. But by this time in the gold country Wells Fargo faced fierce competition from already established companies in the express business as well as in the banking business. Still, Edwin Morgan, president until November 1853, and his successor, Danford Barney, set up express and banking offices in key gold rush areas where they offered a full range of services including the buying and selling of all forms of gold, and express mail and freight between New York and California. By contracting with existing express companies across California they quickly gained a solid foothold.
William Fargo 1862
Then in 1855 the parent company of Page, Bacon and Co., a San Francisco bank, collapsed, setting off a run on the bank and a general panic that quickly involved the entire financial community and Wells Fargo was forced to close its doors. By the next Tuesday Wells Fargo was able to reopen as one of the few financial institutions left on the west coast. Although it lost about a third of its assets it had survived because it had sufficient cash reserves on hand to meet the crisis. This gave the company a reputation for dependability, and coupled with the loss of so many competitors, Wells Fargo expanded rapidly across the entire west. It started its own stagecoach line and later took over and ran the Overland Mail Company and was deeply involved in the Pony Express.
I really enjoyed the information in this post. The early days of banking in that area are fascinating. I wonder how many starting ‘cities’ had that problem. I know when Colorado Springs started in 1871 they had a bank, but it closed its doors in 1873 at the beginning of the long depression. Fortunately another bank opened at about the same time so the city was able to grow.
Actually Wells Fargo started as an express company. They competed with the Adams Express in the beginning but all the big express companies went into banking. They were the ones who hauled the gold in from the mines anyway so why not. There was a run on banks in early san Francisco too. It wound up helping Wells Fargo by getting rid of Adams & Co. I do like your comments, Doris. Thanks.