ON THE EVENING OF JANUARY 6, 1865, two visitors from San Francisco called at the manager’s office in Bear Valley. John Fry was an agent of the Bank of California, which handled the affairs of the Mariposa Estate. He was accompanied by a representative of Dodge Brothers, a San Francisco provisioner and the Estate’s largest creditor. Fry informed an astonished Olmsted that the Mariposa Company in New York had refused payment on its outstanding debt of sixty thousand dollars. Consequently, the Bank of California would no longer honor Mariposa Company checks. Fry himself had just spoken with the sheriff in Mariposa to initiate legal proceedings. He was courteous but firm. He was here to attach the property of the Mariposa Estate.
Olmsted protested that there must be some misunderstanding. He showed the pair his accounts. They agreed that everything seemed in order. He appealed to Fry to suspend legal proceedings until he, Olmsted, had a chance to discuss the situation with the officers of the bank in San Francisco. He was sure that he could straighten things out. Fry agreed. Olmsted quickly arranged to depart. “My impression is that Mariposa will float over this bar,” he assured Mary. But he did take one precaution. Before leaving, he collected four thousand dollars’ worth of gold bullion, as well as some instruments, and gave himself a bill of sale amounting to almost the full value of a year’s salary. He thought that the bank had been unnecessarily hasty, but he prepared for the worst.
He arrived in San Francisco late at night. He immediately met Darius Mills, the bank’s president, and William Ralston, the cashier, whom he had telegraphed from Stockton. They, too, were courteous and assured Olmsted that their actions were not a reflection of their regard for him. He would continue to enjoy their full confidence, respect, and friendship. But the Mariposa Company was another matter. They darkly alluded to a “great Wall Street swindle.” They told him that they had no choice but to act quickly to protect their shareholders. As far as they were concerned, Olmsted’s employers were as good as bankrupt.
Olmsted knew that the Mariposa Company’s cash reserves were low. He had been directed to undertake extensive—and expensive—improvements, and in 1864 his operating costs exceeded income by about $300,000. This deficit was to have been paid from cash reserves. But unforeseen, a previously unknown creditor of Frémont’s had contested the title to the Estate. The claim was settled out of court for $300,000 in gold. The company used current gold production to pay its debts; during October and November, production had been high, but in December the rich vein ran out. Mariposa was caught short.
Temporary liquidity problems were common in the mining business. What had panicked Mills and Ralston was a recent scandal. In December 1864 Opdyke had brought a libel suit against his old political adversary Thurlow Weed, who had published an article alleging that Opdyke had misused public funds as mayor. The trial lasted several weeks and attracted enormous publicity. Opdyke lost his suit and emerged with his reputation severely tarnished. During the trial, the defense charged that Opdyke and his partners had shortchanged Frémont when they bought the Mariposa Estate. The charge was calculated to gain the sympathy of the jury since Frémont was a popular public figure. However, he denied that he had been cheated; on the contrary, he admitted that he had underrepresented the Estate’s indebtedness at the time of the sale! This revelation coming on top of Opdyke’s humiliation rattled Mariposa investors. Frémont testified on December 21. On December 28 the value of the stock, which had been $45 when Olmsted arrived in California, dropped to $30; by January 2 it had tumbled to $19.
Olmsted, who was unaware of the trial, assumed that the Mariposa Company was solid.1 He persuaded Mills and Ralston to wait a few days until he could contact his superiors. He telegraphed the Mariposa president for advice and assistance. The response was “a sort of bunkum message from Mr Hoy, amounting simply to ‘don’t worry.’ ” Stalling for time, Olmsted negotiated an agreement whereby the Bank of California would receive all gold produced by the mines in exchange for granting a grace period of one hundred days before taking legal action.
Meanwhile in New York, the disgruntled Mariposa shareholders voted down the board’s proposal to float a half-million-dollar bond issue. Olmsted was left in the dark about this, as he was about the other developments. Still hoping for some reprieve, he worked mightily to make the best of a worsening situation. He felt an obligation to the creditors and to his subordinates, particularly Pieper and Martin. The mines had to be kept open. This was not easy. Olmsted had been called an autocrat, yet on this occasion he showed himself a persuasive mediator. At one point, the unnerved bank attached the company stores. The miners, unpaid and deprived of supplies, refused to work. Olmsted immediately wrote a public letter to the men explaining the situation, and with Pieper’s help, managed to calm them down. From San Francisco, he made arrangements with the sheriff, who was now effectively managing the Estate, to reopen the stores. Crisis followed crisis. In February the men who were owed back pay occupied one of the mines. Olmsted defused that situation, too, and convinced the bank to postpone collecting on the debt and to pay the miners.
Weeks turned to months. Olmsted stayed in San Francisco, but still no word came from New York. It dawned on him that he was on his own. At first he remained upbeat, explaining in a letter to Mary:
We have lived so very happily of late, & you & the children are doing so well, I shall be disposed to stay as long as possible at Bear Valley. It will not be easy for us to shorten sail to the degree that it will be required if we go East. But although we should probably have to manage a good deal closer than we ever have before, I feel less anxiety about it than usual—less oppressive anxiety. The truth is I have enjoyed the last few months so much, that I think I have [been] sufficiently well charged with caloric to bear a little cold weather, if necessary, without breaking my heart or my temper—and I hope it is the same with you. A certain degree of health and of luxury does tend to limit your discontent, a fact which I don’t think before last summer—autumn—I ever made any progress of faith in. “What I mean to say, is” that I have an increased and increasing positive respect for you as well as a decreased disrespect for your occasional perversities. You will think that I am sick that I write this—but I am, however that may be, very happy in our experience of late.
Despite his warning to Mary about having to manage “a good deal closer than we ever have before,” Olmsted’s financial situation was far from desperate. True, with the Estate in virtual receivership, he was not currently being paid a salary. Moreover, his lawyer had advised him that the bill of sale he had issued himself before leaving Bear Valley was “tomfoolery” and would not withstand legal scrutiny. On the other hand, he had good news from Morris Ketchum. The previous year Olmsted had deposited the one hundred shares of Mariposa stock he had received as annual pay in Ketchum’s bank. Ketchum had had the foresight to sell the shares in November, when they were still worth $36. As a result, Olmsted personally lost nothing in the Mariposa collapse.
Olmsted and Ketchum had a special understanding. Before Olmsted left New York, Ketchum had approached him with a proposal. If Olmsted would provide him with advance information of mining discoveries and shortfalls, in return he would buy and sell Mariposa stock on Olmsted’s behalf. Olmsted agreed. This was long before insider trading was outlawed, but the arrangement does cast a shadow on Olmsted’s probity. Or rather, it suggests that Strong was mistaken: Olmsted did have a mercenary nerve. He was not a novice in business and understood that he needed Ketchum’s help if he was to succeed financially. Their agreement lasted until May 1864, when the prudent Ketchum stepped down as a trustee of the Mariposa Company.
Olmsted’s account with Ketchum, Son & Company contained seven thousand dollars; with his California investments, he had accumulated thirteen thousand dollars. Nevertheless, he had no intention of dipping into his savings—he needed income. An opportunity soon presented itself. “I have another landscape gardening nibble,” he wrote to Mary in Bear Valley, “and shall do all I can to hook it, for Miller’s sake.” Edward Miller was a Central Park surveyor whom Olmsted had brought to Mariposa to work on the irrigation canal. With all improvements on the Estate halted, Miller had nothing to do—and no salary. He joined Olmsted in San Francisco.