During the winter of 1855-'56, and indeed throughout the year 1856,
all kinds of business became unsettled in California. The mines
continued to yield about fifty millions of gold a year; but little
attention was paid to agriculture or to any business other than
that of "mining," and, as the placer-gold was becoming worked out,
the miners were restless and uneasy, and were shifting about from
place to place, impelled by rumors put afloat for speculative
purposes. A great many extensive enterprises by joint-stock
companies had been begun, in the way of water-ditches, to bring
water from the head of the mountain-streams down to the richer
alluvial deposits, and nearly all of these companies became
embarrassed or bankrupt. Foreign capital, also, which had been
attracted to California by reason of the high rates of interest,
was being withdrawn, or was tied up in property which could not be
sold; and, although our bank's having withstood the panic gave us
great credit, still the community itself was shaken, and loans of
money were risky in the extreme. A great many merchants, of the
highest name, availed themselves of the extremely liberal bankrupt
law to get discharged of their old debts, without sacrificing much,
if any, of their stocks of goods on hand, except a lawyer's fee;
thus realizing Martin Burke's saying that "many a clever fellow had
been ruined by paying his debts.
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