At the time of the discovery of gold in California in 1848 San Francisco was a little more than a frontier town with a population of 500 people.
By the end of 1849 San Francisco had become an instant city with a population of 20,000 peoples.
While most of the new arrivals stayed in San Francisco only briefly before heading to the goldfields so seek their fortunes, many others acquired considerable wealth by outfitting the gold seekers. William Ralston was one of these profiteers.
Born in Wellsville Ohio in 1826 at the age of 23 Ralston decided to seek his fortune in California. He was using his time transporting the gold seekers to El Dorado. When he arrived in San Francisco in 1854 the Gold Rush was over but Ralston has amassed enough money to start a banking enterprise that would became the Bank of California in 1864.
Although he was always the driving force behind the bank he assumed the title of Cashier for the bank.
The bank open in time to finance the mine owners in Virginia City Nevada where silver was discovered in the famous Comstock Lode.
Ralston was convinced that San Francisco was destined to become a world class city; he went on to become known the man who built San Francisco.
He would personally sit down with anyone who came into the bank with a proposal for the betterment of San Francisco and would reward the sound proposals with a loan utilizing the proceeds from the Comstock to secure these investments.
Usually the loan would be provided directly by the bank in other instances Ralston would finance the loan from his own account. He had a tendency to blur the distinction between his own money and that of the bank.
In addition to funding the projects for others he had a number of projects of his own. Foremost of which would be the Palace Hotel.
The history of Comstock Lode was marked by periods of boom and bust. A great deal of capital was needed for mining industry. Because the bank of California was doing a lot of business in Virginia City where the mine owners were, Ralston decided to open a bank of bank there, and he choose senator William Sharon to manage that branch.. Sharon a very shrewd businessman would offer loans at interest rates half of that charged by other banks and accept shares of the mines as collateral. When subsequent bust periods kept the mine owner from repaying their loans Sharon would foreclose and take over ownership of the mines.
William Ralston built a luxury hotel Grand Hotel. While grant Hotel was luxurious by San Francisco Standards of the time it lacked in the statue of a world class hotel. When Ralston was guiding a European Dignitary trough the hotel one of the visitors sniffed “This hotel does not seems so grand.”
He was wounded by the insult and decided to build a grander hotel. This would be Palace Hotel.
In 1875 Sharon and other speculates wildly on share of adjacent mines and when the efforts appeared to be fruitless Sharon quietly unloaded all the shares onto the market, leaving Ralston with a portfolio of worthless stocks. The Bank of California had to close its doors early because run out of money on August 26, 1875. The board of directors ordered an audit and discovered that Ralston was approximately $9 million in debt including $5 million he had borrowed from the bank without telling anyone.
The board of directors forced Ralston to resign from the bank and sell everything he owned to Bill Sharon for $5 million so he could repay the bank. With that Ralston was ruined.
On the same afternoon Ralston walked to North Beach to take his customary swim in the bay and died of heart attack while swimming in the direction of Alcatraz.
First Palace Hotel was located on the same spot where the present hotel stands today at the corner of Market and New Montgomery. Ralston first began purchasing land as a site for Grand Hotel. He acquired an entire block for $400,000 Architect John P Gaynor was hired to design the first Palace Hotel. Excavation started in 1873. The General plan of the building was of a rectangle covering 2.5 acres.
The hotel was first opened in 1875 and at that time it was the largest hotel in the world, seven stories high, and covered an entire block.
In order to ensure an adequate supply of bricks and lumber Ralston built his own brickyard in Oakland and purchased and entire oak forest in the Sierra foothills to provide wood for floors.
The first hotel contained 755 rooms with accommodations for 1200 guests Most of the guest rooms were 20 feet squared with 15 foot ceilings. Each of these rooms had its own water closet.
Each of these rooms had an electric call button. Each room had its own fireplace; each floor had a tubular conductor to carry outgoing and incoming mail and messages to various locations in the hotel.
At 5:12 a.m. on April 18, 1906 there was a large earthquake and fire. The Damage at the Palace Hotel was only cosmetic, However Bill Sharon’s son Fred Sharon decided to demolish the hotel and built a new one.
The Second Palace Hotel completed in December 15, 1909 is nine stories high and contains 550 rooms. The cost was 10 millions. The price of a room was $2/night compared with $1/ night at the first Palace Hotel. The architecture was designed by the New York Firm Trowbridge and Livingston with George Kelham as lead architect.
The most famous room is the Garden Court. Famous are paintings such as The Pied Piper that is evaluated at 2.5 million dollars.