Great post by Kaz Nejatian on the history of banking on San Francisco:
It wasn’t until the gold rush that the America’s first modern bank was founded. When nearly a quarter of a million people moved from the east to California, two entrepreneurs saw an opportunity.
In 1850, Henry Wells and William Fargo of Buffalo, New York, who had started an express mail company (which would go on to become American Express) opened up an office in San Francisco to allow miners to exchange their gold for currency.
Miners would hand Wells Fargo, who owned a secure transportation company, their gold. This gold would then be transported, via stage coach, to WellsFargo’s office in San Francisco where it would be transformed into gold coin.
As more people moved to California in search of gold, more Wells Fargo offices opened up. By 1905, Wells Fargo was the largest bank in the United States with offices all over the West Coast.
Then, in 1906, the great earthquake happened:
Wells Fargo’s president in order to avoid a run on his bank sent out a telegram to all depositors
“Building destroyed. Vaults intact. Credit Unaffected”.
Of course, he was only sure of the first sentence. There was no way for him to know if the vault was in fact intact or if all his credit had disappeared.