I reply to your enquiry about investments.

I have had a very good opportunity lately of getting information on the subject with the best advice, I think, to be had in San Francisco; our bankers and factors there being a very trusty and cautious sort of men. I have had four thousand dollars to invest for myself and others and have studied the question carefully.

It is very common to get two to three per cent a month. One and a half to two per cent a month seems to correspond very nearly with six or seven per cent per annum in New York, and, although the ruling rates in the country would seem to be a little higher than this, and much [216]higher is constantly paid upon what is here regarded fair security, what I should regard as perfectly sound security it is difficult to get at any price. Nearly all property is dependent, for its value, directly or indirectly upon some mine or mines and I don’t know of more than two mines which can be regarded as permenant sources of production with much confidence. For this and other reasons I put mines and whatever is dependent on any particular mine or class or district of mines out of the question. Thus, ninety nine one hundredths of the popular investments of California are swept off.

But taking the most unfavorable view of the mines, of agriculture, and all other enterprises in detail, I see no reason to fear that the production of the mines in the Pacific States and Territories will not continue to steadily increase, on an average of the whole. New mines are coming in much faster than old ones are failing and while many towns and small districts are every year ruined and depopulated, and the population rushes about in a terrible way from one part of the country to another, it is on the whole constantly increasing and very well paid, the average wages of ordinary labourers, over a region twice as large as all the States East of the Mississippi, being not much short of three dollars a day in gold.

I look therefore to enterprises which are related to the whole of this field or large parts of it as likely ipse facto to be safe, (if well managed and free from excessive competition). Of this character is the Pacific Mail Company, the Wells, Fargo Express and the lines of Telegraph and general communication. I think San Francisco is bound to be one of the greatest cities of the world from its position and the advantages it has already gained.

The fever of the mining speculation has absorbed capital and discounted the capital of the future to such an extent that it is extremely unlikely in the nature of the case that an excess of capital has been or is available for the more comprehensive class of investments which I have indicated.

So far, theory. Looking for actual opportunities within the limits thus fixed I find, that all those classes of securities the value of which would not be supposed by a stranger to depend upon the integrity and good management of a few men, such as City bonds, have found their market at the East and in Europe and do not give an interest on the present prices much above that of corresponding Eastern securities, or where they do there are obvious grounds for distrust. The Rail Roads and most other transportation lines are dependent on too many local contingencies to be safe, the Express company’s stock is not I believe in market; Pacific Mail is controlled in the New York market.

The Pacific Steam Navigation Company is a very rich corporation, running lines of steamers up and down the coast both ways from San Francisco, and in all the connecting interior navigable waters. It owns [217]therefore a large number of vessels, docks and so forth, no one of which is in itself of very great value; its property risk, therefore, is much divided, and it has many strings to its bow of current profits. Its present managers are chiefly old and successful merchants of San Francisco with a good reputation for integrity and caution in business. Its dividends have been so high that competing lines have been frequently established on one or another of its routes but it has never failed to run or buy them off. Its dividends have been, two per cent a month during the last year, payable half in gold and half in greenbacks. Supposing the worst possible that can be imagined to happen in the way of opposition, hurricanes and fires, I do not think that the stock-holders are likely to suffer much beyond a suspension of dividends; the Company has a large surplus capital held in bank as a reserve with which to meet opposition. The incorporate value of the shares is one thousand dollars and the market price has lately been from forty five to fifty: dividend on the investment at this rate four per cent a month +. I made my heaviest investments in this.

Second; California State Telegraph Company, shares one hundred dollars each, market price thirty, recent dividends one dollar per share, quarterly. The lines are very extensive. It is liable to competition which would cause a suspension of dividends and of course depreciate the stock, but it cannot run out like a mine or be burned down and wrecked like a factory or a ship.

There is but one Gas Company in San Francisco in operation and its stock has been exceedingly good property, a new Company has been chartered and is beginning to erect works. It would hardly seem that the City with its present population could afford good business for both, but the stock which is seldom in the market has not sold for any less than before opposition was threatened: one hundred dollar shares sell now at ninety eight. Recent dividends have been three quarters per cent per month on capital stock. I have ordered a small purchase to be made for me at the first opportunity and having regard to the character of the Directors consider this one of the safest Pacific stocks.

There are two companies which supply San Francisco with water; neither are yet paying dividends but both are expected to soon and both are regarded as offering fair security for investments.

Beyond these I have seen nothing which seemed to me to range nearly equal with them in safety. Loans can be made any day in San Francisco with good security upon goods in store or afloat payable “next steamer day,” at one and a half per cent a month, and at the same rate, [218]with bond and mortgage security upon agricultural property; but owing to the fluctuations of population the latter is not quite as firm a security as it would be in the East.

I have requested the brokers whom I employ, Garnett & Wakelee, to send you the S.F. Weekly Stock Circular. Tell me if you don’t receive it.

I will make investments for you alongside my own, with great pleasure, whenever you wish. The prices I have given you are in gold, of course.

If you desire to discuss the matter further, I advise you to consult Howard Potter. I have no objection to your reading this to him, as a text for discussion.

I never was happier, in the present, in my life. I think I am rather gaining of late in health.

Since I have been in California I have frequently met with statements that the Germans in the East were moving in favor of the nomination of Fremont for the Presidency but presuming that these generally grew out of the mischief-making reports of the Herald, they have not given me much concern. Lately they seem to have taken a more definite form and I have heard you spoken of as one of the leaders of the movement, and I think it a duty of friendship to write you on the subject.

[220]

John Charles Fremont

You know what my business relation to Fremont is and you know that I have been a zealous political friend of his. He did me a kindness before I had any personal acquaintance with him and since then my little intercourse with him has been of an agreeable character and calculated to impress me altogether favorably with regard to him. Indeed, I can appreciate the fascinating power he is reputed to have over many who are intimate with him.

Here at Mariposa I stand in his shoes and am paying his debts. I live in a community which he founded. Several of my lieutenants are men of his appointment, who came here as his followers and who have stood by him in his difficulties here, with great faithfulness, at the peril of their lives. They have been intimately associated with him and I think must know him well. Some of them show evidences of strong personal attachment to him; seldom speak of him; never speak of him without pain. But of his character there is only one opinion; that is, that he is a selfish, treacherous, unmitigated scoundrel. He is credited with but one manly virtue, courage or audacity; with but one talent, persuasiveness. Since I have been in California I have not found a man to speak well of him. With the few exceptions, such as I have referred to above, who speak more in sorrow than in anger, he is universally despised, detested, [221] execrated. So, at least, I am informed by all parties, and such is my experience. His reputation at the East is regarded with amazement. Although a majority of the voting population of California is intensely loyal, I am told and I believe that it would be much easier to carry the State for Vallandingham or Fernando Wood than for Fremont. Chase is not very popular here, partly because his friends in the East are supposed to be also the friends of Fremont, but the State will doubtlessly go enthusiastically for Chase if he should be nominated though Lincoln is the personal choice of nine men out of ten.

Of the knowledge which I have myself obtained of Fremont from my position as Manager of what was formerly his estate, I do not speak at all. I will simply say that certain reports that have been circulated publicly to his advantage and which I had credited, I now know to have been false. I have said nothing which is not publicly said every day here. I think it right simply to call your attention to the unquestionable fact of this local reputation of Fremont, as a matter of private friendship. If you should have occasion to make use of the facts in a manner which, knowing my relation to Fremont, you could not do, receiving them from me, I do not think it would be difficult for you to obtain them from other sources. I can at this moment think of but one man in New York in whose integrity I have perfect confidence who can speak from personal knowledge of Fremont’s California reputation, having no reason to be personally prejudiced against him; this is George Gibbs, a member of the Loyal League Club, a brother of Professor Gibbs of Harvard University (late of the Free Academy) and an ardently loyal man. If you should have occasion to do so, you can call upon him with this letter to introduce yourself and the subject. I think it probable that he would have no objection to be made responsible publicly for substantially the same statement. If not, he would be able to find you some respectable person who would. I do not wish to be on account of my private obligations, unless for a clear and unavoidable public duty.

Mrs. Olmsted and the children have arrived and are settled here safely and comfortably. Mrs. Olmsted will write to Mrs. Kapp soon. The girl Margaret has proved invaluable. It is the greatest possible good fortune to have such an excellent girl in California. She desires that you will be good enough to say to her friends that she is well and she sends her respects to Mrs. Kapp, to whom also Mrs. Olmsted and myself beg to be kindly remembered.

I have been greatly disappointed in the Estate, but do not think that I was more deceived about it than those who employed me. We are living more pleasantly than you might suppose we could in such a wilderness and amidst such a population as surrounds us. The climate seems to be very healthful: and as my health has become very poor and the Doctor informs me must always remain so, I consider myself rather fortunate [222]than otherwise in having been placed here, master in a great measure of my own time and able to accommodate my business habits to the necessities of my infirmities, although in a business point of view I shall not be as able to do as well as I had reason to expect when I left New York. The mines had been almost completely run out before I arrived here and it will yet be several months before I shall be able to fully reopen and test them. There is a fair chance that they may then prove rich and the Estate profitable but there is also great danger that this will not be the case and that a large amount of capital will be required for explorations which may never give any adequate reward. I think the stock of the Company is held at about its just value in the New York market, the indications of the mines varying a good deal from month to month. If I had a very large capital I should not be unwilling to venture a part of it here, but it is not the stock for men of small investments and who should sail close to the wind. This is true of all mining stocks with which I have any acquaintance.

I enclose some observations which may be useful to you. They were written in answer to the request of a friend for advice about perfectly safe moderate investments in California.