As long as the country continued to enjoy the full flood of prosperity, these things did not greatly matter.  The time was individualistic, and every man was supposed to take care of himself.  But in the year 1855 financial stringency overtook the new community.  For lack of water many of the miners had stopped work and had to ask for credit in buying their daily necessities.  The country stores had to have credit from the city because the miners could not pay, and the wholesalers of the city again had to ask extension from the East until their bills were met by the retailers.  The gold of the country went East to pay its bills.  Further to complicate the matter, all banking was at this time done by private firms.  These could take deposits and make loans and could issue exchange, but they could not issue bank-notes.  Therefore the currency was absolutely inelastic.

Even these conditions failed to shake the public optimism, until out of a clear sky came announcement that Adams and Company had failed.  Adams and Company occupied in men’s minds much the same position as the Bank of England.  If Adams and Company were vulnerable, then nobody was secure.  The assets of the bankrupt firm were turned over to one Alfred Cohen as receiver, with whom Jones, a member of the firm of Palmer, Cook, and Company, and a third individual were associated as assignees.  On petition of other creditors the judge of the district court removed Cohen and appointed one Naglee in his place.  This new man, Naglee, on asking for the assets was told that they had been deposited with Palmer, Cook, and Company.  The latter firm refused to give them up, denying Naglee’s jurisdiction in the matter.  Naglee then commenced suit against the assignees and obtained a judgment against them for $269,000.  On their refusal to pay over this sum, Jones and Cohen were taken into custody.  But Palmer, Cook, and Company influenced the courts, as did about every large mercantile or political firm.  They soon secured the release of the prisoners, and in the general scramble for the assets of Adams and Company they secured the lion’s share.

It was the same old story.  An immense amount of money had disappeared.  Nobody had been punished, and it was all strictly legal.  Failures resulted right and left.  Even Wells, Fargo, and Company closed their doors but reopened them within a few days.  There was much excitement which would probably have died as other excitement had died before, had not the times produced a voice of compelling power.  This voice spoke through an individual known as James King of William.