We take for granted today’s speed of banking. It is literally the speed of electrons—funds are wired across continents in moments, communication and transactions over distances are approved the same day, and complex documents are quickly certified with electronic signatures. Not long ago, however, international business moved at a much slower pace.
Adolph Sutro was a twenty-year old emigrant when he arrived in the United States in 1850. A decade later he followed the “call to Washoe” and ventured over the Sierra to the new mining areas in Nevada. He researched the Comstock and noticed that the primary mines started high up on the face of Mt. Davidson and their shafts quickly dropped into the mountain. Traditional mining relied on pumps to dewater the mines, but Sutro preferred to burrow a tunnel from a canyon below that would let gravity drain the shafts. To cover the costs of the tunnel, Sutro proposed that the mines pay the tunnel a royalty for drainage. The idea was met with skepticism.
The tunnel was eventually built. But it took five years to form the Sutro Tunnel Company and another 13 years of construction until it finally intersected with mine shafts on the Comstock. The tunnel consumed large amounts of capital, so much so that Sutro needed overseas financing. French capital was blocked by the Franco-Prussian War, so Sutro raised money through McCalmont Brothers, in the heart of the London Financial District. McCalmont raised both equity and debt funding for the tunnel.
After Sutro’s tunnel linked with Comstock mines, Sutro wanted to re-aquire shares from McCalmont, and sell them in the US. He sent a letter in September, 1879, requesting the transfer; I recently came across the response from the London bankers. Note the drawn out timeline of the transaction: Sutro sent his request in September and the reply was sent in late October, a reply stating that the transfer would take more time since it required the physical partner signatures on the certificate of shares. The letter was sent Royal Mail to Sutro, across the Atlantic via steamship. Sutro received the letter in November. This simple transaction took more than three months to complete.
The letter that documents this tedious transaction was sent from McCalmont’s headquarters at 15 Philpot Lane, London. Today this location is mere blocks from Wells Fargo Bank’s currentLondon banking offices at Plantation Place, 30 Fenchruch Street. A similar transaction of share transfer would take so much less time today, depending on where shares are registered, Compared to the months it took for Sutro’s request, imagine what our customers can do today with current technology!