With the wild see-sawing of the Nasdaq these days, the personal fortunes of L.A.’s New Economy moguls are all over the map. It’s a crazy time but that’s nothing new in the L.A. business scene.
Dot-com startups may be a recent phenomenon, but volatility in personal fortunes is as old as Los Angeles itself. Vast amounts of wealth have been made and lost in land holdings, ranching, oil, motion pictures and real estate development in the past 150 years.
Much of the fluctuation no matter the industry stems from one thing: speculation. Angelenos have flocked to the newest, hottest industries throughout the city’s history.
Often, the highest flyers have taken the biggest hits when they over-leveraged themselves, the markets went belly-up or they wasted their newfound wealth.
“(Swings in fortune) have been happening for as long as there has been commerce in the marketplace in the L.A. basin,” said Bill Deverell, associate professor of history at Caltech. “Even when you go back to the point when California became a state, it sets into motion circumstances that undermine the landholding wealth of the Latino elites in the space of a generation and they found themselves virtually landless. You’re always going to have cycles of wealth and loss of wealth in a land economy.”
Drought, fraud, discrimination and even legitimate sales were among the reasons for that reversal of fortune, Deverell said. But some brought it on themselves.
Ricardo Vejar, part-owner of Rancho San Jose, which is where Pomona is located today, made a substantial amount of money by driving his cattle up to the Gold Country and selling them in the highly inflated Gold Rush economy. But he squandered his proceeds in one night of gambling.
“It’s emblematic of the larger problems ranchers had. They had a tremendous market for cattle, but in a many cases, they went into debt and borrowed money at exorbitant rates and lost their ranches,” said Gloria Lothrop, a professor of California history at Cal State Northridge.
Riches to rags
Real estate boomed in the 1880s, only to crash late in the decade when local banks grew wary of mortgage loans and investors stopped buying land in order to put their money in the newly opened New York Stock Exchange. Speculators lost fortunes overnight.
Even real estate developer Henry Gaylord Wilshire, namesake of one of L.A.’s major commercial corridors, had his share of spikes and drops in wealth. Though born into a wealthy family, he dropped out of Harvard and returned home to run a small mill. He failed miserably, fled to California and made and lost several fortunes while he pursued two seemingly contradictory ambitions material success and socialism, according to historian Kevin Starr.
At one point, he even married a rich English widow to bolster his financial wherewithal. But he also spent large sums on a money-losing socialist magazine and a special belt designed to shoot electricity into the body in small doses, which Wilshire believed would enhance health.
Oil was another source of riches and disappointment. Among the early Angelenos who struck it rich was Edward Doheny, the attorney-turned-prospector who arrived in Los Angeles in the 1890s with “not two dimes to rub together,” Lothrop said. He found oil near the corner of Glendale and Beverly boulevards, near the La Brea Tar Pits and in Fullerton.
Oil, ‘talkies,’ and oranges
Doheny used the proceeds to buy and lease vast areas of land in Southern California and Mexico and to establish several petroleum companies. But in 1923, his lucky streak was temporarily threatened when he became embroiled in the infamous Teapot Dome scandal for having “loaned” $100,000 to then-U.S. Secretary of the Interior Albert Fall in exchange for drilling rights to 32,000 acres of government land.
Bribery charges were brought and Fall was convicted, while Doheny was acquitted.
Many others who don’t have Doheny’s name recognition also aspired to cash in on the oil boom. At one point, 1,000 oil derricks sprouted from Chavez Ravine to MacArthur
Another source of fortune and failure has been Hollywood. Many silent film stars, among them matinee idol Nils Astor, were wiped out by the arrival of “talkies,” Lothrop said. Hungarian-born actress Vilma Banky, another example, didn’t speak English well enough to prosper in the post-silent era.
Then there’s the less glamorous industry of agriculture, specifically citrus growing. L.A. County was the leading agricultural county in the nation until 1950, with growers making handsome livings from citrus production.
But Florida started to give Southern California a run for its money, and with World War II over, the government was buying far fewer oranges for the military.
