Isaias W. Hellman, founding father of the University of Southern California

"Towers of Gold" by Frances Dinkelspiel, St. Martin's Press; 376 pages

Abby Pollak, San Francisco Chronicle [1, 2]

As the United States caroms between eleventh-hour bailout plans, we would do well to remember the words of Isaias Hellman (1842-1919), the remarkable financier and builder who guided the transformation of almost every fledgling California industry - from banking to transportation, oil to utilities, newspapers and education to land development and wine - into a social and economic powerhouse. As it happens, he was also a model of fiscal sobriety.

"I am not a speculator," he once told a reporter for the Los Angeles Times. "I am strictly an investor, and I have all my life paid for things as I go along. I never borrow money. It is against my principles."

Frances Dinkelspiel's carefully researched and superbly written memoir of her virtually forgotten great-great-grandfather begins with a familiar portrait: the Jewish teenager from Bavaria who arrives in Los Angeles in 1859 and goes to work in his cousin's dry-goods store on Bell's Row, a narrow street of small Jewish shopkeepers and blacksmiths. At the time, L.A. was a lawless frontier pueblo with a population of 4,000, an isolated mudflat of one-story adobe buildings with no telegraph, trains or trolleys, no roads or sewers or garbage collection. In transition from Mexican to American rule, it was largely populated by illiterate hardscrabble farmers, gamblers, prostitutes and violent criminals (the homicide rate was 20 to 30 per month).

An almost biblical onslaught of plagues followed Hellman's arrival: the flood of 1861, which ripped out thousands of grapevines by the roots and literally dissolved the town, leaving behind the rotting carcasses of tens of thousands of sheep and cattle, and a mountain of wreckage buried in mud; a smallpox epidemic; and two years of relentless sun and hot desert winds carrying swarms of grasshoppers that devastated pasturelands and livestock, bankrupting the remaining Californios.

Young Isaias Hellman worked hard, learned fast, and in the spring of 1865, at the age of 22, opened his first store, an elegant oasis that aimed to shelter his customers from the chaos outside. He put in gas-lit chandeliers, burnished wooden counters and scales to measure the prevailing currency of gold dust and nuggets. In the rear of the store, he installed his piece de resistance, a Tilden & McFarland safe, which not only radiated protection and security but also allowed him to offer his customers temporary free storage for their gold.

In no time at all, there was $200,000 in his safe. Nervous about making mistakes, but fiercely ethical and armed with an uncanny instinct for a good business deal, Isaias put this capital to good use by establishing credit for deposited amounts and letting customers draw on it when they liked. No longer obliged to borrow at exorbitant rates from private businessmen in San Francisco, farmers and merchants who wanted to expand happily entrusted him with their assets. At age 28, Hellman thus became Los Angeles' first legitimate banker.

No single individual could have accomplished this without partners, and Dinkelspiel paints fascinating portraits of the men with whom Isaias forged alliances, men who invested in one another's railroads, factories, bond deals and financial institutions. This powerful network of friends and relatives in German Jewish circles on both coasts (the "Reckendorf Aristocracy" in California, "Our Crowd" in New York), featured names like Lehman, Strauss, Levi, Haas, Fleishhacker, Zellerbach, Brandenstein, Seligman, Loeb, Dinkelspiel and Schiff.

Moreover, given the historically widespread Jewish anxiety about the dangers of high-profile success - Isaias was the victim of seemingly inexhaustible accusations that he was more Shylock than savior and that in order to destroy his competition he personally caused the gold shortage that resulted in the recessions of 1875 and 1893 - he forged extraordinarily propitious partnerships with local Yankee landed gentry: among them John Downey, the charismatic former governor of California; Harrison Gray Otis; Henry Huntington; William Mulholland; and Phoebe Hearst.

Through flood, fire and the devastating earthquake of 1906, through bank runs, assassination attempts and family betrayals, blackmail and embezzlement scandals, graft and corruption trials, Isaias emerged stronger, more creative and more resolute than ever. Unerringly prescient, he invested heavily in the Southern Pacific Railroad, which connected Los Angeles not only to San Francisco but also to the rest of the country. He bought vast amounts of land from old ranchos and by planting wheat, corn, alfalfa, pecan and orange trees, transformed them into agricultural giants. When his financial activity, especially the lucrative business of selling investment bonds, outran the capability of his own Farmers & Merchants Bank, Isaias took over the Nevada Bank, one of the richest in the country; its merger with Wells Fargo in 1904 made it one of the West's largest financial institutions.

Determined to underwrite businesses that would develop California, he bankrolled Doheney and Canfield, two young oilmen who uncovered rich oil fields under L.A.'s ubiquitous brea pits; their company became today's Unocal. In 1895, he formed a syndicate with Henry Huntington, the visionary railroad man who built the Pacific Electric Railroad with its bright red trolley cars and interurban web of track that crisscrossed the city, extending as far as Pasadena, Long Beach, Monrovia, Whittier, Glendale, Newport and San Pedro. He sold bond issues for Pacific Light and Power and for San Gabriel Electric, for Hetch Hetchy and for the California Wine Association, composed even then of more than 50 wineries, including Cucamonga, Stag's Leap and Greystone Cellars.

In 1862, he founded Los Angeles' first synagogue, which became the Wilshire Boulevard Reform Temple. He also helped start the University of Southern California, and for many years served as a regent of the University of California. By 1911, when women got the right to vote, Hellman had become an almost mythical figure, an international symbol of the breathtaking opportunities in the American West.