A history of California and an extended history of its southern coast counties, also containing biographies of well-known citizens of the past and present, Volume I, Part 50

Author: Guinn, James Miller, 1834-1918
Publication date: 1907
Publisher: Los Angeles, Cal., Historic record company
Number of Pages: 1184

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The first discoveries were made near the isthmus on the northwestern part of the island. The principal claims were located in Fourth of July valley, Cherry valley and Mineral hill.

A site for a city was located on Wilson Har- bor. Lots were staked off and Queen City promised to become the metropolis of the min- ing district of Catalina.

Numerous discoveries were made. Within . nine months from the first location notices of claims to over a hundred thousand feet of leads, lodes or veins, with their dips, spurs and angles, were recorded in the recorder's office of Los Angeles county and probably three times that number of claims were located that were either recorded in the district records on the island or were not recorded at all. Assays were made of gold and silver bearing rock, that ranged from $150 to $800 a ton. Stock com- panies were formed with capital bordering on millions-indecd, a company that had not "mil- lions in it" was not worth organizing in those days. It is needless to say that the capital stock was not paid up in full nor in part either. The

miners believed implicitly in the wealth of their mines, but they had no money to develop their claims nor could they induce capitalists to aid them. The times were out of joint for great en- terprises. Washoe stocks had flooded the lo- cal mining market and the doubtful practices of mining sharps had brought discredit on feet and stocks. Capital from abroad could not be induced to seek investment in mines on an island in the far Pacific. The nation was en- gaged in a death struggle with the Southern Confederacy and there was more money in fat government contracts than in prospect holes.

The boom collapsed unexpectedly - burst by "military despotism." There were rumors that this mining rush was a blind to conceal a plot to seize the island and make it a rendezvous for Confederate privateers, from which they could fit out and prey upon the commerce of the coast. Many of the miners were southern sym- pathizers, but whether such a plot was serious- ly contemplated is doubtful. If such was incu- bating, the government crushed it before it was hatched. A military force was placed on the island and the following order issued :

Headquarters, Santa Catalina Island, February 5th, 1864.

Special Order No. 7.

No person or persons other than owners of stock or incorporated companies' employes, will be allowed to remain on the island on or after this date ; nor will any person be allowed to land until further instructions are received from Washington. I hereby notify miners prospect- ing or other persons to leave immediately. By order.

B. R. WEST, Captain Fourth California Infantry Command- ing Post.

After such an invitation to leave the miners stood not on the order of their going-they went-those whose sympathies were with the Confederacy breathing curses against the tyrant Lincoln and his biue-coated minions. After the withdrawal of the troops, September 15, 1864, a few of the miners returned, but work was not resumed, the excitement was over-the boom had burst.

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HISTORICAL AND BIOGRAPHICAL RECORD.

THE GREAT REAL ESTATE BOOM OF 1887.

The following account of the real-estate boom of 1887 is compiled from a paper written by the author of this history and published in the Annual of the Southern California Historical Society for 1890. The writer describes what he saw and heard :

"In the history of nearly every great Ameri- can city there is an epoch which marks a turn- ing point in its civic life. The great epoch in the civic life of Los Angeles is that which is always spoken of as 'The Boom.' An event is referred to as occurring 'before the boom,' 'dur- ing the boom,' or 'after the boom.'

"By the 'boom' is meant the great real-estate bubble of 1887. Boom, in the sense we use it, is intended to express a sudden inflation of val- ues ; and on the western side of our continent it has superseded the older used and more ex- pressive word, bubble. Boom, 'to rush with violence,' is better suited to the dash, the im- petuosity and the recklessness of western spec- ulators than the more effeminate term, bubble. Boom has come into our literature to stay, how- ever unstable it may be in other places.

"Communities and nations as well are sub- ject, at times, to financial booms-periods when the mania for money-making seems to become epidemic. The South Sea Bubble; the Darien Colonization Scheme; the Mississippi Scheme of John Law; the Northern Pacific Railroad Bubble of Jay Cooke-have each been followed by financial panics and Black Fridays, but the experience of one generation is lost on the suc- ceeding. Experience as schoolmaster is too often a failure.

"There were no booms in Los Angeles under Spanish or under Mexican rule. Then all vacant lands belonged to the pueblo. If a man needed a building lot he petitioned the comisionado, or, later on, the ayuntamiento, for a grant of a lot. If he failed to use the lot it was taken from him. Under such conditions neither real-estate booms nor real-estate agents could flourish.

"After the discovery of gold in California, Los Angeles experienced its first real-estate boom. In 1849 the Ord survey .lots were put on the market and a number of them sold.

There was a great demand for houses. Build- ings framed and ready for putting together were shipped around Cape Horn from Boston, New York, London and Liverpool.

"As the gold excitement decreased the city gradually sank into a comatose state-took a Rip Van Winkle sleep for twenty years or thereabouts. Times were hard, money scarce and real-estate low. Markets were distant, transportation was high and most of the agri- cultural lands were held in large tract. These conditions began to change about 1868. The Stearns ranchos, containing about 200,000 acres, were subdivided. Settlers from the New England and northwestern states began to come in and the push and energy of these began to work a transformation in the sleepy old ciudad and the country around. Between 1868 and 1875 a number of the large ranchos were sub- divided, several colonies were promoted and new towns founded.

"From 1875 to 1881 was a period of financial depression. The Temple Workman Bank fail- ure, a succession of dry years that ruined the sheep industry, overproduction, high freight rates and a poor market for our products brought the country to the verge of bankruptcy. The building of the Southern Pacific Railroad eastward gave us a new and better market for our products in the mining regions of Arizona and New Mexico. The completion of this road in 1881 gave us a new transcontinental route and immi- grants began to arrive from the eastern states. The price of land steadily advanced and grad- ually we recovered from our financial depres- sion.

"Up till 1886 the growth of our cities and towns had kept pace with the growth and de- velopment of the surrounding country, the cry- ing need for new cities and towns had not been heard. The merits of the country had been well advertised in the eastern states. Excursion agents, real-estate dealers, and the newspapers of Southern California had depicted in glow- ing colors the salubrity of our climate, the va- riety of our production, the fertility of our soil and the immense profits to be made from the cultivation of semi-tropical fruits. The last link of the Santa Fe Railroad system was ap-

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HISTORICAL AND BIOGRAPHICAL RECORD.

proaching completion. In the spring of 1886 a rate war was precipitated between the two trans- continental lines. Tickets from the Missouri river points to Los Angeles were sold all the way from $I to $15.

"Visitors and immigrants poured in by the thousands. The country was looking its love- liest. Leaving the ice and snows of Minnesota, Iowa and Kansas, in three or four days they found themselves in a land of orange groves, green fields and flower-covered hills. In the new land they found everybody prosperous, and these visitors returned to their homes to sell their possessions and come to the promised land.

"The immediate causes that precipitated our great real-estate boom of 1887 may be briefly enumerated as follows:

"First. The completion of a competing con- tinental railroad, with its western terminus at Los Angeles, and an era of active local railroad building and railroad projecting in Southern California.

"Second. High prices for all our products, an easy money market and employment, at high wages, for all who wished it.

"Third. An immense immigration, part of it induced to come on account of a better climate and greater rewards for labor, and part of it attracted by reports of the large profits to be made by speculating in real estate.

"Lastly. The arrival among us of a horde of boomers from western cities and towns-patri- ots, many of them, who had exiled themselves from their former places of abode between two days-fellows who had left their consciences (that is, if they had any to leave) on the other side of the Rockies. These professionals had learned the tricks of their trade in the boom cities of the west when that great wave of im- migration which began moving after the close of the war was sweeping westward from the Mississippi river to the shores of the Pacific. These boomers came here not to build up the country, but to make money, honestly if they could not make it any other way. It is needless to say they made it the other way.

"During 1884-5-6 a number of lots were put on the market, but these were made mostly by subdivisions of acreage within or of additions

immediately joining the older established cities and towns. Very few new town sites had been laid off previous to 1887. As the last section of the Santa Fe Railway system approached completion the creation of new towns began, and the rapidity with which they were created was truly astonishing. During the months of March, April and May, 1887, no less than thir- teen town sites were platted on the line of this road between Los Angeles and San Bernardino and the lots thrown upon the market. Before the close of 1887, between the eastern limits of Los Angeles and San Bernardino county line, a distance by way of the Santa Fe Railroad of thirty-six miles, there were twenty-five cities and towns located, an average of one to each mile and a half of the road. Paralleling the Santa Fe on the line of the Southern Pacific Railroad, eight more towns claimed the atten- tion of lot buyers, with three more thrown in between the roads, making a grand total of thirty-six cities and towns in the San Gabriel valley. The area of some of these was quite extensive. 'No pent-up Utica contracted the powers' of their founders. The only limit to the greatness of a city was the boundary lines of the adjoining cities. The corporate limits of the city of Monrovia were eight square miles ; Pasadena, with its additions, the same; Lords- burg spread over eight hundred acres; Chicago Park numbered nearly three thousand lots, lo- cated in the wash of the San Gabriel river. The city of Azusa, with its house lots and suburban farm lots, covered an area of four thousand acres.

"The craze to secure lots in some of these towns is well exemplified in the first sale of lots in Azusa. The founding of the city of Azusa was intended to satisfy a long-felt want. The rich valley of the Azusa de Duarte had no com- mercial metropolis. Azusa city was recognized by real-estate speculators as the coming com- mercial center of trade for the valley, and they thought there was money in the first pick of lots. The lots were to be put on sale on a certain day. Through the long hours of the night previous and until nine o'clock of the day of sale a line of hungry and weary lot buyers stood in front of the office where the lots were to be sold.

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HISTORICAL AND BIOGRAPHICAL RECORD.

Number two claimed to have been offered $1,000 for his place in the line; number three sold out for $500; number fifty-four loudly pro- claimed that he would not take a cent less than a cool hundred for his chance. Number one was deaf to all offers; and through the weary hours, of the night he clung to the 'handle of the big front door,' securing at last the coveted prize-the first choice. Two hundred and eighty thousand dollars worth of lots were sold the first day. The sale continued three days. Not one in ten of the purchasers had seen the town site, not one in a hundred expected to oc- cupy the land purchased.

"Even this performance was surpassed later on in the boom. The sale of lots in a certain town was to begin Wednesday morning at the agent's office in the city. On Sunday evening a line of prospective purchasers began to form The agent, as an advertising dodge, hired a large hall for the display of his would-be in- vestors. At stated intervals the line formed, the roll was called and woe to the unfortunate who failed to answer to his number; his place in the line was forfeited and he was compelled to go down to the foot. Financially, the agent's scheme was a failure. The crowd was made up principally of impecunious speculators and tramps who had hoped to sell out their places in the line.

"An aristocratic and euphonions name was desideratum to a new-born town, although, as in the following case, it sometimes failed to boom the prospective city. An enterprising news- paper man found a piece of unoccupied land on the line of the Santa Fe Railroad-that is, a piece not occupied by a town site-and found- ed the city of Gladstone. An advertisement pro- lific in promises of the future greatness of the city, and tropical in its luxuriance of descrip- tive adjectives, proclaimed among other induce- ments to buy that a lot had been deeded to the premier of all England, and it was left to be in- ferred that the 'grand old man' might build a princely residence on his lot and become one of the attractions to draw dwellers to the new city. In olden times, when a conqueror wished to destroy a rival city, he razed it to the ground, caused the plowshare to pass over its ruins and

sowed the site with salt. The city of Gladstone was prevented from rising above the ground by the caustic criticisms of a rival newspaper man, the plowshare has passed many times over its ruins and its site has been sown in barley. The enterprising newspaper man lost his land (he held it by contract to purchase only), the surveyor who platted the town lost his pay and Gladstone lost his lot.

"Of the phantom cities of the boom, cities that have faded from mortal view, cities that have become spectres that rise out of the mists of the past to haunt the dupes who invested their money in them, of these Carlton is a good illustration. It was located on the slope of the Santa Ana mountains, east of Anaheim. It is described as commanding a beautiful view of the valley of the Santa Ana, with a glimpse of the Pacific ocean in the distance. View was its chief resource the only commodity other than town lots it had to offer. The promises of its projectors were unbounded, and the credulity of its investors seemed to be unlimited. Rail- roads were to center there. There manufac- tories were to rear their lofty chimneys, and the ever-present hotel in the course of erection was to be a palace of luxury for the tourist and a health-restoring sanitarium to the one-lunged consumptive.

"Promises were cheap and plentiful, and so were the lots. They started at $25 each for a lot twenty-five feet front ; rose to $35; jumped to $50, and choice corners changed hands all the way from $100 to $500.

"One enterprising agent sold three thousand, and many others did their best to supply a long- felt want-cheap lots. Capitalists, speculators, mechanics, merchants, day laborers, clerks and servant girls crowded and jostled one another in their eagerness to secure choice lots in the coming metropolis. Business blocks, hotels, restaurants and dwelling houses lined the streets on paper. A bank building, with a costly vault, was in course of construction, and it continued in that course to the end. A railroad was sur- veyed to the city and a few ties and rails scat- tered at intervals along the line. A number of cheap houses were built. and a population of three or four hundred congregated there at the

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HISTORICAL AND BIOGRAPHICAL RECORD.

height of the boom, and for a time managed to subsist in a semi-cannibalistic way on the dupes who came there to buy lots. The site of the city was on the mountain side above the zanja (ditch), and the water supply of the inhabitants had to be hauled up hill in water carts. The productive land lay far below in the valley, and the cities of the plain absorbed all the trade. When the excursionist and lot-buyer ceased to come, 'Picturesque Cariton,' 'Nature's Rendez- vous,' as its poetic founder styled it, was aban- doned, and now the jack-rabbit nibbles the grass in its deserted streets and the howl of the coyote and the hoot of the boding owl echo amid its ruins-that is, if there are enough ruins to make an echo.

"Of the purely paper cities of the boom, Bor- der City and Manchester are the best illustra- tions. An unprincipled speculator by the name of Simon Homberg secured two quarter-sec- tions of government land situated respectively forty and forty-three miles northeast of Los Angeles. These were the sites of Homberg's famous or rather infamous twin cities. Border City was appropriately named. It was located on the border of the Mojave desert, on the northeastern slope of the Sierra Madre mount- ains. (It was named Border City because it was located on the eastern border of Los Ange- les county.) It was most easily accessible by means of a balloon, and was as secure from hos- tile invasioni as the homes of the cliff dwellers. Its principal resource, like Carlton, was view- a view of the Mojave desert. The founder did not go to the expense of having the site sur- veyed and the lots staked off. Indeed, about the only way it could be surveyed was through a field glass. He platted it by blocks and re- corded his map. The streets were forty feet wide and the lots twenty-five feet front by one hundred deep. The quarter-section made nine- teen hundred and twenty lots, an average of twelve to the acre. Such width of street Hom- berg found to be a waste of land, and in laying out the city of Manchester he was more eco- nomical. Out of the quarter section on which that city was located he carved two thousand three hundred and four lots, or about fourteen to the acre. All streets running east and west

were 27 2-13 feet wide, and all running north and south were 34 2-7 feet wide. The lots were twenty-five feet front by ninety-five deep. Manchester was a city of greater resources than Border City. Being located higher up the mountain, it had a more extended view of the desert.

"These lots were not offered for sale in Southern California, nor to those who might in- vestigate and expose the fraud, but were ex- tensively advertised in Northern California, in Oregon, in the eastern states, and even in Eu- rope. It would seem almost incredible that Homberg could have found dupes enough to buy such property unsight, unseen; yet, judg- ing from the records, he sold about all of his four thousand lots, and his profits must have footed up in the neighborhood of $50,000. So many of his deeds were filed for record that the county recorder had a book of records con- taining three hundred and sixty pages, especial- ly prepared with printed forms, of Homberg's deeds, so that when one was filed for record, all that was necessary to engross it was to fill in the name of the purchaser and the number of the lot and block.

"The lots cost Homberg about an average of ten cents each, and were sold at all prices, from $1 up to $250 each, the prices varying ac- cording to the means or the gullibility of the purchaser. One buyer would pay $250 for a single lot; the next investor might get ten or a dozen for that sum. One enthusiast in San José invested $1,000 in a bunch of forty- eight lots, securing at one fell swoop four busi- ness blocks in the center of Border City. Near- ly every state in the Union had its victims of misplaced confidence in the future of Homberg's twin cities. Nor were his operations confined to the United States alone. England, Germany, Holland, Denmark and Sweden furnished him dupes as well.

"The magnitude of our great boom can be measured more accurately by a money standard than any other. The total of the considerations named in the instruments filed for record dur- ing the year 1887 reached the enormous sum of $98.084.162. But even this does not tell half the story. By far the larger number of lots

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HISTORICAL AND BIOGRAPHICAL RECORD

and blocks in the various tracts and town sites that were thrown on the market were sold on contract, the terms of payment being one-third or one-fourth cash, balance in installments pay- able in six, twelve or eighteen months, a deed to be given when the final payment was made. But few of the agreements were recorded. Fre- quently property bought on agreement to con- vey was resold from one to half a dozen times, and each time at an advance; yet the consider- ation named in the decd, when given, would be the sum named in the original agreement. Deeds to the great bulk of property sold on con- tract in 1887 did not go on record until the fol- lowing year, and many of them not then. Thou- sands of contracts were forfeited and never ap- peared of record. It is safe to estimate that the considerations in the real-estate transactions during 1887 in Los Angeles county alone reached $200,000,000.

"So sudden and so great an inflation of land values was perhaps never equaled in the world's history. When unimproved land in John Law's Mississippi Colony sold for 30,000 livres ($5,- 550) a square league, all Europe was amazed and historians still quote the Mississippi bubble as a marvel of inflation. To have bought a square league of land in the neighborhood of some of our cities in the booming days of 1887 would have taken an amount of money equal to the capital of the national bank of France, in the days of John Law. Unimproved lands ad- joining the city of Los Angeles sold as high as $2,500 per acre or at the rate of $14,400,000 a square league. Land that sold at $100 an acre in 1886, changed hands in 1887 at $1,500 per acre; and city lots bought in 1886 at $500 each, a year later were rated at $5,000.

"The great booms of former times measured by the money standard, dwarf into insignifi- cance when compared with ours. The capital stock of John Law's National Bank of France, with his Mississippi grants thrown in, figured up less than $15,000,000, an amount about equal to our real-estate transactions for one month ; yet, the bursting of John Law's Mississippi bub- ble very nearly bankrupted the French Empire. The relative proportions of the South Sea bub- ble of 1700, to our real estate boom are as a

soap bubble is to a mammoth balloon. The amount of capital invested in the Darien Colo- nization scheme, a scheme which bankrupted Scotland and came near plunging all Europe in- to war, was only 220,000 pounds sterling, a sum about equal to our real-estate transfers for one day.

"From a report compiled for the Los Angeles County Board of Equalization in July, 1889, I find the area included in sixty towns, all of which were laid out since January 1, 1887, estimated at 79,350 acres. The total population of these sixty towns at that time was placed at 3,350. Some of the largest of these on paper were without inhabitants. Carlton, containing 4,060 lots, was an unpeopled waste; Nadeau, 4,470 lots, had no inhabitants ; Manchester, 2,304 lots, no inhabitants; Santiago 2,110 lots, was a de- serted village. Others still contained a small remnant of their former population. Chicago Park, containing 2,289 lots, had one inhabitant, the watchman who took care of its leading ho- tel; Sunset, 2,014 lots, one inhabitant, watch- man of an expensive hotel which was in the course of construction when the boom burst. (The building was burned a few years since.)

"The sites of a majority of the boom cities of twenty years ago have been returned to acreage, the plowshare has passed over their ruins and barley grows in the deserted streets.

"The methods of advertising the attractions of the various tracts, subdivisions and town sites thrown on the market, and the devices resorted to to inveigle purchasers into investing were va- rious, often ingenious and sometimes infamous. Brass bands, street processions, free excursions and free lunches, columns of advertisements rich in description and profuse in promises that were never intended to be fulfilled, pictures of massive hotels in the course of erection, litho- graphs of colleges about to materialize, lotteries, the prizes in which were handsome residences or family hotels, railroads that began and end- ed in the imaginations of the projectors-such were a few of the many devices resorted to to attract purchasers and induce them to invest their coin.

"Few, if any, of the inhabitants to the manor born, or those of permanent residence and re-

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A history of California and an extended history of its southern coast counties, also containing biographies of well-known citizens of the past and present, Volume I, Part 50

Author: Guinn, James Miller, 1834-1918 Publication date: 1907 Publisher: Los Angeles, Cal., Historic record company Number of Pages: 1184

Author: Guinn, James Miller, 1834-1918
Publication date: 1907
Publisher: Los Angeles, Cal., Historic record company
Number of Pages: 1184