USA > California > San Francisco County > San Francisco > San Francisco, a history of the Pacific coast metropolis, Volume I > Part 52
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An investigator of the subject declares that the trades unionist of San Fran- cisco was the first to discover "the possible menace of the overwhelming numbers of workers who, through many generations of discipline in the crowded Orient, have learned to live under conditions impossible to the workers of a younger civili- zation." This is an error. Long before organized labor asserted itself, thought- ful men in California sounded warnings and formulated arguments against Chinese immigration. And while they were pointing out its evils the workingmen in the City were the best patrons of Chinese labor, which was by no means as cheap as was sometimes implied.
Chinese Regarded as a Necessary Evil
But while workingmen and others were apparently contradicting themselves they were none the less earnest in their desire to remove the necessity which they imagined circumstances imposed upon them of depending upon the assumedly in- ferior people. The well-to-do did not hesitate to employ them as domestics; they were utilized as laborers; the vegetables they produced were consumed by all classes, and they did practically the laundering for the entire community. Never- theless they were unwelcome and merely tolerated because they were thought to be indispensable for the time being, and must be put up with until a change in condi-
Stanford and Chinese Immigration
Railroad Imports Chinese Laborers
Chinese Labor not Cheap
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tions would be effected by an influx of immigrants of another sort when the anxiously expected overland railroad should be completed.
But while all sections of the community when acting in an individual capacity did not hesitate to employ Chinese labor, this attitude was completely changed when it was incumbent on it to announce and act upon a definite policy. The "sand lot" has been charged with having forced on the constitutional convention of 1879 the insertion of an article on Chinese in the organic law which made it ridiculous in the eyes of the outside world, but there was nothing novel in it except its inser- tion in the organic law. The City Hall Commission of San Francisco on May 24, 1870, in asking for proposals to grade a portion of Yerba Buena park inserted in its advertisement this statement: "The statute provides that no Chinese or Mon- golian shall be employed in doing any of the work bid or contracted for, and the failure to comply with the provision shall work a forfeiture of the contract." Thus it appears that the much ridiculed attempted discrimination against the Chinese in the constitution of 1879 was a settled policy years before the advent of Kearney; and furthermore it was adhered to tenaciously, despite the fact that it was in con- flict with a treaty of the United States. These facts should have warned com- mentators against hastily assuming that the action of the convention was ludicrous.
Although the discussion of the period preceding the decade 1870, and the laws touching Chinese were always associated with the word Mongolian, it does not ap- pear that there were others of that race here in sufficient numbers to give any con- cern. In 1863, when the legislature repealed the law of 1850, prohibiting the testimony of negroes, mulattoes and Indians in cases in which a white man was con- cerned, the new act contained an express inhibition against the testimony of "Chi- nese and Mongolians." In all the earlier descriptions of the cosmopolitan character of the population of San Francisco there is scarcely any mention of other Orientals than Chinese. In 1854 Captain Adams, of the United States navy, passed through the City on his way to Washington with the treaty which Commodore Perry had concluded with Japan, but up to that time no Japanese had appeared among the gold seekers, and if there were any here prior to 1872, when the embassy under the guidance of Charles E. de Long arrived in the City, the number was so small that little account was taken of them.
Shortly after the sand lot episode, James Bryce, in his "American Common- wealth," in discussing its attending features observed that they "belong more or less to all the newer and rougher commonwealths." To which he added: "There are several others peculiar to California-a state on which I dwell more willingly because it is in many respects the most striking in the whole Union, and has more than any other the character of a great country, capable of standing alone in the world. It has immense wealth in its fertile soil as well as in its minerals and forests. Nature is nowhere more imposing, nor her beauties more varied," and more to the same effect. In these expressions he was merely voicing the general conviction of Californians, who had an abiding faith in the great future of the state. In his last message to the legislature in 1856 Governor Bigler said: "Cali- fornia though the youngest of the Southern states, ranks at this among the first in the elements of true wealth, and the rapid progress made in the past warrants the hope that she will soon outstrip all competitors in the friendly struggle for commercial and agricultural supremacy in the markets of the world."
Forbidden Employment on Public Works
Few Japanese in Early Days
Boundless Resources of California
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No Californian regarded this as an extravagant assumption; everyone believed in the boundless resources so much talked about, and all were convinced that the future progress of the state depended on the development of its resources, espe- cially those of agriculture. This was particuarly. true of the people of San Fran- cisco, who looked forward to vast quantities of the products of the soil passing over the wharves of the port, and to an enormous expansion of trade with the outside world. But there was a keen perception of the fact that labor in abundance would be required to realize these dreams and that weakened the objection to the importa- tion of Chinese. Consciousness of their undesirability still pervaded the commu- nity, but practical considerations of the present subordinated the belief that the presence of an alien race of an unassimilable character would prove a menace and an impediment to progress. Even the workingmen of the City, if their actions may be accepted as an index of their state of mind, acquiesced in the belief that all would prosper and do well if only the resources of the soil were developed as they should be and only could be by securing labor from some source or other.
It needed further light on a subject which later became the burning one in city and country, to bring about a practical unanimity of, sentiment regarding Chinese immigration, and it can be truthfully said that in its elucidation the trades unions took but a subordinate part. The Chinese question might have endured indefinitely to plague the City, and impede the progress of the country, if the peo- ple had not awakened to the evils of monopoly, and had not borne in on them by observation the possibility of its perpetuation in California through the command of cheap Oriental labor. It was the dawning realization of what this latter con- tingency might impose upon the state, rather than the agitation of trades unionists, that must be credited with the final success of the anti Chinese crusade. Had not the people of California become convinced that cheap Chinese labor would indefi- nitely postpone the cutting up of the big land grants the unanimity of opinion which finally induced congress to adopt exclusion measures would never have been reached. It was the country and not the City that decided the matter, as will plainly be seen when the events which led to the sand lot uprising are carefully traced through the decade which followed the opening of the first overland railroad.
The Assumed Need of Chinese Labor
Fear of Land Monopoly Settles Chinese Question
CHAPTER XL
THE MINING INDUSTRY AND MINING STOCK SPECULATION
SAN FRANCISCO AND THE MINING INDUSTRY-THE COMSTOCK LODE-DISCOVERY OF SILVER ORE-FOUNDATION OF SAN FRANCISCO'S FINANCIAL STRENGTH-CREATION OF A STOCK BOARD-PRIMITIVE DEALINGS IN STOCKS-MINING STOCK SPECULATION FROWNED UPON AT FIRST-THE SPECULATIVE' FEVER TAKES HOLD-PROSPEROUS BROKERS-NEVADA STOCKS DEALT IN CHIEFLY-EXTENT OF THE MARKET-THE SUTRO TUNNEL SUGGESTED-THE ATTEMPT TO OVERREACH SUTRO PROVES UNSUC- CESSFUL-MINERS STAND BY SUTRO AGAINST THE "BANK CROWD -RELATIONS OF NEVADA AND SAN FRANCISCO-FAITH OF SAN FRANCISCANS IN MINING AS A SOURCE OF WEALTH-LEGITIMATE AND SPECULATIVE MINING.
LTHOUGH the far seeing were predicting the future agri- cultural importance of California before the close of the Fifties, the mining industry was regarded by San Fran- ciscans as the most important prop of the commerce of the port down to a much later date. The statistics of produc- SEALO OF SAN R CO tion amply supported this belief, which was only slightly disturbed by indications of a decreasing output. In 1859 the gold product was valued at $45,846,599. After that year it declined rapidly and in 1870 it had fallen to $17,458,133. But in the meantime a new factor began to operate which effectually deluded all classes by giving a fictitious importance to the waning industry.
In 1859 Henry Comstock, who had obtained some information respecting the operations several years earlier of two brothers named Grosh, in the neighborhood of Mount Davidson, rediscovered the lode which bears his name. The Grosh brothers had ascertained the argentiferous quality of the ores in 1853 but kept their discovery as secret as possible. They returned to the scene of their find in 1855 and again revisited it in 1857, when one of them met with an accident which resulted in his death. The survivor, in attempting to return to California after the accident had both of his legs frozen, and lost his life in the effort to remove them by amputation. The story runs that Comstock learned of the whereabouts of the lode from papers left by the Groshs, which enabled him to successfully re- locate the ore body.
The accounts concur in saying that Comstock and the other Washoe miners who followed him had no acquaintance with silver, and that their search was wholly for gold quartz. In June, 1859, Comstock and a companion, in following up the washouts of a ravine found outcroppings of an auriferous quartz which also con- tained a metal unknown to them. Specimens of this ore were carried to Nevada
San Francisco and the Mining Industry
Discovery of Comstock Lode
Silver Ore Not Recognized
381
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City and were there carefully assayed by J. J. Ott, who reported that the new dis- covery indicated a yield of $1,595 in gold and of $3,196 in silver. The news soon leaked out and caused great excitement and there was an immediate rush to the western part of Utah, now the state of Nevada; and Virginia City, Gold Hill, Sil- ver City and Dayton were soon converted into lively mining towns.
The rush did not affect San Francisco as some previous excitements of that character had. The new mines were not poor men's "diggings," as were the placers of California and the stories of the discoveries, although they gave accounts of ores of fabulous richness, appealed chiefly to the prospectors, a large and growing class in what had come to be known as the Golden State. The chief interest of the people of San Francisco at first centered about the idea that the new mining region would be another added source of wealth to the City as it was certain to be com- mercially tributary to the port of San Francisco. The territory was well known to San Franciscans, who realized that there was no probability of its developing along any other than mining lines, and it was reasonably assumed that the miners would be dependent upon California for agricultural products, and that their wants of other sorts would have to be satisfied by the merchants and manufacturers of San Francisco. This assumption was never disappointed by the event. Nevada for many years has been as much a part of California as if there was no political dividing line. Its development in the early days and subsequently was promoted by San Francisco capital, and the wealth of its mines was regularly poured into the City.
Men who struck it rich and made a fortune in the Comstock and other Nevada mines naturally gravitated towards San Francisco, and "the City" was the Mecca toward which the successful miners' footsteps naturally turned, as it was also the refuge of those who "went broke" in their quest of fortune; for as usual a large proportion of those who were in search of rich mines had their labor for their pains, the fickle goddess smiling only on the few.
Undoubtedly a statistical presentation of the benefits derived from the opening of these mines would show that they played an important part in the laying of the foundation of the financial edifice of San Francisco, whose strength gave the City a commercial importance more than commensurate with its population rank. But concurrently with this contribution to the wealth and importance of San Francisco by the Nevada mines, whose treasures were largely poured into the coffers of the people near the Golden Gate, there was inflicted upon the City a plague whose effects were as disastrous in many respects as the ravages of a widespread disease.
Speculation in Comstock Mines
It is probable that San Francisco might have become infected with the mania for speculation through some other medium, but it is doubtful whether any tempta- tion more alluring than that offered by the Nevada mines could have presented itself to a people who had been blind votaries of chance for nearly twenty years. In the early days the successful placer miner felt that he had "struck it rich" if he washed out a few thousands in a few days; but the possibilities of the Nevada mines opened up visions of millions; dreams which sometimes resolved themselves into realities.
At the time of the discovery of the Comstocks there were in San Francisco a number of brokers who dealt in California Navigation Company, wharf, gas, rail- road, steamboat, telegraph and water stocks and in City scrip. Their business was on a modest scale and they were not organized. Their transactions were not
Stock Board Created
Another Source of Wealth
San Francisco the Miner's Mecca
Foundation of City's Financial Strength
383
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strongly suggestive of speculation; they were more like plain buying and selling of merchandise than anything else, and there was little in them that hinted of dealings in futures. The extent of their operations can hardly be surmised for there is no record of them, but they were insignificant by comparison with those which were promptly developed when the business was systematized by the creation of a stock board.
In 1862 the directory gave the names of several brokers, some of which later became well known, among them W. Sharon, C. Sutro, George C. Hicox, Z. Holt, A. J. King, H. C. Logan, E. P. Peckham, John Perry, Jr., L. Ritter, T. C. San- born, C. H. West, L. Sloss, T. Vassault and F. H. Woods. Their offices were lo- cated on Montgomery street, principally between California and Washington, al- though some of them were found on the side streets adjacent. The most of them presented the same appearance as some of the survivals on Montgomery street, where domestic moneys are exchanged for foreign, and in the windows of which attractive displays of coins and bank notes are made, and saucers full of nuggets are exhibited. The old time broker's offices also announced that they bought and sold Mexican dollars, a trade of considerable importance in San Francisco for many years.
These brokers had begun to buy and sell shares or feet in new mining locations before the discovery of the Comstocks, but their method of operating was very primitive. On receiving an order to purchase feet or shares a broker would hunt up his fellows to learn whether they knew of anyone who wished to sell, if so there was a transaction, or the inquiry paved the way for one in the future. It was a roundabout metliod, but served very well, despite its inconvenience, until what af- terward became derisively known as the "mining stock industry" attained such proportions that the advantages of meeting together suggested themselves to the isolated brokers. This resulted in the formation on September 11, 1862, of the San Francisco Stock and Exchange Board, which was organized on that day by the election of J. B. E. Cavallier as president; John Perry, Jr., vice president; Frank- lin Lawton, secretary and H. Schmiedell, treasurer.
The first board organized was not looked upon with favor. Curiously enough, considering San Francisco's earlier experience, there was a pronounced disposition to condemn speculation, and a merchant who showed any inclination to buy or sell the new mining securities was regarded with disfavor, and the chances were against his receiving accommodations at his bank if the banker knew of his weakness, and wholesale merchants were disinclined to extend credit to a retailer if he was sus- pected of speculative tendencies. The opinion of the conservative banker and mer- chant was evidently shared by the people generally, as may be inferred from the promptitude they showed in fastening the title of "The Forty Thieves" on the board which, unhappily for its reputation, consisted of exactly forty members.
Despite the conservatism of merchants and bankers the Stock and Exchange Board waxed in strength and the business became so attractive that a rival organ- ization, known as the San Francisco Board of Brokers was started, beginning its existence with 80 members on April 15, 1863, and three months later the Pacific Board of Brokers came into existence with a membership of forty. Thus in less than a year there were one hundred and sixty brokers at work in San Francisco catering for the speculatively inclined, with three separate organizations. This latter fact is accounted for by the feeling that the exclusiveness of the first board
Early Stock Brokers
Primitive Methods of Selling
Speculation Viewed with Distrust
Prejudice Speedily Overcome
384
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had resulted in making the cost of seats too high. The formation of rival boards was avowedly for the purpose of bringing down the cost of doing a brokerage business, and it was contended with an air of sincerity that the rivalry was in the interest of the public.
Although the members of the first board formed soon became past masters in their chosen occupation, only two of the original forty had had any previous expe- rience. It was not long, however, before they had their associates inducted into the mysterious art of parting the community from its earnings. On October 15, 1862, a little more than a month after the formation of the San Francisco Stock and Exchange Board the "Bulletin" published a record of its transactions. The innovation was a concession to a growing demand for information. The example of the evening paper was slowly and in some cases reluctantly followed by the other newspapers, but before the close of the year they were all printing the list of purchases and sales made on the board and no information they published was half so eagerly sought after as that which these tables furnished.
The first record of the San Francisco Stock and Exchange Board is that of the purchase of five shares of Wide West and one of Real del Monte by P. C. Hyman from P. B. Cornwall. Before the close of the year 1862 the newspapers published daily long lists of sales, and announcements of the formation of new companies oc- cupied an equal space in their columns. Perhaps the brokers were able to keep track of the new business with which they were flooded, but the community at large was hopelessly at sea concerning the character of the new companies daily offering themselves, but their ignorance in no wise interfered with the zest with which they entered into the game, which soon became a mere gamble in which the dice were nearly always loaded.
The community may have suffered but the brokers did not. The first board which had started with forty members had enlarged its membership to eighty. The original fee had been increased and seats were selling at $10,000 and $12,000, hence the rival institutions. As already related when greenbacks began to depreciate the San Francisco Stock and Exchange Board dealt in them largely. The orders ranged well up into the thousands and the scenes at times were as lively as those on the New York Gold Board. Much of the trading in currency was purely speculative, but there was a large volume of what was regarded as strictly legiti- mate business in the shape of purchases of the depreciated government money by merchants, which they used to meet their Eastern obligations. The quotations usu- ally gave the selling price of the currency and not as in New York the premium on gold. During 1864, when the lowest point was touched United States currency sold at 35 cents on the San Francisco stock boards.
Dealings in Nevada Stocks
It is noteworthy that during most of the time when the speculation in Nevada stocks was rife comparatively little attention was paid to California mining stocks. There were numerous gold mines in the state which were being profitably worked by their owners, who showed no inclination to put them on the market, preferring to hold them as investments. The facts concerning the really paying properties were tolerably well known to the speculating public, and those mines listed which were not supported by an established reputation were distrusted and neglected. This suspicion did not extend to the Comstocks, the glamour of whose richness was such that every vein in the whole region was believed by the credulous to have been touched with a Midas wand; and those who did not believe were equally satisfied
Publication of Stock Transactions
The Speculation Fever
Prosperous Brokers
-
SAN FRANCISCO IN 1865, LOOKING SOUTH FROM NOB HILL
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SAN FRANCISCO
to buy because an actively manipulated "wildact" was worth as much for specula- tive purposes as a real mine.
While the speculation of the Sixties was in no wise comparable with that which ensued when the big bonanza was uncovered in the early Seventies it was sufficiently active, especially during the later years of the first named decade to engross the attention of a large part of the community. In 1867 the business of the brokers had become so extensive that regular meetings were held by the San Francisco Stock and Exchange Board at 11 A. M. and 3 P. M., with informal sessions from 10:15 to 10:45 A. M. The business done, however, was not always on an ascend- ing market. Hale & Norcross, which had sold as high as $3,600 was down to $650 on October 26, 1867. There were still transactions of considerable volume, the sales in October, 1867, aggregating $8,051,329, but they fell off heavily in the en- suing month, shrinking to $5,351,733.
An astonishing feature of the mining stock speculation of this period, and later during the Seventies, was the apparent utter disregard by the people who gambled of the transparent rigging of the market by unscrupulous manipulators. The most of those who entered the game displayed all the characteristics of the tyro who sits down to play with professional gamesters. They had abundant evidence that the cards were marked, but that did not discourage them. When there were strug- gles for control of mines, as was frequently the case, they did not hesitate to try their luck and clung, as it were, to the skirts of the manipulators, often with disas- trous consequences.
In 1868 there was such a contest for control. A brief description of the vary- ing fortunes of the contestants will illustrate the fierceness of the struggles which were constantly occurring at the time. In the early part of the year what in the parlance of the day was known as "the bank crowd," a group connected with the Bank of California attempted to wrest the control of Hale and Norcross from Charles L. Low. There was a continued buying of the stock which drove it up to $7,100 from $2,925, and a number were caught short. Those involved in the corner sought to secure terms by offering $8,000 to $10,000 a front foot, but protested that the extravagant demands made upon them were outrageous, but the bank crowd showed no mercy. Then the device of suspending Hale and Norcross from the list was resorted to on the ground that the stock was being withheld for election purposes, but this failed to interrupt the progress of the scheme for obtain- ing control. The last recorded transaction in Hale and Norcross on the board in this particular deal was $8,000, but $12,000 was being freely paid on the street, and in an open board, having its office in the Merchants Exchange, the announce- ment was made by a member that he was authorized to bid $100,000 for ten feet of the mine. The struggle began on the 8th of February and the election occurred on March 12, 1868. On the latter day Hale and Norcross could be bought for $2,900. The bank crowd had won its fight, and had elected as trustees Joseph Barron, Thomas Bell, Alvinza Hayward, George L. Mann, M. Morgenthou, Thomas Sunderland and Joseph Wallace.
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