USA > California > San Francisco County > San Francisco > San Francisco, a history of the Pacific coast metropolis, Volume I > Part 53
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One of the boldest conceptions affecting the Nevada mining industry was formed in the early Sixties by a man whose name after 1864 frequently appears in the chronicles of the City. Adolph Sutro was born in Prussia in 1830 and in 1850 emigrated to America, arriving in San Francisco in that year, where he engaged in selling tobacco and cigars. In 1859 he joined the rush to the Washoe country, and Vol. 1-25
Extent of the Speculative Market
Rigging the Market
Contests for Control of Mines
Sutro Suggests a Tunnel
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in 1861 built a quartz mill at Carson river. While engaged in this business Sutro conceived the idea of piercing the mountain side with a tunnel so constructed that it would drain all the mines of the Comstock lode, and incidentally supply the ventilation necessary to enable the miners to successfully prosecute the work of extracting the valuable ores.
Sotro's Suggestion Welcomed
Despite the boldness of the suggestion its feasibility was not questioned, and the prospect of the enterprise being carried out was hailed with satisfaction. A company was formed in 1864 for the purpose of constructing the tunnel, and the legislature of Nevada granted the right of way, stipulating that it should be fin- ished in eight years. This was followed by an arrangement with the various mines on the lode by which they agreed to pay a toll of $2 a ton on all the ores extracted by them when the tunnel should reach the stage of providing the promised benefits. The amount demanded for the service to be performed was insignificant by com- parison with that which it would have cost the mining companies under the most favorable circumstances to unwater, remove waste, and ventilate their properties by machinery; and in some cases it was foreseen by the owners that the tunnel would make practicable the prosecution or continuance of operations which would be impossible without its aid.
Attempt to Overreach Sutro
In its inception Sutro's project was hailed by everybody connected with mining enterprises as a great benefaction. The men foremost in the undertakings of the coterie connected with the Bank of California in San Francisco gave him their support and helped him to get through congress an act which granted the tunnel project right of way through the public land crossed by it, and the right to pur- chase not exceeding two sections at the mouth of the tunnel, and at $5 per acre any public mineral land which it might cut, and within 2,000 feet of it except the Comstock mines as then known. There was also a provision in the act that fixed the rate which might be exacted at the amount agreed upon. With his interests thus well secured Sutro started in to raise the necessary funds to prosecute the undertaking when the men who at the outset had supported him suddenly began to oppose his efforts, their object being to obtain control. But they had mistaken their man. They had imagined Sutro to be somewhat visionary and pliable, and thought he would be content to accept a subordinate role with comparatively modest rewards. But he was not made of such stuff. The attempt to overreach and down him was so flagrant he had no difficulty in arraying public sentiment, more particu- larly that of the working miners, on his side. He also enlisted a portion of the
press in his effort to maintain his rights, and altogether made it very lively for what he called "the bank crowd." On the lecture platform, in communications to
the newspapers, and in every conceivable way he made the plea that, while he was attempting to benefit the mining industry and Nevada, the Bank of California was doing everything to obstruct the progress of the tunnel and destroy the enterprise.
The result of his campaign was remarkable. It had the effect of rallying to his aid the miners, who purchased some $50,000 of the tunnel stock, enough to pro- vide him with sufficient funds to make a start. On the 19th of October, 1869, Sutro began operating and as the work on the tunnel progressed the difficulty of obtaining funds for the prosecution of the enterprise lessened, despite the continued hostility of the men whose efforts to obtain control he had so successfully balked. They continued their obstructive tactics until forced by circumstances to yield. In July, 1878. the tunnel had broken into the Savage shaft, but no agreement had yet been
Miner's Come to Sotro's Aid
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reached with the operators of the mines, who remained recalcitrant until 1879, when one of the pumps of the Savage property broke and in order to save the mine the owners turned the water into the tunnel.
Sutro's men were taken by surprise and had to flee from the tunnel, but they returned and under his direction a water tight bulkhead was constructed which ef- fectually dammed the flow and the mines were threatened with destruction. This brought matters to a climax. The owners of the mines had to yield. Additional laborers were put on the work, the drain was reopened and widened, and soon mil- lions of gallons were daily flowing through the tunnel and the Comstocks were kept comparatively free of water and great savings were effected. The cost of the tunnel with its laterals was about five million dollars. In order to secure this amount Sutro had to part with the controlling interest, but he retained enough of the stock to make him a rich man when he sold it and retired to San Francisco.
The story of the construction of the Sutro tunnel and the struggle for its con- trol is as much a part of the history of San Francisco as though the mines it un- watered were within the boundaries of the City. The originator of the enterprise, and those who were interested in its success directly or indirectly, were all San Franciscans or hoped to enjoy the privilege of residing there at some future time. Those who were fortunate enough to obtain large rewards for their exertions as a rule found their way to the City and made it their home when they ceased active operations. The men engaged in merchandizing in Nevada made frequent visits to the metropolis, and they brought their wives with them to have a good time while they were engaged in purchasing goods. The relations of the people of Nevada generally were as intimate and as friendly as those of any part of Califor- nia. Political boundaries even did not count, for it became the custom of San Francisco to provide the timber out of which United States senators and represen- tatives in congress were constructed after October 31, 1864, when Nevada was admitted to the Union.
The experience of Sutro has still another interest as it affords an illustration of the influence, not always beneficial, which mining success had in shaping the destinies of San Francisco. It was a fact not generally recognized at the time, that the acquisition of wealth gained in the pursuit of mining, or that derived from mining speculation, was not as freely used in the development of the varied re- sources of the state as if it had been amassed by the slower processes of the regions where the precious metals are not found. Men willing to plunge into enterprises with the attending uncertainties of mining, or who had gambled in stocks success- fully were as a rule distrustful of undertakings with which they were unfamiliar. As a result their investments were confined to a narrow field, and they failed to give encouragement to industries which, even with the drawbacks attendant upon a restricted market, might have been sufficiently developed to accelerate the progress of the state and promote its prosperity. This conservatism affords an explanation of the endurance of the opinion throughout the Sixties and even later, that San Francisco's interests were peculiarly identified with those of the mines. They were in fact, but the neglected opportunities, had they been seized by the cautious, suc- cessful miner, and the reckless but fortunate speculator, would have produced con- ditions which might have effectually averted the protracted depression which followed the advent of the overland railroad. The feverish speculation of the earlier Seven-
Mine Owners Surrender to Sutro
Relations of Nevada and San Fraucisco
San Francisco and the Mining Industry
388
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ties, which those just described only faintly foreshadowed, postponed this trouble for a while, but it came later and with added intensity.
San Francisco's growth during the sixty decade of the nineteenth century was tolerably constant; the population increased during the ten years from 56,802 in 1860 to 149,473 in 1870 and its assessable wealth in the last named year was $114,759,510, but expansion, as the events of the succeeding decade demonstrated, was not as healthy as it would have been had the development of industries been more symmetrical. But that was seemingly impossible while the mining regions continued to pour their treasure into the City. The placers of California were by no means exhausted, and the quartz mines of this and the neighboring territory were yielding in such a fashion as to suggest illimitable future possibilities. The Comstocks were turning out large quantities of bullion, and there was a prospect of new mines being found whose yield would more than offset the rapidly declining output of the placers. These expectations were not entirely visionary, for they had a seeming justification in such discoveries as that made at White Pine, Nevada, where argentiferous chlorides were found in 1868. There was the usual rush to the new camp; the merchants prospered selling outfits and merchandise to people in the new settlements, more bullion flowed into San Francisco and the speculative disposition was intensified.
There were of course some who regarded the situation with distrust, but the community generally did not foresee trouble, or look forward with hope to the day when the mining interest would be subordinated to industries less under the influ- ence of chance. Queerly enough when the mines of Nevada and California finally ceased to be an object of overwhelming interest to San Franciscans, for a time they attached too little importance to mining as an adjunct of the scheme of general industrial development. The people of the City had become so accustomed to iden- tifying the industry with speculation, that when stocks ceased to have any attrac- tions they refused to think much about mines, but their development continued without interruption. The annual output of the precious metals in California had not greatly decreased since 1870, but the steady production of about sixteen or seventeen millions of gold annually did not appeal to the imagination of a highly impressionable people. Many of those who passed through the exciting events of the closing years of the Sixties, and the early Seventies, thought of the period as the culmination of an era of prosperity. But there were careful observers who discov- ered beneath the surface the signs of an impending trouble due to the indifference to general development; which they recognized as the necessary outcome of a too eager pursuit of an industry which has advanced more steadily, and upon much broader lines without the adventitious aid of speculation, than it did when nearly everyone believed that it was the mainstay of San Francisco prosperity.
Steady Growth During the Sixties
Legitimate and Speculative Mining
BROADWAY WHARF IN 1865-ONE OF THE BUSIEST WHARVES IN THE CITY AT THAT TIME
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CHAPTER XLI
COMMERCE, MANUFACTURES AND FINANCES OF SAN FRANCISCO
SAN FRANCISCANS VERY CONSERVATIVE-OPPOSITION TO CREATING A CLEARING HOUSE -OVERSHADOWING FINANCIAL IMPORTANCE OF THE CITY-EXPANSION OF SHIPPING INDUSTRY-CHANGE IN THE CHARACTER OF IMPORTS-SAN FRANCISCO A DISTRIB- UTING CENTER-FISHERIES OF THE PACIFIC COAST-THE COD FISH INDUSTRY- THE ACQUISITION OF ALASKA-SEWARD'S GOOD BARGAIN-VALUE OF ALASKAN TRADE -TRADE WITH THE HAWAIIAN ISLANDS-COMMUNICATION WITH HAWAII-RECI- PROCITY TREATY WITH THE ISLANDS-SAN FRANCISCO'S ATTITUDE TOWARD RECI- PROCITY-PLANS FOR ANNEXATION-GROWING TRADE WITH THE ISLANDS-ORIENTAL TRADE-FIRST SHIP OF THE PACIFIC MAIL TO THE ORIENT-SAN FRANCISCO'S COAST- WISE TRADE-RAPID GROWTH OF WHEAT EXPORTS-DIVERSIFICATION OF AGRICUL- TURE-WOOL INDUSTRY-WOOLEN AND OTHER MANUFACTURING INDUSTRIES-THE FUR SEAL CONTRACT-END OF CALIFORNIA'S ISOLATION.
AN FRANCISCO has at times incurred the censure of East- ern critics, and of the conservatively inclined of its own S citizens for being too prone to resort to innovations. Occa- sionally it has earned this reputation but it is not open to the imputation that it is always disposed to act hastily SEAL OF SA and without due regard for established usages. It has been shown that owing to a prejudice against wildcat currency the convention which framed the first organic law of the state took precautions which made it impossible for banks to issue paper money, and that the people be- came so habituated to the use of the precious metals that they absolutely refused to abandon what they called "sound money" when patriotism, interest and con- venience dictated its abandonment in favor of the depreciating money of the fed- eral government.
The steadfast adherence to this determination, no matter whether it was mis- taken or wise, may fairly be characterized as devotion to principle, for it is un- doubtedly true that while many saw opportunities for profit through the difference in exchange, the majority of the people were profoundly convinced that their course was for the general good, and that their acceptance of the greenback currency would have had attached to it a taint of dishonesty, because, unlike the people of the East they were not forced to use what they regarded as an unsafe medium of exchange. But while this sentiment explains in part the failure of San Francisco to favor harmonizing its currency with that of the rest of the Union nothing but extreme conservatism can account for the indifference displayed by the financial
Not Prone to Innovation
Adherence to a Principle
389
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SAN FRANCISCO
and other business interests of the City in the matter of improving its banking methods, which were hopelessly destitute of system.
The institution known as the clearing house was established as early as October, 1853, in New York, but it was a quarter of a century later before San Francisco provided itself with such an establishment. The indisposition to adopt this great convenience was based on the narrow suspicion that banks might profit at each other's expense if their checks were cleared or settled at a common center. The fear that a rival would gain a knowledge of the volume of another bank's business, or who its customers were was paramount, and it operated for years to keep the people from that acquaintance with the transactions of its fiduciary institutions which it has been found is absolutely necessary to safeguard the interests of depos- itors and of the community generally.
Clearing House Established in 1876
It was not until 1876 that a clearing house was established in San Francisco, and it is therefore difficult to trace with any degree of exactness the fluctuations of business during the earlier years. The market reports in the newspapers, and the editorial comment on commercial subjects during the Sixties are largely infer- ential. The statistics employed are fragmentary, and it would be extremely diffi- cult if not impossible to construct from them a statement of conditions except one framed in general terms.
Overshadow- Influence of San Francisco
In an effort to determine trade conditions in the City such data as the state at large furnishes are valuable and almost indispensable, for during the Sixties, and many years afterward, San Francisco was the center of all the commercial and financial activity of California, and it may be more truly said of it at that time that it was "the State" than it is now to say that Paris is France. Up to the year 1884 there was not a single incorporated savings bank in any part of California, outside of San Francisco, and the condition so far as other banks were concerned was not much better. The disposition of the machinery of finance marked the paramountcy of San Francisco so emphatically that no one ever thought of questioning it any more than they would have questioned the meaning of the person who spoke of "the City."
Stimulus of Rivalry Needed
There was only one city on the Pacific coast at the time, a fact not altogether fortunate for San Francisco as its people learned later when under the stimulus of rivalry they put forth exertions to promote the development of resources which they had neglected while they were under the hallucination that mining was California's most important industry, and that its prosecution would always suffice to set in motion the activities which would make the port the greatest on the Pacific and one of the most important in the world. That this narrow view was adopted, and that it gained strength during the period when mining stock speculation was rife is perceptible in the tone of the press; and it can be traced also in the gradual neglect of the manufacturing industries, which had attained some importance be- fore the completion of the first overland railroad, despite the fact that an extraor- dinary impulse was given to importation by the advantage which the ability to buy goods at the East in depreciated government money afforded to merchants.
Expansion of Shipping Industry
We find the evidence of this expanding import trade in the statistics of ocean tonnage arrivals. In 1861 the total tonnage of foreign vessels entering the port of San Francisco was 205,600 tons, of which 83,300 were steam. In 1869 the steam tonnage had increased to 205,900 tons and the total entered aggregated 413,900 tons. The domestic tonnage showed a like increase, the steam rising from
Clearing House Opposed
391
SAN FRANCISCO
40,000 tons entered in 1861 to 119,200 tons, and steam and sail combined rose from 389,000 to 757,100 tons. These figures show a doubling of the shipping business of the port in the eight years prior to and including the year of the opening of the railroad, the entrances of all kinds being 1,171,000 tons in 1869 and 594,600 in 1861. This traffic was of a very miscellaneous character. It embraced an active intercourse with the Pacific coast ports of the United States to the north and south of San Francisco, a considerable over sea trade and a large business by way of the isthmus and vessels sailing around the Horn between San Francisco and Eastern ports. A fairly good idea of the importance of the trade may be gained from the statement that freight money to the amount of $8,109,600 was paid on inward car- goes by the merchants of San Francisco in 1864, of which $3,747,700 was on shipments from domestic and Atlantic ports; $2,380,000 on freights by the Panama steamers, and $1,981,000 on freight received by sailing vessels in the foreign trade. The amounts paid for like service during 1867, 1868 and 1869 were, respectively, $6,800,000, $8,064,000 and $8,949,000.
An inspection of the manifests of the vessels which brought the vast quantity of freight for which these large sums were expended discloses many remarkable changes in the character of the imports during the Sixties. In the 273,600 tons of goods imported in 1869 we find enumerated a great variety of articles, many of which, had the manufacturing spirit been as active as that which displayed itself in the development of the mineral industry, would not have appeared in the list. The press frequently called attention to the absurdity of a state like California, with an abundance of raw material at hand, drawing on the outside world for its supplies of such simple domestic articles as soap and candles, and deprecated the folly of dependence upon the East for furniture and other things which they assumed could be profitably produced in San Francisco if the necessary enterprise to engage in manufacturing had existed.
While the records furnish ample evidence that the desirability of establishing manufacturing industries was not lost sight of during the Sixties, and that relatively more progress was made in that decade than during the Seventies, there are strong indications of the growth of the belief that the future of San Francisco would de- pend upon its importance as a distributing center. That this idea had a firm hold upon an important section of the community may be inferred from the great prom- inence given to arguments urging the importance of improving the harbor facilities, which were usually accompanied with gentle reminders that it is also desirable to produce as well as distribute, and occasionally by a rebuke directed against what was recognized as a growing disposition to let things shape themselves. How strongly predisposed to attach undue importance to the comparatively insignificant factor of making the port a sort of supply station, the people of the two first decades were, can be inferred from the general attitude toward the fisheries of the coast. The importance of the Pacific whaling industry had long been realized. Its pro- motion had much to do with shaping the policy which finally culminated in the occupation of California. Presidents dwelt upon it in messages and pointed out the desirability of obtaining San Francisco as a port in which the whalers might safely winter; and after the annexation of California and its erection into a state of the Union successive governors discussed ways and means of inducing the whalers who persisted in harboring in Honolulu, to give San Francisco the preference.
Change in Character of Imports
San Francisco as a Distributing Center
392
SAN FRANCISCO
Pacific Coast Fisheries
The Alaskan Cod Fisheries
Through all their recommendations ran the idea that great advantages would be derived from selling "outfits" to the whalers, but very rarely was there a sug- gestion that the fisheries might prove a more direct source of wealth to the port. The endeavor to secure this class of patronage began to meet with some degree of success in the opening years of the Sixties, but the depredations of the "Shenandoah" and "Alabama" soon rendered Arctic whaling an extra hazardous occupation and the business of outfitting did not prosper greatly. In 1865 thirty-four whalers, whose combined tonnage was 11,000, visited the port, the largest number to call in any one year; but after that date there was a falling off, owing as much to the changes in the methods of pursuing the industry as to any other cause. In the ensuing decade San Francisco wrested from New Bedford the glory of being the principal seat of the whaling industry, but the victory was not due so much to the superior enterprise of San Franciscans as to the introduction of steam schooners, the use of which made San Francisco a desirable base of operations. During the Sixties something like an appreciation of the enormous value of the Pacific coast fisheries began to manifest itself in San Francisco. In 1865 the crew of a brig returning from a voyage to the Amoor while becalmed off Saghalien island amused themselves fishing and were greatly surprised to haul in some fine specimens of cod. Up to that time all the codfish consumed in California had been imported from the Atlantic coast. The manifests of arriving vessels show that it was a very popular article of diet, no miscellaneous cargo failing to contain large quanti- ties of the salted and dried fish. The menus of restaurants and hotels of San Francisco and the interior of the state also furnish evidence of the esteem in which it was held and in the mining camps it always ranked as a "standby." Conse- quently when the "Towanda" entered the port bringing a portion of the catch of the crew great interest was excited and presently a number of small craft were dispatched to the fishing grounds.
The first year of the exploitation of this industry resulted in a catch of 587 tons of Alaskan cod, and this success prompted the sending out of a larger fleet in the ensuing season, when the catch was 902 tons. Probably the people of San Francisco might have awakened to a full realization of the importance of the fisher- ies in the Sixties had not the excitement of the mining stock market so completely absorbed their attention. It was, however, by no means wholly neglected, for the catches continued to increase, but at no time did it make any strong appeal to the imagination of business men. Occasionally a hotel bill of fare ventured to proclaim the fact that Alaskan cod was being served, and the retail grocers were with diffi- culty persuaded that the Pacific product was as good as that taken from the New Foundland banks, but generally speaking, the average San Franciscan was as ig- norant of the possibilities of the fisheries which have since attained such impor- tance as he was of the doings of the Grand Llama.
But the beginnings of the industry were a liberal education to a few and pre- pared them to receive with satisfaction the announcement of the consummation of the treaty with Russia, by which the United States acquired possession of Alaska. That treaty, negotiated by William H. Seward, was proclaimed on June 20, 1867. The dissemination of the news of the purchase called forth an extraordinary amount of uninformed comment, the newly purchased territory being regarded by most of the American people as a vast iceberg, or at least as a country with an impossible climate and destitute of resources. This ignorance was not wholly confined to the
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