USA > California > San Francisco County > San Francisco > San Francisco, a history of the Pacific coast metropolis, Volume II > Part 26
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Bakersfield Oil Cases
One other case of importance which came before the commission in 1901 rounds out the story of the inglorious and often shameful doings of the commission from which so much was expected. In 1901 the condition of the oil market was such that relief had to be afforded producers or disastrous consequences must follow. In April of that year what was called the Bakersfield oil case was brought before the commission and was, after a hearing, settled by compromise, the attorneys of the litigants signing an agreement. The railroads involved were the Southern Pacific, the Atchison, Topeka and Santa Fe, and the San Joaquin valley railroad. It was afterward held by the attorney general of the state that the agreement fixed the rate, an opinion which might have been important in the event of higher prices for oil creating a condition which would have enabled the railroads to put into practice the rule of "all the traffic will bear."
Merchants Show Signs of Revolt
The merchants of San Francisco had submitted, sometimes with good and oftener with bad grace, to the exactions of the Central and Southern Pacific for more than twenty-one years without revolting against their masters, but in 1891 conditions became intolerable and there were signs of rebellion. The railroad treated them with base ingratitude, for during the agitation which resulted in the adoption of the Con- stitution of 1879 the sympathies of the merchants had been with the corporation and against the people, and in the various disputes touching the regulation of rates within the state they had maintained an aloofness which more than anything else contributed to the defiant attitude of the Railroad Commission. In 1891, however, the arrogance of the corporation became unbearable. Not satisfied with domi- nating and controlling land traffic the railroad determined to interfere with the use of the sea.
For some time merchants had found that they could ship domestically produced goods from New York to Europe and reship them from the latter country to San Francisco and save money by the transaction. They adopted this course because the regular clipper lines sailing out of New York were operated under an agree- ment with the transcontinental railroads, as were also the steamers of the Pacific Mail Steamship Company, and the rates had been put up to a figure which made ocean competition a mere farce. The circuitous method of shipping to San Fran- cisco via Europe, despite the necessity involved of crossing the Atlantic twice and rounding the Horn effected a saving of $4 a ton. The railroad, however, was disinclined to submit to the loss of patronage, and set in motion the superserviceable Washington authorities who denominated the roundabout traffic an evasion of the coastwise and navigation laws of the United States, and ordered the confiscation of the cargoes. This drove the merchants who had resorted to the circuitous route into litigation which ultimately resulted in their favor. The feeling aroused
Round About Methods of Shipping
653
SAN FRANCISCO
by this insolent action of the railroad was intense, and for a time it seemed to the dispassionate observer that a crusade had begun which would result in curbing the pretensions of the corporation by making use of the facilities which the finest har- bor on the Pacific coast, and the open sea afforded, to effectively regulate freights.
The first result was the establishment of a line of steamers by the Johnson Locke Mercantile Company known as the Atlantic and Pacific, which began ope- rating in the summer of 1891. It soon, however, became evident to the merchants that the advantage gained by employing ocean facilities were nullified by the exces- sive rates charged by the railroad to carry produce to and from the harbor. The through rate might be lowered, and as a matter of fact was, but the chronicler of the interesting episode remarked "San Francisco still stagnated. The number of stores and tenements to rent continually increased; realty of all sorts produced continually less income or failed to produce any and values of property sank." There was no exaggeration in this statement, and in contemplating the situation the community, under the inspiration of the merchants, fell into line, and supported a movement, which, had it been carried out as originally designed must have afforded the desired relief. It will be seen in the sequel, however, that the primary pur- pose was entirely lost sight of, and that a popular uprising was used to rivet the shackles of railroad domination more firmly on the people of San Francisco.
Naturally as the movement gained force appeals were made to the Railroad Commission for relief, but that body, true to the traditions it had created, showed itself incapable, even if it had been desirous of assisting the merchants in their efforts. It was found that the commissioners lacked the data to formulate a tariff, and that none of its members had any familiarity with the business of rate making. A condition precedent to making a successful fight was an intelligent showing of the situation and this could only be made by creating an extra official body with a competent manager, acquainted with the intricacies of rate schedules and the needs of the community. To attain these ends it was resolved to form a traffic association. A meeting of merchants was held in the offices of A. J. Lusk & Co., over which Isador Jacobs presided, and invitations were sent out for a more rep- resentative gathering which was called for October 19, 1891. This was largely attended. James B. Stetson was called to the chair, and after stating the purpose of the proposed organization a resolution was adopted in which it was declared that the object of the new association would be to forward "the construction of canals, competitive systems of railroads, steamship lines, and for any other pur- pose that might tend to develop the interests of the state, and to seek new fields for our merchants to distribute their goods, products and manufactures." The matter of canals especially interested the gathering, which by resolution caused the creation of a permanent committee, of which John T. Doyle was appointed chairman, to encourage the construction of a waterway across Nicaragua.
A few days later, on October 24, the executive committee appointed at the general meeting elected its officers. James B. Stetson was chosen president and Thomas J. Haynes, secretary. The committee was composed as follows: F. L. Castle, J. C. Siegfried, F. W. Van Sicklen, Robert Watt, B. F. Dunham, Isaac Upham, Isador Jacobs, Eugene B. Beck, A. W. Porter, William Haas, J. H. Wise, A. J. Marcus, A. S. Hallidie, Barry Baldwin, J. B. Stetson, S. N. Griffith, C. T. Settle, J. A. Hodges and W. H. Wood. Joseph S. Leeds, a railroad man of large
A Good Plan that Failed
Traffic Association Formed
Traffic Manager Appointed
654
SAN FRANCISCO
experience was engaged as traffic manager and entered upon his duties December 1, 1891. Although the movement was designed to afford relief from oppressive rates to the large district tributary to San Francisco, very little sympathy was extended by the interior which showed no signs of a desire to cooperate. This was all the more singular as the arguments of the executive committee and subsequently of Mr. Leeds were chiefly directed against the evil results flowing from the rail- road's policy of repressing domestic production in order to promote its through business.
Transconti- Dental Asso- ciation and Ocean Competition
Perhaps the fact that the association appeared to lay more stress on the de- sirability of bringing down through rates may have had something to do with the apathetic attitude of the interior. The first active step taken in carrying out the Traffic Association's programme was to encourage a competing clipper line. The effect of its establishment was to render the Pacific Mail traffic unprofitable, and this caused the withdrawal of the subsidy extended by the Transcontinental As- sociation to that corporation. The Transcontinental Association at that time em- braced the Atchison, Topeka and Santa Fe, the Atlantic and Pacific, the Burling- ton and Missouri, Canadian Pacific, Chicago and Rock Island, Colorado Midland, Denver and Rio Grande, Great Northern, Missouri Pacific, Northern Pacific, Oregon and California, Rio Grande Western, Southern California, Southern Pa- cific (its Atlantic and Pacific systems), St. Louis and San Francisco, Texas and Pacific and the Union Pacific system. All these railroads were banded together for the common purpose, so far as the transcontinental organization was concerned, of nullifying the advantages of sea competition which object was successfully ac- complished until the Traffic Association by pledging the support of its membership to the competing clipper line brought about a change.
North American Navigation Company Formed
In his first report made in 1892 Leeds, after felicitating the members on what had been accomplished, added: "The State of California needs to have cheap com- munication within itself. The annual produce of the state should have an easy market. Transportation between local points should be the minimum. The harbors of the state should be maintained open and free to commerce; unnecessary re- strictions and tolls on trade should be abolished." He also added a recommendation that the Railroad Commission be abolished, as it was a useless body. Although stress was laid on the necessity of cheap communication within the state no active steps were taken in 1892 to achieve that result, the energies of the association being solely directed to the lessening of through rates. In that year the association voted to send Leeds and Frank S. Johnson to negotiate with the Panama Railroad Company for terms to move freight across the isthmus, and the outcome was the establishment of a line of steamers known as the North American Navigation Company, which, however, was not very long lived, owing to the fatal facility with which the railroad was able to detach its patronage by offering special rates to weak kneed members of the association.
The monetary stringency of 1893 made itself felt on the coast, and particularly in San Francisco where business was almost at a standstill. As is usual in times of depression, discontent manifested itself and a crusade was started against the railroad which equalled in bitterness that which was followed by the adoption of the Constitution of 1879. An agitation was started for the removal of the Railroad Commission which proved unsuccessful. The patronage of the North American
Lower Local Rates Needed
POSTOFFICE
UNITED STATES MINT
655
SAN FRANCISCO
Navigation Company dropped off so greatly that its condition became precarious and it was found necessary to aid it with subscriptions; it was impossible, however, to secure any financial assistance for a proposed railroad which was to engage in competition with the Southern Pacific for local business. A mooted enterprise which was to connect San Francisco and Salt Lake was lost sight of during the stagna- tion. The Traffic Association, however, continued its activities. The project of an interior line which should be a real competitor of the Southern Pacific, to be operated with especial reference to the needs of cheap communication with the Great valley, was kept alive. The citizens of Stockton, Fresno, Merced, Berenda, Madera, Modesto, Tulare, Bakersfield and other points in the San Joaquin valley were conferred with by a committee, and the advantages of an independent line pointed out, and some interest was excited. Through the instrumentality of Wil- liam R. Wheeler, the Merchants Freighting Association was formed, and the apprehension that competing steamers might be put on the routes between the Southern California ports and San Francisco resulted in the extension of more favorable rates by the existing companies.
Although Leeds in his first report to the executive committee had said: "It has been found that the principal feature of the trouble has its basis or foundation in the local rates in this state," and supplemented this declaration with information which fully warranted his conclusion that "the high local tariffs to and from the interior had the effect of holding the traffic of the whole state upon an unreasonably high basis, and to a large extent curtailed the trade of the business centers of the coast," and was emphatic in the expression of the opinion that "the local rates are very much more burdensome (than through rates), because they serve not only the purpose of securing an immense local revenue, but serve as a high protective tariff against the possible introduction of a measure of sea competition to the in- terior country of this coast," the efforts of the association during two or three years following to provide a remedy for the situation were feeble and mainly con- fined to talk. Although the Southern Pacific was at this time furnishing an example of the injustice of its local rates by bringing to San Francisco from Liverpool via New Orleans, many commodities at much less cost than was assessed against local shippers for moving the same commodities from San Francisco to Bakersfield in Kern county at the head of the San Joaquin river, the Traffic Association appar- ently was less concerned to bring about a change in this latter regard than it was to force down through rates. This attitude did not escape attention and criticism. Public opinion was fully alive to the desirability of correcting an evil which Leeds had so forcefully pointed out, but no move in the direction of securing an inde- pendent line was made until the Atchison, Topeka and Santa Fe in pursuit of its usual policy took advantage of a popular movement to break into the territory of the Southern Pacific.
There is no doubt about the integrity of the motives of the mass of subscribers to the San Joaquin valley railroad, who were later called upon to give effect to Leeds' recommendations. Outside of a limited few they believed that their con- tributions would be devoted to building a railroad which would be operated inde- pendently of any transcontinental line, and with the sole object of promoting the utilization of the water facilities of San Francisco for the benefit of the distributor of products received by sea and for that of the producers of the great interior valley.
The Santa Fe Takes a Hand in the Game
Contributions for Bollding a Competing Road
656
SAN FRANCISCO
It would have been impossible to secure the support of many who subscribed had there been any suspicion that the road was to be built to turn over to a company belonging to the Transcontinental Association. The members of the Traffic As- sociation had been told, and the people generally were aware that between 1877 and 1903 over $14,000,000 had been paid by the Transcontinental Association to prevent the Pacific Mail Steamship Company competing with their lines. They knew that the Transcontinental Association was responsible for the fact that Bra- zilian coffee was laid down at Denver via New York at $1.25 per 100 pounds, while the rate from San Jose de Guatemala to Denver via San Francisco was $1.921/2; and that tea was moved at rates which were slowly but surely depriving the im- porters of San Francisco of all chances of doing business. Possessed of this knowledge they were disinclined, or would have been, had the idea been suggested to them, to assist an undertaking which would strengthen the association whose purpose it was to choke off competition by sea.
The attitude toward the revived project to build a railroad into the great valley, to be operated as an independent line, however, met with more favor. In June, 1893, a prospectus had been issued at the instance of the Traffic Association invit- ing citizens to subscribe to the capital stock of a line to be constructed from the city of Stockton to the head of the San Joaquin valley in Kern county, the length of the line being about 350 miles. It was stated that the ultimate intention was to construct from Stockton to San Francisco, and thus make a continuous line from San Francisco to the head of the valley having a length of 350 miles. Owing to the monetary stringency and general depression in the latter part of 1893 it was found impossible to raise the requisite funds. This project was taken up again in 1894 and the proposed road was named the San Francisco, Stockton and San Joaquin railroad. The capital stock was fixed at $6,000,000, divided into 60,000 shares of $100 each and a trust fund was formed and trustees named "to preserve the road as a competitive carrier." The enterprise made no headway during 1894, but was not formally abandoned by the Traffic Association. In January, 1895, the project received an impulse from an outside source which later developments disclosed was the Atchison, Topeka and Santa Fe. The connection of that com- pany with the revised project was not understood by the community, but there must have been a suspicion if not a certainty in the minds of the members of the Traffic Association that the original purpose of the enterprise had undergone a change.
A meeting was held on January 22, 1895, at which bitter speeches directed against the Southern Pacific were made by several speakers. Thomas Magee said that he had been told while in the San Joaquin valley that "of every three drops of rain that fell there, two of them were owned by C. P. Huntington." The dom- inant note of all the addresses made was intense hostility to the monopolistic cor- poration. Claus Spreckels was a leading spirit, and on the subject of subscriptions warned those present that unless at least three millions were subscribed for the building of the new road the project would fall through. Subscriptions were then received and Spreckels put down his name for $50,000. On the ensuing day Claus Spreckels increased his subscription to half a million and John D. and Adolph Spreckels each subscribed $100,000. In the course of a week $1,500,000 was sub- scribed and an address was issued to the public in which it was stated that "the
Subscrip- tions to Valley Railroad
The Valley Railroad Project
657
SAN FRANCISCO
proposition is to make it a people's road, owned by the people and operated in the interest of the people, and it is to you as part of the people that we turn for assistance."
Following this declaration a canvass was made and Claus Spreckels offered to double his subscription to $1,000,000 conditioned upon $6,000,000 cash being raised. The appeal was responded to, but not as heartily as the intimation the need of a $6,000,000 subscription implied. The Hibernia bank made an absolute gift of $50,000 to help along the undertaking, and Mrs. D. D. Colton subscribed $50,000. On February 20, 1895, a meeting of the subscribers was held in the Chamber of Commerce and the name adopted for the new corporation was the San Francisco and San Joaquin valley railway. A report was made that $2,248,000 had been subscribed and on February 25th the new road was incorporated. Incor- poration was followed by speedy action in the matter of securing a terminal. The legislature was then in session and was dealing with a bill which originally designed authorizing the Harbor Commission to lease sites on water front property belong- ing to the state for grain warehouses. An amendment was introduced in the inter- est of the new railroad which would enable the commission to lease to any railway company, not having terminal facilities in San Francisco, and desiring the same, for a period of fifty years, any property belonging to the state. The bill passed the assembly by an overwhelming majority, but the Southern Pacific contingent in the senate made a vigorous but unsuccessful opposition and the measure became a law.
The passage of this act was speedily followed by active building operations, and by significant developments which, however, were overlooked in the enthusiasm of the moment, or perhaps not comprehended. A plan was submitted to the directory which created a trust, the powers of which were recited in a preamble as follows: "To cause said corporation to so operate said road that the basis for freights and fares shall be the lowest rates of charge which shall yield sufficient revenue to the company to pay for the proper maintenance, operation and betterment of said road. . And said trustees further agree that they will not knowingly vote said stock for the benefit or in the interest of any corporation or person, or interests hostile to the interests of, or in business competition with the San Francisco and San Joaquin valley railroad, or in favor of any party or parties, or company or companies owning or controlling any parallel line of road to the detriment of the corporation hereinbefore mentioned. And said trustees further agree that the said road shall not be leased to, nor consolidated with any company which may own, control, manage or operate any of the roads now existing in the San Joaquin valley, and the trustees shall not, nor shall their successors, have any power as stockholders to assent to any such consolidation or lease, or in any way to put the said road under the same management as that of any other railroad now existing in the said San Joaquin valley."
On April 5, 1895, a meeting was held and this trust provision was approved, and the following were named as trustees: A. B. Spreckels, James Cross, Daniel Meyer, Thomas Brown, James D. Phelan, F. W. Van Sicklen, Lovell White, Christian de Guigne and O. D. Baldwin. In the meantime a terminal had been selected, the spot chosen being that known as China Basin. The choice was ap- proved by the State Board of Harbor Commissioners and the directors of the road
Terminal Facilities Obtained
San Joaquin Valley Rail- road Built
China Basin Secured by Santa Fe
658
SAN FRANCISCO
accepted the site. A bill authorizing the lease was passed by the legislature and signed by the governor on March 26, 1895, ratifying the transaction, and thus was dexterously completed the job by which the Atchison, Topeka and Santa Fe effected entrance into San Francisco and secured valuable terminal privileges from the people. The only outspoken opposition to the leasing of China Basin came from Mayor Sutro, who as ex officio member of the Board of Harbor Commissioners took part in the conferring of the site. He was dissatisfied with the course taken and expressed distrust regarding the outcome.
It would be impugning the business capacity of the men who acted as trustees to suggest that they were overreached. The provisions of the document creating the trust clearly indicate that what was later accomplished was contemplated by those who drew it up. There is no doubt that the most of the subscribers, had it been made perfectly plain to them that the San Joaquin valley railroad scheme was resorted to merely for the purpose of effecting an entrance to San Francisco, would have given it their hearty support. At that time it was believed that the introduction of a rival road would destroy the power of the hated monopoly, and this belief created a powerful sentiment in favor of any concern which promised to prove a competitor. Nevertheless it is a fact that the original object of building a railroad into the great valley was entirely lost sight of by those who built the road and then sold out to the Atchison, Topeka and Santa Fe. That corporation was not shut. out by the provisions of the trust it did not exist or operate in the valley at that time; it will probably never "consolidate with any company which may control, manage or operate any of the roads then existing in the San Joaquin valley," but since it obtained possession of the San Francisco and San Joaquin valley railroad it has never maintained a competition with the Southern Pacific of the sort the people looked for when they bought its stock which they later cheerfully surrendered when paid par value for the same. In short the San Joaquin valley railroad is not "a people's road, owned by the people and operated in the interests of the people."
The historiographer of this popular enterprise announced: "It will be neces- sary later to publish a volume leading up to the actual beginning of operations of the first competing railroad," but this second volume never appeared for the excellent reason that the San Joaquin valley railroad never developed into the competing road hoped for, and certainly at no time afforded the sort of relief the Traffic Association sought to obtain through its construction. San Francisco, until very recently, has been deprived of the advantages which its water facilities should confer as effectively as before 1895, and since that date it has been compelled to struggle to maintain its position in the San Joaquin valley. Had the original plan of the Traffic Association of 1891 been adhered to, and the San Joaquin valley railroad been made a purely local concern, devoted solely to promoting the development of the commerce of the port of San Francisco there might have been a different story to tell. It was claimed that the transference to the Atchison, Topeka and Santa Fe of the San Joaquin valley railroad was rendered necessary because the road could not be made to pay. That may be true, but with a copy of the original trust provisions before one it is difficult to believe that those most active in the enterprise ever designed making it pay, or that they ever had any other object in view than that of serving the Atchison, Topeka and Santa Fe Rail- way Company.
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