Although the period of active life of San Francisco has been a short one, as historical periods go, it has been crowded with incident. Enough of the latter could be found to present a vivid picture of the career of the metropolis of the Pacific coast, but in this work something more has been attempted than a mere recital of occurrences. It has been the purpose of the author to trace the causes of the growth of the City, and to describe the manifold activities of its citizens. This is volume two out of two of one of the most thrilling and detailed histories of San Francisco.
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A History of the Pacific Coast Metropolis, Vol. 2
JOHN PHILIP YOUNG
San Francisco 2, J. P. Young
Jazzybee Verlag Jürgen Beck
86450 Altenmünster, Loschberg 9
THE SPECULATIVE PERIOD 1871-1883. 1
CHAPTER XLVII. LABOR AND OTHER TROUBLES DURING THE SEVENTIES 1
CHAPTER XLVIII. SAN FRANCISCO SURRENDERS TO THE SPIRIT OF SPECULATION 12
CHAPTER XLIX. THE BURSTING OF THE STOCK SPECULATION BUBBLE 27
CHAPTER L. CONDITIONS ON EVE OF ADOPTION OF THE CONSTITUTION OF 1879 38
CHAPTER LI. THE SAND LOT TROUBLES AND THE NEW CONSTITUTION 53
CHAPTER LII. CONDITIONS AFTER THE ADOPTION OF THE NEW CONSTITUTION 73
CHAPTER LIII. PUBLIC AND PRIVATE EFFORTS TO IMPROVE THE CITY 90
CHAPTER LIV. SOCIAL CONDITIONS AND THE UNREST DURING THE SEVENTIES 122
CHAPTER LV. VARIED ACTIVITIES OF THE PEOPLE OF A GROWING CITY 148
A PERIOD OF GREAT PROGRESS FOLLOWED BY DISASTER 1883-1906. 178
CHAPTER LVI. TRANSPORTATION TROUBLES OF SAN FRANCISCO MERCHANTS 178
CHAPTER LVII. MONETARY PECULIARITIES OF SAN FRANCISCO AND CALIFORNIA 192
CHAPTER LVIII. NUMEROUS AND SERIOUS LABOR TROUBLES IN THE CITY 211
CHAPTER LIX. SAN FRANCISCO MAKES MANY EXPERIMENTS IN MUNICIPAL GOVERNMENT 231
CHAPTER LX. FREQUENT ALTERNATIONS OF ACTIVITY AND DEPRESSION 254
CHAPTER LXI. PEOPLE RISE SUPERIOR TO POLITICAL AND OTHER TROUBLES 281
CHAPTER LXII. VARIED PHASES OF LIFE IN SAN FRANCISCO.. 311
CHAPTER LXIII. THE GREAT DISASTER AND CONFLAGRATION OF APRIL 1906 355
THE REHABILITATION PERIOD. 1906-1912. 393
CHAPTER LXIV. PROMPT INAUGURATION OF THE WORK OF REHABILITATION 393
CHAPTER LXV. GRAFT PROSECUTIONS AND OTHER TROUBLES AFTER THE FIRE 410
CHAPTER LXVI. THE SUMMING UP OF THE ACHIEVEMENTS AFTER THE FIRE 435
THE decade 1870 did not open auspiciously for San Francisco or the State of California. In an address delivered to the State Agricultural society in the opening year the speaker, A. A. Sargent, took for his theme the slow growth of the state. He dwelt at length on the difficulty of obtaining farming lands cheaply, and denounced the evils of monopoly, and suggested the necessity of remedial legislation. Among other things he spoke of the disappointment experienced by the people who had expected that the completion of the transcontinental railroad would give a great impetus to business. Instead of this hope being realized merchants, manufacturers and others, he declared, had been brought into sharp competition with the East and were suffering in the process of readjustment.
He did not fail to touch upon the existing social condition which, he said, was the outcome of the "flush times" of the state. Habits of extravagance, he told his hearers, had been bred which must be abandoned, because they would prove an obstacle to development if they were continued; and he spoke of the anomalous state of the labor market, intimating that it must adapt itself to the imminent change which closer relations with the East would necessarily bring about. On this latter point he touched lightly, leaving his hearers to infer that the adjustment would not prove difficult if the Spanish land grants could be broken up, and the state settled with small farmers.
Sargent voiced one form of dissatisfaction. Governor Newton Booth in a message to the legislature of 1872 gave expression to another. He too objected to monopoly, but he found fault chiefly with the monopolistic tendencies of the corporations, the principal offenders being the men who had constructed the Central Pacific railroad. He recommended the immediate repeal of the five per cent subsidy act, which permitted the state and its political subdivisions to extend aid to railroads, and strongly urged that freights and fares be regulated "in view of the tendency of railroads to consolidate and become monopolies." He was particularly severe in his animadversions upon the device by which the Central Pacific managers were enabled to make contracts with themselves, and said that "the organizations of corporations within corporations is a refinement of subtlety and fraud which should be prevented by law."
In these recommendations and reflections he was adhering closely to the platform of the republican convention which nominated him, and in which a demand was made for an amendment to the constitution preventing the enactment of subsidy laws, and demanding the immediate repeal of the five per cent subsidy act, which had been passed by the preceding legislature. In the election of September 6, 1871, which resulted in Booth's selection, he received 62,500 votes to 57,500 for Haight, his democratic opponent. The latter, as well as the former, had adopted the anti-monopoly slogan; but while the discussions of the campaign revolved about this particular question, voters were merely called upon to decide which candidate would prove the sincerest anti-monopolist. An idea of the depth of popular feeling on the subject may be gained from a comparison of the figures of the national election held a year later, when Grant received 8,000 less votes than Booth polled in 1871, and in which nearly 25,000 fewer votes were cast for president than for governor.
In 1873, the anti-railroad feeling had developed to such an extent that it engrossed the entire attention of voters. The Patrons of Husbandry began an agitation, the effects of which were subsequently witnessed in national legislation, for an adjustment of railroad freight rates on a basis which would exclude the principle of meeting sea competition. Their demand was for a railroad tariff which would prevent a proportionately greater charge for hauling a short than a long distance. In 1873, the Patrons of Husbandry threw their strength to the wing of the republican party, which was antagonizing the railroad, and in the election of September 3 of that year the combination proved strong enough to win a majority in the legislature, the result being the election of Governor Newton Booth to the United States senate as an avowed antagonist of the Central Pacific railroad and its schemes to extend its power.
The alliance between the "Dolly Vardens," as the anti-monopoly republicans were called, and the Patrons of Husbandry did not endure long. The platform of the agriculturalists had more planks than that of opposition to railroad exactions, and some of them were not acceptable, and as a result the "Dolly Vardens" went to pieces, and the legislators elected by that party resumed their former partisan relations. As a matter of fact, the grangers were too advanced in their views and advocated a programme more in harmony with the sentiment of 1912 than of 1873. They urged that grain sacks should be made and sold by the state in order to destroy an existing ring by selling at cost, thus regulating the prices at which bags should be sold; they asked for the creation of a cooperative bank, and a cooperative system of selling agricultural supplies, and they demanded that facilities should be provided for the free storage of grain so that the farmer might be able to hold his product until the market price proved satisfactory.
Although the political alliance of grangers and republicans was short lived it is interesting to note that the demands of the Patrons of Husbandry a few years later were practically conceded by the party in power. A law was passed which provided for the manufacture in the state prison of grain bags. An expensive plant was established at San Quentin, and the product was sold at cost to the farmers. While the result may not have been all that was hoped for, there is no doubt that the prison-made product of grain bags after the Eighties prevented the extortionate practices of a limited number of importers who had for many years manipulated the San Francisco market to the disadvantage of the farmer. There is no means of determining, however, whether the operations of the state were a profitable or losing venture, for the system of accounting of the prison was not devised to furnish such information. The demand for the free storage of grain was also conformed to in a modified fashion by the erection of grain sheds on the San Francisco sea wall by the State Harbor Commission. This system was not designed to warehouse grain for extended periods, but would have undoubtedly developed along those lines had California continued producing cereals on a scale which would have made exportation necessary. The cooperative bank project did not materialize as a public institution, but a concern originally under the auspices of the grangers was started which flourished for a while in San Francisco and then met the fate which usually attends bad financial management.
In the election of 1875 the "Dolly Vardens" were wholly obliterated. Bidwell, their candidate for governor, received only 29,752 votes, while Irwin, who was put up by the democrats, polled 61,500. The election of the latter, however, by no means indicated an abatement of the hostility to the railroad. The corporation had taken advantage of a temporary distraction, and by clever manipulation had succeeded in resuming its interrupted control of public affairs. The speculative excitement which followed the discovery of the rich ore body in the Comstock, known as the big bonanza, had produced a business flurry which resembled prosperity, and as usual under such circumstances, there was a cessation of agitation. There was also an adroit and successful attempt to concentrate attention on public offenders which for the time being diverted assaults from the corporation. In his first message on December 9, 1875, Irwin spoke of "the worse than state prison felons, the unconvicted embezzlers of public moneys and the violators of public trust." It was just about this time that the slogan framed for the democratic party by Samuel J. Tilden, "turn the rascals out" became popular, and the wave struck California with such force that the people, for a while at least, were convinced that malfeasance in office was at the bottom of all their troubles, and that the proper remedy to apply would be a change of officials.
In a message to the legislature Governor Irwin asserted "that the immunity or at least the apparent immunity with which public officers have appropriated to their own use the public funds by an almost open violation of the trusts committed to them has apparently impressed on the lower grade and even average public mind the conviction that to rob the government is legitimate, and that not to do so when one has an opportunity argues a lack of business talent," and there is no doubt that he was in earnest when he added that "society is therefore bound in self-protection, in self-preservation to crush out this sentiment utterly," and that he really wished to find a remedy when he asked: "How can this be done? I answer, only by pursuing and hunting down with tireless energy and punishing with remorseless vigor the guilty violator of a public trust." But the fact remains the tireless energy and the remorseless vigor of punishment he spoke of were not exercised, and that the failure in this regard furnished Kearney and the so-called "sand lotters" one of their most formidable weapons in the active agitation which began a couple of years later.
Men are wiser after the event, and therefore we need not be surprised that James Bryce, when he came to California to make a study of conditions, did not make the blunder of attributing the upheaval which resulted in the adoption of the constitution of 1879 to the discontent of the laboring classes of San Francisco or the machinations of agitators who took advantage of race prejudice to promote their own ends. It is true that he was misled into placing more emphasis on a manifestation than the cause which prompted it, but he put his finger on the sore spot when in speaking of large land holdings he said: "Some of these speculators by holding their lands for a rise made it difficult for immigrants to acquire small freeholds, and in some cases checked the growth of farms. Others let their lands on short leases to farmers, who thus came into a comparatively precarious, and often necessitous condition; others established enormous farms in which the soil is cultivated by hired laborers, many of whom are discharged after the harvest — a phenomenon rare in the United States, which everybody knows is a country of moderately sized farms, owned by persons who do most of their labor by their own and their children's hands. Thus the land system of California presents features both peculiar and dangerous, a contrast between great properties, often appearing to conflict with the general weal, and the sometimes pressed hard farmer, together with a mass of unskilled labor thrown without work into the towns at certain seasons of the year." This condition of affairs was perfectly known to Californians for many years anterior to the Kearney sand lot troubles, and there was in their case an added knowledge of which no account is taken in the quotation, which had been a source of irritation for years, and for which a remedy had been vainly sought. The fraudulent character of the titles of many of the large holdings was understood by the people, who also knew that among the chief beneficiaries of the betrayals of public trust which Governor Irwin excoriated were the owners of great Spanish and Mexican grants, who corruptly influenced assessors to undervalue their holdings in order that they might the easier perpetuate their power. From 1851, when the commission was created by congress to inquire into the validity of the grants until the end of its hearings there was a general belief that most of the land grants were fraudulent, and it was not dissipated wholly when its report was made showing that out of a total of 813 claims, calling in the aggregate for 12,000,000 acres or 20,000 square miles, 514 were confirmed. And when subsequently ninety of the rejected claims were finally confirmed by the United States courts, the belief was not weakened, although the decisions were acquiesced in and even welcomed because they put an end to uncertainty.
To find the origins of this dissatisfaction it is necessary to go back to the early Fifties, when what was called the "Preemptioners' League" was formed in Alameda county by men who were referred to as squatters, but who included in their organization many who afterward were known as substantial citizens. They planted themselves on the proposition that the grants were fraudulent and were quite ready to resist all claims to the ownership of large tracts of land, no matter what the title. It is not surprising that they were imbued with distrust when they found such claims as the Santillan, which set up ownership to all the land of the City and county of San Francisco south of California street. This grant, which was alleged to have been made to Prudencio Santillan in 1846 by the Mexican governor, Pio Pico, was confirmed by the land commission March 1, 1855, but appealed to the United States supreme court, which threw it out in 1860, pronouncing it an unmitigated fraud.
The agitation of the land question in San Francisco in the beginning of the Seventies was not connected with or influenced in any manner by claims touching directly the interests of its citizens. All the vexed title questions were settled in the City before that date and they had left little aftermath of bad feeling. But the condition in the country was different. In the City the land had been cut up and had passed into many hands; and in the country at the opening of the decade most of the large Spanish and Mexican grants were still intact, and those into whose possession they had come seemed determined to hold onto them by "hook or crook." It was this attitude, and the means taken to maintain it which started the anti-monopoly crusade; and when it was entered upon by the workingmen in the City they were merely championing the cause of the small land holder, in whom they recognized their naturalally.
It has already been noted that there were numerous meetings of the unemployed in 1870 and that in July of that year the Knights of St. Crispin advocated the nomination of a political ticket, meeting, however, with opposition from the Mechanics States Council and Eight Hour League. In March 1871, a branch of the National Labor Union was formed in California and in January of the succeeding year a convention was held by which a platform was adopted which not only foreshadowed the demands contained in that of the workingmen's party in 1877-78, but also bears a striking resemblance to that of the advanced Progressives of 1912. Among its most pronounced features we find these pronouncements and demands:
The equalization of the wages of labor with the income of capital.
The establishment of equitable rates of interest for the use of money.
The maintenance of an eight hour day system of labor.
The establishment of a labor bureau at Washington for the better protection of the industries of the country.
The government holds the public land in trust for the use and benefit of the people, and it should be distributed to actual settlers only in limited quantities not exceeding 160 acres, at the cost of survey and distribution.
All unimproved land should be taxed the same as though settled and improved.
There should be universal compulsory citizen suffrage and secular education.
Government should assume control of all chartered and subsidized corporations, and regulate their charges on the principles of equity and exact justice, and enforce such regulations as will best secure the interests and safety of people.
The election of president and vice president and senators by direct vote of the people.
If there is any plank in this remarkable platform formulated forty years ago which the Progressives of 1912 have failed to adopt it should be pointed out. Nevertheless, in 1872, the framers were regarded as visionaries and when in 1878 the workingmen's party of California reembodied them in a pronouncement they were denounced as socialistic and incendiary. The history of a city does not permit indulgence in extended economic discussion, but it is desirable in this connection to point out that the enunciated principles of the men who afterward developed into sand lotters in 1872 differed in no essential particular from those of the advanced reformers of today and that the entire movement which began in the year 1871 and culminated in the constitution of 1879, has been grossly misrepresented and misunderstood.
That it was a popular and not a workingman's movement will be more clearly comprehended by the reader when additional facts are presented. It will be seen when the recital is completed that it was in no sense a trades union demonstration. A careful investigator of the activities of these organizations tells us that "one hears but little of the regular trades unions between 1870 and 1880." The soundness of this observation is well attested. The convention which formulated the platform quoted above through its executive committee announced in June 1872, that "in all future elections the labor party of California would place nominees before the people for each elective office, and even prescribed the manner of making selections, but nothing of the sort was done until 1878, when the unions adopted the plan in nominating their candidates for the constitutional convention.
Doubtless had the conditions which produced the convention remained unchanged the trades union solidarity of the sixty decade might have been restored, but the speculative era interrupted and for a time obscured the hostility to Chinese immigration which had asserted itself in a pronounced manner during the Sixties, and earlier. That it was merely dormant was shown by the promptness with which the Chinese question was revived and became a dominant one as soon as the shoe of hard times began to pinch. While the big bonanza excitement was having its run, and all classes of the community from top to bottom were infected with the fever of mining speculation, the evil results of permitting the state to be filled with a class of immigrants that might be utilized to develop its resources along certain lines agreeable to large land holders were lost sight of, and during the brief period of meretricious "flushness" views were at times advanced which suggested to the careless observer that there was a real division of opinion in California respecting the desirability of introducing this class of labor into the country.
It is necessary to remind the reader that this manifestation was misleading in order to remove the false impression that the hostility which later developed itself was due to the activities of the labor unions of San Francisco or to the unreasoning prejudices of the working classes of the City. As was shown in earlier chapters the antagonism to Chinese immigration was not based on race prejudice. It is true that in the mines there were frequent clashes, and the Chinese were occasionally subjected to assaults, but these were manifestations of the "know nothingism" of the period, the creed of which was hostility to all foreigners, and was not inspired by racial differences. The action of the municipal council in 1850 in officially extending to the "China Boys" an invitation to take part in the funeral ceremonies of President Taylor, and similar courtesies, give evidence that there was no serious friction; and that the subject when it came up for discussion, as it frequently did, was treated in a large way, proves that the step subsequently taken by the people of California was not in response to riotous demands of the working people of San Francisco, but to the development of a settled conviction that the interests of the state and the American nation would be subserved by excluding a class of aliens whose assimilation would be impossible.
It is wise in studying the anti-Chinese movement in San Francisco to keep in mind the unsettled conditions respecting immigration that prevailed throughout the Union. If due consideration is given to the force of the Know Nothing propaganda, and the intolerance begotten by the manifest destiny idea, which seethed in the brains of Californians during the Fifties, we will easily divest ourselves of the belief that opposition to Chinese immigration was merely a device of politicians. The most fantastic notions prevailed at that period. Not only was the doctrine of "America for Americans" being preached, but, as already shown, the desire for absorbing the rest of the world into our body politic was freely broached. In the "Annals of San Francisco" we find the writer seriously discussing the desirability of a white race settling the disturbances in China by playing off against each other the warring factions in that country, and broadly intimating that the United States might easily imitate the example of the British. "Indian sepoys," he said, "fought the battles of England against their own countrymen, Chinese may do the same for Americans."
Fantastic utterances of this sort may be fairly cited to show the wide range taken by California thought in considering American relations with China at a time when, to most citizens of the Union living on the Atlantic sea board, the name of that country was only a geographical designation, and whose knowledge of the Chinese was largely confined to the information gained from a study of the queer characters on tea chests. Californians, however, knew the Chinese. They had observed them at close range, and were by no means disposed to rate them as an inferior people. It is significant that the first governor of California under American rule did not discuss the Chinese adversely, but when he retired from office he expressed it as his "unprejudiced opinion" that they "were more than a match for the white man in the struggle for existence." In view of the fact that Burnett has the distinction of having resigned his office because he was tired of politics, and that the opinion quoted was delivered after he had retired to private life in 1851, it may be cited as evidence that the situation was clearly comprehended long before the advent of Kearney and that Californians were under no illusion respecting Chinese capacity.
Governor Bigler, who followed Burnett in a message to the legislature on April 23, 1852, declared that the Chinese differed from all other immigrants in one important particular. They had come to the country through no other motive than cupidity. "None of them had come as an oppressed people; none of them had sought our shores as an asylum or to enjoy the blessings of free government." And the same legislature to which this message was addressed, in dealing with the question, put its stamp of disapproval upon a phase of Chinese immigration which menaced the state. In March 1852, a bill was introduced in the senate by Tingley, the object of which was to permit the enforcement in the courts of the State of contracts and obligations made in China to perform labor in California. A similar bill was introduced into the assembly. The senate bill when called up was indefinitely postponed by a vote of eighteen to two.
The rejection of the measure is noteworthy because the principle established in 1852 by a California legislature was accepted by the federal government, which nearly a quarter of a century later passed a law to prevent the importation of laborers by contract. Incidentally, it should be mentioned that the object of the attempt to secure legislation which would sanction the importation of Chinese laborers under contracts to work was disclosed in a debate in the legislature of 1855, when a member asked: "Is it not better with modern skill in engineering to put tools into these 50,000 pairs of willing hands, and in place of trickling ditches have torrents rushing along to make the miners glad and people rich?" The debate which called out this expression arose over a proposition to remove the Chinese miners from Shasta county, a fact which should be borne in mind by those who labor under the mistaken impression that Kearney's declaration that "the Chinese must go," made in 1877, had in it any element of novelty.
The truth of the matter is that the agitation against Chinese immigration was continuous from the time of the occupation down to the date when it began to attract Eastern attention. That it was nonpartisan and nonpolitical is proved by the fact that all parties were united as to its undesirability, and that all classes were agreed that restrictions should be placed upon the introduction of Chinese laborers was shown a little later when the people of the state voted almost unanimously in favor of exclusion. When the legislature of 1875-76 created a commission to investigate the subject of Chinese immigration it was not prompted by the desire to gather information for the people of the state; the object was to secure and present in official form facts which would appeal to the rest of the nation. There was no considerable number in California at that time who disapproved of agitation. That was made apparent in a message sent to the legislature by Irwin in 1875-6, in which he declared that the laboring people ought to agitate "as long as they have a just cause for complaint." No one objected to such advice at that time; it was only when the matter was brought to a head by the growth of the evils for which Chinese immigration was responsible that any censure was visited on advocates of exclusion.
That the evils which brought about the sand lot agitation were largely caused by the desire which found expression in the legislature in 1852, when the wholesale importation of Chinese laborers was advocated, cannot be doubted. It was the persistence of the hope that cheap Chinese laborers could be brought into the country which strengthened the determination of the large land owners to hold onto their vast estates, and to that disposition more than anything else may be attributed the retardment of the agricultural industry of the state, the diversification of which has since contributed so greatly to the prosperity of California and the growth of its metropolis and principal seaport. Although the earlier misapprehensions concerning the nature of the soil of California had been succeeded by an appreciation which sometimes assumed the form of an exaggerated optimism, the disposition still existed to regard the state as something apart, and so conditioned that some form of cheap labor would be required for its development. It was still assumed that the treeless plains could only be rendered useful by devoting them to grazing. People no longer believed that the absence of trees indicated sterility, but they were more or less convinced that they could be farmed advantageously only by operating on a large scale. Irrigation was sometimes considered, but not very seriously. Where the experiment had been tried it had usually proved successful but it was not generally resorted to in any part of the state. The wool industry in 1873 was still important, and much pride was taken in the statistics of production which had expanded from an insignificant output of 5,500 pounds in 1850 to over 24,000,000 pounds in the later year. The attitude toward wheat growing was nearly the same. There was a confident belief that it would indefinitely continue to be California's most profitable crop, and this opinion prevailed until after the first half of the decade 1880, when the average annual production was 30,000,000 bushels, largely harvested on big farms.
The first serious attempt to deal with irrigation legislatively was in 1875-76, when an act was introduced for the creation of what was known as the West Side irrigation district. This scheme, which failed of acceptance at the time, contemplated a canal for transportation as well as for irrigation, and the latter was designed to assist the grain grower in a region of scant precipitation. The canal was to be led along the western edge of the San Joaquin valley from Tulare to tide water in Contra Costa county. It was pronounced impracticable in its original shape and awakened no more interest than the project of Wozencraft, who procured the passage of an act by the legislature in 1859 which had for its object the diversion of the waters of the Colorado from their regular channel into the great depression between that river and the Coast Range Mountains. Wozencraft's theory was that the filling of the basin would produce climatic changes similar to those effected by the construction of Lake Maeotus in Egypt, and that the waters could be effectively used for irrigation purposes. The matter was never tested because congress refused to cede the lands asked for within three years of the date of the passage of the act, and the scheme was never revived.
Irrigation received its first genuine impetus when the prospect of breaking up the big ranches began to take on a more definite shape than that of mere hope. This did not occur until the dissatisfaction of the struggling small farmer attracted the attention and enlisted the sympathy of the city workers, who deserve the credit of being among the earliest to perceive that the growth of the state was largely dependent upon the subdivision of the great ranches and their passing into the possession of small owners. In the convention which formulated the plank which declared that "all unimproved land should be taxed the same as though settled and improved," the danger of permitting a tenant system to be developed received ample attention, as did also the menace contained in the possibility of large land owners being permitted to work their estates with cheap Oriental labor. The necessity of making the state attractive to immigrants, and the good results which would ensue from the creation of a population mainly made up of small farmers were likewise emphasized and the rational view which subsequently prevailed was clearly set forth.
It does not appear that the deliberations of the convention attracted attention at the time, but a year later there was much discussion along the same lines, although it was usually dissociated from the labor question. In 1872, it began to be recognized that the cultivation of raisins might become an important industry, and there was a generally entertained opinion that their production would be promoted by cutting up the big tracts into small farms. The editors of the city papers taking this as a text pointed out that a large number of small farmers would be immeasurably more beneficial to San Francisco than a few great estates, even if the latter should be developed to their full capacity by hired help. It was urged that the independent agriculturalist who owned and tilled his own land usually raised a family, while under the other system the conditions would be certain to produce a nomadic population made up of "blanket men," who would have to ramble about the country in search of a job in the seasons when work offered itself and who would seek refuge in the City at other times and become a burden on the community.
It cannot be said of this period that the merchants of San Francisco, or the people of the City generally were alive to the possibilities of diversified industry.
Ideas of development were still in the nebulous stage and there was a marked disposition to drift with the tide. Perhaps there was less interest relatively in the subject of immigration during the early Seventies than was manifested throughout the Fifties, when some at least seemed to clearly perceive that the future of the port depended upon the growth of a large agricultural population, whose wants its merchants would supply and for whose products they would find profitable markets. As late as 1874, when the project was mooted of making a showing at the centennial exposition, which was to be held in Philadelphia two years later, it was not received with any degree of enthusiasm, and the legislature declined to take any part in the enterprise on the ground that the state could not hope to derive any benefit from making an exhibit at a fair held on the Atlantic seaboard.
The canning industry, which had attained sufficient importance to have its output statistically stated in the later Sixties, was credited with a production of 132,000 cases in 1870, but the pack was consumed almost wholly within the state. Some of the fruit put up in San Francisco was shipped to Nevada and Oregon, but very few persons entertained the idea of finding markets at a distance for this particular product. This need not be regarded as a surprising statement for the shelves of the grocery stores of San Francisco down to a much later period displayed a larger assortment of fruit canned in the Eastern states than of domestic, and throughout the Pacific coast states and territories peaches put up in Baltimore shared popularity with the products of California orchards.
It may be said of the people of San Francisco in the early Seventies that they had not yet found themselves. This does not mean that there were not some discerning minds able to penetrate the future, for there were plenty who were ready to prophesy that California was destined to be a great horticultural and viticultural state, and that its people would someday derive great profit from the pursuit of industries then in their infancy. But the great majority did not act up to this belief and were encouraged to be incredulous by critics who were ready to point out that the products of the young state were inferior to those of older communities. In 1871, the vineyards of the state produced about four and a half million gallons of wine, but inferior foreign wines were imported, and it was the fashion to assume that they were better than the native product, and it was the custom to think and say that while California might produce a fairly good raisin it could hardly expect to rival the excellence of "three crown Malagas."
The spirit of the times was not pessimistic, nor can these exhibitions be fairly regarded as evidence of distrust. The City was still under the domination of the idea that mining and cereal farming would remain its chief dependence, and the merchants believed that communities can become rich by buying more than they sell. The value of a domestic manufacturing industry was not entirely lost sight of by enterprising men. Indeed, undue efforts were made to stimulate it in disregard of the economic law that a large nearby consuming population is essential to the development of the factory in an era of sharp competition, and that without an artificial barrier to importation it is hopeless to attempt to successfully produce under a high wage system. One of the most melancholy episodes of this period is the vain effort of W. C. Ralston to promote manufacturing in San Francisco. He was the victim of the delusion that nearby raw materials and remoteness from other centers of manufacturing would offset the disadvantages of a limited market and a higher wage scale and paid a heavy penalty for his mistake.
THE condition described in the preceding chapter would hardly be inferred from a study of the commercial statistics of the port of San Francisco, which showed steady gains in imports and exports. The latter, which had only aggregated $3,649,277 in 1860, increased to $13,385,991 in 1870 and in 1875 they had expanded to $23,444,025. The figures of the last-mentioned year would be materially added to if the products of the state, which were finding their way eastward by rail, were included, as there was a considerable development of the domestic trade after the opening of the transcontinental railroad in 1869. The imports of foreign goods, however, kept pace with exports to other lands, rising from $7,376,016 in 1860 to $15,982,549 in 1870, and reaching $24,677,243 in 1875. There are no available statistics to show the quantities and values of goods brought to San Francisco by rail but there is reason for believing that the facilities of land transportation were largely employed by merchants who very early began to lose sight of the fact that the prosperity of a seaport depends very largely on the use its inhabitants make of their shipping advantages.
As already noted the mines began to show a diminishing output in the Sixties, the yield declining from $44,095,163 in 1860 to $17,123,867 in 1870 and averaging about $16,500,000 during the following five years. The lessening rewards of placer mining undoubtedly turned many from that occupation, and as the opportunities for employment in the country, owing to the system of farming, which was conducted with a minimum of help, a great many of the released miners found their way to the City. This was no unusual phenomenon during the period when the gold yield was more than double that of the early Seventies, for it was the custom of the miners to resort to San Francisco during the season when work could not be prosecuted, but under those circumstances the number who sought work was small. In fact, the visitors from the standpoint of the business man were regarded as a desirable floating population, as they usually expended the earnings of the summer in securing comforts and enjoyments of a sort from which they were debarred while prosecuting their search for the precious metal. The idlers from the mines in the Seventies sought the City with a much different purpose.
The decline of placer mining was not followed by a rapid development of quartz mining, which might have attracted and absorbed the disengaged gold hunters who would probably have taken to that occupation had the opportunity presented itself. A comparatively few when the chances of the placers shrunk took up the work of prospecting, but the major part of those released made their way to the City and helped to swell the army of unemployed, which was exhibiting signs of uneasiness. A large part of the growth of population which the census of 1870 showed was undoubtedly due to accessions from this cause, and not to excessive immigration from Eastern states. The population of the state increased during the Sixties from 379,994 to 560,427, a gain of 180,433, of which San Francisco is credited with 92,671, or more than half, a rate of growth which is shown to be abnormal when compared with the figures of the succeeding census, which showed a gain for the whole state of 304,267, San Francisco's share of which was only 84,486 or a little less than a third.
There was no good reason for this extraordinary urban expansion during the Sixties. It was out of all proportion to the development of industries of the sort calculated to afford employment to large numbers of people. There was some growth of manufacturing during the decade. Woolen mills were established, and the metal trades expanded to some extent, and there was a considerable growth of small concerns, but there was no real factory development of the sort witnessed in the towns on the Atlantic seaboard, where the operations of manufacturers were greatly extended while the Civil war was in progress, and where, under the influence of the Morrill protective tariff, Americans were rapidly taking possession of the domestic market.
While there was much talk in San Francisco about manufacturing in the latter half of the Sixties and during the early Seventies, and some unusual steps were taken to promote industry of that character, as in the case of Ralston who, in his capacity of manager of the affairs of the Bank of California, used the money of that institution to stimulate the domestic production of furniture and carriages and to forward other enterprise, a course for which he was afterward criticized and even denounced, the business men of the City continued to think of the port chiefly as a distributing center. Those who gave thought to the subject were disposed to take New York and Liverpool for their models, and their energies were chiefly devoted to the problems of distribution rather than of production, an attitude not at all conducive to creative enterprise, and a dangerous one in a city which under the modern system of development, acts as a magnet to draw population which must be provided with opportunities for employment if trouble is to be averted, and the process of growth is not to suffer interruption.
San Francisco during the Sixties and Seventies was the distributing point for the vast area known as California, and for the entire Pacific coast. The figures of the custom house show that practically all the exporting of domestic products, and the importation of foreign goods for the vast region known as the coast, was done by the merchants of San Francisco. There is absolutely no mention of any exports in 1860 through any other California port than San Francisco, and all the imports passed through the Golden Gate. Ten years later the condition remained unchanged. In 1875, when the exports from all customs districts in the state aggregated $23,444,025, the amount credited to San Francisco was $23,266,395, and in 1880, when the state's exports totaled $31,910,436, the share of the metropolis in the trade was $31,845,712. The story told by the tables of exports is repeated in that of imports, although care must be taken in making comparisons between different periods to not confuse the statistics which represent goods in transit, with those which show the volume and value of goods received for distribution on the coast. The import totals were greatly swollen after 1875 by the inclusion in them of large quantities of raw silk. In 1870 imports of this commodity only aggregated $318,041; this amount had slowly increased to $603,264 by 1875 and in the opening year of the new decade it had swollen to $10,037,009. Practically all of this raw material passed through the port to the East, only a very small quantity being retained here to be consumed in an attempt to create a silk manufacturing industry which, after a precarious existence of some years, gave up the ghost.
Prior to 1870 the entire volume of imports represented Pacific coast consumption, and the San Francisco merchants enjoyed the profits of its distribution. The habit of direct importation had become well fixed, and the City was perhaps less dependent upon the activities of the importers of New York than any other in the country. It was the boast of San Franciscans at a time when domestic productions were held in less esteem than at present, that the people of the City were able to get the real foreign article while those of Eastern cities were apt to have American imitations imposed upon them by unscrupulous dealers. In view of later developments the propensity to extol the superiority of foreign productions seems foolish, but during the period under review this was the prevalent attitude and it was persistently encouraged by the class who imagined that the future of San Francisco was bound up in its facilities for distribution.
Doubtless this was the natural point of view in the early Seventies. Exports of breadstuffs, which amounted to only $1,178,676 in 1860, had increased to $10,090,179 in 1870, and when the latter decade was half completed $15,813,941 of such commodities had passed through the Golden Gate destined to European ports. Visions of feeding the inhabitants of the old world dazzled men, and it cannot be said that they were unsubstantial for, seven years later, in 1882, there was actually shipped through the port of San Francisco $40,138,557 worth of breadstuffs. When these dreams were being dreamed the great resource which has since become one of the mainstays of the state was hardly considered. In 1860, we find in the customs statistics a record of $120 worth of fruit and nuts exported; in 1870 the value of such shipments was only $44,156, and that amount probably came near to the total of our surplus in the year named, for the shipments by rail, if there were any, were too insignificant to be taken note of, and indeed very little was known about California fruit outside of its boundaries until four or five years later.
There had been tremendous changes in the character and volume of the products of California during the twenty years following 1850, but they were not of a nature to suggest the vast transformation that was to take place after that date. The student of statistics observing the fact that the exports of tallow had dropped to $6,585 in 1870 and to $1,879 in 1875, would have inferred the disappearance of the herds that once roamed the great ranches of the state, but he must have been endowed with more than ordinary prevision to have foreseen that the time would speedily arrive when California would be an importer of breadstuffs and an exporter of tens of thousands of car loads of fresh and canned fruits; and that an almost unconsidered mineral product would outrank in importance as a source of wealth the output of the placer and gold mines of the state.
It is doubtful whether the baser metals or petroleum engaged much of the attention of San Francisco in the early Seventies. "Coal oil" was sought for in a perfunctory manner after the dissemination of the news of the discovery in Pennsylvania but without practical result. It would have been extraordinary if the peculiarities of the region where the California discoveries of importance made in later years had escaped notice. As a matter of fact, they did not. Men acquainted with the formations in the Titusville region were sure that the search for oil in California would be rewarded, but they could not enlist the interest of capitalists. In 1876, the "Ventura Signal" published an article complaining of the indifference shown by the latter, but was rebuked by a San Francisco paper, which scouted its contemporary's assertion that oil found in the vicinity of San Buenaventura could "be reduced and placed in the market as a first class burning fluid." "If," remarked the San Francisco editor, "the 'Signal' desires to gain the ear of capitalists and induce them to look at the subject seriously with a view to investing it must go into it more in detail."
This "you must show me" attitude of San Francisco capitalists was characteristic of the period and applied to almost every sort of enterprise excepting the search for the precious metals. The men who had made their money in mines or by speculating in mining stocks were ready to embark in undertakings of the most dubious sort if the lure was gold, and they were not reluctant to invest in real estate and were even ready to put up buildings, but they were disinclined to take up occupations about which they knew nothing. They lacked the confidence which inspired men in the older communities to back the proficient, and not without some cause, for experience had demonstrated quite early that the conditions which made the investment of capital in manufacturing and other industries quite safe in the East were not present in the new state.
That the discovery of the great ore body in the Comstock contributed to this attitude of indifference towards other enterprises than mining is not surprising. For a period it turned the minds of San Franciscans from the contemplation of other modes of acquiring wealth than by speculating in stocks or making a lucky strike in a mine. From 1872 until the decade was well spent the community was kept in a whirl of excitement. Occasionally the flames of speculation flared up more brightly than at other times, but during the entire period they burned with a consuming heat which destroyed the commercial vitality of the people. This was the greatest evil produced by the discovery of the big bonanza. The unscrupulous manipulation of the stock market, and the robberies practiced by unprincipled men who unhesitatingly took the last dollar of their victims, were criminal offenses whose consequences were disastrous to the individuals whose cupidity caused their misfortune, but the most serious result was that which flowed from the arrestment of progress, due to the diversion of capital from productive enterprises and turning it into the pockets of men who were neither desirous nor capable of making a proper use of their acquisitions.
The so-called "big bonanza" was discovered during the period of speculation which began with the uncovering of rich ore deposits in the Crown Point and Belcher mines on the Comstock and the Raymond and Ely mine at Pioche, Nevada, in 1872. The excitement produced by these discoveries immeasurably surpassed that winch attended the speculative era that began in 1863, when Gould and Curry, Savage, Ophir and Hale and Norcross, all on the Comstock lode, were the stocks chiefly dealt in by the brokers and which a gullible public stood ready to buy despite the fact that watering was unblushingly practiced and that absolutely no dependence could be placed on reports of those in control of the mines, who were more interested in manipulating them so as to absorb the earnings of the people by levying assessments than they were in extracting their ores. There was no doubt about the great richness of some of these mines. Between 1860 and 1876 those in control of Gould and Curry took out $15,178,118, and during the same period there was extracted from Savage $15,703,279, yet these two companies paid dividends amounting to only $8,286,000, while over $23,595,000 was consumed in operating or was grabbed by the manipulators.
The experience of the Sixties did not serve as a warning to the people of San Francisco and the rest of the state. That they disregarded it was not due to ignorance of the villainies practiced by the manipulators, for the community clearly understood that it was being fleeced, and that in nine instances out of ten the money risked by those who bought on margin was at the mercy of sharpers who were playing a game with marked cards. With most of those who dealt in stocks the process was a gamble pure and simple. There was much affectation of consideration of the possibility or probability of ore bodies being uncovered, but no one was deceived by it; least of all the victims of the villainy who were well informed concerning the propensity of the manipulators, even when rich ores were found to so manage matters that few excepting themselves derived any benefits from the discoveries.
Side by side with the speculation involved in buying and selling on margin there was a practice equally pernicious which caught the credulous in great numbers. Mining companies were created by wholesale whose stocks were greedily absorbed by silly people who permitted themselves to be deceived by lies concerning developments which were circulated to induce the dupes to pay assessments. Men went on year after year paying the demands made upon them by unscrupulous rascals who consumed the money they received in paying themselves extravagant salaries and in maintaining costly offices. The amount thus abstracted by these cunning operators was enormous, while the returns to the investors were comparatively insignificant.
It would be impossible to describe all the methods resorted to by the manipulators to absorb for their own use the wealth extracted from the mines with the money paid in by stockholders for their operation. In a message to the legislature in 1872, Governor Newton Booth made reference to a notorious practice which is punished with imprisonment when the offender is a workingman, or a mere servant, but was passed over in the case of the leading spirits controlling the large mines which should have paid handsome dividends to the stockholders if their proceeds had been honestly distributed. He said: "It is not uncommon to find one class of stockholders enriching themselves from a company which impoverishes another. So common is this, especially with mining companies, that it has become proverbial and grown into a distinct and disgraceful code of morals, one of whose tenets is that to own a majority of stock or a controlling interest is to own it all. No stockholder in a corporation," urged the governor, "should be allowed to hold any interest in a corporation which is distinct from and may become antagonistic to the interest of the company as a whole." In this criticism Booth indicted the practice by which mine operators in control managed to divert into their own pockets all the gold extracted by paying extortionate prices to subsidiary companies for performing services which should have been performed by the companies for the benefit of the body of stockholders. This disreputable trick was copied from the managers of the Central Pacific, but the avarice of the men who obtained control of the Comstock mines was so great that at times their operations made those of the railroad men seem mere petty larceny affairs by comparison. Mention has been made of the enormous amount extracted from Savage and Gould and Curry, and the insignificant sum paid to stockholders. A large part of the money robbed from the latter was obtained by the practice denounced by Booth.
If thus early a governor was called upon to denounce this refined system of robbery there was certainly some excuse for the impassioned sand lot oratory in which the mining manipulators were denounced as "the cormorants and vultures of society." The excesses of the speculative era of the Sixties were small by comparison with those which became glaringly apparent after 1872, and continued until the community was nearly squeezed dry. Saturnalia is a much-overworked word, but it is one that best describes the activities of the years of unblushing recklessness during which San Francisco was exploited by the mine manipulators. The astonishing alacrity with which the people embraced the opportunity to get rid of their earnings by cutting loose from all economic traditions is too suggestive of a sort of madness to be classed as a mere experience. Nothing short of a term which implies a complete abandonment of ordinary restraints and disregard of the future can convey an adequate impression of the condition which existed in San Francisco between 1872 and 1877.
There have been speculative disturbances in New York which have surpassed the magnitude of the operations in San Francisco following the discovery of the big bonanza, but there never was one in which a whole community involved itself so generally as the people of the Pacific coast city did between the years mentioned. The best testimony on this point is that of a broker who subsequently in reviewing the conditions produced was actually able to find some words in defense of the iniquities of the period. He tells us that the infection pervaded all ranks of society. Asking the question "From whence come our orders?" he answered it by saying: "Imprimis from San Francisco and literally from the kitchen to the pulpit; from every shade in life, and every nationality represented in San Francisco. Chinamen were large gamblers in mining stocks, and wherever the telegraph wires extended large orders would roll in."
During the height of the excitement the streets in the neighborhood of the mining stock exchanges were so crowded that they became almost impassable.
Police were required to clear the tracks when a slow-moving horse car passed through Montgomery street, although that thoroughfare was a half block distant from the scene of operations. So dense were the throngs that brokers had to be assisted by officers to reach their places of business, and the board rooms. And so keen were the people to engage in the gamble that it became necessary to hold informal sessions during which the heaviest business of the day would be transacted.
The term credulous when applied to the participants only describes the practices and not the beliefs of those who took part in these exciting scenes. One of the marvels of the situation was the cynical attitude of the participants. It was no uncommon thing to hear men who had invested their money in stocks speak of the prevalent roguery of those who manipulated them. Volumes could be filled with stories, some of them apocryphal but all illustrative, describing rascalities which resulted in the impoverishment of the victims. A curious feature of these relations was the utter absence of indignation attending the recital which even when tragic would be considered humorous. One current story seemed to impress all classes as particularly funny. It was to the effect that one of the bonanza quartette had imparted in confidence to a minister that a certain stock was going to move upward. Although he was enjoined to keep the information secret nearly every member of his congregation received a tip, and they all bought largely. Exactly the reverse happened; the stock went down and the dupes lost heavily. The minister when he reproached the mining manipulator was met with expressions of regret, accompanied by an offer to reimburse him for his losses, but of course the speculative members of his congregation, in the parlance of the street, had to "take their medicine."
The story as related may have been untrue, but those who told it, and their hearers, believed it, or at least were convinced that there was no trick too base or deception too vile from which the big men who controlled the mines would shrink in order to get money. It might be imagined that a community possessed of such beliefs would arise and drive its despoilers from their midst, but queerly enough resentment was modified by the illogical opinion that in some inscrutable fashion the men who were robbing them were conferring a benefit upon the City. The process of reasoning was something like this: "A healthy stock market, one founded upon a discovery of rich ore has always proved a great advantage to San Francisco. With a rise in value, a small owner of stock purchased at low figures becomes comparatively wealthy. Experience shows that, as a rule, a man struggling with debt on his shoulders, should he be one of the fortunate owners of stock in a mine where rich ore has been found will sell at about the time when his profits will pay all his debts, and debts of say $10,000 paid in this way may pass through the hands of a hundred other people, each one paying some long neglected obligation. This in a way means prosperity to the community; money placed in circulation in this way always does an immense amount of good, taking the stagnation out of a previously dull period."
It would be a waste of words to point out the fallacies of this argument made by a well-informed broker, but there is not the slightest doubt that a very large proportion of the people of San Francisco really believed that it was the speculation which produced the brief period of prosperity that followed the discovery of the California and Consolidated Virginia mines, and not the wealth which they added to the community. It might have been urged that the sales of stocks of even those companies which never returned any dividends to their investors contributed to the prosperity of the City by stimulating the search which resulted in finding paying mines, but it is incredible that anyone should have imagined that the betting transactions known as dealings in futures could have profited anyone but the brokers, and the winners, except upon the theory that the latter were easily separated from their gains.
And indeed this was true. Almost as disastrous in its effects as the losses of dupes was the example of extravagance which successful operators set the community. "Easy come, easy go" was their motto. In the whirl of excitement which marked the close of the year 1874, both Con. Virginia and California made the extraordinary advance of $500 in price per share in less than thirty days. The fluctuations during the four months beginning with November 1874, and ending February 25, 1875, of the three leading stocks were no less remarkable than the phenomenal rise above mentioned. California which sold at $90 on November 17, 1874, advanced to $160 on December 3rd, was sold at $300 on December 17th, at $100 on the 23rd and at $480 on the 30th. On January 7th it reached $790, the top price. A week later it was down to $590 and on February 18th it was $50. Con. Virginia had a nearly similar experience, rising from $160 on November 17, 1874, touching $710, its highest point, on January 7, 1875, and descending to $415 on February 4th, from which it mounted to $440 on February 25th. Ophir which started at $90 November 17th, touched $315 January 7, 1875, and dropped to $77 on February 25th.
These tremendous fluctuations were caused by the interests battling for control, and those who entered the contest were under no illusions respecting the cause of the phenomenal advances, nor were they wholly unprepared for the subsequent recessions. The volume of transactions was large and the number participating was great. Those not in the ring were without any information whatever and were simply staking their money on the turn of a card, for in the moments which attended the fights for control the people who gambled did not have the sorry excuse which they consoled themselves with at other times that they were acting on a "tip" which they believed to be reliable. One of the most extraordinary features of the mining stock craze in San Francisco was the utterly irrational conduct of the majority of those who speculated. Those who have any acquaintance with the movement of the Eastern stock market, the principal dealings of which are in railroads and industrials, know that the whole line moves up and down in sympathy at times. There is nothing surprising in this unison for the same cause which affects one stock may extend to all similar stocks, and communicate itself to all securities dependent upon business prosperity and adversity. That the value of mining stocks should have displayed the same sympathetic variations seems preposterous and proves conclusively that the mass of San Francisco speculators, in the parlance of the street, were "suckers."
The manipulators were perfectly aware of this fact and were quite willing to pay for the privilege of angling in the muddy stream for the silly fish. The sales of stocks on the boards had fallen off greatly during the opening year of the Seventies, the total of 1870 reported by one exchange aggregating only $51,186,000. In the ensuing year this amount jumped up to $127,888,000, and great eagerness was displayed to secure the listing of new companies. The brokers were prompt to take advantage of this pressure and advanced the listing price from $200 to $600 in April 1872, and later on raised it to $1,000. Before the fires of the excitement were extinguished by the calamitous failures of 1876, the listing price was $2,000, and many utterly worthless mines received the stamp of approval of the exchange because their owners or those in control were willing to pay that figure for the privilege of having their stocks quoted.
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