CHAPTER III.

THE SAN FRANCISCO RUEF RULED.

The decade ending 1910 was for California an era of extraordinary enterprise and development. A third transcontinental railroad, the Western Pacific, was completed; vast land-holdings as large as 40,000 acres in a body were cut up into small tracts and sold to settlers; waters brought to the land by vast irrigation enterprises increased the land's productiveness three and even ten fold; petroleum fields, enormously rich, were opened up and developed; the utilization of the falling waters of mountain streams to generate electric power, brought cheap light and power and heat to farm as well as to city factory. The Spanish war had brought thousands of troops to the coast. Practically all of them passed through San Francisco. This particular activity had its influence on local conditions. The State's population increased from 1,485,053 in 1900 to 2,377,549 in 1910.

Up to the time of the San Francisco fire, April 18, 1906, San Francisco, of the cities of the State, profited most by this development. San Francisco bank clearances, for example, increased from $1,029,582,594.78 for the year ending December 31, 1900, to $1,834,549,788.51 for the year ending December 31, 1905, a gain of 80 per cent.

San Francisco's increase in population during those five years, can, of course, only be estimated. On the basis of the registration for the 1905 municipal election, approximately 98,000, San Francisco had, at the time of the 1906 disaster, a population of about 500,000, an increase from the population of 342,782 shown by the 1900 census of practically 50 per cent. in five years.[26]

The rapid increase in population, the sustained prosperity of the community, and its prospective development made San Francisco one of the most promising fields for investment in the country.

The public service corporations were quick to take advantage of the San Francisco opportunity. Those corporations already established sought to strengthen their position; new corporations strove for foothold in the promising field. Thus, we find the Home Telephone Company, financed by Ohio and Southern California capitalists, seeking a franchise to operate a telephone system in opposition to the Pacific States Telephone and Telegraph Company, which was already established. And we find the Pacific States Company taking active part in municipal politics to prevent the Home franchise or any other opposition telephone franchise being granted. The corporation holding the light and power monopoly, the Pacific Gas and Electric Company, had by the time of the third Schmitz inaugural, practical control of the San Francisco field. But it was face to face with a clamor for reduction of gas rates. The company was charging one dollar a thousand for gas. The Union-Labor party platform of 1905 pledged the Board of Supervisors to a seventy-five-cents-per-thousand rate.

Another matter of tremendous importance to the growing municipality was that of the supply of water. The Spring Valley Water Company had a monopoly of this necessity, but demand for municipal water to be brought from the Sierras was strong. A committee of experts had been appointed to pass upon the various sources of supply. Ruef appeared before them as spokesman for the Supervisors. The experts resigned when it was made clear to them that instead of being permitted to make an adequate study of all available sources of supply they were to report upon the Bay Cities project alone.[27] After the ousting of the Schmitz-Ruef administration the Bay Cities project was ignored and bonds authorized to bring water from Hetch-Hetchy valley. The Spring Valley Water Company, however, has been successful in blocking this project, and in 1914, San Francisco seems almost as far away from realizing her ambition for a supply of pure water as in 1905-6 when Ruef and his followers were at the height of their power.

The public-service problem which was attracting the most attention at the time of the great fire, was that of street-car transportation. The principal lines had passed into the hands of the United Railroads.[28] The corporation had, at the time of Schmitz's election in 1905, practically a monopoly of the San Francisco street-car service.

The company's principal lines were operated by the cable system. But fully five years before the fire, all traction officials as well as the general public, recognized that San Francisco had outgrown the cable road. It was admitted that electric lines must be substituted for the cable, but there was sharp division as to the character of the electric lines which should be installed. The officials of the United Railroads proposed the overhead trolley method of propulsion; the public, so far as it could find expression, declared for the underground conduit system.[29] In taking this position, the public was in reality backing up the municipal engineers, who had been sent to Eastern States to investigate electric transportation systems, and who had found in favor of the conduit and against the trolley.[30]

The San Francisco Merchants' Association, however, apparently dissatisfied with the reports of the engineers employed by the municipality, employed Mr. William Barclay Parsons to report on the relative merits of the trolley and the conduit systems.

Mr. Parsons took issue with the city's engineers, and recommended the trolley as against the conduit.[31] The directors of the Merchants' Association thereupon declared for the trolley system.

Criticism of this action of the directors was followed by submission of the question to a referendum vote of the Association membership. The members voted in opposition to the directors, declaring against the trolley and for the conduit.[32]

But the most determined opposition to the installation of the trolley system came from improvement clubs, whose purpose was to promote the best development of San Francisco.

Prominent among these organizations were the Improvement and Adornment Association,[33] the Sutter Street Improvement Club[34] and the Pacific Avenue Improvement Club. The membership of these organizations consisted of some of the largest owners of San Francisco properties. The leaders were comparatively young men, natives of San Francisco, whose interests were inseparably wrapped up in the community, and who aimed to promote the best possible development of the city of their birth and fortunes.

Prominent in this group were Rudolph Spreckels[35] and James D. Phelan,[36] rated among the heaviest property-owners of San Francisco. These men were ready to join with the United Railroads in any plan which proposed the highest development of the street-car service.[37] On the other hand, they were prepared to oppose any attempt to exploit the service to the detriment of San Francisco.[38]

A conference of the directors of the Improvement and Adornment Association with officials of the United Railroads was finally arranged.[39] The meetings were held in March, 1906, less than a month before the great fire. There were, before the attempted adjustment was abandoned, several sessions.

The citizens urged Patrick Calhoun, president of the United Railroads, to give up his trolley design for Market and Sutter streets. As a compromise, he substantially agreed to build the underground conduit as far as Powell on Sutter, and as far as Valencia on Market, picking up the trolley on Valencia, McAllister, Hayes and Haight streets. The Adornment Committee directors wanted the conduit system on Sutter street extended as far as possible, and held out for Van Ness avenue. Calhoun would not consent to install the conduit beyond Powell.

In the midst of this deadlock, the San Francisco Chronicle published what purported to be reports of the several conferences. Up to that time there had been no publication of the meetings.

Following the Chronicle publication, Calhoun, in a letter to members of the Adornment Association, declared the information contained in the Chronicle article to be inaccurate,[40] and offered to let the people decide whether they wanted a conduit system on Market street to Valencia, and on Sutter street to Powell, or a uniform all-trolley system throughout the city.

Mr. Calhoun's suggestion seemed reasonable until he stated in an interview that by the people he meant the Board of Supervisors.

He was asked how he proposed to ascertain the wishes of the people.

"I should suggest," he is reported as replying, "that the matter be referred to the decision of the Board of Supervisors. The Board of Supervisors is a public body selected by the people, and represents the ideas and wishes of the people of the city."

The reply was not well received. The Supervisors were even then under suspicion of corruption. Less than a fortnight before, March 10, the Examiner had called the board's action on an ordinance which was supported by the Home Telephone Company "suspicious," and had stated that the board had "made the mistake of acting as a bribed Board of Supervisors would have acted."[41]

Later on, the Supervisors themselves confessed to having been bribed to grant the telephone franchise. The public, not at all blind to what was going on, believed, even at the time Mr. Calhoun made his suggestion, although there was no proof, that the Supervisors had been bribed.

San Francisco was opposed to any plan that would put trolley cars on the city's best streets. Submission of the issue to the people would have been popular. Mr. Calhoun's proposal that it be left to the Supervisors was met with suspicion, and open distrust of Mr. Calhoun's motives.

In answer to the criticism which Mr. Calhoun's suggestion had aroused, Mr. Calhoun, in a second letter to the Adornment Association, withdrew his offer to submit the question to the people, and announced the intention of his company to proceed with preparation of a plan for a uniform trolley system to be installed wherever the grades would permit.[42]

This second letter was made public in March, 1906, less than a month before the fire. The position taken by the United Railroads was generally condemned.[43] But the opposition took more practical form than mere denunciation. A group of capitalists, headed by Claus Spreckels, father of Rudolph Spreckels, Rudolph Spreckels and James D. Phelan, announced their intention to organize a street-railroad company, to demonstrate the practicability of operating electric cars in San Francisco, under the conduit system.

The plan was given immediate endorsement both by press and general public. The project was explained in detail to Mayor Schmitz, who in a published statement gave the enterprise his unqualified approval.[44] But when the incorporators sought further interview with Mayor Schmitz, they found themselves unable to secure a hearing.

The company, under the name of the Municipal Street Railways of San Francisco, was formed with Claus Spreckels, James D. Phelan, George Whittell, Rudolph Spreckels and Charles S. Wheeler as incorporators. The capital stock of the company was fixed at $14,000,000. Of this, $4,500,000 was subscribed, ten per cent. of which, $450,000, was paid over to the treasurer.[45]

With this $450,000 an experimental line, under the conduit system, was to be built on Bush street.[46]

The articles of incorporation provided that the franchises acquired under them should contain provisions for the acquisition by the City and County of San Francisco of the roads thus built.[47]

The new company filed its articles of incorporation with the Secretary of State at Sacramento on April 17, 1906.

In the early morning of the day following, April 18, came the San Francisco earthquake and fire. For the moment the public forgot all differences in the common disaster. But the lines of division between exploiter and builder could not be wiped out, not even by the destruction of the city. The contest, which had, without any one realizing its full significance, been fast coming to a head before the fire, was to take definite shape after the disaster.

FOOTNOTES:

[26] Patrick Calhoun, in a letter to the press, dated March 21, 1906--less than a month before the great fire--stated that the time was near when the San Francisco street-car system would have to serve a million people. The 1910 census, taken four years after the fire, gave San Francisco a population of 416,912.

[27] Ruef testified before the Grand Jury that the water deal would have been the most important pulled off by the Board of Supervisors. He testified that he had told Gallagher to tell the members of the Board there would be more money in it than had been received in any other deal. Ruef gave Gallagher to understand that the amount to be divided would be as much as $1,000,000.

[28] The United Railroads was controlled by Eastern capital. Before the entrance of the United Railroads into the San Francisco field, California capital had dominated in purely local public utilities.

[29] The public's opposition to the overhead trolley system was that the poles and wires would be a disfigurement of what were regarded as the best streets; that the wires were dangerous, and would interfere with the work of firemen in fighting fires; that San Francisco was as much entitled as Washington and New York to the best system. Rudolph Spreckels at the trial of Patrick Calhoun for offering a bribe, testified as to his own opposition:

"I believed that the overhead trolley was unsightly; that it increased the risk of fire; that it was dangerous; that it was noisy and unsightly. I believed from my own observation of the operation of the underground conduit system in other cities that it was preferable, that it was more sightly, just as rapid, and in every way more in keeping with a city of the size and importance of San Francisco. Having been born here, and having large property interests I felt it my duty, as I always have, and hope I always shall, to protect the interests of this community and to protect the interests of its citizens and its property owners. That was my purpose in opposing that franchise and that grant."

[30] As early as 1901, C. E. Grunsky, at that time City Engineer, was directed by the Board of Supervisors to gather data on the operation of electric roads under the conduit system. Grunsky's findings were to the effect that conduit-electric roads were rapidly replacing other types of street railroads.

The city also employed J. C. H. Stutt as consulting engineer, and sent him to New York and Washington to inspect and report upon the conduit systems in operation in those cities.

He reported that the system was giving satisfaction in both cities, and in many cases was being substituted for the trolley. Engineer Stutt in comparing the two systems said:

"As between the overhead system and the conduit-electric system, it is natural for private corporations to prefer the overhead trolley system on account of the first cost of roadbed construction, which is more than twice as great for the conduit system. The conduit system leaves the street open with the view unobstructed by poles, conductors, feed, guard and supporting wires and without the menace to the public and especially to the firemen, always inherent in the bare overhead electric conductor."

This report was widely quoted during the overhead-trolley-conduit agitation that was a feature of a greater part of Mayor Schmitz's administrations.

[31] Mr. Parsons found for the overhead trolley on the following general grounds:

(1) That a uniform system was necessary.

(2) That the lines must be extended to the suburbs.

(3) That operation by overhead trolley is more satisfactory than by the conduit system.

(4) That the greater part of the roads could be operated under trolley only.

[32] Several questions were presented. The following is the vote as given in the Merchants' Association Review, the organization's official publication, for February, 1906:

"TOTAL VOTE OF MEMBERS, 364.

"1--Do you favor Mr. Parsons's view of a uniform system of overhead trolley lines throughout the entire city, including a central line of ornamental trolley poles, with lights furnished by the Railroad company between the tracks on Market Street, and a trolley line with ornamental poles and lights furnished by the Railroad upon Sutter Street?

"Votes received--Yes, 121; No, 204.

"2--Do you favor an overhead trolley system throughout the city except on Market Street?

"Votes received--Yes, 67; No, 212.

"3--Do you favor an underground conduit system for Market Street and for the streets with cable lines leading into Market Street in the central downtown district and in the adjacent residence district, the remainder of the system to be overhead trolley?

"Votes received--Yes, 198; No, 84.

"4--Irrespective of what shall be done on any other streets, which system do you favor for Sutter Street: (a) an underground conduit, or (b) an overhead trolley line if equipped with ornamental poles and lights furnished free by the Railroad company, or (c) an improved cable system?

Underground Conduit Trolley Cable

"First Choice 217 93 5 "Second Choice 42 83 62 "Third Choice 7 14 94

"5--Do you favor changing the cable lines on Nob Hill to electric lines by tunneling the hill and constructing a winding driveway with parks on California Street, as proposed in Mr. Parsons's report?

"Votes received--Yes, 158; No, 140."

This vote was taken after an extended debate at a banquet given by the Association in which Patrick Calhoun, president of the United Railroads, argued for the trolley system, and Frank J. Sullivan, president of the Sutter Street Improvement Club, spoke for the conduit.

[33] The Improvement and Adornment Association employed D. H. Burnham to draw plans for the development of San Francisco. These plans, while drawn to attain a maximum of utility, were intended to secure a maximum of beauty as well. Streets were to be widened, boulevards built, parks established. The carrying out of these plans would have made San Francisco one of the most beautiful cities of the world. Their preparation cost the association $17,500. Mr. Burnham volunteered his own services.

[34] The objection of the Sutter Street Improvement Club to the overhead trolley was set forth in the following statement, issued less than a month before the great fire of 1906:

"The Sutter Street Improvement Club is unalterably opposed to the construction of an overhead trolley line on the Sutter Street system. We desire that the public should have no misconception of our position. We propose to contest to the end any attempt to get an overhead trolley on the entire Sutter Street system, and for that purpose we pledge ourselves, and promise to provide the necessary counsel to maintain our position in the courts. We want the public with us in this fight, as the fight is being made in the interests of the whole people.

"Our own investigations make us absolutely certain that if the public understands the true situation, it will not be misled by the specious arguments of the United Railroads. The conduit electric system, despite what the United Railroads and its representatives may say, is practicable, safe, efficient and superior to an overhead trolley. We are further satisfied that the company is seeking, by an offer of $200,000 which they offer to the people, to save itself an expense of several million dollars, which the conduit electric system would cost, if it should be required to reconstruct all its lines using the conduits; but we believe--and we are certain that the citizens of San Francisco will agree with us in this--that since the United Railroads, through the watering of its stock, has already made many millions of dollars out of its properties, and is now taking, and will take many millions of profits from our people, that it can afford to contribute to San Francisco the cost of the most attractive and efficient system of electric railroads. The United Railroads has put forward many arguments which have been and are easily met:

"First: It contended, as the public will remember, that the conduit electric system was impracticable on account of the accumulation of rain water in its conduits. This claim it has been forced to abandon.

"Second: It proclaimed loudly that the added cost of construction of an electric conduit was such that the life of its franchise would not justify the outlay. Now, they have abandoned this claim, and assert that it is not the cost of construction, but that there are other reasons.

"Third: They have declared that a uniform system was desirable. They now admit that a completely uniform system is impracticable, owing to grades, making it necessary to operate some lines by cable. Their only contention now is that the overhead trolley system is more efficient than either the cable or conduit electric system.

"Mr. C. E. Grunsky is our authority for the statement that in making the change from the conduit electric to the trolley, in passing from city to suburbs, there are no objectionable features, nor danger. Sir Alex. B. W. Kennedy, consulting engineer to the London County Council, in recommending the adoption of the conduit electric system for London's municipal street railways, said: 'There is no difficulty in arranging the cars so that they can be run from the underground (conduit) to the overhead and vice versa, either with no stoppage at all at the point of change, or with a stopping of only a few seconds. There is no engineering difficulty whatever in using a mixed tramway system, i.e., partly underground (conduit) and partly overhead.'

"We would suggest that the public compare the present overhead trolley system, operated by the United Railroads these many years in this city and county, with the service rendered by the California Cable Railway. There is no overhead trolley system in San Francisco to-day which surpasses the service given by the California Street Company.

"It is claimed that the public will be given a speedier and more efficient service if the overhead trolley is permitted. We ask the thousands of citizens who have been compelled to wait for overhead trolley cars, and to stand up in those overhead vehicles, whether or not the overhead trolley has thus afforded them satisfactory service? If we may judge the future by the experience with the overhead trolley of the past, it means fewer cars (hence less expense to the United Railroads), overcrowding and discomfort of passengers. The only advantage which thus far has come from the system seems to be to the company itself. It employs fewer men as a result of that system, but the comfort and convenience of the public have not been substantially bettered by it as against the cable.

"Before asking our people to give them an overhead trolley system throughout the whole city, the United Railroads would do well to show on some one of their overhead trolley lines now in operation a frequent, efficient and satisfactory service to the public. We do not want for San Francisco an extension and perpetuation of the unsightly, noisy, dangerous, uncomfortable and inefficient system of overhead trolleys as operated by the United Railroads to-day.

"Citizens of San Francisco: Be not deceived by the selfish and specious arguments put forward by the United Railroads. If the public will stand together, we will win out in this fight; and, if it should be necessary to that end, the supporters of our organization will put before our citizens a plan for building a complete conduit electric system of railroads for San Francisco, to be built, in the first instance, by our people, but with a provision giving to the city an option to purchase the same at any time in the future at actual cost and interest, so that municipal ownership of the said system may result just as soon as the city is ready for it.

"All that we ask is that the people stand fast, and save their city from what we believe would be a calamity from which it would not recover in the next twenty-five years.

"Respectfully.

"Frank J. Sullivan, Rudolph Spreckels, Julius Rosenstirn, Geo. W. Merritt, W. D. McCann, Houghton Sawyer. Edward P. E. Troy, Secretary."

[35] Rudolph Spreckels is a native of San Francisco. At seventeen he was employed in his father's (Claus Spreckels) sugar refinery at Philadelphia. The Spreckels refinery was at the time in a life-and-death struggle with the "Sugar Trust." Young Spreckels was given his first lessons in the methods employed by the "trust" elements to crush competition. His Philadelphia training in large degree prepared him for the work which later he was to do at San Francisco. At twenty-two he became president of the Hawaiian Commercial and Sugar Company, owners of one of the largest sugar plantations of the Hawaiian Islands. The venture had been a losing one. Spreckels put it on a paying basis within a year, and sold it at large profit. Before he was twenty-five he had become a millionaire in his own right. He has been engaged in business at San Francisco for many years, but only when moved by corrupt conditions to take up the fight for honest government did he become active in politics. He financed the graft prosecution. He has since taken active part in California politics, but has steadfastly refused to accept public office, preferring to do his work as a private citizen.

[36] James D. Phelan is a native of San Francisco. He is one of the largest owners of real estate in San Francisco and in California. From his youth he has taken keen interest in public affairs. He was chairman of the Charter convention of 1900 which framed San Francisco's present municipal Charter. He was Mayor of San Francisco from 1896 to 1902. After the San Francisco fire he headed the Relief Committee and was largely instrumental in directing the work of rehabilitation. President Roosevelt designated him by proclamation to receive funds for the relief work, and to use the United States Mint as depository. In 1900 the Democratic minority in the State Legislature gave him complimentary vote for United States Senator. In 1914 he was elected to the United States Senate, being the first Federal Senator from California to be elected by direct vote of The People. Senator Phelan has for many years been close friend and business associate of Rudolph Spreckels. He was one of the heaviest backers of the graft prosecution.

[37] Rudolph Spreckels testified at the trial of Patrick Calhoun:

"I suggested to Mr. Calhoun one thing, that if it was a question of the length of the franchise, of the length of life of the present franchise, standing between the people getting the system which I believed it was entitled to, I would personally be glad to do whatever was in my power to have the Charter amended so that they might enjoy a longer term of franchise, to work out the difference in cost; but that I believed it was all important that San Francisco should have the very best of street-car service obtainable."

United Railroads officials objected to the conduit system on the ground that the conduits would fill with water. Spreckels suggested that property owners agree to drain the conduits without expense to the United Railroads, thus demonstrating their practicability, on the understanding that if the conduit system were found to be practical it should be installed. But in this the United Railroad officials would not acquiesce. (See testimony taken at the Calhoun trial.) The following is taken from Charles S. Wheeler's testimony given at the Calhoun trial:

"Mr. Heney: Q. Did not the property owners on Sutter street and the property owners on Pacific avenue, Mr. Rudolph Spreckels and Mr. Phelan in particular, state that they would not oppose the United Railroads obtaining a franchise or permit for the underground conduit on Sutter street?

"Mr. Stanley Moore: That is objected to, if your Honor please, as calling for the conclusion of the witness and the mental mind and statement and hearsay of other persons.

"Mr. Heney. I am not asking for their mental mind. I am asking about direct statements at these meetings of committees of the Board of Supervisors.

"The Court: I will overrule the objection.

"Mr. Stanley Moore. We take an exception.

"A. I have [heard] both of them make such statements; Mr. Phelan in substance before the Board of Supervisors, and I have heard Mr. Spreckels make it in the Supervisors' chambers." (See Transcript of Testimony, page 3197.)

[38] Patrick Calhoun, president of the United Railroads, had several conferences with Rudolph Spreckels on the questions involved in the street-car situation. Of these conferences Spreckels testified at the Calhoun trial:

"Mr. Calhoun stated that he was very anxious to obtain the overhead trolley privilege, that he understood that I was actively opposing it, and he wanted to know whether I was open to conviction on the subject. I told him that my mind was entirely free, that if he could prove to my satisfaction that the underground conduit was not feasible that I would have no objection. I told him that the arguments that he had presented, namely, that the Sutter street system could not be converted into an underground conduit system because of the accumulation of water at some number of points--I think 16 were mentioned--was hardly worth while urging since Mr. Holland, a former president of the United Railroads, had, together with Mr. Chapman, urged that reason, and I related to Mr. Calhoun that I had questioned Mr. Chapman and Mr. Holland at length in regard to it and had satisfied myself that their reasons then urged were not legitimate or reasonable; that during the conversation with Mr. Holland I had asked him to state all of the reasons that he had for desiring the overhead and urging against the installation of the underground conduit; that Mr. Holland and Mr. Chapman had both assured me that the only reason was the fact that it was an engineering impossibility; that the accumulation of water in the conduits during the rainy season would prevent the successful operation of the cars, that there would be repeated interruptions and general dissatisfaction as the result. I then proposed to Mr. Holland, I said: 'If that is the only reason and you can convince me that that is true I have no objection to withdrawing my opposition, but I want to propose this: Suppose I, or the property owners on the system involved, agree to pay the expense of the proper drainage of those conduits, and succeed for a period of twelve months in treating the conduit drained at those points you indicate, and succeed during that entire term to keep them free from water, so that you and your engineers will be obliged to admit that there was not one hour during the twelve months during which you could not successfully operate an underground system, will you then agree to install that system?' Mr. Holland and Mr. Chapman looked at one another and finally said 'Well, no, we cannot do that.' Then I said: 'Gentlemen, you are wasting my time and your own because your argument is not the truth and is not the only reason you are urging, or that is prompting you to object to putting in that system.'

"Mr. Holland then proceeded and asked me how I proposed to insure that result and I told him I was not an engineer, but that common sense told me and indicated to me that it might be possible to carry off the water at those points through an ordinary stone sewer-pipe and distribute the accumulated waters to the various streets running parallel to Sutter street, and in that way carrying it off and keeping the conduits free from water. Mr. Calhoun said: 'Well, there are other reasons--the question of a uniform system.' He urged very strongly that it would be a very desirable thing to avoid transferring, or it would be an exceedingly nice thing if a man could go to his home without transferring, and have a uniform system of cars operating over all of the system. I told Mr. Calhoun it was hardly a possible thing, that no man would want to stand at any street corner and wait for fifteen or twenty cars to go by until some one car of a particular brand would come along which would take him to the particular part of the city he cared to go to. Then Mr. Calhoun wanted to know if the matter couldn't be compromised, whether I would be satisfied, if the United Railroads would agree to construct an underground conduit system on Sutter street from Market to Powell. He wanted to know also about constructing an underground conduit on Market street, and I told him no, that this did not enter into my calculations, that I was looking to the welfare of the city of San Francisco, that it did not involve merely getting what I wanted in front of the particular properties in which I was personally interested, and I told him that the reasons that had been urged against the granting of an overhead trolley--that it was unsightly, dangerous and noisy and not the most modern system, was my objection, and that it held good for the entire city and not alone on the streets in which I was interested as a property owner. Mr. Calhoun urged further the desirability of the overhead trolley, that it had given satisfaction elsewhere, and I suggested that he might first make the street cars then operated by the overhead trolley in San Francisco a success and satisfactory to the people; that I felt that it was far from a success, and personally, as one of the largest property-owners on Ellis street, I would emphatically prefer the ordinary cable system to the electric lines that they were then operating. Mr. Calhoun asked for another appointment and it was had I think on the following morning, a meeting at the same place, at the Canadian Bank of Commerce; I think our meeting on that occasion was held in the office of the manager, Mr. Kains.

"Q. What was said there? A. I will not be absolutely certain as to whether all that I have related occurred at the first interview, or whether some that I will relate as having occurred now, did not occur on the first interview. The two meetings were close together, and the subjects that I will relate may have occurred, some of them in the previous meeting and some in the latter. Mr. Calhoun proceeded to ask me about Pacific avenue. He said: 'Would you be satisfied if we agreed to operate the underground conduit system on Sutter to Powell, on Market to Valencia, running it, if we changed the system on the Pacific avenue line--to agree to put in the conduit there, otherwise maintaining the cable?' And he also proposed that it might be a nice thing to withdraw the entire street railway system from Pacific avenue, making of that street a boulevard, and placing overhead trolley on Broadway where there was no car line. He said, 'Of course, Mr. Spreckels, you are an owner of carriages and automobiles, and I suppose you don't use the street-cars, and it would be more desirable from the standpoint of a property owner to have your residence under those circumstances on a boulevard than on a street having a street-car service with the attending objections.' I told Mr. Calhoun that my fight was not a selfish one, that I did have carriages and automobiles, that I did not use the street-cars and had no need for them, but that I had in mind the rights of other people living on the street--that there were many people living on the street who were not so fortunate as I, who did not own carriages and did not own automobiles and had undoubtedly been brought to buy their property on Pacific avenue because of the fact that it had a street-car service there. Mr. Calhoun also in one of these interviews said that he would tunnel Powell street hill commencing at Sutter and make that the most important transferring point in San Francisco. I asked Mr. Calhoun at the time whether it was because I was interested in property at the corner of Sutter and Powell. Mr. Calhoun expressed surprise and said he didn't know that I was an owner of property there. I think that in substance was the conversation as I remember it."

[39] Patrick Calhoun, Tirey L. Ford and Thornwell Mullally were among the officials representing the United Railroads at the conference. At the meeting, first mention of $200,000 in connection with the proposed chance in the street-car system was made. Citizens had contended that the objection of the United Railroads in opposing the conduit system was the difference in the initial cost of installation. This point came up, and President Calhoun stated that he would, if the trolley system were allowed, give the difference between the cost of installing the two systems, for any public purpose. This difference, Calhoun stated, would be about $200,000. Turning to James D. Phelan, of the Adornment Committee, Calhoun stated that the money could be used in extending the so-called Park Panhandle, part of the Burnham plans, and a matter in which Phelan was greatly interested. Phelan replied that San Francisco would not accept money for any such purpose, and was able to construct the Park Panhandle if the people wanted it. (See testimony of James D. Phelan at the trial of The People vs. Patrick Calhoun for offering a bribe, page 2750.)

[40] The Chronicle in its issue of March 23, in referring to Mr. Calhoun's letter practically charged him with lack of good faith. The Chronicle said:

The alleged 'inaccuracy' of the Chronicle's interesting report of the compromise reached by the United Railroads and the Society for the Adornment of the City proves to be that the electric conduit in Sutter street is to stop at Powell street instead of extending to Polk street, as proposed, and which is the least which should have been accepted if any compromise whatever was to be made. We shall be greatly surprised if when the changes are finally made there is not a great deal less conduit than Mr. Calhoun now seems to agree to. We gravely doubt whether Mr. Calhoun expects to construct a foot of conduit in this city. However, he does agree to do so under certain conditions and we shall see what we shall see.... It does look as though some settlement of the matter would be reached, as the United Railroads have receded from their iron-clad determination not to consider the electric conduit at all. When that is accomplished we shall speedily see the last of the cables south of California street, a consummation as devoutly wished by the people as was the introduction of the cable in place of the horse-car a quarter of a century ago."

[41] It was openly charged that money had been used to put this franchise through the preliminary steps necessary for its granting. The Examiner in its issue of March 10, some five weeks before the fire, said:

"The Supervisors owe it to themselves to bring back the telephone franchise order for further consideration. Since the hasty vote on the ordinance last Monday ugly rumors have been the measure. The regard of the Supervisors for the good name of the Board demands that they should clear the record of the SUSPICIOUS CIRCUMSTANCES that surround the vote on the order.

"The present Board of Supervisors was elected on a platform that pledged its members to a municipal ownership programme. Among the purposes specifically announced was the ACQUISITION OF A TELEPHONE PLANT to be owned and operated by the city.

"Yet the FIRST ACT OF THE BOARD in dealing with a public utility question is to favor an ordinance granting a franchise for fifty years to a private corporation without proper compensation to the city and WITHOUT ANY CONTRACT that would enable the city to buy out the plant at a just appraisement when the time comes to acquire a municipal telephone system.

"The bill was introduced after a brief hearing and passed to print on the 26th of February. On the 5th of March it was passed to a vote in the Board of Supervisors without discussion. One of the members of the Board who rose to explain his vote was shut off with such indignity that he left the Supervisors' chamber. Nor, indeed, did all the members know what they were voting on; for one of the Supervisors later in the session asked if the telephone franchise was not to be called up, and was surprised to be told that it had already been passed upon.

"This sort of 'gum-shoe' legislation will not do for San Francisco. It inevitably rouses the suspicions of crookedness that have been hawked about the streets since Monday last.

"A telephone franchise is not a matter to be treated lightly. It is an affair of more moment than passing a street or even of fixing a water rate. It deserves the deepest consideration, for the division of service between two companies creates a confusion in business that should be taken carefully into account. It is only the wretched service given by the old company that has brought the backing of a certain popular support to the advent of a new company. The manner in which the obvious evils of a division of service can be lessened requires much more thought than has yet been given, and many changes in the ordinance should be made unless the last state of the San Francisco telephone service is to be worse than the first.

"It is the duty of the Supervisors to recall the ordinance, answer the rumors of crooked work by seeing that everything is carried on above board and in the open, and treat the franchise in accordance with their anti-election pledges to the people. They cannot afford to rest under appearance of evil that now surrounds the late vote on the order.

"We do not wish to believe that any undue influence was used, but the Supervisors must have heard the rumors that are frequent in the streets, and they must realize that they have made the mistake of acting as a bribed Board of Supervisors would have acted. They have broken their pledge, but happily it is not too late for them to correct the gross error."

[42] Mr. Calhoun's second letter, as introduced as evidence at his trial for offering a bribe (page 2775, Transcript, The People vs. Calhoun), was as follows:

"San Francisco, March 23.--Messrs. James D. Phelan, R. B. Hale, Herbert E. Law, Rufus P. Jennings and others--My dear Sirs: You will recall that the only condition on which I consented to even consider the introduction of an underground conduit on Market street from the ferries to Valencia, and on Sutter from Market to Powell, was to secure harmony and unanimity of action in the development of San Francisco. You will further recall that I distinctly stated that 'if all sides to this controversy are not willing to faithfully and loyally abide by what the people of San Francisco may determine on this subject, the United Railroads prefers to urge, in the interest of the development of San Francisco, a uniform system of overhead trolley operation.'

"The development of the last few days, the threatened litigation against my company, and the action of the Sutter-Street Improvement Club, demonstrate that harmony and unanimity of action, so much to be desired, cannot be obtained, and that the United Railroads cannot expect all parties to the controversy 'to faithfully and loyally abide by what the people of San Francisco may determine on this subject.' On the contrary, if the people should elect to put an overhead on Sutter street, the address of the Sutter-Street Improvement Club distinctly states 'we pledge ourselves and promise to provide the necessary counsel to maintain our position in the courts.'

"In view of these facts, I desire to inform you that the United Railroads will proceed to prepare a plan for the improvement of the transportation of San Francisco. The essential feature of which plan will be a modern, up-to-date, efficient and uniform system of electric propulsion, through the introduction of the overhead trolley system wherever the grades of the streets of the city will permit. When this plan is perfected it will be presented to the proper authorities of the city for their consideration. We will be very glad to go over it with you. Under the circumstances, it will be useless for me now to furnish the preliminary plan of which we spoke.

"In conclusion, permit me to express my appreciation of the motives which led you to seek a conference with me, and the earnest desire of every gentleman who participated in that conference to reach a basis of harmonious action in order that the development of San Francisco might not be obstructed and delayed.

"Very truly yours, PATRICK CALHOUN, President."

[43] The Chronicle commented upon Mr. Calhoun's new position as follows:

"The letter written by Patrick Calhoun of the United Railroads to the committee of citizens who have sought to induce him to change his attitude on the subject of overhead trolleys was not in good taste. It exhibited corporative arrogance in its most exasperating form. Mr. Calhoun is too well bred, or perhaps too cautious a man to tell the public to be damned, but every line of his communication breathes the spirit of the insolent utterance of William K. Vanderbilt, and the community will take it that way....

"There is an ill-concealed menace in Mr. Calhoun's declaration that the United Railroads has a plan in preparation which, when perfected, 'will be presented to the proper authorities of the city for their consideration.' As he plainly tells us that this plan provides for an 'efficient and uniform system of electric propulsion through the introduction of the overhead trolley system wherever the grades of the city will permit,' the announcement is equivalent to a notification that 'the proper authorities of the city' will be appealed to for permission to carry out such a scheme, whether the people like it or not. His defiant attitude suggests that he feels pretty sure that the authorities will be on the side of the United Railroads against the people, but he may be mistaken on that score. There is a point beyond which even complaisant authorities would not wish to press the matter to oblige a corporation which shows so little regard for the desires and needs of a community from which it extracts over eight million dollars annually." (See San Francisco Chronicle, March 25, 1906.)

[44] Mayor Schmitz in his statement, said:

"If Claus Spreckels can see his way clear to carry out his great purpose, the fact stands that he must be known more than ever as he has been known in the past, as the greatest public benefactor of the West. I will say, if he can see his way clear, reservedly, for I doubt that any citizen of this city or State can point to any understanding that he has announced he would accomplish, that he has failed to accomplish. Not only is his determination, but within his control is the money to carry out his determination, and I have yet failed to find the man that can say that any object can fail of accomplishment when determination and money walk hand in hand.

"If Mr. Spreckels can carry out his announced desire to network San Francisco with railroads operated by the underground conduit system, I can only say that through his wonderful ambitions of purpose San Francisco will take a stride forward that is wonderful to contemplate. Such action upon the part of Mr. Spreckels would place San Francisco not only in advance of any city in America, but would place it in advance of any city in the world in the battle for public control of utilities operated for the public benefit. The offer of Mr. Spreckels is not only one that must awaken the amazement, but the approbation of every public-spirited citizen. While the rest of the great cities of the world (as well as San Francisco before Mr. Spreckels made his offer) are puzzling to find means through which they can accomplish the great purpose of municipal ownership, Mr. Spreckels has come forward and has offered, for the good of the people, to demonstrate the efficiency of a system that will mean that not only shall the beauty of San Francisco be not sacrificed, but that the public desire for rapid transit shall be fulfilled. Backed with the millions he controls, his offer is significant, and is one that we cannot contemplate lightly.

"As Chief Executive of the city I can only express the hope that something will happen that will permit Mr. Spreckels to carry out his object. At one stride this would place San Francisco at the head of the world in the titanic struggle now waging between the people and the corporations for the control of those utilities in which the people are interested for comfort and the corporations for profit. Great as is his offer, it adds not only enthusiasm, but rekindles hope in my always expressed desire that my administration would mark the first victory of the municipality in its fight to control those things that are theirs.

"The people are on the eve of winning for themselves those things that are theirs. If the offer of Mr. Spreckels can be carried out, and I see no reason why it cannot, the battle is ended. Not only will San Francisco be the victor, but from the battle she will emerge, her beauty unmarred and her railways standing as exemplifications of the fact that what in science is possible is capable of actual and practical accomplishment." (See San Francisco Call, March 24, 1906.)

But in spite of this approval, after the organization of the new company was assured, Rudolph Spreckels found the Mayor's door closed to him when he attempted to secure an interview. (See Rudolph Spreckels' testimony at the Calhoun trial.)

[45] The purposes of the incorporators were brought out at the graft trials. At the Calhoun trial, when James D. Phelan, former Mayor of San Francisco, and one of the incorporators, was under cross-examination, Calhoun's attorney referred to other public utility ventures in which Claus Spreckels had been interested, and asked:

"Q. You knew of the matter of the rival gas or competing gas lines, and the rival and competing electric lines, and the rival and competing steam railroads down the valley at the time you went into the corporation to put in the People's Street Railroad? A. I knew, and I know the effect they had; they reduced rates in both cases; and if our system accomplished the purpose of bringing Mr. Calhoun's railroad to a realization of the public desire to have a conduit system, our purpose would have been accomplished. It was the last resort. I looked upon it, as an incorporator, as the last resort. We had negotiated in a friendly way for months, and I saw the fruit of all the conferences fade away and believed that arrangements had been made by Mr. Calhoun with the city administration, and the only resort left to us to do was to build a road of our own to demonstrate that it was practicable and possibly profitable--a conduit system."

[46] As early as April 3, 1906, a petition was circulated for signatures among residents and property owners on Bush street, asking the Board of Supervisors to grant a franchise to operate street-cars on Bush street under the electric-conduit system.

[47] The San Francisco Examiner of March 31, 1906, set forth that "an important feature (of the plans for competing street railways) was that the city should have the right at the end of ten years or any shorter period that might be preferred, to take over the system and operate the same itself, the terms of the transfer to be such as would be just both to the builders and to the municipality."

Among the purposes for which the Municipal Street Railways of San Francisco was formed, was set forth in the articles of incorporation the following: "To accept and acquire franchises for street railroads, elevated railroads and subways, containing provisions for the acquisition thereof by the City and County of San Francisco, or such other conditions as may be lawfully inserted therein."