CHAPTER IX.

RUEF AND SCHMITZ INDICTED.

Within twenty-four hours after organizing, the Grand Jury had begun investigation into graft charges. Tenderloin extortion, especially in connection with the so-called "French Restaurants," was the first matter taken up. The inquiry involved both Schmitz and Ruef.

The term "French Restaurant" in San Francisco is used in connection with a particular type of assignation house. These establishments contain a restaurant on the ground floor, and sometimes banquet hall and private rooms without assignation accompaniments. The stories overhead are devoted to private supper bedrooms. Some of these assignation places are several stories in height. Before the fire, among the establishments alleged to be "French Restaurants" were Marchand's, Delmonico's, the New Poodle Dog, the Bay State and the Pup. The extent of the business conducted by these places is indicated by the testimony of A. B. Blanco, who stated under oath at the graft trials that he had $200,000 invested in the New Poodle Dog, while Joe Malfanti testified that he had about $400,000 invested in Delmonico's.[118]

French Restaurants had long been a scandal in San Francisco. Toward the close of 1904, the Police Commission, then absolutely under domination of Schmitz and Ruef, gave evidence of proceeding against such places. The commission, as a beginning, revoked the liquor license of a "French Restaurant" known as Tortoni's. Without a license to sell liquor a "French Restaurant" could not continue in business. These licenses had to be renewed once every three months. The Police Commission had arbitrary power to grant, or to refuse, application for renewal. One by one renewal applications of other French Restaurants were held up. It became a matter of common report that all the "French Restaurants" were to be treated as Tortoni's had been, namely, driven out of business by having their licenses to sell liquors revoked.

And then Abe Ruef appeared before the Police Commissioners as attorney for the "French Restaurant" keepers.[119] Ruef asked that consideration of the French Restaurant cases be postponed for two weeks. This was accorded him. But his request that during those two weeks the places be permitted to conduct their business as before, namely, that they be allowed to sell liquors in the private supper bedrooms, was denied by a tie vote, two commissioners of the four voting for Ruef and two against him.

Before the two weeks' extension of time which Ruef had secured had expired, Mayor Schmitz had removed from office one of the commissioners who had opposed[120] Ruef's request that the sale of liquors in "French Restaurant" bedrooms be continued.

The opposing commissioner out of the way, the board by a vote of two to one, adopted certain rules submitted by Ruef for the management of French Restaurants.[121] By the same vote, the commission then granted the French-Restaurant licenses, action upon which had so long been delayed.

All this was done before the public. There were, of course, charges of graft and extortion, which most people, although without definite proof, believed. Heney, nearly a year later, in his speech in the Partridge campaign, referred to in a previous chapter, charged graft. A Grand Jury had made[122] an honest attempt to get to the bottom of the scandal. The efforts of this early Grand Jury came to nothing.

The Oliver Grand Jury had not been in session a fortnight, however, before the whole miserable story of Ruef's connection with the French Restaurant cases had been spread before it.

Thomas Regan, who had served as Police Commissioner during the Schmitz administration, testified that as early as the summer of 1904 Schmitz had told him that the "French Restaurants" were bad places and should not be permitted to exist. When Tortoni's was closed, Schmitz stated to Regan, according to Regan's testimony, that the French Restaurants were all run alike, and should all be closed. Acting upon the Mayor's suggestion, the Police Commission ordered the investigation into the methods of the French Restaurants which created such a sensation in San Francisco during the closing months of 1904. Licenses were denied in some cases. In others, hearings of applications for renewals were postponed from time to time. Some proprietors were called upon to show cause why their licenses should not be revoked. Of all of which, Commissioner Regan testified, he kept Mayor Schmitz informed.

The course of the commission threw the keepers of the French Restaurants into a panic. Their attorneys found themselves helpless and could give their clients no encouragement. Marcus Rosenthal, for example, who appeared before the commission on January 3, 1905, on behalf of the Bay State Restaurant, testified at the Schmitz trial, that he was not permitted to say anything; that the commissioners would not listen to him, nor hear testimony. After that meeting he had advised his client, and a little group of "French Restaurant" keepers who had gathered about him, that it would be useless for them to appeal to any court, because under the law there could be no review of the action of the Police Commissioners; that the commission could arbitrarily dispose of any saloon-keeper, and he could not seek remedy in the courts.

And then, having explained the situation fully, Rosenthal told them, what every observer in San Francisco knew, "There is only one man who could help you, and that is Mr. Ruef."[123] The French Restaurant keepers received this advice from all sides. Joe Malfanti testified at the Schmitz trial that "numerous friends advised me to see Ruef."

And to Mr. Ruef the "French Restaurant" keepers finally found themselves compelled to go--at the urgent suggestion of a fellow French Restaurant keeper, Jean Loupy.

Loupy was proprietor of the French Restaurant known as the "Pup." At Loupy's place Ruef maintained a sort of headquarters. There he took his dinner practically every night, entertained friends and received his henchmen.

Ruef had from time to time acted as Loupy's attorney. He had also loaned Loupy money. At the time of the French Restaurant troubles, Loupy, according to his testimony, owed Ruef $1000.

When the closing of the French Restaurants seemed inevitable, this Loupy brought word to the French Restaurant proprietors that Ruef would represent them all before the Police Commission for $7000 a year,[124] on a contract for two years. The sum was finally cut to $5000,[125] $10,000 for the two years. For the first year "Marchand's," "Delmonico's," "The New Poodle Dog" and the "Bay State" paid $1175 each. Loupy for the "Pup," on the grounds that he had been put to considerable expense and was a poorer man than the others, paid only $300.[126]

The money being paid over to Ruef,[127] Ruef appeared before the Police Commissioners, as has already been told, with his plan for regulating the French Restaurant business in San Francisco.

Ruef's arrangements with the French Restaurant keepers were concluded during the first week in January. Police Commissioner Regan testified that sometime after January 3, Mayor Schmitz asked him to vote to restore the French Restaurant licenses.[128] Regan objected on the ground that it was not right to ask him to vote first one way and then another. With Commissioners Regan and Hutton voting against issuing the licenses, the licenses could not be granted. Either Hutton or Regan had to change their attitude, or one of them had to be removed from office. Police Commissioner F. F. Poheim testified at the Schmitz trial that at a conference on the French Restaurant problem held early in January, 1905, which he and Schmitz attended, Schmitz announced: "We will have to give these people (the French Restaurant proprietors) their licenses if we can. If we cannot do anything else we will have to remove Hutton."

And during the week following Ruef's first appearance before the commissioners as representative of the French Restaurants, Mayor Schmitz removed Hutton.[129] The licenses were then issued to the "French Restaurant" keepers.[130]

Much of the story of these transactions was presented to the Grand Jury. But the evidence was not secured without effort. Many of the witnesses were unfriendly; others afraid of the consequences of frank statement of facts. Witnesses disappeared and could not be found. Several known to have testified were threatened and even assaulted. One French Restaurant keeper, before the investigation had been concluded, had been indicted for perjury. Three attorneys who were more or less in touch with the tenderloin situation had been cited for contempt for refusing to answer questions put to them in the Grand Jury room. But point by point the evidence was presented.

The Grand Jury, on the evidence, indicted Schmitz and Ruef on five counts for extortion.[131] Bonds were fixed at $10,000 on each charge, $50,000 for each defendant.

Ruef[132] was released on $50,000 bail.

Schmitz, the day after the indictments were brought, was reported to have started for home from Europe.

Schmitz's probable reception on his arrival at New York apparently gave keen anxiety at San Francisco.

Heney states that Justice F. W. Henshaw called at his (Heney's) office and asked Heney, as a favor, to tell him whether Schmitz would be arrested upon his arrival in New York, as William J. Dingee of the Contra Costa Water Company, wanted to arrange for Schmitz's bail in New York City. William F. Herrin of the Southern Pacific Company is credited with interesting himself in Schmitz's behalf in arranging for the bond that was furnished when Schmitz reached San Francisco. Schmitz's bond was furnished by Dingee and Thomas Williams, president of the New California Jockey Club. The New California Jockey Club operated the notorious Emeryville racing and gambling establishment. Mr. Dingee was at the time one of California's most prominent capitalists.

FOOTNOTES:

[118] See Transcript on Appeal The People of the State of California vs. Eugene E. Schmitz, pp. 500 and 557.

[119] Ruef stated that he appeared as attorney for the French Restaurant Keepers' Association. But those who paid him the money for his efforts in this instance testified at the trial of The People vs. Eugene E. Schmitz that they held membership in no such organization, nor had they heard of it. In May, 1907, Ruef stated to Heney that he had closed the bargain with the French-restaurant keepers to represent them on JANUARY 6, 1905. He insisted that he had at first flatly refused to represent them; that he had had no intention whatever of so doing until the San Francisco Bulletin denounced him for having had the licenses held up and challenged him to take the cases and to attempt to defend himself upon the theory that the money so obtained by him was received as an attorney's fee.

Heney examined the Bulletin files and found that the first time the Bulletin had mentioned the French-restaurant hold-up as an attempt on the part of Ruef to extort money from the restaurant proprietors was in the last edition of The Bulletin for JANUARY 7. 1905. (See Heney's affidavit in the case of The People vs. Patrick Calhoun, et als., No. 823, pp. 141 to 143, inclusive.)

[120] Commissioner Harry W. Hutton.

[121] These Ruef-provided rules directed that no liquors be served in supper bedrooms on the first and second floors of the establishments, and required the French restaurants to take out hotel licenses and to keep registers the same as hotels. What the keepers of the places thought of the regulations came out at the Schmitz trial. Joe Malfanti of Delmonico's, for example, testified: "They (the Ruef rules) made no change in the running of my business--not a single change. I had a hotel license for years before and I always had a register, so there was no change in my place whatever."

[122] The Andrews Grand Jury, named from its foreman, T. P. Andrews. The work of the Andrews Grand Jury was not lost, however. It served as basis for much of the investigation conducted by the Oliver Grand Jury.

[123] Rosenthal testified at the Schmitz trial: "I told them from my observations and how things were going in the city and had been going for some years, that there was only one man who could help them--it was a question of life and death with them--and I said there is only one man who could help you, and that is Mr. Ruef."

Rosenthal, when examined on this point before the Grand Jury, refused to testify on the ground that conversation between attorney and client was privileged. Adler got into trouble with the Grand Jury over his testimony on this point. Both Rosenthal and Adler, however, testified at Schmitz's trial.

[124] N. M. Adler, proprietor of the Bay State Restaurant, testified at the Schmitz trial as to Loupy's negotiations. Loupy called upon him twice. "The first time he came," Adler testified, "he told me that things were very serious, and we would have to put up some money and hire Mr. Ruef; that he was the only man that could help us. I told him that I could not understand the proposition; that I had run my business for twenty years, and didn't think that they could do me any harm. At that time Ruef was making his headquarters at the Pup restaurant. I could see that from my place across the street. He went there regularly."

Then Adler testified to the meeting before the Police Commissioners at which his attorney, Rosenthal, had not been permitted to speak, and continued: "Afterwards, Loupy came to me again, and told me that Tortoni had closed up, and that we should put up the money or we would be all closed. This was after we had been to the meeting of the Police Commissioners."

[125] The testimony brought out at the graft trials showed that Ruef received $8500 from the French restaurants, $5000 the first year from the five in the combine; $3000 the second, and $500 additional from Camille Mailhebeau. Ruef stated to Heney later and so testified at the Schmitz trial, that half of the $8000 received from the combine he turned over to Schmitz.

[126] The five restaurant keepers were asked at the Schmitz trial whether they had employed Ruef because he was a lawyer or because of his recognized power as political boss. They testified as follows:

A. B. Blanco of the "New Poodle Dog"--"Well, being a political boss we thought he had influence enough to get our licenses."

N. M. Adler, of the "Bay State"--"Well, the way I took it, Mr. Ruef is a boss. He had an influence over the commission. He was the only man who could help us." On cross-examination: "I understood that if I did not employ Ruef I would not get my license. I understood that Mr. Ruef was the only man who could get my license."

Michel Debret of "Marchand's"--"Well, I agreed to (pay the money to Ruef) because having consulted we saw we had no way to get out of it unless we paid Ruef, as he was a political boss, to protect ourselves." "Because we thought--we thought if we didn't pay the money we would be treated like Tortoni's, we would be closed; we had no way to get out of it." "I believed that Ruef and the Mayor controlled the Police Commissioners."

Joe Malfanti of "Delmonico's"--"I did not pay this $1175 for fun; I had to save my license. I had about $400,000 invested there. I never figured on what effect it would have upon my business if I did not get a license. If it was for myself alone I would close the place, but I figured on my partners, what they had paid. They had a lease for five years and could not go through with it and I did it as a favor. If I was alone I would close. I would not make any fight. Numerous friends advised me to see Ruef." "I went to Ruef--Ruef was the man that controlled the administration--Ruef was the one that could do the thing. His relation with the Mayor was so he could do what he pleased."

Jean Loupy was asked by Heney: "Did you go to him (Ruef) because he was a lawyer or because he was a political boss?" "Because he was a political boss," replied Loupy.

[127] Ruef would not take a check, neither would he accept gold--he insisted upon having currency--neither would he give a receipt. The money was taken to him by Pierre Priet, a French-restaurant keeper. Regarding the transfer of the money, Joe Malfanti, at the Schmitz trial, gave the following testimony:

"Mr. Heney--Q. What did he say you were to get for the five thousand dollars, Priet? A. Yes.

"Q. Yes, what did Priet say you were to get for your money? A. We were going to get the license.

"Q. For two years? A. No, we were going to have no trouble for two years about a license.

"Q. Five thousand dollars a year? A. Yes, sir.

"Q. Now, then, what was said about how the money was to be paid? What did Priet say about how the money was to be paid? A. In currency.

"Mr. Campbell--That is under the same objection and exception.

"The Witness--And that two people, not three, only two people, not three.

"Mr. Heney--Q. What do you mean, that no one was to go with him to Ruef? A. Yes.

"The Witness--Priet said the money should be brought there in currency and paid with two people.

"Q. Did Priet get you a receipt? A. I don't think he ever looked for any. I asked him about that when he came back. He said: 'Well, you should be glad to get his word of honor.' That is what I got from Priet."

[128] Regan testified at the Schmitz trial:

"The Mayor asked me to vote for the French liquor licenses. The first time he did so he put it on political grounds. He requested me to vote for them, saying it would hurt him politically if the license was not granted; and that they had so many friends and so many rich people frequented those places that it would be a very unpopular thing to take the licenses away, and he requested me to vote for them. That it would be unpopular to take them, the licenses, away, as they, the restaurants, had so many friends and so many rich people frequented the places. I said I didn't think it was right, that he knew he got me to close those places up. That I could not vote for them, as they were immoral and should be closed. The second conversation was all of the same tenor."

[129] Commissioner Poheim took papers from Ruef's office to the Mayor on the day of Hutton's removal. Poheim testified at the Schmitz trial:

"I took papers from Mr. Ruef's office that I believe were the papers of removal. He told me that they were. That was the day of Hutton's removal."

[130] The Chronicle in its issue of February 1, 1907, thus summarized the evidence against Schmitz and Ruef, and the nature of their defense:

"Those operations are these: There are in this as in all other cities certain dens of vice, ranging from the very fashionable down to those patronized by the dregs of society, which can exist only when licensed to sell liquor. To give or withhold the license is within the discretion of the Police Commissioners, and from their action there is no effectual appeal. Since Ruef got control of the majority of these commissioners they have been mere puppets, giving or withholding the licenses of these places as directed by Schmitz. That being the case, when renewals of licenses were necessary, the applicants were refused. That meant the ruin of their business. In the end, either from their general knowledge, or because as advised, they applied to Ruef. When the fee was settled and paid--in the case of the French restaurants $5,000 a year--Ruef notified Schmitz, who, as the prosecution is evidently prepared to prove, then directed the licenses to issue, and they were issued. In the aggregate, enormous sums were annually collected from these places by Ruef or his agents, and without that payment they could not have continued business. The revenues thus obtained were evidently the sources of Schmitz's suddenly acquired wealth. Presumably some small share was paid to the subordinates.

"Certainly that is extortion, and extortion of the most villainous kind. To the ordinary reader it is completely covered by the language of the statute. The contention of Ruef and Schmitz is not that they did not get the money, or that it was not a villainous thing, but merely that it was not a villainy expressly forbidden by statute, and that therefore to indict them for it is 'persecution.' If there are any people in the city who uphold or condone such things they are no better than Ruef or Schmitz themselves."

[131] The press throughout the State was a unit in approving the Grand Jury's action. The San Francisco Chronicle fairly expressed the general sentiment. It said:

"Every decent man in San Francisco breathes freer to-day. The fact cannot be concealed that there was an uneasy feeling in the community that the machinations of the boss would again secure immunity for himself and those who were with him in the grafting business. The facility with which he turned the Grand Jury preceding the present one into an instrument to accomplish his own purposes inspired the fear that by hook or crook he may have obtained control of the one now sitting; but the promptitude with which the first indictment was brought allays all apprehension and converts it into confidence that the body now in session is in deadly earnest and that it will earn the gratitude of its fellow citizens and cover itself with glory by striking an effective blow which will put an end to flagrant venality in office and restore the good name of San Francisco."

The San Francisco Examiner said of the indictment of Schmitz and Ruef: "The light breaks, the reign of political terror seems at an end. Mayor Eugene E. Schmitz and Abe Ruef, his mentor and master, have been indicted for extortion. The move of political regeneration and civic reform that has been sweeping the country has hit San Francisco with the force of all the other successes behind it. In other cities and other States the powerful rascals as well as their satellites have been sent to prison. Evidently San Francisco and California are to rid themselves of the arch political criminals.... Thursday, November 15, 1906 (the day on which Ruef and Schmitz were indicted), is a day to be remembered. It marks the beginning of San Francisco's regeneration. It is a day of heroic events to be told to children and grandchildren. It is the day of the declaration of independence of California's great metropolis."

[132] Ruef denounced his indictment as absurd, insisting that he had merely taken fees for services rendered. In an interview published in the San Francisco Chronicle of November 16, 1906, he said:

"The whole thing is absurd. I was simply acting in the relation of attorney to a client. I took my fee for rendering legal services. I was retained by a contract as attorney by the restaurant keepers. If it is extortion for an attorney to accept a fee from his client, we all might as well go out of business. This is exactly the same charge that was made against me once before and was found baseless. I have nothing to fear."

On November 17 the Chronicle, touching upon Ruef's defense, said: "Every branch of the city government which is controlled by Ruef men is known to be utterly rotten. The only question has been whether under the advice and direction of low legal cunning, the grafters have kept themselves immune from the law. And the question is about to be settled."