Nevertheless, the Grand Jury succeeded in wringing from the officials of the several corporations involved, damaging admissions; admissions, in fact, quite as startling as had been the confessions of the Supervisors. The refusal of some of those not unreasonably under suspicion, to testify was, too, quite as significant.
In the matter of the bribery of the Supervisors by T. V. Halsey, agent of the Pacific States Telephone and Telegraph Company, the Grand Jury had information that eleven Supervisors had been paid over $50,000 to oppose the granting of a franchise to the Home Telephone Company. A majority of the payments were made in an unfurnished suite of three rooms in the Mills Building. Frank Drum, a director of the company, admitted having engaged the rooms at Halsey’s request. E. J. Zimmer, auditor for the company, testified that Halsey held the position of General Agent of the company. Halsey’s duties, the testimony showed, were assigned him by Louis Glass, vice-president and general manager, and for a time acting president of the company. Halsey, under the company’s organization, reported to Glass. Zimmer testified that Halsey could not spend the company’s money except on the proper approval of the executive officer of the company. From October, 1905, when President Sabin of the company died, until February, 1906, when Henry T. Scott, Sabin’s successor, was elected, Glass acted as president and as executive officer. He had, according to Auditor Zimmer, authority to approve expenditures made by Halsey. After Scott’s elevation to the presidency, either Glass or Scott could have approved such expenditures. Zimmer testified further to giving Halsey, at Glass’s order,[189] as high as $10,000 at a time. Halsey[190] gave no vouchers for these large sums; they did not appear on the books;[191] they were carried on tags.
Zimmer stated that he did not know for what the funds were used; had merely followed out Glass’s instruction, and given Halsey the money.
The testimony of Thomas Sherwin threw some light upon the bookkeeping methods followed. Sherwin had been traveling auditor for the American Bell Telephone Company, which concern owned 51 per cent. of the stock of the Pacific States Telephone and Telegraph Company. Later he took Zimmer’s place as auditor of the Pacific States Company.
Mr. Sherwin admitted that some of Mr. Halsey’s “special expenses,” at least, were finally charged to the company’s legal department.[192]
Passing from the investigation of the bribery transactions of the Pacific States Telephone and Telegraph Company to the activities of the Home Telephone Company, the Grand Jury examined prominent business men of Los Angeles as well as of San Francisco.
The plan of operation followed by the capitalists behind this enterprise was to organize a construction company, whose part was to establish the plants, put them into operation and turn them over to the operating companies, taking their pay in the securities of the local operating company. Thus, at San Francisco, the Empire Construction Company played an important part in the Home Telephone Company enterprise.
As Heney put it, the Empire Construction Company received the most benefit from the granting of the Home Telephone franchise. The Empire Construction Company furnished at least part of the money that went into the fusion campaign fund in 1905. Investigation showed that 25 per cent. of the stock of the Empire Construction Company belonged to men who were in the construction solely, while 75 per cent. was in the hands of men who were financing the enterprise. This last block of stock at the time of the investigation was divided among James H. Adams and Thomas W. Phillips of the Adams-Phillips Company, A. B. Cass, Gerald S. Torrance and A. K. Detweiler. Detweiler could not be found. Adams, Cass and Torrance, after answering some of the questions put to them, availed themselves of their constitutional privilege, and refused to make further answers. The books of the Adams-Phillips Company disappeared and employees of that company undertook to evade answering questions regarding the disappearance, on the ground that they might incriminate themselves. But a sharp order from the Superior Court brought out their testimony. However, none of them gave testimony that led to the discovery of the missing volumes.
But the general trend of the testimony went to show that the responsible agent for the Empire Construction Company and the Home Telephone Company in San Francisco was A. K. Detweiler. The testimony showed Detweiler to have been at Ruef’s office in consultation with Ruef and Supervisor Gallagher; he was active in every move that was made on behalf of the Empire Construction Company and of the Home Telephone Company in San Francisco, and had the disbursing of the funds.
Incidentally, through the testimony of Dr. Fred Butterfield, a representative of Adolphus Busch, the brewer, the Grand Jury learned that a third telephone company, the United States Independent, seeking a franchise to do business in San Francisco, would have bid for the franchise which the Home Company received, had not the franchise been so worded that only the telephone system controlled by the Home people could be operated under it. Butterfield stated that his company, made up of responsible capitalists, considered the franchise worth something over a million dollars, and was prepared to bid up to a million dollars, if necessary, to get it. The Home Company paid San Francisco $25,000 for the franchise. Butterfield testified that his company had intended to invest $4,500,000 in the San Francisco enterprise, and that Ruef knew of the extent of the company’s plans. With such testimony, the assertions of Ruef’s partisans that opposition to the Ruef-Schmitz administration retarded development of the community compare curiously.[193]