In spite of the unwillingness of the state as a whole to join in a campaign which appeared to be designed primarily in the interests of San Francisco, the promoters of the new movement proceeded systematically with their plans. On November 18, 1891, the executive committee appointed a subcommittee to select a traffic manager for the association. Much depended on the choice, and the committee was fortunate in the man whom it secured, Joseph S. Leeds, of Ohio. Mr. Leeds was an individual of marked ability, with a valuable railroad experience behind him. He had been telegraph operator, station agent, assistant general freight agent, general freight agent, and traffic manager on various eastern railroad systems, and at one time had held the position of chairman of the Transcontinental Association. He had been removed from his post of traffic manager of the Missouri Pacific some time before on a charge of rate-cutting, and might reasonably be believed to cherish some animosity toward the railroads which had once employed him. It may be added, as a fact of some importance to the future of the Traffic Association, that Mr. Leeds possessed qualities of energy and aggressiveness which unfitted him for a temporizing or conciliatory rôle. Under his leadership the association promptly became a fighting organization, and remained such until its demise. Mr. Leeds arrived in San Francisco on November 21, 1891, and at once entered upon his duties.[429]
Policy
For some weeks after Mr. Leeds’ arrival, the policy which the Traffic Association should pursue remained unsettled. It will be recalled that the promoters of the association had originally contemplated a policy of harmonious co-operation with the railroad. This implied negotiation and exchange of views between shippers and railroad. Mr. Leeds, however, seems soon to have lost faith in such a method of procedure, if indeed he ever possessed faith to lose. He once remarked that no one ever got anything from a railroad just by asking for it. Moreover, the refusal of the executive committee of the association to push demands for preferential treatment of San Francisco as compared with other cities, removed from the field of negotiation a matter which called for readjustment of rates only, without reduction of railroad revenues, upon which San Francisco and the Southern Pacific might possibly have agreed, and left only demands which the railroad was likely to fight with all its strength. Whatever the reason, no friendly approach to the Southern Pacific seems to have been made.
The apparent methods of bringing pressure to bear upon the rail carriers, on the assumption that the plan of friendly negotiation was to be abandoned, were three: the first was that of appeal to the Railroad Commission of the state and ultimately to the state legislature; the second was the encouragement of water competition; and the third was the construction, or assistance in the construction, of a competing railroad, if not across the continent, yet at least to a junction with one of the existing roads, such as the Santa Fé or the Union Pacific. It must be admitted that no one of these resources looked particularly promising in 1891, but together they exhausted the field. To appeal to the Interstate Commerce Commission was not thought of, and in view of the limited authority and brief experience of that body it is not probable that an appeal would have produced important results.
“Merchants’ Shipping Association”
In December, 1891, the report of the Nicaragua Canal Commission to the federal legislature gave the Traffic Association opportunity to collect signatures to a petition, and generally to indorse the project for the construction of an Isthmian canal. The first circular emanating from Mr. Leeds’ office, however, was dated January 6, 1892, and called the attention of shippers to a reduction in rates from San Francisco to Puget Sound points. This was followed later in the same month by a circular which attracted some attention, and which pointed out that shippers of freight had the legal right to designate the route over which their property should move from point of shipment to destination. It was recommended that all members of the Traffic Association route their freight in every case where they were the owners of the property at point of shipment. Meanwhile, a force of clerks was set to work, and elaborate data relating to railroad expenses and railroad rates in California and elsewhere were compiled.
The first aggressive step of the new association was taken early in 1892, when the executive committee directed the attention of members to the possibilities of water competition. This was done after a meeting of the executive committee in March, at which the committee voted that a line of clipper ships should be established between New York and San Francisco, and referred the preparation of plans for such a line to the president and manager of the association.[430]
In response to the proposal of the Traffic Association, nine of the larger jobbing firms in San Francisco formed in May, 1892, a so-called “Merchants’ Shipping Association.” It was the purpose of the new body to finance a line of clipper ships as proposed, and to cause it to be operated in free competition with the existing lines of William Dimond and Company, and Sutton and Beebe, concerns which, it was believed, were conducted in the interests of the Southern Pacific. This was too ambitious an undertaking for the Traffic Association to underwrite with its slender revenues of about $25,000 a year.
Three months later, in August, the membership of the Shipping Association was largely increased, and a guaranty fund of from $85,000 to $100,000 was subscribed. At this time most of the leading wholesale firms of San Francisco joined. The Traffic Association lent its full moral support to the enterprise, and was reported to have contributed $10,000 to the guaranty fund just mentioned. Actual operation of the ships was entrusted to J. W. Grace and Company as agents. While the exact arrangements between the Shipping Association and these agents have never been made public, the merchants appear to have undertaken to meet all deficits, and to supply at least two-thirds of the freight. According to statements made at the time, Grace and Company were expected to find freight in the open market up to one-third of the capacity of their boats. Practical details of operation were left entirely in the agents’ hands.[431]
Effect of Competition