Chapters on the History of the Southern Pacific

by Stuart Daggett

CHAPTER XVIII

THE SAN FRANCISCO AND SAN JOAQUIN VALLEY RAILWAY

Attempt to Fix Maximum Rates

Properly considered, the construction of the San Francisco and San Joaquin Valley Railway was the complement of the campaign for the encouragement of water competition which the Traffic Association waged between 1891 and 1897. The plans for the subsidizing of clipper ships and for the support of steamship service to and from Panama had from first to last one grave defect—they afforded no means of distributing from San Francisco the products which dealers might succeed in having brought in by sea. That is to say, while the consuming populations of San Francisco, Sacramento, and Stockton might benefit by securing their goods at lower cost because of the activity of water competition, these cities could not extend their markets unless the sum of the through rate from points of origin to terminal city and from terminal city to local point should be made lower than the direct rate from the Mississippi Valley or the Atlantic Coast to the smaller towns in California, Nevada, and New Mexico.

Now the question of local rates differed from that of through rates, in that it dealt with a matter over which the state legislature and the State Railroad Commission appeared to have complete control. In 1892 the Traffic Association accordingly made a serious attempt to persuade the state legislature to undertake direct regulation of railroad rates in California, and to insert a provision for certain maximum rates in the constitution of the state which should affect a considerable reduction in the rates then charged. This attempt failed, for reasons into which it is not necessary to go. There remained another method of influencing local rates, namely, the construction of a competing railroad which should lead from San Francisco Bay to the interior counties of the state, and to this alternative the San Francisco merchants turned in the year 1893. The movement was important, and will be discussed at some length.

First Proposal for Competing Railroad

The proposal that a competing railroad should be built from San Francisco Bay to the interior was not a new one in California in 1893. On the contrary, in February, 1892, President Stetson, of the Traffic Association, told a reporter that no less than nine propositions had been submitted to him as president of the organization, looking to give San Francisco a competing line of railroad. These were successors to still other plans prepared in earlier years. Most of the schemes proposed to Mr. Stetson involved the construction of lines out of San Francisco to a connection with the Santa Fé, but two or three of them contemplated construction from San Francisco across the Sierra Nevada Mountains to the termini of the Union Pacific or the Rio Grande Western. At the time, President Stetson replied that he was a merchant and had neither the time nor the money to build roads, although he added that San Francisco merchants desired more railroads and would under reasonable conditions and at the proper time furnish substantial encouragement to one or more feasible railway projects.[452]

Soon after this, possibly at the suggestion of Mr. Leeds, steps were taken to investigate the possibilities of a line from San Francisco or Oakland to Stockton and thence eastward through Nevada and Utah to Salt Lake City. In May, 1892, a company was formed under the name of the San Francisco and Great Salt Lake Railroad Company, to build from San Francisco to Stockton, with an initial capital of $2,000,000. This was the moment when the Traffic Association was vigorously pushing its plans for the encouragement of water competition, and when it was beginning the legislative campaign mentioned in a preceding paragraph. Little active support could therefore be expected from the San Francisco shippers, although the executive committee of the Traffic Association authorized Mr. Leeds to give the projectors of the San Francisco and Great Salt Lake the benefit of his advice, and the California League of Progress formally indorsed the enterprise.[453]

The San Francisco and Great Salt Lake conducted extensive surveys and was said to have purchased a tract of land at Martinez for a terminal. The company was overtaken by the panic of 1893, however, before it had secured the financial support which was essential to its success. It suffered also from differences of opinion among its friends with respect to the policies to be pursued. Mr. Leeds insisted that to be a success the new road must have a through connection. Shippers, he said, would not patronize a purely local line when a through line was available, because a competitor with through facilities could afford them service which a local line could not.[454] On the other hand, there were capitalists who expressed willingness to subscribe to the stock of a local system, but who would not put a cent into an overland line,[455] and between the two parties the necessary subscriptions were not obtained. The project was finally withdrawn when the promoters failed to secure certain legislation which they thought necessary to make their plans a success.[456]