In the fall of 1898, the directors of the San Francisco and San Joaquin Valley Railway requested the holders of trust certificates to deposit these certificates with the Union Trust Company of San Francisco, and to give an option for the purchase of them at par, valid for a period of three months. The prospective purchaser was not named, but the Santa Fé was understood to be the party interested. Certificate holders responded very generally to the request. Apprehensions were expressed by a number of shippers at this time, and also by some of the San Francisco newspapers, that the deposit of certificates under the conditions required meant an end of railroad competition in the San Joaquin Valley.[485] The plan was nevertheless considered by the trustees of the San Francisco and San Joaquin Valley Railway and was approved by them, Mr. Ripley giving written and verbal assurances in behalf of the Santa Fé that the Valley road would be continued as a competing line.[486] In due course the option was taken up and the expected transfer of control to the Santa Fé occurred.
It may be observed, to conclude this part of the story, that when the Santa Fé began negotiations with the managers of the Valley road in April, 1898, its operated mileage ran from Chicago west to Mojave, Los Angeles, and San Diego (National City). It had no route over the Tehachapi Pass between Mojave and Bakersfield, and thus no way of reaching the San Joaquin Valley save by traffic arrangement with the Southern Pacific. The purchase of the San Francisco and San Joaquin Railway gave to the Santa Fé control over a system of 279 miles, stretching from Stockton to Bakersfield, with a branch from Fresno through Visalia and Tulare, and an extension from Stockton to Point Richmond which, while not completed, was under way, and funds for the construction of which were in hand. Actual construction of the Stockton-Point Richmond line had begun in April, 1898. The work was continued by the Santa Fé, and the road was opened for freight and passengers, respectively, in May and July, 1900. There was talk also of building across the 68-mile gap between Mojave and Bakersfield. Eventually, however, an amicable arrangement with the Southern Pacific was concluded in this territory under which the use of the Southern Pacific line across the mountains was thrown open to both companies. This finally admitted the Santa Fé to northern California.
Reduction of Grain Shipment Rates
Did the building of the San Francisco and San Joaquin Valley Railway justify itself? From the financial point of view the answer is clearly in the negative. To say nothing of the energy spent in its development, investors in the stock of the railroad received no dividends. They therefore lost the use of the capital which they contributed for a period of three years. The principal of their investment they did, indeed, recover, but the interest upon it was gone. On the other hand, the enterprise was never regarded as likely to be a money-making affair in the narrow sense, and the financial point of view was not the chief one to be regarded. The real benefit expected from the construction of the Valley road was that which would come from a reduction in transportation charges between San Francisco and points in the San Joaquin Valley, and the success of the project was therefore to be measured primarily by the cuts in railroad rates for which it might be held responsible. We may consider the problem a moment from this point of view.
The first reduction in rates which may be attributed to the Valley road occurred in June, 1896, when the new railroad published a schedule of charges on wheat and on burlap bags to Stockton from stations upon its line south of the last-named city. This schedule showed substantial reductions. On September 15, 1895, the Southern Pacific rate from Ripon, a town 20 miles distant from Stockton, to Stockton was 95 cents per ton of 2,000 pounds. The Valley road in 1896 filed a rate of 80 cents a ton from Escalon, 21 miles distant from Stockton upon its own line. The Southern Pacific rate for the 29 miles from Modesto to Stockton was $1.35 a ton. From Empire, the nearest station to Modesto upon the San Francisco and San Joaquin Valley, the new railroad put in a rate of $1.10. The rate from Merced was $1.85 over the Southern Pacific; it was now made $1.70 by the Valley road. In addition to these reductions in the rates to Stockton, the new company afforded shippers a sensible relief by abolishing the switching charge of 15 cents per ton which the Southern Pacific had been accustomed to demand on grain handled at that point.[487]
As the Valley road extended itself to the south and added new stations at which it was prepared to receive business, the policy of rate-cutting was continued. In September, 1896, a wheat rate of $2.15 per ton was established from Fresno to Stockton, 20 cents less than the Southern Pacific charge.[488] By 1898 the line had reached Bakersfield, and grain rates were put in from towns between Hanford and that city which were from 10 to 15 cents per ton less than the rates which the Southern Pacific was accustomed to exact.[489] All the rates quoted were met by the Southern Pacific; moreover, word was sent to Mr. Moss, traffic manager of the San Francisco and San Joaquin Valley, that the Southern Pacific would continue to meet reductions as fast as they were made.
Merchandise Tariff
The first merchandise tariff to be established by the new line was somewhat slower in appearing than the tariff on grain, because the formulation of it was a more complicated matter. Nevertheless, such a tariff was filed with the State Railroad Commission on August 22, 1896. The new merchandise rates were based upon the Western classification, and were believed to represent reductions of from 10 to 50 per cent as compared with Southern Pacific rates before the competition of the Valley road had become effective. In the new schedule the first-class rate from Stockton to Merced was 31 cents per hundred pounds, or approximately .9 cents per ton per mile. On class five, the highest carload class, the rate was $4 per ton, or .6 cents per ton per mile.[490] As in the case of the grain rates, the publication of new merchandise schedules continued as the Valley road proceeded south. Thus when the company reached Bakersfield it put in a first-class rate of 83 cents per hundred pounds, a cut of 19 cents under the Southern Pacific tariff, with rates on other classes reduced to correspond.[491]
In addition to grain and merchandise rates, the Valley road also quoted commodity rates. The rate on flour from Merced to San Francisco was set at $2.75 per ton, and that on potatoes and on lime at $1.85 per ton, as compared with rates of $4.20 and $3.10 over Southern Pacific lines.[492] Likewise passengers were carried from Stockton to Fresno and to intermediate points at a flat rate of 3 cents per mile. Later, the fare from San Francisco to Hanford was reduced from $7.30 to $4.65, that to Visalia from $7.40 to $5,[493] and that to Bakersfield from $9.10 to $6.90.[494]
Relative Position of San Francisco Improved