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The Glory Years, 1865-1899

CHAPTER FIVE: The Panic That Broke the Bubble

In San Diego, Horton was lord of all he surveyed. He was now fifty-seven years of age and, after three years of strenuous but exhilarating endeavor, he was at last a wealthy man, at least on paper. The gold in Julian had caused everyone to minimize the warning signs of trouble and the indefatigable Horton went ahead with the building of a major hotel. He had turned the first spadeful of dirt on January 1, 1870, at a site uptown from the center of activity near the bay. It was on D Street, later Broadway, between Third and Fourth Streets.

Rufus K. Porter, the San Diego correspondent of the San Francisco Bulletin, wrote:

“Business in Old and New San Diego is pretty much at a standstill, very little improvement in the way of building being discernible. Horton is going ahead with his mammoth hotel, which tops over all the surrounding country. His faith in the country and in his town does not diminish.”

The Episcopalians, Methodists and Baptists erected churches on lots granted by Horton. The Presbyterians would do likewise. The tall white New England steeple of the Baptist Church held the first church bells in New Town, and they had been donated by Horton. Porter commented that “the music of the church-going bells, heard here for the first time, is pleasant to the ears of every lover of his old home.”

Horton Hall, a two-story brick building, with stores on the first floor and an auditorium on the second, was completed at Sixth and F Streets. He began the building of another brick structure at Third and D Streets, to house railroad offices.

School classes which were begun in the old Army barracks were moved to rented storerooms, then moved back to the barracks, but at last 1870 saw the construction of a school, again on land donated by Horton at Sixth and B Streets, and the three little clapboard structures, known as the “Pink Schools,” soon had more than 200 students.

Merchants began to desert Old Town. The addition of Whaley & Crosthwaite and J. S. Mannasse & Company raised the number of general merchandising stores in New Town to ten. The others were Joseph Nash, A. Pauly & Sons, Bush & Hinds, Lowenstein & Company, J. Connell, Steiner & Klauber, A. B. McKean & Company, and McCormick & McLellan. When Frederick A. Taylor arrived from San Francisco he purchased the interest of Charles P. Taggart in The San Diego Union, on January 1, 1870, and The Union began to take a more kindly attitude toward Horton, Republicans and New Town in general and to consider moving from Old Town. Porter reported to the San Francisco Bulletin:

“The firm of Whaley & Crosthwaite have given up business in Old San Diego, and are fitting up the first floor of Horton’s Hall, where they will hang out in the future. “One by one the leaves are falling” from Old Town, and the old place begins to look desolate. Nothing will be left there in a short time but a few saloons and lawyers…”

The dry winter also had taken its toll and Porter wrote that crops were pretty much out of the question for the year “and something must be done for the poor squatters.”

Efforts were made in the State Legislature and in Washington to force the Southern Pacific company to adhere to its original franchise for a line down the coast to San Diego, even though it already was proceeding down the Central Valleys of California at the rate of 100 miles a year in an effort to reach the Colorado River at The Needles before any rival could reach there from the east along the 35th parallel. The effort was unsuccessful and the federal government then withdrew 7,500,000 acres of public lands along the line, in alternate sections, to be granted to the Southern Pacific as a subsidy.

Not to be left without a connection along the coast, in event of becoming the terminus of a transcontinental railroad, San Diegans in March of 1870 organized the San Diego and Los Angeles Railroad Company, and proposed to construct their own line to Los Angeles, with a branch to San Bernardino, to meet the Southern Pacific.

Economic conditions were bad across the entire country, and the Bulletin in an editorial pointed out that despite that fact, and the distress brought about by the drought and the disappointment over the lack of progress in the railroad project, San Diegans should consider themselves fairly fortunate:

“It would be worse than folly for anyone in Southern California to deny that “times are hard” and “money is scarce” in this section of the country at the present time. The citizens of San Diego may well point to the number of elegant buildings now in course of construction; to the fact that there is not a vacant dwelling house or tenement in our city; and to intelligent countenances, the bloom of health, the hopeful, confident expression met with everywhere upon our streets and in our public gatherings as evidencing the prosperity, health and happiness of our people; yet it cannot be denied that the extremely dry season now prevailing bears heavily upon many of our best and most enterprising men, causing distress in some instances among the poorer class; that has put their little all into a home, depending on the product of their gardens and fields for the means of sustenance for themselves and their families.

“Mechanics that have come here from all parts of the country, having been thrown out of employment at home by the “hard times” that prevail everywhere in the United States, are unable to procure steady work, and particularly feel the “hard times;” and in some instances, become dissatisfied—and it is not to be wondered at — the wonder is that so few of our people have become disheartened or think of looking elsewhere to better their condition.”

By May, the Memphis and El Paso railroad company was bankrupt. Gen. Frémont was personally financially ruined by the disaster arising from the bond-selling deception in Paris, though he himself had been unaware of it, and for the rest of his life he was dependent on the generosity of friends. A railroad for San Diego faded farther into the future, but the New York Tribune commented editorially on the advantages of a railroad along the 32nd parallel and said “it is just a question of time.”

There was another transcontinental railroad bill before Congress, called the Texas & Pacific, and it had significant backing in Washington as well as New York. The “Big Four” of California had no intention of allowing another line to enter California, if they could help it. The Southern Pacific shifted again and won permission to extend eastward through the San Gorgonio Pass to Yuma, the gateway of the proposed 32nd parallel railroad, but only on condition that the proposed Texas & Pacific had not already entered California.

Considerable unemployment followed the end of San Diego’s second railroad boom. Frank Kimball was borrowing in San Francisco to keep his development going. The need for supplies and equipment for the mines in Julian was a boon to San Diego at this time. The Army, too, was using San Diego as a depot, and heavy freight wagons were moving out over the hills and down Mountain Springs grade to posts throughout the Southwest. A turnpike company was organized to further improve the road and lower the grade.

The $40,000 with which Horton had started the construction of his hotel had been used up, and many workmen were laid off or promised their pay in lots. W. W. Bowers, who designed the hotel for Horton and later became a state senator, went to San Francisco in the hope of finding a lessee who would complete and furnish the hotel and operate it without charge for the first three years. He failed in that but was able to obtain furniture on credit, on assurances that once the hotel opened, it would cause a resumption of San Diego’s boom times. By the time the furniture arrived, all work on the hotel had stopped. It was quickly resumed, with the extension of more credit from New Town merchants.

San Diego had the land, the climate, and the country was growing, and there was the waiting port. The railroad surely must be built. The Chamber of Commerce, which had been organized in January at the instigation of Horton and Morse, published a brochure in May. Its glowing words gave heart to its own citizens, if not to the world:

“San Diego is the natural commercial center of a vast scope of country, rich in mineral and agricultural wealth, embracing all of Southern California, Southern Nevada, Arizona, New Mexico, and Northern Mexico … On the completion of the 32nd parallel railway, the bulk of the traffic between the States east of the Mississippi and the Asiatic ports, must of necessity pass through San Diego, and make this the Pacific Coast port of trans-shipment.”

The San Diego Union tried to cheer its readers with a steady run of editorials pointing out that the bill was sure to pass in the next session of Congress and even republished an optimistic editorial from its arch enemy, the Bulletin, saying that everyone should hang on and continue the projects begun in anticipation of the railroad.

The Rev. Sydney Wilbur wrote to the Worcester, Massachusetts, Gazette:

“… the crops have been all but a perfect failure. The country around here was settling up rapidly, previous to this severe drouth, but immigration is now stopped to a great extent, at least for some months.”

The building which Horton erected to house railroad offices was converted into a bank upon organization of the San Diego Bank, the city’s first, with Horton as president. Horton, however, continued using a San Francisco bank and issuing his own certificates which were as good as cash in San Diego. He soon resigned, and it was the opinion of Morse, as expressed in his correspondence, that he was piqued because he had not received sufficient recognition. A theater was opened in Horton’s Hall, but the public library, which had been organized as the Horton Library Association upon the promise of Horton that he would donate 600 books he had obtained from Hubert Howe Bancroft, the historian, in exchange for lots, became nothing more than a reading room. Newspaper files indicate that Horton later asked for $1000 in $100 library memberships and when this was refused, he withdrew his offer of the books. William H. Perry brought in equipment to begin the first gas company but the venture failed. Agents of the Western Union Telegraph Company promised to install a telegraph line to Los Angeles if San Diegans underwrote it to the amount of $8000. A good part of the money was quickly subscribed, though in the end Horton had to put up $5000—but he asked and obtained half of the profits for three years. The first message, greetings to San Francisco, was sent by Horton on August 20.

The San Diego Union saw that the tide had irrevocably turned against Old Town. Frederick Taylor sold his interest to William S. Dodge, and when he was promised all of Horton’s advertising, he announced on June 23 that The San Diego Union was moving to Horton’s Addition. Seven days later it began publishing from a two-story wood building at Fourth and D Streets, near where Horton’s Hotel was being erected. Four months later Dodge retired and was succeeded by Douglas Gunn, a cousin of Chester Gunn, who had opened the Wells, Fargo office in Julian. Gunn became a partner of E. W. Bushyhead and served as printer, reporter and editor.

New public buildings were needed and where they were to be erected was the issue that brought the clash between Old and New San Diego to a climax. The supporters of New Town were determined that they were to be in Horton’s Addition. On July 9 a majority of the Board of Supervisors, upon petition of residents of New San Diego, ordered the removal of all county records from Whaley’s Building in Old Town to the Express Building in New San Diego, and designated Horton’s Hall as the temporary place for the court. In retaliation, Judge Murray Morrison of the District Court in Los Angeles and Judge Thomas Bush of the County Court immediately ordered all writs from their courts returnable at Old Town.

The reaction of the merchants and residents of Old Town to the action of the Supervisors was immediate and vigorous. County Judge Thomas Bush on July 17 ordered the sheriff to use force if necessary to prevent the removal of the records. A posse was organized to aid the sheriff and a cannon was placed in front of the city and a guard mounted over the records. The San Diego Union was delighted:

“Old Town has seceded… They have nailed their flag to the staff in the Plaza … The indomitable Bush commands the artillery, and the watchword is, “Old Town—Now and Forever, One and Inseparable.” “

In September the defenders of Old Town successfully carried their fight to the District Court in Los Angeles and Judge Morrison issued an order removing three of the five supervisors, Joseph C. Riley, E. D. French and G. W. B. McDonald, from office and fining them each $500, presumably for their effrontery in ordering the establishment of a new county seat. Disregarding state law, which called for the election of supervisors, County Judge Bush promptly appointed Charles Thomas, Joseph Mannasse and William E. Flynn to succeed those who had been removed. Suit was brought immediately to prevent their assuming office. The fight dragged on, but Old Town’s day was done. For a full century it had been the San Diego known to padres, the Spanish Dons and the American conquerors. The ruins of the original Royal Spanish Presidio on the hill above the town were grim reminders of the passage of time and the fate of towns as well as empires.

The Horton House was ready to open. It was built of brick and was 200 feet long and two and a half stories in height, and crowned by an observatory with a view of the bay which The San Diego Union described as “the most magnificent in Christendom.” The Bulletin was even more ecstatic and wrote:

“What the Grand Hotel is to Paris; Langham’s to London; The Astor, Fifth Avenue and St. Nicholas to New York; the Continental to Philadelphia; the Tremont and Parker’s to Boston; Barnum’s to Baltimore; St. Charles to New Orleans and the Galt to Louisville; the Southern to St. Louis; the Sherman and Trenton to Chicago; the Grand Lick, Occidental and Cosmopolitan to San Francisco; the Pico to Los Angeles, the Horton House is to San Diego. It is by far the most elaborate, attractive and spacious hotel outside San Francisco; and everything taken into consideration, it is the most (if not, indeed the most) complete and agreeable edifice of entertainment upon the Pacific Coast, and this is the loftiest praise, for all travelers pronounce San Francisco hotels the finest in the world.”

Indeed it was a magnificent structure for a town the size of San Diego and had cost $150,000. Rooms were heated and pipes carried both hot and cold water, a luxury in those times. The hotel provided its own gas for lighting and had its own well capable of producing 2000 gallons of water an hour. The main floor had a reading room, a bar and billiard room with a dais for observers circling the entire room, and a ladies’ parlor. There was a lavishly furnished and decorated bridal suite and thick carpeting and marble-topped furniture. Twenty rooms were fitted out for the invalids who came to San Diego to rest in its healthful climate.

The opening ceremonies on October 17, 1870, were attended by visitors from Mexico and as far north as San Francisco. Among them were Commodore William Rogers Taylor, commanding the Pacific Squadron, United States Navy, and a score of other military officers, both Navy and Army, foreshadowing, as it were, the town’s coming role as a military city. Across the street, Horton set aside a half block as a plaza, to provide a place for his visitors to bask in the sun.

While economic prospects may not have been attractive at the time, the climate drew the ill in health and someday it would bring the tourists and the pleasure-seekers from all over the world. A visitor to California and subsequently San Diego in late 1869 and early 1870 was George Phillips Marston, a pioneer farmer and merchant of Fort Atkinson on the Rock River in lower Wisconsin, a state which had been settled largely by Scandinavians and Germans, though he had migrated from New England and was of English descent.

He suffered from asthma and in two letters to members of his family, one from San Jose, near San Francisco, and the other from the mountain town of Grass Valley, he wrote:

“I like the climate of San Diego very much. The night air here (San Jose) is very chilly and damp, but in San Diego it is soft and delightful … my health has been so much better here than in Wisconsin that you need not be surprised if I should feel it to be my duty to move here one of these days … I have been to San Diego, a nice little spot in the corner of the United States where the climate is delightful and Oranges, Lemons, Figs, Olives, and all Semi-tropical productions flourish…”

In early October of 1870 George P. Marston and his son, George White Marston, started by train for a new home in San Diego, with the rest of the family to follow them later. At San Francisco they boarded a steamer and on October 24, two days after young George had passed his twentieth birthday, they arrived at San Diego.

The same day he got a job as a clerk at the Horton House. One of his duties was to dust off the travelers who arrived by stage from Yuma. In his reminiscences, he recalled:

“This experience of six months in the old Horton House was the most picturesque period of my life. There was a large Spanish and Mexican element in town at that time and our guests included travelers from every part of the world, soldiers from the Indian wars in Arizona, mining men from Lower California, and adventurers from everywhere.”

Though many persons were leaving, more were arriving, and by the end of the year when the census was taken the city of San Diego, which included both Old and New Town and La Playa, had a population of 2300 and the county, which still covered 14,969 square miles, 4951. In ten years the town had grown by more than 1500 residents and had 915 occupied buildings, though the county as a whole had increased only by about 600 persons. The growth was enough to bring about daily mail service to Los Angeles.

Holliday & Company, which operated the Orizaba on the San Francisco to San Diego run, was charging $15 a ton for freight and $60 for a round trip for passengers. Horton went to San Francisco and requested William W. Wright to put the steamer William Taber on the run as competition and promised him a large share of San Diego’s business, at $9 a ton for freight and $30 a round trip for passengers. He did, and for two months Horton diverted cargo to the William Taber, sometimes by withholding business from reluctant firms and threatening to destroy them, until Holliday & Company agreed to meet the lower rates and paid Wright $100,000 to withdraw the William Taber.

San Diego sent representatives to Washington to press for passage of the new railroad bill and to engage in the honored practice of the day of assuring directors and promoters of the proposed railroad of gifts of land that certainly would turn up small fortunes for themselves in the event San Diego became the western terminus.

Donations of land were taken and the deeds deposited in the San Diego Bank. Ephraim Morse, who was in charge of raising the gifts, reported to Matthew Sherman, who was in Washington, that he had asked Joseph Mannasse and Marcus Schiller to canvass Old Town for subscriptions, but that the residents there were suspicious of the whole deal and suspected Sherman wanted the land for himself or was being humbugged by Washington sharpsters:

“Witherby (Oliver Witherby) of course, says he can live without the railroad … It is terribly dry here and all over California, and we all fear another year of drouth … Should the bill fail to pass and the drouth together would ruin many of our merchants and be almost a deathblow to San Diego.”

The rains finally came but Morse wrote that already many had left the country, “cursing it for a desert.”

By the end of January of 1871 they had subscribed 848 lots and 558 acres. The lots were valued at $126,000 and the acres at $56,000. Morse said he thought these were fair estimates but:

“Horton abused the committee shamefully for putting so low an estimate upon it … I never saw Horton more mad than he was with us. He swore he would never give another cent, and he was sorry he had given this, would never work with us again, etc., etc., that we were making d–n fools of ourselves and doing more harm than good as he wanted to call it a million.”

A few days later Morse reported that nearly all the deeds had been signed and delivered to the bank but Horton was among those who had refused to sign. The San Francisco Chronicle reported the bill was sure to pass, and Morse wrote:

“Horton is going around denouncing Sherman and his scheme of getting lands as a swindle to benefit himself in buying into some fat situations, etc., etc… there are plenty of people here to invest if the bill passes… I wish I could look into the future—I am offered half price for some lots, and I think I shall take it for fear of accidents, though I know they would be worth four times as much a week after the passage of the bill.”

Horton was finally listed as giving twenty blocks and Louis Rose 153 blocks in Roseville and 80 acres.

San Diego still had two rival Boards of Supervisors, each claiming political jurisdiction and each planning to build its own courthouse, as a result of the feud between New San Diego and Old Town, and in January Morse wrote:

“The Bogus Board of Supervisors have finally located the Court House at Old Town … and the bonds are being printed. If the courts are not too slow they may be stopped before they go much farther.”

The court fight which would settle the issue between Old Town and New San Diego came to a conclusion on January 27, 1871, when the Supreme Court of California ruled that the Board of Supervisors did have the authority to remove the county records to Horton’s Addition and that Judge Morrison had no power to remove three of the Supervisors from office. In a letter Morse commented:

“The decision of the Supreme Court on the Court House question was a terrible blow to Old Town and a scathing rebuke to Judge Morrison. I don’t think they will fight any longer, but they may, and if they do they will be crowded without mercy.”

The old Board was still in power, and with the subsequent death of County Clerk George A. Pendleton, a champion of Old Town, the Supervisors appointed Chalmers Scott as clerk. On March 29 Judge Morrison ordered the sheriff and Board of Supervisors to provide a courtroom in South San Diego for the April term of the court, and on the following night the new clerk and a few friends went into the Whaley House in Old Town, carried the records out to waiting express wagons, and removed them to New San Diego, where they were temporarily placed in the Express Building on the northwest corner of Sixth and G Streets.

With the champions of Old Town routed, the residents of New San Diego fell to quarreling among themselves over the building of a permanent courthouse and jail. The Board of Supervisors was accused of wasting the taxpayers’ money in proposing to spend $45,000 for a new building, when the county already was $90,000 in debt, and at a gathering of citizens it was decided that an existing building should be purchased for $10,000 and the rest of the money expended on roads.

The wily Horton stepped in and offered Horton’s Hall for $10,000 or a free site on Cedar Street, between Third and Fourth, far uptown on the portion of Horton’s Addition lying west of Balboa Park. Things had been moving rather slowly up there.

In the end, neither Horton nor the citizens’ group won out. The Supervisors were going to have their new building and Horton was forced to capitulate with a site on D Street, between Front and First Streets, on which it was to stand for ninety years. It was a significant political defeat for Horton in the town he had founded only four years earlier.

The cornerstone was laid on August 12,1871, and perhaps symbolically, a box referred to as a casket was carried by four men through the streets with due ceremony, filled with historic and timely documents, and while Martin’s Band played, sealed into the wall. Dr. E. D. French, president of the Board of Supervisors, made “some very neat and appropriate remarks hoping that all the ill feelings that have existed between Old and New San Diego might be buried in the stone.”