PART 5 ~ BOOM AND BUST

January 1, 1960

The Journal of San Diego History
SAN DIEGO HISTORICAL SOCIETY QUARTERLY
January 1960, Volume 6, Number 1
Jerry MacMullen, Editor

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“Thar’s Gold in Them Hills!”

boom 2The discovery of gold in the Julian country during 1870 was a boost to the port and to downtown business. Supplies came in on the steamers, to be freighted up long mountain grades to the mines, and gold went out. For a time it seemed that Julian, founded in 1870, might overshadow San Diego and be the leading community in the county, but there proved to be a limit to the gold in the Cuyamacas.

Then came another boom in 1872, the “Tom Scott Boom,” which brought the city’s population up to four thousand people. It resulted from a visit to the Horton House by Colonel Thomas Scott, the president of the Texas & Pacific Railroad, which was planning to extend to the Pacific as one of the great transcontinental lines. Scott came to look over possible Pacific termini, and to listen to offers from cities of inducements, in the form of gifts. Enough open land and town property were proffered by the city, the county, and private citizens to elicit a promise to put the Pacific terminus of a great southern system on San Diego Bay. Property values soared. Speculation was rife. However, the expansion of the Texas & Pacific system never came about. The untimely failure of the great railroad speculator Jay Cooke, and the Black Friday panic, discouraged the foreign investors upon whom all such developments depended. The boom burst, despondency followed, and half of the town’s boomtime population left.

In 1879 a group of San Diego, and National City businessmen formed a committee to attempt again to bring a transcontinental road into San Diego. Frank Kimball (who with his brother Warren had founded National City) went to Boston to represent the group before the president of the Santa Fe, which then intended to reach the Pacific at Guaymas, Mexico. Kimball sold the Santa Fe road on the idea of coming to Southern California instead, a decision that was never regretted. Perhaps it should be said that he bought them on the idea, for a basic reason for the change of the road’s plans was the offer of cash and land made by Kimball to bring the line here.

Coming of the Iron Horse

A subsidy of three million dollars was paid by San Diego and National City people, and seven million dollars worth of property was added to it. This amounted to twice what it cost to build San Diego’s first rail connection with the rest of the country, a line called the California Southern. The California Southern ran up the coast to the site of Oceanside, then up Temecula Canyon, toward and through San Bernardino, and over the Cajon Pass to Santa Fe’s railhead at Barstow. The road was to be a subsidiary of the Santa Fe. No San Diegan got a share of stock for the contributions made. The only return for the gifts of money and land that the railroad made to the two towns was a promise that its main Pacific Coast terminus would always be on San Diego Bay. Kimball actually got a promise that the favored town would be National City. This pledge the then management of the Santa Fe kept only as long as it was convenient. Not long after Santa Fe trains first rolled into Los Angeles-part of the way over California Southern right-of-way, which they still traverse on that run-the City of Angels became the terminus; the shops went to San Bernardino.

The commencement of construction on the California Southern roadbed breathed new life into San Diego. In 1881 the gas company set up its works and began to lay pipes to provide service to all who wanted hot, clean flames for heating and illuminating their homes and offices. In 1882 the telephone company started in business with thirteen subscribers.

September of 1883 saw the completion of the railroad as far as San Bernardino, but winter rains that year ripped out the tracks through Temecula Canyon. Eastern engineers who laid out that stretch had made a mistake often repeated by newcomers to Southern California; they ridiculed local citizens’ warnings about how Southern California’s washes become real rivers in a good rainy season. Not until November 19, 1885, did San Diego get to celebrate the beginning of through service east. The line only lasted to the next wet winter, that of 1890-91, when it was washed out again, never to be rebuilt. Tracks were laid from Los Angeles via Santa Ana to Oceanside, and San Diego has since remained the last town on a spur line.

Boom of The Elegant Eighties

It was the coming of California Southern’s trains in 1885 which touched off the Great Boom of the Eighties. Buildings spread over the landscape, with “gingerbread” at every turn. San Diego’s population rocketed up to 40,000 in 1887. The price of downtown lots doubled and tripled over and over again.

New economic activities which the railroad encouraged in the town and port of San Diego, and the new accessibility of the area from the East, were reasons why strangers poured onto D Street from every incoming train. Another, very important reason was the most equable climate in the United States. San Diegans advertised what William Smythe in his History of San Diego, called the one resource which did the most to build the city. That it does not snow here was an attraction to Easterners only rivalled by the fact that it does not rain much, and the sunny summers, winters, springs, and falls are all tempered by pleasant sea breezes.

During a visit here Louis Agassiz, the great naturalist, made a speech at the Horton House in which he said, “This is one of the most favored spots on the earth, and people will come to you from all quarters to live in your genial and healthful atmosphere.”

Modernity raced in with the new residents, merchants, and speculators. Horse car lines commenced operations on D Street in 1886. The first electric cars were put on an Old Town run during the following year. This was truly a pioneer effort; only two towns west of the Mississippi instituted trolley service before San Diego did. Edison’s new-fangled incandescent lamps were used to light homes; the streets were illuminated by brilliant arclights at the top of 135-foot poles.

On May 3, 1886, by a vote of the people, the city decided to reincorporate. That year there were 340 businessmen and professional firms. In 1887 the number had grown to 987. In 1888 the first modern high dam, the Sweetwater Dam, was built by National City interests, to begin a new era in providing water for the San Diego area.

Boom delOne of the greatest benefits of the boom, was that it attracted the interest of John D. Spreckels, a sugar-refining millionaire, to San Diego. In 1886 the Spreckels Brothers Commercial Company opened Its warehouse doors on the waterfront. The following year Spreckels bought the Coronado Beach Company, which had begun the development of the transbay community and owned the great Hotel del Coronado.

Dark Days

In the spring of 1888 credit tightened and numbers of land speculators had to offer their holdings for sale, to pay off creditors on whose capital they had been operating. Their need to sell forced prices down, and shattered land values which had been artificially inflated by unrealistic speculation. A great “bust” followed the Great Boom. Ten thousand people left town in the first few months after the bubble broke. Houses stood deserted all over town. Public and private improvement works were suspended, making unemployment a pressing problem.

The upturn soon began, however. The San Diego Flume Company, which had been financed with English capital unaffected by short-term local business cycles, completed their flume from the upper reaches of the San Diego River in 1889. This, with the company’s new Cuyamaca Dam, was to provide plenty of clear mountain water for the city’s expansion. Since the 1870s San Diego had depended on wells downtown, in the canyons of the city park, and most importantly, those of the San Diego Water Company in Mission Valley. Such sources were being exhausted at that time. The flume company’s turning to the back country watersheds for city water provided an answer to the ever constant problem that would hold good until the end of World War II. On February 22, 1889, a mammoth celebration was staged over the arrival of Cuyamaca water in the town’s system. Fountains 125 feet high rose from nozzles on street corners. Dignitaries commented in their speeches on the crystal clearness and excellent taste of the new water. Some days later the news circulated that air-locks in the mains had prevented the flume water from reaching the town, and the water in the fountains on the day of the celebration had come from the Mission Valley wells just as water had for years. Temporary chagrin on the part of the speechmakers was eclipsed by the joy of the actual arrival of the mountain water.

The electric streetcars of 1887 proved too new and untried to succeed. Two years later a cable car company was incorporated, and soon began to lay tracks from the harbor up Sixth Street, over C to Fourth, and then to University Heights and the Mission Cliff Gardens at the end of Park Boulevard. The company failed in 1892, at a time when Spreckels was buying up the various streetcar companies. He converted horse and cable lines to electric trolleys, rendering the city a great service at a time when it could not have helped itself.

Spreckels’ widening investments locally were largely responsible for putting San Diego back into what has become its normal way of life – that of rapid growth. In 1885 he purchased a half-interest in the Otay Water Company. Under the new name of Southern California Mountain Water Company the system supplied San Diego with most of its water, after Spreckels money built a large dam. The system was purchased by the city in 1912.

“The Impossible Railroad”

Spreckels personally took it upon himself to provide San Diego with its yearned-for railroad over the mountains eastward. In 1905 he capitalized the San Diego & Arizona Railroad at six million dollars, and commenced construction. The reluctance of earlier railroad builders (who were motivated by no civic feelings) to come to the Pacific at San Diego, was justified by the fact that it took thirteen years and three times as many million dollars as expected, to build what came to be called “The Impossible Railroad” through Campo and down the spectacularly rugged Carriso Gorge.

In addition to nurturing the growth of San Diego during a difficult period, Spreckels undertook to advertise and encourage development by buying and publishing the San Diego Union and theEvening Tribune. He also improved the city’s skyline by building, over a number of years, such splendid structures as the Bank of America Building and “the finest theater in the West,” the Spreckels.

Other improvements came to San Diego. In 1898 the military reservation on the end of Point Loma, which through the forty-odd years since its establishment had been undeveloped, was fortified against possible enemy attack. The name Rosecrans was assigned to the fort, in honor of a Civil War general who had shown friendly interest in San Diego during the early years of Horton’s Addition.