The Weekly Quill — Seeking: Alternative to Alternatives

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The Growing Risks in U.S. Commercial Real Estate

In life, true second chances don’t come around often. On the night of December 9, 1907, W. J. Bartnett was arrested at his home on Silva Island off the shore of Marin, California. Accompanied by his wife and two policemen, the disgraced director of the defunct California Safe Deposit and Trust company was taken to the San Francisco jail where he was to be charged with the embezzlement of stocks and bonds of the Colton estate. The bank’s depositors, who had been wiped out, wasted no time in pursuing an investigation into what had transpired at the Fillmore Street branch of the bank. In a statement issued December 10th, all the money on deposit at that location had been loaned to stockholders, to themselves and to mythical companies.

The cliche “spectacular fall” applies here. It was only 18 months earlier that Bartnett, in his capacity as chief consul for the Western Pacific Railroad, was given the power to breathe life not a second, but rather a seventh time, back into San Francisco. The hardy residents were no rookies to devastation – between 1849 and 1851, the city was practically razed by fire seven times. Each time, it reconstructed and recovered. Things changed at 5:12 a.m. on Wednesday April 18, 1906, when a different sort of disaster struck. At an estimated 7.9 magnitude on the Richter scale, what shook San Franciscans awake was more than one of the worst earthquakes in U.S. history. For days, the fires the quake set off burned, consuming 80% of the city and killing more than 3,000. Most of the city’s population of 400,000 was homeless and the need to swiftly rebuild acute. U.S. Army troops based at the Presidio and the Red Cross played a key role in the immediate aftermath of the calamity.

Because the railroad empire effectively governed at the turn of the last century, it had the clout to dictate the design and terms of reconstruction. As the Museum of San Francisco frames it, “At the time, the railroads controlled California politics, and San Francisco was the most important city in the state. So, Mr. Bartnett’s ‘suggestions’ in the form of this letter to Mayor Eugene Schmitz were more in the nature of political instructions.” Everything from a revitalization of the port to a bank holiday to cheap rail fares to facilitate the procurement of unemployed engineers, contractors and tradesmen throughout the United States was commanded and delivered, financed through the issuance of bond sales.