THE SOURCE OF THE BRIBE MONEY.
After the confessions of the Supervisors, the Grand Jurors had definite,
detailed knowledge of the corruption of the Union-Labor party
administration. The Grand Jurors knew:
(1) That bribes aggregating over $200,000 had been paid the Supervisors.
(2) That of this large amount, $169,350 passed from Ruef to Gallagher
and by Gallagher had been divided among members of the board. The
balance, the evidence showed, had been paid to the Supervisors direct by
T. V. Halsey of the Pacific States Telephone Company.
(3) The amount of each bribe; the circumstances under which it was paid;
even the character of the currency used in the transaction.
(4) The names of the corporations benefited by the bribery transactions,
as well as the character of the special privileges which their money had
bought.
With the exception of the Home Telephone Company, the names of the
directors of these benefiting corporations were readily
obtainable.[187]
With this data before them, the Grand Jurors proceeded to trace the
source of the bribe money.
Naturally, men who had long held places of respectability in the
community were slow to admit having given Ruef vast sums, even under the
transparent subterfuge of paying him attorney's fees.[188] Some of them,
when haled before the Grand Jury, testified reluctantly, and only under
the closest questioning. Others frankly stood upon their constitutional
rights, and with pitiful attempt to smooth out with studied phrases the
harshness of the only acceptable reason for their refusal, declined to
testify on the ground that their testimony would tend to incriminate
them.
Nevertheless, the Grand Jury succeeded in wringing from the officials of
the several corporations involved, damaging admissions; admissions, in
fact, quite as startling as had been the confessions of the Supervisors.
The refusal of some of those not unreasonably under suspicion, to
testify was, too, quite as significant.
In the matter of the bribery of the Supervisors by T. V. Halsey, agent
of the Pacific States Telephone and Telegraph Company, the Grand Jury
had information that eleven Supervisors had been paid over $50,000 to
oppose the granting of a franchise to the Home Telephone Company. A
majority of the payments were made in an unfurnished suite of three
rooms in the Mills Building. Frank Drum, a director of the company,
admitted having engaged the rooms at Halsey's request. E. J. Zimmer,
auditor for the company, testified that Halsey held the position of
General Agent of the company. Halsey's duties, the testimony showed,
were assigned him by Louis Glass, vice-president and general manager,
and for a time acting president of the company. Halsey, under the
company's organization, reported to Glass. Zimmer testified that Halsey
could not spend the company's money except on the proper approval of the
executive officer of the company. From October, 1905, when President
Sabin of the company died, until February, 1906, when Henry T. Scott,
Sabin's successor, was elected, Glass acted as president and as
executive officer. He had, according to Auditor Zimmer, authority to
approve expenditures made by Halsey. After Scott's elevation to the
presidency, either Glass or Scott could have approved such expenditures.
Zimmer testified further to giving Halsey, at Glass's order,[189] as
high as $10,000 at a time. Halsey[190] gave no vouchers for these large
sums; they did not appear on the books;[191] they were carried on tags.
Zimmer stated that he did not know for what the funds were used; had
merely followed out Glass's instruction, and given Halsey the money.
The testimony of Thomas Sherwin threw some light upon the bookkeeping
methods followed. Sherwin had been traveling auditor for the American
Bell Telephone Company, which concern owned 51 per cent. of the stock of
the Pacific States Telephone and Telegraph Company. Later he took
Zimmer's place as auditor of the Pacific States Company.
Mr. Sherwin admitted that some of Mr. Halsey's "special expenses," at
least, were finally charged to the company's legal department.[192]
Passing from the investigation of the bribery transactions of the
Pacific States Telephone and Telegraph Company to the activities of the
Home Telephone Company, the Grand Jury examined prominent business men
of Los Angeles as well as of San Francisco.
The plan of operation followed by the capitalists behind this enterprise
was to organize a construction company, whose part was to establish the
plants, put them into operation and turn them over to the operating
companies, taking their pay in the securities of the local operating
company. Thus, at San Francisco, the Empire Construction Company played
an important part in the Home Telephone Company enterprise.
As Heney put it, the Empire Construction Company received the most
benefit from the granting of the Home Telephone franchise. The Empire
Construction Company furnished at least part of the money that went into
the fusion campaign fund in 1905. Investigation showed that 25 per cent.
of the stock of the Empire Construction Company belonged to men who were
in the construction solely, while 75 per cent. was in the hands of men
who were financing the enterprise. This last block of stock at the time
of the investigation was divided among James H. Adams and Thomas W.
Phillips of the Adams-Phillips Company, A. B. Cass, Gerald S. Torrance
and A. K. Detweiler. Detweiler could not be found. Adams, Cass and
Torrance, after answering some of the questions put to them, availed
themselves of their constitutional privilege, and refused to make
further answers. The books of the Adams-Phillips Company disappeared and
employees of that company undertook to evade answering questions
regarding the disappearance, on the ground that they might incriminate
themselves. But a sharp order from the Superior Court brought out their
testimony. However, none of them gave testimony that led to the
discovery of the missing volumes.
But the general trend of the testimony went to show that the responsible
agent for the Empire Construction Company and the Home Telephone Company
in San Francisco was A. K. Detweiler. The testimony showed Detweiler to
have been at Ruef's office in consultation with Ruef and Supervisor
Gallagher; he was active in every move that was made on behalf of the
Empire Construction Company and of the Home Telephone Company in San
Francisco, and had the disbursing of the funds.
Incidentally, through the testimony of Dr. Fred Butterfield, a
representative of Adolphus Busch, the brewer, the Grand Jury learned
that a third telephone company, the United States Independent, seeking a
franchise to do business in San Francisco, would have bid for the
franchise which the Home Company received, had not the franchise been so
worded that only the telephone system controlled by the Home people
could be operated under it. Butterfield stated that his company, made up
of responsible capitalists, considered the franchise worth something
over a million dollars, and was prepared to bid up to a million dollars,
if necessary, to get it. The Home Company paid San Francisco $25,000 for
the franchise. Butterfield testified that his company had intended to
invest $4,500,000 in the San Francisco enterprise, and that Ruef knew of
the extent of the company's plans. With such testimony, the assertions
of Ruef's partisans that opposition to the Ruef-Schmitz administration
retarded development of the community compare curiously.[193]
The Grand Jury could not secure the attendance of Mr. Detweiler, for
about the time of the investigation Mr. Detweiler mysteriously
disappeared. The investigation into the affairs of the Home Company
had, therefore, to be concluded without Mr. Detweiler's testimony.
Following the policy of the stockholders of the Empire Construction
Company, the officials of the United Railroads refused to testify.
President Patrick Calhoun[194] and Thornwell Mullally, assistant to the
president, when given opportunity to state their side of the case under
oath, stood upon their constitutional rights, and declined to give
evidence that might incriminate them.[195] They were accordingly excused
from the Grand Jury room.
But the employees of the company did not escape so easily. When, for
example, George Francis, William M. Abbott, George B. Willcutt and Celia
McDermott refused to answer questions put to them in the Grand Jury
room, they were haled before the Superior Court, where they were
informed that they must testify.
In spite of the hostility of these witnesses, the prosecution succeeded
in securing a wealth of data regarding $200,000 which passed into the
hands of Tirey L. Ford and, according to the theory of the prosecution,
from Ford to Ruef.
The prosecution established the fact that two days before Mayor Schmitz
signed the trolley permit, that is to say, on May 22, 1906, Patrick
Calhoun, as president of the United Railroads, received by telegraphic
transfer from the East to the United States Mint at San Francisco,
$200,000.[196] Two days later, the day the trolley permit was signed,
President Calhoun took Ford to the Mint and instructed Superintendent
of the Mint Leach to give Ford $50,000 of the $200,000. Ford told Leach
that he wanted currency. The currency was finally secured by exchanging
gold for bills at the Mint headquarters of the relief work then being
carried on in San Francisco. These bills, it was shown, were all in
small denominations, having been sent to San Francisco from all parts of
the country by individual subscribers to the relief fund.
This money was taken away from the Mint, the testimony showed, by Ford
and William M. Abbott.
Soon after, Ruef loaned Supervisor Rea[197] $3500. By a curious trick of
fate Rea had leased a piece of property from Rudolph Spreckels. In
payment on this lease he used the money that Ruef had loaned him. This
money was all in bills of small denominations. Late in July Ruef gave
Gallagher $45,000, all in bills of small denominations, as partial
settlement with the Supervisors for granting the trolley permit.
Gallagher gave Wilson of this money $5000, and the other Supervisors
with the exception of Rea $2000 each. They all understood that it was
because of the trolley franchise deal. The balance Gallagher retained
for himself.
The confessing Supervisors, with the exception of Wilson and Rea,
testified that their first payment on account of the trolley permit was
$2000 each, in bills of small denominations. Wilson testified to having
received $5000.
Later, Ford, making two trips to the Mint, drew out the $150,000
balance of the $200,000 that had been telegraphed to Calhoun's credit.
As before, the Mint paid him in gold, and as before, Ford exchanged the
gold for currency. But instead of getting bills of small denomination,
on the two trips which Ford made for that $150,000, he secured fifty and
one hundred-dollar bills.
On the day that Ford drew the last of that $200,000 from the Mint, an
agent in the employ of the prosecution followed Ruef from his office to
the car barns in which Ford's office was then located. A few days later
Ruef gave Gallagher $40,000 in fifty and one hundred-dollar bills, the
greater part of which Gallagher distributed among the Supervisors as
second and final payment on account of the granting of the trolley
permit.
In the Parkside deal, the Grand Jury had little difficulty in tracing
the money involved. William H. Crocker,[198] a capitalist of large
affairs, who owned the largest interest in the company, showed
astonishing ignorance of the management. The Grand Jury learned little
from him.
But those interested in the enterprise with Crocker not only told how
half the money was paid Ruef, but how the books had been manipulated to
conceal the payment.
Ruef, according to the testimony of officials of the company, had first
demanded $50,000 as price for his employment to put the franchise
through, but had finally agreed to take $30,000. This amount, officials
of the company testified, was provided by drawing two checks, one in
favor of H. P. Umbsen and the second in the name of Douglass S. Watson,
secretary of the Parkside Company. Umbsen and Watson thereupon deeded to
the Parkside Company two parcels of land. The transaction was then
charged to the purchase of property.[199] The property was deeded back
to Umbsen and Watson at the same time, but these last deeds were not
immediately recorded.
Watson cashed the checks at the Crocker-Woolworth Bank, of which William
H. Crocker was president. He testified that he received currency for
them.
The $30,000 he took to G. H. Umbsen. Half the $30,000 Umbsen paid Ruef.
At the time of the exposure, Umbsen[200] testified he was withholding
the second payment until the franchise should be put through.[201]
In the gas-rate case, the Grand Jury found that the corporation that
would, in the final analysis, benefit by the increase in gas rates, was
the Pacific Gas and Electric Company. The four responsible men in this
company were found to be N. W. Halsey, John Martin, Eugene de Sabla and
Frank G. Drum. Halsey was out of the State for the greater part of the
time and Cyrus Bierce, acting as treasurer of the corporation, looked
after his interests. This narrowed the responsibility down to de Sabla,
Martin and Drum.
De Sabla testified before the Grand Jury that Ruef was not, to his
knowledge, at any time on the pay roll of the company. Martin swore that
he knew of no money that had been expended in connection with the fixing
of the gas rates, and expressed himself as being as surprised as anyone
at the confessions of the Supervisors to having received money after the
gas rates had been fixed. Later, after Ruef had plead guilty to
extortion, both de Sabla and Martin refused to testify further before
the Grand Jury.[202]
Mr. Frank G. Drum, when called before the Grand Jury, stated that he had
had no conversation with Ruef in reference to the fixing of the gas
rates.[203] But later Ruef told the Grand Jury that the money which he
had turned over to Gallagher in the gas-rate transaction had come from
Drum.[204]
The first to be indicted because of these transactions was Ruef.
Sixty-five indictments were on March 20 returned against him. Eighteen
were based upon the bribing of Supervisors in the so-called fight trust
matter; seventeen upon the bribing of Supervisors in fixing the gas
rates; thirteen upon the bribing of Supervisors in the matter of the
sale of the Home Telephone Company franchise; seventeen in the matter of
granting the over-head trolley permit.
On the same day, ten indictments were returned against Theodore V.
Halsey, of the Pacific States Telephone and Telegraph Company, for the
bribery of Supervisors to prevent the sale of a franchise to a competing
telephone company. A number of indictments were found against A. K.
Detweiler, for bribing Supervisors in the matter of the sale of the Home
Telephone franchise. The Detweiler indictments, thirteen in number,
were based upon payments of money by Ruef to Gallagher, and by Gallagher
to different members of the board. On March 23, the Grand Jury returned
nine indictments against Louis Glass, vice-president of the Pacific
States Telephone and Telegraph Company, based upon the bribing, through
Halsey, of Supervisors to prevent the granting of a competing telephone
franchise.
During the two months that followed, the Grand Jury continued at the
steady grind of graft investigation. Finally, on May 24, one additional
indictment[205] was brought against Halsey and two against Glass. On
that date, fourteen indictments were returned against Patrick Calhoun,
Thornwell Mullally, Tirey L. Ford, William M. Abbott,[206] Abraham Ruef
and Mayor E. E. Schmitz, indicted jointly, for the bribery in connection
with the granting of the over-head trolley permit.
The day following, May 25, G. H. Umbsen, J. E. Green, W. I. Brobeck and
Abraham Ruef were jointly indicted fourteen times on charges of offering
a bribe to fourteen Supervisors in the Parkside franchise matter. The
same day, fourteen indictments were returned against Frank G. Drum,
Abraham Ruef, Eugene E. Schmitz, Eugene de Sabla and John Martin on
charges of giving and offering bribes to fourteen Supervisors in the
matter of fixing the gas rates.
Still another series of graft indictments were to be found. Three
prize-fight promoters, W. Britt, "Eddie" Graney and "Jimmie" Coffroth
were, on nine counts, indicted jointly with Schmitz and Ruef for bribery
in connection with the awarding to them of virtually a monopoly of the
promotion of prize fighting in San Francisco.
FOOTNOTES:
[187] The following persons sat on the Boards of Directors of the
several corporations involved in the graft disclosures, either
during 1906 when the briberies were committed, or during 1907
when the exposures came:
Pacific Gas and Electric Company--N. W. Halsey, E. J. de
Sabla, John Martin, Frank G. Drum, Wm. H. Crocker, N. D.
Rideout, Frank B. Anderson, John A. Britton, Henry E. Bothin,
Louis F. Monteagle, Jos. S. Tobin, G. H. McEnerney, Cyrus
Pierce, Carl Taylor, F. W. M. McCutcheon.
Pacific States Telephone and Telegraph Company--Henry T.
Scott, Louis Glass, F. W. Eaton, Timothy Hopkins, Homer S.
King, F. G. Drum, E. S. Pillsbury, Percy T. Morgan, all of San
Francisco; J. C. Ainsworth, P. Bacon, J. H. Thatcher, C. H.
Chambreau, E. H. McCracken, C. B. McLeod, C. E. Hickman, J. P.
McNichols, R. W. Schmeer, all of Portland.
Parkside Company--W. H. Crocker, Wellington Gregg, Jr., C. E.
Green, J. J. Mahony, W. H. Cope, A. F. Morrison, Hugh Keenan,
Wm. Matson, J. M. O'Brien, Douglas S. Watson. J. E. Green.
United Railroads--Patrick Calhoun, G. F. Chapman, Geo. H.
Davis, Tirey L. Ford, Benj. S. Guiness, I. W. Hellman, Chas.
Holbrook, A. C. Kains, J. Henry Meyer, Thornwell Mullally, Jos.
S. Tobin.
The names of the board of directors of the Home Telephone
Company, during the period of the bribery transactions, has
not, so far as the writer knows, been made public. A. C. Kains
resigned from the directorate of the United Railroads, and Jos.
S. Tobin from the directorates of the United Railroads and the
Pacific Gas and Electric Company, about the time of the
disclosures.
[188] The inconsistency of the "attorney fee plea" is well
illustrated in the United Railroads transaction. Ruef received
$200,000 from the United Railroads because of the trolley
permit. General Tirey L. Ford, head of the United Railroads
law department, to which he devoted all his time, was credited
with receiving a salary of $10,000 a year. Thus Ruef's single
"fee" was as much as the United Railroads would have paid its
head lawyer in twenty years, almost a lifetime of professional
service. And Ruef, it must be remembered, in addition was
getting $1,000 a month from the United Railroads--more than
the chief of that corporation's legal department was
receiving.
[189] Zimmer insisted at first that the total of the amounts which
he turned over to Halsey would not exceed $20,000. Later he
admitted that he had not kept track of the amounts, and the
total might have been $30,000. This he increased to $35,000,
and finally stated that it was "not over $40,000, if it was
that." He admitted that it would have been possible for
Executive Officer Glass to have paid out $70,000 without his
knowledge. "Checks," he said, "could have been signed without
going through me; could have been carried just the same as
this tag account was."
William J. Kennedy, cashier and assistant treasurer of the
company, who had charge of the "tags," stated that during
February, 1906, considerable amounts were drawn out in this
way, which might have totalled as high as $70,000.
[190] Regarding the manner in which money was furnished to Halsey,
Zimmer testified before the Grand Jury as follows:
"Q. This $10,000 that you gave him (Halsey) under direction of
Mr. Glass, in what shape did you hand it to him? A. Currency.
"Q. Did you have the currency on hand or send out and get it?
A. Sent out and got it. I went out and got it.
"Q. Where did you get it? A. I don't remember, I had to go to
several banks.
"Q. Did Mr. Glass tell you he wanted you to give it to him in
currency? A. Yes, sir."
[191] These admissions led to close questioning of Mr. Zimmer. The
following is taken from his testimony given before the Grand
Jury:
"Q. Now, in what way did that money appear in the books? A.
Didn't appear in the books.
"Q. How was it taken care of? A. No voucher was ever made for
it.
"Q. How would your cash account for it? A. It wasn't taken out
of the cash account, so far as I know.
"Q. What was it taken from? A. By check issued on the regular
bank account.
"Q. Who was the check made payable to? A. Eaton, treasurer, the
same as other coin checks are issued, coin or currency.
"Q. It would have appeared somewhere in the books, that check,
that amount would be deducted from the bank account? A. Yes,
sir; but carried in the expense account of the cash suspense.
"Q. Leave a tag with you? Leave a tag, would you? A. Yes."
[192] Before the Grand Jury, Sherwin was closely questioned as to
one of Mr. Halsey's "Special expense" claims. The following is
from his testimony:
"Q. Now, then, that shows that it was charged against what
fund? A. That got in the legal expense finally, we charged it
to Reserve for Contingent Liabilities, and each month we
credit that account, I have forgotten maybe $2,000, and charge
it to legal to make it run even in the expense each month.
"Q. Why does it go to legal? A. Because--instead--to what else
would it go?
"Q. What makes it legal? A. Oh, that's just a subdivision of
our expense.
"Q. Was this $600 legal expenses? A. I don't know what it was.
"Q. Who told you to put it under legal expenses? A. You mean
who told us to put it in that account?
"Q. There is nothing on that paper that indicates that it goes
into legal expense? A. No.
"Q. Now, then, you say it was finally charged to the legal
department. Why? A. Simply because everything that is charged
to that reserve finally gets into legal expense.
"Q. Everything that is charged to that reserve fund? A. Yes,
that reserve fund is charged off for legal expense.
"Q. And what is the reason for that? A. For charging it to
legal?
"Q. Yes. A. For charging it to legal--because--I don't know the
reason--it is always done that way."
[193] See Supervisors' letter to the Examiner, footnote 64, page 62.
[194] Calhoun returned to San Francisco April 10. In interviews
published in the San Francisco papers of April 12, Calhoun
emphatically denied all knowledge of the bribery transactions.
In his interview in the Chronicle he said:
"I wish to go on record before the people of San Francisco as
stating that not one of the officers or legal counsel of the
United Railroads of San Francisco or the United Railroads
Investment Company of New Jersey ever paid, authorized to be
paid, approved of paying or knew that one dollar was paid to
secure the passage of the trolley franchise ordinance by the
Board of Supervisors, and if I had known that one dollar was
paid for the purpose of securing this franchise I would not
have accepted it."
[195] The refusal of Calhoun and Mullally to testify created a
sensation, even in those sensational times. The Chronicle in
its issue of May 4, 1907, printed the following account of the
incident:
"For the first time in the history of the examination of
witnesses before this Grand Jury, Heney was careful not to
instruct the prospective witnesses as to their legal rights.
Instead he merely asked them if they were already familiar
with their rights under the law.
"'I am aware,' said Calhoun, who was the first to be called,
'that anything I might tell this body might be used against
me.'
"'With that understanding are you willing to become a witness
before this Grand Jury?' asked Heney.
"'I am not,' was Calhoun's response.
"The Jurymen who had leaned forward as the reply of the
president hung on his lips sank back in their seats.
"'That is all, Mr. Calhoun,' said Heney to the president, and
then going to the door he said to the bailiff, 'Call Mr.
Mullally.'
"Mullally's examination was identical with that of his
superior's and he was permitted to go. Neither President
Calhoun nor Assistant Mullally will be called again to the jury
room."
Calhoun issued the following statement of his refusal to
testify:
"When called before the Grand Jury this afternoon and informed
that it had under investigation the alleged bribery of public
officials by the United Railroads, we declined to be sworn and
in order that our action may not be misconstrued, I call your
attention to these facts:
"For months past the public prints have been full of charges
traceable to certain persons connected with the prosecution
that they had positive evidence that the United Railroads had
spent not less than $450,000 in bribing the officials of this
city. I have repeatedly stated that neither I nor the United
Railroads, nor any official of the United Railroads, had bribed
anyone, authorized any bribery, knew of any bribery or approved
of any bribery. This statement I now fully reaffirm. It is not
for us nor any officer of our company to disprove these grave
charges. It is for those making them to prove them. We do not
now care to discuss their motives. We know that they cannot
produce any truthful evidence connecting us or any officer of
the United Railroads with this alleged crime.
"We relied, in declining to be sworn, upon the broad
Constitutional right of every American citizen that a defendant
cannot be called as a witness, and upon the justice, fairness
and common sense of the Grand Jury, to whom we look for
complete vindication without offering one word in our own
behalf."
[196] For several weeks after the great fire of April 18-19-20,
1906, the banks were closed at San Francisco. Money could,
however, during this period, be transferred to San Francisco,
through the United States mint.
[197] Gallagher had notified Ruef that he would not deal with Rea in
the trolley transaction. Ruef, Gallagher alleged, had agreed
to attend to Rea's case himself. See Chapter XIII.
[198] Crocker testified before the Grand Jury, however, that he had
known Ruef for many years. "He (Ruef) and my brother-in-law,
Prince Poniatowski," said Crocker, "both being French, and
both being pretty clever men, struck up quite a friendship
together and through that means I used to see more or less of
Ruef and that was one of those peculiar friendships that
spring up with people who are not identified and not connected
in any way whatever in any business enterprise, sprang up
between Ruef and myself, and when he told me that in my office
it didn't surprise me a bit."
Crocker had testified that Ruef had promised to do all he
could to get him his franchise, and wouldn't want a dollar
from Crocker, or from the institution with which Crocker was
connected.
[199] Of this manipulation of the books, President J. E. Green, of
the Parkside Company, testified before the Grand Jury as
follows:
"Q. How was the transaction to appear in the books? How was
the property account to be charged with it? It would have to
show some property. A. It was charged for a block that was
purchased from Watson and Umbsen, a block of land.
"Q. Did you tell Watson to do that? A. I believe I did.
"Q. How did they get paid for the land? A. They deeded this
block which they had to the company and the company in turn
executed a deed to them, returning the land to them, simply a
matter of bookkeeping.
"Q. Was the company's deed put on record? From them to the
company? A. I rather think so.
"Q. What was the purpose of that? A. To get a charge to the
property account for the expenditure of that amount of money.
"Q. What was the reason for charging it to property account? A.
Every expenditure that was made was charged to property account
with the idea the property had to pay it back.
"Q. Did you always go through the form with every expense that
wasn't actually a piece of property, did you go through a form
of deeding a piece of property and then deeding it back? A. No,
sir.
"Q. What was the reason of doing it in this instance? A.
Because--other things--there was a case--grading, sewering or
fencing the blocks when they spoke for itself.
"Q. I don't see how it helped you; it went to the property
account and the property went right out; don't see how it
helped you any. A. It had to be charged to something, Mr.
Heney.
"Q. Why couldn't it be charged to what it was, attorneys' fees?
A. Because attorneys' fees were charged against property
account.
"Q. Were Morrison & Cope's fees charged up as a piece of
property and did they go through a rigmarole of deeding a piece
of property too? A. No; their fees or any other expense against
the property interests.
"Q. Didn't they go into the books as a fee for Morrison & Cope
and charged as expenses against property? A. Charged direct to
property.
"Q. As expense? A. Don't know as expense; it was charged to
property, showing that we had that much money in property; when
we got through selling anything over, that was profit in our
favor.
"Q. It appeared on the books as having been paid to Morrison &
Cope for attorneys' fees? A. Can't say without seeing the
books.
"Q. Ordinary way of keeping books? A. Yes.
"Q. You didn't cover up anything you paid to Morrison & Cope by
putting through the hands of the secretary? A. No, sir.
"Q. Why did you cover up this in connection with Ruef? A. I
don't know; suppose the property account is probably the proper
one to charge it to.
"Q. Only explanation of it? A. Yes, sir."
[200] Early in the graft investigation Detective William J. Burns,
with studied carelessness, dropped a remark in the presence of
a salesman of the Parkside Company, that he had heard money
was being used in the Parkside case. Soon after, Thomas L.
Henderson, secretary of the company, received word from
William I. Brobeck, of the law firm of Morrison, Cope &
Brobeck, attorney for the Parkside Company, to call at that
firm's law office. Of the incident. Henderson testified before
the Grand Jury as follows:
"Q. His first question to you was what? A. We went in there.
He said, Mr. Henderson, I am going to talk to you about
Parkside and he said, have you an attorney? I said, no. I have
no attorney. He says, it might be well for you to get an
attorney. I said, all right. Mr. Brobeck, I will take you for
an attorney. He said, all right, I will take you for a client.
"Q. Then what was said? A. Then he spoke, he said, you know
about that remark made by Mr. Burns at Nineteenth and H. I
replied how I got the remark from Hooper who was the salesman
out there and I had passed it off, saying I did not want to
talk about it. Then he said to me, I can't remember just the
words, but his advice to me was not to say anything about it.
I told him certainly, I would not. Then he spoke about Umbsen.
Could I communicate with Gus? And I told him I could on the
4th of the month, he was then between Havana and Florida, and
would arrive in New York about the 4th. Do you think it would
be advisable to telegraph or write to him not to say anything?
I said: Oh, no, I don't see any necessity for doing that.
"Q. What was the remark as you heard it that Burns made? A. We
were coming down on the Sutter street car, Mr. Kernan and
myself, when Ed Hooper, salesman, spoke to us and said: I had a
distinguished visitor yesterday. I said, who; he said, Mr.
Burns, the detective. He said, I knew something about the
telephone cases. I say what he said, a little something. He
asked me about that and started for the automobile and when he
got there, he turned around and said, another thing, I want to
ask you about, I heard Ruef got $30,000 from Parkside. Who
would be the man to see. I am only out here selling land and
don't know anything about that. I had been here with Watson
when he was agent and when Umbsen took charge he kept me in the
same job. He was the salesman out there, that was at that time
they had this automobile race and I turned around and said: I
see the Oldsmobile won the race in Los Angeles, because I
didn't want to continue the conversation with him.
"Q. Did Brobeck, in his conversation, tell you where he got the
information that Burns had been out there? A. No sir, he did
not.
"Q. Did he tell you that he knew what Burns had said? A. The
impression I got was that he knew. I don't remember his saying
in just so many words.
"Q. He referred to the statement made by Burns? A. He may have
made the remark that you know about what was said out there.
"Q. At the time you talked about your having an attorney did he
tell you to send him some money? A. After we finished he said,
'Mr. Henderson, you had better send me pay for this interview.'
I said what? and he said five or ten dollars and when I got to
the office, I mailed him a check for $10."
[201] Ruef's version of the affair, as Ruef gave it before the Grand
Jury, was: "Mr. Umbsen stated to me that with a great deal of
difficulty, he had been able to persuade the people interested
to allow me this fee. I thereupon told Mr. Gallagher that I
had made arrangements to secure for myself an attorney's fee
in the matter and I would allow him something over $13,500 as
his proportion of the fee. Mr. Gallagher estimated what it
would require for his services in the matter and we had
discussed would the Supervisors accept that amount."
[202] John Martin's statement, when he refused to testify, furnishes
fair example of the attitude of those who became involved in
the graft scandal. The Grand Jury record shows:
"John Martin recalled.
"Foreman (to witness). You have already been sworn, so you can
consider yourself under oath. Mr. Martin: I desire to stand on
my constitutional right and not to testify further.
"Mr. Heney: If you feel that your testimony might have a
tendency to subject you to prosecution--. A. (interrupting).
No, not that. I am not so advised that that is necessary. My
constitutional rights are broader than that, I am advised.
"Q. Then you don't desire to testify? A. No, sir.
"Mr. Heney: All right."
[203] Mr. Frank G. Drum testified as follows:
"Q. Do you know Abraham Ruef? A. Met him.
"Q. Did you have any conversation with him about that time? A.
No, sir.
"Q. I mean a conversation with reference to the rates? A. No,
not that I know anything about."
[204] Ruef on this point testified before the Grand Jury as follows:
"I received from Mr. Frank G. Drum, $20,000 as an attorney's
fee as spoken of between ourselves, about the time that the
gas rates were being fixed. Of that money, I gave to Mr.
Gallagher for the Board of Supervisors about, as I remember It
now, $14,000. It may have been a few hundred dollars more or
less. I think about $14,000. Mr. Drum spoke to me about
employing me in the service of the company some month or two
before, I believe, and engaged me as attorney to represent the
interests, as I understood it from him, which he represented
in the company, at $1000 a month, of which I received, I
believe, for two or three months. At the time of the fixing of
the gas rates some of the Supervisors, as I was informed by
Supervisor Gallagher, insisted upon fixing an extremely low
rate, such a rate as would have been ruinous to the business
of the company, a rate which neither I nor any one who had
looked up the question would have considered under any
circumstances to be reasonable, proper or maintainable, and
said they were determined absolutely to reduce those rates.
The matter was brought up at one of the Sunday evening
caucuses and some of the members of the Board of Supervisors
insisted that the board had been pledged by its platform to a
rate of 75c. per thousand feet; they thought that was even too
much and made some strong speeches and others maintained the
75c. rate and they contemplated fixing the 75c. rate that
evening, that is to say, agreeing to do it at the proper time
which I suppose was a week thereafter. In the meantime, the
company sustained a heavy fire loss, not the fire of April
18th, but the previous fire, which caused them a great deal of
damage, and I told Mr. Drum that it would be necessary for me,
in order to protect the interests of the company and the
interests which he represented, to have an additional
attorney's fee and I told him that I thought it would require
$20,000. He considered the matter and one day, a day or two
afterward, he agreed to pay me the additional attorney's fee
of $20,000 which I thereafter received.
"Q. Where did the conversation take place in which you told him
about the necessity of having the $20,000? A. At his office in
the Mills Building."
[205] Although the Graft Prosecution was to be effectively opposed
by Union Labor party leaders, the San Francisco Labor Council,
made up of representatives of practically every San Francisco
labor union, on the night of March 23, 1907, adopted
resolutions declaring for the prosecution of bribe-givers as
follows:
"Whereas, The indictments issued during the past few days by
the San Francisco Grand Jury against certain individuals
involve specific charges of flagrant and widespread corruption
on the part of many members of the present city government;
and whereas, said government, having adopted the name of
'Union Labor' has professed particular concern for the welfare
of the working class, as represented by organized labor, and
has sought and secured election upon pledges of loyalty to the
principles, economic and political, to which organized labor
everywhere is committed; and whereas, the alleged conduct of
the city government is not only grossly repugnant to the
principles of organized labor, but violates every rule of
common honesty; and whereas, the conduct of the 'Union Labor'
government and the inevitable association thereof with the
character of the labor movement is calculated to lead to
public misconception of the latter and thus to injure it and
lessen its efficiency in its chosen field, therefore be it
"Resolved, By the San Francisco Labor Council, that we declare
that every corruptionist, briber and bribed, should be
prosecuted and punished according to law, and hereby pledge our
co-operation to that end; further
"Resolved, That we reassert the position of the San Francisco
Labor Council as a body organized and conducted for purely
economic purposes, having no connection, direct or implied,
with the Union Labor party or any other political party or
organization, and therefore being in no way responsible for the
conduct or misconduct of any such party or organization;
further
"Resolved, That we also reaffirm our belief that the private
ownership of public utilities constitutes the chief source of
public corruption, and is in fact a premium thereon, and
therefore ought to be displaced by the system of public
ownership of public utilities."
[206] At the time Patrick Calhoun held the office of President of
the United Railroads; Mullally was assistant to the President;
Ford general counsel for the corporation. Abbott was Ford's
assistant.