John Vonderlin: Ocean Shore RR Succumbed to the Panic of 1907

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Story by John Vonderlin

Hi June,

A while ago I mentioned that the owners of the Ocean Shore railroad must have felt cursed by the natural events that beset them right after the turn of the 20th Century. There was the Great Quake of April, 1906, the flooding rains of March, 1907, and the disastrous line-closing rains of January, 1909.

Below is the Corrected version of the article Angelo directed you to in the February 20th, 1908, issue of “The San Francisco Call.”

{{Angelo Misthos said: A San Francisco Call 2/20/1908 article titled: “Ocean Shore Line Dream of Years,” quotes The Santa Cruz Surf newspaper’s calling attention to the pitch for the public to buy “gilt edge ” Ocean Shore bonds. Next to the article is an ad for S.F. Call want ads, which begins: “Poor Richard says: ‘He that lives upon hope will die fasting.'” Most appropriate, eh?}}

John Vonderlin continues: The article mentions another huge problem the Ocean Shore had, but euphemizes it as a “financial flurry.” Here’s what that flurry actually was– to read the story please click >> Wikipedia article entitled “The Panic of 1907.” It would seem the confluence of all these natural and manmade catastrophes ensured the railroad’s failure, despite all the enticements the Coastside’s development offered, despite the article’s assurances about this “Unparalleled Proposition.”

For those who don’t realize how close our economy came to collapse last year, read up on this and other panics and imagine no FDIC to insure bank deposits and prevent bank runs, and no Federal Reserve as a lender of last resort to prevent one company after another, one bank after another, falling like dominoes. That’s what was in the potential bond buyers minds when this article was written. When the landslides of January, 1909, closed the Ocean Shore down in many places for months, I wonder if anybody firebombed the Santa Cruz newspaper? Enjoy. John

OCEAN SHORE LINE DREAM OF YEARS
Santa Cruz Paper Reviews History of One of Coast’s Popular Enterprises

Calls Attention to Unparalleled Offer to Public to Buy Gilt Edge ßonds

The Santa Cruz Surf, under the caption “Again the Ocean Shore Railway,” says: Vicissitudes many and various have befallen this undertaking since its first inception, and these are typical and prophetic of the general conditions in California and the whole country to a degree. The Ocean Shore railway project was conceived and the company incorporated three years ago, when the country was on the crest of a bounding prosperity, and optimism regarding the future was epidemic and contagious. It was a bold enterprise fitting the times, when capital was abundant and men’s ambitions easily vaulted over difficulties.

For thirty years prophetic minds had been attracted to the rich possibilities of this coast country and its wonderful resources, material, climatic and scenic, and to the enormous transits of people which would result from closer contact between San Francisco and Santa Cruz.

It was an alluring vision to the promoter, but the engineer and the investor said nay, nay. Too many canyons to cross, too many hills to climb, too many bluffs to blast, too many tunnels to bore, and so the undertaking lay dormant year on year, decade after decade.

TIME MAKES CHANGE

Meanwhile the science of railroad engineering developed, the value of the resources of the section increased, capital became more plentlful and rates of interest reduced, vvhen. lo! suddenly the project sprang into life, vigorous, strong, self confident.

A more enthusiastic bunch never coalesced in any enterprise than the original incorporators of the Ocean Shore railway. They had a good thing, they felt sure; they had. plenty of money, and in 15 months they promised the road, double tracked, electrically
operated.

To Santa Cruz, the Ocean Shore company, came in the guise of King Fortunatus. Nothing to ask, all to bring. It literally promised to elevate Santa Cruz from a city of the . fifth; to the third class in five years without us lifting a finger. Like many another vision. of joy, this proved to be too good to be true, but nevertheless, this was the appearance, and purpose, when their enterprise first took form.

Stock in the Ocean Shore railroad was not ‘for sale. Bonds of the Ocean Shore railroad were not for sale. The incorporators were sufficient unto themselves. Thus matters went on until rights of way were secured, surveys completed and perhaps half the grading accomplished.

SOMETHING HAPPENS
Then something happened. Not our fault, or their fault, but, it happened, and in three days’ time earthquake and fire had robbed some of those interested in the company, of their fortunes and impaired the fortune of every one connected with the scheme. Some dropped out. President Harvey and a few others stayed with the ship. Then the era of stock assessments and bond sales. But the day of railroad bond sales in blocks of millions was over. Wall Street capital was no longer seeking legitimate investment. There was trouble ahead for the “system.” It became evident last year that local capital had got (sic)to lift on the enterprise if it went through. Readers of the Surf, we trust, have not forgotten the campaign for $300,000 Ocean Shore bonds from this county, made a few months ago and which seemed on the eve of realization when, again something happened.

The “financial flurry” scattered to the wind the plan, then so nearly perfected. Now with the new year, with new financial and commercial conditions, we are entering upon a new era with the Ocean Shore railway, as with every other industrial enterprise.

UNPARALLELED PROPOSITION

President Harvey has done what all politicians and financiers do in an emergency ~he has appealed to the people, to the “common people.” if you. please, as distinguisheded from the “capitalistic class.” He has offered a loan in sums of $100 on partial payments.

The proposition is without parallel or precedent in railroad construction. It is the beginning of a new financial era in American affairs.

Of all that has been said in the Surf about the advantage of the Ocean Sbore line, there is not a word to retract, amid the untoward circumstances.

When a railroad over this route was first projected in the early 80’s this paper prophesied that it would make its owners opulent

Every change of time has only added to the attractions of this route, only brought a larger buisiness into view. Moreover, every year has made its construction more and more; important to the city and county of Santa Cuz. When it .promised to come to us like the bag of gold at the end of the rainbowr it looked good.

Now, when the time has come when we must (sic) needs help build it ourselves or see it closed to us forever as a competitive route it not only looks good, but.it looks like a necessity to the future progress and advancement of this section. As an investment there is nothing better on the market than the Ocean Shore railway bonds. As a matter of self protection and self interest every taxpayer in this county ought to buy one or more. Every man and woman ought to be an active missionary, day by day, for the sale of these bonds, until they are all bought, and the road made a certainty.

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If you want to know more about financial panics, you might find The Panic of 1819 by Murray Rothbard of interest, for more info, please click here