Mayor Rolph and the Hetch Hetchy Project

Historical Essay

by William Issel and Robert Cherny

Hetch Hetchy Valley before the dam

Photo: Wikimedia commons

Rolph's ability to deliver on his campaign promises extended as well to the fourth major concern, water. As in the case of the Municipal Railway, Rolph built upon foundations laid by others but threw his considerable energies into the project and—in concert with other prominent San Franciscans—managed to secure federal consent for construction of the Hetch Hetchy reservoir.

Efforts had begun in 1900-1901, toward the end of Phelan's administration. Phelan, the city engineer, and the Board of Public Works agreed that the Hetch Hetchy valley—a canyon with near-perpendicular granite walls rising 2,500 feet above a fiat meadow floor, located in the Sierra 170 miles east of San Francisco—held important advantages over other sites. Phelan left office before any claims could be made and—indeed—before the decision had become public. City officials decided to keep the Hetch Hetchy decision secret “in order to prevent private parties and corporations, speculatively inclined and more mobile than city authorities ... from forestalling the city's actions.” Acting as a private citizen, Phelan applied for the rights to use Hetch Hetchy as a reservoir in April 1902. The city engineer announced the city's intent in July 1902, and soon after, Phelan transferred his claim to the city. Unfortunately, the U.S. Secretary of the Interior had denied Phelan's claims the month before.(27)

For the next ten years, four different Interior secretaries seesawed back and forth in denying, granting, and modifying grants to allow use of the Hetch Hetchy valley as a reservoir. Chief opposition came from two quarters: John Muir, the Sierra Club, and other preservationists, on the one hand, and the Spring Valley Water Company, on the other. The company claimed that its watersheds and reservoirs were sufficient to supply the city's needs for the foreseeable future and correctly saw the Hetch Hetchy proposal as the first move toward municipal ownership of the city water system.(28)

Although Phelan remained committed to the Hetch Hetchy project throughout the ten-year contest for permission, his successors in the mayor's office did not always share his enthusiasm. Abraham Ruef convinced Eugene Schmitz that water sources could be found nearer to home, in the Bay Cities Water Company—which had offered Ruef one-third of an estimated $3 million profit from the sale of its holdings to the city. The city's interest in Hetch Hetchy revived under reform mayor Edward Taylor, and repeated conferences between city officials and Spring Valley officers produced an agreement to sell the company's holdings to the city for $35 million. The bond issue, coupled with another to construct the Hetch Hetchy system, came before the voters in 1910, by which time McCarthy sat in the mayor's chair. McCarthy favored the Hetch Hetchy construction but opposed purchase of the Spring Valley holdings on the ground that the price was too high. The Hetch Hetchy bonds passed by 95 percent, but the Spring Valley bonds secured only 65 percent, slightly less than the two-thirds needed for approval.(29)

The Raker Act

When Rolph took office in early 1912, the city still did not have permission to construct the reservoir. Rolph listed water as one of his major priorities, tied the city's needs to the PPIE (which would, he claimed, greatly increase the need for water), and took charge of the city's lobbying efforts in Washington. Soon after, he appointed a new city engineer, Michael M. O'Shaughnessy, Irish-born and educated, with nearly thirty years of experience that included railroad, mining, and hydraulic projects, as well as town site planning in California and Hawaii. For a generation of San Franciscans, O’Shaughnessy would come to epitomize the engineer-as-city-official as he extended his responsibilities from designing structures to planning and promotion.

By early 1913, proponents of the Hetch Hetchy plan concluded that the only hope for federal permission was through an act of Congress. The time was propitious. Woodrow Wilson had named, as his secretary of interior, Franklin Lane, a California Democrat, long-time Phelan associate, and supporter of the reservoir. Rolph's city attorneys drafted a bill, Democratic Congressman John Raker (another political ally of Phelan, whose district included Hetch Hetchy) introduced it, and San Francisco turned out a full force of lobbyists: Phelan and Rudolph Spreckels both went at their own expense, and Rolph, O'Shaughnessy, city clerk John S. Dunningan, and others from the Rolph administration all made one or more journeys to Washington. Wilson signed the Raker Act late in 1913. From the first draft of the bill, and through its various revisions, it prohibited the city from selling water (and, through a later amendment, electrical power) from Hetch Hetchy to "any private person, corporation, or association" intending to resell it.(30)

Building Hetch Hetchy Reservoir

In retrospect, the ten-year struggle to secure federal permission to build the Hetch Hetchy reservoir must have seemed like the easiest part of the project. Construction began during the summer of 1914 and ultimately involved a sixty-eight-mile-long railroad, eighteen miles of tunnels through granite, and several dams, the largest completed only in 1923—named O'Shaughnessy Dam. The name was appropriate, for the project had become O'Shaughnessy's in almost every way, from design to finding buyers for the city bonds. Simultaneously, Rolph sought to buy out the Spring Valley Water Company. His first try, in 1913, failed when the supervisors refused to place it on the ballot. A second effort, in 1915, went before the voters proposing payment of $34.5 million. Rolph and O'Shaughnessy strongly supported the measure, but Spreckels played his usual role, urging the voters to reject the measure because the price was too high and the properties old and inadequate. Only 54 percent of the voters voted in favor, far short of the two-thirds required. Thus, by the end of his first term as mayor, Rolph could point to the Raker Act and the beginnings of construction in the Sierra, but additional water supplies for the PPIE had to come from other sources.(31)

Defeat of Public Power

The Hetch Hetchy project, like streetcar expansion, continued throughout World War I and the 1920s and, like the Municipal Railway, generated intense political conflicts. By 1918, San Francisco owned a 68-mile-long railway in the Sierra, but pouring of concrete for the major dam in the system did not begin until 1921. Dedication of O'Shaughnessy Dam in 1923 marked completion only of the first major step. Next came the construction of a powerhouse and power lines (completed in 1925), an aqueduct 156 miles long (including 85 miles of tunnels, the last done in 1934), and acquisition of the reservoirs and distribution system of the Spring Valley Water Company. By 1924, the first $45 million bond issue had been exhausted, and another bond issue of $10 million came before the voters. O'Shaughnessy took the central role in promoting the bonds, promising: “Give me the ten million now and I'll be back in a couple of years for twenty­ three million more to finish the job.” Because of his constant advocacy of bond issues, whether for water or streetcar work, some suggested that his initials, M. M., actually stood for “More Money.” The total cost, when Hetch Hetchy water finally flowed from city faucets in 1934, was about $100 million.(48)

Hetch Hetchy reservoir, c. 2015.

Photo: Panoramio

While the cost of the Hetch Hetchy project itself generated political controversy, much greater controversy swirled around the disposition of the power generated at the dam. For nearly five years in the mid-1920s, the power issue held the central place in the city’s politics, and the echoes from that struggle still occasionally reverberate through the city’s politics. The federal Raker Act specified that water and power realized from the Hetch Hetchy project could not be sold to private interests for resale. Conflict began when O’Shaughnessy pushed the electrical generating plan to early completion in order to produce revenue to help offset future construction costs. Funds from the initial bond issue were fast diminishing, however, and O'Shaughnessy could not extend the transmission line across the bay and into the city. In February 1923, acting at the prompting of the Labor Council, Supervisor Eugene Schmitz (the former mayor) introduced a resolution favoring municipal ownership of a power distribution system. Lengthy deliberations ensued, but the supervisors unanimously approved the resolution in July. Soon after, O'Shaughnessy outlined four options for implementation: (1) construction of a distribution system to compete with private companies; (2) purchase of the existing systems owned by Pacific Gas and Electric or Great Western Power; (3) sale of power at wholesale rates, an option seemingly foreclosed by the Raker Act; or (4) power distribution through the facilities of a private company. By the fall of 1923, the approach of municipal elections allowed Neylan of the Hearst press to push Rolph and other candidates to demonstrate their commitment to municipal ownership as a precondition to endorsement. In September, the supervisors declared themselves “unalterably and unequivocally opposed” to distribution through a private company, and Rolph created a five-member advisory committee “one hundred percent” favorable to public ownership, headed by former mayor James Phelan. Rolph received the Hearst endorsement and won his fourth election.(49)

In early 1924, the supervisors began discussion of a recommendation from the advisory committee that the city begin construction of a step-down station. Members of the business community opposed this as a step to more elaborate construction and expenditures; some argued that the cost would imperil prompt completion of the water project. By March, two options came under official consideration: sale of power to a private company, with the company to act as the city's agency for distribution; or construction of a transmission line and step-down station as the first stage of direct city distribution. One newspaper proposed a third alternative, no power generation until a municipal distribution system was in place, but that option did not receive serious consideration. Throughout the first half of 1924, various proposals appeared for separate bond issues for water and power construction, a combined bond issue, or construction of a step-down plant through direct appropriation and the gradual development of a distribution system in the same fashion. In the late spring of 1924, the power companies (Pacific Gas and Electric and Great Western) put their position in writing to Neylan. After conversations with Wigginton Creed of Pacific Gas and Electric and Mortimer Fleishhacker of Great Western, Neylan concluded that they wanted to keep “the city out of the power business forever insofar as competing with them is concerned.” Fleishhacker frankly told Neylan “that they were concerned about the city entering the power business for the reason that he knew once the city got in competition with the private corporations the city would cut rates and render their enterprises unprofitable.” The power companies proposed that Pacific Gas and Electric would receive all the Hetch Hetchy power on the east side of the bay, would transmit the power to the city for street lighting and municipal streetcars, and would purchase all the other power for approximately $2 million per year.(50)

Throughout the remainder of 1924, little action took place on the power issue. In accord with a decision of the supervisors in January, the state Railroad Commission carried out a valuation of Pacific Gas and Electric and Great Western properties as the first step in condemnation proceedings, but estimates of completion in a year’s time proved far too optimistic. By early 1925, some action became essential, for the generating plant was virtually complete. In March 1925, Rolph vetoed a measure to allow the temporary sale of power through a private company, but negotiations with the power companies bogged down. The advisory committee insisted that any contract for distribution through a private company had to specify that certain customers be designated as the city’s customers, but Pacific Gas and Electric refused. Finally, after a tense fourteen-hour supervisors’ meeting, Rolph and eleven supervisors accepted the power companies’ terms. The San Francisco News headlined the action as “SOLD OUT,” and the minority of seven supervisors who opposed the contract appealed to the Interior Department to declare it a violation of the Raker Act. Rolph got Commerce Department Secretary Herbert Hoover to intercede on behalf of the majority, and the contract was approved.(51)

In the fall elections, Rolph gave strong support to every member of the majority up for reelection, but voters retired them all, including such popular figures as Ralph McLeran, Angelo Rossi, Eugene Schmitz, and the board’s first woman, Mary Morgan. A “clean-out” slates of candidates for supervisor and city attorney swept to victory with the support of the Hearst press, the unions, and the progressive faction of the Republican party, headed b Sheriff Thomas F. Finn. The new majority, led by Franck R. Havenner (a former aide to Hiram Johnson), used income from the contract with Pacific Gas and Electric to set up a special fund to build a transmission line to the city, but a taxpayers’ suit defeated this effort. In 1927, Havenner led support for a bond issue to construct a transmission line, but it went down to defeat. The valuation proceedings were finally completed in 1929, and voters faced four bond issues totaling $68 million in 1930; again, all failed. Despite sporadic revival of the issue later, the repeated defeats in 1925, 1926, 1927, and 1930 meant that public power would never again occupy so central a position in the city’s politics.(52)

Buying Out the Spring Valley Water Company

Efforts to secure voter approval to buy the holdings of the Spring Valley Water Company were more successful. Despite defeats in 1910 and 1915, proposals appeared on the ballot in 1921, 1927, and 1928. Rudolph Spreckels continued his opposition into the 1920s. The 1928 effort, led by O'Shaughnessy, Rolph, Phelan, and Havenner, finally produced a majority of 80 percent in favor. The final purchase price of $41 million was up from the $35 million voted on in 1910, the $34.5 million proposed in 1915, or the $38 million in the 1921 and 1925 issues. Although the bond issue finally won voter approval, the city soon discovered that it could find no purchasers for the bonds. The same problem plagued the Hetch Hetchy bonds approved at the same time. In December 1929, A. P. Giannini of the Bank of Italy had his bank buy $4 million of the Hetch Hetchy bonds and led a syndicate that took the entire $41 million Spring Valley bond issue. The Board of Supervisors created the San Francisco Water Department in early 1930 as a division of the Board of Public Works to operate the system as a municipal corporation, to be self­ financing, and to be responsible for liquidation of the bond issues involved in its creation.(53)

Notes

27-31
48-53

Excerpted from San Francisco 1865-1932, Chapter 8 “Politics During the Reign of Rolph, 1911-1932”

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