* * *
There was another significant change in the California wine business in the 1880s. Rich men looking to diversify their investments flooded the wine business. Today, it is Silicon Valley tech entrepreneurs and Japanese video game executives who buy trophy vineyards. In the late nineteenth century, it was men who had made their fortunes in the mines and railroads.
The new wine entrepreneurs included men like George Hearst, the U.S. senator from California who had made millions mining silver, gold, and copper in the west, and James Fair, the U.S. senator from Nevada, whose Virginia Consolidated silver mine yielded the largest silver strike in the world. (His family would eventually build San Francisco’s Fairmont Hotel.) Hearst bought the Madrone Vineyard south of Glen Ellen in Sonoma County and Fair built a vineyard in the Lakeview area of Sonoma County. In 1882, Hellman, former U.S. Senator F. G. Newlands and Senator William Gwin and a group of English businessmen invested $500,000 in the San Gabriel Winery, located in Alhambra, not far from Los Angeles.117
While mining interests had long dominated the west, smart men saw that agriculture was the future of California and they wanted part of the riches.
What set off the dollar signs in their eyes was the phylloxera devastation that had ripped through France’s vineyards—and the potential opportunity it represented for California vintners. By the late 1880s, many of Europe’s vineyards were dead. The grapevines that had covered the hills of Burgundy and Bordeaux had withered away, their green leafy vines turned into brown stumps by the insects that sucked the life out of the roots.
With phylloxera, California winemakers saw the opening they had been waiting for. They had long been convinced that California wines would one day equal the quality of French wines, although they had not yet been able to convince consumers of this. But with 40 percent of French vineyards decimated by phylloxera, imports had dropped. California winemakers were determined to replace the bottles of French wine that had long adorned the dining room and restaurant tables in New York and Boston with bottles from California.
Leland Stanford, the railroad baron and former California governor, was one of the many wealthy men who seized the opportunity. Stanford was a man who personified the West; he had grand visions, grand ambition, and a grand appetite. (Indeed, he weighed more than three hundred pounds.) Stanford had come to California during the Gold Rush and had opened a store to serve the miners. The open frontier and undeveloped landscape provided many business opportunities, and in 1861 Stanford and three other men, Collis Huntington, Mark Hopkins, and Charles Crocker, formed the Central Pacific Railway Company. Congress granted the company the right to build the western half of the transcontinental railroad in 1862. Tremendous riches and tremendous power followed.
Stanford had first gotten involved with wine in 1869 when he purchased land in Warm Springs, modern-day Fremont, in southern Alameda County. That winery, managed by his brother Josiah, made 50,000 gallons of wine in 1876.118 But after he visited some of the great wine châteaux in Bordeaux during a trip to Europe in 1880, he announced plans to make California wine that would rival the greatest wine from France.119
In 1881, Stanford bought the remnants of an old rancho along the Sacramento River in Tehama and Butte counties in northern California. He named the 55,000-acre parcel Vina Ranch and he dreamed of creating the largest vineyard in the world, a place that produced huge quantities of fine wine and brandy that would be savored at homes and elegant dining establishments from San Francisco to London. It was a daunting undertaking: while there were seventy-five acres of old grapevines on the property, most of the land was grass dotted with sprawling ancient oak trees. Stanford spent $300,000 in the first year alone to transform the estate. Laborers blasted through 900 feet of rock and dug a two-mile long irrigation ditch to bring water from the Eagle River. (Workers would eventually build fifty miles of ditches, canals, and dams.120) They ripped out the massive oaks and blasted the trunks with a powder composed of nitroglycerine and a substance called kieselguhr. By the time they were done, the fields were flat and level.
Stanford then imported thousands of grapevines from San Bernardino County by rail car, bringing north Mission, Charbonneau, Burger, Zinfandel, Blau Elben, and Malroisie vines. The vines were treated gingerly. Workers were allowed to remove only five plants at a time, which they set out on top of the rail tracks until they could be transplanted into the ground. Stanford planted 1,200 acres of grapes in the winter of 1881–1882. Over the next few years, Stanford would expand the vineyard to 3,825 acres, making it the largest vineyard and winery in the world. At one point he had one million vines in production. He eventually added a massive winery with a steam-powered crusher and press and elevators to carry the grapes to the third floor.121 He even added electric lights so work could be carried on at night during the harvest and crush.
From the start, Stanford hired both white and Chinese laborers to transform the massive property. At times, there were several hundred Chinese workers on the ranch. Almost immediately, his use of Chinese laborers became a flash point for anti-Chinese agitators, even though Chinese laborers had farmed the land for the previous owner, Henry Gerke.122 While the Chinese had started coming to California in large numbers in the 1850s and had long been critical to the state’s agricultural economy, they were derided as strange and different and given derogatory names like “coolie” or “Celestial,” which conveyed their foreignness. While the state was still in the grip of gold fever, and for many decades after, there was a shortage of white labor. So the Chinese, widely regarded as reliable, stepped in as the Native Americans had done before them.
There was racial trouble almost from the start of Stanford’s venture. The Chico Enterprise newspaper reported in April 1881 that the ranch’s foreman had fired seventy-five white workers who were earning a dollar a day, plus board. He had replaced them with 135 Chinese men who earned the same amount but who fed themselves.123 In 1886, a similar rumor swirled, leading the Red Bluff Sentinel to write: “it is greatly to be hoped that the heathen will have to shoulder their bamboo poles and skedaddle this time.”124
A group called the State Executive Committee of the Anti-Chinese Association threatened to boycott Stanford’s products in 1886, prompting Stanford to say that it was only his “humanitarianism” that led him to employ Chinese men. His “race prejudice,” however, inclined him to employ white men, he said. When the poet Joaquin Miller came to the ranch, he noted the presence of several hundred Chinese workers—and the ill feelings directed toward them. “If only those men who run about making trouble over the presence of the Chinese were as steady and industrious,” he wrote.
In 1887, Stanford started the first in a series of efforts to increase the number of white workers at the harvest. Vina contracted with a Mr. Hagden of San Francisco to bring up “city boys” (aka white) who might benefit from the fresh air and hard work. The newspapers speculated that they would also “stay out of trouble.” But the experiment proved to be a failure. A group of about forty boys rode the train up to Vina in mid-August, at a time when the temperatures generally soared over 100 degrees, a much different climate than San Francisco’s foggy summer weather. The boys arrived and were shown to their bunkhouses. Then were introduced to their boss, who was Chinese, “which did not suit them, nor did they like the food set before them,” according to a newspaper report. The boys departed quickly.125
The next year, Stanford, who still maintained a large interest in the Southern Pacific Railroad, tried a different tactic. The railroad advertised that it would cut fares in half for white boys and girls who “desire to take a hand in gathering the fruit in interior orchards and vineyards in the coming autumn.” The Chinese, of course, would still have to pay full fare.
Stanford would continue to rely on Chinese labor but he managed to get a steady supply of white workers in 1887 when he convinced a large group of French men and women from Bordeaux to come and work the harvest. The French took over some of the living spaces once occupied
by the Chinese workers.
Stanford’s hopes for Vina Ranch were never realized. It lost money and the wine was not particularly good. The area was too hot to produce good quality clarets and white wine. (Thomas Pinney, the wine historian, compared the climate of Vina Ranch to that of Algeria.) But Vina’s sweet Angelica wine and its brandy were highly praised. Perhaps the ranch would have had more success if Stanford had not died suddenly in June 1893, leaving the property in the hands of his wife, Jane, and Stanford University officials. The school’s first president, David Starr Jordan, was a Prohibitionist. Mrs. Stanford cut back on the winemaking operation and switched emphasis to wheat and other crops; the last of the grapevines were dug up in 1915.
By 1890, California had become the most important producer of wine in the United States despite Anaheim Disease and an outbreak of phylloxera in Sonoma County. It had finally surpassed Ohio, Virginia, and New York. By 1890, there were 200,000 acres of grapes planted in the state—only 175 acres fewer than the combined acreage in the rest of the United States.126 California had taken over as the center of winemaking in the United States; a position it would never relinquish.
CHAPTER THIRTEEN
THE ERA OF THE GREAT SAN FRANCISCO WINE HOUSES
The two-story B. Dreyfus & Co. wine house on Brannan Street in an industrial section of San Francisco was not an impressive sight. The only adornment on the stark brick building was a stone statue of an eagle with outstretched wings over the front entrance. The eagle was the company’s trademark; the building was called Eagle Wine Vaults.
A visitor stepping inside, however, could not fail to be impressed. In the center of the main hall stood a 12,500-gallon oak wine cask decorated with carved grape leaves and clusters of fruit. The massive cask, which held only a minute portion of the wine the company distributed each year, was surrounded by dozens of 2,500-gallon carved oak casks that rose ten feet high.
By the 1890s, San Francisco had become the most important wine region in the state, even though there was not a single commercial vineyard in the city’s boundaries. Its economic dominance was the result of the shift of winemaking to northern California, as well as a peculiar system that made wine houses involved in every single aspect of wine making in California, from the grape to the store shelf.
The hills and valleys of California were filled with grape growers, yet few small-scale winemakers sold their own products. Instead, they made wine and sold it in bulk to wine houses, which then blended it, stored it in huge barrels and vats, and shipped it around the world. The wine houses also had their own vineyards and cellars throughout the state. B. Dreyfus & Co., for example, brought wine to its Eagle Wine Vaults in San Francisco from the Cucamonga Vineyard, which it then managed, among others.
The number of wine houses in the city had grown rapidly in the latter years of the century. The San Francisco city directory listed only twenty businesses that sold, bought, and shipped wine in 1860. By 1885, there were more than forty-eight wine houses. Six years later in 1891, the number had doubled to 100 wine houses in San Francisco.127
Many of these wine houses were clustered south of Market Street, just a few blocks from the harbor. The port of San Francisco, where train lines, freighters, and clipper ships converged, was the center of wine exports in the state. It was not uncommon to see steamers, their decks heaped with barrels, pull up to the docks after a trip down the Napa River. Workmen would unload the wooden casks into open-air wagons, and horses would pull them to the wine houses, sometimes leaving a trail of dripping wine behind on the cobblestones. Rail lines crisscrossed the south of Market section of San Francisco as well, and locomotives often hauled carloads of barrels through the streets.
The wine houses had tremendous power as a result of this concentration, which at times they used for good. In 1893, for instance, as the country geared up for the Chicago Columbian Exposition that celebrated Columbus’s arrival in America, four of San Francisco’s leading wine houses came up with an arresting way to promote California wine, which still wasn’t as popular as French wine on the East Coast. C. Carpy & Co., J. Gundlach & Co., Arpad Haraszthy & Co., and the Napa Valley Wine Company commissioned a forty-foot-high replica of a sequoia redwood tree, covered with natural bark, as an exhibit.
From the start, the towering fake tree garnered attention. A curious reporter from the San Francisco Call newspaper noticed it under construction on a vacant lot on Octavia Street. He went by and asked the carpenter, M. Schuman, if he was building another Tower of Babel. He then printed up the exchange. “Mr. Shuman is a master carpenter and when he gets through with the trunk, no one will be able to tell the difference between it and a real tree,” the reporter concluded in a March 21, 1893, article.
The replica tree, once assembled inside one of the 400 buildings that made up the fair, was hollow. It held a tasting room that featured the wines of the four wine merchants, a painting of San Francisco Bay, and signs reading “Welcome Stranger to the Realm of the Golden State,” and “Ye Who Enter Leave Your Cares Behind.”
A statue of “Viticulture,” draped in robes and crowned with grape clusters entwined in her hair, stood by the entrance. She held a long staff topped by a pineapple, which was the classical accessory of those who worshipped the wine god Bacchus. To her right was a statue of an Indian maiden holding a basket of grapes and to her left was a statue of a Franciscan missionary planting the state’s first vines.
L. L. Palmer, the Chicago correspondent for the Pacific Wine and Spirits Review, an industry trade paper based in San Francisco, called the Big Tree exhibit “the most striking feature of the whole wine exhibit, be it foreign or domestic.”128
More often, however, the wine houses used their power to control sales and prices and maximize their own profits. Small winemakers and grape growers couldn’t shop around for the best deals because wine house managers often colluded on how much they were willing to pay. The San Francisco merchants “want to monopolize the whole market and try to crush all others by their price-cutting methods,” one grower complained.129
The problem became particularly acute in the final decade of the nineteenth century. The Panic of 1893, the worst financial crisis the country had suffered in twenty years, prompted the closure of banks and railroads throughout the United States. Hardly anyone was making a profit on anything, including wine. There was a bumper crop that year as all the vineyards that had been planted in the 1880s to take advantage of France’s phylloxera misfortunes produced millions of tons of grapes. The huge harvest drove down prices. Grape growers had trouble finding buyers. When they did, the prices were calamitous. Grapes that sold for twenty-five dollars a ton in 1884 only fetched from six to eight dollars a ton in 1893.
Winemakers received just seven cents a gallon for the wine they sold to the wine houses, making wine cheaper than milk. That was less than a one-cent profit per gallon of wine. The wine merchants, though, would then resell the same product for about fifty-three cents a gallon, pocketing the difference. The farmers resented the wine houses’ strong-arm tactics and price collusion.
Wine houses claimed they weren’t making much money, either. They constantly undercut one another’s prices until wine in New Orleans was going for less than it cost to make.
“Competition is said to be the life of trade, but as a fact it is largely the death of the wine business,” read an article in an industry paper in May.
Drastic action was needed.
CHAPTER FOURTEEN
THE WINE WAR
From the outside, Percy Morgan seemed like an unlikely candidate to rescue the California wine business. An Englishman by birth, an accountant by training, and a mining executive by choice, Morgan didn’t know much about wine. Yet in 1894, he accomplished the seemingly impossible task of bringing together seven of the leading wine houses in San Francisco—all of whom competed fiercely against one another—to form the California Wine Association, or CWA. Its name suggested it was a trade association, but it was in fact a company that at i
ts height controlled 80 percent of the wine production in the state.130 The CWA wielded tremendous power—and yielded tremendous profits—and would elevate the reputation of California’s wine to new heights until Prohibition decimated the industry.
But Morgan and the six other men sitting around a table in a law office on Pine Street in San Francisco on August 10, 1894, couldn’t have foretold the future.131 All they knew was the wine business was in terrible straits. The market was glutted with grapes. Prices had plummeted. And no one was making any money.
Sacrifice and a tolerance for risk were needed to save the industry. The men knew they had to take a bold step, one that subsumed their individual companies and fortunes into a bigger entity. They weren’t alone in their vision. Trade papers and other influential business leaders had been crying out for months for someone, something, to seize control and regulate a business that was draining money from people’s pockets.
Just a day earlier the seven men had filed papers to incorporate as the California Wine Association. The seven wine houses—Kohler & Frohling, B. Dreyfus & Co., Charles Carpy & Co., Arpad Haraszthy & Co., Kohler & Van Bergen, and the Napa Valley Wine Company—had pooled all their assets into the new concern in return for shares of stock for the new company.
By banding together, the new company instantly dominated the California wine business. Its assets included dozens of vineyards around the state, from Napa and Sonoma counties in the north, to Alameda and Santa Clara counties on the south end of San Francisco Bay, to vineyards in Orange and San Bernardino counties, including the Cucamonga Vineyard. There were thirteen wineries to crush, press, and store wine, including Greystone Wine Cellar in St. Helena, a spectacular three-story stone cellar that used gravity to process its wines, Tokay Vineyards and Winery in Glen Ellen, and the Scandinavian Colony Winery in Fresno, among others. There were cooper shops and bottling departments. The company also had relationships with merchants from New York to New Orleans, and shipping contracts to Europe, Mexico, and Central America. The CWA’s assets were valued at $2.75 million.132
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