FACING DOWN THE RULERS OF WALL STREET A HUNDRED YEARS AGO. THEY ARE BACK.
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Sunday, July 25, 2010
FRIENDS AND FOES. ONE OF THREE
I suppose the world always seems simpler when you are young. The difference between friends and enemies seems clear and obvious. Only experience can teach us that we are as shaped by our enemies as we are by our friends. And only age can show us that the villians in our lives are much closer to us than we think. Consider the friendship between William Mulholland and Frederick Eaton. One man left his name on a lot of Los Angeles real estate. The other is largely forgotten. But 20th century Los Angeles could not have been built without both of them. They were, both of them, partners in a great dream and a great disaster.
Fred Eaton was a force of nature. Historian William Kahrl described him as “Youthful, aggressive, innovative, (and) startlingly handsome…”. He was also well connected. Fred’s father was one of the founders of Pasadena, California, one of the richest cities in America. After college, in 1875, Fred became superintendant for Los Angeles’ private water company.
In that job Fred hired a muscular Irish immigrant named William Mulholland, as a lowly well digger. “The two of them made an unlikely pair”, wrote DiLeo and Smith in their book "Two Californias", “Eaton was elegant, well born, refined. Mulholland was gruff, a blunt man who loved games and jokes. While Eaton craved public attention, Mulholland shunned it, preferring to spend his evenings reading for his own edification.” With Eaton’s encouragement, Mulholland taught himself engineering and as he advanced in authority with the Department of Water amd Power he became a close confidant of Eaton’s. But in 1892, when a drought struck the American southwest, Eaton became convinced the city had to find a more dependable supply of drinking water. Mulholland scoffed at his concerns and told his mentor, “If you don’t get the water, you won’t need it.”
Eaton refused to be dissuaded. He traveled to the eastern ramparts of the Sierra Nevada Mountains. There he found year round snow capped summits producing streams that fed two sinks in one of the driest places on earth......
Mono Lake in the north...
And in the south, closer to Los Angels, there was Owens Lake, fed by the Owens River.
As an engineer Eaton realized that it might be possible to draw water from the Owens River for Los Angeles by gravity alone, because the river had a higher elevation than the city. But separating the two was two hundred fifty miles of lava fields, desert and mountains, wilderness that mostly belonged to the Federal Government. Eaton realized that at the moment financially and politically his goal was impossible to achieve. Still, someday those conditions might change. So, after he capped his career in Los Angeles by serving a 2 year term as Mayor in 1898, he retired to spend his summers at a 12,000 acre ranch he bought along the Owens River. And there he might have quietly remained in serene retirement, biding his time. But then two things that changed.
The first was that his friend, William Mulholland, became Chief Engineer for the Los Angeles Water Department, now a city agency. Faced with the same problems Eaton had faced in the same job, Mulholland now came to the same conclusion; if it was to survive and grow, Los Angeles had to find more water. And the second thing that changed was the weather.
As 1892 had been a year of drought, 1905 was a year of floods. In the spring that year heavy rains and heavier than usual snow melts in the Rockies, forced the lower Colorado River to burst through its banks and pour into the depression that became The Salton Sea.
In response to this disaster, and under political pressure to help a millions of farmers around the nation (e.g. “pork projects”) the Teddy Roosevelt Administration created the Reclamation Department (forerunner of the Interior Department). It was America’s first experiment with “big government”. And one of the first projects under consideration by the Reclamation Department was a plan to improve irrigation along the upper Owens River.
The new Department asked Fred Eaton to go to the Mono County, California Court House (above) to investigate property records, which he did. This meant that when Fred started to buy options on water rights to the lower (southern) Owens River, the farmers and ranchers assumed he was buying for the irrigation project. They eagerly sold Eaton their rights at bargain basement prices; except that Eaton was not authorized to buy anything for the Federal Government. In August of 1905 Eaton admitted to the Los Angeles Express newspaper what his game had been. “I knew the government was planning to put in irrigation works… If I had waited until after the government was at work, it would have required $1 million to $2 million more to get the water for the city, and that probably would have killed the project.” Back in Los Angeles Fred met with the city attorney. “The result”, he told the Express, “was an agreement that I would turn over to the city all the water rights I had acquired at the price I had paid for them…”.
The cost was $700,000, for which Eaton was fully reimbursed from Los Angeles Department of Water and Power funds. It was a brilliant and glorious gamble for the city, and presented the city fathers' with an accomplished fact. Any resistance to the Owens River plan was simply run over by Eaton's success. On the face of it, it appeared that Fred Eaton had risked a substantial portion of his wealth out of his love for Los Angeles. There was a catch, of course. Fred had not made his own fortune, and was not risking it, without a catch.
As William Mulholland began to update the plans for and then build the $24.5 million Los Angeles Aqueduct to carry the Owens River to the city limits, it was obvious that the system would require a reservoir at the head end. Such an artificial lake would provide a dependable flow of water regardless of drought years or downpours. And Fred Eaton owned just the spot for that reservoir; his ranch above Lone Pine in what was called Long Valley.
In the original paperwork in which Eaton had been reimbursed for the water rights he had bought, he had also granted permission for the City to build a dam on his Long Valley property. But hidden in the details was a height limit on the proposed Long Valley dam of 100 feet high. Being an engineer, Eaton knew that 100 feet was not high enough. And Eaton had decided that a variance which would allow the extra 10 feet in height required, would cost the city $1 million more. That was going to be Fred Eaton's profit from his gamble. And once he got into the nitty-gritty details of planning the Long Valley dam, Mulholland realized he had been backed into a corner. The problem was that he realized it at a most inconvenient moment.
Just as Fred Eaton sprang his trap, the bankers back east, who had loaned the city the money for the aqueduct, sprang theirs. In late 1910, with the aquedeuct construction just past the half way mark, they lowered the cities’ credit rating. The bankers were hoping that a cash shortage would force the city to sell to them its most valuable asset, the Los Angeles Department of Water and Power. Instead the Board of Public Works which had oversight of the DWP, cut expenses to the bone, eliminating the million dolalrs for Fred Eaton’s higher Long Valley dam.
Mulholland tried to reason with his old friend But Fred Eaton (center) decided that Mulholland was merely being a tough negotiator, and refused to compromise. The friends argued. Heated words were exchanged. And Mulholland (right) walked out of the meeting with his old boss, saying angerly and prophetically, “I’ll buy the Long Valley three years after Eaton is dead.”
How could either man have known that this bitter arguement between two old friends would inspire an open and violent rebellion in the Owens Valley, kill 1,000 innocent people in Los Angeles and Ventura counties and cause the greatest man made disaster in California history?