Note 88 — Chapter V · Graft Prosecution Opens.

The nature of the attacks upon the supporters of the Prosecution is shown by the proceedings in the libel suit brought by the San Francisco First National Bank against the Oakland Tribune. Rudolph Spreckels was president of the bank; the Tribune was one of the stanchest of the opponents of the prosecution. The Tribune charged that the Graft Prosecution had for one of its objects the unloading of the Spring Valley Water Company’s plant upon San Francisco, and that the First National Bank was burdened with Spring Valley securities. Among other things the article set forth:

“The recent disclosures of the methods by which it was sought to unload Spring Valley’s old junk, called a distributing system, together with its inadequate supply of inferior water, on the city at an outrageous figure by the swinging of the ‘big stick’ has not enhanced the value of the securities of the corporation in the view of the national examiners. Even the efforts to cloud the real purposes of the promoters of the Spring Valley job by calling it a civic uprising to stamp out municipal graft is said to have failed to mislead the Federal experts. The suggestion that the ‘big stick’ would force the city to purchase the plant of the decrepit corporation for $28,000,000 after its real estimate was appraised by an expert at $5,000,000 and held by the bondholders to be worth, as realty speculation, $15,000,000, has not enthused the Federal bank examiners in relation to the value of Spring Valley bonds as security for a national bank.”

The First National Bank did not hold Spring Valley Company securities. As the Tribune’s charges were calculated to injure the bank, action for libel followed. At the hearings, it developed that the articles had been furnished the Tribune by the political editor of the San Francisco Chronicle, who testified that he was paid fifty dollars a week for his Tribune articles. This was more than his salary as political editor of the Chronicle. He admitted on the stand that he had heard what he stated in his article, “only as a matter of gossip.”