A Crack in the Edge of the World (42 page)

And, very generally speaking, such also appears to have been the attitude of most of the insurers in San Francisco in the days and weeks that followed the ruinously costly disaster of April 1906. The tone was best set by the famed British insurer named Cuthbert Eden Heath, the tall, deaf son of an admiral who joined Lloyd's at eighteen and, in a matter of five years, began to turn the Victorian insurance industry on its head, taking on risks that no one, up to that time, had ever thought worth insuring against.

It was Cuthbert Heath who first had the idea, for example, of offering fire victims insurance against the loss of profits they might suffer. It was Heath who took Lloyd's into the American market for risks other than the traditional shipping ventures. It was Heath who came up with the smallpox-if-vaccinated insurance plan in 1901, who in 1887 had offered jewelers policies that covered any of their diamonds that might be lost in transit, and who in 1914 would cover people against damage from air raids (their premiums becoming higher as the German bomb aimers became more skillful). It was Heath who set out the first plans for workmen's compensation, and who in 1907 offered the first Lloyd's policy covering American drivers and their cars—and in 1895 it was Heath who first offered, in America, insurance against damage caused by earthquake.

The message he sent to his American agents and claims representatives in the aftermath of the April 18 event was short and simple, and has passed into insurance legend and lore: “Pay all your policyholders in full, irrespective of the terms of their policies.” It was a generous offer, honored perhaps more in the breach than in the observance by some; and it came at a very difficult time for the industry.

For in the years just prior to the San Francisco Earthquake there had been a number of very costly disasters. In 1903 some 600 people had died in Chicago at a fire in the Iroquois Theater. A blaze aboard the steamship
General Slocum
on the East River off Manhattan killed 1,021 people in 1904. And the enormous fire in Baltimore the same year wrecked the city's business center, with losses of up to $90 million. The ruin caused by the earthquake and then the fire in San Francisco was the last thing the insurance industry needed in 1906. The total value of property destroyed was perhaps as much as $500 million—of which the insured liability was estimated at around $235 million. About a hundred insurance companies, some big and national, some tiny and local, had written policies for householders and businesses in San Francisco. Of the total risk, British underwriters had written about a fifth, and German insurance companies stood to be out of pocket by a similar amount.

Claims were made by 90,000 people and companies within a day or two after the last fire was out. But the fires had caused unforeseen complications: Many people had lost their policies, and many insurance companies had lost their offices. Confusion and consternation erupted on all sides.

Then there began as a consequence a great deal of undignified haggling—though, from a moral viewpoint, most now think there should not have been—as company after company tried to force policyholders to accept far less money than they had insured for. Some firms argued in a quite arbitrary fashion that one risk was insured and another was not; and often technical arguments went on for months over whether it was a fire or the earthquake that destroyed a particular building, because one risk was reasonable and covered, the other an act of God and not. In particular there was much heated debate over whether to invoke the so-called fallen building clause that was now standard on most American policies, which held that “if a building, or any part thereof, fall except as a result of fire, all insurance by this policy on such building or its contents shall immediately cease.” Only three American companies that used the standard form, and that could therefore by rights apply the clause, decided to ignore it and to pay up in full. Most of the rest dithered, argued, stalled.

Many others cunningly suggested a dastardly solution: They offered what they christened a “horizontal cut,” proposing to each policyholder that since it was impossible to determine if it was fire or shock waves that had caused his building to collapse, why not take a 30 percent deduction and say no more about it? There was an almighty outcry over the sheer impertinence of this suggestion; but in the end the horizontal cut was applied by a large number of companies, though the discount was reduced to 10 percent, and those firms that applied it became moderately less unpopular as a result.

The reputation of the insurance industry as a whole suffered grievously from the poor behavior of these companies, particularly after the topic became a national issue when a local congressman stood up before the House of Representatives in Washington and inveighed against the number of blatantly dishonest and evasive companies that had been trying, as many began saying, to weasel out of their obligations.

A scant six of the one hundred firms involved were said to have performed impeccably, paying all of their policyholders in full and on time. Four of these were American—the Aetna of Hartford, the California of San Francisco, and the Queen and the Continental of New York. The other two, the Royal and the Liverpool London, were British. The Hartford essentially paid in full as well, deducting just a small percentage for those who demanded to be paid in cash. Some thirty-seven firms had no choice but to go back to their stockholders and pass on the liability to them—to “assess” them, to use the formal phrase, a total of $32 million in claimed money. Twelve companies went entirely broke.

There was enormous praise for the Fireman's Fund Insurance Company, based in San Francisco, which faced more than $11 million in claims, with only $7 million in assets. Fireman's took the unusual step of forming an entirely new company—paying out all the cash the old firm had on hand, and offering policyholders stock in the new firm in lieu of the cash they were owed. A body called the Credit Men issued a report some while later saying this company above all had “proven itself entitled to the confidence, good-will and patronage of the insuring public.”

The same could not be said of fully fifty-nine other firms—a technical majority of the total of one hundred companies that were known to have written policies, though not representing the greatest part of the total value they had insured. Of these pariah companies, all of which argued, prevaricated, demanded huge deductions for paying out cash, and who in some cases defaulted altogether, the very worst appear to have been those based in Germany and Austria. Six of these firms denied all responsibility and simply closed up shop and went home. The Hamburg-Bremen Company seems to have been a special villain. It demanded discounts of between a quarter and a fifth for nearly all of its $4 million in liabilities; and it was excoriated for “insulting and discourteous treatment” of its customers, and for misleading New Yorkers—potential new customers—by running advertisements claiming, falsely, that funds had been sent over from Hamburg to pay San Franciscans in full.

AND THEN THERE
was the question of Chinatown. It had been almost entirely destroyed. As anticipated by the insurance board, fires had roared along the tiny alleyways and consumed almost every single one of the tenements of its nine crowded city blocks; and though Chinese casualties were relatively light, thousands of Chinese men and women, made comprehensively destitute, immediately set to roaming the city in search of shelter, food, and work.

At first the city was, if sotto voce, delighted. There was still a powerfully racist element to San Francisco—at least, so far as the Celestials were concerned—and not a few thought the fires a blessing. Now many residents breathed quietly, the Chinese could push off elsewhere, and the slums where they had practiced their peculiar arts could be replaced by office buildings or houses for more respectable folks. A committee was very quickly formed—within six days—to decide where they should be put. No thought was given at first to where the Chinese themselves might want to live; it was merely assumed by members of the committee (which was led by a Methodist minister named Thomas Filben, and had members named Deneen, Ward, and Phelan—not a Chinese among them) that they knew what was best for this most alien of communities.

By now the terrified Chinese had scattered, many taking boats across to Oakland and settling in what was perceived as relative safety. The committee demanded they come back: first to a temporary camp set up for them at the foot of Van Ness Avenue and then to what had long before been planned for them, an “Oriental City” out at Hunter's Point, a bleak peninsula to the southeast of the city. An industrialist named John Partridge had been pressing for the Chinese to be moved to this distant redoubt, well away from the city center, for some time; now, it seemed, there was an opportunity to achieve his ambition.

But the Chinese were having none of it. They wanted their old community rebuilt, and they wanted to live there. They swiftly won the backing of their government at home in Peking—and by mid-April the Chinese legation in Washington had made it abundantly clear that no less a figure than the Dowager Empress herself, speaking from deep within the Forbidden City, had demanded that her people be housed where they had long wished to be housed. To underline the issue, the legation (which sent an official party to San Francisco) pointed out that the Chinese government owned title to land on Stockton Street, in the heart of Chinatown, and fully intended to rebuild its consulate there. To suggest they do otherwise would offend the Forbidden City, would damage relations between China and the United States, and would damage, no doubt, the lucrative trade across the Pacific.

Faced with such dire consequences, the committee backed down; and Chinatown—though later to be subjected to trials of an altogether different kind, as we shall see—began to rebuild itself in its selfsame sixteen blocks, where it remains today, aromatic and mysteriously and defiantly different from all the rest of San Francisco.

FIVE MONTHS AFTER
the quake the British consul general, Sir Courtney Bennett, was in what at this remove seems a gloomy mood when he wrote a lengthy assessment for his superiors in London. He had a prescience about him that comes across today in one passage, close to the end of a lengthy telegram. He had written copiously about the insurance debacles, about the strikes and riots that he felt were now gripping the city, about the fractious and disputatious mood of the place, and of how even the local press was abandoning its eternal optimism and beginning to ask questions about the city's long-term future. And then he began:

The moral effect of the earthquake has been great, and would-be investors are wondering whether there are not places other than San Francisco where money might not be more profitably invested. A man naturally hesitates to put up a million dollar building when it may be shaken down at any moment.

… a building could be put up in Los Angeles … for thirty percent less than in San Francisco.

And this, in essence, is what then happened. Though the city was rebuilt—hastily, without regard for the kind of planning that might have given it the appearance of the imperial city that so many longed for it to be—and though its commerce did return and its courage was recognized and has been celebrated ever since, one reality obtained. And Sir Courtney, perhaps unwittingly, had forecast it: This was the end, slow in coming and slow to be noticed, of San Francisco's supremacy among the cities of the American West.

The torch would in due time be passed southward, to Los Angeles. And though many will argue that such a transfer of power and standing would have occurred anyway, for other, organic reasons, it remains an unarguable fact that San Francisco's crown began to slip immediately after the disaster of 1906. And the city has never regained its status, nor will it ever.

Large cities survive great natural disasters, true; but earthquakes, of all such trials, tend to have a very different kind of effect upon the future of the cities that survive them. The very fact that a city falls victim to a huge shaking of the earth on which it is built tends to suggest an unanticipated flaw in the process that brought the city into existence in the first place—a sudden revelation that the land on which the city was built held some dark secret, which lay cunningly unrevealed to those who first arrived.

When the first settlers put down their tent poles beside the meadow of sweet-smelling yerba buena, and when they saw how safely and prettily their schooners rode out in the calms of the harbor, there seemed no end of logic and good sense to building a homestead; no one could possibly have imagined the turmoil that was lurking deep within the earth. There was no clue, no hint, of any trouble to come. And then came 1906, and all those comfortable assumptions were shattered, and deep-seated confidence was replaced overnight with an equally deep-felt anxiety.

Earthquakes can as a consequence have effects on cities and city populations that may not become clear for years, or decades, but that in time are realized—as is recognized here—to be profound indeed. A deep anxiety for the future conspired with a host of other circumstances to ensure that, over the decades following 1906, the lure of San Francisco ebbed away, to be replaced by the undisputed magnetic appeal of the gigantic and seismically rather safer city that was then starting to grow 400 miles to the south.

Los Angeles has earthquakes, true. Everywhere in California that lies close to where the two tectonic plates are scraping past each other is, when compared to stable places like Kansas, Nebraska, Siberia, Queensland, or the Canadian Shield, relatively seismically unsafe. It is all a matter of degree. San Francisco was in 1906 almost obliterated by a quake; Los Angeles has, by contrast, never been more than scarred.

And this has all to do with proximity. The change of relative status of the two cities is a result of one immense and often unstated factor: the relative closeness of each to the track of the San Andreas Fault. San Francisco is no longer America's principal western city because, quite simply, the fault runs directly underneath it. Los Angeles, on the other hand, has taken over as the now unassailable capital of California and of the American West because, equally simply, it does not.