Chapter XIII: Confessions of the Supervisors

The resignation of Supervisor Duffey to take charge of the municipal department of public works, and of Supervisor Wilson[167] to take the office of State Railroad Commissioner, left sixteen members of the elected Schmitz-Ruef Board of Supervisors at the time of the exposures of the graft prosecution. The sixteen, after the surrender at their last secret caucus, made full confession of their participation in the gains of the organized betrayal of the city.

Supervisor Wilson added his confession to the sixteen. Thus, of the eighteen Union Labor party Supervisors elected in 1905, four years after the organization of that party, seventeen[168] confessed to taking money from large combinations of capital, the very interests which the party had been brought into being to oppose. The public service corporations, confronting a party organized primarily to control municipal government to the end that equitable conditions in San Francisco might be guaranteed those who labor, by the simple process of support before election and bribery after election, secured as strong a hold upon the community as their most complete success at the polls could have given.

These large interests, approaching the new order with bribe-money, found politicians operating in the name of organized labor, ostensibly to promote the best interests of labor, to be not at all formidable. And when the exposure came, and the bribe-giving corporation magnates were placed on their defense, their most potent allies in the campaign which they carried on to keep out of the penitentiary, were found in the entrenched leaders of the Union-Labor party.

The Supervisors' confessions corroborated the statements previously made by Lonergan, Walsh and Boxton.

The bribery transactions to which the seventeen Supervisors confessed, came naturally under two heads:

The first class included the briberies carried on through Ruef, who dealt directly with those who furnished the bribe money. Ruef employed Gallagher as agent to deal with the Supervisors. Thus Gallagher did not come in contact with those who furnished the money, while the Supervisors were removed still further from connection with them. Ruef, on his part, in passing the money, did not come into immediate contact with the Supervisors except in Gallagher's case. It was bribery reduced to a fine art. In this group of transactions were included the bribery of the Supervisors to grant to the United Railroads its trolley permit; to the Home Telephone Company, its franchise; to the Pacific Gas and Electric Company, an 85-cent gas rate; to the prize fight combine, monopoly of the pugilistic contests in San Francisco. In this class, too, is properly included the Parkside Transit Company, which had, at the time the exposure came, paid Ruef $15,000 to secure a street railroad franchise, with a promise of $15,000 more when the franchise had been actually granted. The Supervisors received nothing in this transaction, but they had been told by Ruef's agent, Gallagher, there would be, first $750 each for them in the Parkside matter. Later on they were told the sum would be $1000 each.

The second class of bribes included those which were paid directly to the Supervisors. They included the bribes paid by T. V. Halsey, agent of the Pacific States Telephone and Telegraph Company to a majority of the Supervisors to prevent their awarding the Home Telephone Company its franchise. Gallagher did not participate in these bribery transactions, and could only indirectly throw light upon them. But in the other cases Gallagher was the pivotal witness. He received the bribe money from Ruef, and, after taking out his share, he paid the balance to the other Supervisors.

With a wealth of detail, Gallagher told how he had received the money, when and where, and went into the particulars of its distribution among his associates. He had received from Ruef in all, $169,350.[169] Of this, he had retained $27,275 for himself; the balance, $142,075, he had divided among his associates on the board.

This enormous corruption fund which Gallagher divided with the Supervisors had come from four sources. The so-called prize-fight trust had furnished $9,000 of it; the Pacific Gas and Electric Company, $13,350; the Home Telephone Company, $62,000, and the United Railroads, $85,000.

The first money that passed from Ruef to Gallagher and from Gallagher on to the Supervisors, the confessions showed, was for the prize-fight monopoly. This particular bribery seems to have been intended as a trying-out of the several members to ascertain which of them would take money in connection with the discharge of their duties as Supervisors.

Every member of the board accepted the package of bills which Gallagher tendered him. Indeed, several of them displayed surprising alertness to secure all that was their due. Ruef, it became known among them, had given Gallagher $9000, which evenly divided, meant $500 for each of the eighteen Supervisors. But Gallagher gave them only $475 each. An explanation was demanded of him. He stated that he had taken out 5 per cent. as his commission.

So strong was the dissatisfaction created by the holding out of this 5 per cent. that Ruef arranged to pay Gallagher a larger amount than the others received to compensate him, no doubt, for his extra services as bribe-carrier.

The new arrangement for the compensation of Gallagher was followed when the Supervisors were paid after fixing gas rates at 85 cents per thousand cubic feet, instead of 75 cents,[170] the sum pledged in their party platform.

One of the Supervisors, McGushin, refused to break his platform pledge, and held out for the 75-cent rate. In distributing the gas money, Gallagher paid nothing to McGushin.[171]

But to each of the remaining sixteen Supervisors, Gallagher confessed to giving $750. Following the new rule that he was to have extra compensation, Gallagher kept for himself $1350.

At the time of the gas-rate bribery, Supervisor Rea was making it unpleasant for his associates. Mr. Rea had accepted $475 prize-fight money from Gallagher, without, he testified before the Grand Jury, knowing what it was for. A few days later he told Schmitz of the matter. Schmitz contended that no such work was going on. Rea, when he received his $750 in the gas-rate case, went to Schmitz with a statement that money was used to have the gas rate fixed at 85 cents. Rea asked Schmitz what he was to do with the money. He testified before the Grand Jury that Schmitz replied: "You keep quiet. I will let you know."

That was the last Rea heard from Schmitz on the subject. Rea testified before the Grand Jury that he still had the money Gallagher had paid him in the prize-fight and gas-rate cases.

Rea's trip to Schmitz seems to have kept him out of the division of the Telephone and the United Railroads money.

The Telephone bribery was somewhat complicated by the fact that rival companies were in the field bidding for Supervisorial favor. It developed that eleven of the Supervisors[172] had accepted from T. V. Halsey, representing the Pacific States Telephone and Telegraph Company, bribes to block the granting of a franchise to the Home Telephone Company. On the other hand, the Home Telephone Company had paid Ruef $125,000[173] to be used in getting favorable action on its application for a franchise. Ruef gave Gallagher $62,000 for the Supervisors. Ruef states that he divided the remainder with Schmitz. In this way, the administration was bribed to grant the Home Telephone franchise, while eleven[174] of the Supervisors, a majority of the board, were bribed not to grant it.

The complications which this created almost disrupted the Ruef-Schmitz combine. The difficulty was threshed out in a Sunday night caucus. Those who had received money from the Pacific States people, with Supervisor Boxton at their head, insisted that the Home franchise should not be granted. On the other hand, Ruef and Schmitz, with the thousands of the Home Company in view, insisted that it should be. Both Ruef and Schmitz warned the Supervisors that they were perhaps at the dividing of the ways.

"Well," replied Boxton significantly, "if men cannot get a thing through one way they might try and get it through in another."

Mayor Schmitz demanded of Boxton what he meant by that. "Well," Boxton replied vaguely but defiantly, "you know there are other ways of reaching the matter."[175]

But Boxton was unable to prevail against the support which Ruef and Schmitz were giving the Home Telephone Company. Although eleven of the Supervisors had taken money from the Pacific States Company to oppose the granting of a franchise to the rival Home Telephone Company, all but four of those present at the caucus decided to stand by Ruef and Schmitz, and voted in caucus to grant the Home Company its franchise.[176]

The next day, in open board meeting, with Boxton still leading the opposition, the franchise was awarded to the Home Telephone Company.

The division of the money received from the Home Telephone Company people was one of the hardest problems in bribe distribution which Ruef and Gallagher were called upon to face.

The first plan was to pay the Supervisors who had at the last supported the Home Telephone franchise, $3500. At once those Supervisors who had, from the beginning remained faithful to the administration's support of the Home Company and had refused to accept money from Halsey, pointed out that they would receive $3500 only, while the Supervisors whom Halsey had bribed would get in all $8500; that is to say, $3500 from Gallagher for voting to grant the franchise and $5000 from Halsey not to grant it. It was, those who had remained true contended, inequitable that Supervisors who had been faithful to Ruef and Schmitz from the beginning should receive only $3500; while those who had been temporarily bought away from the administration received $8500.

The "justness" of this contention appealed to all. A compromise was finally arranged, under which those who had stood out to the end against granting the Home franchise, should receive no part of the Home Telephone bribe money; those who had received $5000 from Halsey but finally voted for the Home franchise, were to return $2500 of the $5000 to Halsey, and receive $3500 from Gallagher, making the total of the telephone bribe money for each $6000; those who had received nothing from Halsey were each to be allowed $6000 of the Home Telephone money. In this way each Supervisor who had voted for the Home franchise would get $6000 for his vote. In the case of four of the Supervisors the entire $6000 came from the Home Company. Gallagher, too, was one of this class, all his compensation being Home Telephone money. But Gallagher received $10,000. Eight of the Supervisors had received money from Halsey, and yet voted to give the Home Company its franchise. These received $3500 Home Company money from Gallagher and were allowed to keep $2500 of the Pacific States Telephone and Telegraph Company money that Halsey had given them. Thus the Pacific States was forced to pay the Supervisors part of the bribe money they received for granting its rival a franchise. Incidentally, some of the Supervisors did not return half the $5000 to Halsey. But this is a phase of the ethics of bribery upon which it is unnecessary to touch.

Ruef regarded this unique discipline of the Pacific States as just punishment for its offense of trying to buy his Supervisors away from him.[177]

Following the telephone bribery, came that of the United Railroads to secure the much-opposed over-head trolley permit. On account of this permit, Gallagher testified, Ruef had given him $85,000 to be distributed among the Supervisors.

Of this $85,000, Gallagher kept $15,000 for himself, gave Wilson $10,000,[178] and to each of the other Supervisors with the exception of Rea,[179] $4000.

Gallagher's testimony relative to the offer of a bribe in the matter of the Parkside Realty Company franchise was quite as explicit. He swore that Ruef had stated to him there ought to be $750 for each Supervisor in this. Later on, with a change in the proposed route,[180] Ruef had told Gallagher that the amount would be $1000 to each Supervisor. Gallagher had conveyed this information to the Supervisors. At the time of Ruef's flight, arrest and the attending breaking up of his organization, the Supervisors were impatiently waiting for this money to be paid.[181]

One by one, sixteen of Gallagher's associates went before the District Attorney and made full confession. In every detail they bore out Gallagher's statements. When they had done, the District Attorney had statements from seventeen[182] of the eighteen Supervisors, that they had received large sums of bribe money to influence their votes in matters in which public service corporations were concerned; he knew the purposes for which the bribe money had been paid; he had a statement from Gallagher, corroborated at many points by the testimony of the other Supervisors, that the money had been furnished by Ruef. Ruef's testimony would bring the bribery transactions directly to the doors of those who had bribed. This testimony could have been had, had the prosecution agreed to give Ruef complete immunity.

Ruef was a prisoner in charge of an elisor. He knew that the Supervisors had confessed. In an agony of indecision he sent for Gallagher and Wilson to learn from them all that had occurred.[183] They told him that full statements had been made to the District Attorney. Ruef complained that Gallagher should have tried to get into touch with him before making statements. To which Gallagher replied that such a course would have been impossible.[184] Both Gallagher and Wilson advised Ruef to make terms with the District Attorney. Ruef replied that he would think it over. Little came of the conference. The statements of the two Supervisors, however, must have shown Ruef how thorough the undoing of his organization had been, and how hopeless was his own case. But Ruef, sparring for time, and pleading for complete immunity, did not make immediate confession and, as a matter of fact has not, up to the present writing, told the full story of his connection with the public service corporations.[185]

After the confessions of the Supervisors, the District Attorney left Ruef to himself and hastened the Supervisors before the Grand Jury, where they repeated their miserable stories.[186]

And then the Grand Jury took up the task of tracing the bribe money from those who had received it, to those who had paid it.

FOOTNOTES:

[167] To the places thus vacated, Mayor Schmitz appointed O. A.
Tveitmoe and J. J. O'Neil. Tveitmoe and O'Neil assumed their
duties as Supervisors after the bribery transactions were
completed. They did not become involved in the graft
exposures, but served to the end of the terms for which they
had been appointed.

[168] The eighteenth Supervisor, who made no confession, was Duffey.
Duffey, according to Gallagher's confession, participated with
the others in the graft distributions. In the hurry of the
final arrangements for the confessions, however, Gallagher
gained the impression that confession was not to be required
of Duffey. Rather than give appearance of lack of good faith,
the prosecution decided to abide by the impression which
Gallagher claimed he had formed.

[169] This was the amount that Ruef turned over to the Supervisors.
It represented a comparatively small part of what he received
from the Public Service corporations. From the United
Railroads alone, because of the granting of the trolley
permit, he received $200,000. In addition he was drawing a
regular fee of $1,000 a month from the United Railroads.

The Supervisors were not always satisfied with the amount
Gallagher gave them. There were times when they entertained
the idea that Ruef had sent more than Gallagher gave. They
accordingly delegated Supervisor Wilson to ascertain from Ruef
whether all the money intended for them was reaching them.
Ruef refused to discuss the matter with Wilson. Wilson, at the
trial of The People vs. Ruef, No. 1437, testified:

"I told him (Ruef) that the Supervisors had asked me to call
and see him; that they wanted other information to confirm Mr.
Gallagher's reports to the Board on these money matters. He
said that he did not care to discuss that with anyone other
than Mr. Gallagher; that it took up time and that whatever Mr.
Gallagher did on the Board was with his full knowledge and
consent; that the matters were being handled satisfactorily by
Mr. Gallagher, and when anything arose, any other condition
confronted him, he would look elsewhere for a leader, but he
did not want to go in at that time and discuss those matters
with anyone."
[170] About the time the 85-cent gas rate was fixed, one of the
Pacific Gas and Electric Company's stations was burned. Ruef
stated to Gallagher that the fire would be used as one of the
reasons for fixing the 85-cent rate: that it would probably
appeal to the public as an excuse for fixing the rate at 85
cents when the platform of the party had mentioned 75 cents.
See Transcript, The People vs. Ruef, No. 1437, page 784.

[171] When McGushin refused to follow directions and give the
Pacific Gas and Electric Company an 85-cent gas rate,
Gallagher went to Ruef about it. At the trial of The People
vs. Ruef, No. 1437, Gallagher testified: "I told him (Ruef)
that McGushin was rather demurring at receiving the money, at
taking the money, and that I had told Mr. McGushin that he had
better go down and talk with Mr. Ruef. He (Ruef) said, 'All
right, if he comes around I will talk with him.'"

[172] The Supervisors who accepted money from Halsey, acting for the
Pacific States Telephone and Telegraph Company, to prevent a
franchise being awarded an opposition company were: Boxton,
Walsh, Wilson, Coleman, Nicholas, Furey, Mamlock, Phillips,
Lonergan, Sanderson and Coffey. The amount paid in each
instance was $5,000. Halsey promised several of the bribed
members from $2,500 to $5,000 in addition to be paid them, if
they remained faithful, after their terms had expired. The
money, the several members testified, had been paid to them by
Halsey in an unfurnished room in the Mills Building which had
been temporarily engaged for Mr. Halsey's use by Frank C.
Drum, a director of the Pacific States Telephone and Telegraph
Company. Examples of the methods employed to corrupt the
laboringmen Supervisors who suddenly found themselves placed
in a position of trust and responsibility will be found in the
appendix.

[173] This is the amount given by Ruef in his "confession." He
states that he received $25,000 when he agreed that the Home
Telephone Company should have the franchise; and $100,000 when
the franchise was granted. According to his statement he gave
$65,000 to Gallagher for the Supervisors; $30,000 he gave
Schmitz; $30,000 he kept himself. Gallagher testified on
several occasions that he received but $62,000 from Ruef. The
details of Ruef's confessions are not dependable. On Ruef's
own statement of the basis of division of this particular
bribe money among the Supervisors, Gallagher received only
$62,000 of Home Telephone money from him.

[174] Ruef was himself to blame for the complication, for he had
given certain of the Supervisors to understand that the
purpose of the Pacific Telephone and Telegraph Company was to
prevail, and that the Home Telephone Company would not be
granted its franchise. The Supervisors in taking the Pacific
Telephone and Telegraph Company's money, not unreasonably
supposed they were taking from the favored of the
administration. Supervisor Wilson in his confession said: "The
first conversation I had with Mr. Ruef, affecting money
matters, was on the Pacific States Telephone matters. I told
him that I had been out to dinner with Mr. Halsey, and I
understood that everything was going to be satisfactory with
their company. He (Ruef) said that it would terminate that
way."

Acting upon this hint, Wilson accepted $5,000 from Halsey.
Later he told Ruef of having got the money. Ruef told him that
he should not have taken it. Wilson has testified that he
offered to return it. "No," he claims Ruef replied, "don't do
that just now. Wait and see. I will let you know later. You
might get into a trap by giving it back; you had better wait."

Ruef claims, however, that he advised Wilson to return the
money.

[175] For description of this "dividing of the ways" scene, see
testimony of Supervisor Wilson, Transcript on Appeal, The
People vs. Ruef, page 2843.

[176] Gallagher in his confession said of the decision of the
Supervisors to stand by Ruef and Schmitz: "Mr. Wilson talked
to a number of those boys (Supervisors who had taken money
from the Pacific States's agent), he being one of those who
had taken this money, and he told me that notwithstanding the
fact that they had taken this money that he didn't feel that
he wanted to stand out from the leadership of Mr. Ruef and
wanted to act with him and myself in the matter and said that
he would talk to the other boys about it, and see how they
felt about the proposition of voting for the Home Telephone
franchise anyhow."

[177] In his confession, Gallagher stated that under this
arrangement he paid $3,500 each to Coffey, Coleman, Furey,
Lonergan, Mamlock, Nicholas, Phillips and Wilson; $6,000 each
to Davis, Duffey, Harrigan and Kelley, reserving $10,000 for
himself. Those who received no part of the Home Telephone
Company money were Boxton, Sanderson, Walsh, McGushin and Rea.
Of the five, Boxton and Sanderson received $5,000 each from
Halsey of the Pacific Company, and Walsh, according to his
recollection, $3,500. McGushin and Rea received none of the
bribe money paid by the two telephone companies.

[178] Gallagher testified before the Grand Jury, that the additional
compensation had been given Wilson because he was more useful
than any other member, besides himself, in keeping the
Supervisors in line and in passing information regarding
prospective bribe money.

[179] Gallagher testified before the Grand Jury that he had paid Rea
nothing, because he had no confidence in Rea's judgment and
self-control. "I told Mr. Ruef," Gallagher testified, "I did
not care to, that I wouldn't take the responsibility of
dealing with Mr. Rea. I believe he was talking and had talked
about matters dealing with me and did not care to have any
dealings with him. He (Ruef) said, 'Very well, I'll attend to
him,' or 'I will see to that myself,' or some such expression
as that."

[180] The original plan was to have this road on Twentieth Avenue.
But to grade Twentieth Avenue would take time, and cost
upwards of $100,000. On the other hand, Nineteenth Avenue had
been graded, macadamized, and accepted as a boulevard. The
Parkside people asked a change in the purchased franchise, to
give them the boulevard. But the Charter prohibited grants of
franchises over declared boulevards. Ruef concluded this
provision could be overcome by ordinance. He feared criticism,
but finally yielded to the Parkside people's request. Then
went word to the Supervisors of increase in compensation in
this particular transaction.

[181] Gallagher's testimony before the Grand Jury regarding the
promised bribes in the Parkside franchise undertaking was as
follows:

"Q. Now, then, the Parkside trolley, was there an
understanding in regard to money being paid on that? A. The
Parkside realty company's franchise for street railway on
Twentieth Avenue, that is what you refer to--on Nineteenth
Avenue, that is correct; it was originally intended for
Twentieth, afterward changed to Nineteenth; that is right
there was nothing paid to any member of the Board upon that
that I know of. There were some rumors about it and Mr. Ruef
spoke to me about it and said there ought to be a payment of
$750 to each member on it and afterward said that if the thing
was changed from Twentieth Avenue to the Nineteenth Avenue,
that there ought to be $1,000 each paid.

"Q. About when did he say it ought or he would be able to pay
them? A. He said that he expected to, yes, sir. He did not say
he was ready to do so, on the contrary, has always denied that
he had the money to pay it with.

"Q. He never said he had the money before on the other matters?
A. No.

"Q. He would just say there will be this much coming? A. Yes,
sir.

"Q. And the same way in regard to this also? A. Yes, sir.

"Q. $1,000? A. Yes, sir.

"Q. And you passed it out in the same way? A. Yes, sir.

"Q. And it was put through with that understanding? A. Yes,
sir.

"Q. The only definite, was it, it hasn't come? A. Not yet.

"Q. Do you know why the money hasn't been given to you yet by
Ruef? A. No, sir.

"Q. Has he given you any reason? A. Mr. Ruef said that the
amount has not been paid to him.

"Q. You heard complaints from the members that they had been so
long about coming through? A. Yes, indeed.

"Q. Did you make complaint to Ruef about it? A. Yes, sir.

"Q. What did he say? A. He made that excuse consequently that
he didn't have it.

"Q. Never said that he did not expect it? A. Did not."

[182] The anxiety on the part of the confessing Supervisors to tell
the truth was pathetic. When McGushin began his story he was
asked: "Of course this statement you make is free and
voluntary." "Yes," replied McGushin, simply, "Mr. Gallagher
himself told me to tell the truth."

[183] "I want to learn from your own lips," he told Wilson, "if what
I have already heard is true regarding your making a statement
to the prosecution."

"I have been thoroughly informed," said Ruef in an interview
given out later, "of everything that the members of the Board
of Supervisors are reported to have told the Grand Jury, and I
have no comment to make upon their alleged confessions at this
time. Later, however, I will issue a statement which will
furnish more sensations in connection with municipal graft
than anything that has been made public."

[184] Gallagher left the conference first. Wilson testified at the
graft trials that after Gallagher had gone Ruef stated that
"had he been in Gallagher's place he wouldn't have made those
statements to the prosecution."

"You can never tell what one will do until he is placed in Mr.
Gallagher's position," replied Wilson, "we discussed the
matter fully for two or three days before he took that step."

[185] The nearest Ruef has come to a statement of his connection
with the public service corporations is contained in his
story, "The Road I Traveled," which appeared In the San
Francisco Bulletin. The account is inaccurate and incomplete.
Nothing, for example, is told by Mr. Ruef, of the proposed Bay
Cities Water Company deal, which at one time he claimed to be
the most important of all he had in view.

[186] The Supervisors were all examined before the Grand Jury on the
same day. Heney in an affidavit, filed in the case of The
People vs. Calhoun et al., No. 823, states that "one of the
reasons which actuated me to examine all of said Supervisors
on the same day was that the newspapers had discovered that
they had made confessions on the preceding Saturday, and I
wanted to make sure that no one of them was tampered with by
anyone who might be interested in changing his testimony
before I succeeded in getting his testimony recorded by a
stenographer in the Grand Jury room."