by Paul R. Spitzzeri
With the sale of Los Angeles municipal bonds for important public works projects stalled in mid-1903 over concerns of low interest, conditions in Eastern markets and others, City Treasurer William H. Workman sought an arrangement by which several Angel City banks would receive deposits of the City’s funds in exchange for taking bonds, though this, too, ran into some difficulties as the spring merged into summer.
Whereas the Los Angeles Express was relatively mild in its concerns when it covered the matter, its contemporary, the Los Angeles Record, was more vocal. It reported in its edition of 17 June that City Attorney William B. Mathews reported that water bonds issued in 1902 ran into similar difficulties, but it was worked out and he acknowledged that “bond buyers require the most flawless accuracy” because “there must be no question about security,” while he affirmed that these bonds would certainly sell.
As for Workman, he shifted away from the local financiers and towards the financial capital of the country as told the paper,
I think the bonds are salable, right in New York at the present moment. If the council wishes to send me, yes, I feel that the bonds are marketable. It is a question of getting at the right people in the right way. To sell bonds you must be on the field. It is not likely that bonds can be sold by telegraph or by long-distance telephone. The only way is to get after the buyers and peddle your bonds, the same as you peddle anything else. To sit out here in Los Angeles and say the bonds can’t be sold is merely wasting time.
The treasurer followed by opining that “I am now beginning to believe we can’t sell to the local banks” because of their balking at some of the conditions involved. Asked if he would travel to the Big Apple, Workman replied that the decision was that of the City Council, but reiterated “I would do all in my power” to broker a deal, which, however, meant “to go to the market.” He concluded that the credit of the municipality was excellent and reeled off data on retired bonds, payments toward them in 1902, and the fact that there was no floating debt, while the city owed about 50% of its limit.
Given this, the Record issued a pointed editorial titled “Don’t Talk About Selling The Bonds, But Go Out And Sell Them!” It exhorted city officials “let us quit twiddling our thumbs . . . let us stop this everlasting talk” and urged “that the council send City Treasurer Workman down east to sell the bonds.” It also called for the body to properly empower Workman to make the best deal and added, “Make Mr. Workman our bond drummer” because “he will be a good one” adding that “he has the experience and necessary conservatism in a business proposition.”
The treasurer would properly represent the Angel City, the argument continued, and get the bonds disposed of to the metropolis’ general advantage. It concluded, “one thing is certain: Sitting down here, away out on the shores of the Pacific, Los Angeles & Co. [the city recast as a business], will never sell her goods if she goes to sleep” and “she must get up and ‘rustle.'” Referring again to Workman, the paper proclaimed, “he will be ‘the finest man on the road,'” and one who “takes only one order in a whole year.”
The following day’s Los Angeles Times reported that “it has been practically settled that the local banking syndicate,” discussed as a potential buyer, “will not take the entire $2,180,000 issue of bonds.” It was reiterated that the City, with Workman’s approval, was prepared to deposit the bond funds in the banks and to withdraw only on a pro rata basis. A National Bank of California official tried to broker a deal, but to no avail, with respect to the whole amount, though hope was held out that the banks would at least take $480,000 in bonds for general school purposes, especially because the need for new facilities in a burgeoning city was urgent.
When it came, though, to the feelings of investors in New York City, it was stated that “the condition of the eastern money market is unfavorable to the sale of bonds of a far western city” and it was added that “the great distance of Los Angeles from the money centers seems to be one of the chief objections of the bonds.” Reference was also made to negotiations with streetcar and real estate tycoon Henry E. Huntington over a property formerly held by Ozro W. Childs (who died in 1899) and which would allow him a reasonable profit after a 40% discount in the asking price.
In its issue of the 19th, the Record published another blunt editorial:
The Record insists that City Treasurer Workman should, without more ado, be SENT to sell the bonds. He is the only man in this town who has FAITH that the bonds can be sold. Everyone else is “knocking” the idea. Men sit down and deplore the fact that the rate of interest is too low . . . But not so with Treasurer Workman. He BELIEVES that he can sell the bonds if he has a little leaway [sic]. This simply means that he wishes to do business in a business way.
The paper wanted to know why Workman should not be dispatched to New York City and remarked that “his appointment should give him absolute discretionary power to do what HE THINKS BEST.” It understood that this was “a very high compliment to any man,” but asserted that “Mr. Workman is deserving of all this faith.”
Finally, the Record inquired, “instead of sitting down with empty hands, why isn’t Los Angeles up and doing?” It wanted the municipality to “settle this bond business, one way or another” and “either send Mr. Workman or take the whole issue and sell it to the ragman at 3 cents a pound,” because, otherwise, “the bonds aren’t worth any more than they will bring for old paper in a junk shop.” After assuming the Council would ponder the matter with due consideration, the paper concluded, “the credit of the city is at stake.”
The 2 July edition of the Record continued the push as it complained that “we are everlastingly boasting about our great material progress” but also “passing the hat” on issues such as the sale of the bonds. An example was given of an unnamed morning contemporary that bragged about a coming skyscraper in a way that was deemed to be “childish talk [that] makes us ridiculous in the eyes of our neighbors.” When it came to the bonds, “we are in the dumps” and it sarcastically commented that “”our august common [city] council, the center of all, the be all and the am all, naturally knows it all.”
It asked the Angel City’s leaders: “Suppose it costs $500 to send Treasurer Workman to New York city and keep him there 30 days?” and “Suppose it cost $5000 to sell the bonds?” but, employing the metaphor of slow-moving bovine and its “brassy jangle of the old cow-bell,” it remarked, “naturally out taxpayers cannot expect our cow-bell politicians to see the point.” The Record concluded,
The only hope is here: That Los Angeles, with all this mismanagement, is a great city, else, with all the neglect, abuse and folly heaped upon her by her alleged friends, still manages to keep moving.
Some good news, at least, came a couple of weeks or so later, when the bonds for new bridges across the Los Angeles River, the only ones taken, at about $100,000, were signed, certified and transferred with Workman joining Mayor Meredith P. Snyder and City Clerk Harry J. Lelande. It was also, however, reported by the Times of the 16th that the close to half a million in school bonds were expected to “signed, sealed and delivered” though the buyer was not named.
The Record, in its coverage of the story, wrote that Workman, Snyder and Lelande “worked . . . as they never have worked before in the signing of the certificates and the treasurer was quoted as stating, “Won’t have to take ’em to New York this time, no, sir; no trip to New York this time. Sell ’em right here. Los Angeles securities are top notch.
The paper added that the Los Angeles Trust Company, which acquired the bridge bonds, and the William R. Staats Company of Pasadena would take the common school bonds. Notably, Workman and others long petitioned for a bridge to extend Fourth Street over the river to Boyle Heights, the community he’d developed starting three decades before and in which, in 1903, he was very active—so there was a notable personal interest in the bridge bonds.
The general school bonds were shortly picked up, as reported by the Express of the 15th, which observed that “in purchasing the Los Angeles school bonds, the Los Angeles Trust company and W.R. Statts [sic] Investment company of Pasadena represented the state board of examiners.” The $480,000 in certificates were to be delivered to Sacramento by a representative of the United States Mortgage and Trust Company of New York, with it stated that Workman might also go along.
Notably, the paper continued that “there has been much reticence in admitting who the investors were” leading to speculation that there were local investors eyeing the bonds. The examiners board, however, had access to “certain moneys derived from the sale of school lands” and it was “authorized to purchase state securities,” especially a safe one like these, which, again, offered the 3 3/4% interest noted earlier in the post. There was a possibility that more of the municipal bonds would be acquired by the examiners.
In its coverage of the following day, the Times commented that the belief was actually that Eastern buyers would purchase the school bonds. It also noted that an act of the state legislature empowering the examiners to buy securities like these was sponsored by Walter S. Melick, who happened to be from Pasadena and that he enlisted the Staats firm to take part in the purchase. As expected, Mathews, Snyder and Workman signed the certificates and the paper ended by stating that the board of examiners might take the Polytechnic High and storm drain bonds, as well.
The edition of the Express on the 20th remarked that
City Treasurer Workman is of the opinion that the state will buy the polytechnic high school bonds. When in Sacramento last week he talked with Governor [George] Pardee, the secretary of state and additional members of the state board of examiners, all of whom agreed that the securities of Los Angeles were desirable and all expressed a willingness to take the entire issue of $200,000 if it should remain unsold in September, when it will become available for investment.
Workman acknowledged that other counties offered higher yields on their bonds, but told the paper “the state officials regard [the Angel City ones] with favor, well knowing the ability of Los Angeles to pay its obligations” and he added that “the standing of this county is excellent, owing to its general wealth.” He felt, however, that the state would go no further than acquiring the Polytechnic High bonds.
Five days later, the Times noted that the United States Mortgage and Trust Company certified the $1 million outfall sewer, $400,000 storm drain, and the high school bonds and these “were then turned over to City Treasurer Workman, and now rest in the city’s vaults, all ready for the purchasers.
In its edition of 23 September, the Express reported a conflict between Workman and the Los Angeles Trust Company with respect to the general school bonds, as officials of that institution intimated that he took some of the funds to other banks. He, however, told the paper that $335,000 was still in its vaults and “we have drawn from the original deposit” of $480,000 “only for school expenditures,” while noting that the firm had about the largest amount of city funds in its keeping.
Moreover, he stated that his actions helped the company “for that institution is getting 2 per cent of the funds from savings bank, subject to call.” But, Workman went on,
I am not favorable disposed to the sale of the polytechnic high school bonds under any agreement that will leave a string on the money after it is paid over to the city. I am under bond to protect the city from loss and must exercise the discretion vested in me as to where I shall keep the funds.
Adding that it seemed like the amount of $110,000 that the Los Angeles Trust wanted to claim for the larger school bond issue would be from the examiners board, he noted that the 2% payment to it would be good compensation for simply being an agent in the bonds’ disposition. Workman then told the Express,
What makes me mad [is that] I had prepared a list of a dozen banks in town and promised to divide the deposit equitably between them all. This plan was worked to tie me up and I was virtually forced to deposit the entire amount in one bank. Not content with that monopoly of state money, the Los Angeles Trust company now desires to tie me up to deposit the money received for polytechnic high school bonds there.
He also awaited the decision of the state concerning these latter securities, while the paper concluded its coverage by noting that whatever was drawn from the $480,000 was by the City Council’s orders and “City Treasurer Workman had nothing to do” with those payouts “but had done his part in maintaining the agreement with the company when the bonds were sold.”
We will return with part four, carrying the story through to the end of 1903, so be sure to look for that soon.
Based on the information noted in this post, William H. Workman truly distinguished himself throughout the entire process of selling the city bonds. While nearly everyone believed that traveling east to personally solicit support from New York capitalists was the only viable approach, Workman remained steadfast in his belief that Los Angeles city bonds were strong enough to be sold locally.
Although some critics questioned whether his active promotion of the bridge bond measure was tied to his personal interests in Boyle Heights, I believe this should not tarnish his political reputation. After all, who isn’t driven by some degree of self-interest? As an old Chinese saying bluntly puts it: “Those who are not selfish will be punished and destroyed by heaven and earth” (人不自私，天誅地滅). With that in mind, expecting a politician to be entirely selfless is unrealistic – as long as they also take into account the public good as well as public interest alongside their own, that is not a bad thing at all.