Carbon Canyon and Rancho Santa Ana del Chino: California Beet-Sugar Estate and Land Company (Limited)

The short-lived sale in September 1894 of Rancho Santa Ana del Chino by Richard Gird to Chauncey H. Phillips and other investors comprising the Chino Ranch Company came about because Gird greatly overextended himself financially in horse breeding efforts, the founding of the townsite of Chino in 1887, the creation of the Chino Valley Railroad, and the rapid development of the one of the country's largest beet-sugar factories.  This all came with the overexpansion of the famed Boom of the Eighties in 1886-88, followed by the inevitable bust, the national Depression of 1893, and other issues.  Gird attempted in November 1893 to promote a massive sale of Chino ranch lands to raise funds and relieve his burdens, but the aforesaid depression hampered his efforts.  Indeed, the Los Angeles Times, in its 4 November issue, reported that some 1,200 persons who attended the sale were more drawn by the tour of the acclaimed beet sugar factory and "a cheap trip with lunch thrown in" than in buying land.  The paper stated, moreover, that most of the purchasers of the $80,000 of land sold that day were Gird's tenants, renting land for beet raising and looking to become owners instead.

A year later, Gird had no choice but to sell and one of the rumored buyers was the noted sugar baron, Claus Spreckels, whose interests in northern California and in Hawaii were world renowned.  When Phillips, however, acquired the property, the Times, on 15 December 1894, reported that "it is also stated that the sale of the ranch to Mr. Phillips of San Luis Obispo is not a bona fide sale, but merely a paper transaction, for the purpose of facilitating the renewal of a mortgage."  This seemed to say that Gird engineered the deal to try and extend his mortgage and give him more time to clean up the financial morass he was in and reclaim his ranch.

Explaining this accusation, the Times noted that Gird had hired a management firm (Easton, Eldridge and Company) for the ranch on a two-year contract.  A key stipulation, however, was that, if a certain stated amount of ranch land was sold during the two-year period, the mortgage was to be extended for three additional years.  The paper reported that $100,000 more than what was called for in the agreement was sold, thus allowing for the extension.  Of course, Gird was not entirely happy that more land was sold than what was needed, because, if he were able to reclaim the ranch by retiring his debt, he would have had less land, so he tried to annul the contract and even offered a bonus to Easton, Eldridge and Company to agree to the cancellation of the deal.  This the latter agreed to, upon payment of several thousand dollars.

It is also worth noting that the Times proclaimed that "the Chino ranch is a magnificent estate and one of the best in the State to handle under present circumstances [meaning, presumably, the dire economy]."  Yet, the paper went on, "it is difficult to see how Mr. Gird can continue to carry his big mortgage of over $500,000 unless he sells some of the land."

In this context, the failure of the Chino Ranch Company, run by Phillips with investors, cattle barons Walter Vail and Carroll Gates, and real estate developer Abram Pomeroy, by 1896 meant that the Chino Rancho reverted back to Gird, but he was still saddled with a huge debt.  Consequently, Easton, Eldridge and Company went out to find other buyers.  On 16 February 1896, the Times reported that "an option was today placed on file whereby Easton, Eldridge and Company secure an option on 40,000 acres of the Chino ranch for $1,600,000."  This option was also filed in Los Angeles and Orange counties and carried a starting date of 26 September 1895 andan expiration of 26 March 1896.  It was stated that "Easton, Eldridge and Company are negotiating for an English syndicate" as part of this option.

Indeed, during April an agreement was reached by which a pair of British investors, George Wilding and John F. Gilmore, traveled to California, looked over the Chino ranch and signed an agreement with Easton, Eldridge and Company to purchase everything but the beet sugar factory, which was under contract to the Oxnard brothers [these also owning a large establishment in Nebraska], for $1.6 million.  The San Francisco Call of 30 March discussed the pending sale, noting that Eldridge had gone to London to negotiate with the British and received a preliminary agreement there.  As expressed then, "the idea of the English purchasers is to subdivide the ranch and form a colony of settlers that will be brought out from England to develop the land."

The 9 April sheet of the Call reported that the agreement was "one of the largest ever made in this State."  A contract of sale on the 7th stipulated that there were 3,000-4,000 head of cattle, the Gird racing horse stables, a dairy, the "home place" at what is now Los Serranos Country Club, the building of the Bank of Chino, the Chino Valley Railroad and the Chino Valley water system.  $160,000, or 10%, was to be paid up front and $550,000 within four months with the balance due in one year.  At the time, the goal was to bring 200 English families to Chino in 1896 and up to 500 by the time all the land was sold.  The Call offered the hopeful note that "the effect of this sale on land values in this State cannot help but be beneficial in the extreme, for it serves to demonstrate that desirable farming lands in this State can be disposed of to advantage to foreign capitalists."  In fact, Easton, Eldridge and Company was said to be working with another British investment group on another major ranch purchase in California.  These influx of foreign investment, said the paper, "will necessarily have a favorable effect on the values of good agricultural lands of all kinds."

Meantime, Richard Gird locked horns with the Chino Ranch Company and Chauncey Phillips, filing on 1 July 1896, a complaint alleging that the CRC was insolvent, to which a judge agreed and appointed a receiver to manage the affairs of the company until it was liquidated.  Gird's complaint claimed that "Phillips has neglected to pay the interest to the San Francisco Savings Union [holder of Gird's mortgage] or meet the payments due to Gird, yet he has collected rentals amounting to $150,000 and has received from sales of land $250,000 in notes."  Gird accused Phillips of misappropriation of these funds and the Times meantime, in its report on the action on 2 July, repeated the assertion that "much speculation followed [after the 1894 purchase] as to who the real purchasers were, as it was generally believed that Phillips was a figurehead."  The paper went on to praise Chino as "probably the most famous ranch in Southern California" with its productive beet industry and purebred cattle and horses befitting "a princely estate."  It also made reference to these economic components feeding "the thrifty little town of Chino."

On 9 August 1896, the Times ran an article on the deal, noting that "articles of incoporation of more than ordinary interest" were filed for a new company to run the Chino ranch, called the California Beet-Sugar Estate and Land Company (Limited) and capitalized for $2.5 million., divded into 100,000 shares at a par value of $25.  The paper joked that "as the unwieldy name would indicate, it is an English affair."  There had, in fact, been quite a few articles in the Times during that period about foreign investment, specifically British, in California real estate.

The incorporators of the CBSELC(Ltd.) were John Farquhar Gilmore (the main negotiator of the deal), Wendell Easton (the other prime negotiator for Gird), Easton's brother George (a partner in Easton, Eldridge and Company), attorney Vincent Neale (who handled the legal affairs of the contract), Henry Francis, V. D. Duboce, and A. H. Quatman.  Specifics of the deal included the fact that, in March, the concern paid $162,000 (ten per cent of the purchase price) and $338,000 were to be forwarded in a few days to satisfy a $600,000 cash "down payment."  Once that money was received, the title deeds were to be forwarded by the Anglo-California Bank [not surprisingly one that had English owners], which held the ranch in escrow.

Significantly, the deal did not come without considerable apprehension.  The Times observed trhat "Gilmore . . . was in much doubt about the advisability of floating bonds upon the property through an English incorporation at the time, owing to the shyness of British capital in touching American investments in such form."  Naturally, this had to do with the ongoing malaise of the depression that began three years before.  The decision was finally made "to localize the project for the present, at least, and afterward to transfer its affairs to an English company, if political and financial conditions in the United States should warrant."

What was meant by "localize" was not, for some strange reason, explained in the article, but the assumption is that the effort to subdivide and sell ranch land would be marketed locally until the conditions were deemed right to expand the effort to British colonists.  A little more detail was provided in the July 1896 issue of the sugar industry journal, The Sugar Beet, which printed a statement from its regular California correspondent, writing under the nom de plume of "Rialto":  "It is the intention of the syndicate to colonize the Chino ranch with Englishmen, and to engage in a general scheme of colonization in different parts of California. Their Western agents in this project will be Easton, Eldridge & Co., who will have full control of the disposition of all colonists after they reach New York." From what the Times reported, however, it would seem that initial attempts to bring English colonists was to be delayed.

Meantime, Easton, Eldridge and Company were given a five-year management contract and there was some good news in that, during the previous year dating to September 1895, $300,000 in property was sold, leading Wendell Easton to proclaim, "this is a tremendous money-making proposition.  In five years we can make out of the property at least $4,000,000.  In eighteen months the syndicate will have gotten its money back and will have left as clear profit a principality."  Continuing on with the greatest confidence, Easton offered "Why, the ranch is earning, under present conditions, $100,000 a year.  The company's debentures [secured notes] will pay 6 per cent, and leave a surplus of 15 per cent per annum."

While actual possession by the CBSELC(Ltd.) and the title deeds were expected to be obtained and delivered to the new owners within a week, this did not happen until November.  It appears that Gird's legal maneuvers against Phillips delayed the process, as the 15 November 1896 issue of the Times referred to the fact that, "the deeds in question were those securing to C. H. Phillips the lands and interests reserved by him out of the Gird property."  In fact, aside from the earlier agreements made with the British syndicate, there had to be complicated separate negotiations with Phillips through his attorney, R.H.F. Variel, in which, on 5 September 1896, the CBSELC(Ltd.) executed a purchase contract with the Chino Ranch Company and issued a first payment of $50,000 to it, at which time actual possession and control of the ranch was finally obtained.  According to the 8 September 1896 edition of the Tombstone Prospector, a paper in the town where Gird made his fortune, "the Chino Ranch Company reserve[s] 1,000 acrfes of land and the townsite of Chino" in the deal. 

Another complication was that Henry Oxnard bought 2,000 acres of the ranch for the sugar beet industry he ran there "and difficulties with Gird."  This latter seemed to have to do with "the division of the cash payments to be made by Gilmore and his successors" as well as the status of the Chino townsite and protracted negotiations between the representatives of Gird and Phillips, which were completed in early November.  The article, which started with the claim that the sale was "the biggest single real estate transaction in the recent history of the State," ended with the statement that "as a result, the Chino Ranch Company has received deeds conveying to it Chino townsite and other land in dispute, and the great deal is closed."

Like its predecessor, the Chino Ranch Company, the CBSELC(Ltd.) advertised in local media, such as the Los Angeles-based journal, The Land of Sunshine, extolling, as the dozens of other real estate ads that appeared in the publication did, the unique virtues of the ranch relative to soil fertility, availability and quality of water, the impossible-to-match climate, and other attributes.

There were, however, problems: in the depressed economic climate of 1893 and afterward and with unemployment high, the labor movement began to gain steam, as did the association of small farmers against conglomerates and individual industralists (the robber barons was the parlance of the day), giving rise to Populism and Progressivism in American politics.  The Times, about as anti-union a paper as was possible for the day, but also pro-small farmer, devoted significant coerage to the problem of the "sugar barons" locally, including those at Chino, led by the Oxnard brothers. 

A series of articles in late 1896, for example, blasted the fact that Senator William A. Peffer, a Populist from Kansas who was sent by Congress to make a report on the sugar beet industry, got so friendly with the operators of the factory at Chino that his son was hired in the laboratory department at a then-impressive $150/month salary.  The 1890s was also a difficult time for the sugar industry, as Congress continued to impose protections on American-produced sugar, such as that at Louisiana and the newly-acquired possession of Hawai'i to offset cheaper prices from places like Cuba.  In fact, tariff issues, related to taxes imposed on commodities imported to the U. S. severely affected small farmers because American-grown products were cheaper than imports.

Finally, the lingering economic slowdown was further exacerbated locally by persistent drought during much of the decade.  In 1896, the year the CBSELC(Ltd.) assumed ownership of Rancho Santa Ana del Chino, drought was severe.  While the next year saw decent rainfall and improved agricultural output, 1898 was another poor rain year.  The effects throughout California of the late 1890s drought cycle were devastating and it can only be assumed that the CBSELC(Ltd.) was similarly affected, so that it was hardly a surprise that it failed and a new buyer soon came onto the scene: the Chino Land and Water Company, the subject of the next post.

The above image comes from the magazine, The Land of Sunshine, and its April 1897 issue.