Renting the street

FRANCHISES IN MOTION—Cable cars pass a horsecar on Market Street while another horsecar has just crossed from Third Street to Kearny, passing Lotta’s Fountain. It’s the 1880s, and transit franchises are hot properties in San Francisco. The stripes you see crossing the streets were granite crosswalks, but many pedestrians ignored them. SFMTA Archive.

Editor’s note: One hundred years ago—April 1, 1921 (no fooling!)—an old name appeared anew on the San Francisco scene: Market Street Railway Company. There had already been four transit companies bearing that name, dating back to 1860. This incarnation of the name came after a financial reorganization of the city’s dominant transit company, United Railroads, which with its predecessor had consolidated numerous private operators of cable cars, horsecars, and electric streetcars in the preceding 30 years. 

Our nonprofit took that famed name, Market Street Railway, for ourselves back in 1977, 33 years after Muni acquired our namesake. To mark the centennial of our namesake, our member magazine Inside Track published this story, illuminating how transit got started in San Francisco and how it brought to us the city we know today. To receive the rest of the series and other exclusive features, please join us as a member! 

Rick Laubscher
Market Street Railway President

For the first half-century of our city’s transit (and really, all of America’s), the driving force was private companies using public streets to try to make a profit, by essentially renting those streets—paying for the exclusive transit use of them. Today, of course, we think of public mass transit as not only serving the public, but owned by the public as well—a function of government, not a for-profit business. Yet public ownership of a big-city transit line didn’t happen until 1912, right here, with Muni. 

Before that, all over the country, mass transit was provided by companies that aimed to make a profit. In the Gold Rush-enriched San Francisco of the 1850s, the first public transit vehicles were horse-drawn omnibuses (yes, that’s where the word ‘bus’ comes from). They were basically urban stagecoaches. But what few streets existed then were rough at best. 

FIRST FRANCHISE—A drawing of Hayes Valley in 1864, probably at Hayes and Gough Streets, showing the steam dummy and trailers of the first transit franchise to operate in San Francisco, the Market Street Railroad Company, awarded to (surprise!) Thomas Hayes. SFMTA Archive.

To provide a smoother ride on larger vehicles, a man named Thomas Hayes won the right from the government in 1857 to lay tracks in a few streets for his exclusive use. It was the first street railway franchise awarded in California.

Hayes named his operation the Market Street Railroad Company, and on July 4, 1860, began operating a steam-powered passenger car on tracks from Third Street out Market and then South on Valencia. He then ran a branch out a street he named for himself to Laguna Street, to help him develop land he owned, land now known as Hayes Valley.

Hayes paid the government for his franchise, basically renting the streets his tracks were laid on. The success of his company immediately attracted competitors. The government took bids for the franchise rights to other streets, with the winners paying fees and a percentage of their fares. 

HORSES RULE ON MARKET—After noisy steam dummies were banned from Market Street in 1868, the first franchisee converted its lines to horse-drawn streetcars like this one. The cobblestone pavement provided sound footing for the horses, but made the wagons and buggies they pulled bounce, attracting many passengers to the smooth ride of horse-drawn rail vehicles. Market & Post Streets, about 1870. SFMTA Archive.

After steam operation on Market Street was banned in 1868, horses took over, pulling little trailers along the tracks on many routes owned by various start-up companies. In 1873, Scotsman Andrew Hallidie won a franchise on Clay Street, not for horse-drawn cars, but for little cars pulled by an underground cable. This high technology innovation was twice as fast as horsecars, and could climb hills that horses couldn’t. But the uncertainty of long-term franchise rights discouraged large-scale investment until 1879, when the state granted San Francisco the right to award long-term street railway franchises, up to 50 years. Existing small-scale franchise holders applied for the new, longer franchises, increasing the value of their companies. This in turn drew bigger financial players to San Francisco transit, since these franchises now had predictable value. 

Stanford on Market Street

In 1882, Leland Stanford, former California governor, a builder of the transcontinental railroad, and soon to become robber-baron-in-charge of the mighty Southern Pacific Railroad (whose tentacles all over the state gained it the nickname of the Octopus), bought up the company Thomas Hayes had started, by this time a horsecar operation calling itself Market Street Railway. 

FIRST CABLE FRANCHISE—Andrew Hallidie’s Clay Street Railroad Company had its eastern terminal at Portsmouth Square, Clay and Kearny Streets. SFMTA Archive.

Stanford’s plans were to replace horsepower with cable power and build more lines radiating off Market. Appropriately, he renamed it the Market Street Cable Railway Company. (Stanford soon got kicked out of his rail interests by Collis P. Huntington, who lived a couple blocks from him atop Nob Hill, but consoled himself with a US Senate seat and a university built on his farm in Palo Alto, which he named for his late son.)

Other San Francisco transit companies, led by the Omnibus Railroad, quickly followed Stanford’s lead in converting the franchises for their horsecar lines to cable power, but after Frank Sprague made the electric streetcar practical in Richmond, Virginia in 1888, companies switched to this latest high-tech transit mode, which was twice as fast as cable cars and cheaper to install and maintain. 

San Francisco got its first electric streetcar line in 1891, built by two brothers named Joost, from Market and Steuart Streets (just steps from our San Francisco Railway Museum) via a variety of South of Market and Mission District Streets to reach the county line. Again, it was the grant of an exclusive long-term franchise that justified the capital investment.

FIRST ELECTRIC FRANCHISE—The San Francisco & San Mateo Railway Company opened in 1891, running from the site of our San Francisco Railway Museum on Steuart Street just south of Market all the way to Daly City. This early electric car is much like preserved “Dinky” 578, built just five years later. SFMTA Archive.

In 1893, the Southern Pacific interests snapped up a number of smaller companies (and their franchises), naming the new entity Market Street Railway Company. Its intent was to convert routes to electric streetcars (if they weren’t too steep, as cable lines such as Powell were). It was able to convert several cable lines to electric streetcars and built new electric lines too. 

Uniting the railroads

But the Market Street Railway of 1893 lasted less than ten years. In 1902, a group of eastern capitalists bought out the Southern Pacific interests and consolidated its holdings with several other rail transit companies it had already purchased. These included the Sutter Street Railroad, operated by cable power, and the San Francisco & San Mateo Electric Railway (the company the Joosts had founded, which had just opened a new carbarn at Geneva & San Jose Avenues, a site now home to Muni’s vintage streetcar fleet).

The new company, holding dozens of valuable street franchises, as well as the track and vehicles that operated on them, was known as United Railroads (URR). Getting the most value from its most valuable franchise, along Market Street, was a top priority for the new company. That required converting the five Market cable car lines to electric streetcars. But a city ordinance pushed by merchants forbade overhead wires on Market (and on Sutter, the company’s most direct route west to the fast-growing Richmond District). URR didn’t want to pay for the expensive electric conduit operation that city leaders demanded (already installed in New York and Washington DC). So, the cable cars soldiered on along Market Street, already antiquated by national standards.

GO BIG OR GO HOME—As quickly as it could afford, United Railroads upsized the streetcars on its electric lines to gain more revenue from its busiest franchises. Car 1352 was built by the St. Louis Car Company in 1904, part of a class of 125 cars of this type that survived the 1906 earthquake and fire and played a key role in the city’s recovery. SFMTA Archive.

The stalemate continued until April 18, 1906, when the earthquake and fire destroyed most cable machinery in San Francisco. URR, aided by bribes paid to members of the Board of Supervisors, won the right to string “temporary” overhead wires on Market and Sutter Streets and substitute streetcars for the old cable cars. These immediately became, along with Mission and Fillmore streets, some of the company’s busiest routes.

Unequal service

The franchises that United Railroads depended upon were not distributed evenly across the city. For example, in the 1880s and 90s, several competing companies built east-west lines from downtown into the Richmond District, both to take advantage of the residential growth there, and to serve the then-new urban oasis of Golden Gate Park. Transit service on almost every block caused the Richmond to grow even faster. Meantime, on the south side of the park, transit service in the Sunset District was sparse, as was also true in neighborhoods starting to develop in the southern part of the city. 

FAIR COMPETITION—United Railroads was struggling financially in the 1910s, and the rise of the new Municipal Railway didn’t help. The City backed Muni’s expansion with several new lines that directly served the 1915 Panama-Pacific International Exposition in what’s now the Marina District. These United Railroads streetcars on Market near Haight can only offer riders transfers to reach the fair. (This is obviously a posed shot, with the mystery man in-between the 7-Haight and 8-Market & Castro streetcars possibly demonstrating the clearance between the tracks). John Henry Mentz photo; SFMTA Archive.

Attracting private transit companies to invest in substantial new lines to these areas got harder in 1902, the same year URR came into being. A new, progressive, city charter in 1900 had set the goal of eventual public ownership of utilities, including transit. Two years later, in furtherance of that goal, the city government cut the length of new transit franchises to 25 years. By this time, many of the original 50-year franchises were at or nearing the halfway point in their lives. Seeing the writing on the wall, the original backers of United Railroads sold their shares. New shareholders, backed by hard-nosed URR President Patrick Calhoun, took an approach less friendly to the city and downright hostile to organized labor, leading to a bloody carmen’s strike in 1907.

Even with a hostile city government, URR leaders had reason to feel they were in the driver’s seat as they fought the carmen’s strike. The city government had twice asked voters to approve bonds to start a municipal railway, and both times voters had said no. Besides, no other big city had publicly-owned transit lines, and most of URR’s important franchises were good for at least 20 more years. But the ugly 1907 strike, in a union-friendly town, started changing minds about the privately-owned transit company.

Competition

Then, after a third failure at the ballot box, bonds to create a municipal railway were finally approved by voters in 1909, starting with the acquisition and conversion to streetcars of the Geary Street cable line, which had eluded United Railroads’ grasp. (We’ll chronicle the birth pangs of Muni in our next issue.) Now there would be competition, at least in some parts of town. And as the years ticked by, those franchises that were the foundation of URR’s business would lose value unless renewed, which was now contrary to city policy.

The first lines of the new Municipal Railway were concentrated in the northeast quadrant of the city, but its biggest spur to the city’s growth came when it opened lines where its private competitors couldn’t get a franchise: underground. The opening of the Twin Peaks Tunnel in 1918 suddenly made the empty lands of the city’s southwest quadrant attractive to homebuilders, replacing the long, indirect surface slogs provided by United Railroads surface service with a quick trip on Muni tracks through the tunnel. The private company lobbied city officials hard to be granted the right to share the tunnel with Muni, but failed. Increased public ill-will toward the company following another bloody strike in 1917 no doubt played a part.

END OF THE LINE—Barely a month before handing the system over to Market Street Railway Company, a final indignity for United Railroads on February 21, 1921: a cave-in of its tracks on Stanyan Street between Frederick and Carl Streets, near the corner of Golden Gate Park, swallowing an auto. Luckily, these tracks were connectors to the Haight carbarn and didn’t carry cars with passengers. The 6-line car will turn east on Carl Street, later sharing trackage there with Muni’s N-Judah line. John Henry Mentz photo, SFMTA Archive.

And yet United Railroads’ problems went far deeper. Physical damage from the 1906 earthquake and fire was followed by plummeting revenue from fewer riders as the city recovered. URR President Calhoun siphoned off money for his own purposes. Competition popped up on busy corridors from unregulated jitneys—private automobiles offering faster rides for the same five-cent fare as the streetcars (a nickel was called a “jit” in the slang of the day). And to top it off, a runaway streetcar in Visitacion Valley, along what’s now Geneva Avenue, killed eight passengers and injured more than 70 in 1918. It was the worst streetcar disaster in California history, resulting in large damage awards to victims.

Taken together, these circumstances caused the financial failure of United Railroads. Since its very formation in 1902, there had been talk that the original investors had paid too much for the properties and franchises they took over, and negotiations had been going on for several years to reorganize the company on firmer financial ground by paying off bondholders in the company at a significant loss. These negotiations accelerated even as a number of civic leaders called for a city takeover. But that wasn’t in the offing, not yet. Instead, a reorganization ended the life of United Railroads, its assets going to a familiar name: Market Street Railway Company.

What did the future hold for this new operator with the old name? What kind of transit service could San Franciscans expect from a company whose franchise rights were ever closer to their end? Would the city government help or hinder Market Street Railway? All questions we’ll address in the near future.


Owning, using, and paying for the streets

Our city’s streets are unquestionably owned by the public (except a handful of private streets in gated communities, a rarity in San Francisco). But owning, paying for, and using are three different things. 

As you can see in our exclusive narrated version of the famous 1906 “Trip Down Market Street” film, horses, buggies, large dray wagons, bicycles, pedestrians, and transit vehicles were all using the city-owned street space. But only the companies operating the cable cars, streetcars, and horsecars were paying for the right to use the street, making money by collecting fares (some of which they shared with the city under their franchise agreements). 

FREELOADING ON THE FRANCHISE—A jitney, at left on Market at Front Street, looks to grab the nickels of riders for a trip in direct competition with United Railroads’ 9-Valencia line. By the time of this 1914 photo, Muni’s Geary streetcars, including the D-line car to the right, were running all the way to the Ferry, providing more competition for URR. John Henry Mentz photo, SFMTA Archive.

In 1914, some private automobile drivers started picking up passengers on the same routes as United Railroads, poaching the five cent fares but not paying “rent” on any kind of franchise. The city eventually regulated these “jitneys” and forced them from Market onto Mission Street instead, a practice that lasted all the way to 2016. Author Don Anderson quotes Uber’s founder, Travis Kalanick, as calling his company the modern equivalent of the jitneys. (See Don’s excellent story on the city’s jitneys here.)

The early jitneys took revenue from United Railroads and the nascent Muni. A century later, the appearance of Uber and Lyft decimated the taxi business and reduced Muni ridership as well. Taxis pay “rent” to use streets by purchasing SFMTA-issued medallions, which cost $250,000. Competition from Uber and Lyft have made the medallions worth only a fraction of that, and taxi owners are suing the city. Uber and Lyft didn’t pay any “rent” to use the streets at the beginning, but many cities now impose some kind of tax or fee on them. In San Francisco, that’s a voter-approved 3.25% tax on most trips. That tax money goes to SFMTA. Additionally, because the city considers Uber and Lyft cars to be private automobiles, SFMTA bans them from Market Street, while taxis are allowed (with conditions). 

BARELY CONTROLLED CHAOS—This still frame from the famous 1906 “Trip Down Market Street” film shows a streetcar, cable cars, buggies, automobiles, a large dray wagon, and lots of pedestrians filling up the intersection of Fourth and Market.

In the past few (pre-pandemic) years, the numbers of bicycles and scooters, both manual and electric, have grown rapidly in the city. Companies that rent them have to get a franchise and pay a fee to the city for the right to operate on the streets. Private owners of bicycles and scooters pay no fees. Automobile owners pay gas taxes and state license fees. They pay to park both at meters in commercial districts and at the curb in many residential districts, though parking permits. Additionally, they pay to park at both SFMTA-owned and private garages, with a hefty parking tax imposed at all garages.

This complex array of charges for various transportation modes is the source of continuing and vigorous policy debate in the city. The city’s overarching goal is to reduce street congestion and vehicle emissions by providing more exclusive street space for Muni vehicles, bicycles and scooters, reducing the space for private automobiles. Increased parking fees are also intended in part to discourage private automobile operation in the city, and the city is now studying a proposed congestion charge on private automobiles that enter the downtown area (similar to what’s in place in London and Singapore). The city has also considered imposing its own license fee on cars registered in the city.

PART OF THE COST—Street railway franchise holders were required to properly pave the tracks and the space in between, even if the city hadn’t paved the rest of the street yet. Here we’re looking east on Clement Street from 30th Avenue on the 2-line in 1914. Note the Belgian block flanking the rails, the San Francisco standard for track installation. John Henry Mentz photo, SFMTA Archive.

Many automobile owners are outraged by what they consider the assault on their long-time primacy on the streets of San Francisco, but the revenue from fees on autos and other modes of transportation is channeled to SFMTA, intended to subsidize Muni service, including of course the historic streetcars and cable cars.  

San Francisco lost 53,000 residents in the first eight months of the pandemic, most of them to neighborhood Bay Area counties. Major downtown employers such as Salesforce, Twitter, Google, and Facebook have said they’ll let employees work from home most of the time for the foreseeable future. As the pandemic wanes, we’re likely to see a far different congestion picture than before. Our nonprofit’s goal is making sure the historic streetcars and cable cars still “own” the place they’ve earned on the streets of San Francisco.

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