Sunday, September 30, 2012

Claus Spreckels, Sugar King

By Victor H. O’Brien

Claus Spreckels
California has had her bonanza min­ing kings, her wheat kings and her cattle kings; other states and coun­tries have had their oil kings and their coffee kings and their iron kings and their cotton kings; but Claus Spreckels of Cali­fornia is another kind of a king, strictly sui generis. He made his money out of sugar —out of the actual manufacture of it, and not out of the speculation and trading in its stock, or out of the juggling of its prices. He is the sugar king by virtue of a veri­table conquest of the industry. He has mastered the craft of it, more than he has cared to exercise the tricks of it—and he has been the one man whom combinations of persons in the same business have been unable to dominate.

Claus Spreckels wanted "to be something and somebody" when he first came to America. That is why he ran away from Germany to avoid being drafted into the army. He had kicked along in wooden shoes behind his father's plow for nineteen years, barring the few years before he was old enough to walk, and had begun to feel, as the seed he sowed, like spreading out. Pa­rents, family parson and friends protested. But he had made up his mind. And his mind was then, as it has been ever since, un­changeable. That is to say, he weighed the prospect of three to five years in the army against three to five years spent in getting a foothold in the United States, and decided in favor of the latter. Then, having decided, he was not to be moved.

He arrived at Charleston, S. C., in 1848, with three dollars in his pocket, and proba­bly thought for a little while that the Ger­man army was preferable. But his three dollars stretched out over a portion of a month's expenses until he got a job in a grocery store for his board, and without much further delay he began "to do some­thing." The "something" was only a raise of four dollars a week in salary during the second month of his employment, and a transfer to another grocer at eight dollars during the third month. But he wrestled with boxes and used the scoop and managed the scales so carefully that when his em­ployer, eighteen months later, was about to give up the business, Spreckles bought him out on credit, and in twelve months addi­tional paid the debt.

That was fifty years ago. To-day Claus Spreckles is generally considered the fore­most individual, in a business way, upon the Pacific Coast. His influence extends from Southern and Central California to the Hawaiian Islands, and he is recognized by the wealthy forces of the East as a formida­ble capitalist and operator in the entire stretch of country from the Pacific to the Missouri.

Most men have some sort of a birthright to their greatness. It may be nothing more than disappointed aspiration on the part of their parents. It may be only an inherited inclination to diligence. But it is almost always some sort of gift that is handed down from generation to generation and could not be arrived at in any other manner.

In the case of Claus Spreckels, the legacy was probably a capacity to appreciate the dignity of work. For the sugar king's father and mother, though toilers in the field car­ried with them a sense of elevation above drudgery and an unwillingness to allow con­stant contact with the soil to suppress a chivalrous nobility, or to obliterate a natural grace and charm. It is said that the father, clinging tenaciously to his personal pride, always trudged along behind his plow, or behind the cattle as he drove them from pasture, with a tall, black plug hat on his large head that afforded quiet amusement to his neighbors.

The parents had come by their homestead as an ancient family inheritance. It was in the kingdom of Hanover, the region of the purest German, and in the village of Lam­stedt. They were persons of large stature and robust health, but poorly schooled and meagerly provendered in the world's goods. When Claus was born in Lamstedt seventy-three years ago they had little to give him except a parent's devotion, a title to a life of hard work, and a meritorious character. He got a plain village school education, learned good habits from home, found pleas­ure in being kind, and at fifteen years of age settled down to farming as a hired map.

It was not very much of a beginning for a man so notable as Mr. Spreckels has be­come. But it seems to have been enough to give him the right sort of a start. He says of it himself.

"I was very strong and energetic. I tried to do well whatever I had to do. The natural result was that my labor was in demand, and I got better wages than other boys."

 San Francisco Residence of Claus Spreckels
He made steady progress for four years, saved his money, and then felt that he could do better. The plan he chose for doing better was the more or less common one of going to America.

It has not been unusual for foreign boys to land in the United States practically with­out money and without knowledge of the language. Nor has it been unusual for them to succeed and to succeed well. But Claus Spreckels seems to have been a little more swift and a little more thorough at it than others. That may have been because he was more venturesome, or it may have been be­cause he was more careful in his methods, and therefore was more sure of himself.

His subsequent career would indicate that it was for other reasons. At any rate, he had hardly become successful in the conduct of his grocery store in South Carolina when he took advantage of an opportunity to buy a store in New York, and he had held the latter property for a comparatively brief time when he had laid aside enough money to take himself and his wife on a visit to the old folks in the Fatherland. Then when business conditions looked rosy in California —seven years after the discovery of gold—he took the four thousand dollars which he had saved, crossed the continent, invested it in a brewery, made money in that, sold out his grocery store in Manhattan, and located for the balance of his life over 7,000 miles from his original home.

A business associate who has known Mr. Spreckels intimately for a great many years says one of the secrets of his subsequent progress is that he seldom had all his eggs in one basket; that he always tried to keep some cash on hand, and that he never went into anything until he was thoroughly ready for it, knew his ground and had built his forts.

California seemed to be the right place for a man of Mr. Spreckels’ nature—for a man who liked to take advantage of all current opportunities. Operating a brewery was only a pastime to him. It was only something that other men could do, whereas Spreckels always possessed a sense of power superior to others. His big frame and his bigger will made him feel that he could do anything big that he chose to do. He had been a subject of ridicule when he, first landed in America. His business as­sociates had called him "Red-face." But not only had he got beyond all that, but he had also reached the point where men of means were look­ing to him for leadership. He had undertaken the establishment of the brew­ery because there was money in it. It had be­come prosperous, and he looked around for some­thing new that would have the element of strenuous effort in it, something that would try his inventiveness, his resources, and his personal strength.
  
Largest Beet Sugar Factory in the world near Salina, Ca.
He hit upon the making of sugar. Cali­fornia was on the line of imports from the Hawaiian Islands. Spreckels saw that it had a position of advantage for the handling of cane. He had only to apply his foresight and his prudence to put himself at once into the business which has since given him room to let out all the personality he had, and to become that "something and somebody" for which his youthful ambition sighed when he left Germany.

Mr. Spreckels was cau­tious enough to retain his interest in the paying brewery until the period of experiment in the mak­ing of sugar was passed. Then he let go the beer and the rye and went at the cane with Teutonic in­domitableness. The under­taking appeared to him to be vast from the beginning —quite as vast as his dreams of America had been. He told his rela­tives that "some day they would see him erecting a big sugar refinery in the East that would surprise people." T h e relatives laughed at him. But they had laughed at him before, and he was used to it.

Backed by German thoroughness and im­pelled by the alertness and verve which his susceptible nature had acquired during his American residence, Mr. Spreckels went at the sugar business in a way to win. The story of his beginning is characteristic. He had concluded that there was money in sugar because he had friends in New York who made money in it. The opportunity to go into it came to him when he overheard some workingmen in a San Francisco refinery dis­cussing a great waste and loss in their institution caused by negligence. Some of the sugar syrup as it boiled up in the vats was allowed to run over the roof of the refinery. This was only a small thing, but it put an idea in Mr. Spreckels' mind—the same sort of an idea that made him think he could run the grocery business better than his South Carolina employer, and that therefore led him to buy the business. He determined at once that he could put up a rival refinery and by close attention and management im­prove upon his competitors.

Knowing that mastery of the details of an undertaking is the first requisite to suc­cess, Mr. Spreckels went to New York and became a workman in the refineries there. When he had learned what he needed to know, he returned to California and organ­ized the Bay Sugar Refinery Company—the real beginning of his vast fortune of to-day. The company prospered, but the men who were in it were not big enough for its chief promoter, and he presently went out in a quarrel over questions of management. The Teuton in Mr. Spreckels makes him impa­tient of opposition. He went out unwillingly, but determinedly—in the same manner that he went out of numerous more important places in later years, only to assume an aggressive warfare that proved disastrous to his opponents.

California Sugar Refinery 
With his first refinery venture thus thrown into other people's hands, he went with his family to Europe, and there entered into an exhaustive study of sugar that has since made him the undisputed master of the business in America. He even became a workman again, serving as an ordinary em­ployee at Magdeburg. By 1867 he was again in the refinery business in California, operat­ing, in connection with his brother, the institution which still exists to his honor, the California Sugar Refinery. For this in­stitution he personally directed in New York the building of the machinery and afterward participated in the training of every em­ployee as well as in the erecting of the build­ings and the management of the finances. He began with a wooden structure, rather small, adapted strictly to the extent of the current operations; but within three years the building was enlarged four times, and at the end of four years an immense brick building was put up, which, with a capacity to turn out 800 tons of sugar per day, still stands on the south bay shore of San Fran­cisco—one of the most conspicuous manu­factories of the Pacific Coast.

The men who had driven Mr. Spreckels from the Bay Sugar Company soon found they had created a Tartar. The doughty German applied his great foresight and his close judgment to every phase of the sugar business. He not only operated upon more scientific manufacturing principles, but he reached out into the general field of compe­tition and brought that within his control. At one time he shrewdly cornered all the sugar afloat and almost shut up the doors of his rivals by cutting off the raw supplies, all of which had always to be imported. He invented new processes which reduced the time of making of hard sugar from three weeks to twenty-four hours, and introduced into the American market for the first time the cube and crushed sugars of to-day. His competitors were helpless against his ability and his cunning, and they eventually had no alternative but to surrender.

The fight, however, went on for a long time—in fact, until, by another of the mas­ter strokes which had given him such ascend­ancy as he had gained up to that time, Mr. Spreckels went to the Hawaiian Islands and made himself the virtual owner of the sugar­cane growing of the Pacific Ocean. This was in 1876, just after the completion of the first reciprocity treaty between Kalakaua and the United States, admitting Hawaiian sugar free of duty.

"I went to the islands for self-protec­tion," says Mr. Spreckels, "and soon be­came the largest sugar raiser there." He went over the local situation scientifically, with an engineer, before entering into opera­tions. But when he began work it was upon a large scale, forming the Hawaiian Com­mercial Company, with a paid-up capital of two million dollars.

The report of the Committee on Foreign Relations of the United States Senate in speaking of the "advent of Spreckels" to the Hawaiian Islands says:

"After a refusal on the part of the Ha­waiian Cabinet to grant a request of Mr. Spreckels for water privileges, he held a conference in the evening with King Kala­kaua and another gentleman, with the result that the next morning the king requested the resignation of each member of the cabi­net, and the following day a new cabinet was appointed which granted Mr. Spreckels his desires."

Gradually the competitors in the local field gave way, and by 1888 Mr. Spreckels was the unquestioned sugar king of the Pacific Coast. But his triumphs in his own field served only to bring against his single hand the colossal power of the American Sugar Refineries Company, which has since become known as the Sugar Trust. This company viewed his lucrative business jeal­ously and sought to absorb it. They offered Mr. Spreckels a million dollars for his inter­ests. But Mr. Spreckels did not prove to be the man to be bought out of his independ­ence for the sake of amalgamation with an institution even of such enormous wealth as the Sugar Trust, nor to be neglectful of the local welfare that was more or less depend­ent upon his personality. He said that so long as he had a dollar in the world he would keep his refinery running, and would never consent to turn into the street men who had faithfully served him, many of them for twenty and twenty-five years.

This was sentiment, and it probably did not seem to be good business to the mana­gers of the trust. But it turned out to be better business for California than the trust or its associates could have intended. Com­petition was at once inaugurated. The trust attempted to coerce Mr. Spreckels. But it did not know him so well then as it does now.

For a while Mr. Spreckels was at a decided disadvantage, because of the enormous prof­its made by the trust on its business in the East and the consequent possibility of sen­ding in California at a loss. But the disad­vantage was quickly met. With his usual resourcefulness, Mr. Spreckels conceived the idea of carrying the war into the enemy's own territory. Against the strenuous advice and objections of his friends who predicted disaster if he attempted to fight the trust single-handed, he erected an enormous refin­ery at Philadelphia, which is the largest and most complete in the world, at a cost of five million dollars. Mr. Spreckels then fixed prices in all the Eastern markets of the trust, and so soon became such a thorn in its side that the trust made overtures for peace, and the terms finally agreed upon involved the purchase of the Philadelphia refinery by the trust and the uninterrupted operation of the California Sugar Refinery in San Francisco.

There was no doubt after this incident of Mr. Spreckels' sound and far-reaching power. Nor was there any doubt as to the extent and solvency of his wealth. To fix himself finally in the control of the great sugar business of the West he had only to take hold and organize the beet sugar growing and refining industry. His entry into the industry has been described as its renaissance in California. In fact, from the erection of his first big factory dates the history of successful beet sugar making in the United States on a large scale. Mr. Spreckels now owns the largest single factory in the world. With a business of great magnitude se­cured beyond possi­bility of assault from without, and with a fortune at command for such further works as a restless and deter­mined nature might demand, Mr. Sprec­kels began to ap­pear as a direct participator in un­dertakings for the palpable benefit of the state in which he lived. He had always been a state patriot of the strongest kind, and his motive in refus­ing to yield to the trust had undoubt­edly been partly for the interest of the state. Yet it was not until well on into the nineties that the general public commenced to know of him as a promoter of enter­prises immediately concerning its interests.

For a number of years California had been complaining of arbitrary practices on the part of the one railroad penetrating its territory, and frequent cries for a competing line had been raised. In 1895 the cries threatened to assume practical form. San Francisco merchants joined with those of the interior in an effort to build an independent road into the rich San Joaquin Valley. The proposal was costly, and the necessary money was slow in forth­coming until Mr. Spreckels got at the thing. With charac­teristic decisiveness, Mr. Spreckels re­quested the promo­ters of the road to meet at his offices. There after a brief session of discussion he rose and said:

"Gentlemen, you talk a good deal. We will now see what you will do." Forthwith he signed his name for a subscription of five hundred thousand dollars, and called upon two of his sons to follow his example. Each of the sons signed for one hundred thousand dollars. In ten minutes one million dol­lars had been subscribed, and in the words of Mr. Sprec­kels, "the road was now bound to go, and nothing could stop it." Afterward Mr. Spreckels loaned the company a mil­lion dollars.
  
Claus Spreckels' Building, in San Francisco
It had long been Mr. Spreckels' hobby to provide electric light service in San Francisco at low cost for small homes. He knew from personal ex­perience in furnishing electric light and power for his own enterprises, that an exorbitant made for these public necessities by the local monopoly. Indifference to a just demand of Mr. Spreckels, and personal discourtesy shown to him by the company, was the match to the fuse. Straightway, as lately as in 1899, in the seventy-first year of his age, he organized a ten million dollar elec­tric light and power company, and was soon tearing through the streets of the city to lay his substantial underground conduits in a manner that sharply suggested his way of tearing through all opposition to his pur­poses. He has now provided for San Fran­cisco one of the finest and most complete electric lighting systems possessed by any municipality in the world.

The underground cables of the new com­pany were to be laid in terra cotta conduits. A combination of the local terra cotta manu­facturers complacently fixed a price a little below that at which the work could be done in the East and shipped out, although the combine itself would make a very unfair profit at the prices offered. Mr. Spreckels as complacently figured that he could build a factory himself for the amount of profits which the combine proposed to itself to make out of the contract and make his own conduits. San Francisco therefore now re­joices in an independent pottery as well as an independent electric light and power company.
  
Still further in line with the local patriot­ism and with the wide scope of the sugar king's conceptions was his founding, in conjunction with two of his sons, the well-known Oceanic Steamship Company, whose steamers are the pioneers in the travel to Australia, Hawaii and New Zealand, and who but recently have created the first steamship service from America to the charming lands of Tahiti. Also, as emphasiz­ing the liberality and high nature of his conceptions is the beautiful Claus Spreckels Building, erected on the most valuable corner in San Francisco, and considered by archi­tects to be the most perfect piece of busi­ness structure in the United States.
Music stand in Golden Gate Park, San Francisco

After a career of such broad activity and such stress, Mr. Spreckels is now going toward his fourth score of years, seemingly almost untouched by the unhappy conse­quences that usually ensue from so strenuous a life. He stands straight, broad-shoul­dered and strong—a bit leonine in his rug­gedness, yet softened and kind as he was in his boyhood. His has been an iron constitu­tion from the outset. Without the sheer capacity for physical endurance, and without the boiler power of a good many ordinary men combined, he could never have stood the strain. He has never seemed to know fatigue. He has worked incessantly and at all hours, frequently laboring until one and two o'clock in the morning upon his affairs. He has always risen early—at six or six-thirty o'clock - and, as he says himself, has always "wanted to be at work and doing something." His deep chest and his full, round trunk carry a large head, firmly set, with a mouth that speaks resolution; open, blue eyes that look straight at one and be­token a warmth and constancy that have always prevailed in his home life, as they prevailed in the home life of his parents.

The first impression that a person gains upon meeting Mr. Spreckels is the idea of power, the second, which comes after a closer acquaintance with his life, is that of unceasing energy or desire to be doing, coupled with a dauntless ambition. Self-preservation with him must extend to the protection of and development of these original possessions of his nature, which must have full scope. That is, he must feel his power, have scope for his energies, and. realize his ambitions. These are the most vital parts of himself, they must be pre­served and grow to their full vigor, other­wise he has not realized himself.

Music Stand in Golden Gate Park, San Francisco
Opposition is to him, therefore, but the opportunity to use his power to beat it down. He seeks to employ no unfair means. He scorns to take under-handed methods. He does not stoop or burrow to accomplish his ends, but is open and fearless." He is fair and liberal himself, and if he thinks any unfair advan­tage is being taken by another, whoever is in the track of the storm had better reef sails and look out for squalls. Sometimes he is very hot-tempered and excitable, giving way to angry bursts of passion when opposed or crossed in his purposes.

He is essentially masculine in his nature. He is bold, original and creative. The predominant instinct in him is not the art instinct, or the literary instinct, or the scientific instinct. He is the active man of affairs, he is through and through the shrewd, successful business man. But he is also more than this. He is a man with a stern sense of justice, and a man of large human sympa­thies. He has a warm social side, and takes pleasure in his home and his club. He has had thirteen children, of whom only five are living, four sons and a daughter. His man­sion has been built on a scale that is in har­mony with his other actions. He is liberal Claus Spreckels, in his religious views, and possesses a rugged simplicity of character. He is big­hearted. He likes to see others get ahead as well as himself, provided they do not, get in his way. He is benevolent, open-handed and generous and has very large sympathies for the working man and small consumers. He believes that he performs the greatest service to others by em­ploying his capi­tal in productive and helpful en­terprises by which men have the op­portunity to help themselves. B u t his public and private charities have also been many. He appreciates the value of art and music.

The crowning work of Mr. Spreckels' life fits well with the dignity of his elderly years. In the Golden Gate Park of San Francisco he has built a superb and costly piece of art to be used as a music stand, for the concerts which California's mild climate renders an open-air passion at all seasons of the year. The mellowness as well as the dignity of the man's career is reflected in his own address at the dedicating of this structure:
  
"California has been for fifty years a State of the American Union, and I have been for nearly fifty years a cit­izen of California. I was among those who came in early manhood to take part in the development of the rich resources of this golden land and to lay the foundations upon which the fabric of her prosperity rests. Whatever may have been the experience of others, my labors in California have been abundantly rewarded. This has been no nig­gard land to me. I have found its people have found its people as generous as the soil, and so­ciety here as rich in human virtues as are the moun­tains with gold. My experience has been that whoso­ever works in California with the honesty of a true in­dustry, and meets the opportunities she offers with a fair degree of sagacity, will not fail to find an ample reward for all work of hand and head and heart. More­over, that reward will not come in material things only, but in the thousand kindly and gracious acts by which true friends make this life worth living."


From Ainslee’s Magazine, January 1901.