Monday, January 12, 2015

Scorpions in a Bottle: He Straddled the Continents

One of the major figures in For Want of a Nail is Bernard Kramer, founder of the business enterprise that bears his name, which grows into the largest corporation in the world by the early 20th century. Yet, for such a central figure, Sobel doesn't actually tell us much about his life. Per Sobel, Kramer was "a German miner who had travelled all over the world searching for wealth". He showed up in California during the gold rush, failed to strike it rich in the gold fields, and went into the supply business instead. "In this way he amassed a fortune, and soon became one of the wealthiest citizens of the state." Kramer served in the California brigades during the Rocky Mountain War with the rank of major, and survived the horrifying Battle of Williams Pass. Sobel also mentions that Kramer "had been raised in a polyglot culture, and was used to mixing with all kinds of people." Five of the twenty-six wealthy California businessmen who formed Kramer Associates in 1865 were Hispanos, including Kramer's brother-in-law. And that's all we know of Kramer's background.

It's time to learn more about Bernard Kramer.

* * *

Few of the prospectors who came to California in the late 1830s and early 1840s were as foresighted, well-prepared, and lucky as John Mason. One who wasn’t was a German immigrant named Bernhard Kramer.

Born in the Kingdom of Hanover in the Germanic Confederation in 1811, Kramer was the son of an instructor at the mining college in Clausthal. Kramer proved to have a gift for languages, and by the time he graduated from Clausthal in 1832, he was fluent in French, English, Spanish, and Italian, as well as in his native German. Kramer set out to travel the world, using his degree as a mining engineer and his linguistic ability to seek wealth as a prospector. Although he was able to make a decent living as he traveled through the Balkans, the Ottoman Empire, India, and Taiwan, great wealth eluded him. He was in Taiwan, prospecting for silver, when he learned of the gold strike in California in 1839. Traveling to San Francisco on board a North American whaling ship, Kramer was able to bribe his way through customs, reaching the gold fields in the fall of 1840. [1]

The pivotal event in Kramer’s life occurred at the Red Dog mining camp in May 1841, when he agreed to return to San Francisco to secure food and other supplies for the miners. The knowledge of Mandarin Chinese he had gained in Taiwan allowed him to strike an advantageous agreement with a Chinese ship captain who had just docked at the city. Kramer was able to sell the Chinese goods at the camp for five times what he had paid for them. From that moment on, Kramer abandoned mining and focused on commerce. [2]

By the time of the outbreak of the Rocky Mountain War in 1845, Kramer (by now calling himself Bernard when among his Anglo business associates, and Bernardo among his Hispano in-laws) had built Kramer Provisions into one of the leading enterprises in San Francisco. When word came of the North American invasion of Mexico del Norte, Kramer used his wealth to recruit and outfit his own company of soldiers, which gained him a captain’s commission from Governor James FitzHugh. A year later, Kramer’s regimental commander, Colonel Carlos Echevarria, recognized that his talents lay in supply rather than field command, and appointed him the regiment’s quartermaster, with a rise in rank to major.

At the Battle of San Fernando, Echevarria’s regiment was able to halt Wilson’s Charge, the furthest penetration west by General David Homer’s army. However, the Mexican forces suffered 4,500 killed and 17,000 wounded in the battle, and were forced to fall back to San Francisco, while the North Americans retreated back to Williams Pass. By October, the California Brigades had been resupplied and brought back up to strength, and General Hernandez was able to lead them east to attack Homer’s men in the pass. Echevarria’s regiment was one of the last to enter the pass, and so was able to maintain a tenuous contact with San Francisco after the winter snows closed the pass, trapping the four armies there.

Kramer’s earlier life as an itinerant miner proved invaluable in helping himself and the rest of Echevarria’s men survive the winter of 1850-51. Kramer was able to organize the men of the regiment into foraging parties, hunting wild game in the pass, and preventing the mass starvation that cost the lives of tens of thousands of other men during the winter. After the death of General Hernandez, Colonel Echevarria succeeded to command of the California Brigades, leading them and the survivors of General Doheny’s army out of the pass after the spring thaw. [3]

The shattering effect of the ordeal on the men of the California Brigades resulted in their discharge from the army in the summer of 1851. However, Kramer’s involvement in the war had not ended. In August, Assemblyman Hector Niles was elected President of Mexico. Like Kramer, Niles was a leading member of San Francisco’s business community, and the two men were acquaintances. After his inauguration in September, Niles approached Kramer to offer him a position as head of the War Department’s Quartermaster Section. Although he was a noted Continentalist who had campaigned against Niles, Kramer accepted, and spent the remainder of the Rocky Mountain War as a member of Niles’ government.

With the coming of peace in August 1853, Kramer resigned from the War Department and resumed his business career in San Francisco. Over the next ten years, Kramer worked tirelessly and ruthlessly to build up Kramer Provisions. In 1861, buying out or bankrupting his competitors, Kramer formed United Dry Goods, the largest commercial enterprise in California. At this point, however, his ambitions to expand his operations throughout the U.S.M. were stymied by the poor transportation links between California and the rest of the country. The California & Jefferson Railroad had never fully recovered from General Parkes’ attacks, and the rest of Mexico’s railroad network was focused on linking Mexico City with Jefferson and with the Chiapas and Durango seaports.

United Dry Goods was not the only California firm suffering from the poor links with the rest of Mexico, and the need to improve them was a constant topic of conversation at social gatherings attended by the state’s business leaders. Efforts to persuade President Conroy to make infrastructure a government priority were unsuccessful. In the end, Kramer and his fellow businessmen decided to finance the work themselves.

At a momentous meeting at the Wilderness Club on April 8, 1865, Kramer and twenty-five other wealthy businessmen agreed to the formation of a consortium to “explore means by which the system of transportation within California, and between California and the rest of the world, might be bettered.” Each member would contribute $200,000 toward the venture, creating the largest pool of capital in the U.S.M.

One aspect of the consortium the new partners could not agree on was a name. The original paperwork referred simply to “the Association,” but suggested names, including United States Transportation, Golden State Partners, and New World Operations, were vetoed by one or another associate. Local newspapers would refer to the group as simply “the Kramer associates,” and by the end of 1865 the name had become permanent. [4]

The first action taken by the new consortium was to buy a controlling interest in the C & J Railroad from original founders Baker and DuForge and carry out much-needed maintenance and upgrades, particularly making the line double-tracked. Plans were also laid for a railroad from San Francisco to Mexico City, and the possibility of a San Francisco-based steamship line was considered. Under the direction of the consortium’s agricultural interests, a state-of-the-art canning plant was built in the Central Valley, the state’s agricultural heartland.

The consortium also considered more far-fetched projects, including a proposal for a lighter-than-air flying machine, submarine cargo vessels, and even rocket-driven trains. The most momentous project, though, proved to be the hiring of Courtney Wymess, the state’s leading mining engineer, to conduct surveys of possible trans-oceanic railroads and canals in Central America.

1. Sonya Parker. Young Kramer: The Early Life of Bernard Kramer (New York, 2002).

2. Elliot Rosen. Bernard Kramer and the California Gold Rush (San Francisco, 2013), pp. 45-58.

3. Timothy Reese. The Businessman at War: Bernard Kramer in the Rocky Mountain War (New York, 1988).

4. Stanley Tulin. The Kramer Associates: Its Origins (London, 1965). Despite the universal use of the name, the company did not officially become Kramer Associates until the merger with Petroleum of Mexico in 1892.

1 comment:

DaveMB said...

Very plausible. No doubt BK later benefited from the loyalty of a number of the survivors of Williams Pass who felt they owed their lives to him. (I'm reminded of Perot IOW, whose senior executives were happy to plan a possible paramilitary operation in Iran to rescue some of their colleagues from prison during the 1979 revolution...)