Railroads and Real Estate - The Pacific Land Improvement Company

Transportation has always played a key role in the development of Orange County, and the railroads were no exception. In fact, competition between the Santa Fe and Southern Pacific railroads touched off the greatest real estate boom in Southern California history in 1886-87, which saw more growth, and more new towns founded in a shorter period than any of the region’s many “booms.” And the railroads were not unaware of their importance. During the Boom of the Eighties, stockholders in the Santa Fe and its various subsidiaries formed a separate corporation specifically to develop new towns along the tracks – the Pacific Land Improvement Company.

The Pacific Land Improvement Company was incorporated in Los Angeles in January 1887, when the boom was near its peak. “The objects are to buy and sell land, water and water rights, to improve land and construct ditches.” The president was George H. Fullerton (1843-1929), a former Massachusetts postmaster who had settled in Riverside in 1884. Other investors came from Los Angeles, Columbus, Ohio, and Topeka, Kansas.

Fullerton was already connected with the Santa Fe railroad and so had inside information on just when and where new railroad lines would be built. The Pacific Land Improvement Company could then found towns along the way, sometimes in partnership with local landowners. Among their major projects in Southern California were Claremont, La Verne, and Santa Fe Springs, all founded in 1887.

In Orange County, the Pacific Land Improvement Company had a hand in four new towns – two that survived (Fullerton and Buena Park), and two that didn’t (St. James and San Juan-by-the-Sea).

The town of Fullerton began with two other recent arrivals from Massachusetts, George and Edward Amerige. Inspired by the boom, they acquired 430 acres north of Anaheim in the spring of 1887. Recognizing the importance of rail connections (and knowing the Santa Fe was planning to build south from Los Angeles), the brothers went to see George Fullerton. He told them that several possible routes were being considered, but that none would cross their land. “But by offering him a right-of-way through their land and an interest in the townsite,” George Amerige recalled, the brothers “prevailed on him to change the survey” and in July 1887 a townsite was laid out.

George Amerige wrote that the brothers did not want to use their name for the new town and suggested naming it after their new partner and benefactor. Fullerton’s son, Perry, later recalled that his father also declined the honor, but while he was out of town, other company officials named the town after him anyway.

Construction on the line from Los Angeles to Orange did not start until May 1888, after the boom had cooled. Service to Fullerton began that August. By then, George Fullerton was no longer president of the land company, and Ed Amerige later claimed that the railroad had renamed their local station La Habra (there was no town of La Habra in those days), but “the opposition to the change in the name was so great that the original name was restored.”

Through a series of transactions, by 1890 the Pacific Land Improvement Company and the other investors in the townsite were out of the picture, but the Ameriges stuck by their town to the end of their days.

The founding of Buena Park also demonstrates the challenges sometimes faced in working with the improvement company. Like the Ameriges, when local rancher James A. Whitaker decided to lay out a town on his property, he got in touch with George Fullerton. The Pacific Land Improvement Company promptly arranged to take a half-interest in the property and Fullerton apparently promised the new town a station once the line from Los Angeles was built. “I would suggest that you go ahead with your improvements at once,” Fullerton wrote, “and I am happy to say that the railroad interest will also be the interest of yourself and your neighbors.” (Anaheim Gazette, March 12, 1887)

So Whitaker hired a surveyor and laid out the town of Buena Park that same month along Grand Avenue, paralleling the expected railroad route. But when the Santa Fe actually came through in the summer of 1888, the tracks were laid well north of the townsite and a station established called Northam (named after the sales manager for the Stearns Ranchos). Angry but undaunted, Whitaker flipped his townsite to where it just touched the Southern Pacific tracks to the south, who gave him his depot. Northam station was not renamed Buena Park until 1929. (The Santa Fe tracks are now the route of the Metrolink line, while the I-5 follows the old Southern Pacific right-of-way.)

In 1887, the railroads could pretty much do as they pleased, and the Pacific Land Improvement Company shared in some of that power. The company bragged that they were “spending millions of dollars in the building up of some nine or ten … towns in Southern California…, pushing with all the power that money or ingenuity can command.” They claimed to be “one of the most energetic, wealthy and enterprising firms on the coast, who have unbounded faith in the future of Southern California and a bank account to back their enterprises to a successful termination, their connection with one of the most liberal railway companies in the world, that has infused so much new blood and life in the southern counties, enables them to provide their various townsites with cheap and rapid transportation.” (Los Angeles Herald, September 4, 1887)

The company had its detractors, though. While Whitaker and the Ameriges were generally silent at the time, a letter writer to a San Bernardino paper in 1888 complained that the Santa Fe was selecting their routes “to favor the sportive speculation of a certain land ‘booming’ … organization.” “The Pacific Land Improvement Company is severely criticized by our correspondent,” the editor noted. “…He alleges that the coast branch from Los Angeles to Santa Ana adown the coast was elongated by three miles more than necessary to accommodate a town scheme at Buena [Park], and that the branch was run through an alkali country, wherein the short line would have traversed a fertile region – all to subserve wildly speculative interests…. It is also asserted that on nearly every line recently built, the selection of the route was made with a view to promote the success of certain land schemes.” The paper refused to publish the actually letter without more proof, but did suggest that stockholders in the Santa Fe “may be imbued with a curiosity to discover the power behind the throne of the alleged prostitution of the railroad construction and management in the interests of wild-cat land speculation and official fortune building.” (San Bernardino Daily Courier, April 22, 1888)

But wild speculation was the order of the day during the Boom of the Eighties. “All towns on the great Santa Fe trail are prosperous,” one of the land company ads in the Santa Ana Herald in 1887 proclaimed. “None of them die. Their sites are selected by gentlemen whose judgment has been ripened by years of experience in the land business…. Those who buy first in them never fail to make money on the inevitable rise of property values.”

Invest early and enjoy the rise in property values the railroad brought was a common theme in Pacific Land Improvement Company advertising during the boom. But that same spirit of speculation helped to bring the Boom of the Eighties crashing down (just as it did in a more recent, national housing collapse). Too many buyers were simply buying to “flip” their lots, with little money down. So when the banks finally had enough and clamped down on credit, the whole house of cards came crashing down. The Pacific Land Improvement Company’s two other Orange County townsites were both victims of the boom going bust.

The first Santa Fe line into Orange County came from Riverside through the Santa Ana Canyon. Service to Santa Ana began in September 1887. From there, the Santa Fe pushed south to San Juan Capistrano, reaching the mission town by December. There construction stalled for several months before the line was completed to San Diego in 1888.

With the railroad on the way, James R. Toberman, a former mayor of Los Angeles and a large property owner north of Orange, stuck a deal with the Pacific Land Improvement Company; in exchange for a right-of-way, a depot grounds, and a share in the tract (rumored to total 150 acres) the company would lay out a new town on his land. They called it St. James, anglicizing the “Santiago” from the name of the old Rancho Santiago de Santa Ana.

St. James was located along both sides of the railroad as it parallels today’s Orange-Olive Road, north of Taft Avenue. The only surviving street name from the tract is Anaheim Avenue – now shortened to Heim Avenue, after a prominent local family. (The current St. James Avenue is north of the original tract, and only dates back to the 1960s.)

Publicity for St. James began even before the rails reached the tract:

“The development of Southern California seems to follow in the wake of the ‘Santa Fe Trail,” as the people’s line is known in the East. The magnificent foothill country has been opened! Towns created and fortunes made by the investors in town property. Now comes the first new town in the beautiful valley of the Santa Ana, St. James…. The maps will be out in a day or two, and the day of sale, which will be by auction, to the highest bidder, without reserve, will be named soon. The sale will positively occur this month. Remember, the first purchasers always make money in our new towns.” (Los Angeles Herald, May 15, 1887)

The big auction sale was held on June 4, 1887, and the company claimed $22,000 in sales that first day. They continued to boost St. James through the summer (though local residents noticed that some of the amenities they claimed were actually already there in the nearby town of Olive). A few buildings were built, but the town never really got off the ground, and by 1888 most of them had been moved to Orange. Eventually even the railroad stop was moved north to Olive.

Two weeks after the big St. James auction, the land company announced that it would soon place on the market the “bewitching seaside resort” of San Juan-by-the-Sea. “Its beauty is known to Californians as exceeding anything on this coast.” (Los Angeles Times, June 18, 1887)

San Juan-by-the-Sea was located in what was later downtown Capistrano Beach. In fact, several of the 1887 street names survive. The main street through town, Forster Avenue, is now known as Doheny Park Road, but it is still crossed by Las Vegas, Domingo, and Victoria streets, with Santa Fe Avenue just to the west.

Once again, the tract went on sale before the railroad even arrived. When the rails finally did reach there at the end of 1887, San Juan-by-the-Sea became the end of the line for several months, before the Santa Fe finished their line to San Diego. During the summer of 1888 the railroad ran several excursion trips down to the townsite, which boasted a dancing pavilion, a small hotel, a couple of stores, and about a dozen homes (plus the 30 or 40 tents of seaside campers.

The village struggled along for a few years after the boom went bust in 1888. In 1892, famed Shakespearean actress Helena Modjeska rented out the entire hotel for the summer as a vacation cottage. Three years later, the building was moved up the coast to Newport Beach and San Juan-by-the-Sea was officially dead. 

As the boom collapsed, things did not go well for George Fullerton. No doubt his financial losses were serious. By the end of 1887, he was out as president of the Pacific Land Improvement Company. Worse, the papers reported that he had “broken down, physically and mentally, and the new management of the company refuses to ratify many of the contracts entered into by Mr. Fullerton.” (Anaheim Gazette, January 26, 1888)

The land company limped along through the 1890s under new management, but its glory days were over. It seems to have ceased operations sometime after 1896. In 1901, George Fullerton and some of the same investors incorporated a new Pacific Land Improvement Company at Fresno, and developed a few San Joaquin Valley tracts in conjunction with the Santa Fe, including the City of Riverbank, in Stanislaus County.