Financial History 139 (Fall 2021) - Page 18

inducement for the officials of San Francisco and five northern counties to convince the State of California in 1923 to pass an act permitting the formation of a Bridge and Highway District for the purpose of building a bridge over the Golden Gate . The growth of automobile ownership throughout the 1920s spurred further discussions . Since 1909 , the Southern Pacific Transportation Company ’ s specialized ferries had been carrying automobiles between the city and various points on the bay ’ s shoreline . Long delays approaching the crossing points were common .
Advocates of a bridge across the Golden Gate would need to spend most of the period 1923 to 1933 overcoming obstacles from many quarters , including the War Department , environmentalists and taxpayer groups in some of the Bridge District ’ s six counties , as well as railroad and ferry interests . By February 1930 , officials had overcome most of the objections .
Chief Engineer Strauss had completed a reexamination of the previous engineering , geologic and traffic surveys and confirmed that the bridge was feasible . He had also agreed to modifications in his design as offered by consulting engineers then developing new techniques for erecting suspension bridges over rivers near Philadelphia , Detroit and New York . And he had provided an updated cost estimate of $ 33 million , which now included the interest expense of bonds to be used to finance the project .
In approving the new design in August , the Bridge District ’ s directors recommended that voters approve a $ 35 million general obligation bond issue . Based on estimated traffic flows , they expected bridge tolls to cover the cost of annual operating expenses plus interest on the bonds . A bond issue that did not arouse major objections when first floated near the end of the boom year of 1927 seemed like an impractical idea in the depths of the Great Depression in the autumn of 1930 . Nevertheless , in November voters approved the bond issue by a margin of more than three to one ; the vote was closer to eight to one in Marin and Sonoma counties .
Unfortunately , poor economic conditions threatened to make that approval moot , and the original offering syndicate backed out of the deal . To further complicate matters , the Southern Pacific-Golden Gate Ferries Co . forced the Bridge District to meet yet one more court challenge . In
Top — The Golden Gate Bridge under construction , 1934 . Bottom — Pylon on the south shore of the Golden Gate Bridge during construction , 1934 .
July 1932 , the California State Supreme Court finally confirmed that the state did indeed have the right to establish the District and that the District did indeed have the authority to sell bonds to finance the bridge .
In August , the Reconstruction Finance Corporation ( RFC ) refused a District request to lend it $ 35 million in accordance with the RFC charter to help finance self-liquidating projects owned and operated by public bodies . Fortunately , a new underwriting syndicate led by the Bank of America offered to purchase the first $ 6 million tranche of a new bond offering ; it marketed another $ 9 million worth of bonds during the next 15 months ; and between the beginning of 1934 and the end of 1937 , that group of bond houses helped avert any major interruptions in construction by successfully marketing the remaining bonds in the $ 35 million issue .
Building the Golden Gate Bridge — Finally !
During the last two months of 1932 , district officials approved the bids of eight
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