San Francisco : Sometime a Great City

SAN FRANCISCO —  The recognition has dawned, indeed, has been dawning for some time now, that Los Angeles has replaced San Fran cisco as the premier financial capital of the West. It is a tribute to San Francisco’s reputation as a financial center that the recognition has been so long in coming. The reality has most likely been in place since World War II.

Money and energy, the will to build and to create, a capacity for proper growth--of late, San Francisco has been lacking them. The recession of San Francisco as a financial center is not an isolated phenomenon. San Francisco’s loss of financial predominance, symbolized most dramatically in the troubles besetting the Bank of America, are part and parcel of the large malaise which grips this once-proud and commanding city.

In a variety of endeavors--art, literature, fine printing, in which San Francisco has so long predominated--a Venetian twilight mood of decline pervades this city. Only in opera, symphony and ballet is there any major vitality; and these enterprises have to them, not a quality of present-tense creativity, but an almost museological representation of past accomplishment. San Franciscans are willing to spend more than $600,000 mounting an opening-night production of Verdi’s “Don Carlos,” as they will be doing when the opera opens its fall, 1986, season; but no one hopes to see comparable commitment and creative energy in the marketplace or in politics, journalism or any of the other pursuits by which one measures the importance or vitality of a city.

In the 19th Century, San Francisco grew up in splendid isolation. A small Mexican village in the late 1840s, it was by the 1870s one of the top 10 cities in the United States. As an urban presence it dominated not just the Far West, but the Southwest as well, and even extended its financial influence into the Rocky Mountain region and the western Great Plains before the rise of Denver and Omaha. San Francisco was not a typical frontier city, developing gradually through successive stages of an agricultural frontier. It was, rather, a maritime colony, poised midway between the oceanic land mass of the unsettled western half of the continent and the mighty Pacific. San Francisco served both these regions, the developing inland frontier and the Asia/Pacific, as a center of commerce, transportation, communications and, most important, financial services.

In California terms, this hegemony was sustained through the 1940s, long after it should have given way to Los Angeles-based institutions. Agriculture in the Imperial Valley, the film industry in Hollywood, municipal bonds backing San Francisco’s massive Hetch Hetchy water project, canning and food processing industries throughout the state, home loans galore--A.P. Giannini kept the Bank of Italy/America at the center of California’s 20th-Century devlopment. When Giannini wrestled back control of his bank from the New York-based Transamerica Corp. in 1932, he also insured that the development capital needed for California’s recovery from the Depression and for the overnight creation of major wartime industries would be San Francisco-based. (Giannini extended to Liberty-shipbuilder Henry J. Kaiser the longest single line of credit in American banking history.) Those days are now, alas, over.

Every weekday morning at the San Francisco International Airport, Bay Area-based businessmen and businesswomen, dressed in matching suits and briefcases, line up to catch a commuter flight down to L.A. for a day’s work. More and more Bay Area-based financial executives and their attendant legal counsels are finding it necessary make the shuttle. Bicoastalism, especially between New York and Los Angeles, is now being augmented by biurbanism between San Francisco and Los Angeles. People live in San Francisco because of its amenities. They struggle for their daily bread in Los Angeles.

A friend of mine recently became a partner in a top Los Angeles law firm, without sacrificing his San Francisco flat, club connections, civic appointments or even voter registration. Monday through Friday he works in downtown Los Angeles, dragging himself exhaustedly home in the late evening to a nearby condominium. Every other weekend he spends in San Francisco. To his way of thinking (and I believe that he is typical of many) Los Angeles is a boomtown: creative, energetic, unbothered by hierarchies or entrenched establishments. It’s where the money and action are. San Francisco, by contrast, is a resort, not totally serious, albeit pleasurable.

The federal government recently released statistics indicating that by the year 2000 San Francisco will be the most prosperous and expensive city in America. For some time now this process of hyper-gentrification has been self-evident. San Francisco has become a mecca for those whose wealth is being earned or has already been earned elsewhere. The city’s collective attention turns from business to the quasi-metaphysical subtleties of cuisine and the performing arts. John Jacobs, executive director of the San Francisco Chamber of Commerce, candidly admits that the influence of those major corporations that still maintain their headquarters here is at an all-time low. Chevron, a major supporter of the performing arts, feels itself stabbed in the back by San Francisco’s recently enacted Draconian boycott of companies with South African involvements.

As San Francisco becomes more enamored of what Edmund Burke calls the unearned increment, or what contemporary society calls transfer of payments, as it distances itself even further from the ongoing slugfest of competitive commerce and manufacture, it begins to assume the ambience of Venice in decline, of Kyoto after the Imperial throne had been moved to Tokyo. There is splendor here, and elegance; but there is also a sense of being past major energies. The city becomes progressively more cozy and comfortable, adverse to taking risks. It becomes hyper-self-conscious as well, substituting an attenuated connoisseurship for its previously enjoyed robust gusto for life.

A handful of major venture capitalists keep their headquarters here, as do the mainline companies--Levi Strauss, Bechtel, Transamerica, BankAmerica--but they are not investing locally. Some are also relocating the majority of their staffs, keeping only front offices in the city itself. The downtown commercial vacancy rate hovers around 14%. The experts tells us that these vacancies will be absorbed over the next decade, but local economists are nevertheless disturbed to see San Francisco so manifestly losing its desireability as a place to locate and create local jobs.

The city’s recently enacted Downtown Plan represents a negotiated compromise between opposing forces of growth and no-growth. The psychological premise behind the Downtown Plan, however, is that the outside world is stumbling over itself to get a foothold in San Francisco, and thus the city’s fragile environment must be protected. The vacancy rate, by contrast, points in another direction: to the possibility that just to be located in San Francisco is not worth it when judged against a payroll tax, a transit tax, housing and child-care obligations, divestment requirements, other forms of investment scrutiny and whatever other anti-business ordinance might be forthcoming in the near future from the aggressively anti-business Board of Supervisors.

San Francisco’s local corporate elite was once energized by ownership. It also possessed great flexibility in its relations with the city. Hence, it could play politics effectively. Companies that were once under local control--Crown Zellerbach, Del Monte, MJB Coffee, Southern Pacific, Sutro and Co., Hibernia Bank--have long since passed to broader ownership, including the Far East. A new breed of managers, many of them in their 20s and 30s, has become virutally privatized, which is to say, oblivious of--even hostile to--the local commonweal.

One doubts, for example, whether the San Francisco corporate establishment could have found the resources to work with government and effect something as triumphant as the Los Angeles Olympics of 1984. For several years, San Francisco hasn’t been able to make up its mind whether it wants a major league team in a downtown stadium. Enterprises of great moment are not aborning these days in the City by the Bay.

Mayor Dianne Feinstein is asking herself of late: Can a national, or even a statewide, political career be launched from a San Francisco base? Does anyone take San Francisco seriously? Not since Hiram Johnson has San Francisco launched a major political career. Feinstein’s political advisers are counseling her to do what others are doing, faced with a similar dilemma: start commuting to Los Angeles.