The California Steam Navigation Company was formed in 1854 to consolidate competing steamship companies in the San Francisco Bay Area and on the Sacramento and San Joaquin Rivers. It was successful in this effort and established a profitable near-monopoly which it maintained by buying out or bankrupting new competitors. In response to the Fraser Canyon gold rush and economic growth in the Pacific Northwest, the company expanded to ocean routes from San Francisco north to British Columbia. Similarly, as California's economy grew, the company offered service from San Francisco south to San Pedro and San Diego. It exited these markets in 1867 when competition drove prices to unprofitable levels. While the California Steam Navigation Company was successful throughout its life in suppressing steamboat competition on its core Bay Area and river routes, it could not control the rise of railroads. These new competitors reduced the company's revenue and profit. Finally, in 1871, the company's assets were purchased by the California Pacific Railroad, and the corporation was dissolved.
Early history In the 1840s and 1850s, road and rail networks in the Bay Area and inland California were primitive. Steamboats and the barges they towed played an important part in moving people, agricultural commodities, and other goods around the region. Numerous wharves and depots sprang up in San Francisco Bay, San Pablo Bay, and Suisan Bay. Steamers also ascended the rivers that emptied into these bays, notably the Sacramento River and San Joaquin River. The Sacramento River was navigable for 250 miles and in periods of high water even further upstream. The Feather River, a tributary of the Sacramento, was navigable beyond Marysville during portions of the year. The San Joaquin was navigable year-round as far as Stockton and in periods of high water, steamers could reach into Fresno County, about 200 miles from the river's mouth.
In 1848 there were but two steamers on the Sacramento River. You could travel from San Francisco to Sacramento for $30 with a cabin, or for $20 on deck. As the California gold rush began, the number of ships sailing on the Sacramento River shot to sixteen in just eighteen months, all of them built in eastern shipyards and sailed around Cape Horn. By 1851 fares had dropped to $1 as all the new ships fought for customers. To make matters worse for the shipping companies, they ordered additional steamers during the boom times and they began to arrive. With loans to pay, the ship owners had no choice but to put them into service, despite the already ruinous level of competition. By 1853 there were 25 steamers running the Sacramento River alone.
The steamboat owners ended their unprofitable competition by combining almost all the vessels that served the inland trade. On February 22, 1854 the California Steam Navigation Company was incorporated under the laws of California. The company's initial shareholders included Richard Chenery, Captain James Whitney, jr., Marshall Hubbard, John Bensley, and Major Samuel J. Hensley. All five men served as president of the company at various times.
Inland competition The new California Steam Navigation Company moved quickly to retire excess capacity: 23 ships were idled. The combination effectively eliminated competition on the Sacramento and San Joaquin Rivers. This allowed the company to raise rates and profitability returned for the company's owners. This profitability lured new competitors, just as it did in 1850. Individual boats such as Surprise and Martin White began service in 1855. Rates from San Francisco to Sacramento fell as low as $0.25 per passenger as the California Steam Navigation Company sought to eliminate the thinly-capitalized newcomers.
In their outrage at freight rates that were raised to $40/ton after the consolidation, Marysville merchants formed the Citizens' Steam Navigation Company to compete with the company in 1854. It's competitive steamer, Enterprise, carried the freight for $12/ton. Not content to have any competition, the California Steam Navigation Company lowered its rate to $1/ton. Citizens' Steam Navigation Company built a larger ship, Queen City, but at the low prices they had to charge to compete, it lost money on every load. Citizen's Steam Navigation could not find sufficient financing to continue operations under these circumstances. On October 1, 1855 it signed a contract giving the California Steam Navigation Company control over its ships, effectively reinstating the company's monopoly on transportation to Marysville.
The general public and the local business community loathed the California Steam Navigation Company for its monopoly rates and the harsh tactics it used to suppress competition. One newspaper went so far as to editorialize that all candidates for the state legislature should pledge, "eternal opposition to the California Steam Navigation Company"
Ocean and coastal service The Fraser Canyon gold rush created an immediate and large demand for transportation from the Bay Area to British Columbia beginning in 1857. The "forty-niners" who rushed to the California goldfields now rushed to mine the new Canadian workings. Similarly, California's growing economy created new demand for transportation to the south as well. The California Steam Navigation Company used a few of its largest steamers for these new routes and acquired other ocean-going ships to meet this demand. Pacific was purchased in 1859. Brother Jonathan was purchased and refit in 1861. Ajax and Orizaba were purchased in 1865. California was built for the company in 1866.
In 1856 Senator began "South Coast" service between San Francisco and San Diego with stops in San Luis Obispo, Santa Barbara, and San Pedro. Orizaba began sailing to the "South Coast" in 1865. In 1859 Pacific began service to Victoria with stops in Crescent City and Portland and was later joined by Brother Jonathan, and Active. California sailed this route as well, beginning in 1866. In January 1866 the California Steam Navigation established another ocean route, offering the first regular steamship service between San Francisco and the Hawaiian Islands using its steamer Ajax. After only two round trips, however, the company put her on the San Francisco - Portland route to counter new competitive pressure.
These new ocean routes brought the company into contact with new competitors. In the north, the Pacific Mail Steamship Company sold its business to the California, Oregon, and Mexico Steamship Company in 1861. Ben Holladay, a tough steamboat pioneer, ran this dominant company. At the time of the acquisition It had five steamboats on the San Francisco - Victoria route to the two (Pacific and Brother Jonathan) deployed by the California Steam Navigation Company. In 1862, an infected passenger onboard the Brother Jonathan introduced smallpox to Victoria, setting off the 1862 Pacific Northwest smallpox epidemic.
Holladay added more ships, but the two companies appeared to have an understanding that prevented a rate war. This changed in 1865 when Jarvis Patton established the Anchor Line, and put his ship Montana on the San Francisco - Victoria line. He cut prices to gain customers, but with only one ship on the route, the pricing equilibrium between the two main competitors more or less remained. In 1866, however, Patton built Idaho, and a full-scale rate war broke out. Profitability went out of the northern route.
Decline In 1867, the fare war on the northern route forced consolidation. The California, Oregon, and Mexico Steamship Company bought the entire ocean-going fleet of the California Steam Navigation Company. It bought Active, Ajax, California, Orizba, Pacific, and Senator. This forced the California Steam Navigation Company back to its Bay Area core, which itself was suffering from competition from new railroads.
On March 31, 1871, the California Pacific Railroad Company acquired all property of the California Steam Navigation Company. This included thirty-two sidewheel and sternwheel steamships, twenty-one barges, twenty wharves and depots, and the franchises that allowed the ships to sail. Cash from the asset sale was distributed to shareholders and the company was disincorporated in September 1871. The railroad continued the operation of the steamboats, integrating them with its own routes and pricing scheme.Lance Armstrong, Capital City, Fort Sutter were among river’s most famous steamboats, Valley Community Newspapers, 10 June 2013, from valcomnews.com accessed November 23, 2013 Excerpt from a series about the history of the Sacramento River. The steamboat-railroad merger was driven by the same desire to reduce competition that had driven the previous steamboat company mergers. Five months later, the Central Pacific Railroad acquired the California Pacific Railroad Company, creating an even more powerful transportation monopoly.Maritimeheritage.org: The Maritime Heritage Project, Shipping Lines in San Francisco Bay Area during the 1800s — California Steam Navigation Company
In a confusing epilog to the corporation's history, a new and unrelated steamboat company was created after the disincorporation which was also called the California Steam Navigation Company. It too, ran steamboats on the Sacramento River, but in this new world it was the upstart competitor under-cutting the monopoly rates of the entrenched incumbent. This second California Steam Navigation Company passed out of existence in June 1889 when it merged with the San Joaquin Improvement Company to become the California Steam and Improvement Company.
Fleet The California Steam Navigation Company owned and chartered dozens of ships, barges, tugs, and boats. Relatively few were in full-time service on specific routes. Some were operated only seasonally to meet the peak demand of the summer harvest time, when ships and barges would bring crops from the interior to San Francisco. Some were operated only when high water allowed passage to ports further inland on the rivers. Some ships were held in reserve, to replace vessels that were due for maintenance or were damaged. Some ships were used as storeships, floating warehouses and offices. Some vessels were anchored or moored and never used. These were typically ships bought from competitors to keep them from competing, or obsolete ships that the company would not sell for fear of them falling into the hands of potential competitors. The company established a base for its unemployed ships in Oakland. Below is a partial list of the company's ships and barges with a focus on how they came to be part of and then left the fleet.
Ships Active (sidewheel steamer): She was built for the Sacramento River route in 1849. She was purchased by the United States Coast Survey in 1852. The United States Government sold the ship for $30,000 in June 1862. After a variety of private charters, the company acquired her no later than April 1866. The ship was, in turn, acquired from the company by the California, Oregon, and Mexico Steamship Company in 1867. She hit a rock and was wrecked south of Cape Mendocino in 1870.
Ajax (propeller steamer): Built in Brooklyn, New York in 1864, she was purchased by the company with California in 1865 for $250,000. The ship was acquired from the company by the California, Oregon, and Mexico Steamship Company in 1867.
Amador (sidewheel steamer): She was built for the company and entered service in October 1869. She was acquired from the company by the California Pacific Railroad Company in 1871.
Amelia (sidewheel steamer): She was launched in 1863 originally as a San Francisco Bay ferry, running between Alviso and San Francisco. In 1868, Amelia was one of the first steamers in the Bay Area to convert from coal to oil for fuel. She was acquired from the company by the California Pacific Railroad Company in 1871.