Disaster and Recovery: The Public and Private Sectors in the Aftermath of the 1906 Earthquake in San Francisco

Abstract

A severe earthquake in San Francisco in 1906 severed electrical and gas lines and collapsed chimneys. Fires resulted, burning for four days over 2800 acres. The commercial and residential center of the city was destroyed. Two hundred fifty thousand people of the city’s 400, 000 population were left homeless, including a majority of public and private sector workers. Municipal records of land titles and bank account records were lost. Payouts from property insurance claims, necessary for rebuilding, were in doubt because policies covered damage from fires, but not from earthquakes. The municipal government was corrupt. Yet, within three years the city was rebuilt, commercial activity restored, and the population level recovered. Two public sectors developments were key. The first was the actions of U.S. Army troops stationed outside the fire zone at the Presidio and Fort Mason. They moved to maintain order, protect property, and fight fires within hours of the earthquake. They patrolled the city for 74 days. These actions were extra-legal in that martial law was never declared. Army troops also built and maintained the communications network, took over the distribution of food and other supplies, and constructed and ran many of the relief camps. The second development was also extra-legal. The municipal government was displaced the day of the earthquake by a citizens committee of business and civic leaders. This Committee would control local government funds, including $10 million in donations, and dictate or cajole liberal land use, zoning, business licensing, and building trade rules to speed redevelopment and build confidence in the recovery. Thus, the U.S. Army and the Committee set the stage for rapid redevelopment by maintaining property rights and a legal and administrative framework conducive to a robust private market rebuilding of the city. In a narrow sense the uniqueness of the U. S. Army response and the displacement of the municipal government means the San Francisco recovery is not generalizable to other disasters. In a broader sense, however, the extraordinary San Francisco recovery echoes Hirshleifer: “Historical experience suggests that recovery [from a disaster] will hinge upon the ability of government to maintain or restore property rights together with a market system that will support the economic division of labor.”

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