I'd look to the major cities excluded so far from your game from that era's American Association & International League for one league:
Minneapolis Millers
St. Paul Saints
Toledo Mud Hens
Jersey City Skeeters
Montreal Royals
Newark Sailors
Providence Grays
Rochester Bronchos
Toronto Maple Leafs
And then I'd go with eight teams from that era's Southern Association for another league:
Atlanta Crackers
Birmingham Barons
Little Rock Travelers
Memphis Egyptians
Mobile Sea Gulls
Montgomery Senators
Nashville Volunteers
New Orleans Pelicans
Shreveport Pirates
(Both of those lists include 9 teams so just pick eight...)
I'd make the above two separate leagues because back in 1907 the travel between many of those cities would just be too much.
I would also, for fun, create the equivalent of that era's PCL, with all independent teams:
Los Angeles Angels
Oakland Oaks
Portland Beavers
Sacramento Senators
Salt Lake City Bees
San Francisco Seals
Seattle Siwashes
Vernon Tigers
Good luck / have fun!