Read Ebook: The Story of the First Trans-Continental Railroad Its Projectors Construction and History by Bailey William Francis

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inspired. At the time he was writing, 1835, there were seven hundred and ninety-seven miles of railroads in operation in the United States. Passenger coaches were patterned after the old stage coach, the track iron straps on wooden stringers, yet here he was outlining what today is an accomplished fact. A railroad with stone ballast from Chicago to the South Pass one branch diverging from there to the mouth of the Columbia, the other to California, traversed by trains comprised of sleeping cars, dining cars and buffet cars. The Union Pacific and its connections.

Carver spent the best years of his life and what was in those days an ample fortune in endeavoring to further his project. The great opposition to his plan arose from the proposed diversion of the public lands and the stock feature, neither Congress nor the public taking kindly to the idea of the Government giving lands for stock in a private corporation.

A third proposition was fathered by John Plumbe of Dubuque, Iowa, who suggested at a public meeting, held at his home town in March 1838, that a railroad be built from the great lakes to the Columbia River. His plan contemplated an appropriation from Congress of alternate sections of the public lands on either side of the right of way. The company to be capitalized at one hundred million dollars, twenty million shares at five dollars each. Twenty-five cents per share to be paid down to provide a fund to commence operations and subsequent assessments of like amount to be paid as the money was needed until the full amount had been paid in. One hundred miles to be constructed each year and the whole line completed in twenty years.

All of these propositions were more or less visionary and advanced by men of theory with little or no capital. They had the effect of awakening public interest and paved the way for a more feasible plan. The question of a Pacific railway, its practicability, earnings, and effect, were constantly before the people. In 1844 the idea had become firmly fixed, the leading advocate being a New York merchant named Asa Whitney, who has been called the "Father of the Pacific Railway." Mr. Whitney had spent some years in commercial life in China, returning to the United States with a competency. Becoming enthused with the idea, he put his all,--energy, time, and money into the project of a trans-continental railroad, finding many supporters. At first he advocated Carver's plan, but becoming convinced that it was not feasible, he sprung a new one of his own. He proposed that Congress should give to him, his heirs and assigns, a strip of land, sixty miles wide, with the railroad in the center, this from a point on Lake Michigan to the Pacific Coast. This land he proposed to colonize and sell to emigrants from Europe, from the proceeds build the line, retaining whatever surplus there might be after its completion, as his own.

Whitney was an indefatigable worker, thoroughly in earnest, a fluent speaker, both in public and private, well fortified with statistics and arguments. He personally travelled the whole country from Maine to fifteen miles up the Missouri River. The legislatures of Maine, New Hampshire, Vermont, Rhode Island, New Jersey, Connecticut, New York, Maryland, Ohio, Indiana, Illinois, Michigan, Tennessee, Alabama, and Georgia, all endorsed his plan by favorable resolutions.

The Senate Committee on public lands made a report recommending his proposition. Thus strongly endorsed, his plan was brought before Congress in 1848 in a bill entitled "Authorizing Asa Whitney, his heirs or assigns, to construct a railroad from any point on Lake Michigan or the Mississippi River he may designate, in a line as nearly straight as practicable, to some point on the Pacific Ocean where a harbor may be had." The road to be six foot gauge, sixty-four pound rails. The Government to establish tolls and regulate the operation of the line, Whitney to be the sole Owner and receive a salary of four thousand dollars per year for managing it.

The proposition was debated for days in the Senate and then was tabled on a vote of twenty-seven to twenty-one. The opposition dwelt largely on the length of time Whitney would necessarily require. Say he could colonize and sell a million acres a year, this would only be funds enough to build one hundred miles and consequently the two thousand miles would require at least twenty years. The defeat was largely owing to the opposition of Senator Benton of Missouri, the most pronounced friend of the West in the House, who used the argument of the power and capital it would put in the hands of one man, Whitney's. This he characterized as a project to give away an Empire, larger in extent than eight of the original states, with an ocean frontage of sixty miles, with contracting powers and patronage exceeding those of the President.

Upon the defeat of Whitney's project, Benton brought forward in 1849 one of his own for a great national highway from St. Louis to San Francisco, straight as may be, with branches to Oregon and Mexico. The Government to grant a strip one mile wide, so as to provide room for every kind of road, railway, plank, macadamized, and electric motor, or otherwise constructed where not so practicable or advantageous. Sleighs to be used during those months when snow lay on the ground. Funds for its construction to be provided by the sale of public lands. Bare in mind this was only fifty-six years ago, but eighteen years before the Union Pacific Railway was completed, and was the proposition advocated by the recognized leader of the Senate in matters western.

Up to the year 1846 when by the treaty of Guadeloupe-Hidalgo, Mexico, ceded to us California, our only territory on the Pacific Coast was Oregon and Washington. The acquisition of California, followed very shortly by the gold discoveries and the consequent influx of people, gave that state a large population and furnished a prospective business for a Pacific railway. This had heretofore been a matter of theory, very questionable, to say the least, being based on very hazy estimates of the prospective volume of trans-pacific business. With an active and aggressive population of three hundred thousand in California, practically all of eastern birth and affiliations the situation became materially changed and the necessity of railroad communication apparent. Both great political parties pledged their support in their quadrennial platforms. Presidents--Pierce, Buchanan, and Lincoln, in their several messages to Congress, strongly recommended its construction. The matter had been thoroughly discussed, both in and out of Congress and the whole country was convinced of the advisability of its construction, and only awaited a leader and a feasible plan. From 1850 to 1860 the question vied with that of slavery in public interest. Survey after survey was undertaken by the Government and private parties. Senator Benton being the first to introduce a resolution looking to the appropriation of sufficient money to pay for a survey. This being in 1851. The question of the North and South, entered into the matter, as it did everything else in the days preceding the Rebellion. "You shall not build through free soil," said the South and "we won't permit it to run through the Slave States," said the North. Compromise was out of the question, and it was not until the southern element had been eliminated from Congress by their secession was any action possible.

It was found that private corporations, duly aided by land grants from the Government, were able to build the necessary connecting links through the comparatively level country, between Chicago and St. Louis, and the Missouri River. From the Missouri River west it was felt that the undertaking was too great for any one set of men or corporation, besides local interests in California were already in the field, consequently two companies were determined upon, one of them working eastward, the other westward, and it was thus arranged.

Situation 1861--Curtis Bill of 1862--Amended Charter of 1864--Further Amendments--1866--Legal Complications in New York--Controversy With Central Pacific.

Commencing with the session of 1835, when a memorial on the subject of railroad communication between Lake Michigan and the Pacific Coast, was presented by Hartwell Carver, up to the present, the Pacific Railways have been ever present in Congress. The Catalogue of Government Publications gives one hundred and eighty-five having the Union Pacific, or Pacific Railroads as their subject.

It is not necessary to recount the many schemes for the construction of these roads that were proposed to Congress. We have already outlined the principal ones previous to 1861.

At this time our country was in the midst of its greatest difficulties. The North and South unable to harmonize over the slavery question, had recourse to the arbitration of arms. The Union forces had met with numerous and severe reverses. The people of the Pacific Coast were loud in their demands for better means of communication. The Government was straining to what seemed the breaking point, their credit and resources to carry on the war and as a Government enterprise the building of a Pacific Railway was out of the question. All were convinced of not only the desirability of such a line but of the absolute necessity thereof, and it had resolved itself into a question of ways and means. Previous discussions had thrashed out the chaff and it now remained for Congress to winnow the wheat. Government surveys had demonstrated the existence of five feasible routes through or over the Rocky Mountains. The Northern, now followed by the Northern Pacific Railroad, the South Pass, Snake and Columbia Rivers, now traversed by the Union Pacific Railroad to Granger, thence the Oregon Short Line and Oregon Railway and Navigation Company. The Middle Route-Union Pacific Railroad in connection with the Southern Pacific Company . The thirty-ninth parallel route, now followed by the Santa Fe Route and the Southern via El Paso, now followed by the Sunset Route. The first two while available, could be eliminated owing to their not reaching California direct, as could also the two latter, on account of their traversing in part at least, country that was then in a state of insurrection.

These reasons were in themselves sufficient to determine the selection, but with the many other arguments advanced, there was no trouble in bringing Congress to adopt practically unanimously the "South Pass" "Middle" "True Pacific" Route as it was variously called. For years this had been the route of the fur traders and trappers, the emigrant, the Overland Stage, and the Pony Express, and if these various interests had agreed as to this being the shortest and best route it was evident there were good and sufficient reasons for their decision, it being incontrovertible that it was the shortest one that reached the desired territory. Especially as their decision was reinforced by the result of numerous surveys made by the Government.

The bill creating the Union Pacific Railroad was known as the "Curtis Bill" from its author, Congressman S. R. Curtis of Iowa. It carried the title of "An Act to aid in the construction of a railroad and telegraph line from the Missouri River to the Pacific Ocean and to secure to the United States Government, the use thereof for postal, military, and other purposes."

This act passed the Senate, June 20th, 1862, by a vote of thirty-five to two and became a law July 1st, of that same year. In addition to creating the Union Pacific Railroad Company it also authorized the Central Pacific Railroad Company to build a railroad from Sacramento to the eastern boundary of California, where it was to connect with the Union Pacific Railroad. The bill also recognized a Company chartered by the legislature of Kansas under the name of the Leavenworth, Pawnee and Western Railway Company, later known as the Kansas Pacific Railway. This latter line was to be built from Leavenworth west to a junction with the Union Pacific Railroad at or near the hundredth Meridian or about two hundred and fifty miles west of Omaha.

The principal features of the bill so far as the Union Pacific Railroad were concerned, were, the creation of a Board of Commissioners consisting of one hundred and fifty-eight commissioners to represent the interest of the United States Government and who were to be named by the Secretary of the Interior. These were to constitute a preliminary organization.

The Union Pacific Railroad proper was to commence at a point on the hundredth Meridian, west of Greenwich, between the Valley of the Platte River on the north and the Valley on the Republican River on the south, with branch lines to be known as the Iowa Branch from said point to the Missouri River. On the west it was to extend to the Eastern boundary of California, where it was to connect with the Central Pacific Railroad.

The Capital stock of the Company was to consist of ten thousand shares at one thousand dollars each, not more than two hundred shares to be held by any one person. Right of way through public lands was granted with the privilege of taking therefrom, without charge, earth, stone, lumber, or other material for construction purposes. The Company was granted every alternate section of land as designated by odd numbers to the amount of five sections per mile, on each side of the road within the limits of ten miles, not sold, reserved or otherwise disposed of by the Government, and to which a pre-emption or homestead claim had not been made up to the time the road was finally located, mineral lands being excepted. All lands thus granted, not sold or disposed of three years after the line was completed, were to be sold by the Government at not to exceed one dollar and twenty-five cents per acre, the proceeds to accrue to the Railroad Company. Nothing but American iron was to be used in the rails. As fast as sections of forty miles were completed and accepted by commissioners appointed by the Government for that purpose, one thousand dollar bonds of the United States bearing six per cent. interest, payable in thirty years, were to be issued to the Company constructing the line. Sixteen thousand dollars in bonds to the mile for the distance east of the Rocky Mountains and forty-eight thousand to the mile for one hundred and fifty miles for the mountain portion of the line. Three-fourths of these bonds were to be delivered to the railroad Company as the sections were accepted, the remaining fourth to be retained by the Government until the entire line was completed. The bonds to constitute a first mortgage on the entire line equipment, terminals, etc? The road to be completed within twelve years, the first one hundred miles within two years. Five per cent. of the net earnings, together with the entire amount accruing on transportation furnished the Government was to be applied to the payment of these bonds, principal and interest.

The Bill which in reality constituted a Charter, also provided that the gauge of the road and its eastern terminus should be left to the President of the United States to determine.

These somewhat onerous conditions were accepted by the promoters. Subscription books opened but capital fought shy of the proposition. Two years solicitation only resulted in subscriptions to the amount of two million dollars being paid up in cash.

It being evident that the necessary funds could not be procured on the terms of the original act, an appeal was made to Congress resulting in a supplementary act passing the House of Representatives, July 2nd, 1864, and soon thereafter becoming law. This increased the amount of the Land Grant to the odd numbered sections within ten miles of either side the track, and made the bonds of the Government a second mortgage instead of first, they to be issued on sections of twenty miles instead of forty, two-thirds of the bonds being available as soon as the grading was done. The limit extended in which the line must be completed, and but one-half the earnings on Government business withheld to meet the bonds. The Company was also authorized to maintain a ferry or ferries across the Missouri River at Omaha as a means of connection with the Iowa Lines until such time as they could construct a bridge suitable for this purpose. Coupled with these favorable amendments were two provisions that eventually militated against the Company. One of them permitting the Kansas Pacific Railway to connect with the Union Pacific Railroad at any point its projectors saw fit at or east of a point fifty miles west of Denver, Colo., instead of at the hundredth Meridian. This created a competitor instead of a feeder. The second was allowing the Central Pacific Railroad Company to build on east one hundred and fifty miles to meet the road from the East instead of stopping at the California State line. The restriction to one hundred and fifty miles was withdrawn in subsequent legislation. This resulted in a race as to which Company should cover the most ground and involved both of them in much additional expense. With the Charter thus amended, the Union Pacific Railroad Company which had not thus far done any real work, commenced active construction. The Credit Mobilier was formed to do the actual building, and with many trials, discouragements, and unforeseen expense, the work was continued to its completion.

The initial eastern point had been fixed by the Charter two hundred and forty-seven miles west of Omaha--at the hundredth Meridian, branches being contemplated to connect it with the Missouri River. In 1866 Congress authorized commencement at Omaha without reference to this fact,--the line to extend from Omaha to a connection with the Central Pacific Railroad.

The question of the gauge or width of track was another matter that occupied the attention of Congress. The question had by the Charter been left to the President. There was a divergence of opinions as to the best gauge for railroad tracks. At this time the Erie, and Ohio and Mississippi Railroads used a six foot gauge. The California legislature had fixed five foot as the gauge in that state, while the principal eastern roads including the Baltimore and Ohio, New York Central as well as the Chicago and Iowa lines, were what is known as standard gauge A committee of Parliament had settled on five feet, three inches as the gauge in England. President Lincoln had announced himself as in favor of five foot and the Central Pacific people had ordered their equipment of that width. The influence of the Chicago-Iowa lines as well as that of the Union Pacific people, was thrown in favor of the so called standard gauge, and on March 2nd, 1863, Congress passed what is one of the shortest laws on the Statute Books, namely,

"Be it enacted by the Senate and House of Representatives of the United States in Congress assembled, that the gauge of the Pacific Railroad and its branches through its whole extent from the Pacific Coast to the Missouri River, shall be and hereby is established at four feet, eight and one-half inches."

The above covers the more important matters so far as the action of Congress was concerned. Many other minor matters received attention at their hands--both before and since the completion of the road. As is stated in the opening paragraph of this chapter, the Pacific Railroads have been ever present in Congress. The more important questions being referred to in their order later.

Preliminary Organization--Board of Commissioners--Company Organized--Directors and Officers Elected--Hoxie Contract--Credit Mobilier--Ames' Interest--Compromise Contract--Davis Contract--Cost of Line--Land Grant.

When the Pacific Railroad Bill passed Congress and received the President's signature in 1862, there was a well organized company to take hold of the western or California end. The Union Pacific or eastern end was not in such good shape. Thomas C. Durant, who was afterwards Vice President of the Company had with a few associates taken a prominent part in the matter but no regular organization existed.

Under the Charter there were one hundred and fifty-eight persons named, who, together with five to be appointed by the Secretary of the Interior were to constitute a "Board of Commissioners" to effect a preliminary organization, open books for the subscription of stock and to call a meeting of the stockholders to elect a board of directors as soon as two thousand shares had been subscribed and ten dollars per share paid in.

When the board of directors had been elected, the property or rather the proposition was to be turned over to them and the duties of the Board of Commissioners should cease and terminate.

The Company thus organized, should follow established precedents, stockholders should hold annual meetings, elect a board of directors, and adopt bylaws and rules for the conduct of its affairs. The directors thus elected to be not less than thirteen in number, two to be added to their number by appointment of the President of the United States. The Board of Directors to elect the officers of the company and exercise supervision.

Something had to be done, and accordingly thirty men of more or less prominence were elected to the position of directors, some of them without their knowledge and some declined to serve. The Company was accordingly organized October 30th, 1863. General John A. Dix, who was elected President, had been a member of the Cabinet and later a general in the United States Army, was a man who was universally respected. The position was not of his seeking, and he gave notice he had neither the time nor inclination to give active attention to its affairs and the burden was practically assumed by the Vice-President Elect, Thomas C. Durant. But two hundred and eighteen thousand dollars the ten dollars per share called for by the Charter on two thousand one hundred and eighty shares had been paid in and further funds were not obtainable. Agitation was kept up and due representation made to Congress, resulting in an amendment to the Charter being passed. After the passage of the Supplementary Act in 1864 made necessary by the failure to secure funds, it was still regarded as an unpromising investment for the reason that investors could not feel any assurance that they or their friends would have any voice in the management of affairs or control of the Company. The capital of the Company was fixed by the supplementary act at one hundred million dollars, , consequently any interest holding over fifty millions of the stock would be paramount and vice versa. Until it was determined who would be in control, investors fought shy. Under the Charter the subscription books must remain open until the completion of the road, making it possible for outsiders to wait until the road was near completion and then step in and by large subscriptions acquire control.

As there were some funds available, a contract was entered into in May, 1864, with H. M. Hoxie, to build the first hundred miles. This contract was extended to cover from Omaha to the hundredth Meridian, two hundred and forty-seven miles, on October 3rd, 1864, and on the 7th of the same month assigned to a company composed of Vice-President Durant and six others, all stockholders of the Railroad Company. The capital of this partnership consisted of four hundred thousand dollars . The members of the firm were unable or else unwilling, owing to the immense personal liability involved, to put up further funds and some other action was necessary.

The Hoxie contract was reassigned to the Credit Mobilier who duly completed the work, finishing the line to the point specified October 5th, 1866. Owing to their inability to raise funds, it seemed as though the two companies, Union Pacific and Credit Mobilier, would fall down. There was no sale for the First Mortgage bonds of the railroad, the Government bonds were but little better, being worth but sixty-five cents on the dollar. Durant and his friends were not men of wealth nor did they command the confidence of wealthy men. The Company had become greatly involved and was compelled to sell some of its rolling stock to pay pressing debts. It was at this junction that Oakes Ames entered the field, being persuaded, it is said, to do so by President Lincoln who desired to enlist his well-known executive ability and capital in the enterprise. Through the efforts of himself and associates the paid up subscriptions were increased to two and a half million dollars.

The original or first contract made with Hoxie for a hundred miles had been extended to cover up to the hundredth Meridian, and the line to that point, two hundred and forty-seven miles from Omaha, was completed October 5th, 1866.

The second contract made was with a Mr. Boomer for one hundred and fifty-three and thirty-five hundredths miles from the hundredth Meridian west, at the rate of nineteen thousand five hundred dollars per mile for that part of the distance East of the North Platte River and twenty thousand dollars per mile west thereof. Bridges, station buildings, and equipment to be additional. This contract was also assigned to the Credit Mobilier. On this, fifty-eight miles were completed when dissensions arose, occasioned by financial stringency among the stockholders of the Credit Mobilier. Vice-President Durant going into court, compelled suspension of action on the third contract, made March 1st, 1867, with one J. M. Williams who had assigned it to the Credit Mobilier. This covered two hundred and sixty-six and fifty-two hundredths miles, commencing at the hundredth Meridian at the rate of fifty thousand dollars per mile. For a time matters were at a standstill, injunctions preventing the completion of present or the making of new contracts.

Finally a compromise was affected between the two factions, Durant and his friends on the one side, and the Ames interests on the other.

Under this, a fourth contract was made with Oakes Ames for which he was to receive from forty-two thousand to ninety-six thousand dollars per mile or forty-seven million nine hundred and fifteen thousand dollars for six hundred and sixty-seven miles, commencing at the hundredth Meridian. This it is supposed is the largest contract ever made by one individual. It was later transferred by Oakes Ames to seven trustees acting for the Credit Mobilier, he and his brother Oliver Ames being among the number. This last contract carried the line to nine hundred and fourteen miles from Omaha.

The fifth contract was made with J. W. Davis for one hundred and twenty-two miles at twenty-three million four hundred thousand dollars, and was in turn assigned to the same seven trustees for completion. In adjustment of accounts the Union Pacific Railroad Company would turn over to the Credit Mobilier or the Trustees for the Credit Mobilier in payment for the work as fast as it was completed First Mortgage Bonds, Government Bonds, Union Pacific Railroad Income Bonds and Union Pacific Railroad Stock, these being sold or hypothecated by the trustees, furnished them the necessary funds required to pay for the construction work.

As the Union Pacific Stock could only be sold for cash at par according to act of Congress, notwithstanding it was only worth thirty cents on the market, the Railroad Company would give their check to the Credit Mobilier on construction account and this check could then be used in payment of stock, making it a cash transaction.

In settlement of the several contracts, the Union Pacific Railroad Company paid the Credit Mobilier:

These figures represent stocks and bonds at par and deducting amount of depreciation, would bring the actual cost of the Main Line Omaha to Ogden to about seventy-three million dollars.

There were issued in payment for this construction, equipment, station building, and the expense of the Company during the construction period.

There were granted to the Union Pacific Railroad Company under its Charter land grants of eleven million three hundred and nine thousand eight hundred and forty-four acres. Up to December 31st, 1866, sales of this land had brought in nineteen million ninety thousand six hundred and seventy-two dollars and forty-two cents and unsold land was then valued at two million three hundred and ninety five thousand five hundred and seven dollars.

During the palmy days of the Credit Mobilier following the adjustment of the differences with the Durant faction, thousands of dollars were spent in advertising and placing the stock. Display advertisements were inserted in all the prominent newspapers and paid agents located in all the important cities. The result demonstrated the wisdom of the expenses, as not only were large quantities of its stock sold but the prices obtained for it were greatly advanced.

In Washington the lobbyists were demanding blackmail with threats of organized hostility. Speculators in Well Street were a unit in bearing the stock and in attacking the credit of the Company.

The stock of the Credit Mobilier up to the assignment by Ames to the seven trustees, had not met with anything like a ready sale. For reasons of policy, some of this was assigned to members of Congress, Senators, and other public men. Some being paid for, others had it carried on their account. After the crisis had passed, the value of the stock rapidly appreciated and in the forthcoming political campaign the subornation of Congress in the interest of the Credit Mobilier by the use of this stock was made an issue and occasioned a great outcry. The accusation was thoroughly investigated by two committees during the next session and it was clearly proven to have been unfounded, so far as members of Congress having received the stock as bribes, it being demonstrated that the Company had no further favors to ask from Congress and that the members receiving it had paid the market value therefor. Notwithstanding, Oakes Ames was called to the bar of the House and severely censured for having sold it to them. The facts were, popular clamor demanded a scapegoat and Ames was selected. This, and the anxiety and strain of the load he had been carrying proved too much for him and he died May 8th, 1873. After his death the voice of calumny silenced, his work and character received the recognition it so well deserved.

The cost of material used in the construction of the road was enormous, thus the ties brought from the East ran as high as two dollars and fifty cents laid down in Omaha. The rails for the first four hundred and forty miles one hundred and thirty-five dollars per ton. This was before railroad connection was established between Council Bluffs and the East. After that the price got down to ninety-seven dollars and fifty cents per ton.

The pay of laborers ran from two dollars and twenty-five cents to three dollars and fifty cents per day. Train men two hundred dollars per month for conductors, one hundred and twenty-five dollars for brakemen, two hundred dollars to two hundred and fifty dollars for engineers, and one hundred and fifty dollars to one hundred and seventy-five dollars for firemen. Telegraph operators eighty dollars to a hundred dollars.

At times the Company was paying as high as five hundred thousand dollars per month interest. And in fact it was claimed by several of the directors that the paramount reason for the haste displayed in building the road was not so much the competition with the Central Pacific as it was to get rid of the enormous interest charges they were paying and which they would cut off upon the road being accepted by the Government and the consequent receipt of Government Bonds.

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