[Illustration: “The Golden Gate”]
CHAPTERS ON THE HISTORY
OF THE
SOUTHERN PACIFIC
By
STUART DAGGETT, PH.D.
Professor of Railway Economics and Dean of the
College of Commerce, University of California;
Author of “Railroad Reorganization”
[Illustration: LOGO]
NEW YORK
THE RONALD PRESS COMPANY
1922
Copyright, 1922, by
THE RONALD PRESS COMPANY
PREFACE
So far as the author knows there is no published study which discusses
in detail the important business problems connected with the history
of the Southern Pacific Railroad lines. Most of the books which
contain references to the Southern Pacific or to the Central Pacific
limit themselves to a few chapters upon the romantic aspects of their
construction. The few works which treat of the later period confine
themselves chiefly to particular episodes in Southern Pacific history,
often with the deliberate attempt to discredit the railroad company.
The truth is that most writers upon the Southern Pacific have relied
upon the reports of the United States Pacific Railway Commission or on
Bancroft’s “History of California,” and very few have done original
work from source material.
Yet the usable material dealing with the subject of Pacific railroads
is abundant. The Southern Pacific has left a broad trail in California.
The record of its doings is to be found in court reports; in state,
city, and federal records; in the public testimony, or still better,
in the private letters of owners or managers of company enterprises;
in the reports of the company itself and of its engineers or other
representatives; in pamphlets without number; in files of newspapers.
It is true that much of the data is partisan and unreliable as to
details. Yet a partisan statement is serviceable if one knows it to be
partisan, and, if one has reliable information with which to check the
unreliable, the extent of partisan exaggeration in a given case becomes
itself a fact of no insignificant importance.
Most of the documents used in the following pages have been consulted
in one or another of three large collections: that of the Bancroft
Library of the University of California; that of the Hopkins’ Railway
Library of Stanford University; and that of the State Library at
Sacramento. Use has also been made of data in the office of the
Secretary of State of California and of the State Railroad Commission.
In certain cases the manuscript has been submitted to officials of
the Southern Pacific Company for their comment, or to shippers or
business men who were believed to be well-informed. The work has been
more or less actively in progress over a period of eight years so that
there has been more than usual opportunity for checking, comparison of
views, and the testing of material. It is the author’s hope that he has
at least examined all the significant classes of information on the
particular subjects which he has discussed. With a subject so extensive
it is rarely, if ever, possible to reach all the fugitive literature,
or to consult all the living men from whom opinions or scraps of
information might be obtained. The most that can be said is that there
has been a diligent search, with good facilities, through a number of
years.
The conclusions which the writer has himself reached with respect
to the political and business activities of the Southern Pacific in
California, he has explained in the book at length and will not now
repeat. There is claimed for them no more conclusiveness than the facts
presented in each particular case may justify, although the conclusions
are free from conscious bias, and the author’s own interests are
engaged on neither side.
Acknowledgment is hereby made of the courtesies extended by the
libraries of Berkeley, Palo Alto, and Sacramento, and of the patient
attention which individuals have given to particular portions of the
book.
STUART DAGGETT
Berkeley, California,
February 1, 1922.
CONTENTS
CHAPTER PAGE
I INCEPTION OF THE PROJECT 3
II RESOURCES FOR CONSTRUCTION—STATE AND LOCAL AID 21
III FEDERAL LAND GRANTS AND SUBSIDIES 45
IV PROGRESS OF CONSTRUCTION—CONSTRUCTION COMPANIES 65
V THE SEARCH FOR A TERMINAL 83
VI ACQUISITION OF THE CALIFORNIA PACIFIC 104
VII BUILDING OF THE SOUTHERN PACIFIC 119
VIII ORGANIZATION OF THE CENTRAL PACIFIC-SOUTHERN
PACIFIC SYSTEM FROM 1870 TO 1893 140
IX THE CASE OF DAVID D. COLTON 154
X FINANCIAL DIFFICULTIES FROM 1870 TO 1879 169
XI THE RAILROAD COMMISSION OF 1880 TO 1883 181
XII THE SOUTHERN PACIFIC AND POLITICS 199
XIII WATER COMPETITION 222
XIV THE RATE SYSTEM OF THE CENTRAL PACIFIC 237
XV LOCAL RATES IN CALIFORNIA 257
XVI THE TRANSCONTINENTAL TARIFF 275
XVII THE TRAFFIC ASSOCIATION OF CALIFORNIA 293
XVIII THE SAN FRANCISCO AND SAN JOAQUIN VALLEY
RAILWAY 317
XIX OPERATING CHARACTERISTICS OF THE SOUTHERN PACIFIC
LINES 347
XX THE THURMAN ACT 370
XXI FINAL SETTLEMENT OF THE CENTRAL PACIFIC INDEBTEDNESS
TO THE GOVERNMENT 395
XXII THE SOUTHERN PACIFIC MERGER CASES 425
XXIII OIL AND TIMBER LAND LITIGATION 441
XXIV FINAL REMARKS 454
ILLUSTRATIONS
PAGE
“The Golden Gate” (_Frontispiece_)
Theodore Dehone Judah (opposite) 6
Sketch of train on the Sacramento Valley Railroad 1860 ” 10
Leland Stanford ” 16
Henry P. Coon ” 32
Chas. Crocker ” 66
Summit Valley, Emigrant Mountain and Railroad Pass ” 72
Summit tunnel before completion—Sierra Nevada Mountains ” 80
Map of Oakland and Brooklyn 93
Boundaries of Railroad Tide-Land Grant, as proposed in 1868 96
Map of California Pacific Railroad 106
Map showing northern end of the San Francisco and San José
Railroad in 1862 121
Proposed route of the Southern Pacific Railroad, January 3, 1867 124
View south from over the San Fernando tunnel—Southern Pacific
Railroad (opposite) 128
David D. Colton ” 160
Mark Hopkins ” 176
George Stoneman ” 192
C. P. Huntington ” 208
Chart showing rates on second-class freight and on grain in the
Sacramento Valley, 1876 260
Chart showing rates on miscellaneous commodities in the San
Joaquin Valley, 1892 261
Diagram showing adjustment of freight rates between San Francisco
and Stockton, 1916 266
Diagram showing adjustment of freight rates between San Francisco,
Santa Rosa, and Sebastopol, 1916 268
Diagram showing adjustment of freight rates between Los Angeles
and points north and east of Los Angeles, 1916 269
Map showing the line of the San Francisco and San Joaquin Valley
Railway, together with portions of the systems of the Southern
Pacific and of the Atchison, Topeka and Santa Fé, 1898 325
Map showing mileage owned in 1913 by the Central Pacific Railway
and the Southern Pacific Railroad (opposite) 432
CHAPTERS ON THE HISTORY
OF THE
SOUTHERN PACIFIC
CHAPTER I
INCEPTION OF THE PROJECT
Significance of the History
The history of the Southern Pacific and the railroad companies
connected with it affords one of the many examples in American economic
life of a great industrial organization built up from small beginnings
within the lifetime of one group of men. It is a story full of the
interest which attaches to constructive achievement in any line. When
we remember that as late as 1870 there was no railroad west of the
Mississippi-Missouri River except the Northern, Union, Kansas, and
Central Pacific railroads, which possessed a mileage as great as 300
miles, and when we recall that in 1860 the total railroad mileage of
the states in this same territory amounted to only 6,000 miles, we are
able to form some idea of the successful energy which created a system
of 861 miles of railroad in the course of six and one-half years,
across an unsettled country, in the face of obstacles due to climate,
altitude, and distance from centers of traffic and of finance.
The history of the Southern Pacific is significant, however, for still
other reasons than because it illustrates what men can do in spite of
serious difficulties. The company’s record is important to the student
of transportation problems because there is embodied in it much of the
experience of the Pacific Coast with respect to railroad construction,
railroad finance, railroad rate-making, and the relation of railroad
corporations to the public at large, as represented by local, state,
and national governments. What the Pacific Coast, and what in
particular the state of California know, first hand, of the habits and
policies of railroad corporations, is mainly derived from contact with
the Southern Pacific Railroad and its auxiliary companies.
The narrative that follows is offered as a contribution from the far
western portion of the United States which may help to explain the
attitude of that section toward transportation matters; as well as an
account of some phases of the earlier development of a railroad system
which is now one of the most powerful in all the country, whether we
compare this system with the railroads of the East or with those of the
West.
The Southern Pacific system today embraces lines from Ogden and New
Orleans on the east, to Portland, San Francisco, and Los Angeles on the
west. The part of the system first built, however, and at all times the
most important part of it, is that section reaching from a few miles
west of Ogden, Utah, to the cities of Sacramento and San Francisco.
This portion of the larger system was built and is owned by the Central
Pacific Railroad Company.[1] It is therefore to the circumstances
attending the construction of this portion of the line that attention
will first be directed.
Early Activities of Theodore Dehone Judah
The promoter of the Central Pacific Railroad was a young engineer named
Theodore Dehone Judah. Judah was born in Bridgeport, Connecticut. He
obtained his first experience in railroad building on the Troy and
Schenectady Railroad in New York. Later he built a railroad down the
gorge of the Niagara River to Lewiston, served as resident engineer
on the Erie Canal, and in 1854 had charge of the Buffalo and New
York Railroad then building to connect with the Erie. This was a
responsible position for a man with so brief a period of training.
When Judah came to California in 1854 he was only twenty-eight years
of age. He was soon to make it evident, however, that he possessed
more than respectable engineering ability, while he also displayed a
capacity for sustained enthusiasm in connection with the project for
a transcontinental railroad which eventually overcame all obstacles
and resulted in the formulation of definite and successful plans for a
transcontinental line.[2]
Judah began work in California as engineer of the Sacramento Valley
Railroad. He left the service of the company, however, before the
road was finished to Folsom. Subsequently he made a survey for a
railroad from Sacramento to Benicia, and also one for a short branch
on the California Central Railroad. Still later he was employed by
the trustee of the Sacramento Valley Railroad, J. Mora Moss, and the
superintendent, J. P. Robinson, to explore the Sierra Nevada Mountains
for wagon road routes north of the south fork of the American River,
and at the same time to act as agent for the Sacramento Valley Railroad
in soliciting freight.
Details of Judah’s activities between 1854 and 1860 are difficult to
obtain. We know that he visited Washington in order to procure the
passage of a bill making grants of land to California for railroad
purposes. In 1859 he was the delegate from Sacramento to the Pacific
Railroad Convention, where he urged the importance of a thorough
survey before any decision should be made regarding the route of a
transcontinental railroad. When the convention adjourned he was sent to
Washington at his own expense to urge the passage of a bill such as
the convention favored. He returned in 1860 without having accomplished
his purpose, but convinced that Congress was in favor of granting
federal aid to a railroad to California from the East, and that it
would act when more important matters had been disposed of.[3]
Discovery of Transcontinental Route
It was after Judah’s return from Washington in 1860 that he undertook
the explorations for the Sacramento Valley Railroad to which reference
has been made. Doubtless while engaged on this work he visited Dutch
Flat, and doubtless also his enthusiasm for a transcontinental railroad
became generally known. Judah was no mountaineer, but he could readily
profit by the knowledge of men acquainted with the country. Such a man
he found in Daniel W. Strong, a druggist at Dutch Flat, who accompanied
him on his explorations. We have Strong’s statement that he himself
conceived the idea that immigrant travel could be diverted through the
Dutch Flat country by the construction of a railroad, and that he hired
assistants, made a reconnaissance, and found a continuous divide over
which he thought a road could pass. Knowing that Mr. Judah was trying
to find a pass over the mountains, he wrote to him, and Judah came from
Sacramento to Dutch Flat. Strong says that he showed Judah the route he
had discovered, and that Judah thought well of it.[4]
[Illustration: Theodore Dehone Judah]
Such is Strong’s testimony given years afterwards, when the Central
Pacific had proved a success, and it was a distinction to have been
connected with it. It is possible that Strong overestimated his
contribution to the work. Yet the essential fact is that Judah was in
the mountains in August, 1860, and that he or Strong, or both of them
hit upon a route which Judah pronounced practicable. One may hazard
the guess that Strong pointed out a pass and Judah tested it with
instruments.[5] Mrs. Judah repeats the story as she heard it:
It was in the drug store of Dr. Strong at Dutch Flat that the first
profile was marked out from notes taken by them (Judah and Strong).
Judah could not sleep or rest after they got into town and the store,
till he had stretched his paper on the counter and made his figures
thereon. Then, turning to Dr. Strong, [he] said for the first time,
“Doctor, I shall make my survey over this, the Donner Pass, or Dutch
Flat route, above every other.”[6]
Appeal for Funds
Judah drew up articles of association for a company late in 1860, and
endeavored to get subscriptions for stock, but without much success.
Meanwhile, the publication in the newspapers of information relating
to the Dutch Flat route cost him his position with the Sacramento
Valley Railroad, for the trustee of the company, J. Mora Moss, took the
position that the information acquired by Judah while an employee of
the Sacramento Valley belonged to the railroad company, and should not
have been published without its consent. It is said that Judah was very
indignant, but to no avail.[7]
By October or November, 1860, the record thus shows that Judah had
satisfied himself of the existence of a railroad route across the
Sierras, and that he was intensely interested in having this railroad
built. He was not personally a man of capital, although not entirely
without means, and success in transforming his bare project into an
actual operating line depended entirely upon the financial support
which he could obtain. In November, accordingly, we find Judah
endeavoring to give wide circulation to the results of his discoveries.
Under date of November 1, 1860, a circular letter was issued directing
the attention of the public to “some newly discovered facts with
reference to the route of the Pacific Railroad through California.”
This letter asserted that a practicable line had been discovered “from
the city of Sacramento upon the divide between Bear River and North
Fork of the American, via Illinois Town and Dutch Flat, through Lake
Pass on the Truckee River, which gives nearly a direct line to Washoe,
with maximum grades of 100 feet per mile.” The estimated length of
line in California was 115 miles. It was said that if the Pacific
Railroad bill then pending in Congress should be passed, providing an
appropriation of $13,000 per mile from the navigable waters of the
Sacramento River to the base of the Sierra Nevadas; thence $24,000
per mile to the summit; thence an additional $3,000 per mile for
each degree of longitude crossed until the 109th degree was reached,
the entire road could be graded without appeal to private investors,
leaving only the iron, rolling stock, etc., to be provided from private
means. The projected railroad might connect with the Sacramento Valley
Railroad at Folsom, or with the California Central Railroad at Lincoln.
Subscriptions were asked to an amount of $1,000 per mile for 115 miles,
with 10 per cent paid in, to allow the organization of a company under
the state law; and it was promised that the money subscribed would be
used to make a thorough, practical railroad survey.[8]
In a letter dated the previous day, and addressed to John C. Burck,
member of Congress from California, Judah added a few details:
We go out of Summit Valley through what I call Lake Pass, while
Fremont’s route, or the old Emigrant road, goes over Truckee Pass,
which is about 700 feet higher, and a few miles off my route. We
strike the foot of Truckee Lake, or the cabins of the Donner party,
nine miles from the summit, and from there it is an easy grade down
the Truckee River, descending about 40 feet per mile, over a smooth
country. The elevation of the pass is 6,690 feet. There are two other
passes leading out of Summit Valley, which I had not time to explore,
but either of them are practicable, although a little higher. This
route is at least 150 miles shorter than the Beckwourth route; crosses
the state at the narrowest point, and is on a direct line to the
Washoe mines. I will undertake to build a railroad over this route in
two years, for $70,000 per mile, from Sacramento City to the state
line or Washoe. Thus the question of crossing the Sierra Nevada, I
consider solved.
After the tentative organization of his proposed railroad, and
the publication of the news of his discoveries in the newspapers,
Judah went to San Francisco. He managed to get in touch with some
capitalists, but was unable to secure their support. If Congress did
not pass a Pacific Railroad bill, they said, no railroad could be
built; if a bill was passed, the road still could not be completed for
ten or twenty years. They had other interests, and were disinclined to
consider a scheme of this sort, however technically feasible. If we may
believe the newspapers of the time, no inconsiderable reason for the
reluctance of the men approached was the provision of the constitution
of California making stockholders liable for their proportion of all
the debts and liabilities of any company in which they held stock.[9]
Sacramento Meetings
When he failed to secure support in San Francisco, Judah went to
Sacramento. The city of the plains, as it was then affectionately
called by its inhabitants, was less wealthy than San Francisco, but for
that very reason might be expected to take an interest in a project
which promised her, for some years at least, a position of relative
advantage with respect to the trade of the interior. The leading
newspaper in that city, the _Sacramento Union_, could be counted on to
support any plausible Pacific railroad scheme for political reasons.
The citizens had further the advantage of first-hand experience with
the workings of the Sacramento Valley Railroad, which had been opened
from Sacramento to Folsom in 1856, and was still the only railroad in
the state.
It does not, however, appear that these various factors stirred the
people of Sacramento to any extraordinary enthusiasm over Judah’s
scheme, or that they regarded him in any other light than that of an
engineer with a risky plan, which it was very desirable to have someone
other than themselves finance. Judah, however, called a meeting at a
local hotel, and people came. He told them he had made twenty-three
barometrical reconnaissances over the Sierras, and had found a line.
He needed money to carry the project further, in particular to make
a thorough instrumental survey, and he asked them what they would
subscribe. Nobody subscribed very much. Huntington says that some gave
a barrel of flour, and some a sack of potatoes. Still, the additional
subscriptions necessary to the legal organization of Judah’s company
probably amounted to as much as $56,500[10] on the 115 miles of line
contemplated, and small miscellaneous offerings were not likely to
carry the promoter very far.
Collis P. Huntington
It is at this juncture that we first hear the names of Collis P.
Huntington, Leland Stanford, Charles Crocker, and Mark Hopkins, all
prosperous business men in Sacramento. Huntington and Hopkins ran
one of the largest hardware stores in the town. Stanford and Crocker
were merchants, and in addition, Stanford had dabbled in California
politics to the extent of becoming a candidate for the position of
state treasurer in 1857 and for that of governor in 1859, getting badly
beaten on both occasions. It is difficult, even at this late date,
to estimate the qualities of the four men with confidence. Beyond
question, Huntington had the greatest genius for business of the four.
Born in Connecticut, and self-supporting from the age of fourteen, he
was a trader _par excellence_. In his youth he peddled watch findings
from New York to the Missouri River. Later, it is related of him that
he started for California with a capital of $1,200, which he increased
to $4,000 during an enforced stay of three months on the Isthmus of
Panama. He was cool, calculating, unscrupulous, a tireless worker,
and a man with few interests outside of work. Enterprise for the
public good interested him little. He had few friends, and some of
these he lost in later years. Narrow in his sympathies, vindictive,
sometimes untruthful, sarcastic, and domineering, he gained his success
through the keenness of his mind and the energy and persistence of his
character, and also through qualities of courage and imagination which
were not absent from his business plans.
[Illustration: Sketch of train on the Sacramento Valley Railroad,
1860]
Leland Stanford
Stanford was a New York lawyer, who had practiced four years in
Wisconsin between 1848 and 1852, and had emigrated to California in the
last-named year to seek his fortunes in that state. Stanford came to
California poor as the proverbial church mouse. Bassett, who was later
his secretary, and who was likely to know the facts, says that two of
Stanford’s brothers set him up in business in El Dorado County, near
Latrobe, with a stock of miners’ supplies. Here Stanford remained a
while, in partnership with a man named Smith. Stanford and Smith were
said to have done a good business. They thought they were making money
until they found that the San Francisco firm with which they dealt was
charging them interest on unpaid balances; whereupon they promptly
closed up, retiring with their debts paid, but with very little cash.
From El Dorado County Stanford went to Michigan Bluffs, in Placer
County, still trading, and in 1855 he moved to Sacramento to take over
the business which his brothers had established there. Presumably his
operations in Michigan Bluffs had provided him with a little capital.
What was quite as much to the point, he had made a number of friends
in the mining district, and it is not unreasonable to suppose that his
attention had been directed toward politics. In 1857 and 1859, as has
been mentioned, he ran for office, but without success. About this time
a prospector in the vicinity of Auburn struck a rich pocket of decayed
quartz. He knew Stanford, and put his name down for an interest in the
claim. From this mine Stanford is reported to have cleaned up about
$60,000, a sum which put him in comparatively easy circumstances. In
1861 Stanford ran again for the office of governor, and this time was
elected on the Republican ticket. He cannot be said to have yet shown
any talent for statesmanship, but he was known as a staunch Union man
and a faithful Republican, and he had a local popularity besides, which
could be trusted to bring in some votes. After his term of office as
governor, Stanford held no political position until 1885, when he
was elected United States senator in place of A. A. Sargent. This
office he retained until his death. He appears at one time to have had
aspirations towards the presidency of the United States, though his
candidacy could hardly have been considered seriously. Certainly he
served with distinction neither as governor nor as senator.
Stanford’s most marked traits were tenacity of purpose, and a certain
rude energy in execution. His associates credited him with great
solidity of judgment. Like Huntington, he was unscrupulous in the
methods which he employed to reach his ends, but, unlike him, he showed
ambition if not capacity outside of the business field. In private
life, Stanford was distinguished by his love of horses, and by his
donations to the university founded in memory of his son. One must hold
him inferior to Huntington in business affairs, vain and extravagant.
Yet not only his political influence, but the virile power of the man,
the attitude of mind which once led an enemy to say of him that “no she
lion defending her whelps or a bear her cubs, will make a more savage
fight than will Mr. Stanford in defense of his material interests,”
were invaluable to the transcontinental railroad project in the years
of its development.[11]
Crocker and Hopkins
The other two members of the quartette may be dismissed with fewer
words. Charles Crocker had no more education than Huntington. He
had been peddler, iron maker, gold miner, and trader. In 1855 he
was alderman of the city of Sacramento. First and last, his strong
point was the handling of men. It was Crocker who drove the work of
construction, roaring up and down the line, as he put it, like a mad
bull. In deciding the larger problems of policy which arose later,
there is no evidence that he had an important part. Indeed, Crocker
endeavored to sell his holdings to his associates in 1871, and only
continued in the organization because the others proved unable to buy
him out.[12]
Last of all, we have to mention Mark Hopkins, the “inside man.” Hopkins
died in 1878, so that his connection with railroad work lasted only
fourteen years, and during part of this time he was ill. Less is known
of him than of any of his associates. He was the man of detail, the
careful scrutinizer of contracts. He was Huntington’s partner in the
hardware business for twenty-four years, and yet in all that time,
according to Huntington, he never bought or sold as much as $10,000
worth of goods.[13] That is to say, he was no trader. Bancroft speaks
of him as the balance wheel in the business. We hear of him later as
objecting to personal indorsements by the partners of Central Pacific
notes. Mr. Crocker once said of him that he was a long-headed man
without much executive ability but a wonderfully good man for an
executive officer to counsel with. Possibly such a man played a useful
part in the Central Pacific organization.
Survey Financed
Huntington, Stanford, Hopkins, and Crocker knew each other as merchants
will. Crocker and Stanford may also have met in a political way. The
four of them seem to have been friends, at least as early as 1860.
Now it appears that Huntington and Crocker, and possibly Stanford and
Hopkins also, attended one of Judah’s meetings in Sacramento, and were
somewhat impressed by his statements. This was the second stage in the
Central Pacific enterprise, when the promoter was in the presence of
capitalists, and was seeking to convince them that a probability of
profit lay in his plans. Huntington says that he spoke to Judah after
the public meeting, and that Judah came to his house the following
evening. He adds that subsequently he, Huntington, talked with Hopkins
and Stanford, and persuaded them to join him in contributing the money
necessary to finance an instrumental survey across the mountains. Other
persons who agreed to share in the expense were Charles Marsh, James
Peel, L. A. Booth, and Judah himself—each assuming one-seventh of the
cost.[14] Charles Crocker was brought in a little later.
The attitude of all these men was of course cautious. Judah had caught
their attention, but as yet they would not commit themselves very far.
The survey might cost them fifteen or twenty thousand dollars apiece,
and they might never go further with the scheme. They thought they
could build a railroad if anyone could, and there might be money in
it, yet they knew that even to finance surveys involved considerable
risk.[15]
Likelihood of Government Aid
Although we have no direct evidence to this effect, it seems very
probable that the chance of profit to be secured in building a
transcontinental railroad under government auspices stood out more
prominently in the eyes of Huntington and his friends than any
consideration of the ultimate earnings of the railroad, once it should
have been built. What should two dry goods merchants and two dealers
in hardware, who knew nothing first hand about railroad operation,
have cared about the administration of a railroad 800 miles long?
If they wanted interest on an investment, why money commanded 2 per
cent a month in Sacramento itself. Only the prospect of still greater
gains was likely to attract a speculative trader like Huntington, and
the source of such profit could be found only in construction of the
road. If this was the real inducement, and if the likelihood of a
government subsidy was kept in mind from the first, it was fortunate
for Mr. Judah that, owing to his familiarity with conditions both
at Washington and in California, he was in a position to inform his
prospective clients of the likelihood of government aid no less fully
and authoritatively than he could advise them concerning routes over
the Sierras.
Indeed it was only on the question of government assistance that
Judah could supply business men of Sacramento with information of a
definite sort. He really knew little about the probable cost of a
transcontinental line. In his original report of November, 1860, he had
declared that the Central Pacific could be built for an appropriation
ranging from $30,000 to $72,000 per mile, varying with the difficulty
of the ground; but this was an estimate based on a very cursory
examination of the line, and could pretend to no exactness. Possibly
he was influenced by the fact that the Sacramento Valley Railroad had
been contracted for in 1854 at $45,000 per mile, payable 44 per cent
in capital stock of the company, 39 per cent in 10 per cent bonds, and
17 per cent in cash. This was equivalent to perhaps $33,000 in cash.
The contract price in this case did not include, however, the cost
of right-of-way, depot grounds, and engineering expenses, for which
additional stock was reserved.[16] Only one year later, when the first
instrumental survey of the Central Pacific was completed, Judah was
forced to change his estimate to $88,428 per mile for the first 140
miles of that railroad, including 51 miles estimated at $1,000,000 per
mile or above. Even these figures were later revised.
Estimating Probable Earnings
Nor was Judah’s information about probable earnings a great deal
more trustworthy than that relating to probable costs. There are
various ways of estimating the earnings which a new railroad is
likely to secure—yet all of them may give curious results when
applied to territory which has never enjoyed the benefits of any rail
transportation at all, as was substantially the case with California
before the Civil War. In general, engineers in California had to reckon
with the facts that the population of the state was small; that it
had only three cities of importance—San Francisco, Sacramento, and
Stockton; that there was but one important business, mining; and that a
dense traffic could accordingly be expected only in the distant future
after the development of the country served. As a practical expedient
most engineers in California who desired elaborate data had some more
or less careful count made of the business moving over their projected
route by pack train, wagon train, stage, or boat, and then made the
broad assumption that this same volume, or this volume increased
by an assumed factor, would move over a railroad during its early
years. Such was the nature of the estimate made by the incorporators
of the Sacramento Valley Railroad in 1853,[17] of the Stockton and
Copperopolis in 1862,[18] of the Placerville and Sacramento Valley
Railroad in 1863,[19] and of the North Pacific Coast in 1873.[20] Judah
had no greater facilities than other engineers of the time, and in his
own estimates followed the prevailing custom.[21]
[Illustration: Leland Stanford]
Estimates of this nature were not accurate, and it was unreasonable to
suppose that they should be accurate. Judah in 1862 put the probable
gross receipts of the Central Pacific on the first 160 miles out of
Sacramento at $4,654,240, or $29,089 per mile. Mr. Montague, who
succeeded him, estimated the annual receipts as far as Dutch Flat at
$27,209 per mile and for the whole road, as far as Nevada Territory, he
named the figures of $5,456,050, or $34,100 per mile. These were very
optimistic figures. As a matter of fact, the earnings of the Central
Pacific never much exceeded $14,000 a mile, and during the early
period, up to 1870, were as often below $10,000 a mile as they were
above it. If it had not been for an operating ratio which in 1866 and
1867 touched the extraordinary figure of 23 per cent, and which did not
reach 50 per cent until 1877, the owners of this road could scarcely
have kept it out of receivers’ hands, so great was the miscalculation.
Organization of Company
We may assume, then, that Huntington and his friends went into the
Central Pacific project as a speculation from which they hoped to
retire with a profit derived largely from construction paid for out of
government funds. Adopting this assumption, the next steps in advancing
the enterprise may be briefly described. The meetings in Sacramento
which have been mentioned took place in the winter of 1860-61. No
progress in surveys could be made at that time, while the Sierra passes
were covered with snow. In April, however, a meeting of subscribers
to the stock of the Central Pacific Railroad was held in Sacramento,
and on the 28th of June, 1861, a company was organized under the
general law of the state, to be known as the Central Pacific Railroad
of California. The capital of this corporation was set at $8,500,000,
divided into shares of $100 each. The railroad contemplated was to
run from Sacramento to the eastern boundary of California, over an
estimated distance of 115 miles. Huntington, Hopkins, Stanford, and
Crocker subscribed to 150 shares each, as did James Bailey and Theodore
Judah. Charles Marsh took 50 shares, and other parties varying, but
lesser amounts, to a total of 1,245 shares, or more than the $1,000
per mile required by the law. Leland Stanford, Charles Crocker, James
Bailey, Theodore D. Judah, L. A. Booth, C. P. Huntington, Mark Hopkins,
D. W. Strong, and Charles Marsh were the first directors.
Instrumental Survey Made
As soon as the season permitted, Judah was sent back into the
mountains, and in October, 1861, the directors had before them the
substance of his second report, this time based on an instrumental
survey. Judah now thought that a railroad from Sacramento to the state
line would cost $12,380,000, or $88,428 per mile. He did not push his
surveys beyond the point at which he reached the Truckee River, but
from his general knowledge of the country he estimated that the 451
miles between Lassen’s Meadows and Salt Lake could be built for $45,000
per mile, and that the whole road of 733 miles could be constructed for
$41,415,000, or an average of $56,500 per mile.[22]
In every way this second report was a more careful piece of work
than the one which had preceded it. The new route differed from that
recommended in November, 1860, mainly in that it ran from Sacramento
through Lincoln and Centralia instead of through Folsom, and also in
the greater detail of its location. The principal characteristics of
the line were two: (1) that it followed a nearly continuous ridge from
Lincoln to the summit of the mountains, and (2) that east of the summit
the road wound down the side of the mountain to Lake Truckee, following
the Truckee River from the lake in the direction of Humbolt Sink, and
entirely avoiding the second summit of the Sierras and the crossing of
the Washoe Mountains.
This is substantially the line of the Central Pacific today. The
maximum grade which Judah allowed himself was 105 feet to the mile.
Judah did not at this time re-examine alternative routes via Georgetown
and via Henness Pass, which he had considered and rejected the previous
fall. Nor did he refer to the line via Beckwourth’s Pass, the present
route of the Western Pacific, which he later admitted to be easier in
grade, if longer in distance, or to the possibility of a route directly
east from Folsom via Placerville around the south end of Lake Tahoe. It
is probable, however, that these two last-named routes were familiar to
him in a general way, as considerable quantities of freight consigned
to the Nevada mines were already moving over them.
Emphasis should be laid upon Judah’s survey of October, 1861, because
the continuance of the Sacramento capitalists in the enterprise
depended upon its favorable outcome. After it was completed Huntington
and his friends became, on the whole and except during certain
intervals of weakness, inclined to see the project through even at
the risk of their personal fortunes, provided reasonable government
assistance could be secured. It was with this understanding that Judah
went back to Washington in 1861 to procure the passage of needed
legislation, and it was in this spirit that a formal beginning of
construction upon the Central Pacific was made at Sacramento on January
8, 1863.