BUILDING OF THE SOUTHERN PACIFIC
San Francisco and San José Railroad
The Huntington interests had secured control of the California Pacific.
The next logical step was to strengthen the position of the Central
Pacific south of San Francisco Bay. A start in this direction had
already been made through the construction of a branch from Lathrop on
the Central Pacific to Goshen in the San Joaquin Valley, finished in
August, 1872. But this was not enough. Not only did the Central Pacific
fail to reach the city of San Francisco, but the company was threatened
in 1869 with the possibility that an independent Southern Railroad
system might be created, no less ambitious than the California Pacific,
and penetrating a richer if less developed territory. This projected
system was that of the Southern Pacific Railroad, and in respect to it
Mr. Stanford frankly said some years afterwards:
Well, the necessity of obtaining control of the Southern Pacific
Railroad was based really upon the act of Congress providing for its
construction. It became apparent that if that last was constructed
entirely independent to those who were interested in the Central
Pacific, it would become a dangerous rival not only for the through
business from the Atlantic Ocean, but it would enter into active
competition for the local business of California. It was of paramount
importance that the road should be controlled by the friends of the
Central Pacific; and all our anticipations consequent upon the control
of that road have been realized.[165]
The small beginning of what later came to be known as the Southern
Pacific Railroad system is to be found in the San Francisco and San
José Railroad, which ran from San Francisco down the peninsula in a
southerly direction to the city of San José. Originally this company
was a local project only, and for some years an unsuccessful one.
Several parties tried their hands at building it, but failed because
they could not raise the necessary funds. In 1860 the project was
taken up by a group of local capitalists of more than ordinary energy
and resources, contracts were let, and four years later a line to San
José was actually in running order. It was to these capitalists that
the Central Pacific transferred its rights in the Western Pacific, and
it seems to have been expected that the San Francisco and San José
and the Western Pacific together would form the western end of the
transcontinental line.
This expectation was disappointed, as was the hope that the San
Francisco and San José would participate in the federal subsidies and
land grants provided in the Pacific Railway Acts of 1862 and 1864. The
city of San Francisco did, however, subscribe $300,000 in city bonds to
San Francisco and San José Railroad stock, and the counties of Santa
Clara and San Mateo, $200,000 and $100,000, respectively. At this time
the Huntington group had no interests south of Sacramento. In 1869 the
San Francisco and San José was extended to Gilroy by a company known as
the Santa Clara and Pajaro Valley Railroad Company.
Southern Pacific Railroad Company
Shortly after the completion of the San Francisco and San José, another
company, the Southern Pacific Railroad Company, was incorporated[166]
by local parties in San Francisco to build a line of railroad in as
direct a route as feasible from San Francisco to the town of San Diego,
through the counties of Santa Clara, Monterey, San Luis Obispo, Tulare,
Los Angeles, and San Diego; thence eastward through the county of San
Diego to the eastern boundary of the state of California. It is quite
possible that this new company was organized in anticipation of further
legislation at Washington. At any rate in July, 1866, Congress granted
to the Southern Pacific Railroad, besides a right-of-way, ten alternate
sections of unreserved and unappropriated public lands on either
side of the road, in the state of California, on condition that it
construct a line, presumably from San Francisco, to a connection with
a projected railroad known as the Atlantic and Pacific Railroad, which
was authorized to extend from the state of Missouri to the Pacific
Ocean. In case any portion of the twenty sections indicated should be
found to be occupied or reserved, the Southern Pacific was to be given
the privilege of selecting other lands within 20 miles of its road. The
company was to begin work within two years, and to complete not less
than 50 miles annually after the second year. No money or bond subsidy
was given.[167] By Act of July 25, 1868, Congress extended the time for
the construction of the Southern Pacific line, requiring the completion
of the first 30 miles by July 1, 1870, and subsequent construction of
20 miles annually.[168] This was plainly an enterprise of first-class
magnitude.
[Illustration: Map showing northern end of the San Francisco and San
José Railroad in 1862.]
The evidence suggests that the San Francisco and San José and the
Southern Pacific Railroad companies fell under the control of Stanford,
Huntington, Hopkins, and Crocker some time in 1868. Mr. Stanford
published a statement on March 6, 1868, to the effect that any rumor
that the Central Pacific or Western Pacific Railroad Company or any
person connected with either of them had purchased the Southern Pacific
or the San Francisco and San José or any property or franchises
connected therewith, or that any negotiations had been made tending to
that result, was utterly without foundation.[169] On the other hand, it
was Collis P. Huntington who signed a letter dated September 25, 1868,
addressed to the Secretary of the Interior, at Washington, transmitting
the annual report of the Southern Pacific Railroad required by the
act of Congress. If Stanford told the truth in March, these two
circumstances would indicate with sufficient precision the time when
the associates took charge. In any case their influence was presently
to appear.[170]
Consolidation
On October 12, 1870, the San Francisco and San José Railroad, the
Southern Pacific, the Santa Clara and Pajaro Valley Railroad, and a
new company, the California Southern, organized on paper only, were
consolidated into a corporation known as the Southern Pacific Railroad
of California. The directors for the first year were Lloyd Tevis,
Leland Stanford, Charles Crocker, C. P. Huntington, Mark Hopkins,
Charles Mayne, and Peter Donahue. Plainly, Central Pacific interests
were in control. The purpose of the new company was stated to be to
construct and operate a railroad from San Francisco to the Colorado
River, through the counties of San Mateo, Santa Clara, Monterey,
Fresno, Tulare, Kern, San Bernardino, and San Diego, together with a
line from Gilroy through the counties of Santa Clara, Santa Cruz, and
Monterey, to a point at or near Salinas City. This was not the line
proposed in the articles of incorporation, as an examination of the
accompanying map will show. It was, however, in the main the route
designated by the Southern Pacific in 1867, upon which land had been
withdrawn from entry by the government at Washington, and it had the
advantage of reaching the eastern boundary of California with less
mileage and fewer grades than the line originally laid out.[171]
[Illustration: Proposed route of the Southern Pacific Railroad,
according to map filed with the Commissioner of the General Land Office
on January 3, 1867.]
In 1871, an additional route from Los Angeles to Yuma was designated
under the authority of the twenty-third section of the act to
incorporate the Texas Pacific Railroad, which authorized the Southern
Pacific Railroad Company to construct a line of railroad from a point
at or near Techachapi Pass, by way of Los Angeles, to the Texas Pacific
Railroad at or near the Colorado River, with the same rights and
privileges, and subject to the same limitations and restrictions as
were provided in the Atlantic and Pacific Act of 1866.[172]
Ambitious Construction Program
Because of the terms of the federal Act of 1866, it was necessary
for the Southern Pacific to proceed steadily in its construction to
the south. The first piece of road offered in satisfaction of the
requirement for a minimum annual construction, was that from San José
to Gilroy. Then came an extension to Tres Pinos, which ended, for the
time being, building on the Northern Division. What happened was that
the associates found the southern end of the San Benito Valley, in
which Tres Pinos is located, relatively poor in traffic, and difficult
to build in. Stanford visited the country personally, and found no
business there, nor, in his opinion, any prospect of business. He
accordingly shifted construction from the Tres Pinos line to the
territory south of Goshen, and caused the Southern Pacific to build
its next 20 miles in that section, expecting to connect with the San
Joaquin Valley branch of the Central Pacific which ultimately came
to Goshen in August, 1872. The Southern Pacific track reached Delano
on July 14, 1873, Caliente on April 26, 1875, and Mojave on August
9, 1876. The stretch of 240 miles from Mojave to The Needles was not
finished until June 22, 1883, but that to Fort Yuma was completed in
1877.
In later years there was discussion concerning the right of the
Southern Pacific to refuse to build the stretch of road lying between
Tres Pinos and Alcalde, connecting the San Benito and the San Joaquin
valleys. It was insisted that the contract implied in the Congressional
land grant of 1866 was an entire one, and that the amount of land
given had been fixed in consideration of the difficulties of mountain
construction between the valleys named. This contention is not,
however, borne out by the terms of the Act of 1866, and there seems to
be no good reason why Congress should have stipulated for the building
of this particular bit of road, when satisfactory connection between
the San Joaquin Valley and San Francisco could be secured in another
way. On their part, the associates never intended to build across the
Coast Range, at least not out of the San Benito Valley. In 1872 the
articles of association of the Southern Pacific Branch Railroad Company
contained provision for a line from a point at or near Salinas City in
the county of Monterey southeasterly to a point in Kern County south
of Tulare Lake, intersecting the San Joaquin Division of the Southern
Pacific. Even this road never was built.[173]
At the time when the Southern Pacific Railroad entered upon its
ambitious project for southern construction, the territory south and
east of Goshen was very slightly developed. Los Angeles was a city of
5,728 persons in 1870, with an assessed valuation of $2,108,061, and an
average of one saloon to every fifty-five inhabitants.[174] San Diego
had a population of 2,300, and Santa Ana 1,445. These were the largest
concentrations of people to be found, and they amounted to nothing more
than little country towns.[175] Nor were the statistics of industry
much more striking. Los Angeles and Kern counties produced respectable
amounts of wool, and in the matter of wine the output from the former
amounted to nearly one-third of that for the entire state and one-sixth
of that reported for the United States as a whole. The number of cattle
was also considerable. But in grain only a beginning had been made,
the yield of the orchards was still small, and the volume of general
agriculture, to say nothing of manufactures, was insignificant.
The railroad construction in the territory consisted of two local
railroads connecting Los Angeles with the harbors of San Pedro and
Santa Monica, to which should be added mention of the Texas Pacific
project of Mr. Scott. The Los Angeles and San Pedro Railroad was
organized in 1868 and was finished on October 26, 1869. The city of
Los Angeles subscribed $75,000 in city bonds, and the county took an
additional amount of $150,000, also paying in bonds. City and county
bonds both bore 10 per cent. The construction of this railroad marked
the fruition of efforts begun as early as 1861, but the credit for
final accomplishment of the work was due to Phineas Banning, the
principal business man of Wilmington.[176] General Banning is said
to have entered the California legislature in order to advance his
project and to have successfully overcome a great deal of opposition
in his own district in order to put it through. The company was
consolidated with the Southern Pacific in 1874.[177]
In addition to the Los Angeles and San Pedro, reference should be
made to the Los Angeles and Independence, a railroad built in 1875 by
Senator John P. Jones, of Nevada, partly to afford an outlet to certain
mines in Inyo County from which the senator expected large results,
and partly to develop property on Santa Monica Bay. This road was also
acquired by the Southern Pacific interests, but at a later date, and at
the instance of Mr. Huntington against the judgment of at least one of
his associates.
Grant by Los Angeles
By the acquisition of the Los Angeles and San Pedro Railroad, the
Southern Pacific provided itself with a southern terminal, in advance
even of the completion of its main line. At the same time it used the
advantage which the location of its mileage in the San Joaquin Valley
gave to it in order to persuade the people of Los Angeles to grant it
aid in the measure they could afford. Speaking after the event, it is
sufficiently obvious that sooner or later the Southern Pacific, or
some other transcontinental road, was bound to seek an outlet on the
Pacific Ocean either at San Diego or at San Pedro, and of these two San
Pedro was the most likely to be chosen. But this fact, clear at the
present time, was not obvious to the inhabitants of Los Angeles; on the
contrary, the possibility that Los Angeles might be passed by caused
them the liveliest concern. This feeling was known to the officials of
the Southern Pacific. In May, 1872, two citizens of Los Angeles wrote
Mr. Stanford stating that they expected to call a meeting of tax-paying
citizens of the county in a few days, for the purpose of selecting
from among them an executive committee which should have full power to
meet the representatives of any railroad company who might visit Los
Angeles, in order to agree upon some plan whereby a railroad to Los
Angeles might be constructed.[178]
[Illustration: View south from over the San Fernando tunnel—Southern
Pacific Railroad]
The meeting was called, and the committee appointed. Harris Newmark,
a prominent business man of Los Angeles, says that before the meeting
he and ex-Governor Downey went to San Francisco and canvassed the
whole situation with Mr. Huntington. A delegation from the citizens’
committee made a second visit and returned with a man named Hyde,
who represented the railroad company. Between Mr. Hyde and the new
committee terms were presently agreed upon. The Southern Pacific
demanded a donation of 5 per cent of the assessed valuation of the
county, which was the maximum authorized by state law. Since the
county valuation in 1872 was set by the State Board of Equalization at
$10,554,592, this meant a gift of $527,730. To cover this the county
proposed to issue $377,000 in new 7 per cent bonds, and to turn over
besides $150,000 in stock of the Los Angeles and San Pedro Railroad,
which it held by virtue of its subscription to that company in 1868.
The city added $75,000 in Los Angeles and San Pedro Railroad stocks,
and 60 acres of depot ground. This made a clear gift in the aggregate
of $602,000, besides whatever the depot ground might be worth, or $100
per capita for a population of 6,000 souls. On its side the Southern
Pacific agreed to build 50 miles of its main trunk line in the county
of Los Angeles, 25 miles to be built northward and 25 miles eastward
from Los Angeles city. Later the company promised to add a branch
to Anaheim. The whole arrangement was submitted to popular vote on
November 5, 1872, and was then approved.
Inconveniences of Travel
Construction in accordance with the terms of the agreement of 1872
was promptly begun. San Fernando and San Pedro were reached in 1874,
Anaheim in 1875, and the Southern Pacific main line in September, 1876.
A vivid picture of the inconvenience of travel between Los Angeles and
the East while the work was in progress, is given in the reminiscences
of Harris Newmark, who has just been mentioned in connection with the
negotiations between the railroad and the county of Los Angeles:
Before the completion of the San Fernando tunnel, a journey east from
Los Angeles by way of Sacramento was beset with inconveniences. The
traveler was lucky if he obtained passage to San Fernando on other
than a construction train, and twenty to twenty-four hours, often at
night, was required for a trip of the Telegraph Stage Lines’ creaking,
swaying coach over the rough roads leading to Caliente—the northern
terminal—where the longer stretch of the railroad north was reached.
The stage lines and the Southern Pacific Railroad were operated quite
independently, and it was therefore not possible to buy a through
ticket. For a time previously, passengers took the stage at San
Fernando and bounced over the mountains to Bakersfield, the point
farthest south on the railroad line. When the Southern Pacific was
subsequently built to Land’s Station, the stages stopped there; and
for quite a while a stage started from each side of the mountain, the
two conveyances meeting at the top and exchanging passengers. Once I
made the journey north by stage to Tipton in Tulare County, and from
Tipton by rail to San Francisco. The Coast line and the Telegraph
line stage companies carried passengers part of the way. The Coast
Line Stage Company coaches left Los Angeles every morning at five
o’clock and proceeded via Pleasant Valley, San Buenaventura, Santa
Barbara, Guadalupe, San Luis Obispo, and Paso de Robles Hot Springs,
and connected at Soledad with the Southern Pacific Railroad bound
for San Francisco by way of Salinas City, Gilroy, and San José, and
his line made a specialty of daylight travel, thus offering unusual
inducements to tourists. There was no limit as to time; and passengers
were enabled to stop over at any point and to reserve seats in the
stage coaches by giving some little notice in advance.
In 1876, I visited New York City for medical attention and for the
purpose of meeting my son Maurice, upon his return from Paris. I left
Los Angeles on the twenty-ninth of April by the Telegraph Stage Line,
traveling to San Francisco and thence east by the Central Pacific
railroad; and I arrived in New York on the eighth of May.[179]
The San Fernando tunnel to which Mr. Newmark refers is located 27 miles
north of Los Angeles in the valley of the same name. It lies along the
most direct and convenient route from Los Angeles into the San Joaquin
Valley. Because of its length, nearly one and a quarter miles, and the
unfamiliarity of the people of the coast with projects of this kind,
there was much interest in the work and many doubts as to whether it
could succeed. Governor Stevenson was credited with the statement
that a tunnel could not be constructed. Other critics maintained that
people could never be induced to travel through so long a tunnel, and
that in any case the winter rains would cause it to cave in, to which
Stanford replied that it was “too damned dry in Southern California
for any such catastrophe.” So far as the records now show, however,
there was no unusual obstacle encountered in the work, although the
slowness with which the bore advanced and the large expense connected
with construction caused considerable anxiety to the management of the
Southern Pacific.
Western Development Company
In carrying out their plans for the occupation of Southern California,
the Huntington group naturally followed the same general policy that
had proved profitable to them in the case of the Central Pacific.
That is to say, they organized construction companies, controlled
by themselves, caused these companies to contract with the Southern
Pacific for the construction of specified sections of line, and in
their capacity as stockholders of the Southern Pacific required that
company to issue and turn over large quantities of stocks and bonds in
payment for work done. No further comment upon this method of procedure
is necessary.
The first construction company which did work for the Southern Pacific,
under the plan outlined in the preceding paragraph, was the Contract
and Finance Company. This was the same organization that had completed
the Central Pacific. It appears that the Contract and Finance Company
simply shifted men, teams and equipment from the Central Pacific to
the Southern Pacific line between San José and Tres Pinos. Later it
built the road from Goshen to Sumner, and that from San Fernando via
Los Angeles to Spadra. In all, it built for the Southern Pacific 143.65
miles, including the stretch from Gilroy to Tres Pinos. In 1874 the
Contract and Finance Company was dissolved and the Western Development
Company took its place.
The Western Development Company was incorporated December 15, 1874,
for the announced purpose, among other things, of carrying on
construction, manufacturing, mining, mercantile, mechanical, banking,
and commercial business in all their branches, and also for the purpose
of constructing, leasing, and operating all kinds of public and private
improvements. That is to say, its powers were made as extensive as
could well be imagined. Stanford, Hopkins, Huntington, and Crocker each
held one-fourth of the stock.[180]
Under date of February 2, 1875, the Western Development Company agreed
to construct a railroad and a telegraph line on the routes selected by
the Southern Pacific, between certain specified termini. The mileage
actually built was that from Sumner to San Fernando, from Spadra to
Fort Yuma, and from Goshen to Huron. Bills were rendered for this work
on the basis of $72,000 per mile, or $29,153,520 for 404.91 miles, half
in Southern Pacific first mortgage bonds and half in stock.[181]
In addition to its contract with the Southern Pacific, the Western
Development Company undertook certain miscellaneous construction,
including work on the Northern Railway, and the San Pablo and Tulare
Railroad, the building of steamers for the Central Pacific, bridges
and buildings for the Central Pacific and Southern Pacific, general
repairs for the various companies controlled by the associates, and
even finally private residences for Hopkins, Stanford, and Crocker. In
short, during its existence the Western Development Company, besides
completing the major part of the Southern Pacific, did incidental
building of any sort which the associates desired to have done.
Pacific Improvement Company
The death of Mr. Hopkins in 1878, and the temporary unwillingness of
Mrs. Hopkins to participate in the financing of new construction,
together with the death of Mr. Colton in the same year, led Stanford,
Huntington, and Crocker to close up the affairs of the Western
Development Company, and to continue their more or less speculative
building enterprises under a new organization. This new company,
incorporated November 4, 1878, was known as the “Pacific Improvement
Company.” Its relations to the Southern Pacific and to the associates
were the same as those of the Western Development Company, except that
Mr. Colton, who had taken one-ninth of the Western Development Company
stock in 1875, was not a stockholder, and that Mrs. Hopkins at the
beginning took no part. Even the capital stock was placed at the same
amount, $5,000,000.
The main accomplishment of the Pacific Improvement Company was the
construction of the Southern Pacific between Mojave and The Needles.
Besides this, however, it extended the Southern Pacific from Soledad
to San Miguel, built the Southern Pacific in Arizona and the Southern
Pacific in New Mexico, completed the California and Oregon, and Oregon
and California railroads, and continued the Northern Railroad from
Willows to Tehama. The contracts made were similar to those executed by
the Western Development Company, although the consideration varied.[182]
The Pacific Improvement Company is still in existence. After the
construction work for which it was incorporated was completed, Mr.
Huntington sold his stock to the Hopkins estate. This gave to the
Hopkins interest, then represented by Mr. Searles, possession of
50 per cent of the stock of the Pacific Improvement Company. The
other 50 per cent remained in the hands of the Stanford and Crocker
interests. At a later date the Searles stock passed to the University
of California. The Pacific Improvement Company is now in process of
liquidation. It owns some thirty town sites, a considerable amount of
real estate, including much unimproved property in the Potrero district
of San Francisco, land in the Monterey peninsula, and other property
in Buffalo, New York. It has, besides, the stock and bonds of certain
railroad companies, stock of the Carbondale Coal Company of Washington,
and of the Oakland Water Front Company of Oakland, California, and what
is still more important, it holds a large number of bills receivable
covering property of all sorts which it has sold in recent years but
which has not been entirely paid for. The Pacific Improvement Company’s
construction outfit was sold to the Central Pacific in 1883.
The last of the construction companies, the Southern Development
Company, became responsible for construction east of the Arizona state
line when the Pacific Improvement Company left the field. It was of
minor importance and may be dismissed with a word. In respect to
ownership and operation it resembled the Contract and Finance Company,
the Western Development Company, and the Pacific Improvement Company.
Identical Control of Companies
There is a great deal of history about the operation of the various
construction companies mentioned, that has not been, and perhaps
never will be, written. The men out on the road seem to have known
little about any of them. The contact of these men was with Stanford,
Huntingdon, Hopkins, and Crocker. They neither knew nor cared whether
they received orders from the associates in their capacities as
directors of the Central Pacific or of the Southern Pacific, or as
stockholders in one of the construction companies. Nor was it easy
for them to keep informed. The same construction force moved from
place to place. The same man in the same pay-car paid off employees
of the Central Pacific, the Southern Pacific, and the construction
companies indiscriminately.[183] The same general shops furnished track
materials.[184] The same equipment was found on all the different
lines, except perhaps on the northern division. There was small wonder
that even the higher engineering officials were unable to locate
accurately the stretches built for each of the principal companies
which they served, nor that men under them should have been altogether
confused.
As a matter of fact, the various corporations interested in the
building of the Southern Pacific were, after 1870, only different
manifestations of the activities of one group of men. It does not
appear that any attempt was ever made to interest outside investors.
On the contrary, Hopkins, Huntington, Colton, and perhaps the other
partners as well, agreed that if anything happened to one of them,
their stock in the Western Development Company should not go to outside
parties until the existing stockholders had had a chance to take
it.[185]
This was a distinct contrast to the attitude of the same men when
the Contract and Finance Company was formed, and indicates that they
anticipated no such difficulty in raising funds as they had experienced
when they built the Central Pacific. Had this not been true, it
is probable that they would have let the Southern Pacific alone,
competition or no competition.
Construction Financing
Under the terms of their contracts with the Southern Pacific, the
construction companies received substantially all of the stock and
bonds which that company put out. The same parties were, therefore,
directly or indirectly in control both of the railroad and of the
companies which did work for the railroad. These securities had,
however, no market for many years, at any price. County donations,
of which there were a few, also yielded but little, and the federal
land grant was not easily or early sold. The real source of financial
supplies for the Contract and Finance Company and its successors,
the Western Development and the Pacific Improvement companies, in
their work upon the Southern Pacific, were the Central Pacific, as a
corporation, and the associates as individuals.
As in the case of the Contract and Finance Company, the associates paid
no money on their stock subscriptions, but deposited funds in varying
amounts which were credited to them as loans. Interest was paid on
these advances at rates varying from 6 to 10 per cent. It appears that
the contributions by the associates to the Western Development Company
began to be considerable in May, 1876. By January, 1877, they had
reached the sum of $3,421,458.35. By March, 1878, the total advance was
in the neighborhood of $11,000,000. It remained at this figure through
1878, and the major part of 1879. The largest contributions were made
by the estate of Mark Hopkins and by Collis P. Huntington, though both
Crocker and Stanford kept substantial balances. There is no record of
the size of advances made to the Pacific Improvement Company, but we
know that the same general practice was continued.
In addition to the advances made by the Huntington group, the
construction companies benefited substantially by the assistance
rendered them by the Central Pacific. This was a sort of help which the
Central Pacific itself and the persons who built it had never known.
It took a variety of forms. A very obvious service which the Central
Pacific could and did offer was the operation of sections of the
Southern Pacific as fast as completed in connection with the Central
Pacific main line. Besides this, the Central Pacific acted as banker
when the construction companies had spare funds. More important still,
the Central Pacific on occasion lent considerable sums to the Western
Development Company. This was later denied by representatives of the
Central Pacific, but the evidence seems conclusive that the loans were
made.[186]
Similar advances were probably made by the Central Pacific to the
Pacific Improvement Company,[187] and to the Contract and Finance
Company, sometimes without interest. Money in the Central Pacific
sinking fund was invested in this way, at interest.[188] Like use
was made of surplus funds belonging to the Occidental and Oriental
Steamship Company, which the Central Pacific was holding, until the
Union Pacific discovered the matter, and, being interested in the
money, demanded that its share be handed over.[189] There is even
evidence that the associates borrowed money from the Central Pacific
between 1874 and 1878, and that the treasurer of the company entered
the sums taken on so-called “cash-tags,” carrying them as cash in his
accounts.[190] How much all these transactions amounted to, it is very
difficult to say, but it is probable that the aggregate was large.
Profits of Associates
There is no way of estimating the profits which Stanford, Huntington,
Hopkins, and Crocker drew out of the Western Development, Pacific
Improvement, and Southern Development companies. We know they were
great, because the associates died very rich men. Mark Hopkins engaged
in no important enterprise outside of his hardware business, except in
railroad construction and operation, and yet in 1878 he left an estate
appraised at over $19,000,000. Eleven years later, Charles Crocker’s
estate was appraised at $24,142,475.84.[191] Stanford’s estate was
not appraised in 1893, or at least no figures of value were made
public, and Huntington did not die until long afterwards. Inasmuch as
the associates up to 1878 were all interested in the same business
together, and since the most important of their investments were in
railroad construction work, it is fair to assume that the profits
of the construction companies were considerable. Whatever they were
it must, however, be remembered that they consisted in the main of
Southern Pacific securities and of California real estate, neither of
which were immediately salable. As a construction enterprise, the whole
Southern Pacific affair was speculative. It was from the point of view
of the owners of the Central Pacific alone that the construction of the
Southern Pacific presented itself as a necessary policy, both for the
protection of an existing investment, and for the full exploitation of
the possibilities of monopoly in California.[192]