In 1862, when the charter was granted by the United States Government
for the construction of a railroad from Omaha to the Pacific coast,
the only States west of the Mississippi Valley in which any railroad
construction of importance existed were Iowa and Missouri. During the
three decades which had passed since the first railroad construction,
the earlier methods of transportation by boat, canal, and stage coach
gave place in the Eastern half of the United States to more modern
methods of transportation. As a result of these new conditions, the
States, cities, and towns were welded together, and population and
prosperity increased rapidly in those inland sections which had formerly
languished because they had no means of easy and rapid communication.
The construction of extensive railways, however, and particularly the
consolidation of small, experimental lines into large systems, dates
from the days of the discovery of gold in California. The nation did
not begin to realize the extraordinary possibilities of the vast
Western territory until its attention was thus suddenly and definitely
concentrated on the Pacific by the annual addition of over fifty million
dollars to the circulating medium. The wealth drawn so copiously from
this Western part of our continent had a stimulating effect on the
commerce, manufactures, and trade of the entire Eastern section. People
began to understand that with the acquisition of California the
nation had obtained practically half a continent, of which the future
possibilities were almost unlimited, so far as the development of
natural resources and the general production of wealth were concerned.
The public conviction that a railroad linking the West and the East was
an absolute necessity became so pronounced after the gold discoveries
of '49 that Congress passed an act in 1853 providing for a survey of
several lines from the Mississippi to the Pacific. Though the published
reports of these surveys threw a flood of light on the interior of
the continent, they led to no definite result at the time because the
rivalry of sections and groups of interests for the selection of this or
that route held up all progress.
The Act of 1862, which created the Union Pacific Railroad Company,
together with the amending Act of 1864, authorized the construction of
a main line from an initial point "on the one hundredth meridian of
longitude," in the Territory of Nebraska to the eastern boundary of
California, with branch lines to be constructed by other companies
and to radiate from this initial point to Sioux City, to Omaha, to St.
Joseph, to Leavenworth, and to Kansas City. * Provision was made for
a subsidy of $16,000 a mile for the level country east of the Rocky
Mountains; $48,000 a mile for the lines through mountain ranges; and
$32,000 a mile for the section between the ranges. The original plan
to secure the government subsidies by a first mortgage on the lines was
amended so as to allow private capital to take the first mortgage, the
Government taking a second lien for its advances. In addition to these
subsidies the several companies were to receive land grants of 12,800
acres to the mile in alternate sections contiguous to their lines. Upon
the same terms the Central Pacific, a company incorporated under the
laws of California, was authorized to construct a line from the Pacific
coast, at or near San Francisco, to meet the Union Pacific Railroad.
* These ambitious designs were never fully realized. The main
line ran eventually west from Omaha, meeting the Sioux City branch at
Fremont. The only other branch which was constructed to connect with the
Union Pacific was that from Kansas City and it ran first to Denver.
The public was quick to realize the significance of this huge
enterprise, for the papers of the day were full of such comments as the
following:
"It is useless to enlarge upon the value and importance of this great
work. It concerns, not the United States alone, but all mankind. Its
line is coincident with the natural and convenient route of commerce for
the world.... Over it the trip will be made from London to Hong Kong in
forty days, over a route possessing every comfort and attraction,
which takes a continent in its course, and which, from the variety and
magnitude of its sources, from the race which now dominates it, and from
the extent of their numbers, wealth and productions, must soon give law
to the commercial world."
Notwithstanding these and similarly optimistic sentiments, the meager
financial support given to the enterprise by the public at large had
been very discouraging. Although the construction had been liberally
subsidized by the Government, gross extravagance had promptly crept
in; juggling of accounts for the purpose of securing profits on the
government advances was freely indulged in, and after only a small
section of the line had been completed it was announced that more
capital must be forthcoming or the work would cease. Out of this
situation grew the plan for subletting the work to a construction
company known as the Pennsylvania Fiscal Agency--a name which was
afterwards changed to that of the Credit Mobilier of America. The story
of the Credit Mobilier, with its irregularities involving conspicuous
politicians, is one of the most disgraceful in American history. The
detailed history of these operations need not be considered here; it
is sufficient to say that finally, in spite of political scandals, the
Union Pacific lines were brought to completion. Within two years after
the letting of the contracts to this new company, in 1866, over five
hundred miles of road were completed and in operation. An advertisement
published late in 1868 announced that "five hundred and forty miles
of the Union Pacific Railroad, running west from Omaha across the
continent, are now completed, the track being laid and trains running
within ten miles of the Rocky Mountains.... The prospect that the whole
grand line to the Pacific will be completed by 1870 was never better."
As a matter of fact, the line through to the coast was finished earlier
than had been predicted. One fact which increased the rapidity of
construction was the growing financial difficulty of the company. It was
absolutely imperative that the through line be completed in order that
the resulting business might make the operation of trains pay. But
aside from this, another influence was at work to encourage rapid
construction. The Act of 1862 provided that the Central Pacific might
also build across Nevada to meet the Union Pacific, on condition that
it completed its own allotted section first. As the Central Pacific
also was receiving a heavy government subsidy per mile, and as there was
great profit in construction undertaken with this government subsidy,
there was naturally a strong incentive for both companies to build all
the mileage possible and as rapidly as possible.
The Central Pacific enterprise was backed by a group of men who were
awake to the possibilities of the situation and who had made large
fortunes in the gold-mining boom of previous years, such as Leland
Stanford, Collis P. Huntington, Mark Hopkins, and the Crockers. The
rivalry between them and the Union Pacific interests woke the whole
continent and formed a chapter in American railroad history as startling
and romantic as anything in the stories of the Vanderbilts and Goulds
with their financial gymnastics.
As the contest proceeded, public interest increased and the entire
country watched to see which company would win the big government
subsidies through the mountains. Through the winter of 1868 the work
continued on the Union Pacific with unabated energy, and freezing
weather caught the builders at the base of the Wasatch Mountains;
but blizzards could not stop them. The workmen laid tracks across the
Wasatch on a bed of snow and ice, and one of the track-laying trains
slid bodily, track and all, off the ice into a stream. The two companies
had over twenty thousand men at work that winter. Suddenly the Central
Pacific surprised the Eastern builders by filing a map and plans for
building as far as Echo, some distance east of Ogden. The Union Pacific
forces, however, were equal to the occasion. At first, one mile a day
had been considered rapid construction, but now, even with the limited
daylight of the winter months, they were laying over two miles a day,
and they finally crowned their efforts by laying in one day between
sunrise and sunset nearly eight miles of track.
In the meantime the Central Pacific also had stopped at nothing. The
company had a dozen tunnels to build but did not wait to finish them.
Supplies were hauled over the Sierras, and the work was pushed ahead
regardless of expense. On May 10, 1869, the junction was formed, the
opposing track layers meeting at Promontory Point, five miles west of
Ogden, Utah. Spikes of gold and silver were driven into the joining
tracks, and the through line from the Missouri River to the Pacific
Ocean had been completed; the first engine from the Pacific coast faced
the first engine from the Atlantic. The whole country, from President
Grant in the White House to the newsboy who sold extras, celebrated this
achievement. Chicago held a parade several miles long; in New York City
the chimes of Trinity were rung; and in Philadelphia the old Liberty
Bell in Independence Hall was tolled again.
The cost of the Union Pacific Railroad from Omaha to its junction with
the Central Pacific formed a subject of controversy for a generation.
The saving of six months of the allotted time for completing the road
no doubt increased its cost to the builders, for at times they borrowed
money in the East at rates as high as 18 and 19 per cent. Besides, in
pushing the line far beyond the bounds of civilization without
waiting for the slower pace of the settler and the security which his
protection afforded, it often became necessary for half the total number
of workmen to stand guard and thus reduce the working capacity of
the construction force. Even so, hundreds were killed by the Indians.
Governmental restrictions of various kinds also increased the cost of
the road. For example, the stipulation that only American iron should
be used increased the cost by at least ten dollars for every ton of rail
laid. The requirement that a cut should be made through each rise in the
Laramie plains, thus giving the track a dead level instead of conforming
to the natural roll of the country, ultimately resulted in a waste of
from five to ten million dollars. Extraordinary costs such as these,
combined with the extravagant methods of construction and financing,
brought the total cost of the property up to what was in those days
a fabulous sum of money. The records indicate that the profits
which accrued through the Credit Mobilier and in other ways in the
construction up to the time of the opening in 1869 exceeded fifty
millions of dollars.
While the Union Pacific was being built, from 1862 to 1869, other
railroads were not idle, and many were rapidly reaching out into the
Central West. Not only had the Chicago and North Western reached Omaha
and made connection with the Union Pacific, but the Kansas Pacific had
penetrated as far west as Denver and had joined the Union Pacific at
Cheyenne.
The close relationship between railroad expansion and the general
development and prosperity of the country is nowhere brought more
distinctly into relief than in connection with the construction of the
Pacific railroads. With the opening of a transcontinental line the vast
El Dorado of the West was laid practically at the doorstep of Eastern
capital. Not only did American pioneers turn definitely toward the
West, but foreign emigrants bent their steps in vast numbers in that
direction, and capital in steadily increasing amounts made its way
there. Towns sprang up everywhere and soon developed into busy centers
of trade and commerce. Caravan trains, which a few years before had
followed a single westward line, now started from points along the
railroad artery and penetrated far to the north and south. The settlers
knew that the time was not far distant when all the vast territory west
of the Missouri, from the Canadian border to the Rio Grande, would
be reached by the rapid spread of the railroad. In the sixties and
seventies there sprang up and rapidly developed in size and importance
such centers as Kansas City, Sioux City, Denver, Salt Lake City,
Cheyenne, Atchison, Topeka, Helena, Portland, Seattle, Duluth, St. Paul,
Minneapolis, and scores of smaller places. The entire Pacific slope was
soon dotted with towns and cities, and even the great arid plains of the
West--as well as the "Great American Desert" covering Utah, Arizona, New
Mexico, and parts of Nevada--began to take on signs of life which had
not been dreamed of a decade before.
But the development of this great section of the country during the
next few years was even more notable. By 1880 four different lines of
railroad were running through to the Pacific States, and a fifth, the
Denver and Rio Grande, had penetrated through the mountains of Colorado
and across Utah to the Great Salt Lake. These were the years when
the modern industrial era was really beginning. Man's viewpoint
was changing, and instead of remaining content with the material
achievements of the Atlantic and Central sections of the continent, he
began to realize that the vast Western regions and the thousand miles of
Pacific coast line were destined to be America's inexhaustible patrimony
for the years to come.
In 1880 the Union Pacific began its expansion to the eastward and
acquired control of the Kansas Pacific, which had come upon evil days,
and of the Denver Pacific, a most important connecting link. In January,
1880, these two companies were absorbed by the Union Pacific, which thus
obtained a continuous line from St. Louis westward. In the meantime the
Central Pacific, operating from Ogden west to the coast, had added many
branches, while a new company--known as the Southern Pacific Railroad
of California--had for some years been constructing a system of lines
throughout that State south of the Central Pacific and by 1877 had
penetrated to Yuma, Arizona, 727 miles southeast of San Francisco. It
had also built lines into Arizona and New Mexico and soon joined the
Santa Fe route, which had for some time been working westward.
During 1881 the Southern Pacific continued its eastern extensions along
the Rio Grande to El Paso, Texas, where it formed a connection with a
new road under construction from New Orleans. A junction was also made
at El Paso with the Mexican Central, which was under construction to the
City of Mexico. The Southern Pacific Railroad was closely allied with
the Central Pacific interests headed by Collis P. Huntington, and in
1884 the great Southern Pacific Company was formed, which acquired
stock control of the entire aggregation of railroads in the South
and Southwest. At the same time the Central Pacific came under direct
control of the Southern Pacific through a long lease.
During these eventful years, while the Southern Pacific properties were
penetrating eastward through the broad stretches of country to the south
of the Union Pacific lines, equally interesting events were occurring
in the north. In 1879 a consolidation was formed of the Oregon Steamship
and Navigation Company with several short railway lines in Oregon and
Washington, under the name of the Oregon Railway and Navigation Company.
These railroad lines extended east from Portland to the Oregon state
line, and north to Spokane, and they finally made connection with the
new Northern Pacific. At the same time, another road, known as the
Oregon Short Line Railroad, was built from Granger, Wyoming, on the
line of the Union Pacific to a junction with the Oregon Railway and
Navigation Company at Huntington, Oregon, on the Snake River. The Oregon
Short Line came under the control of the Union Pacific and was opened
for traffic in 1881. Later a close alliance was made with Henry Villard,
the controlling spirit in the Oregon Railway and Navigation Company.
Ultimately the entire system of Oregon lines passed under Union Pacific
control, to be lost in the receivership of 1893, but later recovered
under the Harriman regime.
When, after ten more years of expansion, the great Union Pacific
property went into the hands of receivers in 1893, it had grown to a
system of more than 8000 miles. It completely controlled the Oregon
railway and steamship lines, the lines to St. Louis, and also an
important extension known as the Union Pacific, Denver and Gulf
Railroad, running from a point in Wyoming across Colorado to Fort Worth,
Texas. The financial failure of the system was due to a variety of
causes. Its management had been extravagant and inefficient, and
construction and expansion had been too rapid. The policy of building
expensive branch lines where they were not needed and of obligating
the parent company to finance them had been a grievous mistake and had
contributed largely to the downfall of the company. Further than this,
the credit of the Union Pacific was steadily growing weaker because
the time was drawing near when its heavy debt to the United States
Government would fall due. In all its history of more than twenty years
the company had never paid any interest on the government debt nor
had it maintained a sinking fund to meet the principal when due.
Consequently, the accruing interest had mounted year by year and, should
the Government enforce payment at maturity in 1897-99, the company
would be doomed to bankruptcy. This government debt, including accrued
interest, amounted to the sum of $54,000,000.
Attention should not, however, be diverted from the fact that during all
these years a vast expansion of competitive lines had been going on far
southward of the Union Pacific. Under the guiding genius of Collis P.
Huntington, the Southern Pacific Company in 1884 had consolidated and
solidified a gigantic system of railways extending from New Orleans to
the Pacific and throughout the entire State of California to Portland,
Oregon, with branch lines radiating through Texas and making close
connection with roads entering St. Louis. In addition to these
railroads, Huntington acquired control of a steamship line operating
from New York to New Orleans and Galveston, and subsequently of the
Pacific Mail Steamship Company, operating along the coast from Oregon
south to the Isthmus of Panama and across the Pacific Ocean.
The ever-growing effects of this powerful and well-managed
competitor--combined with the large development of the Santa Fe system
during these years, the competition of the completed Northern Pacific,
and the possibilities of the new Great Northern Railway or Hill line,
now completing its main artery to the Pacific--were far-reaching enough
in themselves to bring the Union Pacific upon evil days. Consequently
few were surprised when, under the great pressure of the panic of 1893,
the property was forced to confess insolvency. The Union Pacific had
simply repeated the story of most American railroads; it had been
constructed in advance of population and had to pay the penalty. Yet it
had more than justified the hopes of the daring spirits who projected
it. It may have made individuals bankrupt, but it magnificently
fulfilled the part which it was expected to play. It had opened up
millions of acres to cultivation, given homesteads to millions of
people, many of whom were immigrants from Europe, developed mineral
lands of incalculable value, created several new great States, and made
the American nation a unified whole. Its subsequent history belongs to
another chapter of this story--a history that is richer than the first
in the matter of financial success but that can never surpass the early
pioneering years in real and permanent achievement.