Authors: H.W. Brands
Not everyone in California was thrilled at the idea of a railroad across the Sierras. The teamsters who benefited from the new Washoe road of Stanford and his partners could see that their benefit had a strict time limit, for the day a railroad reached the Comstock would be their last day in business. (The operators of rival toll roads were already in trouble.) Stage lines and express services over the Sierras faced a similar threat. Even the Sitka Ice Company, which carried the cold stuff from the far Northwest and sold it for five cents a pound at San Francisco, feared being undercut by blocks and cubes carved from the lakes of the high Sierras.
Moreover, everyone realized that the Sierras were the most serious hurdle in the path of a transcontinental railroad. Once through those mountains, construction east would be straightforward—if long, dusty, hot, cold, and sometimes harassed by Indians. Interests akin to those opposing the California-Nevada line disapproved of a transcontinental track. Steamship companies plying the routes between the East Coast and the isthmus, and between the isthmus and San Francisco, feared loss of their passengers. Clipper ship owners would lose the lucrative California leg of their trade. The overland stage would be run out of business, and all the agents, conductors, and drivers who had so impressed Sam Clemens would be thrown out of their jobs. Hoisting a telegraph wire beside a rail line would cost almost nothing; existing telegraphers (who already had killed off the Pony Express) would be deprived of their monopoly on instantaneous communication.
Nor were competitors’ complaints the sum of the opposition. Although the Republican victory in the 1860 elections neutralized the southern objections to a federally funded western railroad (the southerners took their objections with them on seceding), it didn’t silence eastern opposition. On the contrary, as a western railroad looked more likely, eastern politicians and taxpayers increasingly registered resistance to paying for something that would chiefly benefit the West. Of what use was a California railroad to Massachusetts or New York or Pennsylvania? Easterners argued that they had built their own railroads with private money; let the westerners do likewise.
The answer of Stanford and the Californians was the essence of pragmatism. If the Pacific railroad waited on private funding, it would wait a hundred years. Railroads in the East crossed counties thick with farms and villages and towns and cities—that is, filled with customers who paid the freight that supplied the profits that attracted the investment that built the railroads in the first place. Railroads in the West would cross nothing but emptiness. (Indians didn’t count—or if they did, as a cost rather than a benefit.) In time western railroads would spur settlement that would generate traffic, but any strictly private corporation would go broke long before that happened. The only way the present generation would see California tied to the East by rail was for the government to guarantee financing.
Such arguments swayed the broad-minded; for those with a narrower field of vision, other inducements were employed. Stanford and his partners sent Judah to Washington with a suitcase full of Central Pacific shares, to be dispensed among legislators as necessary. How many shares Judah distributed became a matter of subsequent dispute. Stanford conceded to a congressional committee that he and his partners had supplied Judah shares valued at $100,000; he added, with unhelpful vagueness, “I think, however, that he brought back most of it.”
At the national capital Judah discovered allies. Stanford and company weren’t the only ones hoping to profit from a Pacific railroad; several groups were vying to become the eastern counterpart to the Central Pacific. One such group had the support of Tom Ewing, William Sherman’s
foster brother and brother-in-law and the son of the former treasury and interior secretary. Another group was headed by Thomas Durant, an ophthalmologist who had forsaken sick eyes for railroad stocks and was currently a principal in the Mississippi & Missouri line. Judah brought California senator James McDougall aboard the transcontinental project, while Ewing gained the backing of Senator James Lane of Kansas, and Du- rant, whose M&M line was critical to the economy of southern Iowa, secured the support of Iowa senator James Harlan. (Harlan was a close friend of Abraham Lincoln, who had his own connections to the M&M, an offspring of the Rock Island Line, which once employed Lincoln as attorney.)
The lobbyists didn’t always pull in the same direction. Ewing and Du- rant competed with each other for the eastern concession even as they cooperated toward federal funding of the road. But the rail bill finally passed Congress, which pledged loans and land grants in exchange for the construction of a railroad from the Missouri River to the Sacramento Valley. Durant’s group, reorganized as the Union Pacific Railroad, won congressional blessing for the eastern end of the line; Stanford’s Central Pacific got the nod in the west. “We have drawn the elephant,” a jubilant Judah wired Stanford and the other partners on July 1, 1862. “Now let us see if we can harness him up.”
N
EITHER JUDAH
—who died of yellow fever contracted while crossing the isthmus the following year—nor Stanford had any idea how expensive the harnessing would be. The railroad act of 1862 established the principle of federal support for a railroad, but the law’s particulars left the builders in a yawning initial lurch. For one thing, they had to lay forty miles of track before they qualified for any federal money. For another, the money they received would be in the form of first-mortgage bonds. The latter condition put private lenders second in line for the assets of the roads, a place few of them wished to be, especially on such a risky venture. The reluctance of the lenders made it difficult for Stanford and Central Pacific, on one hand, and Durant and the Union Pacific, on the other, to raise the money they needed to build the first forty miles.
Yet Stanford’s dual identity mitigated the Central Pacific’s problem. Although a later generation would consider his presidency of the Central Pacific to pose a patent conflict of interest with his position as California governor, he—and most of his California contemporaries—considered it entirely natural for an able man to pursue the public interest and private interests at the same time. Stanford certainly did both. He employed the powers of the governorship to browbeat the California legislature into putting up $15 million in state bonds for the road; in exchange the Central Pacific promised to transport the state militia gratis during times of domestic distress. In addition the company deeded a granite quarry to the state, with the rocks likewise f.o.b. At the same time, Stanford engineered referendums in San Francisco, Sacramento, and Placer Counties authorizing those counties to invest in the road. On election day, according to multiple reports, Stanford’s brother Philip handed out gold coins to encourage a favorable vote, which duly followed. Opponents challenged Stanford’s maneuvers, but he shored up his position by appointing Edwin Crocker (Charles Crocker’s brother and himself a member of the Central Pacific board of directors, besides being the former defender of Archy Lee) as chief justice of the California Supreme Court.
Before the construction crews of the Central Pacific began moving mountains physically, Stanford accomplished the same feat politically. The federal law specified larger loans for construction through mountains than on the flat ($48,000 per mile versus $16,000 per mile), but applying the law required defining where the mountains started. Needless to say, the closer to Sacramento they started, the more money the Central Pacific would receive. Stanford recalled a statement by an eminent geologist that the eastern base of the Rocky Mountains might, in theory, be defined as the western bank of the Mississippi River. Stanford guessed that the same reasoning could apply to the Sierra Nevada. He dispatched a team of geologists—who happened to work for him, as employees of the state of California—to render an opinion in the matter. Not surprisingly, they determined that the Sierras started well down in the Sacramento Valley. When the federal Interior Department raised its collective eyebrow, Stanford suggested that Aaron Sargent, a California Republican who had ridden
into Congress on Stanford’s coattails, approach President Lincoln directly. Lincoln had things besides California geology on his mind—the Civil War was going badly at this point—and he accepted the Stanford interpretation in order to rid himself of this annoying congressman. “You see,” Sargent reported proudly, “my pertinacity and Abraham’s faith moved mountains.”
Yet for all the finagles, raising money still proved difficult. After the panic of 1857, investors were wary of speculative schemes, and to most who had been across the Sierras, a railroad to Nevada and beyond seemed speculative in the extreme. Besides, investors in the West were used to higher returns than a railroad could promise. Charles Crocker traveled to the Comstock to prospect for funds among the mining moguls there. “They wanted to know what I expected the road would earn,” he recalled. “I said I did not know, though it would earn good interest on the money invested, especially to those who went in at bed rock. ‘Well,’ they said, ‘do you think it will make 2 per cent a month?’ ‘No,’ said I, ‘I do not.’ ‘Well,’ they answered, ‘we can get 2 per cent a month for our money here,’ and they would not think of going into a speculation that would not promise that at once.”
Consequently, even as Stanford and his associates (the four principals of the Central Pacific were beginning to call themselves the “Associates”) tried to persuade Congress to liberalize the 1862 railroad law, they had to pledge their own private assets as security for the money they borrowed to get the construction started. The four were wealthy as individuals, but building a railroad required fortunes of an entirely different order. At times the burden they took on was downright frightening. Charles Crocker recalled, “I would have been glad, when we had thirty miles of road built, to have got a clean shirt and absolution from my debts. I owed everybody that would trust me, and would have been glad for them to forgive my debts and take everything I had, even the furniture of my family, and to have gone into the world and started anew.”
The uncertainty of financing suppressed the desire of the partners to celebrate the start of construction. A locomotive had been ordered from the East and shipped around Cape Horn; on being unloaded at the dock in Sacramento it nearly fell into the river. Christened the
Governor Stanford
,
it was hauled to where the first rails were being laid. But beyond this nod to their leader, the partners preferred a quiet start, without ceremony or fanfare. Collis Huntington, looking east, explained, “Those mountains over there look too ugly, and I see too much work ahead of us. We may fail, and if we do, I want to have as few people know it as we can.”
The partners divided the decision-making. Crocker and Hopkins headed the construction crews, most often on-site. Huntington handled the financing and purchasing, typically from New York and Washington. Stanford was the political fixer. His partners sometimes accused him of being lazy. “As to work,” Crocker complained during one stretch when he and the others were feeling overwhelmed, “he absolutely succeeds in doing nothing as near as a man can. He spends an hour or two per day at the office if we send for him.” Yet Stanford could deliver what the others could not, including entrée to the highest levels of the Republican party. “Mr. Huntington is one of our wealthiest and most respected and influential citizens,” Stanford wrote Lincoln, by way of introducing his money-hunting partner to the president. “I need hardly add the entire State of California will feel a deep interest in the success of his mission.”
Sometimes Stanford had to travel to exercise his political clout. During the summer of 1864 the citizens of Nevada Territory held a constitutional convention; among the clauses considered was an instruction to the inaugural state legislature to award $3 million in state bonds to the first railroad company to reach Nevada from the west. The delegates were sincerely trying to encourage railway construction, but Stanford, having hastened to Carson City from Sacramento, told them bluntly that any such legislation as they proposed would have precisely the opposite effect. Unless Nevada specified the Central Pacific, investors in the East and abroad would suppose that some question existed as to whether the Central Pacific had the best route. “To the extent to which you throw a doubt upon this being the only route,” he asserted to the convention, “when we go into the market to negotiate our securities or to sell our stock, to that extent you depreciate their value, and to that extent, of course, you prevent the construction of the road.” Stanford’s lecture accomplished its purpose: the offending clause was removed.
Stanford also applied his political skills to Brigham Young. No one in America before or since wielded power quite like that exercised by the Mormon leader. Although no longer the governor of Utah Territory, Young still headed the Mormon Church, and in that capacity largely controlled the lives of the Latter Day Saints. He had called back the Mormons from the California goldfields (in part from disgust at the likes of Sam Brannan), but the church needed cash as badly as ever. Young now found himself being wooed by both the Central Pacific and the Union Pacific, each of which coveted the kind of discipline the Mormons brought to their work. The two lines would meet somewhere between the Sierras and the Rockies; the precise place of meeting would determine the size of their federal subsidies. It might also mean the difference between ultimate profitability and ultimate failure, for whichever road first reached the valley of the Great Salt Lake could command the traffic of the Mormons, whose economic activities were beyond all proportion to their numbers.
Stanford journeyed to Salt Lake City five times to talk to Young. On his initial visit—delayed by the birth of the first child of his eighteen-year marriage to Jane, a son they named Leland Jr.—he discovered that the agents of the Union Pacific had got there before him. Young had signed a $2 million contract to do the Union’s grading, tunneling, and bridge- building from Ogden east into the Wasatch Mountains. This was big money for the Mormons, and Young was mightily pleased. In addition, the Union’s Durant had promised free passes to Mormons traveling over the Union Pacific lines to Salt Lake City, no small consideration for a church that counted on a continuing flow of converts from the East and Europe.