Conceiving the grand idea of a transcontinental railway was an indispensable first step toward achieving the related goals of strengthening America’s Pacific presence and trade with Asia; founding a railroad, formulating a plan to build such a line, and securing government funding for the project constituted equally important next steps. The upshot of this colossal undertaking was that a “greater” California and its transportation giant, the Central Pacific Railroad, would exert considerable economic influence throughout the Far West and beyond. Moreover, as radical economist Henry George had predicted, San Francisco - the Central Pacific’s headquarters - would emerge, if it had not done so already, as western America’s preeminent city.
Theodore Judah spearheaded the process of converting the dream of a transcontinental trunk line, that is, a long-distance rail pathway with connector tracks or spurs, into a reality. A 28-year-old construction engineer and surveyor, he voyaged from the Atlantic Coast to California in 1854. In the ensuing six years, he solved the critical problems of where and how to lay rails through the Sierra and recruited initial investors.
Judah’s greatest contribution to the transcontinental railroad project was in discovering and surveying what became the route through the towering Sierra. Figuring out how to span this rugged rampart with track and tunnels was clearly the thorniest engineering challenge of the entire transcontinental enterprise. Until a workable plan was devised, investment capital could not be raised. Understanding this, Judah went into the Sierra in 1860 with druggist friend Daniel W. Strong and a few assistants, and located a sloping ridge above Dutch Flat that extended between the Yuba and Bear River gorges and the American River toward Donner Pass. The gradual grade of 105 feet per mile convinced Judah that here was the route that could take eastward-bound trains up and over the 7,000-foot-high Donner Pass summit. Now he could form a railroad company, the Central Pacific of California, and bring in business partners.
Four Sacramento dry-goods merchants met with Judah in November 1860 on the second floor of a hardware store on K Street owned by two of them. The prospective investors, who came to be known as the “Big Four” or the “Associates,” were Charles Crocker, Mark Hopkins, Collis P. Huntington, and Leland Stanford. All four of them had come to gold rush California to seek their fortune either through mining or supplying prospectors with shovels and other needed equipment. Judah convinced them to invest in his project. Their joint undertaking resulted in strengthening the Central Pacific, largely because of the business savvy of the Big Four. In April 1861, the Central Pacific was reorganized to admit new stockholders and elect officers: Stanford became president, Huntington vice president, Hopkins treasurer, and Crocker oversaw construction financing and labor. Judah served as chief engineer. All four investors plus Judah served as directors of the company.
Their financial partnership was essential to the launching of the railroad venture, which soon enriched the Big Four. California’s incorporation law required stock purchases of $1,000 per mile of track to be laid. That meant $115,000 would be needed to authorize rail construction across the 115 miles between Sacramento and the state’s eastern boundary.
The Associates barely amassed the requisite 10 percent down payment on the $115,000; doing so allowed their project to proceed. From total combined assets of about $100,000 at the incorporation of the Central Pacific Railroad of California on June 27, 1861, the Associates later acquired an aggregate personal fortune of about $200 million.
Since these businessmen became titans of industry in California and nationwide, biographical profiles of them are in order. Charles Crocker was born in Troy, New York, and raised in Indiana, where from an early age he sold newspapers, split rails, and managed a small iron forge. Large, brawny, and independent, he left home in his teens and traveled overland to California intent on making a fortune mining gold. Mining, however, made for sore muscles and uncertain income; before long the once strapping youth ballooned into a 250-pound, back-slapping, wheeler-dealer Sacramento shopkeeper and politician.
Mark Hopkins, another native New Yorker, sailed to California via Cape Horn, arriving in Sacramento in such desperate straits that he and several companions were reduced to eating the bone marrow of a dead ox along the road to the state capital. He met with some success as a grocer before opening a hardware store with Collis Huntington.
Huntington was born in Connecticut to an impoverished family with nine children. Looking back on his growing up, he declared: “I could whip any boy in school, old or young, I excelled in geography" He also handled numbers well. In 1849 he voyaged from New York to San Francisco, picking up $3,000 en route by buying and selling supplies to gold-seekers crossing the Panamanian isthmus. Nearly monopolizing the California shovel trade, Huntington loved the combat of the marketplace and the political arena.
Born near Troy, New York, Leland Stanford sailed to California in 1852 via the Nicaragua route. He was far more a politician than a businessperson. Though Stanford was “not distinguished by intellect or political deftness,” according to historian William Deverell, he had sufficient aptitude and the good luck of entering California’s fledgling Republican Party at a time when advancement through the organization’s hierarchy was open to men of his ilk. Elected governor of California in 1861, he was well placed politically when the Central Pacific sought government funding at the national and state levels.
The New York connection among Crocker, Hopkins, and Stanford was emblematic of that state’s role in securing financing for transcontinental railroads throughout the last four decades of the nineteenth century. According to historian Richard White, author of Railroaded: The Transcontinentals and the Making of Modern America (2011), New York and Massachusetts were homes to the family and social networks, enriched by the transoceanic China trade, which built most of the transcontinentals during that period.
Federal funding for the first transcontinental railroad came with Lincoln’s signing on July 1 of the historic Pacific Railroad Act of 1862. By then the 11 secessionist Southern states had no representation in Congress; no longer could their voting delegates block a federal government-sponsored transcontinental railroad project following a northern route. By then the case for building a Pacific railroad and telegraph network had grown only stronger. Acutely aware of this, Huntington and Judah voyaged to Washington, D. C., to help write the landmark law along with collaboration from Congressperson Aaron A. Sargent and Senator James A. McDougall, both of California.
The Pacific Railroad Act of 1862, authorizing the building of a telegraph line to complement the rail system, had several major objectives. These included providing for the
Defense of America’s Pacific Coast and growing maritime trade, integrating the nation’s economy by linking markets and resources, pacifying western Indians when necessary, transporting mail, and unifying the country through improved transportation and communication.
Toward these ends, the measure: (1) authorized the Central Pacific Railroad to construct tracks from San Francisco Bay to the eastern state line, and the Union Pacific Railroad to complete the connection from the Missouri River; (2) provided 200-foot rights of way on both sides of the track to the two railroads; (3) granted 10-square-mile (increased to 20-square-mile in 1864) tracts of public land on alternating sides of the roadbed, including timber and stone (but not mineral) rights on these lands; and (4) extended 30-year bond loans yielding 6 percent interest to the two railroads, issued at the rate of $16,000 in bonds per mile of construction for the easy grades, $32,000 for the high plains, and $48,000 for mountainous sections. The bounteous terms of the federal Act and the unprecedented scope of the project reflected the national influence of California businesspersons and politicians.
Bounteous federal aid was still not enough to satisfy the Associates, who created their own contract and finance company to build their eastbound leg of the first transcontinental. This construction company, according to historian White, charged the Central Pacific “roughly twice the actual cost of construction per mile.” Thus, the stockholders in that railroad were being price-gouged and exploited by the men who simultaneously ran the Central Pacific and its construction company. Years later, Collis Huntington admitted that the contract and finance company was “as rotten a corporation as ever lived.”
Shortly after the passage of the Pacific Railroad Act, if not before, a rift between Judah and the Big Four emerged. As chief engineer for the Central Pacific, Judah insisted on overseeing all aspects of construction. His partners, for whom business profits were everything, responded by denying Judah any voice in Central Pacific matters. The rift widened when the Big Four sought to receive the $48,000 per mile federal bond award for construction in foothills some 20 miles distant from the Sierra and Judah refused to certify the deception. Disgusted with his partners, Judah sailed for New York in October 1863 hoping to persuade railroad barons there to help him buy back the Central Pacific from the Associates. Unfortunately, this hero of the first transcontinental railroad contracted yellow fever in Panama and died in his wife’s arms, at the age of 37, on November 2 in New York. His former partners did not so much as name a railroad crossing after him.
That same year the Central Pacific induced the state legislature and counties to help finance its project by providing subsidies in addition to those granted by the federal government. Specifically, the cash-strapped Big Four succeeded in getting the state legislature and several counties, such as Placer and Sacramento, to buy $1.5 million-worth of Central Pacific stock. Moreover, these jurisdictions pledged to assume the interest payments on a like amount of bonds. This timely assistance from the state and county governments enabled the Central Pacific to collect the much-needed first installment of federal aid. Amid this search for more funds, construction began.
Groundbreaking in Sacramento took place with much fanfare at noon on January 8, 1863. The Sacramento Union Brass Band serenaded a gathering crowd beneath a clear sky. Following a prayer invoking God’s blessing, Crocker stepped forward and bellowed: “The
Figure 6.1 Route of the Central Pacific Railroad and the later extension of its rail lines by its successor, the Southern Pacific Railroad Company. Based on map appearing in Richard J. Orsi, Sunset Limited: The Southern Pacific Railroad and the Development of the American West, 1850-1930 (2005), pp. 42-3. Used by permission of University of California Press.
Governor of the State of California will now shovel the first earth for the great Pacific railroad.” California senators and assemblymen looked on admiringly, afterward delivering remarks to the audience. One speaker, echoing Asa Whitney’s dream of Pacific trade, proclaimed that over the road about to be built “the skills of India, the rich tribute of China and Japan, the gold, the wine, and the wool of Australia, the treasures of California, and the spices of the [Far] East shall roll in a mighty tide of wealth such as mankind has never realized before.”
The above statements clearly suggest that the Pacific maritime dimension of the first transcontinental railroad project was of paramount importance. This point was underscored by the fact that nearly all of the supplies and equipment that the Central Pacific needed for its work had to be transported from the war-torn East by sea via the Cape Horn route across the Pacific to San Francisco Bay. Such shipments included all iron products, from locomotives to handcars, rails, and spikes. Also, blasting powder, percussion caps, nails, shovels, picks, and more were carried aboard steamers making their way through the Golden Gate and following the inland waterway to Sacramento. In 1873 New York journalist Charles Nordhoff rightly declared: “Not a foot of iron was laid on the road on all the eight hundred miles to Ogden [Utah], not a spike was driven, not a dirt-car was moved, nor a powder-blast set off, that was not first brought [by vessel] around Cape Horn.” On arrival at their destination, these shipments supplied a Chinese workforce that had also crossed the Pacific en route to California.
World History
