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The Iron Spine
The Union Pacific met the Central Pacific at Promontory—and the nation had truly been railroaded
April 1969 | Volume 20, Issue 3
The Central Pacific Railroad of California was officially incorporated on June 27, 1861. Its officers were Stanford, president; Huntington, vice president; Hopkins, treasurer; and Crocker, a director and chief of construction. By mid-September, Judah had completed his surveys for the line, and in early October the board resolved “that Mr. T. D. Judah, the Chief Engineer of this Company, proceed to Washington … for the purpose of procuring appropriations of land and U.S. Bonds from the Government, to aid in the construction of this road.”
Lobbyist Judah found that the Civil War, now well in progress, was a distinct asset: there were no southern legislators around to wrangle over the route or to block the bill; besides, such a line would help hold California and Nevada Territory—and their gold and silver—in the Union. Thus, at last, on July 1, 1862, President Lincoln signed the Pacific Railroad Act; its provisions were generous enough for the most wildeyed promoter.
The act specified that two companies would build the Pacific line. The Central would lay track to the California-Nevada border, and a new concern called the Union Pacific Railroad Company was to build west from Omaha. Federal aid would include a rightof-way strip and ten alternate land sections per mile of route, on both sides of the line, for the entire distance. Furthermore, the government would lend each company—in the form of low-interest thirty-year bonds—$16,000 per mile of track in flat country, $32,000 in intermediate terrain, and $48,000 in the mountains.
A happy Ted Judah wired Sacramento: “We have drawn the elephant. Now let us see if we can harness him up.”
What Judah did not know was that, having planned the road and helped to guide the bill through Congress, he was no longer considered an asset by his colleagues in California. Crocker, Hopkins, Stanford, and particularly Huntington had decided that Judah was much too earnest—nay, passionate—an engineer to see that the real purpose of a transcontinental line was to make piles of money. He was bound to disapprove of their business meihods—anil sure enough, he did.
Stanford had been elected governor of California in 1861. By the freewheeling ethics of that era it was considered perfectly respectable for the governor to go right on being president of the Central Pacific as well. In his dual role, through some back-room arm twisting and by scattering money among voters on local bond issues, lie managed to take in well over a million dollars in public money to help get the railroad moving. Judah was horrified.
Next, Hunting-ton perceived that it was poor business to lay track at a base subsidy of $16,000 per mile it, with a little imagination, the payment could be trebled. He got a team of geologists to swear that the Sierras began at the limit of alluvial soil just outside Sacramento, rather than twenty-two miles east at the foothills. President Lincoln, distracted by the war, agreed, and the money rolled in at $48,000 to the mile. Judah was scandalized.
Finally, the “Big Four” created a company called the Associates, later renamed the Credit & Finance Company. This dummy concern was to build the railroad—at exorbitant rates. The cronies were, in effect, hiring themselves with an eye to overcharging themselves and pocketing the overage. (The device worked magnificently: it was later estimated that the directors took the government and other investors for about $36,000,000). The Associates were too much for Judah. He spoke his mind, and found himself excluded from a number of private conferences. After one such meeting the directors offered to buy him out for $100,000; alternatively, he was given the option of buying out the others if he could raise the money. Exhausted from six years of uninterrupted work and depressed with the turn of events, Judah once more boarded a steamer for the East, this time to look for backers who would buy the road for him. But he contracted yellow fever in Central America; carried ashore in New York, he was delirious for a week, and then, on November 2, 1863, he died. He was thirtyseven. Back in Sacramento the directors called a quick meeting to pass a resolution of sympathy lor the widow. Then they got on with their business.
Before the act of 1862 was passed there had been no Union Pacific Company. Two and a half years later there still was not much of one. True, Durant had pasted together a company of which lie was vice president, general manager, principal stockholder, and prime mover. In the best Central Pacific style, Durant had devised a holding company called the Crédit Mobilier, whose function was identical to that of the Central’s Credit & Finance front.
By the spring of 1864, however, Durant had managed to lay not a single rail out of Omaha; but he did have some promising schemes afoot. For instance, Durant gave the construction contract for the first 100 miles to a crony named Herbert Hoxie. Hoxie then assigned the contract to the Crédit Mobilier at $50,000 per mile. (The U.P.’s chief engineer, Peter A. Dey, had made an honest per-mile estimate of $30,000.) Hoxie received $10,000 worth of U.P. bonds for being the stooge, and the men of the Crédit Mobilier pocketed roughly $20,000 a mile on this particular deal.