The Inventor and the Tycoon

by Edward Ball

  It was said that Governor Stanford used so much energy to push the Central Pacific that he was able to levitate the mountains and move them closer to Sacramento. The subsidy from Washington went up per mile as the grade rose into the Sierras, starting with the foothills. The conventional view put the first hills thirty miles east of Sacramento, but Stanford telegraphed President Lincoln with a question: “Will you please inform me what evidence you will require to fix the western base of Sierra Nevada?”3 The governor recruited the help of his friend Josiah Whitney, geologist for the state, and with Stanford’s nod Whitney placed the western line of the mountains at Arcade Creek, a stream just east of Sacramento with no hills in sight. Revising the map to move the mountains released an additional $300,000 for the train. Lincoln acquiesced—he was more worried about the Civil War.

  The manic promoter Theodore Judah had brought all the interests to the table, but he fell to fighting with the four associates. They were businesspeople, local and wired into Sacramento—a contract for a friend here, a right-of-way deal for one there. Judah, the engineer, turned his back on politics to study rail widths and spikes and tempers of iron. At one point he changed the route of the first mile of track through Sacramento to bring it closer to the wharfs. Huntington, the sharpest of the group, was away; returning to town, Huntington threw a fit. Within a few weeks, he and the other associates turned against Judah. The shopkeepers told the railroad engineer to buy them out, at $100,000 per head, or to leave the company.

  Theodore Judah got a San Francisco bank to back him, but the bank changed its mind. He reached new investors in New York, and in October 1863 Judah and his wife, Anna Judah, took a steamship from California to meet the sources of their new money. From their stateroom Judah wrote to the small shareholder with whom he was still on good terms—Daniel Strong, with whom he had ridden up the Sierras to make the first survey. “The Central Pacific will pass into the hands of men of experience and capital,” he told Strong, and the grocer Stanford and hardware man Huntington “will rue the day they ever embarked” on the train. Anna Judah, in a memoir, claimed that her husband “had secured the right and had the power to buy out the men opposed to him,” and that “everything was arranged for a meeting in New York City on his arrival.” The deal, if it existed, was probably with New York’s most senior dealer in railroads, Cornelius Vanderbilt.

  Anna and Theodore Judah took the Central American route to the East Coast—a steamer to Panama, a hard road across the isthmus, a steamer to New York. On the overland leg in Panama, Judah caught yellow fever, or perhaps typhoid, and spent the remainder of the trip semiconscious. In New York, he was carried to the Metropolitan Hotel, delirious. He died a day later, at age thirty-seven.

  Theodore Judah had laid the train franchise at Stanford’s door. The associates, who already made decent money selling pickaxes and bags of rice to miners, would become a founding clique of the Gilded Age, the first circle in American life of the poisonously rich. When Judah died, Stanford and the others sent flowers to Anna Judah, his widow, and enclosed the condolences of the investors, professing their “unfeigned sorrow” that he was out of their way.

  “Occasionally the newspapers find fault and slander and impugn my motives but less so than I expected,” Stanford said in a letter to his mother. He was governor of California and president of its most devouring company; while his mother, Elizabeth Stanford, age seventy-one, lived alone in a farmhouse in upstate New York, widowed for several years. “I manage to pursue very steadily the even tenor of my way despite the clamor of enemies,” Stanford told her, an understated boast. Two weeks later, on Christmas Eve, Stanford wrote his mother again, this time to reminisce about winter sleigh rides they used to take through snowbound fields and to apologize that he had not visited her in seven or eight years. The governor offered his mother a grand but wooden excuse—“The building of a railroad over the Sierra Nevada Mountains with as much rapidity as possible is an enterprise that is very exacting in its requirements of time.” Stanford seems to have felt guilty about neglecting his mother, about having left, as a young man, the peaceable modesty of the family farm near Albany for the dream of California, and having never returned. “How many sacrifices you have made for us all,” he said, referring to his brothers, who had also gone to follow money in the West, “and comparatively how little we have been able to make return.” Easing his conscience, Stanford promised to come home to upstate New York one final time to retrieve his mother and bring her to California. “If I am able to visit you during the year I shall hope to have you return with me,” he said. “I am sure that once here we could make your stay happy.” In a couple of years, he would persuade his mother to follow him west, and Elizabeth Stanford would live out her days with her successful son, on the third floor of his house, the dowager matron who had produced the most powerful man west of Chicago.4

  Leland and Jane Stanford on the porch of their house on N Street in Sacramento, ca. 1868 (Illustration Credit 4.3)

  Stanford sent Collis Huntington to Washington to lobby for more subsidies, and Huntington in effect bought his way through Congress. Exactly how he did so would emerge years later, when his correspondence, full of talk of bribes, became public. It was 1863, the Civil War was peaking. To Stanford, back in California, the catastrophe of the Battle of Gettysburg (July 1863, fifty-one thousand casualties) looked understandably distant from the task, 2,700 miles away, of laying track with a 105-foot rise in grade for each mile up into the mountains. But to Huntington, the man in Washington, the slaughter of the war made a kind of background music. In the first month of summer 1864, a second Railroad Act emerged from committee. During early June, as Huntington marked up the draft of the bill, the Union lost twelve thousand men at the Battle of Cold Harbor, Virginia, one hundred miles from Washington. In late June, with Huntington’s notes appended, Congress passed the Railroad Act of 1864; President Lincoln signed it on July 2. The ink was drying when the Union began its long siege of Petersburg, south of the Confederate capital of Richmond. The siege would last ten months and cost the Confederacy twenty-eight thousand men. It is not clear how much the rising lake of blood meant to Huntington and the associates. It is entirely clear they wanted their railroad to go on the ground.

  The Railroad Act of 1864 doubled the payout in bonds for Stanford’s company. The valleys were enriched to $24,000 per mile, the foothills to $48,000, and the high mountains to $96,000. In an additional part, the federal government was now subordinated as the debtor on the bonds, giving up the first mortgage, which meant the Central Pacific could borrow money on them easily, important within capital markets in London. This simple change, finagled by Huntington in a room rank with cigars, hugely increased the flow of capital to the building and grading sites.

  With money streaming in, Stanford stepped off the uneasy boat of politics. When his two-year term as governor ended, he declined to run again, and he was out of his office in the capitol by early 1864. Although the Central Pacific would turn into the company that ran California, Stanford told everyone that he was no longer a politician, but a businessman. He liked it, however, that people still called him Governor Stanford.

  Railroads were thirty years old in the eastern states, and foundries had been developed to build them, but west of the Mississippi no metal works, no rails, and certainly no locomotives could be found. From New York, Huntington shipped the hardware. In his first purchases he bought sixty miles of iron rails, plus the necessary spikes and chairs. A chair was a six-by-nine-inch iron plate, bolted to the wood crosstie, on which the iron rail could sit without slipping; spikes were the fat seven-inch nails that held the rail to the tie. From McKay & Aldus Iron Works in Boston, Huntington bought the first rolling stock: locomotives, passenger and baggage cars, flat cars and boxcars. He bought “frogs,” X-shaped iron plates the size of a table that guided a train from one track to another. He bought turntables, iron disks as big as a train car that wheeled it around 180 degrees so a locomotive might go the other
way. Seat springs came from Delaware, engine oil from Pennsylvania, brakes from Pittsburgh, telegraph wire from Boston, and plate glass from New York City. A glazing company in Manhattan got the contract to make the embossed signs, in silver leaf, for “Ladies” and “Gentlemen.”5

  Everything went by ship around the Horn. People traveling to California from the east might cross the isthmus at Panama, but hardware in multi-ton loads had to go from New York south to the bottom of South America and back up west and north to San Francisco, a distance of eighteen thousand miles and three months.

  Construction gear came from the east, raw materials from the west. Stanford in his office in Sacramento kept up the delivery of timber for rail ties and trestles. Timber went into the furnaces that drove the locomotives, it went into the snow sheds that covered the tracks in the blizzard-prone Sierras. (Thirty-seven miles of roof were built to keep snowdrifts off the rail.) And California had rags. A used clothing dealer in Sacramento, Charles Harley, got a contract for “wiping rags,” and in one month he sent 1,584 of them to rail depots.

  Theodore Judah’s survey had picked out places where tunnels were meant to go through rock, the longest being a 1,660-foot-long hole through a mountain near the peak of the Sierras, the Summit Tunnel. In 1866, crews with hand tools and black gunpowder chipped at the mountain, advancing at a rate of six inches a day. That April a new explosive arrived, nitroglycerine, or “Nobel’s Patent Blasting Oil.” Devised by a Swede of gentle temperament named Alfred Nobel, nitroglycerine possessed much more destructive power than the powder Charles Crocker’s crews had been using. The volatile gelatin might speed up the tunnel at the summit, but the trouble with the explosive goo was that it tended to blow up in transit. After half of a wharf in San Francisco disappeared as one shipload jostled its mooring and exploded, Crocker hired an English chemist named James Howden to make nitroglycerine at the construction site in the mountains, avoiding the need to ship the material. It also escaped the necessity of reimbursing Mr. Nobel for his patent, which Stanford and Crocker thought cost too much. With nitroglycerine, crews blasted a twelve-foot hole in the mountain at a rate of three feet a day, faster by five-fold than the initial method. The death rate also multiplied. The company ordered fresh caskets for the increased numbers of men killed. In November 1867 the Summit Tunnel, the most arduous half mile of the 1,800-mile route, was finished, just as Helios, the photographer, ended his excursion in Yosemite Valley. The tunnel had taken a year to cut.

  The route of the transcontinental railroad, in a map from 1877. The Central Pacific portion reached from western California, east over the Sierras, nearly to Salt Lake City, Utah. (Illustration Credit 4.4)

  The eastern portal of Summit Tunnel, a 1,660-foot-long aperture at the peak of the mountains just west of Truckee, California (Illustration Credit 4.5)

  For six years an army of men clamored around the roadbed, inching the track forward, but no list of their names survives. There is not even a dependable estimate of their numbers. Were there fifteen thousand? Twenty-five thousand? The men (and perhaps a thousand women) came from Guangdong province, China. They built 742 miles of track over the Sierras, and after three or five years, most went back to Asia. The Central Pacific kept memos when the Chinese crews went on strike, yet notes about who was maimed by dynamite or crushed by a loose car were tossed or never existed.6

  In his first speech as governor, in January 1862, Stanford mentioned the lowly decadence of the Chinese. “An inferior race,” he said at his inauguration, on the steps of the capitol building in Sacramento, in the basso voice that pleased people. “China is sending the dregs of its society to California.” By this time, one in six Californians had emigrated from southern China. By this time many whites thought that their state was too full of colored obstacles to their moneymaking—Indians, Mexicans, Negroes, and especially Chinese. Stanford promised voters he would stop the Asian flood and enlarge the stream of white Americans immigrating from the East—the “superior race,” as he put it.7 Follow-through came quickly. Three months into office, Governor Stanford signed House bill 201, which laid a head tax on Chinese residents. (The state’s supreme court later threw out the law.)a

  Migrants from Guangdong, in southeast China, came to California in debt. Chinese brokers in San Francisco or in Hong Kong bought passage and loaned the cost to immigrants, who stayed under the broker’s thumb until the money was repaid; meanwhile the lender hired out his debtors to anyone. Immigrants sent money home—the Cantonese called it “sojourn work.”

  Charles Crocker, the dry goods man, resigned from the Central Pacific board to form Charles Crocker & Co., a contractor with a monopoly on the train’s construction. He claimed to have been the nonracist who broke ranks to hire Chinese after Irish-born workers asked for more money. The Central Pacific put down track beginning in October 1863, and the first Chinese crews went on the line in early 1864. “We increased them very rapidly, and in six months we averaged 3000,” Crocker said, remembering the time. By June, the company had trains running on thirty-one miles of track, from Sacramento to the town of Newcastle, as it kept building east. At the peak, in 1866, some 14,500 Cantonese (“Chinamen”) lived next to the tracks, working six-day weeks to shovel and cart, blast and hammer, spike and straighten, for thirty-one dollars a month.8 The Alta California newspaper said the Chinese crews looked to be “in these dreary solitudes, the presiding genius.”9

  Muybridge, The “Heathen Chinee” Prospecting, ca. 1868. Muybridge looked for subjects among Chinese people, marketable because they were exotic and “heathen” in the eyes of the white photograph-buying mainstream. (Illustration Credit 4.6)

  In January 1865 Crocker advertised in the Sacramento Union for more linemen—“Wanted, 5,000 men for permanent work.” Labor companies, run from San Francisco by Chinese bosses, sent workers in teams, twenty-five to thirty men, each with a leader. Crocker gave each crew a white overseer. A handful of payroll sheets in the Central Pacific files sketch the story. Payroll 288 for September 1866 lists about fifty crews, but not individual linemen, using the name of a single headman for each group. That month, Ah Sing’s company was the biggest with thirty-four men, followed by Ah Fong’s (twenty-eight) and Ah Wing’s (twenty-six). Crocker’s supervisors were mostly Irishmen, who paid the headman a lump sum in gold coin for the number of days a company worked. White workers like carpenters, cooks, and woodchoppers earned $1.60 a day, Chinese laborers a dollar. Deductions thinned the wage. Payrolls show penalties for “fighting the foreman” (fifty dollars deducted from a crew) and for each lost (two dollars) or broken (one dollar) hammer, shovel, or pickax. There were makeshift jails—notes on “detention” appear many times.10

  Chinese linemen traveling on wood cars through a sixty-three-foot-deep crease in the Sierra rock known as Bloomer Cut (Illustration Credit 4.7)

  When the crews shifted from Irish to Chinese, Governor Stanford changed his melody about the “inferiors.” As company president he wrote the White House to praise the linemen—“As a class they are quiet, peaceable, patient, industrious and economical [and] as efficient as white laborers.” Chinese workers were “more prudent and economical” than whites whom the railroad employed. Happily, they were also “contented with less wages.”11

  Throughout the 1860s anyone who rode along the Central Pacific line would rattle past a string of tent villages and look out on the dwellings of many thousands of linemen. Under each tented or ramshackle wooden roof, a dozen or two men lived together, with every crew employing a cook to feed them. An entire workers’ village of five hundred would have drinking sheds and a gambling hall—sometimes a theater for music and comedy, sometimes a brothel. There were no women on the roadbed gangs, but in their sex work, women also helped build the train.

  An item appeared in the Sacramento Reporter as construction was ending. “The accumulated bones of perhaps 1200 Chinamen came in by the eastern train from along the line of the Central Pacific,” the paper said. “Nearly all of them are the remains of
employees of the company, who were engaged in building the road.” The paper published no figures for injury or death, nothing but this observation, merely stating that the bodies were going back to Guangdong.12

  Stations opened on the finished track as the crews built out, and the train spewed money. In 1864, 49,375 passengers and 13,902 tons of freight went by rail, with a profit margin for the associates approaching 50 percent.13 In Sacramento, Stanford and Mark Hopkins, the company accountant, perhaps with some astonishment, counted the income. Revenue as well as work on the train swelled just as Stanford’s two-year term as governor was ending.

  The associates set up an outfit to enlarge the money flow—the Contract and Finance Company, which appears on paper in 1867. By this time, 150 miles of track had gone down, but the majority, 550 miles (and the vault of subsidies they held), remained to be laid. In November, the associates awarded all contracts for construction to the new company, which they owned. The Contract and Finance Company named its prices for work and materials, while subcontracting construction at a fraction of the sum. Government money accruing to the Stanford train at the front end exceeded by five or six times what the train actually cost to put on the ground. The construction deal looks to have been a classic two-sets-of-books accounting scheme, and the overbilling appears to be the first well of Stanford’s fortune—I say appears because the company’s rigging of costs, hidden at the time, can barely be deciphered a century and a half later. The usual figure cited is $47 million—the bonds taken from Washington and pocketed by the associates. (The Union Pacific used a similar shell company, the Crédit Mobilier, to harvest its own subsidies.) Collis Huntington and Charles Crocker later told Congress in hearings that their books, fifteen volumes of ledgers, had been destroyed, and both claimed ignorance about who might have burned them. The four associates emerged as the richest men in the West, and Leland Stanford became first among equals.14