The UP and the CP were the biggest corporations of their time, and the first to have extensive dealings with the federal, state, county, and township governments. They could not have been built without the government aid in the form of gifts—especially the land grants, plus state and county purchases of their stock and the loans in the form of national government bonds. At the CP, the Big Four became extraordinarily rich thanks to the railroad and the way it was financed. They spent their fortunes lavishly, to the point that they became the very model of conspicuous consumption. The men who held stock in the Crédit Mobilier also got rich from it. In large part this was done by defrauding the government and the public, by paying the lowest possible wages to the men who built the lines, and by delaying or actually ignoring payments of bills to the subcontractors and the workmen. In many ways they used their power to guarantee profits for themselves. Most Americans found it difficult, even impossible to believe that they had actually earned those profits.
The original congressional investigation into the machinations of the Crédit Mobilier provided sensational material for the investigative reporters, the politicians, and the public. There were cries of outrage. The general sentiment was, We have been bilked.
People were ashamed of their congressmen who had been complicit. When Oakes Ames said he could see no reason why a member of Congress should not hold Crédit Mobilier stock, most Americans were outraged. They were also furious at the revelations by the investigative reporters and politicians of the amount of corruption that had characterized the building of the UP, and by the amount of lying or dissembling by those who testified.
After a half-year of hearings, the Congress established that Oakes Ames had distributed and used as payoffs quite a lot of Crédit Mobilier stock, that he had lied to Congress about why he had passed out that stock, that the Crédit Mobilier had paid out astonishing sums as dividends, that the Union Pacific was so broke it could only just barely keep functioning, that the Union Pacific directors had a hard time explaining what happened to all the money the UP took in from its own and government bonds.
The case was a smash hit. People couldn’t get enough of it. Papers everywhere ran summaries of the testimonies. Reporters listened for every word. As in so much else, the UP was once again leading the way as the central character in the action. As well it should have been, since what was being argued about was nothing less than the relationship between government and business. Practical matters were involved, such as when government intervention or regulation is justified. The headlines the case produced were nevertheless gripping.
Given the attention paid to the hearings, the House had to do something. After much talk, it passed two meek resolutions of censure, one against Ames, the other against Brooks. (Durant, lucky for him, was gone. Two weeks after the joining of the rails, President Grant made it clear to all concerned that Durant had to be forced off the board of directors. In late May 1869, he was.) For Oakes Ames, however, the shame of the resolution killed him. Or at least that shame was given as the major reason for his death on May 8, 1873. Brooks had died a week earlier.8
The CP, or more particularly the Contract and Finance Company, was also investigated by Congress, but all its books had been burned—whether deliberately or by accident was and is in dispute—so nothing was pinned on the Big Four, even though they were as vulnerable as the UP.
THE Congress felt it had the right, the responsibility, and the power to go after the UP and the CP, because the companies would not exist had the Congress not loaned them government bonds and given them land grants. These two matters have caused enormous controversy ever since. Both companies have been accused of stretching out the lines in order to get more land grants, a notion that is completely wrong. Despite 130 years of working to reduce the length of the lines, only a few miles have been shaved off, and that mainly caused by the fall of the level of the Great Salt Lake, which allowed the railroad to make a shortcut below Promontory Summit by erecting a causeway through the water.
The land grants are much misunderstood, especially by professors teaching the American history survey course. They are denounced, lambasted, derided. In one of the most influential textbooks ever published, Growth of the American Republic by Samuel Eliot Morison and Henry Steele Commager, the authors, who were the most distinguished historians of their day, if not for the whole of the twentieth century, wrote: “The lands granted to both the Union Pacific and the Central Pacific yielded enough to have covered all legitimate costs of building these roads.” A colleague of theirs, also distinguished, Fred Shannon, wrote, “The half billion dollars in land alone to the land grant railroads was worth more than the railroads were when they were built.”9
Other historians—for example, Robert Henry—have been more tolerant. Henry writes that the land grants did “what had never been done before—provided transportation ahead of settlement.”10 True enough, but it is also true that what the Ames brothers, the Big Four, and others thought should have been regarded as a splendid achievement was widely viewed as full of serious abuse. For example, the corruption that was rife in the building of the railroads was widespread. Further, the railroads enjoyed a monopoly that allowed them to charge what most users came to regard as inflated rates for freight and passenger traffic. There was a great deal of shoddy construction that had to be replaced. Collis Huntington had lied and probably used bribes and certainly had drawn a fictitious map to get revisions highly favorable to the CP in the Pacific Railroad Act. He and his partners and their opposite numbers at the UP also lied to the various government commissions set up to examine the track. In these and other matters, they justified the concern and attention of the investigative reporters and the politicians. That was, after all, the people’s money they had stolen.
It was the land grants and the bonds the government passed out that caused the greatest outrage, at the time and later. Still, although many of the owners of the railroads’ stocks and bonds were guilty of most of the charges made against them, there is another side.
The land grants never brought in enough money to pay the bills of building either railroad, or even to come close. In California from Sacramento to the Sierra Nevada, and in Nebraska, the railroads were able to sell the alternate strips of land at a good price, $2.50 per acre or more. But in most of Wyoming, Utah, and Nevada, the companies never could sell the land. Unless it had minerals on it, it was virtually worthless, even to cattlemen, who needed far more acres for a workable ranch. So too the vast amount of land the government still owns in the West.
The total value of the lands distributed to the railroads was estimated by the Interior Department’s auditor as of November 1, 1880, at $391,804,610. The total investment in railroads in the United States in that year was $4,653,609,000.11 In addition, the government got to sell the alternate sections it had held on to in California and Nebraska for big sums. Those lands would have been worth nearly nothing, or in many cases absolutely nothing, if not for the building of the railroads.
With regard to the government bonds, generations of American students have been offered a black-and-white view. The bonds went not only to the CP and the UP but to six companies chartered to build the second, third, and so on Pacific railroads. In the textbooks, as in the lectures, the government was handing out a gift. Now, for those of us who were in college in the 1950s, the classes were taught by professors who had taken their own graduate training in the 1930s and had thus been brought up to blame big business for everything that went wrong, especially the Great Depression. Those professors who were not New Deal Democrats were socialists. They all knew that it helps the anti-big business case if you can call those bonds a gift.
But they were not a gift. They were loans, to be paid back in thirty years or less. The requirement was met. In the final settlement with the railroads, in 1898 and 1899, the government collected $63,023,512 of principal plus $104,722,978 in interest, making a total repayment of $167,746,490 on an initial loan of $64,623,512. Professor Hugo
Meyer of Harvard looked at those figures and quite rightly said, “For the government the whole outcome has been financially not less than brilliant.”12
An automatic reaction that big business is always on the wrong side, corrupt and untrustworthy, is too easy, and the error is compounded if we fail to distinguish between incentives, for example, and fraud.
BOTH roads went through major changes in the century and a third after they were built. And major expansion. The UP built Dodge’s longtime dream, the Oregon Short Line. The CP expanded throughout California and became a major part of the Southern Pacific Company. The SP built and acquired another transcontinental line, the one Jefferson Davis had first favored, from southern California through Arizona, New Mexico, Texas, and Louisiana. By 1900, the SP had trains operating from Portland, Oregon, and Ogden, Utah, to New Orleans. By 1950, the track stretched fourteen thousand miles across twelve states, from the Pacific Ocean to the Gulf of Mexico, and through the states bordering the Mississippi River up to East St. Louis, Illinois.
The UP went into receivership, had Charles Francis Adams—of all people!—and later Jay Gould as its president, then E. H. Harriman, then others. But as the country turned into the twenty-first century, it remained one of the oldest and richest corporations in the world. In 1993, it acquired the Southern Pacific and named all the roads it controlled the Union Pacific.
THE men who built the CP were mainly Chinese. For the most part, as individuals they are lost to history. Many of them stayed with railroad work and performed handsomely on the Northern Pacific, the Great Northern, the Oregon Short Line, and others. Dodge hired them whenever he could, saying, “The Irish labor with its strikes, its dead fall whiskey shops and reckless disregard of all our interests, must be gotten out of the way.”13 In nearly every Western railroad town, there used to be a Chinatown. Mostly they are gone now, victims of discrimination and modern times.
The Irishmen working for the UP also found jobs on other railroads, or they got work at the various mines in the West. They too were discriminated against—“no dogs or Irishmen allowed”—but not so thoroughly as the Chinamen. They and their sons and daughters and their grandchildren and great-grandchildren went on to participate fully and actively and with success in American life.
Firemen, brakemen, engineers, conductors, mechanics, welders, carpenters, repair-shop men, the clerical force (male and female), the foremen, directors, supervisors, and everyone else who worked for either the UP or the CP stayed with railroads. For their careers, and so too for their children, followed by the third generation and beyond. These are the people who make up the force that made the modern railroad. They repair it, improve it, take care of it, make sure the damn things run. More than in almost all other professions, railroading is something a family is proud of and wants to remain a part of.
Railroad people are special. Like all the rest, they lose jobs, have to move, are underpaid, and otherwise have a lot to bitch about. But on the job, they love being next to and able to run and being responsible for all that fabulous machinery. They love being around trains. More than the rest of us, they hold the locomotive in awe.
THE Big Four were also railroad men, in their own way, and they managed to remain working for the railroad—small wonder considering how rich they got from building and running the CP. Charles Crocker kept to construction, serving as the boss for the Southern Pacific Railroad of California. In 1884, he brought about the consolidation of the Central and Southern Pacific roads and was then involved in the construction of the California and Oregon road from San Francisco north to Portland. He built a mansion in San Francisco said to have cost $1.5 million. It was a showplace of the city, but it was destroyed in the 1906 fire. Crocker died in 1888, with a fortune estimated at $40 million.
Collis Huntington remained a railroad king, playing his role in the CP as it gathered unto itself what seemed to be every California railroad, and then expanded nationally as it formed the SP. He tried to sell the CP to financier Darius O. Mills in 1873 for a total price of $20 million, but he was rebuffed. He was therefore stuck with running the system and remained at the head through many problems and decades. The more power Huntington got, the more outspoken his views on the proper relationship between capital and labor became, and thus the more people hated him. He embodied the dark side of unbridled capitalism. He spent much time and money lobbying congressmen to vote the way the CP and then the SP wanted—that is, against any government regulation. He ran the CP and then the SP like a medieval king.
But there was a bright side, the things he did, the work he put in, the bounce he kept in his step. His largest investment, outside the SP, was in the Chesapeake & Ohio. He had acquired it in 1869. Among other things, Huntington founded the town of Newport News, Virginia, as the deep-sea terminus for the Chesapeake & Ohio. He built a mansion on Nob Hill in San Francisco and bought another on Fifth Avenue in New York. He died on August 13, 1900.
Stanford stayed in the railroad business. With his great wealth, he did other things too, including building extensive vineyards in Tehama County, California. He also had a large ranch called Palo Alto, where he bred and ran fine racehorses. He is credited with raising the grade of California horses, and his original methods of training have been widely adopted.
In 1884, Stanford was the one who suggested organizing the Southern Pacific company under the laws of Kentucky, and, the next year, bringing the CP under its umbrella. In 1885, he was elected by the California legislature to the U.S. Senate. This came about at the expense of A. A. Sargent, Huntington’s personal friend. The two men feuded. In 1890, Huntington accused Senator Stanford of using the SP’s influence to gain his election, and that year Huntington became president of the SP, a position Stanford had held since 1885. Stanford remained in the Senate (where he did nothing of distinction) until his death on June 21, 1893.
Of the Big Four, Hopkins’s name is known for the hotel in San Francisco. Crocker is pretty generally unknown today. Huntington is remembered primarily because of the town and beach named for him. But “Stanford” is a name known to everybody, because he had the good sense to found a university and name it after his son, who died in 1884, just two months shy of his sixteenth birthday. The next year, Stanford founded Leland Stanford Junior University. From then until its opening in 1891, he was active in setting the curriculum and picking the faculty and administration for what became one of America’s and the world’s finest institutions. Because of it, not because of the CP or the SP or the governorship or the long period in the Senate, Stanford’s name is remembered today.
THE Ames brothers have also faded from general recognition. They thought they would make money and get great credit from their association with the Union Pacific. And the railroad did commission a famous architect, H. H. Richardson, to design a monument to the two men, sixty-five feet high. It stands at Sherman Summit, right beside the grade that used to carry the tracks of the road. But at the beginning of the twentieth century, the road was relocated southward (which also cut out the Dale Creek Bridge). The monument stands today, isolated and alone even though it is but a mile or so from Interstate 80 coming out of Cheyenne and headed toward Ogden, and has its own exit on the highway. With a sign. But only a handful of hard-core railroad buffs go there, and most of them once only. In Maury Klein’s words, the Ames brothers “risked their fortunes and their reputations on the grandest enterprise yet undertaken by Americans. In return they received not praise but censure as participants in the major scandal of an age busy with scandals.”14
Doc Durant got involved in the UP not so much to become famous as to make money. More than anyone else on the line, he is associated with getting it built fast. He insisted on speed in everything. He worked hard at it constantly from 1864 to 1869 and once said he did not remove his clothes for a week. He was the one who had the honor of tapping in the Golden Spike. But he was forced off the board in May 1869. His health broke. He lost almost everything he owned in the Panic of 1873, and his grandi
ose scheme to develop the iron and timber resources of the Adirondacks, including a railroad from Saratoga across the St. Lawrence into Canada, failed. He lived his later years in the Adirondacks and died there on October 5, 1885, neither rich nor famous. He had made a lot of mistakes, done lots of things wrong, but this must be said of Doc: without him, don’t ask me how they would have built the Union Pacific in so short a time.
Grenville Dodge rightly gets most of the credit for building the UP. It was a stupendous project and his great ambition. In January 1870, he resigned as chief engineer of the UP and soon became chief engineer of the Texas and Pacific Railway (it collapsed in the Panic of 1873) and then joined with Jay Gould in developing railroads in the Southwest. During the next ten years, he was associated with building nearly nine thousand miles of road. After the war with Spain, he was a partner in the Cuba Railroad Company and helped build the line from Santa Clara to Santiago.
The Cuba Railroad was his last. By that time, his surveys alone totaled over sixty thousand miles. Not many men, in his lifetime or later, spent so many nights sleeping on the ground. But he was also active as a railroad lobbyist and as a projector, builder, financier, and director of railroads. His record places him high among the railroad builders of the world.
In his retirement, Dodge was active in the Society of the Army of the Tennessee and other patriotic organizations. He was the richest man in Iowa, but with nothing like the fortunes of the Big Four. He lived in a grand Victorian house in Council Bluffs, Iowa. Though it was modest by San Francisco or New York standards, it was entirely fitting for Dodge, who had from his office window something that no one on either the West or the East Coast had—a view of his beloved Missouri River. He died on January 3, 1916.
Nothing Like It in the World The Men Who Built the Transcontinental Railroad 1863-1869 Page 45
