Rival Rails: The Race to Build America's Greatest Transcontinental Railroad

by Walter R. Borneman

  Given the allegiances of the various newspapers and the frequently tongue-in-cheek journalism of the times, it is all the more difficult to separate fact from fiction. “John” Gallagher’s moment in print is a case in point. Apparently, Gallagher was fired by the Santa Fe for some indiscretion, and a few days later he proved his volatility by becoming “very abusive and making violent threats” in the Santa Fe camp at Cañon City.

  To quell Gallagher’s outburst, a worker struck Gallagher on the head with an axe handle, “which fractured his skull.” The Colorado Weekly Chieftain reported on page one both that Gallagher would not live through the night and that he was in fact dead.

  But the following week, the Chieftain made a retraction—even if the newspaper put it on page four and had initially confused the man’s first name: “Mr. James Gallagher, the man reported killed by Curly, showed up at the Chieftain office yesterday, one of the liveliest corpses we have seen for many a day. He has an ugly bump on his head, but will soon re-cover.”11

  Occasionally, misinformation was blamed on the telegraph lines that clicked in and out of Cañon City. “Yesterday where I said there were no marement [merriment] except in high wines,” corrected one correspondent, “the telegraph made me say high winds. Today it has been whiskey straight on every side …”12

  Indeed, if another story is to be believed, time wore heavily on the hands of the idle men holding the lines in the gorge, and they were not above a practical joke or two. Without saying which railroaders were the pranksters, the Chieftain reported that forty or fifty men dressed and painted as Indians “charged with a war whoop down one of the arroyos [gullies] on a party of tenderfeet, who were holding a point in the canon.” The surprised workers beat a hasty retreat, and the Chieftain captured the tenor of sentiments on both sides by noting, “both sides, as usual, of course, claim the victory.”13

  Even during those periods when the courts permitted work on various sections of the right-of-way, the construction was not without controversy. Both railroads attempted to recruit manpower from as far away as the San Luis Valley and Denver. One grading firm was awarded contracts by both the Rio Grande and the Santa Fe. As a result, the company frequently shifted its crews from one line to the other. This may account for the reminiscences of some who worked in the canyon that “they worked for one railroad company in the day time and the other at night and drew pay from each one.”14

  As the summer dragged on, the question for the Denver and Rio Grande became whether there was a way that might bypass the gorge. Construction superintendent Robert F. Weitbrec came up with four possibilities—none of them good. The shortest and most logical ran up Grape Creek through Temple Canyon and circled back to the Arkansas River just above where it entered the gorge (the present-day Parkdale Bridge). This point was still within the Santa Fe’s 20-mile plat, but Weitbrec thought that upstream from here, the canyon might accommodate two lines.

  A second alternative climbed out of Grape Creek along the same route but went west and descended back to the Arkansas down Texas Creek, well upriver of the Santa Fe’s domain. The other two alternatives followed Grape Creek upstream farther—no small feat given that this canyon has as many twists and turns as it has rattlesnakes. An area called “the Tights” forms what might be called a miniature Royal Gorge, and it would have required many bridges before these routes also returned to the Arkansas River near Texas Creek.15

  If nothing else, the Denver and Rio Grande’s quest to control alternate routes and all conceivable branch lines provided fodder for more lines of facetious journalism. When Palmer associates incorporated the Upper Arkansas, San Juan and Pacific Railroad Company in late May 1878 and listed routes up every major tributary of the upper Arkansas and then some, a correspondent to the Chieftain—possibly Cañon City’s B. F. Rockafellow—proved a quick wit:

  “This great continental, chain lightning railway, with forked adjuncts to every ranch and prospect hole in the southwest, will also extend from Salt Lake to the northwest passage, via the lava beds,” the reporter teased. “From Ouray it will extend to Tampa Town and Stone’s Hill, via the extinct Arizona diamond fields, also to Gulliverville and Munchausonville. They will hold at all hazards for fifty years, all of the known or suspected passes covered by said routes, after the manner of its illustrious prototype, the Denver and Rio Grande Railway.”16

  As Palmer and the Denver and Rio Grande pondered their options, William Barstow Strong and the Santa Fe ratcheted up their game. The traffic pooling agreement between the two roads along the Front Range was long since dead. As the resolution of the Royal Gorge right-of-way sat mired in the courts, the Santa Fe aggressively renewed its threat to parallel the Denver and Rio Grande’s line from Pueblo to Denver with tracks of its own.

  The Rio Grande had laid its narrow gauge tracks during a time of high costs in both construction and credit. Not only could the Santa Fe now build a competing line more cheaply and with less resulting indebtedness but also, as a standard gauge road, it could carry more tonnage at less cost.

  Palmer confronted his bondholders with this threat, and the result was a humiliating defeat for the self-assured general. Rather than face economic ruin, the bondholders reluctantly leased the entire Denver and Rio Grande system to the Santa Fe in return for rather vague assurances that the combined roads would be operated as a unified system and that the Rio Grande’s indebtedness would continue to be serviced. Wall Street investors appeared to like the arrangement, and Denver and Rio Grande bonds increased from 50 percent to 90 percent of par within a few weeks.17

  Although the lease agreement was made on October 19, 1878, disagreements in the field ran deep. Palmer refused to turn over control of his road until the Santa Fe’s Boston crowd of investors fulfilled certain financial guarantees. “The arrogant demand of possession before complying with the plain terms made by Strong has been repeated yesterday by Nickerson,” Palmer groused. “I have declined of course point-blank.”

  Nickerson and Strong appear to have counted on their demand for possession and a mere offer to deposit security to secure the transfer, but Palmer would not be moved. “If they were to put up Boston itself now,” he steamed on, “it would not avail. The actual provisions of the papers must be carried out or they lose the lease.”

  Sounding a little like Collis P. Huntington when the chips were down, Palmer asked his correspondent to keep his rant to himself, but he avowed as how “we may want to take up something else [besides railroading] now that this recent act has put things in a thoroughly antagonistic shape.”

  But also like Huntington, Palmer had railroading too deep in his blood to walk away. The Boston crowd soon provided the required bond guarantees, and the Denver and Rio Grande was finally turned over to Santa Fe control on December 14—with Palmer watching every move.18

  This arrangement, however, did not halt the legal wrangles over the Royal Gorge right-of-way, and soon both railroads were also battling in the courts over the lease itself. The Rio Grande claimed that the Santa Fe’s rate system adversely affected the Rio Grande’s share of traffic and that the Santa Fe was operating the Rio Grande as if it were its own, purchasing new locomotives worth more than $100,000.

  The Santa Fe also laid track through the gorge along the full 20 miles to which it had priority. Beyond that point near Spike Buck, its construction crews were still confronted by DeRemer’s humble but effective fort because Palmer claimed that the lease to the Santa Fe did not include the Rio Grande’s right-of-way upstream of the gorge. It looked as if it was going to be another long, hot summer of standoff. But then things got even wilder, and this time, Bat Masterson was indeed there.

  Masterson received a telegram from officers of the Santa Fe asking him to recruit a posse from Dodge City and assist the railroad in defending its right-of-way through the gorge should the Rio Grande mount an attack. Just what authority a sheriff of a Kansas county had to lead armed men into a neighboring state and do the bidding of a private company is debatab
le. No one, however, doubted Bat’s relationship with the Santa Fe.

  Giving Masterson the benefit of the doubt, he may have been acting in his dual role as a deputy U.S. marshal and been determined to maintain order and the status quo pending further court action. The thirty-three men who joined Masterson on this excursion were not, however, concerned with legalities. As a boastful reminiscence later put it: “… where in the whole universe were there to be found fitter men for a desperate encounter of this kind. Dodge City bred such bold, reckless men, and it was their pride and delight to be called upon to do such work.”19

  DeRemer’s Rio Grande forces were quick to recruit similar rowdies to their cause, and after Bat’s little army arrived in Cañon City, it appeared that wild bedlam—if not open warfare—might break out between the two sides. But despite being the leader of what amounted to paid Santa Fe mercenaries, Masterson managed to keep an uneasy peace.

  Tensions cooled in April 1879 after a U.S. Supreme Court ruling in favor of the Denver and Rio Grande, but there was still the nagging and uncertain matter of the Rio Grande’s outright lease to the Santa Fe. While this matter was pending, Bat took his little army back to Dodge City to await further proceedings.

  Early in June, in anticipation of an adverse decision on the lease, the Santa Fe sent out another call to Masterson, and he hurried back to Colorado with sixty men onboard a special train. Santa Fe reinforcements from Trinidad spread out along the Rio Grande line, and Bat assumed command of the critical Rio Grande depot and roundhouse at Pueblo.

  On June 10, a Colorado state court friendly to the Denver and Rio Grande voided the Santa Fe lease and purported to return the railroad to Palmer’s control. The Santa Fe was convinced that this ruling would be overturned on appeal, and William Barstow Strong gave orders to resist where possible. At six o’clock the next morning, Palmer and his troops successfully seized the Rio Grande’s key points and took over most operations. One of the few Santa Fe holdouts was the depot and roundhouse in Pueblo, the latter of which by some accounts had by now been turned into a veritable fortress by Masterson and his compatriots.

  Robert F. Weitbrec and J. A. McMurtrie of the Denver and Rio Grande conferred with Pueblo sheriff Henly R. Price to devise a plan of attack. Price was supposed to be the neutral legal authority serving the court order for Rio Grande possession. By one report, there was talk of commandeering the lone cannon from the state armory, but closer inspection determined that Masterson had already appropriated it for his own use.

  McMurtrie was forced to assemble about fifty Rio Grande men in front of the Victoria Hotel and supply them with rifles and bayonets. At three o’clock that afternoon, this force marched to the depot and met Sheriff Price on the platform. A bystander was manhandled out of the way, and one of the armed Rio Grande men called out, “Come on now, let’s take the telegraph office!”

  There was a scuffle at the front door, and shots rang out. The door was quickly forced, and the attackers commenced to fire through the building, as the defenders sought escape out the back. There were conflicting reports whether the Santa Fe defenders returned fire, but one of Masterson’s men, Harry Jenkins of Dodge City, was fatally shot in the back as he ran out the rear door. That left the roundhouse.

  Unable to communicate with Santa Fe management, Masterson could not be sure of the exact state of the legal maneuverings. Weitbrec finally requested a parley with Bat and in the end proved persuasive. Regardless of the emotions on both sides, the current legal order required that the Santa Fe surrender its position, and Bat did so—much to the chagrin of “certain Dodge City folks, who … ‘had been hoping that the home boys would be permitted to wipe the Denver & Rio Grande off the map.’ ” When the dust settled, Palmer’s forces were in control of all points on their line, including the Pueblo roundhouse.20

  Their victory was short lived, however, because the Santa Fe appeal to federal court on the lease bounced the Rio Grande back to Santa Fe control on July 16. A month later, the final shoe appeared to drop against Palmer’s road when its bondholders forced the railroad into receivership.

  For the remainder of the summer of 1879, the outlook for the Denver and Rio Grande appeared grim. But later that fall, the railroad’s financial condition improved considerably when it received a sudden and sizeable investment in cash from an eastern investor who was no stranger to railroads. His name was Jay Gould, and he had already demonstrated a mastery of complicated deals. With an involvement in both the Union Pacific and the Kansas Pacific, Gould was keenly interested in railroad routes in the mountains of Colorado, particularly as they related to Leadville’s silver riches.

  Gould was to dabble in the affairs of both the Denver and Rio Grande and the Denver, South Park and Pacific, but his overriding concern was to keep William Barstow Strong and the Santa Fe out of Leadville. As long as the Rio Grande was leased to the Santa Fe, Strong held the upper hand.

  One tactical move was for Gould to buy into John Evans’s Denver, South Park and Pacific, which he did. Then he went to cash-strapped Palmer and bought a half interest in the Denver and Rio Grande, to cover all bases. Meanwhile, Gould arranged a traffic pool for Colorado business between his Union Pacific and the Santa Fe, “while he figured a way out of the stranglehold.”

  Gould encouraged Palmer and Evans to work together to build into Leadville from a point where the South Park’s projected line out of Denver would intersect with the Rio Grande’s claimed right-of-way upstream of the Royal Gorge—a right-of-way that Palmer defiantly continued to assert was not included in the lease to the Santa Fe.

  But Gould was just beginning to flex his muscles among these railroads. The Santa Fe’s threat to parallel the Denver and Rio Grande from Pueblo to Denver was a longstanding one. Now, for their own leverage, Gould and Palmer announced plans for a new railroad that would parallel the Santa Fe from connections with the Kansas Pacific deep in Kansas all the way to Pueblo. Strong and Santa Fe president Thomas Nickerson were not completely bluffed, but they had too much at stake to ignore the possibility that Gould might just pull it off, particularly in light of the increasingly favorable Denver and Rio Grande decisions that were slowly coming out of the U.S. Supreme Court.21

  The Court breathed life back into the Denver and Rio Grande by ruling that the Right-of-Way Act of 1875 did not preempt the railroad’s rights under its original 1872 right-of-way grant. The Court determined that the Rio Grande surveys of 1871 and 1872 were as complete as those made in 1877 by the Cañon City and San Juan on behalf of the Santa Fe. That fact followed by its occupancy of the route amidst the construction flurry of April 19, 1878—and despite a continuing debate whether Morley or McMurtrie had gotten to the critical ground first—was sufficient in the Court’s view to give the Denver and Rio Grande the priority through the gorge.

  This, of course, had been Palmer’s contention all along. It was also his excuse for not complying initially with the Right-of-Way Act of 1875, although doing so would have saved him two years of delay, expense, and uncertainty.

  The Supreme Court ruled further that the federal circuit court had been in error in enjoining the Denver and Rio Grande from construction and in allowing the Santa Fe’s subsidiaries to proceed. But since the Santa Fe had incurred significant construction costs in good faith under the circuit court’s ruling, the Supreme Court directed that the Rio Grande reimburse the Santa Fe for its construction costs throughout the gorge. These were to be determined by an independent commission.

  This should have settled the matter. But now the Santa Fe went to the circuit court and alleged that there were no grounds for enforcing the Supreme Court’s order to turn over the gorge because the Rio Grande had conveyed all its rights to the Santa Fe with its lease. Rather than immediately enforce the Supreme Court’s decision, the circuit court chose to examine the Santa Fe’s claims regarding the lease, including whether or not it had been intended to cover the Rio Grande’s rights to the Leadville extension upstream from the gorge.

  By th
e end of 1879, Denver and Rio Grande attorneys had an application for a writ of mandamus (a directive to a lower authority) before the Supreme Court asking it to order the circuit court to enforce the higher court’s decision—in other words, require the Santa Fe to give up its gorge trackage to the Rio Grande. But when the Supreme Court ruled on this largely procedural matter on February 2, 1880, it denied the application on the grounds that because the lower court had exercised its judicial discretion with regard to the prior mandate, an appeal—not a writ of mandamus—was the proper remedy. It looked as if the legal posturing was going to drag on for yet another summer. 22

  Finally, it was the booming Leadville trade—and Jay Gould—that brought the leaders of both railroads to their economic senses. With considerable pressure from Gould, they sought a compromise. The legal morass of two years of court battles was resolved in a series of agreements between the Santa Fe and the Denver and Rio Grande and their various subsidiaries. Collectively, these came to be called the Treaty of Boston, because their terms were agreed upon in the boardrooms of the East and not the rocky canyons of the West. But significantly, their critical terms were first spelled out in a letter from Gould to the Santa Fe after he had conferred with Palmer’s representatives, including Dr. Bell, “who happened to be in the City.”

  Essentially, the lease that had caused so much angst was declared null and void and all litigation terminated. The Santa Fe agreed not to build to Denver, Leadville, or the San Juan country, or any point west of the Rio Grande’s lines for a period of ten years. In return, it was to receive half of the Rio Grande’s business in and out of Leadville and southwestern Colorado and one-quarter of its Denver traffic. (In other words, ship east from Pueblo via the Santa Fe and not from Denver via the Kansas Pacific.)