The Transcontinental Railroad, Part II
Brian Trumbore
President/Editor, StocksandNews.com

Last week I wrote of Horace Greeley and his case for a transcontinental railroad back in 1859. While it's beyond the scope of this column to tell the full story in any great fashion (I'm staring at one book on the topic that is 800 pages, for example), it's important to lay out some facts for part II and then in part III I'm going to have some fun with the weather workers faced.

You'll recall that President Abraham Lincoln signed a bill incorporating the Union Pacific Railroad back in 1862 but work on the transcontinental link didn't commence in full until right after the end of the Civil War. The Union Pacific (UP) was so named, by the way, because the word "Union" was meant to symbolize the Union would endure. UP was to start from Omaha and work westward, while the Central Pacific Railroad (CP) was to go eastward from Sacramento.

You can imagine the costs associated with building a railroad across the country were huge and there was no way, in the case of the UP, that it would have been able to raise funds in the capital markets of that time. After all, who would invest in a project that would traverse over 1,000 miles of unsettled land? Or, with CP, what would be almost 700 miles over the Sierras.

So for the project to go through the federal government had to step up and the building of the transcontinental railroad proved to be the first massive government project. For starters the two companies were granted right-of-way of 200 feet on each side on public lands, plus, for each mile of track completed, title to 6,400 acres of land to be sold to settlers, alternating with land owned by the federal government. [This was later doubled to 12,800 acres.]

In addition the UP and CP would receive $16,000 to $48,000 in government bonds for each mile completed, depending on the terrain. [$48,000 for track set down in the mountains, for example.] Plus, the two could take out government loans to help defray construction costs.

When it came to the building of the project, the Union Pacific set up a construction company, owned by management, with the name Credit Mobilier. The UP's chief engineer, Peter Dey, had originally estimated the cost per mile for the route west of Omaha at $30,000, but when Credit Mobilier asked for $60,000, Dey was ordered by UP president Thomas Durant to resubmit the proposal with the new figure. Well it just so happens Peter Dey had some morals and he resigned rather than be a party to fraud, saying he had given up "the best position in my profession this country has ever offered to any man."

About 10,000 men worked on the two lines. Most were ex- soldiers and Irishmen for UP, while the Chinese ("coolies") were prominent in the CP labor force. In the case of the latter, following the Gold Rush of 1849 the Chinese population in California exploded; from 7,500 in 1850 to 105,000 in 1880. In his book "Empire Express," author David Haward Bain explains that the "peasants of Kwangtung?traveling by junk to Hong Kong, signed on for passage to San Francisco on credit against future earnings in the mines, jamming like livestock in the holds of sailing vessels for the two-month voyage?"

"The peasants of Kwangtung were indentured in California to locally run Chinese district companies, signed on for up to five years of labor at comparatively low wages until their tickets were paid; they then filtered out into the streams and rivers of the Sierra slope in search of gold."

The Chinese were treated terribly in California and local politicians "quickly discovered?that promises to somehow address the 'yellow peril' paid off at polling places. Notably, Leland Stanford (a founder of the Central Pacific) had found it profitable when running for governor; then, at his inauguration he renewed his promise to aid the legislature in whatever measure it took to halt immigration of 'the dregs of Asia'?."

Samuel Clemens commented on the Chinese after arriving out west.

"They are a harmless race, when white men either let them alone or treat them no worse than dogs; in fact, they are almost entirely harmless anyhow, for they seldom think of resenting the vilest insults of the cruelest injuries. They are quiet, peaceable, tractable, free from drunkenness, and they are as industrious as the day is long." ["Empire Express"]

Then in 1865, word went out that the Central Pacific Railroad needed 5,000 laborers immediately and the Chinese began to line up. I relate the above because some of the themes apply to today's debates.

Back to the main topic, at times the rails were laid four per minute. The labor was also incredibly dangerous and scores were killed in accidents, though it's estimated just as many died in booze-fueled brawls back in camp. These were movable encampments filled with peddlers, gamblers and prostitutes dubbed "Hell-on-wheels." Throw in water shortages, extreme weather and more than a few Indian attacks and you can see that working on the railroad was a bit challenging.

Both the Union Pacific and Central Pacific raced to complete their links and collect their subsidies. The UP avoided the Rockies by going through Evans Pass in Wyoming, while the CP faced severe obstacles in traversing the Sierras just 75 miles from Sacramento. Construction on both ends was so hasty much of it was shoddy and had to be redone later. In the end the UP built 1,086 miles and the CP 689 as they met on May 10, 1869, at Promontory Point, Utah, where California Governor Leland Stanford drove the golden spike to signify completion.

The transcontinental railroad was critical to the development of America. For starters it helped populate the plains and Far West. It connected raw materials to factories and markets. The railroads themselves were big users of iron, steel, and lumber so they created new markets of their own.

Railroad expansion also boomed. In 1865 there were some 35,000 miles of track across the country, but by 1900 the figure was 200,000. The railroads were the first big industry that Wall Street capitalized on and it was the first to build out a management bureaucracy.

Of course when you put Wall Street and the railroads together in those days, you were also asking for trouble. The aforementioned Credit Mobilier proved to be the source of the greatest scandal of the 19th century. We'll get into this in a few weeks, but next time it's all about the weather and massive snowfalls.

Sources:

David Haward Bain, "Empire Express: Building the First Transcontinental Railroad"
John Steele Gordon, "An Empire of Wealth"
George Brown Tindall and David E. Shi, "America: A Narrative History"

Brian Trumbore