Nothing Like It in the World The Men Who Built the Transcontinental Railroad 1863-1869 (61 page)

Putnam's Magazine,
in its October 1868 issue, pointed out why the American people, “standing in the fore-front of the civilized world, have reaped the most signal advantages from this new servant,” the locomotive. In the year 1868, there were forty thousand miles of track in the United States, “or four-tenths of all the railroads in the world.” Without the railroads,
Putnam's
asserted, the Mississippi Valley would have fewer than four million inhabitants instead of the twelve million already there, with more coming. In the past fifteen years,
Putnam's
said, the population of the United States had increased 90 percent, while production had jumped 230 percent.

The conclusion in
Putnam's
was that the railroads, especially the transcontinental railroad, had “lightened human toil, made men richer in blessings and in leisure, increased their activity, shielded them from tempest and famine, enlarged the area available for man's residence and subsistence, enabled him to do more in the same period of time and spread knowledge and virtue over all this earth.”
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M
ISTAKES
were made all along the line, caused both by errors of judgment and a certain cynicism, encouraged by Congress, and cheered on by the populace at large. There was an emphasis on speed rather than quality, on laying as much track and making as much grade as possible rather than doing it right.

One glaring reminder of the waste was the two grades running east and west from Promontory Summit, parallel to each other. Eventually, under dictate from Congress, in November 1869, the UP sold its line from near Ogden to the summit to the CP for $2,852,970 ($58,824 per mile). But just as the CP had to abandon grade it had made from the summit to Ogden (but it did use the Big Fill, ignored by the UP), so did the UP have to abandon everything west of Ogden, all the way to Humboldt Wells, 222
miles from Ogden. That cost the UP over $200,000. The CP abandoned parallel grades that cost it $752,000. Congress had watched as more than two hundred miles of the overlapping grade-work was being done. Not until April 10, 1869, did it step in to halt this.
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P
ROMONTORY
Summit remained the terminus point for the railroads until the CP had paid for the tracks from there to Ogden. For a few months it was the last Hell on Wheels. Boxcars on a siding provided living quarters for railroad employees. A row of tents faced the railroad across a single dirt street. The tents served as hotels, lunch counters, saloons, gambling dens, a few shops, and as nests for the “soiled doves.” There was plenty of whiskey, but precious little water. The railroads had to haul it on their cars, in barrels, from springs thirty to fifty miles distant.

A number of “hard cases” arrived in Promontory. A reporter for the
Sacramento Bee
wrote of “Behind-the-Rock Johnny, hero of at least five murders and unnumbered robberies.” In the gambling tents the games included three-card monte, ten-die, strap game, chuck-a-luck, faro, and keno. A gang of gamblers and confidence men called the “Promontory Boys” set up headquarters there and were “thicker than hypocrites at a camp meeting of frogs after a shower.” J. H. Beadle wrote that Promontory Summit “certainly was, for its size, morally nearest to the infernal regions of any town on the road.” In January 1870, when the terminus was transferred to Ogden, Hell on Wheels moved out of Promontory.
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T
HE
rails were joined but the UP's financial problems continued to grow. Aside from resources Durant had siphoned off, contractors had stolen much material that the UP had paid for, or at least signed for. And among many other creditors, there was Brigham Young, who bombarded the company headquarters in Boston with demands for payment in full. The UP had no money, but it did have equipment left over and Young was desperate to have a branch line, to be owned and controlled by the Mormons, running from Ogden to Salt Lake City. Finally, in September 1869, a deal was struck. The UP gave the Mormons four thousand tons of iron rail ($480,000), 144 tons of spikes ($20,000), thirty-two tons of bolts ($5,600), four first-class passenger cars ($5,000 each), second-class cars, mail cars, flatcars, and boxcars. The total value that Young signed
for was $599,460. The Mormons got started on their railroad immediately and had it in service in a few months.
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W
HILE
building the road, the UP had relied on steamboats and ferries or, in the colder winters, on temporary tracks laid across the frozen Missouri River, to bring into Omaha supplies of all kinds from the east. What was needed was a permanent bridge, which was started in 1870 and opened in March 1872. It had eleven spans, each 250 feet in length and sixty feet above the water. It cost about $2.9 million to build.

With the completion of that bridge, there was a continuous line of track from New York to Sacramento. In Sacramento, the Big Four were putting their first pioneering line into the San Francisco Bay Area and through the broad, fertile, and largely unpopulated San Joaquin Valley. They were taking control of other railroads and had even bigger plans.

O
N
September 4, 1872, the
New York Sun
had a bold headline:

THE KING OF FRAUDS

How the Credit Mobilier Bought

Its Way Through Congress

COLOSSAL BRIBERY

Congressmen who Have Robbed the People, and who now Support

The National Robber

HOW SOME MEN GET FORTUNES
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The newspaper had launched what became the biggest scandal of the nineteenth century. That scandal would scar the UP through the remainder of that century, and indeed to the end of the twentieth century. The House of Representatives had a series of hearings to inquire into the workings of the Crédit Mobilier, the UP, and the CR Every official from the companies was required to testify. In virtually every case the testimony was twisted and given the worst possible interpretation. The hearings went on for a full six months, featuring for the most part acrimony and sensationalism, although most charges were true and would be proven.

A chief but by no means only target was Oakes Ames (“Hoax Ames,” one newspaper called him), because as a congressman he had distributed Crédit Mobilier stock to some of his colleagues. Representative James G. Blaine was one of them. Representative James Garfield was another, Representative James Brooks another, and the list included Vice-President Schuyler Colfax. Ames had written (in a letter published by an inquiring reporter) that he wanted to place the stock “where it would do the most good.”

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.
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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.

T
HE
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.