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

by Walter R. Borneman

  To a large extent, Palmer was right on these counts, but he was dead wrong on his overall thesis that his little road would somehow be free from competition. If the lucrative traffic that Palmer forecast came to pass, it was simply not reasonable to assume that men like John Evans, Cyrus K. Holliday, or Collis P. Huntington would turn aside simply because one railroad had already occupied the field.

  The Denver and Rio Grande Railway began grading south of Denver early in 1871. By October, its rails were complete to Colorado Springs, a town founded and developed by the same cadre of Palmer associates who controlled the railroad and its construction company. These interests sponsored an excursion for the Denver press to see the completed line and boast of the splendor of their new town. The general and his young bride were on hand to greet them, and Queen initially embraced life here. She organized a school, presided over the budding social scene—a queen indeed—and supervised the construction of the Palmer home west of town.

  By the spring of 1872—the year of the Santa Fe’s sprint west from Newton to the Colorado-Kansas line—the Rio Grande had graded another 44 miles to Pueblo. Rails would reach the town that summer and then be extended west to Labran, Colorado (present-day Florence), to tap nearby coal deposits. But in the meantime, General Palmer and Queen embarked on a trip to Mexico, where Palmer began protracted negotiations with the Mexican government to secure a franchise for the line south from El Paso. It was evidence that the magnitude of Palmer’s own transcontinental plans had not diminished.17

  But while Palmer looked far afield from Colorado, the Denver and Rio Grande was not nearly as free from competition as the general boasted. John Evans still had designs on the South Park region. The Atchison, Topeka and Santa Fe stood poised to cross the Colorado border and build up the Arkansas River toward Pueblo. The Kansas Pacific was looking south from its main line at Kit Carson, once again thinking of the southern route to Santa Fe. Lastly, any railroad heading into the Southwest did so at its peril if it failed to take into account the designs of Huntington and his California cohorts. Competition was one thing of which there was plenty.

  7

  “Why Is It We Have So Many Bitter Enemies?”

  It was a long way between Colorado’s mountains and California, but ever since his first conversations with John D. Perry and Thomas A. Scott, Collis P. Huntington was taking no chances that out of squabbles there might come a railroad streaking into California’s backdoor. He had too much at stake to do otherwise.

  Few men saw their own power increase more dramatically than Huntington and his partners, Stanford, Crocker, and Hopkins, did in the decade of the 1860s. From four merely prosperous merchants, the Big Four were becoming the political and business fulcrum of California, if not the western United States.

  Leland Stanford served a two-year term as California’s governor, became a mainstay of Republican Party politics, and enjoyed the prestige of being front and center as a railroad president. Charles Crocker ramrodded the flow of men and materiel to the railhead, whether that be in the snows of the high Sierras or later in the deserts of Nevada and Utah. Quiet Mark Hopkins stayed out of the limelight but presided over the myriad of financial details that would someday pay off in millions for each of them.

  Huntington’s role was twofold: one assigned, the other assumed. Huntington was the designated rainmaker, the partner whose wheeling and dealing—and sometimes outright bribing—ensured the associates access to government land grants, foreign and domestic investment capital, and proceeds from the sale of largely unproven railroad bonds. But Huntington was also the inveterate railroad builder of the group. The other three were keenly interested in their holdings, but for them it was business. For Huntington, railroading became an insatiable obsession.

  There is no question that Huntington was also the driving empire builder of the group. He had little patience in his manner and no wasted motion in his methods. “Had he been a soldier,” one newspaper editor observed, “he would not have depended upon tactics … he … would have struck directly at the enemy’s center.”1

  In the beginning, the Big Four had their hands full with the Central Pacific and did not lack for competition in California. In 1860 a competing group of San Francisco businessmen incorporated the San Francisco and San Jose Railroad. After the usual false starts in the transition from paper railroad to construction, track was completed to San Jose in 1864.

  Overshadowed by transcontinental aspirants, the San Francisco and San Jose was not accorded federal subsidies or land grants in the Pacific Railway acts. Nonetheless, the railroad raised local financing from the city of San Francisco and surrounding counties and extended almost 30 miles farther south to Gilroy. By then, the San Franciscans backing the venture had seen the growing power of federal land grants, and they readily incorporated another line with a less regional identity.

  Called the Southern Pacific Railroad Company, its declared objective was to link San Francisco with Los Angeles and San Diego along the coast and then build east from San Diego to the eastern border of the state. In July 1866, Congress approved its right-of-way and land grants of ten alternate sections per mile on the condition that the railroad connect with the proposed Atlantic and Pacific Railroad near present-day Needles on the California-Arizona border. This had the effect of bending the Southern Pacific’s attention eastward from its stated route south to Los Angeles and San Diego, but as it had yet to lay a mile of track, there was plenty of time for maneuvering.2

  Meanwhile, essentially the same group of San Francisco businessmen also incorporated the Western Pacific Railroad—not to be confused with a twentieth-century line of the same name. This Western Pacific was projected to build from San Jose around the eastern side of San Francisco Bay to Sacramento via Stockton.

  In a complicated transaction they would come to regret and later rectify, the Big Four initially assigned the Central Pacific’s land grant rights west of Sacramento to the Western Pacific. They did so in order to secure San Francisco’s financial backing to their broader transcontinental enterprise and as a gesture that their line’s final terminus would be somewhere on San Francisco Bay and not up the Sacramento River.

  But no matter who controlled it, the San Francisco–San Jose—Stockton–Sacramento route was circuitous at best. A competing all-water grade route was incorporated as the California Pacific along the Sacramento River. It relied on ferries across the bay and avoided the hilly divide between San Jose and Stockton. Other competition loomed for the Central Pacific north of Sacramento. Indeed, there appeared to be no shortage of California railroad ventures—some with actual track, many more with paper charters. 3

  But by the spring of 1868—as Huntington was having his initial meetings with Perry and Scott—California railroads were coming under increasing criticism over rates from the very people who had once been so eager to cheer their advances. After Mark Hopkins made a point of noting such criticism, Huntington was quick with a rejoinder.

  “I notice that you write that everybody is in favor of a railroad until they get it built, and then every one is against it, unless the railroad company will carry them and theirs for nothing,” Huntington wrote. “In all of which I think you are quite right; but I have about made up my mind that it is about as well to fight them on all the railroads in the State, as on our road, as it is not much more fight and there is more pay …”

  Then in a postscript, Huntington added: “I wish you would send me the names of all the railroads in California, the length of them, and the names of the officers, stating starting point and terminus.” Hopkins knew that Huntington was not kidding.4

  In truth, the Big Four had already purchased their earliest competitor, the Sacramento Valley Railroad from Sacramento to Folsom, as well as its extension east toward Placerville. To the south, the Big Four’s construction company ended up building the Western Pacific, and that route was soon back in their hands. Then, on August 25, 1869, the Central Pacific purchased the San Francisco and Alameda Railroa
d that ran from Niles on the Western Pacific straight into the heart of Oakland.

  Frenzied development ensued on the Oakland waterfront, including a wharf over 2 miles in length, and, with the completion of the Central Pacific–Union Pacific earlier that year, there was no longer any doubt that the Big Four had secured their window on the Pacific. But what about the southern half of the state?5

  Even before Huntington’s request to Hopkins for a list of the state’s railroads, there was talk that the emerging Central Pacific–Western Pacific alliance exerted influence, if not outright control, over the trackless Southern Pacific. As president of the Central Pacific, Leland Stanford denied these rumors so vehemently in the San Francisco Bulletin in March 1868 that for many it was a case that all his smoke had to conceal at least a little fire. Those flames became a public record the following September when it was Collis P. Huntington who signed the letter transmitting the Southern Pacific’s annual report to Congress as required by its land grant. Of course, the Big Four had interests south of San Francisco.6

  The Southern Pacific’s original charter called for it to run south between the coast and the Coast Ranges to reach Los Angeles and San Diego. From the latter, it would angle northeast and complete a transcontinental link with the projected Atlantic and Pacific at the Needles crossing of the Colorado River. But when it became clear that prior Mexican land grants limited the amount of public lands available along that path in the southern third of the state, the Southern Pacific remapped its route.

  Now it led southeast from the San Francisco and San Jose’s terminus at Gilroy, down the western edge of the Coast Range to Hollister and Tres Pinos, and then east across the Coast Range to the San Joaquin Valley. If a transcontinental connection at Needles was the objective, this was certainly the shorter, more direct route.

  This hardly left commercial interests in Los Angeles and San Diego very pleased, but they soon found an unlikely hero. General William S. Rosecrans, who had chosen the wrong road at Chickamauga and ridden to ridicule, had nonetheless emerged from the Civil War determined to resurrect his career in California. He started by buying considerable real estate between Los Angeles and San Diego, flirted with running for the California governorship, and then settled on a brief appointment as ambassador to Mexico.

  Rosecrans became convinced that yet another railroad promotion by John C. Frémont—this one to build the Memphis, El Paso, and Pacific along the 32nd parallel—stood half a chance of success. (Frémont was enthralled with the route’s warmer climates after his snowy experiences in Colorado.) Consequently, Rosecrans incorporated the California Southern Railroad to run from Frémont’s projected Pacific terminus at San Diego, north up the coast to San Francisco.

  Though flaunting only a paper railroad, Rosecrans caught the attention of the Big Four when he boasted that if the Southern Pacific altered its route and bypassed Los Angeles and San Diego, he would build up the coast route. If the Southern Pacific stuck to the coast, Rosecrans threatened to cross into the San Joaquin Valley and challenge the Southern Pacific’s contemplated hookup with the Atlantic and Pacific, as well as tap the valley’s developing agricultural markets.

  “Huntington,” his biographer David Lavender later wrote, “had heard many people talk about more railroad than they were able to build”—Huntington himself sometimes had more railroad than he could build—but Rosecrans seemed to have widespread support among the locals of Southern California and to be a credible threat. The general also had certain influence among former comrades in arms in Washington.7

  Consequently, Huntington and his associates would take no chances. In exchange for an undisclosed sum and a vague promise to build a coastal line to San Diego, Rosecrans delivered the paper California Southern into the hands of the Big Four. The loosely held myth that the Central Pacific and Southern Pacific somehow answered to different masters was swept away on October 12, 1870, when Huntington next consolidated the Southern Pacific, the San Francisco and San Jose, and the California Southern under the name of the Southern Pacific Railroad Company. Huntington became its president.

  Rosecrans later had second thoughts and tried to maneuver into the combined company. When Huntington suggested a substantial cash payment as a prerequisite for entry—he had enough partners, but cash for his highly leveraged operations was another matter—Rosecrans balked. In a huff, the general incorporated the California Southern Coast Railroad and tried to attract another offer. This time, having been to the well once before, he came up dry.8

  But now Huntington faced an adversary waving more than incorporation papers. While stymied in Colorado with the Kansas Pacific, Thomas A. Scott was far from finished with railroading. Out of the quagmire of the eastern roads, Scott managed to resurrect the land grants to Frémont’s Memphis, El Paso, and Pacific that had lapsed for lack of construction.

  In March 1871, Congress approved Scott’s new company, the Texas Pacific Railroad Company, building from Marshall, Texas, just west of Shreveport, Louisiana, west through Fort Worth and El Paso, and on across the 32nd parallel to San Diego. (A year later, its name would be changed to the Texas and Pacific Railway Company.)

  Huntington was concerned, but his own machinations with Congress succeeded in including a little present for the Southern Pacific amidst the Texas Pacific authorization. Bolstered with a land grant of twenty sections of land per mile, the Southern Pacific was granted an additional right-of-way “from a point at or near Tehachapi Pass, by way of Los Angeles, to the Texas Pacific Railroad at or near the Colorado River.”9

  Now the question was asked of Los Angeles, what inducements might that small town of 5,728 people offer an advancing railroad? Federal land grants aside, what would persuade the Southern Pacific to breach the San Gabriel Mountains and descend into the Los Angeles Basin, rather than skirt it and head straight east toward the Colorado River?

  The answer was anything that the railroad demanded. California law limited a bond issue in support of railroads to 5 percent of a county’s assessed valuation. For Los Angeles County in 1872, that amount was $610,000. But even that wasn’t enough for the Big Four. Huntington also demanded $250,000 in bonds that Los Angeles held in the little Los Angeles and San Pedro Railroad. Completed in October 1869, the 22-mile line was the town’s commercial outlet to the Pacific. Giving up local control of its rail link to the coast proved such a hotly debated topic that the matter was placed on the November 1872 ballot.

  But the election contest quickly shaped up to be about more than a subsidy to one railroad. Who should show up in Los Angeles that summer but Thomas A. Scott. The Pennsylvanian was in nearby San Diego—then less than half the size of Los Angeles—to get his own share of concessions from the proposed terminus of the Texas and Pacific. Scott came bearing a promise that he would extend the Texas and Pacific line north to Los Angeles from San Diego if the people of Los Angeles would subsidize his efforts—not for the full $610,000 demanded by Huntington but for only $377,000.

  No matter Scott’s Pennsylvania Railroad connections, this was still rather bold talk for a railroad executive whose Texas and Pacific railhead was some 1,200 miles east of San Diego at Fort Worth. And despite Scott’s personal appeal, the Southern Pacific argument was persuasive. Which would Los Angeles rather be, Huntington’s man on the scene asked, a stop on the Southern Pacific’s line with its transcontinental aspirations one way and fixed connections to San Francisco the other, or merely the end of a branch line from the Texas and Pacific at San Diego? The latter, after all, was hardly going to give up any trade from its fine harbor to its neighbor. So, on Election Day 1872, while California voted for President Ulysses S. Grant’s reelection to a second term, Los Angelenos voted for the Southern Pacific over Scott and the Texas and Pacific, 1,896 to 650.10

  But Los Angeles was going to have to wait awhile for a rail connection from either north or south. National economic concerns intervened. Even before what came to be called the panic of 1873, the fortunes of California railroading had never
had smooth financial sailing. Cash was always tight, in large part because of the insatiable demands of Huntington’s relentless construction on so many fronts.

  No wonder that Huntington’s partners tried to halt it from time to time, and no wonder that Huntington himself advised them to go slow with their own expenditures unless they knew “where the money was coming from. I certainly do not,” the rainmaker confessed.11

  Decades later, when the Southern Pacific had become a colossus and Collis P. Huntington one of America’s undisputed industrial leaders, the depth of his despair and the narrow margin by which the Big Four prevailed would be downplayed. But suffice to say that in 1872 and 1873, they were on the ropes. So much so that Huntington did the unthinkable and not only sought buyers for the Southern Pacific but also actively courted Thomas A. Scott to be among them.

  “It is possible that we could sell the So. P. road to Tom Scott,” Huntington mused to Hopkins as early as October 1872. “Give me your views on this, and as to the least amount that we should take.”

  With short-term debt of about $5 million and interest on long-term bond coupons due semiannually, Huntington went begging to everyone. Yet somehow, the onetime peddler stayed the fox and did not become a chicken.

  Scott met Huntington in November in New York to discuss the sale, but when the Pennsylvanian later telegraphed Huntington and asked him to come to Philadelphia to continue the negotiations, Huntington demurred. He told Hopkins, “I thought it would be better that he should come here to buy than for me to go there to sell.”

  Only ten days before, Huntington had reported to Hopkins, “I have been out to see if I could borrow some money with which to pay January interest, and as yet have not been able to get any.”12

  But playing cagey with Scott despite the Big Four’s desperate straits appeared to work. On January 17, 1873, Scott called on Huntington in New York and offered $16 million for the Southern Pacific, essentially the right to the unbuilt western half of his Texas and Pacific–Pennsylvania transcontinental supersystem.