American Colossus: The Triumph of Capitalism, 1865-1900

by H. W. Brands

  The act represented a huge investment by the federal government in the future of the West—but also in the future of the two railroad companies. If all went well, the American taxpayers would get their bond money back, with interest, at the end of the thirty-year period. If things went poorly—and because nothing on this scale had ever been attempted in America, there was no way of knowing whether it would go well or poorly—the taxpayers would be left holding worthless notes.

  The land grants were less risky, if only because the land in question was currently worth next to nothing. Only after the railroad made it accessible would it command any price. Over the long term, the land would prove the most valuable part of the subsidy. But the American people would share the bounty, as the lands along the right of way but not allocated to the railroads increased in value. And the opening up of the West would provide a boon to the nation as a whole.

  YET EVEN WITH the government subsidies, private investors were reluctant to get on board. The subsidies wouldn’t begin until the companies had demonstrated their competence and good faith by constructing forty miles of track. This required raising large amounts of private capital, which was scarce amid the boom brought on by the war. A more serious constraint was the condition in the 1862 law that gave the government first lien on the assets of the companies. Investors considered the Pacific railroad a risky venture, and many didn’t want to stand in line behind Washington in the event of default.

  Construction commenced, but the reluctance of the private sector to join the project kept the pace to a crawl. Stanford and his partners in the Central Pacific borrowed all they could against their own credit but still fell short. Charles Crocker crossed the Sierra to Nevada Territory and importuned the silver barons of the Comstock. “They wanted to know what I expected the road would earn,” Crocker recalled. “I said I did not know, though it would earn good interest on the money invested, especially to those who went in at bed rock. ‘Well,’ they said, ‘do you think it will make 2 per cent a month?’ ‘No,’ I said, ‘I do not.’ ‘Well,’ they answered, ‘we can get 2 per cent a month for our money here,’ and they would not think of going into a speculation that would not promise that at once.”8

  Crocker remembered those early months as downright harrowing. “I would have been glad, when we had thirty miles of road built, to have got a clean shirt and absolution from my debts. I owed everybody that would trust me, and would have been glad for them to forgive my debts and take everything I had, even the furniture of my family, and have gone into the world and started anew.”9

  So the principals returned to the public sector. Stanford, who, without diminishing his participation in the Central Pacific, had been elected governor of California on a wave of pro-Union, pro-railroad sentiment, browbeat the state legislature into putting up $15 million to get the road started. He also engineered local referendums in favor of smaller issues from counties that stood to benefit from the project. Various reports indicated that his brother Philip distributed gold coins to voters as either a sign of the prosperity to come or a token of current appreciation.10

  In the East, the agents of the Central Pacific and the Union Pacific returned to Congress, where Representative Thaddeus Stevens provided invaluable assistance. Stevens’s family and state (Pennsylvania) were both in steel, the industry that benefited most directly from railroad construction, and with other Republicans he believed that what was good for business was good for the country. Moreover, Stevens considered the Pacific railroad essential to national cohesiveness, to prevent a Western version of what the South was currently attempting. As chairman at once of the Ways and Means Committee and the Select Railroad Committee, Stevens was well placed to shepherd friendly new legislation through the House.

  His right-hand man on the railroad committee was Oakes Ames, a founding member of the Republican party in Massachusetts, who had made a fortune selling shovels to miners in California and Nevada—winning him the nickname “King of Spades”—and who expected to sell more of the earth-movers to the gangs building the Pacific railroad. Ames had lately diversified into steel, intending to profit from the rails as well as the roadbed.

  Stevens and Ames consulted fellow committeeman and Stanford ally Cornelius Cole of California, as well as Thomas Durant of the Union Pacific and Collis Huntington of the Central Pacific, who had taken up residence in Washington to plead their respective companies’ cases. Together the capitalists and the congressmen crafted an amendment to the 1862 railroad act that was everything the corporations wanted. It doubled the land grants to the railroads, expedited the delivery of government loans, and, of greatest immediate significance, transferred first-lien rights from the government to the private investors. Now American taxpayers shouldered the largest risk.

  Not every Republican rolled over for the railwaymen. Elihu Washburne was an Illinois lawyer, the chairman of the House Commerce Committee, and a lonely guardian of the public purse. “I am a friend to the Pacific railroad,” Washburne declared. “That friendship has been proved by my official action in this House for the last ten years. I want to see that magnificent enterprise completed at the earliest moment, and anything the Government can properly do in this time of war to urge forward the object, I am in favor of. But because I am in favor of it, I am not going blindly for any projects that may be thrust forward by interested parties, projects that will take the means of the Government and not secure the end desired.” Washburne contended that the railroads ought to stick to the original law, which they had essentially written. “Capitalists and others made their estimates and declared that the work could be successfully accomplished under that act. It embraced all the provisions asked for.” But now they complained that it didn’t give them enough. Amid the war, the capitalists were asserting national necessity. “I have no faith in the noisy patriotism of shoddy contractors,” Washburne said, “and none in the men who in these times of trial and tribulation through which the country is passing are scheming and plotting to fill their own pockets while the nation is verging toward bankruptcy. The sublime and unselfish patriotism of our people, who stand like a wall of adamant behind the Government in its support, a people suffering, bleeding, dying for their country, is in magnificent contrast to the flaunting counterfeit everywhere to be seen.”11

  But a large majority of the House preferred the words of Hiram Price of Iowa, a former bank president and future railroad chief executive. “We want this road, stretching from the granite hills of New England to the golden sands of California,” Price said. “When completed it will far outshine in importance and grandeur the famed Appian Way. It will be the greatest and most useful work done by man. It is needed, and these amendments are necessary for its success.” Thaddeus Stevens guided the bill through the House and dominated the joint committee that reconciled the House measure with its Senate counterpart. At the beginning of July 1864 the bill gained the approval of Congress and shortly that of the president.12

  THE NEW DISPENSATION signally eased the task of Stanford and the other railwaymen in drawing capital to their project. With the government now bearing most of the risk, and with the rewards promising to be even larger than before, capitalists found the railroad to be a most attractive investment. Charles Crocker would come out of the bargain with his furniture, a clean shirt, and considerably more.

  Yet the liberality of Congress didn’t prevent the railwaymen from manipulating the system. The original law allowed greater compensation to the railroads for track laid in the mountains, but it didn’t specify where the mountains began. Stanford remembered a statement by a geologist to the effect that the Rocky Mountains could be thought of as rising out of the Mississippi River; he now supposed that something similar might be said of the Sierra Nevada vis-à-vis the Sacramento River. He commissioned a team of geologists—who, as employees of the state of California, answered to him as governor—to survey the route from Sacramento east. When they determined that the Sierra Nevada did indeed start very far down in what l
aymen considered the Sacramento Valley, Stanford applied to receive the mountain rate for some rather level roadbed. The federal Interior Department initially challenged Stanford’s innovative geology, but the governor dispatched one of California’s Republican delegation in Congress, Representative Aaron Sargent, to speak with the president. Lincoln didn’t know much geology, yet he did know politics, and with a chancy election approaching he preferred to keep his allies happy. “Here you see,” Sargent reported after the successful meeting, “my pertinacity and Abraham’s faith moved mountains.”13

  ONCE THE PROBLEMS of funding were solved, the principal challenge of the Pacific railroad was finding the workers to construct it. Neither Stanford and his partners in the Central Pacific nor their counterparts on the Union Pacific had any good idea when the building began of the manpower required to complete the road; as in the case of financing, they made up policy as they went. Each commenced construction with the workers at hand but quickly discovered the need to supplement the locals with large numbers of laborers imported specifically for the railroad’s purpose. Before they knew it, Stanford and his partners were the agents of a demographic and cultural transformation in the American West that revealed the breadth and power of the capitalist revolution of which it was a part.

  The transformation had begun more than a decade earlier when, in response to the discovery of gold, Chinese started emigrating to California. The news of the gold discovery reached China, straight across the Pacific, before it reached New York or Boston, which were twice as far away, as the ship sailed, around South America. The Chinese had often been reluctant to emigrate, constrained by both filial duties, including the responsibility to tend the shrines of ancestors, and political edicts, which discouraged or forbade emigration. In the latter category was a law established in the early years of the Qing dynasty, when the new rulers feared the return of exiles from the old regime, and still on the books in the nineteenth century (and indeed until 1910), declaring that “all officers of government, soldiers, and private citizens who clandestinely proceed to sea to trade, or who remove to foreign lands for the purpose of cultivating and inhabiting the same, shall be punished according to the law against communicating with rebels and enemies, and consequently suffer death by being beheaded.” In the nineteenth century the law wasn’t always enforced, but even the off chance of decapitation gave pause to would-be emigrants.14

  What this meant in practice was that only the truly determined left China. As it happened, determination levels rose dramatically during the nineteenth century. Population pressure accounted for some of the rise. China’s population grew by half between the late eighteenth century and the middle of the nineteenth, with even larger gains occurring in the southeastern province of Guangdong. Simultaneously China came under assault from European imperialists. The First Opium War of 1839–42 forced China open to British merchants (including those selling opium) and burdened China with a large reparations bill. The merchants flooded the Guangdong region with foreign goods, while the reparations drained silver from the same area, throwing its economy into turmoil and displacing many thousands of merchants, artisans, and workers. The turmoil spread and magnified a few years later with the outbreak of the Taiping Rebellion, an enormous civil conflict that killed tens of millions of people and devastated a region as large as Western Europe.15

  Under the circumstances, many Chinese, especially in Guangdong, sought an occasion to relocate. The discovery of gold in California provided just the occasion. Gum Saan—“Gold Mountain,” as California was called—became the object of the dreams of thousands of Chinese. Ship brokers and others who hoped to profit from a trans-Pacific traffic spread the news. “Americans are very rich people,” explained one pamphlet printed in Cantonese and circulated about Guangdong.

  They want the Chinese to come and will make him welcome. There will be big pay, large houses, and food and clothing of the finest description. You can write your friends or send them money at any time, and we will be responsible for the safe delivery. It is a nice country, without mandarins or soldiers. All alike: big man no larger than little man. There are a great many Chinese there now, and it will not be a strange country. The Chinese god is there now, and the agents of this house. Never fear, and you will be lucky. Come to Hong Kong, or to the sign of this house in Canton, and we will instruct you. Money is in great plenty and to spare in America. Such as wish to have wages and labor guaranteed can obtain the security by application at this office.16

  Chinese responded by the tens of thousands to this sort of appeal. By 1851 some 25,000 Chinese had journeyed to California, and the number continued to rise. The emigration took various forms. Those with ready cash paid the forty or fifty dollars for passage east (via sailing ship till the late 1860s, when steamship service commenced); the rest traveled on someone else’s money. The latter group included the credit-ticket emigrants, who borrowed the price of the ticket and repaid it from their American earnings. It also included contract laborers, who signed contracts in China committing them to fixed periods of labor in America. The contract laborers were the contemporary equivalent of the indentured servants of the American colonial and early national era. Though the practice had fallen out of favor in the American East, it represented an obvious solution to the problem of providing transport to people who couldn’t pay up front.

  The Chinese weren’t uniformly welcomed in America. Native-born American miners demanded to know what right these foreigners had to gold dug from ground liberated from Mexico at the cost of American blood and treasure during the recent war. The California legislature passed a tax on foreign miners, designed to discourage the Chinese (and other foreigners) from entering the mining business. The law was controversial and not entirely successful. Yee Ah Tye, an emigrant from Hong Kong, the British colony at the edge of Guangdong, went into mining and succeeded so well as to hire scores of men to work in his operations along the Feather River. Though Yee avoided (or ignored) the worst of the animus against the Chinese, many of his countrymen weren’t so lucky. (Nearly all the Chinese were men. As late as 1900, census takers discovered that just 5 percent of the 90,000 Chinese in the United States were women.) Chinese workers were widely distrusted as being willing to work for wages below what native-born Americans considered acceptable, and they were resented on this score. And in an age permeated by racism and ethnocentricity, they often seemed peculiarly exotic. Mark Twain described their predicament as it looked from Nevada:

  Of course there was a large Chinese population in Virginia [City]. It is the case with every town and city on the Pacific coast. 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 or the cruelest injuries. They are quiet, peaceable, tractable, free from drunkenness, and they are as industrious as the day is long. A disorderly Chinaman is rare, and a lazy one does not exist. So long as a Chinaman has strength to use his hands he needs no support from anybody; white men often complain of want of work, but a Chinaman offers no such complaint; he always manages to find something to do. He is a great convenience to everybody—even to the worst class of white men, for he bears the most of their sins, suffering fines for their petty thefts, imprisonment for their robberies, and death for their murders.… As I write, news comes that in broad daylight in San Francisco, some boys have stoned an inoffensive Chinaman to death, and that although a large crowd witnessed the shameful deed, no one interfered.17

  Twain’s was a sympathetic view. Horace Greeley, the reforming editor of the New York Tribune, described the Chinese immigrants as “uncivilized, unclean and filthy beyond all conception, without any of the higher domestic or social relations.” Robert Louis Stevenson, visiting from Britain, found Greeley’s attitude to be far more common than Twain’s. “The Chinese are considered stupid because they are imperfectly acquainted with English,” Stevenson wrote after a journey to California. “They are held
to be base because their dexterity and frugality enable them to underbid the lazy, luxurious Caucasian.” This competitive element was the crucial point, Stevenson judged, even if the Americans didn’t always admit it. “The Mongols were their enemies in that cruel and treacherous battle-field of money. They could work better and cheaper in half a hundred industries, and hence there was no calumny too idle for the Caucasians to repeat and even to believe.”18

  Despite the discrimination, the Chinese held on. Some went home (as most, indeed, had planned to do), but others replaced them. And as the California economy developed beyond gold mining, they moved into other sectors. They became farmers and fisherman, houseboys and hostlers, truck farmers and nurserymen, carpenters and bricklayers. They broke into railroad construction on lines built within California during the late 1850s and early 1860s. And when the Central Pacific began advertising for workers, they prepared to push east.