Chapter 2 No.2

The Proposition in Congress.

Situation 1861 - Curtis Bill of 1862 - Amended Charter of 1864 - Further Amendments - 1866 - Legal Complications in New York - Controversy With Central Pacific.

Commencing with the session of 1835, when a memorial on the subject of railroad communication between Lake Michigan and the Pacific Coast, was presented by Hartwell Carver, up to the present, the Pacific Railways have been ever present in Congress. The Catalogue of Government Publications gives one hundred and eighty-five having the Union Pacific, or Pacific Railroads as their subject.

It is not necessary to recount the many schemes for the construction of these roads that were proposed to Congress. We have already outlined the principal ones previous to 1861.

At this time our country was in the midst of its greatest difficulties. The North and South unable to harmonize over the slavery question, had recourse to the arbitration of arms. The Union forces had met with numerous and severe reverses. The people of the Pacific Coast were loud in their demands for better means of communication. The Government was straining to what seemed the breaking point, their credit and resources to carry on the war and as a Government enterprise the building of a Pacific Railway was out of the question. All were convinced of not only the desirability of such a line but of the absolute necessity thereof, and it had resolved itself into a question of ways and means. Previous discussions had thrashed out the chaff and it now remained for Congress to winnow the wheat. Government surveys had demonstrated the existence of five feasible routes through or over the Rocky Mountains. The Northern, now followed by the Northern Pacific Railroad, the South Pass, Snake and Columbia Rivers, now traversed by the Union Pacific Railroad to Granger, thence the Oregon Short Line and Oregon Railway and Navigation Company. The Middle Route-Union Pacific Railroad in connection with the Southern Pacific Company (Central Pacific Railroad). The thirty-ninth parallel route, now followed by the Santa Fe Route and the Southern via El Paso, now followed by the Sunset Route. The first two while available, could be eliminated owing to their not reaching California direct, as could also the two latter, on account of their traversing in part at least, country that was then in a state of insurrection.

These reasons were in themselves sufficient to determine the selection, but with the many other arguments advanced, there was no trouble in bringing Congress to adopt practically unanimously the "South Pass" "Middle" "True Pacific" Route as it was variously called. For years this had been the route of the fur traders and trappers, the emigrant, the Overland Stage, and the Pony Express, and if these various interests had agreed as to this being the shortest and best route it was evident there were good and sufficient reasons for their decision, it being incontrovertible that it was the shortest one that reached the desired territory. Especially as their decision was reinforced by the result of numerous surveys made by the Government.

The bill creating the Union Pacific Railroad was known as the "Curtis Bill" from its author, Congressman S. R. Curtis of Iowa. It carried the title of "An Act to aid in the construction of a railroad and telegraph line from the Missouri River to the Pacific Ocean and to secure to the United States Government, the use thereof for postal, military, and other purposes."

This act passed the Senate, June 20th, 1862, by a vote of thirty-five to two and became a law July 1st, of that same year. In addition to creating the Union Pacific Railroad Company it also authorized the Central Pacific Railroad Company to build a railroad from Sacramento to the eastern boundary of California, where it was to connect with the Union Pacific Railroad. The bill also recognized a Company chartered by the legislature of Kansas under the name of the Leavenworth, Pawnee and Western Railway Company, later known as the Kansas Pacific Railway. This latter line was to be built from Leavenworth west to a junction with the Union Pacific Railroad at or near the hundredth Meridian or about two hundred and fifty miles west of Omaha.

The principal features of the bill so far as the Union Pacific Railroad were concerned, were, the creation of a Board of Commissioners consisting of one hundred and fifty-eight commissioners to represent the interest of the United States Government and who were to be named by the Secretary of the Interior. These were to constitute a preliminary organization.

The Union Pacific Railroad proper was to commence at a point on the hundredth Meridian, west of Greenwich, between the Valley of the Platte River on the north and the Valley on the Republican River on the south, with branch lines to be known as the Iowa Branch from said point to the Missouri River. On the west it was to extend to the Eastern boundary of California, where it was to connect with the Central Pacific Railroad.

The Capital stock of the Company was to consist of ten thousand shares at one thousand dollars each, not more than two hundred shares to be held by any one person. Right of way through public lands was granted with the privilege of taking therefrom, without charge, earth, stone, lumber, or other material for construction purposes. The Company was granted every alternate section of land as designated by odd numbers to the amount of five sections per mile, on each side of the road within the limits of ten miles, not sold, reserved or otherwise disposed of by the Government, and to which a pre-emption or homestead claim had not been made up to the time the road was finally located, mineral lands being excepted. All lands thus granted, not sold or disposed of three years after the line was completed, were to be sold by the Government at not to exceed one dollar and twenty-five cents per acre, the proceeds to accrue to the Railroad Company. Nothing but American iron was to be used in the rails. As fast as sections of forty miles were completed and accepted by commissioners appointed by the Government for that purpose, one thousand dollar bonds of the United States bearing six per cent. interest, payable in thirty years, were to be issued to the Company constructing the line. Sixteen thousand dollars in bonds to the mile for the distance east of the Rocky Mountains and forty-eight thousand to the mile for one hundred and fifty miles for the mountain portion of the line. Three-fourths of these bonds were to be delivered to the railroad Company as the sections were accepted, the remaining fourth to be retained by the Government until the entire line was completed. The bonds to constitute a first mortgage on the entire line equipment, terminals, etc? The road to be completed within twelve years, the first one hundred miles within two years. Five per cent. of the net earnings, together with the entire amount accruing on transportation furnished the Government was to be applied to the payment of these bonds, principal and interest.

The Bill which in reality constituted a Charter, also provided that the gauge of the road and its eastern terminus should be left to the President of the United States to determine.

These somewhat onerous conditions were accepted by the promoters. Subscription books opened but capital fought shy of the proposition. Two years solicitation only resulted in subscriptions to the amount of two million dollars being paid up in cash.

It being evident that the necessary funds could not be procured on the terms of the original act, an appeal was made to Congress resulting in a supplementary act passing the House of Representatives, July 2nd, 1864, and soon thereafter becoming law. This increased the amount of the Land Grant to the odd numbered sections within ten miles of either side the track, and made the bonds of the Government a second mortgage instead of first, they to be issued on sections of twenty miles instead of forty, two-thirds of the bonds being available as soon as the grading was done. The limit extended in which the line must be completed, and but one-half the earnings on Government business withheld to meet the bonds. The Company was also authorized to maintain a ferry or ferries across the Missouri River at Omaha as a means of connection with the Iowa Lines until such time as they could construct a bridge suitable for this purpose. Coupled with these favorable amendments were two provisions that eventually militated against the Company. One of them permitting the Kansas Pacific Railway to connect with the Union Pacific Railroad at any point its projectors saw fit at or east of a point fifty miles west of Denver, Colo., instead of at the hundredth Meridian. This created a competitor instead of a feeder. The second was allowing the Central Pacific Railroad Company to build on east one hundred and fifty miles to meet the road from the East instead of stopping at the California State line. The restriction to one hundred and fifty miles was withdrawn in subsequent legislation. This resulted in a race as to which Company should cover the most ground and involved both of them in much additional expense. With the Charter thus amended, the Union Pacific Railroad Company which had not thus far done any real work, commenced active construction. The Credit Mobilier was formed to do the actual building, and with many trials, discouragements, and unforeseen expense, the work was continued to its completion.

The initial eastern point had been fixed by the Charter two hundred and forty-seven miles west of Omaha-at the hundredth Meridian, branches being contemplated to connect it with the Missouri River. In 1866 Congress authorized commencement at Omaha without reference to this fact,-the line to extend from Omaha to a connection with the Central Pacific Railroad.

The question of the gauge or width of track was another matter that occupied the attention of Congress. The question had by the Charter been left to the President. There was a divergence of opinions as to the best gauge for railroad tracks. At this time the Erie, and Ohio and Mississippi Railroads used a six foot gauge. The California legislature had fixed five foot as the gauge in that state, while the principal eastern roads including the Baltimore and Ohio, New York Central as well as the Chicago and Iowa lines, were what is known as standard gauge (i. e. four feet, eight and a half inches.) A committee of Parliament had settled on five feet, three inches as the gauge in England. President Lincoln had announced himself as in favor of five foot and the Central Pacific people had ordered their equipment of that width. The influence of the Chicago-Iowa lines as well as that of the Union Pacific people, was thrown in favor of the so called standard gauge, and on March 2nd, 1863, Congress passed what is one of the shortest laws on the Statute Books, namely,

"Be it enacted by the Senate and House of Representatives of the United States in Congress assembled, that the gauge of the Pacific Railroad and its branches through its whole extent from the Pacific Coast to the Missouri River, shall be and hereby is established at four feet, eight and one-half inches."

In 1869 about the time the Credit Mobilier Company was about to turn the finished road over, disgruntled stock and bondholders under the leadership of "Jim Fisk" endeavored to wrest possession from the Union Pacific Railway Company. Certain stock was recorded in his name and although paid for with a check that was refused by the bank on which it was drawn, Fisk went into court and secured an injunction preventing the board of directors acting until his relations with the Company had been adjudicated by the Courts. Under cover of these legal proceedings in the state courts, the New York Offices were forcibly entered, the books and securities of the Company removed and a feeling of insecurity and uncertainty aroused that caused a serious depreciation in the value of the securities they were endeavoring to market. W. M. Tweede being appointed receiver by the State Courts of such property of the Company as was to be found within its jurisdiction. It is said the trouble cost the Company some six or seven million dollars. Appealing to Congress, they were granted authority to remove its eastern offices from New York City to Boston. The next appearance in Congress was made necessary by a dispute with the Central Pacific Company over the point of connection. The Union Pacific Company claimed their grade extended to Humboldt Wells, five hundred miles west of Ogden, while the Central Pacific in reprisal claimed the line to the western end of Weber Canon some thirty miles east of Ogden. The facts were the two completed lines met at Promontory Point fifty-three miles west of Ogden, April 28th, 1869. By act of Congress, it was decided that the Union Pacific Railroad Company should build the line to Promontory where the two roads should connect but that the Central Pacific Railroad Company should pay for and own the line west of Ogden. This was "settled out of Court" and the action of Congress simply ratified an agreement made by the two Companies.

The above covers the more important matters so far as the action of Congress was concerned. Many other minor matters received attention at their hands-both before and since the completion of the road. As is stated in the opening paragraph of this chapter, the Pacific Railroads have been ever present in Congress. The more important questions being referred to in their order later.(Back to Content)