USA > California > San Francisco County > San Francisco > San Francisco, a history of the Pacific coast metropolis, Volume I > Part 49
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The theory of the period, and that which prevailed for a long time afterward, was that the interests of the entire people would be best served by the lands of the government passing into private ownership. It cannot be said that the approval given to the schemes for the donation of land on a large scale was due to ignorance or to lack of consideration for posterity. There was at this early day a relatively small contingent of men apprehensive of the evils of land monopoly who expressed themselves freely against the policy of liberal grants, but by far the great majority of the people were firmly convinced that the prosperity of the country would be promoted by opening up the uninhabited sections of the Union to settlers, and that far more would be gained by making all the lands of the government accessible by providing railroad facilities than could possibly be secured by depending on the slow process of population pushing westward.
This was the general belief, but it was more firmly entertained in San Francisco than in any other part of the Union, although there were some who had quite early formed the impression that isolation had its advantages as well as its drawbacks. No such sentiment was expressed, however, at a convention held in the City on Sep- tember 20, 1859, in pursuance of a resolution of the legislature. It was attended by delegates from Oregon and Washington as well as California, and was presided over by John Bidwell. Judah, afterward the engineer of the Central Pacific, was present as a delegate from Sacramento, and his knowledge of the subject largely influenced the convention which pronounced in favor of the Central as the best of the three proposed routes and urged upon congress the desirability of reaching a decision to promote construction at once.
Eighteen fifty-nine was not an opportune time to urge consideration of such a measure on congress. That body was more concerned about the extension of slavery than the opening of the country to settlement. Benjamin P. Judah, who had been selected by the convention for that purpose, visited Washington, but while his arguments in favor of an overland railroad were listened to with interest, the prevalent sectional jealousy raised insuperable obstacles. Judah and four of his fellow townsmen, Leland Stanford, Collis P. Huntington, Mark Hopkins and Charles Crocker, took a more active interest in the matter than most of those who had at- tended the convention, and were not disheartened by the inaction of congress. They believed in the project which Judah had advocated and kept it alive. They were not greatly encouraged by the people generally who were anxious enough to secure a transcontinental railroad, but were indisposed to embark or lend assistance to the enterprise which they believed was too great to be carried through by in- dividuals.
Doubtless the general belief was correct; but it did not persuade the group of Sacramentans to abandon their idea that the project was feasible and would sooner or later be carried out successfully. None of the four was rich, and perhaps that
Opening Public Lands
Advocacy of Railroad Project
Originators of First Transconti- nental Road
Smali Capital for a Big Enterprise
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accounts for the tenacity with which they adhered to their plans. Huntington and Hopkins were dealers in hardware, Crocker had a dry goods store and Stanford sold groceries and provisions. The magnitude of the undertaking, and the smallness of the capital which the four could command, not infrequently subjected them to quiet ridicule, but they were not affected by it, probably because after studying the matter in all its aspects they concluded that their losses in the event of failure would be so small by comparison with the possible gains in the event of success they hardly deserved to be considered.
On June 28, 1861, the Central Pacific railroad of California was organized under the general law which had been passed in 1860. Stanford was chosen presi- dent, Huntington, vice president, and Hopkins, treasurer. James Bailey, a jewelry dealer was made secretary and Judah, chief engineer. The capital stock of the corporation was fixed at $8,500,000, and 85,000 shares of $100 each were offered. Of this number Stanford, Huntington, Hopkins and Crocker took each 150 shares, and about 600 more were taken by others outside the group, but these latter holdings were all parted with later by their owners excepting the few shares held by Edwin Crocker.
Route Adopted
The engineer, Judah, had recommended as practicable three different routes: one through El Dorado county by way of Georgetown; one through Illinois town and Dutch Flat, and a third by way of Nevada City. The second of the three named was accepted as the best and adopted. It was the route subsequently followed by the Central Pacific. After the decision was reached Judah sailed from San Francisco for New York. On the steamer he met Aaron A. Sargent and enlisted his assistance in the undertaking; that of Senator McDougal was also secured, and the campaign for a land grant was inaugurated.
Congress Passes Pacific Railroad Bill
In the following January Sargent made a speech in the house of representatives in advocacy of the proposed transcontinental railroad, and asked for the appoint- ment of a committee to prepare a Pacific railroad bill. There were already several measures before the house, all of which provided for the construction of a road through its entire length by a single company excepting one which proposed that the building of the road westward should be given to an Eastern company, while a Western organization should be authorized to build eastward. Sargent's effort to take advantage of this proposed arrangement was promptly antagonized by the advocates of all the rival projects, but the Rollins bill, by which name the two company proposal was known, after a struggle passed the house on May 6, 1862, by a vote of 79 ayes to 49 noes, and on June 20, with some amendments which were accepted, it passed that body and was approved by the president July 1, 1862.
The bill as passed authorized the Union Pacific to build from the Missouri river to the western boundary of Nevada. It fixed the capital stock of that company at 100,000 shares of $1,000 each, and provided that not more than 200 shares should be owned by any one person. In addition to a right of way of 200 feet on each side of the middle of the line of the road and necessary grounds for station build- ings, etc., it granted five alternate sections of land per mile on either side of the road, or all the odd sections within the limits of ten miles which had not been sold or otherwise disposed of, and excepting all mineral lands, but giving the timber on the granted lands. The company as rapidly as it should complete forty con- secutive miles was to receive sixteen $1,000 bonds bearing six per cent interest,
Railroad Land Grants
Organization of Central Pacific Company
BAH
WINES& LIQUORS
THE WHAT CHEER HOUSE, A FAMOUS HOSTELRY OF THE EARLY FIFTIES, DESTROYED IN THE FIRE OF 1906 View Taken in 1865
MONTGOMERY STREET, LOOKING NORTH FROM MARKET STREET, IN 1865
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and running thirty years. The bonds constituted a first mortgage which the com- pany had to redeem at maturity or forfeit the road to the government.
The authorization to the Central Pacific provided for the construction of a road from the Pacific coast at or near San Francisco, or the navigable waters of the Sacramento to the eastern boundary of California upon the same terms as those granted to the Union Pacific. Provisions were inserted which would enable either company to continue building on the same terms in case one dropped out, and the difficulties of construction in the mountainous region were recognized by increasing the number of bonds to be issued for a distance of 150 miles westwardly from the base of the Rocky Mountains, and a similar distance eastwardly from the base of the Sierra from sixteen to forty-eight per mile. The gauge of the road was fixed at four feet, eight and a half inches, and two years were to be allowed for the completion of the first 100 miles and one year for each additional 100 miles on the eastern half, but this degree of expectation was reduced to one-half the time on the Central Pacific's portion of the line.
Ground was broken on the western end of the line in Sacramento January 8, 1863, and this exhibition of energy was followed by a campaign of solicitation in California which was pursued as zealously as that which succeeded so well in Wash- ington. The four projectors of the enterprise allotted the arduous work before them among themselves. Huntington took the financial agency; Stanford assumed the duty of attending to legislative matters ; Crocker was to superintend construction and Hopkins was to supervise the business of procuring supplies. They displayed remarkable ability in the new field they had entered and won speedy recognition from men who had shown some inclination a year or two earlier to deride the idea of so tremendous an enterprise being successfully carried out by a quartet of small tradesmen.
The early success achieved by the projectors of the Central Pacific in securing support for their undertaking indicates the degree of enthusiasm produced by the prospect of a realization of the long deferred desire for a transcontinental connec- tion by rail. Special legislation was required to secure authorization for communi- ties to extend aid, but it was promptly granted in every instance, because the legislature had every reason to believe that the requests were spontaneous. Be- sides the legislators shared in the general feeling that the state would be vastly benefited by the building of the railroad. If there were any who had misgivings as to the policy of extending aid, or who thought that the projectors of the road were asking too much of the people, they failed to make themselves heard above the chorus of approval.
In 1863 acts were passed authorizing Placer county to subscribe for stock to the amount of $250,000 to be paid for in gold bonds to run 20 years and bearing 8 per cent interest, and San Francisco was permitted to take $600,000 worth of stock in addition to $400,000 subscribed to the Western Pacific, the company to receive thirty year, seven per cent gold bonds. In the same year valuable privileges were given by Sacramento to the company. Extensive right of way, lands outside the City, a great portion of its water front, and the tract covered with water known as Sutter lake or the Slough, were embraced in the donation. Later the city of Sacramento was permitted to take 3,000 shares and to emit $300,000 worth of city and county bonds. The state was also persuaded without much difficulty to pay $200,000 on the completion of the first twenty miles, a similar sum for the second
Central Pacific Construction Authorized
Ground Broken in 1863
Enthusiasm for the Enterprise
State, County and City Aid Rendered
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twenty and $100,000 on the completion of fifty miles. In return for this aid the railroad was to carry public messengers, transport convicts sent to the State's prison, materials for the building of the capitol and exhibits for state fairs, and was to convey munitions of war in time of insurrection or invasion. In April, 1864, an act was passed authorizing the Central Pacific to issue bonds to the amount of $12,- 000,000, the interest on which was to be paid by the state, a tax of 8 cents on the hundred being provided to meet interest and create a fund for redemption, from which, however, the counties that had already subscribed were exempted.
These liberal measures received the approbation of the people at a subsequent election. If it was suspected at the time that the four men who were pushing the enterprise were being too generously dealt with the suspicion was carefully con- cealed. There will always be found some to oppose a measure, no matter how popular, who, when subsequent developments indicate that a mistake has been made, are able to point to some expression of disapproval and say "I told you so." There were a few such in 1864, but the great majority were too eager for the suc- cess of the project to suggest any doubts, or to think that the men who had at last succeeded in putting the undertaking on a footing that promised success could be too greatly rewarded for their efforts. As a matter of fact the value of the land grants, and the importance of the financial aid rendered were hardly appre- ciated; and when they were the prevalent opinion was that the benefits likely to ensue would more than compensate the donors.
Friendliness Converted Into Hostility
This attitude of friendliness to the men back of the undertaking did not endure long. It was speedily converted into a hostility which was transmitted to their successors in the corporation, long after the original four had passed from the scene. That the antagonism the original four aroused was not undeserved is claimed by no one. Occasionally as it grew in intensity their actions were defended by some who attempted to present as an offset to the abuses and evils for which they were responsible the growing wealth of the state, which they declared was wholly due to the facilities created by the energy of the men who had built the transcontinental and other railroads of California. This development, not always commensurate with the expectations of the people, and certainly not as rapid as it would have been had the sole aim of the projectors been to advance the interests of California, it was urged, excused the monopolistic policy of the men who shrunk from the commission of no crime which would help secure their control of the destinies of the state.
The history of the growth of the corporation which at one time completely dominated the policies of the state, controlled executives, legislatures and courts, and for that matter the people who submitted to the domination with wide open eyes, is inseparably linked with that of San Francisco. In its inception it was apparently a Sacramento enterprise, but the projectors of the Central Pacific, although they were inland merchants, had a keen appreciation of the fact that all roads in California led to San Francisco, and that, no matter how advantageous it might seem to utilize the navigability of the Sacramento river, ultimately the termi- nus of the road must be in the metropolis. This was so clearly perceived that the Western Pacific, which was to run from San Jose by way of Alameda Creek, Liver- more Pass and Stockton to Sacramento, was subsequently constructed under an assignment made in 1862 of its rights and franchises westward, the object being to provide a connecting link between Sacramento and San Francisco.
Connecting Sacramento with San Francisco
Everybody Friendly
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The road to San Jose was begun in 1860 and was opened to traffic in January, 186-4. Its construction was aided by the counties of San Francisco, San Mateo and Santa Clara to the amount of $600,000, half of which was contributed by San Francisco. The Western Pacific, which shared in the land grant and bond pro- vision of the act of congress, passed July 1, 1862, also received a helping hand from San Francisco, $400,000 of the $1,000,000, the expenditure of which was author- ized by the legislature of 1863 being devoted to that road. San Joaquin and Santa Clara counties also contributed $400,000.
-The apparently liberal provisions of the act of 1862, by which congress authorized the construction of the Union and Central Pacific railroads, and the supplementary gifts received by those corporations failed to provide the funds necessary for the rapid prosecution of the work, and the energies of the promoters of the great enterprise were devoted to securing further concessions. Judah, who had in the earlier stages of the undertaking attended to the delicate duty of per- suading the solons in Washington that great results would flow from the opening of the country, died in that city in November, 1863, and Huntington undertook the work and subsequently achieved the reputation of being the most successful manipu- lator of men ever known at the national capital. His earliest efforts were not attended with much difficulty, because he had no rivals to combat, but in later years he organized a lobby which moved to the accomplishment of its object without scruples and utterly regardless of public opinion and criticism.
Huntington and those associated with him in 1864 found congress easy game. They dwelt upon the necessity of saving California to the Union, and congressmen and senators affected to believe that the completion of the overland railroad was an absolute necessity to prevent the state falling into the hands of the Confederates. The time had passed for such apprehension, but the argument coupled with glowing accounts of the enormous benefits which would follow the opening of the country west of the Missouri, served its purpose, and on the 2d of July, 1864, the original act was amended so as to greatly increase the bonuses to the two companies, and at the same time it extended the period in which the Central Pacific was to have been completed. The new act increased the number of alternate sections from five to ten sections per mile on each side of the road within twenty miles of it, and reserved lands within twenty-five miles instead of fifteen on each side, and provided that mineral lands to be reserved should not include coal and iron. A modification of the provision respecting the carrying of the mails was also secured by which the gov- ernment agreed to pay half in cash instead of applying the whole amount earned to the account of the loans. But the most extraordinary concession obtained was per- mission to issue mortgage bonds to an amount equal to those authorized by the earlier act. By this legislation the first bonds emitted were practically converted into a second mortgage, the holders of the later issue having first preference.
That the first provision made by congress for the building of the transconti- nental railroad was not regarded as excessive, is shown by the credulous acceptance of an assault made on the Central Pacific by Lester L. Robinson, an engineer, who declared that the route of the road as mapped out by Judah was impracticable above Colfax. Robinson charged that the estimates made by Judah were not based on field notes, and that the purpose of the Central Pacific people was to build only far enough to connect with the Dutch Flat wagon road, and thus secure a monopoly of the freight and passenger business between the Nevada mines and California.
Railroad to San Jose
Huntington as a Lobbyist
Additional Favors and Land Grants
Rivalry Between Carriers
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Robinson was probably inspired to make this accusation by rival carriers, who realized that the route by rail to Folsom, and thence by stage through Placerville to Virginia City, would no longer be able to compete with the Central Pacific when that road determined upon following the north fork of the American river. Sev- eral transportation companies made common cause of their opposition, among them Wells, Fargo & Co., the California Steam Navigation Company, the California Stage Company and the Pacific Mail. Their apprehensions were better founded than Robinson's accusations, for as soon as the Central Pacific began to approach Dutch Flat, preparations were made by its managers to construct a wagon and stage road over the mountains from the end of its tracks into Carson valley, which when completed considerably decreased the cost and reduced the time occupied in travel- ing between California and Nevada.
The "Big Four"
Although Robinson's charges were promptly taken up by the press, a portion of which fell into the habit of calling the transcontinental railroad project "the Dutch Flat swindle," it is not probable that any considerable number of people in San Francisco in 1863 shared the distrust implied by the charge that the selected route was not feasible. It was nearly two years later before strong antagonism began to manifest itself and it was provoked chiefly by observation of the dispo- sition shown by the four controlling spirits to secure for themselves all the profits of the enterprise. In the beginning the work of construction was performed by subcontractors, but very soon there were wheels within wheels in the corporation. A company was formed consisting of the "big four" and they let all the contracts to themselves. This action was denounced as swindling, and a great uproar was made over the unblushing disregard of the rights of stockholders.
Antagonism Benefits Railroad Projectors
If the press and the agitators had been hired to help the men they were denounc- ing they could not have served them more effectively than they did by exposing the facility with which the interests of the stockholders of the corporation could be undermined. It was not long after the outcry began that the communities which had subscribed to the stock exhibited a desire to get rid of it, a disposition which the Central Pacific managers assiduously cultivated. San Francisco, which had promised bonds to the amount of $600,000 for an equal amount of stock, made a proposition which the company accepted to surrender the stock on condition that the amount of the bonds should be reduced to $400,000. The transaction was denounced as sharp practice, but in the light of the subsequent fate of the stock it does not appear that the City suffered financially through the surrender of its shares. It is possible that the people might have profited in the end by clinging to their shares, but the fact that matters were so shaping themselves already at this early period that there seemed no hope of the stock ever being worth more than the paper on which the certificates were printed, justifies the assertion that it was the part of wisdom to save the $200,000 and the interest upon that amount.
Efforts to Establish a Monopoly
The policy of absorption which the transaction with the City of San Francisco indicated was extended, and it was soon perceived by the people that the object of the managers of the Central Pacific, who were rapidly becoming the sole owners of the road, was to absolutely monopolize the transportation facilities of the state. Their avaricious propensities were roundly denounced by the press, which as events subsequently proved, correctly voiced the opinion of the people. It was later urged that the newspaper and other criticism to which the Central Pacific was subjected was responsible for the policy adopted by the railroad of actively interfering in
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politics, but the weakness of the excuse is exposed by the fact that much of the early censure of the methods of Huntington, Stanford, Crocker and Hopkins was directed against the practice of manipulating elections in order to insure control of the legislature, of the courts and even of minor political subdivisions.
The activities of the Railroad, and by that term the people of California for many years knew not only the line operated by the Central Pacific corporation, but all subsidiary roads and connections controlled by its managers, were by no means confined to securing favors in the shape of gifts. They also devoted themselves to the work of debauching those who controlled the taxation system of the state. Every conceivable device was resorted to in order to escape bearing a fair share of the burden of taxation. In Placer county the value of the road was fixed by the assessor in 1864 at $6,000 a mile, and the district attorney demanded that it should be raised to $20,000. In the succeeding year, despite protests, the valua- tion was given by the assessor at $6,000. In 1866 the pressure was too great for the official, and the assessment was raised to $15,000. The corporation refused to pay, and after protracted litigation complaisant courts found defects in the revenue laws which were of such a character that it was deemed prudent by the state and protesting county to compromise on a basis of $6,000 a mile.
In dealing with Placer and other counties the Railroad invariably pursued the Shylockian policy of exacting the full pound of flesh. It took care to value its property for taxation purposes at the lowest figure possible, but demanded the last cent promised by people who had contributed to the building of the road in the expectation that their generosity would be recompensed by an improvement of conditions. Like San Francisco, Placer ultimately was induced to part with its Central Pacific stock. It was obliged by an act of the legislature, passed in 1870, to sell it and apply the proceeds to the redemption of its bonds. San Joaquin was driven to the same course, but made a somewhat better bargain than Placer, which received a very small amount for its holdings.
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