The Story of the First Trans-Continental Railroad Part 2

Under this, a fourth contract was made with Oakes Ames for which he was to receive from forty-two thousand to ninety-six thousand dollars per mile or forty-seven million nine hundred and fifteen thousand dollars for six hundred and sixty-seven miles, commencing at the hundredth Meridian. This it is supposed is the largest contract ever made by one individual. It was later transferred by Oakes Ames to seven trustees acting for the Credit Mobilier, he and his brother Oliver Ames being among the number. This last contract carried the line to nine hundred and fourteen miles from Omaha.

The fifth contract was made with J. W. Davis for one hundred and twenty-two miles at twenty-three million four hundred thousand dollars, and was in turn a.s.signed to the same seven trustees for completion. In adjustment of accounts the Union Pacific Railroad Company would turn over to the Credit Mobilier or the Trustees for the Credit Mobilier in payment for the work as fast as it was completed First Mortgage (Union Pacific Railroad) Bonds, Government Bonds, Union Pacific Railroad Income Bonds and Union Pacific Railroad Stock, these being sold or hypothecated by the trustees, furnished them the necessary funds required to pay for the construction work.

As the Union Pacific Stock could only be sold for cash at par according to act of Congress, notwithstanding it was only worth thirty cents on the market, the Railroad Company would give their check to the Credit Mobilier on construction account and this check could then be used in payment of stock, making it a cash transaction.

In settlement of the several contracts, the Union Pacific Railroad Company paid the Credit Mobilier:

Hoxie Contract Miles Omaha to 100th Meridian 247 $12,974,416.24 Ames Contract 100th Meridian West 667 57,140,102.94 Davis Contract To point five miles west of Ogden 125 23,431,768.10 ______________ 1039 $93,546,287.28

These figures represent stocks and bonds at par and deducting amount of depreciation, would bring the actual cost of the Main Line Omaha to Ogden to about seventy-three million dollars.

There were issued in payment for this construction, equipment, station building, and the expense of the Company during the construction period.

Government Bonds $ 27,236,512.00 First Mortgage Bonds 27,213,000.00 Income Bonds 9,355,000.00 Land Grant Bonds 9,224,000.00 Union Pacific Stock 36,000,000.00 _______________ $109,028,512.00

There were granted to the Union Pacific Railroad Company under its Charter land grants of eleven million three hundred and nine thousand eight hundred and forty-four acres. Up to December 31st, 1866, sales of this land had brought in nineteen million ninety thousand six hundred and seventy-two dollars and forty-two cents and unsold land was then valued at two million three hundred and ninety five thousand five hundred and seven dollars.

During the palmy days of the Credit Mobilier following the adjustment of the differences with the Durant faction, thousands of dollars were spent in advertising and placing the stock. Display advertis.e.m.e.nts were inserted in all the prominent newspapers and paid agents located in all the important cities. The result demonstrated the wisdom of the expenses, as not only were large quant.i.ties of its stock sold but the prices obtained for it were greatly advanced.

No sooner was the completion of the road a.s.sured than did antagonism and hostility appear. For instance in 1867 a government inspector appointed for the purpose of examining and accepting completed sections of the road, refused to do so, until he received "his fee"

(?) which he put at twenty-five thousand dollars, he being in no way ent.i.tled to anything from the Company. By his refusal he tied up the issue of the Government bonds, seriously affecting the credit of the Company at a critical time.

In Was.h.i.+ngton the lobbyists were demanding blackmail with threats of organized hostility. Speculators in Well Street were a unit in bearing the stock and in attacking the credit of the Company.

The stock of the Credit Mobilier up to the a.s.signment by Ames to the seven trustees, had not met with anything like a ready sale. For reasons of policy, some of this was a.s.signed to members of Congress, Senators, and other public men. Some being paid for, others had it carried on their account. After the crisis had pa.s.sed, the value of the stock rapidly appreciated and in the forthcoming political campaign the subornation of Congress in the interest of the Credit Mobilier by the use of this stock was made an issue and occasioned a great outcry. The accusation was thoroughly investigated by two committees during the next session and it was clearly proven to have been unfounded, so far as members of Congress having received the stock as bribes, it being demonstrated that the Company had no further favors to ask from Congress and that the members receiving it had paid the market value therefor. Notwithstanding, Oakes Ames was called to the bar of the House and severely censured for having sold it to them.

The facts were, popular clamor demanded a scapegoat and Ames was selected. This, and the anxiety and strain of the load he had been carrying proved too much for him and he died May 8th, 1873. After his death the voice of calumny silenced, his work and character received the recognition it so well deserved.

The cost of material used in the construction of the road was enormous, thus the ties brought from the East ran as high as two dollars and fifty cents laid down in Omaha. The rails for the first four hundred and forty miles one hundred and thirty-five dollars per ton. This was before railroad connection was established between Council Bluffs and the East. After that the price got down to ninety-seven dollars and fifty cents per ton.

The pay of laborers ran from two dollars and twenty-five cents to three dollars and fifty cents per day. Train men two hundred dollars per month for conductors, one hundred and twenty-five dollars for brakemen, two hundred dollars to two hundred and fifty dollars for engineers, and one hundred and fifty dollars to one hundred and seventy-five dollars for firemen. Telegraph operators eighty dollars to a hundred dollars.

At times the Company (Credit Mobilier) was paying as high as five hundred thousand dollars per month interest. And in fact it was claimed by several of the directors that the paramount reason for the haste displayed in building the road was not so much the compet.i.tion with the Central Pacific as it was to get rid of the enormous interest charges they were paying and which they would cut off upon the road being accepted by the Government and the consequent receipt of Government Bonds.

CHAPTER IV.

_Commencement of the work._

Selection of Omaha as Eastern Terminus--Celebration Over Breaking Ground--Speech, George Francis Train--Commencement of Work--Conditions October, 1864--Routes Considered.

The first move towards the construction of the road was the selection of an eastern terminus which by the Charter was left to the President of the United States. This was fixed by President Lincoln on December 2nd, 1863, the official announcement being as follows: "I, Abraham Lincoln, President of the United States, do upon application of said Company (The Union Pacific Railroad) designate and establish such first above named point on the western boundary of the state of Iowa east of and opposite to the east line of Section Ten in Towns.h.i.+p fifteen, north of range thirteen, east of the sixth princ.i.p.al Meridian in the territory of Nebraska."

"Done at the city of Was.h.i.+ngton this 7th day of March in the year of our Lord 1864.

Abraham Lincoln."

Immediately upon receipt of advice as to the President's action on December 2nd, 1863, the citizens of Omaha regardless of their connection with the road arranged to break ground for the Union Pacific Railroad and to properly celebrate the commencement of the work and especially the selection of their city as the eastern terminus, which was accordingly done. The spot selected for the initial point was near the Ferry Landing and not far above where the Union Pacific shops are now located. This particular spot with the first mile of track constructed, was long ago swept away by the Missouri River.

The ceremonies were commenced by asking the Divine Blessing on the enterprise in a prayer by the Rev. T. B. Lemon, Pastor of the First Methodist Church in Omaha. The Reverend Gentleman pet.i.tioned that the road make one the people of the East and West. That it would result in peopling the waste places of the West; that it might lend security to those on the frontier, and other similar requests, all of which have been fulfilled to a degree that is past being coincidental. The first earth was then removed by Governor Saunders of Nebraska Territory, Mayor Kennedy of Omaha, George Francis Train and others a.s.sisting.

Congratulatory messages were received from different parts of the country. Speeches were made by A. J. Poppleton and others, the day being wound up by a banquet in the evening. The speech of the day was delivered by George Francis Train, then in his heyday, which is so characteristic of the man and of the ideas then prevalent relative to the road and the results of its construction as to warrant the following somewhat lengthy extracts:

"I have no telegrams to read, no sentiments to recite. The official business being over and as I happen to be lying around loose in this part of the country at this particular time, it gives me a chance to meet some of the live men of Nebraska at the inauguration of the grandest enterprise under G.o.d the world had ever witnessed.

"America is the stage, the world the audience of today, while one act of the drama represents the booming of cannon on the Rapidan, the c.u.mberland and the Rio Grande, sounding the death knell of rebellion, the next scene has the booming of cannon on both sides the Missouri to celebrate the grandest work of peace that ever engaged the energies of man. The great Pacific Railroad is commenced and if you know the men who have hold of the enterprise as well as I do, no doubt would arise as to its speedy completion.

"Four thousand years ago the Pyramids were started, but they simply represented the vanity of man. The Chinese wall was grand in conception, but built to break the tide of invasion. The Suez Ca.n.a.l was gigantic, but how limited all those things appear in comparison to this enterprise.

"Before the first century of our nation's birth we may see in the New York Depots, some strange Pacific Railroad notices such as,

'European pa.s.sengers for j.a.pan will please take the night train. Pa.s.sengers for China this way. African and Asiatic freight must be distinctly marked For Pekin via San Francisco.'

"Ere ten years go by I intend to let the European traveller get a new sensation by standing on the ridge pole of the American Nation and sliding off into the sea.

"One day a dispatch will come in--we have tapped a mountain of copper, nineteen miles square, later on--we have just opened up another field of coal--or--we have struck another iron mountain this morning--when Eureka--a telegram electrifies the speculators in Wall Streets and gold drops below par--at ten this morning we struck a pick into a mountain of solid gold.

"The Pacific Railroad is the nation, and the nation is the Pacific Railroad. Labor and capital shake hands today. The lion and the lamb sleep together. Here in the West are the representatives of labor and in the East are those of capital. The two united make the era of progress. Steam, Gas, and Electricity are the liberty, fraternity, and equality of the people. The world is on the rampage. Events are earthquakes now.

"Ten millions of emigrants will settle in this golden land in twenty years."

Early in 1864 work was begun on the first hundred miles. The actual work being commenced within the corporate limits of Omaha in February.

About one hundred thousand dollars was spent in grading a due westerly route out of Omaha. This was abandoned on account of it being so hilly, and a route south and thence west was adopted. The ties for this section were cottonwood from the Missouri River bottom lands, treated with a view of making them last. It was found that the treatment was not effective and for the balance of the road, hard wood ties from Michigan, Indiana, and even as far east as Pennsylvania were used, some of them costing as much as two dollars and fifty cents laid down in Omaha.

At this time there was no railroad completed into Omaha from the East.

The Chicago and Northwestern being the first to reach there, and its first train ran into Council Bluffs on Sunday, January 17th, 1867.

Consequently all supplies, other than those coming to them via the Missouri River, had to be wagoned from Des Moines, Iowa, one hundred and thirty-three miles.

On the Missouri River the Company had in service six large steamboats carrying supplies and material for construction from Kansas City where there was railroad connection with the East by way of the Hannibal and St. Joseph Railroad and the Missouri Pacific Railroad.

Everything had to be brought in, the country being dest.i.tute of even stone and lumber, involving great expense and delays. While the level country enabled rapid progress to be made in grading, it was almost impossible to bring forward the requisite material to keep up with the graders and track-layers.

The contract for the first hundred miles had been let May, 1864, to Hubert M. Hoxie. By its terms he was to receive securities to the face value of $50,000 per mile. Sidings were to be not less than 6 per cent. of the main line. Station buildings, water-tanks and equipment was to be furnished by him to the value of five thousand dollars per mile. Hoxie before this had been in the employ of the Company in charge of the Ferry between Omaha and Council Bluffs. In March 1865, his contract was transferred to the Credit Mobilier Company, which as has been previously stated, was organized by the promoters and insiders of the Railroad Company to do the actual construction.

Several experiences with individual contractors had demonstrated that they could not be relied upon, in fact that it required more in the way of capital-influence, and omnipresence than any individual could exert, consequently all original contracts for the construction and equipping of the line were handled by the Credit Mobilier who subcontracted it with firms and individuals, they by their close relations with the Company and financial interests as well as by their wide ramifications, being able to purchase materials and supplies to better advantage.

Everything was still held at war prices, iron, ties, lumber, provisions, etc., while currency and the Government bonds on which they were relying, were greatly depreciated in value. Labor was scarce and only to be had at extravagant figures.

In the report of one of the Government inspectors, made in 1864, when the grading had progressed some twenty miles out of Omaha, he stated: "There are now some two hundred men employed on the work and a like number of horses and oxen, together with two excavating machines that are doing the work of many men. It is confidently expected that this Section (the first forty miles) will be ready to be laid with rails by June 1st, next." This he regarded as very commendable but as compared with four years later, when there were nearly twelve thousand men engaged and track was going down from two to ten miles a day, it seems anything else but satisfactory.

A great amount of the preliminary work in the way of reconnoissance, surveying, and even locating was done under Governmental auspices previous to 1860, most of it by officers of the army. All of their reports and surveys were by action of Congress given to the Railroad Company, thus saving them greatly in time as well as in money. In addition to the Government surveys the Company investigated and did more or less surveying before deciding upon the route to be followed through the Rockies.

In the report of the Government directors for 1866 they refer to the following eight routes as having been investigated during the preceding year by the Company, viz.:

1st Via South Platte River and Hoosier Pa.s.s.

2nd Via Platte River and Tarryall Pa.s.s.

3rd Via North Fork of South Platte River.

4th Via Berthoud Pa.s.s.