Linking the Oceans

By John Moody in 1919

The year 1862 marked a pivotal moment in American history, witnessing the United States Government’s formal endorsement of an ambitious project: the construction of a railroad stretching from Omaha, Nebraska, to the far reaches of the Pacific coast. At this juncture, the states of Iowa and Missouri represented the western frontier of significant railroad development within the Mississippi Valley. This marked the genesis of an undertaking that would reshape the nation’s landscape and destiny.

For three decades, advancements in transportation had been steadily transforming the eastern half of the United States. The dominance of boats, canals, and stagecoaches gradually yielded to more modern and efficient rail systems. This shift fostered closer ties between states, cities, and towns. The resulting increase in population and economic prosperity was particularly noticeable in inland regions that had previously been hampered by inadequate communication and transport infrastructure.

The widespread construction of railways, especially the consolidation of smaller, experimental lines into expansive networks, gained considerable momentum following the discovery of gold in California. The sudden influx of over fifty million dollars annually into the economy focused national attention on the Pacific and the untapped potential of the vast Western territories.

The wealth derived from the mines of California fueled commerce, manufacturing, and trade across the eastern states. The acquisition of California brought with it the realization that the nation now possessed nearly half a continent, brimming with almost limitless opportunities for resource development and wealth generation.

The belief in the necessity of a transcontinental railroad became so compelling after the gold discoveries of 1849 that Congress passed legislation in 1853 authorizing surveys for various routes from the Mississippi River to the Pacific. Although the published reports provided valuable insights into the continental interior, the selection of a specific route was hampered by regional rivalries and competing interests.

The Act of 1862, a cornerstone in this endeavor, established the Union Pacific Railroad Company. The Act, along with its 1864 amendment, authorized the construction of a main line originating at the one-hundredth meridian of longitude in the Territory of Nebraska and extending to the eastern boundary of California. Branch lines, to be constructed by other companies, were envisioned to extend from this initial point to key locations such as Sioux City, Omaha, St. Joseph, Leavenworth, and Kansas City. Financial incentives were established, with subsidies of $16,000 per mile for level terrain east of the Rocky Mountains, $48,000 per mile for mountainous sections, and $32,000 per mile for the area between the mountain ranges. The initial plan, which called for government subsidies to be secured by a first mortgage on the lines, was modified, allowing private capital to take the first mortgage, with the government securing a second lien for its advances. Furthermore, several companies were granted land grants of 12,800 acres per mile in alternating sections adjacent to their lines. The Central Pacific Railroad, a California-incorporated company, received similar authorization to construct a line from the Pacific coast, near San Francisco, to connect with the Union Pacific Railroad. While the initial designs were not fully realized, the main line ran west from Omaha, meeting the Sioux City branch at Fremont.

The public readily recognized the significance of this immense undertaking. Contemporary newspapers underscored its global implications, noting that the railroad would facilitate a journey from London to Hong Kong in forty days, traversing a continent rich in resources and dominated by a powerful, commercially driven nation. This Linking the Oceans project was not just a domestic endeavor; it was seen as a catalyst for international trade and global connectivity.

Despite the substantial government subsidies, the project was plagued by extravagance and financial mismanagement. The manipulation of accounts to maximize profits on government advances became rampant, leading to a situation where the construction slowed down due to a lack of funds.

This financial instability led to the creation of a construction company known as the Pennsylvania Fiscal Agency, later renamed the Credit Mobilier of America. The Credit Mobilier scandal, involving prominent politicians, stands as a shameful chapter in American history. Despite the political turmoil, the Union Pacific lines were eventually completed. By 1866, just two years after the contracts were awarded to the Credit Mobilier, over five hundred miles of track were operational. An advertisement in late 1868 boasted that 540 miles of the Union Pacific Railroad, running westward from Omaha, were complete, with tracks laid within ten miles of the Rocky Mountains. The completion of the entire line to the Pacific by 1870 seemed within reach.

The transcontinental line was completed sooner than expected. A key factor in accelerating construction was the company’s growing financial difficulties. Completing the through-line was essential for generating revenue from train operations. The Linking the Oceans initiative was quickly becoming a matter of financial survival.

Moreover, the Act of 1862 stipulated that the Central Pacific Railroad could also build across Nevada to meet the Union Pacific, provided they completed their assigned section first. Both companies were incentivized to build as much mileage as possible and as quickly as possible due to the generous government subsidies per mile and the substantial profits to be made.

The Central Pacific enterprise was backed by a group of astute businessmen who had amassed fortunes during the gold-mining boom, including Leland Stanford, Collis P. Huntington, Mark Hopkins, and the Crockers.

The rivalry between the Central Pacific and Union Pacific interests captivated the nation. It became a dramatic episode in American railroad history, reminiscent of the financial dealings of the Vanderbilts and Goulds.

As the competition intensified, public interest grew, with the entire country eagerly awaiting to see which company would secure the lucrative government subsidies for building through the mountains. The Union Pacific continued its work through the winter of 1868 with unwavering determination. Despite freezing temperatures at the base of the Wasatch Mountains, construction continued relentlessly. Tracks were laid across the Wasatch range on a bed of snow and ice, even when one of the track-laying trains slid off the ice into a stream. That winter, the two companies employed over 20,000 men. The Central Pacific Railroad then surprised the Eastern builders by submitting a map and plans to build as far as Echo, Nevada, east of Ogden. The Union Pacific responded in kind, exceeding initial expectations of one mile per day, and eventually laying nearly eight miles of track between sunrise and sunset.

The Central Pacific Railroad was equally determined. Despite the need to build a dozen tunnels, the company proceeded without waiting for their completion. Supplies were transported over the Sierras, and the work continued regardless of cost. On May 10, 1869, the two lines converged at Promontory Point, fifty miles west of Ogden, Utah. Gold and silver spikes were driven into the connecting tracks, completing the through-line from the Missouri River to the Pacific Ocean. The first engine from the Pacific coast faced the first engine from the Atlantic, marking a monumental achievement. The entire nation celebrated, from President Grant in the White House to the newsboys selling extra editions. Chicago held a parade several miles long, the chimes of Trinity rang out in New York City, and the Liberty Bell in Philadelphia was tolled once more. The successful completion of the Linking the Oceans project was a moment of national unity and pride.

The cost of the Union Pacific Railroad from Omaha to its junction with the Central Pacific Railroad became a long-standing controversy. Accelerating the completion of the road by six months increased costs, with the company borrowing money at interest rates as high as 18 and 19 percent. Additionally, the need to protect the workforce from Indian attacks in areas far beyond the reach of civilization required half the workforce to stand guard, thus reducing the construction capacity. Hundreds of workers lost their lives to attacks from Native Americans.

Government regulations also contributed to the increased costs. The requirement to use only American iron added at least ten dollars per ton of rail laid. The stipulation to create a level track across the Laramie plains, instead of following the natural terrain, resulted in a waste of five to ten million dollars.

These extraordinary costs, combined with extravagant construction and financing methods, inflated the total cost of the property to a staggering sum. Records indicate that profits accruing through the Credit Mobilier and other means during construction amounted to over 50 million dollars by the time of the opening in 1869.

While the Union Pacific was under construction from 1862 to 1869, other railroads were also expanding rapidly into the Central West. The Chicago and North Western Railroad reached Omaha and connected with the Union Pacific, while the Kansas Pacific Railroad extended west to Denver and joined the Union Pacific at Cheyenne, Wyoming.

The close relationship between railroad expansion and the nation’s overall development and prosperity is vividly illustrated by the construction of the Pacific railroads. The opening of a transcontinental line brought the vast resources of the West within easy reach of the East. American pioneers and foreign immigrants alike flocked westward, along with increasing amounts of capital. New towns and cities sprung up, quickly becoming bustling centers of trade and commerce.

Caravan trains, which had previously followed a single westward route, now originated from points along the railroad, extending far to the north and south. Settlers anticipated that the entire territory west of the Missouri River, from the Canadian border to the Rio Grande, would soon be accessible by the expanding railroad network.

During the 1860s and 1870s, cities like Kansas City, Sioux City, Denver, Salt Lake City, Cheyenne, Atchison, Topeka, Helena, Portland, Seattle, Duluth, St. Paul, and Minneapolis experienced rapid growth and increasing importance. The entire Pacific slope became populated with towns and cities, and even the arid plains and the "Great American Desert" of Utah, Arizona, New Mexico, and parts of Nevada began to show signs of life, a transformation unimaginable just a decade earlier.

The development of this vast region continued to accelerate in the following years. By 1880, four different railroad lines traversed the Pacific States, and a fifth, the Denver & Rio Grande, reached the Great Salt Lake through the mountains of Colorado and Utah. This era marked the true beginning of the modern industrial age. The nation shifted its focus from the material achievements of the Atlantic and Central regions to the vast western territories and the thousand miles of Pacific coastline, recognizing them as America’s future patrimony. This Linking the Oceans project proved to be a catalyst for growth.

In 1880, the Union Pacific began its eastward expansion, acquiring control of the Kansas Pacific and the Denver Pacific, a crucial connecting link. These two companies were absorbed by the Union Pacific in January 1880, creating a continuous line from St. Louis westward. Meanwhile, the Central Pacific, operating from Ogden west to the coast, added numerous branch lines. Simultaneously, a new company, the Southern Pacific Railroad of California, constructed a system of lines south of the Central Pacific, reaching Yuma, Arizona, by 1877, located 727 miles southeast of San Francisco. The Southern Pacific also built lines into Arizona and New Mexico, connecting with the Santa Fe route, which was expanding westward.

In 1881, the Southern Pacific extended its lines eastward along the Rio Grande to El Paso, Texas, where it connected with a new road under construction from New Orleans. A junction was also established at El Paso with the Mexican Central, which was being built to Mexico City.

The Southern Pacific Railroad was closely associated with the Central Pacific interests led by Collis P. Huntington. In 1884, the Southern Pacific Company was established, acquiring stock control of the entire network of railroads in the South and Southwest. The Central Pacific was placed under the direct control of the Southern Pacific through a long-term lease.

While the Southern Pacific expanded eastward through the southern regions of the country, equally significant developments were occurring in the north. In 1879, the Oregon Steamship and Navigation Company merged with several short railway lines in Oregon and Washington to form the Oregon Railway and Navigation Company.

These railroad lines extended east from Portland to the Oregon state line and north to Spokane, eventually connecting with the new Northern Pacific Railroad. Another road, the Oregon Short Line Railroad, was built from Granger, Wyoming, on the Union Pacific line, to connect with the Oregon Railway and Navigation Company at Huntington, Oregon, on the Snake River. The Oregon Short Line came under the control of the Union Pacific and opened for traffic in 1881. A close alliance was formed with Henry Villard, the controlling figure in the Oregon Railway and Navigation Company. The entire system of Oregon lines ultimately came under Union Pacific control, only to be lost during the receivership of 1893, but later recovered under the Harriman regime.

By 1893, after a decade of expansion, the Union Pacific system had grown to over 8,000 miles before falling into receivership. It controlled the Oregon railway and steamship lines, the lines to St. Louis, and an important extension known as the Union Pacific, Denver, and Gulf Railroad, running from Wyoming across Colorado to Fort Worth, Texas. The financial collapse of the system stemmed from extravagance, inefficiency, and over-rapid construction and expansion. Building expensive branch lines that were not needed and burdening the parent company with their financing proved to be a significant mistake.

The Union Pacific’s financial standing was further weakened by the impending maturity of its substantial debt to the United States Government. For over twenty years, the company had not paid any interest on its government debt or maintained a sinking fund to cover the principal. As a result, the accrued interest grew annually, and the company faced bankruptcy if the government demanded full payment upon maturity in 1897-99. This government debt, including accrued interest, amounted to $54,000,000.

It is important to note that a vast expansion of competitive lines occurred south of the Union Pacific during this period. Under the leadership of Collis P. Huntington, the Southern Pacific Company consolidated a vast railway system in 1884, extending from New Orleans to the Pacific and throughout California to Portland, Oregon, with branches radiating through Texas and connecting with roads entering St. Louis. In addition to these railroads, Huntington acquired control of a steamship line operating from New York to New Orleans and Galveston, and subsequently of the Pacific Mail Steamship Company, operating along the coast from Oregon south to the Isthmus of Panama and across the Pacific Ocean.

The growing influence of this powerful competitor, the expansion of the Santa Fe system, the completion of the Northern Pacific, and the emergence of the Great Northern Railway all contributed to the Union Pacific’s difficulties. Consequently, the company succumbed to insolvency during the Panic of 1893.

The Union Pacific’s fate reflected the experiences of many American railroads: built ahead of population and forced to bear the consequences. Despite its financial challenges, the Linking the Oceans project fulfilled the ambitions of its visionary founders. It opened millions of acres for cultivation, provided homesteads to millions, developed valuable mineral lands, created new states, and unified the American nation. Its subsequent history, marked by financial success, builds upon this legacy of pioneering achievement.

By John Moody, 1919. Compiled and edited by Kathy Alexander/Legends of America, updated February 2024.

About the Author: John Moody wrote The Railroad Builders, A Chronicle of the Welding of the States in 1919. A Century of Railroad Building is the first chapter of the book. Though the content remains essentially original, it has been edited for grammar, spelling, and ease for the modern reader.

Also See:

• American Railroads
• A Century of Railroad Building
• Completion of the Railroad
• Railroad Lines