When Ayn Rand created a heroic American dynasty for her novel Atlas Shrugged, she based the family's fortune not on oil, or autos, or finance, but on a transcontinental railroad. Historically, it was a fitting choice, for railroads represent America's entrepreneurial age at its most colossal and most adventurous. Consider that when construction began on the first transcontinental railroad in 1863 there was only one significant outpost of white settlers along the proposed line between Omaha, Nebraska, and Sacramento, California: Brigham Young's Salt Lake City. Consequently, during the six years that followed, about 1,700 miles of track had to be laid, not between and through established pockets of population, but across unpopulated plains, mountains, and deserts. In its own way, the transcontinental railroad was a "giant leap for mankind," spanning with a permanent bridge a chasm nearly as inhospitable as sublunary space. When the line was completed on May 10, 1869, it was unparalleled as an engineering feat. Truly, there was "nothing like it in the world."
This is the absorbing story of the men, heroic and otherwise, who built the first transcontinental railroad in the years 1863—1869, and historian Stephen Ambrose is a great storyteller. His book is rich with details (although it also has a few editing lapses). For Objectivists, Ambrose's work will offer a journey into a more heroic time. But it will offer, too, an intriguing, realistic glimpse into American social, economic, and political life in the mid-nineteenth century. And though it does not pretend to be a scholarly work, it will whet the appetite of and be a starting point for anyone inclined to undertake a study of the times and titans that built America's first great industries.
To be accurate, there never was nor is there now a counterpart to Taggart Transcontinental: a single, truly "transcontinental" railroad in the United States. The term as used here refers to the railway network, not to individual companies. Thus, Ambrose's book is really two stories, one about the Central Pacific (later to become Southern Pacific), which built east from Sacramento; the other about the Union Pacific, which built west from Omaha. Ambrose gives a rich, detailed account of the very different challenges each faced and overcame.
When the Central Pacific (CP) started construction east from Sacramento in 1863, it quickly faced its biggest challenge: building over and through the Sierra Nevada mountain range, which then and now receives the most annual snowfall of any place in the United States except Alaska. Civil engineer Theodore Judah, with only a horse and a notebook, and a tip from a Sacramento druggist, discovered a railroad route through the Sierras via Donner Pass in 1860, and then successfully argued its feasibility to Congress. He was one of the early heroes of the endeavor, but he contracted yellow fever in Panama and died in 1863, before track was laid.
Even following Judah's route, however, it took the CP years to blast through the granite of the Sierras, and the company had no dependable supply of labor. Those who did sign on deserted as soon as they reached California's gold mines. The solution was Chinese workers, including many immigrants, despite management's trepidation over their small physical stature (they averaged 4'10"in height and 120 pounds in weight) and despite the difficulties posed by the overt racial prejudice against them. But the skeptics were soon converted by the Chinese work ethic. Logistically, too, the CP was at a disadvantage: its supply line for construction materials from the East stretched around South America and was often undependable. At one time, thirty-five ships were simultaneously en route to California with construction supplies.
On the eastern side, the Union Pacific (UP) crews broke ground in July 1865-a relatively late start because most resources and labor were committed to the Civil War, and because of a dispute over the selection of the starting point (which eventually became Omaha). They would not encounter serious geographic challenges until they reached Wyoming. Thus, while the CP progressed at a foot or two a day, drilling their tunnels in the Sierras, UP laid a mile or more of track a day across the plains of Nebraska. But as the line grew westward, UP faced hostile Indians, a lack of timber and water, and elongated supply lines. And UP had its own labor problems with a force that was young and largely Irish (supplemented with Mormon work gangs when the rails reached Utah). Many were Civil War veterans, from both sides of the conflict, who chose not to return home. The laborers had as their chief engineer retired General Grenville Dodge of Civil War fame, and all of them were armed. At times, therefore, they resembled a military army, in size, organization and discipline.
But they could also resemble soldiers when having a good time. While the Chinese workers would quietly smoke their opium on their rest days, the UP construction gangs were a bit more boisterous. As the line progressed westward, towns appeared almost overnight, flourished for a short time, and then virtually disappeared as the construction gangs moved on. "Flourishing" may be too mild a word for this activity, as gunfights, gambling, drinking, and prostitution were the featured attractions. The term "Hell on Wheels" was coined to describe the phenomenon.
Each railroad's construction force had three components. The surveyors went out ahead to select and stake the route. And so well did these early outdoorsmen do their job that a century later civil engineers built Interstate 80 generally parallel to the railroad. Behind the surveyors came the grading gangs who prepared the roadbed for the track, blasting through bluffs or filling valleys as necessary. Special gangs built the necessary bridges-typically temporary, spindly wooden trestles not designed for the faint of heart-and strung a telegraph line parallel to the roadbed. Finally, and often miles behind the graders, came the track layers who laid cross ties and rail, and then dumped the ballast (often just sand) to hold it all together. All of this was accomplished virtually without machines of any kind, using only hand tools and human and animal muscle power, which makes the magnificent result all the more amazing. Tunnels were started from both ends, drilling and blasting toward the center with black powder and sometimes nitroglycerin. Yet when opposing drilling teams would finally meet, the tunnel facings would be only inches apart.
Nevertheless, as one would expect, these feats were not accomplished without heavy loss of life. While no tally was kept of fatalities and no total ascertained, there were easily hundreds. In the West, tunnel blasting accidents and avalanches were the most common causes. In the East, train wrecks, Indian raids, and "Hell On Wheels" gunfights were high on the list of hazards. It is safe to assume that the line would never have been completed if OSHA or the EPA had been in existence in the 1860s.
Ambrose's even-handed treatment of the leaders of the CP and the UP reveals personalities of generally mixed economic and ethical premises. Many problems, then and now, can be traced to this inconsistency. There are heroic episodes of Randian proportions, but other incidents that only a James Taggart could appreciate. Most of the heroism occurred at the construction sites: Theodore Judah and General Grenville Dodge were certainly men to be admired. (Thus, Rand's plot was accurate in having her heroine deal with the operational side of the business.) When one turns to the owners and managers of the CP and UP, however, one will not find a Nat Taggart throwing legislators down the staircase; in most instances, the politicians were invited up the stairs.
The CP was owned by the famous "Big Four" of California. Collis Huntington was a storekeeper who came to California by way of Panama, trading all the way, so that he was richer when he arrived than when he left. During the construction of the railroad, he spent most of his time on the East Coast, obtaining financing, lobbying Congress, and purchasing materials. Charles Crocker came to California via the overland route, opened a dry goods store, and, after investing in the Central Pacific venture, was in charge of construction. So, his claim that "I built the Central Pacific" has merit. For instance, it was he who had the idea of introducing Chinese labor. Another storekeeper, Mark Hopkins, had been lured to California by Gold Rush prosperity and sailed around Cape Horn in 1849. He kept the Big Four's books. Leland Stanford, yet another storekeeper originally, was elected Governor of California in 1861. Ambrose provides little information about Stanford's background but does note twice that he gave long, boring speeches. Later, the Big Four was to control all the railroads in California, with the assistance of the state legislature.
On the UP side, Thomas "Doc" Durant was the most visible personage, for he craved media attention. Although he was adept at selecting good personnel, such as General Dodge, he caused divisiveness by interfering with day-to-day details. Critics accuse him of desiring only to accumulate wealth, not build a railroad. The UP's Ames brothers, Oliver and Oakes, gave some stability to the management of the project, but they and General Dodge were at loggerheads with Durant most of the time. In sum, heroics were generally to be found in the field, not in the office, although the important work of getting material for the construction sites is largely unnoted by history.
Why It Happened
Part of the drive behind the line was undoubtedly nationalistic. Although there were 33,860 miles of railroad in 1864 (up from 4,311 miles in 1844), virtually all were located in the East or Midwest. With the country expanding westward, there was a very real need for a transcontinental rail line to tie together the East and the new states and territories of the West, especially the new State of California. Months of dangerous travel were required to get to or from California, either overland, sailing around South America, or taking a shortcut through the Panama tropics. Only the young, ambitious, and physically fit dared travel overland or via Panama. The nation wanted a railroad to encourage the settlement of its new lands west of the Missouri River, to tap the resources of the Far West, and to be able to quickly deploy military forces to protect the settlers and the expanding country. A transcontinental telegraph line had been completed in 1861, replacing the Pony Express, but more than a wire was needed if the West was to develop. Four routes were considered, but the South's insistence on a New Orleans—Los Angeles route kept selection at an impasse until the Civil War. When the South seceded, the North then did as it wished. According to Ambrose, construction of a railroad to the Pacific was arguably Lincoln's second priority during the war, after winning the Civil War.
Paying for It
Another reason that the story of the transcontinental railroad seems to lack a towering mastermind is that no corporation or bank was big or bold enough to finance this risky project. Thus, the project had no equivalent of a Morgan or a Rothschild, for even if the enterprise were successful, the profits from transporting would come later, rather than sooner. So, though some libertarian economists might object, the reality was that, at that time, only the government had the money and land resources to make the venture happen. Fortunately, Judah pleaded successfully to exclude the government as a stockholder, but ingenious methods were found and used to obtain non-equity government financing.
Ambrose correctly points out that one of these, the land grant program, was a win-win solution. As the railroads were constructed, title to alternate parcels of land on either side of the track was given to the railroad. Worthless because of their remoteness, the coming of the railroad created value in these properties. The government also benefited, as the property parcels it retained for later sale increased in value. Land grants helped the UP more than the CP, since UP was largely built in the plains. Mountain acreage value was and is less responsive to the presence of a railroad.
The Pacific Railroad Bill of 1862, which provided for the land grants, also advanced money to the railroads in the form of six-percent thirty-year government bonds, payable to the companies upon completion of certain mileage segments. This was a loan, not a gift, and the bonds were repaid on time and in full.
In 1864, the Pacific Railroad Act replaced the 1862 Bill. It permitted the railroads to issue their own first-mortgage bonds in an amount equal to the government bonds. It also loosened the construction requirements for obtaining government bonds, including a partial grant after grading, not track laying, was completed. Thus, the UP and the CP were in competition to build faster than the other and thereby earn more federal bonds when the lines met. Consequently, each line continued grading right past the other, until Congress designated Promontory Point, Utah, as the meeting point in April 1869. In the end there were 200 miles of superfluous parallel roadbed.
Ambrose comments that his anti-business college professors taught that the government bonds and land grants were gifts. The research for this book, he says, opened his eyes to the facts. "An automatic reaction that big business is always on the wrong side, corrupt and untrustworthy, is too easy, and the error is compounded if we fail to distinguish between incentives, for example, and fraud."
A second question, however, is raised by the fact that the officers of each road set up construction companies, run by themselves. And while the Big Four's company was privately held, the Crédit Mobilier, run by Doc Durant, was more widely owned and became the source of scandal. Specifically, the UP awarded construction contracts to dummy individuals, who then assigned them to Crédit Mobilier. The UP paid with checks, which Crédit Mobilier used to purchase UP stocks and bonds-at par; these were then sold on the open market or used as loan security. In this way, short-term profits could be made by building the railroad, not running it. Worse still, for a company that was receiving government assistance, it turned out that many of the UP's securities found their way into the pockets of influential politicians.
While Ambrose does not provide sufficient detail to determine the ethical implications of the various financial arrangements used to build the railroads, it would be an interesting study for a free market economist. So, too, would be the allegation made by Ayn Rand that the federal funding of these railroads ultimately led to their bankruptcy. (See Ayn Rand, "Notes on the History of American Free Enterprise," in Capitalism: The Unknown Ideal.)
Driving the Last Spike
At the management level, small-mindedness persisted to the end. Only hours before driving the ceremonial last spike, officials of the two railroads were still squabbling about who would do what first at the ceremony. UP's Durant even threatened a boycott of the event, but cooler heads prevailed.
On May 10, 1869, the two railroads were joined at Promontory Point, triggering a nationwide celebration for a heroic enterprise well done. The event also triggered a flood of new track throughout the west. Several other railroads were built to the West Coast over the next few decades, and feeder lines spread like spider webs throughout the fertile Midwest. By the turn of the century, much of the country's wealth and energy had gone into building the nation's rail network. And so perhaps it was James J. Hill, the Empire Builder, who said it best both for himself and for the whole founding generation of America's industrial dynasties: "Most men who have really lived have had, in some shape, their great adventure. This railway is mine."
Frank Bryan is a retired transportation professional, having previously worked in railriad and airline operations management, as a rail traffic manager for a chemical shipper, and as a private railroad consultant.
This article was originally published in the July/August 2001 issue of Navigator magazine, The Atlas Society precursor to The New Individualist.