A Civil War railroad bond.
Though the Civil War continued with intensity through 1862, Congress did not linger just on military activities. Already the House of Representatives and Senate had passed acts creating a national paper currency and an income tax to help pay for the war, had created land grant colleges, and permitted homesteading on federal lands. Those were major accomplishments. But there still existed another item on the 1860 Republican presidential platform that needed to be addressed — the passage of legislation creating a transcontinental railroad.
The concept of a railroad stretching from the Missouri River to the Pacific Ocean was not a novel idea. A bill had been introduced in 1856, but effectively blocked by Southern legislators. Just like the case of the Homestead Act, the South feared a railroad would open up the western territories to settlement, stripping people from the Southern states and, therefore, some Congressional representation from the South. The South also feared that these growing territories to the west would choose to be free. The Southern slave-holding states basically feared a sway in the balance of power between the free and slave states.
Also stifling the development of a transcontinental line at the time: the railroad companies-to-be said they didn’t have the money to do the job.
But by 1862 this problem had disappeared as all the Southern legislators but one had vacated their Congressional posts. Members of Congress now represented only the Midwest and the North, regions that supported Western expansion and — though never directly stated, but certainly construed — more ‘free’ territory and states, rather than slave-holding states.
Therefore, Congress passed the Pacific Railroad Act of 1862 or, if you want the full length title of the legislation, “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 government the use of the same for postal, military, and other purposes.”
President Lincoln signed the act into law on July 1, 1862 and it certainly favored Western expansion and development. The act officially authorized the construction of a transcontinental railroad and a telegraph line to run parallel to its course. The war surely influenced part of the legislation as one of the act’s first sections stated the new rail line would be for the “safe and speedy transportation of mails, troops, munitions of war and public stores.”
The new line was named the Overland Route.
The Pacific Railroad Act provided many perks to both the Union Pacific and Central Pacific Railroads for constructing the transcontinental railroad. First came the money. The government received authorization to issue 30-year “company bonds of the United States of one thousand dollars each” at 6 percent interest. How many bonds the government issued depended on the actual terrain on the right of way. Tracks graded west of the Sierra Nevadas and east of the Rocky Mountains received an allocation of $16,000 per mile. Along the high plains between the two mountain ranges it was doubled. To pay for the difficult work to “completed over and within the two mountain ranges” the government tripled the basic rate to $48,000 per mile.
Then, land entered into the deal. It first pertained to the right of way granted through all public lands “to the extent of two hundred feet in width on each side of said railroad” required for the building of “stations, buildings, workshops and depots, machine shops, switches, side tracks, turn tables and water stations.”
The deal grew more lucrative as the government provided 10 square miles of land for each graded mile of track. So the railroads would not become total land barons these lands were apportioned in “five alternate sections per mile on each side” of the rail line. The U.S. government retained the remainder of the lands adjacent to the railroad.
The lands included all timber contained on the acreage, but not the mineral rights. As for Native Americans, whose lands were to be crossed by the railroad construction, a secondary act passed in 1864 resolved the potential problem. Part of the law stated the “United States shall extinguish as rapidly as may be the Indian titles to all lands falling under the operation... and required for the said right of way.”
Eventually, the four transcontinental railroads — the Union Pacific/Central Pacific, the Northern Pacific, Southern Pacific and the never completed Atlantic & Pacific — received grants of over 175 million acres of federal land. To put that in a modern day perspective, that acreage is greater than that the state of Texas and encompassed one tenth of the entire United States.
Having gained ownership of such a mammoth parcel of land guaranteed the railroads a great source of income. As the railroad extended west, settlers migrated into the accessible territories, buying up the choicest parcels near the tracks. The two railroads paid off every single bond with interest as they became due.
The Central Pacific commenced construction eastwards from Sacramento, Calif., in 1863. Unfortunately, the war did not permit the Union Pacific to start moving west from Council Bluffs, Neb. until 1865. But when the war ended, construction switched into high gear as the war freed up thousands of soldiers — who, having enjoyed a newfound freedom away from home, decided not to return, but looked westward. With the railroad needing workers, they discovered a great human resource in the newly unemployed soldiers. The Union Pacific was the primary employer while the Central Pacific hired thousands of Chinese immigrants.
On May 10, 1869, the two railroads met in Promontory, Utah. The driving of a golden spike indicated the United States had been fully connected by rail. A telegraph operator at the event sent out a simple message across the country that crowds greeted with great fanfare; “Done!”
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