Wall Street History

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Wall Street History

06/17/2005

The Transcontinental Railroad, Part I

Investment banking legend Felix Rohatyn wrote an op-ed for the
Wall Street Journal on June 16 that addressed the issue of
government borrowing for true investments as opposed to
borrowing for current expenditures; a reality missing in today’s
budget debates, according to Mr. Rohatyn.

Rohatyn brings up cases like Jefferson and the Louisiana
Purchase, Lincoln’s creation of the land grant college system,
FDR’s GI Bill and Eisenhower’s interstate highway system as
being examples of investments that benefited the country in
numerous ways.

So I was trying to come up with a topic for this column when in
thumbing through a book on famous newspaper articles from
years past I stumbled on Horace Greeley’s series back in the
1850s on another such federal investment, the transcontinental
railroad. What seems obvious today wasn’t a sure thing in those
days.

Greeley was the famous editor of the New York Tribune, a paper
that reached hundreds of thousands of readers. Among the many
causes that he promoted through his lectures and books, as well
as the newspaper, was westward expansion. But while he is
often credited with the expression “Go west, young man, go
west!” it was first adopted by John L. B. Soule of the Terre
Haute Express in an 1851 piece on the gold rush. Greeley
reprinted Soule’s article and forever after was linked to the
saying.

In 1859, Greeley went West himself and during his three-month
trip wrote 32 dispatches. Once back in New York, he
summarized his arguments for a transcontinental railroad in a
final piece.

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“Dispatch 33: A Railroad to the Pacific,” by Horace Greeley.
New York Tribune, October 20, 1859

I propose in this letter to present such considerations as seem to
me pertinent and feasible, in favor of the speedy construction of
a railroad, connecting at some point our Eastern network of
railways with the waters of the Pacific Ocean.

Let facts be submitted to, and pondered by, considerate,
reflecting men. There are thousands of usually intelligent
citizens who have decided that a Pacific railroad is a humbug –
the fantasy of demagogues and visionaries – without having ever
given an hour’s earnest consideration to the facts in the case.

[Greeley then charts the number of arrivals and departures from
San Francisco by water over the period 1849-57 .381,000 of
the former and 139,000 of the latter.]

Of course, they were not all from the Atlantic slope, via the
Isthmus, or Nicaragua; but the great mass of them were.
Probably most of those brought by small vessels from the Pacific
ports were not reported to, or recorded at the customhouse at all.
There were some immigrants to California who did not land at
San Francisco, though the great mass undoubtedly did. Then
there was a heavy, though capricious overland emigration.
Governor Bigler stated the number in 1854 alone at sixty-one
thousand four hundred and sixty-two; and there was a very large
migration across the Plains in 1852. In 1857, the number was
estimated at twelve thousand five hundred. This year, my
estimate of the number, founded on personal observation, is
thirty thousand; but others make it forty thousand to sixty
thousand .

Can there be any doubt that nine-tenths of these would have
traveled by railroad, had such a road stretched from the Missouri
or Mississippi to the Pacific, the fare being moderate, and the
passage made within ten days? I estimate that twice to thrice the
number who actually did go to California would have gone, had
there been such a means of conveyance, and that the present
Anglo-American population of the Pacific slope would have
been little less than two millions – say, California, one million
five hundred thousand; Oregon, three hundred thousand;
Washington, one hundred thousand; Sonora and Mexican
California, one hundred thousand.

Now as to the gold crop of California .

The returns for the last two years and the first three-quarters of
the present are not before me, but they are known to have varied
little from the rate of fifty millions of dollars per annum, making
the total amount entered at the customhouse of San Francisco, as
shipped at that port up to this date, rather over five hundred
millions of dollars. How many more millions have been brought
away in the trunks or belts of returning emigrants, or mercantile
passengers, I will not attempt to guess, but the amount is
certainly large. On my recent trip homeward, one of the steerage
passengers was currently reported as having thirty thousand
dollars in gold in his carpetbag which he kept in his hands or
under his head; others were said to have their thousands each, to
a very large aggregate amount. Manifestly, the export of gold
from California, the current produce of her mines, has exceeded
fifty millions of dollars per annum, while a considerable amount
is retained in the country.

Now all this gold is sent away to pay for goods – many of them
very costly in proportion to their bulk and weight – silks and
other dear textile fabrics; jewelry; rare wines; expensive wares;
drugs, spices, etc. Experience has amply proved that all such
products take the quickest rather than the cheapest route. I
believe that twenty million dollars of costly or perishable
merchandise would annually seek California overland if there
were a continuous line of railway from the Atlantic to the Pacific
seaboard; and that this amount would steadily and rapidly
increase .

Now let us see how far the government would necessarily
patronize such a road:

The Post Office Department is now paying at least one million
and a quarter for the conveyance of mails between the Atlantic
and Gulf states and California, and was recently paying one
million and a half. For this, it gets a semi-monthly mail by way
of the Isthmus (six thousand miles, or more than double the
distance direct), and a semi-weekly mail by the Butterfield route
(also very circuitous), which carries letters only. There are two
or three slow mails on other routes, but they cannot be said to
add anything of moment to the facilities enjoyed by California
and the older states for the interchange of messages of ideas.

As to military transportation, I cannot say what is its amount, nor
how far a single line of railway could reduce its proper cost. I
believe, however, that the government is now paying at least six
millions of dollars for the transportation of men, munitions and
provisions to our various military posts between Kansas proper
and California, and that fully half of this would necessarily be
saved and earned by a railroad to the Pacific .

The social, moral, and intellectual blessings of a Pacific railroad
can hardly be glanced at within the limits of an article. Suffice it
for the present that I merely suggest them:

1. Our mails are now carried to and fro California by steamships,
via Panama, in twenty to thirty days, starting once a fortnight.
The average time of transit from writers throughout the Atlantic
states to their correspondents on the Pacific exceeds thirty days.
With a Pacific railroad, this would be reduced to ten, for the
letters written in Illinois or Michigan would reach their
destinations in the mining counties of California quicker than
letters sent from New York or Philadelphia would reach San
Francisco. With a daily mail by railroad from each of our
Atlantic cities to and from California, it is hardly possible that
the amount of both letters and printed matter transmitted, and
consequently of postage, should not be speedily quadrupled.

2. The first need of California today is a large influx of
intelligent, capable, virtuous women. With a railroad to the
Pacific, avoiding the miseries and perils of six thousand miles of
ocean transportation, and making the transit a pleasant and
interesting overland journey of ten days, at a reduced cost, the
migration of this class would be immensely accelerated and
increased. With wages for all kinds of women’s work at least
thrice as high on the Pacific as in this quarter, and with larger
opportunities for honorable and fit settlement in life, I cannot
doubt that tens of thousands would annually cross the Plains, to
the signal benefit of California and of the whole country, as well
as the improvement of their own fortunes and the profit of the
railroad.

3. Thousands now staying in California, expecting to “go home”
so soon as they shall have somewhat improved their
circumstances, would send or come for their families and settle
on the Pacific for life, if a railroad were opened. Tens of
thousands who have been to California and come back, unwilling
either to live away from their families or to expose them to the
present hardships of migration thither, would return with all they
have, prepared to spend their remaining days in the land of gold,
if there were a Pacific railroad .

Men and brethren! Let us resolve to have a railroad to the
Pacific – to have it soon. It will add more to the strength and
wealth of our country than would the acquisition of a dozen
Cubas. It will prove a bond of union not easily broken, and a
new spring to our national industry, prosperity and wealth. It
will call new manufactures into existence, and increase the
demand for the products of those already existing. It will open
new vistas to national and individual aspiration, and crush our
filibusterism by giving a new wholesome direction to the public
mind. My long, fatiguing journey was undertaken in the hope
that I might do something toward the early construction of the
Pacific railroad; and I trust that it has not been made wholly in
vain.

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On July 1, 1862, President Abraham Lincoln signed a bill
incorporating the Union Pacific Company. The company was
subsidized with federal funds to enable it to construct a line from
Nebraska to Utah, where it would meet the Central Pacific which
started out from Sacramento.

Next week the story continues.

Sources:

“Muckraking! The Journalism That Changed America,” edited by
Judith and William Serrin
“America: A Narrative History,” George Brown Tindall, David E.
Shi
“An Empire of Wealth,” John Steele Gordon

Brian Trumbore

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