--- Begin Message --- Title: Chronicles of American Wealth / Nr 1 April 2001
Chronicles of American Wealth / Nr 4 / November 30, 2001
Content :
- Now Online in Chapter 6 : The Transcontinental Railroad
- Introducing : the Pacific Quartet – promoters of the Central Pacific Railroad
- The Crédit Mobilier scheme
My dear readers,
In present days when people are used to cross pour country in a few hours by airplane, it is difficult to imagine what traveling from New York or Chicago to San Francisco meant, before the first American transcontinental railroad was built. At this time California was actually as distant from the East Coast as Europe or Africa. Going there long meant a difficult trip around Cape Horn or later through the jungle of Panama or Nicaragua. The overland route by wagon trek was no shorter and even more dangerous, involving Indian attacks and possible freezing or starving to death in the Rocky Mountains. Thus, when the Pacific railroad was completed on May 10th 1869, the country had good reasons to celebrate. This issue of our “Chronicles of American Wealth” and the part of Chapter 6 in “A Classification of American Wealth” it refers to is dedicated to the men who built the first transcontinental railroad in North America.
D.C. Shouter, November 30, 2001
1. Now Online in Chapter 6 : The Transcontinental Railroad
One of the outstanding construction works of the 19th century in America, the first transcontinental railroad was also an example of how great fortunes were founded on the basis of government support to private enterprises. China merchant and visionary Asa Whitney (1797-1877) had plans for a transcontinental railroad as early as 1844. But it took another 18 years until the Congress of the United States of America enacted the laws, which made construction of the first railroad, between the Mississippi and the Pacific Coast possible. In the Pacific railroad Acts of 1862 and 1864, the government granted rights of way and use of building materials along the way, a 20’000’000 acre land grant and government support for loans of 60’000’000 $ to three companies, which were to build the transcontinental railroad and its feeder lines, in the East from Kansas City and in the West from Sacramento. When on May 10th 1869, the Union Pacific’s locomotive “119” met the Central Pacific’s “Jupiter” at Promontory Utah, America had mastered the Frontier. In just seven years, actual construction works lasted even less, the Union Pacific railroad had built 1’086 miles from Omaha Nebraska, whereas the Central Pacific had built 690 miles from Sacramento. Both railroads had crossed a major mountain range, to the East the Rocky Mountains and to the West the Sierra Nevada. On May 15th 1869, regular scheduled service between Chicago and Sacramento was inaugurated, opening the way for thousands of immigrants, regular travelers and sizeable freight volume. But the building of the transcontinental railroad also had its shadow face. The Union Pacific railroad was overburdened by $ 74 million of bonded debt it was unable to service from regular income for years. Its shares fell to 9 $ before Wall Street manipulator Jay Gould bought control and the scandal around the Credit Mobilier scheme (see below) rocket the political scene in Washington and precipitated the panic of 1873. Read more about the building of the first transcontinental railroad in North America and the men who made it happen at “A Classification of American Wealth”…
2. Introducing : The Pacific Quartet
The men who joined their fortunes and fates in 1861 to build the Central Pacific railroad, the Western part of the first American transcontinental line, would later be known as the “Pacific Quartet” or “The Big Four”, the richest and most powerful group of capitalists on the Pacific Coast of the United States. There were actually five associates of the Contract & Finance Company, the company these promoters used to build the Central Pacific railroad. Mark Hopkins and C.P. Huntington had a large scale hardware business in Sacramento. Leland Stanford, another merchant and the owner of a gold mine, was also the Governor Elect of California, the first republican to hold the office. Charles Crocker became the main contractor of the construction works and his elder brother Edwin Bryant Crocker, an associate justice at the California Supreme Court, was the Central Pacific’s legal counselor. Together these men built the Central Pacific railroad, 690 miles from Sacramento to Promontory Utah, crossing the mighty Sierra Nevada at Donners Pass and in the process, they acquired immense wealth. Read more about the Cental Pacific Railroad and the Pacific Quartet at “A Classification of American Wealth”…
3. The Credit Mobilier of America : a scandal that shook Washington
Although many people know about the Union Pacific and the construction of the first American transcontinental railroad, few are familiar with the Credit Mobilier of America, the scheme that allowed its promoters to make millions by defrauding the public funds allocated to the railroad. The Union Pacific Railroad had a difficult start after the Pacific Railroad Act of 1862 chartered the company to build the main part of the transcontinental railroad. One year after the meeting of the incorporating commissioners in Chicago, the necessary shares to launch the railroad were still not sold. Then entered Thomas Clark Durant, a doctor turned railroad promoter, whose interest in several lines West of Chicago induced him to finance the subscriptions needed to launch of the Union Pacific. Thomas Durant and his partner Cornelius Scranton Bushnell then created the Credit Mobilier of America, a contracting company, which would be used to build the railroad. The scheme was quite simple and standard procedure in American railroad construction in these days. The promoters, who controlled the railroad’s Board of Directors, awarded their contracting company the construction works at inflated prices. The proceeds were distributed to the Credit Mobilier shareholders in dividends, both cash and railroad securities. The Credit Mobilier later became one of the great scandals of the 19th century, because the partners shared the spoils of their looting with a large number of congressmen and public officials, in exchange of much needed support for the railroad project. Republican congressman Oakes Ames, whose younger brother Oliver Ames became president of the Union Pacific in 1866, distributed Credit Mobilier shares among his fellow congressmen. The scandal shook Washington as it involved such key politicians as Vice President Schuyler Colfax, Speaker of the House James Gillespie Blaine, future Vice Presidents Henry Wilson and Levi Parsons Morton, future president James Garfield and scores of other members of Congress and public officials. Find out more about the Credit Mobilier, the Union Pacific Railroad and its promoters at “A Classification of American Wealth”…
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