Dollars per mile of track
How much money did the government pay the railroads for each mile of track laid?
—D.L., Dimmitt Middle School
posted from CPRR Discussion Group at 3:21 PM
Thursday, June 08, 2006
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17 Comments:
The Pacific Railroad Act of 1862 as amended specified $16,000 per mile, except $48,000 per mile over the Rocky and the Sierra Nevada mountains (for a total of three hundred miles), and $32,000 per mile between the mountains – but note that these dollar amounts consisted of bonds that had to be and were repaid in full with interest at 6%, not government subsidies.
"The bill granted bond subsidies of three classes-at the rate respectively of $16,000, of $32,000, and of $48,000 per mile, according to the nature of the country described in certain limits, these bonds being a lien upon the road and all its fixtures, and eventually repayable to Government. A subsequent amendment allowed the companies to issue mortgage bonds to an equal amount, having priority over the Government bonds."
"Railroad Reorganization: Union Pacific." By Stuart Daggett, Ph.D., Harvard Economic Studies, 1908, states on page 256 that: " ... the government debt was paid off in cash ... both principal and interest were paid in full." Regarding the CPRR and Western Pacific RR, Tutorow, p. 1004 reports that final payment to the government was organized by a commission appointed by an 1898 act of congress, determined to be $58,812,715.48 on Feb. 1, 1899, and that the complex transaction was completed on February 1, 1909 when the last of the government debt was duly paid.
sloandeasy@charter.net wrote:
hi-
my name is bill davies and was a clerk in the SFGO from 1960-95 and transferred to the rio grande in 95. retired in 98 after the stUPid took over.
i haveheard that ... arcade creek was the start of the "foothills". ... is this correct? ... where did the mountains begin ?
thanx,
bill davies
Morro Bay
"Leland Stanford, governor of California and president of the Central Pacific Railroad, persuaded a malleable geologist, Professor Josiah Whitney, to declare the gently sloping Sacramento Valley a mountainous region so that the Central Pacific could collect the highest possible rate for laying track across it. A grateful California legislature later named its highest peak Mount Whitney in the professor's honor."
From: "Wendell Huffman" wendellhuffman@hotmail.com
Re: track progress payments
According to Wesley Griswold's Work of Giants, what Josiah W. Whitney stated was that the railroad's grade commenced a regular and continuous ascent at Arcade Creek, and that U.S. Surveyor-General E.F. Beale and California Surveyor General J.F. Houghton independently concurred. It was Lincoln himself who turned this piece of information into the base of the Sierra, and I doubt he was fooled. Lincoln wanted the railroad built and was willing to do what needed to be done to accomplish it.
Consider also that the CPRR and the UPRR were each entitled to drawing the $48K loans for only 150 miles. That was it – 150 miles of mountain mileage each. The total amount ($7.2 millions) for mountainous mileage for each railroad was fixed by law. And – as has been pointed out many times – the money was not a grant. It was a loan. All Lincoln allowed was for the CPRR to begin borrowing more money – when they finally qualified for any of it. At the time the base of the Sierra was "set" (March 1863), the CPRR still had to build 40 miles of track without federal assistance before they could draw the first of that federal. Later that requirement was cut in half – to 20 miles. That was probably as important to the company at the time than the base-of-the-Sierra ruling.
Wendell
From Trail to Rail: A History of the Southern Pacific Company, May, 1927, p. 12. explains that:
"Meanwhile a decision of great importance to the company had been made by President Lincoln. By the terms of the Pacific Railroad Act the company was to receive a loan in bonds to the amount of $16,000 per mile for its line west of the base of the Sierra and $48,000 per mile for the 150 miles east of that point. This tripling of the aid was because of the extraordinary cost of mountain construction.
Lincoln Decides
The Department of the Interior suggested that the base of the Sierra or beginning of the $48,000 a mile construction began at the end of the first 50-mile section. The California Supreme Court, however, had decided that the foothills of the Sierra began 31 miles from Sacramento. It devoIved upon President Lincoln to make the final decision as to where the increased payment would begin. He decided that it should be 7.18 miles east of Sacramento. In making the decision he expressed his belief in the importance of the Pacific Railroad as a national undertaking and declared that he welcomed this opportunity to give the enterprise every benefit the law would permit. 'Here is a case,' he said, 'in which Abraham's faith has moved mountains.' This decision meant a difference of more than $1,000,000 in the amount advanced by the government to the company. More men were put to work as rapidly as the money to pay them became available."
Also see the table of "Bonds to be Issued" in Railroad Communication Across the Continent ..., CPRR Bond Prospectus, 1868.
Bruce Cooper points out that under Section 11, of the 1862 act, while the $48,000 per mile mountainous portion was fixed at 150 miles for the CPRR and 150 miles for the UPRR, the $32,000 per mile portion between the Rocky mountains and the Sierra Nevada mountains was variable, so that moving the Sierra foothills to just outside Sacramento did in fact increase the total amount of money loaned by the federal government to the CPRR by increasing the length of track for which the bond amount was doubled.
"SEC. 11. And be it further enacted, {Subsidy bonds treble over the Rocky and the Sierra Nevada mountains.} That for three hundred miles of said road, most mountainous and difficult of construction, to wit, one hundred and fifty miles westwardly from the eastern base of the Rocky mountains, and one hundred and fifty miles eastwardly from the the western base of the Sierra Nevada mountains, said points to be fixed by the President of the United States, the bonds to be issued to aid in the construction thereof shall be treble the number per mile hereinbefore provided, and the same shall be issued, and the lands herein granted be set apart, upon the construction of every twenty miles thereof, upon the certificate of the commissioners as aforesaid that twenty consecutive miles of the same are completed; {Subsidy bond double between the mountains.} and between the sections last named of one hundred and fifty miles each, the bonds to be issued to aid in the construction thereof’ shall be double the number per mile first mentioned, and the same shall be issued, and the lands herein granted beset apart, upon the construction of every twenty miles thereof, upon the certificate of the commissioners as aforesaid that twenty consecutive miles of the same are completed: Provided, That no more than fifty thousand of said bonds shall be issued under this act to aid in constructing the main line of said railroad and telegraph."
Bruce Cooper points out that the above language in the 1927 Southern Pacific Bulletin article "From Trail to Rail" probably comes from the following earlier publication:
"The Story of the Central Pacific. The Rise of the Big Four: Huntington, Stanford, Crocker, and Hopkins" by W. F. Bailey
The PACIFIC MONTHLY
[later known as Sunset Magazine]
January & February, 1908:
" ... A decision of great importance to the company was made by President Lincoln during the Summer of 1863. By the terms of the Pacific Railway Bill the company was to receive bonds to the amount of $16,000 per mile for its line west of the Sierras and $48,000 for the section through the mountains. Just where the one ended and the other began was a question. The Interior Department was disposed to put the point at the end of the first fifty-mile section. The matter was taken up with President Lincoln, who decided it should be seven and eighteen hundredths miles east of Sacramento, saying to the applicant that 'here was a case where Abraham's faith has moved mountains.' In other words his belief in the statements made on the part of the company had brought the official decision as to the location of the mountains that much farther west. This meant a difference of over a million dollars to the road. On April 26, 1864, the tracks reached Griders, or California Central Junction, now called Roseville, and the operation of that much of the road was commended by the company."
Is it correct that the $48,000 per mile tripling of the bonds for the Sierra Nevada mountains ended and the $32,000 per mile intermountain doubling of the bonds began 7.18 + 150 miles = 157.18 miles East of Sacramento, i.e., about three miles East of Reno, Nevada?
From: "Chris Graves" caliron@cwnet.com
Reading from the U S Pacific Railroad Commission hearings, held at the Palace Hotel, Thursday August 11, 1887, Lewis Clement said, to wit:
Q: Do you know the point that was selected as representing the foothills of the mountains, 7 miles from Sacramento"
A: I understand that Alder Creek was selected as the geological base of the Sierra Nevada Mountains. Other than that, I know nothing about it.
Q: As a matter of fact, is that the point where the more difficult and mountainous construction of the road commences, or can it be said to fairly commence:
A: The ground there is rolling.
Q: Is it any more difficult for construction on one side, east of that point or west of that point for a distance of 4 or 5 miles, than on the other?
A: The work is heavier east of Arcade than it is West of it.
Q: Can you recall any special difficulty which would justify you in saying that, on the whole, the one was difficult and mountainous construction and the other was not?
A: The work east of Arcade is far more rolling than it is west of Arcade.
The above taken from theReport of the US Pacific Railway Commission, 1887, pages 3210 and 3211.
—G J Chris Graves, NewCastle, Cal.
From: "Wendell Huffman" wendellhuffman@hotmail.com
The answer to this very good question ["Is it correct that the $48,000 per mile tripling of the bonds for the Sierra Nevada mountains ended and the $32,000 per mile intermountain doubling of the bonds began 7.18 + 150 miles = 157.18 miles East of Sacramento, i.e., about three miles East of Reno, Nevada?"] can probably be found in the 1887 Pacific Railroad Commission reports, probably buried in the appendix or accountants reports. I'll be very surprised if the government paid the CPRR for more than 150 miles of mountainous work.
The following is Crocker's recollection on the matter as reported in the above mentioned reports (p. 3680).
"I entered into the question ['Where is the base of the mountains'], and I thought a good deal about it. We were very hard up, and we wanted to get the base down as near the river as we could, dealing justly with the Government, in view of that portion of the law which stated that 150 miles eastwardly covered the most expensive portion of the work. I do not know that I am quoting it exactly, but I think it is pretty much that way. The surveyors had made 150 miles from Arcade Creek reach the Truckee Meadows, where it was a level as this floor. and beyond that there was nothing very heavy. The heaviest work was between Arcade Creek and the Truckee Meadows. Therefore that answered that portion of the law. I took Professor Whitney out on a little ride, and I had a profile of the road from Sacramento City to the Truckee Meadows with me, and beyond there even. I showed it to him. I had a copy of the law, and I read that to him. 'Now,' said I 'Professor, we want to have you decide or give your opinion of where this spot should be located.' The profile showed a perceptible rise from Arcade Creek up. It was getting up faster and faster as we went along, and then got down; and when we got down to the Truckee Meadows, 150 miles from this point, on the Arcade Creek, it was almost level again, and the obstructions were trifling. It was smooth ground there. Here was all the heavy mountain work between. It answered the purpose of the law exactly. I did not ask him to do anything except that I wished him to decide where true justice would place the western base of the Sierra Nevadas [sic]. 'Well' he says, 'the true base is the river, but,' said he, 'for the purpose of this bill, Arcade Creek is as fair a place as any.' I think the president of the company addressed him a letter on that question and he answered it, I think, in writing. Then I took out General Houghton, the surveyor-general of the State of California, and I took him over the same course, showed him the whole thing, and talked to him in the same way. He said that undoubtedly, for the purposes of the bill, that was the true place to put the western base, and he answered the letter of the company in the same way."
If you see the problem as fitting the actual mountain mileage into the 150 miles designated by the Pacific Railroad Bill, then the Arcade Creek designation really isn't any particular trick. The profile goes from flat to up, to down, and back to flat. Arcade Creek to the Truckee Meadows puts roughly the same amount of flat profile on each side of the mountains. Had they set the western base twenty miles farther east, there would have been twenty more miles of flat track to the east of the Truckee Meadows – out into the sink. The Truckee Meadows is the location of Reno. The question really wasn't where do the Sierra Nevada begin? but where do we begin to assign the higher value bonds. The fact is, had Lincoln not started paying the higher value bonds where he did, the CPRR may never have gotten east of the Sierra at all.
As Bruce Cooper pointed out, the total cost to the government was higher – by $16,000 per mile (the difference between the $16,000/mile for flat country not paid west of the Sierra, and the $32,000/mile rate paid east of the Sierra). So how much did the Arcade Creek decision cost the government? Well where do you want to set the start of the Sierra? Move the point 10 miles farther east and you can say the decision cost the government $160,000. It really isn't much in the big scheme of things. Maybe Lincoln's willingness to pay that much extra helped make the Pacific railroad a reality.
—Wendell
From: sloandeasy@charter.net
Thanks for the information. I ride my Amtrak pass to Reno 3-4 times a year and when the docents from the Sacramento Railroad Museum are on board they mention Arcade Creek as the beginning of Sierra Nevada. Thanks to you ... I now know why.
Happy rail riding,
—Bill
Morro Bay
From: "Lynn Farrar" littlechoochoo81@netzero.net
My congratulations on knowing history. And I liked the use of the word "stUPid." I'll have to remember that one.
—Lynn
From: "Lynn Farrar" littlechoochoo81@netzero.net
Let me add to what Wendell has said. There were some miles in the Sierra that exceeded $100,000 per mile in cost. From 1966 to 1977 SP created what we called the SP Research Team whose aim was to determine the actual cost of construction of the roadbed and tunnel bores of all predecessor lines from 1852 to 1921. I was designated manager of the project, and to cut short a very long story, we verified that the costs of early construction were every bit in line with the cash costs reported by the railroad. And we had to assume everything was done in the most efficient manner possible, no delays of any kind and no difference between currency and gold. This latter item averaged over 20% during the building of the line from Sacramento to Promontory. For those having access to the Pacific Railway Commission hearings of 1887 a very voluminous record is available for study.
—Lynn
To: Lynn Farrar
Is there a report of your SP Research Team's study of CPRR construction costs that we should put online?
From: "Lynn Farrar" littlechoochoo81@netzero.net
As to the costs of early construction those were all among the records ordered thrown out by the Los Angeles lady in charge of SP building rentals. Sad to say but a great deal of research material was lost to posterity. The UP does not seem interested in historical material of SP. I saved what I could and gave most of it to CSRM in Sacramento. ... I really don't have much if anything of interest ... beyond what you already have. The early maps are available at the Nevada Historical Society in Reno, the Oregon Historical Society in Portland and the CSRM in Sacramento. I intend to give my entire collection of books, files, maps, etc. to the CSRM at some future date ... I wish you well in your wonderful CPRR Museum. ...
—Lynn
I have inherited recently from a northern Calif. aunt a rairoad spike, apparently solid brass, engraved "1887 - Encinal - 1961".Any idea of its source, significance or possible value? Could this have been from "The Encinal Road",(San Frncisco & Alameda R.R. Co.)?
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