Chapter Four

THE BIRTH OF THE UNION PACIFIC 1862-1864

THE men who founded the Union Pacific were like Lincoln’s generals, some of them good, many of them bad, most of them indifferent. No American president had ever before had to fight a civil war involving hundreds of thousands of troops. No one had founded anything like the Union Pacific, which, like the Central Pacific, had in front of it the most formidable task imaginable.* The wonder isn’t how many things they screwed up, but how much they did right.

THE 1862 Pacific Railroad Act authorized the creation of the Union Pacific Railroad. The bill mandated the 163 men appointed in the act to serve as a board of commissioners who were to work out a provisional organization of the company. They held their first meeting in Chicago. They were prominent railroad men, bankers, and politicians, with five commissioners appointed by the President. When the three-day meeting opened on September 2, 1862, only sixty-seven of the directors bothered to attend and, like those who were absent, they had deep doubts about how this railroad was going to be built. They selected Samuel R. Curtis as temporary chairman; Curtis at this time was a major general in the Union Army. Mayor William B. Ogden of Chicago was made president, and Henry V. Poor of New York, editor of the American Railway Journal, secretary. Everyone present agreed with Samuel Curtis’s belief that, “notwithstanding the grant is liberal, it may still be insufficient.”1

The directors also agreed that their biggest problem was the first-mortgage nature of the government bonds, which would make it near impossible for the company to sell its own bonds. But there were many other difficulties needing attention. Most of all the project needed promoters who were tough and practical. Men who could lobby Congress for a new, more generous bill as well as convince their fellow citizens to buy stocks and bonds in the company. Men who would organize the vastest enterprise ever seen in North America, except for the Union and Confederate armies, and push the railroad across the continent in the face of every obstacle.

GENERAL Dodge, meanwhile, was cutting a swath for himself in the Union Army. He was wounded at the Battle of Pea Ridge, Arkansas (March 6-8, 1862), and it was while he was recovering in the hospital in St. Louis that men interested in the Pacific railroad had visited him and urged him to leave the army. “I have enlisted for the period of the war,” was Dodge’s reply.2

Two months later, he had got another plea to quit the army and go to work for the Pacific railroad. This time it came from Peter Reed of Moline, Illinois, a politician and promoter of the Rock Island line. With the Pacific Railroad Bill on the verge of passing, he reminded Dodge, “You once told me that if we could get the Pacific railroad through you would quit the army and identify yourself with it. In the first place, Dodge, you cannot possibly last where the labor and excitement are so great…. The Pacific railroad is a big lick in your affairs and mine, and you can hardly keep out.”3 Dodge again refused.

In June 1862, out of the hospital, Dodge wrote his wife, “I am at my old job again—railroading.” The Union Army had to build its own lines to move troops and supplies in the South, and Dodge was building a road sixty-four miles long, to Corinth, Mississippi. He stayed with building new roads or repairing old ones. In his memoirs, Grant said of Dodge, “Besides being a most capable soldier, he was an experienced railroad builder. He had no tools to work with except those of the pioneer—axes, picks and spades.” He had men making the tools, others working on bridges, others making the grade, still others laying the track. “Thus every branch of railroad building,” Grant wrote, “was all going on at once…. General Dodge had the work finished in forty days after receiving his order.”

Grant was destined to play a major role in the building of the American railroad system. Like Lincoln, he was enamored with the trains. He had first seen one while on his way to West Point in 1839. It ran from Harrisburg to Philadelphia. When he got on it, “I thought the perfection of rapid transit had been reached. We traveled at least eighteen miles an hour when at full speed, and made the whole distance averaging as much as twelve miles an hour. This seemed like annihilating space.”4 That last sentence summed up exactly the sentiments of the thinking men of the age.

After Dodge had completed laying the track to Corinth, Grant put him to repairing lines torn up by the enemy. “The number of bridges to rebuild was 18, many of them over deep and wide chasms; the length of the road repaired was 182 miles.”5 As Dodge’s biographer J. R. Perkins says, with only a bit of exaggeration, “Railroading was new; much of the machinery was defective, and the art of road building was all but in its infancy.”6

Nevertheless, Dodge did magnificently, impressing Grant and his other superiors and railroad men. For example, he put in crib piers for the Mobile and Ohio Railroad. When officials of the company, after the war, ordered them taken out and truss bridges put in, one of them examined the wartime work and remarked, “General Dodge must have thought the war was going to last forever.”7

His wife wrote him that she wanted him to resign and take up the $5,000-per-year salary the railroad was offering if he would become the chief engineer for the UP. Dodge wrote back, “My heart is in the war; every day tells me that I am right, and you will see it in the future.”8

•   •   •

BEFORE adjourning on September 5, 1862, the first meeting of the appointed directors of the Union Pacific arranged to open stock-subscription books in thirty-four cities and advertise the sale in numerous newspapers. With the glittering promise of a transcontinental railroad that looked to make tons of money, and with all the loose cash floating around from wartime profits and inflation, the directors were certain—or at least hopeful—that the Northerners would flock to do their patriotic duty and sign up. Alas. In the first four months of sales, a grand total of forty-five shares were sold to eleven brave men.

Brigham Young, leader of the Mormons, was easily the biggest buyer, and the only one to pay in full, for his five shares, which made him the UP’s first—and for a long time only—stockholder “in good standing.”9 Doc Durant, the Wall Street speculator who had apparently put up the money for some of the other purchasers, bought twenty shares (at 10 percent down) for himself and made the rounds of his friends, looking for them to subscribe. George Francis Train, an erratic promoter and self-styled “Champion Crank,” who had earned a fortune in shipping and had been involved with Durant in a speculation on contraband cotton, took twenty shares.

DODGE was a man who had no fear of taking risks. In the spring of 1863, he had in his camp nearly one thousand former slaves who had walked off their plantations to gather around Union troops. Dodge put them to work. Then he said to reporter Charles A. Dana, “I believe that the negroes should be freed. They are the mainstay of the South, raising its crops and doing its work while its able-bodied men are fighting the government.” Dana published the statement. Dodge went further in his actions than in his words. He began arming former slaves, saying as he did so that “there is nothing that so weakens the south as to take its negroes.”10

From the perspective of the twenty-first century, Dodge was exactly right. But among the men of the 1860s era, he created great consternation. They were not at all sure they wanted the slaves to be free, and for sure they did not want the African Americans bearing arms for the Union. Thus Dodge was surprised and worried when, in the spring of 1863, he received a dispatch from General Grant ordering him to proceed to Washington to report to President Lincoln. There was no explanation, and Dodge confessed, “I was somewhat alarmed, thinking possibly I was to be called to account.” But on arriving in Washington, he discovered that Lincoln wanted to talk railroads, even though Robert E. Lee and the Army of Northern Virginia were just then preparing to march into Pennsylvania.

The President had been charged by the act of 1862 with fixing the eastern terminus of the UP. He recalled his 1859 talk with Dodge and wished to consult with him. Nearly every village on the Missouri River wanted the transcontinental to start at its site. Lincoln showed Dodge pleas from towns on both sides of the Missouri, from fifty miles above and below Council Bluffs. “I found Mr. Lincoln well posted in all the controlling reasons covering such a selection,” Dodge wrote, “and we went into the matter at length and discussed the arguments presented by the different competing localities.”

Dodge reiterated his belief in the Platte Valley route, with Omaha as the best terminus. He pointed out that, from a commercial and engineering point of view, there was no other choice. The great Platte Valley extended from the base of the Rocky Mountains in one continuous reach for six hundred miles east to the Missouri River. And, Dodge added, he had surveyed the valley the whole way and then crossed the mountains, and told Lincoln that the divide of the continent at the head of the river ran through an open country not exceeding eight thousand feet in elevation, while to the north and south the Rocky Mountains towered from ten to thirteen thousand feet high.

In his blunt manner, Dodge also told Lincoln that the act of 1862 had many deficiencies in it, which he enumerated, adding that they made it difficult to raise capital. Lincoln agreed and said he would see what could be done. He was very anxious that the road should be built and wanted to do his part. And he agreed with Dodge about the terminus.

Dodge told him it would be difficult at best for private enterprise to build it. He said he thought it should be taken up and built by the government. Lincoln interjected that the government would give the project all possible aid and support, but could not build the road. As Dodge remembered his words, Lincoln said that the government “had all it could possibly handle in the conflict now going on, [but it] would make any change in the law or give any reasonable aid to insure the building of the road by private enterprise.”11 This was unprecedented, beyond anything imagined by either Alexander Hamilton or Henry Clay, the first secretary of the Treasury and the later senator, who had started the promotion of government aid to internal improvements.

ELATED by the President’s reaction, Dodge took the train to New York, where he met Durant (“then practically at the head of the Union Pacific interests,” in Dodge’s words) and told him of Lincoln’s views. Durant “took new courage” at the news, as Dodge recalled.

Durant also asked Dodge once again to resign from the army and go to work for the UP. Dodge once again refused. He had just said publicly, “Nothing but the utter defeat of the rebel armies will ever bring peace. … I have buried some of my best friends in the South, and I intend to remain there until we can visit their graves under the peaceful protection of that flag that every loyal citizen loves to honor and every soldier fights to save.” That was a splendid speech, straight from the heart.12 It speaks volumes about Dodge’s patriotism and dedication.

But if he could make a little money out of the war, and out of the railroad, he was willing. He wrote Durant of his desire “to identify myself with the project in some active capacity. But I probably can do you more good in my present position while matters are being settled by Congress and others.” Once Lincoln had announced the terminus, Dodge added, Durant should “telegraph my Brother at Council Bluffs, so that he can invest a little money for me…. Bear this in mind.”13

EVEN with Durant and Train out there selling for all they were worth, and even though the Union won a major victory at Gettysburg on July 1-3, 1863, and another when Vicksburg surrendered to Grant on July 4, it was not until September, a whole year after the shares went on sale, that two thousand shares were subscribed at $1,000 each—the minimum 10 percent that had to be put down for a $10,000 share. With the down payment, there was a total of $2 million for a road that was going to cost anywhere from $100 million to $200 million or perhaps more.

It was too risky a proposition for most American capitalists. No one knew if a train could be run over the Rockies in winter, or what the road over the mountains and through the desert would cost to build. With a war on, there were too many, too fat, profits to be made in shorter-term, less risky investments. People could not imagine how big this project was going to be, or the potential returns.

But with the 10 percent in hand, the UP was able, on September 25, 1863, to call for a meeting of the stockholders for October 29, 1863. On that day, the original commissioners were discharged and a board of thirty directors elected. The next day, the board elected General John A. Dix, who had been associated with the M&M Railroad, as president-Dignified, polite, but at sixty-five years of age an old man by mid—nineteenth century standards, Dix was known to everyone of note in New York and most of those in Washington. But he was a titular chief only.

The real leader of the corporation was Doc Durant, who took the title of vice-president, with Henry Poor as secretary. Durant had in his hands reports of the earlier surveys by Peter Dey and his then assistant Grenville Dodge. Durant told the board that two months earlier he had sent Dey west again, with four parties of engineers and a geologist, to survey the entire route, all paid for by his own money.14

So the Union Pacific was born, more than a year after Congress passed the Pacific Railroad Bill and Lincoln signed it.

VICE-PRESIDENT Durant went right to work. “Want preliminary surveys at once to make location of starting point,” he telegraphed Peter Dey in Omaha. “Delay is ruinous. Everything depends on you.” On November 5, 1863, Dey hurried to New York. Over the next two weeks, Durant pressed Lincoln to make his decision on the starting point. He finally did so on November 17, a day when the President was distracted: in two days, he was to make some remarks at the dedication of the Union cemetery at Gettysburg. Nevertheless, Lincoln managed to scratch off an executive order defining the terminus as “so much of the western boundary of the State of Iowa as lies between the north and south boundaries of … the city of Omaha.”

Lincoln put more thought into what he would say in Gettysburg, and it came out much better. Still, Durant was satisfied. Despite the lack of a railroad running to Council Bluffs, not to mention a bridge there over the Missouri River, the Union Pacific would make Omaha the starting point.15

DURANT wanted to get started yesterday. The Central Pacific had already had its groundbreaking ceremony, eleven months earlier. Doc decided the UP must have a ceremony of its own in Omaha, if only to get some publicity. He ordered Dey to rush preparations and be ready on December 1, 1863. On November 30, he sent a telegram to his chief engineer: “You are behind time for so important an enterprise. Break ground on Wednesday.”16

Dey did so, and the ceremony was grand. Citizens of Omaha flocked to the bottomland near the ferry landing at Seventh and Davenport Streets. The governor of Nebraska Territory turned the first shovel of dirt. There were bands, whistles, cannon, flags, and fireworks. George Francis Train was the orator, wearing the only white suit west of the Mississippi. He was described as “visionary to the verge of insanity.” His speech put to shame any previous hyperbole. “America possesses the biggest head and the finest quantity of brain in the phrenology of nations,” was one of his opening stretchers. He was said to be “a man who might have built the pyramids.” He read congratulations from Lincoln and other dignitaries. Secretary of State William Seward, a longtime promoter of the Pacific railroad, had written: “When this shall have been done disunion will be rendered forever after impossible. There will be no fulcrum for the lever of treason to rest upon.”17

Later, the mayor hosted a banquet and ball at the Herndon House. Train wired Durant: “Five (5) o’clock the child is born.” The Doctor was not impressed. “May as well have had no celebration as to have sent such meager accounts. Send full particulars.”18

The groundbreaking had brought the speculators into Omaha in droves, and the local residents tried to accommodate them. Train bought five hundred acres, some of it for as much as $175 per acre.19 Dodge’s brother Nathan wrote him, “Every man, woman and child who owned enough ground to bury themselves upon was a millionaire, prospectively.”

But then it turned out that Omaha might not be the terminus after all. Durant was exploring a line north of the city, through Florence, and another south of Omaha, at Bellevue; indeed, on the same day as the groundbreaking he had chosen the Florence line.

A week after the groundbreaking ceremony in Omaha, Lincoln, in his Annual Message to Congress, praised the Central Pacific and the Union Pacific, with what most railroad men would regard as little cause, when he referred to “the actual commencement of work upon the Pacific Railroad, under auspices so favorable to rapid progress and completion.”20

•   •   •

DURANT was into this thing to make money, not to build a railroad. He was as flamboyant as the most freewheeling man on Wall Street could be. He would bet a fortune on almost anything. He moved too fast for other fast-money boys to keep up with him. In this case, he had bought land north and south of Omaha and wanted to play the three contenders against each other. In January 1864, Durant ordered Dey to survey yet another line, this one from De Soto (more than twenty miles north of Omaha) west. Dey was furious. He wrote Dodge that Durant was “managing it as he has everything else that is in his hands. A good deal spread and a good deal do nothing. He considers it a big thing, the Big Thing of the age, and himself the father of it.”

Instead of deciding on a line, Durant bombarded Dey with new possibilities. “If the geography was a little larger,” Dey wrote Dodge, “I think he [Durant] would order a survey round by the moon and a few of the fixed stars, to see if he could not get some more depot grounds.”

It was Dodge’s turn to grow furious. “Let me advise you to drop the De Soto idea,” he wrote Durant. “It is one of the worst.” Logic, nature, and President Lincoln dictated that the route run from Omaha to the Platte River and then west along the Platte Valley.21

Still the Doctor persisted in his bewildering variety of schemes. He was negotiating with the businessmen of Omaha, Bellevue, Florence, and De Soto all at once, demanding they give the railroad land for depots, rails, water storage, and more, and he had them in competition against each other.

On January 1, 1864, President Dix signed a document formally appointing Peter Dey the chief engineer of the UP. He named Colonel Silas Seymour the consulting engineer, also at Durant’s suggestion. Seymour was a crusty, overweight, eccentric, domineering dandy with little railroad experience and was later referred to as the “interfering engineer.” But his brother Horatio was governor of New York and a leading Democratic candidate for president, and Durant thought it wise to have friends in both parties.22

Engineer Dey wanted to get going on his surveys. He had hired two fine engineers, Samuel B. Reed and James A. Evans, to run a line from the Black Hills* to Salt Lake—that is, across the southern part of today’s Wyoming and northeastern Utah, They needed to start at once if they were going to finish by the autumn of 1864. But Durant would not approve their expenditures—or Dey’s salary, for that matter.

On April 4, 1864, Dey wrote Dodge, “Durant is vacillating and changeable and to my mind utterly unfit to head such an enterprise…. It is like dancing with a whirlwind to have anything to do with him. Today matters run smoothly and tomorrow they don’t.” If the men in charge back in New York would only give him the money to run the operation and otherwise leave him alone, Dey said, “I could build the work for less money and more rapidly than can be done the way they propose to do it.” But of course that couldn’t be done.

As Maury Klein, author of a two-volume history of the Union Pacific and easily its finest historian, comments, “Thus was the Union Pacific charged with mismanagement before it had laid a single rail.”23

THIS was hardly a surprise, because conservative capitalists (the majority) would not risk their fortunes or reputations on the road. They regarded its stocks and bonds as a reckless gamble for high stakes at long odds. Who was there among them willing to wager on long shots?

George Francis Train was one. He knew that construction would require an enormous amount of capital, that it would be years before the road could return any dividends, and that therefore some way had to be found to raise money and provide short-term profits. He further knew that a construction company would attract investment, because it could make money through the government loans plus the company’s sale of the land grant and of its own stocks and bonds. A separate construction company would also limit the liability of investors to the stock they held. Moreover, as stockholders in both the construction and the railroad company, the investors could make a contract with themselves. “I determined,” Train said later, “upon introducing this new style of finance into the country.”24

Sounds simple, and it was. Although he had failed to sell the UP, Train said, “an idea occurred to me that cleared the sky.” He mentioned it to the Doctor, who gave him $50,000 to put it into action. In March 1864, Train and Durant bought control of an obscure Pennsylvania corporation called the Pennsylvania Fiscal Agency that had been chartered five years earlier to do damn near anything it wished. The company had not even organized until May 1863, and then it had transacted no business until March 3, 1864, when Durant and Train were made directors. In May the board of directors was expanded to bring in more men from the UP. Train renamed it the Crédit Mobilier of America and made it into a construction company. The two principals, Durant and Train, were able to sell lots of stock in a company that couldn’t miss. Ben Holladay, founder and owner of the stagecoach line, bought $100,000; so did many others. Train took $150,000, Durant more than double that. Train later claimed that he had created “the first so-called ‘Trust’ organized in this country.”25 Crédit Mobilier was on its way.

Greatly simplified, the process worked this way: The Union Pacific awarded construction contracts to dummy individuals, who in turn assigned them to the Crédit Mobilier. The UP paid the Crédit Mobilier by check, with which the Crédit Mobilier purchased from the UP stocks and bonds—at par, the trick to the whole thing—and then sold them on the open market for whatever they would fetch, or used them as security for loans. The construction contracts brought huge profits to the Crédit Mobilier, which in turn was owned by the directors and principal stockholders of the UP. In short, it didn’t matter if the UP ever got up and running and made a profit, because the Crédit Mobilier would make a big profit on building it. Profit that it would pay out to its stockholders in immense amounts.

As historian Thomas Cochran comments, “The procedure was a general one in the building of western railroads, and often resulted badly for the original small investors who had bought the railroad bonds or stocks at or near par.” But for the insiders it meant excessive profits. “In addition, it necessarily tended to vest control of the railroad in the hands of the chief stockholders of the construction company.”26

CHARLES Francis Adams, Jr., grandson of two presidents and one of America’s leading intellectuals and columnists, became a principal critic of the Crédit Mobilier, which became the greatest financial scandal of America in the nineteenth century. But when he became president of the Union Pacific in the 1880s, he would see things in a different light. He told Halsey Merriman, a scathing critic of the original board of directors of the railroad, “It is very easy to speak of these men as thieves and speculators. But there was no human being, when the Union Pacific railroad was proposed, who regarded it as other than a wild-cat venture. The government did not dare to take hold of it. Those men went into the enterprise because the country wanted a transcontinental railroad, and was willing to give almost any sum to those who would build it. The general public refused to put a dollar into the enterprise. Those men took their financial lives in their hands, and went forward with splendid energy and built the road the country called for. They played a great game, and they played for either a complete failure or a brilliant prize.”27

ALMOST everyone in Congress knew that the 1862 act would have to be revised, modified, changed. Representative James G. Blaine of Maine, a future perpetual candidate for president, later observed, “Such was the anxiety in the public mind to promote the connection with the Pacific that an enlarged and most generous provision was made for the completion of the road.” The struggle with the South, he added, meant “that no pains should be spared and no expenditures stinted to insure the connection with … the interests of the Atlantic and Pacific Coasts.”28

One congressman noted, “Mr. Lincoln said to us that his experience in the West was that every railroad that had been undertaken there had broken down before it was half completed…. He had but one advice to us and that was to ask sufficient aid…. He said further that he would hurry it up so that when he retired from the presidency he could take a trip over it, it would be the proudest thing of his life that he had signed the bill in aid of its construction.”29

In May 1864, a bill to provide sufficient aid was introduced into the House; a similar bill was introduced into the Senate by Senator John Sherman, General William Sherman’s brother. They and most others believed that there had to be more inducement for capitalists to invest. Representative Hiram Price of Iowa put it this way: “I do not believe that there is one man in five hundred who will invest his money, and engage in the building of this road, as the law now stands.”30 But some politicians still held back. Representative E. B. Washburne of Illinois called the revised bill “the most monstrous and flagrant attempt to overreach the government and the people that can be found in all the legislative annals of the country.” He charged that the bill had fallen into the hands of “Wall Street stock jobbers who are using this great engine for their own private means.”31

Washburne was right about that last. Durant was in Washington handing out money and stocks of the UP. Huntington of the CP was also there, working for the new bill. When it finally passed in late June, Washburne noted a “tempest of wildest disorder” in the packed galleries and corridors in which “lobbyists, male and female,” crowded and jostled each other.32

On July 2, 1864, Lincoln, always the railroads’ first and finest friend, signed the bill into law. It was everything Durant and his fellow directors, and Huntington and his, could have wanted.

The Pacific Railroad Act of 1864 allowed the directors of the UP and the CP to issue their own first-mortgage bonds in an amount equal to the government bonds, thus putting the government bonds in the status of a second mortgage. The government bonds (actually, the loan to the railroads) would be handed over by Washington upon the completion of twenty miles of track rather than forty. In mountainous regions the companies could collect two-thirds of their subsidy once the roadbed of a twenty-mile section was prepared—that is, graded. Also, the companies were given rights previously denied, to coal and iron and other minerals in their land grants, which were meanwhile doubled to provide ten alternate sections on each side of every mile, or about 12,800 acres per mile. To attract investors, the par value of UP stock was reduced from $1,000 to $100, and the limit on the amount held by any one person was removed.

The act allowed the Central Pacific to build up to 150 miles east of the California-Nevada border and limited the UP to building no more than three hundred miles west of Salt Lake City, but no meeting point was designated. Maury Klein has pronounced his judgment: the act included these and other provisions that were “monuments to ambiguity.” But as he also points out, “The object was to induce private parties to build the road that everyone agreed must be built.”33

Lincoln did two other things for the UP. First, on November 4, 1864, he approved the first hundred miles of the permanent location of the tracks, as requested by Durant—from Omaha to the west. Second, as directed by the bill, he set the gauge at four feet eight and a half inches, the so-called “standard gauge” urged on him by Eastern railroaders.

HOW much Durant and Huntington spent to make the 1864 act pass no one has ever found out. A lobbyist hired by Durant, Joseph P. Stewart, distributed $250,000 in UP bonds, with $20,000 of them going to Charles T. Sherman, eldest brother of the senator and the general, for “professional services.” Doc also gave to congressmen’s campaign funds, including one for S. S. “Sunset” Cox. Others got their shares, including a young New York lawyer named Clark Bell who got $20,000 for drawing up the act.

Durant was a genial paymaster. An associate called him “the most extravagant man I ever knew in my life.” Another called Durant “a fast man. He started fast, and I tried to hold him back awhile, but he got me to going pretty fast before we got through. He was a man who when he undertook to help to build a railroad didn’t stop at trifles in accomplishing his end.” So too with George Francis Train. As soon as the bill passed, he went off to Omaha (“the seat of Empire,” as he called it) for the first of three trips that year. He charged the UP $4,000 for “expenses and services.”34

ON July 2, 1864, the day Lincoln signed the act, Confederate General Jubal Early, commanding a part of Robert E. Lee’s army, crossed the Potomac River to invade Maryland, and by July 11 he was within five miles of Washington. On July 13, Early was driven back. Grant then gave command of the Army of the Shenandoah to General Philip Sheridan, who in the late summer and fall turned defeat into victory. Grant meanwhile was fighting the terribly costly but ultimately successful battles around Petersburg, Virginia, while Sherman was marching with a hundred thousand men through Georgia. On September 1, 1864, Sherman would march into Atlanta and later burn it to the ground.

Dodge served Sherman in two ways, first as commander of the left wing of the Sixteenth Army Corps, second as Sherman’s personal director of a pioneer corps of fifteen hundred men rebuilding railroads and bridges destroyed by the Confederates as they retreated. Sherman later said that the greatest single piece of bridge construction he ever saw was at Roswell, Georgia, where Dodge’s men built a bridge fourteen hundred feet long. Sherman wrote Dodge, “I know you have a big job, but that is nothing new for you…. The bridge at Roswell is important and you may destroy all Georgia to make it strong.”35

Just before Sherman occupied Atlanta, Dodge went to the front to look over the field before attacking. It was mid-afternoon when he reached the entrenchments. “The boys cautioned me about exposing myself,” he later wrote, “and one of them said that if I wanted to see the enemy I could look through a peep-hole they had made under a log. I put my eye to this peep-hole, and the moment I did so, I was shot in the head. I went down immediately.”36

It was a bad wound. He was unconscious for two days, and word went out that he was dead. But Sherman reached him at the end of the second day, just as he was regaining consciousness. “Doctor,” Sherman said, “Dodge isn’t going to die. See, he’s coming to.”37

DODGE went to the hospital, first in Chattanooga, then in Nashville, finally at Council Bluffs, where the whole town turned out to hear him. “I trust that I can return to Sherman’s army in a few days,” was all he said.38 He had been in town for but a week when he received a telegram from Durant, urging him as soon as he could travel to come to New York to meet with UP officials. In the first week in October, Dodge did so. Doc wanted him to resign from the army and take the position of chief engineer with the railroad. Dodge said no. Instead he took a boat down to City Point, Virginia, where Grant had his headquarters.

He stayed a week. Grant had him inspect the various divisions and corps in his army, then asked Dodge if he would take command of one of them. No, Dodge answered—he preferred to serve in the West. Grant did not think he was up to serving with Sherman again, but humored him, and suggested that he go west by way of Washington and call on President Lincoln. Grant gave no special reason.

Dodge went to Washington on Grant’s own boat. In the capital he went to the White House, where Lincoln greeted him cordially. After pleasantries, Dodge got up to leave. Lincoln reached out with that long arm of his, put his hand once again on Dodge’s forearm, and told him to wait until the two of them were alone. By and by they were, and Lincoln locked the door. After reading aloud something by humorist Artemus Ward, which always gave him a laugh, Lincoln turned to the Army of the Potomac. Did Dodge think Grant could defeat Lee? Could he take Richmond? Dodge said yes. Lincoln placed his hand on Dodge’s and said with great emotion, “You don’t know how glad I am to hear you say that.”39

Shortly thereafter, Grant and Lincoln sent Dodge farther west than he had bargained for, all the way to St. Louis, where he became commander of the Department of the Missouri. Lincoln wanted him there because Missouri, although still in the Union, was a slave state with markedly mixed motives. Grant wanted him there because of the problems confronting the government from the Indian situation on the Great Plains, because of the tides of emigration just moving out onto the Plains, and to protect the UP when it began building.

Dodge’s record in the Civil War could not have been better. What counted most was his skill with railroads. But what mattered for his future was more than what he had learned about the construction of railroads; it was the friendships he had earned. Grant, Sherman, and Sheridan had started a relationship with Dodge that grew over time. They trusted him, as he did them. They would do anything in their power for him, and he for them. Union General O. O. Howard observed that “Dodge could talk to Sherman as no other officer dared to do.”40

ON December 6, 1864, the newly re-elected Lincoln, who had Sherman’s capture of Atlanta and Grant’s triumphs in northern Virginia behind him, delivered his Annual Message to Congress. The war was his principal topic, but he gave a paragraph to the transcontinental railroad, calling it “this great enterprise.” He said it “has been entered upon with a vigor that gives assurance of success, notwithstanding the embarrassments arising from the prevailing high prices of materials and labor. The route of the main line of the road has been definitely located for one hundred miles westward from the initial point at Omaha City, Nebraska, and a preliminary location of the Pacific Railroad of California has been made from Sacramento, eastward, to the great bend of the Truckee River, in Nevada.”41

BY that December, engineer Dey had graded and spent $100,000 on twenty-three miles of line from Omaha west to the Platte Valley. And he exploded when Silas Seymour, the consulting engineer, demanded that it be abandoned. Seymour—and his backer, Durant—favored a route up Mud Creek, a detour to the south in the shape of an oxbow, which added nine miles. It would bring in an extra $144,000 in government and company bonds, plus 115,200 acres of federal land grants, and more profits for the Crédit Mobilier.

There was another dispute. Dey had estimated $30,000 per mile as the cost out of Omaha and up the Platte Valley, But in the fall of 1864, the UP had accepted a proposal from Herbert “Hub” Hoxie, an Iowa politician selected by Durant as a front man—meaning most of all that he was willing to carry out Doc’s intentions. Hoxie said he would build the road for $50,000 to $60,000 per mile for the first 247 miles. On September 23, the contract was signed, and almost immediately turned over to Crédit Mobilier. Durant then instructed Dey to resubmit his own proposal and make it $60,000 per mile. Dey brooded over Durant’s order for five weeks before writing Durant that he believed that amount “would so cripple the road that it would be impossible to ever build [it].”

Dey thought about it some more, and on December 7, one day after Lincoln’s triumphal speech to Congress, he wrote President Dix to tender his resignation. “My reasons,” he said, “are, simply, that I do not approve of the contract made with Mr. Hoxie … and I do not care to have my name so connected with the railroad that I shall appear to endorse this contract.” He wanted no part of the whole thing, and so, reluctantly, he “resigned the best position in my profession this country has ever offered to any man.”42

When Dey left Omaha on the last day of 1864, the Union Pacific had yet to lay a single rail. The corporation had graded just over twenty miles of roadbed and put down not one tie, much less rail.

FOR all its problems and travail in getting started, the UP and its western mate the CP were about to become the biggest businesses in America. The Erie, the New York Central, the Pennsylvania, the Baltimore and Ohio, the Illinois Central, the Michigan Central, and the Michigan Southern, all railroads built before the war, were then the largest business enterprises in the nation. Running them required wholly new methods, just as financing and building the UP and the CP did, and the last two were destined to be much larger than their predecessors.

The general superintendent of the Erie, Daniel C. McCallum, described his problems and practices in dealing with the new methods of management brought on by the sheer size of the railroads:

A Superintendent of a road fifty miles in length can give its business his personal attention and may be constantly on the line engaged in the direction of its details; each person is personally known to him, and all questions in relation to its business are at once presented and acted upon….

In the government of a road five hundred miles in length a very different state exists. Any system which might be applicable to the business and extent of a short road would be found entirely inadequate to the wants of a long one.43

The UP and the CP and the other, lesser railroads were about to bring a revolution to America. As historian Alfred D. Chandler says, “As the first private enterprises in the United States with modern administrative structures, the railroads provided industrialists with useful precedents for organization building…. More than this, the building of the railroads, more than any other single factor, made possible this growth of the great industrial enterprise. By speedily enlarging the market for American manufacturing, mining, and marketing firms, the railroads permitted and, in fact, often required that these enterprises expand and subdivide their activities.”44

Alexander Hamilton and Henry Clay had wanted American manufacturing to grow, but they could imagine nothing like what happened after the Civil War. Nor could Lewis and Clark, who had led the way west. Nor Thomas Jefferson. And none could foresee the way in which the UP and the CP created a precedent for government aid to business, or how the government could create a new class of capitalists. Men of great fortune, already tied to the Republican Party. Men ready to take great risks and to accept great profits.

* As Representative William Holman of Indiana said during the debate over the original Pacific Railroad Bill, “This road could never be constructed on terms applicable to ordinary roads…. It is to be constructed through almost impassable mountains, deep ravines, canyons, gorges, and over arid and sandy plains. The Government must come forward with a liberal hand, or the enterprise must be abandoned forever.”

Which made it the first corporation chartered by the national government since the Second Bank of the United States (created in 1816, it lost its charter in 1836).

* The easternmost thrust of the Rocky Mountains, in eastern Wyoming, not to be confused with today’s Black Hills of South Dakota.

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