Modern history

17

California for a Dollar

The next round in the continuing battle for California between the Atchison, Topeka and Santa Fe and the Southern Pacific was to be fought east of Kansas City, not west of Needles. The Santa Fe decided that access to Chicago via its own independent tracks was essential to its long-term growth and sustainability. Chicago had long been one of the great railroad centers of the country. By the mid-1880s, it was arguably the greatest of them all.

A complex web of lines spread out from Chicago’s hub. Chicago marked the western ends of the great New York Central and Pennsylvania railroad systems. A tangle of regional roads ran from it to the Union Pacific at Council Bluffs, the Northern Pacific at St. Paul, and what would soon be James J. Hill’s Great Northern system. South of Chicago, an array of lines led to Kansas City, St. Louis, and Memphis.

The Atchison, Topeka and Santa Fe built east from its roots and cut through the tangle of the Kansas City roads to secure a railhead on the Missouri River in 1874. Its uneasy partnership with the Frisco gained it access to St. Louis a few years later. As its attention was focused on the frenzied westward expansion of the early 1880s, the Santa Fe was content to rely on other roads for connections between Kansas City and Chicago. The Santa Fe carried the burgeoning cattle trade of the plains to these railroads at Kansas City, and they in turn provided the Santa Fe with freight flowing west. It was a mutually beneficial relationship.

These arrangements were disrupted, and William Barstow Strong and his Santa Fe investors made increasingly uneasy, when the Kansas City–Chicago roads began to construct their own lines west of Kansas City. The Santa Fe’s initial public response was that it had no desire to build east of Kansas City because other roads adequately served it there. But as those same roads invaded the Santa Fe’s territory, the farther west their railheads extended, the greater the threat became that they would capture the Santa Fe’s business and haul it straight through to Chicago.1

Ostensibly, the Santa Fe and Jay Gould’s developing Missouri Pacific system had an agreement not to build into each other’s territory. But while the Missouri Pacific corporately adhered to the letter of the agreement, Gould’s far-ranging personal investments permitted him to sidestep its spirit. One example of this was when the tiny St. Louis, Fort Scott, and Wichita Railroad fell under Gould’s control. It threatened the Santa Fe’s long-held dominance over southern Kansas by simultaneously pushing construction westward and making connections eastward to Gould’s expanding system.

By the end of 1887, Gould’s Missouri Pacific would complete its main line from Kansas City to Pueblo to tap the Colorado trade. This would be detrimental to the Santa Fe in the Colorado markets, but there was an even greater threat. Gould might well use his traffic alliance with the Denver and Rio Grande to forge a link for the Missouri Pacific through the Rockies to Huntington’s Central Pacific at Ogden.

With Gould’s encouragement, the Rio Grande slowly began to extend a third rail west from Pueblo along its narrow gauge tracks in anticipation of such standard gauge traffic. In return, Strong and the Santa Fe had little choice but to abandon their trackage agreement along the Rio Grande line between Denver and Pueblo—to which Palmer had added a third rail in 1881—and build the Santa Fe’s long-threatened parallel line from Pueblo to Denver.

Even the Santa Fe’s friendly rival, the Chicago, Burlington and Quincy Railroad, which had long been the Santa Fe’s most favored connection between Kansas City and Chicago, made plans to build westward. Its first step was into Nebraska to challenge the Union Pacific, but it also contemplated a line across Kansas.

The Burlington’s Kansas extension was not intended as a direct challenge to the Santa Fe, but rather was proposed because the Burlington’s own vitality was threatened by the westward expansion of the Chicago, Rock Island and Pacific Railroad. The Rock Island Railroad was building west across Kansas and would eventually reach Colorado Springs and Denver, the latter via a trackage agreement over the Union Pacific’s Kansas Pacific line.

In the face of this developing competition across the plains, the Santa Fe’s long-term strategy looked obvious to President Strong. If the Santa Fe’s competitors were building west so aggressively, the Santa Fe had little choice but to build east with equal determination to counter them.

As to the competition in the Chicago market, “the people along our whole system, above all other things,” Strong rationalized, “want direct, rapid, and unobstructed communication with Chicago, with only one carrier to deal with in the entire transaction; and they will patronize the road which furnishes it.”2

Once the Santa Fe made the decision to build independently from Kansas City to Chicago, there were three options. A. A. Robinson, now chief engineer of the Santa Fe, simply placed a ruler on the map and drew a straight line between the two cities. The object, after all, was a lifeline link between the western Santa Fe system and the hub of Chicago, not local traffic through an area already overdeveloped by competing roads.

A second option was to buy the Chicago and Alton Railway. This would have lengthened the distance between Kansas City and Chicago but also given the Santa Fe independent access to St. Louis. But the Alton thought rather highly of itself, and the Santa Fe’s directors judged its reported $38 million asking price as highly inflated. That left a third option—essentially a variation on Robinson’s straight ruler route.

From its name, the Chicago and St. Louis Railway sounded as if it were a main artery between those two cities. In fact, the railroad’s tracks had never extended farther south than Pekin, Illinois, about 150 miles from Chicago. The road was described as “two streaks of rust” and because it had only recently completed construction into Chicago, its terminal facilities were little more than a frame depot at Twenty-third Street, then well south of downtown. The road had been poorly built, with heavy grades and light rails, but it offered an established right-of-way over a portion of Robinson’s planned route. And the price was right: $1.5 million.

The Santa Fe organized the requisite number of subsidiaries, including the Chicago, Santa Fe, and California Railway Company, which acquired the Chicago and St. Louis. Meanwhile, Robinson dispatched teams of surveyors to locate and acquire—as quietly as possible—the remainder of the proposed route.

By February 1887, all was in place. President Strong gave Robinson the order to proceed and have the line complete by the end of the year. Robinson soon had crews working all along the planned 450-mile Kansas City–Chicago route. How crowded the countryside was with competing roads was evidenced by no fewer than thirteen crossings of other lines that the Santa Fe was obliged to construct, some at grade with frogs and others with over- or underpasses. But these existing regional lines proved of benefit because they obligingly hauled construction materiel to a dozen points along the Santa Fe’s route. This facilitated construction at multiple points rather than at only two railheads, and Robinson soon had seven thousand men engaged in the effort.

Robinson reportedly admonished his locators not to plan any curves that were not absolutely necessary. In their early development, eastern railroads had been built to connect existing towns via whatever route necessary. Later, western railroads built largely to the dictates of terrain and planned their own towns along the routes. Now without those considerations, Robinson laid out an uncannily straight route much of the way between Kansas City and Chicago, with the result that the line would be both a raceway and the shortest distance between the two hubs.

The two major exceptions to this course were at Fort Madison, Iowa, on the Mississippi River, and the town of Galesburg in upstate Illinois. Fort Madison outbid Keokuk, Iowa, as the crossing of the Mississippi, and this took the line northward into the sliver of southeastern Iowa between the Mississippi and Des Moines rivers. Galesburg was also north of Robinson’s ruler line, but it offered twenty acres for a depot site and $100,000 as inducements. Once across the Illinois River at Chillicothe, Illinois, the line joined the right-of-way of the Chicago and St. Louis at Ancona, Illinois, and then ran along its grade that was relaid with heavier rails.3

Out west, the challenge had been steep mountain passes, narrow canyons, and deep arroyos, but across Missouri and Illinois, except for some stubborn glacial deposits, the main difficulty was bridging wide and unruly rivers. In addition to numerous side streams and creeks, five major river crossings presented themselves between Kansas City and Chicago. To overcome these obstacles, Robinson turned to Octave Chanute, a French-born engineer who was among the most-respected railway and bridge engineers of the day.4 (Later, Chanute would become better known in another dimension as a mentor of Orville and Wilbur Wright.)

Despite bitter winter weather that delayed the completion of the Missouri River crossing for several months, Robinson closed the other gaps along the line with six hours to spare before Strong’s year-end deadline, spiking down the last rail near Medill, Missouri, at six o’clock on December 31, 1887. A full schedule of revenue operations began the following spring.

By then, Strong had spared no expense in making certain that the passenger side of the Santa Fe’s business would be second to none. The road took delivery of cars with vestibules—no longer would passengers have to step outside into the elements to pass from car to car—and electric lights powered by batteries charged by a central dynamo in the baggage car. And the cars were warmed by steam heat from the locomotive rather than sooty coal stoves. What better way to promote the railroad’s freight business than to whisk bankers, businessmen, and stock growers between the two powerhouses of Kansas City and Chicago in thirteen hours and forty-five minutes of comfort?

Clearly, the old depot of the Chicago and St. Louis in Chicago’s southern suburbs wouldn’t do, so Strong spent millions of dollars to gain access to downtown Chicago. The railroad’s passenger terminal was soon ensconced in Dearborn Station. Completed in 1885, Dearborn Station was operated by the Chicago and Western Indiana Railroad, essentially a cooperative providing five railroads, including the Wabash Railway, with Chicago access. The Santa Fe built its own tracks almost to the station and became the sixth member of the consortium.

But the Santa Fe would come to dominate the scene. Chicago’s Dearborn Station, with its landmark clock tower and stable of crack Santa Fe passenger trains gathered around it, would come to symbolize both the Santa Fe’s transcontinental reach and its reliable dominance.

Within three years, the other major chapter of the Santa Fe’s eastern expansion would be written when the railroad finally acquired its struggling partner in the Atlantic and Pacific, the St. Louis and San Francisco Railway. The Frisco acquisition added 1,442 miles of track to the Santa Fe system, mostly in Kansas, Missouri, and Arkansas, but more important, it gave the Santa Fe independent access to St. Louis. The road’s major presence in the three Midwest centers of America’s railroad might—Kansas City, Chicago, and St. Louis—would serve the Santa Fe well as it completed its drive to the Pacific.5

•    •    •

Even as the Atchison, Topeka and Santa Fe secured its own line to Chicago, reaching the Pacific and knocking down the Southern Pacific’s iron fence around California remained paramount to the railroad’s long-term strategy. As a result, the town of Los Angeles would be quiet no more. For its part, San Diego would fuss and never completely forgive the Santa Fe for seeming to abandon it.

The first shoe to drop for San Diegans was the news that William Barstow Strong and the Santa Fe had come to terms with Collis Huntington to operate over the Southern Pacific’s tracks between Colton and Los Angeles. Much as he had done with the sale of the Southern Pacific’s Mojave-to-Needles leg, Huntington hoped that by granting the Santa Fe access to Los Angeles, he might forestall its construction of parallel lines and further dissuade the road from building to the Southern Pacific’s jugular at San Francisco and Oakland.

But Huntington had opened his door to California a crack at Needles, and Strong pushed it open farther and farther with every opportunity—the line to Mojave, the alliance with the California Southern over Cajon Pass, and the Southern Pacific trackage rights into Los Angeles. Now Strong wanted the California door flung wide open.

It was soon reported that the Santa Fe was aggressively courting San Bernardino and promising to move the railroad’s maintenance shops there from San Diego. The Santa Fe offered $200,000 in capital improvements for a new depot, machine shops, and yard improvements if many of the same San Bernardino town fathers who had once hurried to San Diego to support the California Southern would donate an additional eighteen acres surrounding the existing depot site. When this form of persuasion was agreed to, the Santa Fe announced that San Bernardino would also become a division point.

To most knowledgeable observers, “division point” bespoke the obvious. For San Diegans, it was the final evidence that their dreams of a transcontinental terminus were to be divided—and less than equitably at that—with their northern competitor. The best that San Diego got from the deal was a promise from the Santa Fe to continue wharf improvements on San Diego Bay and to reduce some of the heavy grades on the California Southern between the city and Del Mar to facilitate cheaper and faster operations northward.6

Next came a battle over freight rates. Once again, Huntington—more because he was preoccupied with the eastern end of his transcontinental system and less because of any newfound generosity—appeared to extend an olive branch to the Santa Fe. Huntington had long been at the heart of various traffic pooling cartels. In 1885 he was instrumental in creating yet another, the Pacific Coast Association, which was to divide business between Chicago and St. Louis and the West Coast. While seven railroads, including the Santa Fe, were in the pool, the majority of transcontinental traffic went to the Southern Pacific.

Smaller roads, such as the Chicago, Burlington and Quincy and the Denver and Rio Grande, tried unsuccessfully to collect balances due them from the Southern Pacific under the pool’s proportions and threatened withdrawal if they were not paid. But Strong and the Santa Fe—already sniffing about for an independent entry into Los Angeles—demanded past due balances and an increase in traffic share.

After a cantankerous February 1886 meeting in New York City, Huntington’s representatives professed that they had done all they could “to keep peace, and even agreed to give the Atchison some of our earnings for the sake of peace, but it wanted more than it had earned or could earn.” As Huntington’s combative juices flowed, he huffed, “We have done all we propose to do, and I guess the Atchison will get tired of it before we are through.” Meanwhile, the Southern Pacific continued to handle 70 percent to 75 percent of the east-west traffic.7

In response, Strong’s biggest weapon against Huntington was the same strategy he was pursuing in the East by building an independent line into Chicago. Shrewdly, Strong looked for an opportunity to do the same into Los Angeles. It wasn’t long before he found the perfect acquisition.

The Los Angeles and San Gabriel Valley Railroad was originally chartered in 1883 as a narrow gauge. It laid standard gauge rails instead, however, and eventually ran a line northeast to Pasadena, arriving there on September 11, 1885. Banking on developing agricultural markets, the Los Angeles and San Gabriel then continued eastward to Duarte for a total length of 31 miles.

None of this was particularly easy. Only begrudgingly did the Los Angeles city council grant the road a right-of-way into downtown, and the Southern Pacific extorted exorbitant freight rates to transport the new road’s rails, locomotives, and equipment to its railhead. But the Los Angeles and San Gabriel’s president was J. F. Crank, one of Southern California’s earliest promoters and most determined businessmen.

Early in January 1887, Crank went east to New York in search of expansion capital. Scarcely had he arrived in New York City when Crank received an urgent invitation to visit Washington, DC, from Leland Stanford, who was then representing both the state of California and the greater Southern Pacific interests as a United States senator. Almost simultaneously, Crank received a similar invitation from William Barstow Strong to come to Boston and meet with the Santa Fe’s board of directors. Crank was too prescient a businessman to doubt the topic both men wanted to discuss. The little Los Angeles and San Gabriel Valley Railroad was suddenly a pawn in a contest between two giants.

Having felt the heavy hand of the Southern Pacific in California firsthand, Crank eagerly accepted Strong’s invitation and took the next train for Boston. His railroad’s decision to build to standard gauge was about to pay huge dividends. Within an hour of meeting, Crank and Strong agreed to a “bargain” price for the short line. The exact dollars involved have not been documented, but whatever the amount, Strong was never afraid to spend money for strategic purposes. Crank’s little road was a thriving business in its own right—an 1886 net profit of $46,381 on gross income of $95,318—but most important to Strong, its railhead at Duarte was just 40 miles west of San Bernardino, where the Santa Fe tracks emerged from Cajon Pass.

Strong immediately put construction crews to work to close the gap between San Bernardino and Duarte. Clearly showing that it had been planning ahead, the Santa Fe already owned the right-of-way for a telegraph line between the two towns that helped to speed construction. Less than five months later, on May 31, 1887, Los Angeles welcomed the first Santa Fe train to arrive in town over its own independent tracks. The result was a rate war with the Southern Pacific, the intensity of which even Huntington could not have predicted.8

The Southern Pacific’s arrival in Los Angeles in 1876 had been welcome, but it did not unleash a huge Southern California boom. The population of Los Angeles took the decade from 1870 to 1880 merely to double to 11,183. During the same period, Denver mushroomed from 4,759 to 35,500, and San Francisco grew from 149,473 to 233,950.

Certainly there was no shortage of prospective settlers. Between 1860 and 1890, the population of the United States doubled from 31.5 million to 63 million people. One-third of the increase was fueled by immigration—mostly from European countries. The lack of immigrants to Southern California and its slow population growth stemmed in part from the cost of getting there. For starters, Huntington’s Southern Pacific was not offering any cut-rate deals. Chicago to Los Angeles fares averaged about $130 in the early years—equivalent to about $3,000 in 2008.

Immigrants were lured first to the farm belt of the Midwest and later to the Pacific Northwest and even northern California. In some cases, the Los Angeles Herald was probably correct when it bemoaned that would-be newcomers “say they can purchase homes [elsewhere] for what it would cost them to get here.”

There was also the issue of familiarity. European immigrants and East Coast transplants accustomed to winter weather, forested hills, and abundant water had to be sold on the potential of a different landscape. “It seems almost impossible, by the exercise of any human powers of description,” one Southern Pacific agent observed in 1884, “to bring them [potential immigrants] to a realization of the greater personal comfort, afforded by your equable and salubrious climate, and the additional productiveness and value that climate imparts to the soil on which it rests.”9

But promoters kept singing the praises of warm weather and sunny skies, and after the Santa Fe arrived on the scene to give some rate competition, a new wave of visitors began to ride the rails into Southern California. Most weren’t coming to stay, but they were the advance guard of a growing group of winter visitors. “Like birds of passage,” one resident observed, “the whole flock took wing as soon as the almanac announced that spring had come, leaving only a few to conclude to settle.”

Then in the spring of 1886, with the Santa Fe line complete over Cajon Pass, this seasonal exodus was balanced by a steady flow of incoming settlers throughout the summer. Once the Southern Pacific and the Santa Fe went to war over rates the following winter, the dam burst wide open.

At least one version of the “California for a dollar” story tells of a wild seesaw battle raging back and forth between the rate departments of the two railroads. First the Southern Pacific lowered its first-class ticket to $100. The Santa Fe announced fares for less than $100. As the price for fares between Chicago and California plummeted, each road shaved a few more dollars. Supposedly, on the morning of March 6, 1887, a furious exchange of telegrams found the Santa Fe down to $8 per ticket, to which the Southern Pacific responded with $6. By that afternoon, there were reports of rates as low as $1 per head.

Railroad accountants quickly brought their respective marketing departments to their economic senses. Fares promptly rebounded to $50 for first-class and $40 for second-class tickets, but the publicity accompanying the cry of $1 tickets to California had been heard. No more would the Midwest farmer, the newly arrived European immigrant, or the vacationer looking for a warmer climate think that they could not afford a passage westward.10

The result was that by the summer of 1887, the Southern Pacific and Santa Fe lines were both awash with huge numbers of passengers heading to California—many of whom put down roots and stayed. The flood of newcomers hurrying across the continent was reminiscent of the rush of the forty-niners. Only this time, instead of plodding along behind covered wagons pulled by oxen, these argonauts tossed their belongings into a freight car and rode across the country at twenty-five miles an hour in the comparative splendor of an immigrant-class coach.

Real estate prices in Southern California skyrocketed. Within a year, property transfers “increased from 6,000 to 14,000 and from $10 million to $28 million” in 1886 and then in 1887 reached 33,000 and $95 million. This boom would suffer a temporary bust two years later, but that would not stem the long-term trend. By 1890, the population of Los Angeles had quadrupled to more than 50,000 and a Santa Fe vice president predicted, “people will continue to come here until the whole country becomes one of the most densely populated sections of the United States.”11

Seizing upon this boom, the Santa Fe was not content merely to terminate in downtown Los Angeles. Strong undertook just the sort of local network expansion that Huntington had feared. Separate companies built these lines, but they had one thing in common: They all answered to the dictates of the Santa Fe.

Under the moniker of the San Bernardino and San Diego Railroad, the Santa Fe built a second independent line from San Bernardino into Los Angeles via the town of Riverside and Orange County. Running through the gap between the Chino Hills and the Santa Ana Mountains, this 70-mile leg opened in August 1888.

That same year, what came to be called “the Surf Line” was extended south along the coast to Oceanside and Del Mar and on into San Diego. This was part of the Santa Fe’s plan to mollify San Diegans, but more important to the railroad’s operations, this leg bypassed the original California Southern route through flood-prone Temecula Canyon. The town of Temecula withered as a result, and when another flood swept down the Santa Margarita in 1891, the original California Southern tracks were not rebuilt.

The Santa Fe also reached out from downtown Los Angeles to the coast. Branch lines were built south to Redondo Beach to gain access to a harbor and west to Santa Monica to compete with the Southern Pacific’s ownership of Senator Jones’s original Los Angeles and Independence. Both of these lines quickly became popular tourist routes to serve the developing ocean-side resorts, and their success was a portent of what the overall tourist trade would soon become to the Santa Fe.

Having reached Los Angeles and broken down the Southern Pacific’s fence around California, the Atchison, Topeka and Santa Fe was poised for the next chapter of its expansion. To be sure, there would be some rough spots in the tracks up ahead, but the proven leadership of Thomas Nickerson and William Barstow Strong had laid a solid financial and geographic foundation that would serve it well come what may.

In the last annual report he authored for the company, that of 1888, Strong wrote: “The history of Western railroad construction for the past quarter of a century has demonstrated that successful results can only be attained by occupying territory promptly, and often in advance of actual business necessity. This was the policy of the Atchison Company from the first,” Strong insisted. “It led the way. It built, not upon assured returns of profit, but upon a faith which time has abundantly vindicated—that the great Western and South-western regions of the country were rich in possibilities and that the company which first occupied the territory would reap the first and greatest rewards.”12

At the end of 1888, the Atchison, Topeka and Santa Fe owned, operated, or controlled 7,706 miles of railroad—much of it in first-class condition. The little railroad that first steamed out of Topeka had become a corporate powerhouse in America’s transcontinental sweepstakes. About the only thing that hadn’t changed since it laid its first rails in 1869 was that Cyrus K. Holliday was still on its board of directors. “Santa Fe,” Holliday had once rhapsodized, dreaming of a destination. Soon that dream would become the reality of “Santa Fe all the way.”

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