Survey Financed
Huntington, Stanford, Hopkins, and Crocker knew each other as merchants will. Crocker and Stanford may also have met in a political way. The four of them seem to have been friends, at least as early as 1860. Now it appears that Huntington and Crocker, and possibly Stanford and Hopkins also, attended one of Judah’s meetings in Sacramento, and were somewhat impressed by his statements. This was the second stage in the Central Pacific enterprise, when the promoter was in the presence of capitalists, and was seeking to convince them that a probability of profit lay in his plans. Huntington says that he spoke to Judah after the public meeting, and that Judah came to his house the following evening. He adds that subsequently he, Huntington, talked with Hopkins and Stanford, and persuaded them to join him in contributing the money necessary to finance an instrumental survey across the mountains. Other persons who agreed to share in the expense were Charles Marsh, James Peel, L. A. Booth, and Judah himself—each assuming one-seventh of the cost.[14] Charles Crocker was brought in a little later.
The attitude of all these men was of course cautious. Judah had caught their attention, but as yet they would not commit themselves very far. The survey might cost them fifteen or twenty thousand dollars apiece, and they might never go further with the scheme. They thought they could build a railroad if anyone could, and there might be money in it, yet they knew that even to finance surveys involved considerable risk.[15]
Likelihood of Government Aid
Although we have no direct evidence to this effect, it seems very probable that the chance of profit to be secured in building a transcontinental railroad under government auspices stood out more prominently in the eyes of Huntington and his friends than any consideration of the ultimate earnings of the railroad, once it should have been built. What should two dry goods merchants and two dealers in hardware, who knew nothing first hand about railroad operation, have cared about the administration of a railroad 800 miles long? If they wanted interest on an investment, why money commanded 2 per cent a month in Sacramento itself. Only the prospect of still greater gains was likely to attract a speculative trader like Huntington, and the source of such profit could be found only in construction of the road. If this was the real inducement, and if the likelihood of a government subsidy was kept in mind from the first, it was fortunate for Mr. Judah that, owing to his familiarity with conditions both at Washington and in California, he was in a position to inform his prospective clients of the likelihood of government aid no less fully and authoritatively than he could advise them concerning routes over the Sierras.
Indeed it was only on the question of government assistance that Judah could supply business men of Sacramento with information of a definite sort. He really knew little about the probable cost of a transcontinental line. In his original report of November, 1860, he had declared that the Central Pacific could be built for an appropriation ranging from $30,000 to $72,000 per mile, varying with the difficulty of the ground; but this was an estimate based on a very cursory examination of the line, and could pretend to no exactness. Possibly he was influenced by the fact that the Sacramento Valley Railroad had been contracted for in 1854 at $45,000 per mile, payable 44 per cent in capital stock of the company, 39 per cent in 10 per cent bonds, and 17 per cent in cash. This was equivalent to perhaps $33,000 in cash. The contract price in this case did not include, however, the cost of right-of-way, depot grounds, and engineering expenses, for which additional stock was reserved.[16] Only one year later, when the first instrumental survey of the Central Pacific was completed, Judah was forced to change his estimate to $88,428 per mile for the first 140 miles of that railroad, including 51 miles estimated at $1,000,000 per mile or above. Even these figures were later revised.
Estimating Probable Earnings
Nor was Judah’s information about probable earnings a great deal more trustworthy than that relating to probable costs. There are various ways of estimating the earnings which a new railroad is likely to secure—yet all of them may give curious results when applied to territory which has never enjoyed the benefits of any rail transportation at all, as was substantially the case with California before the Civil War. In general, engineers in California had to reckon with the facts that the population of the state was small; that it had only three cities of importance—San Francisco, Sacramento, and Stockton; that there was but one important business, mining; and that a dense traffic could accordingly be expected only in the distant future after the development of the country served. As a practical expedient most engineers in California who desired elaborate data had some more or less careful count made of the business moving over their projected route by pack train, wagon train, stage, or boat, and then made the broad assumption that this same volume, or this volume increased by an assumed factor, would move over a railroad during its early years. Such was the nature of the estimate made by the incorporators of the Sacramento Valley Railroad in 1853,[17] of the Stockton and Copperopolis in 1862,[18] of the Placerville and Sacramento Valley Railroad in 1863,[19] and of the North Pacific Coast in 1873.[20] Judah had no greater facilities than other engineers of the time, and in his own estimates followed the prevailing custom.[21]
