The consideration of possible Central Pacific Railroad receipts, other than those derived from government aid and perhaps from the sale of the company’s first mortgage bonds, brings us back to Stanford’s list as containing substantially all the assets upon which the promoters of the Central Pacific were able to rely. Almost half of these assets were derived directly from political bodies of one type or another, and the value of the remainder of those assets was dependent for the most part upon the security which was afforded by the government donations made to the company.
State and Local Grants
Let us now consider with more care the circumstances under which the local and federal authorities extended such generous aid to the transcontinental project, and the extent and quality of the aid given. We may begin with the state and local grants, and in order to assist the reader, a portion of the table which was printed on page 21 will be set forth again at this point in slightly changed form. As thus presented the table is as follows:
Aid Derived by Central and Western Pacific Railroads From State and Local Governments in California
| Source of Aid | Par Value | Approximate Sum Realized |
| Aid by Cities: | ||
| San Francisco, donation to Central Pacific | $400,000 | $300,000 |
| Sacramento, subscription to Central Pacific | 300,000 | 190,000 |
| San Francisco, donation to Western Pacific | 250,000 | 175,000 |
| Aid by Counties: | ||
| Placer County, subscription to Central Pacific | 250,000 | 160,000 |
| San Joaquin County, subscription to Western Pacific | 250,000 | 125,000 |
| Santa Clara County, subscription to Western Pacific | 150,000 | 100,000 |
| Aid by State: | ||
| Assumption of interest for twenty years on$1,500,000 7 per cent bonds. |
Arguments for Local Aid
Aid from local political bodies was considered legitimate in the early sixties, and was extended freely to a great number of corporations. Voters were told that the construction of railroads increased land values. Until transportation should be improved, it was argued, agriculture could make but little progress, because the products of agriculture could not be brought to market. The mining interest was depressed in 1870, and in partial explanation publicists pointed out that freight charges to the mines ranged from $50 to $180 a ton. Nor was even more precise calculation lacking. An advocate of subsidies in 1870 stated:
It costs for passage to San Francisco from Visalia $25 and consumes generally a day and a half. By rail the trip could be made in eight hours, at a cost of $10, thus saving $15 and nearly a day in time. If on the average, each adult makes one visit per annum to the upper country, and taking 1,300, the number of registered voters, as the adult population, it costs every passenger for the round trip $50 in cash and three days in time—excess over railway fare, $30; board for two extra days, $4; value of time at $2 per day, $4; total excess, $38; total loss to 1,300 passengers, $49,400. I contend, therefore, that the people of Tulare County are now actually paying, in addition to the loss or inconvenience resulting from isolation from market, the sum of $77,780 per annum, for the privilege of being without a railroad.
There was little that was novel in this sort of argument, or in the further contention that the increase of the tax roll of the counties, due to railroad construction, would yield a revenue more than sufficient to cover the taxes incident to the granting of a subsidy. Better transportation meant wider markets, denser population, higher values. Increasing values and volume of sales meant larger profits, higher wages, lower prices, and generally growing prosperity. These things were matters of reasonable anticipation, so that hard-headed business men had quite as much ground as usually underlies business action to approve of even a considerable pledge of state and county property in order to hasten the building of a railroad system. It could not be known whether or not railways would be constructed without subsidies. As we look at the situation today it seems probable that this would have been done, and that railroad building would not even have been greatly delayed. The risk in waiting was, however, great, and the difficulties of a conservative policy were enhanced by the competition of towns, each seeking priority of railroad connection.