I said to Mr. Union Pacific when I saw it, I would take that out as soon as I wanted it out. In 1866 I went to Washington.... I saw probably every member of Congress and the Senate except a few men who were interested in the Union Pacific, or had a direct interest in the Credit Mobilier.... We passed it through the Senate; I think we got thirty-four against eight opposed to it. I took it over to the House and old Thad Stevens attended to the bill for me, and it went through the House with a vote, I think, of ninety-four for the bill and thirty-three against it.[79]
Judah said of the clause as it stood in 1862, that it virtually conceded to the company the right to construct at least one-half of the line of the Pacific Railroad. He was positive that it would be found advisable to undertake construction for about 300 miles easterly from the state line of California.[80]
In addition to the authority to build, the Central Pacific was given a free right-of-way 400 feet wide across all government lands, besides necessary grounds for stations, machine shops, etc., with the privilege of taking earth, stone, timber, and other materials from the public lands adjacent to the line of said road for purposes of construction.
Land Grant
The company was also granted ten alternate sections per mile of public land on each side of the railroad on the line thereof, and within the limits of 20 miles on each side of the road. The government undertook to extinguish Indian titles, but did not include in its grant mineral lands except coal and iron lands, or lands sold, reserved, or otherwise disposed of by the United States, or lands to which a pre-emption, homestead, swamp-land, or other lawful claim might have attached at the time the line of the road should have been definitely fixed. The grant was thus not of a specified number of acres, and no compensation was provided to the company for lands which might prove to be occupied; but in order to prevent speculation and in a measure to safeguard the company’s interests, it was provided that at any time after the passage of the act, and before July 1, 1865, without waiting for definite location of the road, the company might designate the general route and file a map, whereupon the Secretary of the Interior should cause the lands within 25 miles of said route to be withdrawn from pre-emption, private entry, and sale. When any portion of the route should be finally located, the Secretary of the Interior should cause the granted lands to be surveyed and set off so far as might be necessary. As a matter of fact, Judah filed his map and general designation before he left Washington in 1862. Lands were to be conveyed to the company on completion of stretches of 20 consecutive miles. A special clause, never enforced, provided that all granted lands not sold or disposed of by the company within three years after the entire road should have been completed, should be subject to settlement and pre-emption like other lands, at a price not exceeding $1.25 per acre to be paid to the company.
Government Subsidy
In the way of a subsidy, Congress ordered the Secretary of the Treasury to issue to the Central Pacific, United States 6 per cent 30-year bonds, in amounts varying from $16,000 to $48,000 per mile. The subsidy of $48,000 was granted for the 150 miles east of the western base of the Sierra Nevada Mountains, this being the most mountainous and difficult portion of the road. East of this section of line the Central Pacific bond subsidy was to be $32,000 per mile, but west of it, it was to be only $16,000 per mile. It was the understanding of the company that these bonds were not redeemable by the government before maturity, and that until that time the interest charges were to be taken care of by the government. This last point was later the subject of litigation in which the company’s contention was sustained.[81] The subsidy offered by the government inured to the company on the completion of sections of 20 consecutive miles over the greater part of the road, except that bonds might be issued up to two-thirds of the value of uncompleted work when the chief engineer of the company should certify that a certain proportion of the work required to prepare the road for its superstructure had been done.
Company’s Obligations
In return for these very considerable privileges, the demands made upon the Central Pacific do not seem to have been excessive. First and foremost, the company was required to build its road at the rate of 25 miles each year after filing its assent to the provisions of the act, and to reach the state line within four years. The track upon the entire line was to be of a uniform width, to be determined by the President of the United States, so that, when completed, cars could be run from the Missouri River to the Pacific Coast. The grades and curves were not to exceed the maximum grades and curves of the Baltimore and Ohio Railroad, and the whole line of railroad and branches, Union Pacific and Central Pacific included, was to be operated and used for all purposes of communication, travel, and transportation, so far as the public and the government were concerned, as one connected, continuous line.
In the second place, demand was made that the company should pay the principal of the government bonds at maturity, and should meanwhile make certain payments on account of principal and interest. The following section taken from the Act of 1862 shows that there is no basis for the contention sometimes made that the government originally expected no repayment of its loan.