San Francisco and San José Railroad
The Huntington interests had secured control of the California Pacific. The next logical step was to strengthen the position of the Central Pacific south of San Francisco Bay. A start in this direction had already been made through the construction of a branch from Lathrop on the Central Pacific to Goshen in the San Joaquin Valley, finished in August, 1872. But this was not enough. Not only did the Central Pacific fail to reach the city of San Francisco, but the company was threatened in 1869 with the possibility that an independent Southern Railroad system might be created, no less ambitious than the California Pacific, and penetrating a richer if less developed territory. This projected system was that of the Southern Pacific Railroad, and in respect to it Mr. Stanford frankly said some years afterwards:
Well, the necessity of obtaining control of the Southern Pacific Railroad was based really upon the act of Congress providing for its construction. It became apparent that if that last was constructed entirely independent to those who were interested in the Central Pacific, it would become a dangerous rival not only for the through business from the Atlantic Ocean, but it would enter into active competition for the local business of California. It was of paramount importance that the road should be controlled by the friends of the Central Pacific; and all our anticipations consequent upon the control of that road have been realized.[165]
The small beginning of what later came to be known as the Southern Pacific Railroad system is to be found in the San Francisco and San José Railroad, which ran from San Francisco down the peninsula in a southerly direction to the city of San José. Originally this company was a local project only, and for some years an unsuccessful one. Several parties tried their hands at building it, but failed because they could not raise the necessary funds. In 1860 the project was taken up by a group of local capitalists of more than ordinary energy and resources, contracts were let, and four years later a line to San José was actually in running order. It was to these capitalists that the Central Pacific transferred its rights in the Western Pacific, and it seems to have been expected that the San Francisco and San José and the Western Pacific together would form the western end of the transcontinental line.
This expectation was disappointed, as was the hope that the San Francisco and San José would participate in the federal subsidies and land grants provided in the Pacific Railway Acts of 1862 and 1864. The city of San Francisco did, however, subscribe $300,000 in city bonds to San Francisco and San José Railroad stock, and the counties of Santa Clara and San Mateo, $200,000 and $100,000, respectively. At this time the Huntington group had no interests south of Sacramento. In 1869 the San Francisco and San José was extended to Gilroy by a company known as the Santa Clara and Pajaro Valley Railroad Company.
Southern Pacific Railroad Company
Shortly after the completion of the San Francisco and San José, another company, the Southern Pacific Railroad Company, was incorporated[166] by local parties in San Francisco to build a line of railroad in as direct a route as feasible from San Francisco to the town of San Diego, through the counties of Santa Clara, Monterey, San Luis Obispo, Tulare, Los Angeles, and San Diego; thence eastward through the county of San Diego to the eastern boundary of the state of California. It is quite possible that this new company was organized in anticipation of further legislation at Washington. At any rate in July, 1866, Congress granted to the Southern Pacific Railroad, besides a right-of-way, ten alternate sections of unreserved and unappropriated public lands on either side of the road, in the state of California, on condition that it construct a line, presumably from San Francisco, to a connection with a projected railroad known as the Atlantic and Pacific Railroad, which was authorized to extend from the state of Missouri to the Pacific Ocean. In case any portion of the twenty sections indicated should be found to be occupied or reserved, the Southern Pacific was to be given the privilege of selecting other lands within 20 miles of its road. The company was to begin work within two years, and to complete not less than 50 miles annually after the second year. No money or bond subsidy was given.[167] By Act of July 25, 1868, Congress extended the time for the construction of the Southern Pacific line, requiring the completion of the first 30 miles by July 1, 1870, and subsequent construction of 20 miles annually.[168] This was plainly an enterprise of first-class magnitude.
