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Pacific Railroads Acts

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Introduction

In August 16, 1856, the pacific Railroad and telegraph select committee proposed a bill to the 34th congress which was later signed by President Abraham Lincoln into law on July 1, 1862. The act had a long title by the name, “An Act to aid in the construction of a railroad and telegraph line from the Missouri river to the Pacific Ocean and to secure to the government the use of the same for postal, military, and other purposes” (Solomon, 2000, 63). However, it was later shortened and referred to as the ‘1862 Act’. This was the original Pacific Railroad Act, aimed at promoting the construction of a transcontinental railroad to link the Missouri river and the Pacific Ocean by advancing grants of land and government bonds to railroad companies. Some provisions of the Act were subsequently modified and expanded by several supplementary amending Acts:  The Pacific Railroad Act of 1863, Pacific Railroad Act of 1864, Pacific Railroad Act of 1865, and Pacific Railroad Act of 1866. This string of Acts of congress constituted the Pacific Railroad Acts which this write-up intends to discuss more about.

Act of 1862

In July 1862, out of the demand of a continuous line of railroad for industrial, commercial and national purposes, the 34th congress authorized the construction of a continuous railway and telegraph line in the country. The two were to run from Missouri river all the way to the Pacific Ocean. According to Conant (1965), the main purpose of the 1862 Act was to construct a continuous railroad between 100th meridian and San Francisco and five other divergent radial lines to connect Wyandotte, Sioux City, Omaha, Atchison, and Leavenworth and from these, roads would project to Mississippi. The act offered extensive land grants and authorized the issue of government bonds to the two major railroad companies; Central Pacific Railroad and Union Pacific Railroad companies, as an incentive to build the transcontinental railroad.

According to the Public Broadcasting Service (2001), in section 2 of the Act, each company was granted rights of way for the railroad and all public land adjacent to the line within 200 feet including buildings, depots, water stations and machines shops. The United States rapidly extinguished all Indian land titles falling under the areas in construction. In section 3 of the Act, another 10square mile of land was granted per mile of grade except for cities and mineral lands which were excluded in the operation of the Act (PBS, 2001). The Central Pacific Railroad (2011) asserts that section 5 allowed issuance of one thousand dollar bonds payable in thirty years after date at an interest of 6 percent per annum to a maximum of 16 bonds per mile in each section of 40 miles. However, the researcher Wessner argues that due to the hilly and raged landscape of the course, section 11 refined the criteria of issuance of these financial aids to the construction companies by providing that they were to be advanced depending on terrain and thus ranged from $ 16,000 to $ 48,000 per mile.

The union pacific railroad was recognized and received government aid for the eastern region. These incentives enabled the railroad company to acquire large pieces of land along the to-be railway line and as a tool to raise finances; they ended up selling and giving up the land to settlers’, consequently, encouraging immigration to the region. The larger the population in the territory, the busier the ferrying business was to be via the railroad. The stem of the railroad was supposedly to be built by the corporation that would advance to reach the 100th meridian first, alongside the central pacific advancing from the west.

 Conant affirms that, “these two corporations were required to extend their lines from opposite ends until a through connection was formed’’ (Conant, 1965, 6). The Act provided that the two principal companies had the right to advance until they met, reason being, in case one fails or proves inefficient, the other will be privileged to complete the work.

Act of 1863

In 3rd March 1963, another act was established to set a standard gauge for the railroads and its branches. It confirmed that the Pacific railroad together with its branches in totality was enacted by both the House of Representative together with the Senate. It also confirmed that the road was established at 4.8” and one-half inches (William & Bruchey, 1927, 225). The gauge had also been adopted by George Stephenson of England on the Liverpool – Manchester railway and was popular in northeastern states. It later became the standard measuring gauge in the United States easing transfer of engines and carts between different companies.  

Act of 1864

This act was an amendment act of the original 1862 Act. It provided that the stock shares shall be reduced from one thousand dollars to a hundred dollars this meant the total number of shares increased from one hundred thousand to one million. All practicing directors were bound to have 50 shares instead of the earlier five except from the five government appointed directors; and all private subscribers with a share of 1000 dollars was entitled to a ten shares of each hundred dollars certificate (CPR, 2011).

Section 2 of this act stipulated that the union pacific company keep the books open for subscriptions until all the capital stock of a hundred million dollars be subscribed. Durant of Union Pacific and Huntington of Central Pacific Railroads lobbed for amendment of the Act of 1862 to terms that would better the financial status of the companies and avoid any cases of mismanagement of funds by encouraging transparency. The amendment was encompassed in section 4, where the government agreed to issue bonds for every 20 miles of completed track, allowing the companies to raise funds as building continued (Solomon, 2000).

Act of 1865

This was yet another amendment Act of the Act of 1862. It allowed all the companies; union pacific, central pacific, union pacific, eastern division, western pacific and all other companies to issue their 6% centum of 30 years bonds. The second section of this act provided the rate and time frame for the completion of the San Jose to Sacramento stretch. It indicated the period within which the first twenty miles of the railroad were to be constructed; starting from July for a period of one year, including the company that was to construct the road. The Act also clarified that road was to connect Sacramento and San Jos within a period of four years (CPR, 2011).

Act of 1866

The Act of 15th June 1866 was aimed at facilitating postal, military and commercial communication among various states. It conferred the power to homogenize commerce within the different states, raise and support armies, as well as to establish post roads. It authorized any road that is steam operated to ferry passengers, boats, government supplies, troops, mails and other property from one state to another. Section 2 of the act gave the congress powers to repeal, alter or amend the act (CPR, 2011).

There were other minor acts that were introduced later on. Act of 1868 was an act to restore land adjacent to the railroad and branches to markets. Pre-emption and homestead settlement were allowed and land sections standardized to 2 dollars per acre. Act of 1869 authorizing transfer of lands from union pacific, eastern division to Denver pacific railroad company to expedite completion of Denver roads (CPR, 2011). Act of 1870 aimed at fixing the junction point for the two companies: Central Pacific Railroad and Union Pacific Railroad (CPPR, 2011). Act of 1871 made appropriations for supporting the army and other purposes. The treasury’s secretary was ordered to pay the pacific railroad company to secure Government’s use of the railroad for military, postal and other purposes (CPR, 2011).

 Act of 1873 on the other hand made appropriations for the government expenses of the executive, legislation and judiciary for the year ending 30th June, 1874. The treasury' was ordered to withhold all payments to certain railroad companies following the defaulting of some companies in repaying their loans. Lastly, the Act of 1874 ordered the treasury to be collecting moneys of 5 percent per centum on the net earnings of the pacific railroad to secure government use of the road (CPR, 2011).

Conclusion

An in-depth examination of these acts presents the Amendment Act of 1864 as an act passed to increase benefits and privileges, and reduce restrictions and burdens to the companies. The act did not contain chartering provisions for the companies but instead authorized the companies to advance first-mortgage bonds on the railway line of an amount equal to the original bonds issued by the government. This subordinated the government interests. Therefore, while not without abuse, the acts presented some very significant financial incentives to the railroad companies and generally the U.S rail network. The Acts made building of one of the world’s greatest transport system possible and was able to achieve the fundamental policy goals of national unity and economic growth. The scheme also had many benefits to other American firms in terms of market scale, organization and management.

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