As of December 31, 2014, I retired from full-time teaching in Humboldt State University's Department of History. While this website will remain online, it is no longer maintained.

History 383 - Dr. Gayle Olson-Raymer

Entrepreneurial Politics and Economics: The Transcontinental Railroad and Its Consequences for California

Map of Central Pacific and Union Pacific Railroads as they work to create the Transcontinental Railroad in the 1860s.

Introduction: Throughout this unit, we have examined many of the cultural, political, and economic issues that confronted California during its first decade as a state. In particular, we examined various issues related to California statehood that had a huge influence on national politics as the U.S. moved towards and eventually erupted into the Civil War.

Cold Call: 9th Cold Call on required viewing and reading - Introduction (including the video), Goals 1, 2, and 3 in the discussion guide

Discussion Goals - Entrepreneurial Politics and Economics: The Transcontinental Railroad and Its Consequences for California
  1. To follow "the uphill struggle" the U.S. Congress faced trying to get a transcontinental railroad with a western terminus in California.
  2. To understand how the U.S. Congress funded and built the Transcontinental Railroad.
  3. To understand the particular funding and building obstacles faced by the Central Pacific Railroad and its backers, "The Big Four."
  4. To discuss the growth of the railroads in California, the entrepreneurs who backed them, and the empire they created.
  5. To analyze the consequences of creating a railroad empire in California.
  6. To examine a case study of anti-Chinese policies and actions through a case study of Chinese explusion from Eureka in 1884.

Goal #1: To follow "the uphill struggle" the U.S. Congress faced trying to get a transcontinental railroad with a western terminus in California

This part of our story begins with the desire of many southerners who still hoped to expand slavery into the west by establishing a slaveholding colony in southern California that would produce rice, cotton, and sugar. Map of proposed route of Transcontinental Railroad, southern routeTo accomplish this, some southerners began to support the idea for a transcontinental railroad running through the southern states and into southern California. What followed was a major battle in the U.S. Congress over the route - a northern or southern route.

Goal #2: To understand how the U.S. Congress funded and built the Transcontinental Railroad

We have already talked about the "uphill struggle" the U.S Congress faced trying to agree on a route for the Transcontinental Railroad. Northerners and Southerners wanted different routes for different economic reasons, both of which were related to the extension or lack thereof of slavery. But in 1862, the uphill struggle was solved. The nation was divided by war, the south had seceded from the union, and the Democratic opposition was gone. The Republicans had no trouble passing the 1862 Pacific Railroad Act. So, just how was it funded and built?

Funding: In 1862, the U.S. Congress passed and President Lincoln signed into law, the Pacific Railway Act, the first of 10 acts that would guide the building of the Transcontinental Railroad between 1862 and 1874. The 1862 Act was based largely on a bill originally proposed in 1856, but that was unable to get passed by a divided Congress.

The law created the Union Pacific Railroad Corporation - the first federally chartered corporation since the Bank of the U.S. It’s role would be to build a railroad west from Omaha, Nebraska that would meet the Central Pacific Railroad which was a California Corporation created in June 1861 with private monies from the "Big Four" (see Goal #3 below). The 1862 Act instructed the Central Pacific to begin construction at Sacramento at the same time that the Union Pacific began its construction in the east.

The Pacific Railroad Act providing two ways to fund the Union Pacific and the Central Pacific: land grants and loans.

So, how did this federal funding assistance - land grants and loans - work out in reality?

The Railroad Act of 1864 revised the 1862 act in the following ways:

In short, as Stephen Ambrose concludes in Nothing Like It In the World, the Transcontinental Railroad was not a federal give-away. He argues:

Building: But funding was not the only obstacle. Both companies faced the following obstacles as they raced to meet one another:

  1. Mileage and geography. The railroad was to stretch 1,700 miles over 2/3 of the North Map of Transcontinental RRAmerican continent. The size was unprecedented in the world. Throughout most of the route, there were giant stretches of desert and no water, and it had to go over two formiddable mountain ranges - the Rockies and Sierra Nevada - and it had to cross unnavigable streams and rivers running through deep gorges and granite summits. Further, through much of the route, there were no trees for building bridges and railroad ties.
  2. "Civilization." There was only one single settlement along the route.
  3. Resources. Vast areas of the route had no trees for bridges or RR ties, no game for food, no stones for footing. Over much of the route there were no cities, no settlements, no farms, no roundhouses, no water pumps, and no way to carry supplies in and out.
  4. Native American hostility. The Plains Indians who lived in the territory through which the railroad was being built were not happy with what they called the "Iron Horse." It crossed through their territory, interrupting the natural flora and fauna of the land and the migratory patterns of the many mammals in the Midwest. Furthermore, it brought more and more white people across and into their lands.
  5. "Hell on Wheels" towns. According to the PBS Website, Hell on Wheels towns consisted of "gambling houses, dance halls, saloons, and brothels, flimsily assembled from wood or canvas ... Miners and traders, scattered across the countryside, converged upon the relative comforts of the new outpost. Regular train service on constructed track brought carloads of migrants looking to settle down, make a buck, or simply experience the zeitgeist of a town perched on the wild's edge. North Platte and towns that followed were the new boomtowns, and like those Pacific coast convergence points of earlier decades, they grew without law. Which, of course, encouraged a spirit of anarchy, not to mention a proliferation of scoundrels ... The most striking feature of these insurgent colonies was their portability. As winter thawed, and the railroaders built toward new towns, agents of vice or enterprise could simply pack up their wares, dismantle their shacks, and follow along on the newly-laid track. If a town dried up once the railroad left - and many did, for the railroad was where profit resided - then so be it."
  6. Labor. Labor was plentiful for the UP - after the Civil War, thousands of unemployed veterans desperately needed jobs. But the opposite was the case with the CP.
  7. Time. Almost everyone wanted to build the RR fast at the greatest possible profit to the investors. The engineers in both railroads wanted to build it well, while the investors wanted to build it quickly. This become a heated race to see which of the two railroads could most quickly finish their lines and meet the other railroad company.

Goal #3: To understand the particular funding and building obstacles faced by the Central Pacific Railroad and its backers, "The Big Four"

Photograph of Big Four who built the Central Pacific RR


Four entrepreneuers who were new to California - collectively known as the Big Four - put up all the private money to build the Central Pacific that would begin in California and proceed eastward. From the beginning of their enterprise, they faced six major obstacles: financing the railroad, navigating the geography of the Sierra Nevada, coping with the absence of modern technology, dealing with extreme cold and harsh working conditions, handling the absence of building materials at the building site, and finding and hiring labor.

  1. Financing the Central Pacific. Once the 1862 Act was passed, Governor Stanford supported millions of dollars in state bonds issued at $10,000 per mile after the required federal portions of the track were built. In return, the CP agreed to transport without charge the state militia, prison convicts, and inmates from insane asylums. The Big Four becane millionaires as a result of their investment. And who were these men? (In order of appearance)
  2. Navigating the geography of the Sierra Nevada. The Central Pacific RR was to begin in Sacramento which lies at the north end of the Central Valley. The city is located on high ground above the river, at an elevation of twenty feet or more above sea level.
  3. Coping with the absence of modern technology. It took 6 years and 20,000 men to build the Central Pacific and with very few exceptions, the RR was built by hand. The only modern technological help was the use of black powder and one steam engine that was used to haul out hand-hewn rock from the tunnels. An average of two to three miles was laid per day and the men worked six days per week. Base camps were built about 70 miles apart.Photo of Tunnel built through the Sierra Nevada
  4. Dealing with extreme cold weather and harsh working conditions. During the construction of the railroad the workers had to survive extreme conditions which included unbearable snowstorms
  5. Handling the absence of building materials at the building site. The only building materials available in California were men and wood. The rails, engines, cars, wheels, and other equipment had to be made in the industrial East and brought to California.
  6. Finding and hiring labor. Because very few white men were willing to engage in the grueling work of the railroad and instead, preferred working in the hills mining for gold, at least 50 percent of the labor was performed by Chinese immigrants. By 1865, the Big Four realized they had a major labor problem. When it called for 5,000 construction workers, few Californians answered the call. Most white men were unwilling to work in the snows at $35 per month and preferred mining.

Goal #4: To discuss the growth of the railroads in California, the entrepreneurs who backed them, and the empire they created

Capitalizing on the Transcontinental RR's potential for stimulating development, promoters organized dozens of railways in the late 1860s and 1870s. Indeed, by the end of the 1870s:

These new railroads usually fell quickly to the control of the Big Four. The new railroads were quickly and shoddily built, suffered from light traffic, and put their independent financiers into ruinous debt. Thus, the Big Four eventually acquired most of these independent lines.

However, through the 1870s, all these lines failed to make the Big Four terrifically wealthy. In fact, they remained in debt and thus they reasoned that the only way to make the Central Pacific turn a profit was to absorb potential competitors - which they steadily accomplished by 1887.

End of 9/29 discussion

Goal #5: To analyze the consequences of creating a railroad empire in California

Railroads propelled the state of California into the modern industrial age. The following consequences illustrate that modernity.

  1. Railroads increased profits for those who already had some property and influence - especially the Big Four.
  2. Railroads brought the continent together, challenged the role of Europe in the world, allowed people to move west for opportunities, connected the new state to the rest of the nation, and it could help move supplies and men in time of war.
  3. Railroad encouraged economic growth through the creation of urbanized boomtowns for those on the railroad route.
  4. Railroad expanded agricultural markets for farmers. In the 1870s, California farmers began cultivating special crops like citrus and other fruits, winter vegetables, melons, cotton and rice. The Southern Pacific was key in promoting this type of agriculture since the Big Four believed that the future of the state, as well as the future of their business, depended on farm progress. Thus, the RR - especially the Southern Pacific:
  5. Railroads manipulated water resources. California is semi-arid and thus towns and farms required water manipulation. No agricultural growth could occur without the railroad and without reorganizing and manipulating the state's water resources through a variety of channels.
  6. Railroads assaulted the environment and stimulated the beginnings of an environmental movement. Between widespread and devastating mining techniques and the building of the railroads in California, its environment had suffered continuous assault for almost three decades
  7. Railroads encouraged social and political inequality. Like the remainder of the U.S., Californians were divided by wealth, ethnicity, and family backgrounds. Thus, its people were divided into classes of sharply differing status and opportunity.
  8. Railroads encouraged anti-railroad politics. By the 1870s, the monopolies over land, the wheat trade, and transportation came under scrutiny. The Central/Southern Pacific Railroad - the state’s largest business, landowner, and employer of Chinese workers with an annual budget that dwarfed that of the entire state - was no exception.
  9. Railroads provided unprecedented opportunities for young men willing to work hard in pursuit of wealth and helped to perpetuate the idea of the self-made man. This was particularly the case in building the Union Pacific that utilized the labor of thousands of German and Irish immigrants, as well as between 5-10,000 white workers on the Central Pacific.
  10. Railroads encouraged anti-Chinese sentiment. In the late 19th Century, federal policies discriminated against Asians, especially the Chinese with the Chinese Exclusion Act of 1882. The Act prohibited U.S. entry to all Chinese people except teachers, students, merchants, tourists, and officials. This was the first - and only - federal law that restricted immigration based upon nationality and race. The Act was repealed in 1943. The Exclusion Act was one of the first formal federal acts to restrict and discriminate against immigrants.

Cold Call: 10th cold call on required reading - Read Elinson and Yogi, Ch. 2, "In a Strange Land: The Rights of Immigrants"

Goal #5: To examine a case study of anti-Chinese policies and actions through a case study of Chinese explusion from Eureka in 1884

Due to the California Gold Rush and the recruitment of Chinese to work on the RR, California had the largest Chinese population in the nation by the 1860s. By 1880, its Chinese population was 75,000. Thus, the Chinese were pulled to America by promises of working hard, acquiring wealth, and possibly of returning home with their fortunes. But they were also pushed to the U.S. due to natural disasters largely in China's southeastern Kwantung provinces where persistent drought and floods made it hard to maintain a satisfactory quality of life.

Most Chinese immigrant were men who couldn’t afford their passage, Photograph of 19th Century California Chinese familyso they entered California on the credit-ticket system. Upon arrival in California, they worked to pay off the cost of their ticket.

Successful Chinese merchants already settled in California began to recruit young men from their villages in China, pay their passage, and introduce them to the Chinese Six Companies once they landed in San Francisco. Each of the six companies represented one of six districts and clans that existed in the Kwangtung province of China. Each company provided new arrivals from their clans with a place to stay, food, employment, protection, companionship, and language and legal services. Thus, each became an acceptable intermediary between California's Chinese immigrants and California's white society.

By the 1870s, the Chinese had organized themselves into sub-units within each of the Six Companies. Known as Chinese Tongs, they originally worked in association with the Six Companies, but eventually, they broke away, began competing with each other for jobs in the larger white society, and eventually functioned as small, secret societies. When they left San Francisco, their tong affiliations and grievances went with them and often resulted in violence between rival tongs in Chinatowns throughout the state.

Upon arrival in California, the Chinese worked in laundries, domestic service in white households, fishing, heavy construction work - and other jobs that white laborers will unwilling to do. Gradually, a small percentage of Chinese began to work inindustries already occupied by white labor,especially clothing manufacturing, shoemaking, and cigar-making. Thus, they encountered resistance from white workers who could not compete with the Chinese because they were not willing to live as cheaply. In addition to the poor reputation the Chinese had gained from Tong activity and actual and perceived competition for jobs, many white California began to resent the fact that most Chinese did not appear to be assimilating into American life. They continued to live in Chinatowns, speak their language, eat their own foods, and practice their strange religion. Anti-Chinese sentiment grew and with it grew demands for the California legislature to respond

A State, and Local Case Study of Anti-Chinese Policies and Action sin Humboldt County

1852 California's Foreign Miner's Tax imposes $3 monthly tax for non-native-born citizens of the US (the Chinese) and those becoming citizens under the Treaty of Guadelupe Hidalgo (the Mexicans).  The tax was enforced by tax collectors who kept part of the fee for themselves, were allowed to take property of those who failed to  pay, and often used extreme violence in their collection methods.

Commutation Tax requires shipmasters to prepare a list of foreign passengers, and ship owners to post a $500 bond for each, which could be commuted by paying a tax of $5 to $50 per passenger.
1854 People v. Hall California Supreme Court decision overturns murder conviction of a white man convicted on the eyewitness testimony of Chinese workers, finding that "Chinese and other people not white" could not testify in court against whites.

1855 California legislature levies a $50 tax on every ship bringing immigrants "ineligible for citizenship."  The California Supreme Court declared the law unconstitutional in 1857.

California legislature increases the Foreign Miners' License Tax to $6 per month, with increases set for $2 each susequent year.  The State legislature repeals the law and establishes the tax at $4 per month.
1858 California legislature passes "An Act to Prevent the Further Immigration of Chinese or Mongolians to this State" forbidding Chinese individuals from landing in California except during weather-related emergencies.  California Supreme Court declares the llaw unconstitutional in 1862.

1862 California legislature passes "An Act to Protect Free White Labor Against Competition with Coolie Labor and to Discourage the Immigration of Chinese to the State of California."  Requires a tax on laborers who were not working in agriculture.

The California Legislature passes a Chinese Police Tax that levied a $2.50 fee on all Chinese living in the state. The California Supreme Court declared the law unconstitutional by the end of the year.

1863 Chinese individuals are prohibited from testifying in California criminal or civil court cases. Chinese children are excluded from public schools.

1866 California legislature passes "An Act for the Suppression of Chinese Houses of Ill-Fame" which made Chinese brothels illegal.  The law makes it possible for a landlord to discriminate against potential Chinese occupants upon the suspicion that prostitution might take place in the premises.

1870s The Chinese represent 20% of California's labor force, although they constitute only .002 percent of the entire US population. 1880 anti-chinese political cartoon

1874 An area known as Chinatown arises in Eureka, composed primarily of men and a few prostitutes. Chinatown was a small square block between F and E Streets, bounded by 3rd and 4th Streets. It was located in the heart of what is now the business and tourist district of Old Town Eureka. The Chinese did not give up their customs or religion. They celebrated their holidays and interacted with each other within their distinct community. For the most part, they kept to themselves.

1878  California legislature bars Chinese individuals from  owning real estate.

The Federal Circuit Court in San Francisco rules that Chinese are ineligible for naturalized citizenship in Ah Yup, 1, Cas. 223.

1879 Second California Constitution passes with two new articles that discriminate against the Chinese: Chinese immigrants were denied the vote in California; and state and local public works agencies were forbidden to employ a Chinese laborer.

1880 California Chinese population reaches 75,000.

The California legislature prohibits marriage between a white person and a "negro, mulatto, or Mongolian."
1882 San Francisco Schools Policy establishes a separate school for the Chinese.  Sacramento followed the example in 1893.

1883 Chinese labor, recruited by Humboldt Country builders, helps build the Eel River and Eureka RRs.  About 200 Chinese live in Eureka in a small square block between F and E Streets and bounded by 3rd and 4th of Eureka's Chinatown 1884

1884 Local newspapers in Eureka print articles about violence among rival Chinese tongs, as well as random acts of violence committed against the Chinese in Eureka. When the one newspaper printed an article about two white women visiting an opium den, the community was incensed.

1885   February 6 - City Councilman, David C. Kendall is fatally shot by a stray bullet fired by rival Chinese tong members.  20 Chinese are arrested.  Vigilante behavior becomes difficult to quell.  That evening a meeting was held at Centennial Hall during which a resolution was  proposed to massacre "every Chinaman" in the city.  When it fails to pass, another suggested destroying Chinatown and driving the 480 occupants beyond city limits.

1886   Fifty-five of the excluded Chinese filed the first lawsuit for reparations in the U.S. in Wing Hing v. the City of Eureka. The victims sued Eureka in the U.S. Circuit Court to recover $132,000 in damages ($75,000 for injuries to property and $58,000 for the loss of business, for the loss of opportunity to collect debts owed by their white customers, and for being driven out of the city by a mob). Ultimately, the Chinese lost the suit because they did not and could not own land in Eureka, could not testify against whites, and were prevented by vigilante activities from returning to the area. But in the act of bringing Wing Hing, the expelled community quickly regrouped, and the lawsuit itself became an effective warning and sounded across the state against similar treatment of the Chinese. It put other cities on guard.

1891 The California legislature passes a law stating that "the coming of Chinese persons into the State, whether subjects of the Chinese Empire or otherwise" is prohibited. In 1894, the California Supreme Court declared the law unconstitutional in Ex Parte: Ah Cue,101, 197.

1905 Asiatic Exclusion League is organized by delegates from 67 organizations who met in San Francisco to begin plans to press for legislation to halt all Japanese immigration.  Before the end of the decade, the League began lobbying or an Photo of cover of Humboldt Daily Standard newspaper in 1906 declaring "Chinese Must Go."amendment to Constitution that would deny citizenship to American-born Asians.

San Francisco School Board issues a decree that all persons of Asian ancestry must attend segregated schools in Chinatown by stating,  "Our Children should not be placed in any position where their youthful impressions may be affected by association with pupils of the Mongolian race."
1906 The Starbuck-Tallant Canning Company of Port Kenyon near Ferndale imports 23 Chinese and 4 Japanese laborers from Astoria, Oregon. 

1910 Angel Island is opened to enforce immigration Photo of Chinese being expelled from Humboldt County in October 1906laws during the Asian exclusion years. From 1910-1940, at least 175,000 Asian immigrants - mostly Chinese - were detained and interrogated at Angel Island.  The average stay was 2 weeks; the longest was 2 years.  Thousands were deported.

1937 The Humboldt Times publishes a souvenir edition on its 85th anniversary which included an article, "No Oriental Colonies Have Thrived Since the Year 1885."

1959 Eureka officially repealed its anti-Chinese ordinance of 1885.

Question to ponder ... In no other California community were the Chinese expelled. So, why did it happen in Humboldt County?


Entrepreneurial Politics and Economics: The Transcontinental Railroad and Its Consequences for California

  1. Despite the many financial, political, geographical, economic, and human obstacles, the Transcontinental Railroad became a reality and in so doing, politically and economically linked California to the rest of the nation.
  2. In linking California to the U.S., the railroad became the ultimate symbol of Manifest Destiny and American progress.
  3. The federal goverment was the primary investor in the railroad because it crossed through the continent and there was not enough private wealth available to purchase land and supplies.
  4. The Railroad Act of 1862 created "unprecedented government aid to business" and in so doing, contributed to the rise of "a new class of capitalists."
  5. The Central Pacific Railroad faced many financial, geographic, technological, weather, resource, and labor related obstacles - all of which were overcome in 6 years by over 20,000 men who largely built the railroad by hand.
  6. The completion of the Transcontinental Railroad enabled a small group of railroad entrepreneurs to create an empire that monopolized California's transportation industry.
  7. This empire was responsible for several key consequences that shaped California's history from 1868 to the turn of the 20th Century: increased profits for those who already had some property and influence; encouraged economic growth through the creation of urban boomtowns for those on the railroad route; expanded agricultural markets for farmers; manipulated water resources; assaulted the environment and stimulated the beginnings of an environmental movement; encouraged social and political inequality; encouraged anti-railroad politics; provided unprecedented opportunities for young men willing to work hard in pursuit of wealth and helped to perpetuate the idea of the self-made man; and increased the Chinese population and encouraged anti-Chinese sentiment.
  8. Federal and California state immigration policies of the 19th Century greatly influenced the opinions of Humboldt Country residents about the Chinese immigrants living in their various communities. The intolerance sanctioned by the federal government and the California legislature, as well as the geographical isolation of Humboldt County and the central location of Eureka's Chinatown, culminated in the expulsion of Humboldt County's entire Chinese population whose culture, traditions, and standards of living were unacceptable to the larger white community.