Efforts to Build a Road to the Atlantic States

It was a memorable conflict, that conducted by the first rival railroad companies of Oregon; with matter in it for a novelist. It would be rash to intimate that Elliott with all his mythical capitalists was an agent of Holladay all the time, the general opinion being that he was at first acting only for himself, or that the East Side Company knew the extent of his romances, which they used so well to their advantage. It would on the other hand be difficult to believe that Holladay, or the original East Side Company, were actually imposed upon by representations as to a firm like A. J. Cook & Co., of immense wealth and standing, when any business or banking gazetteer would inform them as to the ‘existence or non existence of such a firm; particularly as Mr. Gaston was constantly asserting in public that this company was all a pretence. To sum up the results, the West Side Company was able to prove its statements as to the irregularities of its opponent, and to come off with the original name; also to get a land grant of their own, and to make fair terms for the building of the road. The East Side Company, beginning almost without legal or legislative footing, killed the opposition of their rivals in court by so prolonging the cases as to make them of no practical injury, but rather as sort of a shield to themselves; and gained State and Congressional Legislation that gave them standing and secured for them the original land grant. Both, however, were swallowed up by the money king.

At this distance of time, it will be impossible for the great mass of the people of Oregon, coming to the State at a later day, in any wise to comprehend the character and extent of the struggle, the almost insuperable difficulties to overcome, in starting these two pioneer railroads. It is easier for Portland to raise $1,000,000 now for a railroad; than it was $10,000 in 1868.

After completing his road to Roseburg and St. Joe at a cost of about $5,000, 000, and incurring a debt in Germany of about twice that sum, Holladay found himself unable to pay interest on his bonds. The country was new, the people were unused to travel by rail. Earnings scarcely met expences, and a remark made long before by a Salem gentleman that the railroad would on its first trip carry all the passengers, on its second all the freight of the Willamette Valley, and, on the third would have to pull up the track behind it, seemed not so immeasurably far from realization. Some of the interest as due was met by draughts upon the capital itself. Then the avails of the steamship lines to San Francisco were turned in, but even then there was a deficit. The road was therefore claimed by the bond-holders and the rights of Holladay were won.

Efforts for a road to the Atlantic States began with Oregon as well as in the East. In our State there were two who had their own plans and routes in view, and there happened to be two Surveyor-Generals of the State, W. W. Chapman, who served under appointment of Buchanan, and B. J. Pengra, who served under Lincoln. Chapman was a Portlander, one of the fathers of the place, and although a man of wide sympathies, naturally desired the transcontinental line to terminate at his city. He had passed a life of almost constant political activity in and about legislative halls, having been the first delegate of Iowa to Congress, and from his knowledge of parliamentary tactics was most admirably adapted to lay the foundation of a road. He, of course, only aimed to determine the lines, to secure necessary legislation promised and then interest capitalists. Without large means, he nevertheless applied from his private means enough to make a provisional running of the road, and to send an agent to London to investigate financial conditions. The route of his line he laid by The Dalles, up the Columbia and Snake Rivers, and to connect with the Union Pacific at Salt Lake. About 1869 and ’70 was the period of his activity, although for a long time before this he had cherished the plan, and was making preparation. Before Congress he was indefatigable in bringing the claim of his road to notice, but met with very hostile influences. One of them was that of the Northern Pacific, which saw no occasion for a road to the Pacific Northwest other than their own. The contest in Congress narrowed down to a fight between him and them. In this emergency he was left without assistance by even the delegates from his own State, but proved amply able to at least prevent the passage of a bill that would have left Portland without a road. This was the means authorizing the Northern Pacific to construct their road via the Valley of the Columbia to Puget Sound, the conditions of which would have been fulfilled by laying the rails on the north side of the river, as was shown to have been preferred by their map filed with the Secretary. By his timely protest the bill was defeated, and although unable to go forward with his own plan the way was left open for the O. R. & N. Co., without hindrance from the Northern Pacific, or any other party. The road, earnestly advocated and agitated by Mr. Pengra, was what was known as the Winnemucca line. It was to extend from some point on the Central Pacific in Nevada, preferably Winnemucca, to Oregon, and down the Cascade Mountains, by the passes of the Willamette, coming to Eugene City, and thence via the West Side road to Portland, and also to Astoria. From this point on the Central Pacific it was no farther to Portland than to San Francisco, and the people of Nevada was very much in favor of the plan, being fully seconded by their Congressman Fitch. The road was defeated, however, by an amendment made in the Senate that instead of coming to Eugene it unite with the Oregon & California in the Rogue River Valley. By this change it was effectually killed, as no company cared to build a road which must be working to Holladay’s line, as this would be.

Henry Villard and the Northern Pacific

In July, 1874, Mr. Henry Villard made his first visit to Oregon. He was vested with full powers as agent for and to represent the German bondholders. His purpose in coming was to make a careful investigation of the general condition of the roads then built and equipped, and to inquire thoroughly into the financial affairs of the Oregon & California Railroad Company. Prior to this Mr. Richard Koehler arrived in Portland as a resident financial agent for the German bondholders. Mr. Koehler reached Portland July 25, 1874. He was installed as agent for the syndicate, the members of which obtained, by previous agreement with Holladay, a supervisory right over the management of the road in reference to operation and construction matters and a representative in the board of directors. Holladay still remained in nominal control of the roads as president; the active and actual. management, however, was retained by Villard under the powers and privileges conferred by the bondholders. This condition of affairs continued until April 18, 1876, when Holladay retired altogether from the management of the road. On the following day, April 19, Mr. Villard assumed full control. On the retirement of Holladay the following were the officers of the company: President, H: Villard; vice-president and treasurer, R. Koehler; secretary, A. G. Cunningham. At that time the bondholders bought out Holladay’s interest and became the owners of all the stock. At the regular elections following for several years there were no changes in the officers until April, 1882, at which time A. G. Cunningham retired as secretary and George H. Andrews was elected in his place. Since that date Mr. Andrews has held that position, and, like his predecessor, has proved a most active and efficient officer.

From Roseburg to Ashland

During the time Villard represented the German bondholders, 206 miles of the additional road were constructed. This embraced the distance between Roseburg and Ashland (145 miles); the west side road from St. Joe to Corvallis (50 miles); and the short branch line from Albany to Lebanon (11.5 miles). In May, 1881 a reorganization of the affairs of the company was effected by which the original, or Ben Holladay stock, was wiped out, and the old bonds were converted into stocks, and a new mortgage made to provide funds for the extension of the lines. Work on the extension of the road beyond Roseburg was commenced in December, 1881, under the management of Villard, and operations continued with but little interruption until the completion of the road. On the .25th of May, 1883, the road then constructed between Portland and Roseburg was leased to the Oregon & Transcontinental Company for a term of 99 years; and, on the same date, a contract was entered into between the Oregon & Transcontinental Co. and the Oregon & California Railroad Company for the construction of the incompleted portion-through to the California Line. The Oregon & Transcontinental Company constructed the road between Roseburg and a point 100 miles south of Ashland, and had let contracts for, and. partially completed the Siskiyou tunnels. The Oregon & Transcontinental Company after consummating the lease, continued to operate the road until June, 20th 1884. But upon the failure of Mr. Villard, the lease and construction contracts were canceled, and the road surrendered to the Oregon & California Railroad Company, and mutual releases between the two companies executed. After this, the Oregon & California Railroad Company continued to operate its roads until December, 1884, when, at the suit of Lawrence Harrison, brought against the corporation, Mr. R. Koehler, the former vice-president and manager of the company, was appointed receiver. The road has been operated by him ever since his appointment to the receiver-ship, which was made January 19th, 1885. The condition under which Mr. Koehler was appointed was to assume entire personal charge of the property, and to manage and operate the roads under the direction of the United States Court. This trust Mr. Koehler has faithfully and efficiently discharged, and the affairs of the road have been managed with due regard to every consideration of economy, compatible with the demands of the public, and the adequate facilities-for general transportation.

May 5th, 1884, the road was completed to Ashland, 145 miles south of Roseburg, and 340.8 miles from Portland, and the event was the occasion for an enthusiastic celebration and of general public congratulations. Work beyond Ashland was discontinued in August, 1884. Between Roseburg and Grant’s Pass the natural difficulties of construction were great as compared with most of the distance previously traversed. These obstacles rendered progress necessarily slow, and the building very expensive. For the distance mentioned, the route lay through a mountainous region, necessitating sharp curvatures, and for a length of about thirty-five miles (between Glendale and Grant’s Pass) grades as heavy as 116 feet to the mile had to be overcome. For the remainder of the line between Rose-burg and Grant’s Pass, and also between Grant’s Pass and Ashland, the maximum grades do not exceed 52 feet to the mile. Nine tunnels had to be cut in constructing that portion of the line, aggregating about 7,325 feet.

The Southern Pacific

The present condition of the road is said to be excellent which speaks well for the general efficiency of the management. Notwithstanding the period of financial embarrassments through which the road has passed, its condition has been gradually improved. New bridges have been built wherever and whenever the safety of the public required; the bed improved, new ties laid, and the road thoroughly ballasted. On the main line between this city and Ashland, only about 100 miles of iron rails remain, steel rails of the most improved and durable kind having been substituted. New steel rails will be laid for the 100 miles just as rapidly as the material can be procured. Already during the past season about 85 miles of road have been ballasted. At present the rolling stock of the company consists of the following property : 43 locomotives, 26 passenger coaches, 14 mail and express cars, 582 box, flat and stock cars.

Early during the present year a meeting was held in London, the result of which was the transfer of the stock and control of the corporation of the Oregon and California Railroad to the Southern Pacific Company. At that meeting an arrangement was entered.. into between the first mortgage bondholders of the Oregon and California railroad company, the stockholders of the same corporation, duly authorized representatives of the Pacific Improvement company, and also of the Southern Pacific company. Under this agreement the stockholders of the Oregon and California company sold out to the Pacific Improvement company of California. Very briefly stated, the conditions of the sale were as follows: The Oregon and California railroad company’s stockholders were to receive for every two shares of preferred stock delivered, one share of C . P. stock, and for every four shares of common stock surrendered and delivered, one share of Central Pacific stock; also, a cash payment of four shillings, sterling, for every share of preferred stock, and three shillings for every share. of common stock. The first mortgage bonds of the Oregon and California were to be exchanged for new five per cent. bonds guaranteed by the Central Pacific at the rate of 110 per cent. of new bonds. They were also to pay four pounds sterling for each $1,000 of the old bonds so exchanged. According to the agreement entered into, the amount of the new bonds to be issued and $30,000 per mile of standard guage railroad constructed or acquired, and $10,000 per mile of narrow guage railroad constructed or acquired. Under this mortgage there is not to be issued more than $20,000,000 of bonds in all. Under and in pursuance of this agreement, the stock and bonds were exchanged so thane _ corporate organization of the Oregon and California railroad company was transferred to the management. This formal transfer took place during June, 1887. While the possession and ownership of the stock and bonds of the old organization has passed into the hands of the Southern Pacific, still the custody of the property belonging to the former-rolling stock, road, depot, depot grounds, etc. remains in the hands of Mr. Koehler, the receiver, and the United States Circuit Court. Conjointly, the receiver and the court manage all the operations of the road the same as before the formal transfer was effected. This condition of affairs will continue until some definite action has been determined upon by the several parties to the agreement. The , above is the present status of the Oregon and California Railroad, but what new phase affairs will assume depends upon the future action of the corporation into whose hands the control of the old organization has passed. For that reason, for the present the result remains entirely in conjecture. As yet there has been no annual transfer of the corporation’s property. Since the transfer the annual election of the Oregon and California railroad company has been held, when the following officers were chosen: Leland Stanford, president; C. P. Huntington, vice-president; R. Koehler, second vice-president; George H. Andrews, secretary and treasurer; J. E. Gates, assistant secretary.



MLA Source Citation:

Harvey Whitefield Scott. History of Portland, Oregon: with Illustrations and Biographical Sketches of Prominent Citizens and Pioneers. Portland, Oregon. D. Mason & Company, 1890. AccessGenealogy.com. Web. 23 August 2014. http://www.accessgenealogy.com/oregon/efforts-to-build-a-road-to-the-atlantic-states.htm - Last updated on Apr 12th, 2013


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