In honor of the event, flags
were flying from every available flag staff
in Port-land. A procession was formed in the
city and marched to the spot selected, where
ground was to be broken. This procession was
preceded by the Aurora brass band. The first
division consisted of the Washington and
Fenian Guards, the mayor and members of the
council of Portland, the chaplain, orator.
of the day, the president and directors of
the Oregon Central Railroad Company, the
chief engineer and corps of employees. In
this division was borne the shovel to be
presented by Samuel M. Smith to the
president of the road, and to be used in
breaking the ground. The second and third
divisions consisted of the fire departments
of Portland and Vancouver, and citizens on
horse back, in carriages and on foot. Prior
to the arrival of the procession an immense
crowd had assembled at the grounds to
witness the ceremonies.
The assemblage, numbering not less then
5000, was called to order by Dr. A. M.
Loryea; Rev. A. F. Waller, the chaplain,
then offered prayer. The shovel mentioned
was then formally presented to the president
of the road, Col. I. R. Moores. The shovel
bore on it a beautiful silver plate attached
to the front of the handle, with the
following engraved inscription: 'Presented
by Sam M. Smith to the Oregon Central
Railroad, Portland, April 16, 1868. Ground
broken with this shovel for the first
railroad in Oregon.' The presentation speech
was made at some length by John H. Mitchell
and fittingly responded to by Col. I. R.
Moores.
At the conclusion of the address and
response President Moores then descended
from the platform with the shovel in his
hand. He proceeded to the center of the
square, where was driven the "first stake,"
and threw out the first sod in the
construction of the Oregon Central railroad.
This was accomplished amid the loud
acclamations of the multitude. The breaking
of the ground was followed by three rousing
cheers for the road, for the directors and
contractors, during which the band
discoursed "Hail Columbia." After this, all
the laborers, at a given signal, fell to the
work of grading. The remainder of the
ceremonies consisted of addresses by Judge
W. W. Upton and Hon. J. N. Dolph. Short
addresses were also made in conclusion by J.
- H. Reed, Joel Palmer and others.
Work was pushed on both sides all the spring
and summer, and by the middle of September
the west side had the main grading along the
face of the mountains finished some three
miles out from the city. This road was very
much in the nature of a work by the people,
and to incite them to effort the President
made to them extensive appeals through the
newspapers. In his report of May 25th 1868,
officially to the Board of Directors, really
to the people of the State, he reached a
remarkably fine strain, reminding one of a
military appeal, and well calculated to
awaken enthusiasm. He says "Oregon has not
yet done all that it may easily do to aid
this great work, and especially those along
the line who are most benefitted by the
road. Every man can help some. Let every man
do so and failure will be utterly
impossible. Laborers must be fed and the
farmers along the line can contribute flour,
bacon, vegetables and all the necessaries of
life, when they have no cash to spare; and
this they would not feel. Teams must be
supplied and supported; horses and their
provender are everywhere abundant; let them
be freely supplied and the work will not
lag. The right of way ought to be cheerfully
donated in every case. Cross ties can be
easily furnished by people along the line,
each furnishing a few, and taking their pay
in stock or lands. In this way let a
railroad spirit be aroused and stirred up to
a deeper depth, and the railroad will be
eminently the people's, and an Oregon
enterprise, and will be pushed rapidly up
the Willamette, through the Calapooiahs on
to Rogue River and spreading its iron arms
out on either side, will infuse new life
into the whole country; make your wheat of
uniform current value from Jacksonville to
Portland, take out every brush, reconstruct
every farm, quadruple its value, erect
comfortable houses everywhere, give the
farmer the full value of his labor and
produce at his own door, create new towns
and cities, and finally supply and serve the
wants of a million of people, prosperous and
happy in the enjoyment of one of the most
favored spots and climes beneath the sun."
The east side road being of a less popular
character, and looking more to acquisition
of capital, and use of modern railroad
methods, was already seeking for an alliance
with some capitalist ready to run their road
through. They seemed to have had a wholesome
distrust of popular enthusiasm in matters
financial, and to count but little upon
supplies or money raised in tidbits, and
dependent for its cheerful delivery upon a
large variety of people, many of whom were
likely to be miffed or chilled by reason of
the most trival or personal circumstances.
They knew that promises to the people in
order to, be at all impressive or productive
of results, must be highly colored or even
extravagant; and such promises, before
fulfilled must inevitably seem to many
exaggerated and perhaps spurious, and even
in the fulfillment would to many of
sanguinary temperament seem to fall far
short of their intent. They preferred to
rely upon a railroad king, who, even if he
ate up some of his subjects, would at least
see that he got back interest upon his
investments by carrying his work through to
completion and would have his financial
stakes well set, and thereby assure a road.
With the generous and frank methods of the
west side road it is impossible not to
sympathize, at the same time doubting the
efficiency of their plan to interest the
people in their work enough to be anything
like a reliable aid. The more calculating,
less open, and extraordinary measures of the
east side company commend themselves much
less to our approbation, but nevertheless
took account of some things not provided for
in the other. It may seem a useless thing to
revive the story of old struggles,
especially as both sides got their road and
things are now serene. But there are certain
obligations on the historian to explain how
things have come to be as they are, and
hence we give the thread of the story. It is
no part of our work to award praise or
blame. Errors are always to be set down as
evil, and unscrupulousness is to be
reprobated wherever or by whomsoever
practiced. In this case, however, the reader
is to sit as judge. Both companies wanted a
road, and took the shortest cut to get it.
S. G. Elliott, the original engineer, came
up and took charge of the working measures
and forces of the east side. He was
under-stood to represent a large amount of
capital, and through him' and others, Mr. N.
P. Perine and Mr. James P. Flint of San
Francisco, arrangements were made with a
certain "A. J. Cook & Co." to construct one
hundred and fifty miles of the road. Said
Cook was declared to be immensely rich and
fully able to carry the work through. In a
circular issued by the company it was stated
that the capital stock was $7,250,000, which
was the represented cost of construction.
The actual cost or the road would, however,
be but $5,250,000-at $35,000 per mile. This
latter was to be known as common stock, and
was to be sold at ten cents on the dollar,
bringing in something over $3,000, to be
applied upon every mile. The other ninety
per cent. was to be raised by a mortgage.
Anyone buying a share was to pay $10 and
receive a share marked $100, but designated
as unassessable and not to be subject to any
further demands for payment. It was charged
by the other party that the $2,000,000 of
inaccessible preferred stock-the difference
between the $7,250,000, or the represented
cost, and the $5,250,000, or the actual
cost-was for gratuitous distribution among
the directors of the company and to buy the
favor of prominent men in the State. In a
manner as a confirmation of this charge, the
statement of Col. J. W. Nesmith, that he had
been offered, but refused, $50,000 stock to
become .a director of the east side road and
to deliver the speech at the breaking of
ground, was widely circulated. A letter from
James P. Flint, from San Francisco, to N. P.
Perine, with reference to his mission to
Oregon, advising the liberal use of stock,
common rather than preferred, to secure the
good will and co-operation of influential
men, was afterwards made public. It was
further said that of the Whole-stock but
$700 had been subscribed by actual signature
of responsible men; that the rest had been
subscribed by the company to itself, and the
incorporators had expressly disavowed any
further liability than of the seven original
shares. The organization of the company, by
which they had elected their president and
directors, was said to be contrary to the
State statute, which provided that half of
the capital stock must be subscribed before
the officers were elected.
A spirited public contest began almost from
the first between the two companies, each
making copious use of the newspaper press,
and warning the people of the other. The
president of the west side road issued
circulars not only in our State, but
throughout the East, declaring that the
Oregon Central Railroad, whose principal
office was at Portland, was the only true
Oregon Central Railroad; that the other,
doing business from Salem, was a sham and
fraud; that they had no legitimate
existence, no substantial bottom, no claim
to public lands or franchises of any kind.
He asserted that A. J. Cook & Co. was a
myth; that their methods were fraudulent,
their representations false, and their bonds
worthless, except as made good by
subscriptions of innocent and unsuspicious
parties who took the ten per cent.
inaccessible stock, and might be compelled
to pay one hundred per cent. to redeem their
promises according to statute. His
statements were curt and positive and in the
East broke up a loan that Elliott was
contracting.
The east side replied by denouncing him as
one whose irregular methods had
disintegrated the first company and made
necessary the formation of a new. They said
that he had been originally invested with
power by them to form and incorporate a
company, but he abused his trust by
enlarging the number of incorporators
without their knowledge, and making a secret
agreement with a certain portion,
principally those additionally obtained by
him, to divide among themselves the profits
of the road, to the injury of the others;
and, worst of all, that he failed to file
with the Secretary of State and the clerk of
Multnomah county the records of
incorporation in time for the State
legislature to legally designate the company
as the one entitled to the donation of
government land, as provided by the United
States congressional bill. They also said
that in this last particular he had deceived
the other incorporators and the State
legislature, having asserted that he had
filed the articles.
To these personal
charges Mr. Gaston at first gave little
attention, preferring to continue his
warnings against the rival company and his
analysis of their financial standing; but
when it became necessary to explain the
matter before Congress, he was able to show
by the affidavit of the clerk of Multnomah
county and by statement of the Secretary of
State that he had actually presented for
filing the articles of incorporation on
October 6th, 1866, and such was recognized
in pencil on the articles; but upon his
desire to retain them for a time to get
additional names attached to them, he was
permitted to do so, and they had eventually
been filed formally on a date more than a
month later and after the legislature had
adjourned. The assertion that he had delayed
filing the articles for the sake of working
up a secret scheme hostile to the interests
of the company, was thereby shown to have
been at least misapprehended.
On the part of those who left the first
company and organized a second, it may be
very fairly said that looking as they did in
the office of the Secretary of State for the
articles in order to be sure that they were
there, and finding no account of them-the
Secretary having forgotten the circumstances
of their withdrawal after their
presentation-they might well have felt
solicitous and looked with suspicion upon
agreements that they had heard were going on
with-out their knowledge in Portland. Thus
the whole disruption and contest arose in a
measure from a clerical error and a
misunderstanding. This at least, gave a
certain edge and bitterness to the
controversy that would have been absent from
a mere question of rivalry or pecuniary
interests; for gentlemen of each party felt
that their personal integrity was assailed.
The sharp and wordy battle in public print
was speedily carried to the court room.
After making public statements of the
fraudulent character of their rivals,
complaint was made on the part of the West
side road and suit was brought in the
Circuit Court for Multnomah county, through
the prosecuting attorney of the Fourth
Judicial District, to dissolve the East side
company, and forbid their using the name
Oregon Central Railroad on the ground that
their organization had not been made in
accordance with Statute only $700 of the
$7,250,000 having been subscribed when the
Board of Directors was first chosen; and
that it was a public fraud and statutory
illegality to put inaccessible stock on the
market. Suit was begun also in the Circuit
Court for Marion county, May 1st, 1868, on
the same ground to the same purpose.
In the United States District Court at
Portland suit was brought by James B. Newby,
of California, to dissolve the East side
company and forbid the use of their name O.
C. R. R. Co., on the ground that his stock
in the West side road was depreciated in
value by the fraudulent use of the corporate
name of the company whose stock he held.
Another case was brought up from Clackamas
county, relative to right of way, in which
the same assertions were made as to the
invalidity of the East side organization.
On the other hand, in April, 1868, the East
side company brought suit through the
prosecuting attorney of the Fourth Judicial
District to dissolve the West side company
on the ground of a secret fraudulent
agreement between certain of its
incorporators, and of many other
irregularities; but withdrew it before a
decision was reached.
These cases worked their way very slowly
across demurrers and other legal
obstructions from court to court, producing
little but expensive litigation, retarding
the sale of lands, wasting force and means,
and impairing public confidence. A decision
dampening the ' West side company was
reached in the United States District Court
about this time, that the City of Portland
was barred by the clause in its charter
limiting the indebtedness of the city to
$50, 000, from paying the interest on
$250,000 for twenty years on the West side
bonds, since this created a debt of more
than $300,000. It does not appear that this
suit, which was brought in the name of a
citizen of California who owned taxable
property in Portland, was instigated by the
East side company, yet it may be imagined
that it was; and at all events, it had the
effect of a great victory for them, and a
great defeat for the West side, since it
knocked a quarter of a million dollars
security upon which they were greatly
relying, from under their feet.