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.
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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.