Industry, Politics and Power: the Union Pacific in Wyoming

One of the most significant moments in Wyoming history didn’t occur within its borders. On May 2, 1869, a large crowd gathered at Promontory Summit, Utah Territory, to celebrate the completion of the world’s first transcontinental railroad.

up1.jpup4.jpgAt the given signal, a hammer slammed down on a golden spike, sending an electric pulse out over telegraph lines stretching west to San Francisco, and east across Wyoming Territory to Omaha. The crowd cheered. They listened to speeches. They waved flags, toasted with champagne, and posed for photographs. In New York, Philadelphia, and Chicago thousands took to the streets to celebrate the joining of the Central Pacific and the Union Pacific Railroads.

For the sparsely populated Wyoming Territory, the golden spike meant the end of a prosperous two-year construction period brought by the Union Pacific. Yet in the wake of the boom, the railroad offered economic opportunities that simply didn’t exist during the emigrant trails era.

While hundreds of thousands crossed Wyoming by wagon train in the 1850s, most recognized that it was too high, too cold and too dry for rainfall-dependent farming. It also lacked profitable mines. Those factors meant that almost no travelers who crossed Wyoming by wagon train decided to stay.

The transcontinental railroad changed all of that by giving many more emigrants a means to live in Wyoming. Specifically, the rails provided a model of industrial development based on transportation of agricultural and mineral products. The railroad opened up trade to distant markets, spreading the costs of operating the line outside of the territory. That recipe worked well for the small population of the territory, and gave the Union Pacific tremendous influence on Wyoming’s politics and culture.

In some ways, the combination of transportation and resource extraction created by the Union Pacific continues to drive the Wyoming economy. The railroad also set up dynamics of political and economic power that persist even now. More than any other economic force, the Union Pacific Railroad shaped the Wyoming we know today.

The railroad creates the need for a territory

The building of the Union Pacific across Wyoming forever changed the political and physical landscape, not least by bringing about the organization of Wyoming Territory out of a huge piece of land lopped off the southwestern part of Dakota Territory.

The region needed its own government because of its remoteness from the capital of Dakota Territory at Yankton on the Missouri River. Wyoming Territory also took a small part of Utah and Idaho territory in the west of the continental divide. (The northern boundary of Wyoming Territory was defined by the organization of Montana Territory in 1864.)

When the UP first came to Wyoming in 1867, the railroad exerted a tremendous amount of influence on the government. Often it seemed that governments existed primarily to serve the interests of the railroad, first with federal military support to pacify Indians, unruly squatters or striking coal miners, and then by creating the structure of territorial government needed for conducting business.

In Gov. John A. Campbell's 1869 inaugural address to the Wyoming Territorial Legislature, he noted that, "For the first time in the history of our country, the organization of a territorial government was rendered necessary by the building of a railroad. Heretofore the railroad has been the follower instead of the pioneer of civilization."

As one of the largest private landholders and employers, the UP executives made decisions that affected every town and impacted the wealth of Wyoming. Territorial officials fought for the right to tax property owned by the UP and ultimately prevailed in an 1873 court case. After this, Wyoming Territory collected one-third of its property taxes from the UP right of way, track and rolling stock.

Congress creates the Union Pacific

For the company and the nation, the primary motivation for building a transcontinental railroad was to get to the Pacific Ocean. The idea for such a railroad first appeared in a pamphlet in 1832, but gained more credence with the signing of treaties that opened up trade with China and Japan, and with the 1849 gold rush to California. Merchants and migrants wanted to speed the trip to California and Asia by avoiding the long ocean journeys via Cape Horn and the Panama Canal.

up3.jpgIn 1854, Congress created the Pacific Railroad Survey to study the viability of prospective train routes advocated by southern and northern states. Secretary of War Jefferson Davis sent out parties to identify routes at the 49th, 47th, 41st, 35th, and 32nd parallels. As a devoted southerner, Davis, who would later become the president of the Confederacy, preferred the southernmost route from New Orleans to California.

The 41st parallel report by Edward Beckwith built upon previous reconnaissance made by Howard Stansbury in 1851. On the advice of Jim Bridger, Stansbury had scouted Black’s Fork, Bitter Creek and a low pass over the southern Laramie Range via Lodgepole Creek and Crow Creek. In 1854, Beckwith identified Weber Canyon as a good route between the Green River Basin and the valley of the Great Salt Lake.

Many years later, Grenville Dodge, the chief engineer during construction of Union Pacific, claimed he discovered the pass over the Laramie Range in 1865 while being chased by a band of Indians. The story of the Indian chase is not substantiated by his journal entries from that day, but it does seem clear that he found the route that would become known as "the gangplank" for its even grade, and which Interstate 80 follows now from Cheyenne west to the summit of the Laramie Range.

The 41st parallel survey identified the route that would eventually be used by the Union Pacific. It offered both the shortest route west and the best crossing of the Rocky Mountains. But for the rest of the decade, railroad plans stalled because of tensions between North and South over where slavery would be allowed to expand in the West.

The secession of the Confederacy at the opening of the Civil War allowed the remaining members of Congress to take action on a transcontinental railroad. President Abraham Lincoln chose a northern route for the railroad, with Council Bluffs, Iowa, on the east bank of the Missouri River as the terminus. Lincoln did so at least partially because Dodge, a Union general and railroad engineer, had in the late 1850s shown him maps of a prospective railroad following the Platte River across Nebraska.

Lincoln was a loyal supporter of railroad construction. After the reunification of the Union and the abolishment of slavery, President Lincoln’s other major policy goal was the establishment of a transcontinental railroad. He had seen how railroads developed his home state of Illinois, and railroads had been among his most important clients in his Springfield law practice. Californians started agitating for a railroad over the Sierra Nevada in the early 1860s, and Lincoln wanted to ensure that California would maintain its loyalties to the Union.

up2.jpgup5.jpgThe federal government offers land and financing

Lincoln signed the Pacific Railway Act on July 1, 1862. The act created the Union Pacific, and subsidized the Union Pacific and already-existing Central Pacific railroads by granting 10 square-mile sections of land for each mile of track laid.

In 1864, a second Pacific Railroad Act drafted by Union Pacific attorneys doubled the land grant to 20 sections for each mile, which created a checkerboard of odd-numbered sections for 20 miles on each side of the line and amounted to 4,582,520 acres in Wyoming Territory. The grant also gave mineral rights under these lands to the railroad.

In addition, the government loaned the railroads $27 million, enough to cover half the cost of construction. The loan would last 30 years at a charge of six percent interest. The Union Pacific also sold $11 million of stock, and bonds totaling $30 million. Most of the investment came via financiers in New York who sold stock and bonds on the East Coast and in Europe. Investors included wealthy merchants from the China trade, Civil War financiers, and European nobility.

The chief financier and general manager of the Union Pacific was Thomas Durant, a vigorous self-promoter who seemed to care less about building railroads than earning money. Durant’s allies included Union Pacific President Oliver Ames and U.S. Representative Oakes Ames, two brothers from Boston who showered members of Congress with gifts of stock to gain favorable legal treatment for their line.

The paper value of Union Pacific stock far exceeded the actual capital valuation of the company, in part because the company sold its bonds on par, meaning an investor might buy a $10 bond for a discounted price of $6.30, the par value. This “watered stock” put shareholders at risk, since there was no guarantee their shares would ever reach the face value. Selling stock at par also made it difficult to pay back the government loans because companies didn’t have as much cash value as they claimed on the books. Such questionable financing, however, expedited construction.

The UP also fought territorial attempts to tax its land grant, which resulted in an 1875 ruling against the railroad on that question. The company surveyed its land very slowly to try to avoid taxation, and it didn't secure patents on land until interested buyers appeared.

The checkerboard pattern of ownership made few ranchers interested in purchasing the land, however, as they needed large, intact acreages to raise livestock in a dry climate. The UP floated a proposal to abandon the checkerboard by taking all the land within 20 miles on one side of the tracks and releasing all railroad land on the other side. The territorial government rejected the proposal in 1878, however, because it would create "endless confusion."

In the 1870s, the UP used its cars for shipping meat to packinghouses in Omaha and Chicago. A system of stockyards and slaughterhouses developed which enabled cattle grown on the Wyoming ranges to be shipped to Chicago for slaughter with the beef then transported in refrigerated cars to the East Coast and even to Europe. This helped create Wyoming’s cattle industry, which brought huge investment into the territory from the East and from Great Britain, and led to the construction of the lavish Cheyenne Club where cattlemen enjoyed fine dining and urban luxuries on the Wyoming high plains.

In 1884, the UP began selling some of its land grant acreages to prominent Wyoming livestock growers like F.E. Warren, the Wyoming Central Land and Improvement Company, the Swan Land and Cattle Company and George Baxter.

In 1886, Congress passed a law allowing the taxation of all railroad-grant land, regardless of whether final patents had been issued.


Key Dates

July 1, 1862

President Abraham Lincoln signs the Pacific Railway Act.

Date: 1862-07-01

December 2, 1863

Construction begins on the Union Pacific Railroad in Omaha, Nebraska Territory.

Date: 1863-12-02

November 13, 1867

Track laying crews complete the Union Pacific line into Cheyenne.

Date: 1867-11-13

May 8, 1868

Track laying crews complete the Union Pacific line into Laramie.

Date: 1868-05-08

December 16, 1868

Track laying crews complete the Union Pacific line into Evanston on the Bear River.

Date: 1868-12-16

May 2, 1869

The driving of the golden spike at Promontory Summit, Utah Territory, connects the Central Pacific and the Union Pacific and creates the first transcontinental railroad in the world.

Date: 1869-05-02

July 23, 1959

The last steam train makes a run from North Platte, Neb., to Cheyenne, ending the era of steam power on the Union Pacific and changing the working lives of the skilled laborers in Cheyenne’s steam locomotive shops.

Date: 1959-07-23

About the Author

Gregory Nickerson grew up in Big Horn, Wyoming, and holds a B.A. from Carleton College and a M.A. in history from the University of Wyoming. He lives and writes in Philadelphia.

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