Railroad from the west and the Union Pacific railroad from the east met upon a summit in utah. It was here on may 10th, 19 1859 that Leland Stanford wrote broke the last site, also known as the gold site joining the rails of the Transcontinental Railroad and forever linking Stanford University to this transformational event and the changes it brought to california and the nation. The completion of the Transcontinental Railroads connected the vast expanse of the United States with safe and convenient transport. Reducing coast to coast to travel from six months down to one week. In addition the railroad evoked social change through migration, Economic Growth and the introduction of Chinese Labor to the west. While at the same time delivering a death blow to the way of life of the plains indians. Another of the consequences was great wealth to the big builders of the roadway. Among them california senator Leland Stanford. This fortune and the land that Leland Stanford purchased with it was later to become the foundation of Stanford University where we gather here today. In partnership with the stanford continuing studies program, the Stanford Historical society, we are pleased to bring you today symposium reflecting on the 150th anniversary of the completion of the Transcontinental Railroad and the legacy. Today you will hear from some of stanfords most distinguished historians. From tales of robber barons and the daily soils of laborers, two stories of the nations expansions and the birth of a pioneering university. We hope you will enjoy this multifaceted reflection. To begin our program whether you call them robert barons or entrepreneurs, venture capitalists or crooks. Or influential men of the 1800s were behind the building of the Transcontinental Railroad. Professor white will begin our story with a view of these men who came to be mounted came to be known as the big four. Richard white is a historian of the United States specializing in the american west, the history of capitalism, environmental history, history and memory and the native american story. He is a macarthur fellow and a distinguished professor. His work has won numerous academic prizes and he has twice been a finalist for the Pulitzer Prize. He is the past president of the organization of american historians and the author of influential books on the american west, native americans, railroads and environmental history including the republic for which it stands, the United States during reconstruction in the gilded age, and the middle ground indians in the great lakes. His study of capitalism in the development of capitalism in the late 19th century is viewed through the lens of examining the construction of the Transcontinental Railroad chronicled in his book railroaded the transcontinental and the making of modern america. Which was a finalist for a Pulitzer Prize and won the Los Angeles Times price for history. Richard is the professor of American History at Stanford University having previously taught at the university of washington, university of utah and Michigan State university. Please welcome professor richard white. [ applause ]. I am often accused of having 21stcentury views, the associates the the big four called themselves but that is actually not true i have a cynical 19thcentury view of the associates. And im pretty much in line with Charles Francis adams who is president of the Union Pacific and worked intimately with the big railroad men of the era including the associates. The easiest way to characterize them is simply to quote adams. I have known and known tolerably well a good many successful men. Men famous during the last halfcentury. What is interesting crowd i do not care to meet again. Either in this world or the next. Nor is one of them associated in my mind with the idea of humor, thought or refinement. A set of mere money getters and traders, they are essentially unattractive and uninteresting. The evaluation of individuals associates is much the same. To San Francisco, the most famous writer in the 19th century who probably had the sharpest tongue in california, he wrote that of our modern thieves mr. Huntington is a surviving 36. Huntington was a thief, this was also right he was a very, very good one and formidable one. When it came to life and death, it was the one next to huntington the most powerful of the associates and here i will have to start showing you who they are that is huntington. This is mark hopkins, the golden age of facial hair. And hopkins had a metaphorical cut, which i really admire, when he was sick with his last illness he took his dr. Who was a chinese herbalist and put him on his private car in the railroad train. He brought it to the end of the line and the southern pacific when they reached the end of the line hopkins died. I have never really warmed to the other associates. So Charles Crocker who you will hear about in other instances was really a large lucky thug who is sometimes his partner and sometimes his enemy memorialized him and what the classic 19th century executives which is much better than 20th century he called crocker a living, breathing, waddling a monument to the triumph of vulgarity, viciousness and dishonesty. [ laughter ] Leland Stanford whole career inspired a litany of dismay exasperation and disdain and it came from his own associates. The associates came to hate each other. Huntington once wrote i wish you would tell me to correspond with in california when i want anything done because i have become thoroughly convinced that there is no use in writing to you. It was not huntington noted rarely to do business with them or to do anything. The other associates shared his disdain. The writing of stanford is a chronicle of amazement, dismay and an irritation in his laziness, arrogance and ineptitude. Marcotte fins that stanfords key quality was his ability to combine laziness. Im not making this up, i am just quoting. He could do what hopkins told huntington some necessary task not with more mental effort that is agreeable to. They were not railroad men. They came to own the railroads because experienced railroad men would not touch the transcontinental. Nor do they have much money at risk. Initially they did not have much money at risk because they did not have very much. Their total net worth when they started investing in railroads was only about 350,000. Initial investment was 7500. The total investment probably at the beginning of the building in Central Pacific was around 20,000. And this is not a railroad for this is a rumor that will cost 100,000 a mile. They make their money by financial speculation, financial maneuvers and construction. They do not have a lot of money initially at risk in these railroads. And the result is they already become the most hated man in california. I could drew some cartoons because this gives you a sense of what goes on. This will be the Central Pacific, this is the california area which is exploiting and keeping people out. This is proctor and Leland Stanford milking california dry, that is the root of california here, these are the railroads as the caption says sucking her dry. This is three of the big four, the three were still living at the time writing the railroads, keeping on the railroad in one hand and the legislature in the other hand. And corrupting california. My interest is in this part. How these railroads work, how they made their money and what was in this part that you will hear about later, mostly ends with the driving of the golden spike the railroad construction, the job is done and it is time to move on. But i am less interested in the building of it and how it actually operates. How it works in california in the 19th century. So, this is where usually the culmination of the story end. The meeting of the Promontory Summit. You have all seen these pictures, youre going to see them again, you will see them over and over again for next year during this centennial. I will just skip over those to get more into this which is the railroad actually an operation. Now the best way to see the transPacific Railroad is and the equivalent of modern california highspeed rail. I dont mean this as a good thing. Its a route went from nowhere to almost nowhere and it had very little track. It is a regional route from sacramento, as you can see here it ends in sacramento, it doesnt end in San Francisco, it doesnt reach the bay and it doesnt even reach out to anyplace else, it reaches promissory summit. Promontory summit is what you just saw, a major defining thing about Promontory Summit is that once these people celebrate the Railroad Going away there is absolutely nothing out there. There is in sacramento but sacramento is a minor outpost to the bay area for three quarter of californias population lives in the bay area. It also has this problem, this is the Central Pacific, it is not great resolution but what you can see this is a very small engine. You can see theyre running on what. Wood. They do not have a good coal supplier, and they cannot really haul much over the sierra nevada. This is not a very good technique for moving goods back and forth, but that does not make a whole lot of difference because there are no goods to move back and forth. Collis potter Huntington Wright is a rate country west of the Rocky Mountains and very people on this side, hes talking about the east, know how little business there is there. Even in california, the regional route to sacramento and the state line is about the worst that you can imagine in terms of traffic. You can drive it today, go up through donnas pass. There is not a lot. There are major agricultural areas, there are minor areas that does not generate a whole lot of traffic. Certainly not enough for a railroad built at this time. But the associates do not build, they build for government grants and government guaranteed bonds mostly for guaranteed bonds and the subsidies that they would get from the federal government. The railroad existed during the early years as a vehicle to sell bonds and if possible to sell land. Initially, it is important i am exercising the showing of bonds because nobody will buy the stock. Their initial stock sales are very, very small because it turns out this is who is going to invest in the railroad that has the problems i just described . But it turns out this works in their advantage. The problem with selling stock is that stockholders get to see the books. And once the big four realized the money will come in from selling bonds to easterners and europeans, then in fact they do not want anybody to see the books. The danger is from a man like sam brand, early in 1870s he was a mormon who was in california when gold was discovered, sparked the gold rush i walking through San Francisco waving his hat holding a vial of gold and shining gold, gold, gold from the american reversal. He invested in the railroad. And he goes to stanford realizing he is not going to get much of the return from the stock and asks stanford to buy the stock back up. And stanford made one of his expensive mistakes. He brushed him off and in effect he walked to the streets of San Francisco crying fraud, fraud, fraud in the Central Pacific pacific and he suited to knighting a full Financial Accounting of the Central Pacific. It terrified the associates. They had to do was suppress any other suits that would follow. Here it turned out their greatest ally was misses graham who was divorcing sam brand historic and she got his stock in the divorce settlement and the associate about it back from her at 850 a share. 8. 5 times what he had paid for it, and many, many, many times what it was worth except as something that could be sued. They called it a black male, they were afraid anything that would force them to give an accounting of what they were doing in the Central Pacific. Even though i didnt go through, and alarmed the bondholders bond sales that they are trying. In the early 1870s with the associate were left with is is an indebted railroad badly built, much of it will have to be rebuilt and very little traffic. It is not something that brings a boom to california. Californias growth slows after the completion of the transcontinental. Iowa and all the others grow much more quickly. In california, nevada, the other states it goes through actually lose population after the completion of the railroad. So the question is why didnt this road it just go bankrupt like so many other transcontinentals . The short answer is that in nearly dead. The first plan was to sell out that that was their original plan. Build this thing, milk it and then sell it out. The problem is nobody will buy it. Those with money and San Francisco had loaned money to the associates and they had some idea of what was up for sale and they would not touch it. In 1873 things get worse for them because congress is going to investigate the company designed an Insider Company that works with the Union Pacific. It also was going to take the equivalent company from the Central Pacific which was the contract and finance company. Both are inside of Construction Companies designed to build railroads at inflated prices and siphon the money off into the builders pocket which would be the associates and the other one is to sell bonds and pocket much of the funds. The scandal is going to drive the Union Pacific into bankruptcy. Congress is also after the contract of finance company, but the associates have an effective very simple but effective strategy. They destroy the books. And with the depression of 1873 congress turns. Not a danger, depression is not a good thing for people completely in debt which is what happened to the Central Pacific and they will teeter on the edge of defaulting on a note or loan which will bring the whole period of debt tumbling down on them. The best description was going on as a notation from Collis Potter huntington in september of 1893 hes overwhelmed by work and worry and says i stay in my office not knowing just what to do. They survived because they throw their bankers, to the wolves. The wolves are bigger bankers. And when the wolves close in on them, many of them find out that they hold stock, a 19th century word which means that when the Central Pacific took out a loan they gave stocks or bonds to their bankers as collateral. Then the ipod the bankers then take the same stocks and loads and get a loan on the and gives it to another banker to another banker all the way and all of the loans resting on the same worthless piece of paper. The bankers realize this as they drive the Central Pacific down they will lose the time and make an accommodation. Into the 1870s they have shown a survival rate for survival and fraud but not much else. And they will be the first to admit they know nothing about running a railroad. On the difference between them is that huntington admitted it. He tells general manager in 1880 when the Central Pacific was well into the second decade he quotes i have very little knowledge of the details of operating railroads. This was not false modesty. Stanford knew even less. This is the place they are talking about when in fact there is no traffic. I will come to any second. If we go there first. Stanford hobsons and cropper crocker created an uproar you can look at these they look like small villages perched on the top ofhill. So how in the world that people with the money losing railroad manage to get enough wealth to build houses like this . Huntington thought this was a huge mistake of building these. But he tried to justify it with what seemed to be another huntington lie. He said that he and his associates had made no money from the central Pacific Railroad. This was true. One huntington told the truth it is always best to investigate carefully. They made money from the contracting finance. Which is why they destroyed the books. The contract and finance company was the inside Construction Company the one that paid extravagantly for construction, the one that allows bonds and stocks and other collateral to siphon off into the associates pockets for which they use for taking out loans. Most of the assets remain in bonds and stocks. At some point all of this is going to have to get something that will get them out of their trouble. And they will get a railroad that can help them reach their debt. But it is not the central Pacific Railroad. By the 1890s and the central Pacific Railroad is going to be divided into two streaks because he never repaid back their loans, they said fine take it, it is worthless. What you have is the southern Pacific Railroad. That will come to control the central Pacific Railroad. It is in fact going to be a california monopoly. This is the southern pacific not the Central Pacific. What it does is take the weakness of the transcontinental and turn them into a spring. The weakness is the transcontinental cannot compete, this is the thing people do not understand about these railroads, they cannot proceed. It is going to be, two routes you can do it with one the most important, you put them on the ships, take them to panama, you unload and then you get it into the golf of the east coast port. There is no way in the world that the railroads can compete with this and that is what they are, all these are freight railroads they are not passenger railroads. And this is outrageous. Trying to compete with the Steamship Companies says it is outrageous in such a low place. Very little has changed by the late 1880s Francis Adams testifies before the Pacific Railroad commission. Reduce the race until it is worthless to us and yet make something itself traffic to the east coast anytime the Pacific Railroad as i do this they could have bankrupted the Central Pacific and later the southern Pacific Railroad. Why didnt they do so . The first part of the answer is you lazy and corrupt corporation the second part is that in fact what the associates did was pay them a subsidy. Recognize what is going on here the United States government has no subsidized the Central Pacific and Union Pacific railroads in order to go across the United States. That rather than take her the other subsidies to help pay for the Steamship Company so that it will raise its rates across the u. S. More expensive so they can make some money. That is the Business Model of the Central Pacific and southern pacific in the 1870s and 1880s. And this doesnt even come into the major stories of traffic in california. California grows, that is the bulk of the traffic no doubt. The southern pacific gets to be this monopoly. Losing my options here. Because this control is San Francisco. Pretty much in the southern pacific what it does until the 1890s as bring them to San Francisco, put them on ships, take them off the ship to San Francisco and distribute them out to california. They are a monopoly, traffic moving into california and it will move the transcontinental which is going to move through. This is where some of the 1770s, 1780s. This is the way that the railroad works. They are a monopoly because they are a monopoly. Working out of San Francisco. Now, the contract is going to be replaced by the pacific and provement Company Whose nickname among the railroad is the personal interest company. Both of them operate on the same model, the allow insider dealing which allows the associates to funnel profits out of the southern pacific and put them into their own pocket. My favorite how you do that is a specific improvement. The Central American railroads, all kinds to the main roads, and they get stocks and bonds, nobody will buy the stuff. What they do with it, they market the paper, put up as collateral for a loan. Who do you borrow from . The southern Pacific Railroad. They loaned the insiders the money, get the collateral and returned, and guess what . The associates do not pay their loans. The railroad gets to keep the stock and bond. And they get to keep the money, that is who you funnel money out of one corporation into another corporation and you keep the southern pacific at a much weaker state than otherwise would. Now the problem with being a crook is other crooks. In the early 1870s huntington had heard from his associates that john miller the secretary of the contract finance company was a great man and an honest one. Huntington was suspicious of everyone because since he stole he thought everyone was stealing from him. Before closing down the finance company and forming a new company they examined the book. They knew they did not Want Congress to find in those books. They were surprised. It took him only a few hours to find where he had stolen 300,000. He took 750 900,000 because the books were so corrupt they never know exactly how much he stole. By then miller was also missing. Lest the employer the defendant entirely. He went away and was brought back to explain. Even more to explain in the missing months. John miller turned that was not really john miller, he was ambrose woodruff. The associates got back roughly 400,000 but the rest was gone for good. They never processed it. He knew too much. The contract and finance company was, as huntington later told his nephew henry, an allotment corporation that ever lived in huntington would know. The books i needed to convict miller and woodruff are the same books that had the potential to convict the associates of congress. They go into the 1880s with men who have increasingly grown to detest each other because their interest emerged in these companies they cannot get them out, everything. They can never, ever be rid of each other that they will try very hard. And because they do not trust each other, what they do is they staff the railroads and part with relatives because they think that sometimes longley that their relatives are the only ones they could trust. With they become is a corporation which is not a modern corporation or maybe it is. It is a victorian recrimination and. This man is going to bring out the dirty laundry. Wait a minute, that is the wrong name. So i do not have them. He will bring out the dirty laundry. He is the last of the associates, he comes in later. And he learns, holton feels from the contract of finance. They discover what he has done after his death, he drops dead, they steal it back from his widow. He wants to get some money back again and that is the trial which then leaks. Huntingtons private correspondence all over. And reveals much of what they have been doing the subsidy bribery of congressmen, the insider dealing and all this comes out and creates a great scandal. Dirty laundry is widely known. Meanwhile, they never did pay back the government loans. Hopkins highs, his wife marries the interior decorator. Her adopted son, their adopted son Timothy Hopkins is disinherited. He blackmails his mother and stepfather which means by our terms he was , blackmails his new stepfather for being and gets back a part of his inheritance. Huntingtons wife dies, he marries his interior decorator. Later when huntington dies his nephew henry has become his righthand man divorces his wife and marries her window and creates the library where much of the material im talking about comes from. In los angeles. The death of Leland Stanford junior seems to bring reconciliation between huntington and stanford until stanford buys. He taken a very good and corrupt senator and replaced him with a very bad center. Southern pacific is going to face bankruptcy again in the 1890s. Eventually it will become solid and a true transcontinental but really prosperity comes when is controlled as a transcontinental. That is the short story. Of what happens with the Central Pacific and the big four. What they do is create some of the institutions in modern california. We are sitting in Stanford University but there is a long tangled story there that is beginning to understand that i will not go into that. The huntington library. Im always puzzled about this by most 19thcentury bureaucrats, no direct line, a drug line into stanford that ends with waylon junior. No direct line for the huntingtons so there are rumors about that. No direct line, they all died. Which leaves us probably a way to end the talk, that might be the greatest gift to the state of california. Their children had lived, the institutions they endowed would not exist so thank you. [ applause ]. Thank you very much. That is not quite the lecture i expected this morning. All this . Peter duda is the engineer and his original map was Something Like 80 or 90 feet long. You can see it, i think we have it up online. But he is the first one to take out the map of what will be a practical line for the railroad to get over the sierra nevada. It is a practical line so you can get over it, it is not a practical line for making any money. Judah himself comes to this comes to distrust the other associates and the rumor is, it is unclear, he went back to negotiate with the vanderbilts who are railroad people. To buy out Central Pacific and you can see these guys are going to make a mess of it. But he also catches a yellow fever on the way back and dies. He is going to be in terms of technical skill one of the few who knew something about building a railroad b dies very, very quickly and from everything we can see he was attempting to get out when he died. And it huntingtons correspondence you will see a great feel of begging letters some of which are from his widows. They will give her money, but she has to ask. I grew up in california and this was not the history we learned in the fourth grade. How did the reputations get so rehabilitated. That is actually a much more complicated question than you think it is a. This may be an active attempt, partially coming out of this university to rehabilitate their imitation because he did two things, destroys. The bad thing is you never destroy your own papers because always like to the other side of this. Stanford itself is going to try to make it, he becomes a great donor for the state of california. You hook them out hook them up to the death of leland junior and by the 1930s theres going to be a change to the inventive entrepreneur. Sort of model that. The problem is i never called them a robber baron because robber baron means they are powerful, manipulative and they know what they are doing. My guys do not know what they are doing. That is not what is going on here. The second thing is nobody looked at the books. It is one of those things, we do not like to do the hard stuff, who wants to go to these kind of financial records to put them back together . It is there when you look, economists had looked at it, but by and large historians had not paid a whole lot of attention it is much easier just to do the building and the story there. We also know that any good story depend on the ending and the proper ending is always going to be what happens with Central Pacific. Triumph strands, we move on. Keep going and the fact that the train goes over a cliff cliff, nobody messes them. It sounds to me like a lot has happened in the 1870s and 80s with all of the Insider Trading and the different corporations and siphoning money out, but nobody knew what they had, very similar to what happened in 2008 when crashed and none of the banks knew what they had. I had heard your talk before and [ laughter ] and how the Central Pacific, we understand everything youre saying about the Central Pacific but in the early 50s our family moved to roseville. At the time and had the Worlds Largest iceman, the reason for that when they were shipping california produce to chicago, they put ice in each end of the car and the breeze over the ice caps stuff cool because that was before they could afford air conditioning. Also had a huge butcher, when a traffic start going over the Central Pacific route . Somewhere, but you identified, it makes the reverend profitable is the ability to move food to the east coast because you cannot put that on a steamship and send it to the tropics because it will rot. What you have california orchards that becomes the most lucrative traffic and that is why you can go back to the early 20th century you can see the wonderful posters the southern pacific trains running through orange orchards. That is what makes this a profitable railroad. The problem is he built the road in the 1860s, it is like building a house and deciding not to move into it for 35 years. Curiosity. How did the government adjudicate between the 200 miles of parallel track and sent turn central and Union Pacific built before they finally agreed to a Meeting Point . How did the government decide subsidy for the track . 200 miles of farewell truck. You think you can possibly guess. There are two sets of parallel track one which will be with the Union Pacific which was never fully built and the government will give that to the Union Pacific as i recall. Theyre also going to subsidize the track that Central Pacific is going to build but that is when congress decides to do it. Hi i am a retired fourth grade teacher. [ laughter ] and i do, in fact, teach more like Stephen Ambrose description and of course your description. History repeats itself. And your description of the bonds and stocks being worthless is so reminiscent of our nation in 2008, 2007. It is frightening. My question for you sir is simple, i understand palace huntington, Collis Potter huntington it was not very honest when it came to sitting freight rates and farmers to move things, could you address that. You want to look at this visualization. Because special history lab. You can see the way they done this it is very, very clever. The first thing you have to do is move up and down the rivers. And that is the first thing that they do. They set rates well enough to drive them out of business because you can always move much safer. Once you control that, you need a second set of rates which we visualize how they do it, it is going to make it relatively cheap for wheat growers to move wheat into San Francisco because they want to keep the rates down there. But, all of those wheat growers need all the supplies and everything for their farms coming out of San Francisco. Those rates are extraordinarily hot. What they do is they draw people into weeds growing and then they take the money back with high rates coming out of San Francisco. Once you control rates you control spending. We all know this, we know it is time, it is money, going into San Francisco from here came with frustration, be more expensive. Central pacific and southern pacific simply arrange the rates to make prices oneway going one way and further way going another way. They are not alone. This is why merchants hate them. Everybody hates him. I think 20th Century Airlines learned from the 19th century railroads. Two questions, number one why did they extend the railroad from sacramento to San Francisco originally and second question what were the actual routes and southern pacific. The reason they do not do it initially is because good steamship traffic between San Francisco and its very difficult to build a railroad through there. You go to the edge of the delta and other issues. They are going to put on steamships here but it cuts them off, he realizes very quickly that is a mistake and has to do some very expensive buyouts because everybody else realizes their mistakes and starts Building Local railroads. Really simple, people look at it and you go through deserts in arizona down to mexico and into texas, all that is pretty flat. And it is going to terminate in new orleans. Where can begin with this compete compete with the steamship traffic the southern pacific is going to take a while to be built, really a california monopoly before he becomes a full transcontinental but mostly this is going to be the best way to get around the sierras is literally get around the sierras and not go over them. [ applause ] American History tv products are now available at the new cspan online store. Go to cspanstore. Org to check out what is new for megan history tv and all of the c span products. Live thursday on the c span networks, President Trump speaks at the air force Academy Commencement and Colorado Springs at 12 30 p. M. At 2 p. M. A discussion on russias role in the middle east. At 4 30 the u. S. House protease session where democrats may try for a third time to pass the Disaster Relief bill. On cspan 2 a look at standards and oversight or artificial intelligence. At noon a forum on athletes and activism posted by the atlantic. And on cspan3 at noon a look at state Budget Priorities and tax revenue. At 1 30 p. M. The acting deputy secretary of defense talks about the pentagons current 750 billion budget request. The complete congress is now available, it is lots of details about the house and senate for the current session of congress. Contacts and bio information about every senator and representative, plus information about congressional committee, state senators and the cabinet. The 2019 congressional directory is a handy spiral bound guide. Order your copy from the c span store. Next we traveled to the summit in utah to learn more about the Transcontinental Railroad completion in may of 1869. We are at the summit in utah and the Golden Spike National Historic site, walking you over to the Transcontinental Railroad was completed. This spot