Four Capitalists Who Created California
(Atlas & Co.)Collis Huntington. Leland Stanford. Mark Hopkins. Charles Crocker. They called themselves, humbly, the Associates. They created the Central Pacific to build the first railroad to reach across America. The biggest challenge --- and the best chapter in The Associates --- tells of crossing the Sierra Nevada."The numbers and logistics overwhelm, even now: in that first winter of 1865 - 1866, 13,500 men, mostly Chinese, were working. The payroll average was $450,000 a month."
The drifts were so deep that five locomotives coupled together could not push them aside. There were forty-four storms; temperatures dropped to thirty below. The hard granite in the tunnels bent steel drills like licorice. Ten inches a day was excellent progress. Many days saw the tunnel grow by only two or three inches.It is all very noble, this giant project. The real heroes weren't the Four, but the Chinese. In order to meet the requirements for federal monies, "the Chinese dismantled three locomotives and forty railroad cars and hauled them across the summit by sled, a feat Crocker likened to Hannibal crossing the Alps with his elephants.Rayner pauses in his narrative to praise Collis Huntington. "What he achieved, was 'extraordinary.'"
Here was a man who was writing the book, making it up as he went along, armed with no useful role models, no Harvard MBA, only with his hard nose for a deal and a canny instinct for the big economic weapon of the early industrial age: monopoly.
In all, the Associates built not one but two railroads to cross America, the Central Pacific and the Southern Pacific. They did it in the time-honored American way: buying state and local votes, stealing land, and most enriching, raiding the federal till. The Pacific Railroad Bill was pushed through Congress and signed by President Lincoln 24 June 1862. It --- and several subsequent bills engineered by Huntington with lavish bribes --- meant that the federal government paid for the whole project, rewarding the Associates with cash, bonds, military (to go after the Indians) and vast tracts of land across America. It was the biggest boondoggle yet.
What made it possible? The Civil War. The railroad bill was touted as "an urgent war measure, necessary for troop movement and to bind the western states to the union." It was monopolistic socialism of the highest order. Did the country benefit? Maybe. The Associates --- without a doubt --- hit the jackpot.
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It is hard for us to realize, a century and a half later, the power of the monopoly that Huntington and his partners built. They became the de facto government in Sacramento. They owned the California (and often, the federal) judges. If you were a businessman, and unless you wanted to ship your goods by horse-and-buggy over dirt roads, you did business with this legislated monopoly. "In Hankow, a Chinese merchant asked an American sea captain the freight rate for the pig iron he was shipping to Los Angeles."
The captain replied that the rate was $6 a ton: $4 went to the ship owner to take the iron all the way across the Pacific, and $2 to the Southern Pacific for the haulage by rail from San Pedro to Los Angeles.
"'Ah!' said the Chinese merchant. 'Los Angeles must be far inland.'"
Rayner offers one way of viewing the Associates: they "created wealth and opportunity, not just for themselves, but for everybody." But in the process, they bought and sold whole governments, ruined lives, and withdrew to their grand homes to live like kings. "The building of the railroad, the creation of a state, and the invention of big business as we now understand it were merely the necessary by-products of a process by which these four men became as fabulously wealthy as anybody in American history."
Later they sanctioned murder and were able to paint themselves as civilization-changing philanthropists, but only because by then they'd bought enough newspapermen and historians to make such a recasting of events even remotely plausible.