History of Rail Transportation in California - Corruption and Scandal

Corruption and Scandal

In 1901, Frank Norris vilified the Southern Pacific for its monopolistic practices in his acclaimed novel The Octopus: A Story of California; John Moody’s 1919 work The Railroad Builders: A Chronicle of the Welding of the States referred to "the American railroad problem" wherein the men who rode the iron horse were characterized as "monsters" that too often suppressed government reform and economic growth through political chicanery and corrupt business practices.

While it is true that much of the traveling public would have been unable to make the trip to California's sunny clime were it not for the fleet, relatively safe, and affordable trains of the western railroads, it is also true that those companies in effect preyed on those same settlers once they arrived at the end of the line. For instance, while the railroads provided much-needed transportation routes to out-of-state markets for locally produced raw materials and avenues of the import for eastern goods, there were numerous instances of rate fixing schemes among the various carriers, the Santa Fe and Southern Pacific included. Opposition to the railroads began early in Southern California's history due to the questionable practices of The Big Four in conducting the business of the Central (later Southern) Pacific. The Central Pacific Railroad (and later the Southern Pacific) maintained and operated whole fleets of ferry boats that connected Oakland with San Francisco by water. Early on, the Central Pacific gained control of the existing ferry lines for the purpose of linking the northern rail lines with those from the south and east; during the late 1860s the company purchased nearly every bayside plot in Oakland, creating what author and historian Oscar Lewis described as a "wall around the waterfront" that put the town’s fate squarely in the hands of the corporation. Competitors for ferry passengers or dock space were ruthlessly run out of business, and not even stage coach lines could escape the group's notice, or wrath.

The Northern California railroad barons also effectively slowed San Diego's development in the early 20th century. San Diego had a natural harbor and many thought that it would become a major port on the west coast. However, San Francisco was strongly opposed to this as San Diego's development would hurt their trade. Charles Crocker, the manager of Central Pacific Railroad was quoted as saying: “I would not take the road to San Diego as a gift. We would blot San Diego out of existence if we could, but as we cant do that we shall keep it back as long as we can.” Instead, the Central Pacific only extended their rail route into Los Angeles."

Competition between carriers for rail routes was fierce as well, and unscrupulous means were often used to gain any advantage over one another. Santa Fe work crews engaged in sabotage to slow the progress of the Denver and Rio Grande Railroad through the Rockies as the two fought their way toward the Coast; the Santa Fe (in conjunction with the California Southern) would win the race in establishing its connection to Bakersfield in 1883. Some eleven years earlier, the Southern Pacific essentially blackmailed the then-fledgling City of Los Angeles into paying a hefty subsidy to ensure that the railroad’s north-south line would pass through town; in 1878, the company would be rebuffed in its attempts to extend its Anaheim branch southward to San Diego through Orange County's Irvine Ranch without securing the permission of James Irvine, Sr., a longtime rival of Collis Huntington. The Southern Pacific would similarly block the westward progress of the Santa Fe (known to some as the People's Railroad) until September 1882, when a group of enraged citizens ultimately forced the railroad's management to relent. Numerous accounts of similar "frog wars" and other such tactics have been recorded throughout California's railroad history.

Perhaps the most notorious examples of impropriety on the part of the railroads surround the process of land acquisition and sales. Since the federal government granted to the companies alternate tracts of land that ran along the tracks they had laid, it was generally assumed that the land would in turn be sold at its fair market value at the time the land was subdivided; circulars distributed by the SP (which was at the time a holding company formed by the Central Pacific Railroad) certainly implied as much. However, at least some of the tracts were put on the market only after considerable time had passed, and the land improved well beyond its raw state.

Families faced with asking prices of ten times or more of the initial value more often than not had no choice but to vacate their homes and farms, in the process losing everything they worked for; often it turned out to be a railroad employee who had purchased the property in question. A group of immigrant San Joaquin Valley farmers formed the Settlers' League in order to challenge the Southern Pacific's actions in court, but after all of the lawsuits were decided in the favor of the railroads, one group decided to take matters into their own hands. What resulted was the infamous Battle at Mussel Slough, in which armed settlers clashed with railroad employees and law enforcement officers engaged in eviction proceedings. Six people were killed in the ensuing gunfight. The Southern Pacific would emerge from the tragedy as the prime target of journalists such as William Randolph Hearst, ambitious politicians, and crusade groups for decades to follow. Leland Stanford's term as Governor of California (while still serving on the SP's board of directors) enhanced the corporation's political clout, but simultaneously further increased its notoriety as well.