The Railroad Act of 1862

During the winter of 1861-62, Judah worked tirelessly for legislation to aid the Pacific Railroad. So did a group of eastern promoters who hoped to build west from the Missouri River. President Lincoln, convinced not only of the military benefits of the road but also of its necessity for binding the Pacific Coast to the Union, strongly supported the campaign. With no prospect of a southern route being adopted and with no Southerners to oppose a northern route, Senators and Representatives had little difficulty agreeing on the terms of an acceptable bill. During May and June 1862 such a bill successfully made its way through Congress and on July 1 received the President's signature.

The Railroad Act of 1862 threw the support of the United States Government behind the transcontinental railroad. It authorized the Union Pacific Railroad, the first corporation chartered by the National Government since the Second United States Bank, to build westward from the Missouri River to the California boundary or until it met the Central Pacific. (Congress fixed the longitude and the President named Omaha the terminus.) The act also empowered the Central Pacific, which already had a charter from California, to push farther east and connect with the Union Pacific.

Government aid took the form of land grants and subsidies. The road was to have a 400-foot right-of-way through the public domain, plus 10 sections of land for every mile of track. These were alternate sections, five out of every 10 on each side of the track, or one-half the land in a belt 20 miles wide. For each mile of track completed, more over, the companies were to receive 6-percent, 30-year U.S. bonds, principal and interest repayable at maturity, which were to constitute a first mortgage on the railroad. The bond subsidy was fixed at $16,000 a mile east of the Rockies and west of the Sierras, $32,000 a mile between the mountain ranges, and $48,000 a mile in the mountains.