# Oregon Historical Quarterly/Volume 7/The Genesis of the Oregon Railway System

THE GENESIS OF THE OREGON RAILWAY SYSTEM.
By Joseph Gaston.
It is not intended in this first paper to present a complete history of the railroad development of the State, but rather to outline the events which, following each other in a natural and evolutionary way have in spite of the opposition and mismanagement of men in control, resulted in a railroad system which is entitled to the name of "The Oregon System." And if it may appear to some readers that small details are treated of in the beginning of the great work, yet that possibly may be excused as being quite as interesting to the student of history as the much larger events of a later day. And although this system, now apparently divided by the line of the great river of the West, the work of many opposing interests and diverse minds is yet forced by the decrees of nature to work towards one general end and purpose, and so promoting the vast interest of commerce and transportation, that the welfare of the teeming millions that are to fill up the great Northwest will be benefited thereby.
The first steps to build a railroad in the State of Oregon, followed up by connected and continuous efforts and organization, were taken at Jacksonville in Jackson County in October, 1863. Sporadic meetings had been held and ​corporations formed prior to that time in several places in the Willamette Valley proposing to build railways, but nothing had resulted but talk not worth recording. That the first substantial effort to develop the State by railroad transportation should have taken form at a small interior town three hundred miles from a reliable seaport is quite remarkable, but not unreasonable. Jacksonville was the county seat and trade center of the beautiful Rogue River Valley which has been more benefited by railroad transportation than any other community between the Columbia River and San Francisco Bay. Steamboats could run up the Sacramento River one hundred and fifty miles from San Francisco; and other boats could get up the Willamette River one hundred and twenty-five miles from the ship landing to Eugene, and teams, pack trains, and stage lines could serve a limited trade and population in all the region on the north and south route between these river-boat termini. But limited to these pioneer transportation facilities the trade and population of all this region must forever stand still. There are in what is known as "The Rogue River Valley," of which Jacksonville, Ashland, Talent, Medford, and Gold Hill are trading points, about a million and a quarter acres of fine agricultural, timber, mineral and grazing lands, and of which in 1863 not more than one tenth had been taken up by actual settlers. The pioneer farmers saw the necessity and the immense benefits to be gained from a railroad which should pass through their valley from Portland to San Francisco, and resolved, although poor in purse, to make the best effort they could to secure such a road.
In the spring of 1863 S. G. Elliott, of California, had arranged with George A. Belding, a civil engineer, of Portland, Oregon, to make an instrumental survey for a line of railroad from Marysville to Portland, on their joint account. They commenced their work at Marysville ​in California in May and reached Jacksonville in October. Before reaching Jacksonville they had sent forward a letter to the writer of this paper, then residing at Jacksonville, requesting him to canvass Jackson County for aid in paying the expenses of their survey, which work he performed. Upon reaching Jacksonville, Elliot and Belding disagreed as to which of them should have control of the line of survey through Oregon; Mr. Belding claiming that under their agreement he should select the route, and Mr. Elliot as stoutly claiming that as chief of the party and the original proposer of the undertaking he was entitled to such control. But the question which proved fatal to the ambition of both gentlemen was the fact that their party of twelve men had received no pay for six months and there was nothing in the treasury to further subsist the men and teams. The whole party was stranded and their proposed railroad venture wrecked. Mr. Elliot left the party in possession of all its equipment and returned south to California, and Mr. Belding also left and proceeded to his home in Portland, and this ended the connection of both gentlemen with this preliminary survey.
The subscriptions in aid of this first work on an Oregon railroad (not considering mere portages on the Columbia), and the first money expended in the actual construction of such road, followed up by connected and continuous work until the road was in operation, were contributed by the following named persons: C. Boxlery, John Robison, D. E. Stearns, G. Naylor, John Holton, M. Michelson, R. B. Hargadine, E. Emery, Lindsay Applegate, O. C. Applegate, John Murphy, J. C. Tolman, P. Dunn, H. F. Baren, Enoch Walker, Wagner & McCall, B. F. Myer, W. C. Myer, W. Beeson, J. G. Van Dyke, John S. Herrin, Amos E. Rogers, John Watson, Emerson E. Gore, M. Riggs, William Wright, Frederick Heber, S. B. Vandike, John Coleman, Joseph A. Crain, J. T. Glenn, Wm. Hesse, W. K. Ish, H. A. ​Breitbarth, McLaughlin & Klippel, W. H. S. Hyde, John E. Ross, Aaron Chambers, Mike Handly, Granville Sears, R. S. Belknap, U. S. Hayden, John Neuber, H. Ammerman, Beall & Brother, Wm. H. Herriman, Haskell Amy, Alexander French, Albert Bellinger, James Thornton, Woodford Reames, E. K. Anderson, D. P. Anderson, Joshua Patterson, D. P. Brittain, J. V. Ammerman, Plymale & Bros, and Joseph Gaston, all residents of Jackson County.
Upon consultation with the above subscribers to this fund the writer of this paper was appointed agent to collect and disburse the money subscribed by these men in subsisting the surveying party until May, 1864, and to procure further subscriptions along the proposed line to continue the survey north to the City of Portland, and to organize a company and apply to Congress for a grant of land in aid of the construction of a railroad from the Columbia River to San Francisco, passing through the Willamette, Umpqua, and Rogue River valleys; and in pursuance of this authority this original subscription of money in aid of such railroad was collected, the surveying party subsisted in Jacksonville until May, 1864, when it again took up the line of survey where Elliot and Belding had abandoned it, and under the supervision of Col. A. C. Barry it was extended to Portland, which point was reached on October 1, 1864. To carry on the business part of the undertaking and present the proposition to Congress a company was organized under the name of "The California and Columbia River Railroad Company," and of which J. Gaston was made secretary, and A. C. Barry, chief engineer. The results of this survey were then (October, 1864,) laid before the Oregon legislature, then in session, and a bill, prepared by the secretary of the company, was introduced in the Senate (S. B. No. 14), which provided for granting to a railroad to be ​constructed through the Willamette, Umpqua, and Rogue River valleys, the proceeds of the half-million acres of public lands granted to Oregon for internal improvements. This bill was referred to the Senate Committee on Corporations, which reported the proposition back by recommending the passage of an act to levy a tax of one mill on the dollar on all the taxable property in the State, and apply the proceeds of such tax to the payment of the interest on the construction bonds of a company to build the proposed road. The bill became a law, but was never utilized.
Immediately following the legislature Colonel Barry prepared a report of his survey, with maps and profiles of the line, which, together with a report on the Resources of Oregon (the first ever made), prepared by the secretary of the company, was laid before Congress at the opening of the session in December, 1864. Prior to this in the winter of 1863-4 Hon. C. Cole, M. C., from California, had introduced, in the House a bill granting lands to the California and Oregon Railroad Company to aid in building a railroad from the Central Pacific Railroad in California, through the Sacramento and Shasta valleys to the northern boundary of the State of California, and to such company as the Oregon legislature should designate from Portland, Oregon, through the Willamette, Umpqua, and Rogue River valleys to a connection with the said California road at or near the State line. On being apprised of the work going forward in Oregon in aid of this enterprise Mr. Cole addressed the following letter to the Secretary of the Oregon company:
"Washington, Oct. 15, '64.
J. Gaston, Esq.,
Sir: I have just received a letter from you of June 30th. I think I sent you a copy of my Bill before the adjournment. If your Oregon Company is organized it had better be named in the Bill before it passes.
I will consult with Mr. McBride.
Your obt. servant,C. Cole."
​Mr. McBride referred to was the Oregon member of Congress. The name of the then Oregon company was never inserted in the bill, which passed Congress and became a law on July 25, 1866, and granted twenty alternate sections of public land per mile of the railroad which has been constructed thereunder from Portland to the California line.
I have been thus particular to trace the original connected and successive steps in projecting and carrying out a great public work, to show that the Jackson County people were entitled to the credit of giving it birth, and to show how the wisdom of the original location of the line was vindicated by the actual construction of the road. In seeking the best line for a railway between two distant points, all other inducements being equal, the line of location, like all other forward movements of human effort, will proceed along the line of the least resistance. Two facts determined the location of this Oregon and California railroad. First, the line of least resistance. The physical features of the region to be developed offered a series of beautiful valleys, rich in all the resources to support a railroad, and so located as to form nearly the shortest line between the termini of the road, and through which it could be constructed centrally through the greatest length of these valleys, and at the lowest cost, and serving the majority of population and interests. Second, here on this line had settled the population of the two States, and made the then existing development of their resources, and upon which the road must rely for its support
It was not the only available, or the only line proposed, as many persons might now think. The line of the first transcontinental road had been projected to San Francisco when the first steps to secure this Oregon and California line were taken, and connection with the transcontinental ​line was one of the moving factors to induce action for a connection with Oregon. But the Oregonians were not unanimous as to the best route. Mr. B. J. Pengra, the Surveyor General of Oregon, and a very able and enterprising man and the successful promoter of the Oregon Central Military Wagon Road, with a land grant running from Eugene to the southeast corner of the State, together with a large following of wealthy and influential men, was actively advocating a line for an Oregon railroad connection with the Central Pacific road, called the "Humboldt Route," which should run from the City of Portland to Eugene City, thence southeast by the middle fork of the Willamette River and over the Cascade Mountains, near Diamond Peak, and thence by Klamath marsh and lake on to Winnemucca on the Central Pacific Railroad in the State of Nevada. And had Pengra been supported by as much political influence as southern Oregon was able to command he might possibly have defeated the location through the Umpqua and Rogue River valleys and secured the land grant to the line of his wagon road.
THE LAND GRANT.
We pass now from the history of the location of the line to the administration of the land grant. The Oregon legislature met in September, 1866, six weeks after Congress granted the lands in aid of the road. It was decided to abandon the original organization which had so far promoted the enterprise, and accordingly the writer of this paper prepared articles for the incorporation of "The Oregon Central Railroad Company," the office and headquarters of which should be at Portland, Oregon. These articles were signed by J. S. Smith (member of Congress for Oregon in 1870), I. R. Moores, John H. Mitchell (for twenty-two years United States senator for Oregon), E. D. Shattuck (for thirty years justice of the supreme and ​circuit courts of Oregon), Col. John McCraken, Jesse Applegate, S. Ellsworth, F. A. Chenoweth, Joel Palmer, E. R. Geary, M. M. Melvin, Thomas H. Cox, B. F. Brown, W. S. Ladd (founder of Ladd & Tilton), H. W. Corbett (United States senator). S. G. Reed (founder of the Reed Industrial School), J. C. Ainsworth (founder of The Oregon Steam Navigation Company), C. H. Lewis (founder of Allen & Lewis), R. R. Thompson, and Joseph Gaston, the author of this paper. These articles were filed according to law and the association of these persons became a private corporation to administer the land grant on October 6, 1866. These articles were laid before both houses of the Oregon legislature, then in session, and on October 10th, upon the motion of Hon. E. D. Foudray, representative from Jackson County, Joint Resolution No. 13, designating said corporation to receive the said land grant, was passed. And in December following fourteen of the incorporators of said company appointed Joseph Gaston "Secretary of the Board of Incorporators," and authorized him to open the stock books of the company and solicit subscriptions to its capital stock. In pursuance of this authority in April, 1867, he opened stock books and took subscriptions to the capital stock, the subscribers to the "Barry Survey" to have their subscriptions credited on stock subscriptions, and providing that whichever side of the Willamette Valley should make the greatest subscription to the capital stock would secure the location of the railroad. Persons on the east side of the Willamette River, notably, I. R. Moores and others, at Salem, opposed this proposition because it recognized the "Barry Survey"; and in consequence the people of the east side of the Willamette Valley made no subscriptions to the stock of the company, while the people of the west side made large subscriptions, and thereby secured the location of the road on the west side ​of the Willamette River, where it is now constructed from Portland to Corvallis.
THE ADVENT OF ELLIOT.
About this time appeared Mr. S. G. Elliot of California, referred to above. Mr. Elliot had been a county surveyor, and wasa man of great energy and ambition, but was not a civil engineer or constructor of railroads, and was not troubled with any scruples about plans or methods of business. He had a large scheme for the construction of this Oregon railroad, and at once laid it before I. R. Moores and others of Salem. His scheme was to get control of the company already incorporated, and, in default of that, to organize a new company which should execute a power of attorney to S. G. Elliot authorizing him to let a contract to build a railroad to the California line, and that such company should issue two million dollars of unassessable stock to certain Californians for their good will in the matter, and then these Californians would transfer back to the Oregonians getting up this company one million dollars of the unassessable stock for their services in organizing the company. Gaston was invited to go into this scheme and offered an office in such new company and some unassessable stock if he would throw away the papers of the original company. This he declined, but offered to submit their scheme to the incorporators of the Oregon Central Company and if they approved, Mr. Elliot could use their organization to advance his scheme. But upon submitting the Elliot scheme to the incorporators supporting Gaston, every one of them opposed it. Accordingly, Elliot and his Salem friends, on April 22, 1867, incorporated the Oregon Central Railroad Company of Salem, the incorporators being S. A. Clarke, John H. Moores, George L. Woods, and I. R. Moores. The articles of incorporation of this company provided for a capital ​stock of $7,250,000, to which six persons subscribed each $100, and thereupon elected George L. Woods chairman of the stockholders' meeting, and then at such meeting passed a resolution authorizing the chairman to subscribe $7,000,000 to the stock of the company, as follows: "Oregon Central Railroad Company by George L. Woods, Chairman, 70,000 shares—$7,000,000." Upon this fictitious subscription the company was organized by electing a board of directors and George L. Woods (then Governor of Oregon) as president, and S. A. Clarke, secretary. And upon this organization the Salem company located its road upon the east side of the Willamette River, secured some local donations, some aid from James B. Stevens, proprietor of the then East Portland townsite, and induced Bernard Goldsmith, of Portland, to advance $20,000 on the bonds of the company, and commenced the work of constructing their road. I am thus particular in setting out these facts to show how the railroad was located on the east side of the Willamette Valley.
Mr. Elliot's financiering, however, did not carry the enterprise very far. The $2,000,000 of seven per cent unassessable stock in the company was issued to A. J. Cook & Co. (fictitious name for Elliot) under an agreement that $1,000,000 of it should be given to the directors of the Salem company, and this stock for the directors was deposited in the safe of E. N. Cook and lay there for two years and until the company ceased to exist. But that stock brought no aid or comfort to the company or its directors. Goldsmith's money was all spent, the laborers on the grade were clamoring for back pay, and Elliot's scheme was on the verge of collapse when in very desperation the whole scheme, with all its hopes, assets, and great expectations, was turned over to Ben Holladay.
HOLLADAY, AND THE LAND GRANT CONTEST.
Holladay appeared in Oregon about six weeks before the meeting of the legislature in September, 1868, and took energetic steps to attack the rights of the corporation first named above to its land grant. With ready cash Holladay pushed the work of construction on the east side grade, subsidized newspapers to advocate his cause and sing his praises, bought up politicians on all sides to do his bidding, and treated with imperious contempt the rights of all who dared to question his career. At the ensuing session of the legislature he appeared at Salem as the host of a large establishment, dispensing free "meats and drinks" to all comers, and otherwise equipped with all the elements of vice and dissipation. Joined with and a part of this force, was the first hired and organized band of lobbyists in the history of the Oregon legislature. And so energetic and successful was the battle they waged, that on October 20, 1868, the legislature passed a joint resolution declaring that the act of the previous legislature was made in mistake, that the designation of the company to receive the land grant was still to be made, and that The Oregon Central Railroad Company of Salem be designated to receive such grant. This was done in the face of all the facts stated above, fully presented to the legislature, and of the further facts that the first named company had filed its acceptance of the land grant in the Department of the Interior according to the act and within the time provided, which acceptance had been accepted by the Secretary of the Interior, and the time had passed by within which any company could file another acceptance of the grant. Such a high-handed outrage was probably never enacted before in any State, and was accomplished in Oregon only, as Holladay ​afterwards admitted to the author of this paper at a cost to him of $35,000.
Thus securing this act of the legislature in his favor, Holladay continued to push the work of construction on the grade, and sent agents to Washington to get an act through Congress enabling his Salem company to file its acceptance of the land grant act. Congress finally, on April 16, 1809, passed an act extending the time for filing acceptance of the land grant act and providing that whichever of the two companies should first complete and put in operation twenty miles of railroad from Portland southward into the Willamette Valley should be entitled to file such acceptance of grant. Holladay continued to push construction work with all his available means until in December, 1868, he had in a very cheap and imperfect manner completed and put in operation, with one engine and a car or two, twenty miles of railroad, and was thereby recognized as entitled to the land grant.
But notwithstanding this hard earned success Holladay was now face to face with a state of facts that would have paralyzed a less reckless and unscrupulous operator. It had become everywhere understood and admitted that the Salem Oregon Central Railroad Company was not a corporation and had no legal existence, and for that reason could not appropriate the right of way in any case where the landholder refused it, or enforce any other right of a corporation. The Supreme Court of Oregon afterwards decided that the Salem company was not a corporation, but a mere nullity and fraud, that it had no legal rights and could not take the land grant, and that the act of the legislature of 1868 could not heal its defects. (See the case of Elliot v. Holladay et al., p. 91, Vol. 8 of Oregon Reports.) And besides this the west side company had finally forced the Salem company to stand trial before Justice M. P. Deady, of the United States District Court ​as to its right to its corporate name, and the court had held that one corporation could not take and use the name of a prior organized company. This of itself was a death blow to the Salem company. (See Deady's Reports, p. 609.) In this crisis of his Oregon venture Holladay turned the whole matter over to the great lawyer, W. M. Evarts, who was Secretary of State to President Hayes. After many months of study Mr. Evarts decided that the franchise to exercise corporate rights was a grant from the State and could be questioned only by the State, and not having been so questioned the Salem company was at liberty to transfer any and all rights and franchises it was assuming to own. And that as the land grant was a concession from the Federal Government the right thereto could be disputed only by the grantor, and not having been so questioned the franchise to take such grant could be also assigned and transferred by the Salem company; and that the next step for Mr. Holladay was to lawfully organize a new Oregon corporation to take over all the rights, property, and franchises of the Salem company, and have the Salem company make such transfer. For this opinion Holladay paid Evarts $25,000; and immediately thereafter (1870) incorporated and organized The Oregon and California Railroad Company, to which all the assets of the Salem company were conveyed. After thus clearing up the wreckage of the fictitious corporation, and burying as best he could the scandals which disgraced the lives and ruined the political fortunes of more men in Oregon than all other events in the history of the State, Holladay sold in Germany ten and a half million dollars of bonds upon the land grant and the road to be constructed. Applied at the rate of $30,000 per mile of road, these bonds were estimated to build three hundred and fifty miles, or practically to the California line. But by Holladay's reckless, if not dishonest management, ​not more than fifty-seven cents on the dollar of the bonds ever went into the construction of the road; so that by the time the track had reached Roseburg from Portland the proceeds of the bonds were exhausted, and Roseburg remained the southern terminus of the road for ten years. Then a reorganization took place, the holders of the bonds surrendering their securities for preferred stock, and advancing more money on a new mortgage to extend the road to Ashland in Jackson County. Here the track stood still for seven years; and another reorganization took place, the old bondholders refunding their second issue of bonds in new bonds bearing a still lower rate of interest, and the Southern Pacific Company advancing the capital to finally connect Oregon and California with the present existing road, in the year 1887, making nineteen years from the time construction work commenced until the road reached the California line. Holladay, proving wholly incapable of managing the property, was forced out of its control by the bondholders in 1876, and Mr. Henry Villard put in control; and under Villard, as immediate and responsible manager of the property, a young man from Germany (Richard Koehler) of Whom we shall have more to say further along.
Ben Holladay was born and raised near Blue Licks, Kentucky. Emigrating to Missouri in 1856 he became a hanger-on to the army at Fort Leavenworth, and drifted into various camp-follower speculations for several years until in 1860 when the civil war broke out he was operating a buckboard mail and stage line from St. Joseph, Mo., to Salt Lake City. About this time the great army transportation firm of Russell, Majors & Waddle fell into financial trouble and in order to tide over their affairs and force a cheap settlement with their creditors, as related to the author of this paper by Mr. Russell himself, the firm delivered to Holladay, as their friend, $600,000 of ​government vouchers for transportation the firm had rendered, under the agreement that when they had settled with their creditors Holladay should return to them the $600,000. Holladay took the vouchers, collected the money, and when requested to return it to the confiding firm he repudiated not only the agreement to do so, but all knowledge of the transaction. As it was an unlawful act of the failing debtor he could not recover, and so, not only Russell, Majors & Waddle lost the vast sum of money but their creditors had been beaten by both the debtors and their deceiver, Ben Holladay. On this plunder Holladay came to the Pacific Coast, bought the line of ships to Oregon and got into the Oregon railroad. He was a man of splendid physique, fine address, and knew well how to manage the average human nature. He was energetic, untiring, unconscionable, unscrupulous, and wholly destitute of fixed principles of honesty, morality, or common decency.
THE WEST SIDE ROAD.
Returning now to the Oregon Central Company we find it in 1869 robbed of the land grant which it was justly entitled to, but not wholly driven out of the field. The citizens of Portland, Washington, Yamhill, and Polk counties stood loyally by the old company, and not only gave financial aid to the extent of grading and bridging the first twenty miles of its roadbed, but also threw into the scale the weight of their political influence, declaring that no man should represent Oregon in Congress who would not labor to secure another grant of land in aid of their road. With this support I spent the winter of 1869 and '70 at Washington City and secured from Congress a grant of twenty sections of land per mile in aid of the construction of a railroad from Portland to McMinnville, with a branch from the line at Forest Grove through the Nehalem ​Valley to Astoria. This was not what was desired, but it was the best that could be secured at that time. And in the partition of Oregon local interests then seeking recognition at Washington City, it was agreed by the Oregon delegation in Congress that at the next session of Congress this grant should be extended from McMinnville to Eugene. And upon this basis it was further agreed that Mr. B. J. Pengra, of Eugene, then also at Washington, and representing the proposed railroad from Winnemucca to Eugene (incorporated as "Oregon Branch Pacific Railroad,") should also have a grant of lands for his company. This scheme carried out would give a continuous land grant from the Central Pacific Railroad in Nevada, to Eugene, and Portland and Astoria. And upon this foundation, C. P. Huntington, then in the zenith of his power as a railroad financier and constructor, agreed to furnish the capital and build the railroad from Winnemucca to Eugene, Portland and Astoria, giving Oregon a more direct connection to the East than by the California route. This scheme was defeated by Ben Holladay, then also at Washington, who within ten days after Congress passed the Oregon Central grant to McMinnville, induced Senator Williams to amend the Pengra bill by providing that the Winnemucca road should connect with the Holladay line at a point in the Rogue River Valley. This provision would of course prevent all connection with the McMinnville line, and give Holladay control of all roads from the Rogue River Valley to Portland. Holladay was quick to see that the Pengra bill would bring to Oregon a giant in energy and ability who would dwarf his own pretensions and soon drive him from the field, and with a selfishness and vanity which knew no limits, he demanded the sacrifice of the interests of the State and the ruin of the man who was willing to befriend him. Upon this change being made in the Winnemucca bill Mr. Huntington ​promptly withdrew from his offer to finance the road, and the whole scheme to get another road into Oregon through the Klamath lake region failed. Had not the Winnemucca (Oregon Branch Pacific) proposition been thus emasculated southeastern Oregon, the Nehalem Valley, and Astoria would have had practically a transcontinental railroad more than thirty years ago, and Eugene would have been the junction of two great lines. But for this the Midas touch of Huntington would have made the southeastern Oregon plains and the Nehalem wilderness prosperous and populous with a commerce and population equal to anything on the Pacific Coast, and Astoria would have had a population of 50,000. Driven from this opportunity which Huntington himself sought, he turned his attention to Arizona and Mexico, and gave to the arid deserts of the South the wealth which should have been the reward of Oregon enterprise. It was the most damaging blow to the growth of the State which Oregon ever suffered; for it not only deprived the State of a great railroad and its consequent development, but it wrecked the political career of its greatest man—the man who was beyond all question the greatest statesman, most brilliant orator and profound lawyer which the Pacific Coast ever sent to the United Stated States—and deprived the State of his eminent abilities.
Upon this land grant to the Oregon Central Company, and upon one million dollars construction bonds thereon, English capitalists advanced a million dollars to build the road from Portland to the Yamhill River, where it stood still for ten years at the Holladay town of St. Joe. The same capitalists were induced by Mr. Villard to advance further capital to extend the road from St. Joe (long since deserted) to McMinnville and Corvallis, the present terminus. In the work of building this west side road the citizens of Portland contributed in cash and lands $150,000, ​the people of Washington County $25,000, and the people of Yamhill County about $20,000.
THE WORK OF VILLARD.
The coming of Henry Villard to Oregon in 1874 was the fact of largest importance to the development of the Northwest. Mr. Villard had been by his friends in Germany placed in charge of their interests in the Kansas Pacific Railroad, and had proved so faithful and capable in managing his trust that when similar investments in Oregon had been jeopardized by Ben Holladay he was sent here to make a report and right all wrongs. On his first visit to Oregon I accompanied him on a trip throughout the Willamette Valley and discovered that he had thoughts, if not plans, for a field of action far beyond the confines of the State. Quickly getting under his full control the existing Oregon roads, he went straight at the work of his vast plan of an Oregon railroad system having a transcontinental power and influence. And as one step rapidly followed another in the unfolding of his scheme, it was seen that Henry Villard was not an ordinary railroad promoter, but a veritable empire builder. His genius for grand plans of developing great States was fully equaled by his ability to raise the means to successfully carry them into effect.
Upon the completion of the Union Pacific Railroad to Salt Lake, that interest had sent surveying parties to look out a route for the extension of their road to Oregon. That exploration, made in the year 1868, was known as "the Hudnutt survey." An Oregon man, Col. W. W. Chapman, one of the founders of the City of Portland, took up and exploited the idea of a "Portland, Dalles & Salt Lake Railroad," on the route proposed by Hudnutt. Colonel Chapman worked upon this scheme from 1870 to 1876, attending the sessions of Congress in each year and vainly ​urging Congress to transfer to his company the unused land grant of the Northern Pacific Railroad from» the mouth of the Snake River to Portland. Chapman did a vast amount of work on this proposition, getting rights of way and accumulating facts showing the value, resources, and importance of the route, and may be justly considered the pioneer of the road subsequently built on the route. The want of financial support and the infirmities of age compelled Chapman to abandon the enterprise, but not until the time was auspicious for Henry Villard to take it up in 1879.
Mr. Villard visited Oregon first in 1874, again in 1876, and again in 1878. He was greatly impressed and pleased with the country from the first visit, and had made arrangements to bring his family and settle permanently in Portland. He had from the first been deeply interested in developing the country and had made careful investigation of its resources, and of the tributary regions; so much so that on his visit in 1878 he inquired of Capt. J. C. Ainsworth, president of the Oregon Steam Navigation Company, whether his stockholders would be willing to dispose of that company's property. To this proposal Ainsworth replied by handing Villard an inventory and appraisal of the company's boats and portage railways on the Columbia River, aggregating $3,320,000, with an offer to sell the entire property at $5,000,000. The property probably had never cost more than half the appraisal, but as it was paying twelve per cent dividend on $5,000,000, Villard thought he made a good bargain when he induced the Ainsworth stockholders to give him an option to purchase their property at $4,000,000, one half cash and the balance in bonds and stocks in a new company to be organized. For this option for six months Villard paid Ainsworth $100,000 in cash, and then immediately returned to New York to finance the deal and carry out the ​first move in his great scheme of concentrating the trade of all the region west of the Rocky Mountains and north of California at Portland, Oregon. He presented the proposition first to Jay Gould and other large stockholders in the Union Pacific Railroad, with a view to constructing a branch of the Union Pacific from Salt Lake to Portland on the Chapman route. After considering this for months the Gould party declined to go into the scheme, and Villard at once organized the Oregon Railway & Navigation Company, raised the money to take up the Ainsworth option, and immediately commenced the construction of the road eastwardly from Portland. To this bold movement of Villard, wholly unexpected by the Union Pacific people, they promptly replied by organizing the Oregon Short Line Company, to build a road from the Union Pacific line to the Columbia River, and at once commenced construction. Villard had thrown down a challenge for possession of the Short Line route, it had been promptly accepted, and now the race was on as to see which of these parties should win the game. It was the first great test of Henry Villard's ability as a financier. He was opposed by Gould, Morgan, and some of the ablest and wealthiest capitalists in the world, and yet his talents and energy were such that he pushed his road eastwardly with such force and rapidity as to meet his rivals at Huntington, near the eastern boundary of the State, and effectually hold his chosen field of enterprise.
But brilliant in conception and rapid in construction as had been the great road to control the Columbia River Valley, Mr. Villard had in his fertile brain a still greater scheme of finance and development to astonish the railroad world. The Northern Pacific Railway, with the largest bounty of public lands ever granted in aid of the construction of any road, had been making but a snail's pace in spanning the continent with money raised on ​piecemeal mortgages at high rates of interest. The line from Portland to Tacoma had been built, and the eastern division of the road pushed west to the crossing of the Missouri, and some work done on a section from the Columbia towards Spokane. The outlook was ominous. In the hands of a more energetic management Villard could foresee that his grand scheme of an Oregon system might be crippled, and so, maturing his plans he made the great venture of his career. Quietly ascertaining the amount of money necessary to secure a controlling interest in the Northern Pacific Company he addressed a circular (May 15, 1881) to his financial friends asking for the temporary loan of $8,000,000 for a purpose not named, "and no questions to be asked," assuring his friends that in due time he would account to them for the money intrusted to him with such profits as would be satisfactory. Such a proposition was unheard of in the world of finance. It was appalling, audacious. But nevertheless the money was promptly given him. And this was the formation of the historic "blind pool" to control the Northern Pacific Railroad, never attempted before and never repeated since.
With this $8,000,000 Villard purchased a controlling interest in the Northern Pacific, got control in June, 1881, and was elected president in September. He immediately started an army of men to complete the great work. J. L. Hallett, of Washington County, was superintendent of construction on the west end, Hans Thielsen of Portland, chief engineer, and the work was pushed with such force and vigor that an observer might have supposed that the entire army of the United States was pushing construction of a military work in time of a great war. It was the supreme test of Villard's mental and physical strength. He was at that time president of the Northern Pacific, the Oregon Railway & Navigation Co., the Oregon Steam Navigation Co., and the Oregon & California Co., ​and was raising the money for and pushing construction work on all these lines. But he proved his matchless ability by successfully carrying out these great enterprises, and on September 8, 1883, completing the Northern Pacific across the continent and connecting its steel bands with those of the Oregon Railway & Navigation Company at the long since abandoned town of Ainsworth on the north side of Snake River just above its confluence with the Columbia. And thus was planned and formed what I have named "The Oregon Railroad System." How long Villard was considering this idea I have no means of stating. He doubtless mentioned it to others, but the first time I heard of it was at the dinner table of the late Senator Nesmith, at his farm on the La Creole in Polk County in 1874, while I was accompanying Villard on a trip of observation through the Willamette Valley. The grand conception was his in origin and execution; and although hampered by doubters and opposed by powerful enemies he triumphed over all obstacles and made its success the most enduring monument of his fame as one of the most forceful characters and honorable men of his day and generation. The people of Oregon have but slightly comprehended and do yet but little appreciate the great work he wrought for the State. He planned his work upon "the lines of the least resistance"; he worked in harmony with the laws of nature and upon plans laid down by the great architect of our planet; and his record and his work is invincible. And now, after spending years of effort and millions of money to reverse the plans of Villard and carry the trade of the "Inland Empire" over the Cascades to Puget Sound the great capitalists of the Northern Pacific and Great Northern roads are forced to admit the correctness of Villard's plans and expend ten million dollars to rectify the blunder of opposing them. It was the keen foresight of Henry Villard that ​saw in the distance all the local wealth and productions, trade and population of the empire lying west of the Rocky Mountains from the California line to British Columbia, and all the transcontinental commerce between the same lines pouring its tribute for all time to come down easy grades through the Columbia gateway to a great city to be built at the junction of the Willamette and Columbia; and now, not one road but four are vieing with each other to utilize this water-level pass to the great Pacific and the still greater Orient.
Henry Villard was born in 1835 of an honorable and influential family in Speyer, kingdom of Bavaria, Germany. In the revolution of 1849 his father was a loyalist, and the presiding judge of an important court. Young Villard was at school at the Gymnasium, wore a red feather in his cap and refused to pray for the king. For this offense he was suspended and managed to get out of his youthful disloyalty by going to a school over in France. Subsequently pardoned, he returned and completed his studies at the University of Munich. He came to the United States in 1853, tarried with relatives near Belleville, Ill., for a year, then drifted into journalism, became a war correspondent in the civil war, made friends with influential people, attracted attention by his ability and genial manners, made some money in speculations, went back to Germany on a visit and made the financial friends at Frankfort, who afterwards employed him to look after their interests in investments in America, and put him on the highway to his great success. He was a man of most engaging and genial manners, with nothing of the hard selfishness or avaricious grasp of the typical rich man. No man was more considerate or generous in praise and assistance to those who worked with or under him or whose work he had made use of. In the days of his prosperity his purse was open wide to all works of charity and ​benevolence, chief of which in Oregon was $50,000 to the State University for an irreducible fund at least $400 of the interest from which to be used annually in the purchase of books for the University library. He gave a like sum to house the orphan children at Portland. No act of littleness, meanness, oppression, injustice, or dishonor ever stained the escutcheon of his noble career; and he sleeps well on the banks of the Hudson.
BRANCH ROADS.
This paper might properly end here were it not that others have done good work in building branch lines to complete the grand scheme planned by Villard; and which it seems the facts of history require to be recorded in this connection. The principal of these was the narrow gauge system projected by the writer of this paper in 1878 to more completely develop the Willamette Valley. In that year he built the first forty miles of three feet gauge railroad in the State, from Dayton to Sheridan in the Yamhill Valley, with a branch to Dallas in Polk County. In 1880 this road was sold to capitalists in Dundee, Scotland, who, through their agent in Oregon, Wm. Reid, of Portland, extended the lines on the west side of the Willamette River to Airlie in Polk County, and to Dundee, Yamhill County, with an east side of the river branch from Dundee crossing the river at Ray's Landing, thence to Woodburn, Silverton, Scio, and on to Coburg in Lane County. Mr. Villard leased this system (about 200 miles) in 1880; and Mr. Reid on his own capital subsequently extended the line from Dundee to Portland via Newberg; and the whole road thus built was soon after incorporated in the standard gauge system of the Willamette Valley.
Another important branch is the Columbia Southern, traversing Sherman County and built by Mr. Lytle and others from Biggs on the Columbia to Shaniko, seventy ​miles south. This, too, has been incorporated in the O.R.& N. system.
Of independent roads, which are also in effect feeder lines to this Oregon system, may be mentioned the Sumpter Valley road, built by Messrs. Eccles and Nibley of Utah, from Baker City to the mining town of Sumpter and southwest towards Burns, now aggregating nearly fifty miles of track. This road was organized in 1890. The same parties have within the past year built eighteen miles of a new road running up the Hood River Valley from the town of Hood River, and called The Mt. Hood Railroad. Another important independent line is the Rogue River Valley road running from Jacksonville to Medford, and from there proposed to extend to Crater Lake, and on this line develop the largest tract of sugar pine timber in the United States. This enterprise was started in 1891 by Mr. E. J. DeHart of Medford, and Wm. Honeyman of Portland. Another important independent line is what has been called successively, The Willamette Valley & Coast, "The Oregon Pacific," and The Corvallis & Eastern Railroad, running from Yaquina, on the bay of that name, eastwardly via Corvallis and Albany to Idanha in the Cascade Mountains. This road has had a checkered career. Commenced in 1880 by public spirited citizens of Corvallis and Benton County, who first and last put about $100,000 of hard cash and labor into its construction. It was turned over to one T. Egenton Hogg, a promoter of great promise and little performance, who reorganized the scheme into its second name and issued $15,000,000 in bonds and $18,000,000 in stock on one hundred and forty miles of road and then failed and died, leaving his bankrupt road to be sold for $100,000 to its present owner, A. B. Hammond. It has from the first been such a "misfit" that neither the genius of Villard, the energy of Huntington, nor the comprehensive mind of Harriman have been able to assign to it a practical and ​profitable place in the Oregon system. It is now doing a large business in hauling lumber and must sooner or later find a useful and necessary purpose in the development of the country.
THE WORK OF MR. KOEHLER.
Besides these independent lines the work of development by branches, feeders, and extensions of the main system, has been going on steadily for years, as population and business would justify. Many such additions have been added to the lines east of the Cascades, as well as in the Willamette Valley, showing the purpose to cover the whole territory of the Columbia River water shed with a network of branch line roads. The most notable of this work is that carried out by Mr. Richard Koehler, who has held the reins as general manager of the Oregon & California road for thirty-two years. Under his management over four hundred miles of track have been added to the railroad mileage in the Willamette Valley and Southern Oregon. And in addition to this the roads under his supervision have been entirely rebuilt with new steel rails, new bridges, expensive embankment fills, reduction of grades and straightening of track. In this work Mr. Koehler has disbursed for his employers many millions of dollars, and in every way more than doubled the value of the property under his care, not only to its owners but also to the farmers and business men along the line. Such a long term of service as this in one position of such power and responsibility shows with what fidelity Richard Koehler has discharged his responsible duties to his clients and the people. Taking hold of the property when it had been practically wrecked by Holladay, and when it paid nothing to its owners, he has been compelled to discharge the onerous and thankless duties of watching every detail of operation, service, expenditure, construction, and ​economy in all departments for all these long years, and finally make the roads a self-sustaining, profit earning, valuable property to its owners and to the country. The patience, trials, and ability to accomplish this end has been but little understood and recognized, although a work of as much value to the country as the more noticeable work of projecting new lines.
E. H. HARRIMAN.
A brief notice of the Napoleonic figure of Edward H. Harriman seems necessary in closing this paper. He comes into the railroad battlefield after all the great lines which he now controls had been located and constructed. "The Oregon System" was here before his name had ever been mentioned in connection with any of these lines. His work so far has been to improve and perfect the lines already constructed. In this he stops at no trifles and spares no expense. The stupendous job of running the Union Pacific straight across the north arm of Great Salt Lake, and saving fifty-three miles of track and dangerous mountain grades, is a sample of his policy of improvement. By straightening lines and reducing grades he is making his roads able to do twice the work they formerly did and for one half the cost of transportation. This is just as great a gain to the country as the construction of new lines; although he has now planned and provided the money to fully develop the whole of Eastern Oregon with new branch roads as soon as the best routes have been determined by careful surveys. And now, as I write this, he is engaging in a titanic struggle—with the powers which have so long ignored the value of "The Oregon System" of the Columbia,—for the preservation and complete utilization of that system. In this contest, Oregon is vitally interested in the success of E. H. Harriman; for if he succeeds in forcing his terms on the managers ​of the Great Northern and Northern Pacific systems, he will compel every road coming west over the Rocky Mountains between California and British Columbia to come down through the Columbia River gateway, and contribute their millions to develop commerce on the Columbia and keep that mighty river open from Portland to the Pacific Ocean.