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by UPRR Valuation Department
The development of the Oregon Short Line Railway and its successor companies is briefly sketched in a compilation entitled "Corporate History of the Oregon Short Line Railroad Company", by the Valuation Department.
The following notes are supplemental thereto, and are recorded for reference purposes:
Exploratory surveys:
In 1867 and 1868, F. S. Hodges, one of the assistant engineers of General Dodge's organization, explored the country adjacent to Ham's Fork, Bear River, and Blacksmith's Fork; Dodge's purpose being to find, if possible, a route into the Salt Lake Valley for the main line of the Pacific Railroad which would be shorter and provide lighter grades than the Echo-Weber Canon route.
The part of the reconnaissance line developed by Hodges in Ham's Fork and Bear River valleys was comparatively easy, but the outlet, via Blacksmith's Fork, would have required heavy grades, a long tunnel, and excessive expenditure, and was therefore abandoned as impracticable. It did show the practicability, however, of a line into the drainage of the Portneuf, opening into the Snake River Valley. Dodge's official report for 1868-69, at page 14, contains the following:
"From the date of my first examination for the Pacific Railroad in 1853, each year development has convinced me that the true route to the Pacific Ocean was, after reaching the valley of Green River, by way of Ham's Fork, Bear, Snake, and Columbia Rivers to Portland and Puget Sound. In my preliminary report on this line in 1867, I set forth some of the reasons that led me to these conclusions, .and urged the company to fully settle the question by a thorough instrumental survey.
In October 1868, after completing the surveys to Humboldt Wells, the vice-president (T. C. Durant) instructed me to run a line to the Columbia River, and develop the country, and determine as far as practicable the proper route to the Pacific, by way of Snake River Valley. In compliance with this order, Colonel Hudnutt's party was placed on the route, under instructions that appear in his report".
At the time these instructions were issued, it was thought that the Union Pacific would build the line as far west as Humboldt Wells: Durant's instructions were to commence the line of the "Oregon Branch" at some point on the north side of Great Salt Lake.
Hudnutt's survey:
Hudnutt's survey commenced near Monument Point. His report is embodied as an exhibit in Chief Engineer Dodge's report for 1868-69. In this report, Dodge said:
"By building this branch up Ham's Fork, crossing the rim of the basin at Hodge's Pass, running down Bear River, and again crossing the rim of the basin, through Pont Neuf (Port Neuf) Gap, crossing Snake River, and striking directly across the plain to King's Hill Mountain, which would take you north of the Trap Rock Plain into a country of water, grass, and timber, and intersecting Colonel Hudnutt's line at King's Hill, or in that vicinity, we would have a line across the continent that I undertake to say can never be improved in grades, alignment, or cost, by any other route".
While some further consideration was Given to a line from Monument Point, or Kelton, or Ogden, the route finally adopted followed the Ham's Fork-Bear River location developed initially by Hodges, and strongly preferred by Dodge.
Henry Villard:
The definite decision to build a railroad through Idaho to Oregon grow out of a proposal made in June 1879, to the Union Pacific, by Henry Villard. In that year Villard, with the aid of German capital, had acquired the Oregon Steam Navigation Company, organized the Oregon Railway & Navigation Company, and contemplated building its line eastwardly from Portland along the Columbia River.
On June 13, President Sidney Dillon of the Union Pacific wrote to Frederick L. Ames, at Boston:
"I wish you, Mr. Atkins, Mr. Dexter, and Mr. Baker to come to New York so as to be here Tuesday to consult with us (i.e., Jay Gould) and Mr. Villard in relation to the organization of a new enterprise to build a road from Snake River to Oregon which will secure to the Union Pacific the trade of the Columbia Valley. Mr. Villard has returned from a trip to that country and has all the statistics and documents relating thereto. He has also secured the control of the existing transportation lines and will submit a project for their consolidation with the proposed new road on such a basis that the money to be invested shall receive a large income at once. On receipt of this please telegraph me if you can be here at that time".
In his autobiography Henry Villard asserts that he offered Jay Gould, and Sidney Dillon an opportunity to join him in the Oregon Railway & Navigation scheme and share in the profits, but they declined. As it turned out, the O.R.& N. for a time was a very profitable venture.
Villard's purpose was to establish a through line of railroad from Portland to the east, in connection with the Union Pacific. In the meantime, construction of the Northern Pacific was progressing westward. In 1880 Villard secured control of Northern Pacific, and in 1883 joined it with the O.R.& N. at Wallula Junction, thus giving the Northern Pacific the first transcontinental line between the east and the Pacific Northwest. (Refer to "Henry Villard and the Northwest Railways", Hedges, Chapter IV, page 56).
Dillon proposed to build the Oregon Branch from Ogden, or Kelton:
In August 1880, Dillon wrote Chief Engineer Blickensderfer:
"We desire to commence the location on the Oregon Branch with a view of being ready for work in the spring should we conclude to build. You have the reports, surveys and estimates of Messrs. Hudnutt, Wolcott and Cleburn, from which you will be able to designate the proper line on location. I have telegraphed Wolcott who says he thinks his work on Utah Northern is so far advanced that he can leave without detriment to that road, and I prefer he should take charge of the Oregon line, as it is really due to him. If he leaves the Utah Northern you must see that a proper person is left in charge there.
"First, we shall have to locate from Ogden to Snake River, over the line that Cleburn surveyed, or if not satisfactory you can make further examinations if desired.
"Second, we hope that when the Central Pacific see that we are in earnest they will allow us to use their road to some point between Monument and Kelton, or to some point between those two stations. If they do, then we should build from Kelton or vicinity to Snake River, making a large saving in miles of road to construct.'
"The line Mr. Wolcott ran from Snake River to the Boise River was a cut-off by way of Indian Creek, and that seems to be the route to go after leaving the Snake. Beyond the mouth of Boise, from Mr. Wolcott's report, the line will probably follow in the vicinity of Hudnutt's survey to Baker City or connect with the Oregon Navigation Company's line east of the Blue Mountains.
"I can only point out to you the policy; the details, designation of route, etc., you and Mr. Wolcott should settle upon. I think Mr. Wolcott should be placed in the field as soon as possible, and complete location to Snake River before winter. In the meantime, if any negotiation is made with the Central Pacific, you will be duly advised, and we can shift over to the short line. The line was specially developed by Hudnutt and Cleburn, and a portion towards Snake River will probably be common to both the Ogden and Kelton lines. If you desire any further information and instructions, please call for them."
In the absence of definite record of the discussions of the route by the board of directors, it would seem a fair assumption that the opinion of Dodge, one of the directors, prevailed, and that the decision may have been made by Jay Gould, who placed much reliance upon Dodge's engineering judgment. The route adopted followed generally the location projected in 1867-68 by Hodges, under Dodge's direction, through Ham's Fork and Bear River drainage to the Port Neuf River.
The road was named "Oregon Short Line" by Sidney Dillon. The Oregon Short Line Railway Company was incorporated in April 1881. Construction was commenced in the following month. The first spike was driven at Granger, Wyoming, by a young telegraph operator, stationed there, Edgar Eugene Calvin, who was to become, many years later, president of the Union Pacific Railroad and Oregon Short Line companies.
By December 31, 1881, 64 miles of track had been laid, penetrating the coal field in which the mining camp of Kemmerer was afterward established, and 96 miles additional had been graded. The ridge at Hodge's Pass was crossed temporarily by means of a switchback, pending completion of Hodge's Pass Tunnel.
The section of the road built from Granger reached Pocatello in the fall of 1882. It joined the narrow-gauge Utah & Northern at McCammon, and a third rail was laid, from McCammon to Pocatello, for standard gauge operation. In the meantime, construction had also been commenced at Pocatello, and the road reached American Falls on June 20, 1882, Minidoka on January 13, 1883, and was put into operation as far as Shoshone about March 10, 1883. It reached Blake's (Blake's Junction), near the east bank of the Snake River, in February 1884. The eastwardly extension of the O.R.& N. had been delayed, and the extension of the O.S.L. into Huntington was not pressed until the fall of 1884. The track was laid up to the east end of Huntington yard on November 10th; an actual connection of O.S.L. and O.R.& N. tracks was made on November 14th; the formal connection between the two lines was made on November 25th. (Letter Chief Engineer Blickensderfer to G. M. Lane, assistant to president, December 8, 1884). The station at Huntington was opened for business on November 20th. Through service between Portland and the east via the O.R.& N. and O.S.L. was commenced December 1, 1884. (Refer to "Corporate History, Oregon Short Line").
Method of construction:
The Oregon Short Line was built under the supervision of the Union Pacific construction department, J. Blickensderfer, chief engineer, and by contract with Chester W. Collins, who was Sidney Dillon's nephew.
Huntington Townsite:
The townsite of Huntington was established under an agreement between the Oregon Railway & Navigation Company and the Oregon Short Line Railroad Company, on the one part, and J. B. and J. M. Huntington, on the other part, dated July 13, 1883. The two Huntingtons held their title direct from the United States, by patent, on preemption or homestead filings. The agreement stipulated that 40 acres were to be set aside for depot grounds, terminal and yard purposes. The remainder was to be laid out by the Huntingtons for sale of blocks and lots.
Wood River Branch:
The Wood River Branch, to the Wood River Mining District of the Sawtooth Mountains, was built in 1882, to Hailey. The extension to Ketchum was completed and opened for business on August 20, 1884.
In 1887 consideration was given to the building of a branch, or spur, from Hailey to the nearby gold fields, to be called the "Halley & Gold Belt Railway". It was not constructed. (See report of engineer Charles Blackwell, to Vice President S. R. Callaway, February 2, 1887)
Boise:
Why the original line of the O. S. L. by-passed the growing town of Boise is obscure. From such records as are available, apparently Chief Engineer Blickensderfer recommended against it, since to run the line direct through Boise would have required heavy grades, 80 feet to the mile, and would have added about 10 miles to the length of the line; decision was made to serve Boise with a branch. Such a branch was considered, to be built from Caldwell, on the main line, to Boise. A line was surveyed from Kuna. Neither of these projected branches was built. The branch from Nampa to Boise was constructed by a subsidiary company, the Idaho Central Railroad Company, in 1886-1887, placed in operation in September of the latter year. (See report- of Chief Engineer V. G. Bogue, March 11, 1887, to President Adams).
The main line was finally connected through Boise direct, by the construction in 1925 of the Orchard-Boise Cut-off. The opening of this cut-off was made the occasion of a great celebration by residents of Boise and vicinity. The Union Pacific Museum contains a binder of photographs of scenes during the celebration, presented to President C. R. Gray by the "Idaho Statesman" of Boise.
Method of Financing:
The cost of the road was financed by subscription. According to Sidney Dillon (testimony, U.S. Pacific Railway Commission reports, p. 218), the Union Pacific stockholders were offered the right to subscribe, each holder of 50 shares of Union Pacific stock being given the right to subscribe to a block of one $1000 bond and 5 shares of full paid stock of the O.S.L. company, on agreeing to pay $1000 in cash. The Union Pacific Railway Company, in consideration of its guaranteeing the interest on the bonds, was given one-half of the stock. The bonds were issued at the rate of $25,000 per mile, the capital stock also at $25,000 per mile. The total of the bonds and stock, at par, $50,000 per mile, was set up on the balance sheet as representing the cost of the road. President Charles Francis Adams said (U.S. Pacific Railway Commission reports, p. p. 92), that the actual cost, including equipment, was between $20,000 and $25,000 per mile. The building of the road was therefore financed by the bond issue; the stock itself represented no cash investment.
Traffic contract:
The relation between the Union Pacific and the Short Line was embodied in a contract dated January 12, 1882, which by its terms was in reality, a traffic agreement. Under it the Union Pacific agreed to guarantee the interest (not the principal) of the Oregon Short Line bond issue. The form of this guarantee was as follows:
"The Oregon Short Line Company, the obligor herein, having guaranteed to the Union Pacific Railway Company certain perpetual rights, privileges, and easements, and having also entered into a perpetual agreement with it for the interchange of business, dated the 12th day of January, A. D. 1882; and the Union Pacific Railway Company, in consideration thereof, having agreed, as therein provided, to such division of joint earnings as shall be sufficient, with the other net earnings of the Oregon Short Line Railway Company, to provide for the payment of the interest as it becomes due on this series of bonds.
"Now, in consideration thereof, and of one dollar to it in hand paid by the said obligor, the Union Pacific Railway Company hereby guarantees for the holder hereof, for the time being, that the obligor herein will pay each of the coupons attached to these bonds when it falls due."
The Act of Congress of 1873 prohibited the Union Pacific from mortgaging or pledging its property or earnings without consent of Congress. The contract of January 12, 1882, specifically provided that it should not be construed as pledging the earnings or creating any lien on the property of the Union Pacific company. The device of guaranteeing the interest by means of a traffic agreement was resorted to, to avoid the limitation of the Act. How the contract circumvented the prohibition of the 1873 Act is shown by the following provision:
"It is further expressly understood that the covenants and agreements herein, so far as the same relate to a division of the earnings and the basis of such division, are covenants and agreements inter partes, and subject to be altered by the agreement of the parties; and none of the covenants and agreements herein on the part of the party of the second part (Union Pacific) are intended to create nor shall the same be construed to create or be a mortgage or pledge, legally or equitably, of the earnings of the party of the second part for any purpose whatever; and nothing herein contained is intended, nor shall the same be construed or held to affect any duty or obligation on the part of the party of the second part to the Government of the United States under its charter or any Act of Congress".
In the United States Pacific Railway Commission Investigation of 1887, President Adams testified that the company had been advised by its counsel that the language of the Act did not cover a guarantee of the nature contained in the Union Pacific-Oregon Short Line traffic agreement. He said, "the question turns upon the. meaning of the words 'mortgage or pledge made on the property or future earnings of the company'. This has been submitted to many lawyers, and I have yet to meet one who has expressed the opinion that a traffic guarantee of the. character of that made by the Union Pacific in the case of the Oregon Short Line is either a 'mortgage or a pledge.'." (See Adams' letter press book No. 14, page 331)
The guarantee of the interest on the bonds under the 1882 traffic agreement had the effect of giving some value to the stock. In October 1882, it stood at 36.
The traffic contract provided for a mileage pro rate of through revenues, but this provision was never applied in practice. Under instructions of S. H. H. Clark, probably acting on orders from Sidney Dillon, the Joint earnings, ever since the Short Line was opened for operation, were divided on a basis of 1-3/4 miles to one mile on passenger' revenues, and 1-1/2 miles to one mile on freight traffic. (See Adams' letter to the executive committee of July 26, 1888). In that year Adams engaged Peter A. Dey, a member of the Iowa Board of Railroad Commissioners, to act as one of a board of three referees, to examine the traffic agreement and to indicate wherein, in their opinion, it was unfair to the Short Line and ought to be modified. The other two referees were Judge James W. Savage, of Omaha, one of the "government directors" of Union Pacific, and George M. Bogue, who had been a member of the Illinois Railroad Commission. The referees' report confirmed the equity of the constructive mileage divisions which had been applied, as indicated above.
The annual reports of the Union Pacific Railway Company for 1881, 1882, and 1883, make only meager mention of the building of the Oregon Short Line. The annual report for 1884, issued by President Charles Francis Adams, the first Union Pacific financial report worthy of the name, gives the amounts of bonds and stock issued, and the amounts held by the Union Pacific Railway Company.
O.R.& N. lease:
The Oregon Short Line Railway Company leased the property of the Oregon Railway & Navigation Company under an agreement effective January 1, 1887.
Oregon Short Line and Utah Northern Railway Company:
Effective July 27, 1889, the Oregon Short Line Railway Company and the Utah & Northern Railway Company, together with a number of other subsidiary lines, were merged to form the Oregon Short Line and Utah Northern Railway Company, with a total mileage of 1456 miles. This property was placed in the hands of receivers in October 1893. On March 15, 1897, the receivers conveyed the property to the new Oregon Short Line Railroad Company. (See details in "Corporate History").
C. W. Collins' contract:
Collins ostensibly was an independent contractor, but he had no capital of his own, and there is evidence that his uncle, Sidney Dillon, was the real contractor in the building of the Oregon Short Line. Among several indications to this effect the following letter is illustrative:
"New York, August 28, 1882.
Chester W. Collins Esq.,
Care T. L. Kimball Esq., Omaha, Neb.
Dear Sir:
Enclosed I hand you power of attorney for Mr. Littell, one of our clerks, to transfer any stock of the Oregon Short Line Railway which will be issued to you for construction of that road. As all the stock will have to be issued first in your name. It will be necessary to have this power, so that it can be transferred here to other parties. I wish you to date and sign it, have it duly witnessed and returned to me at your early convenience.
Very truly yours,
Sidney Dillon, President".
The above letter is in a small file of correspondence with Mrs. Leah S. Hilton, of Tiffin, Ohio, in 1931, relating to certain old records of the Oregon Short Line which were then in her possession. These records were purchased from her for a small consideration.
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