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The Great Portland Railroad Race



by: COURTESY OF WELLS FARGO ARCHIVES - Trains like this once ran through Inner Southeast Portland! In 1869, the Eastside Oregon Central Railway Company was renamed the Oregon and California Railroad Company by owner Ben Holladay. Eventually the O&C R.R. became part of the Southern Pacific Railroad, and today the Union Pacific.In 1869 a golden spike was driven into the ground at Promontory, Utah, signifying the linking of the Central Pacific Railroad and the Union Pacific Railroad, and the completion of the first transcontinental railroad route.

For seven long years these two heavyweights battled each other over who could lay the most track, ending only on May 10th when that spike was driven.

But that was in Utah. Out in the Northwest, steam was building, as a new battlefront was forming – although on a much smaller scale. As early as 1863, speculative investors, eager farmers, demanding Portland merchants and especially persistent legislative leaders in Salem, lobbied for a railroad of their own connecting the fertile lands of the Willamette Valley to the desirable markets of Northern California.

On July 25th, 1865, in a special session of Congress, and with plenty of finagling by Oregon Senators, the federal government enacted a bill granting alternate sections of free land – if a railroad and telegraph line could be constructed from Portland south to Sacramento, connecting Oregon to the nation’s not-quite-finished transcontinental railway.

Two rival groups stepped forward to accept the challenge – one wishing to build on the west side of the Willamette River, and the other on the east side.

West Portland contestants included some of Portland’s most powerful and wealthy businessmen: John C. Ainsworth, William Ladd, Simeon Reed, and a host of other notable merchants, all intent on increasing trade with San Francisco.

Their opponents would be Simon G. Elliot and the wheat farmers of Southern and Eastern Oregon, who were tiring of paying high prices to ship their products to California on steamships owned by west-side Portland merchants. As it happened, Oregon Governor George L. Woods and a handful of Oregon politicians and California promoters favored a railway along the east bank of the Willamette River, and they also wanted to send a powerful message reminding the City of Portland that Salem was in charge of Oregon’s future!

The coveted prize for the winner of this eastside/westside railroad race was to be 3.7 million acres of land containing prime forest lumber, with the opportunity to divide and sell the remaining acreage and real estate to settlers and new arrivals to the Northwest. The amount to be realized from the sale of these lands would be a king’s ransom for the winning parties.

While the west side railroad promoters were favored to be awarded – and were actually promised at one time – the prized land grant, a new provision was added by Congress to insure that unscrupulous prospectors didn’t steal the land grant without actually building a railroad. That provision was that the first railway company to complete twenty miles of track would be declared the winner by the State Legislature. And with that, the great Portland Railway Race was officially on!

On October 6th, 1866, west side promoters announced their new railway, to be called the Oregon Central Railroad Company.

And, in a strange and baffling turn of events, Simon Elliot and his east side supporters presented to the public the establishment of their new railroad company with the same name! Local newspapers and common conversation simply referred to these dueling railways as the either the “East Side Company” or the “West Side Company”. The west side company took a commanding lead at the start, as described by Kenneth Munford in his pamphlet about The Oregon and California Railroad race: “On April 15th, 1868, with due ceremony on Portland’s southwest Fourth Street, at the foot of Marquam Hill, on which the medical school now stands, the West Side broke ground for its road.” By late summer, five miles of land had been cleared and graded southward from this spot, but workers on the west side were faced with the slow and onerous task of building through a steep grade and hilly slopes.

On the opposite side of the Willamette River, hoping to gain the right of way from the landowners along the route where the railway would travel, pioneer Gideon Tibbetts donated a portion of his farmland for the project. Local newspapers recounted that on April 16th a parade led the way to the ceremonial breaking of ground with Chinese laborers in tow, at a spot just south of today’s Division Street, near a ferry dock.

The east side construction crews fared much better in making a pathway south, as the land was more flat and level than on the west. But sloughs and winding streams, along with sections of trees and heavy brush, retarded progress.

The east side company quickly ran out of money as few, if any, of the east side investors had the deep pockets or hard cash that their rivals across the river possessed. Most farmers along the Willamette Valley who desired a railway on the east side dealt mainly in cash crops, and hard cash was just not available.

Grading 25 miles for a railroad track through untamed land and wilderness was easier imagined then conceived, and both sides struggled to continue their push southward. With winter weather arriving, construction by both rivals halted till spring.

In September of 1868 a new player arrived on the scene by steamboat. He was Ben Holladay, and among Midwest speculators he was known as a well-experienced government surplus dealer, an entrepreneur extraordinaire, and onetime owner of one of the largest Overland Stage Lines in the West. Small town Portland business owners were about to get a taste of a big-time player.

Standing over six feet tall and heavily built, Holladay’s commanding appearance and supreme confidence caused townsfolk to stop and take notice, and caused uncertainty among the local business executives. Holladay decided to visit the Rose City after having bought some bonds that Simon Elliot was selling in California to help raise additional capital for further investment in his east side train. Curious to know what he had bought, Holladay looked over the situation, and knew exactly what was at stake. He wanted to be more than just an observer; he wanted to be a player.

Portland was about to experience one of the most ruthless and unscrupulous businessmen ever to set foot in slab town, and both railroad companies were about to be involved in one of the greatest manipulations of politics in Oregon history. The West Side Railway supporters saw Holladay as an arrogant, boastful, incalculable scoundrel. Their East Side rivals welcomed him as a savior sent from heaven, and that was the side that Ben Holladay decided to support.

Holladay rolled out the red carpet; he held lavish parties, receptions, and banquets, and invited anyone who could be influential for his cause to attend. Newspapers were lured, and State Representatives in Salem were openly bribed. Using his own cash, Holladay got construction up and running again for the East Side Oregon Central Railway.

Close to 150 men were employed to run a two sawmills – one near Milwaukie and the other in Brooklyn, where timbers were cut and used for railroad ties and building trestles. Brick and wooden buildings were later constructed to build passenger coaches and freight railcars, and also for an engine maintenance and repair shop that eventually became known as the Brooklyn Car Shops.

Outfoxed by Holladay, the west-siders realized they were suddenly at risk of losing the competition. On October 28th, 1869, headlines in the local newspapers announced that rails were finally being laid, and within a month Holladay was riding aboard his locomotive as far as Milwaukie. George Wills negotiated a stop at his town of Willsburg, located east of a small community eventually to be called Sellwood, and by Christmas Eve the needed twenty miles of railway track was completed to New Era, south of Oregon City. The East Side Central Railroad was declared the winner of a hefty government contract.

Conceding defeat, supporters of the West Side Central Railroad sold their company to Ben Holladay.

Holladay continued his dominance, forcing a buyout on Simon Elliot, so that he became the sole owner – and he re-named his rail line the “Oregon and California Railroad Company”. Rails were soon being laid through Salem and then Eugene, and by 1872 the track was completed as far as Roseburg – where work ceased for the next ten years.

Using cash and bonds that had been intended to support his railroad project, Holladay increased his empire by acquiring a rival steamboat company and becoming involved in the streetcars being built around the area. With his acquisitions, Ben Holladay was now becoming one of the most powerful figures in Oregon. But his extensive purchases, lavish spending, and over-extended credit, would soon lead to his ruin.

English and German prospectors had purchased close to 11 million dollars worth of railway bonds during the ensuing years, and became worried about their investments when the railroad to California was still not finished. German Civil War correspondent and newspaper reporter Henry Villard, well-versed in English, was elected as an agent and sent to Portland to investigate.

What Villard saw was a pompous and over-zealous company president who was wasting investors’ money on worthless contracts not related to the construction of the railroad.

Villard turned from reporter to investor and seized control of Holladay’s holdings, and forced him out of the railway business by buying him out. The “railroad king of Oregon” was dethroned, and the extension of tracks southward towards California was resumed. But, like his predecessor, Villard too ran into financial difficulty by over-extending his credit buying other rail lines.

So it came to be that corporate leaders of the Southern Pacific Railroad took control of Villard’s assets, completing the rail line to San Francisco that neither Holladay nor Villard could. Portland’s first transcontinental connection was completed to California with official dedication ceremonies on December of 1887. The final days of the Oregon and California Railroad were over forever, as the Southern Pacific Railroad would become the reigning railway in Portland.

In poor health, and with his goal of being “railroad king of the West” thwarted, Ben Holladay spent his last days in Portland – dying in 1887 a mere pauper. In 1884, Villard was forced to resign from all his companies, and returned to Germany in despair and failure.

It was the residents of Oregon who benefitted the most from the failed investments and dirty dealings of railroad politics. Merchants and farmers at last had reasonably-priced transportation by railway for their products and goods to markets south and east; Portland merchants had better access to other cities along the West Coast. And today, even the Southern Pacific is gone…merged into the Union Pacific that rides its rails today.

About five percent of the land in the Brooklyn neighborhood was owned by the Oregon and California Railroad. If property owners in Brooklyn look at their title closely, they just might find “sold by the Oregon and California Railroad” on their deed. You can visit some of Oregon’s historic locomotives – like the famous steam engines SP&S 700, and the Southern Pacific 4449 – and read other stories about the history of the railways, at the new Oregon Rail Heritage Center near OMSI. While you won’t be able to ride on the Oregon and California Railroad – now long gone – you can take a step back in time by booking tickets aboard the Holiday Express excursion train, running between the Oaks Park Station, where tickets are sold, and the Oregon Museum of Science and Industry. See the November 29 date listing in the Events and Activities calendar in this issue of THE BEE for the excursion schedule.