21

Still West from Denver

As the Atchison, Topeka and Santa Fe clawed its way back from the panic of 1893 and its own overindulgences, one thing had not changed on the map of the American West. There was still no direct rail link through Colorado’s mountains straight west from Denver.

Despite its loss of the Royal Gorge, the Santa Fe never completely gave up the idea of a line through Colorado’s mountains. The road’s independent line from Pueblo north to Denver was completed in 1887. That same year, a standard gauge upstart led by mining man J. J. Hagerman entered the Colorado fray.

Hagerman’s Colorado Midland Railroad built west from Colorado Springs, across South Park to Buena Vista, and then crossed the Continental Divide via a tunnel under Hagerman Pass west of Leadville. From the pass, a tortuous crossing at best, the line descended into the Roaring Fork Valley with a branch to Aspen, which was then enjoying a silver rush long before any boom from its silvery snows.

But there the Colorado Midland faltered. The best the road could do was connect with the Denver and Rio Grande near Glenwood Springs—a connection it might have made at Leadville or Buena Vista some 100 miles of mountain railroading and one backbreaking pass earlier.

Nonetheless, the Santa Fe was interested. From its inception, the Midland had a friendly relationship with the Santa Fe, receiving approximately three-quarters of its westbound passengers and freight from connections with the eastern road. For its part, the Santa Fe viewed the Midland as an excellent feeder into its system. The odd man out proved to be the Denver and Rio Grande. It feared a standard gauge Santa Fe–Colorado Midland connection to the Rio Grande Western at Grand Junction even as the Denver and Rio Grande was converting its circuitous Royal Gorge line over Tennessee Pass to standard gauge.

Consequently, in 1890 the Denver and Rio Grande crowd in Denver led by banker David Moffat approached Hagerman about buying the Midland outright. But somewhere along the line, Moffat and his associates raised the hackles of Hagerman, an independent Midwesterner who’d come west for his health. Well aware of the eastern capital that controlled most western railroads, Hagerman growled, “I do not suppose there are 500 shares of Rio Grande stock owned in Colorado, but to hear the officers here talk, you would suppose they owned it all.”

The Denver and Rio Grande sent its chairman to London to arrange financing for the purchase of the Midland, but the day before he arrived, Hagerman closed a sale to the Santa Fe. Four million dollars was a hefty price to pay, but the Santa Fe considered it necessary to protect its northern flanks and promote a connection in Utah with the Union Pacific. The Santa Fe’s ultimate goal, of course, was a point of entry into northern California, and if nothing else, its acquisition of the Midland proved that the Santa Fe had not forgiven the Rio Grande for past rivalries.

For his part, Hagerman was elated with the deal. Not only did he receive his investment in the Midland back at a tidy profit, but “it enables me with one grand whack,” Hagerman wrote, “to get even with [Moffat’s Denver] combination, and pay them and their followers back for all the sneers, belittlement and other dirt they have heaped on me for the last four years.”

The result for the Santa Fe was not so rosy. In the six years from 1890 through 1895, the operations of the Colorado Midland cost the Santa Fe a $2.25 million loss. In the end, the debt of the Colorado Midland purchase became one of the millstones that pulled the Santa Fe into bankruptcy after the panic of 1893. What the Santa Fe’s brief ownership of the Colorado Midland proved, however, was that the Santa Fe was still concerned about railroad developments on the Sacramento–Salt Lake–Denver axis.

The Colorado Midland emerged from receivership as a separate entity once again. It would linger on the Colorado scene, even building a longer, lower tunnel under Hagerman Pass, but the geography of its mountainous route simply wasn’t conducive to a transcontinental haul. Meanwhile, the standard gauging of the Denver and Rio Grande main line was complete, and that railroad was teaming up with a much more formidable ally than the Midland.¹

Not surprisingly, the Denver and Rio Grande’s new ally proved to be George Gould. In the beginning, Gould’s Missouri Pacific system was content to cooperate with the Denver and Rio Grande via mutually beneficial traffic agreements. But in 1900, with the economic calamities of the past decade receding and George Gould’s confidence in his own powers rising, the Missouri Pacific began to buy Denver and Rio Grande stock. Young Gould’s desire to surpass his dad’s empire was only part of the reason.

Despite the fact that Colorado had the largest population of the Rocky Mountain states, a varied economy of mines, farming, and cattle, and a well-developed system of local railroads, Denver was still forced to ship westbound goods north to the Union Pacific at Cheyenne or south to Pueblo on the Denver and Rio Grande’s roundabout Royal Gorge route. Denver had transcontinental connections, but the Mile High City was not even close to being on a transcontinental main line.

Four hundred air miles to the west, Salt Lake City was singing much the same refrain. It had connections to the Union Pacific at Ogden and was served by the Rio Grande Western–Denver and Rio Grande line to the southeast, but it too did not sit squarely on a transcontinental main line. The idea of a direct rail link between these two cities that was also a main line transcontinental quickened the pulses of conservative businessmen and rank speculators alike.

The map of the West was indeed filling up, but here was an enticing void. “Such another opportunity for railroad builders is not to be found anywhere in the United States,” the Denver Republican proclaimed under the headline “An Empire Without a Railroad.”²

The first step in this last great Rocky Mountain railroad play was for George Gould to acquire control of the Denver and Rio Grande. But no sooner had Gould and the Missouri Pacific begun to buy into the Denver and Rio Grande aggressively than an event akin to Jay Gould’s passing occurred. It might be said that the other shoe dropped. Collis P. Huntington died at the age of seventy-eight on August 14, 1900. He was the last surviving member of the Big Four, and into his hands over half a lifetime had been gathered control of arguably the most powerful transportation empire in the country.

Barely was Huntington cold than E. H. Harriman, a New York financier and architect of a resurgent Union Pacific, made an attempt to buy the Central Pacific segment of the original transcontinental from Huntington’s estate. The only thing diminutive about Harriman was his stature. His banking background belied the fact that he had been quietly accumulating railroad expertise since joining the board of a little road in upstate New York.

In fact, as a Wall Street financier in an era when railroad stocks dominated the market, Harriman had little choice but to learn the railroad business. The myriad of financial details came to him easily enough, but, like the Santa Fe’s Edward Payson Ripley, Harriman also readily embraced the operational aspects, correctly appreciating that poorly maintained roadbeds, underpowered locomotives, and dilapidated rolling stock all suppressed the bottom line.

After brokering Illinois Central Railroad bonds and subsequently joining its board of directors, Harriman became the Illinois Central’s vice president in 1887. Here Harriman realized another aspect of his maturing persona: He simply wasn’t cut out to be vice president of anything. He left the operational role but remained on the Illinois Central’s board of directors as chairman of its finance committee, astutely guiding the road largely unscathed through the panic of 1893. Finally, it was time to look west.

As the Union Pacific emerged from its 1893-induced receivership, Harriman bulled his way onto the reborn road’s executive committee and quickly became its chairman. His first major task was to make a tour of the Union Pacific system. He found it in better physical condition than many on Wall Street assumed, and he moved aggressively to increase its capacity and efficiency. The one weak link in his reborn Union Pacific vision was the Central Pacific’s portion of the first transcontinental that was still owned by Huntington.

After Huntington died and Harriman’s initial efforts failed to purchase the Central Pacific between Ogden and San Francisco from Huntington’s estate, Harriman and his Union Pacific supporters began to buy the stock of its parent, the Southern Pacific. By the time they were done, not only did Harriman control the Central Pacific but Huntington’s entire Southern Pacific system as well. It was no overstatement for Harriman to assert, “We have bought not only a railroad, but an empire.”³

Throughout these negotiations, George Gould continued to buy Denver and Rio Grande stock and refrained from any direct role—for or against—in Harriman’s machinations for the Southern Pacific. Gould could not have been unaware, however, that whatever the result, it was likely to impact the Missouri Pacific and the Denver and Rio Grande at the vaunted Ogden gateway to the Union Pacific system.

So while Harriman bought his empire, George Gould focused on the Denver and Rio Grande, which in turn was trying to buy William Jackson Palmer’s Rio Grande Western between Grand Junction and Ogden. Palmer had clung to this line tenaciously after his ouster from the Denver and Rio Grande and continued to run a first-class railroad. Despite many offers, Palmer and his associates knew that they had a strategically located property that was increasing in value. It was useless to negotiate with Palmer, one Denver and Rio Grande executive complained, because at each negotiation he “advanced the price at which they were willing to sell.…”

Now, with George Gould sitting on the board of the Denver and Rio Grande and about to become its chairman, the capital and the timing came together to consummate the purchase of the Rio Grande Western for $15 million. Palmer’s personal take appears to have amounted to about $1 million. For the general, this transaction marked the end of an active railroad career begun more than forty years before at the elbow of J. Edgar Thomson.

Palmer’s personal heartbreak appears to have been his marriage to Queen. The ardor between them in the heady days of dreaming about their own little railroad cooled as the demands of Palmer’s far-flung enterprises disrupted Queen’s vision of tranquil family life with three daughters. Queen blamed a heart condition on her desire to give up life at altitude in Colorado and to live with the girls first in New York City and then England. Palmer visited once or twice a year, combining family time with financial meetings. When Queen did in fact succumb to heart failure at the comparatively young age of forty-four, the general rushed to her side but arrived too late.

There is a well-circulated story that Palmer, having made an ample fortune from real estate, coal, and other ventures, shared the largesse from his Rio Grande Western sale with his employees. At many levels, he had been as shrewd and calculating as any of his contemporaries, but this act of kindness underscored that since his days at the helm of the Fifteenth Pennsylvania Cavalry, Palmer had taken a keen interest in the welfare of those under him.⁴

For George Gould, the Rio Grande Western purchase was simply another piece in the puzzle of the western expansion of his Missouri Pacific system. His next step was to complete his control of the Denver and Rio Grande. As Harriman was then wrapping up his purchase of the entire Southern Pacific system, Gould went to him and suggested that if Harriman did not want the entire Huntington network, Gould would be quite willing to buy the southern pieces of it—principally the Los Angeles–Tucson–El Paso–Houston main line of the Southern Pacific. (Gould, of course, continued to control the Texas and Pacific as far as the Southern Pacific connection at Sierra Blanca, and the Southern Pacific line would have given him a distinct advantage against the Santa Fe with both transcontinental and Gulf Coast traffic.)

When Harriman declined the offer, “Gould asked for a half interest in the purchase,” claiming that such a joint venture would “exemplify the community of interest spirit” that Harriman had been promoting among the western roads.

Such public relations talk designed to lull one’s opponents was one thing, but with the “empire” securely in his hands, Harriman was not about to share it. A half interest was not possible, Harriman told a suddenly ruffled Gould, but Gould would be more than welcome to become a director of the Southern Pacific.

Shortly thereafter, Gould’s control of the enlarged Denver and Rio Grande became public knowledge as he stepped into its chairmanship. Learning this news, Harriman reportedly remarked to Gould—perhaps with a sly grin—“You bought that, I suppose, for both interests: Union Pacific and your own.”

When Gould replied with a curt no, Harriman nonetheless suggested that he would like to have a half interest in the road. Showing that he was at least capable of flashes of his father’s intellect, George Gould replied, “That cannot be arranged, but I would like you to serve on the Rio Grande board.”⁵

This exchange, however anecdotal, nonetheless characterizes the next round of battle. Gould could almost hear the bang as Harriman slammed the California door shut. With the northern and southern access to California via the Central Pacific and Southern Pacific controlled by Harriman—and no love lost between the Missouri Pacific and the Santa Fe that controlled the third California door—Gould was still stuck, as the Denver and Rio Grande had long been, at Ogden. If Gould’s Missouri Pacific–Denver and Rio Grande system was to enjoy trade west of Ogden, it was going to have to lay its own tracks to California.

George Gould set about it with considerable stealth. During 1902 he quietly dispatched teams of surveyors to find a route through the Sierra Nevada preferable to the Central Pacific’s original line over Donner Pass. The easy winner was 5,218-foot Beckwourth Pass, discovered in 1850 by mountain man Jim Beckwourth and some 2,000 feet lower than Donner. Once across the pass, the route dropped down California’s Feather River Canyon and into the Sacramento Valley.

By March 1903, enough of the right-of-way was under Gould’s control that he incorporated the Western Pacific Railway. But Gould’s history with the line was not to be a happy one. Construction began from both the Oakland and Salt Lake ends early in 1906. While the low elevation of Beckwourth Pass and water grade of the Feather River Canyon were assets, Gould’s bondholders stipulated that the line have a maximum grade of 1 percent. That was admirable from an operational standpoint, but it lengthened the route and made for some circuitous swings.⁶

Where the line crossed the existing Central Pacific–Southern Pacific grade, the Western Pacific had to foot the expense of grade crossings because the other line had been there first. Then there were some forty-one steel bridges and forty-four tunnels. When the road was completed late in 1909, it was 927 miles from Oakland to Salt Lake City, 150 miles longer than the original Central Pacific, albeit over more gradual grades.

By then, George Gould’s attempt to surpass his father as a railroad tycoon had come to ruin. He overreached his Midwest power base, locked horns with E. H. Harriman to his detriment, and, in the end, became a financial casualty of the panic of 1907. Perhaps the Wall Street Journal best summed up the difference between the younger Gould and Harriman. “The policies, ambitions, and apparent destinies of these two magnates are identical…” the Journal concluded, but “Mr. Gould is swayed by incidental circumstances, while Mr. Harriman’s vocation in life is to triumph over incidental circumstances.”

Not only had the Western Pacific been expensive to build, but also its eastern connection to the Missouri Pacific still led over the mountainous and circuitous route of the Denver and Rio Grande from Salt Lake to Pueblo. Even east of Pueblo, the Missouri Pacific “still had light fifty-six-pound rail, dirt ballast, short passing tracks, and a host of other shortcomings.”⁷

Compared to Harriman’s Union Pacific main line to the north, the Western Pacific was only a second-class competitor. But there was an even sharper contrast to the south. Thanks to Edward Payson Ripley’s determined investments in infrastructure, the Atchison, Topeka and Santa Fe had become a model of efficiency and reliability. It was not yet the biggest and the best, but Colonel Holliday’s road was well ensconced among America’s railroads as a Wall Street blue chip. On no other route could one travel from Los Angeles to Chicago with such ease and speed.

The final chapter to control the California–Salt Lake–Denver axis was written in Colorado. While George Gould built the Western Pacific, David Moffat—the Denver banker who had so infuriated J. J. Hagerman—announced that he would build the long-sought standard gauge straight west from Denver. Past history spawned many skeptics, but Moffat’s Denver, Northwestern and Pacific Railway promised to shorten the distance between Denver and Salt Lake City via the Denver and Rio Grande from 735 to 525 miles.

The Denver and Rio Grande bristled at this incursion into its territory, but it was hamstrung by the financial weight of Gould’s Western Pacific expansion. The Rio Grande had difficulty maintaining its own operations and simply was in no position to challenge Moffat. As a retired William Jackson Palmer wryly wrote, “As to the D. and R. G.—if it has an engine that doesn’t leak, I am not aware of it.”

Palmer, like so many of his contemporaries, was approaching the end of the line. In the fall of 1906, he fell from his horse while riding on the grounds of his beloved Glen Eyrie estate west of Colorado Springs. He spent his last two and one-half years incapacitated from a broken neck. But even that injury could not keep the general from grandly entertaining 280 veterans of his old Fifteenth Pennsylvania Cavalry regiment for one last reunion. Many of them were loyal comrades from his railroad wars as well.

Without Palmer or the Denver and Rio Grande to oppose him corporately, Moffat built west from Denver, but his railroad was challenged physically by the heights of the Continental Divide at 11,680-foot Rollins Pass. (The railroad also called it Corona Pass.) Steep grades, winter snows, and howling winds made operations costly and sometimes impossible. Once across the pass, the Denver, Northwestern and Pacific made it only as far as sparsely populated Craig in northwest Colorado.

By then, David Moffat was also dead, having died in 1911 after spending $14 million on the “straight west” dream. Civic leaders in Denver rallied to the cause and, after the better part of two decades of wrangling, secured bonds to construct a 6.2-mile tunnel that avoided the climb over Rollins Pass. The Moffat Tunnel was finally completed in 1927.

Having gone through its share of receiverships, the reorganized Denver and Rio Grande Western acquired the remnants of Moffat’s system and then completed the 38-mile Dotsero Cutoff between Moffat’s road and its own Tennessee Pass main line. The Denver and Rio Grande was thus able to link the two systems and use the Moffat Tunnel to reduce its mileage between Denver and Grand Junction. Only in that way did Denver finally—after more than fifty years—get its long-sought line straight west.⁸