It has been pointed out by Davis in his history of the Union Pacific Railroad that the period of agitation was approaching probable success when the latter was deferred because of the rivalry of sections and localities into which the scheme was thrown. From about 1850 until 1853 it indeed seemed likely that the road would be built just so soon as the terminus could be agreed upon. To be sure, there was keen rivalry over this; yet the rivalry did not go beyond local jealousies and might readily be compromised. After the reports of the surveys were completed and presented to Congress the problem took on a new aspect which promised postponement until a far greater question could be solved. Slavery and the Pacific railroad are concrete illustrations of the two horns of the national dilemma.

As a national project, the railway raised the problem of its construction under national auspices. Was the United States, or should it become, a nation competent to undertake the work? With no hesitation, many of the advocates of the measure answered yes. Yet even among the friends of the road the query frequently evoked the other answer. Slavery had already taken its place as an institution peculiar to a single section. Its defence and perpetuation depended largely upon proving the contrary of the proposition that the Pacific railroad demanded. For the purposes of slavery defence the United States must remain a mere federation, limited in powers and lacking in the attributes of sovereignty and nationality. Looking back upon this struggle, with half a century gone by, it becomes clear that the final answer upon both questions, slavery and railway, had to be postponed until the more fundamental question of federal character had been worked out. The antitheses were clear, even as Lincoln saw them in 1858. Slavery and localism on the one hand, railway and nationalism on the other, were engaged in a vital struggle for recognition. Together they were incompatible. One or the other must survive alone. Lincoln saw a portion of the problem, and he sketched the answer: "I do not expect the Union to be dissolved,—I do not expect the house to fall, but I do expect it will cease to be divided."

The stages of the Pacific railroad movement are clearly marked through all these squabbles. Agitation came first, until conviction and acceptance were general. This was the era of Asa Whitney. Reconnoissance and survey followed, in a decade covering approximately 1847–1857. Organization came last, beginning in tentative schemes which counted for little, passing through a long series of intricate debates in Congress, and being merged in the larger question of nationality, but culminating finally in the first Pacific railroad bills of 1862 and 1864.

When Congress began its session of 1853–1854, most of the surveying parties contemplated by the act of the previous March were still in the field. The reports ordered were not yet available, and Congress recognized the inexpediency of proceeding farther without the facts. It is notable, however, that both houses at this time created select committees to consider propositions for a railway. Both of these committees reported bills, but neither received sanction even in the house of its friends. The next session, 1854–1855, saw the great struggle between Douglas and Benton.

Stephen A. Douglas, who had triumphantly carried through his Kansas-Nebraska bill in the preceding May, started a railway bill in the Senate in 1855. As finally considered and passed by the Senate, his bill provided for three railroads: a Northern Pacific, from the western border of Wisconsin to Puget Sound; a Southern Pacific, from the western border of Texas to the Pacific; and a Central Pacific, from Missouri or Iowa to San Francisco. They were to be constructed by private parties under contracts to be let jointly by the Secretaries of War and Interior and the Postmaster-general. Ultimately they were to become the property of the United States and the states through which they passed. The House of Representatives, led by Benton in the interests of a central road, declined to pass the Douglas measure. Before its final rejection, it was amended to please Benton and his allies by the restriction to a single trunk line from San Francisco, with eastern branches diverging to Lake Superior, Missouri or Iowa, and Memphis.

During the two years following the rejection of the Douglas scheme by the allied malcontents, the select committees on the Pacific railways had few propositions to consider, while Congress paid little attention to the general matter. Absorbing interest in politics, the new Republican party, and the campaign of 1856 were responsible for part of the neglect. The conviction of the dominant Democrats that the nation had no power to perform the task was responsible for more. The transition from a question of selfish localism to one of national policy which should require the whole strength of the nation for its solution was under way. The northern friends of the railway were disheartened by the southern tendencies of the Democratic administration which lasted till 1861. Jefferson Davis, as Secretary of War, was followed by Floyd, of Virginia, who believed with his predecessor that the southern was the most eligible route. At the same time, Aaron V. Brown, of Tennessee, Postmaster-general, was awarding the postal contract for an overland mail to Butterfield's southern route in spite of the fact that Congress had probably intended the central route to be employed. Between 1857 and 1861 the debates of Congress show the difficulties under which the railroad labored. Many bills were started, but few could get through the committees. In 1859 the Senate passed a bill. In 1860 the House passed one which the Senate amended to death. In the session of 1860–1861 its serious consideration was crowded out by the incipiency of war.

Through the long years of debate over the organization of the road, the nature of its management and the nature of its governmental aid were much in evidence. Save only the Cumberland road the United States had undertaken no such scheme, while the Cumberland road, vastly less in magnitude than this, had raised enough constitutional difficulties to last a generation. That there must be some connection between the road and the public lands had been seen even before Whitney commenced his advocacy. The nature of that connection was worked out incidentally to other movements while the Whitney scheme was under fire.

The policy of granting lands in aid of improvements in transportation had been hinted at as far back as the admission of Ohio, but it had not received its full development until the railroad period began. To some extent, in the thirties and forties, public lands had been allotted to the states to aid in canal building, but when the railroad promoters started their campaign in the latter decade, a new era in the history of the public domain was commenced. The definitive fight over the issue of land grants for railways took place in connection with the Illinois Central and Mobile and Ohio scheme in the years from 1847 to 1850.

The demand for a central railroad in Illinois made its appearance before the panic of 1837. The northwest states were now building their own railroads, and this enterprise was designed to connect the Galena lead country with the junction of the Ohio and Mississippi by a road running parallel to the Mississippi through the whole length of the state of Illinois. Private railways in the Northwest ran naturally from east to west, seeking termini on the Mississippi and at the Alleghany crossings. This one was to intersect all the horizontal roads, making useful connections everywhere. But it traversed a country where yet the prairie hen held uncontested sway. There was little population or freight to justify it, and hence the project, though it guised itself in at least three different corporate garments before 1845, failed of success. No one of the multitude of transverse railways, on whose junctions it had counted, crossed its right-of-way before 1850. La Salle, Galena, and Jonesboro were the only villages on its line worth marking on a large-scale map, while Chicago was yet under forty thousand in population.

Men who in the following decade led the Pacific railway agitation promoted the Illinois Central idea in the years immediately preceding 1850. Both Breese and Douglas of Illinois claimed the parentage of the bill which eventually passed Congress in 1850, and by opening the way to public aid for railway transportation commenced the period of the land-grant railroads. Already in some of the canal grants the method of aid had been outlined, alternate sections of land along the line of the canal being conveyed to the company to aid it in its work. The theory underlying the granting of alternate sections in the familiar checker-board fashion was that the public lands, while inaccessible, had slight value, but once reached by communication the alternate sections reserved by the United States would bring a higher price than the whole would have done without the canal, while the construction company would be aided without expense to any one. The application of this principle to railroads came rather slowly in a Congress somewhat disturbed by a doubt as to its power to devote the public resources to internal improvements. The sectional character of the Illinois Central railway was against it until its promoters enlarged the scheme into a Lake-to-Gulf railway by including plans for a continuation to Mobile from the Ohio. With southern aid thus enticed to its support, the bill became a law in 1850. By its terms, the alternate sections of land in a strip ten miles wide were given to the interested states to be used for the construction of the Illinois Central and the Mobile and Ohio. The grants were made directly to the states because of constitutional objections to construction within a state without its consent and approval. It was twelve years before Congress was ready to give the lands directly to the railroad company.

The decade following the Illinois Central grant was crowded with applications from other states for grants upon the same terms. In this period of speculative construction before the panic of 1857, every western state wanted all the aid it could get. In a single session seven states asked for nearly fourteen million acres of land, while before 1857 some five thousand miles of railway had been aided by land grants.

When Asa Whitney began his agitation for the Pacific railway, he asked for a huge land grant, but the machinery and methods of the grants had not yet become familiar to Congress. During the subsequent fifteen years of agitation and survey the method was worked out, so that when political conditions made it possible to build the road, there had ceased to be great difficulty in connection with its subsidy.

The sectional problem, which had reached its full development in Congress by 1857, prevented any action in the interest of a Pacific railway so long as it should remain unchanged. As the bickerings widened into war, the railway still remained a practical impossibility. But after war had removed from Congress the representatives of the southern states the way was cleared for action. When Congress met in its war session of July, 1861, all agitation in favor of southern routes was silenced by disunion. It remained only to choose among the routes lying north of the thirty-fifth parallel, and to authorize the construction along one of them of the railway which all admitted to be possible of construction, and to which military need in preservation of the union had now added an imperative quality.

The summer session of 1861 revived the bills for a Pacific railway, and handed them over to the regular session of 1861–1862 as unfinished business. In the lobby at this later session was Theodore D. Judah, a young graduate of the Troy Polytechnic, who gave powerful aid to the final settlement of route and means. Judah had come east in the autumn in company with one of the newly elected California representatives. During the long sea voyage he had drilled into his companion, who happily was later appointed to the Pacific Railroad Committee, all of the elaborate knowledge of the railway problem which he had acquired in his advocacy of the railway on the Pacific Coast. California had begun the construction of local railways several years before the war broke out; a Pacific railway was her constant need and prayer. Her own corporations were planned with reference to the time when tracks from the East should cross her border and find her local creations waiting for connections with them.

When the advent of war promised an early maturity for the scheme, a few Californians organized the most significant of the California railways, the Central Pacific. On June 28, 1861, this company was incorporated, having for its leading spirits Judah, its chief engineer, and Collis Potter Huntington, Mark Hopkins, Charles Crocker, and Leland Stanford, soon to be governor of the state. Its founders were all men of moderate means, but they had the best of that foresight and initiative in which the frontier was rich. Diligently through the summer of 1861 Judah prospected for routes across the mountains into Utah territory, where the new silver fields around Carson indicated the probable course of a route. With his plans and profiles, he hurried on to Washington in the fall to aid in the quick settlement of the long-debated question.

Judah's interest in a special California road coincided well with the needs and desires of Congress. Already various bills were in the hands of the select committees of both houses. The southern interest was gone. The only remaining rivalries were among St. Louis, Chicago, and the new Minnesota; while the first of these was tainted by the doubtful loyalty of Missouri, and the last was embarrassed by the newness of its territory and its lack of population. The Sioux were yet in control of much of the country beyond St. Paul. Out of this rivalry Chicago and a central route could emerge triumphant.

The spring of 1862 witnessed a long debate over a Union Pacific railroad to meet the new military needs of the United States as well as to satisfy the old economic necessities. Why it was called "Union" is somewhat in doubt. Bancroft thinks its name was descriptive of the various local roads which were bound together in the single continental scheme. Davis, on the contrary, is inclined to believe that the name was in contrast to the "Disunion" route of the thirty-second parallel, since the route chosen was to run entirely through loyal territory. Whatever the reason, however, the Union Pacific Railroad Company was incorporated on the 1st of July, 1862.

Under the act of incorporation a continental railway was to be constructed by several companies. Within the limits of California, the Central Pacific of California, already organized and well managed, was to have the privilege. Between the boundary line of California and Nevada and the hundredth meridian, the new Union Pacific was to be the constructing company. On the hundredth meridian, at some point between the Republican River in Kansas and the Platte River in Nebraska, radiating lines were to advance to various eastern frontier points, somewhat after the fashion of Benton's bill of 1855. Thus the Leavenworth, Pawnee, and Western of Kansas was authorized to connect this point with the Missouri River, south of the mouth of the Kansas, with a branch to Atchison and St. Joseph in connection with the Hannibal and St. Joseph of Missouri. The Union Pacific itself was required to build two more connections; one to run from the hundredth meridian to some point on the west boundary of Iowa, to be fixed by the President of the United States, and another to Sioux City, Iowa, whenever a line from the east should reach that place.

The aid offered for the construction of these lines was more generous than any previously provided by Congress. In the first place, the roads were entitled to a right-of-way four hundred feet wide, with permission to take material for construction from adjacent parts of the public domain. Secondly, the roads were to receive ten sections of land for each mile of track on the familiar alternate section principle. Finally, the United States was to lend to the roads bonds to the amount of $16,000 per mile, on the level, $32,000 in the foothills, and $48,000 in the mountains, to facilitate construction. If not completed and open by 1876, the whole line was to be forfeited to the United States. If completed, the loan of bonds was to be repaid out of subsequent earnings.

The Central Pacific of California was prompt in its acceptance of the terms of the act of July 1, 1862. It proceeded with its organization, broke ground at Sacramento on February 22, 1863, and had a few miles of track in operation before the next year closed. But the Union Pacific was slow. "While fighting to retain eleven refractory states," wrote one irritated critic of the act, "the nation permitted itself to be cozened out of territory sufficient to form twelve new republics." Yet great as were the offered grants, eastern capital was reluctant to put life into the new route across the plains. That it could ever pay, was seriously doubted. Chances for more certain and profitable investment in the East were frequent in the years of war-time prosperity. Although the railroad organized according to the terms of the law, subscribers to the stock of the Union Pacific were hard to find, and the road lay dormant for two more years until Congress revised its offer and increased its terms.

In the session of 1863–1864 the general subject was again approached. Writes Davis, "The opinion was almost universal that additional legislation was needed to make the Act of 1862 effective, but the point where the limit of aid to patriotic capitalists should be set was difficult to determine." It was, and remained, the belief of the opponents of the bill now passed that "lobbyists, male and female, ... shysters and adventurers" had much to do with the success of the measure. In its most essential parts, the new bill of 1864 increased the degree of government aid to the companies. The land grant was doubled from ten sections per mile of track to twenty, and the road was allowed to borrow of the general public, on first mortgage bonds, money to the amount of the United States loan, which was reduced by a self-denying ordinance to the status of a second mortgage. With these added inducements, the Union Pacific was finally begun.

The project at last under way in 1864–1865, as Davis graphically pictures it, "was thoroughly saturated and fairly dripping with the elements of adventure and romance." But he overstates his case when he goes on to remark that, "Before the building of the Pacific railway most of the wide expanse of territory west of the Missouri was terra incognita to the mass of Americans." For twenty years the railway had been under agitation; during the whole period population had crossed the great desert in increasing thousands; new states had banked up around its circumference, east, west, and south, while Kansas had been thrust into its middle; new camps had dotted its interior. The great West was by no means unknown, but with the construction of the railway the American frontier entered upon its final phase.