Oregon and California Railroad
Encyclopedia
The Oregon and California Railroad was formed from the Oregon Central Railroad
when it was the first to operate a 20 miles (32 km) stretch south of Portland
in 1869. This qualified the Railroad for land grants in California, whereupon the name of the railroad soon changed to Oregon & California Rail Road Company. In 1887, the line was completed over Siskiyou Summit
, and the Southern Pacific Railroad
assumed control of the railroad, although it was not officially sold to Southern Pacific until January 3, 1927.
waterfront district, and paying them to sign applications to purchase 160 acre (0.6474976 km²) parcels of O&C lands as "settlers," then selling these fraudulent instruments in large blocks to corporate interests through corrupt middlemen. This elaborate money laundering and land fraud scheme was only the beginning. Southern Pacific Railroad eventually abandoned the pretense of nonexistent settlers, and sold lands in large parcels directly to developers for as much as US$40 per acre. By 1902, with land prices soaring, company declared it was terminating land sales altogether. When the scandal broke in 1904 through an investigation by The Oregonian
it had grown to such a magnitude that the paper reported that more than 75% of the land sales had violated federal law.
reforms, vowed in 1903 to "clean up the O&C land fraud mess, once and for all!" Over the following two years, Roosevelt’s investigators collected evidence, and over 1,000 politicians, businessmen, railroad executives and others were indicted. Many were eventually tried and convicted on charges including fraud, bribery and other corruption. The federal government sought return of the grant lands from the railroad not actually part of the right of way for the railroad line itself.
. This law put the lands back in U.S. federal government control, and compensated the company at an amount equivalent to what it would have received had it abided by the $2.50 per acre limit.
That result was that over 2 million acres (8000 km²) were recovered, removing them from private control and back into federal ownership. As of 2006, their retention by the federal government, and therefore not subject to local and state taxation, remains a political issue.
Oregon Central Railroad
The Oregon Central Railroad was the name of two railroad companies in the U.S. state of Oregon, each of which claimed federal land grants that had been assigned to the state in 1866 to assist in building a line from Portland south into California...
when it was the first to operate a 20 miles (32 km) stretch south of Portland
Portland, Oregon
Portland is a city located in the Pacific Northwest, near the confluence of the Willamette and Columbia rivers in the U.S. state of Oregon. As of the 2010 Census, it had a population of 583,776, making it the 29th most populous city in the United States...
in 1869. This qualified the Railroad for land grants in California, whereupon the name of the railroad soon changed to Oregon & California Rail Road Company. In 1887, the line was completed over Siskiyou Summit
Siskiyou Summit
Siskiyou Summit is a mountain pass that carries Interstate 5 through the Siskiyou Mountains near the border between the U.S. states of California and Oregon. The summit is located on the Oregon side, approximately north of the state line, and, at , is the highest point on Interstate 5...
, and the Southern Pacific Railroad
Southern Pacific Railroad
The Southern Pacific Transportation Company , earlier Southern Pacific Railroad and Southern Pacific Company, and usually simply called the Southern Pacific or Espee, was an American railroad....
assumed control of the railroad, although it was not officially sold to Southern Pacific until January 3, 1927.
History
Grant of public lands
In all, the O&C received grants in the 1860s to about 4 million acres (16,000 km²) of forestland in western Oregon in exchange for the construction of a railroad from Portland to the California border, on the grounds that the development of such a line was in the public interest. Under the provisions of the grant, as construction progressed, the O&C Railroad earned the right to sections of land in strips 20 miles (30 km) wide on alternating sides of the constructed tracks. The public lands transferred to the company created a checkerboard pattern. The railroad was required by Congress to offer the grant lands for sale to "actual settlers," in parcels no greater than 160 acre (0.6474976 km²), and at prices limited to a maximum of US$2.50 per acre. The purpose of these restrictions was to encourage settlement and economic development, while compensating the O&C Railroad for its costs of construction. Construction efforts were sporadic, finally reaching completion in 1887 after the financially troubled O&C Railroad was acquired by the Southern Pacific.Mismanagement and fraud
While construction was still ongoing, multiple charges of land fraud arose. The company was accused of rounding up individuals from saloons in Portland'sPortland, Oregon
Portland is a city located in the Pacific Northwest, near the confluence of the Willamette and Columbia rivers in the U.S. state of Oregon. As of the 2010 Census, it had a population of 583,776, making it the 29th most populous city in the United States...
waterfront district, and paying them to sign applications to purchase 160 acre (0.6474976 km²) parcels of O&C lands as "settlers," then selling these fraudulent instruments in large blocks to corporate interests through corrupt middlemen. This elaborate money laundering and land fraud scheme was only the beginning. Southern Pacific Railroad eventually abandoned the pretense of nonexistent settlers, and sold lands in large parcels directly to developers for as much as US$40 per acre. By 1902, with land prices soaring, company declared it was terminating land sales altogether. When the scandal broke in 1904 through an investigation by The Oregonian
The Oregonian
The Oregonian is the major daily newspaper in Portland, Oregon, owned by Advance Publications. It is the oldest continuously published newspaper on the U.S. west coast, founded as a weekly by Thomas J. Dryer on December 4, 1850...
it had grown to such a magnitude that the paper reported that more than 75% of the land sales had violated federal law.
President Roosevelt intervenes
Newly elected President Theodore Roosevelt, as part of his plan of progressiveProgressivism
Progressivism is an umbrella term for a political ideology advocating or favoring social, political, and economic reform or changes. Progressivism is often viewed by some conservatives, constitutionalists, and libertarians to be in opposition to conservative or reactionary ideologies.The...
reforms, vowed in 1903 to "clean up the O&C land fraud mess, once and for all!" Over the following two years, Roosevelt’s investigators collected evidence, and over 1,000 politicians, businessmen, railroad executives and others were indicted. Many were eventually tried and convicted on charges including fraud, bribery and other corruption. The federal government sought return of the grant lands from the railroad not actually part of the right of way for the railroad line itself.
Case goes to Supreme Court
In 1915, the U.S. Supreme Court decided that the railroad had been built as promised, so the railroad company should not be forced to completely forfeit the lands, despite having violated the terms of the grant. Congress responded in 1916, with the Chamberlain-Ferris ActChamberlain-Ferris Act
The Chamberlain–Ferris Act of June 9, 1916 was an Act of the United States Congress that ruled that of the original 4 million granted to the Southern Pacific Company in California and Oregon were "revested" to the United States, and put under the control of the General Land Office, which was to...
. This law put the lands back in U.S. federal government control, and compensated the company at an amount equivalent to what it would have received had it abided by the $2.50 per acre limit.
That result was that over 2 million acres (8000 km²) were recovered, removing them from private control and back into federal ownership. As of 2006, their retention by the federal government, and therefore not subject to local and state taxation, remains a political issue.