Introduction: The Southern Pacific Empire goes by many, many names. An attempt to organize a fairly detailed analysis of what it means when one talks about The Southern Pacific Company, is the topic of this brief document.
In no way will this be a history of the Southern Pacific Company or U.S. Railroad History. This is however, will be an executive summary with links to more extensive histories. The purpose of this document is to lay out a picture of what the Southern Pacific empire was and where it is today.
SP was formed by four men from Sacramento. They were approached by T. Judah in 1860 who was looking for sponsors of his idea of building a transcontinental railroad company. The four were Charles Crocker, Mark Hopkins, Collis P. Huntington and Leland Stanford. These four, later known by many names, but most commonly called the Big Four, went on to own most of the land, banking resources, transporation resources and political capital that created California.
Their heydays were 1860 to 1900. As the big four passed away, there was an economic battle over control of the empire that they had built. Only the Crocker Family continued to grow, while the others did not have family to take over. The Crocker family broke away from the railroad and focussed on real estate, banking and other companies. By no means was the SP empire to die with the passing of the Big Four.
The most important shift in the empire came with the death of Collis P Huntington in 1900. Edward Harriman had become the leading manager in Kuhn and Loeb's railroad investment empire, having taken control of the Union Pacific in 1896. Harriman purchased the Southern Pacific Empire from Huntington's widow in 1902.
The Kuhn and Loeb Empire was one of the largest investment brokers in the world at the time. In 1905, during government hearings the company stated that it had made $1.5 billion in investments in the previous 5 years.
In 1913, the U.S. Supreme Court struck down the merger of the Kuhn and Loeb blockbuster merger of SP and UP. Did Mrs. Huntington take the empire back? No, but National City amd J.P. Morgan were able to obtain control by 1924.
It took awhile for all of the various consolidations to mature, but by 1934 an empire called American Express, the 5th largest company in the U.S. at the time, was holding the Southern Pacific and much more.
American Express survives today as a credit card name for Citicorp. Back then it was part of the National City Company empire (Citicorp's original name). In 1924, EP Swenson, the Chairman of National sat on SP's board as well as the American Railway Express Company as it was known at the time.
So who was National City Company? Most folks immediately remember the name John D. Rockefeller as the owner of National. Yes, and No... Unfortunately for John, Teddy Roosevelt forced Rockefeller to get rid of control of the bank. He didn't do it without a fight, but after failing to reverse the decision in the Supreme Court, he was forced let go of National City Bank. So he gave it his Brother, who just happened to be rather close to J.P. Morgan.
We all know who J.P. Morgan was right? The man that bought Edison Electric from Thomas Edison and turned it into General Electric Co. Mr. Morgan has been credited with being the most ruthless and powerful financier in american history. Actually he got much of his financing from a jewish family named the Rothechilds.
By 1874, the banking coalition of Seligman, Rothechild, Belmont and Morgan was claimed to have almost a complete monopoly on European investments. They were also the biggest here in the U.S. too. Kuhn & Loeb was part of this small network of insiders, mostly linked to an elite group of jewish investors that were fronting money from the royal houses of Europe.
This same group went on to push for and succeed at creating the privately managed central bank known as the U.S. Federal Reserve Bank.
So what exactly was Ed Harriman (he had a son named Averill who ran for president of the U.S. but failed) getting when he bought the Southern Pacific Company? In 1900, it consisted of close to 11 million acres of land, 10,000 miles of railroad track, 4,000 miles of ocean transit services, Wells Fargo Bank and thousands of employees interlocked with other companies and government officials of California.
They didn't own the Sunset district of San Francico, San Mateo county, Santa Cruz county, Monterey county, or Santa Clara county. These areas were mostly owned by the Crockers, who had taken a hefty portion of the empire prior to Harriman's arrival.
When Mr. Harriman purchased Southern Pacific from Mrs. Huntington, one of his first acts was to hand Wells Fargo bank over to the Los Angeles branch of the Hellman family. Why would he just hand over the most powerful bank in California to the Hellmans? Well, the answer so far is that the Hellman family lived across the street from the Schiff Family in Eberlon New Jersey. Huh? Jacob Schiff was the boss at Kuhn and Loeb. Remember, Harriman was being financed by Kuhn and Loeb.
By 1920, National City Bank had control of Pacific Gas & Electric Company as well as Pacific Telephone and Telegraph.
During the great depression, the Southern Pacific became a cheap bus ride for impoverished american out to california, or back. The huge amount of land owned by Southern Pacific and many of its early insiders became the basis for the development of the giant agricultural plantations in the central valley. Their allies at PG&E went onto to gain control of the water rights of the state, through the entities known as irrigation or reclamation districts.
SP people at one time were actually pushing to fill in the south bay, in the hopes of opening up more real estate. They were and are still pushing through massive real estate development in both the East Bay and in San Francisco, with their multi-billion dollar Mission Bay project. (Put link here to cotelus history)
One of their most well known political allies has been Willie Brown, currently the mayor of San Francisco. Willie used to do legal work for the company. With willie as mayor, the Mission Bay finally got off the ground, after over 15 years of opposition.
Starting just after the Crocker family sold off their bank in 1986, the Southern Pacific also started looking for a new combination. One of their new operations was called Sprint. It was spun off and is now one of the largest long-distance companies in the U.S. (check this)
At this time, the powers that be, realized that the migratory evolution of California was turning it into state that would soon be unmanagable politically. Some of the largest corporations in the U.S., all located in the bay area started to be sold off to out of state buyers. SP led the way when it was sold off to Santa Fe. Soon to follow was Bank of America, Pacific Bell Telephone and Chevron. The latest merger of Wells Fargo with a large Seattle bank, may soon mean the out of state migration of the last major piece of the old SP empire. The question is wheather or not it will end up being a part of HSBC as the move toward TNC mega giants continues.
In 1983 Southern Pacific tried to merge with the Santa Fe Topeka but was later struck down. In 1996, SP merged with the Union Pacific for the 2nd time.
The following piece covers one of the major Southern Pacific Land Companies now known as Catellus. Please check out for much more on Land Grant Thefts.
Millions of acres of the 19th-century railroad land grants were not sold to settlers as the U.S. Congress intended. More than a century later, this land is controlled by dozens of corporations -- and some of the largest holdings of coal, oil and gas, gold, and real estate in the country are based on these illegal transfers of public land grants.
What follows is a preliminary list showing the scope and diversity of the unintended empires which have been carved from the railroad land grants. More entries will be added, and links to more detailed corporate profiles are coming.
Catellus is a real estate spin-off of the combined land grants of the Atchison Topeka & Santa Fe Railroad and the Southern Pacific Railroad.
The Catellus saga is a fine example of the convoluted deals that have emerged from the 19th-century railroad land grant subsidy. Here is a simplified version.
The 1983 merger of the Santa Fe and the Southern Pacific was broken by the U.S. government in 1987, but lots of real estate had been rearranged by then.
In 1989, Santa Fe sold 20 percent of its Santa Fe Realty to a partnership made up of JMB Realty and the California Public Employees Retirement System.
In 1990, as Catellus was spun off to Santa Fe shareholders, it owned two million acres of land in 13 states.
Some of the Catellus land was sold. By the end of 1996, the largest single shareholder was the California Public Employees' Retirement System (CALPERS), with 42 percent of the common stock.
The Catellus portfolio included 837,000 acres of land, 16 million square feet of income-producing office properties, 5,300 acres of land leases, and interests in various joint ventures, mostly located in California (Anaheim, City of Industry, Emeryville and Oakland East Baybridge Center, Fremont, La Mirada, Ontario, Rancho Cucamonga, Richmond, San Francisco Mission Bay, San Jose South Bay Center, and Santa Fe Springs), with the balance concentrated in Oklahoma, Dallas, Phoenix, and Chicago.
Catellus is one of the many land grant-based corporations which continues to benefit from public subsidy -- in this case by arranging a deal to sell 430,000 acres of its 790,000 acres of desert land back to the federal government (for $36 million) and the Wildlands Conservancy (for $16 million). The deal would include 86,000 acres within the Mojave National Preserve and 40,000 acres within Joshua Tree National Park. The Conservancy had already paid Catellus $3.2 million for 25,000 acres in Joshua Tree, and in 1998, with Catellus threatening to sell land it owned inside the Mojave Preserve, the next deal was pursued. As Conservancy head David Myers boasted (no doubt with Catellus approval) to the LA Times (Dec. 2, 1998), "we're going to get the government support we need. We're good at this." In January 2000, 225,000 acres of the deal were transferred to the U.S. BLM. Catellus is headquartered in San Francisco.
In May 2000, it was announced that Catellus would receive another $20 million for another 180,605 acres in the Mojave Desert. About $15 million was from private donations from the Wildlands Conservancy and $5 million were federal funds. The acquisition completes the largest purchase of private land in California history and the largest acquisition from one seller by the BLM. Vice President Al Gore said, "These stunning California desert lands are being preserved for future generations through a true public-private team effort that could serve as a model in other areas." Altogether, the Wildlands Conservancy and federal government have spent $45 million to acquire 405,000 acres from Catellus Development. U.S. Representative Jerry Lewis (R-CA), whose district includes much of the land, has sought to tie the purchase to expansion of the Ft. Irwin Army base, a move environmentalists say could damage desert tortoise habitat (Greenwire, May 19, 2000, citing AP/San Jose Mercury News, May 19, White House release, May 18, and Richard Simon, Los Angeles Times, May 19).
Santa Fe Railroad The Atchison, Topeka & Santa Fe Railway's 2,929,348 acre public land grant was parlayed into a 14,000,000 acre holding by the 1970s. The empire included 1.3 million acres desert lands in Nevada and Utah, managed by subsidiary Catellus (by the time Catellus was spun off in the early 1990s, Catellus had more than two million acres in 13 states). Santa Fe owned or controlled another 7,600,000 acres in Arizona, California, Colorado, Kansas, New Mexico, Oklahoma, and Utah. There were the Lone Tree and Rabbit Creek gold mines near Winnemucca Nevada, stone quarries in five states, 700 million tons of gold, and 250 million barrels of oil and natural gas. And mineral concessions in Paraguay. Santa Fe Energy Resources was spun off in 1990. Santa Fe Pacific Pipeline Partners runs 3,300 miles of pipeline and 14 truck terminals serving the Southwestern U.S. Santa Fe's 1983 merger with Southern Pacific was broken by the U.S. ICC in 1987, but in 1995, the merger of Burlington Northern and Santa Fe Pacific Railroads was approved.
Sierra Pacific Industries is a the largest privately-held timberland owner in the country, with more than a million acres of timberland in California. About half of this was purchased from the Santa Fe Southern Pacific Railroad in 1987. SPI's Emmerson family has used its wealth and power to set itself up as the main beneficiary of the 1998 Quincy Library legislation, which will increase timber cutting in the Lassen, Plumas, and Tahoe National Forests. As the largest contractor on the national forests in California, SPI is also one of the largest beneficiaries of the U.S. Forest Service's road construction subsidies. Headquartered in Anderson, California. Click here for a profile of Sierra Pacific Industries.
Organized under special charter from the State of Kentucky, Mar. 17th, 1884. On Dec. 31st 1923 the company held 11,244.31 miles of 1st main track, 4,795 miles of siding track, 18 miles of ferries, and 4,525 miles of water lines
Through its SP of Mexico company has 1,240 miles of track and 952 miles from affilliated companies
On December 1920, Southern Pacific separated its oil holdings, forming Pacific Oil Company
Officers: J. Kruttscnitt Chair; Wm Sproule Pres;
Directors: J. Alexander, H De Forest, JH Harding, ES Harkness, HE Huntington, JN Jarvie, J Kruttscnitt, LF Loree, Odgen Mills, S Rea, L Spence, Wm Sproule, EP Swenson, FD Underwood, WA Worthington
Special Note: EP Swenson is the Chairman of National City Bank Henry De Forest Chairman, also sits on Wells Fargo, Western Union and American Railway Express Co.
Pacific Oil Company Board of Directors: J. Alexander, G Buck, H De Forest, CA Peabody, S Rea, Mortimer Schiff, C Seger, P Shoup, EP Swensen