They passed legislation in 1862 authorizing the central rail route with financing in the form of land grants and government railroad bond, which were all eventually repaid with interest.

[2] The construction of the railroad also secured for the government the economical "safe and speedy transportation of the mails, troops, munitions of war, and public stores".

[3] In the fall of 1860, Charles Marsh, a surveyor, civil engineer and water company owner, met with Theodore Judah, a civil engineer, who had recently built the Sacramento Valley Railroad from Sacramento to Folsom, California and was working on the California Central Railroad to extend the former from Folsom to Marysville.

In early 1861, Marsh, Judah and Strong met with Collis P. Huntington, Leland Stanford, Mark Hopkins Jr. and Charles Crocker to obtain financial backing.

Papers were filed to incorporate the new company, and on April 30, 1861, the eight of them, along with Lucius Anson Booth, became the first board of directors of the Central Pacific Railroad.

The construction crew grew to include 12,000 Chinese laborers by 1868, when they breached Donner summit and constituted eighty percent of the entire work force.

[25] In time, CPRR came to see the advantage of good workers employed at low wages: "Chinese labor proved to be Central Pacific's salvation.

The story that Chinese workers were suspended in wicker baskets over vertical granite cliffs at Cape Horn, California, to drill and blast a ledge for the Central Pacific has been repeated and exaggerated by uncritical historians.

[27][28][29][30][31][32] Central Pacific Director Charles Marsh had extensive civil engineering experience in projects of this nature, both from planning an earlier proposed railroad into the Sierras, and from building ditches and flumes through those mountains for his water company.

Although the Pacific Railroad eventually benefited the Bay Area, the City and County of San Francisco obstructed financing it during the early years of 1863–1865.

When Stanford was Governor of California, the Legislature passed on April 22, 1863, "An Act to Authorize the Board of Supervisors of the City and County of San Francisco to take and subscribe One Million Dollars to the Capital Stock of the Western Pacific Rail Road Company and the Central Pacific Rail Road Company of California and to provide for the payment of the same and other matters relating thereto" (which was later amended by Section Five of the "Compromise Act" of April 4, 1864).

It took legal actions to force them to do so: in 1864 the Supreme Court of the State of California ordered them under Writs of Mandamus (The People of the State of California ex rel the Central Pacific Railroad Company vs. Henry P. Coon, Mayor; Henry M. Hale, Auditor; and Joseph S. Paxson, Treasurer, of the City and County of San Francisco.

Despite Judah's strong objection, the Big Four incorporated in August 1863 the Dutch Flat-Donner Lake Wagon Road Company.

Frustrated, Judah headed off for New York via Panama to raise funds to buy out the Big Four from CPRR and build his trans-Sierra railroad.

Additional collections of manuscript letters are held at Stanford University and the Mariners' Museum at Newport News, Virginia.

Until the completion of the Transcontinental rail link and the railroad's opening of its own shops, all locomotives had to be purchased from builders in the northeastern U.S.

The engines had to be dismantled, loaded on a ship, which would embark on a four-month journey that went around South America's Cape Horn until arriving in Sacramento where the locomotives would be unloaded, re-assembled, and placed in service.

Locomotives at the time came from many manufacturers, such as Cooke, Schenectady, Mason, Rogers, Danforth, Norris, Booth, and McKay & Aldus, among others.