Pony Express Historic Resource Study

OVERLAND MAIL COMPANY CONTRACT

When the bond scandal broke, the people of California naturally became alarmed about whether or not the Pony Express would continue. By this time, they relied on the service, and feared their communication link with the rest of the nation would be cut. With the country's sectional problems reaching a crisis, Californians and other westerners needed the services of the C.O.C. & P.P. Express Co. even more than before.

Though the bond scandal brought down the freighting firm of Russell, Majors, and Waddell, the C.O.C. & P.P. Express Co. was a separate corporation, and continued to "function under its original management as though nothing had happened." It continued to "capture the admiration of the public as its stage coaches ran regularly to Salt Lake City, Denver, and Sacramento," [118]

Russell continued to lobby for a central overland mail route contract in Congress, but with little success until disturbing news reached Washington, D.C., on February 23, 1861, that Texas had seceded from the Union. Not long after, reports reached Washington, D.C., that the Overland Mail Company's line had been destroyed in southern Missouri and Texas by Confederate troops. Without a southern mail route, the "battle of the routes" no longer existed for Russell to fight. [119] This news greatly encouraged Russell, especially when the Post Office Appropriation bill presented in Congress contained a provision for a route providing "daily mail from Missouri to California, with pay not to exceed $800,000." This bill essentially prevented United States mail from passing through any seceded states on its way to California. [120]

Russell set out to win the all-important mail contract for the central route. The C.O.C. & P.P. Express Co. was in a excellent position because it already held the government mail contracts covering the route from Missouri to California. Though the C.O.C. & P.P. Express Co.'s contracts could be annulled for cause by the postmaster general, that decision could not be executed because the Pony Express ran smoothly during the early months of 1861, in spite of the woes of the Russell, Majors, and Waddell. On the other hand, the postmaster general could not annul the Overland Mail Company's contract and simply give it to C.O.C. & P.P. Express Co. It should be remembered that the customary clause giving the postmaster general revisory power had been omitted from the Butterfield contract, and their contract still had at least two years to run. [121]

On March 2nd, to solve the contracting predicament with the C.O.C. & P.P. Express Co. and Overland Mail Company, and to protect communication lines with California, both houses of Congress, with President Buchanan's approval, modified the Overland Mail Company mail service contract by discontinuing the transportation of mail along the southern route and transferring it to a new central overland route. This new service would originate in St. Joseph, (or Atchison, in Kansas) and provide mail service to Placerville, California, six times a week. In addition to this new route, the contract required that the company run a pony express semi-weekly at a schedule time of ten days . . . charging the public for transportation of letters by said express not exceeding $1 per half ounce" until the completion of the transcontinental telegraph line. [122] Essentially the federal government turned the western half of the central route mail contract (Salt Lake City to Placerville, California) that the C.O.C. & P.P. Express Co. previously operated over to the Overland Mail Company. In exchange for giving this segment of the passenger/mail route to the Overland Mail Company, the government promised to indirectly support the Pony Express until the completion of the telegraph. [123]

For several reasons, this unusual arrangement held both the support of William H. Russell, president of the C.O.C. & P.P. Express Co., and William B. Dinsmore, president of the Overland Mail Company. The Overland Mail Company lacked the finances to run the entire central route alone. It needed the services and stations of the C.O.C. & P.P. Express Co. stations along the route. On the other hand, Russell and his partners were in no position to argue because they needed financial support for the C.O.C. & P.P. Express Co. [124]

On March 16, 1860, the two companies signed a contract validating this arrangement. This contract made the C.O.C. & P.P. Express Co. a "subcontractor on the line it hitherto operated alone," and compensated the C.O.C. & P.P. Express Co. $470,000 to operate the eastern half of the line. The contract also stated that the two companies had to divide equally the receipts from the Pony Express, with each "company paying the expenses on it own part of the route." In addition to these stipulations, the Overland Mail Company "reserved the right to make an exclusive contract with the Wells Fargo Express Company for all express business west of Salt Lake City and for all business originating west of Salt Lake City going East, the receipts to be divided equally." [125]

According to one historian, this contract with the Overland Mail Company was auspicious for the C.O.C. & P.P. Express Co.,

considering that Russell was under a cloud in Washington, his credit destroyed in the East, and he and his partners bankrupt. . . . Only by a stroke of good luck and favorable circumstances was he [Russell] able to participate in the million-dollar overland mail contract at all. Had the [Butterfield] Overland Mail Company been financially able to handle the whole route, Russell would probably have been thrust entirely out of this picture. [126]