<P> The original Act's long title was An Act to aid in the construction of a railroad and telegraph line from the Missouri river to the Pacific ocean, and to secure to the government the use of the same for postal, military, and other purposes . It was based largely on a proposed bill originally reported six years earlier on August 16, 1856, to the 34th Congress by the Select Committee on the Pacific Railroad and Telegraph . Signed into law by President Abraham Lincoln on July 1, 1862, the 1862 Act authorized extensive land grants in the Western United States and the issuance of 30 - year government bonds (at 6 percent) to the Union Pacific Railroad and Central Pacific Railroad (later the Southern Pacific Railroad) companies in order to construct a continuous transcontinental railroad between the eastern side of the Missouri River at Council Bluffs, Iowa (opposite from Omaha, Nebraska) and the navigable waters of the Sacramento River in Sacramento, California . Section 2 of the Act granted each Company contiguous rights of way for their rail lines as well as all public lands within 200 feet (61 m) on either side of the track . </P> <P> Section 3 granted an additional 10 square miles (26 km2) of public land for every mile of grade except where railroads ran through cities or crossed rivers . The method of apportioning these additional land grants was specified in the Act as being in the form of "five alternate sections per mile on each side of said railroad, on the line thereof, and within the limits of ten miles on each side" which thus provided the companies with a total of 6,400 acres (2,600 ha) for each mile of their railroad . (The interspersed non-granted area remained as public lands under the custody and control of the U.S. General Land Office .) The U.S. Government Pacific Railroad Bonds were authorized by Section 5 to be issued to the companies at the rate of $16,000 per mile of tracked grade completed west of the designated base of the Sierra Nevadas and east of the designated base of the Rocky Mountains (UPRR). Section 11 of the Act provided that the issuance of bonds "shall be treble the number per mile" (to $48,000) for tracked grade completed over and within the two mountain ranges (but limited to a total of 300 miles (480 km) at this rate), and doubled (to $32,000) per mile of completed grade laid between the two mountain ranges </P> <P> The 30 - year U.S. government bonds authorized by the act would be issued and backed by the U.S. government, which would then provide the capital raised to the railroad companies upon completion of sections of the railroads in exchange for a lien on that section . The liens covered the railroads and all their fixtures, and all the loans were repaid in full (and with interest) by the companies as and when they became due . Section 10 of the 1864 amending Act (13 Statutes at Large, 356) additionally authorized the two companies to issue their own "First Mortgage Bonds" in total amounts up to (but not exceeding) that of the bonds issued by the United States, and that such company issued securities would have priority over the original Government Bonds . </P> <P> From 1850 to 1871, the railroads received more than 175 million acres (71 million ha) of public land--an area more than one tenth of the whole United States and larger in area than Texas . </P>

The pacific railway bill of 1862 did not