Agreement between Ben Holladay and German shareholders represented by Henry Villard, 1876 February 29

The Oregon and California Railroad Company was formed following the passage of the Oregon and California Railroad Act by the U.S. Congress in 1866. The act designated 3.7 million acres for the purpose of constructing a railroad from Portland, Oregon, to the California border. The firm, initially called the Oregon Central Railroad, was managed by Ben Holladay (1819-1887) until German shareholders, represented by Henry Villard (1835-1900), purchased a controlling interest. Southern Pacific Railroad took control of the Oregon and California Railroad Company in 1887.

The land grants provided by the Oregon and California Railroad Act stipulated that the company could fund construction by selling parcels along the railroad line to settlers at a rate of $2.50 per acre. The Oregon and California Railroad Company, however, submitted fraudulent settlement claims, and then sold the claims to land developers and timber firms for a profit. Exposure of these practices resulted in the Oregon Land Fraud Trials from 1904 to 1910. In 1916, Congress passed the Chamberlain-Ferris Act, which returned 2,800,000 acres of the railroad company's lands to the federal government.