But how would construction be financed?

The Pacific Railroad Act of 1862 set aside a land grant to aid in defraying the costs, but during the high-profit epoch of the Civil War, it just was not enough. The solution lay in the Pacific Railroad Act of 1864, which liberalized the funding available to construction by doubling the land grant and providing for land grant bonds, utilizing the land grant as backing.

For the UP, salvation came in the form of Oakes and Oliver Ames, brothers from Boston whose shovel business flourished during the gold rush, and who provided much of the cannon during the Civil War. The Ames brothers stepped into the breach and threw their tremendous influence behind the enterprise, investing more than a million dollars of their own money and pledging their credit almost to the breaking point; making it possible to carry the project through. At one point when it seemed the project might be doomed regardless, Oakes Ames said, "Go ahead – the work shall not stop, [even] if it takes the shovel shop." It didn't; in part because Ames shovels were used throughout the construction of the Union Pacific.

Meanwhile, the CP began the task of negotiating a route over the formidable Sierra Nevada. In preceding years, Theodore Judah, with just a notebook and a horse, had figured out a way to do it. From the Sacramento Valley he found a series of ridges over the mountains leading to Donner Pass and across the Sierra Nevada. Having established the route, Judah began searching for financial backing. His plan made sense to four shrewd Sacramento shopkeepers: Charles Crocker, Collis Huntington, Mark Hopkins and Leland Stanford. They came to be known as the "Big Four," proving to be too big for Judah, who died while seeking other financing. For both the CP and UP, the risks of financial failure and ruin were huge, as was the potential reward. In California, the Big Four began organizing their supply operation. Most of the iron and anything made by heavy industry, including the locomotive, the rail, the cars and the wheels, had to be made in the East and shipped around Cape Horn to California, a five- to six-month voyage.