I don't know a ton about the time period. It just seems like he is trying to shoehorn his political beliefs into this event. Not saying there wasn't corruption occurring, just that there was probably a more nuanced story. http://mises.org/library/crony-capitalism-and-transcontinental-railroads
If you want to read a short and good book on the subject, Rayner's The Associates tells the story of Leland Stanford, Huntington, Crocker, and friends, as they built out railroads in the West.
Setting aside the Mises article's smugness about Austrian Economics, they are absolutely right about the corruption and crony capitalism of the railroad trade. For example, when they came here to Fresno, they told the City Council that if they wanted the train to come through here, they'd need free land, tons of cash "incentives", and so forth. This was what they did with most of the cities, and it usually work. Fresno told them to go to hell... and they built the railroad anyway.
The whole Progressive Revolution with Hiram Johnson was a reaction to the crazy amount of power the railroads had in turn over state politics.
I can't tell you anything about it, as it's outside my area of focus, but it might help to post a link to the article you're talking about?
Edit: words are hard