Did private industry create the railroads?


Will writes from Washington, D.C. (well, Arlington, Virginia). You can reach him at willblogcorrespondence at gmail dot com.

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11 Responses

  1. Jason Kuznicki says:

    I’m far from an expert on railroad history, but I’d understood that while most railroads were produced with the help of government subsidies, a minority were not. To give more details with any confidence, I’d want to examine the primary sources myself, because it seems like all sides want to claim the railroads for something or other.Report

    • @Jason Kuznicki, As a one-time avid player of Railroad Tycoon, I consider myself an unassailable expert on railroad history. I do not recall ever once being offered a government subsidy in that game. As such, it should be abundantly clear that all railroads, ever, have been built entirely with private funds. If it wasn’t true, it wouldn’t be in a computer game.Report

  2. Someone should send Biden a copy of ‘Nothing Like It in the World” by Stephen Ambrose. Railroad companies made all their money off of the property adjacent to the railroad, so laying the actual track was an investment. The closest thing to a ‘government subsidy’ was allowing them to have that land for ‘free’. Oh – and they also provided government troops as security in some areas.Report

    • Brett in reply to Mike at The Big Stick says:

      @Mike at The Big Stick,

      That’s not correct. The land itself was often almost worthless, particularly in the Southwest (helped by the fact that the railroads didn’t have the right to what was beneath the ground), so the main source of subsidy came from things such as the amount of money paid by the federal government per mile of track laid, and so forth.Report

      • @Brett, You might notice my quotation marks around ‘government subsidy’ and my clarification that it was not a true subsidy. The government encouraged private investment by agreeing to give them land in exchange for risk. From a certain perspective it might be considered an indirect subsidy similar to a state offering an auto manufacturer tax incentives to move a plant there.Report

  3. gregiank says:

    Next the W E will say that the water projects that allowed large scale development had nothing to do with the gov.Report

  4. Randall O’Toole will no doubt continue his career of amusingly absurd distortion for years, but his fellow-travelers should learn that citing him will only embarrass their cause and discredit their case.Report

  5. Mike Schilling says:

    The interstate highway system too — built 100% with private money, with the government merely providing the small service of routing it to the relevant contractors.Report

  6. Kevin Carson says:

    Just noticed this. I’d say without government intervention we’d have something a lot closer to the decentralized network Mumford speculated on in The City in History: a lot of primarily local systems serving local industrial districts, with the system of trunk lines to link them together growing much more slowly, and being much smaller in total capacity.

    Re the land grants as subsidies, it’s true the land wasn’t worth much at the time of the grant. The whole point was that the railroads were granted a monopoly on the right to sell land at the increased value that resulted from having a rail line running through it. The government granted far more land than was necessary for building the lines themselves, extending several miles on either side. And the railroads became booming real estate companies selling off (or renting) land that had increased in value by thousands of percent to residents of the new towns that sprang up after the rail lines were laid.Report

  7. Kevin Carson says:

    Re the anti-Biden article, I think the real lesson is that some form of railroad system would have been built with private money. But without the subsidized creation of a centralized, high-volume system of trunk lines like those associated with the land grants, it wouldn’t have promoted a centralized mass-production economy to anywhere near the extent that actually happened. As the article itself suggests, the transcontinental line served a market that wouldn’t have existed had people been investing their own money, and thus tipped the balance toward making one business model more profitable at the expense of another.Report