28 ChaPter^1
Without formally owning the businesses, the managers of the trust could thus
establish either oligopoly or monopoly arrangements.Railroads and Capitalist Development
In 1849, railway mileage in the U.S. stood about 7500 miles; by 1860, it was
up to 30,000 miles; and at the outset of the 20th Century, it had risen to
193,000 miles! Railroad demand rose as rapidly. In the period 1840-45, the
railroads shipped about 96,000 tons of goods; in 1846-1850, it was up to
308,000 tons; in 1851-55, 565,000 tons; and in the five years before the Civil
War began, an immense 762,000 tons. Now, raw materials could be con-
stantly shifted from the coal and ore fields to the factories [without the same
worries of ice and flood that made canal shipments difficult]. Goods, espe-
cially manufactures from the North, could be transported to a national market
more quickly and inexpensively, thereby leading to increased sales, profits, and
production. Indeed, the railroad was an overwhelmingly northern enterprise.
In 1860, about 30 percent of railroad mileage was in the south [and that per-
centage would shrink due to wartime destruction], while the Midwest by itself
had 36 percent, with similarly high percentages in the Northeast. By tying
markets together, the railroads also increased the “social savings” of land.
When canals and roads were used to deliver goods, most farms had to be
close to those sources or transport, meaning that lands too far away from a
port or highway were not cultivable. With the extension of the railway into
so many new areas, however, land could now be cultivated in areas all over
the countryside, and this led to a rise in crop production to about $250 mil-
lion annually after the Civil War.
Railroads fundamentally changed the American economy and society. Iron
and then steel were needed in huge quantities, and cities emerged due to the
trains—Chicago, for instance, had 2.5 million people in 1910, most lured and
transported by rail. The massive growth in railroads also demonstrated, again,
that the American economy would not be privately based but have equally
huge levels of government intervention. Even with private capital from the
sale of stocks, railroad expansion still required much more financing, and so
the government, at all levels, stepped in. Local and municipal governments
helped with cash subsidies and tax breaks and funded about 20 percent of
railway development [much like local governments fund sports stadiums