Reconstruction, Expansion, and the Triumph of Industrial Capitalism 29today]. State governments were also vital patrons of railroad infrastructure,
going over $100 million into debt to provide resources to railroad investors.
Significant contributions also came from the federal government, which,
beginning in 1850, began making land grants, and within a decade had allo-
cated over 22 million acres of public land to the railroads, and over 170 mil-
lion acres [the size of Texas!] in the second half of the century [estimated to
be worth $2 an acre, so worth $340 million, or about $8 billion today]. In
the decade before the Civil War, just a few firms were capitalized at even $1
million; by 1860, railroad investments by themselves had reached $1 billion in
capital.
So, while the wealthy elite talked of the risks they were taking, in fact the
government was giving them vast amounts of money, tax breaks, land, and
other handouts, and virtually ensuring that their investments would be
extremely profitable. This would become the model for American capitalism;
though the public would be taught that the United States had a private
economy with risk-taking entrepreneurs, in fact the government would remain
highly involved in economic decisions, making sure that certain industries
flourished by providing them vast sums of public money and natural resources.
Rockefeller and Carnegie, Oil and Steel, Power and Wealth
In this era of industrial capitalism and incorporation, two figures stand out–
John D. Rockefeller and Andrew Carnegie. Rockefeller was a commercial mer-
chant in Cleveland, selling hay, meats, and other products, making significant
profits during the Civil War but also sensing huge opportunities in another
area–oil! In 1863, just after the first oil wells had been tapped in Pennsylvania,
Rockefeller became a part owner of the Pennsylvania Rock Oil Company, and
along with his partners developed a plan to drill into the ground for oil and
refine the “rock oil,” the petroleum, into kerosene for lamps. They built their
first refinery in Cleveland, linked by railroad to the oil fields, and within about
a year or so, a virtual oil rush took place, with 75 wells and 15 refineries in
the Oil City and Titusville areas in Pennsylvania. He took control of as many
aspects of the oil industry as he could. He bought fields of white oak to
produce timber for his oil barrels; purchased his own tank cars, boats and even
wagons and horses for transport; hired his own mechanics and plumbers and
bought his own tools for them to work with; eventually had his own produc-