The American Nation A History of the United States, Combined Volume (14th Edition)

338 Chapter 12 The Sections Go Their Own Ways

were made after the Civil War, when the transconti-

nental lines were built.

Frequently, the capitalists who promoted railroads

were more concerned with making money out of the

construction of the lines than with operating them.

Others in the business were unashamedly crooked

and avidly took advantage of the public passion for

railroads. Some officials issued stock to themselves

without paying for it and then sold the shares to

gullible investors. Others manipulated the books of

their corporations and set up special construction

companies and paid them exorbitant returns out of

railroad assets. These practices did not become wide-

spread until after the Civil War, but all of them first

sprang up in the decades preceding the war. At the

same time that the country was first developing a truly

national economy, it was also producing its first really

big-time crooks.

Senate Report on the Railroadsat

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Railroads and the Economy

The effects of so much railroad construction were pro-

found. Although the main reason that farmers put

more land under the plow was an increase in the price

of agricultural products, the railroad helped determine

just what land was used and how profitably it could be

farmed. Much of the fertile prairie through which the

Illinois Central ran had been available for settlement

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and from farmers along the proposed rights-of-way.
Funds were easy to raise because subscribers seldom
had to lay out the full price of their stock at one time;
instead they were subject to periodic “calls” for a per-
centage of their commitment as construction pro-
gressed. If the road made money, much of the
additional mileage could be paid for out of earnings
from the first sections built.
But many railroads that failed to find enough
investors sought public money. Towns, counties, and
the states themselves lent money to railroads and
invested in their stock. Special privileges, such as
exemption from taxation and the right to condemn
property, were often granted, and in a few cases states
built and operated roads as public corporations.
As with earlier internal improvement proposals,
federal financial aid to railroads was usually blocked
in Congress by a combination of eastern and south-
ern votes. But in 1850 a scheme for granting federal
lands to the states to build a line from Lake
Michigan to the Gulf of Mexico passed both houses.
The main beneficiary was the Illinois Central
Railroad, which received a 200-foot right-of-way
and alternate strips of land along the track one mile
wide and six miles deep, a total of almost 2.6 million
acres. By mortgaging this land and by selling por-
tions of it to farmers, the Illinois Central raised
nearly all the $23.4 million it spent on construction.
The success of this operation led to additional grants
of almost 20 million acres in the 1850s, benefiting
more than forty railroads. Far larger federal grants

The shortage of labor in America encouraged mechanical innovation. This picture depicts the 1831 test of Cyrus McCormick’s reaping machine, which
enabled one farmer to do the work of ten.