I picked up a semi-interesting book, called How Capitalism Saved America, by Thomas J. DiLorenzo. I say semi-interesting, because it has one of the characteristics I hate in reading some books. The author seems to make up or twist things to match a pregiven premise/agenda.
In one chapter about Robber Barons, he puts forth a sort of awkward premise about James J. Hill, the man behind the Great Northern Railroad. His take, is that Hill built his transcon by paying cash for everything. Yet, he had to compete with Government subsidized railroads. He goes beyond the idea of Government subsidized contruction of UP, CP, and NP(?), and starts to, as it appears to me, make up the facts from that point on. Somehow, he has the impression that the Government subsidized railroads were run by worst elements of the government, causing them to be run into the ground. He notes gleefully, that UP went bankrupt in 1893, because it was inefficient, due to being Government subsidized. I guess he forgot to read about the financial panic of 1893.
It does bring up some interesting thoughts though…
His idea of Government subsidized railroads has some truth to it, but once built, weren’t UP, CP, NP, ATSF, etc. pretty much on their own?
Would Great Northern have been built as a transcon, if UP had not blazed a trail to the west coast?
His thought: “Subsidies were not needed to cause the transcontinetal railroads to be built”. Really?
I believe the arguement goes that "who would build into the barren west when there was nothing there to build to…no economy to support a railroad, no people, no industry, not nutten!? So the government gave land grants to the railroads to build through so that other government lands, given to people for homesteading, etc., would have a means of travel and transport and thus develop the economy. Taxable lands and economy was the government’s return on investment (along with low U.S. Post Office rates). Hill built his roads after the west was open by the Government and the Transcontental Railroad. So the arguement can be made that he actually benefited from Government 's investment in the earlier endeavor.
As a further note: NY state put up the money for the Erie Canal which opened NY harbor for world trade; PA was building their canal system, etc., so there has always been a government/private enterprise existance for projects beyond what private capital could afford on its own.
You have to understand that there were 4 Federal ‘Land Grant’ railroads:
Central Pacific
Union Pacific
Kansas Pacific
Northern Pacific
The Northern Pacific was built between Lake Superior and Puget Sound, using construction bonus & land grants. The NP was infested with lots of ‘finance’ folks and a lot of money was siphoned off of the railroad - It was in default much of it’s early existance.
The Great Northern was a private operation that came later(James Hill started by taking control of the St Paul & Pacific). The GN was built across the northern US/Canadian border area. It had superior route and grades with only two major mountain crossings. The UP never got to the Pacific NW until the Oregon Div/OSL was built much later. The James Hill also made ‘deals’ with Pacific Rim shippers to give him additional through traffic. The GN controlled a lot of the dock transfer in Seattle and of couse the routing east of that traffic.
The land grant roads were not government run, they just got construction bonus money for the miles constructed and/or land along side the route to develop farms/towns. The panic of 1893 brought down many of the companies that ‘played’ with creative financing(sound familiar in 2009?). If the land grants had not been, the transcons would have been built, but at a much slower rate.
The government subsidized roads didn’t get something for nothing…they were given subsidies in return for meeting commitments on projects that were often of a national interest to complete and beyond the scope of private investment…furthermore it was money with strings attached.
And wasn’t Hill’s originally line…the Saint Paul, Minneapolis and Manitoba the recipient of government monies? I don’t think Hill was a “pure” capitalist although he obviously was a very capable businessman. Your book indeed appears to be bending the truth to suit the writer’s pet theory.
Now…if you would like to read a great book by JJ Hill himself, let me recommend Highways of Progress…You can find and read it on the internet. You will immediately appreciate the depth of this man’s character and intelligence. He was a true legend.
Also Great Northern predecessors, the Texas & Pacific, the Atlantic & Pacific, the Santa Fe, parts of the Frisco, parts of the SP proper, and parts of the MoPac. Then there were the state land-grants to railroads including pieces of the MoPac, Wabash, NYC, PRR, IC, C&NW, Rock Island, Burlington, SP, UP, and just about every line in Texas.
I’m pretty much just going to sit here on the sidelines and wait for RWM to reply in force. (Where’s Chad’s popcorn emoticon, now that I need it ? [swg] )
I’m pretty sure RWM can respond to and address all of this comprehensively right off the top of his head, whereas I’d have to do some research to be sure of what I’d be stating, and that would take more time thanI have at the moment.
But while we’re waiting, I’ll lay some groundwork and do the “previews”.
In general, DiLorenzo’s thesis and conclusions as you’ve summarized them above appear to be pretty much flawed - they seem to be driven more more ideology than facts and causal relationships;
UP and 1893: Does DiLorenzo mention the overcapitalization caused by the excessive costs of construction from the Credit Mobilier scandal ? You know, the good private-sector capitalists that used the UP’s prime construction contractor as a means to line the pockets of themselves and their well-connected friends in Congress ? As well, shortly after the TransCon was completed, the UP also had to build several other major lines, like the Oregon Short LIne ?
Government subsidies after construction: I’m not aware of any. My understanding is that the subsidy was a one-time “capital” grant in nature, not “operating” funds, and was solely for and at the time of construction - they received a combination of cash, govt. bonds, and the infamous land grants. Post-construction, some of the railroads gradually sold off the land grant parcels - kind of like spending an inheritance - to pay for whatever they needed the money for then. So it that sense they received the benefit of the subsidy later on - but not the actual subsidy itself, which was long past, an
Happily, I can say with a reasonably straight face that I have never done the former–make up things to match my premise-agenda. Sadly, I think it is equally true that I have never failed to do the later–twist things to match my pregiven premise-agenda.
I don’t think I am alone in that regard.
To prove my point:
As to the substance of your post, I think the author’s premise is incorrect. But, then again, my agenda does not match his, as I believe the services derived from govenmental subsidies cannot be accurately measured in a purely dolars and cents paradigm because such paradigms cannot easily assign a monetary worth to such subsidies.
Can you really quantify the immesurable ancillary benefits that went to the State of Illinois by way of land grants to the IC–to say nothing of those gained by the Union during the Civil War? Can you really quantify the immesurable ancillary benefits that would accrue to the State of Illinois were high speed rail installed between Saint Louis and Chicago? Some day, this will get built and, you watch, somewhere, someone is going to say see, this is a waste because it does not make money.
If RWM’s previous response was not a reply in force, I don’t know what was or could be. I think the pithy response really tells you every thing you need to know about what RWM thinks of that book’s thesis.
If I could ever learn how to not reply in force in such a manner, I would be a good lawyer.
Sounds like this book is a little thin on research, which caused the author drew some very erroneous conclusions. Being a professional writer, I can attest to how many of my colleagues have failed to do adequate homework before writing the story. While it is a mortal sin to fail to research properly for such a book, these forums are full of examples where newspaper writers don’t ask enough questions and end up looking like fools, writing on subjects they know nothing about.
This book is a perfect example of: “Just because you read it somewhere doesn’t necessarily mean it is true or accurate.”
Yet some raved about the book. This from a review at Freedom Daily.
DiLorenzo brilliantly contrasts the slovenly construction (and attendant political corruption) of the subsidized railroads with the high-quality construction and lack of political intrigue of James J. Hill’s unsubsidized Great Northern line. When DiLorenzo is done with the conventional beliefs about “robber barons,” they lie in ruins.
Now I’ll take a shot at your questions, my own interpretations:
His idea of Government subsidized railroads has some truth to it, but once built, weren’t UP, CP, NP, ATSF, etc. pretty much on their own?
I’d say yes. The subsidization he refers to is the land for the ROW and mucho acres on either side, which the railroads tried to sell to homeowners who’d start towns that would need the railroads’ service
Don’t think I hadn’t considered that option. Sometimes, I’ll snag a book so out there, that I feel compelled to read it for entertainment value. This one, not so much. I found myself doing what our oldest son does sometimes. He has an AP U.S. Government class, where he says the text puts him to sleep. His answer, is to read the text aloud, in funny voices. When I do that with this book, it makes me think of Foghorn Leghorn.[:)] I say…I say…Son!.. Listen here!
[(-D] If I may be so bold…From reading his book, I didn’t get the impression he was a railfan. He seemed to write more like he was a Thomas J. DiLorenzo fan.
Gabe - I was overtaken by events. [:I] I started on my exposition before anyone else had replied, and - a few phone calls, interruptions, an impromptu meeting, and a couple of quick reference checks later - finally got around to clicking on [Post]. Imagine my surprise when I saw all that occurred in the meantime !
You’re quite right - that was indeed a reply in force, undiluted by volume. [:-^] Nothing more needs to be said.
It is said that “Brevity is the soul of wit”, and so it must also be the sting of devastating criticism such as that. Reminds me of the British “Really ?” , said with a raised eyebrow = what you’re saying is hardly believable. I agree with you about the ability to think such things up - are we sure RWM’s not a professor or drama critic someplace ? (I’m thinking of Professor Kingsfield from The Paper Chase.) Like “shelf art” last week, I’m going to have to file that one away for future use - it’s just too good not to “borrow”.
RE: “ATSF - also not sure if it was a land-grant recipient or not” …It was, but not on the scale of many of the others and it’s grants were not so extensive (Largely KS and AZ…Diningcar may have a thing or two to say.)…An awful lot of the grant land is still operating RR right of way.
If you look back at some of the old threads, you will see many bought in to the old wives tale like DiLorenzo did. Really amusing to go through the Department of the Interior/GLO/BLM files and see who got what (and more amazingly, the lands given back, forfeited and never claimed…most of this is hand written ledgers, not typed and a struggle to get through which makes it easier for the brainwashed and/or witless, like DiLorenzo, to gloss over and ignore…Just because somebody put it into print, doesn’t make it correct.
Thanks for confirming my “gut” reaction to the extent of the ATSF’s land grant involvement. The ol’ memory banks weren’t too far off (that time!).
The “old wive’s” tale has been around like forever. I think it was not until in the 1960’s that a historian - Albro Martin ? - published scholarly work debunking all that, complete with more-to-scale and more-to-proportion graphics of same. George Hilton wrote about that in one of the mid-or late-1960s Trains magazine articles.
I know what you mean about hand-written ledgers - every once in a while I have the “privilege” of transcribing old hand-written deeds around here, often involving railroad land. Some are in beautiful Palmer penmanship, others make me wonder what the old boy “scrivener” was drinking the night before. After a while, though, I get to recognize the pattern he used for certain letters, words, and phrases - we all know the common ones, right ? - and that makes it easier to “translate” the rest.
Someone else here - Poppa Zit, I think ? - has a “signature” line to the effect that peope are not entitled to make up there own facts. But that appears to be what DiLorenzo has done in his book. We have to - and should - rely on references sometimes - we can’t all research everything back to the beginning of time and “primary” sources and “rediscover the wheel”. But here, DiLorenzo should have realized that since the central facts to his thesis appeared to be in substantial doubt, he had an intellectual obligation to dig a little deeper and either confirm them or address and resolve that discrepancy in some defensible manner. It appears he did neither.
Following up on and somewhat correcting my earlier post - the below is from James Vance, The North American Railroad, TABLE 2, pg. 201: .
Transcontinental Completion Dates
UP - CP - Omaha to Sacramento - May 1869
SP - New Orleans to San Francisco - Jan. 1883
AT&SF - KC to LA - Aug. 1883
NP - St. Paul to Portland Sept. 1883
CP - Montreal to Vancouver - May 1885
GN - St. Paul to Seatlle - June 1893
CMStP&P - Chicago to Seattle - May 1909
Western Pacific (with D&RG & MP) - St. Louis to Oakland - July 1911
Grand Trunk Pacific / National Transcontinental - Feb. 1914
Canadian Northern - Montreal - Vancouver - Jan. 1915
Looks like 1883 - 14 years after Promontory - was quite the banner year for completing transcontinental railroads - 3 at once ! - plus CP only 2 years later. After that, gaps of 8 years until the GN was completed, then 16 years until the MILW - a perpetual favorite here - was completed, then 2 years for the Western Pacific’s route, and 4 years after that for the CN’s predecessors.
The UP’s Oregon Short Line was opened in Jan. 1885, so that was only a little over a year after the NP was completed, and 8 years before Hill’s GN got out there. So Hill had 3 nearby long-haul competitors by then - UP, NP, and CP - and 2 more in the southern US - SP and AT&SF. So even if the UP had not been built, he still would have had substantial compettion.
I never much could stomach the George Hilton nor Albro Martin rebuttals (or anything Albro Martin ever wrote) as they were nakedly tendentious and editorializing. They were correct that land grants were not a fabulous gift of taxpayer wealth to private interests, but neither, as they assert, were they a Sisyphean stone punitively toted by railways for a century until paid off. They were a term of a contract freely entered into between a nation seeking economic development and investors seeking profit, and whatever burden they put upon subsequent equity owners of the railways, it was not so onerous a burden as to discourage the likes of Harriman and Morgan from their decision to invest tremendous sums into the railway business in lieu of other lines of business.
The rebuttals are embarassed by lack of evidence. Just saying, for example, that a “discounted rate” on government freight traffic existed is not proof that it mattered. The government might have obtained that rate anyway in free negotiation. Moreover, the government discount was on class rates, not commodity rates, and no private industry traffic manager making a nickel an hour ever paid the class rates. As one rail traffic manager remarked to me once, “any chief clerk could figure out how to make the government pay through the nose.” At a minimum I would expect an accounting of the alleged savings but none is made.
The truth is usually more subtle and complex than most people wish it to be. The land grants are a fairly complicated question. Economic analysis is difficult. Answers are grey. People hate grey. If I wanted to be rich I’d deliver black and white answers.