Railroads, Land Grants, and today's political environment

Trains Magazine General Discussion
1

Since many of us seem to like a-historical questions—admittedly to the ire of others—and government aid/intervention with the current rail system is a favorite debate on here, I have a question:

Do you think the U.S. rail system would have evolved nearly has extensively were it not for the land grants?

If your answer to this question is yes it would have developed as extensively—or at least as extensively as needed—how do you think the land grants caused the U.S. rail map to develop differently? Were there harms associated with this over development? Do you see similarities in current government subsidation/involvement (either national or local government) with the rail industry?

If your answer is no it would not have developed as extensively—even as extensively as needed—how do you think the system would have evolved differently were it not for the land grants? Also, do you think the relatively sparse subsidation of the current rail industry is preventing a particularly important rail project in the United States to remain uncompleted due to lack of funding?

Gabe

2

I’m not sure if my answer is yes or no. It appears to me, that the land grants, or something similar were somewhat inevitable. The country wanted to expand. The government wanted the railroad to expand west. About the only financial incentive that the government could offer,without a major fight, was to leverage what it did have lots of-unsettled land.

3

From just prior to the Civil War to the beginning of the 20th century, the land grants were necessary. The government owned a lot of territory in what is now the western US, but the land was relatively worthless because it took months to reach it by horseback, and just as long to ship the products out of the same area. Since the area had no potential freight or passengers to haul, private investors were not ready to pour money into such a vast speculative venture. And since the US didn’t want to build a railroad under the federal government, the only alternative was to assist the railroads building into the virgin territory.

The only way the land, whether granted to the railroads or retained by the government, gained any value was when the railroads were built in and provided transportation for the new settlers.

4

So, by extension, the two of you are saying government investment in private industry is acceptable if it develops a particular aspect of the Nation or a particular aspect of the Nation’s economy that would otherwise not be developed were it not for the government investment?

Under that theory, assuming the money is there, I imagine you are pro-Alaskan Railroad development?

Gabe

5

Well, to take this question further, I’ll take a stab at what I think may have happened sans land grants.

No UP.
No CP.
No NP.

Those probably don’t need any explanation.

Now, for the debatable ones…

No GN - The corporate entity that eventually became GN got it’s start as the St. Paul & Pacific back in Minnesota, which received land grants totalling 2,811,142 acres. Without those land grants, it is doubtful JJ Hill would have even become involved in railroading.

Yes, Milwaukee - although not a slam dunk by any means. The corporate forefathers that evolved into the Milwaukee did not receive federal land grants, but many of the roads were started in anticipation of eventually receiving land grants via the State of Wisconsin. When no land grants were forthcoming, these roads were bought and consolidated into the Chicago and Milwaukee, and eventually the Chicago, Milwaukee and St Paul. Eventually, some of these roads that fell under the Milwaukee did have land grants, so the question arises to the point of whether these land grants were necessary for the corporate success of the Milwaukee. As for the PCE, the incentive for the transcon was due in part to Milwaukee’s neighbors (GN, NP) having their own northern transcons, so it’s harder to make a case that Milwaukee would have ventured into the PNW on it’s own schedule.

I am not up to speed on the corporate beginings of SP and Santa Fe, nor CNW, RI, et al. But I will venture this - without land grants, I still believe at least two US transcons would have eventually been built. A southern road through the SP corridor, and a northern road through the NP/GN/Milwaukee corridor, and neither until the early 1900’s. I say this soley on the basis of the geography of those corridors. I doubt a central corridor road would have been built.

As for today’s poltical environment, if there any federal incentive to build new roads or expand existing ones, such incentives w

6

I’ll refine my thought by saying it was acceptable at the time. Whether it is now acceptable may be a different answer. In order to run a railroad to Alaska (tthrough a foreign country, at that) would require a lot of justification to get Uncle Sam to foot the bill- a hard sell at best.

7

I believe the Illinois Central was the first land grant railroad, and the deal was they had to haul Government traffic at a lower rate to compensate for the grants.
East of Illinois a large network was built without land grants. Those railroads had towns pay them commissions to build into their towns, so the money was coming from the people, just in a different manner.
Without land grants, the rails would have still pushed west, but at a slower pace, and with the more of the funds coming from european investers. A line would have been built out to California, and I would guess 10 or 15 years later.

8

Without the land grants the western US would probably resemble Siberia or western China in terms of their economic development. It’s a chicken and the egg problem. A mine, farm or factory is not viable unless you have transportation connections to a market. No private company is going to build a railroad without existing customers. Land grants solved this problem and brought great wealth to the nation. I would equate the land grants to the Louisiana purchase in their importance to the development of the nation and as bargains to the taxpayers.

Today, similar benefits but on a much smaller scale could be had from government assistance to the railroads. The chances of it happening in today’s political environment are slim though. But (as someone else said) if it does come, it will be in the form of tax breaks and loan guarantees.

9

[quote]
QUOTE: Originally posted by futuremodal

Well, to take this question further, I’ll take a stab at what I think may have happened sans land grants.

No UP.
No CP.
No NP.

Those probably don’t need any explanation.

Now, for the debatable ones…

No GN - The corporate entity that eventually became GN got it’s start as the St. Paul & Pacific back in Minnesota, which received land grants totalling 2,811,142 acres. Without those land grants, it is doubtful JJ Hill would have even become involved in railroading.

Yes, Milwaukee - although not a slam dunk by any means. The corporate forefathers that evolved into the Milwaukee did not receive federal land grants, but many of the roads were started in anticipation of eventually receiving land grants via the State of Wisconsin. When no land grants were forthcoming, these roads were bought and consolidated into the Chicago and Milwaukee, and eventually the Chicago, Milwaukee and St Paul. Eventually, some of these roads that fell under the Milwaukee did have land grants, so the question arises to the point of whether these land grants were necessary for the corporate success of the Milwaukee. As for the PCE, the incentive for the transcon was due in part to Milwaukee’s neighbors (GN, NP) having their own northern transcons, so it’s harder to make a case that Milwaukee would have ventured into the PNW on it’s own schedule.

I am not up to speed on the corporate beginings of SP and Santa Fe, nor CNW, RI, et al. But I will venture this - without land grants, I still believe at least two US transcons would have eventually been built. A southern road through the SP corridor, and a northern road through the NP/GN/Milwaukee corridor, and neither until the early 1900’s. I say this soley on the basis of the geography of those corridors. I doubt a central corridor road would have been built.

As for today’s poltical environment, if there any federal incen

10

The Illinois Central was majority European investment even with the land grant. Moreover, the haulage agreement was relatively unimportant, as the IC still made money hauling government traffic.

Gabe

P.S. Does anyone know if the IC still has to pay the government a discounted rate?

11

[quote]
QUOTE: Originally posted by gabe

[quote]
QUOTE: Originally posted by futuremodal

Well, to take this question further, I’ll take a stab at what I think may have happened sans land grants.

No UP.
No CP.
No NP.

Those probably don’t need any explanation.

Now, for the debatable ones…

No GN - The corporate entity that eventually became GN got it’s start as the St. Paul & Pacific back in Minnesota, which received land grants totalling 2,811,142 acres. Without those land grants, it is doubtful JJ Hill would have even become involved in railroading.

Yes, Milwaukee - although not a slam dunk by any means. The corporate forefathers that evolved into the Milwaukee did not receive federal land grants, but many of the roads were started in anticipation of eventually receiving land grants via the State of Wisconsin. When no land grants were forthcoming, these roads were bought and consolidated into the Chicago and Milwaukee, and eventually the Chicago, Milwaukee and St Paul. Eventually, some of these roads that fell under the Milwaukee did have land grants, so the question arises to the point of whether these land grants were necessary for the corporate success of the Milwaukee. As for the PCE, the incentive for the transcon was due in part to Milwaukee’s neighbors (GN, NP) having their own northern transcons, so it’s harder to make a case that Milwaukee would have ventured into the PNW on it’s own schedule.

I am not up to speed on the corporate beginings of SP and Santa Fe, nor CNW, RI, et al. But I will venture this - without land grants, I still believe at least two US transcons would have eventually been built. A southern road through the SP corridor, and a northern road through the NP/GN/Milwaukee corridor, and neither until the early 1900’s. I say this soley on the basis of the geography of those corridors. I doubt a central corridor road would have been built.

As f

12

Don’t forget the off-shoot of the land grants, the great National Parks of the West. Yellowstone, The Grand Canyon along with other canyon parks in the area, and Glacier were all strongly encouraged (lobbied) by UP, GN, ATSF and NP to the Federal Government. Once approved, the railroads did a great job of developing them to create a passenger traffic base for their railroad.

In my opinion, land grants were only a timing catalyst for route developements in the west. With or without land grants, railroads were going to be built to the Pacific. In that time period, railroads were the only method of traversing such vast areas in a civilized and, for freight, economical manner. Once valuable freight sources such as minerals and, later, ports were discovered or developed, railroads would have been built privately. The land grants put the railroads in place much sooner for these developements than private funding would have.

Also remember that the Civil War had an impact on the timing and routing of the first transcontinental railroad. There was much debate about a more southerly routing, but the outbreak of the Civil War sealed the CP/UP route.

Land grants probably prevented overdevelopement of the western railroads. Since routes were already in place for the freight generating “finds” that later developed, there were, for the most part, no overlapping efforts of private funding fighting for routes to these freight sources.

In short, I think that land grants were a true win/win for the railroads and the government. Land grants opened large areas of the country sooner than they otherwise would have been, helped create, indirectly, some of our great National Parks, and helped prevent a lot of railroad overbuilding if left entirely to the private developers.

Jay

13

First, the land grants were a good thing for the country and the railroads. The govnment got back more in future taxes than they might have gotten had they played the stock market. The railroad got to expand their territory and the longer the trip the more efficient the railroads could be in providing transportation. I would agree with most of the previous posts regarding the timing of rail expansion.

I’m not too sure the railroads will beat a path to the federal trough today, though they will cherry pick a few good ideas like the LA/LB trench. Two major reasons they won’t is a rational fear of governmental strings that come with any federal money. The other is an inbred fear of the government taking over. Take a look at the airline industry to see what government can do to an industry. The government controls the ground facilities outright (airports), in places dictates who can come and go (slot controls), subsidizes smaller markets to extend (justify) national scope, and controls the routes flown in the air. By taking over these cost-intensive functions (except for a computer reservations/communications system, the only “physical plant” an airline needs) the government has removed the biggest hurdles to new competitors. Taken goether, airports, and traffic control can be looked upon as a form of land grant, since rather than compensating the airline for building into an area, the government does the building for them. Consequently, the airline business has become “overserviced”, forcing everyone to drop prices to maintain traffic, but not cash flow. The industry is in the toilet, and the handle has already been pushed. The government tried to correct its mistake with no/low interest loans to prop up the already ailing airlines after the 9/11 traffic nose-dive to no avail. In its present form, the industry will die.

If the railroads had been given the same treatment, we would still be standing track-side waiting for the next “standing derailment” on the PennCentral.

14

FM wondered about the SP and the ATSF. The Central Pacific predecessor to the SP of course got a Land Grant and some direct aid to build across the Sierras, I don’t think that they received any significant other grants, but it is possible that some small road that they absorbed did. The AT&SF on the other hand received large land grants, those in Kansas and Eastern Colorado were very valuable. Those in Arizona and New Mexico were worse than useless. The AT&SF had to force the government to take back well over 1 million acres after paying taxes on them for more than 20 years as they couldn’t even give away some of the sections. Some of the former Santa Fe land is now incorporated into the Hopi Indian Reservation.

15

Without extending anything, I’m saying it WAS acceptable. To understand this, you need to put things in historic context.

100+ years ago, railroads were the fastest transportation available. Nowadays, nowhere near the fastest. Why? Other modes have been developed and refined.

100+ years ago railroads were the only system capable of hauling freight or passengers in large quantities. Nowadays, airlines and highways, to name the most common, are more versatile and in the vast majority of cases faster.

Just after the Civil War (and after the first big California gold strike) there was concern in Washington DC that the west coast was several month’s journey from the settled east coast. An attack on, or threat of secession by the west coast states could not be dealt with effectively under these circumstances. The fastest transportation technology available at that time was the railroad.

What transportation system would best serve the development of Alaska now has more possible answers due to advances in other technologies.

16

How would a Triopoly work? Would you nationalise the rails like britian and or would it be trackage rights?? I am curious how this works?? [?] Who dispatches these three different vendors on one line/

17

First, let’s be aware that the Federal land grants ran only from 1862 to 1882. It is not insignifigant that the same Congress that passed the Pacific Railway Act also passed the 1862 Homestead Act. The IC was the only RR east of the Mississippi to get signifigant land grands and they were from the state. The Homestead and Pacific Railway Acts were facets of a single effort to encourage setlement of the West. The absence of land grants didn’t seem to have a noticable retarding effect on RR building in the East.

18

First off, we’re working under the assumption that the closed access system we have now remains in place. So, no, we would not nationalize. Triopoly just means we’d have at least three distinct systems serving all the major regions of the nation. They’d all dispatch their own trains, as is done now.

So, in the US West, we’d need at least one more railroad (KCS?) or combination of railroads (KCS, DM&E, MRL, CP, CN?) in addition to UP and BNSF. In the MIdwest, we’re in compliance with triopoly for the most part. In the US East, we’d need one more in addition to NS and CSX.

19

Gabe:

You want to define what part of the “Grants” you are referring to? If it’s the schoolbook history warped assumption that all railroads in the west got “checkerboard” land grants under the acts of 1862 & !866 or the more common rights associated with the Acts of 1872, 1875 (biggie) or 1885 along with railroad specific legislation.

In general, had not the Acts been passed, we would have gotten railroads at a slower pace - but they would have come anyhow. The country right now would be less developed with populations more centered on the east coast.