1) The construction of transcontinental rail lines in the late 19th century required massive investments that individual companies could not afford, so the federal government provided subsidies like land grants to encourage development. 2) The first transcontinental railroad was completed in 1869, connecting Omaha, Nebraska to Sacramento, California through the Union Pacific and Central Pacific railroads. 3) While the railroads revolutionized transportation and industry, they were also plagued by corruption like bribery of politicians and risky business practices that led to bankruptcies and consolidation of lines.

3. THE IRON COLT BECOMES an IRON HORSE
The govt.- business relationship that formed during the Civil War sparked the unparalleled industrial
development following the war. The outburst of railroad construction was a crucial case. In
1865, there were 35,000 miles of rail; in 1900, the figure had spurted to 192,556 miles of rail.

4. The proposed transcontinental rail lines would be would be costly and risky. Explain why
the construction of these rail lines would require federal subsidies.

5. Through the federal land grants, Big Business was willing to build the rail lines and the
govt. received long-term preferential rates for postal service and military traffic.
Frontier villages along rail lines became flourishing cities – communities battled one
another for the privilege of hosting a rail line.

6. SPANNING the CONTINENT with RAILS
Deadlock in the 1850’s over the proposed transcontinental railroad was broken when the
South seceded, leaving the field to the North.
In 1862, Congress made provision for starting the long-awaited line that would bind the
Pacific coast with the remainder of the Republic – the desperate war effort created a
sense of urgency.

7. The Union Pacific Railroad was commissioned by Congress to
thrust westward from Omaha Nebraska – construction
began in 1865.
For each mile of track constructed, the company was
granted 20 sq. miles of land, alternating in 640-acre
sections on either side of the track.
And for each mile the builders received a generous federal
loan, the amount determined by the topography.
Because of these govt. incentives, promoters made all haste.
Insiders of the Credit Mobilier construction company
reaped fabulous profits – they slyly pocketed $73 million for
$50 million worth of work. Company officials bribed
congressmen to look the other way.
Sweaty construction gangs, containing many Irish “Paddies”
(Patricks) who had fought in the Union armies worked at a
frantic pace. The work was especially dangerous, including
Indian attacks and construction accidents.

9. Rail laying at the California end to connect
with the Union Pacific was undertaken by the
Central Pacific Railroad.
Four farseeing men, the so-called “Big Four,”
led by Leland Stanford, were the financial
backers.
Some 10,000 Chinese laborers, sweating from
dawn to dusk, proved to be cheap, efficient
and expendable.
The “Big Four” walked away with millions, but
their profit was largely legitimately earned
(no bribery).

12. BINDING the COUNTRY with RAILROAD TIES
Four other transcontinental lines were completed before century’s end. None of them
secured monetary loans from the federal govt., as did the Union Pacific and the Central
Pacific. But all of them except the Great Northern received generous grants of land.

13. Yet the romance of rails was not without its sordid side. Pioneer builders were often
guilty of gross over-optimism. They sometimes laid down rails that led “from nowhere to
nothing.” When prosperity failed, they went into bankruptcy, carrying down with them
investor’s savings. The decades following the Civil War saw many
bankruptcies, mergers, reorganizations, and the exploitation of farmers.
James Weaver

14. RAILROAD CONSOLIDATION and MECHANIZATION
The success of the western lines was facilitated by
welding together and expanding the older eastern
networks, notably the New York Central.
The genius in this enterprise was “Commodore”
Cornelius Vanderbilt. Making millions in steam
boating, he daringly turned to a new career in
railroading.
Though ill educated, coarse, and ruthless, he was
clear-visioned. He offered superior rail service at
lower rates.

15. Two significant
improvements, including the steel
rail and standard gauge, proved a
boon to railroads.
Other refinements played a vital
role in railroading, including the
Westinghouse air brake and the
Pullman Palace Cars.
Despite these innovations, appalling
accidents continued to be regular
occurrences.

16. REVOLUTION by RAILWAYS
The railroads touched countless phases of American life:
1. A sprawling nation became united in a physical sense.
2. The railroad spurred the amazing industrialization of the post-Civil War years.
3. The railroads stimulated mining & agriculture, especially in the West.
4. Railways were a boon for cities and played a leading role in urbanization.
5. Railroad companies also stimulated the mighty stream of immigration
6. The land also felt the impact of the railroad, especially in the country’s mid-section.
7. Time itself was bent to the railroad’s needs. On Nov. 18, 1883, the major rail lines
decreed that the continent would henceforth be divided into four “time zones.”
8. Finally, the railroad, more than any other single factor, was the maker of millionaires.

18. WRONGDOING in RAILROADING
Corruption lurks when millions are at stake.
The Credit Mobilier scandal was but the
first of the first of the unsavory business
practices employed by the railroad
promoters.
Jay Gould was the most adept of these
rail promoters – he mastered the practice
of stock watering – grossly inflating claims
about a given line’s assets and profitability
and sold stocks and bonds far in excess of
the railroad’s actual value.
Cornelius Vanderbilt and son, William
Vanderbilt, lived by the credo, “Law! What
do I care about the law? Hain’t I got the
power?”
Describe the practice of “pooling.”
Other business practices included the
interlocking directorate and the bribery of
govt. officials.

19. GOVERNMENT BRIDLES the IRON HORSE
It was neither healthy nor politically acceptable
that so many people were at the mercy of the few
rail barons. Explain why the American people and
the U.S. govt. were so reluctant to reign-in the
rail barons? What finally goaded farmers into
action against the abuses?
State efforts at regulation screeched to a halt in
the Supreme Court’s Wabash case decision in 1886
– explain the decision.

20. President Cleveland was not supportive of federal
regulation, but Congress passed the epochal
Interstate Commerce Commission Act in 1887 –
identify its provisions. What were the strengths
& weaknesses of this legislation?
In the end, what was the fundamental significance
of this landmark legislation?