Railroads. The railroad's basic principle—lessening the power needed to move objects over land by putting them on rails—had been used since the late eighteenth century, but the railroad took on its modern form in the late 1820s when steam locomotives came into use. English engineers established an early lead in this development, but Americans quickly caught up, often by visiting England to examine the latest innovations. By the 1830s, civil and military engineers such as Horatio Allen, Major William Gibbs McNeill, and Moncure Robinson had become railroad experts in their own right.
As in Europe, the earliest American railroads (e.g., the Granite Railroad in Quincy, Massachusetts, 1826) were powered by horses, and well into the 1830s, the superiority of steam‐powered railroads remained an open question. Not only were steam railroads expensive to build and technologically complex, but the country had recently embarked on a canal‐building boom, sparked by construction of the
Erie Canal. As coastal cities from
Boston to Charleston weighed transportation projects that would enable them to compete with
New York City for western markets, experts debated the relative utility of
canals and waterways versus steam‐powered railroads. Pennsylvania pushed ahead with its Main Line canal system, linking
Philadelphia to Pittsburgh, but
steam power gradually prevailed. Construction of the first U.S. passenger railroad, the Baltimore and Ohio, began on 4 July 1828. Work proceeded slowly, however, and the first long‐distance railroad actually brought into operation, in 1833, was the 136‐mile South Carolina Canal and Railroad.
By 1840 a distinctive “American system” of railroad construction had emerged, characterized by economy of construction obtained by minimizing excavation and by substituting wood for iron wherever possible (including in the rails themselves). This resulted in railroads of light construction with sharp curves and steep grades as well as comparatively high operating costs and low speeds. While a wide diversity of construction styles marked U.S. railroad development, this American system of construction proved especially attractive when the terrain was rough, distances long, or capital scarce. The first locomotives were English imports, but a style more appropriate to the United States soon developed—powerful enough to haul heavy loads up steep grades and with swiveling front wheels to handle sharp curves.
From the 1830s, construction proceeded rapidly and absorbed increasing amounts of capital. By 1850, canal mileage had leveled off at about 3,700 miles, while the nation boasted 9,000 miles of railroads. Railroad investment, meanwhile, climbed from an estimated $96 million in 1839 to some $300 million in 1850.
New England claimed the greatest density of lines, but construction proceeded throughout the country. The largest firms soon commanded capital in the tens of millions, and by the mid–1850s four trunkline railroads stretched from northeastern coastal cities into the Old Northwest. By 1860, American railroads had more than tripled in length, to some thirty thousand miles, while investment soared to more than one billion dollars. Sectional conflict delayed transcontinental railroad construction until after the
Civil War, but four lines were chartered between 1862 and 1871. The first was completed on 10 May 1869 when the Central Pacific Railroad of Collis P.
Huntington and Leland Stanford (1824–1893), building from
California eastward, met the Union Pacific at Promontory, Utah. The rail system tripled in size again by 1880, reaching more than ninety thousand miles as railroad capital exceeded five billion dollars. Over the next two decades, net growth continued—turbulently and well beyond need. James J.
Hill's Great Northern Railroad, based in St. Paul, reached Seattle in 1893. In 1900 American railroads totaled more than 190,000 miles and claimed a net capitalization of nearly $10 billion. Rail expansion peaked in 1920 at more than a quarter million miles, while net capitalization rose for another decade before beginning to decline.
An array of supportive government policies underlay this phenomenal expansion. Beginning in 1838, the federal government transferred the mails from stagecoaches to railroads. Iron imported for railroad construction enjoyed lower
tariffs. The War Department lent early railroads its military engineers or permitted them to take leave while working on railroads. When such leaves were restricted in the 1830s, many engineers resigned to work for the railroads. In the 1850s, military engineers on active duty surveyed transcontinental routes.
State and local governments also energetically promoted railroads. Because the state legislatures that incorporated railroad companies saw transportation projects as a means of competing with other states, railroad charters—generally with liberal terms—were much easier to obtain in the United States than in Europe. Incorporation became even easier when “general incorporation” laws (Illinois, 1849; New York, 1850) made it a purely administrative process. Such easily obtained charters heightened investment risk, but the states offset this by contributing large amounts of capital themselves. In the 1830s, nearly half of the capital invested in American railroads came from state governments. When the depression of 1837–1843 curtailed state investment, local support increased. Overall, state and local governments accounted for an estimated 25 to 30 percent of
Antebellum–Era railroad investment. State and local courts also facilitated railroad construction, particularly in their interpretation of liability and eminent‐domain law.
While the states, especially in the
South, continued to offer abundant aid after the Civil War, federal support now became more central. Western states gave railroads nearly 50 million acres in land grants, but the federal government gave much more. Before the Civil War, sectional conflict had held federal grants in check, but federal grants multiplied during and after the war, especially to the transcontinental railroads, which ran through sparsely settled territories. By 1871, when such grants ended, the federal government had given more than 130 million acres to the railroads. Washington also issued millions of dollars in bonds to promote transcontinental railroad construction, and by various indirect means funnelled even more capital into railroad securities.
The effects of railroad construction and operations rippled through the nineteenth‐century economy. Railroads linked distant markets, enhanced communications, and drove down transportation rates—often spelling life or death for small towns. Their unprecedented demand for capital helped to centralize capital markets in New York and stimulated the creation of new financial instruments. Railway equipment suppliers such as Philadelphia's Baldwin Locomotive Works and George Pullman's sleeping‐car factory in
Chicago sprang up to manufacture locomotives, passenger cars, switching equipment, and so on. In 1889, railroads consumed 29 percent of the nation's domestic iron and steel production.
The railroads also introduced two phenomena that would characterize American industrial
capitalism in the
Gilded Age: large geographic scale and capital intensity. As railroad construction intensified in the
Middle West in the 1850s, the trunk lines found themselves in direct competition. Grappling simultaneously with unprecedented competition and with the novel challenges of long‐distance operation, top executives such as Benjamin Latrobe of the Baltimore and Ohio, Daniel C. McCallum of the Erie, and J. Edgar Thomson of the Pennsylvania Railroad pioneered new management techniques—a decentralized divisional structure, innovative accounting methods, and a systematic flow of information—that were adopted and refined by other industries.
Employing labor on an unprecedented scale, railroads stimulated the rise of an industrial workforce and encouraged massive
immigration. The first transcontinental railroad was largely built by Chinese and Irish immigrant labor. The railway brotherhoods formed in the 1860s became the most powerful unions of their time. Major railroad strikes in 1877, 1886, and 1894, and the government's intervention with troops and court injunctions, intensified the labor unrest of these years. The railroad shaped American culture as well, as a favorite theme of painters, writers, photographers, filmmakers, and songwriters. Frank Norris's novel
The Octopus (1901) evoked the vast economic and political power of California's railroads.
Railroad development had equally momentous political consequences. The chaotic expansion of competing lines profoundly shaped Gilded Age politics at all levels. Legislative bribery and corruption were common. In 1868, Jay Gould, James Fisk, and Daniel Drew, locked in a battle for control of the Erie Railroad, distributed more than one million dollars in bribes to New York politicians. The administration of President Ulysses S.
Grant was tainted by the Credit Mobilier scandal of 1872, involving a fraudulent company set up to siphon off money granted by the federal government to the Union Pacific to build a transcontinental railroad.
As the railroads expanded, they quickly outgrew the states that had created them. This challenged the state legislatures' long‐standing right to regulate transportation rates on common carriers—a right predicated on traditional norms of competition, which the railroads (unlike canals) completely upset by monopolizing carriage on their own lines while competing with other lines. Because of their peculiar cost structure, moreover, the railroads engaged in rate discrimination, which became rampant as competition heated up. As the issue of railroad‐rate regulation intensified, a decades‐long battle erupted first in state legislatures and courts, then in federal courts, and finally in Congress. The U.S.
Supreme Court initially upheld state legislatures' right to regulate interstate rates in
Munn v.
Illinois (1877), but soon reversed itself in the
Wabash Case (1886). In 1887, Congress established the Interstate Commerce Commission (ICC), the nation's first independent federal regulatory commission. Although weak in many ways, the ICC marked a shift in regulatory power from the states to the federal government that would continue in the twentieth century. Western farmers' fight for railroad regulation and their anger at the railroads' discriminatory rate‐setting policies helped fuel late nineteenth‐century agrarian protest and the rise of the
Populist party.
In the meantime, however, costly rate wars and regulatory threats galvanized the railroads to organize themselves to control competition. When self‐regulation through “pooling” failed, the major lines built large “systems” in the 1870s and 1880s to establish regional monopolies. To head off regulation, they also worked collectively to standardize equipment and operations across state lines, formalizing their efforts in 1886 by founding the American Railway Association. (By‐products of these initiatives were a uniform gauge and standard time zones.) But system‐building proved expensive and encouraged overconstruction, which exacerbated competition; between 1873 and 1897, railroads controlling one‐third of the nation's rail went bankrupt. Only concerted intervention by J.P.
Morgan and other investment bankers reorganized the industry on a firmer footing. But consolidation at the turn of the century produced giant holding companies that attracted federal scrutiny. The government's success in breaking up one such company in the
Northern Securities Case (1904), under the Sherman Anti‐Trust Act, ended industry efforts at self‐regulation.
The twentieth century found the railroads in decline, as they faced increased federal regulation and intense competition—now from other modes of transportation. The Hepburn Act (1906) and the Mann‐Elkins Act (1910) expanded the ICC's powers, while the Adamson Act of 1916 granted railroad workers an eight‐hour day. The federal government operated the railroads during
World War I, then again increased the ICC's powers when it returned them to private hands in 1920. Increasingly, most scholars agree, federal regulation hampered the railroads' competitive ability.
As the federal government's regulatory power over railroads increased, it also put its formidable promotional powers behind new modes of transportation: aviation and
motor vehicles. The U.S. Postal Service shifted long‐distance mail from railroads to airplanes in the 1920s, while the Air Commerce Act of 1926 aided civil aviation (e.g., through airport construction). An interlude of renewed prosperity for the railroad industry during
World War II continued after the war, thanks to operational and technical improvements such as dieselization. But the Highway Act of 1956, which authorized construction of a 41,000–mile interstate
highway system, signaled further decline. The government sought to address railroad problems by creating Amtrak (the National Railroad Passenger Corporation) in 1971 and Conrail (the Consolidated Rail Corporation) in 1976. The volume of freight transported by rail nearly doubled between 1970 and 1997, but except for the high‐traffic Boston–to–
Washington, D.C., corridor, passenger traffic remained depressed. The century concluded with deregulation (the Staggers Act of 1980), massive rail mergers, and—most symbolic of all—abolition of the Interstate Commerce Commission in 1996. With the railroads' decline came a wave of nostalgia for the age of rail, marked by the opening of railway museums, efforts to save and preserve old equipment, and a proliferation of short‐line railroad trips for tourists.
See also
Airplanes and Air Transport;
Antitrust Legislation;
Automotive Industry;
Aviation Industry;
Depressions, Economic;
Economic Development;
Economic Regulation;
Granger Movement;
Immigrant Labor;
Industrialization;
Interstate Commerce Act;
Iron and Steel Industry;
Labor Markets;
Labor Movements;
Pullman Strike and Boycott;
Railroad Strikes of 1877;
Strikes and Industrial Conflict.
Bibliography
Robert W. Fogel , Railroads and American Economic Growth, 1964.
Alfred D. Chandler Jr. , The Railroads: The Nation's First Big Business, 1965.
Albro Martin , Railroads Triumphant, 1992.
Gerald Berk , Alternative Tracks, 1994.
Colleen A. Dunlavy , Politics and Industrialization: Early Railroads in the United States and Prussia, 1994.
Maury Klein , Unfinished Business: The Railroad in American Life, 1994.
John F. Stover , American Railroads, 2d ed., 1997.
John H. White Jr. , American Locomotives, rev. ed., 1997.
Colleen A. Dunlavy
