“An American will build a home in which to pass his old age and sell it before the roof is on… He will plant a garden and rent it just as

the trees are coming into bearing; he will clear a field and leave others to reap the harvest; he will take up a profession and

leave it, settle in one place and soon go off elsewhere with his changing desires. If his

private business allows him a moment’s relaxation, he will plunge at once into the

whirlpool of politics.”

Alexis de Tocqueville

By 1900 the United States had more rail miles tying the country

together than did all of Europe. Building this extensive system

opened a vast internal market to American industry. Railroad

companies led the way in developing financial and

managerial practices that made large-scale corporate enterprise

possible.

Eli WhitneyEli Whitney Yale graduate – tutored kids on a southern plantation 1810 – 119 pounds of cotton could be cleaned daily 1860 – 759 pounds of cotton could be cleaned daily

Samuel SlaterSamuel Slater British immigrant – built small water-wheel powered candle

making mill in Rhode Island – then steam power Slater and associates owned over 9,500 spindles controlling

thirteen American spinning mills VanderbiltVanderbilt

Used steam to expedite ferry traffic between NY and NJ 1817-1844 – 4,000 miles of American canals built = $200

million Erie Canal (1825) connected Lake Erie and Hudson River

40 ft. wide, 4 ft. deep, 363 miles long, 86 locks, 565 ft. drop Reached peak tonnage in 1880 Reduced cost from 20 cents/ ton mile to 2 cents/ ton mile

By 1840, most states have railroads By linking Orange County, NY to New York City – reduction in

cholera rates Public demand increases for rail Required huge capitalization efforts Transportation growth also revolutionized communication

U.S. Post Office had over 18,000 branches by 1850 Congressmen benefitted from the franking privilege Shipped speeches and election materials across country From 1800-1840 newspapers by mail jumped from 2 million to

140 million Postmaster General commanded 8,700 jobs – more than ¾ of

the federal workforce - huge patronage! No one could compete with subsidized postal service – until

1971!!!

Before the Transcontinental Railroad: Travel overland

cost $1,000 Took five to six months Very dangerous

Travel by sea Around tip of South America 18,000 miles Through Panama across the isthmus

The Transcontinental Railroad: 2,000 miles of track Five days $150 first class sleeper car

Amtrak’s Acela Express – up to 150 mph on conventional track in the United States

China recently broke the 300 mph barrier for land travel.

Germany 279 mph - Japan 275 mph

From 1830-1860, the building of dozens of separate local lines had resulted in different gauges and incompatible equipment – this changed in the post-war years.

Congressional Action: Pacific Railroad Act of 1862 authorizes building of

Transcontinental Railroad Homestead Act of 1862 grants 160 acres to settlers

In 1867, Cornelius Vanderbilt used his millions earned from a steamboat business to merge local railroad lines into the New York Central Railroad, operating over 4,500 miles of track from New York to Chicago.

Other “trunk lines” such as the Baltimore and Ohio Railroad and the Pennsylvania Railroad connected eastern seaports with Chicago, setting new standards of efficiency and excellence in the industry.

Henry Grady, editor of the Atlanta Constitution, pushed for a self-sufficient “New South” that embraced laissez-faire capitalism and economic diversity.

South discriminated against by Northern Railroad owners. Read about “Pittsburgh plus” over the weekend – pg. 546

Incentives for textile investors in the New South: Local governments offering tax exemptions Large supply of cheap labor Conversion of railroad to standard -gauge rail The south’s rate of growth in the post-war years (1865-1900) equaled

or surpassed any other region in the country in terms of population, industry, and railroads.

James Buchanan Duke 1890 absorbed main competition and formed American Tobacco

Company Based in Durham, North Carolina Trinity College changed to Duke University

I attended a funeral once in Pickens county in my State. . . . This funeral was peculiarly sad. It was a poor fellow, whose breeches struck him under the armpits and hit him at the other end about the knee—he didn’t believe in decollete clothes. They buried him in the midst of a marble quarry: they cut through solid marble to make his grave; and yet a little tombstone they put above him was from Vermont. They buried him in the heart of a pine forest, and yet the pine coffin was imported from Cincinnati. They buried him within touch of an iron mine, and yet the nails in his coffin and the iron in the shovel that dug his grave were imported from Pittsburg. They buried him by the side of the best sheep-grazing country on the earth, and yet the wool in the coffin bands and the coffin bands themselves were brought from the North. The South didn’t furnish a thing on earth for that funeral but the corpse and the hole in the ground. There they put him away and the clods rattled down on his coffin, and they buried him in a New York coat and a Boston pair of shoes and a pair of breeches from Chicago and a shirt from Cincinnati, leaving him nothing to carry into the next world with him to remind him of the country in which he lived, and for which he fought for four years, but the chill of blood in his veins and the marrow in his bones.

Now we have improved on that. We have got the biggest marble-cutting establishment on earth within a hundred yards of that grave. We have got a half-dozen woolen mills right around it, and iron mines, and iron furnaces, and iron factories. We are coming to meet you. We are going to take a noble revenge, as my friend, Mr. Carnegie, said last night, by invading every inch of your territory with iron, as you invaded ours twenty-nine years ago.

Henry Grady to the Bay State Club of Boston, 1889

Economic discrimination: Railroads had too much power Birmingham Steel Industry “Pittsburgh Plus” – pg. 546

Textile Mills: “Bring the mills to the cotton.” Mixed blessing for the South…

Provided jobs and some prosperity Dominated entire communities in the Piedmont Low wages Company towns established – offering credit

over pay Abuses of industry – see pg. 549.

35,000 miles of track in 1865 254,000 miles of track in 1916 Five transcontinental railroads were completed

in America between 1869 and 1894 Between 1862 and 1872 Congress granted more

than 100 million acres of public lands and more than $64 million to railroad companies

Technological innovations made railway service more economical: more powerful engines, refrigerated cars, adoption of a standard track gauge (4’ 8 1/5”), and air brakes.

Introduction in 1883 of four standard time zones permitted an orderly national scheduling system – Meridian Conference in 1884.

Railroads received three times the amount of land issued by the government under the Homestead Act.

The land was given in alternate mile-square sections in a checkerboard pattern along the proposed route.

The government expected the railroad to sell the land to settlers to finance construction.

Government subsidies resulted in “Credit Mobilier,” as well as protests from citizens and farmers who felt they were being cheated.

The Union Pacific was to build westward across the Great Plains from Omaha, Nebraska Led by General Dodge War veterans and Irish immigrants for labor

The Central Pacific had the task of pushing eastward across the Sierras from Sacramento, California Theodore Judah surveyed the route in the West Charles Crocker recruited 6,000 Chinese

laborers to blast tunnels through the Sierras

Many speculators, like Jay Gould, went into business for quick profits and made millions by “watering stock”

In a scramble to survive amidst the competition railroads resorted to the following: Rebates, or discounts, and kickbacks Fixing rates with competition by forming

“pools” Such acts would be regulated eventually

At the end of the 19th century, J.P. Morgan and other financiers move in to take over and consolidate the bankrupt railroads.

With competition eliminated they could stabilize rates and reduce debts – efficiency.

The American public grows suspicious of the financial schemes and ruthlessness of railroad moguls such as William Vanderbilt who replies…”The public be damned.”

Granger laws had been weakened by the courts and the ICC had little effect in the 19th century.

In Wabash v. Illinois (1886), the Supreme Court ruled that individual states could not regulate interstate commerce, which nullified the work of the Grangers.

Consider all the problems that accompanied the federally subsidized RR “Political Entrepreneurs” – Jay Gould and Jim Fisk “Market Entrepreneurs” – Vanderbilt and Villard

Most roads constructed pre – Civil War were privately funded – Vanderbilt’s New York Central No one died in construction Chopped 13.3% from expenses Increased profits

James J. Hill completed private railroad in 1893 all the way to Seattle – the Great Northern Railroad