CHAPTER V.

VAST EXTENSION OF THE RAILWAY SYSTEM.

The first thing to be done to prepare the way for a new era of vast development in the great Valley was to complete the Railway System so as to render access to its treasures and remotest localities from the Eastern and Western seaboards. easy, speedy and cheap. The Railway was the true providence of the Valley. Its products were found to be so vast and so easily obtained that water transportation by its systems of rivers, lakes and canals was wholly inadequate long before the latter were completed. Corn, transported more than 125 miles by ordinary roads, loses its value, or profit, even when it may be sold at 75 cents per bushel; and wheat, at $1.50 per bushel, can be profitably transported only 250 miles. Residence at any considerable distance from places of shipment by water took all profit from the heavy products of the prairies. When the water courses were most wanted they were frozen up; delay by accident, and frequent losses, required a high rate of insurance, and with only facilities of transportation by water the progress of this rich agricultural region must be painfully slow.

The transportation of freight by railroads commenced on a grand scale in 1851 and soon came, by its cheapness, to increase the value of the products of the Valley one hundred and sixty times over that which they bore when required to be transported to market on ordinary roads by land. Thus between 1850 and 1860 the gold mines of California opened a far richer mine in the West and furnished the North with the "sinews of war" for the four years' struggle.

Railways enriched the South much less than the North, chiefly owing to its different industrial organization. Its

SPEEDY DEVELOPMENT BY RAILWAYS.

417

inability to develop its equally great sources of wealth except in one direction, for want of an intelligent laboring class and a variety of pursuits, left it far behind when the strict comparison was made in a long and vigorous war. Yet, it was by means of its railway system that it was able to maintain a desperate resistance so long. When this system was broken up by the conquest of Chattanooga, Atlanta, and Sherman's raid through Georgia the members of the Confederacy were severed and its destruction inevitable.

During the war comparatively little was done in railway extension. About 1,500 miles had been built during the four years, in the northern Valley; but for the next five years the system was extended greatly, averaging 2,000 miles a year for the whole Valley, or 10,000 by 1870. In the next four years the increase was more than 12,000 miles in the Valley, and the whole increase outside of it for the ten years, a large part of which was, directly or indirectly, tributary to its prosperity, was about 20,000 miles.

The value of the merchandise transported over all the railways of the country in 1870 was six times the amount of the public debt, and had increased yearly, after 1865, on an average of over a thousand million dollars, or one half the war debt, and the earnings of all the roads were about one fifth of that debt yearly. All the railways in the country, in 1870, had cost, for building, about one thousand five hundred million dollars, and it has been affirmed that the increased value they gave to property-or the wealth they created, as it is saidequaled that sum the moment they were completed—that is, their existence restored, to the full, the capital invested in them. They increased the capacity of the Valley for development perhaps two hundred times. We quite lose ourselves in these immense estimates; but the new nation found itself in the vast wealth which immediately flowed through all the channels of commerce, business and industry, and, while constantly lightening the burdens of taxation, was able, in ten years, to pay off more than one fifth of its war debt.

two oceans.

While yet the war was in progress the prophetic spirit of the people, their unbounded confidence in the great destiny awaiting the re-united nation inspired them to lay great plans, the accomplishment of which had been before considered as vague possibilities of a distant future. In 1863, while the war was at its height, the Pacific railway was planned. This was to complete. the railway connections between the In 1865 about one hundred miles of it were completed; in 1866 three hundred were open for use; three hundred in 1867; eight hundred in 1868, and the remaining three hundred in 1869. The importance of this enterprise was even greater politically than commercially. It was continuing, and irrevocably confirming, the idea of indissoluble union-of an undivided nationality. Its economical result was to hasten the growth of Nebraska and Colorado, on the western borders of the Valley; to facilitate the working of the precious metals in the broad ranges of the Rocky Mountains; to build up the ports and the commerce of the Pacific coast, and to bring China and the trade of Eastern Asia practically nearer the Valley by more than two thousand miles. Besides this, the moral effect of success in carrying through, in so short a time, the greatest undertaking of any time was, possibly, greater still. The American could think few things impossible after this experience and that of the war, and all the citizens were inspired to plan boldly and execute vigorously in all the walks of life and business. The mental force which it brought into action told with great effect.

This general enthusiasm of eagerness to provide all the conditions for the great developments they foresaw was shared by the General Government as well as by the mass of the people, which it, in this at least, very completely represented. For many years every possible encouragement was given to the extension of the railway system. To assist their construction in the thinly settled, or entirely vacant, sections, and over the vast distances of the West, Congress granted, between the

EFFECT OF GOVERNMENT AID TO RAILWAYS.

419

years 1850 and 1870, about 80,000 square miles of unsettled land to the corporations undertaking the work. Some of this land was worthless and some companies failed to meet the conditions; but it has been estimated that nearly 60,000 square miles would be available and valuable to the companies. Besides this, the Government lent its credit in bonds to the Pacific road for over sixty-four million dollars. States, counties and towns followed this example with contagious enthusiasm, and there was accomplished, in a few years, a work that might reasonably have occupied generations. They did not see the point at which it was advisable to moderate their action, and where encouragement became a waste and a loss, involving great financial difficulty for the production and business of the country. The world could not immediately find sufficient market for the supplies necessary to occupy all the railways, so over-extended, nor a sufficient surplus population to occupy and cultivate all the wild lands so opened to settlement.

In their eagerness to accumulate and to obtain large revenues, railway organizations consolidated to secure a monopoly of business and control the price of carriage, and provoked opposition and counter combinations; excessive investment in railway extension, excessive production, excessive speculation and the determination to recover the currency from the depreciation it had sustained by excessive issue during the war, combined to bring on a serious financial disturbance in the autumn of 1873. Loose morality inevitably gains ground when the confusion of war gives a shock to the stricter habits of peace, unaccustomed profusion of expenditure tempts the ambitious to speculation and illicit gain; and these disorders no doubt had much to do with the sudden check to the rapid movement of business. Activity had become too great in certain lines, enthusiasm had turned to fever, and ends had been lost sight of in the preparation of means.

Yet, happily, in a country where action and reaction have

a play so free and undisturbed, the cure of evils is soon and naturally accomplished. While the active period of railway expansion continued individuals and communities were eager to have one, or several, passing near them because they advanced the value of property; the yearly earnings of the roads averaged $10,000 per mile, and the investment of money in railway stocks, the opportunities for speculation on a large scale and in various ways stimulated capitalists, and financiers, individuals and companies found many opportunities for gain. The free organization of American institutions provided no general control over the activities of its citizens, and left the extension of the railway system, as other branches of business, to the operation of the laws of trade. When railroad investments no longer proved profitable they must cease of themselves.

It became apparent in the end, that railway building did not really require government aid any more than other branches of industry, and that such aid, in the majority of cases, sooner or later served to over-stimulate that branch and found its way quite as often into the hands of individuals as into the public purse. As a general result it disturbed, instead of aiding, the natural course of development, and produced evils greater than it removed. It increased the tendency begun during the periods of profuse war expenditure, to accumulate wealth in the hands of individuals. It rendered corporations powerful enough to exert an excessive control over general business, more to their own advantage than to that of the public; and it helped to destroy the equilibrium of development which alone can prevent difficult situations and financial crises that sweep, like a tropical storm, over the business of the country, leaving ruin and paralysis in their track.

Yet this stimulus to private and corporate enterprise was far from being all evil. The initiation it gave to great undertakings which promoted rapidity of development and tended to equalize the advantages of all the sections of the whole