Did You Know? Working conditions for railroad laborers were very harsh. In 1866 about 5,000 Chinese railroad workers went on strike. They demanded higher wages and a shorter workday. The railroad company surrounded the Chinese workers on strike with strikebreakers and starved them, forcing most of them to return to work.
Sep 6­9:25 AM
• Linking the Nation ﴾page 442﴿
In 1862 President Lincoln signed the Pacific Railway Act. This law called for
the building of a transcontinental railroad by the Union Pacific and the
Central Pacific railroad companies. To encourage the companies, the government
gave each company land along the route of the tracks.
Grenville Dodge, a former Union general, directed the building of the Union
Pacific. It started in Omaha, Nebraska, in 1865. At one time the Union Pacific
employed about 10,000 workers. They included Civil War veterans, immigrants,
miners, farmers, and ex­convicts.
A Connecticut engineer sold stock in the Central Pacific Railroad Company
to four merchants in California. One of the investors was Leland Stanford, who
made a huge fortune, founded Stanford University, and later became a U.S.
Senator. The Central Pacific Railroad Company hired about 10,000 workers
from China, because there was a labor shortage in California.
Sep 6­9:27 AM
1
Discussion Question
How did the government encourage rapid construction of the railroads?
(The government offered each railroad company land. Competition occurred between the two railroad companies as each tried to get as much land and money as possible.)
Sep 6­9:28 AM
• Railroads Spur Growth ﴾page 444﴿
By 1860 the United States had hundreds of unconnected railroad lines.
Many capitalists in the East saw this as an opportunity to create a single rail
transportation system from all these unconnected lines. In the 1880s, large rail
lines combined hundreds of small ones. One of the most famous consolidators
was Cornelius Vanderbilt. By 1869 he had merged three short New York railroads
to form the New York Central. He then extended his control over lines
all the way to Chicago.
Before the 1880s, each community set their clocks by the sun’s position at
high noon. For example, when it was 12:50 P.M. in Chicago, it was 11:41 A.M. in
St. Paul, Minnesota. This created a problem for train scheduling and for passenger
safety. To make rail service more reliable, in 1883 the American
Railway Association divided the country into four time zones in regions
where the same time was kept.
The large railroad systems benefited the nation in many ways. They could
shift rail cars from one section of the country to another. Long­distance transportation
was faster. New technology allowed railroads to put longer and
heavier trains on their lines. More powerful locomotives helped make railroad
operations more efficient and less expensive. Railroads also united people
from different regions of the country.
Sep 6­9:29 AM
2
Discussion Question
What were the benefits of integrated railroad systems?
(Integrated railroad systems were equipped to shift cars from one section of the country to another and made long distance transportation quicker. It also helped unite people from different regions.)
Sep 6­9:35 AM
• The Land Grant System ﴾page 445﴿
The government helped encourage railroad building by giving many railroad
companies land grants. Railroads would then sell the land to settlers and
businesses to raise the money they needed to build the railroad. By the 1860s,
the railroads owned an area of land larger than New England, New York, and
Pennsylvania combined. Some railroad companies earned enough money
from the land grants to cover much of the cost of building their lines.
Sep 6­9:36 AM
3
Discussion Question
Why were land grants necessary? (The building and operating of railroad lines required more money than most private investors could raise on their own.)
Sep 6­9:37 AM
+
• Robber Barons ﴾page 445﴿
Some railroad entrepreneurs in the late 1800s got their wealth by cheating
investors, bribing government officials, and cheating on their contracts. Jay
Gould was famous for these actions. He used information he received as a railroad
owner to manipulate stock prices for his benefit.
Bribery occurred often with federal and state governments. Railroad
investors knew that they could make more money by getting government
land grants than by operating the railroad. As a result, investors bribed members
of Congress and state legislatures to vote for more land grants.
The Crédit Mobilier was a construction company that several stockholders
in the Union Pacific set up. The investors set up contracts with themselves.
Crédit Mobilier greatly overcharged the Union Pacific for the work it did.
Because the investors owned both companies, the railroad agreed to pay. The
investors had made several million dollars by the time the Union Pacific was
completed. However, the railroad had used up its land grants and was almost
bankrupt. To convince Congress to give the railroad more grants, one of the
investors gave some members of Congress shares in the Union Pacific at a
price well below what the shares were worth. In the 1872 election campaign, a
letter to a New York newspaper listed the members of Congress who had
accepted the shares. A further investigation into the scandal showed that the
vice president at the time also had accepted money from the railroad.
Sep 6­9:38 AM
4
Not all railroad entrepreneurs were robber barons, or people who loot an
industry and give nothing back. James J. Hill, an entrepreneur, built the Great
Northern Railroad without federal land grants. He planned the route to pass
by towns in the region. To increase business, he promised settlers low fares if
they settled along his route. He transported American­made products that
were in demand in China to Washington State, where they were shipped to
Asia. In this way the railroad made money by transporting goods both east
and west. The Great Northern became the most successful transcontinental
railroad and one that did not eventually go bankrupt.
Aug 31­8:16 AM
Discussion Question
What was the Crédit Mobilier scandal?
(Several stockholders of the Union Pacific set up the Crédit Mobilier, a construction company. The investors signed contracts with themselves. The company greatly overcharged Union Pacific and the railroad agreed to pay the inflated bills. When the railroad was completed, the investors had made a fortune, but the railroad was almost bankrupt. Congress agreed to give additional grants to the railroad after several members of Congress were given shares in Union Pacific at a price well below market value. An investigation implicated several members of Congress.)
Sep 6­9:39 AM
5
Sep 8­8:23 AM
6