CHAPTER III.

HISTORY OF RAILROADS IN THE UNITED STATES.

In no country in the world has the growth of railroads been so rapid as

in the United States. With a population less than one-fifth as large as

that of Europe this country has a larger number of miles of railroad

than that continent. While European countries generally opposed the

introduction of the new system of transportation, our people extended to

it a hearty welcome. This difference of sentiment can easily be

accounted for. At the time of the invention of railroads Europe had a

system of turnpikes and canals which, at least for the time being,

answered every purpose. It became necessary for the railroads to enter

into competition with these well-established agencies of transportation,

which had the test of time, popular prejudice and governmental sanction

in their favor. Moreover, the railroad as a new and unknown quantity

caused a feeling of uneasiness in all conservative circles. It seemed to

make war against time-honored principles of statecraft and society, and

threatened to bring about a revolution the outcome of which no one could

foresee.

The condition of things was entirely different in the United States.

There were but few good roads and still fewer turnpikes and canals. A

vast territory in the interior awaited cultivation. Excepting the coast

and a few cities situated on the large navigable rivers, the East and

the West and the North and the South were practically without commercial

relations, and were only held together by a community of political

traditions and the artificial cement of a common constitution. Even had

the country had a system of turnpikes and canals, the Mississippi River

would still have been a forty days', and the extreme Northwest a three

months' journey distant from New York. It seems extremely doubtful

whether the different sections of so large a realm, having so little

community of commercial interests, could long be kept together under a

republican system of government. The settlement of the central portion

of the country and the development of its resources seemed to be the

task of future centuries. The railroad under these circumstances made

its appearance at a most opportune time for America, and the American

people were not slow to make the best of the opportunities presented to

them.

In the United States, as in England, the railroad was preceded by the

tram-road. The first tram-road in this country was opened in 1826. It

connected the granite quarries of Quincy with the Neponset River, and

was operated by horsepower. The second road of this kind was the Mauch

Chunk tramway, in Pennsylvania, opened in 1826, for the transportation

of coal. The trains were drawn up an inclined plane by stationary

engines and were moved down by their own weight. During the same year

the Delaware and Hudson Canal Company opened the Carbondale and

Homesdale tramway, connecting their mines with the Delaware and Hudson

Canal. It appears that an English locomotive was imported for use on

this line in 1828, but that it did not answer its purpose.

During the same year was commenced the construction of the first line of

importance in this country, the Baltimore and Ohio. The line was opened

for traffic in 1830, having then an extent of fourteen miles. In 1831 it

was extended sixty-one miles, and the year following sixty-seven miles.

For a year the road was operated by horsepower, but in 1831 the company

purchased for its road an American locomotive.

The first road upon which a locomotive engine of American manufacture

was used was the South Carolina Railroad, which was commenced in 1830.

The engine was manufactured at West Point and was placed upon the road

in December of the same year. The line had then an extent of ten miles.

In 1832 it had increased to sixty-two miles, and in 1833 to 136 miles.

The construction of the Mohawk and Hudson was commenced in August, 1830,

and the road was opened in September of the following year. Its first

locomotive engine was also imported from England, but, being found too

heavy, was soon replaced by an American engine of half its weight. In

1831 two other New York roads were commenced, the Saratoga and the New

York and Harlem. A small portion of the latter was opened during the

same year, and the former in July, 1832. The Camden and Amboy Railroad

in New Jersey was likewise commenced in 1831, but its completion was not

reached till 1834. The New Castle and Frenchtown Railroad was completed

in 1832, the Philadelphia and Trenton in 1833, and the New Jersey in

1834. In 1835 the Washington branch of the Baltimore and Ohio was

opened, and the entire line had at the end of that year attained an

extent of 115 miles. During the same year three Massachusetts roads,

connecting Boston with Providence, Worcester and Lowell respectively,

were opened. In 1836 the New York Central route was opened to Utica. In

1837 the Richmond, Fredericksburg and Potomac Railroad was completed

from Richmond to Fredericksburg. In 1838 the Richmond and Petersburg and

the Philadelphia, Wilmington and Baltimore railroads were opened. The

Wilmington and Weldon Railroad was completed in 1840, and the Petersburg

and Roanoke three years later. There was now a continuous line of

railway from the Potomac to Wilmington, North Carolina. In 1842 the

whole line of the Boston and Albany road was completed, which thus

became the first important through route in America.

The construction of railroads in the United States was from the first

carried on without a system. Railroads in an early day were purely local

affairs. Each locality operated its own road in its own interest and

without any supervision from the State which had granted its charter.

Acts of incorporation or charters were granted as a matter of course.

Railroads were looked upon as the natural feeders of canals, and their

future importance was foreseen by very few men. The early roads were a

heavy burden on the capital of the country. A number of small roads were

built that proved unprofitable and had to be abandoned. After the

financial panic of 1837 there was, except in New England, a very

perceptible stagnation in railroad enterprise, which lasted until the

discovery of gold in California, in 1848. The average number of miles of

road constructed per annum during the ten years preceding 1848 was 380,

while it was nearly 1,800 per annum during the seven years following.

It may be said that with the discovery of gold in the West ends the

first or formative period of railroad construction. From the first

opening of the Baltimore and Ohio to the beginning of the year 1848, a

period of eighteen years, there were constructed in the United States

5,205 miles of railroad, or an average of 289 miles per annum. The

discovery of gold on the Pacific gave a new impetus to railroad

construction throughout the country. Railroads now ceased to be local

works and became interstate or national thoroughfares. Extensive new

lines were built and through routes were formed by the coalition of

local roads. It was during this period that railroad companies first

became conscious of the importance of their mission and that they

commenced to compete with river and canal carriers. In 1848 a through

route was completed between Cincinnati and Lake Erie. A more direct

line, the Cleveland, Columbus and Cincinnati road, was opened in 1851.

During the same year the Erie Railroad reached Lake Erie and connected

the lake with the Hudson, and a year later Chicago received railroad

connection with the East by the completion of the Michigan Central and

Michigan Southern. In 1854 the Chicago and Rock Island reached the

Mississippi River, and in 1855 the Chicago and Galena was opened. One

year later the Illinois Central reached the Mississippi at Cairo, and

the Chicago, Burlington and Quincy Railroad was opened to Quincy. The

Ohio and Mississippi, between Cincinnati and St. Louis, was completed at

about the same time. The Pittsburgh, Fort Wayne and Chicago, an

extension of the Pennsylvania road, was completed to Chicago in 1858. At

the beginning of 1859 the Hannibal and St. Joseph Railroad reached the

Missouri River, and eight years later the Cedar Rapids and Missouri was

completed to the Missouri at Council Bluffs.

To encourage the extension of railroads into new and thinly settled

territories, and to thus hasten their settlement and the development of

their resources, the people of the United States began at the

commencement of this period to favor the policy of land grants. Such

grants had repeatedly been made to roads and canals prior to the crisis

of 1837. The first railroad that received a land grant was the Illinois

Central. The scheme was proposed as early as 1836, but the act making

the grant was not passed until September 20, 1850. Other grants followed

in 1852 in Missouri, in 1853 in Arkansas, in 1856 in Michigan,

Wisconsin, Iowa, Florida and Louisiana. As a rule these lands were

granted by the National Government to the States, and by them to the

railroads. The land grants made during President Fillmore's

administration amounted to eight million, and those made during Pierce's

administration to nineteen million acres. The financial crisis of 1857

and the War of the Rebellion again checked railroad building, but this

period developed a new phase of railroad enterprise as well as of the

land grant policy. In those times of national trial a railroad to the

Pacific Coast seemed a political necessity. The project of connecting

the Atlantic and Pacific oceans by a line of railroads was first brought

prominently before the American people by Asa Whitney of New York. At a

meeting held under his auspices in Philadelphia on the 23d day of

December, 1846, a movement was inaugurated for the purpose of

interesting the people in this enterprise and securing the aid of the

government for its accomplishment. Various plans were urged, and earnest

discussions followed, in which the ablest minds of the nation

participated. The continual agitation of the subject finally led, on the

1st of July, 1862, to the passage by Congress of an act incorporating

the Union Pacific Railway Company and the adoption of the central route.

The Union and the Central Pacific companies received a virtual money

subsidy of $30,000,000 and a land grant aggregating nearly twenty-three

million acres, a domain almost equal to the State of Indiana. Other

direct grants of territorial lands soon followed. The Northern Pacific

received, just before the close of the war, a grant of forty-seven

million acres of land. In the Southwest public lands were also freely

given to new Pacific lines. The various grants made to railroads

comprise no less than 300,000 square miles, equal to four and a half

times the area of New England, or six times that of the State of New

York, or equal to the total area of Iowa, Wisconsin, Illinois, Indiana,

Michigan and Ohio. Where these grants were not deemed sufficient

inducement for the construction of roads, counties, cities and towns

freely voted subsidies, while private citizens made donations to or

subscribed for the securities of the new railroads.

As has already been stated, the consolidation of connecting lines and

their transformation into a few large through routes was one of the

characteristic features of this period. As through traffic, and

particularly through freight, grew in importance, it became more and

more apparent that frequent transhipment was an expense to the railroads

as well as a burden to the public. The system of railroad ownership and

management soon adapted itself to the necessities of business. The

change seems to have been inevitable, for it occurred in all parts of

the world at about the same time. Sagacious men early recognized the

importance of railroads as national lines of communication. This idea no

doubt controlled the projectors of the Baltimore and Ohio, of the Erie,

and of the Boston and Albany roads. The first consolidation of any

importance took place in 1853, when eleven different roads between

Albany and Buffalo were united to form the New York Central. Five branch

roads were added to the system between 1855 and 1858. In 1864 Cornelius

Vanderbilt secured control of the Hudson River road, and in 1867 of the

New York Central, which lines he consolidated in 1869. By gaining soon

afterward control of the Lake Shore and Michigan Central and Southern

Canadian roads, he united under one management over 4,000 miles of

railroad between New York and Chicago, and thus created the first

through line between the East and the West.

As has already been stated, the Pennsylvania road gained control of the

Pittsburgh, Fort Wayne and Chicago in 1858 and thus extended its system

as far as Chicago. Through the absorption of other lines it reached an

extent of over 7,000 miles. The creation of this through route was

chiefly the work of Thomas A. Scott, at that time vice-president, and

later president, of the Pennsylvania railroad.

In 1874 the Baltimore and Ohio, under the management of John W. Garrett,

extended its system to Chicago, and became a competitor of the two older

lines in the transportation of through freight. At about the same time

two other parallel trunk lines were developed, the Grand Trunk on the

north, and the Erie, between the Lake Shore and Pennsylvania lines.

There were, therefore, in 1874 five rival trunk lines competing for the

business between the West and the seaboard.

During the same period large rival lines developed west of Chicago and

St. Louis. From the former city radiate the St. Paul and Northwestern

systems, each with from 6,000 to 8,000 miles; the Atchison, Topeka and

Santa Fe with over 9,000 miles; then the Rock Island, the Chicago,

Burlington and Quincy, the Illinois Central, the Chicago Great-Western,

and the Chicago and Alton, their systems ranging from 1,000 to 6,000

miles in extent. From St. Louis radiate the various branches of the

Missouri Pacific and the closely allied Wabash system, controlling

together some 10,000 miles of road.

This process of consolidation also went on in the Southern States,

though to a less extent. Their systems do not run parallel, like the

trunk lines, nor do they radiate from a common center, like the roads of

the Northwest, but they radiate from the principal ports of the Atlantic

and the Gulf of Mexico toward the interior.

We now enter upon the third period of the history of American railroads,

the period of combinations. During the time of great activity in

railroad construction following the War of the Rebellion many abuses in

railroad management had been developed, which caused general complaint

and led to what is known as the Granger movement. Laws were demanded,

especially in the agricultural States of the West, which should regulate

the rates, methods of operation, and the political relations of the

railroads. The friends of this movement were successful in the political

contests that followed, and Granger legislatures were elected in the

States of Illinois, Wisconsin, Iowa and Minnesota. Laws were passed

fixing the rates on different classes of roads and providing penalties

for their violation. The companies contested these acts in the courts,

but were defeated at every step, until in 1877 the Supreme Court of the

United States sustained the constitutionality of the Granger laws. In

the meantime railroad managers tried their utmost to render, by shrewd

manipulation, these laws obnoxious, and they finally succeeded in having

them repealed or so amended as to render them largely ineffectual.

It was the principal object of the Granger movement to do away with the

many discriminating tariffs which so injuriously affected local points.

It is true, discriminations between individuals were practiced at

business centers, but rates upon the whole were low at such points as

compared with those which obtained at local stations. While the Granger

contest was still going on in the West, a new evil developed in the

East, which became characteristic of the period and finally grew into

one of the most intolerable abuses of railroad management. Railroad men

had gradually learned that it was in their power to maintain high rates

at competitive as well as at non-competitive points, provided all the

roads centering at such points could be induced to cooperate, or rather

to conspire for that purpose. The final solution of the problem was,

after some experimentation, found in the device to control the prices of

transportation generally known as the pool. It is doubtful whether any

contrivance connected with railroad management ever threatened to

subvert long-established principles of the common law more completely

than this. Within a few years it extended its dominion over the whole

country, exacting a heavy tribute from its commerce, until the people's

patience finally became exhausted and their determined demand for

railroad reform led to the enactment of the Interstate Commerce Act in

1887.

When this act passed, dire results were predicted by nearly every

railroad man in the country. Prophecies were freely made that it would

ruin half of the roads and seriously cripple and sadly interfere with

the usefulness of the other half, that it would derange the business of

the country, greatly depreciate all railroad securities and put an end

to railroad construction. Nearly seven years have passed since the

adoption of the law, but not one of these prophecies has come to pass.

There are at present probably less bankrupt roads in the United States

than there have been at any time for twenty years, our business

interests have been improved, the securities of honestly managed roads

are in better repute than they were previous to the passage of the law,

and the railroad mileage of the country is increasing at the rate of

about 6,000 miles a year. If any branch of business has suffered in

consequence of the enactment of the law, it is the branch monopolized by

Wall Street. Since 1885, the time when the Interstate Commerce Bill was

first seriously agitated, the aggregate of railroad securities has

increased nearly $2,500,000,000, or about one-third. This certainly does

not look as if capital had been seriously frightened by the Interstate

Commerce Act. There are other proofs of railroad prosperity. In 1885 the

gross earnings of the railroads of the United States were $772,568,833,

or 9.9 per cent. on their reported capital. In 1886 their gross earnings

were $829,940,836, or 10.2 per cent. on the reported railroad capital.

In 1890 the gross earnings had increased to $1,097,847,428, and equaled

10.8 per cent. on the reported capital. This includes even the

capitalization of new lines and others not reporting operations. Mr.

Poor gives the reported cost of the lines actually operated as

$8,519,670,421, against $10,122,635,900 reported cost of all the

railroads built. Omitting from the computation the lines not reporting

operations, the gross earnings of the roads actually operated equaled

12.7 per cent. and their net earnings 4 per cent. on the actual cost of

the lines which reported. The gross earnings for 1891 were

$1,138,024,459, and for the year ending June 30, 1892, $1,222,711,698.

The gross earnings per mile have increased from $6,265 in 1885, and

$6,570 in 1886, to $6,946 in 1890, and $7,409 in 1892. In 1885 the

capitalization per mile of road was $55,059 and the net earnings per

mile were $2,185. In 1890 the capitalization per mile had decreased to

$53,783, while the net earnings per mile increased to $2,195. The

railroad mileage of the country has grown from 128,361 in 1885 to

166,817 in 1890, to 170,601 in 1891, and to 175,000 in 1892.

The railroad system of the United States has had a phenomenal growth,

especially since 1870, since which time nearly 120,000 miles of road, or

more than two-thirds of the total mileage, have been constructed. The

table below shows the number of miles of railroad constructed and in

operation, by quinquennial periods from 1830 to the close of 1890,

inclusive:

YEAR. MILES IN OPERATION. INCREASE.

1830 23

1835 1,098 1,075

1840 2,818 1,720

1845 4,633 1,815

1850 9,021 4,388

1855 18,374 9,353

1860 30,626 12,252

1865 35,085 4,459

1870 52,922 17,837

1875 74,096 21,174

1880 93,296 19,200

1885 128,361 35,065

1890 166,817 38,456

It will be noticed that in the sixty years covered by the above table

there are but two quinquennial periods which show a falling-off in the

rate of growth, viz.: 1860-65 and 1875-80. During the former period

railroad construction was partially checked by the War of the Rebellion,

during the latter by the general financial depression following the

panic of 1873.

The length of railroads in the world has grown from 206 miles in 1830 to

about 400,000 miles in 1892. The following table shows the growth of

railroad mileage by quinquennial periods:

YEAR. MILES.

1830 206

1835 1,502

1840 5,335

1845 10,825

1850 23,625

1855 42,340

1860 66,413

1865 90,280

1870 131,638

1875 182,927

1880 231,190

1885 303,172

1890 385,000

From this table it is seen that the railroad mileage of the world has

doubled during the past fifteen years, and that its average annual

increase is at present not far from 17,000 miles. There is no doubt that

the extent of railroad construction has everywhere exceeded all

anticipations. So fast has the railroad system expanded in the most

highly civilized countries that it soon outgrew in nearly all of them

the laws originally adopted for railroad control. In time an almost

universal demand arose for reform, and the most progressive governments

were not slow in heeding it. For the past fifteen years there has been a

decided drift on the European continent toward state ownership of

railroads, or to such strict control of the transportation business as

virtually deprives the operating companies of the power to do injustice

to the public.

The railroad is assuming more and more the character of an international

highway. A movement is on foot to connect the railroad systems of the

United States with those of South America by an intercontinental or

"Pan-American" railroad. Appropriations have been made by the United

States and several of the South American republics for a preliminary

survey of the proposed line. Three different surveying parties are in

the field, one in Central America and the other two in the United States

of Colombia and Ecuador. The progress so far reported by them is

encouraging, and there is now some hope that before the close of the

nineteenth century one may be able to travel by railroad from New York

to Valparaiso without even a change of cars.

It has also been proposed to span Behring Strait and connect North

America with Asia and Europe by an international railway. This line, if

constructed, would be simply an extension of the proposed Pan-American

railroad and would follow the western coast of the United States as far

as Behring Strait, then cross over into Asia, traverse Siberia and

finally reach London via St. Petersburg, Berlin and Paris. It is very

questionable whether such a line is at present feasible either from a

technical or financial point of view, but the time will probably come

when the railroad track will connect New York and London.

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