HOW THE LAND GRANT RAILROADS "DEVELOPE" A COUNTRY.
The ostensible object in granting lands to railroad companies was to aid
new and undeveloped portions of the country in procuring necessary
railroad facilities for communication with the rest of the world; and to
assist, by donations of alternate sections, in their development and
settlement.
Whether these ends have been achieved is a matter of doubt. It is
scarcely to be hoped that the people will ever be reimbursed for the
vast extent of lands, and large amount of bonds, which have been so
recklessly lavished upon so many railroad companies. When the
proposition to grant lands to railroad companies was brought before
congress, the right to donate them to private corporations was not
admitted; the right of the states to have control of the lands was not
questioned. Recognizing this latter right, the lands were granted to the
states for the purpose of aiding in the construction of certain roads
within their borders. It was not until 1862 that congress came to the
front, created private railroad corporations, and endowed them with
lands and money. Nor did these corporations commence their wholesale
raid upon the public treasury until after congress went into the
business of creating railroad companies. Is it true that the country has
been benefited in proportion to the grants made? Are the people richer
because of these grants? Has the country, as a general rule, been more
rapidly settled and improved by this railroad legislation? We are aware
that the idea is commonly entertained that the people receive an
equivalent for these railroad grants in the increased facilities for
travel and transportation of freights. Were it true that the roads
receiving grants of land were more speedily constructed, or that
transportation over them was less expensive, then we would admit that
the benefits derived would in some degree be an equivalent for the aid
afforded them. To ascertain the facts let us see how this legislation
has affected the west, taking Iowa and Kansas as illustrations.
In the first place, for every acre of land given to railroads in these
states the people have paid $1.25; inasmuch as they are charged $2.50
for the reserved alternate sections. Taking the land granted in Iowa,
the amount charged to the people of this state is $9,009,841, or, taking
the grants already certified to, the people are charged with $4,387,303.
This sum, amounting to about $4.00 per head, has been taken from the
people of Iowa and given to railroad companies, and must be charged
against the benefits received. The construction of about eleven hundred
miles of railroad in Iowa was aided by land grants. The cost, at $30,000
per mile, would be less than $33,000,000. The amount the people are
obliged to pay into the public treasury for the _reserved sections_, in
making up the account should be charged to the land grant roads, as also
the increased price they are compelled to pay the companies for the
donated lands, which range from $5.00 to $50.00 per acre; and this, too,
of lands that under the general laws they could have entered at $1.25
per acre.
The amount taken from the people who settle in and improve the state and
develop its resources, which they must pay to the government and these
railroad companies before getting title to their lands, is about
$25,000,000 more than would have been demanded of them but for these
land grants. What have they received in return? The companies in Iowa
receiving grants of land have not extended their lines across the state
more rapidly than companies receiving no grants. In fact, roads built
entirely with private means have been constructed more rapidly than
these land grant roads. The companies receiving the grants did not keep
pace with the settlement of the country; the people, as pioneers, were
always in advance of the roads. It was only when the population of the
country was sufficient to afford a paying business that the roads were
extended. The excuse paraded by congress for making these grants was
that the companies would advance their roads so as to draw after them
an agricultural population. This has not been done. On the contrary, the
lands outside of the boundaries of the railroad grants were the first
settled, and the most rapidly developed. Has the result been different
in Kansas? The number of miles of railroad in this state in 1870 was
about seventeen hundred, of which nearly one thousand received grants of
land, and the Kansas Pacific company $6,303,000 in subsidy bonds.
Companies constructing these roads received land grants to the amount of
5,420,000 acres. At $1.25 per acre the grants amount to $6,775,000. This
sum is charged upon the reserved sections as in Iowa, and must be paid
by the people of Kansas. Add to this the $6,303,000 subsidy bonds, and
the Kansas railroads have cost the people of that state and the public
treasury $13,000,000, outside of the immense local aid voted to them by
the different cities, towns and counties. The population of this state
in 1860 was 107,206. In 1870 it was 362,872. Saying nothing about the
increased prices to be paid to the railroad companies for the lands
granted to them, or the large amount of subsidy bonds, and leaving out
the immense amounts of local aid afforded to the different railroads,
and the sum to be charged to the railroads for the extra price of the
reserved sections is about $20.00 per head for the entire population.
Looking at the facts as they are developed we conclude that the people
have not been benefited by these grants of lands, that railroad
companies are the only parties benefited, that the people are not richer
because of these grants, but, on the contrary, they would have made
money by giving to the railroad companies the actual cost of the roads.
Has the country been more rapidly settled and improved by reason of this
special legislation? The leading idea advanced in favor of grants to
railroad companies has been their necessity in developing the new states
and territories. We are pointed to the new states of Iowa, Minnesota,
Nebraska, Kansas, and Nevada, and the territories of Colorado, Utah, and
Wyoming, and referred to the fact that these states have a population of
2,874,000, and 9,000 miles of railroad; and from this exhibit an
argument is deduced in favor of these grants. The theory is that the
population has followed the roads. Is this theory correct? In 1850 Iowa
had a population of 676,913, and in 1870 a population of 1,191,729. In
1860 there were 655 miles of railroad, about three-fourths of which had
received grants of land. In 1870 the number of miles of railroad had
increased to 2,668. Of this increase not more than one-third was aided
by land grants, private enterprise having constructed at least
two-thirds of it; and the same kind of enterprise is still at work, and
since 1870 has increased the number of miles to 3,250. The land grants
were nearly all made to Iowa in 1856, yet the energetic and rapid
building of roads was not shown until after the close of the war, nor
until the people had advanced beyond the roads, and their necessities
demanded them. Kansas in 1860 had a population of 107,209; In 1870 it
had increased to 364,400. Prior to 1864 it had no railroads. In 1870 it
had 1,501 miles, all of which, save forty miles, was built in four
years. Nearly all of the Kansas roads were aided by grants, and some of
them by subsidy bonds. In 1870 there was one mile of railroad in Kansas
for every 242 inhabitants. To construct these roads in Kansas, counties,
cities, and towns have taxed themselves by vote to the amount of
$4,400,000, or about $9.00 to each inhabitant. This debt must be charged
to the railroad account, and a similarly voted indebtedness in Iowa to
the amount of about $6,000,000. The valuation of property in Iowa in
1860 was $205,166,000, and in 1870 $302,515,000. Thus while the
population of the state had nearly doubled, and the lines of railroad
had more than quadrupled, the valuation had increased less than fifty
per cent, and at least one-half of this increase was in the value of
railroads. Deducting from the increased valuation of property in Kansas
the value of railroads there, and about the same state of facts appears.
The figures in these two states will show, that so far from the
donations of land and money adding to their wealth the reverse is true.
And this position is supported by the exhibit of other states. In
Pennsylvania the population has increased since 1860, 600,000. The
mileage of railroads has nearly doubled in this time, and the valuation
of property has increased from $719,253,000 to $1,318,236,000. In that
state, where no government aid has been voted to railroads, the wealth
of the state has nearly doubled, while in the same time in the state of
Iowa it has not increased fifty per cent, land grants included.
The population of Nebraska has increased from 7,000 to 42,000 in the
last decade. This state has 593 miles of railroad, or one mile of
railroad to each seventy of its population, nearly all aided by grants.
California had a population in 1860 of 380,000. In 1870 it had increased
to 560,000.
Colorado in the last decade increased from 34,000 to 40,000. In this
territory there are 392 miles of railroad, all built by grants of lands
and bonds.
Of course the roads through the territories are the Pacific roads, but
as the states and territories were both cited as illustrations of the
wisdom of congress in making grants to companies for the construction of
railroads, we have examined the matter somewhat in detail to show the
weakness of the argument. If we take the census of 1860 and that of
1870, and observe the increase in population, wealth, and railroad
building, we will discover that the laws of trade, of supply, and demand
have controlled the whole matter, and that the growth of the country has
not been increased because of these grants from government. In all cases
where the construction of railroads has approached the frontier line of
settlement, it has drawn but little population after it, aside from the
employes of the road. The real pioneer immigration, that which opens and
improves the country, is doing now what it has done for the last
generation, moving steadily to the west, followed and surrounded by
railroad sharks and jobbers, who, after getting all they can from
government, prey upon the people; and the people of the new states,
instead of being blessed with the means of adding to their wealth, find
themselves burdened with debt and taxes, fastened upon them by the
construction of railroads, many of which are of doubtful utility. As a
necessary consequence of the railroad taxes upon their lands, and the
excessive charges imposed for the transportation of their produce, their
farms do not appreciate in value, and the anticipated rapid increase in
population and wealth of the locality is not realized. From a view of
the whole situation, regarding the benefits accruing to the people from
these grants to railroad companies, with what the people have paid for
them, the withholding of these railroad lands from market, and the high
prices charged per acre by the companies, together with the unjust
privileges granted to these corporations, we conclude that the people of
the new states and territories have not received an equivalent for the
grants made to railroad companies. We are aware that a different opinion
prevails, and that our conclusions will be controverted; but when it is
remembered that thousands of people have left Iowa, or, coming from the
east, have refused to settle in Iowa, because of the fact that lands
could only be had by purchase from railroad companies at extravagant
prices, and that for this reason vast tracts of Iowa lands are yet
unimproved which would now be settled upon and cultivated had they not
thus been withdrawn from the market, it must be admitted that Iowa would
have had a greater population, and greater wealth, had her railroad
companies received no land grants. And what is true of Iowa is also
true, as a general rule, of other states and territories. Perhaps an
exception exists in the far western territories, whose gold and silver
mines are in themselves an exception to the general rule, and where
agriculture has but few followers.
The advocates of the railroad land grant and subsidy bond system for the
settlement of a country have the following to say in its favor. We quote
from the _Railroad Manual_ before referred to: "One of the most
remarkable things connected with the progress of this country is the
construction of railroads in advance even of the lines of settlement of
our people. Such result is largely due to the grants made by government
of lands for the encouragement of these works. Never was a policy more
wise or more beneficent." No instances can be shown where railroads have
been built in advance of the line of settlement, save when the objective
point could only be reached by passing over an unsettled country, as in
the case of the road from the Atlantic to the Pacific states. In all
other cases, railroad companies have awaited the settlement and
development of the country, and followed, not led, our pioneer corps. Of
the wisdom and beneficence of these grants the people can judge from
their acquaintance with the workings of the system, and the wholesale
robberies and frauds practiced by the companies, to some of which we
have already referred. Again the author says: "The government has been
greatly the gainer in a pecuniary point of view, as it was enabled to
sell the land reserved at twice the established rate." It is not clearly
seen how this _gain_ is made. The people, who are the government, give
away one-half of their lands, and then pay into their treasury just
money enough for the remaining half to make up the value of the lands
they have given away. The only gain the government has made (and this is
not a pecuniary one) is the reflection that the men who have received
these large grants have become rich, while the people have been deprived
of their lands at the original price; they must pay for one-half of them
a double price, and for the residue just what they can buy it for from
the corporations to whom their servants have donated it. This author
says: "That the public has reaped the advantage of the construction of
some ten thousand miles of railroads, that otherwise would not have been
built." Is this true? In Iowa the land-grant roads were not built as
fast as other roads having no grants, and the companies finally
completed them because they were about to lose their lands by longer
delay. And in other states and territories some of these land grant
roads are dragging their slow length along, and are being constructed
only as fast as the lines are settled with a sufficient number of
inhabitants to make the business of the roads profitable. After showing
that in certain states and territories there is now one mile of railroad
for each three hundred inhabitants, the author adds: "This is certainly
a most wonderful exhibit, and is one no other nation can display, and
which in our case has only been secured by the wise, benevolent policy
of our government, which in this way did more to give remunerative
employment to the poorer classes than any other legislation could
adopt." It is certainly a "_most wonderful exhibit_." It is one that
"_no other nation can display_;" but its wisdom and benevolence are
matters of grave doubt. If we add to this "wonderful exhibit" the
$65,000,000 stolen from the people by corrupt men and interested
legislation, with the $3,126,000 annual interest that the whole people
are taxed to pay, because the Pacific railroad companies and the
congressional Credit Mobilier have wrongfully appropriated this vast sum
to their own use, it presents truly "a _most_ wonderful exhibit,"
without a parallel in any country in the world, but its wisdom and
benevolence are certainly wanting.