How did railroads make money from land grants?

To encourage development of rail lines westward, the government offered railroad companies massive land grants and bonds. Railroads received millions of acres of public lands and sold that land to generate money for the construction of the railroads.



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The railroad grants helped companies raise the capital they needed to build lines into sparsely settled areas like Nebraska. In exchange, the railways agreed to carry the mail at rates set by Congress and to transport US soldiers and freight without charge.

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At the same time that homesteaders were getting free land from the government, large tracts of land were granted to railroads by both the states and the federal government. The goal was to encourage the railroads to build their tracks where few people lived, and to help settle the country.

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Between 1850 and 1872 extensive cessions of public lands were made to states and to railroad companies to promote railroad construction. [18] Usually the companies received from the federal government, in twenty- or fifty-mile strips, alternate sections of public land for each mile of track that was built.

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If you were interested, the railroad would put you on a special land-seeking train. If you decided to buy, the price of the train ticket would be applied to the price of the land. Together, the Burlington and Union Pacific Railroads had sold more than 7 million acres to private purchasers.

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In 1862, Congress passed the Pacific Railway Act, which designated the 32nd parallel as the initial transcontinental route, and provided government bonds to fund the project and large grants of lands for rights-of-way.

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The total of public land grants given to the railroads by states and the federal government was about 180 million acres. At the time, the value of this land was about one dollar per acre, which was the average price realized by the government for sales in the land grant states during that period.

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United States. Current subsidies for Amtrak (passenger rail) are around $1.4 billion. The rail freight industry does not receive direct subsidies.

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To encourage railroad construction across the Great Plains, the federal government gave land grants to many railroad companies. The railroads then sold the land to settlers, real estate companies, and other businesses to raise money to build the railroad.

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Federal Rail Programs. Rail, unlike other transportation modes, does not have a dedicated federal funding source. Thus, any federal funding programs that are rail oriented are discretionary and awarded on a competitive, nationwide basis. No state is guaranteed to receive federal rail funding.

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