What did the government offer railroad companies to subsidize them?

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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Source: Association of American Railroads, Bureau of Railway Economics. Railroads received extensive subsidies in the form of land grants, mostly in the years 1850–70. In the 1862–66 period alone, more than 100 million acres of public land were turned over to railroad companies.

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This act provided for the construction of a transcontinental railroad by two corporations, the Union Pacific and the Central Pacific railroad companies. To encourage rapid construction, the government offered each company land along its right-of-way. (About 1-5 miles on either side of the tracks)

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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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When the U.S. government decided a transcontinental railroad was necessary, it stimulated private industry to build one. Railroads, as private companies, needed to engage in profitable projects. So the federal government passed the Pacific Railroad Act that provided land grants to railroads.

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The rail line was built by three private companies over public lands provided by extensive US land grants. Building was financed by both state and US government subsidy bonds as well as by company-issued mortgage bonds.

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Although these figures are immense and would appear to suggest that the American railroad system was built largely on the basis of government aid, this is actually not the case. In fact, only 18,738 miles of railroad line were built as a direct result of these land grants and loans.

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The two lines of track would meet in the middle (the bill did not designate an exact location) and each company would receive 6,400 acres of land (later doubled to 12,800) and $48,000 in government bonds for every mile of track built.

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In the end, the federal government gave 134 million acres of land as incentives to the railroads. To further assist the railroad companies, the federal government offered the companies bonds.

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Railroad workers put in long hours; a 1907 law restricted train crews to 16 hours work out of every 24. Well into the twentieth century, work was unsteady and unsafe. One railroad worker in every 357 nationally died on the job in 1889.

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This act, passed on July 1, 1862, provided Federal subsidies in land and loans for the construction of a transcontinental railroad across the United States.

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In 1862 the federal government offerred land grants for building transcontinental railroads. The expectation was the railroads would quickly sell the land to settlers to raise the money to pay for the building of the railroad.

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The railroad opened the way for the settlement of the West, provided new economic opportunities, stimulated the development of town and communities, and generally tied the country together.

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