What was one reason the United States government gave subsidies and land grants to railroad companies in the 1800s?
The second half of the nineteenth century was the era of railroad land grants. Between 1850 and 1872 extensive cessions of public lands were made to states and to railroad companies to promote railroad construction.
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To entice investors into building a continuous line from the Mississippi River to the Pacific shore, Congress agreed to give the railroads 10 square miles of land for every mile of track.
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.
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.
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.
In 1862 the Central Pacific and Union Pacific railroads were orginally promised ten miles of checkerboard land on each side of the tracks, but to help meet expenses, ten was changed to twenty miles on each side in 1864.
The checkerboard pattern of the land grants had begun during the canal land grant era, and continued with the railroad grants as a concession to opponents both of land subsidies and of interstate railroads. Land grant proponents compromised by agreeing to grant every other square-mile section of land to the railroads.
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.