Why did the government give land grants to railroad companies?

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. This provided public lands to railroad companies in exchange for building tracks in specific locations.



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The government loaned a total of $64,623,512 to the transcontinental companies. These loans were for the most part paid back at six percent interest. The law also provided that a company could be given up to twenty sections (a section is a square mile) of land for every mile of track put down.

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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.

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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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Receiving millions of acres of public lands from Congress, the railroads were assured land on which to lay the tracks and land to sell, the proceeds of which helped companies finance the construction of their railroads.

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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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At first, the farmers wanted the government to control prices on the railroads. Later, the farmers began to demand that the government own the railroads. The farmers decided they had to have an organization. They formed several organizations.

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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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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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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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In 1887 Congress passed the Interstate Commerce Act, making the railroads the first industry subject to federal regulation. Congress passed the law largely in response to decades of public demand that railroad operations be regulated.

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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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Paul to Seattle. On September 18, 1889, James J. Hill created the Great Northern Railway from the bankrupt St. Paul and Pacific, and the Minneapolis and St.

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