Why did the government give land grants to the railroad companies?

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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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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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 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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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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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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Land Grants were given to railroad companies and allowed them to sell land to settlers, real estate companies, and other businesses to raise the money they needed to build the railroad.

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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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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 Complaints of Farmers First, farmers claimed that farm prices were falling and, as a consequence, so were their incomes. They generally blamed low prices on over-production. Second, farmers alleged that monopolistic railroads and grain elevators charged unfair prices for their services.

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The railroads provided the efficient, relatively cheap transportation that made both farming and milling profitable. They also carried the foodstuffs and other products that the men and women living on the single-crop bonanza farms needed to live.

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