How much money did the federal government save shipping over land-grant railroads?
Here is the statement I'm asked to verify.
RAILROADS RECEIVING LAND GRANTS HAD TO HAUL GOVERNMENT CARGO AT REDUCED RATES. WHEN THIS AGREEMENT ENDED IN 1946, THE RAILROADS HAD REPAID AN ESTIMATED TEN TIMES THE VALUE OF THE LAND.
The land grant part is relatively easy. From Richard Orsi's Sunset Limited (2005) p.74-81, we learn that Central Pacific, Southern Pacific and associated lines acquired about 18 million acres of land (the government was so slow in issuing patents that some of that land was not actually received until the 1940s). Because the railroad sold the land off as rapidly as possible (to generate business through development of farms) they never owned more than about five million at one time – and generally much less than that. Even the good agricultural land was sold for less than $5 per acre, and most of the land was sold for much less than that. In short, the railroad company probably earned something in the area of $50 million off of their land grants.
But, what remains is the question of revenue lost to the railroad because they had to carry federal cargo at reduced rate (or was it for free?) between 1860s and 1946.
(I know that the original statement applies to all land-grant railroads. I'll be happy for a take on merely the CP/SP's portion of it.)