Railroad History Myths Repeated
" ... The story of the five transcontinental railroads built by 1900 often overlooks some remarkable lessons about private initiative and government subsidies. Four of the five transcontinentals received huge 'donations' from Washington in the form of land grants and taxpayer cash. [Myth #1 – in fact, not subsidies, and it was bond investors' cash (see CPRR prospectus, UPRR)] [James J. Hill's] Great Northern was the only one that accepted neither and the only one that never went bankrupt. [Myth #2 – in fact, the Central Pacific Railroad never went into bankruptcy] ... The lure of subsidies created powerful incentives for the other railroads to throw down tracks just to get the government goodies. That's why hundreds of miles of track had to be replaced later [Myth #3 – in fact, CPRR construction was 'first-class'] before any train could ride them [Myth #4 – in fact, transcontinental train through traffic began immediately and the UPRR's deficient construction was replaced over time]. Historian Burton Folsom, author of the classic book, The Myth of the Robber Barons, reveals that before the lines of the Union Pacific and the Central Pacific met where the famous Golden Spike connected them, teams from the two railroads blew up each other's track [Myth #5 – in fact, CPRR and UPRR attacking each other with explosives never happened, likely a complete misinterpretation of a newspaper illustration because its explanation was printed on a different page separated from the engraving.] to claim more land and cash from Washington. ... " [More]
[Courtesy Google Alerts.]
[Mr. Reed and his excellent Foundation for Economic Education has for more than seven decades been the leader in teaching free market economic principles. The Central Pacific Railroad Photographic History Museum has been attempting to correct a number of what appear to be widespread myths from the secondary literature representing incorrect transcontinental railroad history, but unfortunately a few have crept into this recent article. Any corrections needed to these errata, and help in documenting the actual history with primary sources will be greatly appreciated.]
posted from CPRR Discussion Group at 7:47 AM
8 Comments:
A possible origin for these myths is the Democrat 1884 campaign propaganda (see graphic). See especially this related comment.
Can't find the earlier discussion that for an underfunded project, it may be rational (although distasteful and ultimately more expensive) to cut costs, if the project will have a long lifetime, with shoddy initial construction, if that is the only way to get revenue coming in to fund replacing the original shoddy construction later with more costly quality construction.
Also see, regarding railroad construction quality inspection, Report from the Commissioners of the Pacific Railroad Commission, January 14, 1869 at the National Archives.
We know that the first transcontinental railroad was underfunded, because congress had to amend the Pacific Railroad Act to double the land grants in order to sufficiently incentive the required private bond investments to get the railroad construction going.
President Lincoln also had to utilize the fib that the Sierra Nevada mountains started in the foothills in order to sufficiently increase payments to get the CPRR construction going.
It is important for free market advocates to address how to finance and organize essential long term projects, such as the transcontinental railroads, space exploration, fundamental science, mathematics, or medical discovery, which clearly should be pursued but where adequate private investment cannot be secured because the path forward is not clearly determined, the risk is too high, the investment time horizon too long, where future markets cannot be secured to the pioneer companies, where the intellectual property, extra-planetary real estate, etc. ownership is not protectable, or where immense likely ultimate investment returns will probably go to others who enter later, not to the pioneers,
Here it is:
See related discussion.
Tragically, the organizations that we rely on to teach economics and history so people understand that free market capitalism produces abundance with a rising standard of living and eliminates poverty over time, and why socialism consistently does not work and results in totalitarianism and mass murder, have failed us because an increasing number of Americans, now almost half, think that they prefer socialism.
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