History Channel's The Men Who Built America
With more episodes being planned, I am keeping my fingers crossed that the series will cover the building of the first transnational railroad. This particular story is full of outrageous behavior by characters rightfully called Robber Barons.
One of the most entertaining stories is about the financing of the western half of the railroad. This consortium began from the central California laying track eastwards while the other started simultaneously in the Midwest building eastwards. The plan was for the two to meet in the middle and connect their tracks. Both groups relied heavily on government support to make the enormous projects viable. This support came in the form of both land grants for right-of-ways and money. In some cases the right-of-ways were 20 to 30 miles in width. The cash component was paid out every time the line achieved a mileage milestone and not before. This created some cash flow problems for the consortiums. The western group headed by Leland Stanford and Collis Huntington received incentives from the federal government consisting of $24 million in financing and over nine million acres of land for railway rights of way.
However, Stanford and Huntington didn’t have to wait for the completion of the railroad to start earning a profit. Early on, or perhaps before even tendering their bid to the government, they realized that money was to be made quickly with a variant of the chokepoint strategy. Villages along the proposed route were told that they had to contribute funding to the project. If they refused the consortium’s surveyors found a justification for routing the track through a parallel valley or around the far side of an adjacent lake, thereby, in many cases, choking the life out of the existing town or settlement.
His [Collis Huntington] methods were clearly described by a member of the Constitutional Convention of 1878, who said : They start out their railway track and survey their line near a thriving village. They go to the most prominent citizens of that village and say, “If you will give us so many thousand dollars we will run through here; if you do not we will run by.” And in every instance where the subsidy was not granted this course was taken, and the effect was just as they said, to kill off the little town. - Matthew Josephson, The Robber Barons
Think of this as a case of a moving chokepoint.
Legend has it that Stanford, who was by then governor of California, and Huntington built the western half of the first transcontinental railroad without putting up a dime of their own money. Judging by their tactics it’s that not hard to believe.