HV اردلان50-1 American Railroads
In the United States, railroads spearheaded the
second phase of the transportation revolution by
overtaking the previous importance of canals. The
mid-1800s saw a great expansion of American
railroads. The major cities east of the Mississippi
River were linked by a spiderweb of railroad tracks.
Chicago's growth illustrates the impact of these rail
links. In 1849 Chicago was a village of a few
hundred people with virtually no rail service. By
1860 it had become a city of 100,000, served by
eleven railroads. Farmers to the north and west of
Chicago no longer had to ship their grain, livestock,
and dairy products down the Mississippi River to
New Orleans; they could now ship their products
directly east. Chicago supplanted New Orleans as
the interior of America's main commercial hub.
The east-west rail lines stimulated the settlement
and agricultural development of the Midwest. By
1860, Illinois, Indiana, and Wisconsin had replaced
Ohio, Pennsylvania, and New York as the leading
wheat-growing states. Enabling farmers to speed
their products to the East, railroads increased the
value of farmland and promoted additional
settlement. In turn, population growth in agricultural
areas triggered industrial development in cities
such as Chicago, Davenport (Iowa), and
Minneapolis, for the new settlers needed lumber for
fences and houses and mills to grind wheat into
flour.
Railroads also propelled the growth of small towns
along their routes. The Illinois Central Railroad,
which had more track than any other railroad in
1855, made money not only from its traffic but also
from real estate speculation. Purchasing land for
stations along its path, the Illinois Central then laid
out towns around the stations. The selection of
Manteno, Illinois, as a stop of the Illinois Central, for
example, transformed the site from a crossroads
without a single house in 1854 into a bustling town
of nearly a thousand in 1860, replete with hotels,
lumberyards, grain elevators, and gristmills. By the
Civil War (1861-1865), few thought of the railroadlinked Midwest as a frontier region or viewed its
inhabitants as pioneers.
As the nation's first big business, the railroads
transformed the conduct of business. During the
early 1830s, railroads, like canals, depended on
financial aid from state governments. With the
onset of economic depression in the late 1830s,
however, state governments scrapped overly
ambitious railroad projects. Convinced that
railroads burdened them with high taxes and
blasted hopes, voters turned against state aid, and
in the early 1840s, several states amended their
constitutions to bar state funding for railroads and
canals. The federal government took up some of
the slack, but federal aid did not provide a major
stimulus to railroads before 1860. Rather, part of
the burden of finance passed to city and county
governments in agricultural areas that wanted to
attract railroads. Such municipal governments, for
example, often gave railroads rights-of-way, grants
of land for stations, and public funds.
The dramatic expansion of the railroad network in
the 1850s, however, strained the financing capacity
of local governments and required a turn toward
private investment, which had never been absent
from the picture. Well aware of the economic
benefits of railroads, individuals living near them
had long purchased railroad stock issued by
governments and had directly bought stock in
railroads, often paying by contributing their labor to
building the railroads. But the large railroads of the
1850s needed more capital than such small
investors could generate. Gradually, the center of
railroad financing shifted to New York City, and in
fact, it was the railroad boom of the 1850s that
helped make Wall Street in New York City the
nation's greatest capital market. The stocks of all
the leading railroads were traded on the floor of the
New York Stock Exchange during the 1850s. In
addition, the growth of railroads turned New York
City into the center of modern investment firms.
The investment firms evaluated the stock of
railroads in the smaller American cities and then
found purchasers for these stocks in New York
City, Philadelphia, Paris, London, Amsterdam, and
Hamburg. Controlling the flow of funds to railroads,
the investment bankers began to exert influence
over the railroads' internal affairs by supervising
administrative reorganizations in times of trouble.
