THE PUSH WESTWARD
After the Civil War, the country was bursting with energy. Industries developed, immigrants poured in, railroads crisscrossed the land, education spread, wealth increased, and the West was settled. The country began to look abroad for new frontiers.
The railroad and economic growth
At the end of the Civil War, most of the railroads were in the North and east of the Mississippi; none of them crossed the West. California could be reached only by weeks of sailing or riding in a bumpy stagecoach. By 1900, the United States had more railroads than Europe, and people could ride the rails to the West Coast in a matter of a few days.
Beginning right after the end of the Civil War in 1865, a crew of 5,000 (mostly Irish) workers pushed the rail lines west from Omaha, while 10,000 Chinese workers labored over the Sierras from Sacramento. By 1869, the railroad across America was complete.
The Crédit Mobilier (1872) scandal tainted the westbound-from-Omaha owners of the Union Pacific Railroad. The Central Pacific Railroad from Sacramento made a lot of money but avoided the large-scale political bribery of the Crédit Mobilier gang.
Cornelius Vanderbilt (1870) had made a fortune in steamboats. In his late 60s, when he should have been happily enjoying the money, he decided to build some railroads. He pioneered the use of steel instead of iron rails for the important New York Central, making train tracks safer and less expensive to build. In the years after the Civil War, the railroads finally agreed on a standard width or gauge for rails so that people didn't have to keep getting off and changing trains. Westinghouse air brakes helped trains stop, and Pullman cars made them comfortable.
Railroads made the United States the largest integrated market in the world. Food, resources, and products could move anywhere in the country, which stimulated growth. Building the railroads also helped develop the U.S. steel industry. When Vanderbilt first used steel rails, he had to buy the steel from England — soon the U.S. had a strong steel industry. Settlements sprung up like strings of pearls along the railroads, just as they'd done in the past along rivers. Corn, wheat, and cattle replaced tall-grass prairies and buffalo. Forests were cut down and became lumber carried on rails to build cities.
Question: How did the railroads contribute to economic growth?
Answer: Transportation sparked growth from 1860 to 1900 by creating the world's largest connected market system, by allowing settlers and businessmen to reach any part of the country quickly, and by fueling the business involved in the very act of building the world's largest railroad system.
Quick profits attracted rip-off artists. Jay Gould made a fortune buying railroads, inflating their stocks, and then selling them. The scam was called stock watering, after the farmer's trick of getting cattle really thirsty and then letting them fill up with heavy water just before they hit the scales to be sold by weight.
Railroad stock wars led to bare-knuckle fights between capitalists. Tough old Vanderbilt said, "I won't sue you; the law takes too long. I'll ruin you." Railroads had almost unlimited political power; they bought influence by giving out free passes to politicians and reporters. Without competition on most routes, they could charge whatever they wanted. They angered small shippers and farmers by demanding more money from them than from their large business cronies.