politicalcivility.com Blog

The Utah quarter is finally out, but as Paul Harvey would say…”And now the rest of the story.”

History of Railroad Construction

I find it rather ironic that Utah/Gov. Huntsman choose a symbol that represents one of the worst cases of government waste in US History.  While the “golden” spike put Utah on the map so to speak, the building of the transcontinental railroad should serve as a grave reminder not as a point of celebration.

A Few Facts About The Railroad

1. Paralell Lines: North Pacific (NP) and Central Pacific (CP) were paid for how many miles of track they laid, so the line that built the most rails got the most cash.  For awhile in Utah the two companies were laying and getting paid for tracks that were being built parallel to each other, which of course cost taxpayers additional millions of dollars.
2. Free Land: The two companies were given more than 44,000,000 acres of free land to build the railroad. Assuming and average of $4.00 per acre (the going rate at the time), CP and NP received a $401 Billion (in today’s dollars) land subsidy.  Arguably one of the largest government handouts in the history of America.
3. Huge Loans: CP and NP also received more than $61,000,000 dollars ($139 Billion in today’s dollars).
4. Bloodshed: Competition was so fierce amongst the two railroads that war literally ensued as many lives were lost on account of a series of attacks each company carried out on the other’s employees.
5. Repairs: In the first year alone, repairs for the “newly” built railroad cost the taxpayers in excess of 113 Million (today’s dollars) to repair the line, because CP and NP had built the railroad so poorly.
6. Bankrupt: Despite all the corporate welfare these two companies received, at the end of the building of the railroad, both companies were nearly bankrupt.  The subsidies, during the building, hid the waste and corruption and lack of good management of these two companies.

The list could go on.  Some sources estimate that the building of the transcontinental railroad actually cost 3x the numbers I have listed here.

Now that’s something to be proud about.  Maybe the golden spike should have ended up on the $1,000 bill instead of the quarter.  At least then it would better represent the largesse needed to build our government funded landmark: The Transcontinental Railroad.

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Sources:

1. “The Myth of the Robber Barons,” by Burton Folsom.  He gives a lot more detail about how corrupt this process was and also highlights how another rail line in the Northwest was built privately, cost significantly less (even though they used far superior build supplies) and without any government help.  This line also charged less, was more efficient in getting goods from East to West, and paid its shareholders handsomely.
2. http://measuringworth.com/calculators/uscompare/