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Railroad History - Why They Built the Railroads

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[quote user="henry6"] Got a question....did the Federal Government give the land grants to the western railroads because the Government nor anyone else didn't have the money to purchase the lands (from the Government) or was it the idea of those in Government of a stimulus package by giving railroads abilies to build while giving people incentives to settle? <div style="clear:both;"></div> [/quote] People don’t want to move into a land that has no rail transportation.  And railroads don’t want to build into a territory that has no business.  If they did, the business would come eventually, but the payback was too far out.  That made the risk of investment too high. To break that deadlock, the government granted land to the railroads.  It amounted to the government partnering with a railroad to share the risk of investment.  So the government became an investor alongside of the railroad company.  Then, both the railroad company and the government received a return on their investment.   <o:p></o:p> In actuality, the settlers who moved into the territory were the government.  So they were the investors that partnered with the railroad to bring rail transportation into the territory.  And as Greyhounds mentioned, the settlers received a return on their investment in the form of better transportation.  Better transportation made more money for them.  Hauling their goods made money for the railroad.  The whole thing together created wealth.
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