The distinction here is that to some, Subsidy is a bad word, so to justify their love of the railroads, they have to concoct linguistic distinction to justify how this or that isn't a subsidy. In either case, its the government spending tax money for what it sees as the public interest.
YoHo1975Except that the reason the railroad lowered its fairs was to encourage travel and resettlement in locations where it owned land and facilities. Ultimately the intrinsic value of those locations was based on people using them. Now you might say that these other enterprises picked up the slack and thus the RPO car was just another revenue stream and I suppose that's a valid way to look at it, but its also a chicken and egg situation. the RPO car brings in revenue whether people partake of the railroad services or not.
I don’t think it is a "chicken and egg" situation. The RPO service, the passenger travel, and the passenger restaurants are just three different chickens. You say the RPO car brings in revenue whether people partake of the railroad services or not. Yes it does, but those other services bring revenue whether the RPO brings in revenue or not.
It is true that only the government can offer a subsidy, but it does not necessarily follow that every government expenditure amounts to a subsidy to the recipient.
greyhounds Snip. The land grants took an otherwise basically useless resource and made it useful. The land was useless without transportation because anything produced on the land could not be moved to market. So a useless, but potentially useful, resource was developed. The government took nothing of value away from someone and gave it to someone else.
Snip.
The land grants took an otherwise basically useless resource and made it useful. The land was useless without transportation because anything produced on the land could not be moved to market. So a useless, but potentially useful, resource was developed. The government took nothing of value away from someone and gave it to someone else.
Presumably that "useless" resource was worth something to the people that were living there (you know, the ones called Indians and later Native Americans or First Americans). Otherwise they would not have felt the need to fight those who came and stole their land and put them in concentration camps, sorry "reservations".
greyhounds That isn't the case with these trains. The government will have to take economic resources away from productive, wealth creating, segments of the economy and put it in to a money loosing, wealth destroying train service. Doing things such as that harms the economy and the US economy doesn't need to be harmed any more than it has been. The wealth created by the productive segments should be allowed to go where it will create more wealth and growth, not destroyed by this looser train service.
That isn't the case with these trains. The government will have to take economic resources away from productive, wealth creating, segments of the economy and put it in to a money loosing, wealth destroying train service. Doing things such as that harms the economy and the US economy doesn't need to be harmed any more than it has been. The wealth created by the productive segments should be allowed to go where it will create more wealth and growth, not destroyed by this looser train service.
As opposed to putting it in (global) wealth destroying banks and wars?
Sorry, don't mind me. I have a bad day and this post just rubs me the wrong way.
The main reason why much of the public opposes HSR is the objection to the fact that HSR must be subsidized with public funds. HSR proponents will then always counter that highways are subsidized, or even that everything is subsidized. By using a highly elastic definition of subsidy, they can prove that virtually everything the government spends money on is a subsidy to the recipient. Therefore, they conclude that if everything is subsidized, it is okay to subsidize any new thing, and that means it is okay to subsidize HSR no matter what it costs. But to compare apples to apples, there needs to be the following:
1) A definition of subsidy.
2) A measurement and quantification of the subsidy.
3) An explanation of who pays the subsidy and who benefits from it.
Even the definition of the term, subsidy is subject to individual interpretation. To some extent a subsidy might simply be the government directing the public’s money to a public good. One could therefore argue that that’s a direct purchase by the public, mandated by government. In those terms, the subsidy would not even be a subsidy.
Here is another way of looking at it:
Government has the authority to tax at whatever amount it chooses. So the government could tax income at 100% if it wanted to. Then if you earned a dollar, government would take the whole dollar as tax. If instead, they set the tax at 50%, and because they could take 100%, does that mean that government is giving you a 50-cent subsidy on each dollar you earn if they tax it at 50%? That is believed to be the case by those who consider corporate tax breaks to be government subsidies to those corporations.
Because the term subsidy means so many different things, I believe that it should be set aside for purposes of HSR funding discussion. The far more important issue is item #2, and especially item #3 above. Whether we call it a subsidy or not is beside the point. Ultimately, it is not the government doing the funding of these public projects, but rather, the government forcing private citizens to do the funding. So the more those citizens find the funded work useful, the more fair the deal will be for them.
While both highway and HSR funding might be called subsidies, there are many times more highway users in the group doing the funding of highways than there will be HSR users in the group doing the funding of HSR. That is the difference.
YoHo1975Incentive vs. subsidy sounds like a game of semantics. And you can say it had little value (something I dispute, especially say in California and parts of the midwest), but the value wasn't zero. If nothing else, the Federal government paid money for it and they could have recuped that. and what of the money paid out for mileage completed? Was that a subsidy or an incentive? The distinction here is that to some, Subsidy is a bad word, so to justify their love of the railroads, they have to concoct linguistic distinction to justify how this or that isn't a subsidy. In either case, its the government spending tax money for what it sees as the public interest.
Yes the government paid for the land. The Louisians Purchase which covered the land between the Mississipi River and the Rocky Mountains worked out to about 3 cents per acre. California and the Southwest were taken as a result of the Mexican War. Speaking of subsidies, the railroads were required to carry government cargo and troops at a reduced rate as part of the land grant.
YoHo1975The RPO car subsidized the cost of passenger trains they ran on allowing the railroads to lower the price of passenger tickets while maintaining profitable service. Land grants were a subsidy, the land was owned by the government and had a value. The government gave up that value to encourage the railroads to expand. The government could have charged the railroad for the land instead in which case it would not have been a subsidy. Therefore the government subsidized the costs of the expansion of the railroads by eating its own potential profits. I'm not asking you to prove a negative, I'm asking you if you've taken in all of the variables in your assertion. I do not believe you have.
I'm not asking you to prove a negative, I'm asking you if you've taken in all of the variables in your assertion. I do not believe you have.
You're making up your own definition of the word "subsidy".
The mail lowered the average cost of moving people and goods by rail because it spread the fixed costs of the railroad (which are high) over a larger base. But then, so did a carload of hogs shipped by a farmer to Chicago for slaughter. Was the farmer "subsidizing" the railroad? No. He was purchasing services from the railroad. He made the purchase for one reason. His purchase improved his economic situation. Same with the government mail. The government gave itself a monopoly (weren't we lucky) on mail by passing the Private Express Statues which prohibited the private express companies from handling mail. (UPS, FedEx, fax, and email finally broke the government choke hold.)
Having given themselves a monopoly, the government had to actually move the mail. The best way to do this was often by purchasing transportaiton service from a railroad. A government purchase of transportation is in no way different than a hog farmer's purchase of transportation as far as the transportation provider is concerned. The customer is simply paying for what they use. That ain't no subsidy. If you want to make up an inovative definition of the word "subsidy" that says it is, have fun. But thinking folks know better.
As far as the land grants, the land without transportation had virtually no value. It didn't do much good to raise those hogs or grow corn if you couldn't get the hogs/corn to a market. And before the railroads you could not do that very well.
You might want to read "The Chicago & Alton Railroad" by Glendining. The author goes in to detail about the difficulty of moving around in Illinois prior to the railroads. People basically had great difficulty getting themselves somewhere, let alone with a load of hogs or corn. (Some of the best farmland in the world was useless because they couldn't get its production to a market.) Close to the rivers they could do something. Abe Lincoln, who you invoked, participated in this transportaiton inefficiency.
What they did was construct a small wooden barge called a "flatboat". They loaded this thing up with whatever they wanted to get to a population center or a port, such as New Orleans. Then a couple guys with poles took this thing down the rivers. At destination they sold whatever the load was, sold the boat for lumber, and walked back. Needless to say, economic development and growth lagged.
Lincoln did this at least once. He took a flatboat to New Orleans and walked back to Springfield, IL. He then became an ardent supporter of railroad building.
They had otherwise useless land (more than 10 miles from the river) and could make it valueable by getting railroads built. They did this with land grants (about 7% of the rail mileage in the US was built with land grants.) They created something out of nothing. They didn't divert any economic resources from more productive uses. They made a potentially great economic resource, midwest farmland, valuable. Great gain, no harm.
This incredibly wasteful plan to operate high speed trains to Madison, WI won't be like that. The government will have to divert economic resources from more productive uses to subsidize (I'm using the word correctly.) the wasteful service. That will harm the people of the United States. I have considered everything I know that should be considered about this train service. I know the experience in China and France with these "High Speed Trains". They are money pits that degrade the people's standard of living. They benefit a few while harming many.
I grew up in a very small town in central Illinois. I plan on going back over Labor Day. The town holds a "Homecoming" over Labor Day. As a friend put it, "It's a little town surrounded by corn." That it is. The agricultural production is amazing. This time of year one can see very tall corn stalks closely spaced in mile after mile of fields. That was created by transportaiton. The first railroad land grants were used to build railroad tracks in Illinois. But those grants didn't divert economic resources from other, more productive uses, which is what the subsidies for the Wisconsin high speed rail will do.
BTW, I do visit Madison, WI with regular frequency. I have no difficulty getting there or back. I don't know anyone who does have any such difficulty.
greyhounds They created something out of nothing. They didn't divert any economic resources from more productive uses. They made a potentially great economic resource, midwest farmland, valuable. Great gain, no harm.
Aside from two bankruptcies for the NP and one for the UP, ripping millions out of the US economy, and particularly when both simultaneously bankrupted in 1893 -- strictly a government land grant fiasco -- which precipitated the worst and longest financial depression up until 1933.
The losses in railroad investment and devastating effects on the general economy prompted the so-called "Progressive Era," resulting in regressive regulation which nearly killed the industry.
Kind of like, "... other than that Mrs. Lincoln, how did you like the Play?"
ICLand - Are you saying that the Panic of 1893 was that era's version of the 2000 or so "dot-com" "irrational exuberance" and subsequent crash - or better yet, the current burst housing bubble and ripple effects ? I had thought that the 1893 bust was more related to the silver market crash - or was that in 1873 ?
I'd be interested in some elaboration on the "government land grant fiasco" aspect of your post. Are you perhaps saying that the land grants were the basis of/ led to overcapitalization/ too much debt for those firms, which they couldn't support/ pay off for the long term ?
Also, I had thought the Progressive/ Granger movements were more related to high rail rates for farmers, and many business trusts - think Standard Oil - than just the railroads.
- Paul North.
marcimmeker greyhounds Snip. The land grants took an otherwise basically useless resource and made it useful. The land was useless without transportation because anything produced on the land could not be moved to market. So a useless, but potentially useful, resource was developed. The government took nothing of value away from someone and gave it to someone else. Presumably that "useless" resource was worth something to the people that were living there (you know, the ones called Indians and later Native Americans or First Americans). Otherwise they would not have felt the need to fight those who came and stole their land and put them in concentration camps, sorry "reservations".
If I understand his point correctly, the land's value is a relative term. It grew crops, it fed animals, it fed the indians, but what's the point in having a million dollars if there's no place to spend it? There was such plentifuls amount that could be sold, but no way to do so. Hence, the waste or "Useless". The railroads created their way to that market, and what Americans called value increased.
And since the Indians' interest was in themselves, not market greed, they did not need the railroad, and the land was fully valuable already.
Have I helped at all?
ICLandAside from two bankruptcies for the NP and one for the UP, ripping millions out of the US economy, and particularly when both simultaneously bankrupted in 1893 -- strictly a government land grant fiasco -- which precipitated the worst and longest financial depression up until 1933.
Wasn't that the Credit Mobilier blowing up? Or am I too far ahead? The thing I love about UP, for the iron giant it is today, When UP was formed, it was so a bunch of corrupt tycoons could makemoney off the governmen,. since they were sponsoring the Transcon. Most of them had no interest in running a railroad, and the ones that did had the smarts to get out of the project before the Mobilier was discovered, IE that UP execs were siphoning off money from the Government into their own pockets.
Anyway, in getting back to the orignal topic, I wanted to sharethe exerience Indiana Transortation Museum is now experiencing. The tracks have been ther sinc 1848. (The ex-Peru & Indianapolis) The museum has been there since the late 60s I believe it is. Last Year, the museum was told to be quiet in their own museum by the town of Noblesville. No station calls, nothing but the absolute minimum. That got carried into not doing stationcalls or anything at the other towns.
Three problems with that:
I've noticed, we seem to be making more noise again though. It's kinda nice.
-Morgan
FlashwaveICLandAside from two bankruptcies for the NP and one for the UP, ripping millions out of the US economy, and particularly when both simultaneously bankrupted in 1893 -- strictly a government land grant fiasco -- which precipitated the worst and longest financial depression up until 1933. Wasn't that the Credit Mobilier blowing up? Or am I too far ahead? The thing I love about UP, for the iron giant it is today, When UP was formed, it was so a bunch of corrupt tycoons could makemoney off the governmen,. since they were sponsoring the Transcon. Most of them had no interest in running a railroad, and the ones that did had the smarts to get out of the project before the Mobilier was discovered, IE that UP execs were siphoning off money from the Government into their own pockets.
Well, that was yet another damage done to the economy and to the American political system that took decades to wring out of the economy and the political system, if it ever did. The poster who commented that there was essentially no cost is clearly not an economist.
These projects took land which, per se, did nothing for anybody at the time except speculators. The projects themselves however took enormous sums of money out of the US government, and absorbed enormous capital resources at a time when the US economy simply didn't have the wherewithal to undertake such projects. And the Government can't just "invent" stimulus, as we are again seeing. Wall Street was all about these two massive projects, and this took investment money from nearly everything else. They slowed the development of the economy significantly, made Wall Street look increasingly speculative, sunk enormous capital into vast wastelands, and hindered development of private railroads.
Was there a wheat shortage in the fields of Ohio, that really required wheat to be hauled on the NP from Montana? Was there really a timber shortage in Michigan, that required lumber from Washington state? Were the copper mines of Hecla so played out that Utah copper was absolutely necessary to development? None of the above. The whole project likely caused excessive competition as rates plunged on certain commodities as railroads tried to be part of a competitive commodity structure for which no rational basis existed except the "existence" of railroads that shouldn't have been there at the time.
Commodity prices plunged, especially in agriculture, and agitation began against the only thing that farmers could directly see as responsible: railroad rates that had caused the problem of low commodity prices in the first place, hauling goods into markets that didn't need them at loss rates, injuring farmer and railroad alike. The resulting regulatory structure damaged railroads and the national economy alike for over a century.
But, as you note, this is WOT, way off topic. So, that's that.
Flashwave marcimmeker Presumably that "useless" resource was worth something to the people that were living there (you know, the ones called Indians and later Native Americans or First Americans). Otherwise they would not have felt the need to fight those who came and stole their land and put them in concentration camps, sorry "reservations". If I understand his point correctly, the land's value is a relative term. It grew crops, it fed animals, it fed the indians, but what's the point in having a million dollars if there's no place to spend it? There was such plentifuls amount that could be sold, but no way to do so. Hence, the waste or "Useless". The railroads created their way to that market, and what Americans called value increased. And since the Indians' interest was in themselves, not market greed, they did not need the railroad, and the land was fully valuable already. [snip]
marcimmeker Presumably that "useless" resource was worth something to the people that were living there (you know, the ones called Indians and later Native Americans or First Americans). Otherwise they would not have felt the need to fight those who came and stole their land and put them in concentration camps, sorry "reservations".
And since the Indians' interest was in themselves, not market greed, they did not need the railroad, and the land was fully valuable already. [snip]
Old story - perhaps apocryphal, but here goes:
Erie RR Right-Of-Way Agent negotiating with the hard-nosed Chief of an Indian tribe in the 'Southern Tier' of NY state, for the Indians to just give or donate the ROW to the railroad: "But, Chief, look at it - the land is rocky, it's no good for growing crops, there's no animals there to hunt, there's not even any water - it's just not worth anything to you and your tribe !".
The Chief, after a moment's reflection: "It pretty good for railroad !".
The Erie paid.
I believe that Carl, Johnny, jeff, and maybe a few others here will recognize the source(s) of that account.
This goes back about 20 years. I live next to the tracks of the now non operating for sale Minnesota Zephyr. They USED to have a steam engine operate on this line until neighbors complained of the noise. Some people at a city council meeting said the engine scared their children. They were made to no longer use the steam engine in their operation and I think it went up to Osceola Wi. If not for that I could have been lucky enough to see a steam engine go by the house 2-4 times a day from 1997 through 2008 when it stopped. If it had steam who knows, maybe it would still be operating today.
Modeling the "Fargo Area Rapid Transit" in O scale 3 rail.
Johnny
Yep - my memory banks worked OK this time - the "Panic of 1893" is also known as the "Silver Panic". See - http://en.wikipedia.org/wiki/Panic_of_1893 (usual disclaimers apply), although that article cites railroad finances as well as silver as the causes - and mirrors my post above about the similarity with the dot-com bust and current real estate speculation bubbles, etc. (Hey - maybe those Wikipedia people do know what they're writing about ! ) Seriously, the article has lots of footnotes and referneces, and appears to be pretty well done.
But better yet is a mongraph that I also stumbled across, somehow indexed or referenced under "Silver Panic" [13 pages, approx. 84 KB in size]:
President, Mackinac Center for Public Policy
Midland, Michigan
Delivered at the Durell Colloquium on
“The Role of Markets and Governments in Pursuing the Common Good”
Hillsdale College
October 28, 2006
I recommend it to any of the current audience that has an interest in government, politics, elections, budgets, spending, monetary policy, the 'gold and silver standard' debate, etc. It's a pretty good read - I learned a lot about Cleveland too, which may surprise and impress some of you to whom he's known only as a punch line or answer to a trivia question.
In Chester, SC, they have opposed a CSX intermodal yard that decidd to stay in Charlotte as well as a freight car builder that instead built in Alabama. The latest NIMBY action was against a proposed incernerator that they think they have defeated. There's no rationale here; they had no problem with a prposed ethanol plant six miles from the city limits. The ethanol would move out via 18 wheeler. The 18 wheeler traffic was, they said, the main reason they didn't want the intermodal yar. But those 18 wheelers would have carried mostly non haz mat products (ten miles fromthe city and mostly going the other direction) while the ethanol would be passing through the city limits in some cases.
Didn't seem the matter and now the point seems to be oot as the funding never came on for the ethanol plant.
DeggestyICLandAside from two bankruptcies for the NP and one for the UP, ripping millions out of the US economy, and particularly when both simultaneously bankrupted in 1893 -- strictly a government land grant fiasco -- which precipitated the worst and longest financial depression up until 1933. What did the granting of land have to do with the Panic of 1893? The dishonesty which precipitated the bankruptcies was the cause of the panic; that the government granted the land was not the cause.
What did the granting of land have to do with the Panic of 1893? The dishonesty which precipitated the bankruptcies was the cause of the panic; that the government granted the land was not the cause.
Well, let's see: Government handing out "free money." Nothing to see there. No cause of anything.
Wow.
Wikpedia actually gets this right:
"The Panic of 1893 was a serious economic depression in the United States that began in that year. Similar to the Panic of 1873, this panic was caused by railroad overbuilding and shaky railroad financing which set off a series of bank failures. Compounding market overbuilding and a railroad bubble was a run on the gold supply and a policy of using both gold and silver metals as a peg for the US Dollar value. Until the Great Depression, the Panic of '93 was the worst depression the United States had ever experienced."
Please note the distinction between "caused by" and "compounded by."
If anyone wishes to start an appropriate thread, that is indeed perhaps more appropriate.
ICLand "The Panic of 1893 was a serious economic depression in the United States that began in that year. Similar to the Panic of 1873, this panic was caused by railroad overbuilding and shaky railroad financing which set off a series of bank failures. Compounding market overbuilding and a railroad bubble was a run on the gold supply and a policy of using both gold and silver metals as a peg for the US Dollar value. Until the Great Depression, the Panic of '93 was the worst depression the United States had ever experienced." Please note the distinction between "caused by" and "compounded by."
Paul_D_North_Jr Yep - my memory banks worked OK this time - the "Panic of 1893" is also known as the "Silver Panic". See - http://en.wikipedia.org/wiki/Panic_of_1893 (usual disclaimers apply), although that article cites railroad finances as well as silver as the causes - and mirrors my post above about the similarity with the dot-com bust and current real estate speculation bubbles, etc. (Hey - maybe those Wikipedia people do know what they're writing about ! ) Seriously, the article has lots of footnotes and referneces, and appears to be pretty well done. But better yet is a mongraph that I also stumbled across, somehow indexed or referenced under "Silver Panic" [13 pages, approx. 84 KB in size]: Grover Cleveland and Sound Currency By Lawrence W. Reed President, Mackinac Center for Public Policy Midland, Michigan Delivered at the Durell Colloquium on “The Role of Markets and Governments in Pursuing the Common Good” Hillsdale College October 28, 2006 I recommend it to any of the current audience that has an interest in government, politics, elections, budgets, spending, monetary policy, the 'gold and silver standard' debate, etc. It's a pretty good read - I learned a lot about Cleveland too, which may surprise and impress some of you to whom he's known only as a punch line or answer to a trivia question. - Paul North.
DeggestyI will not argue against overbuilding and shaky financing being causes of the panic, but, how did the granting of land cause railroad overbuilding and shaky railroad financing? Was it not the venality of builders and financiers that brought about these two causes of the panic?
Well, if there is an incentive to build 16,000 miles of railroad that wasn't justified by demand, sucking up nearly 7% of the GDP in capital investment that generated a negative return, sucking up capital that would have accelerated a normal economy, deflating in the process the entire US economy for a half a century thereafter, what WOULD you call "overbuilding" and "shaky railroad financing"?
The two biggest railroads entering receivership in 1893, causing the worst depression in US history up to that point -- the "railroad financing bubble" -- were the biggest recipients, by far, of government largesse in history. They were purely the result of government intervention, and their simultaneous failures crushed the US economy as a result.
The largest "private" railroads on the frontier, Milwaukee, Burlington, Rock Island, the Manitoba, the Illinois Central -- all of which had also added thousands of miles of lines -- did not enter receivership. Possibly excepting the Manitoba, all of those were cut out of "normal" market expansion by the massive economic intervention of the US government through land grants.
What causes "venality"?
ICLandThe largest "private" railroads on the frontier, Milwaukee, Burlington, Rock Island, Illinois Central -- all of which had also added thousands of miles of lines -- did not enter receivership
Thanks to Chris / CopCarSS for my avatar.
Can't afford to fuel up the big SUV? Tired of fighting idiot drivers in gridlock traffic? Well there certainly must be SOME solution. What? they want to raise my taxes to install some kind of what do you call it, light rail line? Well THAT IS OUT OF THE QUESTION!!!!! PUBLIC TRANSPORTATION IS FOR POOR PEOPLE!!!!! Not in MY backyard!! Unfortunately, that is the mentality of our country these days. These affluent credit card dependant idiots cannot see beyond their overmortgaged "Mc Mansions" and realize the true facts of life. All their Lincoln Navigators, and Cadillac Escalades with the DVD screens in the back seats (what ever happened to families talking on drives)? And the heavy air bags, (they need those because they can't be bothered with paying attention to driving, what with the cell phones, GPS, DVD's, etc. and could crash at any time). We have these 5000 pound behemoths going down the streets with self-centered, idiotic drivers at the wheel. All the time sucking up around 8 miles per gallon. What really burns me up is when I see one of these rigs with a "Green-Environmental" type bumper sticker. You know what I'm talking about, you have seen them... Makes me sick. But these kind of people will fight tooth and nail to keep any kind of commuter rail system from being established anywhere near their town because " It would be a niusance"... "too much noise", "not safe for road traffic", Yes, I've heard them all. But next time gas hits $5.00 a gallon, these same narrow-minded idiots will be the first to complain.
Murphy SidingICLandThe largest "private" railroads on the frontier, Milwaukee, Burlington, Rock Island, Illinois Central -- all of which had also added thousands of miles of lines -- did not enter receivership How do you see them as being any different?
100 years?
ICLand What causes "venality"?
ICLandThe largest "private" railroads on the frontier, Milwaukee, Burlington, Rock Island, the Manitoba, the Illinois Central -- all of which had also added thousands of miles of lines -- did not enter receivership. Possibly excepting the Manitoba, all of those were cut out of "normal" market expansion by the massive economic intervention of the US government through land grants.
ICLand Murphy Siding ICLandThe largest "private" railroads on the frontier, Milwaukee, Burlington, Rock Island, Illinois Central -- all of which had also added thousands of miles of lines -- did not enter receivership How do you see them as being any different? 100 years?
Murphy Siding ICLandThe largest "private" railroads on the frontier, Milwaukee, Burlington, Rock Island, Illinois Central -- all of which had also added thousands of miles of lines -- did not enter receivership How do you see them as being any different?
It was an expensive route, however, since the Milwaukee, receiving few land grants, had to buy most of the land or acquire smaller railroads.
aka, the Milwaukee paid their own way rather than having the land gifted to them by the government meaning that the managers of the milwaukee had to be smarter with their money.
I assume 100 years was a broad reference to the time between bankrupcy of the heavily land granted railroads (Union Pacific) and those listed (Did Milwaukee fall into receivership at all prior to the end?). It might be better stated as 80-90 years.
I hadn't been following this thread. But I looked at it today and found, somewhat surprisingly, that it had morphed (in part) into a discussion of Federal government land grant policy in the 19th century.
I don't want to get into a long discussion of this subject, since I'm sure it has been addressed ad nauseum in older threads. I just want to make the point that, unlike modern Federal subsidy programs, the Federal government MADE money from the railroad land grants. It did this in two ways:
(1) Federal railroad land grants were typically made in a "checkerboard" pattern. In other words, in one area, the railroad would receive a parcel of land on, say, the north side of the railroad, while the government retained the parcel on the south side. Then, as you went down the line, the railroad received a parcel on the south side, while the government retained the parcel on the north side, and so on down the line. The importance of this practice is that, after the railroad was built, the government sold its retained parcels. The money it received for these parcels typically exceeded the value of the entire strip (both the rail granted property and the retained property) had before the construction of the railroad. In other words, by making the land grants, which enabled construction of the railroad, the government increased the value of its retained parcels much more than the value of what it had given away. That's a nice deal for Uncle Sam.
(2) One of the conditions of the land grants was that the railroads receiving them had to handle government traffic for free or at reduced rates (typically half of the commercial rates). These requirements stayed in effect through two world wars (they were finally repealed in 1946 or so) and conferred an enormous ecomonic benefit on the Feds. Another nice deal for Uncle Sam.
The bottom line is that the railroad land grants were nothing like modern Federal government give-away programs, where the government pays out great gobs of money and gets no financial return. The land grants were shrewd business deals from which the government profited hansomely. Modern politicians could learn something from them.
To take an installed example, the Chicago El runs on a subsidy. If you were to remove the CTA, because it is subsidized, the economic impact to the city and people and thus the loss of tax revenue would dwarf the cost of the subsidy.
The government is not a business that should do things based on profit motive. It's job is the promotion of life, liberty and property for all Americans. If they determine that a rail line is in the public interest more so than the people and businesses displaced, then subsidizing it is their job. It is no different than them determining that DM&E or the Mayo Clinic and associated ranchers perform more of a benefit to the people with regards to the potential Powder River Coal line.
In either case, the promotion of the railroads for the betterment of the country has long been funded by the government. That makes it a subsidy. The fact that those land grants generated money does not somehow make it not a subsidy.
YoHo1975 The government is not a business that should do things based on profit motive. It's job is the promotion of life, liberty and property for all Americans. In either case, the promotion of the railroads for the betterment of the country has long been funded by the government. That makes it a subsidy. The fact that those land grants generated money does not somehow make it not a subsidy.
The government is not a business that should do things based on profit motive. It's job is the promotion of life, liberty and property for all Americans.
If those land grants generated more return to the government than it cost them, then they absolutely were NOT a subsidy. Just because they were grants, does not mean they were subsidies.
And if the government entered into the land grant agreement for the purpose of making what you call a profit, there is nothing wrong with that. What is wrong with “the people” making a profit collectively? Why wouldn’t a profit by government add to the life, liberty, and property of all Americans? Back in the land grant era, the government was probably capable of making a profit in concert with the private sector to their mutual benefit. Today they are not.
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