Don't Blame the RRs

[MichaelSol]

Unless it is done well, any government involvement in setting railroad freight rates will cause great harm. 

Odd that railroads were the primary advocates of regulation according Gabriel Kolko, primarily because competition was forcing them to reduce rates to unsupportable levels. What happened?

Regulation stopped a free-fall in rates.

Railroads advocated deregulation because they thought it would allow them to raise rates. What happened?

A free-fall in rates.

Hmmm.

What saved the railroads?

The entirely unrelated ability to lay off or fire employees as a result of crew agreements first negotiated as a result of a bankruptcy proceeding at Milwaukee Road.

What did that have to do with rates?

Nothing.

The ability to freely set rates hurt railroads, the ability to fire employees helped railroads. Regulation affected rates, other factors affected crew laws. The Staggers Act had no effect on crew agreements.

Market theory proposes that monopoly or captive pricing creates "great harm." It is the fundamental tenet of Capitalism and, incidentally and oddly enough, of the Staggers Act.

Who was/is right?

[Anonymous]

I hardly think that re-regulation of the railroads is going to solve anything.

Regulation had a leveling effect:  It helped weak carriers survive; it prevented strong carriers from getting stronger.  The result was that none were prosperous.

When the entire US rail system was in danger of collapsing under its own weight in the 1970's, the options were (1) make the system purely government-owned, or (2) get the government completely out.

The powers that be opted for dereg, and so today we have a hand-full of carriers that are prosperous.  Things turned out okay.  Maybe they turned out great.  There is no perfect solution.  Perhaps the aggrieved shippers could ask for mitigation from the government.  Wouldn't be the first time farmers asked for price support from the government.

[Anonymous]

I don't know what everyone is all fired up about.  The article mentions how railroads have benefited from the Staggers Act and de-regulation in 1981.  Yes, some people may not like the market based pricing they are paying, but an open and free market is essential to our economy and our way of life.  Introducing competition (DME) is a good way to maintain a  healthy industry that regulates itself.  It is kind of hard for a monopolistic railroad to charge exorbitant prices if another railroad can still make a profit with lower rates.  Perhaps captive shippers should consider location if they don't want to be served by only one railroad. 

I hardly think that re-regulation of the railroads is going to solve anything.  We have one of the greatest rail systems in the world, in large part because it is a private system that HAS to be competitive to survive.  A heavily regulated semi-public system is prone to failure and mis-management.  Why go back to the dark ages?

You're right.  Why go back to the dark ages when we have the option of moving forward to the light?  Separate infrastructure from transporter operations, classify the infrastructure portion for what it is - aka, a de facto utility - and govern it like we do all such utilities, then let the transporters run free relative to their multimodal brethern aka trucks, barges, etc.

The status quo will not remain, so it's one way or the other.  Take your pick.

[Anonymous]

I hardly think that re-regulation of the railroads is going to solve anything.

Regulation had a leveling effect:  It helped weak carriers survive; it prevented strong carriers from getting stronger.  The result was that none were prosperous.

When the entire US rail system was in danger of collapsing under its own weight in the 1970's, the options were (1) make the system purely government-owned, or (2) get the government completely out.

The powers that be opted for dereg, and so today we have a hand-full of carriers that are prosperous.  Things turned out okay.  Maybe they turned out great.  There is no perfect solution.  Perhaps the aggrieved shippers could ask for mitigation from the government.  Wouldn't be the first time farmers asked for price support from the government.

How many farmers received massive land grants?  How many farmers get anti-trust exemption?  How many farmers were allowed to expand via Eminent Domain?

[TomDiehl]

I hardly think that re-regulation of the railroads is going to solve anything.

Regulation had a leveling effect:  It helped weak carriers survive; it prevented strong carriers from getting stronger.  The result was that none were prosperous.

When the entire US rail system was in danger of collapsing under its own weight in the 1970's, the options were (1) make the system purely government-owned, or (2) get the government completely out.

The powers that be opted for dereg, and so today we have a hand-full of carriers that are prosperous.  Things turned out okay.  Maybe they turned out great.  There is no perfect solution.  Perhaps the aggrieved shippers could ask for mitigation from the government.  Wouldn't be the first time farmers asked for price support from the government.

How many farmers received massive land grants?  How many farmers get anti-trust exemption?  How many farmers were allowed to expand via Eminent Domain?

To mention one, the Oklahoma Land Rush of 1889.

http://www.library.cornell.edu/Reps/DOCS/landrush.htm

[solzrules]

Odd that railroads were the primary advocates of regulation according Gabriel Kolko, primarily because competition was forcing them to reduce rates to unsupportable levels. What happened?

Regulation stopped a free-fall in rates.

Railroads advocated deregulation because they thought it would allow them to raise rates. What happened?

A free-fall in rates.

Hmmm.

What saved the railroads?

The entirely unrelated ability to lay off or fire employees as a result of crew agreements first negotiated as a result of a bankruptcy proceeding at Milwaukee Road.

What did that have to do with rates?

Nothing.

The ability to freely set rates hurt railroads, the ability to fire employees helped railroads. Regulation affected rates, other factors affected crew laws. The Staggers Act had no effect on crew laws.

But today RR's like the BNSF are able to charge what the market will bear.  This doesn't mean that they are charging cost plus overhead plus profit, but rather they are charging the most they can and still retain the business.  That is an ideal position to be in REGARDLESS of what business you are in.  That's how companies make real money.  What is even more interesting is that RR's charge these prices and yet people are still clamoring for the service of the RR.  RR's are also able to recoup costs resulting from fluctuations in the fuel market - something that they just ate before 1981. 

In other words I think market pricing has only been good for the rail industry, even though there have been some painful decades of abandonment.  Today, for the most part, if a Class 1 rail line exists it is because it is a profitable venture.  It isn't being propped up by artificial rates or the political considerations.  There are very few RR's in the rest of the world that can claim this. 

As for crew laws and the ability to hire and fire, don't you think that is a result of collective bargaining changes over the last 20 years?  I don't know that the RR's survived because they were able to hire and fire people with more ease.  I think it is because they are making money and people are willing to invest in them. 

Market theory proposes that monopoly or captive pricing creates "great harm." It is the fundamental tenet of Capitalism and, incidentally and oddly enough, of the Staggers Act.

Who was/is right?

[Limitedclear]

I hardly think that re-regulation of the railroads is going to solve anything.

Regulation had a leveling effect:  It helped weak carriers survive; it prevented strong carriers from getting stronger.  The result was that none were prosperous.

When the entire US rail system was in danger of collapsing under its own weight in the 1970's, the options were (1) make the system purely government-owned, or (2) get the government completely out.

The powers that be opted for dereg, and so today we have a hand-full of carriers that are prosperous.  Things turned out okay.  Maybe they turned out great.  There is no perfect solution.  Perhaps the aggrieved shippers could ask for mitigation from the government.  Wouldn't be the first time farmers asked for price support from the government.

How many farmers received massive land grants?  How many farmers get anti-trust exemption?  How many farmers were allowed to expand via Eminent Domain?

Seems to me that many settlers of our western states did indeed receive massive land grants from the Federal and in some cases (California) state land grants to settle and cultivate vast lands. How would all the large cattle ranches have started were it not for government opening up the west?!? And then there are the more modern price supports and out right grants which had their roots in FDR's New Deal. How many railroads have a free government provided extension service to provide assistance in running their business and providing free tax subsidized research to improve their yields and thus revenues? How may railroads receive special tax breaks on their property? How many railroads receive relief from a whole panoply of laws designed to protect workers including safety regulation (when was the last time you saw a farm tractor with working tail lights or even a license plate??), even exemption from child labor laws???

Your argument is, as usual, a loser FM....

LOL...

LC

 

 

[Murphy Siding]

              How many farmers received  land grants? 

    How many?  Literally thousands of farmers did.  Around here, they called it homesteading.  What did they call it there?

[SALfan]

How many farmers received massive land grants?  

Wasn't massive, but one of my ancestors did.  In 1851.  In south Georgia.  I imagine most of his neighbors did, too.

[MichaelSol]

A little rewriting of history going on here. Let me guess that none of you gentlemen actually know anything about the Homestead Act of 1862, or the Enlarged Homestead Act of 1909. Just a guess.

1.   The Homestead Acts were not land grants. Farmers had to pay fees to purchase the title right, then "prove up" in order to receive title by a minimum of five years of working the land. They were required to specifically occupy the land and work it. They could buy the land outright for $1.25 an acre. That rate had been in effect since 1800 for government lands and was available to farmers, railroads, manufacturers, loggers -- the public as a whole. The only thing the Homestead Act did was to substitute an optional, alternative work requirement for persons desiring to purchase agricultural land specifically. The government provided no loans or subsidies to the Homesteaders by which to do this, although the government not only extended land grants for free to the Union Pacific, but provided cash loans as well.

2.   Excise taxes and government land sales (including homestead fee income) were primary sources of Federal Government revenue during that era.

3.    The Desert Land Act of 1877, under which many cattle spreads were created, permitted an initial purchase at 25 cents an acre, but an additional $1 per acre was required to be paid the Federal Government after the owner brought the irrigation required under the act to his parcel. That brought the purchase price up to the standard $1.25 an acre that government lands had been sold for to the general public.

4.   The railroads themselves were the primary advocates and the primary beneficiaries of homesteading, but the territories and states also demanded them because the Federal government paid no property taxes to the states, whereas private landholders did. See the railroad evasion of that requirement set forth below.

5.   The Union Pacific received actual land grants valued in excess of four times the estimated cost of construction of the transcontinental railroad. No Homesteader received anything of any value in excess of what he either paid for outright, or worked for by "proving up" for five long years.

6.   No government receivership proceeding or assistance was available when Dad broke his leg and couldn't farm and lost everything, or when the dry years came -- the dry years that government and railroad settlement "experts" said would never come again -- and blew everything away, or when the blizzard hit and the cattle died. Neither the Bank nor the government looked the other way when the mortgage was due or the taxes due and couldn't be paid. The railroads that made the promises weren't interested when the promises proved to be false, and people's lives and hopes were ruined in human catastrophes of despair resulting from the railroad's "honest" desire to make a buck.

7.  While there were undoubtedly minor instances of homestead corruption, there was nothing like the wholesale corruption of railroad land grants. See, Montana Improvement Company, Credit Mobilier.

8.   With some minor exceptions, only the railroads received bona fide land grants in American history. Farmers did not.

"Underscoring concerns about its monopoly attitude, the Northern Pacific immediately became embroiled in scandal in the form of the Montana Improvement Company, which contracted to cut Railroad timber lands and supply the Railroad with ties, lumber, and cordwood, in return for the Railroad hauling the Improvement Company's lumber for less than half of that of competitors. The Railroad was the majority stockholder, by $100, of the Montana Improvement Company.  Improvement Company foremen did not care to distinguish between railroad land grant sections and the alternating government sections, freely cutting from both.  The abuses were so widespread that by 1885 a government report to President Cleveland charged that "depredations upon public timber are universal, flagrant and limitless." Civil and criminal suits followed against both the Improvement Company and the Northern Pacific Railroad. [from K. Ross Toole, "The Genesis of the Clark-Daly Feud," in Malone, Michael, and Roeder, Richard, History of Montana. p. 295.]

" Taxation would become a sore spot with the residents of the Northern Pacific's territories.  Although the federal grant of land was made in praesenti -- that is by virtue of the act itself -- for decade after decade, the Northern Pacific evaded taxation on these lands by delaying proofs regarding prior settlement and the non-mineral character of the land, which was incident to its perfecting its land patents. "For all these years, the lands of the settler, the even numbered sections, bore the tax burden of all; a greater sum in the aggregate through the years of exemption than the value of the lands on the market."" [Clarence Bagley, History of King County, Washington (Chicago and Seattle, 1929), Vol I, pp. 582-583.]

[Murphy Siding]

     My understanding, from what my ancestors told me, was that my great-great whoevers, had to pay a nominal fee to enroll in the program, then "prove up" to get title of the land.  I seriously doubt any of my Norweigan or Irish ancestors had 2 nickles to rub together, so I can't believe they paid very much.

[TomDiehl]

     My understanding, from what my ancestors told me, was that my great-great whoevers, had to pay a nominal fee to enroll in the program, then "prove up" to get title of the land.  I seriously doubt any of my Norweigan or Irish ancestors had 2 nickles to rub together, so I can't believe they paid very much.

Wow a WHOLE $1.25 an acre. How did they ever come up with so much money?

[MP173]

In return for the land grants, railroads provided the US Government vastly reduced rates for the movements of passengers and freight.

 

I just read the GAO report (all 31 pages) and found it very interesting.  I agree with Ken...they DONT know what to do with this issue.  After laying out the entire process they finally admit that there needs to be a balance between captive shippers and revenue adequacy for the RR's.

The entire R/VC (180%) seems somewhat flawed, but it is the current law. 

The real problem is not the railroad's pricing, but the failure of the system to adequately address any disagreements.  I find the method to settle, involving an average 3.3 years and $3million per case to be outrageous. 

If I were a pricing manager of a railroad it would be full throttle on the pricing until further notice.  Sorta like driving 65mph in a 55mph zone, just dont get caught.

Finally, the system no doubt needs to be fine tuned, ok probably overhauled...but any adjustments would jack the 180% upwards in my opinion.

 

ed

[MichaelSol]

In return for the land grants, railroads provided the US Government vastly reduced rates for the movements of passengers and freight.

 

Is that meaningful in the larger context of railroading? The US Government was not a producer, and didn't actually consume much in that era.  The US Government was pretty small potato(e)s.

[MichaelSol]

"TomDiehl"

"Murphy Siding"    My understanding, from what my ancestors told me, was that my great-great whoevers, had to pay a nominal fee to enroll in the program, then "prove up" to get title of the land.  I seriously doubt any of my Norweigan or Irish ancestors had 2 nickles to rub together, so I can't believe they paid very much.

Wow a WHOLE $1.25 an acre. How did they ever come up with so much money?

Would it make a difference if the average household income in America was $400 a year, and the average farm income less than half of that?

[MichaelSol]

     My understanding, from what my ancestors told me, was that my great-great whoevers, had to pay a nominal fee to enroll in the program, then "prove up" to get title of the land.  I seriously doubt any of my Norweigan or Irish ancestors had 2 nickles to rub together, so I can't believe they paid very much.

If they worked hard, and endured what is described in Willa Cather's "O Pioneers" or Rolvaag's "Giants in the Earth," they paid a lot.

[bobwilcox]

In return for the land grants, railroads provided the US Government vastly reduced rates for the movements of passengers and freight.

 

Is that meaningful in the larger context of railroading? The US Government was not a producer, and didn't actually consume much in that era.  The US Government was pretty small potato(e)s.

The so called land grant rates lasted untill the late 1940s.  In WW II the federal government was not a small potato rather they were the railroads largest customer.

 

[bobwilcox]

     My understanding, from what my ancestors told me, was that my great-great whoevers, had to pay a nominal fee to enroll in the program, then "prove up" to get title of the land.  I seriously doubt any of my Norweigan or Irish ancestors had 2 nickles to rub together, so I can't believe they paid very much.

If they worked hard, and endured what is described in Willa Cather's "O Pioneers" or Rolvaag's "Giants in the Earth," they paid a lot.

They paid a lot more on the High Plains when the rain stopped.

[Murphy Siding]

     My understanding, from what my ancestors told me, was that my great-great whoevers, had to pay a nominal fee to enroll in the program, then "prove up" to get title of the land.  I seriously doubt any of my Norweigan or Irish ancestors had 2 nickles to rub together, so I can't believe they paid very much.

If they worked hard, and endured what is described in Willa Cather's "O Pioneers" or Rolvaag's "Giants in the Earth," they paid a lot.

     That's quite true, but it was a lot better than where they came from.

[bobwilcox]

The real problem is not the railroad's pricing, but the failure of the system to adequately address any disagreements.  I find the method to settle, involving an average 3.3 years and $3million per case to be outrageous. 

If I were a pricing manager of a railroad it would be full throttle on the pricing until further notice.  Sorta like driving 65mph in a 55mph zone, just dont get caught.

There is a lot of truth in what you say about a price setting in cases with captive shippers but as one of my captive shipper from TX once told me, "you've got me by the bxxxs but I'm in a perfect position to pxxx on you".  He did just that when he arranged with another railroad to build into his facility by the time the contract was up for renewal.

[MichaelSol]

In return for the land grants, railroads provided the US Government vastly reduced rates for the movements of passengers and freight.

 

Is that meaningful in the larger context of railroading? The US Government was not a producer, and didn't actually consume much in that era.  The US Government was pretty small potato(e)s.

The so called land grant rates lasted untill the late 1940s.  In WW II the federal government was not a small potato rather they were the railroads largest customer.

 

A World War was probably not something either side anticipated in 1862, but notwithstanding that, "government rates" during WWII still seem to have supported the period of the greatest profitability of railroads prior to the Staggers Act.

Either those rates were profitable in their own right, or other shippers were really paying through their collective nose(s).

[bobwilcox]

     My understanding, from what my ancestors told me, was that my great-great whoevers, had to pay a nominal fee to enroll in the program, then "prove up" to get title of the land.  I seriously doubt any of my Norweigan or Irish ancestors had 2 nickles to rub together, so I can't believe they paid very much.

Wow a WHOLE $1.25 an acre. How did they ever come up with so much money?

Was it possible for a  homesteader to get a loan for the land using the land as collateral?

[Anonymous]

              How many farmers received  land grants? 

 

    How many?  Literally thousands of farmers did.  Around here, they called it homesteading.  What did they call it there?

Wasn't massive, but one of my ancestors did.  In 1851.  In south Georgia.  I imagine most of his neighbors did, too.

Seems to me that many settlers of our western states did indeed receive massive land grants from the Federal and in some cases (California) state land grants to settle and cultivate vast lands.

Ya know, it's so elementary - you just bait the hook, cast your line, and wait patiently.

First time I've ever caught three at once, though!

Homestead lands and railroad land grants were two different things.  With homesteading, the farmer had to make his living off that land, a measley 160 acres, and if he failed (as many did), the land went up for auction by the revenuers.

The land was the farmer's sole source of income for the most part.  No one in their right mind would call it a "land grant" because it wasn't.

With the railroad land grants, the land itself was mainly used to provide collateral for construction bonds  The rest was kept as future collateral, basically banked right up until just recently by most of the railroad companies.  The land itself was not meant to provide a sole source of revenue for the railroads, rather incentive for construction of the lines themselves.  Little if any of the railroad land grants were ever reaquired by the feds via seizure and auction.

Hmmmmm, 160 acres is some kind of moral equivalent to the millions of acres of railroad land grants per company?

Nice try, rookies.

[solzrules]

              How many farmers received  land grants? 

 

    How many?  Literally thousands of farmers did.  Around here, they called it homesteading.  What did they call it there?

Wasn't massive, but one of my ancestors did.  In 1851.  In south Georgia.  I imagine most of his neighbors did, too.

Seems to me that many settlers of our western states did indeed receive massive land grants from the Federal and in some cases (California) state land grants to settle and cultivate vast lands.

Ya know, it's so elementary - you just bait the hook, cast your line, and wait patiently.

First time I've ever caught three at once, though!

Homestead lands and railroad land grants were two different things.  With homesteading, the farmer had to make his living off that land, a measley 160 acres, and if he failed (as many did), the land went up for auction by the revenuers.

The land was the farmer's sole source of income for the most part.  No one in their right mind would call it a "land grant" because it wasn't.

With the railroad land grants, the land itself was mainly used to provide collateral for construction bonds  The rest was kept as future collateral, basically banked right up until just recently by most of the railroad companies.  The land itself was not meant to provide a sole source of revenue for the railroads, rather incentive for construction of the lines themselves.  Little if any of the railroad land grants were ever reaquired by the feds via seizure and auction.

Hmmmmm, 160 acres is some kind of moral equivalent to the millions of acres of railroad land grants per company?

Nice try, rookies.

 

 

HEH HEH HEH HEH

 

ZING!

[TomDiehl]

"TomDiehl"

"Murphy Siding"    My understanding, from what my ancestors told me, was that my great-great whoevers, had to pay a nominal fee to enroll in the program, then "prove up" to get title of the land.  I seriously doubt any of my Norweigan or Irish ancestors had 2 nickles to rub together, so I can't believe they paid very much.

Wow a WHOLE $1.25 an acre. How did they ever come up with so much money?

Would it make a difference if the average household income in America was $400 a year, and the average farm income less than half of that?

The homesteaders paid a nominal fee for the land then had to develop the land into a farm or ranch. The railroads had to spend investor's money to develop a transportaion system to serve these lands.

The point is "what's the difference?" The government got the land developed. Dave likes to shoot his mouth off that railroads got government welfare, then made the mistake of asking "who else?" He got a deluge of answers, and has no reply to cover his foot-in-mouth statement.

[Murphy Siding]

              How many farmers received  land grants? 

 

    How many?  Literally thousands of farmers did.  Around here, they called it homesteading.  What did they call it there?

Wasn't massive, but one of my ancestors did.  In 1851.  In south Georgia.  I imagine most of his neighbors did, too.

Seems to me that many settlers of our western states did indeed receive massive land grants from the Federal and in some cases (California) state land grants to settle and cultivate vast lands.

Ya know, it's so elementary - you just bait the hook, cast your line, and wait patiently.

First time I've ever caught three at once, though!

Homestead lands and railroad land grants were two different things.  With homesteading, the farmer had to make his living off that land, a measley 160 acres, and if he failed (as many did), the land went up for auction by the revenuers.

The land was the farmer's sole source of income for the most part.  No one in their right mind would call it a "land grant" because it wasn't.

With the railroad land grants, the land itself was mainly used to provide collateral for construction bonds  The rest was kept as future collateral, basically banked right up until just recently by most of the railroad companies.  The land itself was not meant to provide a sole source of revenue for the railroads, rather incentive for construction of the lines themselves.  Little if any of the railroad land grants were ever reaquired by the feds via seizure and auction.

Hmmmmm, 160 acres is some kind of moral equivalent to the millions of acres of railroad land grants per company?

Nice try, rookies.

     Potato/pottotto.  The land my Irish ancestors homesteaded, combined with the adjacent land they lease under long term grazing rights, is an area 1 mile by 7 miles.  While perhaps not the *moral equivilent*, one could argue it may be the *reletive equivilent*.  Seven square miles of the American dream was to one immigrant family what "millions of acres of railroad land grants" was to a railroad.  I would venture to guess, that you live on land that your ancestors homesteaded-no?

[MP173]

Hmmm, lets see.

US Mail and troop trains were pretty significant reductions for the government. 

Dave you seem to be placing a present valuation on speculative actions after the fact.  Sure, it worked out well for the railroads.  But, shouldnt it have worked out well in order for it to be a fair deal?  All in all, I would venture to say it was fair for both sides (rails and government).  And speaking of present value on speculative actions, that land purchased at $1 per acre sure seems like a pretty good deal right now too.

Bob, you said it about your customer in Texas.  Sometimes you win a battle only to lose later on. 

I deal with pricing on a daily basis by establishing my own selling price (offer to sell).  Each and every situation is different.  My personal view is to maximize profit while being able to justify it.  That is where "value added" comes into play.  If you have nothing to add and it becomes $$$ only you lose. Either you dont gain the sale or it is so riduculously priced there is nothing in it.

I dont have a lot of sympathy for the large shippers.  I get cut to pieces on a large Fortune 50 company and will lose business for the amount of $1.  No problem tho, he is simply doing his job.  My turn will come.

The same shippers that scream and yell "captive" will have no mercy when they are in a commanding position.

Moral of the story is if you are buying have several options.  If you are selling eliminate as many options as possible. 

 

ed

 

[TomDiehl]

              How many farmers received  land grants? 

 

    How many?  Literally thousands of farmers did.  Around here, they called it homesteading.  What did they call it there?

Wasn't massive, but one of my ancestors did.  In 1851.  In south Georgia.  I imagine most of his neighbors did, too.

Seems to me that many settlers of our western states did indeed receive massive land grants from the Federal and in some cases (California) state land grants to settle and cultivate vast lands.

Ya know, it's so elementary - you just bait the hook, cast your line, and wait patiently.

First time I've ever caught three at once, though!

Homestead lands and railroad land grants were two different things.  With homesteading, the farmer had to make his living off that land, a measley 160 acres, and if he failed (as many did), the land went up for auction by the revenuers.

The land was the farmer's sole source of income for the most part.  No one in their right mind would call it a "land grant" because it wasn't.

With the railroad land grants, the land itself was mainly used to provide collateral for construction bonds  The rest was kept as future collateral, basically banked right up until just recently by most of the railroad companies.  The land itself was not meant to provide a sole source of revenue for the railroads, rather incentive for construction of the lines themselves.  Little if any of the railroad land grants were ever reaquired by the feds via seizure and auction.

Hmmmmm, 160 acres is some kind of moral equivalent to the millions of acres of railroad land grants per company?

Nice try, rookies.

And to you Dave, I'll say "lame try." The government wasn't in a financial position to build the railroads at that point in time. If they had, maybe you'd see how well your "open access" fantasy would work with the rail lines in as bad a shape as the interstate highway system.

The companies had to build the transportation system into a wilderness. Otherwise, those farmers and ranchers would be hauling thier products to market in covered wagons. The land wouldn't even be worth the $1.25 an acre until the government could afford to build some type of system for transport.

If the land granted to the railroads wasn't supposed to be a source of income for the railroads, exactly what was the incentive the railroads received from the grants besides what was needed for right of way?

And what is your source for the statement "basically banked right up until just recently by most of the railroad companies." How much? How recent?

And are you also trying to tell us that EVERY railroad that received land grants was a financial success?

[MichaelSol]

"TomDiehl"

"Murphy Siding"    My understanding, from what my ancestors told me, was that my great-great whoevers, had to pay a nominal fee to enroll in the program, then "prove up" to get title of the land.  I seriously doubt any of my Norweigan or Irish ancestors had 2 nickles to rub together, so I can't believe they paid very much.

Wow a WHOLE $1.25 an acre. How did they ever come up with so much money?

Would it make a difference if the average household income in America was $400 a year, and the average farm income less than half of that?

The homesteaders paid a nominal fee for the land then had to develop the land into a farm or ranch. The railroads had to spend investor's money to develop a transportaion system to serve these lands.

The point is "what's the difference?"

Well, $1.25 an acre -- $200 for a farm -- compared to annual income of around $200 per year with little income in excess of necessities is a pretty big deal compared to wealthy speculators building speculative railroads where they "had to spend" investor's money -- i.e. bilk both the investors and the government.

"What's the difference?"

The Homesteaders were honest and paid for their land.

Railroads by and large were not, and got free land.

[MichaelSol]

The companies had to build the transportation system into a wilderness. Otherwise, those farmers and ranchers would be hauling thier products to market in covered wagons. The land wouldn't even be worth the $1.25 an acre until the government could afford to build some type of system for transport.

How on earth do you know what the land was worth without a railroad?

The U.S. Government had settled on $1.25 per acre in 1800. Long before railroads existed.

Are you now arguing that only railroads made land worth anything?

Further, most railroads were private binding the East, Midwest, and South. They didn't need land grants, and they exploited lands that had already been long before sold by the government -- the government didn't need railroads to charge $1.25 an acre.