The rapid settlement of the western territories in the 1850s convinced most members of Congress of the need for efficient rail transport to the Pacific coast, but which route would the railroad follow? In the years leading up to the Civil War, Congress commissioned topographical surveys in an effort to identify the best route. Unfortunately, competition between northern and southern members seeking a route advantageous to their own region prevented the Senate from passing any proposed legislation for a transcontinental railroad. Ironically, only days before bidding farewell to the Senate after Mississippi seceded from the Union, Senator Jefferson Davis expressed his support for the railroad as a symbol of national unity. “I have thought it an achievement worthy of our age and of our people, to couple with bonds of iron the people of the Pacific with the valley of the Mississippi,” he declared, “and show that even snow-capped mountains intervening could not divide them.”
After Southern states seceded, Congress agreed on a northern route to the Pacific and to the use of federal lands to subsidize the construction of a railroad and telegraph line. The Pacific Railway Act, which became law on July 1, 1862, offered government incentives to assist “men of talent, men of character, men who are willing to invest” in developing the nation’s first transcontinental rail line. Authorizing the Union Pacific and the Central Pacific railroad companies to construct the lines, the legislation provided government bonds to help fund the work, in addition to vast land grants. Employing thousands of immigrant workers and facing enormous challenges including harsh weather, massive mountain ranges, and conflicts with Native Americans, each company made its way towards a meeting point that would complete the line. On May 10, 1869, workers drove in the ceremonial “Golden Spike” at Promontory, Utah, joining the two lines.
The legislative efforts that resulted in the Pacific Railway Act led to the successful completion of the transcontinental railroad, which reduced the travel time across the continent from several months to one week and is considered one of the greatest technological achievements of the 19th century.
Abstract
Construction of the first transcontinental railroad, financed with large federal subsidies, is an important event in American history. Were the subsidies necessary to induce private investment in the railroad? The ex-ante investment decision examined uses contemporary reports and a simulation model to show that investors expected the railroad to be profitable. Evidence also shows that the railroad created political conflicts in Congress between the North and South. The secession removed the South as a disputant in Congress, reducing short-term political conflict but not long-term conflict. Subsidies reduced political risk, rather than transport market failure, and encouraged private investment.
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“Done.”
Telegraph message announcing the completion of the transcontinental railroad, May 10, 1869
The question of "internal improvements" was constantly before Congress in the 19th century: Should Congress assist in improving the country’s transportation system? One such improvement was the dream of constructing a railroad that would cross the entire country. In the 1850s Congress commissioned several topographical surveys across the West to determine the best route for a railroad, but private corporations were reluctant to undertake the task without Federal assistance. In 1862 Congress passed the Pacific Railroad Acts which designated the 32nd parallel as the initial transcontinental route and gave huge grants of lands for rights-of-way.
The legislation authorized two railroad companies, the Union Pacific and the Central Pacific, to construct the lines. Beginning in 1863, the Union Pacific, employing more than 8,000 Irish, German, and Italian immigrants, built west from Omaha, Nebraska; the Central Pacific, whose workforce included over 10,000 Chinese laborers, built eastward from Sacramento, California. Each company faced unprecedented construction problems—mountains, severe weather, and the hostility of Native Americans. On May 10, 1869, in a ceremony at Promontory, Utah, the last rails were laid and the last spike driven. Congress eventually authorized 4 transcontinental railroads and granted 174 million acres of public lands for rights-of-way.