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Dingleberry Sir:
Crony Capitalism and the Transcontinental Railroads
"the first transcontinentals were all creatures, not of capitalism or the private markets, but of government. There simply were not enough people, capital, manufactured goods, or crops between Missouri and the West coast to support a private-sector railroad."
AND? Yes, like I SAID, Gov't created the rail system in the US...
AND all those created by the government failed, miuserably.
The ONLY one which survived did not ask , nor accept, federal funds. James J. Hill's Great Northern Railroad "
.
I WAS HOPING SOME DUMBASS WOULD COME UP WITH THAT (MINOR IN HISTORY REMEMBER?)
Government Intervention, James J. Hill and the Great Northern Railway
James J. Hill is often invoked as a hero by apologists for extreme laissez faire, because his railway was allegedly built completely privately, without any government subsidies or land grants. Unfortunately, there some inconvenient facts the free market ideologues leave out when they discuss Hill and the Great Northern Railway:
(1) Hill acquired a pre-existing railway called the Saint Paul and Pacific Railroad (which was originally charted as the “Minnesota and Pacific Railroad” in 1857) as the starting basis for his Great Northern Railway.
The Saint Paul and Pacific Railroad existed because of massive government support:
“In 1857, the territorial legislature of the state of Minnesota issued a charter to the Minnesota and Pacific Railroad to build a standard gauge railway from Stillwater in the east to St. Paul in the west .... The railroad received a grant of 2,460,000 acres (1,000,000 ha) of land from the territorial legislature. This was the seventh largest land grant of the 75 given to railroads nationwide between 1850 and 1871. Construction began in the autumn of 1857, and in 1856 the state backed a $5 million bond issue to support the new rail system. But speculators manipulated the nascent railroad’s profits, overcharged it for supplies, and sold off some of its assets. It went bankrupt in 1860, and the new state legislature purchased all of its assets for a mere $1,000. … In 1862, the state legislature reorganized the bankrupt railroad as the St. Paul and Pacific Railroad.
....
But James J. Hill, who ran steamboats on the Red River, knew that the SP&P owned very valuable land grants and saw the potential of the railroad. Hill convinced John S. Kennedy (a New York City banker who had represented the Dutch bondholders), Norman Kittson (Hill’s friend and a wealthy fur trader), Donald Smith (a Montreal banker and executive with the Hudson’s Bay Company), and George Stephen (Smith’s cousin and a wealthy railroad executive) to invest $5.5 million in purchasing the railroad. On March 13, 1878, the road's creditors formally signed an agreement transferring their bonds and control of the railroad to Hill's investment group. On September 18, 1889, Hill changed the name of the Minneapolis and St. Cloud Railway (a railroad which existed primarily on paper, but which held very extensive land grants throughout the Midwest and Pacific Northwest) to the Great Northern Railway. On February 1, 1890, he transferred ownership of the StPM&M, Montana Central Railway, and other rail systems he owned to the Great Northern.”
(2) Hill benefited from government negotiations with Native Americans to obtain the right to build his railway on their land:
OOPS
Lloyd J. Mercer summarises how HillÂ’s Great Northern System relied on the acquisition of previous state-subsidised railways with land grants:
The unsold portion of that old grant passed to the new company and became the major part of the land grant of the Great Northern System.
This grant formed the remainder of the land grant of the Great Northern System, which became the beneficiary of efforts to subsidize predecessor railroads that were, unlike the Great Northern, truly pioneer effects.”
Social Democracy for the 21st Century: A Post Keynesian Perspective: Government Intervention, James J. Hill and the Great Northern Railway
Wow...
