Railroads were instrumental in opening the western U.S. in the 19th century. The main incentive provided for the railroads to connect San Francisco, CA and Omaha, NB were land grants out of the public domain. In a period of 21 years (1850-1871), 174 million acres were patented (deeded) primarily to what would become four major railroads. Many acres were returned to the government, some were sold and many others were retained or disposed of through holding companies. This paper emphasizes an oft-overlooked reality: that in many cases the railroads leveraged these land grants in support of the growth and prosperity of the U.S. and that privatizing these lands to the railroads was the most productive use of those resources at that point in history. Further, those grants continue to bear fruit in the present day. We contend that the counterfactual, one in which those lands remained in the public domain and under control of the federal government, would not have yielded anywhere near the development and wealth that they created under the railroads’ control.
Gurney, Brian and Hill, Joshua P.
"Selected Railroad Contributions To The United States: An Economic and Historical Review,"
Journal of Transportation Management: Vol. 31:
1, Article 7.
Available at: https://digitalcommons.wayne.edu/jotm/vol31/iss1/7