Railroad Business In 19th Century America

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The railroad business in the 19th century America was a lucrative one, many people became very rich from the investment. There was always the question by historians on if the railroads were built ahead of demand for it, or if the railroad was built for demand. Both had their risks and rewards, and each had their own invectives. Investing in the railroad ahead of demand is quite the risk. If one puts all their money into the railroad and it ends up being a flop like the pony express then all that money has gone to waste. However, there is also government aid to help build the railroad to connect east and west. For the transcontinental railroad, government aid meant twenty sections of land for every mile of rail laid and two mortgage securities. Investors would be a lot more secure and would possibly still gain something if the railroad failed. There was also the government subsidies, so there was a smaller risk as it wouldn’t just be the investor’s money going into the railroad, but the governments as well. In terms of…show more content…
Both the State and Federal government still gave land grants, stone and timber and 200 feet right away for the railroad. That meant that even if an investor was facing more competition, they would still be able to make their money back with what the government gave them. Less risk, but a lot of reward. Being an investor in 19th century America for the railroad was a risky business, but many miles of rail were still built. Some investors tried to build ahead of demand, some tried to build with demand, and both had their risks and rewards. Building ahead could mean more money as the rail is already there when people see how great it is, but building with demand meant less risk as you could build where people wanted to go. Historically, it is likely that a mix of both were used, as both have their good and bad elements to
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