The Age of the Railroads

Credit Mobilier

The Age of the Railroads

The Grange and the Railroads

Credit Mobilier was a fraud scheme created by stockholders in the Union Pacific Railroad that gave the company a contract to lay track at two to three times the actual cost and pocket the profits. Shares of this scheme were donated to 20 represenatives in Congress in 1867, including Vice-President Schuyler Colfax and future president James Garfield.

Farmers were especially disturbed by what they viewed as railroad corruption. The Grangers- members of the Grange, a farmers' organization founded in 1867- began demanding governmental control over the railroad industry.

Chapter 6 Section 2

Railroad Abuses

Farmers were angry with railroad companies for several reasons including, misuse of government land grants, formal agreements to fix prices, and charging customers different rates, often more expensive rates for short hauls than for long hauls.

Granger Laws

Pullman

Opportunities and Opportunists

Grangers took political action- sponsored protests, elected legislators, and pressed for laws in their favor.

Munn v. Illinois- Supreme Court case that upheld Granger Laws by a vote of seven to two . This gave the states the right to regulate the railroads for the benefit of farmers and consumers.

New Towns and Markets

George M. Pullman built a factory for manufacturing sleepers and other railroad cars on the Illinois prairie. The nearby town was built by Pullman to model earlier industrial experiments in Europe. The town would be held under strict rules by Pullman's company.

The town would hold a violent strike in 1894 when Pullman refused to lower rent after cutting wages.

By linking previously isolated cities, towns, and settlements, the railroads promoted trade and interdependence. Cities began to specialize in particular products. Other towns would begin to appear along the railroads.

Interstate Commerce Act

Panic and Consolidation

The ICC presented few problems for the railroads, corporate abuses, mismanagement, overbuilding, and competition pushed many railroads into bankruptcy. This was the main cause to the Panic of 1893.

By 1894, a quarter of the nation's railraods had been taken over by investment firms such as J.P. Morgan & Company. By 1900, seven powerful companies held contorl over two-thirds of the nation's railroads.

This ruling did not last long- in 1886, the Supreme Court ruled that a state could not set rates on interstate commerce.

Congress would pass the Interstate Commerce Act in 1887 to establish the right of the federal government to supervise railroad activity and established a five-member Interstate Commerce Commission (ICC) for this purpose. Did not become effective until 1906.

Romance and Reality

Railroads Span Time and Space

Railroad Time

A National Network

By 1869, Railroads connected the East and West coasts together. These were called transcontinental railroads.

Until 1869, noon was recognized at a different time depending on when the sun was directly above you. Railroad time was created as a solution to this problem. By 1884, the world had adopted this practice that was first introduced by C.F. Dowd, and created world-wide time zones.

Immigrants made up of most of the workforce behind the building of the railroads. This was a dangerous job for all, as accidents and diseases would disable and kill thousands of men each year.