1. Chapter 20, Section 1: Railroads Spur Industry
Main Idea: A boom in railroad building encouraged American industry to grow but gave vast amounts of power to a few railroad owners.

2. Knitting the Nation Together
A. A Network of Rails
Track Gauge
After the Civil War, RR companies built all over the country (the war showed the importance of RRs for moving troops & supplies).
Knitting the Nation Together
Most early RRs were short & local only (not connected = many transfers & interruptions)
In 1886, a standard gauge (width) was adopted. After this, RRs were networked (connected) = cheaper & faster shipping & travel.
Improving Rail Travel
New inventions improved rail travel by making it safer, faster & more comfortable.
Air brakes (George Westinghouse) enabled all cars on the train to stop at same time.
Sleeping cars (George Pullman) allowed passengers to sleep while train continued on.
Dining Cars improved comfort & service for passengers, whose needs were attended to by waiters & porters for a better experience.
Sleeping Car
Dining Car

3. Growth of Railroads Railroads in 1890
Once the gauge, or width, of tracks was standardized, railroads formed a network, or system of connected lines.
Railroads in 1890
Railroads in 1918

4. Consolidation Brings Efficiency
Cornelius “Commodore” Vanderbilt
Consolidation Brings Efficiency
As RRs grew, they began to consolidate (combine) so they could run more efficiently & save money.
Larger lines bought out smaller ones or forced them out of business.
Cornelius Vanderbilt was one of the best at this. He used his fortune from steamships to build a RR empire between NYC & Chicago.
Vanderbilt University in Tennessee.
He used ruthless tactics to force smaller owners to sell to him. If they refused, he drove them out of business by not allowing their passengers to transfer to his lines.
Eventually, most RR lines were run by a few very rich & powerful men who controlled a vast network of rail lines across the nation.
4 min
video
The “Breakers”- Newport, RI
This was a Vanderbilt summer home

5. Cornelius “Commodore” Vanderbilt
“Can’t I do what I want with my money?”
Cornelius Vanderbilt and James Fisk are shown in a race for control of New York's rails. Vanderbilt unsuccessfully tried to take over the Erie R.R. by buying out its stock.

6. Building New Lines
3 more transcontinental (across the continent) RRs were built after the first was completed in 1869.
James Hill finished the last one in His Great Northern Railway empire spanned the Northwest, which wasn’t very populated back then.
To make profits right away, he encouraged farmers & ranchers to move to that part of the country & settle near his rail lines.
He bought them supplies & equipment, knowing that eventually, they would make him richer when they use his RRs to ship things (if they succeed, he succeeds).
3 min video

7. B. Eliminating the Competition
Rebates & Pools
Cutthroat competition- Rate wars broke out between rival RRs, forcing everyone to slash their rates & eventually lose money.
To compete for business, many RRs offered secret rebates (discounts) to their largest customers, which hurt small businesses & farmers, who now had to pay higher rates as a result -the rich get richer & the poor get …
To survive, many RRs established pools, in which they divided up business in an area, thereby limiting competition. This would keep prices (& profits) high for everyone.
This is known as price fixing &/or collusion.
Extra Burdens for Farmers
Farmers were angered by high shipping prices, so many joined the Populist Party, which called for government regulation of railroads to keep prices fair & reasonable.
Some states did pass laws regulating RRs, but they were often weak because officials were bribed by RRs to not enforce them.
3 min video

8. C. Railroads Fuel the Economy
The “Ripple” Effect
Despite all the problems they caused, RRs made growth of industry possible- steel and iron for tracks, lumber for ties, coal for fuel, etc. Many jobs were created as a result.
RRs became models for how other businesses operated - departments, managers, chains-of-command, etc.
RRs connected the country brought people & businesses together. They helped settle the West, developed new communities & made the US an industrial giant.
Railroads fueled the growing US economy:
1st big business in US.
Magnet for financial investment.
Key to opening the West.
Aided development of other industries.