Railroaded: The Transcontinentals and the Making of Modern America.

• Author: Bogart, Dan
• Position: Book review

* Railroaded: The Transcontinentals and the Making of Modern America

By Richard White

New York: Norton, 2011.

Pp. xxxiv, 660. $35.0 cloth.

Network industries are especially prone to market and government failures because they involve large, durable, and fixed investments across space. History is useful in trying to understand how network industries evolve and the role of policies and institutions in their development. One needs to see them in a long-run perspective, which is exactly what Richard White does in his provocative and well-researched book on the American transcontinental railroads.

It is difficult to overstate the centrality of railroads to American history, especially in the territories west of the Mississippi River. In economic terms, transcontinental railroads are seen as an engine of growth, integrating eastern and western markets and thereby opening the possibility of settlement. Frederick Jackson Turner's famous safety-value argument posits that the opening of the frontier kept American wages relatively high because it prevented diminishing returns to labor. In this perspective, railroads are seen as a great achievement. This story has a dark side, however. Private companies built the transcontinental railroads, but they received significant government aid. The federal government most notably gave land grants and low-interest loans. The official rationale for the subsides was that railroads across the American West would be built too slowly or not at all unless investors received extra inducements. Government was giving a helping hand to a strategic industry. As it turned out, transcontinental railroads were not a financial success in the short term. By the 1890s, many could not meet their interest obligations and went into receivership. They also aroused tremendous complaints from farmers and shippers. Discrimination in freight rates across space and across traffic types led to calls for regulation and eventually led to the founding of the Interstate Commerce Commission.

In Railroaded, Richard White gives a comprehensive account of the economic, social, and political aspects of transcontinental railroads. The book is based on a deep reading of the sources and is a must read for anyone interested in transportation and the development of the American economy. White is particularly keen on pointing out the transcontinental railroads' failings in order to counter many studies that view them in a favorable light. He makes...