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He bought older, smaller, rundown railroads, offered minimal improvements, and then capitalized on factory owners’ desires to ship their goods on this increasingly popular and more cost-efficient form of transportation. Jay Gould was perhaps the first prominent railroad magnate to be tarred with the “robber baron” brush. Among their highly questionable tactics was the practice of differential shipping rates, in which larger business enterprises received discounted rates to transport their goods, as opposed to local producers and farmers whose higher rates essentially subsidized the discounts. Midwest farmers, angry at large railroad owners for their exploitative business practices, came to refer to them as “robber barons,” as their business dealings were frequently shady and exploitative. These individuals became some of the wealthiest Americans the country had ever known. Individual investors consolidated their power as railroads merged and companies grew in size and power. Railroads also listed their stocks and bonds on the New York Stock Exchange to attract investors from both within the United States and Europe. Federal and state loans of cash and land grants totaled $150 million and 185 million acres of public land, respectively.
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From 1877 to 1890, both the amount of goods and the number of passengers traveling the rails tripled.įinancing for all of this growth came through a combination of private capital and government loans and grants.
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Inventions such as car couplers, air brakes, and Pullman passenger cars allowed the volume of both freight and people to increase steadily. The amount of track grew from 35,000 miles at the end of the Civil War to over 200,000 miles by the close of the century.
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By 1890, railroad lines covered nearly every corner of the United States, bringing raw materials to industrial factories and finished goods to consumer markets. The railroad industry quickly became the nation’s first “big business.” A powerful, inexpensive, and consistent form of transportation, railroads accelerated the development of virtually every other industry in the country. RAILROADS AND ROBBER BARONSĮarlier in the nineteenth century, the first transcontinental railroad and subsequent spur lines paved the way for rapid and explosive railway growth, as well as stimulated growth in the iron, wood, coal, and other related industries. Regardless of how they were perceived, these businessmen and the companies they created revolutionized American industry. Some of these new millionaires were known in their day as robber barons, a negative term that connoted the belief that they exploited workers and bent laws to succeed. The exploitation of these new technologies provided opportunities for tremendous growth, and business entrepreneurs with financial backing and the right mix of business acumen and ambition could make their fortunes.