Railroads

Cheap efficient land transportation was an essential need of the industrial

revolution, as existing road transportation by wagon was too slow and expensive.

Although English shippers had experiemented with man-made canals from the middle of

the eighteenth century, they were expensive to build and maintain, still slow as mule-

drawn boats moved at only three miles an hour, and using steam power was impractical.

But in fact they provided the main competition with railroads until well into the 1840s, in

both England and the United States.

With its extensive river system, the United States supported a large array of

steamboats that effectively competed with railroads after 1815 until the 1870s. The

canals and steamboats lost out because of the dramatic increases in efficiency of the

railroads, in terms of speed, scheduling, and costs per ton-mile. In Germany, on the other

hand, parts of its well-integrated system of rivers and canals remained competitive into

the early 21st century.

Railroads originated in England, which had created an elaborate system of canals

and roadways to haul coal for the new steam engines, The engineers and businessmen

needed to create and finance a railway system were also available. The first high

pressure steam engine locomotive was developed by Richard Trevithick in 1802; a

locomotive using smooth wheels on an iron track could pull cars of freight a few

hundred yards. In 1815, George Stephenson built the prototype of the modern steam

locomotive, starting a technological race over the next century to build locomotives with

more power at higher steam pressures. Stephenson himself was one of the major
innovators. His decisive breakthrough came in 1825 when he built the Stockton and

Darlington line, 12 miles long, that proved it was commercially feasible to have a system

of usable length. On his first run, his locomotive pulled 38 freight and passenger cars at

speeds as high as 12 miles per hour. Stephensons Rocket was the locomotive for the

Liverpool and Manchester line, which opened in 1830. Stephenson went on to design

many more railways, and is best known for standardizing designs, such as the standard

gauge of rail spacing, at 4 feet 8 inches.

Thomas Brassey was even more prominent, operating construction crews that at

one point in the 1840s totalled 75,000 men throughout Europe, the British Empire, and

Latin America. He and thousands of British engineers and crews went all over the world

to build new lines. In the process, they invented and improved thousands of mechanical

devices, and developed the science of civil engineering to build roadways, tunnels and

bridges. The telegraph, although invented and developed separately, proved essential for

the internal communications of the railways because it allowed a central control station to

track all the trains in the system, shifting slower trains to a siding while a fast train went

by, warning of hazards, and sending out orders to fix or work around troubles. Most

important for efficiency, the telegraph allowed a system to use a single track for two-way

traffic.

Britain had a superior financial system based in London that funded both the

railways in Britain and also in many other parts of the world, including the United States,

up until 1914. The boom years were 1836 and 1845-47, when Parliament authorized

8,000 miles of lines at a projected cost of 200 million, which was about the same value

as the countrys annual Gross Domestic Product (GDP) at that time. A new railway
needed a charter, which typically cost over 200,000 (about $1 million) to obtain from

Parliament, but opposition could effectively prevent its construction. The canal

companies, unable or unwilling to upgrade their facilities to compete with railways, used

political power to try to stop them. The railways responded by purchasing about a fourth

of the canal system, in part to get the right of way, and in part to buy off critics. Once a

charter was obtained, there was little government regulation, as laissez faire and private

ownership had become accepted practices. The railways largely had exclusive territory,

but given the compact size of Britain, this meant that two or more competing lines could

connect major cities. George Hudson became the railway king of Britain, as he

amalgamated numerous short lines and set up a Clearing House in 1842 which

rationalized the service by providing uniform paperwork and standardized methods for

transfering passengers and freight between lines, and loaning out freight cars. By 1850,

rates had fallen to a penny a ton mile for coal, at speeds of up to fifty miles an hour.

Thus, Britain had a well integrated, well engineered system that allowed fast, cheap

movement of freight and people. The system directly or indirectly employed tens of

thousands of engineers, mechanics, repairmen and technicians, bringing a new level of

technical sophistication that could be applied to many other industries, and helping many

small and large businesses to expand their role in the industrial revolution. Thus railroads

had a tremendous impact on industrialization. By lowering transportation costs, they

reduced costs for all industries moving supplies and finished goods, and they increased

demand for the production of all the inputs needed for the railroad system itself. By

1880, there were 13,500 locomotives which each carried 97,800 passengers a year, or

31,500 tons of freight.

EUROPE

In France, railways became a national medium for the modernization of backward

regions, and a leading advocate of this approach was the poet-politician Alphonse de

Lamartine. One writer hoped that railways might improve the lot of populations two or

three centuries behind their fellows and eliminate the savage instincts born of isolation

and misery. Consequently, France built a centralized system that radiated from Paris

(plus lines that cut east to west in the south). This design was intended to achieve

political and cultural goals rather than maximize efficiency. After some consolidation,

six companies controlled monopolies of their regions, subject to close control by the

government in terms of fares, finances, and even minute technical details. The central

government department of Ponts et Chausses [roads and bridges] brought in British

engineers and workers, handled much of the construction work, provided engineering

expertise and planning, land acquisition, and construction of permanent infrastructure

such as the track bed, bridges and tunnels. It also subsidized militarily necessary lines

along the German border, which was considered necessary for the national defense.

Private operating companies provided management, hired labor, laid the tracks, and built

and operated stations. They purchased and maintained the rolling stock6,000

locomotives were in operation in 1880, which averaged 51,600 passengers a year or

21,200 tons of freight. Much of the equipment was imported from Britain and therefore

did not stimulate machinery makers. Although starting the whole system at once was

politically expedient, it delayed completion, and forced even more reliance on temporary

experts brought in from Britain. Financing was also a problem. The solution was a

narrow base of funding through the Rothschilds and the closed circles of the Bourse in
Paris, so France did not develop the same kind of national stock exchange that flourished

in London and New York. The system did help modernize the parts of rural France it

reached, but it did not help create local industrial centers. Critics such as Emile Zola

complained that ir never overcame the corruption of the political system, but rather

contributed to it.

The railways probably helped the industrial revolution in France by facilitating a

national market for raw materials, wines, cheeses, and imported manufactured products.

Yet the goals set by the French for their railway system were moralistic, political, and

military rather than economic. As a result, the freight trains were shorter and less heavily

loaded than those in such rapidly industrializing nations such as Britain, Belgium or

Germany. Other infrastructure needs in rural France, such as better roads and canals,

were neglected because of the expense of the railways, so it seems likely that there were

net negative effects in areas not served by the trains.

Belgium on the other hand provided an ideal model for showing the value of the

railways for speeding the industrial revolution. After breaking with the Netherlands in

1830, the new country decided to stimulate industry. It planned and funded a simple

cross-shaped system that connected the major cities, ports and mining areas, and linked to

neighboring countries. Belgium thus became the railway center of the region. The

system was very soundly built along British lines, so that profits were low but the

infrastructure necessary for rapid industrial growth was put in place.

In Germany, political disunity (Germany did not become unified until 1870) and

deep conservatism made it difficult to build lines in the 1830s. However, by the 1840s,

trunk lines did link the major cities, although each German state was responsible for the
lines within its own borders. Economist Frederick List summed up the advantages to be

derived from the development of the railway system in 1841: First, as a means of

national defense, it facilitates the concentration, distribution and direction of the army. 2.

It is a means to the improvement of the culture of the nation. It brings talent,

knowledge and skill of every kind readily to market. 3. It secures the community against

dearth and famine, and against excessive fluctuation in the prices of the necessaries of

life. 4. It promotes the spirit of the nation, as it has a tendency to destroy the Philistine

spirit arising from isolation and provincial prejudice and vanity. It binds nations by

ligaments, and promotes an interchange of food and of commodities, thus making it feel

to be a unit. The iron rails become a nerve system, which, on the one hand, strengthens

public opinion, and, on the other hand, strengthens the power of the state for police and

governmental purposes.

Lacking a technological base, the Germans imported their engineering and

hardware from Britain, but quickly learned the skills needed to operate and expand the

railways. In many cities, the new railway shops were the centers of technological

awareness and training, so that by 1850, Germany was self sufficient in meeting the

demands of railroad construction, and the railways were a major impetus for the growth

of the new steel industry. Observers found that even as late as 1890, their engineering

was inferior to Britains. However, German unification in 1870 stimulated consolidation,

nationalization into state-owned companies, and further rapid growth. Unlike the

situation in France, the goal was support of industrialization, and so heavy lines

crisscrossed the Ruhr and other industrial districts, and provided good connections to the
major ports of Hamburg and Bremen. By 1880, Germany had 9,400 locomotives pulling

43,000 passengers or 30,000 tons of freight.

Throughout western Europe, railway construction was the main engine of

economic growth in the 1840s and into the 1850s, stimulating growth in coal mining, iron

mongering, machinery making and civil engineering. By speeding up turnover, the

railways made wholesaling and manufacturing more profitable, while bringing remote

farmlands closer to markets and thus much more profitable. The creation of complex

business organizations led to the multiplication of new managerial and engineering skills

that spread from railways to other technologically-oriented industries. As T.H. Ashton

concluded: The locomotive railway was the culminating triumph of the technical

revolution: its effects on the economic life of Britain and, indeed, of the world, have been

profound.

Russia was a latecomer, building a private system in the 1870s and 1890s. The

state nationalized most of the lines, with military goals in mind, as exemplified by the

Trans-Siberian railroad, and with the aid of foreign funding. While the modernizing

dreams of Count Wittke in the early 20th century were not fully realized, the lines did give

an impetus to the metallurgical industry, as a major new industrial area grew up in the

south, based on the coal mines of the Donetz basin and the iron ore of Krivoi Rog, linked

by rail lines.

In Spain, the railways were designed by the government to foster industry, but

setting the hub in Madrid for political reasons negated much of the advantage. The lines

were poorly built and poorly managed, and probably slowed industrialization by diverting

capital and talent. In Italy, the railways were a political necessity to bind together the
new nation. The equipment, expertise and funding was imported, but the main export,

silk, was too light to make the system profitable.

ASIA

India provides an example of the British Empire pouring its money and expertise

into a very well built system designed for military reasons (after the Mutiny of 1857), and

with the hope that it would stimulate industry. The system was overbuilt and much too

elaborate and expensive for the small amount of freight traffic it carried. However, it did

capture the imagination of the Indians, who saw their railways as the symbol of an

industrial modernitybut one that was not realized until a century or so later.

In Japan, by contrast, railways were part of the stunningly successful industrial

transformation of the late nineteenth century. Betweem 1870 and 1874, railway building

accounted for nearly a third of all state investment in modern industry, augmented by

large British loans. Profits were high as the lines facilitated the rapid growth of textiles,

cement, glass, and machine tools as well as civil engineering.

NORTH AMERICA

In Canada, the federal government strongly supported railway development for

political goals. First it wanted to knit the far-flung provinces together, and second, it

wanted to maximize trade inside Canada and minimize trade with the United States, to

avoid becoming an economic satellite. The Intercolonial line, finished in 1876, linked the

Maritimes to Quebec and Ontario, and contributed to an ice-free winter route to Britain.

No less than three transcontinental lines were built to the west cost, but that was far more

than the traffic would bear, making the system simply too expensive. One after another,

the federal government was forced to take over the lines and cover their deficits. Since
most of the equipment was imported from Britain or the United States, and most of the

products carried were from farms, mines or forests, there was little stimulation to

manufacturing. On the other hand, the railways were essential to the growth of the wheat

regions in the Prairies, and to the expansion of coal mining, lumbering, and paper

making. Improvements to the St. Lawrence waterway system continued apace, and many

short lines were built to river ports.

In the United States, railway mania began in the 1830s and persisted through the

1870s. A large number of short lines were built, but thanks to a fast developing financial

system based on Wall Street and oriented to railway securities, the majority were

consolidated into 20 trunk lines by 1890. State and local governments often subsidized

lines, but rarely owned them. The federal government operated a land grant system

between 1855 and 1871, through which new railway companies were given millions of

acres they could sell or pledge to bondholders. A total of 129 million acres were granted

to the railroads before the program ended, supplemented by a further 51 million acres

granted by the states, and by various government subsidies. This program enabled the

opening of numerous western lines, especially the Union Pacific-Central Pacific with fast

service from Omaha to San Francisco in 1869. Although the transcontinentals dominated

the media, with the completion of the first in 1869 dramatically symbolizing the nations

unification after the divisiveness of the Civil War, most construction actually took place

in the industrial Northeast and agricultural Midwest, and was designed to minimize

shipping times and costs. West of Chicago, many cities grew up as rail centers, with

repair shops and a base of technically literate workers. The U.S. imported British

technology in the 1830s, but was soon self sufficient, as thousands of machine shops
turned out products and thousands of inventers and tinkerers improved the equipment.

The military academy at West Point saw most of its graduates become civil engineers in

the private sector. This was a better paying, higher status job than army officer, in stark

contrast to the preeminence of officers in Europe. The result was that the Americans

became enamored of engineering solutions for all economic, political and social

problems, combined with an unusually strong financial system that grew out of the

railways. As the railways grew larger they devised increasingly complex forms of

management, invented middle management, setting up career paths, and establishing

uniform bureaucratic rules for hiring, seniority, firing, promotions, wage rates and

benefits. By 1880, the nation had 17,800 locomotives carrying 23,600 tons of freight, but

only 22,200 passengers. The effects of the American railways on rapid industrial growth

were many, including the opening of hundreds of millions of acres of very good farm

land ready for mechanization, lower costs for food and all goods, a huge national sales

market, the creation of a culture of engineering excellence, and the creation of the

modern system of management.

For Further Reading

Rainer Fremdling. Railways and German Economic Growth: A Leading Sector Analysis

with a Comparison to the United States and Great Britain, in The Journal of Economic

History, 37:3, September 1977.

Leland H. Jenks. Railroads as an Economic Force in American Development, in The

Journal of Economic History, 4:1, May 1944.

O.S. Nock, ed. Encyclopedia of Railways. London: 1977.

Patrick OBrien. Railways and the Economic Development of Western Europe, 1830-

1914. 1983.

Jack Simmons and Gordon Biddle, eds. The Oxford Companion to British Railway

History: From 1603 to the 1990s. 2nd ed. 1999.

John Stover. American Railways. 2nd ed. Chicago: 1997.

Richard Jensen