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Nineteenth-Century Patterns of Railroad Development on the Great Plains University of Nebraska - Lincoln DigitalCommons@University of Nebraska - Lincoln Great Plains Quarterly Great Plains Studies, Center for Summer 1983 Nineteenth-Century Patterns Of Railroad Development On The Great Plains Russell S. Kirby University of Wisconsin-Madison Follow this and additional works at: https://digitalcommons.unl.edu/greatplainsquarterly Part of the Other International and Area Studies Commons Kirby, Russell S., "Nineteenth-Century Patterns Of Railroad Development On The Great Plains" (1983). Great Plains Quarterly. 1719. https://digitalcommons.unl.edu/greatplainsquarterly/1719 This Article is brought to you for free and open access by the Great Plains Studies, Center for at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Great Plains Quarterly by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. NINETEENTH .. CENTURY PATTERNS OF RAILROAD DEVELOPMENT ON THE GREAT PLAINS RUSSELL S. KIRBY he North American Great Plains experienced ment of the region were largely due to the rapid settlement and economic growth from uneven expansion of the railroad network 1870 to 1914. The advance of settlement and after 1870. Some areas were heavily overen­ the development of local economy, while dowed with railroad facilities, while others generally contiguous, were by no means uni­ received barely adequate, or even niggardly, form. Soil conditions, underground water treatment at the hands of railroad businessmen supplies, the network of rivers and streams, and entrepreneurs. The construction and rainfall, and growing season are all attributes operation of railroads on the plains were of the physical environment that vary across governed in part by strategic, managerial, the plains both longitudinally and latitudinally. financial, and institutional forces that produced In addition, the extent of effective settlement a transport system with no necessary relation­ in the Mississippi River valley, the natural ship to the contemporary or potential eco­ starting point for westward expansion onto the nomic landscape of the Canadian and American plains, varied considerably in 1865. Given these Great Plains. economic and environmental preconditions, it This article examines the process of corpor­ is not surprising that settlement on the Great ate railroad decision making in the larger con­ Plains after 1870 varied in timing and degree. text of investments, developmental strategies, Although the physical geography of the area and operational considerations, and explores must be taken into account, the differences the spatial evolution of four major railroad in the timing and amount of economic develop- systems from their origins to 1915. These railroads, two American and two Canadian, demonstrate various strategies of system Dr. Russell S. Kirby is a lecturer in the Depart­ ment of Geography, University of Wisconsin­ development. Generalizations drawn from a Madison, and a research analyst for the Wis­ brief historical overview, combined with consin Division of Health. He is especially insights from other analyses of entrepreneurial interested in transportation geography and the and business practices of nineteenth-century historical geography of nineteenth-century railroads and their leaders, suggest a hypothet­ America. ical sequence of railroad system development 157 158 GREAT PLAINS QUARTERLY, SUMMER 1983 at the level of the corporation in nineteenth­ their railroads, financiers used their properties century North America. for much broader strategic purposes, manipu­ lating the securities, freight rates, connections, and through routes almost at will. As often as TERMINOLOGY opportunistic profits were made-through fi­ Within the context of railroad systems, from nancial wizardry, shady construction contracts, both an investment and an operational point or dealings in railroad lands-great fortunes of view, several concepts and terms have been disappeared overnight in the aftermath of bank developed by business and economic historians failures, overextension, or bankruptcy and to facilitate the understanding of investor and receivership. corporate decision making. As these ideas will Except in virgin railroad territories, it is be applied to the development of the four difficult to characterize most late nineteenth­ Great Plains railroads considered here, some century railroad investments as anything but brief definitions are warranted. opportunistic. If one makes a conceptual leap First, in order to understand the investment from the level of the investor to that of the strategies pursued by individual capitalists and company, however, this is not so. While John­ entrepreneurs, it is useful to differentiate, as son and Supple are careful to apply their analy­ Arthur M. Johnson and Barry E. Supple have sis only to investors, however wealthy or influ­ done, between developmental and opportunis­ ential they may have been, it seems appropriate tic investments and investment strategies in the to discuss the investment, operating, and new nineteenth-century railroad business. A devel­ construction decisions of nineteenth-century opmental investment strategy is one in which railroad corporations in the same terms. Thus, an 'investor looks to long-term growth in a an opportunistic managerial strategy might booming region for the economic rewards involve the sale of railroad assets, competitive from capital investment. Opportunistic invest­ pricing policies on freight or passengers, or the ments, on the other hand, have "relatively rapid construction or acquisition of railroad shorter time horizons, the context of which lines in direct competition with one or more was not so much future income growth as the rival companies. Developmental corporate stra­ securing of profits from available markets­ tegies would include controlled systems growth whether for goods, for railroad services, or for and the husbanding of nonrail assets such as stocks and bonds.,,1 agricultural lands and mineral or forest re­ There is a continuum from developmental sources for the long-term prosperity of the to opportunistic investment, and while any railroad. Viewed from a broad, system-wide individual's current motives can be placed perspective, it would be conceivable for a given somewhere along this continuum, those mo­ railroad to engage in a purely or largely oppor­ tives, or the criteria for subsequent investment tunistic strategy in one part of its system while decisions, could easily change with time or with simultaneously developing the future potential changes in other financial and economic factors of its business in another portion of its net­ not necessarily bearing directly on railroading. work. Indeed, the larger the system, the more Local merchants and farmers committed their likely that this combination of strategies would capital to early local railroad companies as a exist. means of increasing their business profits. Dis­ Railroad historians have also identified two tant investors often purchased railroad bonds types of system development. The major devel­ and debentures with a view to stable, long-term opment strategy of many nineteenth-century developmental profits. By the late nineteenth railroads was the territorial development of a century, many railroads had come under the near monopoly on freight and passenger traffic control of strictly financial, large-scale capitalist in a particular district. Indeed, the concept of a interests. Often located at some distance from "natural" territory appears again and again in NINETEENTH-CENTURY PATTERNS OF RAILROAD DEVELOPMENT 159 the documents left by important figures in the through passengers and freight traversing a line railroad industry of the late nineteenth and between major cities often paid a lower fare per earI y twentlet. h centunes.. 2 I n contrast to tern-. mile or unit weight than local traffic, which torial development, the term interterritorial paid a premium fare for transportation pur­ competition describes the sequence of events chased in what was often a nearly monopolized that often ensued when the lines of one road marketplace. invaded the natural, or integral, territory of Bearing in mind these three sets of concepts­ another railroad. Interterritorial competition opportunistic and developmental investments could take many forms, including physical con­ and managerial strategies; territorial develop­ struction of mileage in direct competition with ment, interterritorial competition, and city­ another firm, preferential agreements with hinterland symbiosis; and local versus through complementary systems in competition with traffic and routes-let us now examine the one another, mergers, consolidations, and evolution of four major Great Plains railroad cutthroat price wars. Just as developmental systems from their origins to 1915. and opportunistic investment or management strategies are pure forms that seldom exist in GREAT PLAINS CASE STUDIES practice, territorial development or interterri­ torial competition rarely characterizes the The lines chosen for study include two strategy of a single railroad over its entire net­ American railroads, the Chicago, Burlington, work at any given time.3 and Quincy and the Atchison, Topeka, and To these two ideal types of territorial stra­ Santa Fe, and two Canadian railways, the tegy, I would add a third. The concept of Canadian Pacific and the Canadian Northern. city-hinterland symbiosis is useful in describing All four grew by 1914 into major common the nexus of mutually
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