Crony Capitalism and the Transcontinental Railroads - Ryan McMaken - Mises Daily

Posted by  $  straightlinelogic 5 years, 7 months ago to History
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The only transcontinental that wasn't a complete boondoggle was James Hill's Great Northern Railway, built without subsidies or land grants, and profitable from day one. Hill was America's greatest railroad man, and he gets his own chapter in The Golden Pinnacle (Chapter 14, Mr. Hill's Railroad).
SOURCE URL: http://www.mises.org/daily/6686/Crony-Capitalism-and-the-Transcontinental-Railroads


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  • Posted by  $  MikeMarotta 5 years, 6 months ago
    I have to disagree. I do appreciate this chapter of the larger narrative, but I have been reading JAMES J. HILL AND THE OPENING OF THE NORTHWEST by Albro Martin (New York; Oxford Press, 1976). Hill was not the perfect paragon that Ayn Rand claimed him to be: he was cognizant of the value of government land grants to the now-bankrupt railroads which he bought and merged. While it may well be true that the transcontinental line to California was not profitable, Hill, a Canadian (later naturalized as a US citizen), built a northern route into lands that were prosperous. Indeed, he was instrumental in that prosperity, having developed markets in water-borne shipping, wood and lumber, and then coal, before turning to railroads - which he planned for for years of patient building. One of his first enterprises before he was even married, was to build a depot, a convenient central place where freight was brought to, bought, and sold, in preference to doing business in the open elements and then schlepping small lots to various carriages and boats. Twenty years later, that foundation knowledge was just one asset in his inventory of expertise. It is an exciting story and I will have a full review later.

    Moreover, this book spawned another by two different writers: THE MAN WHO FOUND THE MONEY: John Stewart Kennedy and the Financing of the Western Railroads by Engelbourg and Bushkoff (East Lansing: MSU Press, 1996). In the Hill biography, Martin wrote briefly about Kennedy and called him under-appreciated in the story of American capitalism. Twenty years later, these professors did that.

    The error we all often make is projecting the present onto the past. People always make use of whatever is available. Jay Cooke and other robber barons wanted to run railroads in order to sell off the lands granted by governments. Hill actually wanted to run railroads - the lands were just extra profit that came with the deal when he bought Cooke's bankrupt line.

    But to evaluate that morally, you must judge the individuals, not the financial transactions.

    All of that being as it may, I grant the +1 for the Mises article on its own merits.
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    • Posted by  $  5 years, 6 months ago
      Hill couldn't very well buy the Northern Pacific without also buying the land that had been given to it by the government. That may make him an imperfect paragon, but he turned the Northern Pacific into a profitable part of his railroad empire. I would rather have someone like Hill come along and transform a waste of taxpayer money into an enterprise that can stand on its own, rather than see it in the hands of another moocher. As Martin's book makes clear, Hill wanted no part of land grants for his original creation, The Great Northern Railway. He did not want the government strings that came with those grants. I think Hill deserves the praise he got from Ayn Rand, and from me in The Golden Pinnacle. I also mentioned Kennedy, and one of my characters called him the best railroad finance man in New York.
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