6.2 Westward Expansion: Economic Development

The Pacific Railway Act of 1862 gave railroad companies huge strips of public land and government loans to build a line to the Pacific. The Union Pacific built west from Omaha, Nebraska, and the Central Pacific built east from Sacramento, California. They met at Promontory Summit, Utah, on May 10, 1869, finishing the first transcontinental railroad.

Thousands of Chinese immigrants did much of the Central Pacific's most dangerous work in the Sierra Nevada. Irish immigrants and Civil War veterans made up much of the Union Pacific's crews.

Over the next decades the federal government granted railroads about 130 million acres in all, and states added more. Railroads sold much of that land to settlers, often advertising in Europe to recruit them. Rail mileage grew from about 35,000 miles in 1865 to about 190,000 by 1900.

Notice the irony. The era is famous for laissez-faire talk, but the federal government actively paid for Western development through land grants, loans and the army.

• Mining: strikes like Nevada's Comstock Lode (silver, 1859) and gold in the Black Hills (1874) created boomtowns. Individual prospectors gave way to big companies with expensive machinery and wage-earning miners.
• Ranching: after the war, cowboys (many of them Mexican American or Black) drove Texas cattle north to railroad towns such as Abilene, Kansas, for shipment to Chicago meatpackers. The open range ended by the late 1880s because of barbed wire, overgrazing and the brutal winter of 1886–1887.
• Farming: the Homestead Act (1862) offered 160 acres of public land, for only a small filing fee, to settlers who lived on and improved it for five years. Many homesteads failed on the dry Plains, and far more land went to railroads and speculators than to homesteaders, but the act still drew hundreds of thousands of families west.

Mechanization means replacing human and animal labor with machines. Steel plows, reapers, threshers and later combines let one farmer work far more land. Scientific farming, spread partly through land-grant colleges created by the Morrill Act, raised yields too.

The result was a classic trap. American farmers grew so much wheat and cotton, and competed with so many farmers worldwide, that crop prices fell through much of the period. At the same time farmers borrowed money for land and machines, and the money supply grew slowly, so prices across the economy deflated. Paying back a fixed debt with crops worth less each year was crushing.

Farmers also depended on railroads, which often had no competition in a given town. Railroads and the grain elevators that stored crops could charge whatever the market would bear, and they gave secret discounts (rebates) to big shippers.

The Grange (officially the Patrons of Husbandry) was founded in 1867 as a social and educational group for farm families. In the 1870s Grangers pushed state legislatures in the Midwest to pass Granger laws regulating railroad and grain elevator rates. The Supreme Court upheld one such law in Munn v. Illinois (1877), saying a state can regulate private businesses that serve the public interest. In Wabash v. Illinois (1886), though, the Court ruled that only Congress could regulate rates on interstate traffic, which led Congress to pass the Interstate Commerce Act in 1887.

In the 1880s the larger Farmers' Alliances spread across the South and the Plains. They set up cooperatives to buy supplies and sell crops together, cutting out middlemen. The Colored Farmers' Alliance organized Black farmers separately. When cooperatives were not enough, Alliance members turned to politics and formed the People's Party, or Populists, in 1892 (see 6.13).