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4 Cultivating the Prairie

Cordery, Simon Indiana University Press ePub

In the beginning, railroads needed land and the federal government had it. For settlers, it seemed in plentiful supply. The earliest European immigrants entered an apparently empty territory rich in resources and potential. Initial colonization—despite charters from British monarchs—was haphazard and small-scale. Violence against indigenous peoples was commonplace, squatting widespread, and ownership frequently a matter of dispute. Early national land policy was, in the words of historian John Mack Faragher, a matter of “Extinguish Indian title, survey, and sell.”1 Only when the federal government turned to the orderly settlement of the frontier did systematic landownership develop, and only with the arrival of railroads could mass migration occur.

Public land sales in Illinois began in 1814. Land offices in Kaskaskia and Shawneetown did a brisk business and a third office opened in Edwardsville in 1816, all in the southern third of the state. The federal government began planning for settlement north of the Illinois River by setting aside approximately 3.5 million acres—the “military tracts” from which the Central Military Tract Railroad would get its name—between the Illinois and Mississippi Rivers for veterans of wars up to and including the War of 1812. Only after a delegation of territorial leaders, including Governor Ninian Edwards, obtained title in 1816 from the Native Americans living there did land offices make 160-acre plots available to veterans. Purchasers were not required to live on the land, and many veterans sold their allotments to speculators for as little as ten cents an acre. Soon Illinois land was trading on the open market in New York City for prices ranging from 50 cents to $1.50 an acre. As much as a quarter of the total acreage in the military tract sold that way, violating the principle of establishing small farms to settle the region.2

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13 Progressive Regulation

Cordery, Simon Indiana University Press ePub

The perceived excesses symbolized by the Reid-Moore syndicate’s bleeding of the Chicago, Rock Island & Pacific Railway contributed to a political and social climate conducive to further regulation. Behind this renewed regulatory fervor was a fear of dependence on enormous economic entities. Corporations appeared to be getting too big, too powerful, and too likely to control an entire industry. Democratic republics were not supposed to give rise to monopolies dominating entire sectors of the economy, but that is precisely what seemed to be happening. When Minnesota-based railroader James J. Hill and Wall Street banker J. P. Morgan merged the Chicago, Burlington & Quincy into a holding company already containing the Northern Pacific and the Great Northern Railroads, the government called foul. President Theodore Roosevelt, spurning Morgan’s gentlemanly offer to “send your man to see my man and tell him to fix it up,” instead mobilized the might of the federal government and established a precedent for future trust busting.

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1 Preliminaries

Cordery, Simon Indiana University Press ePub

The topography of Illinois is particularly conducive to railroading. Trains move best over flat land, and the state has few hills of any size and nothing that could be mistaken for a mountain. Its 56,400 square miles vary from a low of 279 feet above sea level to the 1,235 feet of Charles Mound on the Wisconsin border near Galena. The glaciated north boasted extensive prairies dotted with stands of timber, while in the heavily wooded south, coal deposits lay concealed beneath the surface. The hilliest section of the state is in the northwest. Here the lead-mining region of Galena escaped the graze of the glaciers, as did Calhoun County in the south. The south offered numerous engineering trials, especially around Cairo, strategically placed at the confluence of the Ohio and Mississippi Rivers but swampy and subject to frequent flooding, while much of far-southern Illinois was viewed as “a hilly extension of the Ozark highland.”1 The state’s rivers provided obstacles to emigrants and challenges to bridge builders, while bluffs at Peoria and Alton restricted railroad development at those two important towns. Generally, however, the gentle prairies presented few insurmountable or even challenging hindrances except distance: Illinois is larger than England, birthplace of the railroad industry.

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12 Coal and Competition

Cordery, Simon Indiana University Press ePub

Coal lies beneath two-thirds of Illinois and has been mined at one time or another in three-quarters of the state’s counties. More than 7,400 mines have operated within the Prairie State’s borders. Illinois is in a bituminous (soft coal) field also covering much of Indiana, Ohio, and western Pennsylvania, providing a source of power for individuals and industries along the East Coast and into the Midwest. The price of Illinois coal fluctuated with national demand trends and regulatory shifts, creating periods of boom and bust over which mining companies had almost no control.1 Railroads were likewise at the mercy of the marketplace until they built lines into coal fields, contracting directly with the mines for the resource.

Coal was vital to the financial health of the railroads, but the operational and commercial problems of finding and transporting it were not the only challenges the railroads faced at the beginning of the twentieth century. In 1915 between three-quarters and four-fifths of total rail revenue came from freight, but the rates being charged in 1915 were virtually the same as they had been in 1900 despite prices rising by 30 percent. The Interstate Commerce Commission (ICC) refused to grant anything other than minimal rate increases.2 This situation, coupled with a disastrous takeover, led to the Rock Island’s first bankruptcy.

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9 Panic and Innovation

Cordery, Simon Indiana University Press ePub

Regulators could do little to help the railroad industry in the face of global economic downturns, though their strictures did not help the bottom line. The capital needed to build railroads came from the Netherlands and Great Britain, from New York and Rock Falls. Financiers and farmers proffered their savings in hopes of earning a profit, but sometimes disaster struck. Connecting with a transatlantic economy could prove painful, as events in 1873 would demonstrate. In that year another of the recurring crises of capitalism forced numerous railroads into bankruptcy, demonstrating the dangers of relying on the invisible and far-flung forces of capital accumulation.

The vulnerability of railroads to financial forces they unleashed but could not control was stunningly demonstrated in 1873. Railroad construction virtually stopped and operations were threatened when the New York office of the country’s largest private banker, Jay Cooke, suddenly closed its doors. This unexpected catastrophe was the culmination of a series of smaller failures and precipitated a downturn lasting on and off to the end of the century. The Panic of 1873—which initiated a frenzied effort to convert stocks, bonds, and savings into cash—revealed the dangers of overcapitalization and overbuilding. The cultural scale tipped against speculators again, and a new round of corporate consolidations kicked off.1

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