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Railroaded: Transcontinental Rails and Robber Barons

November 27th 2011

Book Covers - Railroaded

Railroaded: The Transcontinentals and the Making of Modern America. Richard White. W.W. Norton. 2011. 660 pages.

The construction of the transcontinental railroads following the Civil War is often celebrated as the triumph of American business and industry, with the support of government, unifying the country and fostering the growth of national markets. In Railroaded, Richard White, the Margaret Byrne Professor of American History at Stanford University and one of the founding scholars of the New Western History, challenges this assumption; concluding that Americans were “railroaded” in the late nineteenth century by finance capitalists into supporting the construction of a transportation system which was not based upon the economic needs of the western United States.

Refuting the creative destruction model of entrepreneurial capitalism employed by Joseph Schumpeter, White questions the assertion that the initial economic chaos of the transcontinentals paved the way for long term progress. In this important piece of scholarship, White doubts whether the farm and business failures, dispossession of Native populations, and the environmental destruction wrought by the transcontinentals were harbingers of progress. In a time when the achievements of corporate America are under great scrutiny, White’s history merits careful reading and consideration.

The construction of the transcontinental railroads following the Civil War is often celebrated as the triumph of American business and industry, with the support of government, unifying the country and fostering the growth of national markets. In Railroaded, Richard White, the Margaret Byrne Professor of American History at Stanford University and one of the founding scholars of the New Western History, challenges this assumption; concluding that Americans were “railroaded” in the late nineteenth century by finance capitalists into supporting the construction of a transportation system which was not based upon the economic needs of the western United States.

Refuting the creative destruction model of entrepreneurial capitalism employed by Joseph Schumpeter, White questions the assertion that the initial economic chaos of the transcontinentals paved the way for long term progress. In this important piece of scholarship, White doubts whether the farm and business failures, dispossession of Native populations, and the environmental destruction wrought by the transcontinentals were harbingers of progress. In a time when the achievements of corporate America are under great scrutiny, White’s history merits careful reading and consideration.

Viewing the American transcontinentals, the Canadian Pacific, and the railroads of northern Mexico as an interconnected railroad system essentially controlled by the same interests, White focuses most of his attention upon corporate records and the story of entrepreneurs who created these railroads.  Government played a crucial role in providing the credit that enriched private fortunes at public expense. 

Describing the transcontinentals as dysfunctional corporations, White argues, “They built railroads that would have been better left unbuilt, and flooded markets with wheat, silver, cattle, and coal for which there was little or no need.  They set in motion a train of catastrophes for which society paid the price” (xxvi).

White also challenges the assumption of scholars such as Alfred Chandler and Robert Wiebe that the transcontinental railroad corporations were models of order and rationality, ushering modernism into the economy.  Instead, White perceives the organization of the railroads as dysfunctional and requiring government rescues to bail out corporate greed and mismanagement.  But White insists that he does not want to simply resurrect the Robber Baron interpretation of late nineteenth-century capitalism. 

Rather than brilliant tycoons who masterfully manipulated the system to gain their personal fortunes, White views such entrepreneurs as often inept, while the corporations they created were often mismanaged and required public rescue.  Nevertheless, many of these business leaders were quite successful in creating personal financial empires, even if their railroads ended up bankrupt or in receivership.

This state of affairs promoted antimonopoly movements, which White depicts not as traditionalists opposed to modernism, but rather dynamic organizations of merchants, farmers, and laborers who sought control of government to limit corruption and the powers of corporations, recognizing the inequality imposed by the new social order.  While the antimonopolists were unable to wrest control of the government from railroad corporations, their story, notes White, indicates the possibilities for a different American history and future.

But it was never easy for the reformers, as is noted by the career of railroad critic Charles Francis Adams who ended up serving as President of the Union Pacific Railroad before being ousted by Jay Gould.  White devotes considerable time and space to Adams’s career as a railroad executive.  Adams expressed contempt for the railroad men whose credit schemes milked the public to amass private fortunes. 

Nevertheless, Adams was unable to change corporate culture, and he succumbed to the notion that building even more inefficient rail lines could in some fashion restore competition and reform the system.  Adams found the political influence of the railroads, or what White terms “friends” in high places, thwarted his efforts at rationalizing the system.

While White expresses some sympathy for Adams, he finds little redeeming value in the careers of Leland Stanford, Collis P. Huntington, and their Associates with the Central Pacific and Southern Pacific Railroads.  White argues that Stanford and Huntington understood the big truth that corporate failure could be even more lucrative than business success.  White concludes, “The smooth internal function of these corporations was not necessary to their persistence.  They could be internally chaotic, financially undisciplined, prone to failure, and tremendously attractive for insiders nonetheless.  Attached to this big truth was a little one:  if failure could be lucrative, then ignorance, incompetence, and disorganization were not incompatible with the corporate form” (232).

The financial schemes of Stanford, Huntington, Gould, Tom Scott, Henry Villard, and James J. Hill are complex, and White deserves credit for carefully researching these market manipulations and attempting to explain them to the reader.  However, these details are often overwhelming for the reader, and it seems that even the perpetrators of these frauds were often in over their heads.  White, who has spent decades examining corporate records and archives, however, seems able to follow the bouncing ball of stock manipulations.

While much of this massive book focuses upon the financial schemes of railroad tycoons, White does not ignore the workingmen who constructed and maintained the rail lines.  Railroad monopolies, sometimes referred to as “The Octopus,” threatened a republican economy based upon the opportunity for producer citizens to rise in society.  Unfortunately, to many labor leaders in the West exploitation of Chinese contract labor represented the degraded fate of all workers, and thus Chinese immigrants earned little sympathy from their white counterparts whose struggles against the railroads were often plagued by racist rhetoric and action. 

To combat consolidated corporate power and curtail vigilante actions against groups such as the Chinese, union leader Eugene Debs attempted to organize workers in the corporate image with a centralized and hierarchical structure.  The corporations, however, were able to enlist the aid of government and crush the countervailing power of labor.  White concludes by the mid 1890s, the railroads were even more wards of the government than thirty years earlier when their construction was paved by land grants and the Credit Mobilier.

Thus, White insists that the transcontinentals were “the triumph of the unfit, whose survival demanded the intervention of the state, which the corporations themselves corrupted” (509).  As an academic who has spent many years in railroad corporate archives, White is careful when making comparisons between the Gilded Age and the contemporary financial crisis. 

Nevertheless, White finds the continuing linkage of corporate profit with state legislation and intervention to be a troubling legacy.  White writes, “Much has changed, but states and corporations remain intertwined, and structural conditions forged during the Gilded Age have never entirely disappeared.  My guys are dead and gone, but their equivalents—and the conditions that allow them to prosper—endure” (513). 

White, however, perceives a more positive legacy in the tradition of antimonopoly which opposes corporate corruption as endangering the democratic promise of an economic and social system based upon republican citizenship.  It is the democratic promise of American life which empowers the Occupy Wall Street movement and the questioning of corporate greed and bail outs. 

White’s history of the late nineteenth-century transcontinental railroads deserves a wide readership as we ponder the continuing social, economic, and political costs of the corporate model of creative destruction pioneered by the railroad entrepreneurs of the Gilded Age.

Ron Briley reviews books for the History News Network and is a history teacher and an assistant headmaster at Sandia Preparatory School, Albuquerque, New Mexico.


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