ic railroads by granting outright twenty square miles of land for
every mile of track and by loaning the credit of the government to
the extent of fifty million dollars,--a debt which was settled by
compromise only after thirty years.

Counties, townships, cities, and villages then entered into keen
competition to secure the building of railroads, projected by
private enterprise. Bonds, bonuses, tax-exemptions, and many special
privileges were granted. To obtain this new Aladdin's lamp, this great
wealth-bringer, localities mortgaged their prosperity for years to
come. The promoters bargained skilfully for these grants, playing off
town against town, cultivating the speculative spirit, punishing the
obdurate. Not the civil engineer, but the railroad promoter determined
the devious lines of many a railroad on the level prairies of America.
The effects of these grants were in many cases disastrous, and after
1870 they were forbidden in a number of states by legislation and by
constitutional amendments. But before this era of generosity ended,
probably the railroads in America had received more public aid than
has ever been given to any other form of industry in private hands.

Sec. 8. #Emergence of the railroad problem#. In most charters and laws
authorizing the building of railroads, either nothing was specified
regarding rates, or maximum rates were fixed which proved to be so
high that they were of little, if any, practical effect. But very soon
began to appear some serious evils in the policy of railroads toward
the shipping and traveling public in matters of rates and of service.

As the ownership of the wagons, ships, and canal-boats of a country
is usually divided, ocean ports and points along the lines of
turnpikes and canals enjoy competition between carriers. In the early
days of the railroads it was believed that a company or the government
would own the rails and charge toll to the different carriers, who
would own cars and conduct the traffic as was done on the canals.
Experience soon showed the impracticability of this scheme and the
need of unified management. An operating railroad company, therefore,
has a monopoly at all points on its line not touched by other
carriers. This, like any other monopoly, is limited, for the railroad,
to secure traffic, is led to meet competition of whatever kind--that
of wagons, canals, rivers, or of other railroads--wherever it occurs.
The railroads in private hands early