The Role of the Railroads in the American Economy in the Late Nineteenth Century

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The role of the railroads in the American economy in the late nineteenth century.

Before the civil war and well into the industrial age all but a few manufacturers operated on a small scale and mainly for nearby markets. The American economy had no need for mass marketing and large-scale enterprises. Most goods were moved by water, a mode of transportation quite adequate at the time. With the arrival of the locomotive from Britain in the 1830’s that was certain to change. With a population swell from 1870 to 1890 people flocked to the cities and the nations economy moving to large-scale enterprises was inevitable. The railroads brought these tightly packed markets within reach of distant producers.

Nowhere else in the world did manufactures have so vast and accessible home markets for there products, but it wasn’t until the late nineteenth century that the railroad system became so well organized. Along with the arrival of locomotives came many afflictions. Railroad development was often lewd, fiercely competitive, and subject to boom and bust. The railroads more than met the transportation needs of a maturing industrial market, but for investors the cost of competition and an unrestrained growth was disturbingly high. When the economy took an unfortunate turn, as it did in 1893, a third of the railroad industry went into receivership. Out of the rubble, major railroad reorganization took place. When the railroads failed investment bankers, who’s main role had been railroad stock and bond issues, stepped in to consolidate rivals and pick up the pieces. By 1900 no corner of the country lacked rail service.

How manufactures best seized the opportunity of mass marketing opened by the reorganization of the railroad is perhaps best revealed in the meat packing industry. When the union stockyards opened in 1865, Chicago became the cattle market for the country. Before the organization of railroad systems, cattle were slaughtered in local “butchertowns”....
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