Interfacing with Obama’s Intercontinental Railroad

by Burt on September 27, 2011

“Now we used to have the best infrastructure in the world here in America,” President Obama told an Ohio audience recently. “We’re the country that built the Intercontinental Railroad.” Maybe from Miami to Rio de Janeiro? No, the president obviously meant “transcontinental” railroad—from Omaha to Sacramento. Within the United States.

Hey, we need to give some leeway to public figures. I make my mistakes in front of my wife or in front of my startled students. But the president’s errors are magnified in front of millions. Thus, we should cut him some slack, but with the understanding that if you are going to pose as an authority on high speed rail, you need to learn about transcontinental railroads—or risk looking foolish.

The Intercontinental Railroad gaffe shows two things worth discussing. First, the president still needs to learn the history of the nation he is governing. Since he didn’t grow up on the continent, he doesn’t know some of the basic information most U.S. schoolchildren were taught. The U.S. is a unique nation and American exceptionalism is real; however, oddly, not in transcontinental railroads. The president needs to know there was more than one in the U.S., and that Canada also had a transcontinental railroad (which was built by an American, but that’s okay because one of ours was built by a Canadian).

Second, the story of the transcontinental railroads really is a great teaching tool for today. If we study the Union Pacific, the Central Pacific, and the Northern Pacific Railroads, we learn they all went broke after receiving a combined total of 61 million acres of land. And they ran the nation deep into debt, too. The Union Pacific alone, which was joined to the Central Pacific in 1869, ran $28 million in debt—which is one-half of what the entire U.S. national debt was in 1860. In other words, federal spending on transcontinentals meant corruption, land grabs, and wasted taxpayer dollars.

But wait. The Great Northern Railroad, which went from St. Paul to Seattle, never went bankrupt and was one of the best-built railroads in the United States. Why did the Great Northern succeed when the others failed? Because James J. Hill, the president, built his railroad with no federal subsidies. He built the Great Northern slowly and made each part profitable before expanding it further. In doing so, Hill developed grain in North Dakota, copper in Montana, and apples and timber in Washington state. In my book The Myth of the Robber Barons, I quote Hill as saying, “You will recall how often it has been said that when the Northern Pacific, Union Pacific and other competitors failed, our company would not be able to stand. . . . Now we have them all in bankruptcy . . . while we have gone along and met their competition.” Hill made profits and never went bankrupt.

Here is the lesson: that which is privately owned is properly cared for and is best positioned to create jobs and profits. When the government gets involved, profits vanish and quality declines. Therefore, the president is right. Let’s discuss railroad history and apply what we learn to the present day.

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