Who Turns Down a Federal Subsidy?

by Burt on August 21, 2013

Three cheers for the Abilene and Smoky Valley Railroad. I thank Glen, one of our readers, for calling my attention to this railroad, which recently turned down a $500,000 federal grant to fix a bridge on its route from Abilene to Enterprise, Kansas.

Mary Jane Oard, the general manager of the railroad, said the government was too slow and had too many strings attached to the federal aid. So the small railroad is raising the fix-it cash to do the job privately. “If the railroad is its own contractor,” Oard said, “we can probably get it done for around $115,000.” The railroad’s co-pay, if it took the federal loot, would have been $148,000, Oard noted.

The ingenuity of this railroad brings back memories of James J. Hill, who built the Great Northern Railroad from St. Paul to Seattle in the late 1800s with no federal subsidy. The “experts” told Hill that no transcontinental railroad could possibly be built across the Rocky Mountains and through the American Northwest without abundant federal aid.

But Hill, an American hero, built what many believed to be the best railroad in the country without a federal dollar. When the other transcontinental railroads fell on hard times (the Union Pacific went bankrupt, for example), Hill observed, “our own line in the North . . . was built without any government aid, even the right of way, through hundreds of miles of public lands, being paid for in cash.”

Federal aid, Hill explained, was a curse–not a blessing. First, federal aid encouraged railroads to build too quickly (to load up on government money). Second, federal aid encouraged railroads to avoid straight flat lines to their destination because crooked roads generated more miles, and the government paid by the mile. Third, federal money created corruption in railroad building because the railroad owners often used the government money to buy high priced supplies from companies operated by the railroad owners. They sold to themselves and made money on the railroad and on the supplies. The head of the Union Pacific Railroad was censured by Congress for his corrupt behavior.

James J. Hill showed us the right way to build infrastructure. He built slowly and chose the best routes. When Hill learned that the best route west probably lay through the Marias Pass in Montana, he was determined to build his railroad there. The explorers Lewis and Clark had traveled through the Marias Pass and discussed it in their diaries. But in the 1880s, no one knew where it was. Hill’s chief engineer, John Frank Stevens, trekked through the Rockies in Montana with a Blackfoot Indian guide named Coonsah. The pair located the Marias Pass, and Hill used that shorter route to save many miles of construction.

Today, let’s commend the Abilene and Smoky Valley Railroad for refusing federal aid, and building a better and more honest railroad in the process.

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