Loans & Land Grants
Map of Nebraska showing the Union Pacific Railroad land grant
Another way that the government was involved in the railroad industry was by the distribution of federal loans and land grants, a system that was full of complications and fraud.
- In 1850, Senator Stephen Douglas arranged a "checkerboard compromise" which allowed the first federal land grant railroad, the Illinois Central, to be created.
- In 1854, the Minnesota & Northwest Railroad's grant was cancelled due to fraud and bribery. Rechartered and renamed the Minnesota & Pacific, it received 5 million acres and millionsof dollars in state bonds- It only built 10 miles of railroad.
- Abraham Lincoln was a supporter of railroads, granting more land than any other U.S. president.
- In 1862 he signed the Pacific Railroad Act, the first major land grant for the transcontinental railroad. This gave the Union Pacific Railroad more than 11 million acres of land and $27 million in bonds, and the Central Pacific Railroad received 8 million acres and $24 million in bonds.
- This bill resulted in the Credit Mobilier Scandal of 1872.
- In 1864, Lincoln signed the Northern Pacific land grant.
- Due to numerous scandals, lack of productivity and results, and a general absence of effective use of land grants and loans, Congress began to reclaim land.
- Between 1884 and 1887, Congress reclaimed 28 million acres from 5 unfinished railroads, in 1887 21 million acres were restored, and in 1890 the general forfeiture act recovered 5.6 million more.
FEDERAL LAND GRANTS FOR THE CONSTRUCTION OF RAILROADS AND WAGON ROADS 1823-1871
Map of the Northern Pacific Land Grant
