Don't Blame Capitalism!!!

In 1869 the Central Pacific Railroad and the Union Pacific Railroad met at Promontory Point, Utah. What a celebration!!!!! But did you know.......

*In the beginning, in order to 'encourage' railroad construction, Congress granted 44 million acres of land and $61 million in federal loans to the transcontinental railroad project.

*Congress paid incentives for every mile laid and even bigger incentives for track laid on difficult terrain. As a result;
--Tracks were built meandering all over the place to increase mileage. Some were even built on ice and had to be totally reconstructed.
--Quality was sacrificed for quantity--both railroad companies were planning reconstruction before the Golden Spike ceremony.

*Congress mandated the railroads had to sell their stock for $100 par value.

*When stock prices dropped, the Credit Mobilier was a credit arm founded by Railroad owners solely to buy up railroad stocks, and get railroad contracts. In short, the railroad was awarding it's own contracts to itself and buying its own stock through the Credit Mobilier arm. This allowed them to over bill the government for the railroad and make double profits off of government subsidies.

*Several congressman were being paid off by Credit Mobilier to ensure that the government continued to fund the railroad projects.

*Though many people were suspicious of shoddy railroad construction no one questioned it because the government was financially backing the whole thing--they trusted the gov't to oversee it.

*Great Northern Railroad and the Milwaukee Railroad were transcontinental railroads built with private capital.

*The private railroads made investments in communities to ensure their railroads had customers. They also arrived at national standard measurements for the tracks amongst themselves without gov't mediation.

*These private lines held up in financial recessions and panics when the government subsidized railroads failed.

*Politicians blamed the waste, the corruption and the Credit Mobilier scandal on unbridled capitalism and cried out for--you guessed it--more government 'oversight' and regulation.

"Far from laissez-faire capitalism necessitating government regulation, it was government intervention that caused the corruption and fed it. People acted no better, or worse, in the 1870's than they did in George Washingtons' day. What had changed, however, was the opportunity for graft combined with the incredible profits to be gained from corruption. Such corruptions tracked precisely with the expansion of the federal bureaucracy."

~Larry Schweikart