June 13, 2003


Fred at Rantavision Rantavation made a mistake when he said:

"government programs" allow businesses to make money by subsidizing otherwise huge infrastructure costs, such as distribution (roads--rail (remember, the rail service in this country was completely subsidized by the government through land grants, loans, and matching funds)

The federal government provided land grants to a limited number of companies, with the idea being that the railroads would sell this land to fund their westward expansions, while also helping to promote settlement. However, all railroads did not receive these grants -- only western ones, and only a little over half of those. Railroads east of the Mississippi were largely not recipients of land grants.

Construction subsidies were only provided to one enterprise -- the first transcontinental, the Union Pacific. This is the source of the infamous Credit-Mobiler scandal, wherein contractors overcharged UP, and UP in turn overcharged the government, in order to bilk. Although lineside communities in other areas would from time to time offer subsidies bribes to railroads to come to their towns over bypassing them, the amount of money given by any government to the other railroads was slim to none. (The second transcon, the Northern Pacific, received land grants but no subsidies.)

Lastly, it should be noted that the railroads had to provide free transportation to the government until about WW2, which more than repaid any money they ever were given or borrowed, and then some.

Lastly, one of the most prominent companies in western railroad history was the Great Northern. Built by St. Paul magnate James J. Hill, it used no government money of any kind to complete it's line, which is one of the finest transcon grades in the nation. Today, GN survives as Burlington Northern Santa Fe, the second largest railroad in the United States.

In short, rail service was definately not "completely subsidized by the government", not by a longshot. If you are going to make a detailed analysis of a tax system or a government, please, Fred, don't make false blanket statements taken from inaccurate schoolbooks and popular myth.