How Did Railroads Affect The Economy After 1860

3. Despite the initial sentiment of economic historians, the railroad was not an integral part of American economic development after 1860. Even though the railroads were not crucial to economic growth does not negate the fact that the railroads were the first big business in the United States. The railroads benefited from economies of scale, increases in technology and pro-railroad legislation. The miles of track line increased exponentially from 30,000 miles of main line track in 1860 to 254,037 miles by 1916. In addition to the increase in track distance, in 1883 there was standardization of gauges and time, which created a more seamless process. These advancements contributed to an increase in revenue from $1 billion in 1890 to $3.6 billion in 1916. From 1860 to 1916 the railroads expanded tremendously. Aided by new technology in the form of air brakes, steel tracks, and refrigerated cars, the railroads were able to offer new services like meatpacking transportation. The technological improvements led to decreases in shipping costs and in 1900, the cost was 0.80 per ton mile. Along with the

Fogel and Fishlow are two economists who fall into this category and studied just how important the railroads were. Using econometric techniques, Fogel was able to calculate just how much backward stimulation the railroads produced and how important the railroads were to GNP. Fogel determined that the railroads accounted for a paltry amount of the total goods sold, only 6% of the total coal output, less than 5% of iron output, and an inconsequential amount of lumber. In addition, Fogel created a counterfactual of a United States that was made up of other transportation methods to replace the railroads. He determined that the railroads only increased GNP by 2 years. In other words, the railroads were only significant to American economic growth if you wanted the GNP in 1892 to occur in