Railroads and Conflict in the West

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How did railroad expansion affect the US economy?

Railroad expansion affected the US economy by creating jobs, establishing a national market, establishing a cattle industry on the Plains, and allowing certain people to acquire great wealth through investing in the railroad.

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Railroad expansion allowed the United States to ship goods without having to use canals and rivers. Railroads were also more reliable than state and national roads at the time, though rail accidents killed hundreds every year. The railroad allowed raw materials to reach factories in the East and consumer goods to reach all parts of the United States in a timely manner. Railroads helped to create the cattle industry on the Plains immediately after the Civil War. Cattle brought low prices in Texas, but demand was higher on the East coast. Cowboys would drive the cattle to rail heads in towns such as Dodge City. The railroad was also instrumental in bringing precious metals such as silver and gold to the East. Many towns would not exist if not for the railroad.

Indirectly, the railroad had a profound effect on the economy through investment. Many people such as Leland Stanford were able to make millions through railroad investing. These investments were unregulated, however, as companies could print as many shares of stock as the market could support. An excess of speculation sparked an economic depression in the United States in 1873.

Not only did railroads link the United States in terms of transporting people, but they were also influential in linking the nation's Western resources with Eastern factories. Railroads were one of the major engines in driving economic growth in the United States during the nineteenth and twentieth centuries.

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The expansion of the railroads in the late 1800s was instrumental in helping the US economy boom.   It did this in two ways. 

First, the railroads created a tremendous amount of demand for goods and labor on their own.  As the railroads were being built, they needed huge numbers of people to build them.  They also, of course, needed enormous quantities of steel for rails and rolling stock and wood for things like railroad ties.  This demand, particularly for steel, helped the US economy to boom.

Second, the railroads created a huge national market.  Before the expansion of railroads, it had been very hard to get goods from place to place on land.  Moreover, the whole western United States was essentially worthless to the national economy because goods could not be easily transported from there to the rest of the US (particularly because there was no Panama Canal in those days).  The railroads tied the whole US together.  Now, crops and cattle from the West could become part of the economy as could the things produced by mines in the West.  Now, anything could be transported anywhere in the country.  This allowed companies to become much bigger and allowed the economy to boom.

In these ways, the railroad expansion allowed the US economy to expand rapidly in the late 1800s. 

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