In 1862, President Abraham Lincoln approved the Pacific Railway Act, assuring private railroad companies that the government would subsidize the cost to build a transcontinental railroad. The Civil War delayed construction, but the ambitious project picked back up shortly after the war ended. Railroad construction in the West and South continued for decades after workers completed the transcontinental railroad.

Transcontinental Railroad

The two major competing railroad companies after the Civil War were the Central Pacific Railroad and the Union Pacific Railroad. The Central Pacific laid track from Sacramento eastward and the Union Pacific from Omaha westward, each planning to eventually meet in the middle to connect the tracks. Because the government provided hefty funds for construction, both companies competed to lay the most track and reap the financial benefits. According to the Harvard University Library, the government subsidized each mile of track to the tune of more than $16,000. Between 1865 and 1869, the Central Pacific laid 690 miles of track and the Union Pacific 1,087 miles. A golden railroad spike symbolized completion of the transcontinental railroad in Promontory, Utah in 1869.

Land Grants

One of the ways the government funded railroad construction was to grant land to railroad companies, usually as alternating square-mile sections along each mile of track laid. Railroad real estate was valuable and the railroads could profit further from the rising number of settlers who established thriving communities in the West. The government was generous with land grants and railroad construction subsidies because it wanted America to expand westward. Politicians knew westward expansion would ease some of the strain in overcrowded Eastern cities flooded with a surge of immigrants and create new opportunities for commerce along railroad routes.

Reconstruction in the South

The destruction caused during the Civil War left Southern railroads in dire need of repair, so many were rebuilt during the postwar Reconstruction period. New railroads were also created along the Ohio and Mississippi rivers. Samuel Spencer acquired several smaller railroads to establish the Southern Railway in 1894 and shifted the company's focus from transport of tobacco and cotton to industrial development. He also built major railroad stations in Knoxville, Tennessee and Atlanta, Georgia. By 1916, the Southern Railway owned over 8,000 miles of track that crossed 13 states.

Northeastern Railroad Construction

Unlike railroads built in the West designed to develop new communities and support Western expansion, Northeastern cities needed a means for connecting existing towns and businesses. The New York, New Haven and Hartford Railroad was chartered in 1872 and acquired smaller railroad companies until there was a strong network between Boston and New York. The consolidated effort was called the New Haven Railroad. By 1890, the company's annual revenue exceeded $100 million; it employed more than 4,000 workers and served 12 million passengers on an annual basis.