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The American Railroad Network during the Early 19th Century: Private versus Public Enterprise
By Clifford F. Thies
Introduction
At the founding, the United States were a bunch of experiments in self-government (note the use of the plural). Each state was very much free to determine its own destiny. Many states directed economic development through state enterprises, loan guarantees, and direct subsidies, mostly in banks and in canals and other transportation projects. Almost all of these interventions proved to be failures. These failures forced state governments to raise taxes and sell off their money-losing ventures. In some cases, states were forced into default. Many states then amended their state constitutions to prohibit state enterprises and loan guarantees, and to restrict government borrowing. It was, thus, almost entirely as private enterprise that the railroad network of the country was developed.
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