Railroads and Land Grant Policy

Railroads and Land Grant Policy

A Study in Government Intervention

1st Edition - January 28, 1982

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  • Author: Lloyd J. Mercer
  • eBook ISBN: 9781483257990

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Railroads and Land Grant Policy: A Study in Government Intervention attempts to replace a major part of the railroad land grant legend (according to which the granting of federal and state land to private railroad firms benefitted these firms more than it contributed to society as a whole) with some real numbers and analysis. An attempt is made to put the income and wealth distribution impact of the railroad land grants in perspective, but thorough analysis of this issue is not undertaken. The primary question this study does try to illuminate is that of the effect of the railroad land grants on economic efficiency. This emphasis was chosen because it seems clear that improvement of economic efficiency was the major goal that Congress and various state legislatures sought to attain, and thus the examination of economic efficiency questions is fundamental to evaluation of railroad land grant policy. This study will not completely replace the railroad land grant legend (because much is not covered here), but it does represent a considerable diminution of that legend.

Table of Contents

  • List of Figures

    List of Tables


    1. Introduction

    Land Grants: Government Intervention in the Market

    Subsidy, Profitability, and Railroad Investment

    The Railroad Land Grants

    Historiography of the Land Grants

    Objectives of the Study

    2. Economic Issues in Railroad Land Grant Policy

    Building Ahead of Demand

    External Economies from Railroad Operation

    Railroads as Natural Monopolies

    Capital Market Imperfections

    Hypotheses of the Land Grant Advocates

    Railroad Land Grants and the Distribution of Income


    3. Building the Land Grant Railroads

    The Central Pacific System

    The Union Pacific System

    The Texas and Pacific System

    The Atchison, Topeka and Santa Fe System

    The Northern Pacific System

    The Great Northern Railway System

    The Canadian Pacific System


    4. Private Rates of Return

    Subsidy Unnecessary

    Subsidy Necessary but Inadequate

    Subsidy Necessary and Adequate


    5. Social Rates of Return

    Intraregional Benefits

    Interregional Benefits

    Passenger Benefits

    The Social Returns Stream

    Tests of Hypotheses B1 and B2

    6. Building Ahead of Demand

    Test of the Fishlow Hypothesis for the Land Grant Systems

    Estimation of Investment Demand

    Capacity Utilization

    The Overbuilding Hypothesis

    Building Ahead of Demand

    7 Summary

    Economic Rationality of Land Grant Policy

    Building Ahead of Demand

    Evaluation of the Railroad Land Grants

    Appendix A: Investment Expenditure

    Appendix B: Capital Earnings

    Appendix C: Net Land Grant Revenue

    Appendix D: Zero Rent Perimeters

    Appendix E: Intraregional Benefits

    Appendix F: Interregional Benefits

    Appendix G: Passenger Benefits

    Appendix H: Loan Subsidy Cost

    Appendix I: Capital Stocks


Product details

  • No. of pages: 284
  • Language: English
  • Copyright: © Academic Press 1982
  • Published: January 28, 1982
  • Imprint: Academic Press
  • eBook ISBN: 9781483257990

About the Author

Lloyd J. Mercer

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