PART II: Once Again John Stossell Lies About History


In Part II, The Pink Flamingo will examine the historical implication of the railroads and why Stossel is completely incorrect in his faulty assumptions of the historical record.

For my first argument that Stossel has no grasp of American history, when the 1861 bill was signed by Lincoln in 1863 (and may have been his greatest legacy) the US was in the middle of the worst moments ever. There was no possible way such a project could be financed privately. There probably was not that much private capital in the country. We were in the middle of a massive Civil War. Lincoln needed the railroads. The project was terribly important for National Security.

The Pink Flamingo has a problem with people who have no grasp of history and use it to try and prove their own pathetic points.  John Stossel is one of those people. In arguing against government investment in grand projects, he chooses to mix apples and oranges.  James J. Hill was one of the first very modern businessmen.  There was nothing “Victorian” about him.  He was a business person like a Bill Gates, Donald Trump, or a Warren Buffet.  He was a good 25 to 40 years younger than the men who put the first transcontinental railroad together.

The men who built the first transcontinental railroad were products of the early age of expansion in this country.  They were rugged individualists who know how to manipulate and use the government to get what they wanted.  The federal government from the era of James J. Hill was NOTHING like the federal system these earlier railroad men knew.  They were relics of a different age.   There were different ethics, if there were any ethics at all.  What was almost criminal in the boom days of Hill, was perfectly acceptable in their world.

These are the same generation of men who brought you the abject corruption of the Reconstruction Era.  They were corrupt, amoral, and had no grasp of running a business.  They cannot even be considered “Victorian”, rather they were almost frontiersmen.  Their attitude in life was as different as was that of Kit Carson and Wyatt Earp.

Their achievements cannot be compared the way Stossel does.  It is like trying to compare Julius Caesar and William the Conqueror.  It doesn’t work.  It only works if you are a dishonest libertarian trying to prove a dishonest point.

What is truly pathetic is that information about the building of the railroad, the reasons behind it are literally child’s play. Even Stossel should know the basics. (From a teacher manual)

“…During the 1800’s, many people traveled by horse and buggy making travel long, hard and often dangerous. There were many railroads during this time, however there was not a railway that connected the Pacific to the Atlantic Ocean. Once the railroad was built, travel became quicker and less dangerous. Travel that might take a family six months would now take them six days. The transcontinental railroad would unite the Central Pacific and Union Pacific railroads….”

It is like the Apollo program. If you want to understand why the feds were required to finance the railroad, just look at the fine mess we are in with space exploration. It is almost impossible for private enterprise to finance massive projects, such as going to the moon, or building a railroad across the US. Even the founding fathers, whom Stossel and his libertarians claim to worship, endorsed big projects. Jefferson shelled out impossibly big bucks for the Louisiana Territory (ostensibly, The Pink Flamingo theorizes, to prop up Napoleon’s war against England) and then he created the template for big government science and exploration. Two words: Lewis & Clark.

Stossel says that the entire project was a big loss for the US Taxpayer. You don’t argue with Stephen Ambrose, who disagrees.

“…The bonds and land grants have been frequently characterised as a government subsidy. However, historian Stephen Ambrose has argued against this since the companies repaid both the capital and interest. He also argues that although the companies were able to sell the land grants in the Sacramento Valley and Nebraska at “a good price”, most of the land in Wyoming, Utah and Nevada was “virtually worthless”….”

US 1860

Stossel is an abjectly ignorant wretch when it comes to history and reality. Look at the map of the US in 1860. The vast amount of territory between the Midwest and California is empty. Then compare it with a map from the 1880s.

First, the story behind the Great Northern Railway is completely different from that of the Union Pacific and the Northern Pacific. In fact, for his pathetic argument, Stossel relies on losertarian sourcing for his information. Also, Stossel ignores the fact that the northern line was built years after the Civil War, when the economy in the US was recovering.

Stossel does not mention that the financial problems the Union Pacific faced were in late 1800s. He also neglects the following:

“…The original company, prior to later uniting with the Central Pacific Railroad, was incorporated on July 1, 1862 under an act of congress entitled Pacific Railroad Act of 1862. The act was approved by President Abraham Lincoln, and it provided for the construction of railroads from the Missouri river to the Pacific as a war measure for the preservation of the Union…..”

Then again, the Great Northern is a libertarian’s dream. The real problem was the fact that by the time the Great Northern was building its transcontinental route, there were nearly 10 years of additional technological developments.

  1. During the Civil War the South had the railroad advantage. Building a transcontinental railroad linking California to the rest of the Union was critical for the survival of the nation. It did not matter how the railroad was funded.
  2. Time was critical. When the railroad was begun in 1863, Union officials had no idea how long they had, and if the country could survive. By this time the South, with their railroad advantage, was winning.
  3. Because time was critical, cost did not matter. Materials did not matter. Getting a supply link from California – and the gold to pay for the Union’s losing effort was more important than how much it cost, per mile.
  4. One of criticisms libertarian historian Burton Folsom makes is that substandard timber was used for track. He points out the use of cottonwood, which is not a strong wood. I gather Dr. Fulsom is unfamiliar with the “Great American Desert” and the fact that just about the only timber available at that time was cottonwood. Such salient points do not matter to libertarians.
  5. Stossel uses the Great Northern as an example of how a railroad should be built. The First Transcontinental Railroad was built between 1863-1869
  6. The Great Northern began their effort in 1878 finishing in 1893. The depression of the 1870s was over, and his efforts to build his railroad had ended by the time the depression of the 1890s began.
  7. The depression of the 1890s hit small railroads especially hard. Those who were connected to now dying mining towns and used single gauge track, built prior to the standardization of track went under. Stossel ignores the fact that ALMOST ALL of these small railroads were privately funded and were NOT taking government funds.
  8. The Great Northern benefited from the standardization of track.
  9. James J. Hill had the advantage of hindsight. When the railroad Stossel criticizes was being built, there was NO example to be followed. There was no business example. Even the gage of the track had to be decided.
  10. The Credit Mobilier scandal that Stossel uses to flay the Union Pacific and praise the Great Northern occurred in 1872
  11. The union Pacific filed for bankruptcy in the 1870s. There was a major depression from 1874-1878.
  12. It reorganized in 1880, and went bankrupt during the Crash of 1893.
  13. It re-emerged from bankruptcy in 1897 and is still much the same corporation.
  14. And finally – most importantly, the Great Northern Railway is the inspiration for Atlas Shrugs. Need I say more? There is nothing else anyone needs to know.

Can people like Stossel see anything but dollar signs? Does he even comprehend the history, the implications of what happened with the Union Pacific and the Northern Pacific? Does he even begin to realize that there are more important things than a bottom line. If you simply consider the amount it took to build a railroad cross country, and that is that, then he is an ass, a braying, ignorant ass. The poor, foolish little man has no earthly idea what this nation is all about.

“…After the secession of the southern states, the House of Representatives on May 6, 1862, and the Senate on June 20 finally approved it. Lincoln signed it into law on July 1. The act established the two main lines—the Central Pacific from the west and the Union Pacific from the mid-west. Other rail lines were encouraged to build feeder lines.
Each was required to build only 50 miles (80 km) in the first year; after that, only 50 miles (80 km) more were required each year. Each railroad received $16,000 per mile ($9,940/km) built over an easy grade, $32,000 per mile ($19,880/km) in the high plains, and $48,000 per mile ($29,830/km) in the mountains. This payment was in the form of government bonds that the companies could resell. To allow the railroads to raise additional money Congress provided additional assistance to the railroad companies in the form of land grants of federal lands. They were granted right-of-ways of 400 feet (100 m) plus 10 square miles (26 km2) of land (ten sections) adjacent to the track for every mile of track built. To avoid a railroad monopoly on good land, the land was not given away in a continuous swath but in a “checkerboard” pattern leaving federal land in between that could be purchased from the government. The land grant railroads, receiving millions of acres of public land, sold bonds based on the value of the lands, sold the land to settlers, used the money to build their railroads, and contributed to a rapid settlement of the West. The total area of the land grants to the Union Pacific and Central Pacific was even larger than the area of the state of Texas: federal government land grants totaled about 5,261,000,000 square meters and state government land grants totaled about 1,983,000,000 square meters. The race was on to see which railroad company could build the longest section of track and receive the most land and government bonds….”

1887 US Pacific Railroad

There are times when I simply want to bang libertarian heads together, and try to get them to comprehend the history and they nation they belittle while they worship at the altar of Rand. I feel sorry for people who don’t understand what this country is all about. That drain on the tax-payer dollar Stossel is complaining about is what opened up this nation, uniting it from one coast to another.

Let’s try this, rationally.

From the moment Meriweather Lewis and William Clark returned to Washington to report on their amazing expedition to the Pacific, the great dream was to somehow create a way to facilitate travel across the vast, untamed wilderness. Travel was long, extremely dangerous, and prohibitively expensive.

Today, those who do not understand history, cannot comprehend the danger, the romance, and the abject impossibility of such travel. Only a few brave souls, mostly considered crazy frontiersmen and mountain men even dared such an insanity. They were people like Jim Bridger, Jedediah Smith, and later Kit Carson. When they first started their treks across the vast frontier, there was no Santa Fe Trail. They helped to create it.

In 1849 gold was discovered at Sutter’s Mill, just outside San Francisco. There was no real way to get from one side of the US to California, save for the Santa Fe Trail and the long and dangerous journey by water (which Josephine Marcus’ family did).

The journey along the Santa Fe Trail was long, miserable, extremely expensive, terribly dangerous, and heart-breaking. It made young women old. Babies died. Children did not survive. Indians attacked. The travelers constantly battled dysentery from bad water. They frequently lived on the brink of starvation or could die of thirst. If a crossing was made too late in the season, traveler could be stranded the way they were during the Donner Party. If they left too soon, they could be caught in the early summer droughts.

The only logical and safe way to travel the Santa Fe Trail was to create a railroad.


The moment it was announced that the railroad would follow the Santa Fe Trail, this nation experienced the greatest financial boom it had ever seen. It was a boom that helped stabilize the post-Civil War depression, and helped to unite a battered nation.

Right after the Civil War, people in the US were starving for beef. Chicago was developing a reputation for stockyards and meat processing. The only way to get that beef from Texas and New Mexico was to drive thousands of head of cattle across the dry plains of Texas to the rail heads in Kansas. The railroads had not arrived in that part of Texas.

They started in Abilene, moved to Ellsworth where Wyatt Earp was alleged to have disarmed Ben Thompson one night in the summer of 1873. They then moved to Wichita, where Wyatt Earp was a local cop. Dodge City went out of its way to attract the cattlemen. In 1876 Wyatt Earp became the assistant marshal in Dodge.

That is where the action was. Because of rail travel, a person could buy a travel guide to the cowtowns of Kansas. In 1878 they could purchase a ticket from New York (or any Eastern city), and in three days they would be in Dodge City, where they would spend their vacation, hanging out, going to the Long Branch Saloon. There they would watch Wyatt Earp, Bat Masterson, and Doc Holiday play poker. A few days later they took the train back to New York, and could brag about their wild west vacation.

This is what the railroads did.

In 1880 a woman in Tombstone, who wanted a new dress from Montgomery Ward in New York City, would simply write out an order from the catalog, that came by railroad and the US mail. She would wire her money to Montgomery Ward, along with the order. A week later, thanks to those “subsidized” railroads, her new dress would arrive in Tucson, and be freighted to Tombstone.

Libertarians like John Stossel wax poetic about commerce, money, and the making of money. Stossel is seeing one small aspect of the whole. He is ignoring the fact that, because of the subsidized railroad, Chicago grew into the city it is today. Because of the railroads, the vast “Great American Desert” was rapidly settled by people from all over the world.