The Role of the Railroad in Minnesota from 1850 to 1885
by Jenny Makosky
Before the establishment of railroads, settlement in the west most often followed the course of waterways. Waterways provided easy access to markets downstream where produce could be shipped and life-supporting goods could be bought. The advent of the railroad changed all of this, allowing people to spread throughout the west, as markets could be accessible from any point near the line. States and territories quickly recognized the benefits of the railroads and did almost anything in their power to promote their growth. Railroads, however, did not just change the settlement patterns of Minnesota. The growth of railways and the subsequent misuse of power also helped to change the political atmosphere of Minnesota from one of laissez-faire to regulatory politics during the late nineteenth century.
The early settlement of Minnesota followed the typical settlement of western territories of the United States – settlement near water. The 1850 census documents a white population of roughly 6,000 people for the entire area of Minnesota (Table 1). These settlers were found in Benton, Dakota, Itasca, Kittson/Pembina, Mankahta, Ramsey, Wabasha, Wahnahta, and Washington counties (Table 1). Minnesota, at this time, was still a territory and was without any railways (Miller 1971). Hence the only convenient and reliable way to transport produce and goods was via boats and settlements established along these water routes. The primary trade relationship was with the South, which further reinforced settlement along the rivers, as the rivers directly connected farmers to the Southern markets.
As settlement continued and the market shifted to the East, there became an increasing need to build a system of rails and/or canals needed to be installed (Miller 1971). Rails were probably preferable over canals as they involved less complicated work. It is easier to lay a mile of track than dig a mile of a canal. Additionally, no direct river route connects Minnesota to the East, so overland travel became necessary. Thus, rails seemed to be the obvious choice. The fact that the eastern markets were larger than the southern also was a push for the establishment of rails.
The railroad arrived in Minnesota in 1860, after a decade of promotion by the Territory and then the State of Minnesota. Land grants, which eventually gave one-fourth of Minnesota’s land to the railroads and other incentive programs, were instituted in order to promote railroads in the state (Miller 1971). By 1873, 1,950 miles of track had been laid in Minnesota and soon settlers began to pour in (Miller 1971). Census data shows a rapid rise in population from 171,454 to 780,773 between 1860-1880 (United States Historical Census Browser, Table 1). By 1884, railroad companies had established around four thousand miles of track (Hicks 1922).
By 1874 railways connected most of the major ports along the Great Lakes and the Mississippi and their monopoly on transportation had become established. For a while after the Civil War the railroads had worked with the river ports as the railways ended at the key ports, such as Lacrosse. This changed as the river ports became connected via rail with larger ports on the Great Lakes, such as Chicago (Miller 1971). When given the option between using rail or water at these ports, rail was used, thus diminishing the role of water transport.
The dominant political attitude of the early railway expansion was a laissez-faire attitude. Settlers did not want the government involved in their personal matters; they did not want to be told how to run their farms, what to plant, or anything else. The government, both at the federal and the state level, stayed out of most things. Besides providing land grants to settlers, just as it did for the railroads, and collecting taxes, it did not do much else. Even in times of crisis, such as the grasshopper plague, government action was minimal. The price supports, marketing programs, and conservation programs of the New Deal and today were unheard of in the late nineteenth century. But the tides were slowly turning.
In this spirit of laissez-faire, the railroads were basically given free reign over their activities. However, Minnesota’s constitution and other early acts did regulate the railways a little. The act in 1858 that encouraged development of railways in Minnesota also restricted passenger and freight fares for all distances over 30 miles, however this was not strictly enforced (Miller 1971). States, like Minnesota, were afraid to pass strict legislation governing railroads; it was considered suicide to do impose highly regulatory legislation. The young states of the Midwest did not have the capital to build their own lines and hence needed to attract Eastern investors to build lines within their boundaries (Miller 1954).
Railroad companies exploited the lack of regulation on their activities and took advantage of the monopolies that they had acquired. Rates in general were too high. For example, wheat that sold for eighty-five cents a bushel in New York only gave a Minnesota farmer fifty cents (Hicks 1922). In 1884 a bushel of wheat in Minnesota sold for forty-two to forty-eight cents a bushel and cost a farmer at least forty-five cents to raise (Hicks 1922). Much of the discrepancy cost involved in producing wheat came from the transport costs. In the Dakotas, rates absorbed one-half of the price of oats and corn and one-third of the price of wheat (Farmer 1926).
Discriminatory rates occurred throughout the Midwest, especially in areas without competition. For example, in 1871 price for transport in Rochester, Minnesota, which only had one railway, was six cents per ton per mile whereas at a location along the line with competition it was 2.6 (Miller 1971). Rates fluctuated without reason besides exploitive corporate gain (Miller 1971). In Minnesota, the major issue with freight rates was that they had not dropped with produce prices after the Civil War, greatly decreasing the profit margin for farmers (Miller 1971). Merchants were also upset, as they could not guarantee profit margins on products that they shipped to Eastern markets. Farmers and merchants gathered together and protested these unfair, discriminatory rates.
Large elevators often were owned or had agreements with railroads that allowed them to monopolize the market as well, further hurting the farmer. Railroads in times of grain shortage would assign all of their cars to go to specific elevators, giving the farmer no choice in the eventual destination of his produce (Farmer 1926, Hicks 1922). These practices made it virtually impossible for some elevators and shippers to survive.
Many railroad companies also refused to pay income taxes. They also did not comply with the limited legislation in place. Many used land grants to escape taxation as well (Ridge 1956). Railroads were seen by many investors as a way to make money with little investment. Money was made through land speculation, in-town site projects, and construction contracts (Farmer 1922).
Multiple conferences were held among farmers throughout the state and the Midwest debating the power abuses and discussing possible courses of action (Miller 1954, Miller 1971). As protest built and power abuses became more of a problem, the state legislature moved to act, in part in fear of farmer revolt. Legislative action culminated in 1874 with the passage of a law that deemed some discriminatory action unjust and established a commission to fix maximum rate schedules (Miller 1971). These and other similar laws passed at this time are known as the Granger Laws, based on the Granger protest movement that was heavily involved with the passage of the legislation. This move into governmental regulation of the railroads was a giant step from the hands-off approach of the previous several decades. The government had in the 1850s and 1860s encouraged the railroads to come to Minnesota via its extensive programs of land grants and other incentives. However, it had not until the 1880s enacted such strictly regulatory legislation. The act in 1858 that established maximum rates for passengers and freights had been accompanied by incentives for railroads and was not as stringent as the law passed in 1874. It had also not been strictly enforced. In the face of economic hardship and discrimination, settlers had opted for increased governmental control of their lives – a huge political step.
These 1874 laws still did not solve the problems. Railroads still refused to comply and used the fact that penalization could only occur through legal action to their advantage. They broke laws and continued to break them as cases slowly made their way through court (Hicks 1922). The Morse Bill passed in 1875, which actually restricted the power of the railroad commission and many felt that this allowed the railroads to maintain an unfair advantage (Ridge 1956). As the problems persisted a second wave of regulatory railroad laws went into effect. These laws attempted to stop discriminatory elevator practices, force railroads to provide reasonable sidetrack facilities, and allow a railroad commission to establish fair rates, among other measures. Railroads once again resisted following the rate measures, and the railroad commission brought the case before the courts. The U.S. Supreme Court declared the law governing rates unconstitutional because it did not provide for judicial review into the reasonableness of the rates. By the late 1880s, it became obvious that federal regulation was needed to control railroads, as states were not succeeding in doing so. In 1887, the Interstate Commerce Committee was established and federal regulation of railroads took effect.
The step towards increasing governmental involvement in the lives of
individuals can be seen in other areas as well. For example, farmers clamored
for relief during the grasshopper plague. A strict laissez-faire approach
would have not asked for intervention even in this case. Additionally as
corporations grew larger and more powerful, it became obvious that the
lone settler could not hold his own. He needed the help of a “Big Brother”;
he needed the government. Railroads did not solely contribute to this change
in political attitudes, but they definitely played a significant role and
set the stage for more radical governmental regulation in the future.
Table 1: US Census
Data, United States Historical
Census Browser. 24 March 1998. http://fisher.lib.virginia.edu/census/
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Literature Cited
Hicks, JD. 1922. The origins and early history of the Farmer’s Alliance in Minnesota. The Mississippi Valley Historical Review 9:203-226.
Farmer, H. 1926. The railroads and frontier populism. The Mississippi Valley Historical Review 13:387-397.
Miller, GH. 1954. Origins of the Iowa Granger laws. The Mississippi Valley Historical Review 40:657-680.
Miller, GH. 1971. Railroads and the Granger Laws. Madison: University of Wisconsin Press.
Ridge, M.1956. Ignatius Donnelly and the Granger Movement in Minnesota. The Mississippi Valley Historical Review. 42:693-709.
United States Historical Census Browser. 24 March 1998. http://fisher.lib.virginia.edu/census/ . Accessed 19 March 2002.