State Aid to Railroads in Missouri
Journal of Political Economy
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... ntent at http://about.jstor.org/participate--jstor/individuals/early-journal--content. JSTOR is a digital library of academic journals, books, and primary source objects. JSTOR helps people discover, use, and build upon a wide range of content through a powerful research and teaching platform, and preserves this content for future generations. JSTOR is part of ITHAKA, a not--for--profit organization that also includes Ithaka S+R and Portico. For more information about JSTOR, please contact email@example.com. STATE AID TO RAILROADS IN MISSOURI. I. REASONS FOR AIDING THE ROADS. IN the early history of the State of Missouri the people did not generally desire to have the state enter in its corporate capacity into the construction of public works. It was not long, however, before Missouri began to show much sympathy with the movement common to many of the states in the decades immediately preceding I85o. Pennsylvania, New York, and other of the older states engaged first in the construction of canals. But when the importance of the railroad had been recognized by the commercial world, these states began the construction of railroads, in addition to canals; and many of these enterprises had resulted disastrously long before Missouri began her experiment. The advocates of the experiment in Missouri urged both positive and negative reasons for aiding private corporations in the construction of railroads. The state, it was argued, should assist in the construction of roads because: (I) they would develop the territory of the state, (2) they would, in the near future, become parts of transcontinental lines, and (3) the general government would thus be led to make grants of public lands to the state to be used in assisting railroad construction. The first of these reasons was common to all of the states which had made, or were making, similar experiments. The idea of directing transcontinental traffic of the future through a state was, naturally, most insisted upon in those states which were more nearly central in their location. In Missouri this aim was particularly strong, and exerted a great influence in the earlier days of the state's experiment, because roads were being projected westward both north and south of the state. Each of the central states was naturally desirous of securing for itself as much as possible of the prospective advantage. Moreover, the gold discoveries at this time (i850) also rendered this idea prominent. 73 JO URNAL OF POLITICAL ECONOMY It was also argued that the state should aid private enterprise because there was a lack of private capital in the state. In 1850, just prior to the granting of the first aid to the roads, the population of the state was only 700,000, and the assessed valuation of property in the state was less than $Ioo,ooo,ooo. In such a state it is evident that railroad corporations could not at once secure large amounts of capital. It was also plainly seen that the people of the state were not able to bear such a tax as would pay the interest on an amount of money large enough to construct the roads, and therefore taxation as a source of help could not be relied upon. The state itself, at this time, did not possess funds sufficient for beginning the work of railroad construction. The two small funds, viz., the "Road and Canal Fund,"I and the proceeds arising from the sales of the 5oo,ooo acre land grant,2 formerly in the hands of the state, had been distributed among the counties of the state. At best, however, these funds could have yielded only a small amount of aid. The only other chance of securing funds was to bring foreign capital into the state. And since this could be done only through the use of the bonds of the state, it was decided to secure the funds needed in this way. As to the manner in which the state should carry out the proposed scheme, the experience of other states proved to be valuable for the guidance of Missouri. New York had loaned several millions to private companies and was waiting patiently for repayment. This state has now waited half a century, and more than $8,ooo,ooo has never been repaid.3 Pennsylvania had IThis was also known as the "three-per-cent. fund." It was constituted by Congress at the time of the formation of the state government, and consisted of threefifths of the proceeds of all sales of public lands in the state to be used in making internal improvements. It was distributed among the counties of the state in i845.-Revised Statutes of Missouri (I845), p. 956. 2This fund consisted of the proceeds of the sales of the 500,0o0 acre land grant made to Missouri by the general government for purposes of internal improvements in i841. The same amount of land was granted at the same time to each of the following states: Ohio, Indiana, Illinois, Alabama, Mississippi, Louisiana, Arkansas, and Michigan.-United States Statutes at Large, vol. v. p. 453. 3AVewv York (Commonwealth Series), p. 547. STATE AII) TO RAILROADS IN MISSOURI.