Although railways were not specifically mentioned in the Act, all of the 61 surveys made or proposed were for railways, and the amount spent on them was about $75,000.[1]
Another early and very substantial Federal aid to railroads was the remission of import duties on railroad iron during the years 1830 to 1841. The total duties remitted in this period—almost $6 million—gave the infant railroad industry a much-needed boost at a critical time in its history at the expense of the infant iron industry.[N 1][2]
By an act approved on July 7, 1838, Congress made all railroads “post routes” and, thus, eligible to carry the mails. Strictly speaking, this was not a subsidy, but it opened to the railroads a valuable source of income.
These early aids to railroads were a mere foretaste of what was to come in later years.
- ↑ The remitted duty amounted to about $2,000 per mile of track, or almost one-sixth of the total cost per mile.
The Railroad Land Grants
In the early 19th century, it was almost an article of faith with the American people that national prosperity depended on the settlement of the western lands, practically all of which belonged to the Government. The Federal policy was to encourage settlement by removal of the Indians, favorable laws and cheap land prices. A logical extension of this policy was to encourage access to the lands by building first the National Road, and later, by subsidizing canals and railroads.
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