THE ERA OF RAILWAY BUILDING
“BLACKFRIDAY” was only a symptom of the deeper disorders of the body politic. The minority of the committee of the House which investigated the “Black Friday” episode declared that “no one doubts that if the constitutional currency of coin had remained to us, such panics would have been, and would now be, impossible.” The stimulus to over-expansion afforded by an unstable currency operated also upon mercantile enterprise and railway development. The demand for the extension of the railway network over new farm land, and across the Rocky Mountains to the Pacific, became the channel through which speculative influences converged to bring on the panic of 1873. Already, in 1862, Congress had granted a charter for the construction of the Union Pacific line, and in 1864 it granted further aid by making the United States bonds that were to be issued for construction purposes a subordinate lien to that of the bonds of the company sold in the market. Thus, as John Sherman put it, “The constructors of these roads, who were mainly directors and managers of the company, practically received as profit a large portion of the bonds of the United States issued in aid of the work, and almost the entire capital stock of the company.” At the same time was enacted the Northern Pacific charter, which, according to the same authority, was an act “with broad and general powers, carelessly defined, and with scarcely any safeguards to protect the Government and its lavish grants of land.”
Already, shortly before the war, the ground had been cleared for extensive railway enterprises by the knitting together of small roads into trunk lines connecting New York with the Mississippi Valley. Originally, eleven companies owned and operated the lines making up the route between Albany and Buffalo. After this anomaly disappeared, it remained for the genius of Commodore Vanderbilt to acquire the Hudson River road in 1864 and the New York Central lines in 1867, and to bear his share in the picturesque battles of the Stock Exchange and the courts, which gave such fascination to this lawless epoch of American finance.