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There were two companies: Central Pacific started building eastward from the West Coast and the Union Pacific started westward from the East Coast. The government paid those companies by the total miles of track they built. So what did they do? Instead of being bound by the disciplines of a bottom line, they were getting lavish subsidies from the government for the total miles of track they built. So they rushed into the wilderness to collect government subsidies.
But because they were being paid by the mile, these companies purposely built the longest, most circuitous routes they could possibly justify so they could get more government money. And they rushed construction to collect their per-mile subsidies. They rushed ahead with poor construction and poor planning into the wilderness.
Remember, the congressmen were spending money that they did not earn but controlled, and they wanted to reap the glory for spending that money. Those politicians, always trying to justify their jobs, always trying to show that they benefit the American public, got into the railroad business where they had no business being in the first place. Controlling tremendous amounts of money they did not earn, they reaped all this popularity that comes with spending the money. Now they could say, "Look how valuable we are; we're financing the building of a transcontinental railroad across America!"
But those career politicians were part of bogus big government. They gladly spent money with their flashy "good intentions", but they were not interested in getting out and exerting the nitty-gritty effort that business does when it spends money. They were glad to spend the money, large amounts of money, and reap the glory, but they weren't about to get out there and exert the nitty-gritty effort to put the controls on spend-ing to make sure that money was spent right. They were not about to get right down into the details themselves to make sure that they were buying the right quality goods and that the railroad was being built over the right routes...not like a market business-man would who is spending that money out of his own pocket.
So the whole program was laced with fraud from the beginning. The line managers set up their own supplier companies selling their railroads substandard quality rails and ties at exorbitant prices. For, there was no control over the government money.
In addition, because they were getting paid by the amount of rail they built, each company was racing to build as much track as it could before the other one...to get the most money from the government. So instead of taking the proper time to carefully map out the best routes, especially vital for building over hills at the lowest uphill grade, they instead just raced forward and paid no attention to vital planning and surveying. No time to be wasted on planning and surveying, they built track over uphill grades that were far too steep. They did not take the necessary time to do anything right. When winter came, they just kept on building over the plains, right over the ice! Because they wanted to build as much as possible, they did not wait for the ice to melt -- they just kept on laying track. When summer came, they had to tear up thousands of miles of track and rebuild it, before they could open the line! And to get more money, the two railroad companies built the longest routes with under-quality material. ...You can just imagine what the future operating costs this transcontinental railroad would endure.
Indeed, when the Union Pacific was complete, from day one it could not make a profit because its operating expenses were too high. First of all, thousands of miles of shoddily built, under-quality track had to be constantly replaced. Second, because they took the extra long route, and it wasn't built over the lowest grade hills, they had to pay a lot more money in fuel costs, wage costs, and it took a lot more time to haul freight across the country. So the operating expenses were so high, from day one the Union Pacific was never able to make a profit.
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