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After the Union Pacific was built, other political entrepreneurs got together with glory-seeking politicians in their areas of the country and said, "The federal government financed the Union Pacific, therefore they have to finance a transcontinental railroad in our region."
So Congress went ahead and financed the building of a transcontinental up North called the Northern Pacific, and one down South called the Santa Fe. Of course, both of those had the same results. They built extra long, circuitous routes; they turned into an orgy of fraud, substandard quality material used, no time taken to select the lowest grade hills. So right from day one, the other two transcontinentals lost money, and they had to receive government subsidies just to continue operating.
In the meantime, there was a young man way up North, James J. Hill, going about making a living. He was born in a log cabin in Ontario, Canada to a working-class family. His father died when he was a boy, so Hill got a job to support his mother. At seventeen, he moved to St. Paul and got a job for a shipping company. He started in an entry-level position, but he loved the transportation business. He really applied himself; he began making contacts, and he began moving up. Before long, he began making partnerships in local railroads that were being built in his area. With a sweeping vision, yet always focussed on nitty-gritty details, Hill commanded success. Eventually, Hill decided that he was going to build the first completely privately financed transcontinental railroad way up along the U.S. and Canadian border, which at that time was all wilderness with no settlers!
Well, from the beginning the idea was labeled Hill's Folly, and you can see why. How could someone build a railroad that could possibly compete when he had to pay all the building costs himself, and there were three others that existed farther South that had all their building costs paid by the government? Moreover, Hill's railroad was going to be way up North where no one lived. Those other three government-financed railroads were located in the main population areas of the U.S. In addition, once Hill did complete his railroad, how could he compete with the other three railroads when they continued to receive government subsidies and Hill had to pay his expenses through his own bottom-line profits -- and the three other lines proved that no profits existed!
Well, Hill went ahead with his plans anyway. Hill had to obey the disciplines of a bottom line. He could not go rushing into the wilderness to collect government subsidies. He had to build his line out West one extension at a time. He would build westward into the wilderness a few hundred miles at a time. Then he would send agents back East to advertise to farmers in the East. Hill offered to move people for free into this western wilderness so they could settle and start their farms. Then Hill would give them free rates to ship their crops back to the markets in the East for a couple of years until they got established. He gave a lot of ordinary low-income people exciting new leases on life and made their dreams come true.
This worked. For each extension West, he brought in enthusiastic hardworking farmers; they'd flourish; he'd build up his track, and after awhile his extension West made money. From those profits, he'd finance another extension West...a few hundred miles at a time. He never stopped. By turning low-income settlers into land-owning entrepreneurs, among others, he settled the entire northern border of the United States with his railroad. And, lo and behold, in 1890 the first American transcontinental railroad was built without one penny of government money! He reached the Pacific Ocean, and he did it by offering people, some of whom had little chance at much in life, an opportunity of a lifetime to own land and become entrepreneurs.
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