Engine No. 44, a Baldwin 2-8-0 steam locomotive engine built in 1921, has two wheels on the leading truck, eight driving wheels, and no trailing truck. The engine works on the Georgetown Loop Railroad and formerly ran in Central America. Diesel-electric locomotives began to replace steam locomotives in the 1930s and 1940s.
Public demand for transcontinental rail connections was originally inspired by a proposal made in favor of them in 1836 by the American statesmen John Plumbe and Robert John Walker. The public demand was increased by the California gold rush of 1849 and by fear that the Pacific Northwest would be annexed to Canada. The need for transcontinental lines was felt so urgently by many influential people that construction of the Union Pacific Railroad was begun during the American Civil War (1861-1865), when railroad building in the East and the Middle West came to a standstill. In 1862 extensive federal land grants had been made directly to the Union Pacific and several other railroad companies. The rails of the Union Pacific, reaching westward from Omaha, Nebraska, and those of the Central Pacific Railroad, reaching eastward from Sacramento, California, were joined at Promontory, Utah, in 1869, completing the coast-to-coast connection.
The inflation of money following the Civil War hampered railroad development for a year or two, but a spurt of extraordinarily rapid growth followed, chiefly in the Middle West and West. Expansion was virtually halted when the financial panic of 1873 caused the price of railroad stocks to drop to a small fraction of their original value. In the 1880s construction boomed again, and mileage was added at an average rate of more than 11,300 km (7,000 mi) a year. Expansion at varying rates continued through 1910. The trackage added to the American rail network in the rest of the 20th century was negligible; railroad construction was limited largely to double-tracking, addition of sidings, improvement of inadequate tracks, and related projects. After World War I the total remained generally static.
Track added by new branch lines was balanced by the track of branch lines abandoned because operation had become unprofitable. In some years there was actually a decrease in the national total. All in all, U.S. railroad route mileage declined from a peak of 409,177 km (254,251 mi) in 1916 to 236,910 km (147,210 mi) in 1996.
While the network of rails was spreading, great financial networks were also developing. Groups of independent railroad companies were consolidated to form railroad systems. The New York, New Haven, and Hartford Railroad, for example, was formed by the consolidation of about 200 originally independent lines. At first consolidation was effected usually by outright mergers of corporations, but in later periods leases and stock purchases were the most common methods. Manipulating stocks became a common method of struggle between powerful rivals.
Although some consolidation occurred in the early days of railroading, it was in the last half of the 19th century, after the Civil War, that the combinations that now dominate American railroading began to appear. In this period, for example, the railroad magnates Cornelius Vanderbilt and his son, William Henry Vanderbilt, formed the New York Central. In the first few years of the 20th century, some railway systems that were already large and complex were joined by stock purchases into enormously powerful railroad empires. The Baltimore & Ohio came temporarily under the control of the Pennsylvania Railroad, which previously had established control of a great network of roads in the East and Middle West. The transcontinental routes to the Northwest were brought into the orbit of J. P. Morgan and Company, and those to the Southwest and to San Francisco came under the control of the American railroad magnate Edward Henry Harriman.
By the 1870s public sentiment had been aroused against the railroads because of the power and influence of the growing consolidations and because of certain questionable practices. Railroad commissions with regulatory powers came into being in most of the states, and in 1887 Congress created the Interstate Commerce Commission. In 1904 the U.S. Supreme Court applied the Sherman Antitrust Act to railroads, and in 1906 Congress directed the Interstate Commerce Commission to divorce railroad companies from manufacturing and mining companies. Further consolidation was hampered until the Transportation Act of 1920 was passed, granting permission for mergers under certain conditions.
In the depression years following 1929, railroad earnings fell sharply, and in 1937 companies controlling about one-third of the railroad track in the nation were bankrupt. Extensive reorganization of railroad finances was effected in the following decade, with the result that only about 7 percent of the total track remained in the hands of trustees or receivers. Although U.S. railroads were under federal management and control during World War I and were subject to a number of emergency regulations during World War II, they remained under private ownership.