What role did the transcontinental railroad play in the development of the US economy?

Updated on October 30, 2020

The impact of the railroad on the geographic, economic, and political future of the United States was enormous, and not just because of the sheer physicality of the construction of the Transcontinental Railroad connecting the entire continent east to west in 1869. 

This massive amount of construction was only a tiny piece of the large and varied impact of rail travel on the development of the United States, beginning some 30 years earlier. 

Rail History in the United States

The first railroads in America were horse-drawn, but with the development of the steam engine, railroads became a viable enterprise. The era of railroad building began in 1830 when Peter Cooper's locomotive called the Tom Thumb was put into service and traveled 13 miles along what would become the Baltimore and Ohio Railroad line. Over 1,200 miles of railroad track were laid between 1832 and 1837. And, in the 1860s, the construction of the Transcontinental Railway brought the two coasts closer together.

The impact of railroad traffic was no less than a revolution of communication for the new territories of the rapidly expanding United States. 

Bound Counties Together and Allowed for Distant Travel

Railroads created a more interconnected society. Counties were able to more easily work together due to the decreased travel time. With the use of the steam engine, people were able to travel to distant locations much more quickly than if they were using only horse-powered transportation. In fact, ​on May 10, 1869, when the Union and Central Pacific Railroads joined their rails at ​Promontory Summit, Utah Territory, the entire nation was joined with 1,776 miles of track. The Transcontinental Railroad meant that the frontier could be extended with a greater movement of population. Thus, the railroad also allowed people to change their place of living with greater ease than ever before.

Outlet for Products

The advent of a rail network expanded the available markets for goods. An item for sale in New York could now make it out west in a much shorter time, and the railroads allowed the movement of a wider variety of goods much farther distances. That had a two-fold effect on the economy: the sellers found new markets in which to sell their goods and individuals who lived on the frontier were able to obtain goods that had previously been unavailable or extremely difficult to get.

Facilitating Settlement, Part I

The railroad system allowed for new settlements to thrive along the rail networks. For example, Davis, California, where the University of California Davis is located, started around a Southern Pacific Railroad depot in 1868. The end destination remained a focal point of settlement and people were able to move whole families great distances much easier than in the past.

However, towns along the route also thrived. New towns sprung up at regular intervals as stations where travelers could find layover points and residents find new markets for goods.

Facilitating Settlement, Part II

The construction of the transcontinental railroad also facilitated European settlement of the west to a large extent by disrupting and impacting the Indigenous peoples that lived in the Plains states. The construction altered the landscape, leading to the disappearance of wild game, in particular, the American buffalo or bison. Before the railroad, an estimated 30 to 60 million buffalo roamed the plains, providing meat, furs, and bone for tools to the people. Massive hunting parties traveled by trains, killing buffalo by sport. By the end of the century, only 300 bison were known to exist. 

In addition, new White settlers established by the trains put them into direct conflict with Indigenous peoples who fought back. In the end, those efforts were fruitless.

Stimulated Commerce

Not only did the railways provide greater opportunity through extending markets, but they also stimulated more people to start businesses and thereby enter the markets. An extended marketplace provided a greater number of individuals the opportunity to produce and sell goods. Whereas an item might not have had enough demand in a local town to warrant production, the railroads allowed for the shipment of goods to a greater area. The expansion of the market allowed for greater demand and made additional goods viable.

Value in the Civil War

The railroads also played a vital role in the American Civil War. They allowed the North and South to move men and equipment vast distances to further their own war aims. Because of their strategic value to both sides, they also became focal points of each side's war efforts. In other words, the North and South both engaged in battles with the design to secure different railroad hubs. For example, Corinth, Mississippi was a key railroad hub which was taken first by the Union a few months after the Battle of Shiloh in May 1862. Later, the Confederates tried to recapture the town and the railroads in October of the same year but were defeated. Another key point about the importance of railroads in the Civil War was that the North's more extensive railway system was a factor in their ability to win the war. The transportation network of the North allowed them to move men and equipment longer distances and with greater speed, thus providing them with a significant advantage.