Did the Pacific Rail Acts of 1862 create lines to nowhere?

Question

This Video by 'ReasonTV' claims that the Pacific Rail Acts of 1862 subsidized railway construction based on distance, therefore causing rail lines to be unnecessarily extended to gain federal subsidies.

To quote: ^{citation needed}

"While Congress has never been great at keeping an eye on spending, it's even worse at it during a Civil War. With no one looking, the Union Pacific unnecessarily lengthened the route, adding miles of track and pocketing almost half a million dollars."

Is there any evidence to support this particular incident? Additionally, is there much evidence to suggest that this happened on a large scale? Did this subsidy cause companies to intentionally build inefficient and indirect land just to seize up more subsidies and land grants?

Answer 1

First let's be clear that Reason is a highly ideological outlet, and so regardless of whether they get the facts right, their interpretation will be fringe. I did not watch the video and most of the reported claims are vague. The land grants to railroads were problematic for sure, but not in the ways suggested in the question.

The quote seems to refer to the Crédit Mobilier scandal. This was a classic case of war profiteering, and more importantly, blatant and illegal fraud including bribery. It had more to do with corruption then some inherent flaw in policy.

I see no evidence for the idea that the land grants led to unnecessary or wasteful railroad construction. Railroads were expensive to build and the companies were responsible for finding the capital. Huge amounts of land were clawed back because the rails were never actually built. Of course, in an era of frontier settlement, it didn't matter if rails were built to nowhere: people came. In fact, squatters were grabbing as much farmland from the railroads as they could even before rails were built. See further "The Forfeiture of Railroad Land Grants, 1867-1894" (Ellis 1946).