36 
INDUSTRIAL REVOLUTION AND WAGES 
land grants to Western Railroads to aid in their con- 
struction, to the amount of 305,114 square miles. This 
is equivalent, approximately, to all the area east of the 
Mississippi River and north of the Ohio and Potomac 
Rivers, with the exception only of the States of Wiscon- 
sin and Michigan. The unfortunate feature of this land- 
grant policy was that these great subsidies were diverted 
from their original purposes to the enrichment of a few 
financial adventurers. A number of Western Railroads, 
such as the so-called Pacific Lines, were built in a spirit 
of financial corruption, by collusive construction con- 
tracts, stock manipulation, excess capitalization, and the 
defrauding of the Government and the public. The value 
of the extensive areas of lands granted was capitalized 
and distributed in the form of securities to the stock- 
holders. In other instances, the value or income-produc- 
ing power of the land was capitalized. A few Railroads, 
such as the Northern and Southern Pacifics, and the 
Atchison, Topeka and Santa Fé, retained very valuable 
holdings of timber and minerals, despite the stipulation 
that such lands be sold to settlers in small tracts. They 
are now among the unreported assets of these trans- 
portation companies. The Southern Pacific Company 
alone is now estimated to have oil and timber holdings 
ranging in value from $100,000,000 to $700,000,000, 
which are reported to the Interstate Commerce Com- 
mission at a book value of slightly more than $40,000,000. 
(b) During the years following the construction of 
the Western Railroads through Government aid, and 
extending into the early nineties, the greater number 
were characterized either by financial managements 
which dissipated their resources in the form of special 
distributions to stockholders, or by stock manipulations, 
or they capitalized cumulatively the expansion of trade 
and business, and gains in operating efficiency. The 
hundreds of millions of dollars of fictitious capital issued