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Primary Sources - Workshop in American History Cans,Coal and Corporationshomesitemap
Introduction -Link Before You Watch - link Lectures and Activities Classroom and Applications - Link

Workshop 5:  Lectures & Activities

Lecture Transcript One:
Cans, Coal, and Corporations

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Well, railroad manufacturers used to do this. Well, this was all, of course, a mess for the Civil War, and so the decision was made to standardize the gauge—sort of finding a new computer operating system that would work for Macintoshes and PCs. What this means is a dramatic breakthrough in terms of the efficiency of rail transport, and it means that the railroad can expand rapidly. What would begin in 1865 and extend to 1893 is a period of immense rapid construction of railroads. There are five transcontinental railroads that are completed in 1893.

Railroads are also very interesting, because as they develop, they also become for us the prototype of the modern corporation. Railroads are intensely in need of capital. They need large amounts of money, but in order to get that money out, there has to be a limitation of legal risk. In the 19th century, if one were responsible for "a company," then one became responsible for all of its debts forever. And what the railroads do is help to usher in a modern corporation, which limits the liability upon individuals. So in that sense it begins the idea of stock purchases, of massive investments, of limited liability for the shareholder.

Railroads are also interesting, too, because they're the first industries that have to cross state lines on an extensive basis. In fact, the railroad becomes more efficient the longer it goes. And so railroads raise other kinds of issues in terms of the distances they have to travel. Standardization of time, for example, becomes a crucial aspect of railroad operations. You have to know when that train is leaving Kansas City to go to Chicago. One of the reasons for this is rather than—you want to maximize the use of your locomotive and your rolling stock, and the way you do that is you want them constantly moving back and forth. But you also don't want to construct two rail lines when you only have to construct one, so by constructing sidings at opportune moments, you could actually minimize your construction costs. But in order to do so, you don't want two trains on the same single stretch of track going in the opposite direction at any one time. So railroads have to learn to standardize time.

They also have to have standardized operations. The people in Kansas City or Keokuk or Seattle or Chicago have to know how the trains are operating; they have to know what the maintenance schedules are; and they have to know that the maintenance is done in a certain kind of way. So the corporation, the railroad, has to set up patterns of behavior. The railroad also has to figure out what it's going to pay for everything, and one of the crucial elements of the development of the railroad in which railroads loomed terribly large in the legal history of the United States is the way in which the railroad learns to allocate the cost of accidents—whether the worker will bear the cost of the industrial accident; whether the railroad will bear certain costs; whether passengers or traffic will bear it, the cost of the railroad's negligence.

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