The Railroads: The First Big Business

Beginning in the mid-sixteenth century, local railroads around the world served as a means of conveying coal and iron ore from mines to low-lying coastal areas. Horses drew wagons along rails made of wood and later iron. In the 1820s, the English introduced the first successful steam locomotive engine. As routes were carved out, mining areas transformed into industrial centers and coastal sites into bustling ports.

  • Map of the Old Colony Railroad and Connections. ABC Pathfinder Railway Guide. Boston: George K. Snow and Rand, Avery & Co., 1886. Baker Old Class Collection, Baker Library Historical Collections.
  • Statements of joint income and expenses, July 1877.  Nashua and Lowell Railroad Corporation Records, Baker Library Historical Collections.
  • Among the social forces of the modern world the railroad holds unquestionably the first place. There is not a single occupation or interest which it has not radically affected. Agriculture, manufactures, commerce, city and country life, banking, finance, law, and even government itself, have all felt its influence.

In the United States in the 1830s and 1840s, the railroads linked port cities to outlying areas, and, by the 1850s, they pushed westward and helped settle the frontier. From eastern terminals, American railways grew at an astonishing pace: from 23 miles of track in 1830 to 240,000 miles by 1910. As an Atchison and Pike’s Peak Railroad report of 1866 noted, “So considerable is the existing commerce, and so rapidly on the increase that competent railway authority expresses the belief that within less than the five years from the opening a single track will be inadequate to the business flowing to it.”5 The first vehicles to exceed the speed of a horse, locomotives compressed weeklong journeys into days. By mid-century, the rails moved people, raw materials, and goods around the country relatively quickly, cheaply and, for the most part, in all seasons and weather.

With the establishment of the transcontinental lines, shared technological systems among state railroads began to emerge. Coordination of functions became not a choice but a necessity in order for the railroads to perform even the most basic services of running on time and avoiding catastrophic accidents. Passengers, employees, nearby buildings, livestock, and pedestrians could fall victim to the violent force of locomotive trains running at unprecedented speeds or to the hazardous sparks they emitted. In 1841 a tragic collision of two trains on the Western Railroad in Massachusetts killed a conductor and passenger and injured seventeen others, making urgent the need to create and adhere to exact timetables.6 The resulting “Report on Avoiding Collisions and Governing Employees” called for a system of clearly defined responsibilities and lines of communication.

  • ABC Pathfinder Railway Guide. Boston: George K. Snow and Rand, Avery & Co., 1886. Baker Old Class Collection.
  • Fisk & Hatch. Railroad Communication with the Pacific. New York: Hosford & Sons, 1867. Historic Corporate Reports Collection, Baker Library Historical Collections.

As tracks expanded across geographic areas, the sheer size of operations—from surveying and engineering to scheduling and accounting—required organization on a massive scale. The systems to support the new industry—in management, finance, business analysis, and distribution—shaped the infrastructure from which the modern business enterprise would emerge. “The railroad organizations . . . were the biggest and richest organizations in the country, and then the world,” sociologist Charles Perrow argues. “They set organizational forms that would dominate all of industry for the next century.”7

  1. Edward Howard, “A Railroad Study,” Harper’s New Monthly Magazine, September 1877, p. 614.
  2. Statement Showing the First Mortgage Gold Bearing Six Per Cent. Bonds of The Atchison & Pike’s Peak Railroad Company (Central Branch of the Union Pacific) to be A First-Class Investment. New York: B. J. Beck & Co., Stationers and Printers, 1866, p. 9.
  3. In 1883 railroad executives met to establish a system of Standard Time in four time zones in the United States.
  4. Charles Perrow, Organizing America: Wealth, Power, and the Origins of Corporate Capitalism. Princeton: Princeton University Press, 2002, p. 215.