America’s railroads and the World Wide Web

Published November 1, 2000

If you ever wonder what the World Wide Web will mean for economic growth in the 21st century, look to the 19th century and the history of American railroading.

Historian Stephen E. Ambrose’s Nothing Like It In The World: The Men Who Built The Transcontinental Railroad 1863-1869 characterizes the first transcontinental railroad as the greatest engineering feat of the 19th century. It most certainly was.

In February 1861, secession by seven southern states was a stark reality. Four others teetered on secession’s brink as Abraham Lincoln arrived in Washington, DC to assume the Presidency. In the midst of catastrophe, Lincoln glimpsed opportunity and seized it.

The departure of southern Senators meant they no longer could filibuster against a transcontinental railroad connecting undeveloped territory in the West with Free States. On July 1, 1862, President Lincoln signed The Pacific Railway Act, creating the Union Pacific Railroad Company and authorizing it to construct a railroad from Omaha, Nebraska to the western boundary of Nevada Territory. The Central Pacific Railroad Company of California was authorized to lay track from the Pacific coast and to meet the Union Pacific.

The history of the Union Pacific and Central Pacific build-out, concluding with their historic joining with a golden spike at Promontory, Utah, is an epic tale well told by Ambrose. It is history Americans should appreciate because of its importance to our economy.

Other transcontinental crossings by the Northern Pacific and Southern Pacific followed. Within 30 years, railroad tracks crossed much of the American West. Coast-to-coast travel and commerce became possible with modest expenditure of time and money. Information flowed freely on the telegraph lines strung alongside the railroads. Together, railroads and telegraph delivered important benefits to isolated parts of the West, where communities began to spring up and flourish. Minerals were mined to fabricate and energize the Industrial Age.

Coupled with railroad development in the East, the nation was on its way toward our present industrial might. Incredibly, while a member of Congress in the 1840s, Lincoln foresaw such development and was a proponent of what he called “internal improvements”–canals and railroads.

In a similar vein, the World Wide Web will do for the world economy what railroads did for the American economy. We can anticipate within the next 20 years industrial growth in parts of the world where there is little or none today because the World Wide Web connects the world the way railroads connected America. Information and commerce flow freely at vastly reduced cost. The infrastructure build-out generates economic growth.

And still, America’s railroads are as important to the development of the world economy today as they were to the American economy in the 19th and early 20th centuries. U.S. railroads transport coal to over 400 power plants scattered across the country. The power plants burn close to a billion tons of coal a year and supply over half of our electricity. The investment in the power plants is $125 billion. Their present value? One trillion dollars.

If America’s coal-fired power plants are allowed to operate at their full rated capacity, they can burn over 1.2 billion tons of coal per year and supply still more electricity to a growing economy. Many of the power plant sites have room for additional units that can be constructed quickly at reasonable capital cost, operate efficiently, and provide still more electricity generating capacity to energize our economy. As we learned this summer, we clearly will need it.

Coal is an important source of electricity supply for growing economies worldwide. More will be required. Two billion people live without electricity today and within 50 years, experts estimate, there will be an additional four billion people among us.

Are the world’s citizens to be allowed access to the Internet? Will everyone be allowed access to electric supply on a reasonable basis? If so, growth in the world economy will dwarf that of the United States between 1860 and now.

For this to happen, the coal chain industry in the United States must continue to prosper. Railroads need to earn a reasonable return on investment. If they need to consolidate to do it, so be it. Coal mining companies today, in many parts of the country, do not earn enough on their investment to replace capital needed for mine expansion. Both railroads and coal companies are crucial to our future. Utilities, while they operate in a better price environment than they did just a few years ago, are confronted by federal government hostility to continued use of coal for electricity generation.

In this context, the threat to our economic future does not come from market conditions. It comes from governments here and abroad that are determined to ration electricity based on concern for climate change. They persist even in the face of observations that overwhelm the vision of apocalyptic global warming so long promoted by the environmental community and Clinton-Gore administration.

Only a determined and informed electorate in the U.S. and abroad can and should change the course of government policy in this regard.

For the world to become wired; for all of the world’s population to have access to reasonably priced electricity and to enjoy living standards like our own; and for everyone to enjoy the material well-being that accompanies industrial growth, greater resource utilization will be required.

By studying U.S. railroad history, we can see how important the electric backbone of the New Economy is to increased commerce and communication in the 21st century. That future can be realized only if people firmly reject the vision of apocalyptic global warming in favor of continued economic progress and growth for the United States and the people of the world.

Fredrick Palmer, in addition to being president of Greening Earth Society, is general manager and chief executive officer of Western Fuels Association Inc., a not-for-profit fuel supply cooperative comprised of consumer-owned electric utilities.