The bubbles that built America

In the decades after the Civil War, the United States witnessed what historian Maury Klein dubbed an "orgy of railroad construction." During the 1880s, 71,000 miles of rail were constructed - nearly doubling the total. As financiers knit together vast, redundant national networks, they slashed rates furiously, built gigantic stations, engaged in Enron-style accounting tricks, and tried (unsuccessfully) to divide up the market.

The boom ended with a bust in 1894, when about one quarter of all railroads were bankrupt. But the rails didn't get torn up. Instead, with freight prices falling drastically, the railroad emerged as a powerful commercial infrastructure for new businesses. Mail-order retailers like Montgomery Ward and Sears, consumer products companies like Procter & Gamble and Coca-Cola, rapidly built highly efficient national enterprises and brands on the railroad.