Question

In: Economics

Was it appropriate for the US and Canadian governments to subsidize the construction of their transcontinental...

Was it appropriate for the US and Canadian governments to subsidize the construction of their transcontinental railroads in the way that they did? Why?

Solutions

Expert Solution

Yes, it was a reasonable decision by both governments to subsidize the construction of their transcontinental railroads by granting public grants to private railroad companies to build tracks. Both the governments kept in mind, the long term expansion of their countries as building railroads would ensure increase in the value of land, increased trade, modernization along with settlers coming in. On the other hand, profits from these private railroad companies would be used by both governments to expand further. Hence, it was the right step.


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