The Railroad Theft 175 Million Acres, the First Stadium Authority Scam, and the Birth of American Extraction THE ENDLESS FRONTIER: Public Money, Private Empires — Post 2

The Railroad Theft

175 Million Acres, the First Stadium Authority Scam, and the Birth of American Extraction

THE ENDLESS FRONTIER: Public Money, Private Empires — Post 2 | February 2026

THE ENDLESS FRONTIER: PUBLIC MONEY, PRIVATE EMPIRES
"Different Frontier. Same Extraction. Since 1850."

Post 1: The Pattern — 200 years, one mechanism
Post 2: The Railroad Theft ← YOU ARE HERE
Post 3: The Oil Extraction — Public mineral rights, Rockefeller's empire
Post 4: The Internet Heist — DARPA built it, Silicon Valley owns it
Post 5: The Defense Machine — 70 years of cost-plus contracts
Post 6: The Space Grab — The biggest extraction in human history, happening now
Post 7: The Same Players — How public wealth compounds into private dynasties
Post 8: What Breaks the Cycle — Three attempts, one possibility

In 1864, Thomas Durant — vice president of the Union Pacific Railroad — created a separate company called Crédit Mobilier of America. On paper, it was an independent construction firm hired to build the transcontinental railroad. In reality, it was owned by the same people who owned Union Pacific. Durant hired himself to build the railroad. He paid himself with government money. He charged nearly double what construction actually cost. The excess profit went to himself and his partners. To make sure no one in Congress investigated, he distributed discounted shares of Crédit Mobilier stock to key members of Congress, including the sitting Vice President of the United States. In one year, Crédit Mobilier paid an 805% dividend. By the time the railroad was finished, Union Pacific — the public-facing entity — was bankrupt. Crédit Mobilier — the private extraction vehicle — had made $50 million profit on a $1 million investment. The public got a railroad. The insiders got rich. The separate entity was the mechanism. Sound familiar? In 2016, the Clark County Stadium Authority issued $750 million in bonds to build Allegiant Stadium. The Raiders control all revenue. The Authority holds the debt. The insiders used a public entity as the vehicle to extract private wealth. One hundred and fifty-two years apart. The same structure. The same outcome. We didn't inherit the stadium authority model from some modern financial innovation. We inherited it from the railroad barons of 1864. And before that fraud, there was something even bigger: 175 million acres of public land — an area larger than Texas — handed to private railroad companies between 1850 and 1871. This is where American extraction was born. This is where the template was set. Everything that followed — oil, defense, the internet, space — is built on this foundation.

The Scale: What 175 Million Acres Actually Means

Numbers this large are meaningless without context. So let's make it real.

The United States Congress, between 1850 and 1871, gave private railroad companies between 129 million and 175 million acres of public land (estimates vary by source due to forfeitures and final accounting). The high-end estimate — 175 million acres — is larger than the state of Texas. The conservative estimate — 129 million acres — is larger than California and Nevada combined.

This land belonged to the American public. It was federal land, held in common, managed by the government on behalf of all citizens.

Congress gave it to private companies.

The mechanism: For every mile of track a railroad laid, it received alternating sections of land along both sides of the track — typically a checkerboard pattern extending 10-40 miles in each direction. The government kept some sections, the railroad got the rest.

The justification: Surrounding land values would increase as settlement followed the railroad. The government's retained sections would become more valuable. Economic development would benefit everyone. The public investment would "pay for itself."

This argument — word for word — is the same argument used to justify every stadium subsidy, every defense contract, every internet privatization, and every space grant in the 175 years since.

What actually happened: The railroads got the land. Surrounding values increased. The railroads captured that appreciation — selling land to settlers, using it as bond collateral, holding it for speculation. The public got transportation infrastructure. The private owners got an empire.

THE RAILROAD LAND GRANTS: SCALE IN CONTEXT

TOTAL LAND GIVEN: 129-175 million acres
(Conservative: 129M federal acres — Library of Congress)
(High estimate: 175M acres including state grants — Wayne State study)

CONTEXT:
• 175 million acres = larger than Texas
• 129 million acres = larger than California + Nevada combined
• 7-10% of the entire continental United States
• Given to private companies in 21 years (1850-1871)

THE MECHANISM:
• Congress authorized: Land Grant Act 1850, Pacific Railway Act 1862
• Structure: Alternating land sections along rail corridors
• Width: Up to 40 miles each side of track
• In addition: Government bond guarantees ($16,000-$48,000/mile)
• Hidden subsidy: U.S. Army military protection of construction

THE JUSTIFICATION (1862):
“Surrounding land values will increase. Economic development.
The public investment pays for itself.”

This is word-for-word the same argument used in 2016
to justify $750M in stadium bonds for the Las Vegas Raiders.

The script doesn’t change. Only the frontier changes.

The Hidden Subsidies Nobody Counted

The land grants were visible. Three other massive subsidies were buried in fine print:

1. Government bond guarantees

The Pacific Railway Act of 1862 didn't just give land. It also promised government bonds — $16,000 per mile on flat terrain, $32,000 per mile in foothills, $48,000 per mile in mountains. These were 30-year bonds backed by the U.S. government.

Private investors took the upside (land appreciation, freight monopolies, construction profits). The U.S. government backstopped the debt. Public risk, private reward. The same structure as every stadium authority bond issued since.

2. Military protection

Building transcontinental railroads meant crossing land that indigenous nations had occupied for thousands of years. The U.S. Army provided military protection — and conducted military campaigns — to enable railroad construction.

The private railroad companies paid nothing for this protection. The public paid through its military budget. The railroads got secure construction corridors. The true cost of "private" railroad construction included billions (in today's dollars) in military expenditure that never appeared on any railroad balance sheet.

This is the hidden public subsidy model perfected: count only what's visible (land grants, bond guarantees), ignore what's invisible (military protection, displaced populations, environmental costs). Undercount the public investment. Overstate the private contribution.

3. Exclusive monopoly rights

The grants weren't just land. They were monopoly corridors. A railroad that controlled the only practical route across a mountain range controlled all commerce through that corridor — forever.

The government gave not just physical land but permanent economic monopoly. The right to charge whatever freight rates the market would bear, with no competition. Vanderbilt's railroad empire wasn't just valuable because of the land. It was valuable because of the captive customers who had no alternative.

This is the orbital slot model in space today: SpaceX isn't just getting launch contracts. It's getting permanent positions in low Earth orbit — public commons managed by the FCC — that give it structural monopoly over satellite communications. Same gift. Different frontier.

🔥 THE THREE HIDDEN RAILROAD SUBSIDIES

VISIBLE (what everyone counted):
• 175 million acres of public land
• $16,000-$48,000/mile in government bonds

HIDDEN (what nobody counted):

1. MILITARY PROTECTION:
• U.S. Army secured construction corridors
• Military campaigns enabled westward construction
• Cost: Billions in today’s dollars
• Paid by: Public (military budget)
• Appeared on railroad balance sheets: $0

2. MONOPOLY RIGHTS:
• Exclusive corridor control (no competition)
• Captive freight customers (no alternatives)
• Permanent pricing power over all commerce
• Given by: Congress (free)
• Value: Incalculable

3. INDIGENOUS DISPLACEMENT:
• True cost of “public” land = taking it from occupied territories
• Nations displaced: Dozens
• Compensation to displaced nations: Minimal
• Appeared in railroad cost calculations: $0

PATTERN MATCH:
Every frontier since has had hidden subsidies beyond the visible ones:
Oil: Public mineral rights (below-market leases)
Defense: Classified R&D (value never disclosed)
Internet: GPS satellite network (military, free to private use)
Space: Orbital spectrum (public commons, private monopoly)

Count only visible subsidies = undercount public investment by 50%+

Crédit Mobilier: The First Stadium Authority Scam (1864)

The land grants were extraction at the frontier level. Crédit Mobilier was extraction at the transaction level. And it established a structure still used today.

Here is what Thomas Durant did:

Union Pacific Railroad was chartered by Congress to build the transcontinental railroad. Congress provided: land grants, government bond guarantees, a 200-foot-wide right of way across the continent. Public money. Public infrastructure. Public mandate.

Durant created Crédit Mobilier of America — supposedly an independent construction company hired to build the railroad. In reality, it was owned and controlled by the same people who owned Union Pacific.

Durant hired himself to build the railroad. He paid himself — through Crédit Mobilier — with government money. He inflated construction costs massively.

The actual cost to build: approximately $50 million. What Crédit Mobilier charged Union Pacific: $94 million. The excess — $44 million — went to Durant and his partners.

To ensure Congress didn't investigate, Durant distributed discounted Crédit Mobilier stock to members of Congress. Recipients included: the sitting Vice President (Schuyler Colfax), the future Vice President (Henry Wilson), the Speaker of the House (James Blaine), and a future President of the United States (James Garfield).

The result: Union Pacific went bankrupt — stripped of what Congress had intended as a permanent endowment. Crédit Mobilier made $50 million profit on a $1 million investment. 805% dividends in one year.

"Experience had already taught veteran railroad organizers that more money could be made from construction contracts than from operating the completed road."

— Britannica, analyzing the Crédit Mobilier scandal

More money in the deal than in the business. This is the core insight of every extraction documented in this series.

• NFL owners: More money in real estate than in football
• Defense contractors: More money in cost-plus construction than in actually delivering
• Tech companies: More money in monetizing publicly-funded infrastructure than in innovation
• Space companies: More money in government contracts than in commercial launches

In 1864, railroad organizers knew: the money is in the deal, not the business. Every extraction since has operated on this insight.

🔥 CRÉDIT MOBILIER = THE STADIUM AUTHORITY MODEL (1864)

CRÉDIT MOBILIER (1864):
• Public entity: Union Pacific Railroad (chartered by Congress)
• Mandate: Build transcontinental railroad with public funds
• Private extraction vehicle: Crédit Mobilier of America
• Owned by: Same people as Union Pacific (hidden)
• Mechanism: Inflated construction contracts (billed $94M, cost $50M)
• Excess profit: $44M to insiders
• Regulatory capture: Stock given to VP, Speaker of House, future President
• Result: Union Pacific BANKRUPT, Crédit Mobilier 805% dividends
• Accountability: Two congressmen censured. No one went to prison.

LAS VEGAS STADIUM AUTHORITY (2016):
• Public entity: Clark County Stadium Authority
• Mandate: Issue bonds for stadium with public funds ($750M)
• Private extraction vehicle: Raiders Las Vegas LLC (controlled by owner)
• Owned by: Raiders ownership (separate from Authority)
• Mechanism: Authority holds debt, Raiders control all revenue
• Excess profit: Owner captures appreciation, naming rights, suites, parking
• Regulatory capture: Board appointed by politicians who wanted NFL
• Result: Authority holds $1.2B in debt, Raiders control $2B+ asset for $1
• Accountability: None. It’s all legal.

152 YEARS APART. SAME STRUCTURE.

Public entity takes risk and debt.
Private entity (controlled by insiders) captures all value.
Regulatory capture ensures no oversight.
Public gets infrastructure.
Insiders get rich.

Durant invented this model in 1864.
NFL owners perfected it in 2016.
They learned from the same playbook.

The Network: Vanderbilt, Rockefeller, Carnegie (The Original "Same Players")

The railroad land grants didn't just create railroad companies. They created an interconnected network of wealth that funded every subsequent frontier.

Cornelius Vanderbilt:

Built the New York Central Railroad into the dominant rail network in the Northeast. Used public land grants and monopoly rights to control freight between New York and Chicago. By his death in 1877, Vanderbilt's fortune was equivalent to approximately $200 billion today — the second largest private fortune in American history.

Vanderbilt didn't just profit from railroads. He used railroad control to extract from everyone who used them: farmers, manufacturers, merchants, cities. Whoever needed to move goods paid Vanderbilt's rates. No alternatives existed. The public had built the infrastructure that made his monopoly possible.

Leland Stanford:

Founded the Central Pacific Railroad (the western half of the transcontinental line). Received massive land grants. Used railroad profits to found Stanford University — which would later become the nexus of Silicon Valley, producing the engineers and companies built on DARPA's publicly-funded internet. The wealth chain from railroad land grants to Google is more direct than most people realize.

John D. Rockefeller:

Didn't build railroads. But he used them. Rockefeller negotiated secret freight rates with Vanderbilt's railroads — paying less per barrel of oil than his competitors. This pricing advantage (obtained through monopoly negotiations, not market competition) let Standard Oil undercut competitors and build its 90% refining monopoly.

Rockefeller's empire was built on two layers of public subsidy: the railroad infrastructure (land grants) and the public mineral rights (cheap access to oil on federal lands). Neither layer appears on Standard Oil's balance sheet. Both were essential to its dominance.

Andrew Carnegie:

Built Carnegie Steel by supplying rails to railroad companies — companies flush with public-subsidized capital. Used railroad profits to vertically integrate: bought iron ore deposits (often on public land), built steel mills, controlled transportation. By 1900, Carnegie Steel produced more steel than all of Britain.

Carnegie sold Carnegie Steel to J.P. Morgan in 1901 for $480 million (equivalent to roughly $17 billion today) — creating U.S. Steel, the first billion-dollar corporation in American history. The foundation of that sale: public land grants to railroads, public mineral rights to iron ore, public infrastructure enabling industrial scale.

These four men — Vanderbilt, Stanford, Rockefeller, Carnegie — built the first American billionaire class directly on public resources. Their wealth funded the banks, universities, and investment vehicles that financed the next frontier. The extraction compounded.

THE RAILROAD NETWORK: WEALTH THAT FUNDED EVERYTHING AFTER

VANDERBILT:
• Source: New York Central Railroad monopoly (public land grants)
• Fortune: ~$200B today (2nd largest in U.S. history)
• What it funded: Banking, real estate, Vanderbilt University
• Extraction mechanism: Freight monopoly on public-subsidized infrastructure

STANFORD:
• Source: Central Pacific Railroad (transcontinental land grants)
• Fortune: Hundreds of millions (19th century)
• What it funded: Stanford University → Silicon Valley
• Chain: Railroad land grants → Stanford University → Google, Apple, HP
(The direct line from 1860s public land to $11T tech market cap)

ROCKEFELLER:
• Source: Standard Oil (built on railroad + public mineral rights)
• Fortune: $340B today (largest in U.S. history)
• What it funded: Banking, philanthropy, political influence
• Extraction chain: Railroad infrastructure (Frontier 1) → Oil monopoly (Frontier 2)

CARNEGIE:
• Source: Carnegie Steel (supplied railroads, used public mineral rights)
• Fortune: ~$17B (1901 sale, first billion-dollar corporate transaction)
• What it funded: Carnegie Mellon University, Carnegie Endowment
• Chain: Railroad contracts → Steel monopoly → J.P. Morgan (banker for all frontiers)

THE COMPOUND EFFECT:
Railroad wealth → funded banks that financed oil
Railroad wealth → funded Stanford → produced Silicon Valley engineers
Railroad wealth → funded Carnegie Mellon → produced defense/tech talent
Railroad wealth → funded J.P. Morgan → financed every subsequent frontier

This is not separate wealth. It is one continuous accumulation
from one continuous extraction mechanism across successive frontiers.

"The Great Barbecue": What They Called It Then

People in the 1870s and 1880s were not naive about what was happening. They saw it clearly. They named it directly.

Historian Vernon Louis Parrington coined the term "The Great Barbecue" to describe the post-Civil War era of railroad expansion. The image: a massive public feast where connected insiders gorged on public resources while the general public got scraps.

Journalist Matthew Josephson, in his 1934 book, named them directly: "The Robber Barons." Not entrepreneurs. Not innovators. Robbers. Men who took what was public and made it private.

The 1870s saw the first organized public resistance: the Granger Movement. Farmers — who depended on railroads to get crops to market but were being charged monopoly rates — organized politically. They pushed through state laws regulating railroad rates. The railroads challenged the laws in court. In 1877 (Munn v. Illinois), the Supreme Court ruled that states could regulate businesses "affected with a public interest."

For a moment, it looked like the public might reclaim some of what it had given away.

Then in 1886 (Wabash v. Illinois), the Supreme Court reversed course — ruling states couldn't regulate interstate railroads. Congress would have to act. Congress, full of politicians who had received Crédit Mobilier stock, was slow to act.

The Interstate Commerce Act of 1887 created the first federal regulatory agency (the Interstate Commerce Commission). But the railroads immediately began capturing the ICC — appointing friendly commissioners, influencing regulations, using the regulatory process to entrench their monopolies rather than limit them.

This is the regulatory capture model documented in every frontier since. Create a public regulatory body. Capture it. Use it to protect your monopoly rather than limit it. The railroads didn't invent this. But they perfected it. And every subsequent extraction has used the same playbook.

"The wickedness of all of it is, not that these men were bribed or corruptly influenced, but that they betrayed the trust of the people, deceived their constituents, and by their evasions and falsehoods confessed the transaction to be disgraceful."

— New York Tribune, February 19, 1873, on the Crédit Mobilier scandal

The New York Tribune in 1873 understood what had happened. The public understood. The robber barons were censured. Two congressmen were mildly disciplined. No one went to prison. And the extraction continued for another 30 years until trust-busting began in 1901.

Congress Stopped the Land Grants in 1871 (Too Late)

Public pressure eventually forced Congress to stop the land grant program in 1871. The last major railroad land grant was issued that year.

But by 1871, the damage was done:

• 175 million acres had already been granted
• The transcontinental railroad was complete (driving spikes in 1869)
• The railroad monopolies were entrenched
• The wealth had already accumulated with Vanderbilt, Stanford, Huntington, Carnegie, and their networks
• Crédit Mobilier had already paid its 805% dividends and gone out of business

Stopping the land grants in 1871 was like closing the barn door after the horses had left, multiplied, and built an empire.

This is the pattern of every attempted extraction reform: the public eventually says "stop." Congress eventually acts. But the wealth has already transferred. The monopolies are already entrenched. The extraction has already compounded.

Stopping railroad land grants in 1871 didn't undo Vanderbilt's fortune. It didn't return Rockefeller's oil profits. It didn't reclaim the 175 million acres already transferred.

The same pattern holds today: if Congress stopped all SpaceX contracts tomorrow, it wouldn't undo the $38 billion already transferred. It wouldn't return the orbital slots already allocated. It wouldn't prevent the extraction already locked in through existing contracts and infrastructure.

By the time the public recognizes the extraction, the extraction is already done.

What the Railroads Built (And What They Didn't)

To be precise: the railroads did build the infrastructure. The transcontinental railroad was completed in 1869. It connected the country. It enabled westward settlement. It was genuinely transformative.

This is important because the same precision applies to every frontier: the public does get something. Stadiums get built. Defense gets funded. The internet works. SpaceX launches rockets.

The question is not "did the public get something?" The question is: at what cost, and who captured the surplus value?

The transcontinental railroad cost approximately $50 million to build. The public paid: 175 million acres of land (worth hundreds of billions in any reasonable present-value calculation) + government bond guarantees + military protection + monopoly rights + the Crédit Mobilier overcharges.

The public received: transportation infrastructure.

The private owners received: 175 million acres + $50M in Crédit Mobilier profits + freight monopoly income for generations + the foundation for oil, steel, and banking empires.

The railroad was built. And the public paid orders of magnitude more than the railroad was worth — in assets, in monopoly rights, in hidden subsidies — while private owners captured the surplus.

That's not progress. That's extraction with a railroad attached.

🔥 THE RAILROAD ACCOUNTING: WHAT PUBLIC GAVE VS. WHAT IT GOT

WHAT PUBLIC GAVE:
• 175 million acres of public land (value: incalculable)
• $16,000-$48,000/mile in government bond guarantees
• Military protection (billions in today’s dollars)
• Monopoly corridor rights (permanent, exclusive, invaluable)
• Crédit Mobilier overcharges: $44M (billing $94M for $50M of work)
• Indigenous lands (true cost: never calculated)

WHAT PUBLIC GOT:
• Transcontinental railroad ✓
• Transportation infrastructure ✓
• Westward connectivity ✓

WHAT PRIVATE OWNERS GOT:
• 175 million acres (sold, developed, held for speculation)
• Vanderbilt fortune: ~$200B equivalent
• Rockefeller fortune: $340B (built on railroad infrastructure)
• Carnegie fortune: ~$17B (1901 sale price alone)
• Stanford fortune: Founded Stanford University (Silicon Valley origin)
• Crédit Mobilier: 805% dividends, $50M profit on $1M investment
• Railroad monopolies: Captive customers for generations

THE CALCULATION:
The public paid hundreds of billions (present value) for infrastructure
worth tens of billions. The surplus went entirely to private owners.

The railroad was built. The extraction was real.
You can acknowledge both simultaneously.

Why This Matters for Space

The railroad extraction established every structural element now being applied in space:

Land grants → Orbital slots: Public resources (land then, orbital positions now) granted to private companies with minimal compensation to the public. Permanent, monopolistic control over strategic infrastructure.

Bond guarantees → NASA contracts: Government backstops private risk. Railroads got bond guarantees before they proved viability. SpaceX got $278 million from NASA before it successfully launched a single rocket.

Military protection → Classified contracts: Hidden public subsidy that doesn't appear in official tallies. Railroads got Army protection. SpaceX gets classified defense contracts (NRO spy satellites, etc.) whose value is never fully disclosed.

Crédit Mobilier → SpaceX separate entities: Public contracts fund private companies that hold separate IP, infrastructure, and value in structures not visible to public accounting. The $38 billion in public contracts has built private infrastructure — Starlink, launch facilities, IP — that belongs to Musk, not NASA.

Freight monopoly → Orbital monopoly: Whoever controls the only transcontinental rail route controls all commerce through it. Whoever controls the dominant low-Earth orbit satellite network controls global communications. Different asset. Same monopoly structure.

Regulatory capture → FCC/FAA capture: Railroad barons captured the Interstate Commerce Commission. Space companies are capturing the regulatory bodies that govern launches, spectrum allocation, and orbital rights.

The railroad extraction of 1850-1871 is not ancient history. It is the operating manual for space extraction today.

The Legacy: What 175 Million Acres Built

The railroad land grants didn't just create railroad empires. They created the foundation for everything that followed:

The wealth accumulated by Vanderbilt, Rockefeller, Carnegie, and Stanford funded the banks that financed the oil industry. Those banks (J.P. Morgan, Kuhn Loeb, others) financed the defense contractors of World War II. The defense contractors' profits funded the venture capital firms of Silicon Valley. Stanford University — funded by railroad wealth — became the institutional home of Google, HP, Sun Microsystems, and hundreds of other companies built on publicly-funded internet infrastructure.

The line from an 1862 land grant to a 2024 SpaceX contract is not metaphorical. It is financial. The wealth compounded. The players evolved. The mechanism never changed.

175 million acres in 1862. $11 trillion in tech market cap in 2024. $350 billion SpaceX valuation in 2025.

Different frontier. Same extraction. Since 1850.

In Post 3, we follow the money from railroad infrastructure to Standard Oil — documenting how the General Mining Act of 1872 gave private companies access to public mineral resources that built the second great American private fortune.

METHODOLOGY: HUMAN-AI COLLABORATION

KEY SOURCES FOR THIS POST:
Crédit Mobilier: Library of Congress Business History archives, PBS American Experience documentary research, Britannica Money analysis, American Heritage article by Robert Mitchell. Railroad land grants: Library of Congress records, Wayne State University analysis, Cambridge University Press Law and History Review (2017). Vanderbilt/Rockefeller/Carnegie wealth: Historical wealth analyses cross-referencing period financial records with present-value calculations.

THE SMOKING GUN WE DIDN’T EXPECT:
The Crédit Mobilier scandal — which we researched to document the land grant fraud — turned out to be the most direct historical precedent for the stadium authority model documented in our NFL series (THE LAND GRAB). The structural match is exact: public entity holds debt and mandate, private entity (controlled by same insiders) captures all value, regulatory capture prevents accountability, public gets infrastructure while insiders get rich. Durant invented this in 1864. NFL owners are using it in 2025. 161 years of the same structure.

WHAT WE LABELED AS ESTIMATES:
Present-value calculations for 19th-century fortunes are approximations — different methodologies produce different numbers. We’ve used the most cited figures. The precise amounts matter less than the documented pattern: these fortunes were built on public resources, and their scale dwarfs any reasonable value the public received in return.

WHAT COMES NEXT:
Post 3 (The Oil Extraction) documents how railroad infrastructure and the General Mining Act of 1872 — still in effect today — gave private companies access to public mineral resources. The same law that enabled Rockefeller is still being used to extract resources from federal land with minimal public compensation.