Procedimiento constructivo

stabilized a t a re la tiv e ly low leveL

According to C. K. Harley, the railw ay companies in a fron tier area in the period o f westward movement 'found themselves in a "P rison ers' Dilemma" w ith resp ect to new construction. Collectively the railroads maximized th e ir p rofits b y not building any line until

the presen t value o f th e investment reached its maximum. But

individually each railroad would be b est o ff, assuming its riva ls' action g iv e n , b y b u ildin g all lines in its own and its r iv a ls ' te rrito ry

that it perceived to h a ve a positive presen t valu e.'11 Whether

railways pursued the jo in t maximising s tra te g y o r chose competitive solution depended upon th e following tw o conditions: 'the b arriers to outside en try* and 'th e en forceability o f the collu sive agreement’ , both o f which change 'to stake cooperative behaviour more d ifficu lt as agricultural settlem ent proceed ed '.1*

The railway b u ildin g boom started in the late 1870s in Texas and Iowa w ith the collapse o f cooperative atmosphere as a consequence o f the agricu ltu ral developm ent and grow th o f tra ffic , which appear to have contributed g r e a tly to the improvement in n et railway earnings p er mile a fte r 1877(P ig IV -6 ).U The boom caste to an end in the early 1880s, with the estergence o f the state o f overin vestaien t1*, as is reflected in the d ecline o f net earnings per mile a fte r 1880.(F ig IV -

11 C. K. Harley (1988) p.804

12 C. K. Harley (1982) p.804 Such was th e case, both because with the p rogress in settlesien t 'th e benefits o f en try g re w rela tive to the costs', and because 'th re a t to the maintenance o f the cooperative option astong the e x is tin g companies aroae from s p ecify in g and en forcin g the coop erative outcome.'

13 For a detailed descrip tion o f «illu s io n and competition ass>ng the railways in the states concerned, see J. Orodinsky(1962) Chap. V III A X.

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6)ia The downturn was followed b y th e years o f decline in the

ra tio o f railway mileage to land under cultivation, which, as in 1872- 75, was due to agricultural developm ent.1*

I t was not until 1885 that c o lle c tiv e restraint from building ahead o f demand waa lost, and that railw ay companies yielded to com petitive building with the p ro g re s s o f agricultural settlement in

Kansas and Nebraska.1' I t would appear probable that the

agricu ltu ral development in these sta tes waa at leant partly

responsible fo r the b rie f halt in the f a ll o f the net earn in gs in 1885- 87 (P ig IV -6 ). The improvement in ra ilw a y p ro fita b ility would have contributed to the sta rt o f the ra ilw a y building boom also by r e v iv in g stock market: attribu tin g th e ria e in stock p rices from the mid-1885 to the beginning o f thé New Y o rk Central-Pennaylvania-Weat Shore negotiation, C om m ercia l a n d F in a n c ia l C h r o n ic le argu ed that 'the transform ation in 1885 was based almost e n tirely on the one idea o f a tolera b ly certain status in railroad p r o fits , whenever the companies a re placed in such a position that t h e y find it both practicable and

necessary to maintain rates.'1* T h e upswing, thus started,

continued until 1887, when sign s o f overinvestm ent developed,

inclu ding the decline in n et earnings p e r siile.(Pig IV -6 )1* In short, 15 Th e p ositive relationship in 1873-1895 period between the net US railway investstent and railway p ro fit r a t e lagged b y two years, which was identified b y J. Kmenta k J. O. Williamson (1966) p.178, may pick up auch a sequence o f even ts re la te d to 'building ahead o f demand' in the West, as well as the 'c a p ita l stock adjustm ent' by established f ir sis, as they in terp reted , (p . 175)

16 In Iowa, the ratio fe ll a fte r the ra ilw a y building peak only in 1885 and resumed to riae until 1887. T h is appears to be due both to the slow grow th in settlement in the clo s in g stage o f westward movement, e v e n re la tiv e ly to the not so a ctive ra ilw a y building in these years, and to the decline in acreage h a rvested in 1887 and 1888, which prob ab ly had something to do with bad harvest.

17 J. Grodinsky(1962) Chap. XV d es c rib e s the sh ift from cooperation to competition among railway lines in th s two states.

18 January 9 1886, C om m ercia l a n d F in a n c ia l C h ro n o c le

19 C om m erc ia l a n d F in a n c ia l C h r o n ic le re p o rte d on 5 Jan 1889 that T h e e ffe c ts o f excessive railroad b u ild in g during ths th ree oonsecutive years 1886, 1887 and 1888 w e re distinctly visib le; ths

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