The railroads themselves are, perhaps, the most perfect illustration of the profits which accrue in a rapidly growing country from the possession of certain advantages in supplying to the public an indispensable service.  They were not built, as in most European states, under national supervision and regulation, or according to a general plan which prevented unnecessary competition.  Their routes and their methods were due almost entirely to private enterprise and to local economic necessities.  They originated in local lines radiating from large cities; and only very slowly did their organization come to correspond with the great national routes of trade.  The process of building up the leading systems was in the beginning a process of combining the local roads into important trunk lines.  Such combinations were enormously profitable, because the business of the consolidated roads increased in a much larger proportion than did the cost of financing end operating the larger mileage; and after the combinations were made the owners of the consolidated road were precisely in the position of men who had obtained a certain strategic advantage in supplying a necessary service to their fellow-countrymen.  Their terminals, rights of way, and machinery could not be duplicated except at an increased cost, and their owners were in a position necessarily to benefit from the growth of the country in industry and population.  No doubt their economic position was in certain respects precarious.  They did not escape the necessity, to which other American business enterprises had to submit, of fighting for a sufficient share of the spoils.  But in making the fight, they had acquired certain advantages which, if they were intelligently used, would necessarily result in victory; and as we all know, these advantages have proved to be sufficient.  The railroads have been the greatest single source of large American fortunes, and the men who control the large railroad systems are the most powerful and conspicuous American industrial leaders.

Important, however, as has been the direct effect of big railroad systems on the industrial economy of the country, their indirect effects have probably been even more important.  In one way or another, they have been the most effective of all agencies working for the larger organization of American industries.  Probably such an organization was bound to have come in any event, because the standard economic needs of millions of thrifty democrats could in the long run be most cheaply satisfied by means of well-situated and fully equipped industrial plants of the largest size; but the railroad both hastened this result and determined its peculiar character.  The population of the United States is so scattered, its distances so huge, and its variations in topographical level so great, that its industries would necessarily have remained very local in character, as long as its system of transportation depended chiefly upon waterways