Completion of the railroad, a priority of the Iowa legislature beginning in 1853, was halted by the Civil War and legal challenges about how land would be awarded to railroad companies.
It wasn’t until the magical summer of 1881 that the Sioux City & St. Paul Railroad would finally be completed from the Minnesota border, near Sibley, to the Missouri, opening up the last broad swath of Iowa prairie to settlers and setting the stage for an era of development across the state. The year marked a quarter century of frantic railroad development across the young state.
The first railroad in Iowa, the Mississippi and Missouri Railroad, was built in 1853 by Antoine LeClaire, a citizen of Davenport. During that time Chicago was becoming an important railroad center and Iowa promoters knew that constructing connections to the Windy City was important to economic prosperity in the state.
LeClaire’s railroad stretched from Davenport to Iowa City and was finished in 1855. About the same time, leaders in Dubuque, Clinton, and Burlington were making their own plans to link their cities to eastern rail lines. In Burlington, officials’ hopes were bolstered when the Chicago and Aurora Railroad – the predecessor of the Chicago and Burlington Railroad – reached Oquawka, Illinois, ten miles upstream.
Because the state legislature had set debt limits at $100,000, local contributions were essential to developing the rail line. Bond issues were approved in Dubuque, Clinton, Scott, and Des Moines Counties during that time; the money was given to railroads in exchange for company stock. In addition, the city of Burlington approved a loan of $75,000 to the railroad in 1855, and local residents privately contributed $80,000 to the railroad.
That money was supplemented with federal aid secured by the Iowa congressional delegation. In 1856, Congress granted four million acres to the state, stipulating that the land be divided among four railroads selected by the Iowa legislature. The four companies were located in Dubuque, Clinton, Davenport, and Burlington and lawmakers stipulated that three of the rail companies had to lay track to Council Bluffs.
As planned, the land transfer was a financial windfall for the railroads, which provided them with the necessary capital to build lines across the state. No other institution had such a lasting impact on the economic vitality of the state. For each mile built, a participating railroad received 3,840 acres of land which they sold for an average of $10 an acre, to finance rail line construction. The four million acres accounted for about one-ninth of all land in the new state.
However, because the railroads wouldn’t receive until portions of the line were finished they still needed other forms of assistance. The new communities sprouting up across the state knew that prosperity would come more quickly if a rail line passed through. One popular practice – especially in central and western Iowa – was to award free lots to railroads, giving the transportation companies a place to build depots, roundhouses, and other facilities. Some communities also exempted railroad property from taxes for 99 years. In Pacific Junction, in western Iowa, and Burlington, in eastern Iowa, local leaders offered additional property if the railroad promised to make the local station the only one in the county.
In 1868, to fuel expansion even more, the legislature allowed local governments to implement surcharges on taxable property, not to exceed five percent, as a way to raise additional funds for the railroads. Communities and townships in Worth, Mills, Fayette, Hamilton, Jackson, and Madison counties approved such measures.
In eastern Iowa – where most of the state’s growth had occurred early – the railroads served as a way to connect communities. But by the time construction reached the center of the state, the railroads had begun to outdistance settlement. So the four railroad companies began to establish towns along the route and sold the land they received adjacent to the lines in the form of town lots. As a result, many of the towns in western Iowa were named by railroad barons.