Making Private Enterprise: Railroad Dividends and the Urban Public in Nineteenth-Century Baltimore

The American railroad began as an urban institution. The Baltimore & Ohio Railroad, the first railroad in the United States, was founded in 1827 to link Baltimore to the trans-Appalachian West. More than half of the capital to build this line came from the governments of Baltimore City and the state of Maryland. This investment marked the B&O as a public institution. But when the B&O disappointed popular expectations after opening to the Ohio River in 1853, stockholders began to redefine the company’s relationship to the local public. From 1853 to 1863, the B&O’s private stockholders launched a campaign to remake the company as a private corporation, one that could set policy without interference from its municipal and state sponsors.

This paper examines one strand of this debate, an effort by the B&O’s private stockholders to declare an “Extra Dividend” on revenues that had been spent on construction ten years prior. Led by future company president John W. Garrett, the campaign for an Extra Dividend laid out new understandings of the line between private enterprise and the public good. Its supporters argued that profits belonged by right to stockholders, and that city officials should not dictate corporate policy. Its opponents argued that large dividends channeled revenues away from the commonweal and into private hands. They warned that pursuing such policies would make the B&O a “mere private enterprise.”

Reconstructing conflicts over railroad dividends in the 1850s highlights the ways in which the development of corporate practices emerged in dialogue with an urban public. To make the B&O a private corporation, its stockholders had to transform the railroad from a local institution to a national enterprise. In the process they articulated new boundaries between public and private in the nineteenth-century city, redefining the relationship between individuals, corporate entities, and the body politic.