To these deliberate acts in aid of the Pacific railways, Congress added others in the form of local or state grants in the same years, so that by 1871 all that the companies could ask for the future was lenient interpretation of their contracts. For the first time the federal government had taken an active initiative in providing for the destruction of a frontier. Its resolution, in 1871, to treat no longer with the Indian tribes as independent nations is evidence of a realization of the approaching frontier change.
The new Pacific railways began to build just as the Union Pacific was completed and opened to traffic. In the cases of all, the development was slow, since the investing public had little confidence in the existence of a business large enough to maintain four systems, or in the fertility of the semi-arid desert. The first period of construction of all these roads terminated in 1873, when panic brought transportation projects to an end, and forbade revival for a period of five years.
Jay Cooke, whose Philadelphia house had done much to establish public credit during the war and had created a market of small buyers for investment securities on the strength of United States bonds, popularized the Northern Pacific in 1869 and 1870. Within two years he is said to have raised thirty millions for the construction of the road, making its building a financial possibility. And although he may have distorted the isotherm several degrees in order to picture his farm lands as semi-tropical in their luxuriance, as General Hazen charged, he established Duluth and Tacoma, gave St. Paul her opportunity, and had run the main line of track through Fargo, on the Red, to Bismarck, on the Missouri, more than three hundred and fifty miles from Lake Superior, before his failure in 1873 brought expansion to an end.
For the Northwest, the construction of the Northern Pacific was of fundamental importance. The railway frontier of 1869 left Minnesota, Dakota, and much of Wisconsin beyond its reach. The potential grain fields of the Red River region were virgin forest, and on the main line of the new road, for two thousand miles, hardly a trace of settled habitation existed. The panic of 1873 caught the Union Pacific at Bismarck, with nearly three hundred miles of unprofitable track extending in advance of the railroad frontier. The Atlantic and Pacific and Texas Pacific were less seriously overbuilt, but not less effectively checked. The former, starting from Springfield, had constructed across southwestern Missouri to Vinita, in Indian Territory, where it arrived in the fall of 1871. It had meanwhile acquired some of the old Missouri state-aided roads, so as to get track into St. Louis. The panic forced it to default, Vinita remained its terminus for several years, and when it emerged from the receiver's hands, it bore the new name of St. Louis and San Francisco.