Final answer:
The first transcontinental railroad, completed when the golden spike was driven at Promontory, Utah, in 1869, was a critical development in American transportation, facilitated by the Pacific Railway Act and transforming the nation's economy and connectivity.
Step-by-step explanation:
The most significant development in the history of American railroads was undoubtedly the completion of the first transcontinental railroad. This momentous event occurred on May 10, 1869, when a golden spike was driven into the ground at Promontory, Utah, marking the connection between the Union Pacific Railroad, which laid tracks westward from Omaha, Nebraska, and the Central Pacific Railroad, which extended eastward from Sacramento, California.
The Pacific Railway Act of 1862 and subsequent legislation such as the 1864 grant of federal lands were instrumental in financing this massive undertaking. The transcontinental railroad revolutionized the country's transportation and economy, creating a coast-to-coast network that enabled goods and people to move much more efficiently than ever before, thus cementing the United States as a connected nation both commercially and culturally.