Final answer:
Railroad owners often went bankrupt due to overinvestment, speculation leading to a bubble, and inadequate financing. The Panic of 1873 was largely influenced by these railroad bankruptcies, affecting the larger economy. Cities like Chicago grew as successful railroad hubs, boosting real estate values and market connections.
Step-by-step explanation:
Many private railroad owners filed for bankruptcy due to a combination of factors, including overinvestment and speculation in railroads which led to a bubble that eventually burst. Ill-conceived railroad projects were often inadequately financed, resulting in failure and loss for investors. The Panic of 1873, a time referred to as the "Great Depression" of the 1870s, stemmed significantly from railroad bankruptcies as they were interconnected with the broader economy, affecting various enterprises and triggering a chain of financial failures. This panic emerged when speculative investment, fostered by irresponsible lending and marketing of worthless securities, outpaced genuine economic growth, especially within the railroad industry.
The growth of cities like Chicago can be attributed to the success of railroads which, when prosperous, increased real estate values and connected markets, spurring urbanization. For every successful city like Chicago, there were multiple ghost towns, remnants of failed railroad dreams. Despite these challenges, surviving cities grew rapidly thanks to their role as transport hubs in expanding agricultural and industrial markets.