Ladies and Gentlemen,
I'm a writer working on a project that involves (albeit tangentially) the ins and outs of railroad planning and finance around 1875 in the U.S. Unfortunately, I know precious little about the topic.
Building railroads is obviously a capital-intensive endeavor, so my central question is simply: How did the old railroad magnates raise all the capital they needed? Please don't spare me the details. The deeper my knowledge, the better. And if there's some definitive source I should be consulting, let me know.
My central question can probably be parsed into these subquestions, to make it a little more manageable:
Did the railroads—on a large scale—borrow from banks or other lending institutions?
Did they issue securities? What kinds? Were these general securities (e.g., common stock or general obligation debentures) or were they distinguished in some way? Were they issued to the public or to insiders only?
Were there government subsidies of any kinds?
What kind of money are we talking about here? What's an all-in figure (material, labor, etc.) for constructing 100 miles of rail, for example? How much did engines and cars cost? (Figures preferably not adjusted for inflation.)
Any insight you learned individuals could provide would be of great help. Thank you all!
Edit: Specified U.S.
Most of the railroads were financed by selling shares, and this sometimes involved a fair bit of, um, salesmanship. Some of the granger roads in the Midwest would go out and convince farmers to buy just five or 10 shares, in hope of getting much better prices for their crops once the roads connected them to market centers or ports. Such salesmanship eventually led states to enact blue-sky laws. There was great temptation for cities or states to lure railroads, such that some state constitutions were amended to forbid such practices (though some states, notably Illinois, helped finance railroads the same way they might have canals or other internal improvements).
Some railroads were naked franchise ploys, acquiring (sometimes by bribery) a state franchise to build between sought-after termini, with the sole purpose of being bought out by a bigger company. In other cases, the construction companies were owned by friends of the directors, and once the construction firms were paid off, the other investors lost everything as the company went through bankruptcy reorganization.
To help open up the West, the federal government gave some railroads large grants of land (that the railroad would make accessible and more valuable.)
For a general, encyclopedic view of this subject, you may want to look at Railroads in the Nineteenth Century (from the series Encyclopedia of American Business History and Biography). As for specific figures for construction/materials/shares, annual reports of various railroads are pretty easy to find on Google Books.