Rather than giving funds directly to the railroads in the form of grants or loans, the government divided the land along the railroad rights-of-way into square sections, and alternate sections were given to the railroads. The remaining sections were sold directly to settlers. The government could command a much higher price for land that would be serviced by a railroad, and many settlers willingly paid a premium for the promising sites. Conversely, the lands granted to the railroads could be similarly sold to settlers in order to raise the necessary capital for the actual building.
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