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The transcontinental railroad cost $50,000,000 to build. The budget and outline of all of the costs were laid out by Theodore Judah before work began in 1863.

Abraham Lincoln signed the Pacific Railway Act on July 1, 1862, hoping to bind the Union's East and West. The Pacific Railway Act gave each company loans from the Treasury of $16,000 for each mile of track laid in the flat plains, $32,000 for each mile of track laid in the Great Basin, and $48,000 for each mile of track laid in the mountains. It also provided for each company to receive 10 sections (6,400 acres) of public land grants, mineral rights excluded, on each side of the track for each mile of track built. In 1864 a second Pacific Railway Act was passed increasing the land grants for each company to 20 sections per mile. In total, the companies received 33 million free acres of land. The second Pacific Railway Act also gave the companies rights to the iron and coal deposits on the land grants and moved the federal loans to second-mortgage status so that the Union Pacific and Central Pacific could issue first-mortgage bonds for sale to private investors.