The U.S. government helped the development of the railroad in two principal ways. First, and most important, it granted millions of acres of public land to the railroads. These land grants started with the Pacific Railroad Act of 1862. Through the grants, the railroads obtained free land to build upon and could sell any surplus land at a profit. Between 1850 and 1871, the U.S. government gave 1.31 million acres to the railroads to encourage building—and also loaned them money.

The Kansas Pacific Railroad route: Colored portions show the extent of the land grants

Of course, some of the land given to the railroads was already occupied by Native Americans, who were not particularly happy about rail lines being built through their hunting grounds. Members of the affected tribes sometimes attacked work crews and line surveyors. In 1867, the Cheyenne derailed a handcar and killed everyone on board except a repairman named William Thompson, whom they scalped and left alive. One can argue that perhaps the natives were justified in the attacking railroad builders. However, U.S. policy toward Native Americans who responded in this way was best summed up by a statement from General William T. Sherman: "We must act with vindictive earnestness against the Sioux . . . even to their extermination, men, women, children."

Handkerchief from the 1892 presidential election showing the importance of the tariff issue

The U.S. government also supported the rise of industrialization through its policies toward tariffs, or taxes on imports. In general, the Northeast, which was industrializing rapidly, wanted heavy tariffs on goods such as iron and steel and woolen products. The South, still largely agrarian, preferred to import cheaper manufactured goods from Great Britain rather than buying domestic products.

Tariffs were a major factor in presidential politics. In 1887, President Grover Cleveland, a Democrat, argued that tariffs were not good for the the country overall. The result of Cleveland's attack on existing tariffs was his defeat by William McKinley, a Republican, in 1888. Until the end of the twentieth century, tariffs on imported steel, iron, and woolen goods were high, between forty and fifty percent of the value of the product. The impact of these tariffs was generally positive for the United States, however; by 1900, the United States was recognized as the world's largest industrial power.

U.S. Secretary of State John Hay, author of the Open Door Policy

To further expand the nation's economy, the U.S. government created foreign policy initiatives designed to help American industries find markets overseas. This approach was particularly important after the closing of the American frontier in 1890. In 1898, under the Presidency of William McKinley, the United States even fought a "good little war" against Spain. Easily defeating Spain, the United States gained control of Puerto Rico, Guam, and the Philippines.

Next, the U.S. prepared to intervene in Asia. In 1899, the U.S., under the guidance of Secretary of State John Hay, issued the Open Door Policy regarding trade with China. The policy protected equal privileges among countries that might want to trade with China—including Great Britain, Germany, Italy, France, and Russia. The real aim of the policy, though, was to allow American participation in trade with China and to find markets for goods like cotton.