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Early Western railroad builders were educated in engineering or in business, brought up with Yankee traditions of commerce, and eager to establish themselves financially in the new emporia of the West. They were familiar with the custom of formally platting a settlement. A grid of streets (though irregular it may have been) with building lots of various sizes and extra wide avenues for important thoroughfares, in an orderly, compact layout was as Northern as an informal arrangement of stores and houses at a crossroads was typically Southern. But the creation of a townsite was only the first step in a company's economic strategy. Railroad towns also had to be sold, which meant that prospective buyers had to be found, sent to the right places, and made to bid on property.
Townsite agents thus became information brokers as well. They had to respond to the inquiries of merchants, lawyers, doctors, newspapermen, and many others who were looking for profitable business locations. Well-informed agents could suggest whether a given town might support several general stores, one or two hardware stores, one newspaper and two livery stables; or whether another might support twice that many. The formulas used to make such calculations were in a way folk location theories; notions that anyone familiar with trade-center towns of the Middle-West or the Northeast might have had knowledge of.
Townsite agents broke with tradition in one important respect. Since each business needed a building lot, the way to produce more lot sales was to encourage more small, specialized businesses. General stores were welcome, but specialized businesses such as shoe stores or confectioneries were even better. The result was an expanded business population, without any guarantee of the trade to be had.
When railroad officials spoke of "colonization", they almost always referred to their efforts to establish agricultural settlement, which was different from recruiting people for the townsites themselves. This division in railroad promotion efforts was rooted in a strong ethnic and class bias held by railroad management, and this division was to be reflected in many of the settlements. In this view, certain races and nationalities were especially suited for hard labor on farms and in factories. The Land Departments of nearly all Western roads wanted immigrants, especially from the non-English-speaking countries of northern Europe, in the belief that they would work harder, complain less, and produce more than anyone else.
The approach was very different where recruiting merchants was concerned. The immigration officers from competing railroads fought over the Russian-German Mennonite wheat farmers, because they were perceived as perfectly suitable for working the land. But they were absolutely not the kind of people the immigration officers imagined opening a store on a railroad townsite. They were peasants, and towns were for the native born and educated. Railroad officials saw merchants as being such a class of people, who would through their intelligence and thrift, bring forth a prosperous town, just as the hard-working farmers beyond the city limits would produce huge crops of grain. Somehow this cannot be what a writer for the North American Review had in mind when in 1867 he wrote that the railroad "had made the nation cosmopolitan; removed the old distinctions between classes[51]" .
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