IT BACKFIRED.

Years ago, Frederic Bastiat had some fun with the notion of "negative railways," the reductio ad absurdum of municipalities providing continued work for local stevedores, draymen, and warehousers by forbidding interchange.  One way to forbid interchange was to require a different gauge in your state, as, without the kind of traffic base East Broad Top had, swapping out the bogies would not be an adoption and the local strongmen could get a workout doing all the transloading.  (Permit me an impertinence: how much of that transloading might have been done by prison trusties sentenced to hard labor?)

The powers-that-be of Portland, Maine, caught the negative railway mania.

Maine forbid [c.q.] the railroad into Portland to change its track gauge. For, if it shifted to the standard 4-foot 8-inch gauge, goods would have hurtled right through Portland on their way to Boston. The legislation ensured that shipments would still have to be unloaded in Portland from one railroad line to another. All of this generated incomes for Portland’s laborers, truckers, and wholesalers. It also kept up the value of city lots and buildings. (Unfortunately it offered no long-run solution. Shippers began using cheaper, competing routes to market. Portland then failed to develop in its competition with Boston and Montreal as it might have but for that feat of policy, so shrewd in the short term.)

That sort of legislation was contrary to the war effort. Abraham Lincoln chose the Stephenson gauge for the Pacific Railroad, and Federal transportation corps civil engineers regauged all the Rebel rail lines they seized as contraband to the Stephenson gauge.  The property in question is the original Maine Central, which was built to a wider-than-Rebel-standard five feet, six inches, and after the Rebellion, subsequent managers saw the light and regauged it to the standard. 

Now, Portland's problem might have been that once goods sail to Portland, it's not that much longer a sail to Boston, which has the Boston and Albany onward to the Erie Canal as well as a rail connection to Chicago, and the direct rail route from Portland to Montreal runs bang into the Presidential Range, which is one reason three companies came to own segments of the putative Portland and Ogdensburg, and none ever made a go of it.

Donald "Cafe Hayek" Boudreaux offers the verdict on such short-term fatal conceits.

In the short run, legislative interventions can often protect from market forces this group’s jobs, enhance that group’s property values, and ensure for members of yet another group the ability to gaze lovingly upon a townscape or countryside unchanged by economic dynamism. But there is no practical way that such interventions can avoid over the long-run decreasing the well-being of a randomly chosen subset of denizens of the ‘protected’ area. And the longer is the time horizon considered, the smaller is the number of individuals who can legitimately be said to reap benefits from such interventions. After enough time, everyone affected and still alive will be a loser.

Yes, and economic historians ever after can quibble over the counterfactuals by which evidence of those welfare losses is in the population statistics or the income accounts.