When Congress began its session of 1853–1854, most of the surveying parties contemplated by the act of the previous March were still in the field. The reports ordered were not yet available, and Congress recognized the inexpediency of proceeding farther without the facts. It is notable, however, that both houses at this time created select committees to consider propositions for a railway. Both of these committees reported bills, but neither received sanction even in the house of its friends. The next session, 1854–1855, saw the great struggle between Douglas and Benton.

Stephen A. Douglas, who had triumphantly carried through his Kansas-Nebraska bill in the preceding May, started a railway bill in the Senate in 1855. As finally considered and passed by the Senate, his bill provided for three railroads: a Northern Pacific, from the western border of Wisconsin to Puget Sound; a Southern Pacific, from the western border of Texas to the Pacific; and a Central Pacific, from Missouri or Iowa to San Francisco. They were to be constructed by private parties under contracts to be let jointly by the Secretaries of War and Interior and the Postmaster-general. Ultimately they were to become the property of the United States and the states through which they passed. The House of Representatives, led by Benton in the interests of a central road, declined to pass the Douglas measure. Before its final rejection, it was amended to please Benton and his allies by the restriction to a single trunk line from San Francisco, with eastern branches diverging to Lake Superior, Missouri or Iowa, and Memphis.

During the two years following the rejection of the Douglas scheme by the allied malcontents, the select committees on the Pacific railways had few propositions to consider, while Congress paid little attention to the general matter. Absorbing interest in politics, the new Republican party, and the campaign of 1856 were responsible for part of the neglect. The conviction of the dominant Democrats that the nation had no power to perform the task was responsible for more. The transition from a question of selfish localism to one of national policy which should require the whole strength of the nation for its solution was under way. The northern friends of the railway were disheartened by the southern tendencies of the Democratic administration which lasted till 1861. Jefferson Davis, as Secretary of War, was followed by Floyd, of Virginia, who believed with his predecessor that the southern was the most eligible route. At the same time, Aaron V. Brown, of Tennessee, Postmaster-general, was awarding the postal contract for an overland mail to Butterfield's southern route in spite of the fact that Congress had probably intended the central route to be employed.

Between 1857 and 1861 the debates of Congress show the difficulties under which the railroad labored. Many bills were started, but few could get through the committees. In 1859 the Senate passed a bill. In 1860 the House passed one which the Senate amended to death. In the session of 1860–1861 its serious consideration was crowded out by the incipiency of war.

Through the long years of debate over the organization of the road, the nature of its management and the nature of its governmental aid were much in evidence. Save only the Cumberland road the United States had undertaken no such scheme, while the Cumberland road, vastly less in magnitude than this, had raised enough constitutional difficulties to last a generation. That there must be some connection between the road and the public lands had been seen even before Whitney commenced his advocacy. The nature of that connection was worked out incidentally to other movements while the Whitney scheme was under fire.

The policy of granting lands in aid of improvements in transportation had been hinted at as far back as the admission of Ohio, but it had not received its full development until the railroad period began. To some extent, in the thirties and forties, public lands had been allotted to the states to aid in canal building, but when the railroad promoters started their campaign in the latter decade, a new era in the history of the public domain was commenced. The definitive fight over the issue of land grants for railways took place in connection with the Illinois Central and Mobile and Ohio scheme in the years from 1847 to 1850.

The demand for a central railroad in Illinois made its appearance before the panic of 1837. The northwest states were now building their own railroads, and this enterprise was designed to connect the Galena lead country with the junction of the Ohio and Mississippi by a road running parallel to the Mississippi through the whole length of the state of Illinois. Private railways in the Northwest ran naturally from east to west, seeking termini on the Mississippi and at the Alleghany crossings. This one was to intersect all the horizontal roads, making useful connections everywhere. But it traversed a country where yet the prairie hen held uncontested sway. There was little population or freight to justify it, and hence the project, though it guised itself in at least three different corporate garments before 1845, failed of success. No one of the multitude of transverse railways, on whose junctions it had counted, crossed its right-of-way before 1850. La Salle, Galena, and Jonesboro were the only villages on its line worth marking on a large-scale map, while Chicago was yet under forty thousand in population.

Men who in the following decade led the Pacific railway agitation promoted the Illinois Central idea in the years immediately preceding 1850. Both Breese and Douglas of Illinois claimed the parentage of the bill which eventually passed Congress in 1850, and by opening the way to public aid for railway transportation commenced the period of the land-grant railroads. Already in some of the canal grants the method of aid had been outlined, alternate sections of land along the line of the canal being conveyed to the company to aid it in its work. The theory underlying the granting of alternate sections in the familiar checker-board fashion was that the public lands, while inaccessible, had slight value, but once reached by communication the alternate sections reserved by the United States would bring a higher price than the whole would have done without the canal, while the construction company would be aided without expense to any one. The application of this principle to railroads came rather slowly in a Congress somewhat disturbed by a doubt as to its power to devote the public resources to internal improvements. The sectional character of the Illinois Central railway was against it until its promoters enlarged the scheme into a Lake-to-Gulf railway by including plans for a continuation to Mobile from the Ohio. With southern aid thus enticed to its support, the bill became a law in 1850. By its terms, the alternate sections of land in a strip ten miles wide were given to the interested states to be used for the construction of the Illinois Central and the Mobile and Ohio. The grants were made directly to the states because of constitutional objections to construction within a state without its consent and approval. It was twelve years before Congress was ready to give the lands directly to the railroad company.

The decade following the Illinois Central grant was crowded with applications from other states for grants upon the same terms. In this period of speculative construction before the panic of 1857, every western state wanted all the aid it could get. In a single session seven states asked for nearly fourteen million acres of land, while before 1857 some five thousand miles of railway had been aided by land grants.

When Asa Whitney began his agitation for the Pacific railway, he asked for a huge land grant, but the machinery and methods of the grants had not yet become familiar to Congress. During the subsequent fifteen years of agitation and survey the method was worked out, so that when political conditions made it possible to build the road, there had ceased to be great difficulty in connection with its subsidy.