A Stock Certificate From 1941 Taught Me More About AI Than Anyone from OpenAI

I went down a rabbit hole about 19th-century railroad finance. I came back out thinking differently about everything happening in 2026.

A few weeks ago, I bought a stock certificate from the Boston & Albany Rail Road Company. Certificate number B79362. Twenty-five shares, face value $2,500, issued to Hussey & Co. on May 29th, 1941.

It’s a beautiful piece of paper. Olive-green scalloped border, the kind of ornamental engraving that no one does anymore. Across the top, a panoramic scene of Boston Harbor: sailing ships, steamships, a city skyline rising behind them. On the left side, a steam locomotive pulling a line of freight cars. In the center, the Massachusetts state seal, flanked by classical figures. Bottom right, an allegorical scene of Commerce and Industry, a winged figure and a seated goddess surrounded by the tools of trade.

Boston and Albany Railroad Company Stock Certificate - 1949

On the right side, two stamps. “CANCELLED. Jul 23, 1949. State Street Trust Company.” The shares were transferred and voided eight years after they were issued.

The company that printed this certificate no longer exists. Neither does the company that acquired it. Or the company that acquired that company. Or the one after that.

The railroad it financed is still running.

I kept staring at this thing, because the more I learned about the story behind it, the more it started to feel like a message from the past about what’s happening right now. So I went down the rabbit hole. Three weeks later, I came back out, and I think this story is one of the most important things you can read if you’re trying to make sense of the AI moment we’re living through.

Let me explain.

Erie Canal Was the First-Mover Advantage

In 1825, the state of New York opened the Erie Canal. If you’re thinking “a canal, how exciting,” you’re underestimating what this thing did. The Erie Canal connected the Great Lakes to the Atlantic Ocean via the Hudson River, which meant New York City could now move goods to and from the entire American interior for a fraction of the previous cost. Freight rates dropped by 90%. Ninety percent. New York went from one of several competing East Coast ports to the dominant commercial hub in the Western Hemisphere, basically overnight.

Boston watched this happen and panicked.

Boston had no river connecting it to the interior. Worse, the Berkshire Mountains sat between Boston and Albany like a geological middle finger. You couldn’t build a canal over them. For a few years, it looked like Boston would fade into regional irrelevance while New York ate the continent.

Then someone had an idea: what about this new “railroad” technology?

Now, railroads in the 1830s were about as proven as large language models were in 2021. A few short lines existed in England. Nobody had built one over a mountain range. The engineering was uncertain, the costs were unknown, and most sensible investors thought the whole concept was speculative nonsense. (Sound familiar?)

Boston bet on it anyway. In 1831, the state chartered the Boston & Worcester Railroad. A few years later, the Western Railroad started pushing west toward Albany. By 1842, the full line was open. Boston had its connection to the interior, and it hadn’t needed a river or a canal to get it.

The cost was staggering. That one railroad from Worcester to Albany cost $8 million, about the same as the entire Erie Canal. Except the canal was publicly funded by the state of New York. The railroad was financed with private capital, through a financial instrument that most Americans had never used before:

Bonds.

This is where the story gets wild.

Railroads Were the Platform Play

Before railroads, America’s financial system was small and simple. The federal government issued some debt. Banks made loans. A handful of state-chartered companies traded shares on the New York Stock Exchange, which in the 1820s was a few dozen guys meeting under a buttonwood tree. That was it. That was the whole financial system.

Railroads broke it.

They needed more capital than any private enterprise had ever required, and they needed it for longer. You can’t build a railroad with a six-month bank loan. You need money for years before a single train generates a dollar of revenue. The time lag between investment and return was enormous.

So railroad companies started issuing bonds. Lots of them. A bond said: give us $1,000 now, and we’ll pay you 5% per year for 20 or 30 years, then give your $1,000 back. For investors, this was attractive because it paid a fixed income and (in theory) returned your principal. For railroads, it was the only way to raise the kind of money they needed at the timescale they needed it.

By 1859, American railroads had issued over $1.1 billion in bonds. In 1859 dollars. To put that in perspective: the entire federal budget that year was about $69 million. Railroad debt was sixteen times the federal budget.

That bond market transformed the New York Stock Exchange from a sleepy club into the center of global capital markets. Trading volume went from a few hundred transactions a week to hundreds of thousands.

And the money wasn’t coming from America alone. British banks underwrote railroad bond offerings. German investors, sitting on savings they couldn’t deploy in their own fragmented economies, bought American railroad debt by the trainload. Capital flowed across the Atlantic for the first time at industrial scale.

I want you to sit with this for a second, because I think most people (including me, before I went down this rabbit hole) don’t realize what happened here. The basic financial infrastructure that today’s economy runs on, corporate bonds, public equity markets, institutional underwriting, cross-border capital flows, credit analysis, even the concept of a “balance sheet,” all of it was built to finance railroads. Railroads didn’t just change transportation. They changed money. They were the platform layer underneath everything else.

$700B Is the New Railway Mania

Okay, so railroads rewired capital markets. How big was that rewiring, and how does it compare to what’s happening with AI?

Let me try to make these numbers feel real, because they’re the kind of numbers that are so large they slide right off your brain.

In the peak years of the 1850s, railroad investment hit about 3% of American GDP. When you count the knock-on spending (land development, equipment, labor camps), the total reached 4-5%. In Britain during Railway Mania in the 1840s, it was even crazier: railway investment surged to 7% of GDP, representing half of all investment in the entire economy. Half. Every other industry in Britain combined was investing the same amount as railways alone. Some scholars put it at 10-20% of private capital formation in peak mania years.

No single technology before or since has consumed that much of a nation’s savings.

Until, maybe, now.

In 2026, five companies (Microsoft, Alphabet, Amazon, Meta, and Oracle) plan to spend between $660 billion and $700 billion on capital expenditure, most of it for AI. That’s up from $162 billion in 2022. A quadrupling in four years. U.S. GDP is roughly $29 trillion, so $700 billion from just five companies is about 2.4% of GDP. To make that tangible: imagine the U.S. economy as a dollar. These five companies are taking about two and a half cents of every dollar produced in America this year and converting it into data centers, chips, and cooling systems. And that’s before you count the chip manufacturers, the energy buildout, the fiber optics, the neocloud startups like CoreWeave and Lambda, and everyone else piling in. Add all of that, and we’re approaching railroad-era levels of capital intensity. McKinsey projects that global AI capex will require $6.7 trillion by 2030 to keep pace with demand. Trillion. With a T.

But the comparison that should make you pause is on the revenue side.

In 1859, American railroads had $1.1 billion in bonds outstanding, and they were generating revenue from every train that moved. Freight paid by the ton-mile. Passengers paid by the ticket. The business model was tangible and immediate. You could stand at a station and watch your investment earn money.

In 2026, OpenAI’s annual recurring revenue is about $20 billion. Anthropic’s is about $9 billion. Combined, that’s $29 billion. The hyperscalers spending $700 billion on AI infrastructure are generating some AI-related cloud revenue on top of that, but nobody can cleanly separate “AI revenue” from “cloud revenue” in their reporting. Alphabet’s free cash flow is projected to fall nearly 90% this year, from $73 billion to $8 billion. (Read that sentence again. Ninety percent.)

The railroad investors of the 1850s could at least count the number of trains running on their tracks. AI investors in 2026 are making a bet that the revenue will come, because the technology is too important for it not to. That bet might be right. It was right for railroads, too, in the long run.

In the short run, though, the story got ugly.

Jay Cooke Was the First Blitzscale Casualty

On September 18, 1873, Jay Cooke & Company went bankrupt.

If you haven’t heard of Jay Cooke, think of him as the most trusted name in American finance. During the Civil War, he was the guy who figured out how to sell Union war bonds to ordinary citizens, basically inventing retail financial marketing. He was the federal government’s primary banker. In modern terms, he was a combination of Goldman Sachs, the U.S. Treasury Department, and a patriotic marketing campaign, all rolled into one guy.

After the war, Cooke took on the financing for the Northern Pacific Railway, a line that was supposed to connect the Great Lakes to the Pacific coast. Huge project. Very exciting. Investors loved it.

The problem was that the Northern Pacific was burning cash faster than it could sell bonds. (Again: sound familiar?) The first transcontinental railroad had already been built, and investors were starting to wonder whether America needed a second one. Bond prices dropped. Cooke’s firm couldn’t meet its obligations.

And then everything fell apart at once.

The New York Stock Exchange closed for the first time in its history. Ten days of no trading. Eighty-nine of America’s 364 railroad companies went bankrupt. Eighteen thousand businesses failed within two years.

But here’s the part that messed me up when I read about it, the part that I think is the most important lesson in this entire story:

The devastating part of the 1873 panic wasn’t domestic. German investors, who had been buying American railroad bonds for a decade, got spooked. A real estate bubble in Vienna had just burst. The German economy was opening up new domestic investment opportunities after unification. So German capital started flowing out of American railroads and back to Europe.

Read that again. A real estate bubble. In Vienna. Crashed the American railroad industry.

Nobody in 1872 was modeling “Viennese real estate bubble bursts → German capital exits American railroad bonds → 20-year depression follows.” The trigger had nothing to do with railroads. The railroads were fine. The routes were good. The trains ran. But the financial system that funded them was entangled with forces on the other side of the ocean, and when those forces shifted, everything crumbled.

Twenty years later, it happened again. Between 1893 and 1897, companies owning a third of all American rail mileage went through bankruptcy. This time the cause was domestic: too many companies had built parallel lines competing for the same routes, driving prices below the cost of service. None of them could generate enough revenue to pay their bond interest. They had built the infrastructure first and assumed the economics would follow. For many of them, it didn’t.

(If you’re keeping score at home: blitzscale, check. overbuilt competing infrastructure, check. revenue that couldn’t keep up with capital deployed, check. exogenous shock from an entangled financial system nobody fully understood, check. We’re running this playbook again right now, except with GPUs instead of rail ties.)

J.P. Morgan Invented the Rollup

So the industry is in ruins. A third of American railroads are bankrupt. Investors have been wiped out. Who shows up?

J.P. Morgan.

Morgan’s playbook was simple and ruthless: buy the bankrupt railroad’s debt for pennies. Foreclose. Create a new company with less leverage. Raise fresh capital. Install management you trust. Put your partners on the board, including the boards of competing railroads, so they stop cutting prices against each other.

Between 1893 and 1898, Morgan restructured the Southern Railway, Erie Railroad, Reading Railroad, and Northern Pacific. Other banks followed his model: Kuhn Loeb took Union Pacific, Speyer took B&O. By 1900, Morgan controlled about a sixth of all American railroad track.

They called this process “Morganization.” A restructured railroad was said to have been “Morganized.” The term carried a mix of respect and dread, because Morganization worked, but it also meant the original investors, the people who took the risk and funded the construction, were wiped out. The builders and the eventual owners were different groups of people.

If you work in finance, you recognize this playbook immediately. Morgan invented what we now call private equity restructuring, distressed debt investing, and activist board governance. He didn’t create these concepts from a textbook. He created them because the railroad industry was a catastrophe and someone had to clean it up, and it turned out that cleaning up catastrophes was the most profitable business of all.

I keep thinking about this when I look at AI. The question isn’t just “who builds the best model?” The question is: when the shakeout comes (and if the railroad precedent means anything, a shakeout will come), who will be the Morgan? Who’s sitting on the sidelines with enough capital and enough patience to buy the wreckage and reorganize it?

My guess: it won’t be a name you’re reading about in TechCrunch right now.

Right Thesis, Wrong Cap Table

Five companies are spending $700 billion this year to build AI infrastructure. Their combined cash reserves are about $420 billion. These are the most profitable companies in the history of capitalism, and they are burning through their cash at a rate that would have made Jay Cooke uncomfortable.

OpenAI has announced over $1.4 trillion in data center deals. The Stargate project alone is targeting $500 billion in infrastructure. Anthropic, xAI, and a constellation of “neocloud” companies (CoreWeave, Nebius, Lambda, Crusoe) are all building as fast as they can.

The question everyone keeps asking is: “Is this a bubble?”

I’ve spent three weeks with the railroad story now, and I think that’s the wrong question. The railroad investors of the 1860s weren’t wrong about railroads. Railroads changed everything. They connected the continent, enabled industrial agriculture, created the modern corporation, and generated trillions of dollars in economic value over the next century. The investors who bet on railroads were right about the technology.

Many of them still lost everything.

They lost because the financial structures built around the technology were fragile. They lost because capital flowed in from places they couldn’t control and flowed out for reasons they couldn’t predict. They lost because competing companies overbuilt capacity and destroyed each other’s pricing. They lost because the gap between “this technology will be transformative” and “this specific company will generate enough cash flow to service its debt” is wide enough to swallow entire fortunes.

The railroad boom peaked in 1916, when the U.S. had 254,000 miles of track. Today there are about 140,000 miles. That’s a 40% decline. The technology won. Many of the companies and investors who funded it did not.

The thesis was right. The cap table was wrong.

Seven Owners, One Railroad

The Boston & Albany Railroad survived the Panic of 1873. It survived the Panic of 1893. It survived because its route was irreplaceable (you still can’t build a highway over the Berkshires faster than running a train through them), because its management was disciplined, and because its capital structure wasn’t overextended.

In 1900, the Vanderbilt family’s New York Central Railroad was impressed enough to lease B&A for 99 years. The railroad ran under that lease until 1961, when NYC absorbed it fully. Then NYC merged into Penn Central in 1968. Penn Central went bankrupt in 1970, the largest corporate bankruptcy in American history at that time. Then Congress created Conrail. Then CSX bought Conrail’s assets.

My certificate was issued in 1941, four decades into that 99-year lease. By then B&A was a subsidiary of New York Central in all but name. Hussey & Co. bought 25 shares for $2,500. Eight years later, State Street Trust Company stamped it “CANCELLED” and transferred the shares. The certificate became a piece of paper. The railroad kept moving freight.

I’ll say it plainly: the track from Boston to Albany has been owned by seven different entities in 190 years. Seven. Boston & Worcester. Western Railroad. Boston & Albany. New York Central. Penn Central. Conrail. CSX. Each ownership change created a new set of winners and losers among the people who held the financial instruments. Some shareholders were bought out. Some bondholders were paid in full. Some got pennies. Some got nothing.

The trains kept running.

The Exit Nobody Planned

I don’t know who wins the AI race. Nobody does. If you’d asked someone in 1865 which railroad company would dominate American transportation in 1920, they would have given you a confident answer that was wrong. I’m pretty sure we’re in 1865 right now.

But I think the railroad story, if you take it seriously, tells you six things about what happens next.

First, the technology will work. That part isn’t in doubt. Railroads worked. AI works. The question was never “will trains move faster than horses?” or “will language models generate useful output?” The answer to both was always yes. The technology question is settled. Everything that follows is a finance question and an ownership question, and those are much harder.

Second, the buildout will be larger than anyone currently projects. In 1850, America had 8,879 miles of track. By 1860, it had 30,626. Nobody in 1850 would have believed that number. AI infrastructure spending has quadrupled since 2022 and shows no sign of slowing. McKinsey’s $6.7 trillion projection for 2030 might end up being low. When a technology changes the cost structure of everything, the capital required to build it out has a way of exceeding every estimate, including the ones that already seemed crazy.

Third, the financial system will change in ways we can’t anticipate. Railroads didn’t just use the existing capital markets; they created new ones. Bond markets, equity markets, underwriting syndicates, credit analysis, bankruptcy law, corporate governance, even the concept of the limited liability corporation, all got reshaped or invented to handle railroad finance. AI will do the same. We don’t know what the new financial instruments will look like yet. Maybe compute futures. Maybe revenue-sharing tokens tied to model performance. Maybe something nobody has named yet. The railroad precedent says the instruments themselves will be part of the story.

Fourth, a crisis will come, and its trigger will be something nobody is watching right now. In 1873, it was a Viennese real estate bubble. In 1893, it was the cumulative effect of rate wars nobody thought would last. Whatever hits AI won’t be “AI doesn’t work.” It’ll come from some adjacent system that’s quietly entangled with the AI buildout in ways nobody has mapped. A chip supply disruption. A sovereign debt crisis in a country that’s heavily invested in AI infrastructure. An energy bottleneck. Something nobody is talking about at Davos or on the All-In Podcast. The black swan, by definition, is the one you’re not looking for.

Fifth, the people who build it and the people who own it long-term will be different. The merchants of Boston who funded the Boston & Worcester Railroad in 1831 were not the Vanderbilt family that controlled it in 1900, and neither of them were CSX, which runs it today. OpenAI’s current investors, Anthropic’s current investors, the hyperscalers currently spending $700 billion a year: these may or may not be the entities that own and profit from AI infrastructure in 2050. Morgan got rich not by building railroads but by picking up the pieces after other people’s railroads collapsed. Someone will play that role in AI. We don’t know their name yet.

Sixth, and this is the one I keep coming back to: the infrastructure will outlast everyone’s financial projections. The tracks the Boston & Albany laid in the 1840s are still carrying freight in 2026. Data centers being built today will run computation, in some form, for decades after the companies that built them have been restructured, merged, acquired, or dissolved. The physical layer endures. The capital layer above it churns.

I keep the stock certificate on my desk. Certificate B79362. Cancelled July 23rd, 1949.

A new technology that changes the cost structure of everything. A flood of capital chasing the opportunity. Financial instruments invented on the fly to channel that capital. A period of expansion that feels like it will never end.

Then a shock. Then wreckage. Then reorganization. Then, slowly, the emergence of a new system that looks nothing like what anyone planned but works better than what came before.

The trains kept running through all of it.

I think the models will, too.