Perhaps the most notable incident to occur for railroads during the decade was the financial panic of 1873. The industry was building so fast leading up to the panic that it was averaging almost 6,000 miles a year or 17,000 miles between 1871 and 1873. And this is ultimately what led to the panic (along with the failings of banker and railroad tycoon Jay Cooke whose Northern Pacific Railway went bankrupt), railroads were far too overextended into western regions and areas that had yet to be settled thus these empty lines had no means to earn a profit. To make matters worse America's Heartland was filled with angry Indians who were not happy about the encroachment of the White Man onto their lands and promptly destroyed track and infrastructure when possible.
More Railroad History
The Beginning, The 1820s and '30s
A New Industry Takes Flight, The 1840s
The 1850s, A Blossoming Industry
The 1860s, Railroads In The Civil War
A Standard Time Achieved, The 1880s
Safety And Steel, The 1890s
The "Golden Age" Comes To A Close, 1900-1920
The "Silver Age," Streamliners And The 1930s
The Industry In Decline, The 1950s
Mergers And Bankruptcies, The 1960s And 1970s
Railroads Of Today, The 1980s Onward
This would lead to the "settling of the west" as the U.S. government sent in the military to protect civilians and allow railroad construction to continue on westward. After several years of bloodshed, capped by the famous Battle At Little Big Horn where Colonel George A. Custer's Seventh Calvary was annihilated by the Sioux led by Crazy Horse, most of the fighting had ended by 1877. This allowed railroads like the NP to continue building and eventually reached Seattle by 1883. The decade also saw new western railroads like the Atchison, Topeka & Santa Fe Railway continue to push westward across the plains towards the southwest. The AT&SF dated back to 1863, originally known as the Atchison & Topeka Railroad of 1860, and after connecting its namesake cities and Kansas began its trek westward finally reaching Santa Fe in 1880.
The Southern Pacific was also feverishly building that decade heading eastward from the San Joaquin Valley towards the southwest. The SP had covered most of Southern California by the end of the 1860s and a decade later continued its march eastward eventually reaching El Paso, Texas by the early 1880s. While westward expansion was underway railroads also continued to sprawl out farther in the eastern U.S. At the beginning of the decade railroads in the South were still recovering from the ravages of the Civil War. However, by 1880 the network had been aggressively built upon gaining 55% of its 1870 mileage total to over 19,000. In total the country's rail mileage increased from roughly 53,000 in 1870 to 93,000 by 1880.
The decade also saw an improvement of railroads switching to the standard gauge of 4 feet, 8 1/2 inches. However, numerous gauges still persisted. For instance, there were about six different gauges in use: 4 feet, 8 1/2 inches (found predominantly in the Northeast and Midwest); 4 feet, 10 inches (found mostly in Ohio); 5 feet (found mostly in the South); 5 feet, 4 inches; 5 feet, 6 inches; and 6 feet. As a historical footnote you may be interested in knowing how the 4 foot 8 1/2 inch gauge came to be used. Well, American railroads took this gauge from the English. For England, they used the 4 foot 8 1/2 inch gauge because that was the standard width between the common horse carriage of the day and so they applied the concept to the new railroads as well.
The other significant event that took place during the era was the adoption of Standard Time Zones. Since the time could be different depending on where one was, along with the fact that it was earlier in the day the further west one was a plan was set in motion in the early 1870s to create a more unified timing system. Originally known as the Time Table Convention, later as the General Time Convention. William Allen was secretary of the convention in 1876 and would be the one credited with planning the four major time zones now common in the country: Eastern, Central, Mountain and Pacific. These zones lie along the 75th (Eastern), 90th (Central), 105th (Mountain) and 120th (Pacific) meridians. Railroads liked the new proposal and accepted it in 1883 with the new time going into affect on November 18th of that year.
Railroads at this time saw many improvements and redundancies achieved that would be further advanced in the 1880s. That decade would see the nation's rail mileage again nearly double hitting the 100,000+ mark for the first time. Aside from Standard Time being adopted during the decade other improvements included better passenger services, a standard gauge adopted and increased use of the automatic knuckle-coupler and air brake. While these two devices would not be federally mandated until the 1890s at least one state would required them to be used on all trains operating within its borders during the 1880s. Lastly the 1880s saw more and more bridges crossing major waterways, such as the Ohio and Mississippi Rivers.
For more reading about railroads in the west you might want to consider picking up a copy of Nothing Like It In the World: The Men Who Built the Transcontinental Railroad 1863-1869 by Stephen which, in great detail, describes the building of the original transcontinental line and the difficulty in doing so. One other book of note, while dated, is The Story of the Western Railroads: From 1852 Through the Reign of the Giants by Robert Riegel, which describes western railroading from its beginnings in the 1850s, before the transcontinental line was built (when west meant across the Mississippi) to how the large systems that dominated the 20th century came about.