Michigan's railroads DID start out as government railroads. Three lines out of Detroit and Toledo, Michigan. Yes, Toledo, MI. Michigan Territory was a hotbed of "internal improvements", and it started the Southern Line, Central Line, and Northern Line. They were given bank charters to use to generate capital, which failed miserably, sparking the Panic of 1837. To meet bond obligations, Michigan had to agree to the resolution of the Toledo War to become a state, which was desparately needed in order to collect a huge cash handout from the Federal Gov't's budget surplus at the time-- which only went to States.
Still not enough money to cover bonds, the public lines were sold to the few companies around with available capital, which stil wasn't enough. Bankruptcy was a regular occurrance.
The three lines, all relavively east-west:
Southern Line became the Lake Shore and Michigan Southern (LSMS) . Toledo/Monroe to Chicago, along what's now US-12. This is the crossing you see at US-131 and the Indiana border. Much of it is abandoned, with the rest as short lines. The switch in the highway is the branch to Grand Rapids, which is long gone, Kalamazoo to G.R. (Kent Trails)
Central Line became Michigan Central, Detroit-Chicago. Roughly parallels I-94. Now the new State passenger line with Amtrak service.
Northern Line attracted money from London and it gradually became the Grand Trunk Western. This is the line along Ann Street, the Coopersville & Marne line along I-96, along M-21, and serves Amway in Ada. Not much left; it was never a big main line.
The result of all this was that Michigan had a long aversion to transportation funding until just before World War One. It took some serious work to get the first highways financed. Even as late as post-WW2, Michigan was reluctant to sink a stake into large transportation projects. Mackinac Bridge had some huge funding obstacles, and MI nearly sat out participating in the Interstate system. And, we had to give up the Toledo Strip.
By the way, don't believe the story that the Toledo War's casualties were limited to a pig getting killed.
To answer a following post, most Michigan railroasds weren't Land Grant Railroads, annd those that were Land Grant were required to haul gov't traffic at a hugely reduced rate. States and the Federal Gov't made a huge amount of money off this. The discount was finally eliminated after the Korean War. A very large amount of this land was never sold, and the railroasds ended up paying grossly inflated taxes on what turned out to be unsellable land. There's a reason small towns in MI died when the railroad pulled up the rails, and it wasn't the loss of freight access-- it was the removal of tax revenue, especially in places where the reilroads paid almost all the school taxes.