James J. Hill
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James Jerome Hill (September 16, 1838 – May 29, 1916), was a noted Canadian-American railroad executive. He was the chief executive officer of a family of lines headed by the Great Northern Railroad, which served a substantial area of the Upper Midwest, the northern Great Plains, and Pacific Northwest. Because of the size of this region and the economic dominance exerted by the Hill lines, Hill became known during his lifetime as the Empire Builder.
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[edit] Childhood and youth
Hill was born in Eramosa Township, Wellington County, Upper Canada (now Ontario). A childhood accident blinded him in the right eye. He had nine years of formal schooling. He attended the Rockwood Academy for a short while, where the head gave him free tuition. He was forced to leave school in 1852 due to the death of his father. By the time he had finished, he was adept at algebra, geometry, land surveying, and English. His particular talents for English and mathematics would be critical later in his life.
After working as a clerk in Canada (during which he learned bookkeeping), Hill moved to the United States and settled in St. Paul, Minnesota at the age of 18. His first job in St. Paul was with a steamboat company, where he worked as a bookkeeper. By 1860 he was working for wholesale grocers, for whom he handled freight transfers, especially dealing with railroads and steamboats. Through this work he learned all aspects of the freight and transportation business. During this period, Hill began to work for himself for the first time. During the winter months when the Mississippi River was frozen and steamboats could not run, Hill started bidding on other contracts, and won quite a few. Particularly of note was his contract to provide wood fuel to a United States Fort.
[edit] The young businessman
Because of his previous experiences in shipping and fuel supply, Hill was able to aggressively enter both the coal and steamboat businesses. In 1870 he entered the steamboat business, and by 1872 he had a local monopoly by merging (with Norman Kittson). In 1867 Hill entered the coal business, and by 1874 it had expanded five times over, giving Hill a local monopoly in the anthracite coal business. During this same period, Hill also entered into banking and quickly managed to become member of several major banks' boards of directors. Even with all of this, Hill still managed to grab at any extra business opportunities that came his way. He often bought out bankrupt businesses, built them up again, and then resold them—often gaining a huge profit.
Virtually all of this early and stunning success was due to a few key traits—traits that would reappear again and again as Hill made his way through the world of business. Firstly, he was incredibly hard-working. It takes a huge amount of diligence to tackle more than one grand project at the same time, and Hill was not only undertaking to monopolize the steamboat business. He was monopolizing coal, getting friendly with bankers, and buying out other businesses at the same time. All of that requires a large degree of dedication. Hill noted that the secret to success was, "Work, hard work, intelligent work, and then more work." Secondly, he was almost maniacally competitive. He took it almost as a point of personal honor to be the best, the biggest, and the most competitive of any business out there. Thirdly, and perhaps most importantly, Hill was simply a brilliant man and a brilliant leader of men. He was able to quickly pick up the nuances of working in any new business. His business strategy was amazing, and he was able to convince almost anyone to come to his side. All of these traits had a role in James Hill's precipitous rise to power—most especially his almost uncanny ability to predict the future of business, as shown by the way he entered the railroad business in 1877.
[edit] Entry into Gilded Age railroading
During the Panic of 1873, a number of railroads, including the St. Paul and Pacific, had gone bankrupt. The SP&P in particular was caught in an almost hopeless legal muddle. For James Hill, a man with the intelligence and perseverance to fix the problems, it was a golden opportunity. For three years Hill researched the SP&P, and finally concluded that it would be possible to make a good deal of money off of the SP&P, provided that the initial capital could be found. So Hill teamed up with Norman Kittson (the man he had merged steamboat businesses with), Donald Smith, George Stephen, and John S. Kennedy. Together they not only bought the railroad, they also vastly expanded it by bargaining for trackage rights with Northern Pacific Railway. In May 1879 the St. Paul, Minneapolis, and Manitoba Railway Co. formed—with James J. Hill as general manager. His first goal was to expand and upgrade even more.
By all accounts, James J. Hill was a hands-on, detail-obsessed manager. He wanted people settling along his rail lines, so he sold homesteads to immigrants and then imported them to their new homes (on his rail lines, of course). He imported grains from Russia and sold this to farmers. He even sold wood to farmers in order to encourage them to buy his wheat. When he was looking for the best path for one of his tracks to take, he went out on horseback and scouted it out personally. Under his skillful management, SPM&M prospered. In 1880 their net worth was $728,000; in 1885 it was $25,000,000. One of his challenges at this point was the avoidance of federal action against railroads. If the federal government believed that the railroads were making too much profit, they might see this as an opportunity to force lowering of the rates. Hill cleverly avoided this by investing a large portion of the railroad's profit back into the railroad itself—and charged those investments to operating expense. It was at this point that Hill became the official president of SPM&M (not that he hadn't been the man behind the curtain far before this), and decided to expand the rail lines even further.
[edit] The "Empire Builder"
Between 1883 and 1889, Hill built his railroads across Montana, across Wisconsin, across North Dakota and around the Great Lakes. Hill and his men worked in spite of all obstacles—including a presidential veto of a bill that would allow Hill to build legally through American Indian territory (the act was later repealed under President Grover Cleveland). When there wasn't enough industry in the places Hill was building, Hill brought the industry in, often by buying out a company and placing plants along his railroad lines. Then, in 1889, Hill decided that the future was in building a transcontinental railroad - and so he embarked on his greatest project.
"What we want," Hill is quoted as saying, "is the best possible line, shortest distance, lowest grades, and least curvature we can build. We do not care enough for Rocky Mountains scenery to spend a large sum of money developing it." Hill got what he wanted, and in January 1893 his Great Northern Transcontinental Railway, running from St. Paul, Minnesota to Seattle, Washington — more than 1,700 miles — was completed. This was the only transcontinental built with neither public money nor land grants and was the only transcontinental that did not go bankrupt.
[edit] The Hill lines: the 1890s
Six months after this amazing feat came the depression of the 1890s. Hill's leadership became a case study in the successful management of a capital-intensive business during the economic downturn. In order to ensure that he did not lose his patronage during the crisis, Hill lowered prices for farmers and gave credit to many of the businesses he owned, so they were able to continue paying their workers. He also took strong measures to economize—in just one year, Hill cut the expense of carrying a ton of freight by 13 percent. Because of these measures, Hill not only stayed in business, but increased the net worth of his railroad by nearly $10 million. Meanwhile, every other transcontinental railroad went bankrupt. His ability to ride out the depression garnered fame and admiration for Hill.
Part of Hill's success during the depression was due to repeatedly cutting his employees' wages. That, and his hard micromanaging practices, eventually lead to a railway-wide strike and the workers' unionization under the leadership of Eugene V. Debs. Hill and Debs agreed to arbitration by other business owners led by Charles Pillsbury. The result was restoration of the workers' wages to pre-depression levels.
[edit] The Northern Pacific and the "short squeeze" of 1901
With 1901 and the start of the new century, James Hill now had control of both the Great Northern Railroad (which he had renamed the SPM&M), and the Northern Pacific (which he had obtained with the help of his friend J. P. Morgan, when that railroad went bankrupt in the depression of the 1890s). Hill also wanted control of the Chicago, Burlington and Quincy railroad because of its Midwestern lines. Unfortunately for Hill, Union Pacific Railroad, the biggest competitor of Great Northern and Northern Pacific, also wanted control of Chicago, Burlington, and Quincy. Although Great Northern and Northern Pacific were backed by J. P. Morgan and James J. Hill, the Union Pacific was backed not only by its president, Edward H. Harriman, but by the extremely powerful William Rockefeller.
Quietly, Harriman began buying stock in Northern Pacific with the intention of gaining control of Chicago, Burlington, and Quincy. He was within 40,000 shares of control when Hill learned of Harriman's activities and quickly contacted J. P. Morgan, who was on vacation in Europe at the time. Morgan, acting on behalf of his friend, ordered his men to buy everything they could get their hands on.
The result was chaos on Wall Street. Northern Pacific stock was forced up to $1,000 per share. Many speculators, who had sold Northern Pacific "short" in the anticipation of a drop in the railroad's price, faced ruin. The threat of a real economic panic loomed. Neither side could win a distinct advantage, and the parties soon realized that a truce would have to be called. The winners of that truce were Hill and Morgan, who immediately formed the Northern Securities Company with the aim of tying together their three major rail lines. Unfortunately for the Hill-Morgan alliance, on the same day they formed the Northern Securities Company, President William McKinley was assassinated, placing Theodore Roosevelt—the "trust-buster," into the office of president.
[edit] The Hill lines survive the trust-busting era
Roosevelt wasted little time in breaking apart the trust. On March 14th, the Northern Securities Company was ordered to be dissolved under the Sherman Antitrust Act. However, Hill, without the benefit of a central company, managed to acquire the Colorado and Southern Railroad lines into Texas, and the Spokane, Portland, and Seattle Railway. By the time of his death in 1916, James J. Hill was worth more than $53 million (more than $1 billion in today's money).
The Great Northern Railway and the Northern Pacific had tried to merge four times, in 1893, 1901, 1927, and 1961, but were denied by the US government.[1] They finally merged in 1970, creating the Burlington Northern Railroad. In 1995, Burlington Northern merged with the Atchison, Topeka and Santa Fe Railway to become Burlington Northern Santa Fe (BNSF Railway).
[edit] Hill's legacy
Hill was a supporter of free trade and was one of the few supporters of free trade with Canada. In St. Paul the city's main library building and the adjoining Hill Business Library were funded by him. In addition he donated to numerous schools, including the St. Paul Seminary (but not, contrary to legend, the city's new cathedral).
Hill also helped President Woodrow Wilson arrange the Anglo-French Loan of 1915 and was the one to insist that the US should not aid the warring parties with ammunition—only with humanitarian goods. He was immortalised as the (absent) character Nathaniel Taggart in Ayn Rand's novel Atlas Shrugged.
Hillsboro, North Dakota, Hill County, Montana and the town of Hillyard, Washington (now a neighborhood of Spokane) are named for him as is Amtrak's Empire Builder train, which uses former Great Northern tracks. The James J. Hill House in St. Paul, Minnesota is a National Historical Landmark.
| Give me snuff, whiskey and Swedes, and I will build a railroad to hell. | ||
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—Attributed to James J. Hill |
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[edit] References
- Robert Sobel The Entrepreneurs: Explorations Within the American Business Tradition (Weybright & Talley 1974), chapter 4, James J. Hill: The Business of Empire ISBN 0-679-40064-8
- Martin, Albro. James J. Hill and the Opening of the Northwest. New York: Oxford University Press, 1976. ISBN 0-19-502070-7.
- Burton W. Folsom, Jr., The Myth of the Robber Barons, Young America.
- The American Nation: A History of the United States, John A. Garraty, pgs. 469, 481, 587
- A People's History of the United States, Howard Zinn, pg. 343
- http://voteview.uh.edu/jjhill.htm, Keith T. Poole
- The World Book Encyclopedia
- Encyclopedia Encarta
- James J. Hill House, Minnesota Historical Society. URL accessed on 2006-04-21.
[edit] External links
- Obituary, New York Times, May 30, 1916
- James J. Hill Reference Library
- James J. Hill and the Building of His Railroad Empire
- The Destruction of a Wealth and Jobs Creator by Parasitical-Elites A criticism of government intervention in the business of Hill
- Biography at the Dictionary of Canadian Biography Online
- James J. Hill Scrapbook, 1916 Archives Center, National Museum of American History, Smithsonian Institution.
- Webvideo:James J Hill and the Building of the Stone Arch Bridge
- The Truth About the "Robber Barons" A discussion of Hill's building of the transcontinental railroad by Thomas DiLorenzo
