Joel E. Ferris, a Spokane banker, wrote this article on the life of the railroad entrepreneur James J. Hill for the Winter 1959 edition of The Pacific Northwesterner. It is here edited by David Wilma and reprinted with permission. Joel Ferris was president of the Eastern Washington State Historical Society (Spokane), a member of the Washington State Historical Society Board (Tacoma), and of the Council of Friends of the Bancroft Library, University of California. He was a charter member, of the Westerners of Spokane and is the eponym of Spokane's Joel E. Ferris High School. James J. Hill was the founder of the Great Northern Railway.
Empire Builder: James J. Hill
In the history of the great railroads of the United States and, in fact, in the story of the leading industries of America with a few exceptions, such as Ford and Edison, perhaps no name has been featured as prominently by a railroad, business, or industry as the name of James J. Hill by the Great Northern Railway system which he created. Now [1959] over 40 years after his death, his picture looks down on you in the swank vista-dome lounge cars of the Great Northern's Empire Builder and on your table in the dining car along with a card giving three suggested benedictions or prayers of thanks, before your $3.00 dinner is served, is a card or small brochure telling of Mr. Hill, the great empire builder and of his creative genius and vision. In many chair cars his picture looks down on the weary travelers trying to make themselves comfortable or on the tourists gazing at the never ending panorama of the plains, mountains, forests, rich valleys, and the expanding cities and towns.
James J. Hill is becoming almost a legend and to review his career, his early history and days, his struggle up the ladder of fame, his battles with his rivals and competitors, his ambitions, his dream of a great transportation empire by land and sea, his relations with Spokane and our own Inland Empire are what, to a limited extent, I will try to touch on or cover in this paper.
Hill was born in the village of Rockwood, upper Canada, now Ontario, September 16, 1838, of Scotch-Irish antecedents, in a log house which his parents had built in the Canadian backwoods. His habits of industry and study were influenced by an English Quaker school teacher, William Wetherald. In his early age, his widowed mother moved to Guelph where, as the head of the family, he went to work in a grocery store. His pay was $4.00 per month. He read much and it is reported he was greatly influenced by Wetherald in his reading and early education. In 1856, not yet 18 years of age, he left home to seek his fortune in the west by way of New York state. He found his way to Chicago, the Mississippi River and by river steamer to St. Paul, only recently called "Pig's Eye," the center of trade for the furs of the Far West and supplies for the Red River, Dakota Territory, and Canada. He planned to join a fur trading brigade for the Rocky Mountains and the Far West but reached St. Paul too late to join the last brigade of the season.
In St. Paul, a rough pioneer town of 5,000, he found a job with a shipping firm and worked in their warehouses on the levee and in all departments and formed the foundation for his life's interest in shipping and transportation. Advancing in experience and responsibility he was, in 1866, in business for himself as a forwarding agent and transportation man with a number of side lines, including the management for the St. Paul business of the largest packet line on the upper Mississippi River. He was buying, selling and pressing hay, and bought furs, wheat, and wool.
He entered the railroad business as the agent for the St. Paul and Pacific Railroad Company which only ran 10 miles to St. Anthony, Minneapolis, but it gave young Hill the opportunity to develop business, move freight cheaply and learn much.
Hill, at the age of 25 was a man of prominence and married an Irish girl, a devout Catholic. The St. Paul and Pacific Railroad extended its rails north and west to St. Cloud and operated stage lines to points on the Red River where steamers, operated by the great Hudson's Bay Company, carried goods and passengers into Canada’s Fort Garry, now Winnipeg.
On the River
Hill's future was influenced by a powerful pioneer figure, Norman Kitson, born in 1814 in Canada, a fur trader and man of power and prominence who was agent in St. Paul for the Hudson's Bay Company and an early Mayor of St. Paul. In 1866 Kitson interested Hill in transporting supplies from St. Paul into the Dakotas and into Manitoba.
With tremendous energy, resourcefulness, and courage, Hill built flat boats and steamboats for the Red River trade. He made trips in to the west and north in winter and summer. He traveled by dog sled, horseback, river boat, and snow shoes, and slept in sod huts. He saw the possibility of competing with the Hudson's Bay Company and engaged in bitter competition with them and used the United States Customs to embarrass his competitor by enforcing the law requiring goods going into Canada to be bonded. The story of the struggle between the Hudson's Bay Company and its Canadian and American competition is a picturesque and brutal story. Hill, Kitson, and Donald Smith of the Hudson's Bay Company (later Lord Strathcona) formed a coalition or monopoly and the Red River Transportation Company was formed with Kitson as the ostensible owner and manager and Hill as a secret partner. This is said to have been the foundation of Hill's fortune.
In the early 1870s, railroads were being promoted and a period of bankruptcies was soon to follow. The Northern Pacific and the St. Paul and Pacific were factors in the expanding government from St. Paul to the west. The panic of 1873 brought failures, left partly completed railroads, and gave Hill the opportunity which, in time, led to his place in railroad history as the "Empire Builder."
Railroads
The St. Paul and Pacific was bankrupt and its ownership was in the control of Dutch bond holders. It reached out into the Red River country toward Winnipeg and had valuable land grants in Minnesota. It was a broken road not able to operate at times and places and had incurred the enmity of the people and the legislature of Minnesota. Hill secured the financial backing of the Bank of Montreal and its president, George Stephen (later Lord Mount Stephen). Through the efforts of Smith, later to become Lord Strathcona and the head of the Canadian Pacific Railway, a deal was made. Hill and his associates secured the St. Paul and Pacific and took it over with the newly organized St. Paul, Minneapolis and Manitoba Railroad Company. Certain land grants required construction or they would be cancelled. Hill's energy and resourcefulness brought about favorable action by the legislature of Minnesota, the courts and the receiver and even the competing bankrupt Northern Pacific Railway.
John P. Farley, who had been the receiver, later brought suit against Hill and his associates claiming a secret agreement with Hill by which he, the receiver, was to have one-fifth interest in the newly organized railroad which took over the bankrupt St. Paul and Pacific. The United States Circuit Court remarked, "Courts will not and ought not to be made the agencies whereby frauds are ordered or recognized. They will not unravel a tangled web of fraud for the benefit of anyone enmeshed therein through whose agency the web was woven." The agreement was unwritten and the United States Supreme Court upheld the lower court.
The road, under Hill's drive and ability, prospered. There were favorable crops, a great flow of emigrants into the Red River country in both the United States and Canada. Under a charter given by the Territory of Dakota, he built tracks on the west side of the Red River from Fargo to the border.
A chapter in Hill's life which we cannot cover in detail is his active participation in the construction of the Canadian Pacific Railway which was chartered in 1880 with Hill as one of the Executive Committee and he was made Chief of Routes and Construction. His desire to develop trade and business for his Red River lines, his belief in Canada and his unlimited ambition were factors in this connection. The record of construction is in itself incredible. Hill saw the program of the Canadian Pacific developing a transcontinental system and with visions of his own road extending west across the continent he parted company with his Canadian associates and a bitter enmity developed with charges of bad faith against Hill. Hill tried to prevent the building of the Canadian Pacific east from Winnipeg.
The Northern Pacific, with a checkered financial record, was finally completed from Duluth to Tacoma in 1883, and Hill's ambition and plan was to build a great competing road. He saw the value of branch lines as feeders. He saw the great undeveloped area to the north of the Northern Pacific and his plan of settlement and colonization became part of his program. He established a stock farm and in 1883 paid $5,000 for an Angus bull. He gradually pushed west and in 1884 had 1,307 miles of track in Minnesota and Dakota. To cross Montana he secured the passage of a bill by Congress permitting the laying of tracks across the extensive Indian Reservations. He promoted the organization of the Montana Central Railway, soon to become part of his expanding system, and in 1886 began his great construction drive to reach Great Falls and Butte.
With low grades, wide curvatures and the shortest distance he had a great advantage. He built great docks and elevators at West Superior, near Duluth, and organized the Northern Steamship Company with six steamers that in their first season moved nearly one million bushels of wheat. He formed an alliance with the Burlington system giving Hill's road a connection with Chicago and even then in 1886, no doubt, envisioned the time 19 years later when he purchased the entire Burlington system which brought him into national prominence as well as into conflict with the government, the courts, the Interstate Commerce Commission and with the other so-called "railroad giants," in particular E. H. Harriman and Harriman's Union Pacific associates.
On September 16, 1889, then 51 years of age, Hill organized the Great Northern Railway and leased the property of the St. Paul, Minneapolis and Manitoba for 999 years and took over 2,700 miles of road. His directors took official action requesting the management to extend its lines from some suitable point in Montana to Puget Sound.
Pushing West
His great engineer, John F. Stevens, whose bronze statue stands at Marias Pass, the summit in Montana of the Rocky Mountains, whose low grade passes he discovered and surveyed, and who also surveyed Stevens Pass in the Cascades, was the genius who developed the low grades and economical program of construction.
Hill had secured the financial backing of the House of Morgan and J. P. Morgan and Hill became close friends.
In 1895, Hill gained control of the bankrupt Northern Pacific with the Great Northern, guaranteeing payment of $100 million of Northern Pacific bonds. Hill was to receive one half of the Northern Pacific common stock. A suit was brought by Thomas W. Pearson, a Great Northern stockholder, citing a Minnesota law prohibiting the unification of parallel and competing lines. He secured an injunction and the United States Supreme Court sustained the law. Hill and his associates individually bought into the Northern Pacific and in 1896 were in control of it. Hill at the age of 58 controlled and dominated the two great systems. He was a driving, powerful man with an unlimited dominating character. Both roads prospered and they practically ceased to be competitors.
Hill saw in the great Burlington system an important addition to his railroad empire and began buying its stock, but soon found himself competing with E. H. Harriman for control. Harriman had gained control of the Union Pacific system, being as ambitious as Hill and was being backed by the great private banking house of Kuhn, Loeb and Company. Hill secured control of the Burlington, but Harriman started a counter attack by invading Hill's domain in the Northern Pacific. A battle of stock buying followed with Northern Pacific stock reaching $1,000 per share. This move came near to precipitating a financial panic in the stock market. The publicity with the financial repercussions brought about an agreement between Hill and Harriman by which Harriman was to have representation on the Northern Pacific Board but control of the Great Northern and the Burlington was to be held by the Hill and Morgan group.
The struggle, with the attendant collapse in the stock market brought both camps into deserved disrepute and Hill's further plan of strengthening his control brought him a losing battle with the United States government. He organized a holding company, the Northern Securities Corporation, to control both the Great Northern and the Northern Pacific and these two roads were to control the Burlington. President Theodore Roosevelt ordered his Attorney General to prosecute the Northern Securities Corporation on the grounds that it violated the Sherman Anti-Trust Law. The United States Supreme Court in 1904 ordered the corporation dissolved. The Burlington control remained, however, with Hill and Morgan.
Hill and Harriman soon were in a battle over Central Oregon where both were building lines up the Deschutes River. There were battles and many broken heads with a few casualties in the rival construction crews. The Portland area and the Spokane, Portland and Seattle along the Columbia River, owned equally by the Great Northern and Northern Pacific, was built and extended to Astoria. Hill and Harriman again declared a truce and Hill's line, while reaching southern Oregon and connecting with San Francisco, refrained from becoming a great competitor for the Union Pacific and Southern Pacific now under Harriman’s direction.
Hill's ambition was more than to build railroads. He realized the necessity of settlers and carried on a great campaign that brought thousands into Montana and Dakota, many taking land which was unfit for farming. The failure of crops along the "high line" of the Great Northern brought tragedy and suffering. Hill was soon criticized and reviled and the Jim Hill mustard, a noxious weed, perpetuated his name. One song went:
Twixt Hill and Hell, there is just one letter.
Were Hill in Hell, we'd feel much better.
Spokane
In 1891, Spokane and the entire Northwest were excited over plans of the newly created Great Northern and their program of pushing the new system west to Puget Sound. Surveying parties were in the field at many points and were near Spokane when on Saturday morning, September 25, 1891, Hill himself arrived in Spokane in a Soo Line palace car over the Northern Pacific. Carriages were summoned and the railroad president and his engineer drove out the dusty road to the surveyors' camp north of the city near Mead. The Spokesman, then a rival paper to the Review and the Chronicle, sent a reporter to interview Hill. The reporter found him in his car seated at a table on which were some tempting grapes and oranges. His interview was reported as follows:
"Mr. Hill is about medium height, bald, wears his whiskers in a manner that proclaims his Canadian nationality and draws his mouth up in a half smile after each sentence as much as to say 'You see what I mean.' He gesticulates a good deal while talking. He wore a suit of light grey Cheviot tweed and seemed thoroughly the man of business.
" 'I can say nothing definite at this time,' he said, "any further than that the Great Northern is certainly coming to town. At present I have a corps of engineers making a preliminary survey to this city. They should get to Spokane by Wednesday or Thursday of next week. I must have a 1½ per cent grade to run my line to Spokane. The first corps of engineers only found a two per cent grade. I discharged them and sent a new party into the field.
" 'I took a birds-eye view of your town as I drove through and I believe it is going to be a very big city,' he said, expressing the opinion that eventually Spokane would be a 'second Minneapolis.'
" 'I propose to run a road from the Mississippi Valley to the Pacific Coast that can carry freight 20 per cent cheaper than any of existing lines," he said. "You have in Washington three great products that a railroad can calculate on for freight: first, your timber, (a smile), second, your grain (another smile), and your mineral (another smile).' "
No wonder Spokane was excited and enthusiastic over the definite prospect of a rival road as heavy freight rates, "the long-short haul" handicap, giving lower rates to coast cities than to Spokane, was causing bitterness and was to cause years of litigation and the never-ending struggle on the part of Spokane's businessmen and shippers, conditions which continue to this day [1959].
Mr. Hill and his plans caused great rejoicing and enthusiastic support. He arrived in Spokane again on February 9, 1892, in his private car the Manitoba. He made it his office and headquarters during his stay, declining the offer of hotel accommodations. After arriving he went to L. C. Dillman's office for a long discussion, but would not make any statements for the newspapers. This was the only statement that he would make as reported in the Spokesman on February 10, 1892: "I am coming here to get your business and to carry your freight."
When asked if he favored the free trackage proposition he said he had not heard about the matter very definitely, and asked questions about what was proposed to be done, switching charges, etc. He thought the present $2.50 rate very high. "Everything which increases the cost of doing business, hinders it. Every encouragement should be given to make this a great milling center." "Your great market is your home market. You do not want to ship wheat but flour. Cheap fuel and cheap transportation are what you need."
His statements were just general, saying what should be done in the state and area. He talked of canneries, fruit shipped to Chicago (fresh), and a smelter in the area. The mention of cheap fuel [coal] was the supply that he talked of being between the Columbia River and the Cascades which he said was $4.00 a ton or cheaper.
He met the citizens in a large public meeting in the famous old Auditorium. There on the platform with him were Mayor Frothingham, ex-Mayor Clough, J. J. Browne, A. M. Cannon, C. R. Burns, L. C. Dillman, and S. S. Glidden. He made a general speech outlining the plans of the railroad. He told of the plans for Spokane and presented his request for free right of way.
The land that we need for our yards and terminals we shall buy and pay for, but the right of way we ask for because we expect to confer upon you great benefits in return by the election here of our shops, by the constant expenditure here of large sums of money, and by the reduction we shall make in the transportation expenses borne by your business men. It will be our policy to see that its merchants are enabled to handle their business in the most advantageous and successful manner, not handicapped by unfair competition. We propose to reduce rates for you.
The Spokesman, a rival paper of Mr.. Durham's Review, at that time quotes Mr. Hill as saying, "We are coming to Spokane to do business with you and we know that nobody can underbid us and make a profit. If I were a Spokane merchant I would refuse to pay a higher freight rate than was paid by Tacoma. For a railroad to demand it is a clear violation of the short-haul clause of the Interstate Commerce Law."
A committee of 18 prominent citizens entered into a contract and agreement and guaranteed to secure and donate the right of way into and through the corporate limits of Spokane. The Railway Company agreed to locate shops at a convenient point in or adjacent to Spokane.
The story of James J. Hill, of which much has been omitted, shows that he was a truly remarkable man, a man of courage and vision, ruthless at times, perhaps, and in the opinion of some guilty of duplicity or worse, a many-sided man whose standard of business morals was in line with many others of his period. In his late years he encouraged culture, art, and education and with all his shortcomings was indeed an "empire builder." He stands out a greater builder, a greater character than Huntington, Harriman or any other of the great builders of American railroads which had so much to do with opening and developing our own western country.
In 1912 when Hill retired from the presidency of the Great Northern he said, "Most men who have really lived have had, in some shape, their great adventure; this railway is mine."
In 1910, Hill published a book Highways of Progress in large part made up of his public addresses and articles. Much of the book is a plea for conservation and intelligent development in all departments of agriculture, both by irrigation, drainage, and soil conservation, and a forecast of the future needs and growth of the United States and a defense of railroad and business consolidations as bringing greater efficiency and service to the public and better returns to the stockholders. He criticized the interference of the Government, saying:
"The lawmaking authority has fluttered about the natural and necessary transportation much as a fly buzzes about a horse. It can sting and annoy but it neither hastens nor impedes the progress of the horse unless the bites are thick enough and can bite hard enough to bring him to a halt in the effort to drive them away."
James J. Hill died on May 29, 1916, thus ending a long life span which began in a log house on the Canadian frontier. Before he passed on, his son Louis had succeeded him as president of the Great Northern.
Succeeding presidents were Ralph Budd, William P. Kenney, Frank J. Gavin, and John M. Budd. All have carried on the direction of the Great Northern. [Editor's Note: The Great Northern became part of the Burlington Northern in 1970, and later became the Burlington Northern Santa Fe.]
One author in writing of Hill concludes with the following paragraph: "The memory of Jim Hill should persist as long as the lounge car of each Great Northern passenger train displays a fine copy in color of the authorized portrait of the old man; and as long as the number one train is the Empire Builder. Let the Great Northern serve as Hill's monument. He needs no other."
