James J. Hill

James J. Hill at about age 35, ca. 1875

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 Railway, 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.

Childhood and youth

Hill was born in Eramosa Township, Wellington County, Upper Canada (now Ontario). A childhood accident blinded him in the right eye (cutter shack). He had nine years of formal schooling. He attended the Rockwood Academy for a short while, where the head gave him free tuition.[1] 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 hard 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 the nearby Fort Snelling.

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 persuade almost anyone to come to his side. All of these traits had a role in 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.

Entry into Gilded Age railroading

During the Panic of 1873, a number of railroads, including the St. Paul and Pacific (StP&P), had gone bankrupt. The StP&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 StP&P and finally concluded that it would be possible to make a good deal of money off of the StP&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. (StPM&M) formed—with James J. Hill as general manager. His first goal was to expand and upgrade even more.

By all accounts, 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, StPM&M prospered. In 1880, its 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 railway tariff 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 StPM&M (not that he hadn't been the man behind the curtain far before this), and decided to expand the rail lines even further.

James J. Hill ca. 1890

The "Empire Builder"

Between 1883 and 1889, Hill built his railroads across Minnesota, into Wisconsin, and across North Dakota to Montana. Hill and his men worked in spite of all obstacles—including a presidential veto of a bill that would have allowed Hill legally to build through American Indian territory (the law preventing Hill from laying track across Indian territories was later repealed under President Grover Cleveland, who like Hill was a Bourbon Democrat. When there was not enough industry in the areas Hill was building, Hill brought the industry in, often by buying out a company and placing plants along his railroad lines. By 1889, Hill decided that his future lay in expanding into a transcontinental railroad.

"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 Railway, running from St. Paul, Minnesota to Seattle, Washington — a distance of more than 1,700 miles — was completed. The Great Northern was the first transcontinental built without public money and just a few land grants and was one of the few transcontinental railroads not to go bankrupt.

Hill chose to build his railroad north of the competing Northern Pacific line, which had reached the Pacific Northwest over much more difficult terrain with more bridges, steeper grades, and tunnelling. Hill did much of the route planning himself, travelling over proposed routed on horseback. The key to the Great Northern line was Hill's use of the previously unmapped Marias Pass. The pass had been discovered by John Frank Stevens, principal engineer of the Great Northern Railway, in December of 1889, and offered an easier route across the Rockies than that taken by the Northern Pacific.

The Great Northern reached Seattle in 1893.

The Hill Lines: The 1890s

Six months after this amazing feat came the depression called the Panic of 1893. 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 rail tariff shipping rates 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 railway's expense of carrying a ton of freight by thirteen percent. Because of these measures, Hill not only stayed in business, but also increased the net worth of his railroad by nearly $10 million. Meanwhile, nearly every other transcontinental railroad went bankrupt. His ability to ride out the depression garnered him fame and admiration.

Part of Hill's success during the depression also 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.

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 StPM&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 mid-1890s). Hill also wanted control of the Chicago, Burlington and Quincy railroad because of its Midwestern lines and access to Chicago. 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.

James J. Hill's home, 240 Summit Avenue, St. Paul, Minnesota

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"—in the office of President.

The Hill Lines survive the trust-busting era

Roosevelt wasted little time in breaking apart the trust. On March 14, 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 tried to merge four times, in 1896, 1901, 1927, and 1955. This last attempt lasted from 1955 until final United States Supreme Court approval and merger in March, 1970, which created 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).

Hill's legacy

A portrait of James J. Hill is now hung in the library in his home.

Politically, Hill was a Bourbon Democrat. The Democratic Party's continued enchantment with the populist William Jennings Bryan led Hill to support Republican presidential candidates William McKinley (1896 and 1900), Theodore Roosevelt (1904), William Howard Taft (1908 and 1912).

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 Saint Paul Seminary. Some attributed the financing of the Cathedral of St. Paul to Hill; but, in fact, it was his wife (who was a devout Roman Catholic, whereas Hill was a Protestant) who made significant financial contributions to its construction.

In 1891, after three years of building, construction was completed on a new Hill family home on Summit Avenue in St. Paul. Over 400 workers labored on the project. Built at a cost of $930,000 and with 36,000 square feet, the James J. Hill House was among the City's largest. As with his business dealings, Hill supervised the construction and design himself, hiring and firing several architects in the process. The house has many early electrical and mechanical systems that predate widespread adoption in modern domestic structures. After the death of Hill's wife in 1921, the house was donated to the Diocese. It was obtained by the Minnesota Historical Society in 1978 and today is operated as a museum and gallery. Upon completion of the Summit Avenue residence, Hill had the family's old house, which he had constructed in 1878, razed.

Though a Protestant, Hill maintained a strong philanthropic relationship with the Catholic Church in St. Paul and through the northwest. Hill's historic home is located next to the Cathedral, largely due to the special relationship Hill's wife, a practicing Catholic, had with the Diocese. The Hills maintained close ties with Archbishop John Ireland and Hill was a major contributor to the St. Paul Theological Seminary, Macalester College, Hamline University, the College of St. Thomas, Carleton College, and other educational, religious and charitable organizations.

In order to generate business for his railroad, Hill encouraged European immigrants to settle along his line, often paying for Russian and Scandinavian settlers to travel from Europe. To promote settlement and revenue for his rail business, Hill experimented with agriculture and worked to hybridize Russian wheat for Dakota soil and weather conditions. He also ran model experimental farms in Minnesota to develop superior livestock and crop yields for the settlers locating near his railroads.

An enthusiastic conservationist, Hill was invited by President Theodore Roosevelt to a governor's conference on conservation of natural resources, and later appointed to a lands commission.

Drawing on his experience in the development of Minnesota's Iron Range, Hill was, during 1911-1912, in close contact with Gaspard Farrer of Baring Brothers & Company of London regarding the formation of the Brazilian Iron Ore Company to tap that nation's rich mineral deposits.

Near the end of his life, Hill played what a recent biographer, Albro Martin, called his "last and greatest role." After the first punishing year of World War I, the Allied Powers desperately needed financial support to continue the war effort. To that end, Hill was a major figure in the effort launched by J.P. Morgan to float the Anglo-French bond drive of 1915, which allowed the Allies to purchase much-needed foodstuffs and other supplies. In September of 1915, the first public loan, the $500,000,000 Anglo-French loan, was floated. Concomitantly, the resulting trade in munitions with England and France carried the United States from a depression in 1914 to boom years in 1915 and 1916.[2]

Hillsboro, North Dakota, Hill County, Montana and the town of Hillyard, Washington (now a neighborhood of Spokane) are named for him. In 1929, the Great Northern Railway named its flagship passenger train the Empire Builder in his honor. The train continues as Amtrak's daily Empire Builder, which uses former Great Northern tracks west of St. Paul, Minnesota. The James J. Hill House in St. Paul, Minnesota is a National Historical Landmark.

In 1887, the Great Northern's first company headquarters building was constructed in St. Paul. It was designed by James Brodie, who also built the Hill's house on Summit Avenue. The 1887 building was converted between 2000 and 2004 to a 53 unit condo in the Historic Lowertown District of St. Paul.[3] Always the innovator, Hill had seen the devastation done to downtown Chicago by the great fire of 1871. As a result, one feature Hill integrated into the construction of the 1887 company headquarters (the Great Northern General Office Building) was barrel vaulted ceilings constructed of brick and railroad steel rails that held up a layer of sand several inches deep. The theory was that if a fire broke out and the ceiling caved in, the sand would drop and retard or suppress the fire.

Hill was intimately involved in the planning and construction (1914-1916) of a new company headquarters in St. Paul (to be known as the Great Northern Office Building), which was to house the corporate staffs of the Great Northern, the Northern Pacific and Hill's banking enterprises. The 14-story building cost $14 million to construct and was the tallest building in the Twin Cities until the Foshay Tower was completed in 1929.

Give me snuff, whiskey and Swedes, and I will build a railroad to hell.

— Attributed to James J. Hill

Hill's heirs established the James J. Hill Reference Library in St. Paul, which is considered by the United States Small Business Administration the premier source for publicly accessible practical business information in the United States, and many SBA programs rely on the Hill Library's HillSearch service (http://www.hillsearch.org) to provide business information resources to small businesses nationwide. The Hill Library has developed numerous online programs and now serves millions of small business owners worldwide (http://www.jjhill.org/research) and trains business leaders around the globe on effective uses for information (http://www.jjhill.org/coldcall).

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, pp. 469, 481, 587.
• A People's History of the United States, Howard Zinn, p. 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.
• Malone, Michael P., James J. Hill: Empire Builder of the Northwest Norman, OK.: University of Oklahoma Press, 1996. ISBN 0-8061-2793-7

External links

• Obituary, New York Times, May 30, 1916
• James J. Hill Washington State History
• 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