James Jerome Hill (September 16, 1838 – May 29, 1916) was an American railway entrepreneur. 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 the Pacific Northwest. Because of the size of this region of the United States and the economic dominance exerted by the Hill lines, Hill became known during his lifetime as "The Empire Builder", and died in 1916 with a fortune of about $63 million, or about $1.3 to 1.7 billion today.James J. Hill, James J. Hill House, Minnesota Historical Society. His former home, James J. Hill House, is now a museum in Saint Paul, Minnesota.
Biography
Childhood and youth James J. Hill was born September 16, 1838, in Eramosa Township, Upper Canada (now Ontario) to James Hill Jr. and Ann Dunbar. A childhood accident with a bow and arrow 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 of the academy gave him free tuition.See James J. Hill and the Building of His Railroad Empire Railserve He was forced to leave school in 1852 after the death of his father. By that time, he was adept at math, land surveying, and English. His particular talents for English and mathematics were helpful in his career.
After working as a clerk in Kentucky (during which he learned bookkeeping), Hill decided to permanently move 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 with railroads and steamboats. Through this work, he learned the freight and transportation business. During this period, Hill began to work for himself for the first time. In the winter, when the Mississippi River was frozen and steamboats could not run, Hill started bidding on other contracts and won several.Pyle. 1918.
Hill was a member of the Pioneer Guard. When the Civil War broke out, he wanted to join the First Minnesota Volunteer Infantry Regiment, but due to blindness in one eye he did not pass medical inspection.
Young businessman Because of his previous experiences in shipping and fuel supply, Hill was able to enter both the coal and steamboat businesses. In 1870, he and his partners started the Red River Transportation Company, which offered steam boat transportation between St. Paul and Winnipeg. By 1879 he had a local monopoly by merging with Norman Kittson. In 1867, Hill entered the coal business, and by 1879 it had expanded five times over, giving Hill a local monopoly in the anthracite coal business. During this same period, he also entered into banking and quickly became a member of several major banks' boards of directors. He also bought out bankrupt businesses, built them up again, and resold them—often at a substantial profit. Hill said the secret to his success was "work, hard work, intelligent work, and then more work."
Entry into Gilded Era railroading During the Panic of 1873, a number of railroads, including the St. Paul and Pacific Railroad (StP&P), went bankrupt. The StP&P was caught in an almost hopeless legal muddle. Hill researched the StP&P for three years and concluded that it would be possible to turn a profit off the StP&P, provided that the initial capital could be found. He teamed up with Norman Kittson (the man he had merged steamboat businesses with), Donald Smith, George Stephen, and John Stewart Kennedy. Together they not only bought the railroad but also vastly expanded it by bargaining for trackage rights with the Northern Pacific Railway. In May 1879, the St. Paul, Minneapolis, and Manitoba Railway Co. (StPM&M) formed with Hill as general manager. His first goal was to expand and upgrade even more.
Hill was a hands-on, detail-obsessed manager. A Canadian of Scotch-Irish Protestant ancestry, he brought many men of the same background into high management.Claire Strom, "Among Friends: The Power of Ethnicity in the Great Northern Railway Corporation," Journal of the West (2009) 48#4 pp 11-17. He wanted people to settle along his rail lines, so he sold homesteads to immigrants while transporting them to their new homes on his rail lines. When he was looking for the best path for a track to take, he went on horseback and scouted it personally. Under his management, StPM&M prospered. In 1880, its net worth was $728,000 (equal to $ today); in 1885 it was $25,000,000, equal to $ today.
One of Hill's challenges was to avoid 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 avoided this by investing much of the railroad's profit back into the railroad itself—and charged those investments to operating expense.
"Empire Builder" Between 1883 and 1889, Hill built his railroads across Minnesota, into Wisconsin, and across North Dakota to Montana.
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, he decided that his future lay in expanding into a transcontinental railroad.
Hill said: "What we want 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." He got what he wanted, and in January 1893 his Great Northern Railway, running from St. Paul to Seattle, Washington—a distance of more than —was completed. The Great Northern was the first transcontinental built without public money and just a few land grants, and one of the few transcontinental railroads not to go bankrupt.
Hill built his transcontinental 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. He did much of the route planning himself, traveling over proposed routes on horseback. The key to the Great Northern line was Hill's use of the previously unmapped Marias Pass in northernmost Montana. The pass had initially been described by Lewis and Clark in 1805, but no one since had been able to find it. Hill hired Santiago Jameson to find it.
The Great Northern reached Seattle on January 7, 1893.
In 1898 Hill purchased control of large parts of the Mesabi Range iron mining district in Minnesota, along with its rail lines. The Great Northern began large-scale shipment of ore to the steel mills of the Midwest.Don L. Hofsommer, "Ore Docks and Trains: The Great Northern Railway and the Mesabi Range," Railroad History (1996) Issue 174, pp 5-25
Settlements The Great Northern energetically promoted settlement along its lines in North Dakota and Montana, especially by Germans and Scandinavians from Europe. The Great Northern bought its lands from the federal government—it received no land grants—and resold them to farmers at cheap prices. It operated agencies in Germany and Scandinavia that promoted its lands, and brought families over at low cost. Hill also invested in founding schools and churches for these communities and promoted a variety of progressive techniques to ensure they prospered.
This "Dakota Boom" of largely Northern Europeans pouring into North Dakota's Red River Valley along the Minnesota border between 1871 and 1890 peaked in 1882 with 42,000 immigrants.
Hill Lines in the 1890s Six months after the railroad reached Seattle came the deep nationwide 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, gave credit to many of the businesses he owned so they could continue paying their workers, and started a "10 dollar trip" (equal to $ today) for immigrants. He also took strong measures to economize—in just one year, Hill cut the railway's expense of carrying a ton of freight by 13%. Because of these measures, Hill not only stayed in business, but also increased the net worth of his railroad by nearly $10,000,000 (equal to $ today). Meanwhile, nearly every other transcontinental railroad went bankrupt. His ability to ride out the depression garnered him fame and admiration. Hill saved money by repeatedly cutting wages, made possible by a time of deflation when prices were falling generally.
In 1893, Hill began the process of looking for a source of labor other than Chinese workers. For a brief period of time, he hired Italian and Greek laborers, but company officials were not satisfied with their performance. Hill sent emissaries to the Pacific who found that Japan had the most potential in the market of "Oriental Trade," and he decided to capitalize on this opportunity.
In this time he also began to focus his energies on securing trade with Asian countries. He offered Japanese Industrialists Southern cotton and would even ship it for free if they would compare it with the short staple cotton they were using with the promise of a refund if they were dissatisfied, which they were not. With these friendly relations established, Hill managed to secure the industrializing Japanese order for 15,000 tons of rails against competition from England and Belgium. From 1886 to 1905, American exports to Japan leapt from $7.7 million a year (equal to $ today) to $51.7 million, equal to $ today.
Leonard says that after 1900 Hill exhibited poor business judgment regarding one Canadian subsidiary, the Vancouver, Westminster and Yukon Railway Company (VW&Y). He ousted its president, John Hendry, thereby worsening the problems, prolonging the delays, and adding to the costs of taking over the VW&Y. Hill's top aides were careless about details, bookkeeping, correspondence, and reports.Frank Leonard, "Railroading a Renegade: Great Northern Ousts John Hendry in Vancouver," BC Studies (2007), Issue 155, pp 69-92.
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 Railway, 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. The Union Pacific Railroad was the biggest competitor of Great Northern and Northern Pacific Railroads. 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 and Jacob Schiff.
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 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 outcome was the formation of the Northern Securities Company, which added Harriman to the joint control of the Northern Pacific, Great Northern, and Chicago, Burlington and Quincy railroads.
Northern Securities Company gets Trust Busted