Science Fair Project Encyclopedia
James J. Hill
Hill showed his aptitude for the intellectual side of the world early in life; although he only ever had nine years of formal schooling, by the time he had finished (he was forced to leave school in 1852 due to the death of his father), 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 for a while as a clerk (at which job he learned bookkeeping), Hill settled in St. Paul, Minnesota at the age of 18. His first job at St. Paul was with a steamboat company, where he worked as a bookkeeper. His talents at this earned him a great deal of respect, and by 1860 he was working for wholesale grocers, for whom he handled freight transfers, especially dealing with railroads and steamboats. This work made him learn, by necessity, about all aspects of the freight and transportation business. Like everything else Hill tried his hand at, he was quite successful at it. During this time 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 US fort. These experiences made him quite the valuable employee, and by 1865, Hill was worming his way up through the business world.
If there is one thing to be said in favor of James J. Hill, it is this: he did absolutely nothing by halves. 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; by 1872 he had monopolized it, by way of a merger (with Norman Kittson). In 1867 Hill entered the coal business; by 1874 it had expanded five times over; by 1877 James Hill had virtually monopolized the Anthracite coal business. During this same time period, Hill was also entering banking—he had managed to become Member of the Board of several major banks. And with all of this, Hill still managed to grab at any extra business opportunities that came his way. Even at this early age (Hill was not yet forty), Hill had established the habit of buying out bankrupt businesses, building them up again, and then reselling—often to a huge profit.
Virtually all of this early and stunning success was due to a few key traits of Hill's—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. That takes quite a level of dedication. Hill was once quoted telling a questioner that the secret to success was, "Work, hard work, intelligent work, and then more work." Secondly, he was almost maniacally competitive. This "crusty" man took it almost as a point of personal honor to be the best, the biggest, 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; 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.
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 sort out this muddle, it was a golden opportunity. For three years Hill researched the SP&P, finally concluding that it would be possible to make quite a 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 , and together they not only bought the railroad, but rather 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? To expand and upgrade still more.
By all accounts, James J. Hill was a hands-on, detail-obsessed manager. Did he want people settling along his rail lines? 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 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 feds believed that the railroads were making too much profit, they might see this as an opportunity to force lowering of the rates. Hill rather cleverly ducked 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.
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 (Cleveland later changed his mind). When there wasn't enough industry in the places Hill was building, Hill brought the industry to him, often by buying out a company and placing plants along his railroad lines. Then, in 1889, Hill decided that the future was in transcontinental railroad - and so he embarked on his great 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 transcontinental railroad was completed—the only transcontinental built with no public money or land grants. This is the only transcontinental that did not go bankrupt.
Six months after this amazing feat came the depression of the 1890s. Hill, in his usual calm manner, handled this crisis brilliantly. Firstly, in order to ensure that he did not lose his patronage during the crisis, Hill lowered prices for farmers and gave many of the businesses he owned credit, 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. (Of course, this was partially due to his ready exploitation of the cheap cost of labor during the depression.) Because of these measures, Hill not only stayed in business, but increased the net worth of his railroad by nearly 10 million dollars. Meanwhile, every single other transcontinental railroad went bankrupt. This feat raised Hill quite a bit of fame and admiration. However, he wasn't quite done yet. Before long, Hill would nearly cause an economic crisis of his own.
To recap briefly: James Hill now had control of both the Great Northern Railroad (what he had renamed the SPM&M), and the Northern Pacific, as well (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. And while Great Northern and Northern Pacific were backed by the monies of 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. Stock was forced up to $1,000 per share. Innumerable speculators were ruined. 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 shook down to be 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 McKinley was assassinated, placing Teddy Roosevelt—the trust-busting Teddy Roosevelt—solidly in presidential office.
Roosevelt wasted little time in busting this trust. On March 14th, the Northern Securities Company was ordered dissolved under the Sherman Antitrust Act. Not that this would stop Hill, who, without the benefit of a central company, managed to acquire the Colorado and Southern lines into Texas, and the Spokane, Portland, and Seattle railroad. By the time of his death in 1916, James J. Hill was worth more than 53 million dollars.
Hill was a rabid supporter of free trade and was one of the few supporters of free trade with Canada. He also helped President Wilson arrange the Anglo-French Loan of 1915, and was the one to insist that we should not aid the warring parties with ammunition—only with humanitarian goods. Hill's decent acts towards the farmers that lived on his rail lines also cannot be forgotten. He was immortalised as the (absent) character Nathaniel Taggart in Ayn Rand's classic novel Atlas Shrugged.
Whatever personal feelings may be, however, the fact remains that James J. Hill was one of the most powerful figures in American history.
- James J. Hill Reference Library
- James J. Hill and the Building of His Railroad Empire
- A criticism of government intervention into the business of James J. Hill]
- Martin, Albro. James J. Hill and the Opening of the Northwest. New York: Oxford University Press, 1976. ISBN 0195020707.
- 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
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