James J. Hill

James Jerome Hill
Hill circa 1875
Born	(1838-09-16)September 16, 1838 Eramosa Township, Ontario, Upper Canada
Died	May 29, 1916(1916-05-29) (aged 77) St. Paul, Minnesota
Nationality	Canadian-American
Occupation	Railroad tycoon
Spouse(s)	Mary Theresa Mehegan
Children	10

James Jerome Hill (September 16, 1838 – May 29, 1916), was a 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."

Biography

Childhood and Youth

Hill was born in Eramosa Township, Wellington County, Upper Canada (now Ontario). 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 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 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 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.

The 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.^[2] 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, Hill also entered into banking and quickly managed to become member of several major banks' boards of directors. He also bought out bankrupt businesses, built them up again, and then resold them—often gaining a substantial profit. Hill noted that the secret to his success was "work, hard work, intelligent work, and then more work."^[3]

Entry into Gilded Era Railroading

During the Panic of 1873, a number of railroads, including the St. Paul and Pacific Railroad (StP&P), had gone bankrupt. The StP&P in particular was caught in an almost hopeless legal muddle. For James Hill 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. Hill 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, 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.

Hill was a hands-on, detail-obsessed manager. A Canadian himself of Scotch-Irish Protestant ancestry, he brought in many men with the same background into high management.^[4] He wanted people to settle along his rail lines, so he sold homesteads to immigrants while transporting them to their new homes using his rail lines. When he was looking for the best path for one of his tracks to take, he went on horseback and scouted it personally. Under his 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 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 went from general manager to the official president of StPM&M, and thereafter decided to expand the rail lines.

The 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, 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."^[5] 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 (2,700 km) — 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 routes on horseback. The key to the Great Northern line was Hill's use of the previously unmapped Marias Pass. The pass had initially been described by Lewis and Clark in 1805, but no one since had been able to find it so Hill hired Santiago Jameson to search it out. Jameson discovered the pass 1889 and it shortened the Grand Northern's route by almost one hundred miles.^[6] The pass had been discovered by John Frank Stevens, principal engineer of the Great Northern Railway, in December 1889, and offered an easier route across the Rockies than that taken by the Northern Pacific. The Great Northern reached Seattle in 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.^[7]

Settlements

The Great Northern energetically promoted settlement along its lines in North Dakota and Montana, especially by German 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.^[8] This "Dakota Boom" peaked in 1882 as 42,000 immigrants, largely from northern Europe, poured into the Red River Valley running through the region.^[9] The rapidly increasing settlement in North Dakota's Red River Valley along the Minnesota border between 1871 and 1890 was a major example of large-scale "bonanza" farming.^[8][9][10]

The Hill Lines: The 1890s

Six months after the railroad reached Seattle came the deep nationwide depression called the Panic of 1893.^[10] 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 could 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 13%. 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. Hill saved money by repeatedly cutting wages, made possible by a time of deflation when prices were falling generally.^[11]

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.^[12]

In this time he also began to focus his energies on securing trade with Asian countries. He offered Japanese Industrialists Southern cotton and ship it 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 to $51.7 million.^[13]

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.^[14]

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 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. As the Hill-Morgan alliance formed the Northern Securities Company, Theodore Roosevelt became president and turned his energies against the great trusts that were monopolizing trade.

The Hill Lines survive the trust-busting era

Roosevelt sent his Justice Department to sue the Northern Securities Company in 1902. The Supreme Court in 1904 ordered it to be dissolved as a monopoly. (Ironically, the Burlington Route, Northern Pacific, and Great Northern would later merge in 1970 to form the Burlington Northern Railroad.) This unfortunately ended Hill's ability to maintain competitive rates in Asian countries and in the subsequent two years American trade with Japan and China dropped 40% (or $41 million).^[6] Hill moved on without the benefit of a central company, and acquired the Colorado and Southern Railway lines into Texas. He also built the Spokane, Portland and Seattle Railway. By the time of his death in 1916, James J. Hill was worth more than $53 million (almost $2.5 billion (2007) dollars). When his estate was divided his widow received over 16 million, and each of his children received almost 4 million; only 1.5 million was paid in income and inheritance taxes.^[15]

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 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 the Burlington Northern and Santa Fe Railway.

Family life

In 1867, James J. Hill married Mary Theresa Mehegan, born in 1846 in New York City. They had ten children:

1. Katherine (died in infancy)
2. Mary Hill Hill, who married Samuel Hill of Washington D.C. & Seattle. Samuel Hill was an executive at the Great Northern Railway when he married Mary Hill.
3. James N. Hill of New York City.
4. Louis W. Hill of St. Paul, Minnesota, who was named president of the GN in 1907 and board chairman in 1912.
5. Ruth Hill Beard, who married Anson McCook Beard of New York City.
6. Clara Hill Lindley, who married E. C Lindley of St. Paul, Minnesota, who was Vice President, Counsel General, and a member of the Board of Directors of the Great Northern Railway.
7. Charlotte Hill Slade, who married George T. Slade of New York City and St. Paul, Minnesota. George T. Slade was an executive at The Great Northern Railway and Yale classmate of Louis W. Hill.
8. Rachel Hill Boeckmann, who married Egil Boeckmann of St. Paul, Minnesota.
9. Gertrude Hill Gavin, who married Michael Gavin of New York City.
10. Walter Jerome Hill of St. Paul, Minnesota. Walthill, Nebraska was named for Walter.^[16]

Death

By early 1916 Hill began pouring more attention into philanthropy, donating thousands of dollars to various institutions as he privately struggled with a variety of increasingly painful ailments. His condition deteriorated quickly in mid-May, but even with the help of many respected doctors he was beyond saving.^[15] After falling into a coma, he died in his home in St. Paul, Minnesota, on May 29, 1916.^[14] Mary Hill died in 1922 and was buried next to her husband by the shore of Pleasant Lake on their North Oaks farm. Because of vandals and curious admirers, both graves were later moved to Resurrection Cemetery in St. Paul for safer keeping.

Hill's legacy

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), and William Howard Taft (1908 and 1912).

Hill was also a member of the Jekyll Island Club (aka The Millionaires Club) on Jekyll Island, Georgia along with J. P. Morgan and William Rockefeller.

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.

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 (3,300 m²), 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. Upon completion of the Summit Avenue residence, Hill had the family's old house, which he had constructed in 1878, razed. After the death of Hill's wife in 1921, the house was donated to the Roman Catholic Archdiocese of Saint Paul and Minneapolis. It was obtained by the Minnesota Historical Society in 1978 and today is operated as a museum and gallery.

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 Saint Paul Seminary, Macalester College, Hamline University, the University of St. Thomas, Carleton College, and other educational, religious and charitable organizations. He was the first major donor to the Marquette University School of Medicine.

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 such as North Oaks 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 1915, the first public loan, the $500,000,000 Anglo-French loan, was floated after negotiations with the Anglo-French Financial Commission. 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.^[17]

Hillsboro, North Dakota; Hill County, Montana; and Hillyard, Washington^[18] (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 Historic Landmark.^[19]

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.^[20] Hill had seen the devastation done downtown by the Great Chicago Fire. 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.

“	Give me Swedes, snuff and whiskey, and I'll build a railroad through hell.	”
	— Attributed to James J. Hill[21]

Hill's heirs established the James J. Hill Reference Library in St. Paul,^[22] which is considered by the 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 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.

In The Great Gatsby, Hill is the man whom Gatsby's father says Gatsby would have equalled if he had lived long enough.

Hill and his railway are mentioned in the Harry McClintock song "Hallelujah, I'm a Bum."

In 1959, Hill High in St.Paul, Minnesota, was established as a school from the funds set aside from Hill's wife for education. The school, which was all girls, consolidated in 1971 with Archbishop Murray School to form Hill-Murray School in Maplewood, Minnesota.

Hill Capital is a venture capital fund established in 2016 "aligned with James J. Hill’s belief in the cooperation of the production, distribution and exchange of wealth as outlined in his writings".^[23] The Hill library owns 75 shares.^[24] As of September 2016, the fund is not yet closed.

See also

• Charles T. Hinde railroad executive, founder of the Hotel del Coronado, and long time friend of James J. Hill.
• Pierce Butler (justice)
• List of railroad executives

References

Further reading

External links

Wikimedia Commons has media related to James J. Hill.

Wikisource has the text of a 1905 New International Encyclopedia article about James J. Hill.

• Mary Theresa Mehegan Hill in MNopedia, the Minnesota Encyclopedia
• James J. Hill in MNopedia, the Minnesota Encyclopedia
• 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 on YouTube
• The Truth About the "Robber Barons" A discussion of Hill's building of the transcontinental railroad by Thomas DiLorenzo
•  "Hill, James Jerome". Encyclopedia Americana. 1920. 
• Works by or about James J. Hill at Internet Archive
• Works by James J. Hill at LibriVox (public domain audiobooks)