Wednesday, September 16, 2009

This Day in Business History (“Empire Builder” Hill Forms Great Northern Railway)

September 16, 1889—On his 51st birthday, James J. Hill organized what he called “the great adventure” of his career, the Great Northern Railway—a mammoth enterprise that involved leasing the property of the St. Paul, Minneapolis and Manitoba for 999 years and taking over 2,700 miles of road. Meeting in New York, the directors of the Manitoba got the ball rolling with a $40 million stock issue.

Remarkably for the Gilded Age—or, indeed, our own—the building of this transcontinental railway was free of governmental subsidy, bankruptcy or scandal. It was not, however, as we shall see, free of controversy.

Hill liked to do things on a grand scale, brooking no deviation from his vision—something I found out several years ago on a visit to his mansion in St. Paul, Minn.

Though Lexuses rather than surreys pass down Summit Avenue these days, the Victorian boulevard remains the premiere address in Minnesota’s capital. Stately elms, leaded glass windows, and sturdy stone facades line both sides of its four-mile ascent.

And then your eye is caught—no, seized—by the James J. Hill House.

Perched on a bluff across the street from the Cathedral of St. Paul, the red sandstone mansion doesn’t startle or even awe so much as confront. Its several chimneys thrust imperiously skyward, and with 22 bedrooms it is still, more than a century after its construction, the largest residence in the state.

In spirit, the mansion embodies the boast about the transcontinental railroad its owner willed into being: “I’ve made my mark on the surface of the earth, and they can’t wipe it out.”

In American memory, James J. Hill has taken a back seat to other turn-of-the-century robber barons: Rockefeller, Carnegie, Morgan, and Frick. Yet Hill deserves to be better remembered—if not, perhaps, in the fashion he would have liked.

A Tycoon for Fitzgerald
His legacy is summed up in a vignette from The Great Gatsby, by F. Scott Fitzgerald—who, in his youth, lived down the street from Hill in a handsome if decidedly inferior brownstone. The novel’s Henry C. Gatz, “from a town in Minnesota,” mourns that his son James (who had shed his given name to assume the alias Jay Gatsby), had he not been murdered, would have “been a great man. A man like James J. Hill. He’d of helped build up the country.”

Fitzgerald’s contemporaries would have caught the paradoxical nature of his allusion. Indeed, if Fitzgerald’s novel is a fictional manifestation of the American Dream, then Hill’s life is a real-life version.

A penniless Canadian immigrant whose first job was as a “mudclerk” on the Mississippi, Hill lived to earn the nickname, “The Empire Builder of the Northwest.” The Great Northern Railway extended from St. Paul to Puget Sound, opening up thousands of acres in the West for settlement.

Hill angered many with his iron-fisted methods. A St. Paul paper’s support of a Populist-Democrat brought Hill to such a pitch of anger that he bought the paper just to change its policies. He ensured his company’s survival in the Panic of 1893 by laying off thousands of workers and cutting the pay of the survivors.

Not only hauling freight and people but selling rights to land adjoining the Great Northern, Hill maintained a virtual chokehold on rail traffic from Chicago to Seattle and provoked bitterness among his agricultural tenants. His creation, with archrival E.H. Harriman, of the Northern Securities holding company made him the first target for Theodore Roosevelt’s enormously popular foray into “trust-busting.”

The magnate’s iron will can be glimpsed in a painting in the house’s parlor. Though his right hand rests on a leg, his left hand clutches the chair, the better to propel himself toward his listener. A short beard and droopy moustache soften the expression of his mouth, and one eye is curiously vacant, the result of a childhood accident with a bow and arrow.

But a bright, unyielding flame emits from his one good eye—one that carefully measured the value of people, resources, and the finer things in life.

At a time when most homes on Summit Avenue were built for between $15,000 and $40,000, the final tally for Hill’s came to $931,275. Two years in construction, the site attracted hundreds of curious onlookers every day. When completed, the house comprised 36,000 square feet of interior space, 42 rooms, 13 bathrooms, and 22 fireplaces.

Nothing But “Good, Simple Louis XV” Style
Although he loved to show off his house (his magnificent art collection was open to the public in fair weather, by prior appointment with his secretary), Hill constantly feared that others would do him harm. His home’s “annunciator” system consisted of electrical contact alarms attached to basement doors and windows, as well as a collection of nearly 500 locks and keys. (Naturally, the keys for Hill’s room were labeled “1”.)

More than a century after its construction, Hill’s mansion continues to attract thousands of gawkers every year. For 53 years after the death of his wife Mary, the building was owned by the Roman Catholic Archdiocese of St. Paul. (Four Hill daughters bought the home back from the estate after their mother’s death, then willed it to the archdiocese—something, they believed, that would have appealed to their devout parent, who, like her husband, died without making out a will.)

In 1978, the archdiocese, no longer able to cope with the home’s high maintenance expenses, sold it to the Minnesota Historical Society, which continues to operate it. In 1961, the house was designated a National Historic Landmark.

The Summit Avenue estate was not the first Hill family residence in St. Paul, nor even necessarily the best architecturally. In their first years in St. Paul, the Hills had moved frequently, their size swelling in tandem with James’ fortunes.

From 1878 to 1891, it appeared that they had finally settled in at Ninth and Canadian Streets, in the Lowertown section of the city—a cheerful, Italianate structure with a mansard roof. But with typical lack of sentimentality, Hill had this home demolished after the move to Summit.

Hill proved equally impervious to the builders of his new trophy home. A Philadelphia firm’s plans for the mansion’s interiors set his teeth on edge. (“What I desired was good, simple Louis XV style (but) your design seems to be a hybrid between half a dozen styles,” he scoffed in a letter.) A famous Boston architectural firm, Peabody & Stearns, suffered an even greater indignity: dismissal for disregarding Hill’s orders.

Still, Hill yielded again to the advice of business associates to look eastward for a firm that would create a home befitting a captain of industry such as himself. Irving and Casson, another Boston firm, replaced Peabody and Stearns and hewed to Hill’s demands.

The result was a structure with comparatively subdued family rooms, but public space that piled on detail after detail. The first-floor entertainment room, for instance, contains lavish carving, rococo floral scrolls, neoclassical columns and pilasters, Islamic motifs, and Renaissance paneling.

The Master of the Universe, At Work and (Occasionally) At Ease
Although its grandiosity alternately evokes a fortress and a museum, Hill’s mansion also served as a family abode. The rise of Hill’s wife from humble origins was as marked as her husband’s, and she played a distinct role in running the house.

Like her husband, she was orphaned at age 14. Serving as a waitress in a St. Paul hotel, the pretty 17-year-old Mary Mahegan caught the eye of Hill, who was already earning a reputation as a young man to watch in St. Paul business circles. Before marrying him, however, Mary spent three years in a Milwaukee convent that served as a finishing school for Catholic girls, learning the etiquette necessary to assume the status she expected after matrimony.

The Hills children remained close to their parents into adulthood, with five eventually owning homes on Summit Avenue. Their father particularly respected the oldest, Lou, who succeeded him as president and chairman of the board of the Great Northern.

“If I had Lou to make over, I wouldn’t change a thing,” James once remarked. When Lou married and started a family, he built his home right next door.

The World Beyond His Doors
After his 70th birthday, with the Great Northern now run by Lou, Hill looked beyond the great enterprise of his life and toward affairs of the wider world.

Though not Catholic himself, he donated a half million dollars to build St. Paul Theological Seminary. (Typically, when his friend Archbishop John Ireland thought that two rooms per student were excessive, Hill snapped: “Two rooms or none, Archbishop. The choice is yours.”)

As World War I heated up, Hill helped President Woodrow Wilson arrange a loan to enable England and France to buy food, clothing, and provisions. The most visible monument to his philanthropy was the James J. Hill Reference Library in downtown St. Paul.

While his vision of a transcontinental railroad was achieved, Hill did not live to see the fulfillment of another dream. His lobbying for a free trade pact passed in Congress but stalled in the Canadian Parliament. It would take another 80 years for the North American Free Trade Agreement to be ratified in the U.S., Canada and Mexico—and even now, its effects, like its great advocate, remain a matter of contention.

Since Hill’s death in 1916, other business magnates have reaped millions, left much of their fortune to charity, or excited distrust. But few have left a more enduring imprint than Hill’s “mark upon the surface of the earth.”

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