In the end the brothers overstretched themselves, and it was the canny, practical James Rothschild who in a sense ‘won’; though the Pereires came through their financial embarrassments with their fortune merely dented and their ideals barely scratched at all. And why not? It is largely to the Saint-Simonians that France owes its magnificent railway system.
Was the Curmudgeon also a Murderer?
American railroads were accused of many crimes, but none has entered more vividly into local folklore than the murder of William Goebel, the ‘dark, taciturn figure … considered by some to be the most controversial figure in modern Kentucky history’. To this day it is difficult to find anyone in Kentucky who does not believe that William Smith was responsible for his death.
Kentucky’s martyr to the power of the railroad.
Smith, president of the Louisville & Nashville Railroad from 1884 to 1921 was a ‘curmudgeon for all seasons’ in the words of Maury Klein.26 He was gruff, sardonic, a brilliant railroad manager, but also ‘a symbol of rugged individualism’ in an increasingly corporate era.
He was a man of vision, playing a crucial role in developing Birmingham, Alabama as a major steel centre. Not surprisingly he hated government regulation, which he viewed as a mere preliminary towards public ownership. His hatred focused on the progressive forces which flourished in the depression which hit Kentucky hard in the 1890s. The anti-railroad agitation resulted in a stringent regulatory bill, known as the McChord Bill, which the Republican governor duly vetoed on behalf of the L & N.
In the gubernatorial election of 1898 Goebel led the progressive forces. The L & N naturally fought hard to deny him the Democratic nomination, but succeeded only in splitting the party. In the subsequent election the Republican William S. Taylor gained a narrow victory. The Democrat-controlled legislature immediately cried foul, the L & N carried car-loads of rugged mountaineers ‘equipped with rifles, pistols and an ample supply of corn liquor’ into Frankfurt, the state capital, to support Goebel.
The inevitable explosion came when Goebel was shot, removed to a hotel, where he was sworn in as governor, and, three days later, died from his wounds. His lieutenant-governor was immediately sworn in as his successor. Eventually the Democrats gained the day and the McChord Bill was passed. Although three men, including the Republican Secretary of State, were tried and convicted of Goebel’s murder, no one knows who fired the fatal shot, or whether Smith ordered it.
Whistle Stops and Other Political Tours
Politicians found railways convenient from the very outset. In the early 1830s the record for the journey from Manchester to Liverpool was held by an election special which hurled voters between the two cities in a single hour, at a time when the journey normally took two and a half hours.
Naturally politicians employed railways as a means of getting their messages through to more, and more scattered, audiences than ever before. In the United States the idea became a symbol of the whole democratic process, the mobile equivalent of the ‘town meeting’ which had been at the very base of American democracy in New England. But inevitably the politicians going on what became known as ‘whistle-stop tours’ (stopping at even the most insignificant stops) were the outsiders. Until well into the twentieth century, incumbent presidents seeking re-election did not deign to tour the country.
The precedent was set by Lincoln’s successor, Andrew Johnson, with what became known as a ‘Swing Around the Circle of the Union’, a tour which took in all the major cities of the North between Washington, New York, Detroit and Chicago in an attempt to preach his gospel of reconciliation after the Civil War. Johnson was heckled by increasingly well-organised crowds of Radicals and his ideas were doomed to failure. Nevertheless the journey set a fashion for those bold enough to take their cause to the country by train which was to last for eighty years.
One of the most famous ‘outsiders’ to specialise in such tours was the silver-tongued William Jennings Bryan, an orator so in love with the sound of his own voice that his special train was always late. According to James Marshall,27 the trainmaster ‘conceived the idea of getting the candidate onto the back platform and letting him talk from there. Then at starting time, Mr Lake [the trainmaster] simply high-balled the engineer and they pulled out, Mr Bryan still talking to the receding crowd … sometimes he was talking when they pulled into the next town’.
President Truman’s ‘give ’em hell’ campaign in the 1948 presidential election was the last burst of populism organised round the country’s railroad system. Since then presidential hopefuls have often posed on the cabooses of trains – as late as 1988 the Reverend Jesse Jackson was photographed on one in the course of the New Hampshire primary – but these have been token appearances, attempts to associate the candidate with the earlier populism of the whistle stop. Yet the symbolism remained powerful even though the private jet had become the effective campaign vehicle.
Abe Lincoln’s funeral train, one of several used to carry Lincoln’s body from Washington, D.C., to Springfield, Ill.
Trains retained one power: to arouse emotions at the demise of well-loved statesmen. In 1865 the crowds had gathered in their hundreds of thousands to watch President Lincoln’s body being transported from Washington to his final resting-place, Springfield, Illinois. A hundred years later crowds just as large, just as affected, swarmed by the tracks to mourn the passage of the funeral train carrying Robert Kennedy’s body. As Theodore White put it28 ‘one finally understood aboard the train the purpose of an Irish wake: to make a man come alive again in the affection and memory of his friends.’
* The Société Nationale des Chemins de Fer was formed as a private company, albeit one in which the state retained the majority of the shares.
† The railway was so valuable that its gradual sale enabled Bismarck to finance the Prussian war against Austria in 1866.
* The model for Merdle in Dickens’s Little Dorrit.
* Mark Hopkins, Leland Stanford, Collis Huntingdon and Charles Crocker, names attached to most of California’s most venerable and reputable institutions, from banks and hotels to universities and museums.
* See page 109–10.
* For a striking instance when a railroad allegedly took extreme measures against a determined opponent, see the note at the end of this chapter, ‘Was the Curmudgeon also a Murderer?’
IV
CAPITALISM, CAPITALISTS –
AND CONTRACTORS
Railways were by far the biggest projects undertaken since the time of the Romans. Before the railways, the world’s financial markets were, at best, primitive affairs, incapable of providing the unprecedented amount of capital railways absorbed, while only a handful of European countries and American states, had raised capital outside their own country. But the railways did more than create markets: miraculously they conjured up whole new breeds of men. The promoters and financiers found the money: the contractors, particularly the English pioneers, worked marvels in actually building the lines.
Much of the process is described in later chapters: the creation of the international markets as part of my discussions of Imperialism, direct and indirect, and of the armies the contractors commanded. But the railways also spawned a new, and deeply involved, breed of capitalist. Robert Louis Stevenson in The Amateur Emigrant was typical in associating them with the cartoon figures of frock-coated, pot-bellied financiers. ‘When I go on to remember that all this epical turmoil [the first American transcontinental railroad] was conducted by gentlemen in frockcoats, and with a view to nothing more extraordinary than a fortune and a subsequent visit to Paris, it seems to me, I own, as if this railway were the one typical achievement of the age in which we live.’
For half a century railway securities dominated the world’s stock markets. In London they were far and away the biggest gambling counters until they were replaced by ‘Kaffirs’ after the discovery of gold in South Africa in the 1880s. In New York they were the very stuff of Wall Street’s most inglorious era, whil
e even in Germany, where the whole process was relatively sedate, three quarters of the capital invested in Prussian joint-stock companies in the twenty years after 1850 went to railway companies.
Railway securities also established the relationships between markets, corporate owners, and their shareholders, who, then as now, didn’t get much of a look-in. In Britain the financial goings-on induced a certain amount of popular concern – in the painful aftermath of the 1845–46 railway mania Punch, then a radical journal, even suggested that railway directors be tied to their company’s locomotives. The hostility did not die out with the mania. Ten years later a disgusted radical calling himself ‘a Lancashire victim’ published ‘a satire’, entitled ‘The Railway Meeting – dedicated to the pillaged shareholders of Great Britain’.
At a more philosophical level Herbert Spencer pointed out that while the constitution of the railway companies, like that of the country itself, was democratic, the directors (like Members of Parliament), ‘by no means regarded themselves as servants of the shareholders; directors rebel against dictation by them.’1
He even perceived how a group of not necessarily dishonest men can, as a board of directors, behave dishonestly. The ‘corporate conscience is ever inferior to the individual conscience – that a body of men will commit as a joint act, that which every individual of them would shrink from did he feel individually responsible … most of these great delinquencies are wrought out, not by the extreme dishonesty of any one man or group of men, but by the combined self-interest of many men and groups of men, whose minor delinquencies are cumulative.’
The directors were often not major shareholders, their involvement was often indirect: as landowners or manufacturers they were more interested in the building of a new branch line than in the company’s profits. ‘The indirect profits accruing from the prosecution of one of these new undertakings, may more than counter-balance the direct loss upon their railway investments.’ So they would not worry too much at those classic malpractices, the dividends not backed by profits, the capital artificially increased to build smaller and smaller, decreasingly-economic, branch lines.
In Britain popular interest was initially concentrated not on the deeds and misdeeds of railway directors but of that peculiarly British breed, the railway contractors. The first generation, at least, were not mere builders. They were part shyster, part entrepreneur, part financier, part civil engineer, wholly typical of an age which bred chancers of all descriptions. On a much larger scale they followed the pattern set by the nabobs of the late 18th century, their fortunes made in India, who ‘increased the price of everything, from fresh eggs to rotten boroughs’. They were not the last of their sort. The contractors were succeeded by the ‘hard-faced men who had done well out of the war’, who had made their fortunes by supplying Britain’s armies between 1914 and 1918.
Like the nabobs and the ‘hard-faced men’, they were, by definition, a transitory phenomenon, a group which took advantage of an unrepeatable opportunity to exploit their peculiar talents. After all their work could only be done once. Moreover their businesses were purely personal. None of them built up a continuing business, not even the greatest of them all, Thomas Brassey, who at times was undertaking a dozen contracts in as many countries. It was left to later entrepreneurs – contractors – who may, like John Mowlem, have started as sub-contractors on railway lines, to found long-lasting industrial dynasties.
The contractors’ defenders naturally take Brassey as their archetype. Even in his lifetime he acquired an extraordinary aura thanks to his total honesty, his unflappability and his extraordinary organising capacity, which included the crucial ability to choose reliable subordinates. During the Austro-Prussian war in 1866 one of his agents charged through the battle-lines in an old engine carrying enough money to pay the workers, an incident which earned Brassey a medal from an astounded Austrian Emperor. But Brassey stuck too closely to his work to be typical of the breed. Many of the contractors – most obviously Sir Samuel Morton Peto – had a far more general influence on British public life.
The contractors, again like the nabobs and the ‘hard-faced men’, enjoyed large-scale, suddenly-earned, greatly-resented wealth. In the words of Sir Edward Watkin, one of the greatest of late-Victorian railway magnates, ‘At the opera, if we look at the lady occupants of the best boxes, who are glittering with the best diamonds, and ask who they are, we are told that they are the wife and daughters of Clodd the great railway contractor.’ Clodd and his like were reviled, worshipped, sneered at for their pretentions, then gradually absorbed, their expensively-educated offspring merging imperceptibly into the British upper classes. Thomas Brassey’s son was typical in turning to good works and thus acquiring a peerage.
Even the earthiest of them all, Joseph Firbank, produced a son who showed every sign of respectability. ‘Old Joseph,’ wrote R. S. Joby, in The Railway Builders ‘was a genius at building railways, had a calculating mind that needed no elaborate machinery to check the results, and worked hard and long all his life, devoting more time to public service in his later years. The other side was an intolerance towards leisure, foreigners and paper deals … one story is that he even refused a contract in the Isle of Wight because that was abroad.’ The son was more broad-minded and was prepared to quote for a railway in the Isle of Wight – though he then became an MP and retired to a life of idle luxury.
It was not only the sons who entered Parliament, but some of the first generation as well. They were greeted with something less than enthusiasm, because most of them – Peto was an exception – clearly regarded their seats as simply a rung in the social ladder and an opportunity to promote their business interests. In the disgusted words of the Morning Post in 1865:
A large number of those who seek admission to Parliament now are contractors, speculators, men who take a wonderful interest in the promotion of joint stock companies, in fact what are called businessmen, and who are as indifferent to the fact of political parties as they are ignorant of the distinctions which characterise them. These individuals simply require, for their own special purposes, to have seats in Parliament and are perfectly ready to give any pledges to those who will send them there.2
Once the major British lines had been completed, a mere twenty-five years after the opening of the Liverpool & Manchester Railway, the contractors either had to go abroad or conjure up new lines within Britain, the usually unnecessary and uneconomic ‘contractors’ lines. ‘They are as insatiate as millionaires in general,’ wrote Herbert Spencer,3 ‘and so long as they continue in business at all, are, in some sort, force0 to provide new undertakings to keep their plant employed … lines are fostered into being, which it is known from the beginning will not pay.’
Ambitious local grandees could easily be seduced by a big name – the projectors of a small railway near Bristol demanded a contractor ‘of the class of Peto, Brassey and Betts’ (Peto’s partner). The promoters would then ‘make an agreement with a wealthy contractor to construct the line, taking in part payment a portion of the shares, amounting to, perhaps, a third of the whole, and to charge for his work according to a schedule of prices to be thereafter settled between himself and the engineer’ – a guarantee of profit, for the contractor would take care to choose an amenable engineer.
Contractors’ lines soon, and rightly, got a bad name and the whole breed was finally destroyed by the Overend Gurney crash of 1866. The disaster resulted from the enormous appetite of the whole railway financing machine. The promoters and contractors desperately needed new schemes, but all the most viable had already been constructed. So they were left with a rag-bag of inevitably unsound projects – including contractors’ lines, railways in Spain, and the disastrously expensive efforts of the London Chatham & Dover Railway to establish a terminus within the City of London at any cost. In 1864 the contractors began to find it difficult to secure adequate finance. To fill the gap they formed finance companies which borrowed the necessary money. But since these compan
ies’ major (or only) assets were shares in increasingly unsound new railway companies they were bound to crash. They duly went under, and it was Overend Gurney, the most prominent City house involved in these shenanigans, whose own crash gave its name to the whole disaster. In the ensuing panic Brassey barely survived, Peto was destroyed, and the term ‘contractor’ took on its modern meaning. They ceased to be self-financing entrepreneurs and became purely the agents of the bankers and promoters backing the railways, rather than principals.
Thomas Brassey, king of contractors.
Curiously enough, the only other country which produced ‘contractors’ similar to the British breed was Russia. There, in the words of J. A. Westwood, in his History of Russian Railways there was a whole spectrum of railway kings. There were those ‘who had entered the railway field after making their fortunes in other business, men like Bernardaki who became a promoter after making his fortune in the Siberian liquor trade; professional bankers who simply became chairmen of the railways they were financing, and then a new generation which made its fortune solely from railway promotion.’
There was Von Derviz, a schoolmate of Reitern, the Minister of Finance, who had given him concessions to build two major lines from Moscow. After completing a third from Kursk to Kiev, Derviz kept the shares and managed to sell debentures to finance the railway at a difficult time. But he was no villain: he built sturdy and durable lines before he retired to Italy where he built a theatre and hired an opera company to give performances solely for him.
More exotic was Polyakov, a former plasterer and small-time contractor, who, in an anti-Semitic environment, nevertheless flaunted his Jewish origins. He started as sub-contractor, was lucky in attracting Count Tolstoi as his patron, and made a vast fortune from building a number of major lines below the estimated cost.
The World the Railways Made Page 11
