Iron Empires

by Michael Hiltzik

  The train continued across the plains: herds of antelopes, scampering away from the tracks over the dreary alkaline landscape dotted with skeletons of oxen and bison; magnificent sunsets “like scarlet and golden fire,” Fanny wrote, the distant Rockies “like a glimpse of the Alps, all whitened with snow.”

  Then they were in Utah Territory, where they eyed the Mormon settlements they passed with all the curiosity they had earlier devoted to the bands of Indians. Fanny noted with evident surprise that the Mormons all looked “well and neat and prosperous.” She described the scenery of the eastern part of the territory as beautiful “almost beyond description,” but spared her diary the recollection of traversing Weber Canyon, where the Union Pacific bridge had originally been so ramshackle that passengers were required to disembark and walk across the structure, tie by tie, so the locomotives could pull empty cars across without risking its collapse. The Mormon leader Brigham Young had made deals with both the Union Pacific and Central Pacific to provide labor for track construction; among the crews’ first tasks had been to shore up the bridge after its foundations had been eaten away by the ferocious snowmelt-fed Weber River. By the time of the Morgans’ arrival the repair work had been completed and the passengers could remain aboard, but the height of the bridge and the rocking of the cars as they crossed still made for a harrowing traversal.

  Pierpont, Fanny, and the two Marys transferred at Uintah to a horse-drawn coach for a side trip to the territory’s capital, Salt Lake City, thirty-four miles to the south. It was a rough ride over rutted paths, “bumpety bump over rocks and stones and dashing down into the gullies and tearing up again without the least regard for our four poor horses,” Fanny wrote. “All the valley is a barren wilderness without a tree,” though the Mormon settlers “have turned it into a garden of plenty with their system of irrigation.” The travelers arrived in Salt Lake coated in grime, the stench of the sulphur springs they had passed still stinging their nostrils, to find what Fanny referred to as “only a sort of second class (or third even) hotel” bare of “any luxuries at all, not overclean at that,” and with bedding “apparently stuffed with chips of granite.”

  The prejudice against Mormons common at the time—Mary Tracy’s reflexive term for the men was “Mormon swine”—clashed with the evidence before the Morgans’ eyes of a thriving, industrious community. They visited the work site of the Salt Lake Temple, then in its sixteenth year of construction (it would not be dedicated for another twenty-four), where Fanny stepped into a pothole, wrenching her foot. While she was laid up that evening, she reported later, Pierpont and the two Marys paid a call on “the old sinner Brigham,” who “seemed to take quite a fancy” to Fanny’s sister, provoking giggles. At age sixty-nine, the polygamous Mormon leader had already been married fifty-three times (by some reckonings), most recently only a few weeks earlier. The next day, a Sunday, Pierpont and the girls attended a little Episcopal church for services while Fanny stayed in the hotel. There she found solace by dipping into a popular devotional volume dedicated to Louise of France, the pious daughter of Louis XV who had taken vows as a Carmelite nun and was known as Madame Louise. Returning to Uintah on Monday after another bone-rattling coach ride, they discovered that their train would be seven hours late.

  Two days later they reached California. The Central Pacific brought them over the Sierra Nevadas—“the scenery the finest I have ever seen,” Fanny judged—and terminated in Sacramento; the last ninety miles to San Francisco had to be crossed by boat over the channels and bays of the Sacramento River delta. They were promptly taken under the wings of the city’s business elite, especially Milton Slocum Latham, a businessman and politician who had served as California’s governor in 1860 (for five days, or until he could appoint himself successor to US senator David Broderick, who had been killed in a duel). Latham settled the Morgan party in his palatial mansion and made sure the women were kept entertained by excursions to the theater and waterfront. Meanwhile he escorted Pierpont to the financial district so the young banker could cement business contacts for the future.

  After a week they were on the road again, this time for an overland trip to the spectacular unspoiled country around Yosemite, including tours on horseback to Yosemite Falls and Mission Lake. They doubled back to San Francisco and then returned to Sacramento by way of Napa and Sonoma, the future winemaking regions then blanketed with fruit orchards—“we literally stuffed ourselves with peaches, figs etc.,” Fanny wrote. Finally they reboarded the train to retrace their outbound journey. Fanny’s journals exude ever-growing relief with every mile that brought them nearer to civilized Chicago, which they reached on Saturday, August 28. That evening they viewed a gallery exhibition of oils by Albert Bierstadt, who specialized in brooding, dramatic landscapes of mountain ranges, waterfalls, and rushing rivers. Among the paintings on display were views of Yosemite, bathed in purple light and orange sunsets. Fanny, having recently viewed the real thing, pronounced the artwork “not very satisfactory.”

  * * *

  PIERPONT ARRIVED HOME in September armed with firsthand impressions of the transcontinental railroad and its territory west of the Mississippi. More to his purposes, he returned with a greater sense of the importance of the rail links between the Eastern Seaboard and Chicago, the growing city already shouldering its way toward its destiny as the paramount railroad center of the Midwest.

  The journey left him with a long-lasting disdain for the Union Pacific, borne of weeks of uncomfortable travel over incompetent track laid through a vacant wasteland devoid of productive capacity or commercial demand. He had seen nothing on his journey to contradict an expert’s description of the UP as “two rusty streaks of iron on an old road-bed.” But this was an unduly pessimistic impression of the Union Pacific’s potential, and arguably the costliest misjudgment J. Pierpont Morgan would make in his life. His error would not come back to hurt him until the emergence, many years hence, of the only man on earth who would challenge him for power and influence over the economic life of the United States.

  That man was Edward H. Harriman, who at this moment of Pierpont Morgan’s ascendance was an unknown broker just embarking on his own career on Wall Street, eleven years Morgan’s junior and untold steps below him on the social ladder. Harriman would erect his own railroad empire on a scale that matched Morgan’s in size and surpassed it in geographic reach—starting with the railroad from which Pierpont had just disembarked, the Union Pacific. When the two met for their climactic showdown at the very dawn of the twentieth century, the entire financial world would feel the tremors.

  But that great test lay far in the misty future. For now, Morgan had a more immediate concern that involved the buccaneering Jay Gould and Jim Fisk. Having won command of the debt-laden, undermaintained Erie Railroad, they were aiming to solve their own problems by—how else?—creating new difficulties for their rivals.

  The Erie was in decrepit condition, but Jay Gould’s solution was based less on Vanderbilt’s principle of improving the road than on the Commodore’s habit of suppressing competition, as he had done by merging the Harlem and the Hudson roads. Hoping to outmaneuver the New York Central in the business of carrying coal from Pennsylvania to New England, Gould and Fisk turned their eyes to the Albany & Susquehanna Railroad.

  This road ran 142 miles through “a difficult and sequestered region, neither wealthy nor of varied industries, opening to a new trade neither great markets nor a particularly active people,” in the words of Charles F. Adams Jr. It had been conceived in 1853 to link Albany with Binghamton, New York, skirting the Catskill foothills. At the time it was mapped out as just another small upstate New York road. Construction began in 1863 but moved at a glacial pace; its constant financial tribulation made it a “very contractors’ Golgotha,” Adams wrote, adding that the work finally was brought to a conclusion in 1868 largely through the determination of its “originator, president, financial agent, legal advisor, and guiding spirit,” a New York politician named Joseph
H. Ramsey. By the time it was finished, the business landscape had changed. The once unprepossessing Albany & Susquehanna was now seen as a strategically important lever between two contesting trunk lines, the Erie and the New York Central—“an element of strength or a source of danger” to each, depending on which one ended up with control.

  While Pierpont had been out West, Gould and Fisk had launched a campaign for control of the Albany & Susquehanna. Morgan remained unaware of their machinations until he arrived home in New York in September. His banking partners had been paying close attention, however, since on behalf of the firm Pierpont had helped the road with its mortgage financing just before leaving for his journey. Gould and Fisk are “carrying things with a high hand but they have found their match in Ramsey,” James Goodwin, Pierpont’s cousin and partner (and brother of Mary Goodwin, Pierpont’s traveling companion) had informed Junius Morgan in August. He thought public opinion was rising against Gould and Fisk after years of watching them carry on in the railroad business—they are “losing their power somewhat, & if vigorous steps were taken there is a fair chance of getting rid of them,” he wrote, adding, “they are a shame and disgrace to the country.”

  Now that Pierpont was home, the Albany & Susquehanna clamored for his attention. More precisely, Joseph Ramsey was determined to drag him into the fray. Pierpont, after consulting with his father-in-law, Charles Tracy, a high-minded lawyer who had had his own run-ins with Gould, agreed to help Ramsey fend off the attackers, provided that the matter was placed “entirely and absolutely in his charge.” The ordeal would leave the young financier with the vivid impression of an industry so burdened by the manipulations of unscrupulous privateers that it would surely collapse unless it could be brought under adult supervision.

  Gould and Fisk had been buying up the road’s shares all summer, finally accumulating enough to challenge Ramsey’s control. Once Ramsey noticed the action in his railroad, however, he launched a counterattack, quietly issuing himself ninety-five hundred new shares and concealing the maneuver by burying the stock subscription books in an Albany cemetery. There followed a crossfire of judicial writs similar to what had sent Drew, Gould, and Fisk fleeing to Jersey City a few years before. Fisk and Gould called upon a bought New York judge named George Barnard, who barred Ramsey from voting his shares, issuing the order from his temporary quarters in the apartment of Josie Mansfield, “where he was not averse to the charms of cards, champagne and vivacious female company.” Barnard’s writ was not the last word, however, for a countervailing order was promptly handed down by a judge in Albany friendly to Ramsey.

  Brawn, not legalism, decided the next phase of the fight. Fisk assembled a squadron of tough maintenance workers from the Erie shops in Binghamton to board a train running north toward Albany on August 9, commandeering engines, cars, and depots along the way. Simultaneously, Ramsey dispatched a train carrying 150 burly personnel from Albany with corresponding instructions to seize all the railroad property they encountered on their way south.

  The two tatterdemalion armies headed toward a violent confrontation, which took place at a long tunnel about fifteen miles from Binghamton. The Albany train, arriving first, halted just shy of the tunnel entrance. On the far side, the Erie’s general superintendent, following Fisk’s orders, tried to arrange his motley troops into some semblance of martial order. “A more unwieldy body could not well have been got together,” reported Adams. “The men were wholly unarmed, except, perhaps, with sticks. . . . They had been hastily summoned from the [Erie] shops, and were ignorant as children of the crazy errand they were about, nor had they the slightest enmity toward those opposite to whom they stood in ludicrous array.” Their adversaries, however, were long-term Albany employees loyal to Ramsey, “thoroughly stirred up and ready for anything.”

  By 7 P.M. the Erie ranks swelled into “an unwieldy mob of some eight hundred men.” Their fully loaded train moved through the tunnel and emerged at the other end, there to find the Albany train advancing upon it from around a blind curve. The Erie conductor leaped off his train and ordered the engineer to reverse, but in vain, for the grade back into the tunnel was too steep. The two locomotives came together in a crash. Men poured from both trains and the violence became general. Despite their inferior numbers, the Albany crews routed Fisk’s men, who retreated in confusion back through the tunnel. There were a few further skirmishes before night fell, at which time the conflict degenerated into “loud shouts and excessive profanity,” punctuated by the occasional pistol report. Eventually the state militia arrived, called out by Governor John T. Hoffman to quell the riot.

  Hoffman was forced to operate the Albany & Susquehanna under gubernatorial authority, with militiamen keeping order on the tracks, until the railroad’s annual meeting a month later. By then he had become “heartily sick of running a railroad a la militaire,” as the New York Times put it. With the conflict interfering with the governor’s plan for a presidential run in 1872, he became “satisfied that in taking military possession of the road he ‘put his foot in it,’ and he is anxious to get it out again as easily and speedily as possible.”

  Morgan and Ramsey, backed by a contingent of Albany police, were in possession of the railroad’s headquarters when Fisk and his troops arrived for the annual meeting. A melee ensued as the newcomers tried to move up the stairs to the office, resulting in Fisk’s being “knocked off his feet and . . . back on the men who were coming up behind him.” According to Morgan family legend, Pierpont personally delivered the blow, but his biographers tend to consider the story implausible.

  The meeting finally convened in a stifling room filled to overflowing with members of the two camps and their raucous supporters. Fisk was “arrayed in his usual fancy style, and with his speckled straw hat and blue ribbon, looked as gay and frisky, and almost as Fisky, as when he hops about in his regimentals on the wheel-house of a Bristol steamer.” (The Times again.) It would be said later that the insurgents waded into battle at a disadvantage. Jay Gould, their key strategist, had become preoccupied with his (ultimately unsuccessful) scheme to corner the gold market and had left the Albany affair in the hands of the bumbling Fisk.

  In Pierpont Morgan, Fisk was dealing with a man who was learning to wield true financial power, not the bluster that was Fisk’s stock in trade. Morgan had put his plan to control the Albany into action by acquiring six hundred shares of its stock, enough to restore Ramsey’s majority and enabling him to elect a board of his own choosing. Once the election was certified, Morgan promptly leased the Albany & Susquehanna to the Delaware & Hudson Railroad for ninety-nine years. The tactic froze Gould and Fisk out of the Albany for good and placed the railroad permanently out of their reach.

  * * *

  IN STRICTLY FINANCIAL terms, Morgan’s coup would have been a footnote in railroad history, except for what it presaged about his role in the industry going forward. As part of the deal, Morgan took a board seat, his first in a railroad company. This represented not merely a financial interest but management power, which was to become much more important. It heralded a sea change in the administration of a rapidly expanding industry and hinted at its transition away from “the slippery and fraudulent” freebooters who saw the railroads merely as enterprises to be plundered by speculators out for the main chance, and toward control by builders with the vision to create America’s first big business out of a patchwork of small concerns. Morgan was the new man, and the rescue of the Albany & Susquehanna a turning point in his career. He had demonstrated by force of personality and full control of strategy and tactics that he could stand up to pirates such as Gould and Fisk.

  The Albany raid would permanently mark Gould in Morgan’s eyes as a financial villain—“a ruthless destroyer of values when there was an opportunity to enhance his own fortunes,” as Pierpont’s son-in-law Herbert Satterlee would recollect. Over the coming years Pierpont, in his self-image as a man who earned his wealth by contributing his skills to the building of America, would
become increasingly offended by those who followed Gould’s approach to finance: “Other men built railroads,” Satterlee reflected, channeling his father-in-law. “Jay Gould wrecked them. . . . He cared not at all for the upbuilding of the country; his end was the advancement of his personal position and the enlargement of his own bank account.”

  Gould’s low morals irritated Morgan not merely on a spiritual or ethical plane, but in practical terms as well. For all that the House of Morgan viewed the railroads’ insatiable thirst for European capital as opportunity writ large, Gould’s machinations undermined the railroads’ claim to be the sort of sturdy, stable investments the firm’s clients valued most. The opportunity beckoning the Morgans would fade if the industry’s two main problems were not solved. One was its habit of internecine strife and wasteful competition among duplicative roads—such as the Erie and the New York Central. The other was its record of speculative debauchery, exemplified by the activities of Gould and Fisk and their guru, Daniel Drew. It was already evident that the railroads wanted a disciplining hand. Pierpont Morgan, as the purveyor of stupendous amounts of capital, was well positioned to be that steadying influence. His purpose would be to develop the railroads into functioning pieces of a rationalized, spectacularly profitable industry. Before he could do so, more scandals would break, including one that threatened to tar the entire industry as a magnet for fraud and to annihilate Pierpont’s grand vision—and the promise of American railroads.