-Caveat Lector- an excerpt from: Bonds of Enterprise John Lauritz Larson President and Fellows of Harvard College©1984 Harvard University Press ISBN 0-87584-155-4 257 pages – First Edition -- Out-of-print In-print from: McGraw-Hill Companies ISBN: 0071032797 ----- Highly recommended. --Born in Cincinnati, Ohio, in 1840, Charles Perkins was the oldest son of James Handasyd Perkins, himself a cousin of John Murray Forbes. The elder Perkins had rejected the commercial life of his family to take up an intellectual calling in the West. Briefly recognized as a lecturer, writer, and Unitarian minister in the Cincinnati region, James Perkins died suddenly in 1849, leaving young Charles to care for his mother and four brothers. The youth managed to stay in school until he was sixteen, when he took employment with a wholesale fruit grocer in Cincinnati. From this position he applied to John Murray Forbes for advice and direction in selecting a career. "There is a great want of good, trustworthy businessmen for the management of our railroads," came the reply. "I can help you on better in that direction than any other, and if you can fit yourself to manage such matters well . . . you would certainly stand a good chance of having your services recognized by pay and promotion when the proper opening comes." In July 1859 the eighteen-year-old Perkins accepted an offer to assist Charles Russell Lowell in the land department of the Burlington railroad. It proved to be the most successful of John Murray Forbes's many efforts to place willing young men on the path of the future.[13]-- --James F. Joy was formulating a different plan made possible by the wartime development of the transcontinental railroad. Leaping ahead of sequential investors, the federal government was creating a trunk line through barren lands from which all transcontinental traffic must flow to the half dozen carriers in the Mississippi Valley. It took no special insight to recognize that whoever controlled the first and most numerous connections with the Union Pacific Rail Road possessed an immense source of immediate wealth. Because the bottleneck at the gateway created this opportunity, further development of far western lines would be counterproductive. This prospect led Joy to concentrate on connecting the existing Hannibal & St. Joseph with short lines up the Missouri River to meet the Union Pacific at Omaha. The deep contradiction between Joy's opportunistic strategy and sequential development in Nebraska was not immediately recognized by the Boston directors.-- --Cultural differences help explain the interpretation of the Granger Laws in the centers of eastern commerce. In part, John Murray Forbes saw the movement as a personal affront. His style of business was paternalistic, and his patient efforts to develop the Iowa country had been repaid with hostility. Furthermore, because Forbes and his class of entrepreneurs assumed that the new corporate order was already triumphant, they could not understand these resurgent defenders of local autonomy. When western tempers flared, eastern capitalists attributed the anger to agrarian reaction or alien communism—thereby concealing their own assault on local democracy and traditional American values.[68]— Om K --[2a]-- 5 Localism Under Siege IN MAY 1865, barely a month after the signing of the peace, Major General Quincy A. Gilmore asked John Murray Forbes if he would build a railroad on the sea islands off South Carolina. Forbes responded with a firm negative: "I hope my labors in the way of railroad building are done," he explained, "having been one of the pioneers in such enterprises, and being now entitled to a rest." But he urged the general to press forward his scheme before the government of South Carolina could be reinstated and the army's jurisdiction curtailed. Reconstruction for Forbes was the act of forcibly bringing the South into harmony with the industrial integration and progressive outlook now favored in the North, and no procedural stumbling blocks, like the resurgence of stubborn local democracy, should be allowed to bar the way. Throughout the Reconstruction era Forbes begged his wartime friends not to split the Republican party by intrigue and plotting, because "upon the unity and cohesion" of that party depended the "successful restoration of industry and order ... for years to come."[1] In May 1866, a little over a year after the signing of the peace, Senator James W. Grimes rose in the U.S. Senate to denounce the continued proliferation of federal agencies. "During the war," he lectured, "we drew to ourselves here, as the Federal Government, authority which had been considered doubtful by all, and denied by many of the statesmen of this country." Grimes reminded his colleagues that the extraordinary powers exercised in war were justified only by the state of emergency: "That time," he thundered, "has ceased and ought to cease." The only honorable course for the victors, according to Grimes, was to go back to "the original condition of things, and allow the States to take care of themselves." For Senator Grimes, Reconstruction was an act of restoration. He did not acknowledge what men like John Murray Forbes believed was the primary truth in the Civil War: that the consolidation of power to and the administration of progress from the center was the meaning of the victory. Between Forbes and Grimes lay the great unsettled issues of the American Civil War.[2] For more than three decades Forbes had tried to bring order to his changing world, first in a small commission house at Canton, then in ever expanding railroad lines, and finally in the government of the nation. Despite his addiction to conservative, paternalistic postures, Forbes's successes depended on emerging liberal systems of business and government. His personal interpretation of the war left him a thorough nationalist, and he feared any return to antebellum ways. Unrepentant Southerners would naturally seek to reverse the outcome of the war by a return to states' rights heresies; and if loyal Republicans like James W. Grimes could relapse so completely, there was much to be feared in the West as well. The Republican party's work was unfinished. Forbes envisioned his party as an army of occupation not only in the South but in the house of government itself. "We owe it to the living and the dead," he wrote in 1868, "to keep together until we have absolutely secured the fruits of our dearly bought victories."[3] it was to watch and assist in this continuing revolution that John Murray Forbes "retired" once more from active business. Ironically it was business, not politics, that brought the great questions back into focus in the postwar years. The hegemony of the Republicans stifled debate and turned the electoral process into a factional exercise that corrupted partisans and in time repulsed men like Forbes. At the same time, ideological issues gave way to bread-and-butter complaints emanating from the economic distortions of the war and its aftermath. Outside the South, two issues transcended partisan quarreling: currency deflation and railroad regulation. On the money question there was no simple, clear division among men, but the railroad question resolved itself into a challenge by the advocates of localism to the encroachments of national interests.[4] The public vehicle of protest in the postwar struggle for railroad control was a farmers' movement called the Grange. Men like Forbes called it agrarian reaction, but the Grangers were often inspired and led by local merchants who were threatened by emerging national markets. Remembering with James W. Grimes the reservations they had about the party of Lincoln, western farmers and local moguls rose up in the early 1870s to defend the ideals of the early American republic. By now the story of Forbes, the Iowans, and the Burlington Route was but a single example of a larger phenomenon that was regional in scope and so complex in nature that no contemporary understood the problem well. Forbes could not understand the West's devotion to antiquated theories of business and government while the Iowans only dimly perceived that they had too great a stake in the new age to go back to "original conditions." LANGUAGE AND THE LAWS OF TRADE The problem with "original conditions" was that they belonged to a preindustri al, prerailroad world. By the end of the Civil War the shape of American business and society had been irreversibly altered by three decades of railroad development, and the return of peace brought an explosion of new construction in the West that would reach the Pacific Ocean before the decade's end. Adam Smith's eighteenth-century model of merchant capitalism still supplied the language of political economy for most practical-minded Americans, but the conditions of trade scarcely resembled the markets of England ninety years before. Railroads had brought isolated markets into competition with each other in ways that local entrepreneurs were powerless to address. At the same time, competition between carriers in the railroad network was governed, not by commodities markets, but by the capacity of the system and the demand for transportation. Competition—the "invisible hand" that regulated Smithian markets to perfection—was threatening local enterprise all across the railroad system while it seemed to encourage the railroad's assumption of monopoly powers. Railroads were a centralizing force in the American economy, and by the end of the war it was clear that something was "wrong" with the laws of trade. The evolution of economic language itself made it hard to respond to the tendency of railroads to accumulate power. For example, back in 1846, when John Murray Forbes took up the Michigan Central, railroad transportation was universally seen as an "artificial" advantage in the commercial environment. Western boosters like the editor of the Burlington Hawk-Eye were confident that these "artificial means of prosperity" would complement and preserve the natural advantages of their own commercial centers. But for two decades thereafter progressive entrepreneurs like Forbes had dedicated their energies to eliminating just those barriers of time, space, and physical geography that defined the "natural" commercial network. By 1865 this sense of conscious intervention in economic geography had been lost among railroad men. They saw the railroad system as a natural environment in its own right, obeying the same natural laws of trade. Those who suffered under the new system and sought to defend the priority of geographical location or the old river routes were now charged with "artificially" obstructing progress. This adaptation of old language by the forces of change rendered traditional economic rights meaningless in the postwar world.[5] As a merchant, John Murray Forbes had been raised to believe in the natural laws of trade. He easily transferred his theories from foreign commerce to his new railroad enterprises. However, few merchants and farmers at the local level in the West were prepared to embrace all the changes wrought by the transportation revolution. For Forbes, new developments were inevitable and resistance was futile. Local western interests saw the same developments as corrupt and threatening to their economic independence. It was this contrast of perspective that caused B&MR Treasurer John N. Denison to defend rate discrimination at Burlington as the "fate of all western cities and towns." To the towns this fate was a "return to serfdom.[6] The rhetoric of natural and artificial markets was misleading from the start. All economic systems reflect the exploitation of nature by human society; at issue in postwar America was the arrangement of that exploitation and the tools by which it was accomplished. The spectacular growth of Chicago as the premier midwestern entrepot offered striking proof that new technologies were gaining the upper hand. Between 1840 and 1850 Chicago grew from an outpost of five thousand souls into a booming city of thirty thousand. Another decade boosted Chicago over the hundred thousand mark-the eighth largest city in the country and close behind St. Louis. In volume of trade, Chicago's exports (mostly produce) rose from $5.3 million in 1851 to almost $73 million in 1860. Total trade at Chicago just before the Civil War rivaled the great western mart of Cincinnati; during the war Chicago passed St. Louis forever as the trading capital of the upper Mississippi Valley.[7] How had this been accomplished? St. Louis lay at the meeting of two great rivers in the geographical center of the nation, the natural focus of prerailroad trade for the north-central region. The general faith in St. Louis's natural advantages even fostered a complacency among the city's merchants toward the new railroad developments. The energetic drive of Chicago promoters, however, reversed the downstream flow of trade. Railroads, lake steamers, sophisticated storage, handling, and marketing systems, and abundant commercial credit were the instruments of the Chicago victory. The railroads led the way in transforming Chicago's commercial systems.[8] During the 1850s eastern trunk lines met at Chicago, then feeders radiated into the rich farming districts to the north, west, and south of the city. Although the first rails to the Mississippi fed produce into the downstream trade, the superior facilities at Chicago were already reversing that flow by 1861. To capture the bulk agricultural business, the railroads built grain elevators at convenient collection points, often creating new towns for the purpose. Managers tapped their personal and financial connections in the East, through telegraphic communications along the railroad rights-of-way, to offer the latest price quotations to merchants in the country. Faster service, better credit, and fewer handling charges frequently outweighed a slightly higher ton-mile rate for carrying grain. Furthermore, aggressive Great Lakes steamship lines kept long-haul New York charges competitive for either water or rail transportation. Chicago soon became the better market even for eastbound grain from Michigan and Indiana. While St. Louis dealt in bagged grain that was loaded by hand, stored outdoors, or hauled across town in wagons for storage, Chicago grain merchants pioneered the bulk elevator, ran rail spurs directly to the docks, devised automatic systems for loading freight cars and steamships, and implemented uniform systems of grading, pricing, and warehouse receipts. Two elevators built by the Illinois Central Railroad in 1858 exceeded the storage capacity of the entire St. Louis market. In the 1850s, grain exports from Chicago by water and rail rose from 1.3 million to 26 million bushels; flour jumped from 100,000 to 700,000 barrels. By 1860 the vast majority of this freight came into Chicago by rail.[9] For a host of smaller towns in the Mississippi Valley the success of Chicago was a mixed blessing. Prairie towns in Illinois and Iowa river ports like Dubuque, Clinton, Davenport, and Burlington all entertained visions of their growing importance in the railroad network. Unprepared for the streamlined integration of the Chicago market, most of these centers found their own growth quickly stunted by rates and services that made Chicago more attractive to interior shippers. By offering more attractive rates than the hometown buyers, Chicago railroad agents were soon in a position to dictate terms to the interior as well. The legitimate advantages of the commercial system through Chicago brought powerful examples of centralization and integration with eastern markets to the heart of the agricultural Midwest. The outlines of the new system were evident when the war closed the Mississippi River in 1861; the absence of meaningful river competition during the war allowed the rapid consolidation of this power and opened the door to monopolistic abuses.[10] The central element in the railroad's power to manipulate the flow of trade was the rate-making process, yet the "science" of rate making was makeshift at best. Overall levels and average rates meant nothing to particular shippers; it was the relative structure of rates that mattered. Dozens of variables influenced the rate on any class of freight at each station on the line, and freight agents were expected to adjust the published schedule of tariffs whenever necessary to maximize revenues at their stations. High fixed costs called for increased volume to spread these costs more widely. Because terminal and handling charges did not vary with the length of trip, short hauls were substantially more expensive per mile. Interregional "through traffic" passed at far lower rates than local freight in order to compete at distant markets. Seasonal fluctuations and a chronic imbalance between bulk agricultural exports and compact manufactured imports resulted in periodic car shortages, "deadheading," and frequent underemployment of equipment throughout the system. Finally, the presence of rail or water competition at a terminal pressed rates downward, while single-service "way points" were charged all that "the traffic would bear." Given the circumstances, railroad freight agents quoted charges that varied wildly.[11] Even a perfect rate structure would have seemed unfair to the western shippers because the objectives of the railroad network were different from those of local producers. Rationalization of a national market necessarily discriminated between primary and secondary centers of trade. Furthermore, the laws of supply and demand, as they bore on the transportation business itself, often contradicted the behavior of commodities markets. High demand for transportation resulting from a good harvest, for example, made transportation dear just when the price of grain was lowest. On the other hand, crop shortages that raised grain prices also raised the price of transportation, except at the most competitive points, because carriers had to recover fixed costs on the reduced volume. At such times more expensive corn would bear the higher charge. If this was unfair to certain captive shippers, it was the price to be paid for large regional advantages in the new transport system. Unable to store their services or withdraw from the market, railroad managers followed shifting rules of competition that baffled the shipping public—and many railroad men as well. These serious problems were aggravated by ignorance of the real cost of transportation by rail for any given service. In their struggle to show an overall profit, most railroad men disregarded questions of equity in the rate structure. Citing the time-honored principle, "what the traffic will bear," they constantly intervened to manipulate the supply of traffic and the rate it would bear through monopolistic agreements with grain merchants, wholesalers, manufacturers, and steamboat companies. Collusive agreements among the railroads to divide the business further curtailed competition. By the late 1860s these practices resulted in wild distortions of the competitive environment and "unjust" discrimination against individuals and localities. Large shippers depended on the favor of their railroad friends. Intermediate cities rose or fell in response to the structure of local rates. Certain shippers and towns made unprecedented gains while the majority of small merchants and farmers in the Mississippi Valley lost all control over where and how and at what price they sold their crops. If railroad rates were often fair and equitable, they were always arbitrary. The threat of destruction, even more than actual abuses, focused public hostility on the arrogance and power of the railroad managers. While the best of these managers proclaimed the virtues of the "natural laws" of supply and demand, they constantly defied those laws from necessity or from habit.[12] Ironically, free competition had created the problem both for the midwestern shippers and their railroad rivals. Rate discrimination grew out of competitive pressures, from consumers and railroad promoters, to build developmental lines faster than the territory could support them. For two decades John Murray Forbes had been preaching the gospel of patient development, but his argument fell on deaf ears. Neither railroad builders nor anxious pioneer patrons would be stayed in their frantic rush to the West. As a result, conflict was built into the original bargain and proved almost impossible to overcome. Distortions in the rate structure reflected the railroad managers' understandable need to raise immediate income while building a revenue base for future defense against competition. Techniques of operating efficiency that made possible reductions in interregional freight rates favored long- over short-haul business. Furthermore, aggressive merchants in those local markets blessed with competing rail service encouraged the rate wars that so heavily taxed their less fortunate neighbors. Railroad defenses against ruinous competition were indistinguishable in character from monopolistic abuses. Western interests therefore unfailingly pressed for more competition to recover their independence. At the same time that eastern capitalists like John Murray Forbes were condemned for dominating the western economy, they were forced to expand their investments in response to the demands of western people. If Forbes refused, others would invade the territory he already controlled. A "FIT" YOUNG MANAGER Charles E. Perkins was located uncomfortably at the center of all these contradictory pressures. Perkins had come to Burlington in 1859 as a clerk on the B&MR. As the war drew off his immediate superiors, he took on the duties of land agent, assistant treasurer, and assistant secretary. Forced to sit out the war in Iowa, and finding little employment as yet in selling railroad lands, Perkins became the principal liaison between cousin John Murray Forbes, the Burlington company, and the people of Iowa. His considerable talents as a manager together with the circumstances of his confinement in the Burlington office cast young Perkins in the mold of a company man, a role that in time would make him an invaluable resource to the Forbes group and the Burlington railroad. Born in Cincinnati, Ohio, in 1840, Charles Perkins was the oldest son of James Handasyd Perkins, himself a cousin of John Murray Forbes. The elder Perkins had rejected the commercial life of his family to take up an intellect ual calling in the West. Briefly recognized as a lecturer, writer, and Unitarian minister in the Cincinnati region, James Perkins died suddenly in 1849, leaving young Charles to care for his mother and four brothers. The youth managed to stay in school until he was sixteen, when he took employment with a wholesale fruit grocer in Cincinnati. From this position he applied to John Murray Forbes for advice and direction in selecting a career. "There is a great want of good, trustworthy businessmen for the management of our railroads," came the reply. "I can help you on better in that direction than any other, and if you can fit yourself to manage such matters well . . . you would certainly stand a good chance of having your services recognized by pay and promotion when the proper opening comes." In July 1859 the eighteen-year-old Perkins accepted an offer to assist Charles Russell Lowell in the land department of the Burlington railroad. It proved to be the most successful of John Murray Forbes's many efforts to place willing young men on the path of the future.[13] If Forbes wanted a manager for his western railroad, Perkins was determined to "fit himself" to be the best. He took to the Iowa country and the railroad business immediately. The outbreak of war brought added responsibilities which he gladly shouldered, but the lure of battle promised high adventure and stimulated his sense of ambition. By the summer of 1862 Perkins threatened to take a commission in the army for "$1,300 besides the glory" unless Forbes could get him a substantial raise in pay. While most young men of his class and generation were distinguishing themselves on the fields of battle, he complained, he was marking time on a stagnant railroad. Forbes finally convinced him that he could better serve his country and his widowed mother by staying alive in Burlington. During this isolation Perkins formed an increasing attachment to the Burlington company. When, in the last years of the war, he desperately urged Forbes to extend the Iowa line, Perkins felt that his own future along with the Iowa business was at stake.[14] In the beginning Perkins was both a paid company manager and the personal agent for the Iowa Land Association, through which Forbes and his friends speculated in real estate along the line of the road. The Boston men may have viewed him for the moment as a hireling, but Perkins's own ambition was to accumulate knowledge and property and rise to partnership among them. For this reason he carefully exploited the family connection with John Murray Forbes, writing privately to Forbes to insure that his views would cut through regular company channels. He thought of himself as a spokesman for the eastern men in their western mission, and he tried to interpret events and attitudes at each end of the network for the benefit of the other. Like the younger John Murray Forbes in the Canton commission house, Perkins gradually made himself indispensable to all parties interested in the Burlington road. He was placing himself at the center of an emerging Burlington railroad system.[15] Perkins believed that the Iowa line was the key to the postwar success of Forbes's whole railroad network. Forbes was inclined to agree, but he paid little attention to its development. Immediately after the war Perkins persuaded Forbes and four other eastern directors to visit Iowa to examine the prospects for themselves. Perkins argued strenuously for the old developmental ideal, but with a quickened pace. Both the value of the land grant and the steady traffic of the Burlington road depended on rapidly and systematically planting a friendly population in southern and western Iowa. Since local fundraising for new construction was no longer promising, he placed more faith in the contract with CB&Q to finance construction from Iowa earnings. By the end of summer 1865 those earnings were "very large," and Perkins was secretly investing his eastern friends' money in depot lands just beyond the railhead. As winter approached plans were laid to bridge the Mississippi River at Burlington. At long last things were moving on the Burlington railroad.[16] Time was the enemy for Charles Perkins. Throughout 1866 he pressed for bonuses to speed construction, and he fumed about delays. Contrary to Forbes's traditions, Perkins asked for a cheap road quickly in order to get the line open and catch his competitors. Forbes and the Boston men remained deliberate in their methods. In October 1866 the CB&Q directors agreed to finance another sixty miles beyond Chariton. Slowly the work progressed. By June 1867 the line had advanced only forty-seven miles, while the Chicago & North Western (C&NW) had completed its line to Council Bluffs, complete with bridges at the Mississippi and Missouri rivers. Still, the Burlington line had earned nearly half a million dollars in the past fiscal year, and less than half had gone for operating expenses. This kind of revenue would service construction debts for perhaps another year, but Perkins knew only too well that finished lines to the north would draw off his traffic and drive down prevailing rates. When the Burlington line finally reached the Missouri River its profit margin was sure to be slim. Construction from current earnings must be done very soon or not at all.[17] Perkins's efforts to finish the line were hindered at every turn by public impatience with the B&MR. He turned to local politics for relief, cultivating members of the state legislature with free passes and correspondence. An open lobby "of R.R. men at Des Moines," he reasoned, "could turn some honest members against us, who, by judicious behavior on the part of our friendly members, may be brought to us." Whenever he could, Perkins reminded his western Iowa "friends" that rate regulations favored only those eastern Iowa interests, "who having the road care nothing for the interests of the State at Large." When it seemed prudent, he issued a friendly line expressing his "interest" in some local election. At one point he asked Forbes to send out a man with money and doctrine enough to buy out the Burlington Hawk-Eye, whose current editor was hostile. Perkins's politics, however, were not entirely insincere. He made positive efforts to secure the city of Burlington against commercial losses resulting from the new Mississippi River bridge. Even as the superintendent of a "foreign" railroad, Charles Perkins was deeply attached to Burlington and worked conscientiously to develop his adopted community.[18] Because of his field experience and his growing commitment to the Iowa road, Perkins was the first to recognize weakness among his eastern supporters. James F. Joy was the chief doubter. Without coal and timber, Joy reasoned, Iowa could not be settled. Perkins thought this a mistake in judgment, but in time he came to suspect that Joy had "so much else on foot that he pays no attention to us." Naturally the Burlington's lands would not be settled, he argued, "till the road is built." In fact, Iowa courts would soon "decide our lands Taxable" unless the railroad were finished and the lands sold. As Joy turned against him, Perkins warned Forbes that endless delay "not only makes the heart sick, it sometimes makes men mad!!"[19] By 1868 the pressure on Perkins had become intense. Rumors were flying that the CB&Q intended to absorb the Iowa road. (Perkins asked Forbes, was it true?) In January 1868 the Iowa legislature began debating the resumption of the Burlington land grant. Characteristically, Perkins bristled at this kind of threat, even when it indirectly served his interests: "Would it be wise or dignified to be whipped into doing what a parcel of black-mailing cutthroats ... want us to do [?]" Perkins wanted to press forward, taking no more local aid and making no promises to local communities. Still Joy dragged his feet, keeping the Iowa road at arm's length from the CB&Q.[20] While Forbes and his friends dawdled on their Iowa project they might have lost the property altogether. A recent contract for aid from the CB&Q called for B&MR bonds convertible into preferred stock, which required the approval of two-thirds of the voting shareholders. But the nonresident directors held only a simple majority. By February 1868 it was evident that Iowa stockholders would use their voting strength to block the new issue. Perkins devised a scheme to corner the full-paid shares of the city and counties whose bonds had not been honored. He pressed for judgments against the remaining bonds, forcing an auction of full-paid shares that he then secretly bought. Forbes was cool to the idea at first, but the ease with which Perkins was acquiring shares at fifteen and twenty cents on the dollar brought him around. When the marshall's sale took place in Burlington in July, Perkins captured 750 shares at less than seventeen cents per share. Systematically B&MR attorney Henry Strong foreclosed on public delinquents. United States District Judge David J. Rorer, a former company attorney, then ordered the sale and Perkins's agents bid off the stock with funds supplied by Forbes, Perkins, Counselor Strong, and Senator James W. Grimes. By this method another 3,250 shares were acquired before the cover blew off in August. In the face of charges of fraud and a possible injunction, Perkins transferred certificates to the real owners of this new stock as quickly as possible.[21] This entire operation had been Perkins's initiative, designed both to strengthen eastern control of the company and to improve his own position with the eastern directors. When Forbes finally scolded Perkins for his constant complaints about the directors, Perkins was ready with his defense. He had more faith in Iowa than all the rest. He had gone out on a limb to secure control when others were indifferent. "You know," he told Forbes, "what a queer man judge Rorer is—It was all I could do to bring him to sell.... I had to give him 43 shares!" Perkins's maneuvering had profited everyone in Boston, but if "Mr. Thayer & others think I would turn my hand over to put money into their pockets (possibly) without a 'consideration,' they are mistaken." Without wealth of his own, Charles Perkins was capitalizing accomplishments which John Murray Forbes was bound to respect. It was risky for so young a man to cross powerful opponents like James F. Joy and Nathaniel Thayer, but Perkins would soon be rewarded.[22] By the autumn of 1868, B&MR stock had begun to rise, and completion of the line to the Missouri River was nearly assured. Perkins figured the cost of the finished road of 300 miles at just over $10 million. Nine million of that sum was interest-bearing debt, but the earnings record suggested that the B&MR could pay all of its interest plus a 7 percent dividend in the first year of operations to the Missouri River. The stock rose to par in June 1869, and the line itself was completed to Plattsmouth on November 26. After sixteen years the Burlington & Missouri River Rail Road was finally completed. In the next twelve months its earnings exceeded Perkins's wildest predictions-over $200 million.[23] DIVERGENT STRATEGIES In his struggle to finish the B&MR, Charles Perkins had proved himself to be an able "descendent," though not simply a copy, of John Murray Forbes. He pursued the basic theory of development that Forbes had laid out before the war, even though Forbes now paid entirely too little attention to his sprawling railroad interests. Perkins subtly adapted Forbes's ideas to the postwar environment, but the old merchant himself blindly followed James F. Joy into an explosive new period of railway expansion. Convinced that nothing could shake his confidence in Joy, Forbes had given that Detroit promoter essentially free reign over the management and strategy of the CB&Q and its allied western lines. Forbes's confidence in Joy was based on two decades of successful cooperation. At the beginning of the postwar boom, the CB&Q was a solid Illinois road of four hundred miles, doing some $6 million worth of business per year. Roughly half that sum was consumed in operating expenses; the balance easily serviced $6 million of funded debt and returned 11 percent on a capital stock of $8.4 million. Thus situated, the CB&Q was a perfect anchor for more speculative ventures to the West, and the Boston directors perhaps understandably took their dividends from Joy without complaint. Expansion from earnings was always safe, and presumably Joy would come to Boston if the need arose for new inputs of capital. What Forbes did not consider was that Joy had acquired new financial supporters of his own, chief among them Moses Taylor, president of the National City Bank of New York and one of the richest railroad investors in the nation. This alternative source of capital gave Joy a measure of independence from the cautious conservatives in Boston, just when western railroads entered the fiercest round of competitive construction the industry had seen. Less deeply committed to sequential development than Forbes, James F. Joy was easily attracted to those manipulations of grand systems that marked the "looser" side of railroading. As president of the CB&Q and a leading executive in the Michigan Central, the Hannibal & St. Joseph in Missouri, and the B&MR in Iowa, Joy was in potential control of much of the interstate rail traffic in America's heartland. Neither he nor Forbes recognized how treacherous a temptation that was.[24] By manipulating the rate structure, railroad managers could often divert traffic over long and inefficient routes without serious loss to the company's revenues. The mischief that resulted from such practices was well recognized before 1865. John W. Brooks had complained in 1863 that any rule other than "even and uniform rates would produce utmost chaos." Brooks knew, however, that as long as two roads connected the same two points, any physical difference in their routes would be counteracted by the rate structure. Security lay in having the most efficient route and keeping rates up to a paying level. For this reason Brooks came to share Charles Perkins's impatience to finish the Iowa railroad and establish steady, efficient through traffic over the long western line. Both Brooks and Forbes identified sequential development-working westward along with the settlers-as their best defense against wild competition.[25] James F. Joy was formulating a different plan made possible by the wartime development of the transcontinental railroad. Leaping ahead of sequential investors, the federal government was creating a trunk line through barren lands from which all transcontinental traffic must flow to the half dozen carriers in the Mississippi Valley. It took no special insight to recognize that whoever controlled the first and most numerous connections with the Union Pacific Rail Road possessed an immense source of immediate wealth. Because the bottleneck at the gateway created this opportunity, further development of far western lines would be counterproductive. This prospect led Joy to concentrate on connecting the existing Hannibal & St. Joseph with short lines up the Missouri River to meet the Union Pacific at Omaha. The deep contradiction between Joy's opportunistic strategy and sequential development in Nebraska was not immediately recognized by the Boston directors. The true friends of the Iowa railroad made two perceptual errors that gave Joy his opening. Forbes, Brooks, and John N. Denison allowed their disputes with the Iowa people to assume such importance that they almost believed their own threats not to finish the line. While these men adhered to their theories of local aid and territorial development, CB&Q President Joy treated his whole board of directors to endless statistics that proved that the Hannibal road was a more profitable feeder for the Chicago company. Charles Perkins recognized the game, but his word was not enough. Joy spoke favorably about the Iowa line in his CB&Q reports, but he implied a choice between quick profits in Missouri or expense and hostility in Iowa.[16] Forbes's assumption that the Nebraska land grant promised the B&MR its own transcontinental connection was another error that played into Joy's hand. Though clearly safer in the long run, this developmental strategy meant even longer and larger commitments before really handsome profits could be expected. It had been difficult enough to get CB&Q directors to approve the pay-as-you-go aid to the B&MR. By November 1866 Joy was subverting that agreement with unfair comparisons between the completed Missouri line and the truncated Iowa road. Kansas City was the focus of joy's new interests. His sudden large investments in land, railroads, bridge stock, and cattle in that region drew off the capital of Nathaniel Thayer and others into a field that would one day compete with the direct Iowa line. Finally sensing trouble in late 1866, Forbes tried to scold Joy back into line: "I have not any interest on the southern line," he pronounced, "and shall not have any." Forbes had placed B&MR bonds among "old fashioned people with my own individual guarantee," and he would not "give it the go by." Thayer would do both if Joy presented them jointly; but if Joy persisted in offering "alternatives" to Iowa, Forbes would break with him and "shoulder it alone with Brooks and a few" others. Unlike the Hannibal, the B&MR brought business only to the CB&Q. "It has become to me what the C.B.& Q. once was when I alone had pluck enough to endorse its notes," Forbes concluded. Joy agreed to speak up for the Iowa road, but he made no withdrawal from his southwestern design." Awakened to the danger, Forbes outlined a transcontinental strategy of his own. The Pacific Railroad Act of 1864 designated Council Bluffs, Iowa, as the eastern terminus of the Union Pacific (UP). However, the section of the Union Pacific from Kearney, Nebraska (on the one hundredth meridian), to Council Bluffs was technically one of several branches authorized by Congress to compete for interchange at the Kearney gateway. The B&MR's Nebraska grant authorized another such branch. Because government engineers had identified Bellevue, Nebraska-midway between Omaha and the Burlington's western Iowa terminus-as the preferred site of a UP bridge, Forbes planned to meet the UP at Bellevue on equal terms with the roads coming into Council Bluffs. This would give the B&MR the short line to Chicago and postpone construction in Nebraska until the volume of traffic demanded the new Burlington line. Omaha merchants and Forbes's Iowa railroad competitors wanted an Omaha bridge instead, with a single connection at Council Bluffs for all Chicago roads. These interests had the upper hand in 1867, partly because of close financial relations between the UP's Omaha branch and the Chicago & North Western Railroad in Iowa. Executive control of the Union Pacific was in the hands of old Forbes competitors whose "friends" in Congress stoutly opposed the Bellevue bridge. After repeated unanswered calls for help, Forbes was told by Iowa Senator James W. Grimes to come to Washington and "attend to your bridge yourself."[28] Forbes's position was only technically reasonable. Omaha was the obvious commercial center in Nebraska and a bridge between that city and Council Bluffs was more useful even if less desirable from an engineer's point of view. Besides, in 1867 the Chicago & North Western line was nearly completed to Council Bluffs while the Burlington had almost two hundred miles to build before reaching Bellevue. Nevertheless, Forbes hired a lobbyist to press his case in Washington and sent his own engineers to survey a bridge at Bellevue or Plattsmouth for his independent connection with the Union Pacific. By early summer 1867, the company surveys had revealed the Bellevue crossing as no better than Omaha, but by then Forbes was too deeply committed to back down.[29] At Bellevue Forbes was trying to force his ideas on an issue that was already lost. Joy, on the other hand, was manipulating completed lines and short connectors into a quick, if roundabout, route to the Union Pacific at Council Bluffs. His immediate success encouraged the notion that railways could triumph over geography. Forbes and his closest allies knew that the lay of the land would never be irrelevant to the cost of transportation—that a circuitous route could not hold the business. But Joy stressed the immediate needs of the Illinois railroad over the Iowa line. Treating the CB&Q directors as short-line investors, he was splitting their interests from the system as a whole, at the expense of Iowa's B&MR. After June 1867 he openly opposed the Iowa project; Forbes finally understood Charles Perkins's complaint.[30] Forbes now turned his whole attention to the Burlington & Missouri River Rail Road. He ousted Joy from the Iowa presidency, putting Brooks back in charge, and he shored up his support on the B&MR board. The climax came at a CB&Q board meeting in August 1867. Forbes was presenting his argument for the immediate extension of the Iowa and Nebraska lines when Joy announced that the subject would not be discussed. Erastus Corning called for adjournment. The meeting was gavelled right in the middle of Forbes's speech." Joy had overplayed his hand. His strongest supporters were also holders of B&MR bonds. Joy's demonstration in August started a rush to unload the Iowa paper. "[I]nstead of buyers," complained Treasurer Denison, "I have sellers of bonds after me." If the B&MR failed to meet its obligations Forbes would see to it that angry investors discovered the true source of their losses. Joy backed down enough to endorse a circular on September 18, 1867, recommending more Iowa bonds to the CB&Q stockholders. Forbes then committed his Iowa directors to extending their line to the Union Pacific. By the first months of 1868, Forbes had regained the initiative in Boston: A new circular called the Iowa road the main line of the CB&Q; Hannibal & St. Joseph was a feeder.[32] Two distinct strategies had taken shape within the CB&Q directorate. Forbes, Brooks, and Denison were determined to stay with Perkins on the main east-west line of development, pouring money into the B&MR in Iowa and Nebraska. James F. Joy, backed by Thayer, Corning, and Moses Taylor, was drawn by competitive intrigue into trying to control every branch line or route southwest of Chicago that might invade his territory or divert through traffic. Easy money and a booming market for railroad securities allowed both sides to pursue their objectives for a while. A network of branches was clearly needed to retain local traffic in the Burlington's territory, while steady westward extension and consolidation of the east-west lines offered the strongest defense in the overall contest for trunk line business. At least Joy and Forbes agreed on one thing: It was "impossible to remain stationary."[33] --[cont]-- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. Roads End DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credeence to Holocaust denial and nazi's need not apply. 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