A Classification of American Wealth
History and genealogy of the wealthy families of America - Sponsors


 Part 1 : Colonial and Mercantile America  Part 2 : America in the Gilded Age
 Part 3 : America in the Twentieth Century  Encyclopedia of American Wealth

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  Part II-Chapter 8 : Railroad Barons  >   Index and Introduction   Previous  1 -  2  Next

Other railroads grew in length during the 1850's, the most successful being the Pennsylvania and the Baltimore & Ohio. These companies were funded by leading merchants and bankers of these cities and also benefited from the support of local communities. They were generally successful; not so, the New York & Erie which soon became the favorite playground of the great stock manipulator Daniel Drew, later the mentor of the infamous Jay Gould, who entered history as the typical robber baron of the Gilded Age. The various tendencies of railroad finance were thus existing in the 1850's, but still on a relatively modest scale. This would soon change with the further push into the West and the building of a Transcontinental railroad.

The great breakthrough came in the 1860's, as Civil War raged between the industrial North and the aristocratic South. The conquest of the West suddenly had increased attention, and this time, 16 years after Asa Whitney's first proposal, Congress approved a Transcontinental railroad and chartered two companies to build it, the Union Pacific building westwards from Omaha and the Central Pacific who started in Sacramento and built eastwards through the Rocky Mountains. Heavily funded by government credit and land grants, these private enterprises created in one case great fortunes and in the other case an even greater scandal which ended in the panic of 1873. In a less publicized yet certainly as significant move, shipping magnate Cornelius Vanderbilt bought control of the New York Central Railroad and extended it with other roads from New York through to Chicago. Vanderbilt's railroad ventures were so successful, they made him the richest man in America by the time he died in 1877. In the same years, the tandem of Jay Gould and Jim Fisk manipulated gold and Erie railroad stock and built themselves large fortunes, which were little more than robbery proceeds in the eyes of their adversaries and the general public.

Thus the Gilded Age rolled on and railroad construction, finance, operation and consolidation created millionaire estates on a scale never seen before. Among the great railroad tycoons, certain are remembered for the great systems they built; Cyrus K. Holliday for his Santa Fe, John Murray Forbes for the Burlington. Others became famous for the wealth they accumulated : the Vanderbilts, Russell Sage and John Insley Blair. There were those enriched by alleged privateering on government funds; the Pacific Quartett and the Credit Mobilier ring. And some idealistic souls like Charles Francis Adams, who almost seemed lost among the sharks. Some successfully built profitable local roads into large regional systems without government support : Hill in the Northwest, Plant and Walters in the South East. Others piled up huge debts in schemes that ended little better than in bankruptcy : Cooke and later Villard, both with the Northern Pacific. Then there were those who managed to blow life into dying railroads, little better than rusted streaks, like Edward Henry Harriman and his turnaround of the Union Pacific. All these men had in common an outstanding sense for business in general and transportation in particular; all of them left lasting marks on the communities in which they acted and most of these men died very rich and left millions to their descendants.

The saga of the American railroad barons ended with the Gilded Age and the innovations of the 20th century, the popularization of the automobile and commercial aviation. The vast estates of the regal dynasties built on railroads, the Vanderbilts, Goulds, Huntingtons, and other Crockers and Hills melted both by the generous spending level of the heirs and the reduced profitability of their main economic activity. New financiers tried themselves at great railroad consolidation schemes but eventually failed, like the Van Sweringens of Cincinnati, who failed with their 28'000 miles wide system during the Depression, and Robert Young, who wrested control over the New York Central from the Vanderbilts in 1954. In 1968, after more than a century of strong competition the two largest systems in the North East, the New York Central and the Pennsylvania merged to form the Penn Central, only to go bankrupt two years later and be reorganized by the government as Conrail.

Railroad Barons  >   Index and Introduction   Previous  1 -  2  Next

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