Nineteenth-Century Patterns of Railroad Development on the Great Plains

University of Nebraska - Lincoln DigitalCommons@University of Nebraska - Lincoln

Great Plains Quarterly Great Plains Studies, Center for

Summer 1983

Nineteenth-Century Patterns Of Railroad Development On The Great Plains

Russell S. Kirby University of Wisconsin-Madison

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Kirby, Russell S., "Nineteenth-Century Patterns Of Railroad Development On The Great Plains" (1983). Great Plains Quarterly. 1719. https://digitalcommons.unl.edu/greatplainsquarterly/1719

This Article is brought to you for free and open access by the Great Plains Studies, Center for at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Great Plains Quarterly by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. NINETEENTH .. CENTURY PATTERNS OF RAILROAD DEVELOPMENT ON THE GREAT PLAINS

RUSSELL S. KIRBY

he North American Great Plains experienced ment of the region were largely due to the rapid settlement and economic growth from uneven expansion of the railroad network 1870 to 1914. The advance of settlement and after 1870. Some areas were heavily overen the development of local economy, while dowed with railroad facilities, while others generally contiguous, were by no means uni received barely adequate, or even niggardly, form. Soil conditions, underground water treatment at the hands of railroad businessmen supplies, the network of rivers and streams, and entrepreneurs. The construction and rainfall, and growing season are all attributes operation of railroads on the plains were of the physical environment that vary across governed in part by strategic, managerial, the plains both longitudinally and latitudinally. financial, and institutional forces that produced In addition, the extent of effective settlement a transport system with no necessary relation in the Mississippi River valley, the natural ship to the contemporary or potential eco starting point for westward expansion onto the nomic landscape of the Canadian and American plains, varied considerably in 1865. Given these Great Plains. economic and environmental preconditions, it This article examines the process of corpor is not surprising that settlement on the Great ate railroad decision making in the larger con Plains after 1870 varied in timing and degree. text of investments, developmental strategies, Although the physical geography of the area and operational considerations, and explores must be taken into account, the differences the spatial evolution of four major railroad in the timing and amount of economic develop- systems from their origins to 1915. These railroads, two American and two Canadian, demonstrate various strategies of system Dr. Russell S. Kirby is a lecturer in the Depart ment of Geography, University of Wisconsin development. Generalizations drawn from a Madison, and a research analyst for the Wis brief historical overview, combined with consin Division of Health. He is especially insights from other analyses of entrepreneurial interested in transportation geography and the and business practices of nineteenth-century historical geography of nineteenth-century railroads and their leaders, suggest a hypothet America. ical sequence of railroad system development

157 158 GREAT PLAINS QUARTERLY, SUMMER 1983 at the level of the corporation in nineteenth their railroads, financiers used their properties century North America. for much broader strategic purposes, manipu lating the securities, freight rates, connections, and through routes almost at will. As often as TERMINOLOGY opportunistic profits were made-through fi Within the context of railroad systems, from nancial wizardry, shady construction contracts, both an investment and an operational point or dealings in railroad lands-great fortunes of view, several concepts and terms have been disappeared overnight in the aftermath of bank developed by business and economic historians failures, overextension, or bankruptcy and to facilitate the understanding of investor and receivership. corporate decision making. As these ideas will Except in virgin railroad territories, it is be applied to the development of the four difficult to characterize most late nineteenth Great Plains railroads considered here, some century railroad investments as anything but brief definitions are warranted. opportunistic. If one makes a conceptual leap First, in order to understand the investment from the level of the investor to that of the strategies pursued by individual capitalists and company, however, this is not so. While John entrepreneurs, it is useful to differentiate, as son and Supple are careful to apply their analy Arthur M. Johnson and Barry E. Supple have sis only to investors, however wealthy or influ done, between developmental and opportunis ential they may have been, it seems appropriate tic investments and investment strategies in the to discuss the investment, operating, and new nineteenth-century railroad business. A devel construction decisions of nineteenth-century opmental investment strategy is one in which railroad corporations in the same terms. Thus, an 'investor looks to long-term growth in a an opportunistic managerial strategy might booming region for the economic rewards involve the sale of railroad assets, competitive from capital investment. Opportunistic invest pricing policies on freight or passengers, or the ments, on the other hand, have "relatively rapid construction or acquisition of railroad shorter time horizons, the context of which lines in direct competition with one or more was not so much future income growth as the rival companies. Developmental corporate stra securing of profits from available markets tegies would include controlled systems growth whether for goods, for railroad services, or for and the husbanding of nonrail assets such as stocks and bonds.,,1 agricultural lands and mineral or forest re There is a continuum from developmental sources for the long-term prosperity of the to opportunistic investment, and while any railroad. Viewed from a broad, system-wide individual's current motives can be placed perspective, it would be conceivable for a given somewhere along this continuum, those mo railroad to engage in a purely or largely oppor tives, or the criteria for subsequent investment tunistic strategy in one part of its system while decisions, could easily change with time or with simultaneously developing the future potential changes in other financial and economic factors of its business in another portion of its net not necessarily bearing directly on railroading. work. Indeed, the larger the system, the more Local merchants and farmers committed their likely that this combination of strategies would capital to early local railroad companies as a exist. means of increasing their business profits. Dis Railroad historians have also identified two tant investors often purchased railroad bonds types of system development. The major devel and debentures with a view to stable, long-term opment strategy of many nineteenth-century developmental profits. By the late nineteenth railroads was the territorial development of a century, many railroads had come under the near monopoly on freight and passenger traffic control of strictly financial, large-scale capitalist in a particular district. Indeed, the concept of a interests. Often located at some distance from "natural" territory appears again and again in NINETEENTH-CENTURY PATTERNS OF RAILROAD DEVELOPMENT 159 the documents left by important figures in the through passengers and freight traversing a line railroad industry of the late nineteenth and between major cities often paid a lower fare per earI y twentlet. h centunes. . 2 I n contrast to tern-. mile or unit weight than local traffic, which torial development, the term interterritorial paid a premium fare for transportation pur competition describes the sequence of events chased in what was often a nearly monopolized that often ensued when the lines of one road marketplace. invaded the natural, or integral, territory of Bearing in mind these three sets of concepts another railroad. Interterritorial competition opportunistic and developmental investments could take many forms, including physical con and managerial strategies; territorial develop struction of mileage in direct competition with ment, interterritorial competition, and city another firm, preferential agreements with hinterland symbiosis; and local versus through complementary systems in competition with traffic and routes-let us now examine the one another, mergers, consolidations, and evolution of four major Great Plains railroad cutthroat price wars. Just as developmental systems from their origins to 1915. and opportunistic investment or management strategies are pure forms that seldom exist in GREAT PLAINS CASE STUDIES practice, territorial development or interterri torial competition rarely characterizes the The lines chosen for study include two strategy of a single railroad over its entire net American railroads, the Chicago, Burlington, work at any given time.3 and Quincy and the Atchison, Topeka, and To these two ideal types of territorial stra Santa Fe, and two Canadian railways, the tegy, I would add a third. The concept of Canadian Pacific and the Canadian Northern. city-hinterland symbiosis is useful in describing All four grew by 1914 into major common the nexus of mutually reinforcing economic carriers on the Great Plains. Although the ties between a railroad line and its initial railroads originated in slightly different circum terminus. This type of development strategy stances, a review of their corporate histories was pursued by early or small railroad com and systems evolution suggests a number of panies that identified their economic interests parallels and some differences in their sequen closely with those of the business community tial development. The maps in Figures 1 and 2 they served. show the general extent of each network in Finally, the concepts of local and through 1915. Major trunks and branches have been traffic and routes are very important in under classified according to the probable develop standing corporate railroad system development ment strategy under which each line was built in the nineteenth century on the Great Plains. or acquired by each company. These system Local traffic refers to business that originates maps should be examined in conjunction with or terminates at a local station on a railroad's the following overviews of the growth of each line. Through traffic requires some transfer or railroad. connection, with the same carrier or with an other carrier. Through routes are direct lines THE BURLINGTON SYSTEM between pairs of major cities, with no change of cars required. On any given journey, a pas The Chicago, Burlington, and Quincy Rail senger might be deemed local traffic from, say, road (hereafter referred to as the Burlington) a village station to Kansas City, but a through had its origins in several short railroads in cen passenger from Kansas City to Chicago on tral Illinois that were largely financed locally. another line. A traveler might have purchased a The system as it was first integrated in the mid- through fare for the entire journey, but the 1850s consisted of a main line from Chicago to type of traffic classified by each road could Galesburg with two branches to the Mississippi differ. The distinction is important, because River at Burlington, Iowa, and Quincy, Illinois. 160 GREAT PLAINS QUARTERLY, SUMMER 1983

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FIG. 1. The evolution of the Burlington and the Canadian Northern to 1915.

Prior to the Civil War, the Burlington served as Following the Civil War, the Burlington a symbiotic link between the rising commercial rapidly expanded westward into a burgeoning metropolis of Chicago and the rich agricultural but highly competitive market for the trans lands of north and central Illinois (Fig. 1). continental trade brought to the Missouri River The Boston capitalists who gained control valley over the Union PacifIc, and for the agri of the Burlington before the Civil War, and cultural produce and supply trade of Iowa and maintained control of the fIrm's capital stock the eastern Great Plains. In entering this for a considerable period of time, pursued a market, the company began to engage in inter generally developmental growth strategy. De territorial competition. spite numerous opportunities for profIt taking, An early strategy of controlling the Bur through manipulation of construction contracts lington and Missouri River Railroad enabled or speculation in the land grants awarded to the the Burlington to participate in the famous company or to its subsidiaries, there is little Iowa Pool of the 1870s as a strong partner. evidence of opportunism in the development of The Council Bluffs-Chicago route became a the Burlington system during its formative western trunk line, providing extensive and years.4 profItable through traffic for the system. The NINETEENTH-CENTURY PATTERNS OF RAILROAD DEVELOPMENT 161

Burlington also attempted to garner a larger already existing system in Nebraska, Iowa, and share of local traffic in north-central Illinois northern Illinois. Work was proceeding on a by acquiring strategically located but weaker new line into north-central Wyoming, but no lines. By 1875 the railroad had also built a other interterritorial construction took place.6 line, nominally under its control, to Kearney, Thus the Burlington had its origins as a Nebraska, on the platte River, in an attempt western road in symbiosis with the city of chi to command an even larger share of the trans cago and its growing hinterland in north-central continental traffic to Chicago. This strategic Illinois. After the Civil War, the railroad devel construction set off a round of securities manipu oped local territories in Illinois, Iowa, and lation, intrigue, and interterritorial competition Nebraska. Partly as a response to interterritorial for the Burlington line. 5 competition, but also to gain longer haul traffic By 1900 the Burlington system could boast with its increased revenues, the Burlington de of several through routes not present in 1875. veloped a number of through routes after 1875 These provided direct connections between and built up natural territories of monopolized Chicago and Minneapolis-Saint Paul, Saint local traffic on the prairies and eastern Great Louis, Kansas City, and Denver, as well as be Plains. tween important city pairs including Denver

Kansas City, Kansas City-Saint Louis, and Saint THE CANADIAN NORTHERN SYSTEM Louis-Minneapolis. In each case, these through routes were acquired or constructed in order to The Canadian Northern Railway had its gain a stronger position in the through traffic origins in several local lines north and north markets of the Great Plains and the Middle west of Winnipeg. These lines were symbiotic West. Once each line was built or consolidated links designed to develop the agricultural into the system, its primary function was the resources of Manitoba and to stimulate the long-distance movement of commodities and local economy of the city of Winnipeg. Under passengers. The railroad did what it could to the aggressive leadership of William MacKenzie develop local traffic along these routes, but the and Donald Mann, the Canadian Northern important role of each in interterritorial com established a network of railroad lines in Mani petition placed the development oflocal traffic toba from its original nucleus (Fig. 1).7 in a secondary position in the strategy of the At first, the Canadian Northern lines were system's managers. built largely with provincial aid in the form of Western branches to Billings and Cheyenne bond guarantees. Some of the railway lines provided connections with transcontinental preceding the Canadian Northern had federal roads much farther west than did the Burling subsidies or land grants associated with their ton's competitors. These lines also served to charters. The strategy of the Canadian Northern develop the ranching industry and the natural principals was to finance the construction of resources of the eastern Rockies and the north new territorial development with provincial ern Great Plains. Local traffic did playa role in bond guarantees and to carry the operating the strategic location of these western routes, as expenses of these lines initially on the profits did the prospect of a long haul of commodities generated on existing lines in more prosperous, to Chicago or to other distant cities on the Bur longer-settled agricultural districts. New con lington line. struction was built to minimum specifications The essential outlines of the Burlington rail and tracks were upgraded as traffic warranted. network were in place by 1900. Although addi The Canadian Northern became the line of tional mileage was added, the system gained choice for many prairie farmers, in part because access to no major new markets in the period the railway agreed to rates set by the provin from 1900 to 1915. Most new lines were cial government at levels below those prevailing branches and feeders that reinforced the on the Canadian Pacific Railway, the only 162 GREAT PLAINS QUARTERLY, SUMMER 1983 major competitor. The Canadian Pacific had its Mountain front to the lakehead, competition long transcontinental spine to subsidize and was fierce indeed. Maximum rates were set by maintain, while the Canadian Northern had the dominion agency controlling railway rates, only its prairie network and could afford to leaving a ceiling on transportation costs. At move traffic profitably at lower rates. peak harvest season, however, the two com The Canadian Northern proprietors fi panies must have moved traffic at cost or very nanced most of their original system through little above. As in the case of the Burlington, government subsidies and debt securities, re local traffic supported the growth of the sys taining the entire capital stock of the company tem as a whole and offset the cost of unprofit for most of its history. Only during the troubled able or recently constructed segments. years after 1912 did any equity securities leave The economic climate in the years preceding their grasp, and these went to the dominion the outbreak of World War I, and the changed government in exchange for additional sub financial situation and immigration patterns sidies. that ensued during the war, spelled the end for The quest for through traffic initially led the Canadian Northern. Seriously overextended, the railway to consider interterritorial competi the line might have survived had the economic tion. With no lines to the East, the Canadian growth of the prairies continued unabated. In Northern got only a short haul on its local 1918, control of the Canadian Northern came traffic to Winnipeg or to connections at the into the hands of the dominion government. international border. The only alternative was Today it forms the bulk of the western system to turn over traffic to the Canadian Pacific of Canadian National Railway. The firm was even closer to the point of origination. The not killed by its competitors, despite the stren Canadian Northern proprietors therefore deter uous nature of interterritorial competition on mined to build to Port Arthur on Lake Su the prairies after 1900. perior. The ability of the company to control the grain traffic of the Prairie Provinces with THE SANTA FE SYSTEM this extension eastward was hampered only by the inadequacy of its rolling stock at peak The Atchison, Topeka, and Santa Fe Rail seasons. Eventually it became clear that the road (hereafter referred to as the Santa Fe) road would have to develop its own tracks grew out of the interurban rivalry among the both to eastern urban centers and to the Missouri River towns of Atchison, Saint Joseph, Pacific. Unfortunately for the people of Can Leavenworth, and Kansas City for the com ada in the future, negotiations either to merge merce of Kansas and the West. 8 The Santa Fe the Canadian Northern and the Grand Trunk, had its origins as a locally controlled, symbiotic or to operate the Canadian Pacific's line north link extending westward from Topeka toward of Lake Superior jointly for all three trans the Kansas-Colorado state line, with connec continental systems, fell through. The Canadian tions via the Kansas Pacific to Atchison. Early Northern received dominion land-grant and recognizing its need for direct connections with cash subsidies, but the railway became over midwestern trunk lines to the East, the Santa extended in the course of completing its Fe built its own line to the Missouri River at transcontinental route. Atchison. By 1872, this young, rapidly growing After 1900 the Canadian Northern and the road had completed the skeleton of its network Canadian Pacific were the major rivals engaged across the southern half of Kansas and had in interterritorial competition on the prairies. earned its congressionally mandated land grant While the two railroads extensively overbuilt (Fig. 2).9 the railroad network of the region, each was Santa Fe managers dreamed of building a able to claim substantial districts as territorial transcontinental railroad along the old 35th preserves. For through traffic from the Rocky parallel route.10 This long-term objective NINETEENTH-CENTURY PATTERNS OF RAILROAD DEVELOPMENT 163

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\ "------~ o 200 " MILES

FIG. 2. The evolution of the Santa Fe and the Canadian Pacific to 1915. required large investments in the secuntIes of El Paso. By 1885 the Santa Fe was embroiled the railroad and the development of extensive, in an interterritorial struggle with both the profitable local traffic along the existing rail Southern Pacific and the Denver and Rio network. Considerable through traffic could Grande. The extensive route development that be anticipated only upon the completion of took place after 1872 would have been impos the transcontinental road. After 1872, there sible without the profits generated from local fore, the Santa Fe followed an aggressive policy traffic in the natural, or integral, territory of of territorial development in Kansas, building the road. some new branches and feeders while acquiring The system continued to expand through others. Although not a true monopoly in south the early 1890s. Like many other roads, the ern Kansas, the Santa Fe had become the domi Santa Fe had difficulty weathering the de nant railroad in the area by 1875. pressed economy of the period and succumbed During this period, the Santa Fe pursued a to receivership in 1893.11 One historian of the rapid territorial growth policy in extending its Santa Fe suggests that the financial condition line first to Pueblo, Colorado, and later south of the company deteriorated in part because of from La Junta through New Mexico and into the aggressive acquisition in 1890 of both the 164 GREAT PLAINS QUARTERLY, SUMMER 1983

St. Louis and San Francisco (the Frisco) and in the late 1880s to improve the railway'S the Colorado and Midland railroads. When the interterritorial competitiveness to Chicago and road emerged from receivership in 1895, it no beyond. The Santa Fe connected at Kansas longer controlled these lines. Financial control City with several roads, among them the Bur of the fIrm had passed by this time into the lington, the Milwaukee Road, the Missouri hands of eastern fInancial interests.12 PacifIc, and the Rock Island. None of these The Santa Fe had developed the Atlantic lines provided connections with points beyond and PacifIc Railroad (the A and P) in coopera Chicago; thus, further transfers and divisions tion with the Frisco after signing the Tripartite of rates were required on eastbound shipments Agreement of 1879.13 This jointly controlled and passenger traffic. The Santa Fe deter and operated line ran from Albuquerque, New mined to increase the length of its haul by Mexico, to Needles, California. The A and P building its own line to Chicago. The new track played an important role in the transconti was built to the highest specifIcations, and nental plans of both proprietary roads and may when completed, the Santa Fe provided the have represented a reasonable solution to the fastest service available from Kansas City to high construction and operating costs and the Chicago. IS Because this line was intended to low traffIc potential of the territory traversed. serve through traffIc only, no diversions of the The Santa Fe's acquisition of the Frisco also tracks to nearby local traffIc markets were brought the A and P under the sole control of made. the Santa Fe. Although the Frisco system In the years prior to 1900, the Santa Fe also proved too large to digest, the A and P fIt expanded in two additional markets for inter nicely into the interterritorial growth schemes territorial reasons. The Denver extension of the Santa Fe's management and was retained enabled the system to compete for traffic on a in the newly reconstituted system of 1895. major through route, while the acquisition of The struggle between the Southern PacifIc the Gulf, Colorado, and Santa Fe brought and the Santa Fe for the traffic of the South traffic from major Texas cities over the tracks west has been recounted elsewhere.14 The sub of the Santa Fe and into the Middle West. sequent development of Santa Fe lines into Los By 1915 the Santa Fe had further consoli Angeles, San Diego, and the San Francisco Bay dated its position in Kansas, Oklahoma, and area resulted from the unwillingness of the Colorado. These areas remained natural terri Southern PacifIc to cooperate with the Santa tories of the road, while the system came to Fe in the matter of through routes and a divi depend on long-haul and through traffIc for sion of traffic accommodating to the latter profIts. Major construction projects after 1900 fum. The actions of the Southern PacifIc are included improvements on the main line to the perhaps understandable, as the railroad stood PacifIc and connections between the Gulf of to lose considerable revenue by interchanging Mexico and the main line near the Texas-New with the Santa Fe at Barstow, California, rather Mexico border. The system continued to ex than at a junction in New Mexico or even at El pand into new markets in California, the Phoe Paso. To generate long-haul traffic and the nix region, and eastern Texas. desperately needed through routes, the Santa Fe was forced to develop its own lines to the THE CANADIAN PACIFIC SYSTEM major urban centers of California. Like the Burlington with its line from chi Unlike the Burlington, the Canadian North cago to Minneapolis, several Santa Fe lines in ern or the Santa Fe, the Canadian PacifIc Rail California crossed the most physically direct way was conceived as a political plaything of routes between their terminals. The Santa Fe Conservative national policy under Canada's also constructed a line that minimized the dis prime minister, John A. McDonald, during the tance from Kansas City to Chicago. It was built 1870s and 1880s. The road had its origins in NINETEENTH-CENTURY PATTERNS OF RAILROAD DEVELOPMENT 165 the compact from which the Dominion of served an additional strategic function by Canada emerged. That political agreement re siphoning off the traffic of the international quired the consolidation of the new federation boundary area and by rendering potential inva through a continental spine of steel rails. The sions by American railroads less remunerative. mission of the Canadian Pacific was transcon A competitor, the Northern Pacific, arranged tinental in nature from the outset, and this for construction of a line to Winnipeg with the railroad is an example of a system that never cooperation of the provincial government of enjoyed a period of city-hinterland symbiosis Manitoba, but interterritorial competition of as so many nineteenth-century North Ameri the type so common south of the border did can railroads did (Fig. 2).16 not occur in western Canada, for the most part, The Canadian Pacific syndicate intended to until after 1900. build its road without recourse to the sale of Another matter of great concern to Cana equity securities. Together with personal invest dian Pacific management was the main line ments by syndicate members, the subsidies of north of Lake Superior. Constructed as re land and cash from the dominion government quired by the original contract, the track had were deemed sufficient to construct the line. strategic uses in the event of a disruption in Unfortunately, because of a number of eco American-Canadian relations. In the normal nomic, political, and environmental circum course of business, however, the greater length stances, the original developmental strategy ran of this route and the economic sterility of the into difficulty. With further federal aid, and the territory traversed lessened the prospects of sale of some equity securities and additional profitable operation over this stretch of track. debt issues, construction of the skeletal net The Canadian Pacific therefore determined to work was completed in 1885. gain control of its own line south of Lake Through acquisition the Canadian Pacific Superior. Such a road would yield not only a gained control of a number of short lines in shorter route to eastern Canada, but also poten Manitoba as well as considerable mileage in tially greater local traffic, while enabling the eastern Canada. Following completion of the company to serve additional Great Lakes ports. transcontinental line, the railway adopted a By 1890 the Canadian Pacific had come into territorial development policy aimed at pro control of four roads in this area: the Minnea ducing local traffic to support the high fixed polis and Pacific; the Minnesota, Sault Ste. costs of the lengthy system. Of particular con Marie, and Atlantic; the Minneapolis and St. cern after 1885 were the physical geography of Croix; and the trackless Aberdeen, Bismarck, the Upper Great Lakes region and the sover and Northwestern. These roads were reorgan eignty of the Dominion over the trade and ized as the Minneapolis, St. Paul, and Sault Ste. economic relations of its territory. Marie (the Soo Line). The Canadian Pacific As the only railway operating a trunk system also gained control of the Duluth, South Shore, in the Canadian West, the Canadian Pacific had and Atlantic during this period. These lines, both a political and a strategic obligation to together with a connection built under ex build additional lines to speed the colonization tremely competitive conditions from Sudbury, and agricultural growth of the prairies. This it Ontario, to Sault Ste. Marie, gave the Canadian did by constructing a network of east-west lines Pacific its own line through the United States in Manitoba and the territories, with a few south of Lake Superior.17 north-south connections and taproot lines In the fifteen years following 1900, the northward into the Canadian wilderness. Con Canadian Pacific became engaged in a territorial struction in the rapidly growing province of battle with two new Canadian transcontinental Manitoba often provided quick returns in local lines. The railway had to combat incursions traffic, and the system as a whole was generally from south of the border as well. For political profitable in this period. Many of these feeders reasons that made little economic sense, the 166 GREAT PLAINS QUARTERLY, SUMMER 1983 dominion government commissioned the con The four railroads generally pursued devel struction of the Grand Trunk Pacific and the opmental managerial strategies at the corporate Canadian Northern.18 What followed was a level, especially the Canadian Pacific and the major interterritorial confrontation in which Canadian Northern. Indeed, the Canadian the Canadian Pacific was successful in retaining Northern fell victim to the extreme zeal of its a significant share of its former near monopoly rapid development. The Santa Fe followed a of the local traffic of the Canadian West. Num more opportunistic course in some merger and erous east-west lines were built on the Canadian acquisition activities, while engaging in long prairies in an almost senseless competitive at term developmental investment policy in sys mosphere in which operational factors were tematically improving its strategic position on considered only too late if at all. the central Great Plains and financing its trans The Canadian Pacific also extended its terri continental expansion from this profitable local torial dominance over southern British Colum base. The Burlington also engaged in a generally bia. Although unable to keep its rivals out of developmental management strategy, although some of the more easily traveled passes through the construction and acquisition of major inter the Rockies, the railway forced its competitors urban lines linking Kansas City, Saint Louis and to build more expensive lines to the Pacific. Minneapolis-Saint Paul with Chicago, and its By 1915 the Canadian Pacific was in a strong acquisition of the Colorado and Southern, had position on the Canadian prairies. Not only did opportunistic undertones. On other parts of its the firm hold impressive through routes to the system, especially prior to 1880, a develop East and to the West, but it controlled a signifi mental management policy was the order of the cant share of the local traffic in some of the day. Likewise, these four systems all pursued richest ranching and agricultural districts of the similar objectives in developing local traffic Prairie Provinces. bases from which to subsidize aggressive mar keting tactics for through traffic over wholly or

SEQUENTIAL DEVELOPMENT partly owned routes. Differences among the four systems can be The four North American railroad systems seen in the role of institutional factors, in the examined here showed certain similarities in geography of capital flows, and in the location their development. In their early years, three of management. In the institutional settings in of the systems underwent a phase of city which each road developed, decisions were hinterland symbiosis in which their interests made on the basis of both state or provincial were closely identified with those of the major and national policies. While the American poli terminus. The Burlington was linked to Chicago, tical landscape was more favorable to railroads the Canadian Northern with Winnipeg, and the prior to 1875, the Canadian situation seems to Santa Fe with Topeka and later with Atchison. have improved after that date. Canadian politi Only the Canadian Pacific, with its truly con cal positions were subject to more short-term tinental mandate, never experienced this form fluctuation, however, than was the case south of territorial development. All four roads of the border. Both American railroads received sought the development of exclusive local substantial land grants in areas that later devel traffic domains, and each was successful in oped into their natural (integral) territories. meeting this long-range objective in the years The Canadian roads also received land grants, prior to 1915. Each system engaged in one or and in addition, the Canadian Northern was more forms of interterritorial competition; granted important concessions in the form of indeed, in some years much of the construction provincial bond guarantees by Manitoba and activity on the Santa Fe and the Canadian later other provincial governments. In both the Northern falls into this category of territorial United States and Canada, agrarian protest development. at the local and regional levels stimulated NINETEENTH-CENTURY PATTERNS OF RAILROAD DEVELOPMENT 167

lawmakers to establish federal and state or pro Significant differences among the four rail vincial agencies to oversee rates, tariffs, and roads are also apparent in the location of the general levels of profits from railroad business, original capital for each line and in the history although Canada lagged some twenty years be of corporate control. In the case of the Bur hind the United States in these developments. lington, control of the original short lines in

TABLE 1

THE HYPOTHESIZED SEQUENTIAL EVOLUTION OF THE STRATEGY OF NORTH AMERICAN CORPORATE RAILROAD DEVELOPMENT IN THE NINETEENTH CENTURY

Traffic Finance and Territorial Development Stage Diagram Organization Policy Strategy

1. City· Local control, Symbiotic Local traffic Hinterland developmental development of Symbiosis investment local area

2. Territorial Shift to nonlocal Integral Lo cal traffic, Development control, generally territory, organization of developmental identification through routes investment with a region

3. Interterritorial Nonlocal ownership, Maintenance and Through traffic, Competition occasional expansion of maintenance of opportunistic integral territory, local traffic investment, development of preserves separation of through routes fmancial from operational control 168 GREAT PLAINS QUARTERLY, SUMMER 1983

Illinois remained in the hands of local investors growth of corporate railroad systems through for only a short time, falling into the fIrm grasp out the nineteenth century in the United States of a group of astute Boston capitalists even and Canada. Closer examination of primary before 1860. The Santa Fe remained under the documents will undoubtedly lead to further re control of regional investors somewhat longer, fInements, but viewed from a broad, continent but by the 1880s, large New York based inter wide perspective, this hypothetical development ests were in command of the fInancial and sequence should help scholars and railroad operational fortunes of the road. Both Cana enthusiasts alike to understand better the dian systems fared somewhat differently. The process through which the contemporary rail Canadian Northern gained control of several road map of North America was created. locally based Manitoba lines at the outset but remained under its eastern Canada based lead NOTES ers, MacKenzie and Mann, until its demise. The debt securities of the fIrm were largely in the 1. Arthur M. Johnson and Barry E. Supple, hands of British investors, as these provincially Boston Capitalists and Western Railroads: A guaranteed bonds appeared extremely safe to Study in the Nineteenth-Century Railroad In the investing public. The Canadian PacifIc was vestment Process (Cambridge: Harvard Univer originally controlled by capitalists based in sity Press, 1967), p. 10. 2. For an extended discussion of regional Montreal, but control gradually gravitated differences in investment strategy, see Maury across the Atlantic, helped in part by the return Klein, The Great Richmond Terminal: A Study to London of several original principals in the in Businessmen and Business Strategy (Char company. lottesville: University Press of Virginia, 1970), Generalizations from the developmental his pp.26-29. tory of these four Great Plains railroads prior 3. See the corporate histories by Maury to 1915 can be combined in a hypothetical Klein, History of the Louisville and Nashville sequence of development that incorporates Railroad (New York: Macmillan, 1972) and general trends but allows for dissimilarities in John F. Stover, History of the Illinois Central the evolution of corporate railway systems. Railroad (New York: Macmillan, 1975). Table 1 shows a proposed sequence of three 4. This discussion of the Burlington system is based, in part, on Richard C. Overton, Bur stages: from city-hinterland symbiosis, through lington West: A Colonization History of the territorial development, to interterritorial com Burlington Railroad (Cambridge: Harvard Uni petition.19 This sequence of development cor versity Press, 1941); Johnson and Supple, Bos responds in general terms to changes in fInan ton Capitalists and Western Railroads; Julius cial and organizational structure, territorial Grodinsky, Transcontinental Railway Strategy: policy, and traffIc development strategy on the A Study of Businessmen (Philadelphia: Univer part of a railroad corporation. The proposed sity of Pennsylvania Press, 1962) ;Poor's Manual sequence is highly generalized: any company of the Railroads of the United States (New might skip a stage; show manifestations of more York: H. V. and H. W. Poor, 1868-1924); and than one stage on portions of its system at any the Commercial and Financial Chronicle and particular time; or show minor deviations in Hunt's Merchants Magazine (New York: Na tional News Service, 1871-1896), succeeded the timing of transitions from local to nonlocal by the Commercial and Financial Chronicle control, developmental and opportunistic man (1896-1941). agement or investment strategies, territorial 5. See Julius Grodinsky, The Iowa Pool: A development policies, or local and through Study in Railroad Competition, 1870-1884 traffic objectives. This hypothetical sequence of (Chicago: University of Chicago Press, 1950). nineteenth-century North American corporate 6. In part, the Burlington's failure to ex railroad development strategies, however, ap pand onto the northern Great Plains resulted pears to have applications in understanding the from its acquisition by the Hill syndicate. The NINETEENTH-CENTURY PATTERNS OF RAILROAD DEVELOPMENT 169 railroad was involved in the famous Northern (Lawrence: University Press of Kansas, 1972). Securities Case; see Balthasar H. Meyer, "A 11. The reorganization of the Santa Fe and History of the Northern Securities Case," Bul other roads during the 1890s is examined in letin of the University of Wisconsin, Economics E. G. Campbell, The Reorganization of the and Political Science Series, vol. 1, no. 3 (July American Railroad System, 1893-1900 (New 1906), and Albro Martin, James J. Hill and the York: Columbia University Press, 1938). Opening of the Northwest (New York: Oxford 12. Bryant, History of the Santa Fe, pp. University Press, 1976), pp. 506-20. Although 153-72. the Burlington acquired the Colorado and 13. Ibid., p. 85. Southern early in 1909, this road was managed 14. Grodinsky, Transcontinental Railway separately and not merged operationally with Strategy, pp. 162-77; Johnson and Supple, the Burlington system prior to 1915. The Boston Capitalists and Western Railroads, pp. Colorado and Southern lines are not shown in 287-317. Figure 1. Were these routes included, all of this 15. Bryant, History of the Santa Fe, pp. mileage would be classed as interterritorial, 134-40. because the map shows each stretch of track in 16. This discussion of the Canadian Pacific relation to the Burlington's strategy at the time is based on W. Kaye Lamb, History of the of construction or addition to the corporate Canadian Pacific Railway (New York: Macmil parent's network. The standard history of the lan, 1977); Heather Gilbert, The Life of Lord Colorado and Southern is Richard C. Overton, Mount Stephen, vol. 1, Awakening Continent Gulf to Rockies: The Heritage of the Fort (Aberdeen: University of Aberdeen, 1965) and Worth and Denver-Colorado and Southern Rail vol. 2, End of the Road (Aberdeen: University ways, 1861-1898 (Austin: University of Texas of Aberdeen, 1977); Poor's Manual of the Rail Press, 1953). See also Moody's Analyses of roads of the United States, and the Commercial Railroad Investments (New York: Analyses and Financial Chronicle. Publishing Co., 1909), pp. 284-91. 17. The Minneapolis, Sault Ste. Marie, and 7. The following discussion is based largely Atlantic was itself developed initially as a sym on T. D. Regehr, The Canadian Northern Rail biotic link between the Twin Cities and eastern way: Pioneer Road of the Northern Prairies, markets for flour, grain, and lumber. See Pat 1895-1918 (Toronto: Macmillan of Canada, rick Donn, The Soo Line (Seattle: Superior 1976), Poor's Manual of the Railroads of the Publishing Co., 1979), pp. 7-15, and Mildred L. United States, and the Commercial and Finan Hartsough, "The Twin Cities as a Metropolitan cial Chronicle. Market: A Regional Study of the Economic 8. On this rivalry, see Charles N. Glaab, Development of Minneapolis and St. Paul," Kansas City and the Railroads: Community Studies in the Social Sciences, Research Publi Policy in the Growth of a Regional Metropolis cations of the University of Minnesota, no. 18 (Madison: State Historical Society of Wiscon (December 1925). sin, 1962). 18. On these new transcontinentals, see 9. This discussion of the Santa Fe is based G. R. Stevens, History of the Canadian National primarily on Keith L. Bryant, Jr., History of Railways (New York: Macmillan, 1973), pp. the Atchison, Topeka and Santa Fe Railway 189-265. (New York: Macmillan, 1974); L. L. Waters, 19. This hypothetical sequence of develop Steel Rails to Santa Fe (Lawrence: University ment represents a synthesis of work on the four of Kansas Press, 1950); Grodinsky, Trans Great Plains railroads and on nineteenth-century continental Railway Strategy; and Johnson and North American railroads in general. Among Supple, Boston Capitalists and Western Rail the most important studies consulted were roads; as well as Poor's Manual of the Railroads Klein, The Great Richmond Terminal; Grodin of the United States and the Commercial and sky, Transcontinental Railway Strategy; Thomas Financial Chronicle. C. Cochran, Railroad Leaders, 1845-1890: The 10. The most comprehensive history of the Business Mind in Action (Cambridge: Harvard 35th parallel route is H. Craig Miner, The St. University Press, 1953); and Johnson and Sup Louis-San Francisco Transcontinental Railroad ple, Boston Capitalists and Western Railroads. 170 GREAT PLAINS QUARTERLY, SUMMER 1983

Also consulted were numerous regional railroad Urban Regions: An American Example," Jour histories and studies of individual lines through nal of Historical Geography 1, no. 4 (October out nineteenth-century North America. The 1975): 361-82, suggested some of the ramifi study of transport development and regional cations of through traffic development for urban integration by Michael P. Conzen, "A corporate railroad systems engaged in inter Transport Interpretation of the Growth of territorial competition.