James J. Hill

James J. Hill was one of the richest railroad executives of his time. His business practices were sometimes unfair, and might be described as unethical, but these strategies helped him to earn the nickname of the “Empire Builder”. One of his companies, the Great Northern Railway, became the first transcontinental railroad to be formed without public money and was one of the few transcontinental lines that did not go bankrupt. Because of the success of his railways and his ability to carry them through economic depression, James J. Hill secured a legacy as one of the greatest business minds in history.

James Hill had very modest beginnings. He was born in Ontario in 1838. As a child, an accident with a bow and arrow blinded him in the right eye. After going to school for only nine years, he went to Rockwood Academy, where he was forced to withdraw due to the death of his father in 1852. He soon moved to Kentucky where he got a job as a bookkeeper. At the age of 18 he moved to St. Paul, MN where he planned to settle permanently. While in St. Paul Hill got a job as a bookkeeper for a steamboat company. He eventually worked for grocery and produce companies, where he dealt with logging their freight. This experience was vital for him in his future work in the railroad business.

In 1870 Hill put all of his experience to good use and formed a steamboat company. The company was very successful and just two years later he merged with Norman Kittson to form a monopoly in the upper Midwest. At the same time he was monopolizing the steamboat industry Hill entered the coal business and just five years later in 1874 he had a monopoly of the coal companies. Along with steamboats and coal companies, Hill also sat on the Board of Directors for several banks. While Hill is best known today as a railroad mogul, it is important to remember that even before his first railroad company he was a very rich man.

James Hill obviously had great instincts and timing in his business decisions, and his entry into railroads was no different. During the panic of 1873 the St. Paul and Pacific railroad went bankrupt. Hill had been researching the company for some time, and decided that it could make a profit given the right management. He then formed a group of investors (included Norman Kittson), and formed the St. Paul, Minneapolis and Manitoba Railway, with Hill as its General Manager. To improve it, the group bargained for tracking rights with the rival Northern Pacific railroad. He soon formed the Great Northern Railway which served Minnesota and North Dakota at first, but grew to become the first intercontinental railroad to be built without public assistance.

Over the next twenty years Hill worked on expanding his railway empire. He purchased railroads from all over the country and cut employees’ wages while charging as high of rates as his monopoly allowed. The only change to his formula was during the Depression of 1893. During this time he slashed prices on all freight in order to make shipping more affordable. At the same time his workers unionized under Eugene V. Debs and demanded better wages. In order to get his workers back he restored their wages to a higher level. During this depression his longtime rival, the Northern Pacific, went bankrupt. Ever the aggressive businessman, Hill used his friend JP Morgan to get enough credit to buy the rail line. He now had a complete monopoly over the railroads. Unfortunately for Hill on the same day the Great Northern and the Union Pacific were set to merge, William McKinley was assassinated and Theodore Roosevelt, ‘the trust buster’, became president.

Hill’s railroads did survive the trust busting, and he remained extremely wealthy. However he would never reach the same heights of monopoly again in his life. Hill died in 1916 and left a fortune of over $53 million, or $2.5 billion 2007 dollars. This fortune was one of the largest of the time and even more extraordinary considering his corporations went through two of the worst depressions in United States history. Hill’s legacy as an empire builder is secured in history and probably will never be matched.

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