A well-known Canadian-American railroad executive and businessman, a chief executive officer of the Hill lines, James Jerome Hill was fondly tagged as “The Empire Builder” which he truly was. He headed the Great Northern Railway which runs from Saint Paul, Minnesota, to Seattle, Washington stretching more than 1,700 miles. He acquired great fame and admiration for his economic measures during the Panic of 1893. Under his management, his company not only escaped the economic downturn, but also earned substantial profit. Hill’s company, The Great Northern Railway, was one of the few transcontinental railroads that avoided bankruptcy during the economic crisis.
James Jerome Hill Childhood & Early Life
James J. Hill was born in Eramosa Township, Ontario, Canada on September 16, 1838. After having nine years of formal schooling, Hill attended the Rockwood Academy. But due to his father’s death, he had to leave the school in 1852. Since his childhood days, Hill was good at algebra, geometry, land surveying, and English. He worked as a clerk in Kentucky where he also learned bookkeeping. At the age of eighteen, Hill moved to United States and settled in St. Paul, Minnesota. In St. Paul, he started as a bookkeeper in a steamboat company. In few years, by 1860 he began working for wholesale grocers in which he handled freight transfers. His work also included dealing with steamboats and railroads. It was during this work that Hill learned the basic aspects of all the freight and transportation business. In the winter months, when the Mississippi River froze and the steamboats couldn’t run, he started bidding on other contracts and eventually won many of them. His contracts included providing wood fuel to nearby Fort Snelling. His earlier experiences in shipping and fuel supply helped him to get into both the coal and steamboat businesses. Hill entered coal business in 1867 and the steamboat business in 1873. By 1879, he had spread the coal business five times and attained a local monopoly over anthracite coal business. Simultaneously, he entered the banking sector and quickly became the member of board of directors of several banks. He applied the method of buying the bankrupt businesses, building them and then reselling them to acquire substantial profit. His actions, monopolizing the coal business, socializing with bankers and the purchasing other business helped him to achieve a local monopoly over steamboat business.
The Panic of 1873 made many businesses bankrupt, including the St. Paul and Pacific Railroad. However, James Hill found a golden opportunity in the hopeless condition of St. Paul and Pacific Railroad. He spent his next three years in researching the company and finally came to a conclusion that with some initial capital, St. Paul and Pacific Railroad could actually give good returns in terms of money. He teamed up with Norman Kittson, Donald Smith, George Stephen and John S. Kennedy and bought the St. Paul and Pacific Railroad. The further bargaining for trackage rights with Northern Pacific Railway helped the St. Paul and Pacific Railroad to expand immensely. In May 1879, the St. Paul, Minneapolis, and Manitoba Railway Company (StPM&M) was formed and James Hill became the general manager. Hill’s first goal was to expand and upgrade the business. He wanted to settle people along the railway lines. For this, he sold homesteads to immigrants and then imported them to their new homes. He imported grains from Russia and sold them to local farmers, he even sold wood to the farmers to encourage the buying of wheat. Under his management, the company grew vastly and had a net worth of $25,000,000 in 1885. One of the challenges he had to face was the probable federal actions against railroads. If the federal government would have seen the lucrative profit in railroads, they would have lowered the railway tariff rates. As such, to avoid the federal actions, Hill invested the great portion of railroad’s profit back into the railroad only. This action further helped him to become the official president of StPM&M.
During the time period from 1883 to 1889, Hill built his railroads across Minnesota, into Wisconsin, and across North Dakota to Montana. When he didn’t find much industry near the built areas, he brought in industries mostly by buying and placing them along the railway lines. In the end of 1889, he had decided to expand the transcontinental railroad and by the January 1893, his Great Northern Railway was running from St. Paul, Minnesota to Seattle, Washington - a distance of more than 1,700 miles. With this feat, the Great Northern Railway became the first transcontinental built without public money and with the help of few land grants. It was also one of the few transcontinental railroads that didn’t go bankrupt. Hill decided to expand his railroad towards north and did most of route planning himself. One of the key features of Great Northern line’s success was the use of previously uncharted Marias Pass. This pass gave an easier route to cross the Rockies and helped Great Northern line to reach Seattle in 1893. The Panic of 1893 was a test for Hill’s management skill. While every other transcontinental railroad company went bankrupt during the Panic, Hill managed to save his company during the economic downturn. In very effective economic measures, he lowered the rail tariff shipping rates for farmers and gave credit to the businesses he owned, so that they could pay their workers continually. In another desperate economic measure, Hill sliced the railway’s expense of carrying a ton of freight by thirteen percent. These measures not only helped him staying in business but also increased the net worth of his company by $10 million.
With the help of his friend J.P. Morgan, Hill acquired Northern Pacific which had gone bankrupt during the Great Panic of 1893. By 1901, James Hill had control over both the Great Northern Railway, and the Northern Pacific. Hill wanted control over Chicago, Burlington and Quincy railroad as well, which made him the fierce competitor of Union Pacific Railroad which had the same plans. Union Pacific was backed by the powerful William Rockefeller, Jacob Schiff and the Edward H. Harriman, company president. Harriman quietly started buying stocks in Northern Pacific to gain control over Chicago, Burlington and Quincy. When Hill knew about it, he asked his friend J.P. Morgan to order his men to buy everything they could get. This caused a chaos in Wall Street forcing the stock of Northern Pacific to go up by 1000$ per share. Facing the threat of an economic panic, both sides decided to have a truce for mutual advantage. Hill and Morgan were the main gainers of truce and formed the Northern Securities Company. After the assassination of President William McKinley, Theodore Roosevelt became the President and he eventually broke the trust between the companies. This forced the dissolving of the Northern Securities Company under the Sherman Antitrust Act. Hill finally managed to get Colorado and Southern Railway lines into Texas. He further built the Spokane, Portland and Seattle Railway.
James Hill married Mary Theresa Mehegan and the couple had ten children. The children were Katherine, Mary Hill, James N. Hill, Louis W. Hill, Ruth Hill Beard, Clara Hill Lindley, Charlotte Hill Slade, Rachel Hill Boeckmann, Gertrude Hill Gavin and Walter Jerome Hill.
James Hill died in St. Paul, Minnesota on May 29, 1916. He was first buried in the shore of Pleasant Lake (North Oaks, Minnesota), but later moved to Resurrection Cemetery in St. Paul.