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Union Pacific

Union Pacific: Volume II, 1894-1969

Copyright Date: 1989
Edition: NED - New edition
Pages: 676
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  • Book Info
    Union Pacific
    Book Description:

    The second volume in the history of the Union Pacific begins after the financial panic of 1893, which pushed the railroad into bankruptcy. Maury Klein examines the challenges faced by the Union Pacific in the new century and how, under the innovative leadership of Edward H. Harriman, the Union Pacific again played the role of industrial pioneer._x000B_

    eISBN: 978-0-8166-9664-2
    Subjects: Transportation Studies

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
    (pp. ix-xii)
    (pp. xiii-xiv)
    Maury Klein

    Any historian of American business or railroads knows that precious little has been written on the carriers and their fate in the twentieth century. This is not surprising. The nineteenth century was the golden age for American railroads. It has the most stirring sagas, the cleanest story lines, the happiest endings, and the most colorful cast of characters. Life got more complicated after 1900 for everyone, including the railroads. The sagas moved indoors, the story lines got more involved, the characters more drab, and the endings anything but happy in most cases.

    This was in fact true of American business...

    (pp. xv-xv)
  6. Map
    (pp. xvi-xx)
  7. Prologue: THE FUNERAL, 1916
    (pp. 1-8)

    On a cold and dreary Thursday afternoon in January of 1916 they gathered by the hundreds to honor the general who, like so many old men, had far outlived his time. Schools and businesses in Council Bluffs and public offices througthout Iowa closed in tribute to his memory. Earlier that day and during the previous afternoon, long lines of citizens had filed solemnly past his body lying in state at the magnificent house on Third Street, from which the view stretched to the river and beyond. Now, as the hour of the funeral neared, they braved a biting wind and...

  8. Part One: The Transformation, 1893–1909

    • 1 The Receivership
      (pp. 11-29)

      During the summer of 1893 Americans flocked eagerly to Chicago for what many of them would treasure as the excursion of a lifetime: a visit to the Columbian Exposition celebrating the 400th anniversary of the discovery of America. In an age that took immense pride in the magnificence of display, the fabulous White City dwarfed every world’s fair that had come before it. “Sell the cookstove if necessary and come,” wrote novelist Hamlin Garland; “youmustsee this fair.” Most of the twenty-seven million people who toured this “City of Aladdin’s Palaces” went home satisfied that it had been worth...

    • 2 The Second Coming
      (pp. 30-47)

      To the railroad officers standing alongside the business car on a warm June day in 1898, the New York people were just one more party of official tourists to be waltzed over the road and shown all possible amenities along the way. Veteran superintendents had done the chore a hundred times for eastern officials or government people or visiting dignitaries or friends of the “swells” in Union Pacific’s higher management. Like soldiers at parade rest they stood silhouetted against the sun, their leathery faces lined with patience. For them it was a duty that at best got in the way...

    • 3 The Reconstruction
      (pp. 48-68)

      The welcome accorded Harriman by the other members of the Union Pacific board during the winter of 1898 was neither cordial nor enthusiastic. Some viewed him as an intruder who was beneath them in terms of wealth, position, and achievement. One doubter was James Stillman, the powerful head of National City Bank, who later became one of Harriman’s closest associates. Years earlier a prominent businessman had warned Stillman to “look out for Ed Harriman. He is not so smart as some people think, and he is not a safe man to have business with.” The cautious Stillman had heeded this...

    • 4 The System
      (pp. 69-83)

      Alice Roosevelt, the president’s daughter, became good friends with young Mary Harriman but never felt that she knew Mary’s father. “He was a small, brown, taciturn man who never seemed to play,” she remembered years later. Although Harriman mystified her, Alice glimpsed in him one quality that made his behavior all of a piece to her: “There was little of the pomp and none of the splurge of great wealth about him. What he wanted was power; quietly, deliberately, thoroughly, he worked to get it.”¹

      The children knew this influence only too well. No man was a more loving, attentive...

    • 5 The Empire
      (pp. 84-100)

      The rehabilitation of the Union Pacific was a calculated risk at best and a great gamble at worst. The traffic was there and growing if some way could be found to carry it for a profit. Apart from the phenomenal growth of the West, transcontinental business was fed by the dawn of American empire in the Far East. The Spanish-American War had delivered the Philippines into American control, and the Open Door policy was helping American interests improve their foothold in the China market. Japan had emerged as a promising industrial nation and potential trading partner or rival. The flow...

    • 6 The Community of Interest
      (pp. 101-120)

      The basic premise was simplicity itself; it was the scale that boggled men’s minds. If they would not sell the colt, Harriman would buy the mare. Denied a share of the Burlington purchase, he would get it by buying one of the buyers. The Great Northern was out of the question, but the Northern Pacific was vulnerable to a lightning attack if one had capital and nerve enough. It had outstanding $80 million in common and $75 million in preferred stock. Of that amount, Hill and Morgan controlled $35 or $40 million, which they assumed was more than enough. Who...

    • 7 The New Order
      (pp. 121-142)

      Charles Perkins had no doubts as to who was the prophet of the new era. “The truth is,” he once observed, “Mr. Hill has seen more clearly than any of us that the fittest to survive would be the railroad which could work at the lowest rate per ton mile. That has been his central idea.” This tribute to Hill was deserved, but Perkins, like most men with strong convictions, had his share of blind spots. Just as earlier he had failed to see the positive side of Jay Gould, so in his twilight years did he miss the immense...

    • 8 The Storms
      (pp. 143-164)

      To the officers who served him he was known simply as “The Chairman,” and The Chairman presided over so many systems and companies that those around him struggled to keep straight which chairman they were addressing at any given time. He sat astride the largest and most complex transportation system in the world, one in which the individual systems were larger than most other railroads. His influence kept spreading, first into other roads and then into other industries. To outsiders he was a marvel of brilliance and efficiency, and a ruthless engine of raw power as well. His indifference to...

    • 9 The Reckoning
      (pp. 165-182)

      While the brilliance of Harriman’s strategy in modernizing the Union Pacific was obvious to anyone with a cursory grasp of railroad affairs, fewer people understood the extent to which the company also owed its prosperity to his masterful handling of its finances. The Harriman system raked in profits because it was well managed in every respect. Some attributed its success to Harriman’s remarkable foresight and wondered what elixir enabled him to peer into the future. Only a few understood that Harriman’s vaunted foresight was at bottom merely an unbounded confidence in his ability to make things turn out the way...

  9. Part Two: The Great Adjustment, 1910–1939

    • 10 The Stewardship
      (pp. 185-201)

      “Who is to be Mr. Harriman’s successor?” a reporter asked Alex Millar, the venerable secretary who had served both Gould and Harriman. Millar chewed thoughtfully on a pencil, his brows furrowed above piercing gray eyes. “There will be none,” he said finally. “His work will be divided. There is no man in the country who can fill the shoes of that little giant. And, besides, his intentions have been so thoroughly mapped out that there really is no necessity for one at present.”¹

      Millar was right. The Chairman was gone, and there would never be another like him. He had...

    • 11 The Turning Point
      (pp. 202-218)

      During its early history, nothing had plagued the Union Pacific more than its tempestuous relationship with the government. The receivership of 1893 had come in large part because of failure to reach a settlement in the thirty-year war over the government loan or to find solutions for a host of other conflicts. No railroad endured more public investigations and political censures. The tarnished reputation born of the Crédit Mobilier scandal was reinforced by the Pacific Railway Commission and prolonged by the constant howl of critics, demagogues, and sharks looking to snatch prey from the wounded company. During the reorganization the...

    • 12 The Takeover
      (pp. 219-239)

      On a fine January afternoon in 1916 the portly A. L. Mohler, seeking relief from the cares piling up in his office, motored to a park in Omaha with his wife and mother-in-law to do a little skating. He wobbled onto the ice and tried a few strokes. Suddenly he lost his balance and flopped backward, striking his head hard. Too heavy for his wife and chauffeur to lift, he lay on the ice ten minutes before help arrived and got him to a hospital, where he did not regain consciousness for several hours. Three weeks later he returned to...

    • 13 The Fresh Start
      (pp. 240-257)

      The Transportation Act of 1920 was supposed to give the railroads a fresh start in the postwar era, but the past lingered on in the form of disputes over the terms of settlement ending federal control. When the director general of USRA expressed a desire to wind up the affairs of his agency quickly if the railroads would cooperate, Judge Lovett smirked knowingly. The carriers were willing, he said, but the transactions involved were so large it would take months to settle them. He was right. Like most roads, the Union Pacific spent nearly two years haggling with the government.¹...

    • 14 The New Competition
      (pp. 258-278)

      During the summer of 1919, while debate over the railroad problem raged, a veteran import-export man paused from his own labors to ask Judge Lovett a question. No one seemed to him to be discussing “the inroads which the constantly increasing number of automobiles have made in cutting down both passenger and freight business for the Railroads. Have you any idea of the tonnage that is carried by automobile trucks within a hundred miles from New York, or any other large distributing point in the United States? Or of the millions of people who have automobiles and hardly ever use...

    • 15 The Counterattack
      (pp. 279-294)

      The board room of the Union Pacific floated in the clouds on the thirtysecond floor of the Equitable Building, its windows overlooking downtown Manhattan and the bay beyond. Like most board rooms it wore an air of muted opulence, a plush aerie high above the clamor of the streets. At the same time it possessed one feature not found in other board rooms. All the chairs lined one side of the table, facing a wall on which hung a map ten feet high and thirty feet long showing every mile of the Union Pacific System along with its stations, shops,...

    • 16 The Projects
      (pp. 295-316)

      The decision came partly by chance, as many decisions do. Averell was still learning, still seeking the right path to strike. Unlike the blunt, abrasive manner of his father, he had a smoother style of doing things that made them seem simpler than they were. “I really had a great deal to do with saving the Illinois Central from bankruptcy,” he explained years later. He had imposed ruthless economies on everything from maintenance to the payroll. “It was pretty hard to lay people off, but you had to do it. I think that was one reason why, when I assumed...

    • 17 The Trimmings
      (pp. 317-339)

      The Union Pacific had always been more than a railroad. From the first, it had engaged in land operations and coal mining, both of which were vital to development along its line. It was involved in the express business, dabbled in the mining of other minerals, owned a rolling mill for a time, and had even gone modestly into the resort and tourist field. E. H. Harriman added still another dimension by giving it investment holdings that provided a major source of income. The company had always been a diversified enterprise, but it had never found a satisfactory way to...

    • 18 The Family
      (pp. 340-356)

      The course of labor relations, like that of true love, never did run smooth for railroads. During the nineteenth century disputes remained a family affair to be settled between the company and its employees. Gradually the unions elbowed their way into the process until their role grew strong enough to draw in the federal government as well. By 1920 a new set of relationships had emerged in which the ground rules had yet to be fully clarified.

      The basic parameters had been set. Negotiations had become generic, taking place between spokesmen for the industry and the unions rather than between...

    • 19 The Operation
      (pp. 357-378)

      With the war over and return from federal control imminent, Union Pacific management was anxious to know how well the road had survived the ordeal. During 1919 Judge Lovett, engineer E. E. Adams, and a consultant all toured the line, followed by the newly-arrived Carl Gray in 1920. To their relief the road had held up even though the government had not maintained it to company standards. The rail renewal program begun before the war had been let go, as had the ballasting and the general appearance. The main line had been ravaged by heavy rains, and the track west...

  10. Part Three: The New Railroad, 1940–1969

    • 20 The Railroader
      (pp. 381-401)

      The world of the railroader had always been a closed one. Its members shared traditions, practices, and peculiarities that set them apart from others. They spoke their own language and endured a life-style dictated by the demands of their calling, demands that seemed inordinate if not inhuman to people who kept ordinary schedules. Like the inhabitants of any closed society, railroaders were prisoners of custom to an exceptional degree. Their behavior and values, even their vocabulary, were as rigid and unthinking as those of Newport society or the DAR.

      In their own eyes “real” railroaders comprised only part of those...

    • 21 The Czar
      (pp. 402-426)

      Like all czars, Jeffers was a throwback to the old school, and he made no bones about it. “He was rough and tough,” said his former secretary, D. O. “Doc” Churchill, “and I think absolutely he ruled by intimidation.” Controller Reg Sutton agreed: “He was as rough and tumble as they came, and he ran a real honest-to-goodness bang-up railroad.” While the officers came most directly under the hammer, the men in the ranks felt his wrath through their quaking superiors. “Jeffers there, . . . he’d fire you just like that,” said a shop man. “It was nuthin’ to...

    • 22 The Misfits
      (pp. 427-439)

      As early as 1944, E. J. Connors and the personnel staff began grappling with the question of how to handle returning veterans. The Union Pacific had 12,000 employees in the armed forces and expected to have 3,000 more by the time the war ended. Already some unions were pressing to have the returnees absorbed without discharging any of their replacements, who had swelled the union ranks. Some unions advocated a thirty-hour work week for forty hours of pay as a way to avoid postwar unemployment. The situation looked alarming. Since 1922 the proportion of wages to total operating expenses had...

    • 23 The Blizzard
      (pp. 440-458)

      Ashby wasted little time shuffling his organization. He brought W. H. Guild back from Los Angeles as vice-president and promoted A. J. Seitz to vice-president of traffic when the venerable Robinson retired in June 1946. E. J. Connors stayed on to handle the thorny labor area, and a select group of officers were given raises. The intention, Ashby assured Woody Charske, was to strengthen the organization and its outside relations. New York gave him every support. After Roland Harriman became chairman in October 1946, he scheduled a series of trips west to acquaint himself with the officers there. Ashby invited...

    • 24 The Sleeping Gaint
      (pp. 459-474)

      To wall Street and the railroad industry alike the postwar Union Pacific was known as a sleeping giant, rich in assets and slow to maximize its use of them. Some called it the gold-plated railroad; others used a less flattering name: the fat old lady with a bag of candy. The big question was what she would do with her candy. Would someone snatch it from her?¹

      “No other railroad liked the Union Pacific,” declared Jervis Langdon, a veteran railroad official who headed the Rock Island for a time. “. . .I guess it was too rich and successful, and...

    • 25 The Awakening
      (pp. 475-493)

      In November 1958 a brokerage firm concluded its analysis of the Union Pacific by observing that “A greater separation of [its] natural resources from the railroad operations, looking towards their commercialization to a far greater degree than now exists, would be a desirable objective for Union Pacific stockholders to contemplate.”¹

      Robert Lovett had already come to this same conclusion for many reasons. The most generic one had to do with the law, going back to the Hepburn Act, that forbade railroads from engaging in any other business. A tangled web of statutes, state and federal, kept the carriers from fully...

    • 26 The Parts Changers
      (pp. 494-513)

      The new railroad was a creature not perceived whole for a long time. It was a whole beyond the sum of its parts, most of which were grasped through a series of painful revelations. For railroaders these revelations often came in the form of new technology, which forced everyone to do things in new ways.

      Nothing rammed this point home more forcibly than the diesels. Never mind that they represented a quantum leap in efficiency and economy: few liked them at first. Older engineers eyed them like alien creatures. “They just missed the feel of the throttle,” said Bill Fox,...

    • 27 The Merger Misstep
      (pp. 514-531)

      By the early 1960s two major movements had begun to emerge in the railroad industry. The first was a drive to reorganize into holding companies that separated out nonrail assets. The second was a fresh round of merger mania that threatened to redraw the nation's railroad map in startling fashion. One looked to restructure individual firms, the other the industry as a whole. Together they amounted to the most drastic overhaul of American railroads in history.

      These epochal movements affected the Union Pacific in a peculiar way. The restructuring of the rail industry collided with the reorganization of the Union...

    • 28 The New Railroad
      (pp. 532-546)

      The ultimate frustration of the Rock Island merger was not just that it dragged on for more than a decade without result but that it drained the energy and attention of the Union Pacific management during a crucial period.It became a meat grinder chewing up resources sorely needed elsewhere. “Our total energies . . . [were] on this thing and the hearings,” lamented Reg Sutton. Everybody got caught up in gathering data first for the case and then for rebuttal of the cases made by objecting roads. The foremost casualty of this drain was the drive to restructure the Union...

  11. Epilogue: THE REBIRTH
    (pp. 547-552)

    Prior to 1893 the Union Pacific was a large but unstable road struggling to stay afloat in an age when railroads ruled the transportation roost. During century the twentieth century it emerged as one of the giants in an industry that lost ground steadily to competing forms of transportation. Put another way, the Union Pacific was weak when railroads were strong, and grew strong just before railroads became weak. This inversion does much to explain both its peculiar history and its promise for the future.

    During its first life the Union Pacific paid the price of being the pioneer among...

    (pp. 553-554)
    (pp. 555-636)
  14. INDEX
    (pp. 637-654)
  15. Back Matter
    (pp. 655-655)