James J. Hill

Store Clerk, Venture Capitalist, Railroad Baron and Investor

James Jerome Hill (September 16, 1838 - May 29, 1916) was a Canadian-American railroad director. He was the chief executive officer of a family of lines headed by the Great Northern Railway, which served a substantial area of the Upper Midwest, the northern Great Plains, and Pacific Northwest.

Hill was born September 16, 1838, in Eramosa Township, Upper Canada (now Ontario) to James Hill Jr. and Ann Dunbar. A childhood accident with a bow and arrow blinded him in the right eye. He had nine years of formal schooling. He attended the Rockwood Academy for a short while, where the head gave him free tuition. He was forced to leave school in 1852 due to the death of his father. By the time he had finished, he was adept at math, land surveying, and English. His particular talents for English and mathematics would be helpful in his career.

Because of his previous experiences in shipping and fuel supply, Hill was able to enter both the coal and steamboat businesses. In 1870, he and his partners started the Red River Transportation Company, which offered steam boat transportation between St. Paul and Winnipeg. By 1879 he had a local monopoly by merging with Norman Kittson. In 1867, Hill entered the coal business, and by 1879 it had expanded five times over, giving Hill a local monopoly in the anthracite coal business. During this same period, Hill also entered into banking and quickly managed to become member of several major banks' boards of directors. He also bought out bankrupt businesses, built them up again, and then resold them - often gaining a substantial profit. Hill noted that the secret to his success was "work, hard work, intelligent work, and then more work."

During the Panic of 1873, a number of railroads, including the St. Paul and Pacific Railroad (StP&P), had gone bankrupt. The StP&P in particular was caught in an almost hopeless legal muddle. For James Hill it was a golden opportunity. For three years, Hill researched the StP&P and finally concluded that it would be possible to make a good deal of money off the StP&P, provided that the initial capital could be found. Hill teamed up with Norman Kittson (the man he had merged steamboat businesses with), Donald Smith, George Stephen and John Stewart Kennedy. Together they not only bought the railroad, they also vastly expanded it by bargaining for trackage rights with the Northern Pacific Railway. In May 1879, the St. Paul, Minneapolis, and Manitoba Railway Co. (StPM&M) formed - with James J. Hill as general manager. His first goal was to expand and upgrade even more.

Hill was a hands-on, detail-obsessed manager. A Canadian himself of Scotch-Irish Protestant ancestry, he brought in many men with the same background into high management. He wanted people to settle along his rail lines, so he sold homesteads to immigrants while transporting them to their new homes using his rail lines. When he was looking for the best path for one of his tracks to take, he went on horseback and scouted it personally. Under his management, StPM&M prospered. In 1880, its net worth was $728,000 (equal to $22,075,972 today); in 1885 it was $25,000,000, equal to $814,259,259 today.

"Empire Builder"

Between 1883 and 1889, Hill built his railroads across Minnesota, into Wisconsin, and across North Dakota to Montana.

"What we want," Hill is quoted as saying, "is the best possible line, shortest distance, lowest grades, and least curvature we can build. We do not care enough for Rocky Mountains scenery to spend a large sum of money developing it." Hill got what he wanted, and in January 1893 his Great Northern Railway, running from St. Paul, Minnesota to Seattle, Washington - a distance of more than 1,700 miles - was completed. The Great Northern was the first transcontinental built without public money and just a few land grants, and was one of the few transcontinental railroads not to go bankrupt.

With 1901 and the start of the new century, James Hill now had control of both the Great Northern Railway, and the Northern Pacific (which he had obtained with the help of his friend J. P. Morgan, when that railroad went bankrupt in the depression of the mid-1890s). Hill also wanted control of the Chicago, Burlington and Quincy railroad because of its Midwestern lines and access to Chicago. The Union Pacific Railroad was the biggest competitor of Great Northern and Northern Pacific Railroads. Although Great Northern and Northern Pacific were backed by J. P. Morgan and James J. Hill, the Union Pacific was backed not only by its president, Edward H. Harriman, but by the extremely powerful William Rockefeller and Jacob Schiff.

The Great Northern Railway and the Northern Pacific tried to merge four times, in 1896, 1901, 1927, and 1955. This last attempt lasted from 1955 until final Supreme Court approval and merger in March 1970, which created the Burlington Northern Railroad. In 1995, Burlington Northern merged with the Atchison, Topeka and Santa Fe Railway to become the Burlington Northern and Santa Fe Railway.

After a court battle, which he lost with the Justice Department concerning a monopoly controlled by Hill and his pal, J.P. Morgan, Hill moved on without the benefit of a central company. Hill acquired the Colorado and Southern Railway lines into Texas. He also built the Spokane, Portland and Seattle Railway.

Though he officially retired in 1912 Hill maintained an active hand in his businesses until his death on May 29, 1916. His personal fortune at that time has been estimated at $63 million with $200 million in related assets, making Hill one of the wealthiest and most powerful figures of America’s Gilded Age. When his estate was divided his widow received over 16 million, and each of his children received almost 4 million; 1.5 million was paid in income and inheritance taxes.