The great territories of Oregon and California came to the United States by treaty with Britain and by battle on Mexico’s plains between 1845 and 1848. The immense work of continental expansion, begun when Jefferson bought the Louisiana country, was complete, and the land of the free stretched from sea to shining sea.
Then the task of exploring and settling these vast regions began. Towering mountains, foaming rivers, dark forests, and treeless prairies seemed to bar the advance westward. They were guarding treasure. Gold, lead, silver, and copper were in the mountains; lumber in the forests; and power in the rivers.
A million fat farms slept beneath the prairie grass. The treasure of the West went to those who were brave, lucky, and hard-working. It made no difference if the newcomers were rich or poor, or what their manners and accent were. Two American success stories prove this point. The hero of one is a poor Canadian farm boy. The other story is about a wise, old Swiss immigrant and his seven sons.
James Jerome Hill, the subject of the first story, began his career by not being on time. He arrived in the muddy Mississippi River town of St. Paul, Minnesota, one day in 1856, just too late to join a fur-trapping brigade heading westward. Jim was only eighteen, but he had hoped to work his way to the Pacific and take ship to the Orient. Unfortunately, trapping expeditions left only once each year. The young man had to put aside his dream for a while and find work in St. Paul. He was husky and intelligent. His only handicap was one blind eye, destroyed by a badly aimed arrow in a boyhood game of “Indians.” However, that did not prevent him from getting a job as a clerk for J. W. Bass and Company, agents for a line of steamboats. Within a year, Jim Hill had forgotten about going to China. He had found more interesting dreams.
Westward of St. Paul stretched the prairie. A few days’ journey across it, the Red River flowed north, through the most fertile land in the Minnesota Territory, into Canada’s Manitoba province. Men were already moving into an area that in twenty years’ time would be producing the richest wheat harvests in America. And up the Mississippi to St. Paul churned paddle-wheelers under columns of smoke, carrying the settlers’ needs: dry goods, hardware, furniture, and tools. Jim Hill realized that the job of organizing this traffic was one with great potentialities. The prospects excited him.
Working for various steamboat and railroad companies in St. Paul made Hill a crack transportation agent, with a head full of facts about routes, distances, and costs. In 1865, he went into business for himself. He learned his territory the hard way, personally visiting isolated huts and hamlets where he sold coal, provisions, pumps, and reapers. He forded icy rivers, was stung by hailstorms, and went thirsty in the brassy heat of prairie summers. He would and could do anything, from assembling a carload of machinery to setting a traveling companion’s dislocated arm. When he was thirty-two, he proved to be a fighter who would take on an enemy of any size.
In 1870, there was only one steamboat on the Red River, the International, which carried passengers and freight up to the growing Canadian center of Winnipeg. It belonged to the great Hudson’s Bay Company, which for 200 years had acted as Britain’s sole trading agent in the Canadian Northwest. It made a great deal of money from its monopoly of the Red River water traffic and was not accustomed to competition. The Hudson’s Bay Company governor learned with some surprise that a spanking little boat named the Selkirk had suddenly appeared on the river and was giving the International stiff competition. The new packet belonged to Jim Hill, whose service and rates were good enough to take considerable dollars out of the company’s pocket. What was more, he had found a law that would bar the foreign boat from American waters. Half angry, half admiring, the company fought back by transferring the International to the control of an American, Norman Kittson. After a brisk rate war, the mighty company was willing to compromise with the upstart newcomer. The two boats and a wagon service across Minnesota were merged as the Red River Transportation Company.
Jim Hill was looking ahead, however, to something better than wagons to carry the trade between the Red and the Mississippi rivers. The Canadians were planning a rail line from Winnipeg to Pembina, on the Minnesota border. If he could build a connecting link from St. Paul, Jim Hill could tap an endless reservoir of agricultural traffic. But how? There was a rickety, unfinished railroad running part way across Minnesota, grandly called the St. Paul & Pacific Railroad. It was, unfortunately, bankrupt. Practically speaking, it belonged to a group of Dutch investors who held its bonds (that is, promises to pay) in return for a loan of some $15 million. Since the line was earning nothing, they might be persuaded to sell out for only half that amount. But even that was far more money than Jim Hill could scrape together.
Late in 1877, however, Hill saw the ghost of a chance. The St. Paul & Pacific had been offered a 5-million-acre land grant by the Minnesota Legislature on condition that it build about 770 miles of track by the end of 1878. The value of such a huge grant would more than pay back the cost of buying the line, if it could be bought. Hill and his Canadian associates in the Red River Transportation Company put their heads together with bankers they knew. Somehow, Hill and his friends borrowed the money to buy out the Dutch investors, with the sure knowledge that they could never pay off the loan unless the line was finished in time to claim the grant.
Jim Hill became a dynamo of activity in 1878. He got together rails and equipment on credit. He hustled to the offices of a rival line in the Northwest, the Northern Pacific, and bluffed them out of building their own connection to Winnipeg. He roared in and out of his St. Paul office, hiring work gangs and arranging to ship supplies out to the point where the tracks were inching westward. From time to time, he supervised rail laying operations personally. The men worked desperately to bridge rivers and cut through hills, tormented first by summer heat, dust, and flies, and then by winter blizzards that froze their hands to their iron tools. But James J. Hill drove them on, and legend has it that he sometimes stripped off his coat to swing a pick himself, his beard whipping in the chill winds, and his one good eye glowing like a live coal.
By January 1879, the line was complete from St. Paul to Winnipeg. The land grant, now earned, was a future asset worth millions in itself. By 1881, at an average price of $5 an acre, land sales were bringing in $100,000 a month to Hill’s treasury. And, as he had expected, a golden flood of grain poured over the rails of the St. Paul & Pacific, now reorganized and renamed the St. Paul, Minneapolis & Manitoba Railroad.
Destiny works in curious ways. As a boy, Jim Hill came to St. Paul in hopes of going to the Pacific coast with fur-trappers. Because he missed that chance, he entered the field of transportation, and by following his opportunities, finally became a railroad builder. In a sense, he could take up his trek toward the Pacific once more by extending his railroad westward. In 1879, the territory that would soon become the Dakotas, Montana, Idaho, and Washington contained, in a cynic’s words, nothing but buffalo bones. Yet Hill knew the region was potentially an empire of gold, lumber, cattle, and wheat. He began to create the well-built railroad line that could turn his dream into a reality.
From 1879 to 1893, he added track to his original line. This time he was in no hurry. Each section was carefully surveyed and graded, and from the main line, he ran off many little spurs to places that would one day be mines, ranches, and farming communities. In 1890, Hill’s various links of track were united in the Great Northern railroad system. In 1893, he reached the Pacific coast at Seattle.
Ten years earlier, another northern transcontinental line had been completed, the Northern Pacific. It had been built in a hurry, to get a sizable land grant. Various promoters had successively bought and bankrupted it. Hill waited until 1893 when a big depression toppled the Northern Pacific’s shaky financial structure. Then he bought control of it. Later, in 1901, through an alliance made with the great banking house of J. P. Morgan, he raised money to buy stock that divided control of the Chicago, Burlington & Quincy line between the Great Northern and the Northern Pacific railroads. The Burlington linked Hill with Chicago, St. Louis, Omaha, and Denver. The rising cities of the great West joined his empire.
He ran the empire on the basis of long-range planning. To populate the area through which the Great Northern ran, he fixed special passenger rates, aimed particularly at the nearly 9 million immigrants who flooded into the country between 1880 and 1900. A newcomer to the Northwest could get help from the Great Northern in picking out a government homestead in, say, Montana and could ride to it for $10. The Great Northern set up farms on which scientific experts developed fresh varieties of seed and then distributed it free to farmers. Hill would get his money back many times over when the new farmers’ grain came to his railroad sidings for shipment east.
But Hill did not rely solely on the trade in farm products. He bought coal and iron lands and offered them to interested mining companies at bargain rates. Then he watched the profits roll in as gondola cars full of ore and anthracite clicked over the rails to St. Paul and Duluth. By cutting the rate on western fir and pine from ninety to forty cents per 100 pounds delivered to Chicago, he forced southern pine into second place in Midwestern lumber yards.
In addition, he wanted to make sure his freight cars did not travel back empty from their eastern unloading points. He negotiated with Japanese and Chinese businessmen and offered to carry American steel, oil, cotton, and flour to the Pacific coast for them at rates that cut out his European competitors. To pick up trade with the Orient at the dockside, where the Great Northern tracks ended, Hill created the Great Northern Steamship Company with two ships, the Minnesota and the Dakota. With ships docking in Yokohama and Hong Kong, and his agents in Germany, Norway, and Sweden persuading farmers to move to Minnesota, Hill’s operations had become truly international.
Like all emperors, Hill was eventually challenged. In 1901, his hold on the rail traffic of the Northwest came under the jealous eye of Edward H. Harriman, a powerful New York stockbroker. By skillful stock purchases, Harriman had gained control of the Union Pacific Railroad, which had important branches in Idaho and Oregon. He did not intend to share the wealth of these regions with Hill’s Great Northern.
Just after Hill bought the Burlington line in 1901, Harriman quietly began to place orders for shares of Northern Pacific. If he got enough of them, he could break his rival’s grip on that line. When the word leaked out to Hill, he too began to buy. As the millionaires fought, the price of Northern Pacific shares climbed dizzily. In desperation, brokers who had contracted to deliver the stock sold other holdings in order to cover themselves, and a near-panic ensued. Meantime, the public grumbled about a war between rich men that threatened to ruin banks and start a new business depression. At last a compromise was reached, with Harriman getting representatives on the Northern Pacific board, but Hill staying in control.
Hill and Harriman then hatched a plan to create a huge holding company - the Northern Securities Company - that would consolidate all their subsidiaries: the Great Northern, the Northern Pacific, and the Burlington. But this monster railroad monopoly aroused the country’s anger and was eventually attacked by the United States government, which sued to dissolve it under the Sherman Antitrust Act. In 1904, the Supreme Court gave it the death blow. Hill and Harriman kept heavy individual holdings of stock in the three lines. The Great Northern and the Union Pacific continued to battle each other for business in Oregon for a long time after the Northern Securities case. In fact, they were still doing so after Harriman died in 1909 and Hill in 1916.
Toward the end of his life, Jim Hill had many of the things that rich men of his time liked to display. He owned homes in New York and St. Paul, and he had a fine collection of French paintings to show that he was no mere frontier roughneck. He spent little time looking at them, however. Like most men of his kind, he remained deeply absorbed in work, with occasional time out to pay attention to his family of ten children.
As he grew old, Hill was courted for his wealth and feared for his still-hot temper. He was condemned by many as a monopolist who got an unjust share of the wealth sweated from the country by loggers, mine workers, and farmers. Others pointed out that without his driving, scheming, and maneuvering, the wealth of the West would never have been unlocked. There is some truth in both viewpoints, and most people would agree that James J. Hill was, indeed, a giant-sized figure, well fashioned to match the greatness of the West.
The second story of Western adventure started in Switzerland in 1847. A Jewish tailor named Simon Guggenheim decided that America offered his family a wonderful chance for success and freedom. Like millions of other immigrants, he sailed from a European port with his family including a son of nineteen named Meyer.
The family settled in Philadelphia, where Simon felt confident his boy could build himself a future. Few men had their hopes so thoroughly gratified. For Meyer Guggenheim had a shrewdness, a knowledge of what he wanted and how to get it, and a firm character that bespoke leadership. He was the kind of purposeful person who could do wonders with an opportunity, and the move to America gave him just that. In Switzerland, as a Jew, he would probably have found social and economic advancement closed to him by age-old tradition. Across the Atlantic it was different.
Even in abundant America, Meyer had to work hard for a living. He found employment doing what many of his fellow Philadelphian Jews had done before him. With a sack on his back, he trudged from door to door, peddling laces, needles, ribbons, and knickknacks. It was slow and discouraging work. One day, it occurred to Meyer that the manufacturer of the articles in his peddler’s pack had an easier route to success. He took a can of stove polish from his stock and had a chemist analyze it for him. Then, with a few dollars of carefully hoarded family savings, he and his father began to make it themselves. The difference in the profit they received on a ten-cent can of polish was small. But the extra nickels, prudently saved, made it possible for Meyer Guggenheim, as he grew older, to become more than a footsore salesman.
Meyer’s ideas did not end with becoming a stove-polish maker. For him, one business success was simply a stepping stone to another - each profitable deal gave him the resources to satisfy a teasing little inner voice that said, “There are better things. Try them.” The earnings from polish went into a succession of other business operations - wholesaling cloth, spices, coffee, and lace. As Meyer’s enterprises prospered, he married Barbara Weil, a girl he had met on the voyage from Europe, and moved with her into a succession of homes, each one a little larger, a little finer, and in a more elegant Philadelphia neighborhood. This was fortunate because, after 1854, children kept adding to his pleasures and responsibilities - three girls and eight boys, one of whom died in childhood - and he had definite plans for their futures.
Meyer Guggenheim was a strict but loving father. His sons were set to work early learning the ways of the business world. Education was, for them, a preparation for future usefulness in the family company, M. Guggenheim’s Sons, which Meyer created in 1881. Daniel, for example, was sent to school in Switzerland to learn foreign languages and manners and meet people important to his father’s lace-importing business who would initiate him into the tricks of the trade. From their patriarchal father, the sons inherited a love of business affairs and an ability to initiate and manage imaginative ventures in the economic world. As they grew older, they continued to live near him, to raise their families in close proximity to his, and share their work with him right up to his death. All became successful businessmen themselves.
In 1881, Meyer took the step that determined the basic course of the family fortunes: He turned from merchandise to metals. It began one day when he suddenly appeared in the rip-roaring mining town of Leadville, Colorado. In his sober eastern clothing, with his long whiskers neatly parted in the middle, he looked out of place among the grizzled prospectors of the Rockies. He may even have felt foolish, for an indulgence in the habit of taking risks on unusual propositions had brought him two-thirds of the way across America to look at a hole in the ground! As he became wealthier, Meyer liked to invest his money here and there - a few railroad stocks, for example, or a loan at good interest. One day, a man named Charles Graham came to Guggenheim to ask for money to help develop a couple of silver mines he had bought for a song from an out-of-luck miner. Meyer offered, instead, to go into partnership. He had an inkling that a mine was a useful property and would go on producing wealth no matter if stocks went up or down. When he first saw the “A.Y.” and the “Minnie,” however, on a wet and chilly day in Leadville, his heart sank. They were filled with water, and many thousands of dollars would be needed for pumps and repairs before they could be productive.
Many times in the next few years Meyer wondered if his judgment had been wise. But slowly, the yield from the mines began to catch up with the expenses of running them. Then, suddenly, output skyrocketed. By 1889, more than $1 million worth of silver and lead had been taken from the mines. Meyer Guggenheim had become what the Western newspapers called a bonanza king.
For someone else, that might have been enough. However, Meyer Guggenheim planned further. His few years of mining experience convinced him that the big profits were made by smelters and refiners who, in their gigantic plants, turned ore into finished metal. In 1887, he made three breathtaking decisions. First, he would build his own smelting and refining plant. Second, he would gradually shift his total investments into the mining industry. Third, the smelting company would be a family affair with each of the sons taking a full part.
Meyer was the kind of father whom sons obeyed. It turned out, too, that he was right in his impulsive idea that the hidden metals of the Rockies would make the whole family’s fortune. In 1888, the Philadelphia Smelting and Refining Company opened a $1.25 million smelter in Pueblo, Colorado. Dan became the eastern head of the company; Murry, its president, organized financial connections in the West. Isaac was busy winding up the lace business, while Simon was hunting for new mines to furnish ore for the smelter. Ben was general manager at Pueblo, and Will was studying metallurgy so he could do his part. They all worked, and they all prospered. Before too long, they began to look beyond the boundaries of the United States.
Mexican ores could be dug, carried, and refined very cheaply. So in the 1890s, Dan and Murry Guggenheim went to Mexico City to conduct negotiations with the government of dictator Porfirio Díaz. Their Spanish was excellent, and their European manners most acceptable to Latin-American gentlemen. Soon they had permission to build two smelters in Mexico.
There were problems, of course, but the smelters were built, and new mines were located and bought. When other American smelters were paying high prices for ore, the Guggenheims were cutting costs and piling up profits. By 1895, they were estimated to be earning over $1 million a year.
Toward the end of the century, they showed just how good they had become in the boom-and-bust mining and refining game. A group of promoters decided to organize a smelters’ trust that would dictate prices to the country’s miners. They included some shrewd and well-financed operators. One of them, Henry H. Rogers, was a partner in Standard Oil, who had already organized a copper-mining monopoly worth $75 million in stock. The smelting combine was set up as the American Smelting and Refining Company, and it moved boldly to buy up every smelting plant in the country. Its agents offered old Meyer Guggenheim $11 million for his mines, his smelters, and his newly built copper refinery in Perth Amboy, New Jersey. Guggenheim laughed. He wanted no part of $11 million in the stocks of a new company. “Who knows what good their stock is?” he told his boys. The American Smelting and Refining Company thereupon set to work to run the Guggenheims out of business.
They were in for a surprise. Meyer and Dan Guggenheim fought back with extraordinary shrewdness. They contracted with independent mine owners whose small outputs were spurned by the mighty American Smelting monopoly. They paid top prices for the ores that fed their smelters. Mining men found it profitable to do business with the Guggenheims. Meyer and Dan undersold the trust in the lead market and made deals with the mineworkers’ union that enabled Guggenheim plants to operate while those belonging to the trust were paralyzed by strikes.
In 1901, Goliath gave in to David. M. Guggenheim’s Sons were taken into the trust, not on Rogers’s terms, but on their own. And their terms included virtual control of the organization. Dan was made chairman of a board of directors that included four of his brothers.
The Guggenheims’ key move in the trust war was the organization, in 1899, of the Guggenheim Exploration Company. Known as Guggenex, it hired the best engineering talent in the world to develop supplies of ores outside the United States, where no rival could threaten to take them over. In the years before the World War I, the brothers used Guggenex to explore and develop mines of all sorts - tin in Bolivia, gold in Alaska, diamonds in Africa. Perhaps the most interesting part of their change from silver kings to smelter millionaires, and then to general overlords of world mining, was their move into the field of copper.
This metal had a romantic history in America. In the 1840s, valuable copper deposits had been discovered in Michigan’s upper peninsula, an inhospitable hard-to-reach region, not far removed from its Indian past. Thousands of tough miners swarmed into the area. By 1880, nearly 30,000 tons a year were being shipped out across Lake Superior. The demands of modern industry and especially of the electrical age swelled the market further and intensified the search for new mines. Men grubbed for copper in Arizona’s Apache country and made the fortunes of giant combines like the Anaconda Copper Mining Company in Butte, Montana. By 1895, the United States was producing more than half the world’s copper output.
The Guggenheims followed this adventurous pattern of expansion as they shifted their interests. In 1906, they began building a $20 million railroad to develop the Kennecott mine in Alaska. By the next year, they were opening mines in faraway Chile.
The Guggenheims’ empire was worldwide and their power formidable. In 1909, the extension of their Alaskan ventures to include a coal field worth $25 million, in direct violation of government conservation policies, involved the family in a national scandal. A congressional investigation acquitted the Secretary of the Interior of being an agent for the Guggenheims, but the case considerably tarnished their reputation.
Meyer Guggenheim lived out his last years enjoying the opera, horses, good cigars, and the company of an increasing horde of grandchildren. It must sometimes have amazed him to think that all but two of his sons were multimillionaires. Two years after his death in 1905, the total stock value of the Guggenheim enterprises was estimated at more than $200 million.
Meyer Guggenheim’s sons spent their money to enrich their country as well as themselves. Daniel created a foundation that invested millions in aviation research. Murry endowed a free dental clinic. Simon instituted a series of fellowships and grants to allow artists, writers, scholars, and scientists a year or more of free time for creative work. His wife, Olga Hirsch Guggenheim, additionally benefited New Yorkers by generously endowing the Museum of Modern Art. And in 1959, Solomon Guggenheim’s art museum, originally established in 1939 by the foundation he had created, moved to its new home, the landmark that bears his name and houses his own collection of modern art - a striking circular building on Fifth Avenue designed by Frank Lloyd Wright.
The gift of the West to Meyer Guggenheim was a shower of mineral wealth. The secret of his success was having seven sons who combined business ability with complete loyalty, enabling him to expand what initially was a family business into an enormous enterprise run on a global scale.