Chapter 57: America's Railroad Age
In this episode, we talk about the many changes to American life brought about by the railroads in the late 19th Century. Topics include:
New construction tools like dynamite
George Pullman’s sleeper cars
Railroad tycoons like Cornelius Vanderbilt and Jay Gould
The development of modern corporations
Innovations in time management
The growth of the American beef industry
The spread of consumer catalogues
Sources for this episode include:
“Alfred Nobel’s Will.” NobelPrize.org. Nobel Prize Outreach AB 2022. Sun. 23 Jan 2022. https://www.nobelprize.org/alfred-nobel/alfred-nobels-will
Betts, Jonathan D. “Aaron Lufkin Dennison: American manufacturer.” Encyclopedia Britannica. Last updated: 5 Jan 2022. https://www.britannica.com/biography/Aaron-Lufkin-Dennison
“George M. Pullman.” Pullman National Monument. https://www.nps.gov/people/george-m-pullman.htm
“George Mortimer Pullman.” Friends of the Pullman State Historical Site. Apr 2020. http://www.pullman-museum.org/theMan/
Greenspan, Rachel E. “‘It’s the Legacy of Slavey’: Here’s the Troubling History Behind Tipping Practices in the U.S.” TIME. 25 Oct 2018. https://time.com/5404475/history-tipping-american-restaurants-civil-war/
Herreld, Donald J. “An Economic History of the World Since 1400.” The Great Courses. 2016.
Johnson, Steve. How We Got to Now: Six Innovations That Made the Modern World. Penguin Random House. 2014.
Kelly, Jack. “The Rise and Fall of the Sleeping Car King.” What It Means to Be American. Smithsonian Magazine. 11 Jan 2019. https://www.smithsonianmag.com/history/rise-fall-sleeping-car-king-180971240/
Lisa, Andrew. “History of America’s Meat-Processing Industry.” Stacker. 18 Aug 2020. https://stacker.com/stories/4402/history-americas-meat-processing-industry
“Maria Ressa and Dmitry Muratov win 2021 Nobel Peace Prize.” Al Jazeera. 8 Oct 2021. https://www.aljazeera.com/news/2021/10/8/nobel-peace-prize-2021
Morris, Charles R. The Dawn of Innovation: The First American Industrial Revolution. PublicAffairs. 2012.
Morris, Charles R. The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J.P. Morgan Invented the American Supereconomy. Henry Holt and Co. 2005.
Nickerson, Matthew and Chicago Tribune Reporter. “When Sears, the Facebook of its Era, Launched its IPO.” Chicago Tribune. 13 May 2012. https://www.chicagotribune.com/ct-per-flash-sears-ipo-0513-20120513-story.html
Pruitt, Sarah. “When the Sears Catalog Sold Everything from Houses to Hubcaps.” History. 16 Oct 2018. https://www.history.com/news/sears-catalog-houses-hubcaps
Ringertz, Nils. “Alfred Nobel – His Life and Work.” NobelPrize.org. Nobel Prize Outreach AB 2022. 23 Jan 2022. https://www.nobelprize.org/alfred-nobel/alfred-nobel-his-life-and-work/
Sawyer, June. “The End to Falling Back and Forth in 100 Time Zones.” Chicago Tribune. 6 Nov 1988. https://www.chicagotribune.com/news/ct-xpm-1988-11-06-8802130818-story.html
Schiff, Judith. “The Man Who Made Time Workable.” Yale Alumni Magazine. Jul/Aug 2017. https://yalealumnimagazine.com/articles/4507-charles-f-dowd
“Simon Ingersoll: Steam-Powered Rock Drill” National Inventors Hall of Fame. https://www.invent.org/inductees/simon-ingersoll
“Simon Ingersoll.” National Mining Hall of Fame & Museum. https://www.mininghalloffame.org/hall-of-fame/simon-ingersoll
Specht, Joshua. “The Price of Plenty: How Beef Changed America.” The Guardian. 7 May 2019. https://www.theguardian.com/environment/2019/may/07/the-price-of-plenty-how-beef-changed-america
This Episode is Sponsored by Surfshark VPN!
Get Surfshark VPN at https://surfshark.deals/INDREVPOD - Enter promo code INDREVPOD for 83% off and 3 extra months free!
Full Transcript
Reminder: Footnotes and an ad-free stream are available to our Patreon supporters. To sign up, go to Patreon.com/indrevpod.
Around the world today, alarm bells are ringing about the growing momentum of nationalistic, authoritarian regimes. We’ve seen them pop up in just about every region of the globe. Among them have been the governments of Vladmir Putin in Russia and Rodrigo Duterte in the Philippines.
Independent journalists have come under particular scrutiny in these countries, as well as in others. And that’s why, late last year, one Russian journalist (Dmitry Muratov) and one Filipino journalist (Maria Ressa) travelled to Olso. There, for their scrutiny of their respective governments, they were awarded the 102nd Nobel Peace Prize.
Beginning in 1901, the Norwegian Nobel Committee has awarded this prize each year (or most years, anyway) to persons who “have done the most or best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses.” At least those are the criteria for the prize as described in the last will and testament of its namesake, the Swedish scientist and industrialist, Alfred Bernhard Nobel.
Born in Stockholm in 1833, Alfred Nobel was the son of a bankrupt engineer who would move to Finland and then Russia in an attempt to turn his fortunes around. The family’s prospects improved when Nobel’s father pulled him out of school and moved the family to St. Petersburg, where he was working on various new inventions and machines. Among other things, he would go on to supply the Czar the sea mines used to keep the British and French navies out of the Gulf of Finland during the Crimean War. (Shout out Chapter 52!)
Young Alfred was then able to receive a world-class education, and in time he was sent around the world to broaden his horizons. Though he was interested in all sorts of subjects – especially English literature and poetry – Nobel’s family steered him toward chemistry and physics.
He decided to settle in Paris and took up work in a laboratory where he met a young Italian chemist named Ascanio Sobrero. Just a few years earlier, in 1847, Sobrero had synthesized a new chemical compound called nitroglycerin. It was a dangerous liquid that, if handled correctly, could finally replace gunpowder as the world’s best explosive material.
But as Sobrero also discovered, handling nitroglycerin safely was easier said than done. Nevertheless, Nobel saw great potential in it.
In 1863, he returned to Stockholm to further develop nitroglycerin as a practical explosive. But Nobel was set back by several accidental explosions, one of which took several lives, including that of his brother, Emil. City authorities then decided to ban the experimentation of nitroglycerin, forcing Nobel to move his operations to a barge on Lake Mälaren. There he began mass-producing the substance and experimenting with additives. When he mixed nitroglycerin with Diatomaceous earth – a soft rock powder – he was able to turn it into a paste which could be shaped into rods. In 1867, he patented this new material as dynamite.
The irony that the inventor of dynamite would be the creator of the Nobel Peace Prize is seldom lost on anyone. You see, Nobel was always interested in the work of peace activists, and he struggled with the contradiction of trying to promote their goals while also developing new explosives, some of which he was selling to various militaries.
Much like our old friend from way back in Chapter 18 – the Quaker arms manufacturer, Samuel Galton Jr. – Nobel was not easily able to reconcile his personal beliefs with his economic endeavors. This is likely the reason he included the Peace Prize – along with the prizes for accomplishments in literature, medicine, physics, and chemistry – in his will.
But while there were certainly violent applications of Nobel’s inventions, there were many peaceful, industrial ones too. And, ultimately, it was these applications that would make him such a wealthy and important historical figure – and why he’s featured in our story today.
Remember how in Chapter 34 I told you about Isambard Kingdom Brunel’s Great Western Railway needing to dig the 1.75-mile Box Tunnel? For three years, they blasted away with about one ton of gunpowder per week, killing a hundred workers in the process. Or, if you heard the Chapter 31 Bonus Episode, you may remember how the Chinese immigrant laborers for the Central Pacific Railroad had to dig 16 tunnels through the solid granite of the Sierra Nevada mountain range – and, to do it, they needed to hammer drills into the mountain face and then fill the holes they made with gunpowder, every day using as much as 500 kegs of the stuff and only making inches of progress. And we’ll never even know how many of them died in this work.
With dynamite, tunneling and mining became a heck of a lot easier. You could go from making inches of progress per day to several feet of progress with every blast. Within the first ten years of his invention, Nobel helped set up 16 explosives factories in 14 different countries. In the U.S., he teamed up with the descendants of our old friend from way back in Chapter 16, Éleuthère Irénée du Pont de Nemours, turning the DuPont chemicals company into a major explosives manufacturer. Competitors soon followed (violating the patent), as did newer, better explosives, like Nobel’s 1875 invention, gelatinized blasting nitroglycerine.
Industrial explosives helped expand mining across Appalachia and the American west. Before the end of the 19th Century, they were used to clear Hell Gate and tunnel the Croton Aqueduct in New York City. At the turn of the next century, dynamite would become essential in the construction of the Panama Canal. And the new explosives were critical to building new railroads through and around mountain ranges across the world.
This was perhaps most important in the United States, where the rail network increased from about 35,000 miles to a quarter-million miles during the Second Industrial Revolution. And these rail lines, in turn, massively reshaped American life – and ultimately, world history.
---
This is the Industrial Revolutions
Chapter 57: America’s Railroad Age
---
Alright, as always, we need to start with a little admin.
First up is a correction. Michael O’Brien wrote to point out a little mistake I made in Chapter 55 when I mentioned the Kelvin temperature scale. Technically, the measurement is in units of Kelvin, not degrees Kelvin, like I said. As Michael explains, “the freezing point of water, for example, is 273.15 Kelvin, rather than 273.15 degrees Kelvin.” I think people sometimes colloquially say degrees Kelvin, but as I’ve now learned, that’s not quite right. So, thank you Michael for correcting me.
Second, you can now rate podcasts on Spotify! So, if you use Spotify to listen to the Industrial Revolutions, please go ahead and give it a five-star rating. The more fans rate it, the better Spotify will be able to promote it to other listeners who like the kind of content you like.
Finally, I want to thank all of the podcast’s Patreon supporters. Special shout outs go to Hakim Ahmed, Jim Ankenbrandt, John Bartlett, Adam Bibby, Chris Bradford, Elizabeth Brooking, Harriet Buchanan, Jeppe Burchhardt, Tara Carlson, Amelia Dunkin, Matthew Frost, Michele Gersich, Michael Hausknecht, Jason Hayes, Jeremy Hoffman, Eric Hogensen, Ian Le Quesne, Brian Long, Mac Loveland, Andrew C. Madigan, Duncan McHale, Denis Morgan, Emeka Okafor, Ido Ouziel, Brad Rosse, Kristian Sibast, Jonathan Smith, Brandon Stansbury, Sebastian Stark, Ross Templeton, Walter Torres, and Seth Wiener. Thank you!
…
Explosives weren’t the only thing that helped Americans expand the construction of railroads in the late 19th Century.
In 1871, a Connecticut-born farmer and engineer named Simon Ingersoll introduced a new invention to market: the Steam Drill. A friend of his had won a contract to excavate rock in New York City and told Ingersoll how he could do the job faster and to greater profit if only he had a mechanical drill.
Now, there were mechanical drills out there, but they were so big and heavy they needed to be mounted on carriages, making them impractical in most mining and tunnelling operations. Ingersoll’s drill, though, was light and simple to set up. It was mounted on a tripod and came with leg weights to keep it steady. Powered by steam (and later with compressed air), the steel drill bit would rotate after each strike, allowing it to make progress into the rock with ease.
Now, for some of you, I’m sure, you hear about the steam drills on the railroads and you think of the contest between one of these machines and the legendary hammer-swinger, John Henry. You will be happy to hear that, later this month, I’m going to do a bonus episode on the legend of John Henry, so keep an eye out for that.
Between the new explosives and the new steam drills, railroad construction really took off. The U.S. Civil War had spurred new industry in the Midwest, necessitating an ever-expanding rail network there. It had also torn apart the rail network of the southern states, which now needed to be rebuilt. And the Homestead Act was incentivizing westward settlement, just as the Transcontinental Railroad finished construction. By 1884, another four Transcontinental lines were complete, linking cities like Seattle and Los Angeles to the more expansive rail networks back east.
By that point, there were over 100,000 locomotives in use across the world, pulling nearly 3 million train cars and 2 billion passengers annually. Americans accounted for nearly 20% of that traffic. And more and more they were travelling in comfort and style, thanks in large part to an entrepreneur in Chicago – fast becoming the nation’s most important railway hub.
George Mortimer Pullman was born in a tiny village in western New York State in 1831. When he was a teenager, his father – a carpenter by trade – moved the family to a town on the Erie Canal and was hired for a widening project, using jackscrews to move buildings and make way for the wider canal. George joined his father’s new business and took it over when his father died in 1853. The next year, then, he won a contract with the state for another canal widening project, moving another 20 buildings out of the way.
But that contract wrapped up just as the Panic of 1857 hit. (Shout out Chapter 54!) Pullman needed to look elsewhere for work. That’s when he saw an ad for a new job in Chicago. Ellis Chesbrough needed help moving buildings to construct the city’s new sewer system. (Shout out Chapter 51!) Pullman answered the call and headed west. Using the jackscrew like he had learned from his dad, he spent several years helping Chesbrough lift massive buildings to install sewer pipes underneath.
Between his savings from this work, and the returns from a mining venture he set up in Colorado, Pullman had the capital to build a new business around an idea he had been developing.
Back in New York, Pullman had experienced travel on the Erie Canal, with barges that provided compact yet comfortable sleeping accommodations. His trip from New York to Illinois, though, had not been so pleasant. So, he formed a partnership with a friend from back in New York to build more comfortable sleeping cars for the railways. Shortly after, they pitched the idea to the Chicago, Alton, and St. Louis Railroad, which gave them a contract to build two. That friend from back home soon lost interest and sold his share of the company to Pullman, who finished the cars in 1864. He described them as “palace cars” and marketed them as “luxury for the middle class.” More contracts followed.
But it was a national tragedy that sprung Pullman’s little hustle into a business empire. After the assassination of Abraham Lincoln, the slain president’s body was carried across the country for a national funeral procession on its way back to Springfield, Illinois. Several of the cars on that train procession were built by Pullman, including the car that carried the Lincoln family. And as the funeral procession stopped in city after city, Americans saw these luxurious cars and wished they could experience them too. Soon after, orders for palace cars poured into Pullman’s Chicago office from railroad companies across the nation.
In a nod to the murdered man who gave him his big break, Pullman named his next big project The President. It was nothing less than a “hotel on wheel.” Not only did it include the lavish and comfortable sleeping cars, but also a kitchen and dining car, which served some of the best food you could find in the United States at the time.
Introducing a proto-assembly line to his Chicago factory, he built his cars in the finest Victorian fashions, with beautiful carpeting and upholstery, chandeliers, and double-glazed windows to make the ride quieter.
But, rather than sell the cars, he contracted them to the various railroads. The railroads were fine with this arrangement because the comfier cars meant more customers paying fares. To actually get a Pullman car, the customer would pay for a fare upgrade, and that extra fee is what went to Pullman. It gave him both a steady stream of revenue and control over the operation and maintenance of the cars. In other words, it guaranteed he could keep his brand successful.
To staff the cars and provide immaculate service to the passengers, Pullman hired recently-freed African Americans as porters. In fact, the Pullman Company exclusively hired Black men for these positions until the 1960s. Pullman wanted his customers to have a luxurious experience, being waited on, but also knew that this would make many of them uncomfortable, as so many white Americans at the time believed themselves to be living in some kind of classless society. (That kind of service was what European aristocrats had.) But Pullman also knew that these same white Americans did not see Black Americans as their equals. Ergo, they could don a uniform and humbly serve the white customers.
Pullman also knew he could pay relatively low wages to Black men, since these would still be the best jobs the ex-slaves could find. Sure, it wasn’t quite a livable wage, and sure, they had to deal with super-racist passengers all the time, but they were able to pocket their tips. And for what it’s worth, Pullman Porters would in time become the foundation of a growing Black middle class. (By the way: This is why tipping is so much more prevalent in American culture than anywhere else, even though a lot of us hate it. State governments – and later the federal government – decided that the minimum wages most workers were entitled to wouldn’t apply to service workers, since service workers could rely on tips… a practice that got started thanks to racism.)
Now, we’ll talk more about Pullman another time – specifically his notorious approach to labor relations – but the reason he’s so important to our story today is because of how he made rail travel simply better. Before his sleeper cars, traveling by train was terrible. You often sat upright on wooden benches for hours and hours. It was loud, smelly, and often too hot or too cold. Now you could traverse the continent not only comfortably, but enjoyably. More and more Americans rode the rails in the years and decades to come.
It also helped that there were more and more lines for them to choose from, taking them all over – even to smaller cities and towns. And the expanding rail network was made possible by often unscrupulous businessmen – railroad tycoons who we often refer to as Robber Barons.
For years, the most famous of them was our old friend, Cornelius “the Commodore” Vanderbilt.
While continuing his steamboat and steamship businesses, Vanderbilt had expanded into railroads with his aggressive takeover of the Stonington Railroad in 1847. Throughout the 1850s and 60s, he continued buying up shares in various railroads around New York – sometimes in hostile takeovers – and in 1864 sold the last of his steamships to focus his energies on the more profitable rail interests. Also around this time, he began consolidating many of the railroads he controlled, most notably the New York Central.
Time after time, Vanderbilt emerged victorious in the many railroad wars on Wall Street. That is until he came into a dispute with his fellow Erie Railway board members, most critically its secretary, Daniel Drew, as well as some Boston investors, including the company’s president.
The background of these Erie Wars is complicated, but basically, in 1868, the Commodore fully and publicly launched them when he tried buying up a controlling share of the company on the open market. The reason it failed was because of one of Drew’s allies in the fight was buying up $10 million worth of convertible bonds and leaking them back into the stock exchange as Erie Railway shares. Vanderbilt was unable to drive the price up enough to corner the company. And by the time this whole chaotic episode was over, the railroad was in the hands of that Drew ally – a talented financial thinker who shared Vanderbilt’s transport sector management intuitions, as well as his aggressive (borderline-sociopathic) business instincts.
Jason Gould – better known by his nickname, Jay – was born in the small town of Roxbury, New York, in the Catskills, in 1836. Like Vanderbilt, he came from a relatively poor family. They were farmers, but Gould’s father knew that would not be the life for his son – not because he saw great promise in the boy, quite the opposite. Disappointed by his small stature and weak physique, he basically abandoned young Jay, sending him to a nearby high school with just 50 cents in his pocket to get by on.
Gould worked his way through school, where he demonstrated a keen intellect. He tried becoming a surveyor but was unable to get a state job. Instead, he was hired to survey a site for a tannery. Gould so impressed the tanner building it that he was hired to manage the new tannery as a partner. He then took about 50 workers out into the woods to build it, as well as a little village for its workforce. Gould would end up controlling the business within a few years, but it pretty much fell apart due to a literal battle that broke out there between him and his workers on one side and his investors on the other. This story is way too crazy and tangential for me to go into here, but if you’re a Patreon supporter you’ll get to hear about it in the footnotes.
Gould then moved to New York City and started from scratch. It was there he met Helen Miller, the daughter of a well-off merchant family who he would go on to marry in 1863. Poor as he was, her father liked him and helped him get back on his feet. He was working in the leather industry when, in 1861, one of his associates sold him $50,000 worth of mortgage bonds in a railroad near Lake Champlain. Still reeling from the Panic of 1857, the railroad’s bonds were trading at 10 cents on the dollar. It must have been almost all of his savings, but Gould was able to take control of the line and turn it around. When it merged with another railroad a few years later, Gould was holding a fortune.
He continued investing in railroads during the Civil War and was slowly building a reputation around Wall Street as a skilled railroad manager and financial wizard. Then, in his early 30s, he was approached by an eccentric stock broker named Jim Fisk – an agent for Daniel Drew. Fisk enlisted Gould in the Erie Wars and they conspired to defeat Vanderbilt.
Once Vanderbilt realized the scheme underway, he got a friendly (read: corrupt) judge to issue an injunction and warrants to arrest the entire Erie board. What followed was a rather bizarre episode where Gould and Fisk fled to New Jersey for a month before returning to New York with a briefcase full of cash. Though he was briefly arrested, Gould paid off the cops and set up shop in an Albany hotel room. Vanderbilt’s crew also set up shop in another room in the hotel. From these rooms, the two camps held meetings with state legislators. According to his accounts, Gould spent about $600,000 in “legal expenses” (which I’m pretty sure was a code for bribes) – which comes out to about $11 million today. It worked. The Legislature passed a law to retroactively okay Gould’s maneuvers earlier that year.
The Commodore finally gave up, but not before forcing about $9 million in stock buybacks, depleting the company’s reserves. From there, he resigned. As did Drew. As did the Boston investors. New board elections were held. Among the new members elected was State Senator William Tweed – boss of the Tammany Hall political machine. They appointed Fisk comptroller and Gould president.
As head of the Erie Railway, Gould helped improve its financial position. He also started looking westward, toward the industrializing cities around the Great Lakes, and came up with a scheme to corner an entire rail network from New York to Michigan, knowing how massively profitable it would be to monopolize the freight of coal, iron, oil, and agricultural goods coming out of the region. He stealthily bought up stock in several railroads in those states and began lobbying campaigns in Pennsylvania and Ohio to wrest control of the lines. (Remember, again, a lot of corruption in these days.)
It almost worked too. But then he and Fisk came up with an idea to improve freight profits by improving American exports. Since foreign buyers paid for American goods in gold, which was then converted for greenbacks, Gould and Fisk would buy up gold, thus raising prices for gold futures, thus making the greenback-gold exchange rate better for exporters, thus more agricultural goods would be traveling via his railroads.
But the scheme went way, way too far.
For one thing, they got Abel Corbin involved – brother-in-law of the newly-elected American president, Ulysses S. Grant. The government was sitting on about $100 million worth of gold reserves. If the price of gold shot up, the Treasury could simply sell some gold on the market. The increased supply would stabilize the price. Corbin lobbied the president to hang on to those reserves.
As 1869 went on, the price of gold kept rising – to the point where Gould had nearly cornered the market. Wall Street investors were sending telegrams to Washington, begging for intervention. Finally, news that the government would start selling reserves came on September 24th. The date would go down in history (for some decades, anyway) as Black Friday. The price of gold instantly collapsed. Gould and Fisk had to barricade themselves in the nearby Opera House behind armed guards. In the lawsuits that followed, they lost a small fortune and, more importantly, their reputations.
For the rest of his life, Gould was seen in the newspapers as the worst kind of villain. Now cash-strapped, he was outbid for the western railroads by (who else but) Cornelius Vanderbilt. He resigned from the Erie a few years later, as the other railroads were launching expansive networks all over the place in order to prevent the oneupsmanship-style takeovers Gould and Vanderbilt had been practicing.
But Black Friday was not to be the end of Jay Gould.
His departure from the Erie had left him with some strong capital gains, and he put those funds to use during the Panic of 1873, buying up stock in the Union Pacific Railroad – the eastern part of the Transcontinental Railroad. Shares had been plummeting, in part due to the company’s internal problems, in part due to the sudden death of its president (Vanderbilt’s son-in-law, in fact), and in part due to the floundering stock market. Gould gobbled up the cheap shares until he was in a control position.
For all of Gould’s shenanigans, he really was a remarkable railroad manager. Within a couple of years, the Union Pacific’s debt problems were under control, they bought a major competitor, and they streamlined management operations and costs. Revenues jumped about 30% per year. By 1875, the stock price had quadrupled from its 1873 lows. He then paid the shareholders the company’s first dividend.
Then he went on the attack.
In the 1880s, Gould bought up railroad after railroad – each time strengthening his position, as he could tap the financial leverage of each to bring another to its heels. Most railroad executives understood that their companies were sort of like utilities – it didn’t make sense to build infrastructure overlapping with a competitor’s. So, they formed gentlemanly “pools” – what we would call cartels – to avoid messy situations like the Erie Wars. But Gould’s only use for pools was to exploit them – joining only so the other execs would get a false sense of security. His philosophy was to avoid the utility problem not through cooperation, but through domination and consolidation under his personal ownership. Nobody suffered Gould’s aggression more than Willie Vanderbilt – the Commodore’s son, who took over the family holdings after Cornelius died in 1877.
In addition to the western railroads, Gould took control of Manhattan’s mass transit system, he bought up newspapers (which started spinning the news to his liking), and he stole the jewel in the crown of the Vanderbilt empire – the telegraph company, Western Union.
After 1883, at any given time, Gould controlled dozens of railroads. He expanded them significantly, often to merge them (and I’m talking about the literal tracks) with the Union Pacific or another company, or because of the expanding opportunities he saw. For example, Gould personally met with western ranchers to make the lines more cattle-friendly. He also helped expand the rail network in the west. Thanks in part to those efforts, the long cattle drives of old – like the famed ones from Texas to Nebraska – faded away, effectively ending the cowboy era so associated with American culture.
Gould’s insatiability was a key reason for why the railroads expanded so much in the U.S. during late 19th Century, and why American industrialization became so widespread – because with more transport, there was much more you could produce and distribute.
Jay Gould and Cornelius Vanderbilt had also been responsible for the development of the modern corporation – not only the financial mechanizations, but also the advanced system of management they needed. And on the railroads, those management innovations brought about some big changes for society as a whole.
---
No sector dominated the major stock exchanges of the 1870s quite like railroads. Others – like telegraph companies, public utilities, insurance companies, and oil companies – were coming up as well. By 1896, these and other such corporations started being tracked by financial journalist Charles Dow in his new index: the Dow Jones Industrial Average.
The 1870s through 1890s was a time of major transformation for business enterprises. Increasingly, companies that once would have been small partnerships with relatively simple structures were being crowded out by larger, more complex, limited liability corporations, owned by pools of investors, often with ownership shares traded on a public exchange. In this way, they followed the railroads’ lead.
One of the things that was so remarkable about Jay Gould was how directly he managed his empire. He personally orchestrated business negotiations, restructured the finances of his railroads, planned new construction, and communicated with fellow shareholders. He had a small, devoted cadre of lawyers who assisted with these efforts, but for the most part, it was Gould running the show.
That was not the norm. Due to their sizes and operational challenges, most railroads had to be managed by scores of overseers within increasingly complex systems to get the trains to run on time (and I mean that both figuratively and literally).
In particular, the larger American railroads adopted a multi-unit structure. Within each “division”, as it was called, managers would operate independently, answering to a central office that oversaw systemwide functions. So, you’d have divisions for track maintenance, machinery repair, contracts, etc. Similar innovations were put in place on the European railroads as well.
In the U.S., this also caught on outside the transportation sector, particularly by businesses looking to expand the reach of their products – cutting out middlemen, wholesalers and retailers. By establishing divisions like distribution centers, sales offices, purchasing offices, etc., they could market their goods directly to the consumer, allowing for increased production and sales. This dramatically increased the size of these enterprises. And to supervise the new functions of such multi-unit manufacturing companies, specialized managers were hired.
But there was one kind of logistical nightmare that the railroads had to deal with which few other companies did (at least not to the same extent): Time management.
One good way to define industrialization is the maximizing of efficiencies in economic endeavors. And to do that requires, first and foremost, disciplined organization around time. This is why mill and factory owners – going back to guys like Josiah Wedgwood and Richard Arkwright – put big clocks up to keep track of workers’ shifts.
This is a little tougher when you’re talking about an operation, not in a single factory location, but spread across hundreds of miles of tracks. It was made considerably easier though, thanks to an old piece of technology that was now being mass-produced.
Clock watches first started coming onto the scene in Bavaria in the early 16th Century. It is generally believed to be a 1510 invention by Nuremberg clockmaker Petere Henlein. By the late 17th Century, men were increasingly keeping these devices in their pockets, usually connected to a chain. Over the centuries, the springs and wheels became increasingly advanced, making the clock functions increasingly accurate.
But still, watch making remained a skilled craft. Because they were not produced at scale, pocket watches were expensive and, thus, worn primarily by the aristocratic and bourgeois elites. But starting in 1851, a more affordable pocket watch came on the market, allowing railroad employees across the country to better manage time.
Aaron Lufkin Dennison was born in Freeport, Maine, in 1812. His father was a cobbler who moved the family to Brunswick shortly after Aaron was born. It was there where, at age 18, Aaron first apprenticed as a clockmaker. He showed a great deal of skill and was offered a partnership in the business after the apprenticeship ended. Instead, he moved to Boston to continue developing his skills. He bounced around various jobs for a while, but his clock and watch-related business pursuits kept failing.
During the 1830s though, he went into business with his brother, making paper boxes for jewelers. This Dennison Manufacturing Company scaled production, allowing the company to continually grow sales. But by 1840, Aaron left the business to try watchmaking again. This time, though, he would employ those same principles of mass production.
After years of struggle to turn this dream into a reality, Dennison finally formed a company with fellow clockmaker Edward Howard in 1849, backed by a small group of investors. They brought in experts from Britain, used interchangeable parts, and, in 1854, built a new factory in Waltham – the same Boston suburb where Francis Cabot Lowell had built his first textile mill decades earlier. (Shout out Chapter 33!) But when the Panic of 1857 hit, the company was forced into bankruptcy, unable to turn a big enough profit to pay down the enormous start-up costs of the enterprise.
And yet, that didn’t stop them. In 1859, backed by new investors, they started over, earning Dennison the nickname, “The Boston Lunatic.” This Waltham Watch Company, as it was now called, then hired a superintendent by the name of Ambrose Webster who implemented a new, hyper-efficient and more mechanized process for producing the watches. Sure enough, within a few years, the rate of production soared by a factor of seven. And this came just in time for the U.S. Civil War, as the Union army needed tens of thousands of pocket watches for its officers.
In the years to come, their manufacturing system continued to improve, with new precession instruments and a near-fully automated production line. Pocket watches improved dramatically in terms of quality and fell just as dramatically in terms of price. In 1850, the average price of a pocket watch was about $40. Eighteen years later, a Waltham Watch cost just $3.50. And by 1910, the company was selling as many as 18 million pocket watches per year.
Dennison’s success made pocket watches among the first of the many new consumer goods now being mass manufactured in the United States, and it made people from all backgrounds better able to manage their time.
But even then, there was another challenge for railroad workers. Even if two railroad workers, communicating over telegraph from dozens of miles away from each other, both had pocket watches – who’s time were you following? After all, it’s not like the time in Buffalo, NY, was the same as the time in New York City.
For most of history, the time of day was determined by the position of the sun in the sky. If you were travelling from east to west, the time would differ by about 4 minutes for every degree of longitude. This is why in community after community, you would see a community clock, usually overlooking the town or city in a big clock tower, ringing a bell for whatever time of day it was. So long as the community was all on the same time, that was enough. A visitor, travelling by horse, could look up when he arrived in town and know what time it was there.
But that was 100% untenable for the railroads. Locomotives moved east to west much faster than the sun did. For every hour you travelled by train, you’d need to adjust your watch by about 4 minutes. And let’s say you were travelling from New York to Chicago. You’d need travel over different railroads to get there. One railroad might say the time is 9:15 am, based on where their office was located, while another, further west, might say the time is 8:00 am sharp. Trying to figure out what connecting trains to catch was a nightmare. And as the railroads produced timetables for their customers, they became increasingly frustrated with the whole situation.
This problem had been around for a while by this point. A generation earlier, British railway companies had come together to address the issue. In 1847, they agreed to a single railway time, based on the official time at the Royal Observatory in Greenwich, on the outskirts of London. In 1880, this “Greenwich Mean Time” as it was called, or GMT, was further adopted as the official time across all Great Britain. Not long after, an international conference decided to make the degree of longitude at that observatory the Prime Meridian.
But the concept was not well received in America. One editorial in a Cincinnati newspaper went so far as to declare the idea “simply preposterous… Let the people of Cincinnati stick to the truth as it is written by the sun, moon, and stars.”
Part of the problem was the size of the United States. It was one thing for a Great Britain or France or Germany to adopt a single time. There wasn’t a massive difference between the local time in London to the local time in Cardiff. But by this point, the U.S. stretched “from sea to shining sea.” There were hours of difference between the local time in New York City and the local time in San Francisco. And with the Transcontinental Railroad complete, this wasn’t just a theoretical problem – it was a very real one.
Then, in 1870, the co-principal of a women’s college in upstate New York – Charles F. Dowd – came up with a solution. He wrote a pamphlet titled “A System of National Time for Railroads” in which he proposed splitting the country into four “hour sections” – or, as we call them today, time zones. He showed the pamphlet to some professors at Yale and West Point, who endorsed the idea, and then he shopped it around to railroad executives.
Except – with the Gould-Vanderbilt wars going on – this wasn’t an age of great cooperation between the country’s 500-some railroad companies. So, for years, Dowd wrote more and more on the subject as he travelled the country for meetings and to make speeches promoting his vision. It caught on internationally as well. Before the end of the decade, the Italian politician and mathematician Quirico Filopanti suggested the time zone concept be applied to the entire world. And the Canadian railroad engineer Sanford Fleming proposed these ideas be adopted for the railroads now spanning his country.
Finally, a railroad convention was held in St. Louis in 1883. The secretary of the convention – a travel magazine editor named William F. Allen – presented a map for five time zones across North America: The Intercolonial (now called “Atlantic”, covering the provinces of far-east Canada), Eastern, Central, Mountain, and Pacific. To make sure his plan was adopted, Allen did not simply layout these time zones by the neat, hourly lines of longitude – he drew them according to the zigzagged points of where the major railroads connected their lines.
It was enough to persuade the railroad executives attending the convention. They gave Allen nine months to convince the peoples of the two nations of its merits. After an exhausting letter-writing campaign to observatories and city councils across the continent, the time zones were officially adopted on November 18th that year. Exactly 9 minutes and 32 seconds after 12pm Chicago time, the Allegheny Observatory at the University of Pittsburgh set the new, official clock for standard time. At that point, they transmitted a telegraph signal for every railroad in the country to reset their clocks for 1pm Eastern, 12pm Central. It went down in Chicago history as the “Day of the Two Noons.”
The next year, GMT was adopted as the international standard, and the entire planet was divided into 24 time zones, with each country able to determine the time zone maps that made the most sense for them. (Interestingly, for example, China has decided to keep just one time zone, despite its vast width.) Canadian time zones then became official under the law, thanks to Britain’s 1880 Definition of Time Act. Standardized time zones were eventually adopted by the U.S. Congress in 1918.
But even the adoption of time zones was not the most important outcome of America’s railroad age. It was, rather, the incredible spread of commercial distribution which the railroads made possible.
---
With Chicago suddenly finding itself as perhaps the #1 convergence point for the American railroads, a new industry there quickly took off: meatpacking.
Cattle, hogs, and other livestock could be put on train cars in cities all over the Midwest and Great Plains. From there they would be transported to Chicago, where they would be slaughtered and processed for shipment across the region. As the Civil War dragged on, Chicago butchered hundreds of thousands of animals per year to supply the Union Army. The animals were kept in pens throughout the city until, in 1864, the Union Stock Yards were built in the marshes south of the city as a consolidated stockyard district, servicing nine different railroads.
The Union Stock Yards – or “The Yards” as they were better known – led to an explosion in Chicago’s meatpacking operations. A settlement for their new workforce sprang up around them and then everything down there was soon incorporated into the city. By 1870, the Yards were slaughtering two million animals per year. By the end of the century, it would be about 14 million per year.
But 80% of the country’s population still lived on the East Coast, way too far to get fresh beef brought in from Chicago. Therefore, much of the country’s cattle still needed to be transported closer to the butchers who could sell directly to customers. Fresh beef only has about a one-week shelf life, after all. Yet, rail-transported cattle often lost weight and/or got banged up and bruised along the way, leading to a degraded quality of beef.
So, what could you do? Well, you could extend the beef’s shelf life a bit if you could keep it cold. In 1868, Chicago pork producer Benjamin Hutchinson built a new packing plant that included cooling rooms filled with ice. In these rooms, the workers could pack pork all year long. The idea soon spread to other plants. Milk producers were similarly using ice to transport their product, packing the ice on the walls of freight cars. But when an Indiana butcher named George Hammond tried this for his beef in 1869, the results were disappointing. The beef frequently spoiled in the summertime and sometimes in the winter too. He couldn’t get enough ice on the cars and much of the ice he did get on melted in transit.
Then, in 1875, a New England butcher relocated to Chicago. Within the next ten years, he completely revolutionized the American beef industry.
Gustavus Franklin Swift was born to a livestock farming family on Cape Cod, Massachusetts, in 1839. As a teenager he went to work at his brother’s butcher shop and gradually learned the cattle-buying trade. He opened his own butcher shop in 1862 and then formed a partnership with another butcher from Boston ten years later.
But they seemed to have difficulty deciding where to locate the business. They left Massachusetts for Albany, then relocated to Buffalo, and finally for that sprawling meatpacking hub, Chicago – at The Yards. Swift began to make a name for himself as a shrewd cattle trader and beef producer.
He would seal his legacy in 1878, when he hired an engineer to build for him a new refrigerated train car. Ice would be placed in storage bins above the meat. At various stops, workers could replace the ice without disturbing the meat, keeping it cold throughout the journey. Furthermore, a mechanical forced-air circulation system was added to the design, helping regulate the temperature of the meat.
The prototype was used to transport beef from Swift’s plant in the Yards to his brother’s butcher shop in Boston, and it succeeded beyond expectations. The beef that arrived was of high quality and sold with high profits.
The railroads, though, weren’t especially interested in losing the cattle traffic business. So, Swift gathered as much capital as he could and invested in building ten more cars. A Canadian railroad agreed to carry them on behalf of his new business, The Swift Packaging Company. It shipped cold beef to the east coast, and from there, to New England and Mid-Atlantic. This “Western Beef” was so much better than most of what East-Coasters could enjoy that eventually the American railroads had to give in. The business, soon incorporated as Swift and Co., took off as one of the Yards’ leading meat producers.
The idea was quickly adopted by competitor Philip Armour, a New Yorker who had thrived as a butcher in California during the Gold Rush. He set up regional meat-finishing centers across the country to cut out as many retailers as possible. Swift would push for his own vertical integration as well. Their two companies, along with a couple others, completely dominated the meatpacking industry by the end of the century. And by then, it had become the nation’s biggest industry, with about $1 billion in annual sales. Though it took a while to convince consumers it was now safe to eat beef processed a thousand miles away, beef consumption was gradually becoming tied to the American identity itself.
At one point, Armour even provided retail of his meat products right off the train cars. He saw the incredible power of the direct-to-consumer distribution the railroads could offer. And he wasn’t alone.
In the mid-1860s, a New Jersey-born travelling salesman name Aaron Montgomery Ward worked for a number of different dry goods stores in Chicago. His job was to act as a wholesale distributor and travel out to rural communities to hock his employers’ goods to local retailers. But time after time, he found dissatisfied local customers. The selections at their general stores were limited and overpriced. The customers felt taken advantage of, especially when they knew how city folk had an ever-growing selection of affordable goods to choose from.
Ultimately, these customers faced two problems: (1) Getting the goods from wholesalers to retailers meant bulk purchases transported by rail and often horse-drawn rigs too – this created a lot of risk for all involved and, thus, both limited the selection and drove up the price; and (2) There was usually only one retailer in town. If you were the only person in town who wanted a particular good, then the general store owner had limited incentive to stock it. And, since that owner had no local market competition, he could set whatever prices he wanted.
That’s when Ward came up with an idea to solve both problems: Give the customers a mail-order catalogue.
Now, the idea of mail-order catalogues had been around for some time, but they were mostly for luxury items and targeted toward wealthy customers. But, with the expansion of rail-driven postal services in the 19th Century, that was starting to change. In 1861, a Welshman named Pryce Pryce-Jones had started one for woolen products back in Great Britain. He soon had tens – and in time, hundreds – of thousands of customers.
Ward began this new business in 1872, but from the start, he faced immense challenges – he struggled to enlist investors and his initial stock of inventory went up in flames during the Great Chicago Fire. But he was getting sales and, in 1874, he expanded the catalogue from a simple, 1-page product list to an 8-page booklet with pictures of the goods. A decade later, it had grown to 240 pages, selling over 10,000 different products. And, because the catalogue itself was free to get, customers were happy to look through it. (This practice of remote retailing is, of course, the precursor to how we shop online today.)
Montgomery Ward and Company was the leading mail-order catalogue outfit of the 19th Century. But by the end of that century, it was being outmatched by an aggressive competitor – a start-up founded by a former railroad employee who came to the retail business by chance, when he found himself in the middle of a dispute over a shipment of pocket watches.
Richard Warren Sears was born to a frontier family in Stewartville, Minnesota in 1863. His father, a blacksmith and wagon-maker, lost everything when he invested in a failed stock-farm venture. Richard, still a teenager, had to enter the workforce. He moved to a town near the Twin Cities, where he got a job as a telegraph operator for the Minneapolis & St. Louis Railway. He was later promoted to Station Agent for the railroad in the tiny town of Redwood Falls.
It was there where, in 1886, a jeweler refused a shipment of gold watches. A wholesaler had shipped them to the jeweler without the jeweler ordering them, hoping the guy would go ahead and sell the watches on consignment, since the consignment fee was less than the cost of shipping them back. The jeweler refused to take the watches, but also refused to ship them back. And so, with this box of watches sitting in his station, the 23-year-old Sears decided he would buy them for a very low price and sell them to railroad customers for a very low price as a side hustle. Pocket watches, after all, had long been considered a symbol of success. And now that they were so affordable, lots of ordinary folks wanted them.
By the time he had sold them all, Sears had reaped an incredible $5,000 in profits, and decided to use the proceeds to start a business. Like Ward, he would use the postal service – now booming across the upper-Midwest, thanks to the railroads – to sell watches to a rural consumer base via mail-order. He also started placing ads in local newspapers across the region, targeting farming communities. The next year he moved his business to Chicago, where he partnered with a watch repairman named Alvah Curtis Roebuck and began publishing his own catalogue.
Like Montgomery Ward, Sears, Roebuck and Company would go on to sell much more than watches, bringing in millions in revenue by the turn of the century. Tools, clothing, medical equipment, musical instruments, furniture – at one point, even entire houses – could be ordered through the catalogue and shipped to virtually any settlement in the country. Using intense advertising in the catalogue, Sears promised the lowest prices for the best quality products, and he ushered in (what turned out to be) an extraordinary new age of consumerism – next time, on the Industrial Revolutions!
---
Once again, Spotify listeners, please be sure to rate the Industrial Revolutions on your app. Or, if you listen on Apple Podcasts, please rate the Industrial Revolutions and leave a short review. This is an easy way you can help the podcast get new listeners and keep it going. Thank you!