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Michael Malone

James J. Hill: Empire Builder

Summary

Jim Hill was one of the great railroad tycoons, founding and expanding what eventually became the Great Northern, today the Burlington Northern. His incredible persistence, competitiveness and focus on quality infrastructure and lowest cost per ton helped him dominate his competitors and amass one of the great fortunes in American history.

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Key Takeaways
  1. Hill came from a modest Canadian background
  2. Began his railroad career with a regional carrier in Minnesota but his ambition soon compelled him to create a trans-pacific railway
  3. Was a tireless worker, often working himself to ill health
  4. Could not delegate and was a taskmaster
  5. Continually aimed to plow earnings back into improving the railroad infrastructure and besting the regional competition
  6. Had a different strategy than the other railroads - he built slower but it was all quality, at lower cost by finding the easiest route (which allowed him to charge lower prices), well capitalized (allowing him to fare better than his competitors during economic downturns)
  7. Was able to tap into new markets and add new tonnages to his trains (lumber industry in NW became a huge source of profits)
  8. By 1900, Hill had become one of the wealthiest and most powerful men in America
  9. Hill eventually started using his influence through politics and newspapers but his business was always his main concern
  10. Great Northern (GN) soon started venturing into the maritime world on the Pacific and mining of iron ore in Minnesota. Hill was ahead of his time in seeing the potential opportunities Japan and China offered and the iron ore ranges near Lake Superior eventually supplied 2/3 of America's mined iron ore (booming with the steel industry)
  11. 2 major competitors were the Canadian Pacific Railway and the Northern Pacific Railway
  12. During the 1893 downturn, Hill worked with Morgan to acquire Northern Pacific (NP). Due to monopoly regulations, it wasn't acquired but the railroads worked together to improve business and decrease competition. Eventually, Morgan came to accept the inevitable and respected Hill so much he made him head of NP
  13. Like anybody else, Hill owed as much of his success to luck, timing and chance as his aggression and self confidence
  14. Hill was blind to the threat of automobiles and asphalt roads on his railroad business
  15. Towards the end of his career Hill's arch rival was Edward Harriman, one of America's most prominent businessmen but somewhat obscure because of his shady business practices
  16. In 1901, Morgan and Hill were able to convince Burlington to be acquired and were able to add another important leg to their empire
  17. Soon after, after nearly losing control of Northern, Hill and Morgan formed a holdings company, Northern Securities Company, so that takeover attempts would be nearly impossible. A couple years later, the Supreme Court would deem that it violated the Sherman Anti Trust Act and the GN, NP, Chicago, Burlington and Quincy would be merged into Burlington Northern instead of into the Northern Securities Company
  18. Teddy Roosevelt played a large role in this time in breaking up some of the super corporations (monopolies) such as Standard Oil and American Tobacco
  19. Hill had major success with iron ore and lumber in Washington but was frustrated by his maritime venture to Japan
  20. Biggest passion besides railroads was agriculture and helped with research and land grants in order to make the mid west and pacific northwest some of the most productive agricultural lands in the country
  21. Hill turned towards philanthropy towards the end of his life
  22. Died of blood poisoning and at the time of his death every train on the Hill lines stopped for five minutes to pay their respects
  23. Hill's influence on his lines lasted well into the 1950s with his sons and Ralph Budd leading the company. They experienced more frustration than Hill had due to wartime regulation and reprivitization of the railroads
  24. Hill was described as having "a sort of lunar dualism" - positive traits were quite remarkable (quick intelligence, analysis, power of will and personality, unparalleled work ethic and commitment) and negative attributes were mirror images of the positive (extreme irascibility which often turned to rage, willfulness that could turn to ruthlessness, cold manipulativeness used on politicians and others and a preoccupation with purpose at hand that he sometimes lost sight of the broader perspective)
What I got out of it
  1. Incredible story of persistence, business acumen, strategy and boldness in creating one of the more dominant railroad lines in US History, the Great Northern (today Burlington Northern Santa Fe owned by Warren Buffett). Along with his incredible work ethic and determination, Hill was manipulative, irascible and ruthless but overall did incredible things and perhaps no other man has had as much of an impact on the Midwest and pacific northwest as Hill has had.

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