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James J. Hill and the day the railroads roiled Wall Street

“When you think of all the wealth that he created and multiplied in this state, it’s surprising that he’s been forgotten.”

JJ hill
Courtesy of the Minnesota Historical Society
James J. Hill, photographed by Henry Havelock Pierce
in 1916.

James J. Hill was responsible, perhaps more than any other one person, for the rise of Minnesota industry and agriculture, and its lasting international impact. His robust railroad empire drew the state’s arterial maps, and even influenced the layout of the city of St. Paul. He was a brilliant businessman and dazzling intellectual, a self-taught scholar with a grade-school education whose work gave rise for a better way of life for thousands of people in the early years of Minnesota statehood. Yet he has been largely forgotten.

“I think in Minnesota we tend to be ambivalent about our business leaders,” says Larry Haeg, author of “Harriman vs. Hill: Wall Street’s Great Railroad War” (University of Minnesota Press), the first new book in 37 years about the man whose Great Northern Railroad linked Minnesota and Wisconsin to the West and helped facilitate the country’s westward expansion.

“I continue to be amazed by the number of younger people I meet who have never even heard of him, despite everything he did,” Haeg said in an interview. “We don’t have a single monument to him in the state, aside from the mansion [the James J. Hill House on Summit Avenue, run by the Minnesota Historical Society] and the railroad he built [known today as BNSF]. When you think of all the wealth that he created and multiplied in this state, it’s surprising that he’s been forgotten.”

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Haeg has spent much of the past decade immersed in the world of Hill and his contemporaries. A former news writer for WCCO Radio who spent the bulk of his career in corporate communications, Haeg now writes about history. His first book, “In Gatsby’s Shadow: The Story of Charles Macomb Flandrau” (University of Iowa Press) followed the path of a talented St. Paul writer who powerfully influenced F. Scott Fitzgerald. If Haeg had lived a century earlier, he might have crossed paths with Flandrau or Hill; all three called the same St. Paul neighborhood home.

As he began his second book, Haeg intended to write a character study of Hill and the businessmen known as the “robber barons.” As he advanced in his research, however, he found the true test of their character came during what is known today as the Northern Pacific Corner, a four-day run on the railroad company’s stock that roiled Wall Street and set off the country’s first stock market panic.

book cover

Hill and a competitor, Edward Harriman, head of the Union Pacific line, both sought to buy the Chicago, Burlington and Quincy line, a smaller railroad that would link them to important markets in Chicago. Hill came up with the high purchase price that Harriman wouldn’t meet, but Harriman, in a dramatic ploy, attempted to gain control from within by purchasing a majority share of the Northern Pacific line’s stock. During the raid, shares of Northern Pacific shot from $110 to $1,000 a share, and cornered the stock. The flamboyant financier J.P. Morgan, who owned a significant portion of the remaining stock, joined forces with Hill to fend off Harriman, and eventually a truce was called through the formation of a massive railroad holding company. But the damage to the market was significant, and impacted the way Americans viewed the stock market.

“You have to remember, in 1901, the United States was in the midst of a huge boom and expansion. Average people were becoming wealthy quickly. Oil was discovered in Texas. It was a heady time for America. Investors began to assume the market could do nothing but go up. And then this thing happens,” said Haeg.

“The Northwest Corner was the first real stock market panic. It helped burst that bubble. Small investors got burned and almost overnight, the faith in the U.S. economy was shattered. The storm cloud passed quickly but it left doubts about the stability of the markets and it left one very important lesson: There’s a very fine line between being an investor and being a speculator.”

Haeg spent three months holed up in the Wilson Library at the University of Minnesota reading every issue of the Wall Street Journal from January to June 1901. “It was essentially a newsletter about the railroads. But it also helped me put myself in that time period. I knew what events were impacting the business, and followed the stock volume and movement, and read what people were saying. It was a very different business climate back then — there was very little government oversight over business or Wall Street. There was no requirement that you had to disclose anything to your stockholders and no requirement that you had to disclose who your stockholders were. These events helped change all that.”

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Haeg realized that he could best test the characters of Hill and his contemporaries by observing how they handled the crisis of the Northern Pacific Corner. In this fast-paced, highly readable social history, he examines Harriman, Hill, Morgan, Jacob Schiff, J.D. Rockefeller, Robert Bacon, and other key players of the day, and follows the deal through to its aftermath — Theodore Roosevelt’s breakup of the trust.

“It’s fascinating to see how each man behaved in the situation,” said Haeg. “They were portrayed very unfavorably, but these were not evil people. They were incredibly smart, resourceful, hardworking people who didn’t waste much time. And they were right for their day. Hill was a difficult personality — he had a violent temper and demanded a great deal from his employees. He was not a people person, he never asked for favors. He did it all himself, that’s what it took. He wouldn’t survive as a CEO of a Fortune 500 company today. But what he was able to accomplish is just phenomenal. He was an amazing person.”


  • Oct. 3, 7 p.m. Book launch at Common Good Books, St. Paul
  • Oct. 9, 7 p.m. at The Bookcase, Wayzata
  • Nov. 21, 7 p.m. at SubText, St. Paul