The Man Who Found the Money: John Stewart Kennedy and the Financing of the Western Railroads

The Man Who Found the Money: John Stewart Kennedy and the Financing of the Western Railroads

The Man Who Found the Money: John Stewart Kennedy and the Financing of the Western Railroads

The Man Who Found the Money: John Stewart Kennedy and the Financing of the Western Railroads

Synopsis

The Man Who Found the Money is a critical biography of John Stewart Kennedy, an "Eastern" banker, whose contributions to railroad development are often left unmentioned in the writing of American railroad history. John Stewart Kennedy (1830-1909), a Scots immigrant and entrepreneur, was a pioneer in this building boom. His rise to prosperity occurred because of his ability to mobilize the capital; in the end he helped create railroads that still form part of the backbone of America's transportation network. By the time he was thirty-eight, Kennedy had formed his own banking company and had taken advantage of the booming economy. In the years to follow, Kennedy carved out an impressive niche in the world of railroad finance. His dual role as commission merchant and private banker provided him with information, contacts, prestige, and an uncanny sense of timing which allowed him to raise new capital while attracting investors into new ventures. Through his contributions, several railroads were reorganized and,transformed into the more prominent lines still in use today. Later in his life, after he retired from banking and finance, Kennedy devoted his time and money to charity and civic activity. At his death in 1909, a large portion of his immense fortune was distributed to a wide range of charities and philanthropies.

Excerpt

The railroad building that began in the 1830s with a few tiny lines around the major Eastern seaport cities evolved into major expansion by 1848.

Until the Civil War intervened, railroads built more than a thousand miles of track annually, and more than two thousand in some years; this peaked above three thousand in 1854. in the 1850s, a phenomenal 20,000 miles of track were laid throughout the country, primarily in the South, the Old Northwest, and just across the Mississippi. By then, the Atlantic seaboard had been connected to the Great Lakes and the Ohio River by the Erie, the Pennsylvania, the New York Central, and the Baltimore & Ohio, the great Eastern trunk lines which ultimately controlled this vast territory. in 1847, Chicago had not a single mile of track; by 1860, it had eleven railroads, and was both the national rail center and the fastest growing American city. All this entailed a massive mobilization of private capital by American and British bankers to buy securities and tie lines into east-west through routes which, in turn, gradually sprouted north-south feeders. Consider the result: by 1860, railroad trackage stood at some 30,000 miles, while investment reached about $1 billion, a remarkable figure for the day.

Building intensified after the Civil War. Soon the northern Great Plains were traversed by a handful of powerful lines: the Union Pacific, the Northern Pacific, the Great Northern and the Chicago, Milwaukee & St. Paul. Inevitably, they drove on to the Pacific. the 1880s surpassed other decades in mileage built, and the railroad network was essentially completed by 1890, when capitalization had climbed to $10 billion -- though much additional track was built until 1914.

By the 1850s, it was clear that this great transportation revolution required far, far more capital than the sums needed for the new textile mills and iron works that already were transforming economic life. By then, the pattern of railroad finance had been established in Boston, New York and Philadelphia. Capital would have to be mobilized on a grand scale, from investors whose financial horizons barely had exceeded their own vicinity, and who therefore . . .

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