Chapter XVIII: Fifty-Six Years with the New York Central Railroad Company

Heredity has much to do with a man's career. The village of Peekskill-on-the-Hudson, about forty miles from New York, was in the early days the market-town of a large section of the surrounding country, extending over to the State of Connecticut. It was a farming region, and its products destined for New York City were shipped by sloops on the Hudson from the wharfs at Peekskill, and the return voyage brought back the merchandise required by the country.

My father and his brother owned the majority of the sloops engaged in this, at that time, almost the only transportation. The sloops were succeeded by steamboats in which my people were also interested. When Commodore Vanderbilt entered into active rivalry with the other steamboat lines between New York and Albany, the competition became very serious. Newer and faster boats were rapidly built. These racers would reach the Bay of Peekskill in the late afternoon, and the younger population of the village would be on the banks of the river, enthusiastically applauding their favorites. Among well-known boats whose names and achievements excited as much interest and aroused as much partisanship and sporting spirit as do now famous race-horses or baseball champions, were the following: Mary Powell, Dean Richmond, The Alida, and The Hendrick Hudson.

I remember as if it were yesterday when the Hudson River Railroad had reached Peekskill, and the event was locally celebrated. The people came in as to a county fair from fifty miles around. When the locomotive steamed into the station many of those present had never seen one. The engineer was continuously blowing his whistle to emphasize the great event. This produced much consternation and confusion among the horses, as all farmers were there with their families in carriages or wagons.

I recall one team of young horses which were driven to frenzy; their owner was unable to control them, but he kept them on the road while they ran away with a wild dash over the hills. In telling this story, as illustrating how recent is railway development in the United States, at a dinner abroad, I stated that as far as I knew and believed, those horses were so frightened that they could not be stopped and were still running. A very successful and serious-minded captain of industry among the guests sternly rebuked me by saying: "Sir, that is impossible; horses were never born that could run for twenty-five years without stopping." American exaggeration was not so well known among our friends on the other side then as it is now.

As we boys of the village were gathered on the banks of the Hudson cheering our favorite steamers, or watching with eager interest the movements of the trains, a frequent discussion would be about our ambitions in life. Every young fellow would state a dream which he hoped but never expected to be realized. I was charged by my companions with having the greatest imagination and with painting more pictures in the skies than any of them. This was because I stated that in politics, for I was a great admirer of William H. Seward, then senator from New York, I expected to be a United States senator, and in business, because then the largest figure in the business world was Commodore Vanderbilt, I hoped to become president of the Hudson River Railroad. It is one of the strangest incidents of what seemed the wild imaginings of a village boy that in the course of long years both these expectations were realized.

When I entered the service of the railroad on the first of January, 1866, the Vanderbilt system consisted of the Hudson River and Harlem Railroads, the Harlem ending at Chatham, 128 miles, and the Hudson River at Albany, 140 miles long. The Vanderbilt system now covers 20,000 miles. The total railway mileage of the whole United States at that time was 36,000, and now it is 261,000 miles.

My connection with the New York Central Railroad covers practically the whole period of railway construction, expansion, and development in the United States. It is a singular evidence of the rapidity of our country's growth and of the way which that growth has steadily followed the rails, that all this development of States, of villages growing into cities, of scattered communities becoming great manufacturing centres, of an internal commerce reaching proportions where it has greater volume than the foreign interchanges of the whole world, has come about during a period covered by the official career of a railroad man who is still in the service: an attorney in 1866, a vice-president in 1882, president in 1885, chairman of the board of directors in 1899, and still holds that office.

There is no such record in the country for continuous service with one company, which during the whole period has been controlled by one family. This service of more than half a century has been in every way satisfactory. It is a pleasure to see the fourth generation, inheriting the ability of the father, grandfather, and great-grandfather, still active in the management.

I want to say that in thus linking my long relationship with the railroads to this marvellous development, I do not claim to have been better than the railway officers who during this time have performed their duties to the best of their ability. I wish also to pay tribute to the men of original genius, of vision and daring, to whom so much is due in the expansion and improvement of the American railway systems.

Commodore Vanderbilt was one of the most remarkable men our country has produced. He was endowed with wonderful foresight, grasp of difficult situations, ability to see opportunities before others, to solve serious problems, and the courage of his convictions. He had little education or early advantages, but was eminently successful in everything he undertook. As a boy on Staten Island he foresaw that upon transportation depended the settlement, growth, and prosperity of this nation. He began with a small boat running across the harbor from Staten Island to New York. Very early in his career he acquired a steamboat and in a few years was master of Long Island Sound. He then extended his operations to the Hudson River and speedily acquired the dominating ownership in boats competing between New York and Albany.

When gold was discovered in California he started a line on the Atlantic side of the Isthmus of Darien and secured from the government of Nicaragua the privilege of crossing the Isthmus for a transportation system through its territory, and then established a line of steamers on the Pacific to San Francisco. In a short time the old-established lines, both on the Atlantic and the Pacific, were compelled to sell out to him. Then he entered the transatlantic trade, with steamers to Europe.

With that vision which is a gift and cannot be accounted for, he decided that the transportation work of the future was on land and in railroads. He abandoned the sea, and his first enterprise was the purchase of the New York and Harlem Railroad, which was only one hundred and twenty-eight miles long. The road was bankrupt and its road-bed and equipment going from bad to worse. The commodore reconstructed the line, re-equipped it, and by making it serviceable to its territory increased its traffic and turned its business from deficiency into profit. This was in 1864. The commodore became president, and his son, William H. Vanderbilt, vice-president. He saw that the extension of the Harlem was not advisable, and so secured the Hudson River Railroad, running from New York to Albany, and became its president in 1865. It was a few months after this when he and his son invited me to become a member of their staff.

The station of the Harlem Railroad in the city of New York was at that time at Fourth Avenue and Twenty-sixth Street, and that of the Hudson River Railroad at Chambers Street, near the North River.

In a few years William H. Vanderbilt purchased the ground for the Harlem Railroad Company, where is now located the Grand Central Terminal, and by the acquisition by the New York Central and Hudson River Railroad of the Harlem Railroad the trains of the New York Central were brought around into the Grand Central Station.

In 1867, two years after Mr. Vanderbilt had acquired the Hudson River Railroad, he secured the control of the New York Central, which ran from Albany to Buffalo. This control was continued through the Lake Shore on one side of the lakes and the Michigan Central on the other to Chicago. Subsequently the Vanderbilt System was extended to Cincinnati and St. Louis. It was thus in immediate connection with the West and Northwest centering in Chicago, and the Southwest at Cincinnati and St. Louis. By close connection and affiliation with the Chicago and Northwestern Railway Company, the Vanderbilt system was extended beyond to Mississippi. I became director in the New York Central in 1874 and in the Chicago and Northwestern in 1877.

It has been my good fortune to meet with more or less intimacy many of the remarkable men in every department of life, but I think Commodore Vanderbilt was the most original. I had been well acquainted for some years both with the commodore and his son, William H. When I became attorney my relations were more intimate than those usually existing. I was in daily consultation with the commodore during the ten years prior to his death, and with his son from 1866 to 1885, when he died.

The commodore was constantly, because of his wealth and power, importuned by people who wished to interest him in their schemes. Most of the great and progressive enterprises of his time were presented to him. He would listen patiently, ask a few questions, and in a short time grasp the whole subject. Then with wonderful quickness and unerring judgment he would render his decision. No one knew by what process he arrived at these conclusions. They seemed to be the results as much of inspiration as of insight.

The Civil War closed in 1865, and one of its lessons had been the necessity for more railroads. The country had discovered that without transportation its vast and fertile territories could neither be populated nor made productive. Every mile of railroad carried settlers, opened farms and increased the national resources and wealth. The economical and critical conditions of the country, owing to the expansion of the currency and banking conditions, facilitated and encouraged vast schemes of railroad construction. This and a wild speculation resulted in the panic of 1873. Nearly the whole country went bankrupt. The recovery was rapid, and the constructive talent of the Republic saw that the restoration of credit and prosperity must be led by railway solvency. In August, 1874, Commodore Vanderbilt invited the representatives of the other and competitive lines to a conference at Saratoga. Owing, however, to the jealousies and hostilities of the period, only the New York Central, the Pennsylvania, and the Erie railways were represented.

The eastern railway situation was then dominated by Commodore Vanderbilt, Colonel Thomas A. Scott, of the Pennsylvania, and John W. Garrett, of the Baltimore and Ohio. Both Scott and Garrett were original men and empire builders. There was neither governmental nor State regulation. The head of a railway system had practically unlimited power in the operation of his road. The people were so anxious for the construction of railways that they offered every possible inducement to capital. The result was a great deal of unprofitable construction and immense losses to the promoters.

These able men saw that there was no possibility of railway construction, operation, and efficiency, with a continuance of unrestricted competition. It has taken from 1874 until 1920 to educate the railway men, the shippers, and the government to a realization of the fact that transportation facilities required for the public necessities can only be had by the freest operations and the strictest government regulations; that the solution of the problem is a system so automatic that public arbitration shall decide the justice of the demands of labor, and rates be advanced to meet the decision, and that public authority also shall take into consideration the other factors of increased expenses and adequate facilities for the railroads, and that maintenance and the highest efficiency must be preserved and also necessary extensions. To satisfy and attract capital there must be the assurance of a reasonable return upon the investment.

The meeting called by Commodore Vanderbilt in 1874, at Saratoga, was an epoch-making event. We must remember the railway management of the country was in the absolute control of about four men, two of whom were also largest owners of the lines they managed. Fierce competition and cutting of rates brought on utter demoralization among shippers, who could not calculate on the cost of transportation, and great favoritism to localities and individuals by irresponsible freight agents who controlled the rates. Under these influences railway earnings were fluctuating and uncertain. Improvements were delayed and the people on the weaker lines threatened with bankruptcy.

Public opinion, however, believed this wild competition to be the only remedy for admitted railway evils. As an illustration of the change of public opinion and the better understanding of the railway problems, this occurred in the month of October, 1920. A committee of shippers and producers representing the farmers, manufacturers, and business men along a great railway system came to see the manager of the railroad and said to him: "We have been all wrong in the past. Our effort has always been for lower rates, regardless of the necessities of the railways. We have tried to get them by seeking bids from competing lines for our shipments and by appealing to the Interstate Commerce Commission. The expenses of the railroads have been increased by demands of labor, by constantly rising prices and cost of rails, cars, terminals, and facilities, but we have been against allowing the railroads to meet this increased cost of operation by adequate advances in rates. We now see that this course was starving the railroads, and we are suffering for want of cars and locomotives to move our traffic and terminals to care for it. We are also suffering because the old treatment of the railroads has frightened capital so that the roads cannot get money to maintain their lines and make necessary improvements to meet the demands of business. We know now that rates make very little difference, because they can be absorbed in our business. What we must have is facilities to transport our products, and we want to help the railroads to get money and credit, and again we emphasize our whole trouble is want of cars, locomotives, and terminal facilities."

Happily, public opinion was reflected in the last Congress in the passage of the Cummins-Esch bill, which is the most enlightened and adaptable legislation of the last quarter of a century.

To return to the conference at Saratoga, the New York Central, the Pennsylvania, and the Erie came to the conclusion that they must have the co-operation of the Baltimore and Ohio. As Mr. Garrett, president and controlling owner of that road, would not come to the conference, the members decided that the emergency was so great that they must go to him. This was probably the most disagreeable thing Commodore Vanderbilt ever did. The marvellous success of his wonderful life had been won by fighting and defeating competitors. The peril was so great that they went as associates, and the visit interested the whole country and so enlarged Mr. Garrett's opinion of his power that he rejected their offer and said he would act independently. A railway war immediately followed, and in a short time bankruptcy threatened all lines, and none more than the Baltimore and Ohio.

The trunk lines then got together and entered into an agreement to stabilize rates and carry them into effect. They appointed as commissioner Mr. Albert Fink, one of the ablest railway men of that time. Mr. Fink's administration was successful, but the rivalries and jealousies of the lines and the frequent breaking of agreements were too much for one man.

The presidents and general managers of all the railroads east of Chicago then met and formed an association, and this association was a legislative body without any legal authority to enforce its decrees. It had, however, two effects: the disputes which arose were publicly discussed, and the merits of each side so completely demonstrated that the decision of the association came to be accepted as just and right. Then the verdict of the association had behind it the whole investment and banking community and the press. The weight of this was sufficient to compel obedience to its decisions by the most rebellious member. No executive could continue to hold his position while endeavoring to break up the association.

It is one of the most gratifying events of my life that my associates in this great and powerful association elected me their president, and I continued in office until the Supreme Court in a momentous decision declared that the railroads came under the provision of the Sherman Anti-Trust Law and dissolved these associations in the East, West, and South.

It was a liberal education of the railway problems to meet the men who became members of this association. Most of them left an indelible impression upon the railway conditions of the time and of the railway policies of the future. All were executives of great ability and several rare constructive geniuses.

In our system there was John Newell, president of the Lake Shore and Michigan Southern, a most capable and efficient manager. Henry B. Ledyard, president of the Michigan Central, was admirably trained for the great responsibilities which he administered so well. There was William Bliss, president of the Boston and Albany, who had built up a line to be one of the strongest of the New England group.

Melville E. Ingalls, president of the Cleveland, Cincinnati, Chicago and St. Louis, had combined various weak and bankrupt roads and made them an efficient organization. He had also rehabilitated and put in useful working and paying condition the Chesapeake and Ohio.

Ingalls told me a very good story of himself. He had left the village in Maine, where he was born, and after graduation from college and admission to the bar had settled in Boston. To protect the interests of his clients he had moved to Cincinnati, Ohio, and rescued railroad properties in which they were interested. When his success was complete and he had under his control a large and successfully working railway system, he made a visit to his birthplace.

One evening he went down to the store where the village congress was assembled, sitting on the barrels and the counter. They welcomed him very cordially, and then an inquisitive farmer said to him: "Melville, it is reported around here that you are getting a salary of nigh unto ten thousand dollars a year."

Mr. Ingalls, who was getting several times that amount, modestly admitted the ten, which was a prodigious sum in that rural neighborhood. Whereupon the old farmer voiced the local sentiment by saying: "Well, Melville that shows what cheek and circumstances can do for a man."

I recall an incident connected with one of the ablest of the executives in our system. One day we had a conference of rival interests, and many executives were there in the effort to secure an adjustment. For this purpose we had an arbitrator. After a most exhausting day in the battle of wits and experience for advantages, I arrived home used up, but after a half-hour's sleep I awoke refreshed and, consulting my diary, found I was down for a speech at a banquet at Delmonico's that night.

I arrived late, the intervening time being devoted to intensive and rapid preparation. I was called early. The speech attracted attention and occupied a column in the morning's papers. I was in bed at eleven o'clock and had between seven and eight hours' refreshing sleep.

On arriving at our meeting-place the next morning, one of the best-known presidents took me aside and said: "Chauncey, by making speeches such as you did last night you are losing the confidence of the people. They say you cannot prepare such speeches and give proper attention to your business."

"Well," I said to him, "my friend, did I lose anything before the arbitrator yesterday?"

He answered very angrily: "No, you gained entirely too much."

"Well," I then said, "I am very fresh this morning. But what did you do last night?"

He answered that he was so exhausted that he went to Delmonico's and ordered the best dinner possible. Then he went on to say: "A friend told me a little game was going on up-stairs, and in a close room filled with tobacco smoke I played poker until two o'clock and drank several high-balls. The result is, I think we better postpone this meeting, for I do not feel like doing anything to-day."

"My dear friend," I said, "you will get the credit of giving your whole time to business, while I am by doing what refreshes my mind discredited, because it gets in the papers. I shall keep my method regardless of consequences."

He kept his, and although much younger than myself died years ago.

George B. Roberts, president of the Pennsylvania, was a very wise executive and of all-around ability. Frank Thompson, vice-president and afterwards president of the same road, was one of the ablest operating officers of his time and a most delightful personality. Mr. A. J. Cassatt was a great engineer and possessed rare foresight and vision. He brought the Pennsylvania into New York City through a tunnel under the Hudson River, continued the tunnel across the city to the East River and then under the river to connect with the Long Island, which he had acquired for his system.