OUR business continued to expand and required frequent visits on my part to the East, especially to New York, which is as London to Britain—the headquarters of all really important enterprises in America. No large concern could very well get on without being represented there. My brother and Mr. Phipps had full grasp of the business at Pittsburgh. My field appeared to be to direct the general policy of the companies and negotiate the important contracts.

My brother had been so fortunate as to marry Miss Lucy Coleman, daughter of one of our most valued partners and friends. Our family residence at Homewood was given over to him, and I was once more compelled to break old associations and leave Pittsburgh in 1867 to take up my residence in New York. The change was hard enough for me, but much harder for my mother; but she was still in the prime of life and we could be happy anywhere so long as we were together. Still she did feel the leaving of our home very much. We were perfect strangers in New York, and at first took up our quarters in the St. Nicholas Hotel, then in its glory. I opened an office in Broad Street.

For some time the Pittsburgh friends who came to New York were our chief source of happiness, and the Pittsburgh papers seemed necessary to our existence. I made frequent visits there and my mother often accompanied me, so that our connection with the old home was still maintained. But after a time new friendships were formed and new interests awakened and New York began to be called home. When the proprietors of the St. Nicholas opened the Windsor Hotel uptown, we took up our residence there and up to the year 1887 that was our New York home. Mr. Hawk, the proprietor, became one of our valued friends and his nephew and namesake still remains so.

Among the educative influences from which I derived great advantage in New York, none ranks higher than the Nineteenth Century Club organized by Mr. and Mrs. Courtlandt Palmer. The club met at their house once a month for the discussion of various topics and soon attracted many able men and women. It was to Madame Botta I owed my election to membership—a remarkable woman, wife of Professor Botta, whose drawing-room became more of a salon than any in the city, if indeed it were not the only one resembling a salon at that time. I was honored by an invitation one day to dine at the Bottas' and there met for the first time several distinguished people, among them one who became my lifelong friend and wise counselor, Andrew D. White, then president of Cornell University, afterwards Ambassador to Russia and Germany, and our chief delegate to the Hague Conference.

Here in the Nineteenth Century Club was an arena, indeed. Able men and women discussed the leading topics of the day in due form, addressing the audience one after another. The gatherings soon became too large for a private room. The monthly meetings were then held in the American Art Galleries. I remember the first evening I took part as one of the speakers the subject was "The Aristocracy of the Dollar." Colonel Thomas Wentworth Higginson was the first speaker. This was my introduction to a New York audience. Thereafter I spoke now and then. It was excellent training, for one had to read and study for each appearance.

I had lived long enough in Pittsburgh to acquire the manufacturing, as distinguished from the speculative, spirit. My knowledge of affairs, derived from my position as telegraph operator, had enabled me to know the few Pittsburgh men or firms which then had dealings upon the New York Stock Exchange, and I watched their careers with deep interest. To me their operations seemed simply a species of gambling. I did not then know that the credit of all these men or firms was seriously impaired by the knowledge (which it is almost impossible to conceal) that they were given to speculation. But the firms were then so few that I could have counted them on the fingers of one hand. The Oil and Stock Exchanges in Pittsburgh had not as yet been founded and brokers' offices with wires in connection with the stock exchanges of the East were unnecessary. Pittsburgh was emphatically a manufacturing town.

I was surprised to find how very different was the state of affairs in New York. There were few even of the business men who had not their ventures in Wall Street to a greater or less extent. I was besieged with inquiries from all quarters in regard to the various railway enterprises with which I was connected. Offers were made to me by persons who were willing to furnish capital for investment and allow me to manage it—the supposition being that from the inside view which I was enabled to obtain I could invest for them successfully. Invitations were extended to me to join parties who intended quietly to buy up the control of certain properties. In fact the whole speculative field was laid out before me in its most seductive guise.

All these allurements I declined. The most notable offer of this kind I ever received was one morning in the Windsor Hotel soon after my removal to New York. Jay Gould, then in the height of his career, approached me and said he had heard of me and he would purchase control of the Pennsylvania Railroad Company and give me one half of all profits if I would agree to devote myself to its management. I thanked him and said that, although Mr. Scott and I had parted company in business matters, I would never raise my hand against him. Subsequently Mr. Scott told me he had heard I had been selected by New York interests to succeed him. I do not know how he had learned this, as I had never mentioned it. I was able to reassure him by saying that the only railroad company I would be president of would be one I owned.

Strange what changes the whirligig of time brings in. It was my part one morning in 1900, some thirty years afterwards, to tell the son of Mr. Gould of his father's offer and to say to him:

"Your father offered me control of the great Pennsylvania system. Now I offer his son in return the control of an international line from ocean to ocean."

The son and I agreed upon the first step—that was the bringing of his Wabash line to Pittsburgh. This was successfully done under a contract given the Wabash of one third of the traffic of our steel company. We were about to take up the eastern extension from Pittsburgh to the Atlantic when Mr. Morgan approached me in March, 1901, through Mr. Schwab, and asked if I really wished to retire from business. I answered in the affirmative and that put an end to our railway operations.

I have never bought or sold a share of stock speculatively in my life, except one small lot of Pennsylvania Railroad shares that I bought early in life for investment and for which I did not pay at the time because bankers offered to carry it for me at a low rate. I have adhered to the rule never to purchase what I did not pay for, and never to sell what I did not own. In those early days, however, I had several interests that were taken over in the course of business. They included some stocks and securities that were quoted on the New York Stock Exchange, and I found that when I opened my paper in the morning I was tempted to look first at the quotations of the stock market. As I had determined to sell all my interests in every outside concern and concentrate my attention upon our manufacturing concerns in Pittsburgh, I further resolved not even to own any stock that was bought and sold upon any stock exchange. With the exception of trifling amounts which came to me in various ways I have adhered strictly to this rule.

Such a course should commend itself to every man in the manufacturing business and to all professional men. For the manufacturing man especially the rule would seem all-important. His mind must be kept calm and free if he is to decide wisely the problems which are continually coming before him. Nothing tells in the long run like good judgment, and no sound judgment can remain with the man whose mind is disturbed by the mercurial changes of the Stock Exchange. It places him under an influence akin to intoxication. What is not, he sees, and what he sees, is not. He cannot judge of relative values or get the true perspective of things. The molehill seems to him a mountain and the mountain a molehill, and he jumps at conclusions which he should arrive at by reason. His mind is upon the stock quotations and not upon the points that require calm thought. Speculation is a parasite feeding upon values, creating none.

My first important enterprise after settling in New York was undertaking to build a bridge across the Mississippi at Keokuk.[29] Mr. Thomson, president of the Pennsylvania Railroad, and I contracted for the whole structure, foundation, masonry, and superstructure, taking bonds and stocks in payment. The undertaking was a splendid success in every respect, except financially. A panic threw the connecting railways into bankruptcy. They were unable to pay the stipulated sums. Rival systems built a bridge across the Mississippi at Burlington and a railway down the west side of the Mississippi to Keokuk. The handsome profits which we saw in prospect were never realized. Mr. Thomson and myself, however, escaped loss, although there was little margin left.

The superstructure for this bridge was built at our Keystone Works in Pittsburgh. The undertaking required me to visit Keokuk occasionally, and there I made the acquaintance of clever and delightful people, among them General and Mrs. Reid, and Mr. and Mrs. Leighton. Visiting Keokuk with some English friends at a later date, the impression they received of society in the Far West, on what to them seemed the very outskirts of civilization, was surprising. A reception given to us one evening by General Reid brought together an assembly creditable to any town in Britain. More than one of the guests had distinguished himself during the war and had risen to prominence in the national councils.

The reputation obtained in the building of the Keokuk bridge led to my being applied to by those who were in charge of the scheme for bridging the Mississippi at St. Louis, to which I have already referred. This was connected with my first large financial transaction. One day in 1869 the gentleman in charge of the enterprise, Mr. Macpherson (he was very Scotch), called at my New York office and said they were trying to raise capital to build the bridge. He wished to know if I could not enlist some of the Eastern railroad companies in the scheme. After careful examination of the project I made the contract for the construction of the bridge on behalf of the Keystone Bridge Works. I also obtained an option upon four million dollars of first mortgage bonds of the bridge company and set out for London in March, 1869, to negotiate their sale.

During the voyage I prepared a prospectus which I had printed upon my arrival in London, and, having upon my previous visit made the acquaintance of Junius S. Morgan, the great banker, I called upon him one morning and opened negotiations. I left with him a copy of the prospectus, and upon calling next day was delighted to find that Mr. Morgan viewed the matter favorably. I sold him part of the bonds with the option to take the remainder; but when his lawyers were called in for advice a score of changes were required in the wording of the bonds. Mr. Morgan said to me that as I was going to Scotland I had better go now; I could write the parties in St. Louis and ascertain whether they would agree to the changes proposed. It would be time enough, he said, to close the matter upon my return three weeks hence.

But I had no idea of allowing the fish to play so long, and informed him that I would have a telegram in the morning agreeing to all the changes. The Atlantic cable had been open for some time, but it is doubtful if it had yet carried so long a private cable as I sent that day. It was an easy matter to number the lines of the bond and then going carefully over them to state what changes, omissions, or additions were required in each line. I showed Mr. Morgan the message before sending it and he said:

"Well, young man, if you succeed in that you deserve a red mark."

When I entered the office next morning, I found on the desk that had been appropriated to my use in Mr. Morgan's private office the colored envelope which contained the answer. There it was: "Board meeting last night; changes all approved." "Now, Mr. Morgan," I said, "we can proceed, assuming that the bond is as your lawyers desire." The papers were soon closed.

Junius Spencer Morgan

JUNIUS SPENCER MORGAN

While I was in the office Mr. Sampson, the financial editor of "The Times," came in. I had an interview with him, well knowing that a few words from him would go far in lifting the price of the bonds on the Exchange. American securities had recently been fiercely attacked, owing to the proceedings of Fisk and Gould in connection with the Erie Railway Company, and their control of the judges in New York, who seemed to do their bidding. I knew this would be handed out as an objection, and therefore I met it at once. I called Mr. Sampson's attention to the fact that the charter of the St. Louis Bridge Company was from the National Government. In case of necessity appeal lay directly to the Supreme Court of the United States, a body vying with their own high tribunals. He said he would be delighted to give prominence to this commendable feature. I described the bridge as a toll-gate on the continental highway and this appeared to please him. It was all plain and easy sailing, and when he left the office, Mr. Morgan clapped me on the shoulder and said:

"Thank you, young man; you have raised the price of those bonds five per cent this morning."

"All right, Mr. Morgan," I replied; "now show me how I can raise them five per cent more for you."

The issue was a great success, and the money for the St. Louis Bridge was obtained. I had a considerable margin of profit upon the negotiation. This was my first financial negotiation with the bankers of Europe. Mr. Pullman told me a few days later that Mr. Morgan at a dinner party had told the telegraphic incident and predicted, "That young man will be heard from."

After closing with Mr. Morgan, I visited my native town, Dunfermline, and at that time made the town a gift of public baths. It is notable largely because it was the first considerable gift I had ever made. Long before that I had, at my Uncle Lauder's suggestion, sent a subscription to the fund for the Wallace Monument on Stirling Heights overlooking Bannockburn. It was not much, but I was then in the telegraph office and it was considerable out of a revenue of thirty dollars per month with family expenses staring us in the face. Mother did not grudge it; on the contrary, she was a very proud woman that her son's name was seen on the list of contributors, and her son felt he was really beginning to be something of a man. Years afterward my mother and I visited Stirling, and there unveiled, in the Wallace Tower, a bust of Sir Walter Scott, which she had presented to the monument committee. We had then made great progress, at least financially, since the early subscription. But distribution had not yet begun.[30] So far with me it had been the age of accumulation.

While visiting the Continent of Europe in 1867 and deeply interested in what I saw, it must not be thought that my mind was not upon affairs at home. Frequent letters kept me advised of business matters. The question of railway communication with the Pacific had been brought to the front by the Civil War, and Congress had passed an act to encourage the construction of a line. The first sod had just been cut at Omaha and it was intended that the line should ultimately be pushed through to San Francisco. One day while in Rome it struck me that this might be done much sooner than was then anticipated. The nation, having made up its mind that its territory must be bound together, might be trusted to see that no time was lost in accomplishing it. I wrote my friend Mr. Scott, suggesting that we should obtain the contract to place sleeping-cars upon the great California line. His reply contained these words:

"Well, young man, you do take time by the forelock."

Nevertheless, upon my return to America. I pursued the idea. The sleeping-car business, in which I was interested, had gone on increasing so rapidly that it was impossible to obtain cars enough to supply the demand. This very fact led to the forming of the present Pullman Company. The Central Transportation Company was simply unable to cover the territory with sufficient rapidity, and Mr. Pullman beginning at the greatest of all railway centers in the world—Chicago—soon rivaled the parent concern. He had also seen that the Pacific Railroad would be the great sleeping-car line of the world, and I found him working for what I had started after. He was, indeed, a lion in the path. Again, one may learn, from an incident which I had from Mr. Pullman himself, by what trifles important matters are sometimes determined.

The president of the Union Pacific Railway was passing through Chicago. Mr. Pullman called upon him and was shown into his room. Lying upon the table was a telegram addressed to Mr. Scott, saying, "Your proposition for sleeping-cars is accepted." Mr. Pullman read this involuntarily and before he had time to refrain. He could not help seeing it where it lay. When President Durrant entered the room he explained this to him and said:

"I trust you will not decide this matter until I have made a proposition to you."

Mr. Durrant promised to wait. A meeting of the board of directors of the Union Pacific Company was held soon after this in New York. Mr. Pullman and myself were in attendance, both striving to obtain the prize which neither he nor I undervalued. One evening we began to mount the broad staircase in the St. Nicholas Hotel at the same time. We had met before, but were not well acquainted. I said, however, as we walked up the stairs:

"Good-evening, Mr. Pullman! Here we are together, and are we not making a nice couple of fools of ourselves?" He was not disposed to admit anything and said:

"What do you mean?"

I explained the situation to him. We were destroying by our rival propositions the very advantages we desired to obtain.

"Well," he said, "what do you propose to do about it?"

"Unite," I said. "Make a joint proposition to the Union Pacific, your party and mine, and organize a company."

"What would you call it?" he asked.

"The Pullman Palace Car Company," I replied.

This suited him exactly; and it suited me equally well.

"Come into my room and talk it over," said the great sleeping-car man.

I did so, and the result was that we obtained the contract jointly. Our company was subsequently merged in the general Pullman Company and we took stock in that company for our Pacific interests. Until compelled to sell my shares during the subsequent financial panic of 1873 to protect our iron and steel interests, I was, I believe, the largest shareholder in the Pullman Company.

This man Pullman and his career are so thoroughly American that a few words about him will not be out of place. Mr. Pullman was at first a working carpenter, but when Chicago had to be elevated he took a contract on his own account to move or elevate houses for a stipulated sum. Of course he was successful, and from this small beginning he became one of the principal and best-known contractors in that line. If a great hotel was to be raised ten feet without disturbing its hundreds of guests or interfering in any way with its business, Mr. Pullman was the man. He was one of those rare characters who can see the drift of things, and was always to be found, so to speak, swimming in the main current where movement was the fastest. He soon saw, as I did, that the sleeping-car was a positive necessity upon the American continent. He began to construct a few cars at Chicago and to obtain contracts upon the lines centering there.

The Eastern concern was in no condition to cope with that of an extraordinary man like Mr. Pullman. I soon recognized this, and although the original patents were with the Eastern company and Mr. Woodruff himself, the original patentee, was a large shareholder, and although we might have obtained damages for infringement of patent after some years of litigation, yet the time lost before this could be done would have been sufficient to make Pullman's the great company of the country. I therefore earnestly advocated that we should unite with Mr. Pullman, as I had united with him before in the Union Pacific contract. As the personal relations between Mr. Pullman and some members of the Eastern company were unsatisfactory, it was deemed best that I should undertake the negotiations, being upon friendly footing with both parties. We soon agreed that the Pullman Company should absorb our company, the Central Transportation Company, and by this means Mr. Pullman, instead of being confined to the West, obtained control of the rights on the great Pennsylvania trunk line to the Atlantic seaboard. This placed his company beyond all possible rivals. Mr. Pullman was one of the ablest men of affairs I have ever known, and I am indebted to him, among other things, for one story which carried a moral.

Mr. Pullman, like every other man, had his difficulties and disappointments, and did not hit the mark every time. No one does. Indeed, I do not know any one but himself who could have surmounted the difficulties surrounding the business of running sleeping-cars in a satisfactory manner and still retained some rights which the railway companies were bound to respect. Railway companies should, of course, operate their own sleeping-cars. On one occasion when we were comparing notes he told me that he always found comfort in this story. An old man in a Western county having suffered from all the ills that flesh is heir to, and a great many more than it usually encounters, and being commiserated by his neighbors, replied:

"Yes, my friends, all that you say is true. I have had a long, long life full of troubles, but there is one curious fact about them—nine tenths of them never happened."

True indeed; most of the troubles of humanity are imaginary and should be laughed out of court. It is folly to cross a bridge until you come to it, or to bid the Devil good-morning until you meet him—perfect folly. All is well until the stroke falls, and even then nine times out of ten it is not so bad as anticipated. A wise man is the confirmed optimist.

Success in these various negotiations had brought me into some notice in New York, and my next large operation was in connection with the Union Pacific Railway in 1871. One of its directors came to me saying that they must raise in some way a sum of six hundred thousand dollars (equal to many millions to-day) to carry them through a crisis; and some friends who knew me and were on the executive committee of that road had suggested that I might be able to obtain the money and at the same time get for the Pennsylvania Railroad Company virtual control of that important Western line. I believe Mr. Pullman came with the director, or perhaps it was Mr. Pullman himself who first came to me on the subject.

I took up the matter, and it occurred to me that if the directors of the Union Pacific Railway would be willing to elect to its board of directors a few such men as the Pennsylvania Railroad would nominate, the traffic to be thus obtained for the Pennsylvania would justify that company in helping the Union Pacific. I went to Philadelphia and laid the subject before President Thomson. I suggested that if the Pennsylvania Railroad Company would trust me with securities upon which the Union Pacific could borrow money in New York, we could control the Union Pacific in the interests of the Pennsylvania. Among many marks of Mr. Thomson's confidence this was up to that time the greatest. He was much more conservative when handling the money of the railroad company than his own, but the prize offered was too great to be missed. Even if the six hundred thousand dollars had been lost, it would not have been a losing investment for his company, and there was little danger of this because we were ready to hand over to him the securities which we obtained in return for the loan to the Union Pacific.

My interview with Mr. Thomson took place at his house in Philadelphia, and as I rose to go he laid his hand upon my shoulder, saying:

"Remember, Andy, I look to you in this matter. It is you I trust, and I depend on your holding all the securities you obtain and seeing that the Pennsylvania Railroad is never in a position where it can lose a dollar."

I accepted the responsibility, and the result was a triumphant success. The Union Pacific Company was exceedingly anxious that Mr. Thomson himself should take the presidency, but this he said was out of the question. He nominated Mr. Thomas A. Scott, vice-president of the Pennsylvania Railroad, for the position. Mr. Scott, Mr. Pullman, and myself were accordingly elected directors of the Union Pacific Railway Company in 1871.

The securities obtained for the loan consisted of three millions of the shares of the Union Pacific, which were locked in my safe, with the option of taking them at a price. As was to be expected, the accession of the Pennsylvania Railroad party rendered the stock of the Union Pacific infinitely more valuable. The shares advanced enormously. At this time I undertook to negotiate bonds in London for a bridge to cross the Missouri at Omaha, and while I was absent upon this business Mr. Scott decided to sell our Union Pacific shares. I had left instructions with my secretary that Mr. Scott, as one of the partners in the venture, should have access to the vault, as it might be necessary in my absence that the securities should be within reach of some one; but the idea that these should be sold, or that our party should lose the splendid position we had acquired in connection with the Union Pacific, never entered my brain.

I returned to find that, instead of being a trusted colleague of the Union Pacific directors, I was regarded as having used them for speculative purposes. No quartet of men ever had a finer opportunity for identifying themselves with a great work than we had; and never was an opportunity more recklessly thrown away. Mr. Pullman was ignorant of the matter and as indignant as myself, and I believe that he at once re-invested his profits in the shares of the Union Pacific. I felt that much as I wished to do this and to repudiate what had been done, it would be unbecoming and perhaps ungrateful in me to separate myself so distinctly from my first of friends, Mr. Scott.

At the first opportunity we were ignominiously but deservedly expelled from the Union Pacific board. It was a bitter dose for a young man to swallow. And the transaction marked my first serious difference with a man who up to that time had the greatest influence with me, the kind and affectionate employer of my boyhood, Thomas A. Scott. Mr. Thomson regretted the matter, but, as he said, having paid no attention to it and having left the whole control of it in the hands of Mr. Scott and myself, he presumed that I had thought best to sell out. For a time I feared I had lost a valued friend in Levi P. Morton, of Morton, Bliss & Co., who was interested in Union Pacific, but at last he found out that I was innocent.

The negotiations concerning two and a half millions of bonds for the construction of the Omaha Bridge were successful, and as these bonds had been purchased by persons connected with the Union Pacific before I had anything to do with the company, it was for them and not for the Union Pacific Company that the negotiations were conducted. This was not explained to me by the director who talked with me before I left for London. Unfortunately, when I returned to New York I found that the entire proceeds of the bonds, including my profit, had been appropriated by the parties to pay their own debts, and I was thus beaten out of a handsome sum, and had to credit to profit and loss my expenses and time. I had never before been cheated and found it out so positively and so clearly. I saw that I was still young and had a good deal to learn. Many men can be trusted, but a few need watching.