CHAPTER IV

THE BUILDING OF MY FIRST ROAD

   In 1887 I was president of a prosperous trust company in Kansas City, the second trust company in Missouri.  One of the directors was E. L. Martin, one of Kansas City's leading financiers, a man who had saved the city's credit by paying out of his own pocket the interest on the city's bonds when it had no funds to meet it.  I told him of my grandfather's experience in building railroads, and that I was making a study of railroading, and expected to take it up.  He told me of a franchise he had for building a belt railroad with an entrance to the city on Second Street, but that, after three years of endeavor to find the money, he had given it up, and that his franchise would expire in less than a week.  We went over the line, and I at once saw its great possibilities.  That night we both left for Philadelphia, and on the way I devised a plan to raise the money and start the work before the time elapsed.  We formed an underwriting syndicate.  Each subscriber to this syndicate as to receive for each one thousand subscribed thirteen hundred and thirty-three dollars of six per cent bonds and two thousand dollars common stock.  When the road was afterwards sold to the Kansas City Southern, each bond of the Belt Line received thirteen hundred and thirty-three dollars of new Southern bonds and two hundred and fifty dollars of the four per cent preferred stock; for each share of the common stock the subscribers received two hundred and fifty dollars of four per cent preferred and seven hundred and fifty dollars of common stock of the Kansas City Southern.  So for each one thousand dollars invested in this syndicate the subscriber received seventeen hundred  and seventy-nine dollars of Kansas City Southern bonds, five hundred dollars of the preferred stock and fifteen hundred dollars of the common stock, or a total of thirty-seven hundred and seventy-nine dollars in bonds and shares of the Southern.

   The Belt Liner prospered and is now one of the greatest properties of Kansas City, and part of the Kansas City Southern System.  Other extensions were built under the name of the Union Terminal and the Consolidated Terminal.  Their five per cent bonds were sold at eight-five to ninety, and with each bond was given a bonus of the Belt Line stock.  In the consolidation with the Southern these bonds of the Union and Consolidated received one thousand dollars in the new Southern bonds and two hundred and fifty dollars of the preferred stock, showing in the first case very large profits and in the second case ample profits.

   While the Kansas City Southern was building, Mr. Martin called to my attention the great need of a short line to the Gulf of Mexico.  We designed what is now the Kansas City Southern.  This formed a line to the Gulf of Mexico over one hundred miles shorter than any other line.  To build the first section a company was formed, called the "Philadelphia Construction Company."  Later, two other companies were formed, called "The Arkansas Construction" and "The Kansas City Terminal Construction Company," to build the other sections.  The panics of 1893 and 1896 gave us serious conditions to contend with, but they were met, and in 1896, notwithstanding the panic, we built one-fourth of all the new mileage constructed in the United States.

   During this year, one of the darkest in the history of the United States, people interested in our road asked me to write a report, giving my estimate of the earnings of the road when finished.  I complied with this request and wrote a book estimating that the road, when finished, would earn ten thousand dollars per day or five thousand dollars per mile per year, but i stated that the road soon after being finished would earn seven thousand four hundred dollars per mile gross and would soon exceed the earnings per mile of the Missouri Pacific, Rock Island or the M. K. & T. R. R., as the Kansas City Southern would be all main line.

   To prevent me from finishing this enterprise, that would mean so much for Kansas City, one of the best known traffic men of the United States was employed by people interested in seeing this road fail. He wrote a report in which he characterized my statement as the dream of an unsound mind, and said the road could not earn four thousand dollars per day.  He said the Belt Line and Southern was a swindle of gigantic proportions -- whether premeditated or not, would not enter into his calculations.  And, as far as the road ever earning more than the Missouri Pacific, the Rock Island, or the M. K. & T., that was absurd!  I give this more in detail in a succeeding chapter.

   But I here wish to state that my prediction more than came true, as the Southern earnings now exceed the earnings of the Missouri Pacific by between four thousand and five thousand dollars per mile per year.  I hope the Orient stockholders will, when they read my prediction regarding the Orient road earnings, remember how this derided estimate of mine was more than verified.

   When the Kansas City Southern was started, all agricultural industries in Kansas and other Western states were languishing; mortgages were being foreclosed al over the West.  The railroads were forcing the people of the West to ship all grain fourteen hundred miles to the East, in place of eight hundred and nine hundred miles to Southern ports; the rates on grain were twenty-one to twenty0-six cents per hundred; corn was some years ten cents per bushel in Kansas, and people were using it for fuel.

   The rate on long-leaf lumber was nearly ten cents per hundred more to Kansas City than to Chicago, and Kansas City was from two hundred to three hundred miles nearer the long-leaf pine territory.  Seats on the Kansas City Grain Exchange were fifty dollars; there were only two grain elevators in Kansas City, and they had little business.  Farm land was the lowest for years.  Kansas City was the center of an empire, the greatest on earth, but it was losing in population, and its business was also decreasing in volume.  I saw the injustice of these high railroad rates.  I saw the city that I loved languish.  I saw that just rates on lumber would make Kansas City the great lumber market of the Southwest.  I saw great lumber companies thriving in Chicago, made prosperous by the railroad rate; they had a fair rate per ton per mile, while my home town and the people of my section of the United States must pay five to ten cents more per hundred than the people of Illinois and Ohio.  Why should we stand this injustice?  Why were not the people of the Golden West entitled to the same rate per ton per mile as the people of Illinois and Ohio?

   Then I saw the great injustice of the grain rate.  Why pour sixty to eighty cents more per acre into the coffers of railroads by forcing grain to take a fourteen hundred mile haul eastward, when nature had provided a great port less than a thousand miles south?  This injustice I made up my mind to remedy by the Kansas City Southern.  I made up my mind that the Southern should serve the people of the section now suffering from unjust rates; and, filled with this idea, I worked with the spirit of a crusader.  No man could have done what I did in building the Kansas City Southern -- all personal work -- unless he was inspired by some other goal than profit.  The obstacles I jumped could not have been surmounted if my aim had not been impersonal.  I sank self; I was fighting a battle to free Kansas City from the yoke of unjust rates.  I was to increase the value of all land in the West.  I was to bring Kansas great prosperity.  Millions of money now being paid to railroads was to remain in Kansas, pay its mortgages and free its people from debt.  These blessings would reach to Nebraska and all the West.  Great lumber companies and coal companies would come to Kansas City.  Great buildings would arise.  It would be the grain market of the West.  Was I not fighting a wonderful battle?

   This is the vision I saw.  Would you not be inspired by such a vision?  I was not taking from people.  I was not taking life or property.  No trail of destruction and death would follow my path of victory, but the blessings of justice to the section I loved.  Cannot you see, with such a vision, what I had to inspire me during the Baring failure and the panic of 1896?  Cannot you understand, with such a vision, how I could work as a man could not work otherwise.

   My visions have come true.  The picture of the blessings to be conferred shaped itself as if by magic I had stood on some summit and waved a magician's wand and, as I did so, said: "Beloved West, I now free you from the shackles of unjust rates.  Kansas, I free you from mortgages; the lumber you use shall come to you at fair rates; your grain shall find ready market, and the rates for transportation shall be just.  No longer shall you burn corn.  In Kansas City, in the place of depression of real estate values, shall come prosperity; great grain elevators shall spring up on every hand.  It shall be the lumber and grain market of the Southwest."  This was my; dream and this the reality, and no magician with his wand could ever have brought it quicker than the finished Kansas City Southern did.  Read of the prices before this work was done; talk to the people who lived there before 1890.  And then go and see that dream of mine, now a reality.  See what can be done by the president of a railroad who whishes to serve the territory which gave him the right of eminent domain, the right to build -- a president who considered his territory, and not Wall Street.

   Now what a storm these so-called revolutionary rates  brought down on me!  Railroad meetings were called in New York, Chicago and distant places, to curb me.  When the lumber rates went into effect, all Western roads boycotted the Southern for ninety days; a meeting was called in Chicago to force us to restore the twenty-six cent lumber rate.  The boycott was at all division points.  Our cars would not be received by any railroad.  The millions I had secured for the road were in danger.  Some of my directors wired me that I must give in' stockholders thought my act would spell ruin.  But I made up my mind that I would triumph over all the combined railroad influence and wealth, because back of me was right and justice.  My visions of the blessings to be conferred would come to naught if I gave in.  There would be one more railroad, but no one would be benefited. 

   I refused to go to the meeting, but sent our traffic man with this message:  "The rate on lumber from the long-leaf belt to St. Louis is eleven cents per hundred; from St. Louis to Chicago, ten cents per hundred; the combined rate is twenty-one cents per hundred; Kansas City is a much shorter haul than to Chicago, and the people our road serves are entitled to this rate, and it will stand as long as I am president."

   When my message was read, one of the great railroad men of the West, Mr. Stickney, President of the Chicago Great Western, said, "Stilwell is right.  There is no argument.  I shall at once remove the boycott as soon as a telegram can be written."  He did, and I owe a great debt of gratitude to him for this act, as do asll the people of the West.  Had it not been for the act of his I cannot tell what would have been the result.  A meeting of railroad presidents was called at Bar Harbor, Maine, to consider the cut rates I had to put in on grain.  I refused to attend.  Why go to distant Bar Harbor to talk of justice to Kansas and the West?

   I saw the injustice; I knew the remedy and I intended to apply it.  Wall Street and the markets were not what I had constructed that steel ribbon south for; it was to benefit my beloved section of the United States.  Better go down to defeat fighting for the right than win personal ease and personal gain by surrendering the rights of others. 

   What capacity for work Hope gives man!  When the vision before him is justice, he is able to tread the thorny path of life; the fires of adversity he does not feel; his eyes are on the high goal of honest endeavor.  Sneers and personal loss are nothing to him.  He is fighting for a principle; he is endowed with strength  that comes no other way.  I know all of my fight for freedom of action will bear fruit, and that none of my constructive work for my country will in the long run fail.  With your face turned toward Good, the final will be triumph, no matter if the road be long.

   Now all western railroad interests were united to fight me.  I was a menace to the stock market.  I was a disturbing factor; at least, this was their viewpoint.  My new rates, railroad men said, would ruin the railroads of the West, and I am sure they honestly believed it -- but my vision was different.  I saw just rates would bring prosperity to the West; it would increase the buying power of all.  The loss of the rates made on grain and lumber would be made up by greater crops, as capital would go into paying business; greater use of lumber would come with lower rates; the farmers of the West would have millions for merchandise which they could not now buy, and the rates on the merchandise that should come West to a section with ample money to buy would make up for loss through the new rates in grain and lumber.

   All of these visions came true.  Land advanced in value by leaps and bounds.  The people grew rich and were enabled to hold their property and buy more, and no harm was done to anyone.  The route for western grain to go south was established.  Galveston, Port Arthur, and New Orleans throbbed with life as the products of the soil were turned south; the Kansas City Southern shipped trainloads of packing house products to the south for export -- never before done.  New packing houses were built; the existing ones were enlarged to fill export orders for by-products -- a condition never before known in Kansas City.  The people of the West had money, mortgages were paid, and all the great good, as I foresaw, came to this section and is there today.

   Let me try to give you a pen picture of the work I was daily doing as this great road was being built.  The road is progressing to the Gulf, as the message of blessing is daily written on the ground in characters of steel and ties of oak.  All over the West and Northwest are hundreds of agents telling of the new empire open for settlement.  Towns grow as by magic.  Mena, Arkansas, grew to two thousand in population in a few weeks.  When the townsite sale started, there were over one thousand people camping around the townsite.  Often in one week five thousand dollars would be paid for tickets by home-seekers going to a townsite or land sale.  All the while this construction work was going on companies were formed to build hotels in the new towns, to develop water power, gas and electric lights.  Men were induced to come to these towns and locate in all kinds of business, and like the building of Solomon's Temple, there were skilled men in all departments.  Great orchards were planted; thousands of acres were turned form swamp lands to rice fields; and when the road was finished, it jumped to greater earnings the first month than the Western pacific did with all of the seventy-eight millions of dollars expended, and all the Gould lines back of it.  Think of such development, which enables a road the first month of its history to earn at the rate of over five thousand dollars per mile per year.  Seldom before has there been such a record made.

   Station after station handled big business for some company I had financed.  The road had fought an unnecessary fight at Port Arthur, yet amidst all this fight, I had found time to develop a territory as few ever have before or since.  And when the road was finished, all these mills, orchards and rice fields, in connection with a line of steamers to Europe and Mexico, made a wonderful picture of the achievement of a man who was fighting for his people, for his Nation.  I had only made forty thousand dollars profit in all these years of work in this great enterprise.  I had no time to think of self.  I was fighting a battle like Grant fought -- like all men n the battlefield fight.  You cannot think of reward; only your duty can hold you during such a bombardment as Kountz and others gave me.

   But all the time I felt that this great constructive work would be rewarded in some way.  I looked at the work of my hands and found it good.  I was just railroad rates take the place of unfair ones.  I saw just railroad rates take the place of unfair ones.  I saw hundreds of new homes dot the plains and hillsides.  I head the hum of scores of mills at work on the road; I saw the grimy miners going to open up the new mines this road developed; the husband-men at work on the thousands of acres of land just opened; the hundreds of tie cutters at work in the forests cutting ties for the roads of the West.  I saw the ships at Port Arthur loading at the grain elevator for the Continent; saw the stacks of lumber being loaded for all parts of the world.  And that was the picture, painted by a so-called Dreamer!

 

 

Arthur Edward Stilwell, Visionary

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