Collectively they only held about a 23% interest in the company. Hill and Morgan never fully controlled the Northern Pacific. That was cheaper and easier than to buy an equal interest in Burlington… Harriman said nothing more to Hill but to his associates he showed how Hill could be defeated by the purchase of the controlling interest in the North Pacific. They desired peace, even at $200 a share for Burlington stock. They expressed their views and amiably added that while they thought he had “paid a damn fool price for Burlington” - as one of them put it to me - they were willing to participate, so that everybody should be satisfied and the status quo maintained. That was repugnant to Harriman temperamentally, and alarming to his associates financially. There was a delicate balance of power in the railway world the acquisition of the Burlington by Hill would smash it and give him the dominant influence. The backing of Morgan helped but Perkins believed Hill offered a better home for Burlington. Eventually, Perkins chose Hill over Harriman. Unrelenting, Harriman began buying Burlington stock in the open market.Īt the same time, Hill proposed a Burlington merger with Northern Pacific, was told the price and also began buying shares in the open market. Harriman countered $150 a share in cash or $200 a share in Union Pacific bonds. Perkins set the going rate for Burlington at $200 a share in cash. A sale was imminent. So the first battle of Harriman and Hill was fought over the Burlington. Acquiring the Burlington Railroad would make the Northern Pacific the dominant railroad in the country.Ĭharles Perkin was president of the Burlington railroad and was closing in on retirement.
The Northern Pacific did a great deal of business moving cotton from the South to Seattle to be shipped off to Asian markets. Morgan, controlled the Northern Pacific Railroad. Buying the Burlington railroad would make the Union Pacific the strongest railroad in the country. The Chicago, Burlington & Quincy Railroad was a critical piece in controlling that movement. Anyone moving people or products by rail from east to west, or vice versa, had to go through Chicago. Chicago was the railroad hub of the country. So he set his sights on a key acquisition. He quickly bought up competing railroads until Union Pacific dominated the U.S.
Harriman recognized that expansion through acquisition was the most efficient way to lower costs and ensure profitability for Union Pacific. In total, they paid $75 million for 1,800 miles of railroad and got every penny back in profits within three years. Through a syndicate of backers - the Vanderbilts, Rockefellers, Goulds, Ameses, and Kuhn, Loeb & Co. But Edward Henry Harriman saw an opportunity. It was mired in bankruptcy - receivership in the hands of the government. The Union Pacific was a railroad nobody wanted to touch, not even J.P. Two heavyweights fought for control of a railroad, cornered the market, and forced the biggest short squeeze of the last century. An epic stock market battle took place in 1901.