(upbeat violin music) - [Narrator] With the rise of the Great Northern as a transcontinental railway, James J. Hill became one of the most dominant figures associated with any railroad.

- Many railroads were run by managers who left New York once a year for an inspection trip.

- Some of the others who built railroads, like Henry Villard, were financiers, they knew about money, but they didn't know a lot of the particulars about railroading.

- Hill had an intimate knowledge of the landscape that his railroad was traveling over, perhaps unlike any other head of any other railroad in the United States.

- He got out on the line frequently.

Attention to detail that was unbelievable.

- There is one letter from a farmer in Fargo who was complaining about the drainage in his ditch alongside the Great Northern Railroad line.

Hill responds, "Have this fixed.

I know exactly where this farmer lives and the space he's talking about and I think he's right."

1,600 miles of railroad track, it's absolutely astounding.

- [Narrator] This intimate knowledge gave Hill a complete mastery of the Great Northern's operation, but he could not have predicted the impact of outside forces.

- Hill completes the Great Northern with the last spike in January of 1893.

And then in a matter of just months, the entire national economy collapses from too much credit, from too much building, from too much debt.

- It's the worst year of the 19th century to start operating railroad, or much of anything else.

The bottom simply fell out of the economy.

One of the aspects of Hill's career that I find the most interesting is how he was able to juggle so many balls all at the same time.

- He was a man who had his fingers in so many pies.

He had unlimited energy.

- [Narrator] In the late 1880s, while Hill was driving the Great Northern's expansion and operation, he was also involved in every aspect of the design and construction of his new residence on Summit Avenue in St.

Paul's most fashionable neighborhood.

During its three-year construction, more than 400 masons, carpenters, and laborers built the home to Hill's exact specifications.

He chose to build the house with sandstone, a sedimentary rock that hardens with age.

Designed in the Romanesque Revival style, the five story, 36,000 square foot mansion had 42 rooms, 13 bathrooms, and 22 fireplaces.

In 1891, Jim, Mary, and their children moved into their new home where they celebrated their 25th anniversary.

- "My dearest Mary.

This year will mark the union of our lives for a quarter of a century.

As the time rolls by, I do not want to spend the weeks and days away from you.

The years we have left, be they many or few, will, I am sure, be happier if we are left largely to our children and ourselves."

James J. Hill.

- [Narrator] But Hill showed no signs of slowing down.

- James J. Hill was, to my mind, was a workaholic.

I recall seeing many letters running something like this: "It's two o'clock in the morning now, so I better sign off.

I'm getting up at five or six to go to New York or Seattle."

So he worked seven days a week.

- I actually ran across letters which were written on Christmas Eve or even Christmas Day.

Hill would slip down to the office on holidays when he maybe should have been home with his family.

- [Narrator] When Mary was asked about her husband's work habits, she replied that he never brought his business home, which may have been her way of saying he wasn't home much.

In addition to raising nine children, Mary ran a household of 10 to 12 servants who helped her with the multitude of formal dinners and social functions she hosted.

- She ran things, I think that's pretty evident.

So she came close to matching her husband in work ethic.

She had lots of friends, loved reading history and fiction, politics.

Very well-informed.

- [Narrator] From early on, she was a devout Catholic and active at her parish church, St.

Mary's.

One by one, she saw to it that each of their children had their first communion while their father, a Protestant, was absent more and more as his workload grew.

- Certainly mixed marriages were not respectable, quote, unquote, for Victorian America.

My suspicion was it may have held the Hills back socially.

However, as time went on, once you get to a certain level in terms of personal fortunes and power and so on, that some things are simply accepted.

- [Narrator] The two oldest boys, James and Louis, attended the finest prep schools before going on to Yale.

- They weren't the best students.

When they actually hit bottom and were on the verge of getting kicked out, James Hill would write.

And his letters, you would think he would write really tough and threaten and threaten, and he really didn't.

- "My dear Louis, My ambition and, in fact, the object of my whole life has been to give my children the benefit of a good and thorough education... Dear boy, I have been very anxious about both you and Jim.

All I can do for you... I am deeply mortified and disappointed at what has occurred, that it could all have been avoided by good, faithful work... It surely will make you feel better and more of a man to know that your work has been well and intelligently done.

I am affectionately your father, James J.

Hill."

- His letters to his sons in those instances are really wonderful.

- [Narrator] Some of the happiest times for the Hill family were the summers they spent at their North Oaks farm.

- "A beautiful morning.

The flag was run up early.

The children had a very happy, busy day riding, playing games, and fishing.

In the evening, we had fireworks, later singing."

Mary Hill.

July fourth, 1899.

- Mary and the children spent the summers at North Oaks.

That was her favorite place to be.

James would get so tied up with his work that he wouldn't even come out to North Oaks.

- And I think he felt by giving his family a good life, a very comfortable life, that he was making up for some of the absences.

- [Narrator] The family also vacationed at their home on Jekyll Island, Georgia, which had a membership that represented one-sixth of the world's wealth.

- James went down with her, but he didn't stay much.

A lot of his contemporaries knew how to relax, but he didn't.

- [Narrator] Mary would often travel with Jim to speaking engagements and on trips to New York, staying at their five story home on the Upper East Side.

They would stroll along the avenues, shopping for art and jewelry.

James had gained a comprehensive knowledge of precious gemstones and wasn't shy about lavishing Mary with diamonds, pearls, sapphires, and rubies.

- He bought jewelry all the time.

- He would walk around with gemstones in his pocket.

- There's a whole ledger book with 80 pages of single stones or bracelets, necklaces.

I think she enjoyed the fruits of their wealth, but she also wasn't ostentatious.

- [Narrator] Hill continued collecting fine art and proudly displayed them in his two story skylit gallery, which he would often open to the public.

- He had close to 35 Corot paintings.

He also collected Courbet and Daumier, Dupre, all of the Barbizon painters.

- "He bought with taste and discrimination and in a few years made what is certainly the finest and most complete collection of that school in the country."

Paul Durand-Ruel, Art Dealer.

- [Narrator] When the Art Institute of Chicago staged its grand opening in 1887, Hill was asked to lend five paintings.

He sent 13.

He later donated six paintings to the Minneapolis Public Library.

It was the first gift of many that would become the foundation of the Minneapolis Institute of Art.

- Hill at various times was ranked the third richest man in the country and the tenth richest man in the country.

He also was a man who assumed this persona as a rugged individualist, a Westerner.

There's a famous picture of him arm in arm with two businessmen and little Hill with his scruffy beard and his fedora and his sack suit, that was intentional.

I mean, the man had money, he could dress well if he wanted.

- [Narrator] As Hill's fortune and public image grew, so too did the volume of letters he received asking for financial help, many of which he answered himself.

At Mary's request, the family's houseman, Axel Johnson, often delivered groceries to the poor, commenting that Mary ran her own welfare agency from her sitting room.

- The Good Shepherd Sisters had orphanages and they had a small laundry, but they were terrible money managers, so they would go to James Hill a lot and he said, "I'm gonna build you a brand new commercial laundry and you're going to pay me back.

I'm giving you the contract for the railroads."

And I'm sure he loved getting them to really work for this gift.

And they paid him back.

You wouldn't think he would have had time to mess with all of these little odd things, but he did.

(soft acoustic music) - [Narrator] The railroad had ushered in the Gilded Age, creating an ever-widening gap between the wealthy and the poor, now made even worse by the panic of 1893.

- There was a depression of absolute misery and poverty without any government safety net, you have to remember.

- [Narrator] The unemployment rate hit as high as 43% in some areas of the country, with some 500 banks closing and 15,000 businesses failing.

- Surprisingly, however, the Great Northern does not go bankrupt.

What's even more surprising is it doesn't go bankrupt when all the other transcontinental railroads do.

- Hill's transcontinental was not only the best built but also it reached its destination quicker than the others because it was the shortest transcontinental.

The Northern Pacific Railroad was 115 miles longer than the Great Northern Railroad.

Hill was actually able to cut costs and maintain his profits throughout the panic of 1893 even in the midst of 18% unemployment in the United States.

- [Narrator] Hill instructed managers to lay off more than 1,000 workers and cut wages across the board.

- He decided to lay people off rather than miss a dividend.

- [Narrator] Workers grew more incensed when they learned that the Great Northern was actually earning better than normal profits.

A number of them banded together, under the leadership of Eugene Debs, president of the newly formed American Railway Union.

In the spring of 1894, when a union member intercepted a coded telegram calling for the firing of all Great Northern's union members in Montana, the entire crew in Butte walked off their jobs.

As the strike spread both east and west along the line, Hill agreed to arbitration suggested by Minnesota's governor.

But Debs declined.

Hill asked the president to step in, but Cleveland stood pat, hoping for a resolution.

At the labor hall in St.

Paul, striking workers broke into song.

"It puzzles the hill of J. J. Hill, hurrah, hurrah.

To find the men our places to fill, hurrah, hurrah.

His brain may go on spinning its webs, but he's no match for E. V. Debs, so we all feel gay, for that union has come to stay."

At the Hill home, Mary was shaken when she read the contents of an unsigned letter addressed to her, but meant for her husband.

- "It would be a fitting climax if you should be taken by your employees and hung by the neck until dead from one of the triumphal arches so recently erected at the expense of the very people you are now defrauding of their hard earnings."

- [Narrator] One by one, key hubs along the line were shut down.

8,000 employees ultimately joined the strike, bringing the Great Northern to a standstill that would last 18 days.

While Hill was frustrated by empty depots losing money, lack of pay and arguments among the striking men kept Debs struggling to keep the union together.

Finally on May 1st, the two men met and agreed to arbitration with a panel of civic leaders led by the prominent mill owner, Charles Pillsbury.

- "After two weeks and two days of weary waiting, the Great Northern strike is at an end.

Mr.

Hill made many concessions to the men.

In fact, they gained all their demands, and he seemed satisfied with the result."

St.

Paul Daily Globe, May 2nd, 1894 - [Narrator] Debs' victory celebration did not last long.

Nine days later, he was embroiled in a strike against the Pullman Company that would claim 30 lives, land him in prison, and dissolve the American Railway Union.

Debs would go on to launch the American Socialist Party and run for president five times, the last of which was from a prison cell.

Despite his willingness to settle the labor strike, Hill distrusted the increasing power of labor unions.

He still had hundreds of miles of Great Northern spur lines to build and cheap labor was growing more and more scarce.

- By the time the Great Northern was built, the Chinese had been stigmatized as undesirable workers.

This was unfair, but starting in the mid-1880s, both Seattle and Tacoma had had a lot of anti-Chinese agitation.

- [Narrator] The Chinese Exclusion Act of 1882 had cut off the flow of Chinese labor in America.

Japanese businessmen and Seattle residents, Tetsuo Takahashi and Ototaka Yamaoka, saw an opportunity.

They established The Oriental Trading Company in 1898 and within a year, had a contract with the Great Northern to recruit 2,500 Japanese laborers.

- The Russo-Japanese war had just ended in Japan and there was hard economic times and these young Japanese men had heard through the trading companies and the recruitment offices that money was plentiful and they could make it easily and either send it back to Japan or make enough money after a few years and go back to Japan and to help their families.

- [Narrator] These first generation immigrants, known as Issei, traveled for three weeks on cramped steamships.

Passports were often forged and immigration officials were paid an unofficial head tax to ensure that all were admitted.

America's newest arrivals were housed in detention centers known as immigrant halls with thick wire on the windows to prevent escape.

They were charged 90 cents each day for meals and a bed until a job opened up.

The Issei crews worked separately in their own gangs, overseen by a Japanese boss.

- The working conditions on the railroad were often very harsh and forbidding.

The Japanese immigrants were often assigned the most dangerous and the most difficult jobs.

- [Narrator] When a storm in Vancouver, British Columbia brought four and a half inches of rain in 1909, the Great Northern sent a Japanese crew of 43 men to make repairs.

Just as the locomotive passed over a culvert, the ground beneath it washed out, sending the boxcar full of Japanese men into the ravine below.

Twenty-three were killed and another 15 severely harmed.

Newspapers made special note of the one white man who was badly injured.

Days later, the Great Northern again turned to Japanese crews to clean up the wreckage.

- The Japanese men who worked on the Great Northern worked long, hard hours and received anywhere from 85 cents to 1.25 per day.

It was enough to live on, but very little savings.

They often slept on straw and it was cold and wet and I think it was very lonely for them and isolating.

- "4,000 Jap laborers are held in practical slavery on the Hill roads working between Seattle and St.

Paul.

Their great master, The Oriental Trading company, gets a generous rake while the laborers themselves, ignorant, helpless, unable to speak English, think themselves fortunate for the job."

The Seattle Star.

- [Narrator] At its peak, the Great Northern employed more than 5,000 Japanese workers.

The addition of this independent workforce weakened unions and stirred racist rants that were amplified in the press.

The Seattle Union Record threatened that "Jim Hill will have Japs as yardmen, engineers, and conductors if a check is not put upon his career of greed."

While the Labor Journal reported that "Everett is fast-coming to the front as a union town and anti-Jap agitation is the chief incentive and it is a powerful one."

Of the workers who were able to pay off their debt to The Oriental Trading Company, many found work elsewhere.

Kisaburo Shiosaki was one such laborer who repaid his debt and married a woman from his hometown.

They settled in Hillyard, Washington and opened a laundry business, best known for cleaning tough grease stains from railroad uniforms.

- As the Japanese men, the Issei, settled in, they were also interested in starting families.

So their parents typically arranged their marriage back in Japan with young women they hadn't met and they only way they had to identify each other was with photographs they exchanged through the mail.

And so, once they arrived, they had to find their prospective husbands by looking at the photograph and looking in the crowd and sort of matching that up.

In fact, that was my grandmother's experience.

- [Narrator] Like the influx of Scandinavians to the Midwest, the railroad changed the cultural mix of many west coast cities.

Between 1880 and 1910, Seattle's Asian population grew from 550 to over 4000, a trend that would continue, turning the Asian community into the largest minority population in the city.

(birds chirp) While the impact of the 1893 depression forced many lines to scale back their routes, the Great Northern grabbed more and more shares of the passenger and freight market.

Hill fed his growing profits into infrastructure improvements, led by his newly appointed chief engineer, John F. Stevens.

For the next eight years, Stevens was given free rein to spend millions rebuilding every mile he thought necessary.

- Well, there's an old saying that the railroad is never finished.

- Mr.

Hill was never satisfied that the railroad was as good from an engineering and operating standpoint as it could be.

- He would rebuild it at least two times to get out all the curvatures, to lower the grades, to do all these things to make it a quicker, more reliable, more efficient form of transportation.

- [Narrator] By 1899, every major wooden bridge and trestle was replaced with steel.

Hill was the envy of every railroad owner as his operation efficiencies and reinvestments drastically reduced his cost of carrying a ton of freight.

Stevens once remarked that "Hill was no pinch penny" and never once asked him for an estimate of cost.

The Northern Pacific was once again mired in bankruptcy and Hill saw an opportunity.

- Hill had had his eye on the Northern Pacific for a number of years and one of the things that drove him nuts about the Northern Pacific was that it had no discipline in building track.

It would build a spur line to a mine without knowing if the mine could be productive.

And Hill owned stock in the Northern Pacific and it annoyed the heck out of him.

- [Narrator] In 1895, Hill aligned himself with America's leading investment banker, John Pierpont Morgan.

- J. P. Morgan was simply the most powerful, influential investment banker in the world.

He was the Federal Reserve before there was a Federal Reserve.

- [Narrator] The New York based House of Morgan dominated the world of corporate finance and had arranged the mergers that created General Electric and later US Steel.

But Morgan's specialty was the consolidation of the railroad industry.

- This whole notion of competition in our economic life is something that, in the early 21st century, we think is a good thing.

In 1900, not all leading business figures felt that way.

Certainly Morgan didn't, and I suspect Hill didn't either.

They would consider competition wasteful, barbaric, unnecessary.

In the case of railroads, building two sets of tracks by two railroads to the same place, it's redundant, you don't need to do it.

- [Narrator] As a major investor in the Northern Pacific, J. P. Morgan called for a meeting with Hill.

- Well, Hill and J. P. Morgan became if not fast friends, because I don't think they were, they certainly became fast business partners.

Hill and Morgan's goal in the mid-1890s was essentially to take it over.

From Hill's point of view, this was really hunky dory, of course, because NP was a parallel competing line.

- Many states had laws, statutes, that prohibited the merger of parallel and competing lines and the Supreme Court so ruled against Morgan and Hill in 1895.

So what's the way around that?

The way around that is to buy enough shares of the Northern Pacific to influence decisions.

- Together they will start buying up the bankrupt Northern Pacific shares.

They will get de facto control of the NP by the mid-1890s.

- [Narrator] Hill crossed the Atlantic to meet with Morgan, to work out an agreement known as the London Memorandum.

Together, they created a permanent alliance between the Great Northern and the Northern Pacific.

Business was divided equally between the two and both agreed that neither railroad could build in the other's territory.

- It's like today, could you imagine the CEOs of Delta Airlines and American Airlines being on each other's boards?

Hill had managed to have such influence over the Northern Pacific that he was essentially running it.

- [Narrator] With Hill now at the helm of both railroads, he ran the Northern Pacific as if it were a second line of the Great Northern.

He fed the Great Northern's profits into improving the efficiency and operation of the Northern Pacific.

He also gained control of the NP's 47 million acres of federal land grants.

It was more total acreage than the entire state of Washington.

On a cold winter night in 1899, Hill's next door neighbor walked down Summit Avenue and approached the side entrance of Hill's home.

Frederick Weyerhaeuser and his wife, Sarah, had often been dinner guests of Jim and Mary, but tonight, at Hill's invitation, the timber baron came alone to talk business.

- Weyerhaeuser had been very active in the forests of the Great Lakes.

I think sometimes today we forget that the Great Lakes were America's timberland at one time, but they were running out by the late 1890s.

- [Narrator] Sitting in the warmth of the parlor, Hill offered to sell his good friend 900,000 acres of Washington State timberland.

- The story goes that he had Weyerhaeuser in his den after a long dinner and just kept plying him with bad whiskey and wouldn't let him go home until he agreed that going out west would be a good idea.

- I don't think he had to serve him bad whiskey, one, Frederick Weyerhaeuser would have known the difference, and two, he didn't have to do it.

They were offered these lands at bargain basement prices.

- [Narrator] The two agreed on a price of six dollars per acre, or the equivalent of $183 million today.

Weyerhaeuser put up one-third of the financing while the rest of the shares were said to be purchased by every last timberman on the Mississippi River.

Hill had secured the largest private land transaction in American history.

News of the land deal, however, did not come soon enough for the upstart town of Everett, Washington.

The panic of 1893 and the ensuing depression forced droves of residents to move elsewhere.

When all the partners of The Everett Land Company wanted out, Hill bought their shares and resurrected the town with new investors.

Within a few years, Everett boasted ten sawmills, 12 shingle mills, a paper mill, a flour mill, a brewery, and a very spirited book club.

Weyerhaeuser purchased the nearby Bell Nelson Mill and would soon become the largest lumber producer in the world.

Everett became known as the city of smokestacks and the Pittsburgh of the West.

Timber provided a constant flow of income for the Great Northern and the Northern Pacific and proved to be a catalyst for growth as Washington became the top lumber producing state in the nation.

In central Washington, just beyond the eastern foothills of the Cascades, the town of Wenatchee became the focus of James J. Hill's attention.

Platted by a group of Seattle businessmen along with surveyors from the Great Northern, the town was situated at the confluence of the Wenatchee and Columbia Rivers and was surrounded by rich volcanic soil.

"The land," Hill proclaimed one visit, "will surely flow with milk and honey."

- There was this notion that the land was good enough, the growing season was adequate, if only you could bring water to it.

- [Narrator] The Great Northern and Hill personally invested in the Wenatchee Water Power Company and the Washington Canal Company.

By 1900, those two ventures were supplying water to some 12,000 acres of prime orchard land.

- Hill worked very hard to irrigate in the Wenatchee Valley and also in Montana and North Dakota, but he found, as did so many other people who were trying to irrigate, that irrigation was incredibly expensive and was beyond the purse of any individual, corporation, state.

- [Narrator] Hill helped establish the National Irrigation Association and sent representatives to the nation's capital to speak with legislators.

In 1901, a bill was drafted to fund irrigation projects in 13 western states.

Hill's business partner in Great Falls, Paris Gibson, now a Montana senator, asked Hill to use his influence to attract more Congressional support.

- I think what Hill did was he lent his force, his considerable force, his considerable personal influence, and money, he put money behind things that he believed in.

- [Narrator] Hill combined forces with Nevada's House representative, Francis Newlands, convincing legislators that the bill was in the country's best interest.

A year later, the Newlands Reclamation Act was passed into law.

The legislation would ultimately fund irrigation projects in 20 western states, turning more than 10 million arid acres into productive farmland.

- The passage of the Newlands Reclamation Act, at least in agricultural terms, I think represents the confluence of Hill and the federal government, their happiest moment together, if you will.

It was all downhill from then.

- [Narrator] Over the years, Hill would incentivize growers with cash prizes to produce bigger and better varieties of apples, some of which were named in his honor.

Wenatchee evolved from a barren landscape to the apple capital of the world, producing 20% of the nation's crop.

- Wenatchee would be a winner, as anyone would know, anyone who likes apples.

- [Narrator] But hauling apples, timber, wheat, and passengers through the switchbacks of the Cascades still proved to be a serious challenge for the Great Northern.

During heavy snowstorms, traveling these three miles could take as long as 36 hours, as rotary snowplows and crews worked to exhaustion to clear the tracks.

Hill needed a tunnel and again tapped John Stevens to take on the engineering challenge.

Once again, the press dismissed the idea as "Hill's Folly."

- Cascade Tunnel construction started in 1897.

The first thing they did was a detailed survey across the top of the mountain, kind of using methods of triangulation to locate the tunnel.

- [Narrator] To meet Hill's deadline of completing the tunnel in three years, Stevens launched a crew of 800 men who worked three eight-hour shifts seven days a week from both ends of the tunnel.

Using air compression drills and dynamite to blast through the granite mountain, crews excavated an average of 16 feet per day.

Stevens was constantly taking measurements to check the alignment on a tunnel that spanned 2.6 miles and dropped 250 feet from the east end to the west.

In January of 1900, the two sides met.

Stevens was delighted to find that the vertical and horizontal alignment of the tunnel were off by less than half an inch, an engineering feat with few comparisons.

Newspapers swallowed their pride and corrected their earlier assessments.

The Cascade Tunnel was the longest in the world and eliminated nine miles of track and reduced the elevation gain by 700 feet.

- So on the way to Seattle, they gained about six hours, in many cases, running through the mountain instead of over the top of it.

- [Narrator] A new problem emerged, however, from the combination of a long tunnel and the noxious fumes from the coal powered trains.

In the first six months of the tunnel's operation, two crewmen suffocated to death.

Two years later, when a locomotive stalled inside the tunnel, nearly all of the 103 passengers and crew lost consciousness.

An alert passenger ran to the locomotive and released the brake before passing out, allowing the train to roll backwards out of the tunnel.

After narrowly avoiding a mass tragedy, power lines were installed and four electric engines were purchased to pull trains through the two and a half mile passage.

(soft acoustic music) Over a period of five years, since gaining control of the Northern Pacific, Hill had increased the line's revenue per freight mile by 85% and sent shares skyrocketing from 25 cents to $96, a 38,000% increase.

Missing from his portfolio, however, was access to the country's most important transportation hub.

- There is one city that is dominant and essential for all railroad traffic moving north-south and east-west and that is Chicago.

It was the Rome of the railroads and it's the one area on Hill's path that he didn't have controlling access through, so he could not control the rate that he could promise customers through Chicago.

- [Narrator] The Midwestern city had become the second largest in the nation and the largest food distribution center in the world.

- There was one remaining independent railroad, Chicago-based, and that was the Chicago Burlington Quincy.

- [Narrator] The president of the Burlington, Charles Perkins, had been an early investor with hill in Great Falls and was now looking to connect to a transcontinental.

- At that point, they'd run afoul of Edward H. Harriman, also an empire builder of his own.

- [Narrator] Nicknamed "The Little Giant," Harriman recently gained control of the Union Pacific, Southern Pacific, and the Central Pacific.

If the Burlington fell into Harriman's hands, it would threaten Hill's entire western traffic.

- Edward Harriman and James J. Hill were the two most powerful leaders in the most dominant industry in the United States at the turn of the century.

What they both lacked was Chicago, and the key to Chicago was the Chicago Burlington Quincy.

- [Narrator] To fund his operations, Harriman partnered with Kuhn, Loeb & Co., represented by Jacob Schiff, who was also Hill's longtime friend, Great Northern investor, and current Great Northern board member.

- The great conflicted character in this story is Jacob Schiff.

He is very adept at working both sides of the street.

Although he has the relationship with Mr.

Harriman, he also has a deep allegiance and friendship with James J. Hill.

- [Narrator] Harriman and Schiff began purchasing shares of the Burlington on the open market, but had little chance of gaining control in this manner.

To purchase the Burlington outright, Perkins set a price of $200 a share, but Harriman countered.

Hill didn't flinch at the price and immediately wired J. P. Morgan to get permission to meet Perkins' valuation.

Hill's offer to the Burlington's board of directors was approved and Perkins convinced 97% of its shareholders to sell their stake to Hill and Morgan.

- The Great Northern and Northern Pacific together bought Chicago Burlington and Quincy.

- Morgan and Hill purposely did this to present the Great Northern and the Northern Pacific to the world as one operation, even though they're technically two separate railroads.

- [Narrator] At a dinner party Hill was attending, Harriman dropped by unannounced to lecture Hill on his hostile act, threatening him with consequences.

- Harriman was no village idiot.

He figured out there might be a back door open here and the back door would be to buy stock control of the Northern Pacific.

- Essentially they say to themselves, you know, "if we can't get the cream, let's see if we can get the cow."

- If they could get control of the NP, that would give them control of the Chicago, Burlington and Quincy and they would be able to wipe out the Hill lines.

- [Narrator] The stage was set for an epic battle.

On one side, Hill and Morgan were the largest shareholders of Northern Pacific stock, but they did not own a majority.

On the other side, Harriman and Schiff added Standard Oil tycoon, William Rockefeller, to their syndicate.

- Edward Harriman and Jacob Schiff are incredibly shrewd about their purchases of the Northern Pacific.

They are making these purchases through third parties.

So there is no paper trail back to either Harriman or Schiff.

They're also selling just a few shares of Northern Pacific, enough to divert attention away from their buying.

- [Narrator] Morgan and Hill could not have been further out of position.

Morgan was vacationing in Europe, while Hill was out west showcasing the Great Northern to European investors.

- You know, Hill was out in Seattle and he notices the ticker tape starts ticking up and the price of Northern Pacific is going up and he smells a rat.

- [Narrator] Hill cleared the tracks to St.

Paul and reached a top speed of 85 miles per hour, arriving at his destination 19 hours faster than had ever been recorded.

As he stepped down from the train, his secretary handed him an encrypted telegram.

It asked, "Is it Louisa Pomegranate to Comport Hopingly Nursery Wooden?"

"Is it your plan to come to New York next week?"

- This is one of the premier issues on Wall Street.

- Nobody is quite sure where is the momentum coming from.

Something is going on.

- [Narrator] On Monday, April 29th, 1901, when Hill arrived in Manhattan, the New York stock exchange set a single day record for volume.

The fevered trading continued setting records on Tuesday.

Over a period of five hours, sales of stock averaged a million dollars every minute.

Fortunes were made and not just by the wealthy.

Anyone who overheard a stock tip, secretaries, butlers, and waiters were now playing the market.

- They're looking at what Hill is buying or what Harriman is buying and bidding the prices up.

- [Narrator] Wall Street journalist Edwin LaFevre wrote of this time, "There was no God but the ticker and the brokers were its prophets."

With each day, the Harriman, Schiff, and Rockefeller partnership accumulated more and more NP stock, $60 million worth, without Hill or anyone else suspecting them.

On Friday, May 3rd, Hill was working from the Great Northern's ninth floor Manhattan office when his old friend, Jacob Schiff, called asking to see him.

Hill rode the elevator down the six floors to the headquarters of Kuhn and Loeb.

Schiff explained to him that the Harriman forces had purchased a majority interest of the Northern Pacific with a combination of preferred and common stock and with it, control of the Burlington as well.

While Hill took this in, Harriman walked through the door and began explaining to him that he wanted to combine Hill's two transcontinental lines with his three railroads and offered Hill the leadership role.

- This is a thunderbolt for James J. Hill.

He rushes down the steps of the building, down Pine, over to Broad Street, into the offices of J. P. Morgan.

- Well, my great-grandfather, he's probably the only guy to walk in and call 'em a bunch of damn fools who were asleep because they hadn't figured it out yet.

- And they discover, indeed, they are short of a majority.

- [Narrator] But Hill recalled that the Northern Pacific charter was structured so that the preferred shares, a large portion of those owned by Harriman, were essentially a loan that could be retired by a vote of common stock shareholders.

Harriman still needed 40,000 shares to gain control.

Hill sent a coded telegram across the Atlantic to J. P. Morgan, requesting permission to purchase the 150,000 shares they needed to stay in control.

Hill did everything he could to give Schiff and Harriman the impression that they still had the upper hand, and that night, accepted an invitation to have Shabbat dinner with Schiff's family.

The next morning, Harriman awoke from a mostly sleepless night while Jacob and his wife, Therese, walked to services at Temple Emmanuel.

- And Mr.

Harriman is uncomfortable with the fact that they are still short of owning a majority of the common shares.

- [Narrator] With the stock market open for trading until noon on Saturdays, Harriman sent a messenger to the synagogue with instructions to buy 40,000 additional shares.

Schiff received the note, but inexplicably did not place the order.

- And he later defended himself, saying Saturday was the Sabbath and he couldn't conduct business.

Personally, I think that's nonsense.

This would not have been the first day he worked on the Sabbath.

- Perhaps also Mr.

Schiff was still concerned about alienating James J. Hill.

- [Narrator] By the time Morgan sent word back to Hill to buy at any price, the market had closed.

It was a quiet end to what the New York Herald called "the most colossal week of speculative trading in the world's history."

- So the market opens Monday morning on the floor of the New York stock exchange and it is a howling physical mob.

It is panic, all hell breaks loose.

- [Narrator] By Tuesday, the Hill-Morgan faction breathed a little easier, thinking they had purchased enough of the needed shares to maintain their majority.

- But the Harriman forces, in their panic, continue buying.

- They start buying at any price.

- Buying to the point where more shares of Northern Pacific are purchased than exist.

- [Narrator] The Northern Pacific market had been cornered, causing the first modern-day panic on the New York Stock Exchange.

On Thursday, NP shares opened at 170, hit 400, and continued rising.

- In May of 1896, you could have bought a share of Northern Pacific common stock for 25 cents.

At 11 o'clock on Thursday morning, May 9th, on the floor of the New York Stock Exchange, it was selling for $1,000 a share.

- [Narrator] Short sellers, those who had borrowed shares hoping that the price would drop, suffered losses than ran into the tens of millions of dollars.

By noon, seven out of ten Wall Street brokerage firms were said to be technically bankrupt.

- "During the present week, two groups of American capitalists have given to the world an exhibition of the use of vast power for private ends unrestrained by any sense of public responsibility.

Possessing the strength of titans, they have behaved like cowboys on a spree, mad with rum and shooting wildly at each other with entire disregard for the safety of bystanders."

New York Times, May 10th, 1901.

- [Narrator] When the dust had settled, Hill's group owned 53% of Northern Pacific common shares to Harriman's 46%.

Only one percent of the shares were owned outside these two groups.

Hill himself had sunk two-thirds of his entire fortune in NP stock.

- Harriman was ultimately the loser in this, Hill-Morgan the ultimate winners in all this.

- [Narrator] The two sides met at Morgan's office to hammer out a truce.

They agreed to release enough shares at a fixed price of $150 to help short sellers from going bankrupt and to stabilize the market.

But the battle for control had made financial concerns tremble as far away as Berlin, Amsterdam, and London.

- One of the fascinating aspects of this story is it allows you to see capitalism functioning without the control of a large regulatory system.

There were no rules against insider trading or the market manipulation and this is the result.

There is hardly a single government official in sight.

So this is really capitalism in the raw.

- Nothing like that has ever happened in the history of the stock exchange before or certainly after.

- [Narrator] When a reporter asked Hill for a comment on the Northern Pacific corner, he noted that Hill had a tear in his eye.

- "Look at the ruin that has been done.

I have received lots of letters from friends of mine, men and women who are not rich, now they are completely ruined and simply because they have been caught in the vortex of a gamble.

I repeat that this trouble has not been of my making and no one regrets it more than I do."

James J. Hill, May 11th, 1901.

- The fight for control of the Northern Pacific created an uncertainty about whether the market could be trusted.

And that's really the birth of the American regulatory state.

- [Narrator] As regulations began to tame Wall Street, the lawlessness of the West started to fade as well.

In July of 1901, a gang of men led by Robert Parker and his partner, Harry Longabaugh, better known as Butch Cassidy and the Sundance Kid, pulled off their last train robbery.

The Hole in the Wall Gang brought the Great Northern flyer to a halt in Malta, Montana.

They blew open the express car and at gunpoint forced the bank messenger to open the safe.

The outlaws fled with the equivalent today of two million dollars, which they divided up and forever went their separate ways, ending one of the most notorious crime sprees in American history.

(patriotic music) On September 1st, 1901, Vice President Theodore Roosevelt gave a stirring speech at the Minnesota State Fair, first uttering his foreign policy maxim "speak softly and carry a big stick."

Roosevelt then contradicted President McKinley's hands-off attitude towards business, shouting to the crowd that "the state and, if necessary, the nation has got to possess the right of supervision and control of these great corporations."

The line stirred a rousing response and Roosevelt knew he had struck a chord.

- Now, this is 1901 and this is the very year that Theodore Roosevelt would become president following the assassination of William McKinley and Theodore Roosevelt was a very different kind of president than William McKinley.

- [Narrator] Hill was immediately interested in checking the pulse of the new president and requested a meeting.

On November 2nd, the two sat down for dinner and conversation that lasted until 11 PM.

Hill explained the long-term benefits his railroads would continue to bring to the American West.

The young president listened politely, but his disdain for unscrupulous industrialists and unchecked corporate power did not weaken.

James Jerome Hill and John Pierpont Morgan had come perilously close to losing control of the Northern Pacific.

Rattled by the financial chaos all of this had caused, Morgan invited "The Little Giant" and "The Empire Builder" to the Metropolitan Club to discuss a plan Hill had envisioned two years earlier.

Hill's attorneys had created a detailed blueprint for a new kind of entity called a holding company, in which the stock of his three railroads could be held.

The structure would allow them to operate as separate and competitive entities, but the sheer size of the trust and the primary reason for its existence was to protect Hill's lines from hostile takeovers.

Harriman agreed to the reorganization, converting his Northern Pacific stake into shares of the newly incorporated Northern Securities Company, with Hill named president and chairman of the board.

Valued today at $12 billion, Northern Securities became the second largest company in the world, trailing only Morgan's colossal US Steel.

Life magazine quipped that "God made the world in 4004 BC, but it was reorganized in 1901 by James J. Hill, J. Pierpont Morgan, and John D.

Rockefeller."

In the coming years, a merger mania swept across the American business landscape as more than 2,600 consolidations occurred.

While Northern Securities wasn't technically a merger, two transcontinentals under one umbrella created the perception of one.

- James J. Hill had total domination of the railroad trade in the American Northwest in about 1900, and so that was viewed as being something that was dangerous to have one entrepreneur that would have so much power.

- This was an era when big corporations were suddenly being called into question, this is totally unprecedented.

- [Narrator] Encouraged by an increasingly vocal public, President Roosevelt felt that the pendulum had swung too far, that in matters regarding legislation, transportation, and the stock market, giant corporations had gained too much power and influence and that the federal government needed to protect the public.

- The railroad industry of 1901 touched every US citizen, every day, in one way or another.

It was a poster child of resentment on the part of those who felt that big companies had gotten to be too big and too powerful and owners of big companies had gotten too big and too powerful.

Theodore Roosevelt perhaps trying to build his reputation, he asked his attorney general to quick find a candidate to prosecute under the Sherman Act, he chose Northern Securities.

- [Narrator] Passed into law a decade earlier, the Sherman Anti-Trust Act was created to prevent monopolies from deterring competition and harming consumers.

- From 1890 to 1904, no American corporation was bothered by the Sherman Anti-Trust Act.

It was a very vague act.

- The Sherman Anti-Trust Act was Congress's best effort to create some language to preserve competition in the marketplace.

- By Congress passing a vague act, they therefore turned it over to the courts to decide what does this mean?

What constitutes restraint of trade?

- [Narrator] Certain that this was all a big misunderstanding, J. P. Morgan traveled to the White House, famously telling Roosevelt, "If we have done anything wrong, send your man to my man and they can fix it up."

Morgan, no doubt, feared that his US Steel Goliath would be next.

- All of a sudden, you have this assertive, aggressive president who is going after large companies in a manner that's never been pursued before.

- [Narrator] While Morgan and Harriman were willing to accept President Roosevelt's decision, Hill refused to back down.

Hill said of Roosevelt that "he was undoubtedly honest and desires to serve his country, but he is so vain and self-willed that he has no judgment."

Roosevelt said of Hill, "He detests me, but I admire him, and he will detest me much more before I am done with him."

- James J. Hill provided the cheapest and the most efficient transportation throughout the American Northwest.

So it's odd that the Sherman Act would be applied against people who are benefiting the lives of so many Americans.

- Roosevelt didn't buy that.

He viewed it as an attempt to monopolize the western railroads.

- [Narrator] Hill debated the point in speeches and editorials in the newspapers he owned, reminding the public that time after time he had cut rates throughout the west, lower than all of the other railroads combined.

In the Northwest, Colonel Alden Blethen, publisher of the Seattle times, wrote that "there was no evidence that the proposed merger will be detrimental in its effects."

The Seattle Argus took a more cynical approach.

- "Jim Hill is doing good work to build up the state, because whenever he settles a family in the territory adjacent to his road, he has a mortgage on them for life.

Everything that they consume has to pay tribute to Mr.

Hill."

- [Narrator] The US Attorney General, Philander Knox, brought a suit against Northern Securities in St.

Paul.

And within weeks, Washington State filed similar charges.

- "I do not hesitate to let anybody from Washington know that I am thoroughly disgusted with the conduct of your people.

It was the exceedingly low rate on lumber that made it possible for the lumbermen of Washington to do business."

James J. Hill.

- [Narrator] Defeated in the US Circuit Court in St.

Paul, Hill appealed the ruling.

- That case, one of the most celebrated cases of the progressive era at the turn of the century, goes all the way to the Supreme Court.

- [Narrator] Front pages across the nation described a trial that pitted populists against capitalists, with Hill portrayed as the embodiment of corporate greed and misdeeds.

The legal battle dragged on for more than two years.

On March 19th, 1904, the Supreme Court ruled against Northern Securities.

In a five to four decision, the court ruled that it was an illegal combination of companies, and that while having done nothing wrong, it had the potential for destructive practices.

- Then Northern Securities had to be abolished and it gained for Theodore Roosevelt the nickname "The Trust Buster."

- "It seems hard when we look back at what we have done that we should be compelled to fight for our lives against political adventurers, who have never done anything but pose and draw a salary."

James J. Hill.

- It wasn't that Roosevelt was frightened by bigness, but he was concerned that there ought to be some countervailing power.

- [Narrator] The Northern Securities case sent shockwaves through industrial board rooms across the country.

The Roosevelt Administration filed 40 more anti-trust actions during his term.

For the first time in the history of American business, the sky was no longer the limit.

- This is an issue that we are still dealing with today.

It remains unresolved.

How big can a company be before perhaps it poses a danger?

- What happened insofar as Northern Securities was concerned is that it was bifurcated, every shareholder got one share of Great Northern, one share of Northern Pacific, so nothing really changed, the ownership stayed the same.

Instead of having one share, you had one of each.

But it surely made Hill angry.

(soft orchestral music) (upbeat violin music)