Hill

place wood entirely for locomotive use. With
characteristic thoroughness he made a compre-
hensive survey of all available sources of coal
supply and of markets. As the business grew
steadily he took in new partners to supply ad-
ditional capital, but in 1875 he bought them
out and formed the Northwestern Fuel Com-
pany, in which he had the controlling interest
until 1878.

It was at that time that he decided to give
major attention to transportation on the Red
River to Fort Garry (now Winnipeg), Mani-
toba. Norman W. Kittson, who later was close-
ly associated with Hill in his large dealings in
railroads, was agent of the Hudson's Bay Com-
pany, which in 1861 had begun the operation of
a steamboat between Fort Garry and Fort Aber-
crombie, Mich. That company, in an effort to
maintain its monopoly of the fur trade, was fight-
ing the free traders, and Kittson, who could not
consistently transport their freight, suggested
that Hill should do so. The latter's boats became
such serious competitors of the Hudson's Bay
line that Kittson, in 1872, asked Hill to join him
by consolidating their separate activities in the
Red River Transportation Company. The com-
pany was successful and from its operations Hill
made the beginnings of his fortune. His opera-
tions on the Red River and many journeys made
on horseback and on snowshoes had enabled Hill
to gain intimate acquaintance with the region
and to appreciate its great agricultural poten-
tialities. To his mind the need of a railroad to
Fort Garry was apparent.

He had closely followed the affairs of the St.
Paul & Pacific and knew that the road was head-
ed for disaster. It was grossly overcapitalized,
poorly constructed, and in bad physical condi-
tion, and the small part of authorized mileage
then built lacked integration. The money for
construction came from bonds, which were sold
at heavy discount and exorbitant commissions
through a bank in Holland and could not be dis-
posed of in the United States. The bonds were
soon defaulted and the property placed in re-
ceivership. In 1873, when a large number of
railroad companies were in like plight, the dis-
couraged Dutch bondholders of the St. Paul &
Pacific were in the mood to salvage the wreck on
any terms. Hill had worked out plans to re-
habilitate the property and make it pay if the
purchase could be effectuated on terms consonant
with his idea of actual value. The Northern Pa-
cific management also had taken steps to gain
control by the purchase of stock. Unfortunately
for the Northern Pacific, however, it too was
fprced intp receivership, by the failure of Jay

Hill

Cooke & Company, and was therefore in no po-
sition to carry out the plan.

The time was ripe for Hill to act, but before
he could start negotiations it was necessary to
enlist the aid of friends with capital. His first
convert was his long-time associate, Norman W.
Kittson, and together they induced Donald A.
Smith (later Lord Strathcona) to join them.
Smith, as a leader in the affairs of the Hudson's
Bay Company, had had many dealings with Hill.
Smith and Hill together enlisted the aid of
George Stephen (afterward Lord Mount Ste-
phen), then president of the Bank of Montreal.
Hill and Kittson risked every cent they had;
Smith and Stephen used their personal resources
and influence to obtain credit, and after pro-
tracted negotiations the four individuals pur-
chased in 1878 the St. Paul & Pacific Railroad.
Hill regarded this as the great adventure of his
life. To the friends of the new owners it seemed
a reckless gamble. Under Hill's management the
road was rehabilitated by virtual reconstruction,
and its lines were developed into an integrated
system and extended, first to the Canadian bor-
der (1878) connecting with a Canadian line to
Winnipeg, then westward through the Dakotas
and Montana to Great Falls (1887), and finally
over the Cascade Range to the Pacific Coast at
Everett (1893) and Seattle, with joint running
rights over the Union Pacific to Portland, Ore.
In the meantime, the original St. Paul & Pacific
had been reorganized (1879), its name being
changed to the St. Paul, Minneapolis & Mani-
toba Railway, and the several Hill-controlled
lines, organized for construction purposes, had
been absorbed in the new company. The need
for further comprehensive permanent financing
for extensions, actually made or planned for, led
to the creation of the Great Northern Railway
Company in 1890 to absorb all of the properties
in one corporate entity. Since that time there
have been further extensions and alliances with
other companies but no notable changes in the
corporate organization. During the years 1891-
1906, an average of one mile of railroad was
built and equipped for each working day of the
year. Hill's official positions with the system
were: general manager, 1879-81; vice-president,
1881-82; president, 1882-1907; and chairman of
the board, 1907-12.

The striking peculiarity of the Hill railroad
system was that under his management it alone
of the transcontinental lines weathered all finan-
cial storms and maintained an uninterrupted divi-
dend record. The other railroads in that section
had been given land grants or governmental fi-
nancial aid. Hill had no such assistance in ex-

37