Read an Excerpt
The Pennsylvania Railroad at Bay
William Riley McKeen and the Terre Haute & Indianapolis Railroad
By Richard T. Wallis Indiana University Press
Copyright © 2001 Richard T. Wallis
All rights reserved.
ISBN: 978-0-253-33872-3
CHAPTER 1
PRELUDE
It was just a patch of Indian prairie, at first; a flat piece of land cleared of trees along the winding Wabash River. By the time Indiana became a state in 1816, Terre Haute was only a cabin or two just south of Fort Harrison. The name meant "high ground" in French. It might better have meant "high hopes," for once settlement began in earnest in the 1820s, the citizens of this frontier village were pursuing wealth and commercial advantage with single-minded devotion. It was here that William Riley McKeen entered the world on October 12, 1829, the first of five children born to Benjamin and Leatha Paddock McKeen.
Benjamin McKeen had moved to Terre Haute from Kentucky in 1823, purchasing land and settling east of the little frontier village. In the early 1820s, Terre Haute was not much more than a simple farming village. Its business pursuits were confined mainly to gathering the area's crops and shipping that produce down the Wabash, Ohio, and Mississippi rivers, an activity which soon attracted Benjamin McKeen's attention. The elder McKeen went into the shipping business, building flatboats which, after loaded with the various products of the village, he then piloted down river to New Orleans to market. The Terre Haute products he shipped were inevitably flour, cornmeal, and salt pork.
Riley, as the younger McKeen would come to be known, had a modest education in the village schools and spent most of his time working on the family farm. With his father often away from home on extended shipping trips, it fell to Riley as the eldest son to look after the family homestead. He chafed at being tied to the farm, but his father's imperative gave the young McKeen a front-row seat in the struggle to make Terre Haute into a town of substance, and it helped develop in the boy ambitions of his own.
Like every other town of the period, particularly those in the Old Northwest, Terre Haute made business its business. By the mid-1840s, the town had grown into an ambitious little trading center, but its commercial prospects as a river town were limited. Terre Haute's future would ultimately depend on the development of better transportation facilities.
With his father already involved in the shipping business, young Riley McKeen must have been particularly interested in the attempts to create Terre Haute's links to the outside world. First, it was the building of the National Road, an east-west thoroughfare that reached Terre Haute in the mid-1830s. This was followed by agitation for the Wabash & Erie Canal, which was gradually being extended southwestward across Indiana from Toledo, Ohio, on Lake Erie. Although the canal extension would be opened in 1849, the making of Terre Haute as a business center would truly begin with the construction of its first railroad, originally titled the Terre Haute & Richmond.
To a great extent, Riley McKeen's own business career developed in step with the railroad corporation he would eventually come to dominate. McKeen became so closely identified with the railroad that biographical material written in his later years implied that Riley had been actively involved in the actual promotion and building of the road. But since he was only 17 when the company was chartered, it is unlikely that the young McKeen was much more than an avid spectator in the beginning.
The man credited with the actual building of Terre Haute's first railroad is also traditionally celebrated as the city's most important patriarch, Chauncey Rose. Rose had first come to Terre Haute in 1818, and within two decades he had attained the status of a wealthy local merchant and real estate baron. As one of the town's leading businessmen, Rose tirelessly promoted all the developing links in Terre Haute's transportation system, beginning with the National Road. He went on to invest in the Wabash & Erie Canal in the mid-1840s and then led the effort to secure the charter of the Terre Haute & Richmond Railroad in January 1847.
By mid-century Terre Haute was a thriving town of pork-packers and retail merchants, but its business leaders dreamed of greater things. To become the important western metropolis they envisioned, Terre Haute would need better communication with the outside world than that afforded by seasonal navigation down river to the port of New Orleans or by the slow and equally seasonal canal boats plodding northeast to Lake Erie.
No one had a better grasp of the crucial commercial importance of cheap, dependable transportation than Chauncey Rose, whose first local enterprise in the early 1820s had been a combination grist- and sawmill located a dozen miles north of town. Since the miller's portion was limited in value unless it could be gotten economically to those who would pay cash for it, Rose had concentrated on sawing lumber, and eventually moved back to Terre Haute to pursue a more profitable career in retail merchandising and real estate.
Indiana's pioneer railroad, the Madison & Indianapolis, had finally been completed in 1847, and its construction had provided several pointed lessons to those interested in developing a useful transportation network. The Madison line was a product of the state's disastrous attempt to provide internal improvements by fiat in the late 1830s. The railroad was built in the wrong direction and might have been a total failure had it not been turned over to private enterprise. As it was, even with citizen stockholders, the company would have only the briefest period of prosperity until it was eclipsed by its better-located rivals; but in the meantime, it demonstrated the profit potential and regional developmental power of local railroads.
The Madison line's economic effect on Indianapolis was electric, and its approaching completion stimulated an epidemic of railroad charters designed to link practically every corner of Indiana with its young capital. Among them was one for a line to cross the state, from Richmond in the east to Terre Haute in the west. The new railroad was to be the central link in a proposed chain of roads between Cincinnati and St. Louis.
Rose gathered around himself the cream of Terre Haute's budding business community and, with the charter of the Terre Haute & Richmond in hand, proceeded to organize the infant enterprise. The directors met for the first time on March 14, 1847, and elected Rose the company's first president. He was an excellent choice. Over the next five years, he would virtually will the road into existence.
Rose began by seeking out additional on-line investors, almost all of whom came from the territory west of Indianapolis. Thus, despite the charter's intent, the line between Terre Haute and Indianapolis would be the sole focus of the TH&R's construction efforts — so much so that the Terre Haute interests would eventually be forced to solicit a separation of the company in 1851, leaving the eastern half to be rechartered and completed as the Indiana Central. It was a divorce of no great consequence, for, with the Madison & Indianapolis in operation and a number of more direct eastern connections already under construction, the TH&R's success no longer depended on the line to Richmond.
The brief triumph of the Madison & Indianapolis had another happy byproduct: the pairing of the company's Madison, Indiana, banker James F. D. Lanier with New York-based Richard H. Winslow to help float the securities of the pioneer Indiana railroad. The rise of the banking house of Winslow, Lanier & Company would help make possible an ever-widening market for the securities of a long list of midwestern railroads, the Terre Haute & Richmond included. But while Chauncey Rose would rely on Winslow, Lanier as his company's New York banker, he had even more fortuitous financial help from a very successful older brother, John.
John Rose was a wealthy New York businessman whose early career had been spent as a southern cotton merchant in partnership with another Rose brother, George. As cotton brokers, the Rose brothers had made a number of influential friends who were active in British finance and business. With these contacts in the London market, John was able to help place a substantial amount of his younger brother's railroad stock with solid investors in England, Ireland, France, and Switzerland. When the railroad quickly became a profitable dividend-payer, its stock became a valuable investment worth holding onto, a circumstance which would help make the TH&R a very stable enterprise in the years ahead.
Initial stock sales were strong, and the issue quickly sold out. But stock proceeds were sufficient only for acquiring right-of-way, grubbing, and grading. Like most American railroads, the company would have to borrow the money necessary to purchase iron rails and machinery. Once the required charter amendment to permit the issuance of mortgage bonds had been pried from the state legislature, Chauncey Rose was able to build and equip his railroad in a relatively short time. Construction got under way late in 1849, and the Terre Haute & Richmond was open throughout its entire 73-mile length in February 1852.
Business, in the form of packed pork, farm products, and passengers, was brisk and profitable from the beginning, and the TH&R was soon hailed as a significant achievement. Terre Haute now had its ticket to future greatness.
* * *
For young Riley McKeen, the late 1840s were a time of opportunity and decision. By now his father was a man of some means and involved with friends and relatives in the pork-packing business. Riley, still tied to the family farm, had resolved to find a more congenial livelihood, and he found it in 1846 as an assistant in the county clerk's office.
A hallmark of 19th-century Terre Haute was its closely knit and usually interrelated community structure. McKeen would step firmly toward the very center of that structure with his next position. In early 1848, after a single term at Asbury University in Greencastle, the young man was offered a job as bookkeeper at the Terre Haute branch of the Indiana State Bank. It proved to be the seminal moment in McKeen's career. The position not only established a firm direction but also provided unparalleled access to virtually every businessman in the community.
The bank, one of 13 semi-autonomous branches in a centrally supervised system, had been formed by practically the same group of investors that would charter the railroad; their respective boardrooms were filled with the same faces. And no wonder, since both the branch bank and the railroad were designed for the same purpose: to advance Terre Haute to the front ranks of wealth and prosperity. For a farsighted businessman, nothing could be more personally rewarding than building up the local economy; one's own success was inextricably linked to the success of the community. This was not just rank civic boosterism, it was an article of faith, and young Riley McKeen learned it well.
In 1852 McKeen received a promotion to the important position of bank cashier and took a wife, Eliza Johnston. Frail, young Eliza was the daughter of James Johnston, one of Terre Haute's most successful businessmen and a packinghouse partner of Riley's father. Eliza would bear one son, Frank. Sadly, the marriage would be cut short by Eliza's death from tuberculosis in 1855. McKeen left the state bank that same year to begin his career as a private banker, joining an older, more experienced partner named Ralph Tousey on his father's recommendation.
* * *
With his railroad in operation and immediately successful, Chauncey Rose resigned the presidency of the Terre Haute & Richmond, stepping aside in favor of a more appropriate manager. It was a pattern he would repeat in a number of his commercial projects. With his brusque and sometimes impatient personality, Rose seemed temperamentally more suited to the tough tasks of starting a business than the tedious and often diplomatic requirements of its day-to-day operation. So, although he remained on the TH&R board and an active voice in the railroad's management — by virtue of being the largest stockholder — Chauncey turned over the reins to another Terre Haute business associate, Sam Crawford. Rose was far too busy for the presidency anyway, because he had already turned his attention toward extending the TH&R's reach westward to St. Louis.
The Terre Haute Sr Richmond's completion in 1852 had given Terre Haute its railroad outlet to the state capital. There the new road connected with the Madison & Indianapolis, which in turn extended to the busy steamboat port of Madison on the Ohio River. From Madison, steamboats carried goods and passengers to and from Cincinnati, Wheeling, and Pittsburgh. By the end of the following year, however, an unbroken all-rail route was opened to the East over the Indianapolis & Bellefontaine and its Ohio twin, the Bellefontaine & Indiana. At Crestline, Ohio, this route, soon to be known as the Bellefontaine or Bee Line, connected with a predecessor of the Pittsburgh, Fort Wayne & Chicago to Pittsburgh and with the chain of roads which led to Cleveland, Buffalo, and — by way of the New York Central — to Albany and New York City. Pittsburgh was, of course, the western terminus of the brand new Pennsylvania Railroad to Philadelphia.
West of Terre Haute the situation was more problematic. Rose and his Terre Haute associates favored a direct link to St. Louis, and their first choice was the Mississippi & Atlantic Railroad, organized in 1850 by downstate Illinois businessmen from Greenville and Vandalia. Unfortunately, the efforts of these southern Illinois partisans had met with the organized opposition of virtually the entire rest of the state.
The Illinois legislature in Springfield, dominated by a coalition of interests including Chicago and the port towns along the Illinois and Mississippi rivers, initially refused to sanction any railroad charters that would benefit St. Louis at their expense. Specifically, this meant vigorous opposition to the Mississippi & Atlantic from Terre Haute to St. Louis and to the Cincinnati-sponsored Ohio & Mississippi from Vincennes to St. Louis. The chief beneficiary of this so-called "state policy" was the rival Mississippi River port of Alton, which would soon field its own cross-state charter for the Terre Haute & Alton Railroad.
Already wounded by their loss of influence and prestige after the state capital had been removed from Vandalia, the down-staters were incensed by this heavy-handed suppression of what they considered their legitimate economic rights. With a torrid flood of political rhetoric, the on-line proponents of both the Mississippi & Atlantic and the Ohio & Mississippi rallied to each other's support, but with only partial success. The legislature would eventually, if grudgingly, allow construction of the Ohio & Mississippi. But the Greenvilleans, having had their application for a charter rebuffed once before in 1846, found their charter rejected again in 1850.
With admirable tenacity, the Greenville and Vandalia crowd bypassed the legislature and went ahead to incorporate and organize their railroad anyway, following the provisions of a new Illinois General Railroad Law passed in 1849. But a problem lay with one section of the law that reserved the right of the legislature to fix the actual route and termini of a proposed railroad. Thinking this clause far too ambiguous to be effective, the Mississippi & Atlantic partisans ignored it and proceeded to survey their route and acquire the necessary right-of-way. Their opponents in Alton, feigning outrage at this flagrant disregard for state authority, hastily organized the Terre Haute & Alton, the charter for which the legislature hastily confirmed in January 1851. The battle was now joined.
While the Alton forces floundered, the Mississippi & Atlantic completed its survey and secured nearly two-thirds of the right-of-way. But in attempting to condemn a piece of property in Effingham County, the railroad ran afoul of the law. The landowner sued, contending that the company, being illegally organized under the terms of the General Railroad Law, had no right to condemn. The plaintiff lost in the circuit court but won on appeal to the Illinois Supreme Court in early 1852, bringing the Mississippi & Atlantic's progress to a halt.
Not content with this one legal assault, the M&A's opponents added a companion quo warranto action (a suit brought by government to test a franchise or charter). This suit, also decided in early 1852, actually sustained the validity of the Mississippi & Atlantic's charter, leaving the railroad in a peculiar limbo. Now, with their organization weakened in the public eye by uncertainty over its legal rights, the men from Greenville and Vandalia sought financial reinforcements from their eastern connections.
(Continues...)
Excerpted from The Pennsylvania Railroad at Bay by Richard T. Wallis. Copyright © 2001 Richard T. Wallis. Excerpted by permission of Indiana University Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
