Saturday, June 14, 2008

Replay 7/15/07: A.B. Widener, Transit Mogul

Peter A.B. Widener is not one of the most famous railroad barons who specifically ran street railways, but he most certainly was the richest. From the New York Times:
A transit mogul, Widener monopolized the street railways of Philadelphia. Starting in 1875, Widener and a partner began buying transit lines, modernizing the horse drawn cars first with cable cars, then with an electric trolley system that required the repaving of the city's streets. By 1895, the system supported 100 passengers a year.
What is fascinating about this is how the money was made. Before Widener and a few others pioneered the collection of utilities to operate as one, each line and lighting company were separate in different sections of the city, leading to competition and the need to pay a different fare for each transfer.

But it was these moguls who paved the streets and lit the houses in New York, Chicago and Philadelphia, however through nefarious means. Dubbed syndicates, they were the reason we have the term 'Public Utilities' :

When Thomas A. Edison invented the incandescent light, and when Frank J. Sprague in 1887 constructed the first practicable urban trolley line, in Richmond, Virginia, they liberated forces that powerfully affected not only our social and economic life but our political institutions. These two inventions introduced anew phrase--"Public Utilities." Combined with the great growth and prosperity of the cities they furnished a fruitful opportunity to several particularly famous groups of financial adventurers. They led to the organization of "syndicates" which devoted all their energies, for a quarter of a century, to exploiting city lighting and transportation systems. These syndicates made a business of entering city after city, purchasing the scattered street railway lines and lighting companies, equipping them with electricity, combining them into unified systems, organizing large corporations, and floating huge issues of securities. A single group of six men--Yerkes, Widener, Elkins, Dolan, Whitney, and Ryan--combined the street railways, and in many cases the lighting companies...
Charles T. Yerkes was the driving force behind Chicago's street railway and lighting was able to control city and state government officials. However in Philly, he was imprisoned for of all things embezzlement which led him to move to Chicago and opened up the door for a City Official named Peter A.B. Widener.
It was this circumstance in Yerkes's career which impelled him to leave Philadelphia and settle in Chicago where, starting as a small broker, he ultimately acquired sufficient resources and influence to embark in that street railway business at which he had already served an extensive apprenticeship. Under his domination, the Chicago aldermen attained a gravity that made them notorious all over the world. They openly sold Yerkes the use of the streets for cash and constantly blocked the efforts which an infuriated populace made for reform. Yerkes purchased the old street railway lines, lined his pockets by making contracts for their reconstruction, issued large flotations of watered stock, heaped securities upon securities and reorganization upon reorganization and diverted their assets to business in a hundred ingenious ways.
Widener stepped up after Yerkes had gotten the previous city treasurer in trouble for the embezzlement. He was also a butcher, which apparently is a pretty big deal for politics.
A successful butcher shop in Philadelphia in those days played about the same part in local politics as did the saloon in New York City. Such a station became the headquarters of political gossip and the meeting ground of a political clique; and so Widener, the son of a poor German bricklayer, rapidly became a political leader in the Twentieth Ward, and soon found his power extending even to Harrisburg.

He also picked up a bond partner in Elkins and the two came into control of Philadelphia's traction organization.


Widener and Elkins, however, not only dominated Philadelphia traction but participated in all of Yerkes's enterprises in Chicago and held an equal interest with Whitney and Ryan in New York. The latter Metropolitan pair, though they confined their interest chiefly to their own city, at times transferred their attention to Chicago. Thus, for nearly thirty years, these five men found their oyster in the transit systems of America's three greatest cities--and, for that matter, in many others also.
Later on, the syndicate ended up buying the Broadway Traction Company in New York City. This led to their organization being the first holding company.
This Broadway franchise formed the vertebral column of the New York transit system; with it as a basis, the operators formed the Metropolitan Street Railway Company in 1893, commonly known as the "Metropolitan." They organized also the Metropolitan Traction Company, an organization which enjoys an historic position as the first "holding company" ever created in this country.
It's a fascinating story and the Age of Big Business is definitely a good read and as much as I want to, I can't quite cover it all without just copying and pasting the whole thing.

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