Excerpt From BUILDING BIG IRON
The Epic History of Locomotive Building
in the United States from 1830 to the Present
by Bill Yenne
Copyright © 2013 by William Yenne
The Civil War was the turning point of nineteenth century American history. As Abraham Lincoln said in his Gettysburg Address, the war tested whether “the United States, or any nation, conceived in Liberty, and dedicated to the proposition that all men are created equal could long endure.”
The four years of war, from 1861 to 1865, saw approximately 620,000 soldiers killed in battle, and nearly as many civilians killed as well. This was about three percent of the total population, and eight percent of all white males between the ages of 13 to 43.
Though it pales by comparison to the loss of life, the effect of the Civil War upon the railways and industry of the United States and the Confederate States was unprecedented. The North began with around 21,800 miles of railroad, and the South with about 8,800 miles. The South ended with very little left intact. The South began with only about ten percent of the manufacturing capacity of the North, and ended the war with almost none. Before the war the South exported 4.5 million bales of cotton annually, accounting for more than double the value of all Northern exports. By 1864, cotton exports stood at a mere six percent of prewar levels.
As Emory Johnson points out, railroad construction was so seriously interrupted by the 1857 recession that it “had not regained its previous activity when the great Civil War stopped nearly all industrial progress for half a decade.”
Certainly the immense industrial power of the Northern states was one of the key practical reasons for its having prevailed in the war. Many industrial firms made the transition to weaponry and war materiel from civilian goods. For example, the Mason Machine Works in Taunton, Massachusetts, switched from locomotives to rifles in 1861 when they received a War Department contract for 100,000 Springfields.
The locomotive manufacturers who survived the Panic of 1857 endured layoffs, and deliveries dropped. From its record of 83 deliveries in 1860, only 40 locomotives were turned out by the Baldwin Locomotive Works during 1861. Baldwin’s historian recalled that, “by many it was thought that railroad traffic would be largely reduced that the demand for locomotives must cease altogether.”
He went on to add that the company “even seriously contemplated to turn the resources of the establishment to the manufacture of shot and shell, and other munitions of war, the belief being entertained that the building of locomotives would have to be altogether suspended. So far was this from being the case, however, that after the first excitement had subsided, it was found that the demand for transportation by the General Government, and by the branches of trade and production stimulated by the War, was likely to tax the carrying capacity of the principal Northern railroads to the fullest extent.”
Indeed, the “General Government” was in the railroad business. In 1862, the government created the United States Military Rail Road (USMRR), and it became a major purchaser of freight locomotives—and these were larger and heavier than pre-war locomotives. Industrial production spiked during the war. Baldwin produced 75 locomotives in 1862 and set a new production record of 96 in 1863. The latter marked the last time in the nineteenth century that the Baldwin Locomotive Works would produce fewer than 100 locomotives in a single year. In 1864, Baldwin built 130 locomotives.
Between May 1862 and June 1864, the Baldwin Locomotive Works manufactured 33 locomotives specifically for the USMRR. As the company itself noted, at the same time, the demand for motive power from the coal roads in and around Pennsylvania was “particularly active, and large numbers of ten‑wheeled engines, and of the heaviest eight‑wheeled four-coupled engines, were built.”
Technically, the legislation passed by Congress and signed by President Lincoln in January 1862, provided for the federal government to simply take over existing railroads and telegraph lines for military use, and for these to be managed by the USMRR. In fact, the USMRR exercised this authority mainly on Southern railroads that had been captured by Union forces. As has been pointed out, this was a practical matter; the people who owned and managed the railroads were much better equipped to run them than the War Department.
The late nineteenth century was the era of America’s great captains of industry. Certainly, the railroad industry was filled with flamboyant “robber barons” that history loves to hate. There were the Vanderbilts, who controlled an empire that centered on the New York Central. There was Edward Harriman, who controlled the Union Pacific and later united it (if only briefly) with the Southern Pacific. There was James Jerome Hill, the “Empire Builder,” whose empire included the northern tier of the United States from the Great Lakes to the Pacific Northwest. There was the much-demonized Jay Gould, who controlled a multitude of railroads all across the country at various times in his career.
Railroads had come to be owned and managed by financiers rather than by railroad men with coal dust under their nails, and this was also becoming the case with the locomotive industry. Men such as Samuel Vauclain and Albert Pitkin had certainly earned their way to the boardrooms by the way of the shops, but by the turn of the century, many men coming into the upper strata of the business had never swung a hammer.
It was big business, which attracted the interest of deal makers. The industry was dominated by a single big business—the Baldwin Locomotive Works—and therein lay an opportunity.
Baldwin had a 40 percent market share, with the remaining 60 percent scattered among nearly a dozen major players and a larger number of smaller players, none of which was a serious challenger for Baldwin—that is, until 1901.
The spring of 1901 was a turning point like no other in the history of the locomotive industry in the United States. Plans were afoot to create, through a merger, a firm that would be large enough to compete head-to-head with the industry giant. It was an idea that had probably been widely discussed, but one man had the skill, the energy and the resources to make it happen.
Enter Pliny Fisk, a man with an unforgettable name whose importance to the history of American locomotive manufacturing has largely been forgotten. However his name should be recalled almost as readily as that of Matthias Baldwin or Thomas Rogers. Unlike them, but very much like Jay Gould and Edward Henry Harriman, Fisk was at home not in the machine shop, but on the brokerage floor.
A Wall Street financier, Pliny Fisk was the son of Harvey Fisk, who had earned a fortune financing the Civil War, and later helped finance the transcontinental railroad project. After graduating from Princeton in 1881, Pliny joined his father’s firm—which became Harvey Fisk & Sons—and in 1884, he had become the firm’s trader on the floor of the New York Stock Exchange. Here, the energetic and successful Pliny was known as the “apple‑cheeked boy of Wall Street.”
The April 10, 1939 issue of Time magazine tells the story of one day when Fisk happened to be standing behind Edward Harriman on the floor of the Exchange, when “Harriman, who had gone heavily short, attempted to break the market by a sudden offer to sell $500,000 worth [of stock] at 90. Fisk promptly accepted, offered to take all others at 110. When Harriman admitted he couldn’t deliver, Fisk let him off for $50,000 but blandly extracted a promise that Harriman would try to compose his battle with J.P. Morgan Sr. over the Northern Pacific Railroad, which was then depressing the market. Harriman was soon closeted with Morgan, and Pliny Fisk thereupon put every available dollar into the market. When peace was announced next morning, he had an overnight profit of $800,000.” That’s almost $20 million in today’s dollars.
Pliny Fisk went on to finance such projects as Bethlehem Steel and the Hudson Tubes, but in 1901 he wheeled the biggest deal of his career to create a serious competitor for the Baldwin Locomotive Works.
The idea was to swallow up the major companies other than Baldwin and roll them into a single entity that would be known as the American Locomotive Company (Alco). Completed in cooperation with the William C. Sheldon Company, this deal was worth nearly $1.2 billion in today’s dollars.
The centerpiece of the merger was to be the “Big Shop” of the Schenectady Locomotive Works. The other locomotive manufacturers included in the merger were the Brooks Locomotive Works in Dunkirk, New York; the Cooke Locomotive and Machine Works in Paterson, New Jersey; the Manchester Locomotive Works in Manchester, New Hampshire; the Pittsburgh Locomotive and Car Works in Pittsburgh, Pennsylvania; the Rhode Island Locomotive Works in Providence; and the Richmond Locomotive Works in Virginia’s capital city. The smaller Dickson Manufacturing Company in Scranton, Pennsylvania, was added shortly thereafter, but was not among those listed in the initial merger announcement.