7.1. CHICAGO’S FIRST RAILROAD: THE GALENA & CHICAGO UNION

The Proposed route of the Galena & Chicago Union Railroad. (Online)

The first train to make an appearance in Chicago did not chug into town accompanied by the usual celebration of parades and speeches, however, as many American cities had experienced their first encounter with the iron horse. Instead, the first train to appear in Chicago had departed from the city, headed west on October 25, 1848. (What this meant was that all the iron rails and the early rolling stock had to be shipped to Chicago via lake steamers.) William Ogden, the builder of Chicago’s first railroad did not want to helplessly wait for the lines slowly coming from the East to make a connection with Chicago or worse, completely bypass the small town altogether by simply continuing due west from the tip of Lake Michigan (as had Redfield’s and Dexter’s original routes fifteen years earlier), but in exemplary “I will” fashion, unilaterally started building his tracks to the west, confidently assuming that the Eastern tracks would eventually make their way to Chicago in order to forge a connection with his planned western route (however, this would take three and a half long years to occur, testifying to the gamble that he was undertaking). Let me restate this fact to emphasize Bill Ogden’s foresight and the immense gamble he was undertaking in 1848, without any financial assistance from the Federal Government, i.e., land grants, because I don’t believe history truly appreciates Ogden’s achievement. In 1848, there was not a railroad track within 100 miles of Chicago. Ogden could have laid his tracks safely to the East to make a link with one of the two roads, the Michigan Central or the Michigan Southern, laying tracks from the East headed for the southern tip of Lake Michigan, and thereby hastened the connection of Chicago with the East Coast, and have had a quicker return on his investment. Instead, he started building to the Pacific, ahead of all comers. His tracks started in Chicago and headed straight first for the wheat fields in northern Illinois and southern Wisconsin (the Pacific connection would come, hopefully, later). His plan was that his small. short road would entice the eastern roads to head north, once they reached the tip of Lake Michigan, to connect with his operational line to the Pacific. Hindsight, once again shows how intelligent Ogden had been, but that original pair of iron rails to “nowhere” dangled on the edge of bankruptcy for their first three years, with Ogden’s investors nervously hoping that they had not thrown away their money on a pipe dream.

In Chicago in late 1845, as construction on the canal had resumed with vigor once the Bostonians refinancing plan had been accepted by the legislature, Ogden, who had a number of canal construction contracts, was also looking ahead to the next financial opportunity once the canal had been completed. Undoubtedly he had found inspiration during that summer from Asa Whitney’s reports of his Pacific Railroad expedition and Douglas’ counterproposal that had started from Chicago that had been published on October 15, 1845. But in truth, Ogden had voiced his support for a transcontinental road as a member of the New York State Assembly ten years earlier, before he had left the state for Chicago (see Chap. 3.11). However, ten years after he had delivered this speech he now understood that the inherent importance to the long-term economic success of his adopted hometown lay not with the route in the midsection of the country that linked Cincinnati to St. Louis for which he had initially advocated back then, but with Douglas’ route that led directly from Chicago to the Pacific, and determined to make the project his own life-long ambition. His ultimate objective to build a road to the Pacific was revealed as early as April 5, 1848, when in his first Annual Report of the Galean & Chicago Union, he expressed his interst in extending the road not only to its original terminus on the Mississippi, Galena, but also via a second line directly to Rock Island.

One can assume that through Ogden’s network of friends and business associates (after all, these were the same people with which he had just finished working behind the scenes in securing Boston’s refinancing of the canal) he was at least aware of the Bostonians’ plan to push their railroads to Lake Michigan once the national economy rebounded. Rather than waiting for the railroad from Boston to arrive at the Calumet River at the southern tip of Lake Michigan, with the chance that the Bostonians might just keep going west and, thereby, bypass Chicago altogether, he had initiated a campaign in Chicago to build a railroad to the West that could be the next link in their chain, and thereby, attempted to insure that the railroads from the East would swing north to connect with his line out of Chicago. Therefore, once Ogden had succeeded in getting the construction of the canal restarted in October 1845, that serendipidtously coincided with Douglas’ publication of his proposed Chicago transcontinental railroad, it took Ogden less than month to call a secret meeting at his house to discuss with his inner circle his plan to take over the charter of the moribund G&CU (see Chap. 3.9). At this same moment, Douglas moved into the Chairmanship of the House Committee on Territories, in charge of overseeing all legislation that pertained to the development of all lands west of the Mississippi (i.e., land grants) that as of yet had not fallen under the jurisdiction of a state. He would hold this powerful position for two years until he was elected to the U.S. Senate in the fall of 1846, in which he politically maneuvered to eventually take over the Chair of the Senate Committee on Territories, a power he would wield for ten long and critical years, to the distinct advantage of Chicago’s long-term interests.

Construction of the original G&CU that had been chartered on January 16, 1836, under the direction of Elijah K. Hubbard, Gurdon Hubbard’s younger cousin and business associate, who represented the interersts of New York financier Elihu Townsend who owned a majority of the company’s stock, had actually begun in 1838 with a few piles being driven along Madison Street, to the west starting from the point where the construction of Dearborn Street had stopped. However, first the financial panic of 1837, and then the death of the younger Hubbard on May 26, 1839, had stopped the project dead in its tracks. Nothing had been done on the project during the economic recession, as the deadline contained within its original charter that required the road had to be completed within ten years (i.e., January 16, 1846) inevitably approached. Farmers along the proposed route in the Rock River valley who had subscribed to the company’s stock understood that the deadline was upon them, and had called a meeting in Rockford, scheduled for January 7, 1846, to discuss what alternatives they would have once the deadline had come and gone.

Apparently, Ogden had gotten word of the meeting which had piqued his interest in the G&CU, in which he quietly had his team research the pertitent legal facts. Maybe the most important fact they uncovered was that Gurdon Hubbard was planning to make a bid to take over the charter once it expired on January 16, as he believed he had first rights to purchase the charter through his cousin’s will. It appears from Ogden’s next series of actions that at this time there may have been some bad blood between himself and Hubbard. This may have resulted from Middletown, CT, financier Samuel Wadsworth Russell’s decision, who was then the owner of the country’s largest China merchant, Russell & Co., having absorbed J. & T.H. Perkins in 1827 upon the retirement of its head, John Perkins Cushing, to replace Hubbard with Ogden as his local real estate agent. (Andreas claimed that over time Ogden & Jones would become the agent over Russell’s entire financial estate.) Nonetheless, Ogden had called the secret meeting at his house in the fall of 1845, prior to the Rockford meeting, that included his close associates J. Young Scammon and Walter Newberry, his new partner William E. Jones, his attorney Isaac N. Arnold, and a newcomer, John Bice Turner, to orchestrate a secret campaign to resurrect the bankrupt G&CU. While Ogden and Scammon knew how to run a business, neither of them knew anything about building a railroad, and so they had asked Turner, who had been a contractor on a number of lines in upsate New York before he had serendipitously moved to Chicago in 1843, to join the campaign. On December 5, 1845, a mere ten weeks after Asa Whitney had returned in St. Louis and began to promote his route for the transcontinental railroad, and only seven weeks after Douglas had published his own transcontinental railroad plan, Ogden held a public meeting at the Courthouse to elect Chicago’s delegates to the Rockford convention in the coming month.

At the convention on January 7, 1846, Scammon, Newberry, Arnold, and Jones successfully presented Ogden’s proposal, with Newberry moving a resolution that their group be allowed to take over the expired charter if they could gain control over a majority of the Galena’s stock, that Newberry had then revealed was already under discussion. The resolution was almost unanimously approved by those in attendence, the news of which infuriated Hubbard when he eventually found out. But it was too late for Hubbard to do anything about it, for while Ogden’s associates were working the convention, he himself had traveled secretly to New York to finalize the purchase of the needed stock from Townsend. Ogden may have already made the acquaintence of Townsend some twelve years earlier, as Townsend had been a member of the original Board of Directors of New York & Erie Railroad when Ogden had made his impasioned speech in the New York Legislature. Among the provisos of the deal struck by the two New Yorkers had been the transfer, new stock for old stock, of six shares of Townsend’s Galena stock, one each to Ogden, Scammon, Newberry, Charles Walker, Thomas Dyer, and William H. Brown. Brown was a lawyer originally from Connecticut who had moved to Chicago in 1835 to be the Cashier of the new Chicago Branch of the State Bank of Illinois. What was to become a trademark of Ogden’s later corporate takeovers was the fact that no cash was exchanged between the involved parties. Townsend’s price was $20,000 that Ogden agreed to pay in two installments: $10,000 in full-paid stock upon the formation of the Board of Directors, and $10,000 in stock upon the road’s completion to the Rock River (note that at this early date Ogden had already decided to build to Rock Island, and not to Galena!). Following the Rockford convention, the new stockholders met in Chicago and elected a new Board of Directors, with Ogden as its president. The Ogden group had handily beaten Hubbard in taking over control of the city’s first railroad.