Conquering Gotham Page 5

  “In 1891,” Rea later wrote, “I resigned my position in Baltimore on account of ill health, and on the same day I had a message from Mr. [George] Roberts asking me to refrain from committing myself to any professional engagement until he could see me. This was exceedingly gratifying to me, as well as a surprise, for when I left the Pennsylvania Railroad I felt it unlikely that I would ever be invited to return to the service.” Having lost him to a rival road, Rea’s old superiors wanted him back, a signal tribute to his stellar qualities—his brains, his quiet thoroughness, his easy way with his men, his voracious intellectual curiosity and technical brilliance. What Cassatt particularly liked was Rea’s hustle. Rea did big things right, without fuss or folderol. And like Cassatt, Samuel Rea was a reader, a curious man who wanted to know what went on in the world beyond engineering. They were both also, unusual for their kind, Democrats.

  Samuel Rea as a young PRR employee.

  On May 25, 1892, Rea, now rested and recovered from his health problems, met with PRR president George Roberts at the Broad Street Station offices, where one could hear and feel the hiss and rumble of the powerful steam locomotives in the gigantic train shed below. Rea would work for Roberts himself. His new bailiwick was equally flattering: the study of various large and vexing engineering problems, above all that perennial “bitter trial”—how best to enter New York. As Rea was about to sail to England on vacation, President Roberts asked him to study London’s rapid transit tunnels, especially those under the Thames River.

  Soon after Rea returned from England in the fall of 1892, Roberts told him, “I would be glad to have you see Mr. Cassatt, who has had more or less to do with the question of reaching New York, and take up this subject in its broadest sense.” He, President Roberts, and Cassatt began spending hours around the big wooden conference table discussing five possible solutions. “The railroad situation at New York is unique: a parallel does not exist,” Samuel Rea once explained. “Here is a great seaport…of commercial importance second to none in the world, separated by navigable waters of a river from all the rail transportation systems of its country, with but a single exception, namely the New York Central system.” Moreover, Rea had warned Roberts back then, “This is not a simple task.” Entering Gotham would be “one of the World’s great undertakings—on a parity with such works as the Suez and Manchester Ship Canals, and of equal, if not greater importance.”

  Roberts, ever one for the tried and true, favored a plan already in use for New England-bound trains, which were floated across the harbor to be put on the tracks of the New Haven line. He envisioned a “floating service for trains” that would run hundreds of daily passenger trains arriving at Exchange Place straight onto swift steamships that would ferry them across the Hudson to the “foot of West Thirty-fourth Street, where, with transfer bridges, the cars would be placed on tracks that would run in a tunnel under Thirty-fourth Street to a point near Ninth Avenue and turn in under the Blind Asylum property…where a suitable station was to be located.” Roberts could persuade no others to like this plan.

  George B. Roberts, president of the Pennsylvania Railroad, 1880–1897, died in office.

  A second option: resurrecting and finishing Haskins’s moribund tunnel, intending to operate cable-drawn trolleys from Jersey City into a lower Manhattan terminal and elevated stop. Opinion here was also lukewarm. If the tunnel could be finished—a big if—it was still inadequate to the problem. The third option also involved trolley tunnels, but new ones from Jersey City to Cortlandt Street and Maiden Lane, and under the East River to Flatbush Avenue. These evoked more enthusiasm. Rea and Charles Jacobs, a British engineer, even made surveys, studies, and estimates, “but only for small-sized cars doing a local suburban business.” Cassatt was opposed, for weary train passengers still had to drag themselves and their luggage to the trolley.

  Cassatt had championed a fourth solution, a convoluted “back door” entry into Manhattan via “a tunnel under the ‘Narrows’ and thence across Brooklyn via the Bay Ridge route, and by bridge across the East River to a terminus at Thirty-eighth Street and Madison Avenue.” But the plan’s advantages were offset by three serious flaws: it required steam locomotives to get through the tunnel, it would not serve the PRR’s many New Jersey commuters, and it added ten miles to the trip. Only Cassatt was enthused.

  The fifth possibility was, of course, Gustav Lindenthal’s North River Bridge. Rea argued in favor, asserting, “This…solves the problem. It would furnish an ideal terminus in the heart of our greatest city for passenger traffic, and in addition would develop freight facilities of inestimable value.” Rea had calculated that the North River Bridge itself would cost $27 million, and the station, hotel, and warehouses another $15.5 million. With right-of-ways and other necessary real estate, the full tab was a breathtaking $100 million. Of course, the federally chartered bridge would be (in fact, had to be) shared with all other lines, and they in turn would certainly help finance it and pay to use it. But the Pennsy, the “Standard Railroad of America,” would have to lead.

  Now, Rea exhorted his colleagues, “No half-way solution should be attempted by the Pennsylvania Railroad Company. It should ultimately go into New York in such a manner as to answer the needs of the Company for the next half century at least, and on an equality with, if not on a more elaborate scale, than the New York Central & Hudson River Railroad.” Samuel Rea was making an impassioned call to corporate arms. Were they to continue letting the Vanderbilts best them? Were they to shy away from this monumental challenge? Before they could act, the Panic of 1893 struck and industrial depression ended all such ambitious enterprises.

  And so in mid-1899, when Cassatt dutifully emerged from his early retirement to take charge of the beleaguered Pennsylvania Railroad, Lindenthal’s vast suspension bridge still seemed the best answer to the PRR’s long quest to enter Gotham. Not only was the bridge federally chartered, a status confirmed by the U.S. Supreme Court, the Army Corps of Engineers had bestowed its blessing and Lindenthal had redesigned it yet further to handle the ever-increasing volumes of traffic. The design for the North River Bridge now featured fourteen train and trolley tracks as well as numerous pedestrian and carriage lanes soaring high above the mile-wide North River. It would touch down in Manhattan and wend its way to a gigantic and glorious Union Station at Thirty-fifth Street and Seventh Avenue, there to intersect with the lines of the elevated and trolleys. And the era’s powerful steam locomotives with all their belching coal smoke and cinders could easily enter Manhattan via the large open-air bridge. On October 24, 1899, Samuel Rea, who was actively working with Lindenthal on financing the bridge, wrote Cassatt wondering, “Did you make an engagement in New York this week with Mr. J. P. Morgan?”

  For almost three irksome decades, day and night, through rain, shine, sleet, and snow, the Pennsylvania Railroad’s ferryboats had plied the Hudson. To handle the ever-growing multitudes coming and going between Manhattan and the rest of the world, the PRR had added in 1897 another ferry stop at West Twenty-third Street, while an entirely separate PRR fleet known as The Annex boats served downtown Brooklyn. Now, when Cassatt boarded his ferries, and they chugged forth into the luminous space of river and sky, he could look north and envision Lindenthal’s North River Bridge, imagining a few years hence his beautiful PRR trains steaming elegantly into Manhattan at last.

  Ferryboat plying the North River between New Jersey and Manhattan.

  On September 12, 1900, the PRR’s directors formally committed their railroad to this monumental project. The PRR made no public announcement, but guaranteed Lindenthal in writing that 200,000 of their passenger cars (at four dollars each) would roll across the Hudson each year on his bridge. This had been a hard-won triumph, but would not be enough revenue. Lindenthal calculated that when his North River Bridge first opened, it could handle 900,000 “passenger coaches, baggage and express cars, dining, parlor and sleeping cars, but not counting mail cars.”

  To obtain financing, Lindenthal r
equired firm commitments from each railroad, especially the major trunk lines. Even the Vanderbilts would come in as partners, for the Grand Central Terminal was close to its capacity, and a second Manhattan depot could well serve their West Shore line. And so, Alexander Cassatt and the PRR finally had at hand a definite plan for entry into Gotham. They had only to convince the other roads that it was in their best collective interest to back the bridge and enable all to steam into Manhattan in monumental style.

  But before Alexander Cassatt could help build the North River Bridge, he had to stave up the tottering finances of his powerful road. This meant doing what no other American railroad monarch had ever yet managed: killing illegal railroad rebates, for decades the bane of the business world, “a thing whose existence was half admitted, half denied, a kind of ghostly economic terror.” Moaned the PRR’s board, “The struggle for competitive traffic had forced down the actual rates paid by shippers to a point where none but the strongest and best equipped lines could earn a living profit…Agreements to maintain rates were not worth the paper upon which they were written.”

  The railroad rebate had distorted the whole economy to the benefit of the big, the strong, and the bullying. Consequently, reported one associate, “Cassatt had not occupied the President’s chair an hour,” back in June of 1899, when “he startled the railroad and financial world by his unheralded call on Mr. [William K.] Vanderbilt at the Grand Central Station, and in a short conference evolved his ‘community of interest’ plan.” It was a hugely audacious and expensive strategy, involving a concerted alliance with the Vanderbilts, the PRR’s biggest rival, and their New York Central, equally beleaguered by secret rebates. To stop the weaker roads and their pusillanimous yielding on rebates, declared Cassatt, “Why, simply buy a dominating interest in them.”

  And so the Vanderbilts and the PRR each spent staggering sums—the PRR’s part was $110 million at a time when its net profits were $333 million—to secure dominance in the Baltimore & Ohio Railroad, as well as a handful of smaller lines. With their own newly appointed men instilling backbone on these boards, in the spring of 1900 Cassatt announced in his low-key manner, but with great relish and surprising certainty, that the Pennsylvania Railroad’s published public rates were the now real rates. For everyone. The question was, could Cassatt and the PRR outlaw rebates when for two decades all others had failed?

  The PRR’s biggest and most difficult customer and its most persistent and entitled rebater was none other than Andrew Carnegie, the brilliant, diminutive Steel King. Carnegie always cast himself as a public-spirited man superior to other run-of-the-mill millionaires. Yet this cutthroat genius of capitalism had for years ruthlessly (and illegally) played one road against the other for sub rosa rock-bottom rates and rebates. One of Carnegie’s old employees jeeringly reminded his longtime boss of this darker, predatory side, for “through the great volume of your business, you were able to take railroads by the throat and to compel them to secretly violate state and federal laws—to steal vast millions of money from their stockholders and dump them into your Carnegie Steel Co. Ltd…. you were the ‘chiefest rebater’ of the Penna. R.R. Co…. [Why don’t you] frankly acknowledge that you have been the Prince of Grafters and the King of Rebaters as well as the Steel King and the Emperor of Libraries?”

  By 1900 Carnegie, whose state-of-the-art mills spread across Pennsylvania’s grimy riverfronts produced more steel than all of England, was ostensibly retired to Skibo, his Scottish Highlands estate, and a life of golf and salmon fishing. Nonetheless he was in a choleric state about Cassatt’s new No Rebate policy. On October 9, Carnegie dictated a letter to young Charles Schwab, his hand-chosen successor as president of Carnegie Steel: “Mr. Cassat’s [sic] action is the most serious blow we have ever received, and it is a life and death struggle…He is a clever, able man, has a versatile brain. He has hastily assumed that he could make what rates he pleased through combination with competing lines. That the public will not stand.” And so the battle was joined.

  Gustav Lindenthal’s North River Bridge design in 1890.

  Alexander Cassatt was determined to destroy the entrenched system of spectral rebates. Above all, the PRR desperately needed that lost revenue and more to begin the monumental revamping, rebuilding, and expanding of its gridlocked system. Until then on his proud but beset road, “Overworked engines failed every day by dozens on the lines. Yards were piled with freight that should be moving to its destination. The main tracks were not sufficient to accommodate the traffic, and the equipment not enough to carry it. Shippers were raising angry voices from one end of the system to another.” Only when the lost revenues were recovered could Cassatt make real his longtime dream, the building of the New York extension via the North River Bridge.

  But some of Cassatt’s motivation was more personal. As the twentieth century dawned, Cassatt possessed the prize of power that had eluded him as a younger man. He had that rare opportunity—a second chance in life to rectify a terrible wrong. After those searing days of the Pittsburgh Railroad Riots of 1877 and the PRR’s subsequent capitulation to John D. Rockefeller, Cassatt had come to appreciate how terrible corporate power could be when carelessly or wrongly wielded. Afterwards, he had been the only railroad official to willingly testify at government inquiries into Standard Oil’s predatory chicaneries. At a time when more and more of the middle class feared the rising power of the trusts and monopolies, Cassatt felt it his duty to use his newfound power to conduct business honorably. Though he generally shunned the press, he had helped the star journalist of McClure’s Magazine, Ida Tarbell, understand how Standard Oil unfairly destroyed its early rivals. The conflict between labor and capital was as bitter as ever, but Cassatt, whose impatience in Pittsburgh had contributed to the deadly riots, now tried to be fair to his own employees, sharing the road’s wealth by establishing a pension plan for workers retiring at age seventy, and a Relief Fund. All employees making less than two hundred dollars a month were given two 10 percent raises.

  None of this interested Andrew Carnegie, who was hell-bent on retrieving his rebates. On the last day of 1900, the Steel King sat in his Fifth Avenue townhouse at West Fifty-first Street (a wedding present to his much younger wife) writing Cassatt a hectoring letter: “You have returned to harness after years of recreation and rushed into a policy which, being unsound, as I believe, you will soon abandon…there will be a return to the rates which your predecessors thought it wise to give us East and West.” Carnegie, who always adored the limelight (he had a special drawer in his rolltop desk where his secretary slipped in favorable articles about him), attacked Cassatt in the most high-profile way in the New York and Pittsburgh papers: “Carnegie Says Railroad Rates Are Outrageous,” and the triumphant but untrue, “Carnegie Forces Pennsylvania to Reduce Rates.”

  Fortunately for Cassatt, Andrew Carnegie was not only engaged in a high-profile war with the PRR, he was also—in between games of golf, his latest passion—mobilizing against Wall Street financier J. P. Morgan over steel. The ferocious Morgan, with his plutocrat’s large belly and his nose permanently inflamed by acne rosacea, had angered Carnegie by cobbling together a small steel tube trust. No one doubted that Carnegie could obliterate Morgan’s firms with better, cheaper tubes. Morgan chomped on his Cuban cigar and complained, “Carnegie is going to demoralize railroads just as he demoralized steel.”

  Nor did Charles Schwab, thirty-eight, the handsome strapping president of Carnegie Steel, harbor much zest for Carnegie’s warlike machinations. He was ready to enjoy his millions. As 1901 dawned, he and Morgan combined most of the nation’s iron ore deposits and steelmakers into one giant trust, U.S. Steel, the world’s first billion-dollar corporation. J. P. Morgan bought out Carnegie for $480 million in a deal that stunned and unsettled the nation. Morgan’s billion dollars “represented a twenty-fifth of the whole national wealth, more than the combined dividends from the railroads for eight years, and more than the value of all the wheat and barley and cheese and gold
and silver and coal produced in 1900 in America.” Few had dreamed that even J. P. Morgan had the wherewithal to pull off such a coup. The historian Henry Adams quipped to his friends, “Pierpont Morgan is apparently trying to swallow the sun.”

  Morgan’s pact with Carnegie delivered Cassatt and the PRR a most felicitous peace, for in dispatching the Steel King to golf and good works, Morgan had ended Carnegie’s war to retain his illegal railroad rebates.

  With great pride President Cassatt would tell a reporter, “We have trampled out the secret rate and rebate system, which was not only ruining the railroads, but also made for unequal and unfair conditions of business in America.” And so, with the combative Andrew Carnegie bought out, the rebates “trampled,” and the PRR’s coffers filling nicely, in the early summer of 1901 Alexander Cassatt was firmly focused on building Gustav Lindenthal’s gargantuan North River Bridge.

  FIVE

  “A SEVERE DISAPPOINTMENT”