The Bee Line Railroad Financing Dilemma: Loss of Local Control

Indianapolis and Bellefontaine Railroad 1853 advertisement-schedule
Indianapolis & Bellefontaine RR train schedule, printed in Calvin Fletcher’s diary, courtesy of the Indiana Historical Society.

See Part I to learn about the origins of the Bee Line and the men who brought it to life.

The Bee Line Railroad almost never was. At the dawn of the Midwest railroad era Hoosiers were slow to embrace what became the technological marvel of the 19th century. Dependent on state funds or newly emerging Wall Street for cash, initial railroad financing prospects looked dim. Instead, canals were the preferred method of transportation in the mind of the public.

The State of Indiana began planning for a litany of “internal improvements” from its inception in 1816.  In his 1827 message to the General Assembly, Governor James B. Ray (1825-1831) admonished the legislators, noting that railways could convey “equal burdens to any that can be transported on a Canal . . . and with double the velocity.” However, at the time, the legislature was not moved by his argument.

Indiana Governor James B Ray and Wall Street financier James F. D. Lanier
(L) Governor James B. Ray, courtesy of the Indiana Historical Society (R) James F. D. Lanier, Sketch of the Life of J. F. D. Lanier (self-published, 1877).

Finally, as interest in railroads began to percolate by 1832, legislators approved charters for eight – including the Madison, Indianapolis and Lafayette Rail-Road Company. Prominent among its board members was Madison banker James F. D. Lanier, destined to become the leading Wall Street financier of virtually all Midwest railroad era lines during the mania of the 1850s, including the Bee Line.

More than thirty Indiana railroads were chartered between 1832 and 1838. Nonetheless, attempts to lure private capital via stock subscriptions fizzled. Only a mile and a quarter of experimental track had been laid near Shelbyville by the end of the decade.

Madison and Indianapolis Rail Road 1850 Annual Report Cover
Annual Report Cover, Madison and Indianapolis Rail Road Company, 1850, courtesy of the Indiana State Library.

Indiana’s infatuation with canals was reflected in the Mammoth Internal Improvements Act of 1836, which appropriated one-sixth of the state’s wealth for the effort. Of eight state projects funded, only one was for a railroad – what became Indiana’s first: the Madison and Indianapolis Railroad [M&I].

Much of the debt to fund these efforts was taken up by the financial barons and financiers of Europe. Rolling mills and metal fabricators in the United Kingdom (UK) were then seeking new markets for their locomotive and rolled rail products. American manufacturers capable of producing such articles were only just beginning, as the Industrial Revolution reached its peak in Europe a full generation before doing so in the U.S. It became a mutually dependent relationship through the 1850s: English products for American dollars.

By the early 1840s Indiana’s failed internal improvements push had become obvious. The state called on Lanier to extricate it from near financial ruin. Before Lanier sailed to Europe in 1847 to negotiate Indiana’s financial exit plan, it had already jettisoned its canal and railroad holdings.

Beyond his success ensuring the state’s survival, Lanier returned from Europe with the confidence of the barons of Continental and English finance. Since the UK was America’s primary source for finished iron rails until the Civil War, the importance of such developed trust was pivotal. These relationships became the cornerstone of Lanier’s success as the Midwest’s preeminent member of Wall Street’s new financial sector: investment banking.

Wall Street Investment House floor circa 1865
Wall Street Investment House, circa 1865.

As part of its privatizing move in 1842, the Indiana legislature had authorized the M&I to borrow money and issue bonds to complete the line to Indianapolis not later than 1848. In his role on the M&I’s reconstituted board, Lanier orchestrated placement of $50,000 (in 1845) and $100,000 (in 1846) of private bonds through the Wall Street firm which would soon bear his name: Winslow, Perkins & Co.

With funds in hand, the M&I finished the final fifty-six miles of track to Indianapolis by October 1847, at a cost of $628,000. Daniel Yandes, subsequently the Indianapolis and Bellefontaine Railroad’s primary stockholder, had won a bid to construct ten miles of the road. The whole task was finished nearly a year before its targeted completion date. In comparison, as a state-run company, it had taken seven years and over $1.5 million to lay the line’s first twenty-eight miles.

The M&I’s Wall Street firm of Winslow, Perkins & Co. began to weigh in on the railroad’s managerial approach after suffusing it with cash. It foretold the more active role financiers would take in operational decision-making of businesses they were funding. To that end, a new president arrived at the M&I in August 1848: John Brough of Ohio, whose life would revolve around the Bee Line railroad.

John Brough image
John Brough. Courtesy of the Ohio History Connection.

Brough had been a youthful and powerful member of Ohio’s legislature. As a freshman legislator at the age of 26, he chaired the Committee on Banks and Currency. Subsequently he was chosen the state’s auditor, a position he held until 1845. Brough had come to Madison, Indiana from Cincinnati, after a three year stint with his brother running the emerging Cincinnati Enquirer newspaper.

By the time Brough issued his first report to shareholders in January 1849, the newly christened Wall Street financial firm of Winslow, Lanier & Co. held more than $92,000 of M&I cash equivalents. Both Merssrs. Winslow and Lanier held positions on the board of directors.

Wall Street was fast becoming the financial clearinghouse for matching Eastern Seaboard and European investors with Midwest railroad securities. A new class of private bankers arose, backed by European firms, which began to serve as investment middlemen. These newly coined “investment bankers” evaluated the quality of securities, served as investment advisers to individuals with surplus capital, acted as financial agents for the railroads, and frequently took investment positions themselves. They also allocated investment capital among the many railroads seeking cash infusions.

Map of Midwest Railroads, with Madison and Indianapolis, Indianapolis and Bellefontaine, Bellefontaine and Indiana, and Cleveland, Columbus and Cincinnati railroads annotated in color
Map of Midwest Railroads, with the Madison and Indianapolis [M&I], and Bee Line component lines: Indianapolis and Bellefontaine [I&B], Bellefontaine and Indiana [B&I], and Cleveland, Columbus and Cincinnati [CC&C] annotated in color. Courtesy of Erin Greb Cartography.
Initially, Brough developed a strategy to build, invest in, or otherwise secure favorable operating agreements with a planned web of railroads radiating from Indianapolis. And invest he did. The M&I, Brough reasoned, would gather agricultural goods from the southern two-thirds of Indiana and funnel them via Indianapolis to Madison for transport on the Ohio River.

To assure its dominant position, Brough used his politically powerful board to block a railroad charter for a rail line headed from Indianapolis toward Cincinnati (Lawrenceburg). He also rejiggered timetables to prevent convenient connections over a newly chartered branch line extending toward Louisville (Jeffersonville) from Columbus, Indiana.

David Kilgore image
David Kilgore, from the author’s personal collection.

David Kilgore, director of the 1848-chartered Indianapolis and Bellefontaine Railroad [I&B] – first leg of the Bee Line extending from Indianapolis to the Ohio state line – noted Brough’s aggressive, anti-competitive tactics: “now they would put their feet upon the neck of competition . . . And why? . . . Rival interests are springing up at other points, and if they can be crippled, so much the better for this city [Indianapolis] and Madison.” It would not be long, however, before Brough would prove unable to stem the tide of competition.

Brough’s involvement planning Indianapolis’ Union Station in the early 1850s, with M&I’s investment in the Indianapolis Union Railway Company, yielded insights about the financial health and intentions of other lines terminating there. Unfortunately for him, in 1851 Indiana’s new constitution was adopted, including a mandate to craft general incorporation laws. No longer would special charters be required to form new railroads. It signaled the end of the M&I’s political agility to stifle competition.

Indianapolis Union Station image circa 1906
Indianapolis Union Station, circa 1906, courtesy of the Indiana Historical Society.

As a result, Brough shifted strategies. He now sought to make two of the newborn and financially anemic lines dependent on the M&I. Brough would set his sights on the Indianapolis and Bellefontaine, building northeast from Indianapolis. It was already making plans to connect with roads angling to another key center of economic growth: Cleveland. And with the help of Lanier and his Wall Street firm, the lure would prove to be almost irresistible.

Cleveland Railway Station and Docks 1854
Cleveland Railway Station and Docks, 1854 (James Harrison Kennedy, A History of the City of Cleveland: Its Settlement, Rise and Progress 1796-1896. Cleveland: Imperial Press, 1896).

To the surprise of investors, as well as the Indianapolis and Bellefontaine’s board, costs of funding construction and operation of the new railroad had been grossly underestimated. Without access to substantial credit facilities, motive power equipment, rolling stock, iron rails and operating personnel, the I&B was going nowhere. There to “help” was Brough and Winslow, Lanier & Co.

The M&I, as orchestrated by Brough, guaranteed newly issued I&B bonds that Lanier had floated.  Now, it could purchase the M&I’s surplus iron rails, and lease its motive power and rolling stock equipment. The basis of the bargain was a lucrative five-year operating agreement, which commenced in 1850. The M&I would not only supply all personnel, but also collect and distribute ticket and freight receipts, paying itself from the proceeds it handled.

Whose railroad was it anyway? By the time the I&B started partial service between Indianapolis and Pendleton in 1851, the railroad was the Indianapolis and Bellefontaine in name only. It was all as Brough had planned.

image of Henry B Payne, president of Cleveland, Columbus and Cincinnati Railroad 1851-1854
Henry B Payne, courtesy of the Library of Congress.

There was another important aspect of the new line’s financial health. By 1853, when the I&B commenced service all the way to Union, the dominant regional player – the Cleveland, Columbus and Cincinnati Railroad [CC&C] through its president Henry B. Payne – had loaned the I&B and its sister Bellefontaine and Indiana line in Ohio a combined sum of over $100,000.

Thus, no sooner had the smaller combined Bellefontaine lines, now known collectively as the Bee Line, begun full service than they began to lose a grasp on their own destiny. Pulling the financial strings were John Brough, James F. D. Lanier, and a Cleveland Clique of businessmen and bankers headed by Henry B. Payne, then at the controls of the CC&C. The resulting tug of war between the Cleveland Clique and Hoosier Partisans for control of the Bee Line would continue throughout the 1850s.

Map of the Madison and Indianapolis, Indianapolis and Bellefontaine, Mississippi and Atlantic, Terre Haute and Richmond railroads annotated
Map of the Madison and Indianapolis [M&I] and involved lines: Indianapolis and Bellefonatine [I&B] and Mississippi and Atlantic [M&A] annotated in color, as well as the Terre Haute and Richmond [TH&R]. Courtesy of Erin Greb Cartography.
But Henry Payne and the Cleveland Clique had other aspirations as well. Controlling rail lines all the way to St. Louis would cement its dominant role among Midwest railroads. And John Brough, recognizing the need for the M&I to control other railroads heading to more viable destinations, had – with the help of James Lanier – already turned his gaze to St. Louis.

Check back for Part III to learn more about John Brough and the Cleveland Clique’s pivotal play to reach St. Louis, as well as the resulting impact on the Bee Line and its Hoosier Partisans.

Continue reading “The Bee Line Railroad Financing Dilemma: Loss of Local Control”

William Hayden English: A Man Apart

William Hayden English. Courtesy of Indiana Historical Society.
William Hayden English. Courtesy of Indiana Historical Society.

When I started researching him, William Hayden English seemed like a pretty typical figure for the 19th century: Congressman, businessman, Vice-Presidential candidate. However, I soon realized how complicated his life and his politics really were.

English played a key role in the unrest in Kansas during the antebellum period, yet supported the Union during the Civil War (but was still antagonistic towards Lincoln’s presidency). A deal broker, English often chose the middle of the road. He was a conciliator, a compromiser, and a tactical politician who was a Pro-Union Democrat who held misgivings about both slave-sympathizers in the South and radical Republicans in the North. In more ways than one, he was truly a man apart.

William Hayden English was born on August 27, 1822. Early in his life, English received some formal education. According to a letter by E. D. McMaster from 1839, English received education in the “Preparatory and Scientific departments” of Hanover College. Additionally, he received accreditation to teach multiple subjects at common schools by examiners Samuel Rankin and John Addison. He would eventually leave school and pursue law, where he passed the bar in 1840.

The English family home in Englishton Park, Lexington, Scott County, Indiana, circa 1900. English lived here for many years with his family until his time in the Indiana House brought him to Indianapolis. An IHB marker for English is at this location. Courtesy of Indiana Historical Society.
The English family home in Englishton Park, Lexington, Scott County, Indiana, circa 1900. English lived here for many years with his family until his time in the Indiana House brought him to Indianapolis. An IHB marker for English is at this location. Courtesy of Indiana Historical Society.

His major break in politics came with his selection as the principal Secretary of the Indiana Constitutional Convention of 1850. During his time as Secretary, he earned the reputation as being a thoughtful and balanced tactician, someone who was willing to work with others and make things happen.

The first page of the manuscript version of the 1851 Indiana State Constitution. English honed his political skills during his time as principal secretary for the Constitutional Convention. Courtesy of Indiana Historical Society.
The first page of the manuscript version of the 1851 Indiana State Constitution. English honed his political skills during his time as principal secretary for the Constitutional Convention. Courtesy of Indiana Historical Society.

Using this newly-earned reputation, English was first elected to the Indiana House of Representatives from Scott County in August of 1851. On March 8, 1852, after the resignation of Speaker John Wesley Davis, English was elected Speaker of the House with an overwhelming majority of the vote. He was only 29 years old, making him the one of the youngest Speakers in Indiana History.

In his election speech, he stated his praise for the new Constitution and called for a full new legal code to be established. He additionally called for a “spirit of concession and compromise” and for his colleagues to “zealously apply himself to the completion of the great work intrusted [sic] to us by a generous constituency.” In effect, the Indiana House of Representatives under Speaker English had consolidated state government and extended its purview to neglected regions of the state.

William English's officialt Congressional Portrait, 1859. Courtesy of the Library of Congress.
William English’s official Congressional Portrait, 1859. Courtesy of the Library of Congress.

After his time in state government, English was called for national service. He won his first election to the United States House of Representatives in 1852, and was reelected in 1854, 1856, and 1858. During his tenure in Congress, English would be remembered for his “wise and patriotic course in Congress,” notably his important role in crafting a controversial bill that gave Kansas the choice of whether to come into the Union as a free or slave state.

English’s time in Congress, much like the rest of his political career, can be seen as pragmatic. While he morally abhorred slavery, he condemned abolitionists and believed in the notion of “popular sovereignty,” which argued that the people of a state or territory should choose for themselves whether to have slavery. He stated his view in a speech in 1854:

Sir, I am a native of a free State [sic], and have no love for the institution of slavery. Aside from the moral question involved, I regard it as an injury to the State where it exists….But sir, I never can forget that we are a confederacy of States, possessing equal rights, under our glorious Constitution. That if the people of Kentucky believe the institution of slavery would be conducive to their happiness, they have the same right to establish and maintain that we of Indiana have to reject it; and this doctrine is just as applicable to States hereafter to be admitted as to those already in the Union.

During this session, Congress was debating a bill named the Kansas-Nebraska Act, which would repeal the Missouri Compromise (also known as the Compromise of 1820) and allow for states and their citizens to decide whether they wanted to be admitted as a slave state or free state. English voted for the bill and it was later signed into law by President Franklin Pierce on May 30, 1854. Almost immediately, violence erupted between pro-slavery and anti-slavery advocates in the state, who could not agree on the direction of the state constitution.

Alexander Stephens, circa 1860s. A congressman from Georgia, Stephens helped English craft the "English Bill" that would later ensure that Kansas as a free state. Today, he is best remembered for being the Vice-President of the Confederacy during the Civil War. Courtesy of the Library of Congress.
Alexander Stephens, circa 1860s. A congressman from Georgia, Stephens helped English craft the “English Bill” that hoped to quell unrest in the territory of Kansas. Ironically, he is best remembered for being Vice-President of the Confederacy during the Civil War. Courtesy of the Library of Congress.

After his reelection in 1856, English, along with congressional colleague Alexander Stephens, went to work on a compromise bill that would potentially quell the violence and political unrest. This compromise, known as the English Bill, allowed the citizens of Kansas to either accept or reject the pro-slavery Lecompton Constitution. However, if the citizens of Kansas chose to be a slave state by referendum, they had to additionally let go of federal land grants within the territory.

The bill passed and the voters of Kansas did not reject the land grants, thus rejecting the Lecompton Constitution. Upon the Bill’s passage, English declared that, “The measure just passed ought to secure peace, and restore harmony among the different sections of the confederacy.” The Kansas issue would be not resolved until its admission to the Union as a free state in 1861.  As he did in the Indiana House, English struck a compromise that hoped to quell the violence, using federal land grants as a way to take heat off the slavery issue.

While the English Bill attempted to stave off conflict within Kansas, the harmony among the nation was short lived. The growing tensions among pro-slavery and anti-slavery factions of the country were mounting, and English lamented this development in one of his final speeches to Congress. He chastised both the abolitionists and radical Republicans, who he believed had appealed to the “passions and prejudices of the northern people, for the sake of getting into office and accomplishing mere party ends.” To English, the cause of all this strife was the agitation of the slavery question and the solution would be to elect a Democrat President and ensure that the national discussion be reverted back to other issues of state. This did not happen; in the fall of 1860, voters chose Republican Abraham Lincoln and the first seven southern states seceded from the union.

By 1861, right as English was leaving Congress, the United States became engulfed in Civil War. While many within the national Democratic Party either defected to the Confederacy or took a tenuous position of support in the north, English was unequivocally for the Union. In an August 16, 1864 article in the Indiana Daily State Sentinel, the Committee of the Second Congressional District, under the chairmanship of English, wrote a platform that supported the Union and decried the act of secession. However, it did reserve criticism for President Lincoln, particularly with regards to supposed violations of freedom of speech. English’s pragmatic, even-handed political gesture fell in line with many of his past political actions.

Campaign poster for candidacy of Winfield Scott Hancock and William Hayden English, 1880. Image courtesy of the Library of Congress.
Campaign poster for candidacy of Winfield Scott Hancock and William Hayden English, 1880. Image courtesy of the Library of Congress.

After his time in Congress,  he was the President of the First National Bank of Indianapolis for 14 years. He established the bank in 1863, taking advantage of the reestablished national banking system during the Civil War. According to historian Emma Lou Thornbrough, the First National Bank of Indianapolis became “the largest bank of Indianapolis, and one of the largest in the Middle West.” He is also listed as a “banker” in the 1870 Census and as a “capitalist” in the 1880 Census. By the time of his death in 1896, English had become one of the wealthiest men in Indiana.

Even though his time in national politics was years removed, he was nonetheless nominated by the Democratic Party in 1880 for Vice President, with Winfield Scott Hancock as President. Articles in the Indianapolis News and the Atlantic noted that his chances for the Vice-Presidential nomination were quite good, especially if the candidate was presumed front-runner Samuel J. Tilden of New York. Within days of the News piece, when asked if he was interested in the VP nomination, English said, “None whatever, for that or any other office.

A campaign poster for Hanock and English, with a patriotic flair, 1880. Image courtesy of the Library of Congress.
A campaign poster for Hanock and English, with a patriotic flair, 1880. Image courtesy of the Library of Congress.

Despite his protestations, English was nominated for the Vice-Presidency by the Democratic Party on June 24, 1880, after Tilden redrew his consideration for the Presidential nomination and General Winfield Scott Hancock was elected in his stead. In his acceptance letter, English wrote that he was “profoundly grateful for the honor conferred” and that his election with Hancock would be a triumph over the dominance of the Republican Party in the presidency. Their chances to win the White House were dashed when they lost to Republicans James Garfield and Chester Arthur in the General Election.

English's Hotel and Opera House, circa 1948. Completed in 1880, it became a mainstay on Monument Circle before its demolition in 1948. Courtesy of Indiana Historical Society.
English’s Hotel and Opera House, circa 1948. Completed in 1880, it became a mainstay on Monument Circle before its demolition in 1948. Courtesy of Indiana Historical Society.
William Eastin English, circa 1880s. The son of William H. English, William E. managed the English Hotel and Opera House. Like his father, he became a successful businessman and U.S. Congressman. Courtesy of Indiana Historical Society.
William Eastin English, circa 1880s. The son of William H. English, William E. managed the English Hotel and Opera House. Like his father, he became a successful businessman and U.S. Congressman. Courtesy of Indiana Historical Society.
Actor Lawrence Barrett, circa 1880. When English's Hotel and Opera House opened on September 27, 1880, Barrett played the lead role in its production of Hamlet. Courtesy of Indiana Historical Society.
Actor Lawrence Barrett, circa 1880. When English’s Hotel and Opera House opened on September 27, 1880, Barrett played the lead role in its production of Hamlet. Courtesy of Indiana Historical Society.

While he was running for Vice-President, English’s business empire was also expanding, with his financing and construction of the English Hotel and Opera House. Historians James Fisher and Clifton Phillips noted that English purchased land on the city circle in the 1840s, as a residence for himself and his family. In early 1880, during renovations on the circle, English announced that he would invest in the construction of a new Hotel and Opera House. His son, William E. English, became the proprietor and manager. It officially opened on September 27, 1880, and the first performance was Lawrence Barrett as Hamlet. It would be in continual use until its closure and demolition in 1948.

English served as the President of the Indiana Historical Society, from 1886 until in his death ten years later. During his tenure, English wrote a two-volume history of the Northwest Territory and the life of George Rogers Clark. It was published in 1896, shortly after his death. An 1889 article in the Indianapolis Journal noted his compiling of sources and his emerging methodology; a two-volume general history that would be divided at the 1851 revised State Constitution. By 1895, the project materialized into the history mentioned above, with English using documents from leaders involved, such as Thomas Jefferson and Clark himself. He also conducted interviews with other key figures of the revised Indiana Constitution. English’s historical research became the standard account of the Northwest Territory for those within the Historical Society and the general public for many years.

The English family home on Circle Street, Indianapolis, 1870s. English lived in Indianapolis for most of his adult life, occasionally visiting his home in Scott County. Courtesy of Indiana Historical Society.
The English family home on Circle Street, Indianapolis, 1870s. English lived in Indianapolis for most of his adult life, occasionally visiting his home in Scott County. Courtesy of Indiana Historical Society.

William English died on February 7, 1896, as reported by the Indianapolis Journal. On February 9, thousands came to see his body displayed in the Indiana State Capitol before he was buried in Crown Hill Cemetery.

His legacy in Indiana is lesser known, but he does have some monuments. A sculpture in the Indiana Statehouse commemorates his place in history. The town of English, Indiana is also named after the late politician. According to historian H. H. Pleasant and the Crawford County Democrat, the unincorporated town was originally named Hartford. It was changed to English in 1886 after the town was officially incorporated, in honor of election to Congress from the area. He also has an IHB marker at his former home in Lexington, Scott County, Indiana.

The William English Bust in the Indiana State House. Located on the fourth floor, the bust only lists his time as Indiana House Speaker as an accomplishment. Courtesy in.gov.
The William English Bust in the Indiana State House. Located on the fourth floor, the bust only lists his time as Indiana House Speaker as an accomplishment. Courtesy in.gov.

To many who enter the Statehouse and see his statue on the fourth floor, he might be just another leader of Indiana’s past. However, English’s political career attempted to stave off Civil War (at least temporarily) and reinforced Indiana’s political tradition of measured, temperate leaders who sought a middle ground on most issues. In that regard, English might be one of Indiana’s most emblematic statesmen.