Tag: banking

Thomas A. Hendricks: “The Constitution as it is, the Union as it was”

Governor Thomas Andrew Hendricks, Governors’ Portrait Collection, accessed Indiana Historical Bureau.

Thomas A. Hendricks (1819-1885), an attorney from Shelbyville and, later, Indianapolis, became the most prominent Democrat in Indiana during the Civil War era. As such, he articulated the conservative Democratic position most forcefully and memorably. This stance can be summed up in the words, “The Constitution as it is, the Union as it was.” Hendricks was also known for his outspoken white supremacist, but antislavery, views.  His frequently quoted remark, uttered on the floor of the U.S. Senate, reveals this attitude: “This is the white man’s Government, made by the white man, for the white man.”

In a storied career that included single terms as senator, governor, and election in 1884 to the vice presidency of the United States, Hendricks spent nearly four decades in public life.  First elected to the Indiana House of Representatives in the late 1840s and then to Congress in 1851, he was appointed by President Franklin Pierce (and later reappointed by President James Buchanan) to lead the extremely busy General Land Office during a period of numerous and generous land grants.  Increasingly out of step with Buchanan’s proslavery and anti-homestead bill policies, Hendricks resigned his Washington position in 1859.

Governor Oliver P. Morton, Governors’ Portraits Collection, accessed Indiana Historical Bureau.

He returned to Indiana, and almost immediately found himself at the head of the Democratic Party ticket as it attempted to retain control of the state’s reins of power. However, although 1860 was a Republican year, Hendricks fared better against his gubernatorial opponent, Henry S. Lane, than did the rest of the Democratic ticket.  Then, according to a pre-arranged agreement, Governor Lane was chosen by the Republican-controlled General Assembly to become Indiana’s new United States senator.  The energetic and ambitious lieutenant governor, Oliver P. Morton, then became governor and served throughout the Civil War.

It was a different story in the off-year elections of 1862, when the unpopularity of the war and many of President Abraham Lincoln’s policies—especially his emancipation plan—resulted in a Democratic sweep of state offices, including control of the Indiana General Assembly.  When this body elected another new senator, the popular Hendricks was chosen.  In office from 1863 to 1869, Senator Hendricks was involved with the final years of the Civil War and the first years of Reconstruction. Initially, he stoutly supported the Union’s war effort, but not the plans for the emancipation of African American slaves. After the war, he spoke out against (and voted against) the three so-called Civil War Amendments (the 13th, 14th and 15th) to the federal Constitution.  In his view, the impassioned feelings of the immediate postwar era and the absence of representatives in Congress from eleven states, made the times “unpropitious” for making basic constitutional changes.

Governor Conrad Baker, Governors’ Portraits Collection, accessed Indiana Historical Bureau.

Obviously, Hendricks’s views resonated with his fellow Hoosier Democrats, and while still a senator he was nominated to run again for governor in 1868.  Hendricks was narrowly defeated by the incumbent governor, Conrad Baker, who had succeeded Morton when he went to the U. S. Senate in 1867. Hendricks retained his personal popularity and ran a third time, successfully, for the governor’s seat in 1872, serving from 1873 to 1877.  Still not done with electoral politics, the charismatic governor was Samuel J. Tilden’s running mate in the famous “disputed election of 1876,” in which the Democratic team received more votes than did their opponents, but a partisan Electoral Commission awarded the victory to Republicans Rutherford B. Hayes and William A. Wheeler.

Campaign poster for Grover Cleveland and Thomas A. Hendricks, 1884, courtesy of PBS Learning Media.

Hendricks’ final campaign came in 1884 when he reluctantly, for health reasons, agreed to join Grover Cleveland at the head of the Democratic Party ticket. Successful this time, Hendricks’ service as vice president was destined to be short.  Inaugurated in March 1885, the Hoosier politician died at his home in Indianapolis in November 1885.

Regarding Hendricks’ Civil War years in Indiana, there is no evidence that he was a member of any “dark lantern” society, the Knights of the Golden Circle, the Sons of Liberty, or the Order of American Knights; nor was he a Copperhead, if one defines that term as a Northerner who supported the South during the war.  If, however, one defines the term more broadly to include those who opposed the Lincoln administration and, following Lincoln’s death, the Radical Republican agenda, then, of course, Hendricks certainly belongs in that category.

Greenback bill, issued March 1863, courtesy of Museum of American Finance.

He was an outspoken critic of what he considered the excesses of Lincoln’s wartime policies, including emancipation, suspension of the writ of habeas corpus, high tariffs, the issuance of “greenbacks” and other banking policies that he believed aided the New England states at the expense of western states, and many more extra-military actions by both the state and national administrations. In particular, Hendricks lambasted the Lincoln administration in a major speech in Indianapolis on January 8, 1862, during the state Democratic Party convention, which in its platform condemned the Republicans for rejecting compromises that might have averted war, and for its violations of freedom of the press and the domestic institutions of sovereign states. But Hendricks consistently supported the war to save the Union, urged compliance with the draft, and deplored armed resistance to its enforcement.

Thomas A. Hendricks monument at the Indiana State House, accessed Wikipedia.org.

In May 1863, at the time of another party gathering in Indianapolis, Hendricks was threatened by an unauthorized band of roaming soldiers when he attempted to speak.  The melee that followed led up to the events known as the “Battle of Pogue’s Run.”  Hendricks was also at the center of a volatile situation when he joined Governor Morton on the steps of the state house in eulogizing the assassinated president; Morton’s stern demeanor quieted the protesters, following cries of “Hang him” aimed at Hendricks, and the Democrat was able to continue his remarks. Ironically, this episode occurred near the site on the current State House grounds where a tall monument with a larger than life-size statue of Hendricks was erected in 1890 and still stands.

Bibliography

Gray, Ralph D. “Thomas A. Hendricks:  Spokesman for the Democracy,” in Gray, ed., Gentlemen from Indiana: National Party Candidates, 1836-1940. Indianapolis: Indiana Historical Bureau, 1977.

Holcombe, John W., and Hubert M. Skinner. Life and Public Services of Thomas A. Hendricks with Selected Speeches and Writings. Indianapolis: Carlon and Hollenbeck, 1886.

Neely, Jr., Mark E., The Fate of Liberty: Abraham Lincoln and Civil Liberties. New York: Oxford University Press, 1991.

Stampp, Kenneth M.  Indiana Politics during the Civil War. Indianapolis: Indiana Historical Bureau, 1949.

Tredway, G. R. Democratic Opposition to the Lincoln Administration in Indiana. Indianapolis: Indiana Historical Bureau, 1973.

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”