National Aspirations, Financial Chicanery and the Ultimate Destiny of the Bee Line Railroad

Leander M. Hubby (Biographical Cyclopedia and Portrait Gallery of the State of Ohio, Vol. 4. Cincinnati: Western Biographical Publishing Company, 1887); First Annual Report Cover, Cleveland, Columbus, Cincinnati and Indianapolis Railway, books.google.com.

On December 5th 1868, a home gas stove explosion nearly killed and “terribly burned” longtime Cleveland, Columbus and Cincinnati Railroad (CC&C) president, Leander M. Hubby. For more than a decade Hubby had led this regional powerhouse as it solidified its financial grip on the Bee Line component railroads. Along the way, he earned an almost patriarchal reputation among officers and men of the road’s operating corps.

Routes of the Cleveland, Columbus and Cincinnati Railroad , Cleveland, Columbus, Cincinnati and Indianapolis Railway
Routes of the Cleveland, Columbus and Cincinnati Railroad (green; Bee Line), Bellefontaine Railway (red) and Cleveland, Columbus, Cincinnati and Indianapolis Railway (green and red), courtesy of Erin Greb Cartography.

In May 1868 Hubby had assumed the presidency of the successor railroad that, for the first time, combined the Bee Line components roads into a single legal entity: the Cleveland, Columbus, Cincinnati and Indianapolis Railway (CCC&I). Unfortunately, his near-death experience effectively sidelined Hubby until he officially resigned his role in September 1870.

Oscar Townsend (Crisfield Johnson, History of Cuyahoga County, Ohio. D.W. Ensign & Co., 1879.); Hinman B. Hurlbut (J. Fletcher Brennan, ed., Biographical Cyclopedia and Portrait Gallery of the State of Ohio, Vol. 1. Cincinnati: John C. Yorston & Co., 1880.)

Into this leadership vacuum stepped a new duo of recently ensconced Bee Line board members. Oscar Townsend’s board appointment in September 1868 closely followed Hinman B. Hurlbut’s similar election at the formation of the CCC&I that May. Then, following Hubby’s unfortunate accident and subsequent resignation in 1870, the Townsend/Hurlbut duo formally assumed their heretofore-tacit responsibilities as president and vice president. They could not have written a more perfect script.

Hurlbut had joined the Bellefontaine Railway’s board and finance committee at its formation in 1864. His Cleveland-centric banking business included numerous Cleveland Clique clients. Soon he was part of the group. Hurlbut had purchased the charter of Cleveland’s Bank of Commerce in the 1850s and reorganized it as the Second National Bank.

Oscar Townsend began his career with the CC&C as a laborer in 1848. Between 1856 and 1862 he advanced through the ranks of its Cleveland freight office. Townsend shifted to Hurlbut’s Second National Bank in 1862, learning his banking skills at Hurlbut’s knee.

The CC&C’s longstanding general ticket agent S. F. Pierson reported, in an exposé on the demise of the railroad, that Hurlbut had tapped the bank of its financial strength by the time he left it in 1865. While one flattering biographer characterized Hurlbut’s exit as due to “the arduous labors and close application necessitated by these and other financial tasks he had undertaken,” Pierson had a different take.

Samuel F. Pierson
Samuel F. Pierson (The Biographical Directory of The Railway Officials of America for 1887. Chicago: The Railway Age Publishing Company, 1887: 252)

From Pierson’s perspective, Hurlbut “retired, consequent upon the destruction of more than its [the Second National Bank’s] entire surplus, and some of the securities and private deposits of the Bank. These…had been abstracted, and the money lost in speculation. The cashier had ended his own life in a painfully tragic manner, and Mr. Hurlbut was permitted to retire.”

It was about this time that Oscar Townsend also left the bank and segued to a superintendent’s role overseeing the Western Department of the Empire Transportation Company. Such businesses were immensely profitable and important extensions of the railroads they served in the post-Civil War era. Responsible for developing relationships with key shippers, businesses such as the Empire Line “fast freight” often decided which railroads would transport the huge amounts of freight under their control.

Empire Line “fast freight” boxcar
Empire Line “fast freight” boxcar (The Official Railway Equipment Register, Vol 23, No 9, February, 1908. New York: The Railway Equipment and Publication Company, 1908: 50.)

At the same time, nearly all railroad presidents quizzed by an 1867 Ohio Special Legislative Committee confessed they had been offered fast freight line stock “on favorable terms, or as a gratuity.” Enticed railroad directors began to work in concert with the “fast freights” to direct high-value freight traffic over their favored “fast freight”. This left only bulkier and less profitable local freight for the railroads themselves.

Inasmuch as the CCC&I started life in 1868 as a “financiers” railroad, Townsend and Hurlbut fit right in. By the time of Hubby’s retirement in 1870, they took control.

David Kilgore, author’s personal collection.

In the Bee Line’s new form, an old and wily politician to handle the Hoosier “good old boy” network was no longer needed. The long railroad career of David Kilgore came to an end in February 1870. And with his departure went the last vestige of the Hoosier Partisans.

Routes of the Atlantic and Great Western Railway, Erie Railway, Cleveland, Columbus, Cincinnati and Indianapolis Railway, Cincinnati, Hamilton and Dayton Railroad
Routes of the Atlantic and Great Western Railway (blue), Erie Railway (orange; partial), Cleveland, Columbus, Cincinnati and Indianapolis Railway (green; Bee Line), and Cincinnati, Hamilton and Dayton Railroad (purple). Courtesy of Erin Greb Cartography.

Only one significant transregional railroad would be constructed during the Civil War. The amalgam of railroads that became known as The Atlantic and Great Western Railway Company (A&GW) would stand by itself. With huge capital infusions from London and Continental investors, the road opened for business in August 1865 along its entire 388 mile route from Salamanca in Upstate New York to Dayton Ohio.

The first Atlantic and Great Western train arrives in Kent, Ohio, 1863
The first Atlantic and Great Western train arrives in Kent, Ohio, 1863. Courtesy of Kent (Ohio) Historical Society.

Nefarious London rail broker-cum-financier James McHenry had cajoled voracious  English and European investors to fund the improbable A&GW project. Exploiting his role as proxy for these complacent capitalists, McHenry seized control of the road Ohioan Marvin Kent had brought to life in the 1850s. And by the early 1870s, he also commandeered the board of the Eastern trunk line intersecting with the A&GW at Salamanca: The Erie Railway. Now, he needed an outlet to St. Louis to complete his domination of railroads extending from New York City to the West.

(L to R): Marvin Kent, courtesy of Allegheny University, Pelletier Library Special Collections, Reynolds Collection; James McHenry, Courtesy of Pelletier Library (Reynolds Collection), Allegheny College, Meadville, PA.; Peter H. Watson (Edward Harold Mott, Between the Ocean and the Lakes: The Story of Erie. New York: John S. Collins, 1901.)

James McHenry’s financial flimflam with A&GW’s European investors always left free cash with which to subsidize his own schemes. He had used some of those funds to insert Peter H. Watson as president of the Erie Railway in 1872. Watson became McHenry’s conduit to Hinman B. Hurlbut and the Bee Line. McHenry would sprinkle a substantial amount of cash on Hurlbut, and their subterfuge to assume control of the CCC&I.

Within weeks of Watson’s elevation to Erie’s presidency, he penned a letter to McHenry:

I opened negotiations with the parties controlling this road [CCC&I], and my success was greater and more rapid than I could have hoped. The result is embraced in the conditional agreement made by you with Mr. Hurlbut.

Hurlbut convinced members of the Cleveland Clique to sell their shares before word of an impending takeover became public. He then conveyed the acquired shares, and others from the Bee Line treasury, to McHenry. As S. F. Pierson noted:

…several members [of the CCC&I board] were …retired from active pursuits, and not disposed to take much trouble in the matter; and of the balance, one portion used the Vice-President [Hurlbut] to further some scheme of their own, and the other hoped he might want to use them.

When the A&GW’s plans for the CCC&I became public in early 1873, members of the Cleveland business establishment and other New York investors were completely flummoxed. After all, the A&GW showed assets of less than $40 million while reporting liabilities of more than $120 million. By comparison, the CCC&I was of robust but declining financial health. S. F. Pierson was stunned, noting, “Vice President [Hurlbut] has unbolted our doors from within.”

John H. Devereux (J. Fletcher Brennan ed., Biographical Cyclopedia and Portrait Gallery of the State of Ohio, Vol. 1. Cincinnati: John C. Yorston & Co., 1880.)

John H. Devereux, soon to become a key player in the final destiny of the Bee Line, painted a more colorful picture. He characterized the possibility as “an attempt to chain a living man to a dead corpse.” Before long, as orchestrated by James McHenry, Devereux would become President of both the Bee Line and the A&GW, and vice president at the Erieall at the same time!!

McHenry had arranged for Devereux’s CCC&I presidential appointment as soon as the A&GW assumed financial and board control of it in April 1873. Devereux’s installation quelled some of the Bee Line stockholders’ angst, given his upstanding reputation as a railroad executive. But when Ohio’s legislature blocked McHenry’s plan to lease the CCC&I to the anemic A&GW, the Bee Line shareholders’ attitude shifted.

Still seeking to run the A&GW and CCC&I as a single entity in spite of his failed leasing scheme, McHenry orchestrated Devereux’s appointment as general manager at the A&GW. By January 1874 he was bumped up a notch to president – while still heading the rival Bee Line!

The Bee Line shareholders had had enough. In an effort to oust McHenry’s A&GW and Erie board proxies, they orchestrated a massive CCC&I shareholder turnout for the March 1874 annual meeting. The opposition candidate slate included several former Cleveland Clique members, New York investors, and one Hoosier: David Kilgore.

And in an interesting twist, deposed CCC&I president Oscar Townsend headed the opposition – until Hinman Hurlbut brought to light Townsend’s involvement in a freight payola ring. The revelation tipped the balance. The opposition suffered a narrow defeat. There would be no Hoosier Partisan revival.

Longer term, James McHenry’s self-induced financial problems would only mount. His tenuous grip on the A&GW and CCC&I slipped away at the hands of Peter Watson’s 1874 Erie Railway successor: Hugh H. Jewett. Jewett would extricate the Erie from McHenry’s grasp, and push him to near-bankruptcy.

(L): Hugh J. Jewett (Edward Harold Mott, Between the Ocean and the Lakes: The Story of Erie. New York: John S. Collins, 1901.) (R): William H. Vanderbilt (Harper’s Weekly 29, no. 1513 [December 19, 1885].)

John Devereux remained president of both the Bee Line and A&GW (exiting bankruptcy as the New York, Pennsylvania and Ohio Railroad [NYPA&O; Nypano]) until 1881. At that time William H. Vanderbilt, of New York Central Railroad fame, sought control of the Bee Line to assure an entry into Cincinnati and St. Louis. Devereux had taken control of the linchpin to Cincinnati: the Cincinnati, Hamilton and Dayton Railroad. He soon yielded to Vanderbilt’s advances.

By 1889 the Bee Line and the Indianapolis and St. Louis Railroad it controlled (between Indianapolis and St. Louis) would be folded into another Vanderbilt-controlled railroad and emerge as the Big Four route.

Route Map of the Big Four Route
Route Map of the Big Four Route (the Cleveland, Cincinnati, Chicago and St. Louis Railway), c1900. Courtesy of the New York Central System Historical Society.

In making this decision Devereux, in his role as president of the NYPA&O, effectively parted ways with a livid Hugh Jewett and the Erie. A week later Devereux resigned. Soon, the Erie would subsume the NYPA&O.

Route Map of the Erie Railroad 1930
Route Map of the Erie Railroad, c1930.

The die was now cast for the future of the Bee Line as well. Its destiny would lie with Vanderbilt’s New York Central.

Oliver H. Smith
Oliver H. Smith, Courtesy of the Indiana Historical Society.

It had been a long journey since 1848, when Oliver H. Smith challenged the citizens of east central Indiana to avoid being bypassed by the technological marvel of the age. They would heed his warning by their investment in the Indianapolis and Bellefontaine Railroad – the Bee Line’s Indiana segment.

Smith’s prescient vision proved to be uncannily accurate. It was if he had penned Indiana’s state motto: “the Crossroads of America.” But for the Bee Line, it might never have come to pass.

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Push and Pull of the Hoosier Partisans and Cleveland Clique: Consolidation of the Bee Line Railroads

See Part VI to learn how the Hoosier Partisans moved for autonomy as the Cleveland Clique tightened its grip on the Bee Line railroad.

image of Steam Locomotive Explosion, 19th century
Steam Locomotive Explosion, 19th century, courtesy of Martin F. Wintermute.

In the summer of 1859, the Indianapolis, Pittsburgh and Cleveland’s (IP&C’s) Madison locomotive exploded near Kilgore Station in Yorktown, Indiana – killing the engineer and fireman. A month later, near the same location, an intoxicated man fell from the station’s platform and was killed by a passing train.

These tragic events occurred just weeks after the Hoosier Partisans’ scheme to achieve their independence, by leveraging on the IP&C’s strategic position as a funnel to the West, had failed. The accidents seemed eerily suggestive of the Hoosier Partisans’ plight in the face of the Cleveland Clique’s mustered financial power.

Map of the Indianapolis, Pittsburgh and Cleveland Railroad (formerly the Indianapolis and Bellefontaine Railroad), ca. 1855
Route of the Indianapolis, Pittsburgh and Cleveland Railroad (formerly the Indianapolis and Bellefontaine Railroad), ca. 1855. (Reprinted from Map of Indiana. New York: J. H. Colton & Co., 1855. Courtesy of Ball State University Libraries, Map Collections. Annotated by Erin Greb Cartography.)

By the IP&C’s May 1860 board meeting the Partisans were resigned to their fate: “we know of no other means by which we can extricate ourselves from our monetary difficulties and save the road . . . We deem it best to extend and continue said [joint operating] contract with said Bellefontaine and Indiana Railroad (B&I).”

Indiana board members had again faced the reality that the railroad business, on many levels, could be a perilous endeavor. The push and pull of the Hoosier Partisans and Cleveland Clique would ultimately result in the legal consolidation of the Bee Line Railroad components roads.

Map of the Bee Line’s Bellefontaine Line joint operating railroads and the Columbus, Piqua and Indiana Railroad
Map of the Bee Line’s Bellefontaine Line joint operating railroads (Indianapolis, Pittsburgh and Cleveland [blue], Bellefontaine and Indiana [red]), and the Columbus, Piqua and Indiana Railroad [brown], courtesy of Erin Greb Cartography.
Clearly sensing the IP&C would be reluctantly compelled to extend its joint operating agreement with the B&I, John Brady, the receiver for the Columbus, Piqua and Indiana Railroad (CP&I), demanded that the IP&C honor its 1852 through-line agreement with them. He recited the agreement’s language regarding freight and passenger traffic between Columbus, Ohio and Indianapolis, which mandated “sending any/all east/west traffic which can be done” over this connection.

Incredibly, Brady was able to pull off what the Hoosier Partisans had been unable to accomplish in their effort to effect a divorce from the Cleveland Clique – at least until 1863 when the CP&I was once again reorganized.

Ironically, the advent of the Civil War in 1861 would bring prosperity to the anemic component roads of the Bee Line – now operating jointly as the Bellefontaine Line. The combination of enhanced demand for grain to feed the troops and bolster poor harvests on the European continent spelled profits for the railroads.

Map of the Eastern trunk line railroads, c1855
Map of the Eastern trunk lines, c1855 (Baltimore and Ohio Rail Road, Pennsylvania Railroad, Erie Railway [New York and Erie Rail Road 1832-1861], New York Central Railroad), courtesy of Erin Greb Cartography.
During this time, frustrations had mounted among East Coast merchants and the railroad trunk lines that served them. West of the Appalachians they were dealing with a fractured network of independent short lines and their inefficient freight handling between lines. Add to this the further stress of moving troops and supplies quickly, and something had to be done.

The demands of war pushed operational efficiency forward – driven by the trunk lines.  The resulting more integrated rail networks also led to enhanced profitability, and opened the door for the Eastern trunk lines to expand their footprint west.

The Bee Line roads finally got their financial houses in order. By June 1863 the IP&C declared its first dividend in years—3 percent. Taking advantage of newfound prosperity, it declared another 3 percent dividend in December and voted to increase capital stock by $300,000.

Ostensibly this was done to pay for new equipment, new terminals, and road improvements. In reality it provided a convenient opportunity for the Cleveland Clique to increase their stock position and thereby dominate upcoming shareholder votes. To that end they determined, once and for all, to quell the IP&C board’s irritating Hoosier independence.

images of John Brough, Thomas A. Morris, Alfred Kilgore
(L to R): John Brough, courtesy of the Ohio History Connection; Thomas A. Morris, courtesy of the Indiana Historical Society; Alfred Kilgore, author’s personal collection.

Courtesy of the Clique’s voting block, John Brough returned as IP&C president at the February 1863 annual meeting – following Hoosier figurehead Thomas A. Morris’ 3½-year tenure. In a last-ditch effort to stem the Clique’s board dominance, Alfred Kilgore—Yorktown’s first station agent, son of director David Kilgore, and an Indiana state legislator— introduced a House bill in January 1863. Had it passed, all Indiana railroad corporations would have been required to elect three-quarters of their board from stockholders resident in the state. It died in committee.

image of State Flag of Ohio
State Flag of Ohio, officially adopted 1902.

Beyond Brough’s return to the IP&C’s presidency, he emerged as the front-runner in Ohio’s governor’s race in the summer of 1863. Orchestrated by the Cleveland Clique, Brough’s candidacy leveraged on his earlier but noteworthy Ohio political career and effective pro-Union speechmaking style. The War Democrats and Republican Union parties joined forces to secure his nomination. He was overwhelmingly
elected in October 1863.

image of Stillman Witt
Stillman Witt (J. Fletcher Brennan, ed., Biographical Cyclopedia and Portrait Gallery of the State of Ohio, Vol. 2 Cincinnati: John C. Yorston & Co., 1880.)

Stillman Witt, Cleveland Clique heavyweight and by then the second-largest individual holder of Bee Line roads stock, had encouraged and supported his close friend’s candidacy. On Brough’s election as governor Witt volunteered to fulfill his duties as president of the Bee Line roads. He insisted Brough draw his IP&C presidential salary while serving as governor.

During 1864 Witt steered the Bee Line roads toward a brisk legal consolidation. At the IP&C’s June board meeting a committee was appointed “to agree upon mutual and just terms for consolidating the capital stock of this company with that of the B&I.” Reprising its once central role in the history of both the IP&C and B&I, Union and its Branham House was chosen as the site for the decisive shareholder consolidation vote.

image of Branham House Hotel, Union, Indiana.
Branham House Hotel in Union, Indiana, courtesy of the Preservation Society of Union City.

Finally, after years of Hoosier Partisan and Cleveland Clique push and pull, the two lines were legally consolidated on November 24, 1864 – emerging as the Bellefontaine Railway Company. For the first time since its inception in 1848, the railroad extending from Indianapolis to Union failed to exist as a stand-alone Hoosier-based—if not completely controlled—entity.

Brough was elected the new entity’s first president at its inaugural meeting in Union on December 22nd. It would be a short tenure, however, as Brough died in office on August 29, 1865 while also serving as Ohio’s last wartime governor.

After Brough’s death, Witt officially assumed the role he had been occupying as Brough’s proxy. His style was businesslike and close to the vest. Board minutes reflected meetings run with a limited agenda, focused on few topics, and with little discussion noted.

Witt saw to it that the Cleveland Clique began to recoup investments made in the road’s predecessor lines. Hardly a board meeting would go by over the next three years in which a dividend was not declared. And there were up to three board meetings a year.

The Cleveland Clique was not done tightening its grip on the Bee Line. In addition to Brough’s election as president in December 1864, a landslide of Cleveland Clique members took eight of eleven seats on the Bellefontaine Railway’s board. Included among this number was an individual destined to alter the Bee Line’s future trajectory: Hinman B. Hurlbut.

Hoosier David Kilgore, the only surviving original director from the Indianapolis and Bellefontaine Railroad (I&B) days, assumed one of the three crucial executive committee positions.

images of Hinman B. Hurlbut and David Kilgore
(L to R): Hinman B. Hurlbut (J. Fletcher Brennan, ed., Biographical Cyclopedia and Portrait Gallery of the State of Ohio, Vol. 1. Cincinnati: John C. Yorston & Co., 1880.); David Kilgore, author’s personal collection.

By the spring of 1868 the Cleveland Clique decided to finally consolidate all three of the original Bee Line component roads – then comprised of the Bellefontaine Railway and the Cleveland, Columbus and Cincinnati Railroad (CC&C). The need for additional monies to restructure debt and fund an expanding footprint was justification enough to tap the CC&C’s solid financial underpinnings.

In reality the freed and raised cash by the consolidation would be spent on both business expansion and personal enrichment. To a greater extent than marketed to the public the new road was being recast, like many others in the post-Civil War era, as a “financiers’” railroad.

Leander M. Hubby, First Annual Report Cover, Cleveland, Columbus, Cincinnati and Indianapolis Railway
Leander M. Hubby (Biographical Cyclopedia and Portrait Gallery of the State of Ohio, Vol. 4. Cincinnati: Western Biographical Publishing Company, 1887.); First Annual Report Cover, Cleveland, Columbus, Cincinnati and Indianapolis Railway, books.google.com.

On May 13, 1868, the Cleveland, Columbus, Cincinnati and Indianapolis Railway (CCC&I) sprung to life under the leadership of former CC&C president Leander M. Hubby. Hubby had established a long, profitable, and almost patriarchal reputation among his management team over the course of more than a decade at the helm of the CC&C. He and the newly recast Bee Line faced two immediate and significant obstacles to their future viability.

One challenge was to finally complete and/or control a rail line between Indianapolis and St. Louis. By 1867, the Cleveland Clique had assembled what it thought was a consortium of six similarly-interested rail lines to sign an expensive long-term lease of a road between Terre Haute and St. Louis. It proved to be otherwise.

The poorly engineered, indirect, and financially tenuous St. Louis, Alton and Terre Haute Railroad (StLA&TH) was its only option. And by the time the lease was signed the original consortium had essentially dwindled to two: the Bee Line and another Clique-affiliated railroad.

Annotated Map of the routes of the St. Louis, Alton and Terre Haute; St. Louis, Vandalia and Terre Haute; Indianapolis and St. Louis; Terre Haute and Indianapolis; Indianapolis, Pittsburgh and Cleveland railroads
Routes of the Cleveland, Columbus, Cincinnati and Indianapolis (partial; blue), St. Louis, Alton and Terre Haute (green), Indianapolis and St. Louis (red), Terre Haute and Indianapolis (purple), St. Louis, Vandalia and Terre Haute (“Vandalia Line”, brown), courtesy of Erin Greb Cartography.

More to the point, as the consortium disintegrated, the road between Indianapolis and Terre Haute – by then called the Terre Haute and Indianapolis Railroad (TH&I) – backed out. Instead, it would align with Pennsylvania Railroad interests to complete John Brough’s dream of a direct line to St. Louis, under the colloquial Vandalia Line moniker. As a result, consortium participation with competitors made no sense.

However, the TH&I’s realignment with Pennsylvania Railroad interests meant the Bee Line was left without a link between Indianapolis and Terre Haute. And the TH&I would not entertain an arrangement to let the Bee Line utilize its tracks.

By the fall of 1867 the Clique’s Bee Line board made the financially difficult decision to build its own parallel line between Indianapolis and Terre Haute. The Indianapolis and St. Louis Railroad (I&StL), headed by Thomas A. Morris, would be built in less than three years. And soon, it would fold and operate the StLA&TH under its banner. But it had been a costly decision.

Hubby’s other immediate Bee Line challenge was more sinister in its design. And, at least initially, Hubby would be unaware of its existence. But, in fact, it would threaten the Bee Line’s very survival and that of its Cleveland Clique benefactor.

Check back for Part VIII, the final blog in the Bee Line series, to learn more about how the national aspirations of other railroads, and their financial chicanery, recast the Bee Line Railroad’s ultimate destiny.

Interested in the Bee Line?

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image of Forging the Bee Line Railroad book cover

The Hoosier Partisans Move for Autonomy as the Cleveland Clique Tightened Its Grip on the Bee Line Railroad

See Part V to learn about the Cleveland Clique’s elusive grasp for control of the Bee Line Railroad.

Map of Bee Line Railroad Component Lines: the Indianapolis, Pittsburgh and Cleveland, the Bellefontaine and Indiana, and Cleveland, Columbus and Cincinnati
Map of Bee Line Railroad Component Lines: Indianapolis, Pittsburgh and Cleveland (blue), Bellefontaine and Indiana (red) and Cleveland, Columbus and Cincinnati (green), courtesy of Erin Greb Cartography.

In the four months since John Brough left the presidency of the Bee Line’s Indianapolis, Pittsburgh and Cleveland Railroad (IP&C) in February 1855, more than just its name had changed. The Hoosier Partisans’ move for autonomy would take concrete form as the Cleveland Clique tightened its grip on the Bee Line Railroad

Calvin Fletcher, reluctantly elected president in John Brough’s stead, had met with a litany of key personnel and other midwestern railroad presidents to gain a broader perspective. He had also dealt with a variety of operational, cash flow and accounting issues left unaddressed by Brough.

Images of John Brough and Calvin Fletcher
(L to R): John Brough, courtesy of the Ohio History Connection. Calvin Fletcher, courtesy of the Indiana Historical Society.

As a result, by April the line’s Superintendent had resigned. At the same time, Fletcher engaged an individual to look into unaccounted for and delayed freight. He pushed for cost reductions at the engine shop at Union, and restructured the road’s finances.  John Brough, reflecting on his own performance, acknowledged: “It appeared there were large discrepancies between the books of the Superintendent and those of the Secretary…As President I should have discovered these discrepancies and applied the remedy.”

Map of the proposed route of the Mississippi and Atlantic Railroad, the Terre Haute and Richmond Railroad, and the Indianapolis, Pittsburgh and Cleveland Railroad
Map of the proposed route of the Mississippi and Atlantic Railroad (orange), Terre Haute and Richmond (magenta) and Indianapolis, Pittsburgh and Cleveland (blue), courtesy of Erin Greb Cartography.

On top of Brough’s lapses while heading the IP&C, he had been removed as President of the Mississippi and Atlantic Railroad (M&A) by late May 1855 in favor of Chauncey Rose – founder and former president of the Terre Haute and Richmond Railroad. The M&A, the Cleveland Clique’s bet to reach St. Louis, was in its death throes. It had taken a public relations beating at the hands of Illinois river town and Chicago politicians, who questioned the road’s legal legitimacy – and John Brough’s managerial track record. Investors abandoned the M&A, leaving Brough without portfolio.

Image of Chauncey Rose
Chauncey Rose, courtesy of the Indiana Historical Society.

Calvin Fletcher, frustrated by what he discovered as president of the IP&C, informed the Hoosier Partisans: “I feel that my official duties in the RR are oppressive & that I must leave them…There is a degree of corruption in relation to it that I cannot arrest—or rather the effects of which already passed that I cannot overcome.”

As the July 1855 annual meeting approached, the Partisans pushed Fletcher to continue on as president. They soon faced reality:  he would not remain. As late as the day before the meeting Fletcher could not figure who would become his successor. It soon became clear, however, the Cleveland Clique had been making plans as well. Incredibly, John Brough would be resurrected not only to retake his prior role at the IP&C, but also be anointed as president of the Bee Line’s Bellefontaine and Indiana Railroad (B&I) at the same time!

Brough’s operational and financial shortcomings would have been obvious to the Cleveland Clique by then. On the other hand he was loyal, politically savvy, and possessed an Ohio pedigree. Given the newly redefined and more limited scope of the president’s role, and with strong Clique operational and financial expertise now present on both boards, Brough was serviceable.

Effectively, the Cleveland Clique would now control both the B&I and IP&C. While not yet legally consolidated, the two roads would be run as one while John Brough and the Clique considered the calculus to officially bind them together.

Sparked by Brough’s Clique-masterminded elevation to the dual Bee Line presidential roles, the IP&C’s Hoosier Partisans squirmed under the terms of the joint operating agreement foist upon them by the Cleveland Clique the year before. Both the perpetual nature of the contract and mandate to consolidate with the B&I “at the earliest possible moment” were not sitting well. Discovering the Cleveland, Columbus and Cincinnati Railroad (CC&C) had never technically executed the contract, the Hoosier Partisans made a move to modify its language.

By the IP&C’s March 1856 annual meeting, revised terms of the joint operating agreement had been hammered out. A newly reconstituted and more representative overall executive/finance committee was arranged. At the same time, the contract term was reset to five years, instead of being perpetual. Any party to the contract could now terminate it with three months’ notice. However, this clause could only be exercised after the agreement had been in place for three years.

Map of the Bee Line Railroad component lines, and Columbus, Piqua and Indiana and other roads aligned with the B&O (to Wheeling WV), Pennsylvania (to Pittsburgh PA) and New York Central (to Buffalo NY) trunk lines.
Map of the Bee Line Railroad component lines (blue, red, green), and Columbus, Piqua and Indiana (brown) and other roads aligned with the B&O (to Wheeling WV), Pennsylvania (to Pittsburgh PA) and New York Central (to Buffalo NY) trunk lines, courtesy of Erin Greb Cartography.

Fortunately for the Hoosier Partisans, the IP&C’s three-year joint operating obligation ended as the Columbus, Piqua and Indiana Railroad (CP&I) finally reached Union in the spring of 1859. Now the IP&C could anticipate a substantial revenue boost as freight and passengers traveled to/from Columbus across CP&I track to Union. From Columbus, Pittsburgh could now be reached – and the Pennsylvania Railroad headed to Philadelphia – via affiliated lines.

Union and the IP&C were proving to be a pivotal funnel for other traffic as well. Freight and passengers headed to/from New York across the CC&C and aligned roads to the fledgling New York Central Railroad at Buffalo would find their way to Union. Similarly, via the CP&I link between Union and Columbus OH, the Baltimore and Ohio Railroad (B&O) could now be accessed at Wheeling WV. And, courtesy of a new through-line arrangement connecting the B&O’s eastern terminus at Baltimore with New York City, a second alternative for reaching this center of commerce from Union became a reality.

The IP&C would be the clear beneficiary of these new connections to the east – if only it could effect a separation, if not a divorce, from the B&I as well as the CC&C. Then, standing individually, the IP&C could strike lucrative through-line agreements with each of the eastern trunk lines and their local affiliates. By way of these arrangements, the Hoosier Partisans could once again regain control over their own destiny.

At the March 1859 IP&C board meeting, Partisan David Kilgore proposed a three-person board committee be appointed to “pursue a line of fair and impartial conduct between our two connections at Union.” The concept was for the IP&C to direct traffic under its control and destined for New York, Philadelphia, Boston, and Baltimore to these connecting roads “in proportion to the trade and travel received from the several points named above.”

Images of David Kilgore, Thomas A. Morris, and Stillman Witt
(L to R): David Kilgore, from the author’s personal collection; Thomas A. Morris, Courtesy of the Indiana Historical Society; Stillman Witt (J. Fletcher Brennan, ed., Biographical Cyclopedia and Portrait Gallery of the State of Ohio, Vol. 2. Cincinnati: John C. Yorston & Co., 1880.)

In addition to David Kilgore, ubiquitous Indiana railroad construction engineer, recent president of the Indianapolis and Cincinnati Railroad and IP&C board/executive committee member Thomas A. Morris, and Cleveland Clique and CC&C strongman Stillman Witt were appointed to the committee.

The stars were aligning from an operational standpoint as well; a March 28 letter from the receiver of the CP&I announced they “will be prepared in a very few days to transport passengers and freight” between Union and Columbus OH.

A crucial series of IP&C-arranged meetings with presidents and general managers of several of the eastern trunk lines and their Ohio-affiliated roads took place in Columbus, Ohio that May. The importance of Union and the IP&C’s Indianapolis connection west toward St. Louis were obviously not lost on the roster of kingpins who decided to attend the Columbus confab.

As might be expected, there were two distinct perspectives on the IP&C’s postulated autonomy. Those regional lines aligned with the Pennsylvania Railroad or B&O via CP&I connections at Columbus OH endorsed the IP&C’s move toward independence. Not surprisingly, those roads associated with the New York Central via Bee Line alignments at Cleveland, or with the Pennsylvania Railroad via the Ohio and Pennsylvania Railroad [O&P] (passing near the B&I’s eastern terminus at Galion OH) took the opposite position. Among this group was the CC&C’s then president, Leander M. Hubby.

Image of Leander M. Hubby
Leander M. Hubby, (Biographical Cyclopedia and Portrait Gallery of the State of Ohio, Vol. 4. Cincinnati: Western Biographical Publishing Company, 1887.)

Shortly after the meeting, as Hubby contemplated the implications of the IP&C’s stratagem – with its alternative access to New York City via the B&O – he balked. “This company would not quietly submit to receiving a divided business from the IP&C.” Hubby went on, and to the heart of the matter, “this company contributed largely in money and credit to the completion and opening of the Bellefontaine Line…I think it my duty to say…this Company…will at once form other connections which are being offered them.”

Bee Line financier Richard H. Winslow of Winslow, Lanier & Co. tag-teamed with Hubby, mounting an attack on the IP&C’s soft financial underbelly. “In view of your embarrassments growing out of the large debt falling due the 1st of January next, we should think it a hazardous experiment and one that may lead to very bad consequences.”

In many respects the Hoosier Partisans’ dream of an independent IP&C had been dashed years before when it accepted the financial help of “foreign” interests—be they in New York, Cleveland, or Europe.

Hollow recognition was paid to the Partisans in the wake of the Union episode. At the annual IP&C board elections in July 1859, Thomas A. Morris was elected president. In turn, John Brough stepped down from the IP&C presidency but continued to hold dual roles as president of the B&I and chairman of the overall Bellefontaine Line executive committee. The title of general superintendent was also added to his dossier. Brough and the Cleveland Clique would control eight seats on the IP&C board to the Hoosier Partisans’ seven.

At the May 1860 board meeting, extension of the revised Bee Line joint operating contract was considered. Swallowing its pride and with a financial gun to its head, the IP&C board reluctantly moved to accept it.  If anything, the Union episode crystallized the Cleveland Clique’s determination to drive the B&I and IP&C to a formal and final consolidation under their direct control.

And while the IP&C’s contract extension with the B&I had taken more than a year to be resolved, the Union episode hastened the day when the IP&C would no longer exist as a separate entity. And with it, the Hoosier Partisans’ dream of maintaining control of their own destiny faded to a smoldering ember.

Check back for Part VII to learn more about the push and pull of the Hoosier Partisans and Cleveland Clique, leading to the legal consolidation of the Bee Line component railroads.

Continue reading “The Hoosier Partisans Move for Autonomy as the Cleveland Clique Tightened Its Grip on the Bee Line Railroad”

The Cleveland Clique’s Elusive Grasp for Control of the Bee Line Railroad

See Part IV to learn how the Cleveland Clique leveraged on John Brough to solidify its control of the Bee Line and a route to St. Louis.

John Brough, Henry B. Payne
(L) John Brough, courtesy of the Ohio History Connection. (R) Henry B. Payne, courtesy of the Library of Congress.

With John Brough’s election to president of the Indianapolis and Bellefontiane Railroad [I&B] on June 30, 1853, the Cleveland Clique cemented its position as the Midwest’s dominant railway cabal. Brough’s dual roles, both there and as president of the Mississippi and Atlantic Railroad (about to initiate construction between Terre Haute and St. Louis), personified the Clique’s reach.

It was also a visible sign of president Henry B Payne’s effectiveness crafting and implementing the Cleveland, Columbus and Cincinnati Railroad’s [CC&C’s] growth strategy. Now his attention turned to commanding the Bee Line component railroads and a line to St. Louis, both physically and legally. But, the Cleveland Clique’s grasp for control of the Bee Line Railroad would be elusive at best.

Map of railroads between Indianapolis and Cleveland c1860, annotated to show component Bee Line railroads, and the Columbus, Piqua and Indiana railroad
Map of the Bee Line component lines: CC&C, B&I in red, I&B in blue; Columbus, Piqua and Indiana Railroad (CP&I) in brown, courtesy of Erin Greb Cartography.

Just prior to Brough’s promotion, the I&B’s Clique-influenced board had resolved to convert its 4’ 8½” ‘standard gauge’ track (lateral dimension between rails) to the 4’ 10” ‘Ohio gauge.’ By law, the Ohio legislature had mandated that all railroads chartered there must be constructed to this dimension. As a result both Ohio legs of the Bee Line, the Bellefontaine and Indiana [B&I] and CC&C, had been built to this dictated standard. The Indiana-chartered I&B’s non-conforming gauge, however, prevented uninterrupted service between Cleveland and Indianapolis.

The I&B moved carefully to implement its gauge-change resolution. This was because, in early 1852, former president Oliver H. Smith had come to terms on a through-line agreement with a rail line being built between Columbus OH and Union IN – the Columbus, Piqua and Indiana Railroad [CP&I]. When completed, this important link would provide a connection to lines extending toward Pittsburgh, and on to Philadelphia over one of the growing trunk line giants: the Pennsylvania Railroad.

image of Oliver H. Smith
Oliver H. Smith, courtesy of the Indiana Historical Society.

As part of through-line negotiations to coordinate schedules and share facilities, the CP&I had acceded to Smith’s demand that it petition Ohio’s legislature to build to the I&B’s ‘standard’ gauge. It soon received a legislative exemption and began building. However, the CP&I met financial headwinds almost immediately – most notably from the Pennsylvania Railroad, which failed to meet its guarantee commitment when the company defaulted on construction bonds. Unfortunately, following bankruptcy reorganization, the CP&I would not complete construction to Union until 1859.

From the I&B’s perspective, the CP&I’s financial problems and construction delays seemed insurmountable. In contrast, the temptation to avail itself of lucrative east-west business across the combination of Ohio gauge B&I and CC&C lines proved irresistible. Under cover of a finely crafted resolution to skirt its through-line agreement with the CP&I, the I&B board resolved to lay track using the Ohio gauge as “other circumstances and relations for the welfare of the Road may require.” Under this guise, by the summer of 1853, it had re-laid track between Union and Muncie to the “Ohio gauge”.

Given this developing situation, the CP&I felt compelled to act. It successfully sought a preliminary injunction to block further track/gauge conversion. The Bee Line was effectively stymied in its effort to achieve a uniform gauge run from Cleveland to Indianapolis. Although the I&B argued the 1852 through-line agreement was silent on the CP&I’s track conversion accord, Smith’s apparent sidebar pact proved compelling to the court. I&B president John Brough, backed by a new board replete with Clique members, was directed to move decisively to resolve the problem in late summer 1853. It proved to be a particularly costly settlement.

Together, all component roads of the Bee Line agreed to guarantee the CP&I’s performance on $400,000 of bonds issued to complete the road to Union. Beyond eventually finding themselves on the hook for this issue, the Bee Line roads would provide another, and then another tranche of funding by the time the CP&I limped into Union in 1859. At least the I&B could now finish its Ohio gauge track conversion between Muncie and Indianapolis. And, under terms of the settlement, the CP&I also re-laid its track to the Ohio gauge.

Winding up the CP&I lawsuit had been a prerequisite to inking a Cleveland Clique-initiated through-line agreement among all Bee Line component roads. The day after securing the CP&I settlement, the Bee Line’s through-line agreement was signed. There were two telling provisions that spoke to the different vantage point of the Cleveland Clique and Hoosier Partisans.

Map of midwestern railroads c1860, annotated to show Bee Line component railroads and intersecting rail lines to Pittsburgh
Map of the Bee Line component railroad: I&B, B&I in blue, CC&C in red; lines to Pittsburgh in brown: CP&I to S&I/P&S, O&P, courtesy of Erin Greb Cartography.

On the one hand, the agreement allowed the B&I and I&B to make “fair and eligible connections and business arrangements . . . to secure . . . their legitimate share of the business between the cities of Philadelphia, Pittsburgh and Indianapolis.” While this clause provided a degree of freedom for the Hoosier Partisans and their Ohio counterpart to step away from their CC&C overseer, the other clause was engineered to reign in these independently minded stepchildren: “The B&I and I&B shall be consolidated at the earliest practicable moment.”

As to the latter clause, it would be easier for the Cleveland Clique to do its bidding if the Hoosier Partisans’ influence was diluted in a newly constituted board. At the same time, combining the two lines could prevent the Partisans from cutting their own agreement with the CP&I to carry traffic back and forth to Columbus and toward Pittsburgh via Union – totally avoiding carriage over the B&I and CC&C. And there was also a second option to reach Pittsburgh, via the Ohio and Pennsylvania Railroad (O&P) – passing near the B&I’s eastern terminus at Galion OH. Still, at the time, the Clique’s consolidation mandate only served to draw the two smaller lines more closely together in their common struggle for independent decision-making. As unfolded for the Cleveland Clique, however, its consolidation directive would not be accomplished easily or quickly.

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

Squirming under the Clique’s dictate, and recognizing its strategic position as the funnel for rail traffic to and from Indianapolis to either Cleveland (and New York) or Pittsburgh (and Philadelphia), the I&B board served up its own subtle message. Essentially touting its option to bypass Cleveland through separate links to Pittsburgh, Hoosier Partisan David Kilgore proposed a name change “from and after the first day of February 1855. . . . The said Corporation shall be known by the name and style of the ‘Indianapolis, Pittsburgh and Cleveland Railroad Company’ [IP&C].” It was overwhelmingly adopted.

The name change really symbolized much more. The locally controlled and focused I&B railroad era was gone. The newly rechristened road would now test its wings as a regional player—hoping, like a teenager seeking freedom from parental control, to stand apart from the clearly parental CC&C.

Map of the proposed Mississippi and Atlantic Railroad route from excerpt of Map of the Bellefontaine and Indiana Railroad 1852
Map of the proposed route of the Mississippi and Atlantic Railroad. Excerpt from “Map of the Bellefontaine and Indiana Railroad and connecting lines” (W. Milnor Roberts, Chief Engineer: 1852). Courtesy of the Library of Congress.

Separately, in 1854, John Brough was ramping up his Mississippi and Atlantic Railroad [M&A] – destined to link Terre Haute and St. Louis. After an arduous legal effort to validate its claim to an Illinois charter, the M&A had prevailed against Chicago and Mississippi River town political interests earlier in the year. However, it would soon be faced with another trumped-up legal challenge and a concerted public relations effort to undermine its viability and management capabilities. Such obstacles were having a detrimental effect on Wall Street investors.

In March 1854 a legal opinion by Abraham Lincoln’s Illinois law office asserted the illegality of the M&A’s corporate existence. Then, a New York newspaper article questioned Brough’s managerial track record at the Madison and Indianapolis Railroad. The investor community was beginning to shy away from the M&A.

Nonetheless, with short-term funding secured, Brough pressed on with the M&A’s building phase. He issued a marketing circular and let contracts for the whole line by May, announcing the line would be completed by the summer of 1856. Brough would spend an increasing amount of time on this effort as 1854 wound down.

By the beginning of 1855 it was becoming clear Brough had the M&A on his mind. At the very least, the M&A’s pivotal role in the Cleveland Clique’s Midwest control strategy virtually mandated Brough’s full-time attention. Rumblings of his imminent departure reached IP&C board members by early February. He resigned as IP&C president on February 15, noting “experience has demonstrated to me that in this event my entire time and attention will be required on that [M&A] line.”

image of Calvin Fletcher
Calvin Fletcher, courtesy of the Indiana Historical Society.

Former I&B director (1852-53) Calvin Fletcher, among Indianapolis’ most prominent civic and business leaders, was elected president in Brough’s stead. Reluctantly thrust into the role, Fletcher noted, upon hearing of his election: “I learned to my regret I was appointed President of the Bellefontaine R.R. Co.”

Fletcher’s reticence to assume the post was understandable, based on his close familiarity with the affairs of the I&B. “I fear their affairs are desperate . . . It needed my character & acquaintance to unravel the mischief of the finances. . . . The president Brouff [Brough] has no influence on the road. All employees eschew his authority & claim that the Superintendent is the man to look to & not the President. The road & its business is [sic] in great confusion.”

image of James F. D. Lanier, c1877
James F. D. Lanier, Sketch of the Life of J. F. D. Lanier, self-published, 1877.
image of Chauncey Rose
Chauncey Rose, courtesy of the Indiana Historical Society.

Even though Brough was dealing with M&A matters full time beginning in mid-February 1855, the concerted efforts of powerful Chicago and Mississippi River town political interests had swept away investor confidence. James F. D. Lanier, the M&A’s financier through the Wall Street firm that bore his name – Winslow, Lanier & Co. – decided to take desperate action.

On May 20th the M&A board, controlled by Lanier, demoted Brough to Vice President in favor of Chauncey Rose. Rose, founder of the Terre Haute and Richmond Railroad linking Indianapolis with Terre Haute, assumed the presidential mantle. In spite of his impeccable reputation as a railroad executive, Rose’s presence failed to sway the investor community.

John Brough would not live to see the Mississippi and Atlantic Railroad completed to St. Louis. And, more to the point, how would the Cleveland Clique view Brough as their pawn in its broader Midwest railroad control strategy?

Check back for Part VI to learn more about the Hoosier Partisans move for autonomy as the Cleveland Clique tightened its grip on the Bee Line Railroad.

Continue reading “The Cleveland Clique’s Elusive Grasp for Control of the Bee Line Railroad”