Chicago and the Railroads

The industry that more than any other was responsible for building Chicago into a great city got its start 149 years ago next month by staging a media event. A hastily assembled train, consisting of a couple of baggage cars fitted with 100 seats and pulled by an obsolete, secondhand locomotive chugged at 16 miles per hour for 10 miles over rough track from Chicago to the Oak Ridge House, now Oak Park. The seats were for dignitaries and members of the press, who were getting a look at Chicago’s first railroad. It was Nov. 20, 1848.

Within a decade, the newfangled contraption had remade Chicago in its image. Even before the Civil War, Chicago was the nation’s undisputed rail center and terminal for 4,000 miles of track, a fifth of the nation’s total. The railroads made possible the city that historian William Cronon described more than a century later as "Nature’s Metropolis—hog butcher and stacker of wheat. The iron horse hauled the rich harvest of grain from the Plains to Chicago and moved mountains of lumber west to build the farmers’ houses and barns, as well as places like Omaha and Denver. They carried millions of live cattle and hogs to Chicago’s stockyards, then took their dressed carcasses east to New York and Philadelphia."

They also made mass production possible by creating a system of mass distribution. It is no accident that the nation’s major catalog houses, such as Sears, Roebuck and Co. And Montgomery Ward & Co., arose in Chicago.

Besides influencing the development of Chicago—the suburbs were wholly the railroads’ creation—railroads made more subtle contributions, such as the modern corporation. They were the first incorporated joint stock companies in which capital was pooled from thousands of shareholders, and professional managers hired to run the operations. Before then, most businesses were family affairs or partnerships.

By 1870, the railroads had become so dominant, Illinois became the first jurisdiction in the union to impose economic regulation on private industry—the State Railroad and Warehouse Commission—to put an end to rate-fixing and price-gouging. That agency didn’t slow the railroads much. In 1883 the industry met in Chicago and decided the nation needed a standard time system to coordinate its trains. Until then, every city set its clocks based on when the sun was directly overhead—noon. The railroads adopted a standard time system with four zones and everyone else gradually fell in line. Chicago lost 9 minutes and 33 seconds at 11:45 a.m. Nov. 18, 1883, when the clocks were stopped in Union Station to bring the city in conformity with the rest of the country. Even today the city is a terminal to every major railroad in the U.S. Only the Illinois Central and Wisconsin Central regional railroads call the Chicago area their home.

The city’s transportation links to the East were Great Lakes ships, which took up to three weeks to get from Chicago to Buffalo, and Frink & Walker stagecoaches, which rattled and bounced along at 10 miles per hour to Detroit. The most exciting transit system was the Illinois and Michigan Canal on which boats took two days to plod 96 miles between Chicago and LaSalle on the Illinois River. A group of investors headed by William B. Ogden, a wheeler-dealer from New York, a tireless promoter and Chicago’s first mayor, held a long dormant charter to build a 181-mile railroad from Chicago to the thriving lead-mining town of Galena, in the northwest corner of the state. Because there were no railroads to Chicago from the East until 1852, the Galena & Chicago Union in 1848 was seen primarily as an extension of the Great Lakes. The promoters’ financial projections a year earlier indicated that 78 percent of the traffic would be eastbound for the Port of Chicago. The projections also indicated that the railroad would get $30,000 a year in revenue from hauling lead, $100,000 from wheat, $12,000 from lumber and $180,000 from passengers and mail. Nobody believed them, so they couldn’t raise enough money to start construction. They had glad-handed people with money in the East and Chicago without much luck, and by 1847 were asking farmers and merchants along the route for pledges. Chicagoans, content with their canal, had pledged only 8 percent of the money needed. Warren Wheaton, in DuPage County, gave them a strip of land for the right of way.

But most farmers were unable to come up with any cash until they sold their crops in the fall. Ogden needed an estimated $2.6 million to build his railroad to Galena, but by April 1, 1848, he had stock pledges for only $351,800 and only $10,817 in cash. In the railroad’s annual report, he pleaded for stockholders to honor their pledges. As the year wore on, Ogden and his partners made a gutsy decision: They would build the railroad on a pay-as-you-go basis. They calculated they could build it 42 miles to Elgin for less than $360,000. Then they could extend the tracks west as revenue from the trains began to roll in. So they bought a secondhand locomotive they renamed "Pioneer," had it shipped to Chicago from Michigan by schooner and completed the first 10 miles of their line to the Des Plaines River. Then they decided to run a publicity train. On the return trip, according to legend, they passed a farmer and his wagon loaded with hides and wheat and talked him into letting them haul the cargo to Chicago. The stunt worked. Between Dec. 15, 1848, when it began regular service and the end of the year, the railroad hauled 30 loads of wheat to Chicago and at least one load of dressed hogs. It was instantly profitable. In its first full year, the Galena paid a 10 percent dividend on profits of $29,812 and revenue of $48,331, and by 1855 it produced a profit of $400,000 on revenue of $2.5 million. Suddenly there were all sorts of people in New York and Boston, and as far away as Europe, willing to pour money into railroads in a frontier town called Chicago. In the case of the Illinois Central Railroad, 86 percent of its investors were from Europe. Wealthy China merchant John Murray Forbes, of Boston, bought and extended the Chicago, Burlington & Quincy line (originally the Aurora Branch Railroad, but now the Burlington Northern Santa Fe Railroad) west of the Mississippi River. The Galena, by the way, never got there. It was renamed the Chicago & North Western Railway in a merger, and diverted to Omaha after the Civil War. There it met the Union Pacific, then being built west as the nation’s first transcontinental railroad. The Union Pacific bought the North Western in 1995.

By David Young, Tribune Staff Writer Web-posted Sunday, October 26, 1997