June 25, 2010
Charles Tyson Yerkes: The American Street Railway King
The British always seem to have a somewhat different view of things. Take for example this 1901 biographical sketch of Charles Yerkes, written four years before his death. The author gushes with admiration for the "modern American man of business, but keep in mind that upon his death, Yerkes left no real record of his life; no letters or papers. In short - no evidence. For a more objective view of Chicago's "father of the "L" and developer of the "Loop," I recommend: Charles Tyson Yerkes: Philadelphia-born Robber Baron. Multiple sources is a good thing.
IN Charles Tyson Yerkes we have a very typical example of the modern American man of business. He is not a financier in the strict sense of the word, and yet he has had the handling of great enterprises in which large amounts of money have been involved. He is not connected with any special industry, still, he has been the means of rendering valuable aid to the development of his country's industrial affairs. Carrying the negative style of argument still further, it might be said that he is not to-day engaged in several other capacities which he at one time or another has endeavoured to fill. He is simply a speculator in and controller of street railways, and has probably done more than any other man to bring about the present effective condition of street tramways transportation in the leading cities of America, which are, it has to be confessed, as far ahead of our own cities in this respect as the latter are in advance of the former in general cleanliness and good paving. Chicago, where Mr. Yerkes has his headquarters, is one of the worst-paved cities to be found anywhere, yet for twenty years or more it has enjoyed a system of tramway service which has represented the latest developments of tramway transit and been of great advantage to the extension of the city—the linking together of town and suburb.
The London Maze.
This being so, Mr. Yerkes may well have been surprised on visiting London to observe how the streets are crowded and rendered almost impassable with omnibuses of a lumbering, antique type, moving at such a funereal pace as would not be tolerated in any ten-year old town of the United States. The sight of this inextricable maze of vehicular traffic must have been in the highest degree bewildering and irritating to him, unless it engendered immediate dreams of gigantic schemes for rescuing London from its vehicular bondage. With the consciousness of what he had accomplished in America strong upon him, he naturally began to study the problem of street passenger traffic as it was here presented to him, and it was not long before he arrived at certain definite conclusions as to what ought to be done. The conditions were different from the conditions in Chicago or Philadelphia. In the American streets the thoroughfares are uniformly wide and mostly straight, permitting of a double line of tram-rails being put down without serious detriment to the passing and re-passing of the vehicles of commerce and pleasure; but no such solution of the difficulty was possible in London, where even the main arteries are comparatively narrow. It had to be either by overhead or underground relief-ways that the thing had to be worked out, and London had not become so utterly utilitarian as to be willing, even for the sake of having the means of ingress and egress appreciably increased, to have its thoroughfares disfigured with elevated roads. So, although such underground railways as already existed were continually being denounced by Londoners, it was only by additional underground systems that there seemed to be any prospect of ready relief. It was not Mr. Yerkes who was the first to tackle this great work, but it was the opening of the " Twopenny Tube"—an American idea carried out on American lines almost throughout—that showed the direction in which the question of rapid transit in and around London was destined to be ultimately worked out. Underground ways, electricity as the motive power, and a train-equipment like that of the American elevated railways, were the necessities, and the success of the first enterprise of the kind was so marked that there were immediate calls for other similar undertakings.
Then it was that Mr. Yerkes took his place in the transformation scene, and how many of the successive developments he is destined to witness or assist in is more than he himself could predict at the present time. But his appearance means business, and profit, and rapid results, if he can obtain anything like as free a hand as he had in America. His associations with England, however, are now sufficiently strong to make his personality a matter of interest to the British public, and a glance at his career will show how well he has acquitted himself in the double task of fortune-building and ministering to the traffic requirements of the time.
Before Mr. Yerkes allied himself with British electric railway schemes he was well enough known in the English financial world, and Englishmen who had travelled in America knew something of him by repute, but to the people at large his name carried with it no significance or meaning at all, which shows that, close as is our touch with the land of the Stars and Stripes on many points, it is still possible for a man of business to work himself up from obscurity to fame and competence in America—even to become a multi-millionaire, and to have under his control some of his country's most profitable undertakings—without any of his glory being reflected upon the British people.
Reared In The Quaker City.
Mr. Yerkes was not brought up to any profession or industrial calling, but, having the money-making instincts strongly developed, he was able while a very young man to make his way into channels where profit was to be made. He was born in Philadelphia, nearly sixty years ago, and it was there that he received his education and made his first business ventures. Although Mr. Yerkes would have "got on" anywhere, Philadelphia was in his youthful days the next best place for a business mind to ripen and gather experience in to New York. In these days the Quaker City is voted slow by the more high-pressure cities of the Union, but when young Yerkes was casting about for enterprises of profit, Philadelphia was quite abreast with the times and up-to-date in every way. Native Philadelphians insist that it is so to-day.
A Smart Idea.
When Charles Yerkes was a boy of twelve he initiated himself into the art of bargain-making. Usually, at such an age, a boy is too much occupied with fun and frolic to think of watching the course of business, and the spending of money is more to his taste than the making of it. Young Yerkes, however, was as exceptionable as a boy as he afterwards proved to be exceptionable as a man; and he used to regard it as an agreeable pastime to attend certain Saturday auction sales in a local auction-room. It was the best of excitement to him to stand among the crowd and watch the buying and selling of the miscellaneous wares and commodities that were put up, and he often amused himself by mentally calculating the probable profit a man would realise from his purchase. He was not at first able to speculate himself, much as he longed to do, for the reason that his pocket-money was not ample enough to admit of such indulgences. But presently a day of terrible temptation came. Walking into the auction room one Saturday some time before the opening of the sale, and taking stock of the goods set out in readiness for offering, he observed a number of boxes of soap of a brand that was familiar to him because it happened to be the same as that which he was in the habit of purchasing for his mother at a corner grocery store. Surely, he argued with himself, there was something to be done here. After reflecting for a little while, an idea occurred to him, and he walked over to the family grocer and asked him what the particular brand of soap was worth per box. The affable grocer, knowing the boy and imagining that he had been sent to make a large purchase, quoted eleven cents a pound as the price for a quantity. Young Yerkes had always been accustomed to pay twelve cents a pound. " Eleven cents a pound!" cried the boy. " Oh, that's too much." Then the grocer assured his youthful questioner that really there was very little profit made out of the soap, and to emphasise this view he remarked that he would be glad to give nine cents a pound for any quantity. This was all the information young Yerkes desired, so, making some plausible excuse, he left the grocery store and went back to the auction-room on business intent, counting his little stock of pocket-money — which he had been steadily saving up for a time—on the way. The soap was put up for sale soon after his return, and he made bold to start it on the run himself by making a bid of six cents a pound. His shrill, juvenile voice caused every one in the room to look round, but, nothing daunted, he stuck to his post, and bid for and bought one box after another until he had fifteen boxes knocked down to him at six cents per pound. After that he took five more at five and a half cents. Then, proud of his bargain, he hurried across to the family grocer again and told him that he had twenty-five boxes of the soap for him at the price he had named, nine cents a pound. Though hardly prepared for this, the grocer could not very well go back on his word, so he took the soap and paid for it, and the juvenile Yerkes marched delightfully homeward, the richer by sundry dollars. From that day he resolved that he would become a man of business.
From Flour To Stockbroker.
When his schooldays were over, Mr. Yerkes obtained a position as clerk in a flour and grain establishment, but without salary, though at the end of his first year's service his employers were so satisfied with him that they made him a present of £10. In this situation Mr. Yerkes picked up some valuable knowledge of business routine, being always diligent, energetic, and painstaking; but his ambition soared far higher than a clerkship in the flour and grain trade, so, in 1858, at the age of twenty-one, he launched out on his own account, and started business as a stockbroker. This was not a difficult matter to accomplish. That is, as far as the initial stage was concerned, for the business of finance was not then so fenced round with restrictions and conditions in America as such a business was (and is) in England. If a man wanted to embark on such a career, the course was open to him; all he had to think about was the getting of clients; and this Mr. Yerkes contrived to accomplish with more than average readiness, his manners and methods being such as to inspire investors with confidence. It was not long before he was able to number several wealthy citizens among his patrons, and in the course of three years he found himself in command of sufficient means to encourage him to branch out into the regular banking business. Charles Tyson Yerkes became one of Philadelphia's bankers.
A "special" Banker.
There are bankers and bankers, however, and Mr. Yerkes decided upon being one of a rather special kind. The period was that of the Civil War, when everything in connection with financial affairs was strained. It was a time of extraordinary risks and extraordinary opportunities. There was much reckless speculation indulged in, the mark of the gambler was set upon all classes of securities, and the fluctuations in stocks were so irregular and inexplicable that it took a cool head to keep any sort of track of them. Mr. Yerkes, however, was for a time quite equal to the occasion, and kept cleverly in the running, to the advantage of his clients and himself. It was not with ordinary stocks that he pushed his way ahead. They were dangerous to handle, and he let them alone. Government, State, and city bonds were steadier, and offered a better field to one who understood them, and of this line of securities Mr. Yerkes became a specialty, and did so well with them that he became quite prosperous—almost wealthy—and began to look the future in the face with a good deal of confidence, certainly without misgiving. Moreover, he was able to do the city a good turn by his ingenious way of dealing. The city bonds made but small realisations owing to the fact of the high premiums put upon gold, the interest being payable in currency. In this difficulty Mr. Yerkes hit upon a scheme whereby the price could be advanced from 85 cents to par, which was a great boon to the city, enabling the municipal authorities to raise money enough to pay bounties to the soldiers as well as to provide funds for the establishing of public parks which were at that time much agitated for. According to the terms of its charter, the city could not sell its bonds at less than par, consequently when the price fell below that figure the municipality was practically without funds for either war bounties or improvements. The scheme which Mr. Yerkes brought forward removed the harassing restrictions, and the young banker began to make money more rapidly than ever. His connection with the city was of considerable advantage to him. It stamped him as a substantial and trustworthy man, and was the means of attracting much good business to him. Success upon success resulted, and his fortune seemed made.
A Financial Panic.
Thus matters went on, with apparent assurance of continued prosperity, until the sudden depression of the financial panic which followed close on the heels of the Chicago fire. [Panic of 1873] Every banker and broker in the country was affected. Hundreds failed. The strongest firms were shaken. All over the Union the story was the same, and, substantial as Mr. Yerkes was, cautious as he had been, and resourceful as he was, he found himself with an enormous load of securities on his hands, and before he could realise them he was forced to surrender. One day he had seemed in the full flush of prosperity, the next he was bankrupt. To add to his embarrassment, he was indebted to the city authorities in heavy sums for bonds sold on their account. They demanded an immediate settlement, and thus forced him to the wall, for rather than give them an undue preference over his other creditors, he decided on making an assignment in which all would share equally. This action, although it ultimately made him many attached friends and gained him the general respect of the community, brought down upon him the wrath of the city fathers, who pressed matters so harshly that for a time he suffered imprisonment at their suit. Still he preferred that to an unfair distribution of his assets. It was a terrible ordeal for the young banker to have to undergo, but he bore it resolutely and manfully, and when he was at liberty to enter again into the financial strife he was not without friends and supporters. His mishap had been one of pure misfortune, and as no imputation rested upon him, he was able to make a fresh start with little difficulty.
The Street Railway Idea.
The subject of street railways had engaged Mr. Yerkes's mind even before his failure, an interest of his in a Philadelphia tram-line being among the things that were realised for the benefit of his creditors. But now that he was free to take stock of things, and without the worry of daily venturings on the exchanges, he turned almost instinctively to this new sphere of action, it being clearly demonstrated to him that it afforded him the best opening for the restoration of his shattered fortunes. Having this end always in view, he resumed operations in stocks and shares, but in a quiet and exceedingly cautious way, running few risks and handling only high-class securities. He was soon putting by money again, and when the Jay-Cooke failure of 1873 occurred, he was able to turn that staggering event to profitable account by a daring course of action that few men could have adopted with equal success. He was quick to foresee that Mr. Cooke's collapse would mean a serious decline in stocks of all descriptions, and he prepared for this, and by selling heavily before purchasing made large and speedy profits, with the result that he reestablished himself on a sound enough monetary basis to permit of his obtaining a valuable interest in the Continental Passenger Railway of Philadelphia.
This was one of the chief turning-points of his life. It had the effect of putting him in direct touch with the class of enterprise that more than any other he longed to be connected with. It drew his mind from the riskier speculations of the money market, and gave him work to do and plans to evolve and problems to solve that exactly suited his mental equipment. In a short time he was in practical control of the undertaking, and so admirably did he manage the affairs of the company that the stock, which was at about £$ per share when he took office, advanced steadily until it reached the value of £20 per share or more.
This was a great achievement. His success decided his future. He gave up all other work and speculation and devoted himself to tramways alone; and he was wise in this, for he could think ahead in these matters and make money out of them where many failed. He had discovered his metier. And how energetically he laboured ! He was at his office before six o'clock of a morning, and did not leave until late at night—Sundays as well as week-days. The result of all this effort was that he accumulated a considerable amount of capital for himself, made high dividends for the shareholders, and set the organisation on a thoroughly sound footing. Then, like Alexander, he longed for other worlds to conquer, and, unlike the Greek general, found a few left for him to battle with.
There was nothing further to tempt him in Philadelphia, so he journeyed west, and in 1880 paid a visit of inspection to Chicago. At first he was inclined to enter upon street railway schemes in that city, having a good amount of capital at his disposal at that time, what with his own accumulations from the settling out of his interests in Philadelphia, and the amounts that his friends were ready to venture with him in any promising enterprise. But he felt a little uncertain about Chicago. Not that he doubted its continued expansion, but because of the difficulty of determining just then which particular point of the West was destined to become the chief money centre. Things in the West were in a state of transition. Chicago offered fine prospects for tramway developments, it is true; but perhaps some other Western city might be still more favourable. In this frame of mind he resolved upon a further journey of exploration, and directed his steps towards the great territory of the North-West, visiting St. Paul, Minneapolis, Duluth, and other cities scattered about the banks of the lakes and rivers of the far-stretching wheat and ore States. None of these places, however, fully satisfied his requirements, so he proceeded still further west, taking the route of the Northern Pacific.
At Fargo his progress was interrupted by a blinding snowstorm that compelled him to remain at the hotel there for many days. He made himself as comfortable as he could, however, and entered freely into conversation with the rough-and-ready guests of the house, who sat in characteristic postures over the great stove and related wonderful stories of the development going on in the different parts of the country they came from. They sounded very much like fairy tales, but by degrees he began to sort them out and to put questions to the narrators, and came to the conclusion that beneath the general surface of exaggeration there was a sufficient substratum of fact to give a wandering capitalist food for thought. He became particularly interested in the tales about North Dakota, and began to have dreams of new cities, new streets, new railways, new banks, and other newnesses in that much-lauded region. According to the stories he heard, North Dakota was a veritable El Dorado. The crops had been good and prices were high, it was said, and everything pointed to a great " boom " in that State in the immediate future. Mr. Yerkes was no dreamer, however, but was in all things intensely practical. The tales he had heard simply influenced him to the extent of engendering a strong desire to visit North Dakota. Nothing more. He would take no action on any fancy pictures, no matter by whom they were drawn, and had just as strong a dislike to trusting his own imagination. He must have solid fact to work upon.
Starts For Dakota.
So when the snow died down sufficiently to admit of his continuing his journey, he set out in the direction of North Dakota, and when he arrived there and had had time to look about him he was so satisfied with the prospect that he organised a syndicate—partly composed of his Philadelphia friends—with the express object of obtaining concessions and embarking upon projects connected with the development of North Dakota. Then followed a few months of what may be called reconnoitring or prospecting, during which Mr. Yerkes was carefully taking the measure of things out there, and the next spring, when the land looked bright and smiling and productive, he invited his Eastern associates out to that State, and in a very short time afterwards they had entered upon vast schemes, involving the building of spacious new streets, vast building blocks, factories, and what not, while they laid out great tracts of land into building lots, and the usual Western mushroom process of throwing up new cities and establishing new and populous communities was proceeded with under the direct superintendence of Mr. Yerkes. The influence that he exerted was astounding. His object was to create prosperous settlements, and as far as his aims extended he succeeded. The first fair or exhibition in North Dakota was organised by Mr. Yerkes, and was of great service to the farmers, the display of agricultural machinery being of a very complete kind.
North Dakota, for all that, was not to the mind of Mr. Yerkes exactly. Things didn't move rapidly enough there for a man of his spirit and activity. He missed the pace of the great cities. Waiting for harvests to grow and settlers to settle strained his patience. Indeed, the agricultural interests did not appeal to him strongly, and certainly North Dakota was not populous enough to afford him any of those great opportunities of street-development upon which he had set his heart. So, after a year or so of busy and not unenjoyable existence among the vacant places of the North-West, he sold out most of his holdings there, and in the autumn of 1881 removed to Chicago, resolving to throw in his luck with the pork metropolis, and try to advance his fortunes there. To begin with, he opened a bank, in conjunction with one that he still retained an interest in in Philadelphia, for it was as a banker only that he was known in Chicago for the next few years.
Sticks To The Tramway.
But Mr. Yerkes had his eye on tramway development all the time. He never lost sight of it, never relinquished the idea of taking it up. He simply bided his time, watching all that was going on, and studying the matter in every aspect, prepared when the proper moment arrived to step forward and declare himself. At length, in 1886, after waiting five years, the anxiously looked for opportunity presented itself. This was in connection with the Chicago North Side Railway, an enterprise which was not doing much for its shareholders, and which fell far short of fulfilling the requirements of the district it traversed. Mr. Yerkes saw the defects of the system, and acquainted himself with their causes, after which he was in a position to negotiate with the company, and made them an offer. Before making the proposal, however, he had broached the project to certain Chicago capitalists, as well as to a few of his old friends in Philadelphia, and having made sure of their backing, he put himself in communication with the old directors. The result was the purchase by Mr. Yerkes and his associates of the entire undertaking. Then Mr. Yerkes got to work in his old energetic way. He formulated a new scheme, including extensions and improvements, obtained new and highly valuable concessions from the city authorities, and, with a freshly organised company, of which he became president, he entered upon his remarkably successful career of Chicago tramway management, throwing his whole soul into the work, and introducing a marvellous change in street-railway traffic. One of the first things he did was to supersede the old horse propelled cars by the underground cable system. He quickened the pace of things altogether, and by giving the public better facilities of transit, greatly increased the number of passengers, and correspondingly enhanced the profits of the undertaking.
Prosperous Ventures. Two years later Mr. Yerkes was able to get hold of the Chicago West Division tramway system. After buying the greater part of the stock, and thus becoming master of the position, he set about reorganising the company, as he had done with the old North Side company, and in a short time he was in main command of the Northern and Western systems, and had won the confidence both of the public and the capitalists who were associated with him in the two ventures. He was supreme, and for a number of years he and his party continued to operate Chicago street railways with splendid success, extending and extending, until they came to have over 500 miles of tramways under their control.
Mr. Yerkes also conceived the idea of organising other lines extending out into the prairies, to connect with the two original lines. A number of companies were organised, and three lines were built. It was impossible, however, for them to enter the heart of the city, and they were obliged to stop at some distance therefrom. To remedy this, Mr. Yerkes planned a loop-line, which would connect with these different roads, and run into the densely settled part of the town. [Thus was born "The Loop"]
He also organised the North-Western Elevated Railroad, to carry passengers north. The three original elevated roads were unsuccessful until the loop-line was built, and after they had undergone a reorganisation, the company was leased to the elevated roads, the four roads using the loop-line together.
In this way a perfect system of street railroad travel was formed, extending from the north, north-west, west, and south. Mr. Yerkes's plan was to consolidate all of these lines, and also the surface roads. The effect of all this was that passengers could be carried long distances for a single fare of five cents, and thereby the tenement house was eliminated from the residence districts of Chicago. The labouring classes were enabled to have homes out on the prairies, the only disadvantage being in the difference of time which it would take for them to go from their residences to their places of business.
This revolutionising of the street traffic has had much to do with the improvement of the health of the people of Chicago, and has tended to keep the death-rate at a very low percentage.
When Fortune Came.
Those were prosperous and busy years for Mr. Yerkes. The reward was commensurate. He and his fellow-capitalists became multi-millionaires, and Mr. Yerkes built himself a lordly mansion in New York—the paradise of American millionaires—where he appeared and shone from time to time, though he never threw Chicago over, but has all along kept up his residence there, passing more time perhaps in the Western city than in the capital, for although Mr. Yerkes is now one of the money peers of America, and has a fine picture-gallery, and entertains somewhat, he has little sympathy with society displays and the ceremonies and shows of fashion, and still regards Chicago as his principal home, and Chicago men as his closest friends.
Within the last year or two, however, Mr. Yerkes has been compelled to relinquish a good part of his hold on the Chicago street railway systems, for on the expiration of the leases there was no obtaining a renewal of them on the old terms. A strong spirit of opposition was aroused against the re-granting of the original concessions. The people were told that the road privileges were being given away, instead of being made to contribute to the funds of the city and the lessening of taxation, and the agitation became so strong that the capitalists had in the end to confess themselves beaten. Since then the holdings of Mr. Yerkes in Chicago street railways have dwindled considerably, though he is still a ruling spirit, as he ought to be; for even allowing that the terms of the first concessions were of such a character as gave him the means of enriching himself, it must be admitted that in return he provided the city with a new, quick, and efficient service which was well worth paying for.
It remains to be stated, that when fortune came to Mr. Yerkes he did not forget his obligations to his old creditors of the days of his misfortune in Philadelphia. Paying a secret visit to that city, he invited them all to a dinner at the leading hotel, and when the repast was over presented each guest with a cheque for the amount of his original claim, with compound interest at 6 per cent.
Mr. Yerkes, besides being an art connoisseur, takes much interest in scientific and educational matters, and has given to the University of Chicago a telescope, said to be the largest and finest in the world, at a cost of £100,000. The object glass of this gigantic refractor by Alvan Clark is forty inches in diameter, being four inches more than the great " Lick" instrument.
In regard to street railways, Mr. Yerkes is acknowledged to be one of the greatest living authorities, and in bringing his great ability to bear upon the London traffic problem he may have even a wider field for developments than he discovered in Chicago. He may not be able to secure such favourable concessions as were given to him by the Chicago municipality, but, for all that, the opportunities will be great and the reward handsome, doubtless, and he will make many friends.
From: Millionaires and Kings of Enterprise: the Marvellous Careers of some Americans who by pluck, foresight, and energy have made themselves masters in the fields of industry and finance by James Burnley (London, 1901)
Robber Baron: The Life of Charles Tyson Yerkes by John Franch
Charles Tyson Yerkes: Railway Tycoon by Tim Sherwood
Railroads and the "L" (Chicago History Online; Internet links)
Charles Tyson Yerkes (London Reconnections: "The Man Who Painted London Red")
Central London Tube Railway poster (Wikipedia; public domain)
Cartoon: Portion of a Chicago Tribune cartoon dated October 18, 1896