“Nature’s Metropolis: Chicago and the Great West,” by William Cronon, WW Norton, NY, 1991. This 530-page hardback tells of the development of Chicago. The author believes cities develop from the economics of the communities they serve. Hence, this is the story of businesses in Chicago. Not only railroads, but also especially grain, lumber, and meat packing. He also includes sections on Montgomery Ward mail order retail and banking.
The fundamental element is inexpensive transportation of grain by water to the east especially New York via the Great Lakes and the Erie Canal. As a result Chicago could pay $0.20/bu more for grain. This was noted with the completion of the Illinois and Michigan Canal (April, 1848). Once the railroads arrived, grain poured into Chicago. Steam powered elevators were invented in 1842. Chicago and the railroads adopted them allowing bulk shipment of grain. Out of this came the Chicago Board of Trade grain trading system, including futures and corners. The telegraph arrived in 1848 allowing prices to be shared promptly.
St. Louis had been a leader in grain trading. Grain was shipped by steamboat, usually to New Orleans. The grain was in sacks and required crews to load and unload. In addition, north of St. Louis the Mississippi River had rapids that required smaller, less efficient steamships. Shipping was more expensive. Farmers found the rates charged by railroads especially attractive. Steamboats could not compete with railroads. Chicago passed St. Louis in grain trading soon after the arrival of railroads.
Missouri had considerable difficulty financing construction of railroads. Grain was probably a factor in the decision of eastern investors to finance Chicago’s railroads. Later finances came from Europe, especially London. In the competition with St. Louis, Chicago easily financed the construction of the Chicago & Alton RR sucking trade from northern Illinois away from St. Louis. Similarly, the first railroad completed in Missouri was the Hannibal & St. Joseph across the northern part of the state to the Missouri River at St. Joseph. It was financed by the Forbes family of Boston and connected with the CB&Q diverting that trade to Chicago. A branch line to Kansas City captured western trade.
Construction of the Illinois Central Railroad using the first federal land grants was no small achievement. Originally it ran from Cairo to Galena, but later a branch from Centralia brought the railroad to Chicago (1856). Federal support was arranged by Sen Stephen Douglas. It allowed settlement of much of the Illinois prairie that had previously been landlocked.
White pine forest were a source of lumber from Michigan, Wisconsin, and Minnesota. Chicago became the wholesale market for lumber. Water transportation gave easy access to Chicago. Railroads facilitated distribution–especially in the plains states that lacked timber. This continued until white pine was depleted and the industry moved west to Washington and British Columbia.
The story of meat packing is well known. Swift and Armour were the biggest but there were two others, Hammond and Nelson Morris, that made up the Big Four. They used the assembly line system developed in Cincinnati but coupled it with the railroad to bring cattle and hogs from as far away as Kansas. Meat packing was traditionally done in winter to reduce spoilage. They used ice cut from lakes for cooling allowing them to operate year round. They also developed ice cooled refrigerated railcars to ship dressed beef east. The fact that only 50% of the animal is meat made dressed beef more economical than butchering live animals. Often the beef was sold at near cost. Profits came from processing the by-products into marketable derivatives such as soap, margarine or buttons.
This was the age of monopolies. Packers were extremely competitive and would undercut the prices of any competitor to drive them out of business. They partnered with competitors to distribute their products where possible. Or they built their own branch houses to compete. Eventually Swift built packing plants in St. Louis, Kansas City, and Omaha to be closer to the livestock.
Montgomery Ward and Sears Roebuck built its mail order business in Chicago using railroads to ship their products. Catalog sales offered cost advantages as they did not need retail storefronts or sales personnel. And they purchased in large quantities.
Bankruptcies allowed assessment of the range of the business activities in various cities. Chicago had the longest reach. Similarly business activity of Chicago banks covered multiple states especially to the west while St. Louis banks activity went only to Kansas City and St. Joseph.
The author is unkind in his description of St. Louis’ efforts to compete. He sneers at the failure to build railroads to Illinoistown (East St. Louis) opposite St. Louis. He fails to note that Terre Haute, IN, 180 miles south of Chicago, also had connections to eastern railroads–New York Central and Pennsylvania, thanks to Chauncey Rose, best known as the founder of Rose Hulman Polytechnic Institute in Terre Haute. He brought the Terre Haute & Indianapolis Railroad to Terre Haute in March, 1852, almost simultaneous with the Michigan Southern’s arrival in Chicago, February 20, 1852.
Rose was also behind the construction of the Terre Haute & Alton RR. Cronon is incorrect in stating the TH&A stopped in Alton 20 miles above Illinoistown. The western portion of the Indianapolis railroad system should have been the Vandalia route from Terre Haute to Illinoistown, following the route of the National Road. The Illinois state legislature had a “home policy” that promoted Chicago railroads and sought to block St. Louis’ access to eastern railroads. They refused to charter the Vandalia route, but instead chartered the Terre Haute & Alton and the Ohio & Mississippi. The Terre Haute & Alton was chartered in January, 1851. The Belleville & Illinoistown Railroad was chartered in June, 1853. It built north to connect with the Terre Haute & Alton at Wood River, IL.
Although the Ohio & Mississippi didn’t connect with the B&O at Cincinnati until 1857, it was complete to Vincinnes, IN, July 5, 1855. From there, the Evansville & Terre Haute RR carried passengers to Terre Haute. The Vincinnes to Terre Haute section was also constructed by Rose. Eventually that line extended to Chicago via Danville as the C&EI. The Vandalia route did get built but not until after the Civil War. It was part of the Panhandle Route, affiliated with the Pennsylvania RR, and participated in the dedication of Eads Bridge in St. Louis.
Not discussed is the decision of Chicago railroads to endorse construction of the Transcontinental Railroad through the northern Rockies. Keeping the road passable in winter required miles and miles of snow sheds. Didn’t they believe the Donner party stories or was it greed? The routes used by the Santa Fe and Southern Pacific were and still are better choices.
Cronon also says all east west railroads meet in Chicago. Jay Gould assembled the Kansas City to Toledo route via Springfield and Danville that even now bypasses rail congestion in Chicago. It is owned by Norfolk Southern.
This is a well written, highly readable telling of the businesses of Chicago. Photos. References. Index.