Greg Gordon

Economic Phoenix

How A.B. Hammond Used the Depression of 1893 and a Pair of Defunct Oregon Railroads to Build a Lumber Empire

THE MOST SEVERE ECONOMIC depression of the nineteenth century, the Panic of 1893, affected the business world much the way an understory fire acts upon a forest, leaving the big trees unscathed while clearing out smaller and marginal players. Those with shallow roots and overextended financial commitments — Henry Villard, for example — toppled over, while men like John D. Rockefeller, Jay Gould, E.H. Harriman, and Andrew Carnegie profited from the reduced competition. Particularly hard hit by the Panic, dozens of overextended railroads owning one third of the nation's trackage fell into receivership. With operating expenses exceeding earnings by over half a million dollars, the Northern Pacific Railroad (NPRR) failed. James J. Hill and J.P. Morgan took advantage of the situation and bought controlling shares in the railroad. The condition of the other Montana railroads built by local entrepreneurs Samuel Hauser, A.B. Hammond, and E.L. Bonner was worse than the Northern Pacific's, with a total deficit for Montana branch lines of $525,000. All these lines went into receivership as well.¹

Vilified by the local press as "the Missoula Octopus," in 1893, Andrew B. Hammond controlled every major business in western Montana, including the First National Bank of Missoula, the Missoula Water Works, the Missoula Street Railway, the Missoula Gazette, the Florence Hotel and downtown blocks, the Missoula Real Estate Association (land speculation and development), the Bitterroot railroad, and the area's only flour mill. Hammond's Big Blackfoot Milling Company dominated the region's lumber industry. He even owned the cemetery. Underpinning it all was the Missoula Mercantile Company (MMC), the largest wholesale and retail business between St. Paul, Minnesota, and Portland, Oregon, and Missoula County's largest employer, which critics often referred to as the "Missoula Mercantile Monopoly" or simply, "The Monopoly." Although fellow businessmen, including Marcus Daly and Hauser, acknowledged Hammond's business acumen, his ruthless practices and brusque manner had won him few friends. In the 1889 election for town council, for example, he received one vote.²

Many residents of western Montana resented A.B. Hammond's domination of the region's economy and politics. On October 28, 1891, the Weekly Missoulian caricaturized Hammond as the "Missoula Octopus, that is undertaking to reach its slimy arms over the county and strangle the life out of it." The following year, Hammond purchased the newspaper.

Courtesy of the Dixon Collection, Archives and Special Collections, Mansfield Library, University of Montana

Previous to 1893, the profits from Hammond's Montana enterprises were running $300,000 to $400,000 per year. Although he suffered a forty percent loss in the Panic, the MMC and the bank were breaking even by the following year, and his lumber business was operating at a close margin. Hammond's aversion to mining and cattle ventures, combined with his adroit handling of the banking crisis and the solid foundation of the MMC, allowed him to weather this greatest crisis of his career relatively undamaged. Finding his finances, credit rating, and business reputation still intact, Hammond enlarged his empire, but he was careful not to overextend his finances and used little of his own money.³

In many ways, 1893 marked the end of the era of the pioneer entrepreneur and the beginning of the rise of the corporate businessman. Alfred D. Chandler, Jr., traces the rise of modern corporations to the expanding railroad network, the development of national markets, technological innovations, the vertical integration of industry, and bureaucratic structure — all of which were predicated on railroads connecting the source of raw materials with urban markets. Prior to 1893, American investments were primarily in railroads, but with their financial collapse, a new economic order emerged from the ashes, the modern corporation designed around mass production, global markets, and government bureaucracy.⁴ Although he retained many nineteenth-century practices in his businesses, Hammond readily adapted to the emerging industrial model. As Hammond shed old partnerships in Montana, he applied the new paradigm identified by Chandler to the development of the Oregon coast, connecting the nascent lumber industry with national markets via railroads.

HAMMOND REALIZED THAT Montana was, and would remain, a hinterland, subordinate to the metropolis that controlled capital investment. Portland and the Willamette Valley were, in many ways, more established versions of Missoula and the Bitterroot Valley, but on a much grander scale. Agricultural produce streamed down the Willamette toward Portland as manufactured goods moved up the valley. Historian William G. Robbins notes that capital investments also flowed from one region to another in an incessant quest for higher profits. "The interior Northwest paid tribute to Portland," he writes, "just as Portland paid tribute to San Francisco."⁵ The repeal of the Sherman Silver Purchase Act in 1893 sent Montana's economy further into the doldrums. Overnight, 3,000 people fled the silver mines of the Philipsburg area.⁶ Hammond also began spending more time outside Montana, often wintering in California to alleviate his rheumatism and other health issues. He often passed through Portland, which was quickly becoming the hub of the entire Northwest. Thus, Hammond cast his gaze toward the Pacific Coast for future investments. Montana had become too small for him.

Edwin Stone, a former employee of Eddy, Bonner and Company, had moved to Corvallis, Oregon, but stayed in touch with his Montana friends. In the fall of 1894, Stone wrote to Hammond, telling him that the Oregon Pacific Railroad was up for sale at a bargain basement price.⁷ The letter prompted a dramatic turn for Hammond. The Oregon Pacific had been built by T. Egerton Hogg who, in a fit of over opportunistic boosterism in the 1870s, had promoted it as Oregon's first transcontinental line, linking Yaquina Bay on the central Oregon Coast with Boise, Idaho. Slicing through the Cascades, the route would cut 225 miles off the trip from San Francisco to the inland Northwest by routing steamship traffic to Yaquina Bay. Bypassing Portland, it would also siphon traffic from the Willamette Valley. Boosters claimed that Yaquina Bay and Newport would be the new metropolis of the Northwest. With the railroad bonded for $15 million, Hogg sunk $5 million into building the line from Yaquina Bay through Corvallis and up the Sanitam River to Detroit at the base of the Cascades. The Oregon Pacific opened to traffic in 1884, but the entrance to Yaquina Bay was too shallow, and the company wrecked two of its steamships in the following three years crossing the harbor mouth. In 1890, the Oregon Pacific defaulted on its bonds and plunged into receivership with more than $1 million in accrued debt. Subsequently, the rail line fell into disrepair. During the following four years, the sheriff made repeated attempts to unload the railroad to pay off the debts, each time lowering the bid.⁸

Hammond's experience made him leery of enterprises that were long on vision and short on cash. Nevertheless, in the fall of 1894, he and Bonner traveled up the Willamette Valley to Corvallis to inspect the Oregon Pacific. In December, the sheriff accepted Bonner and Hammond's bid of $100,000. The railroad included 142 miles of finished rail, the right-of-way, and an unfinished road through the Cascades. Along with the train cars, they acquired sixteen locomotives, two tugboats, and four steamships. By paying off the debts on the ships and selling them, the partners quickly recouped their original investment plus $20,000.⁹

While waiting for the sale of the Oregon Pacific to go through, Bonner and Hammond travelled to Astoria, Oregon, to investigate another struggling railroad proposition, the Astoria and Columbia River Railroad (A&CRR), which was the unfinished portion of the Northern Pacific's transcontinental project. When the partners arrived in Astoria, they discovered two other promoters already issuing proposals. C.T. Karr of Chicago even offered to put up $1 million the first month, but the Astoria subsidy committee turned him down in favor of the proven track record of Bonner and Hammond, who had already built several railroads in Montana as well as the Rocky Mountain division of the Northern Pacific. In a behind-the-scenes deal, the other competing promoters, J.C. Stanton and H.I. Kimball, withdrew their offer and threw in with Hammond and Bonner.¹⁰

Hammond's arrival and interest in the railroad stimulated a renewed optimism in Astoria. Despite many previous disappointments, Astorians once again pinned their hopes on yet another out-of-town investor. The leading citizens must have been suitably taken by Hammond's demeanor, poise, and professionalism to believe that he would be the savior to deliver them into the grace of the market. Astoria's town leaders regaled Hammond with stories of how Astoria was destined to become a great port city. Boosterism in Astoria went back farther than was the case in most far western communities. Originally envisioned by John Jacob Astor as the great outpost of his American Fur Trading Company in 1811, Astoria had never become a booming port at the mouth of the Columbia River. Having crossed the treacherous bar at the mouth of the river, ships continued on to Portland. A railroad, however, could transform Astoria into the entrepôt to the Northwest.

Born in New Brunswick, New Jersey, in 1848, A.B. Hammond worked as a lumberjack in Maine and Pennsylvania before moving to Montana in 1867. From an inauspicious start as a store clerk, he assembled one of the West's largest lumber companies, stretching from Alaska to Arizona. This portrait, taken in the 1890s, shows Hammond in his early forties.

Courtesy of Archives and Specila Collections, Mansfield Library, University of Montana

As early as 1853, Astoria began agitating for a railroad, and five years later, the Oregon territorial legislature granted a charter for a line from Astoria to Eugene, the first of many failed attempts to connect Astoria by rail. With the coming of the transcontinental railroad in 1883, Astoria was assured a connection to the rest of the nation. By the time the Northern Pacific reached Portland, Henry Villard had already overextended the railroad's finances by $14 million. With costs of $50,000 per mile to complete the line to Astoria, he stopped fifty-eight miles short at Goble, effectively making Portland the western terminus of the railroad. Hoping to spur Villard to finish the job, Astorians added their voices to the call for repeal of the unused portion of the Northern Pacific land grant, which Congress heeded in 1885. The result, however, was that Astoria had to come up with its own incentives for someone to build the $2 million line. Town leaders formed a railway company and offered a cash bonus for a capitalist to take it over. Railroad promoter William Reid took the bait and began grading a roadbed. Although he was supposedly backed by railroad tycoon C.P. Huntington, the deal fell through and Reid lost $155,000.¹¹

By 1891, Astoria residents had heaped subsidy upon subsidy, offering 1,000 acres of prime real estate plus $300,000 to lure a rail line. A new company formed and graded seventeen miles before construction suddenly halted and contractors disappeared. Astorians responded by making the subsidy even larger and advertising across the country for investors. There were five more attempts between 1892 and 1894, but all failed to secure enough capital to complete the job. Union Pacific entered the picture briefly, but withdrew because of the national depression in 1893. By 1894, Astoria had increased the subsidy to 3,000 acres of land at Astoria and 1,500 acres at Flavel, a town site across Young's Bay. The estimated value of the town lots was placed at $1,787,335.¹²

Having made a handsome profit off Northern Pacific's Bitterroot and Drummond branch lines in Montana, Hammond and Bonner were well aware of the benefits of building a railroad and then selling it. Although Bonner was reluctant to undertake building the A&CRR, Hammond became swept up by the prospects. Astoria seemed an ideal location for a busy port. Hammond was usually calculating with his investments, but in this case, his optimism overflowed. He extolled the virtues of Astoria and Seaside as tourist destinations as he escorted Northern Pacific officials on a promotional tour. Pointing out the projected railroad route, salmon canneries, and real estate to be developed, Hammond gushed to his guests: "Wait until we reach Seaside and I will show you one of the prettiest spots on the coast."¹³

Excited by his new Oregon prospects, Hammond returned to Missoula briefly before continuing on to New York City to secure financing for the projects. Relying on the solid credit rating of the MMC and Bonner's financial contacts, he displayed clippings from Oregon newspapers, hoping to attract investors, but to no avail. Meanwhile, Astoria's "Committee of Direction," composed of twenty-two of the city's preeminent businessmen, voted unanimously to accept the Hammond-Bonner proposal and signed the contract on December 1, 1894.¹⁴ That day, the Astoria newspaper assured its readers: "The financial ability of these two gentlemen is unquestionable. They have been connected with several very important financial enterprises in Montana and the northwest and have a national reputation of not only possessing large personal fortunes but also of controlling an unlimited amount of eastern capital."¹⁵

Contrary to what the Astorians believed, however, Hammond did not intend to put up any of his own money, confiding in his friend C.H. (Herb) McLeod, manager of the MMC, "the Astorians treated me in great shape and if things should go my way I will make quite a clean up."¹⁶ By mid January 1895, however, the "unlimited eastern capital" had all backed out, as had Bonner, who urged Hammond to drop the project because of his health. Perhaps success or illness had bred paranoia. Hammond confirmed to McLeod that he suspected his old mentor and business partner was trying to squeeze him out and take control. Bonner, however, displayed remarkable prescience, as Hammond contracted malaria a few weeks later. Still, relations between the two men would never be the same.¹⁷

Although confined to his hotel room in New York, Hammond continued to make plans for raising the capital to turn both Oregon railroad investments into profitable ventures. He wrote to McLeod:

This is the worst time that one could come to New York with a railroad proposition. The inability of the administration of the democratic Congress to deal with the financial question has paralyzed all industries and enterprises, and the best railroad propositions in the country are going begging. However, I am far from being discouraged.... I am sure that this is a grand scheme if it can only be properly floated, I propose to stay with it for a while yet.¹⁸

In late 1894, while Hammond was in New York, Bonner returned to Oregon to facilitate the purchase of the Oregon Pacific, which was confirmed by the State Supreme Court in January — an important step toward final approval. Bonner also had misgivings about funneling more money into that decrepit railroad. Nonetheless, he assured Oregonians that he and Hammond would not abandon the line and would repair and finish the road through the Cascades with transcontinental connections.¹⁹

By late February 1895, Hammond was more optimistic, writing to McLeod:

I still expect to accomplish all that I have undertaken in Astoria. I will be alone in the matter too ... I believe that we are about to enter upon an era of great prosperity, and our credit and standing is 'gilt edged' here. We are in a position to take up most any ordinary enterprise in any part of the country, and carry it to a successful issue.²⁰

Hammond had become so absorbed in his Oregon prospects that he turned the entire management of his Montana operations over to McLeod and made it clear he was unwilling to invest any more money in Missoula. He reassured McLeod, however, that he would "not do anything to impair the credit" or use the funds of his Montana enterprises. The Astoria contract required that Hammond begin construction by April 1 and complete the line by October 30, 1896, and spend at least $50,000 per month on construction. Although he still had not found financial backing, Hammond remained optimistic.²¹

While Hammond was confident his Astoria enterprise would prove profitable, he fretted that Oregon newspapers might be read in Montana, leading rival Missoula businessmen to jump in on the deal. Wishing to keep his Oregon strategy secret, when Hammond began traveling again, in March 1895, he moved in and out of Missoula as quietly as possible, spending just a few days to catch up on business before boarding the train to Portland or back to New York. Since the telegraph agent could easily spread the news, Hammond and McLeod developed a secret code for telegrams that Hammond used to signal his arrival or in case of any risk of being detained in Missoula.²² As the April deadline approached, however, Hammond became increasingly apprehensive about his financial ability to build the railroad. He still had not found any backers and would have to finance the project on his own. He returned to Oregon in the spring of 1895 and demanded the Astoria committee rescind the money and time stipulations, hoping they would liberate him from the contract. To his chagrin, the subsidy committee consented. Now, Hammond's only recourse was to exploit the subsidy to fund construction.²³

Although freed from the contract provisions, Hammond wished to complete the railroad as soon as possible and threw all his manic energy into building the Astoria line. By May, however, Astoria's boosters still had neither obtained the right-of-way for the railroad nor turned over all the land titles listed in the subsidy. Hammond laid off his engineers, stating he would incur no further expenses and waste no more time on the railroad until Astoria honored its contract. "Unless the right of way and subsidy matters are speedily closed up there will be no road as far as he is concerned," the Daily Astorian reported. Instead of chastising this extortion, the paper applauded him for showing he meant business, stating, "Mr. Hammond is a man of pre-eminent honor coupled with immense wealth; he is also a man who expects and will have honorable treatment from others."²⁴

The newspaper further reprimanded those who were holding up the railroad by not assigning right-of-way through their property and referred to those who did sign as being on the "roll of honor." The paper cited James Quinn, who donated the deed to a 100-foot right-of-way across his ranch as a "shining example of noble patriotism." The subsidy committee had promised something that was not theirs to give: access through private lands they did not own. As a corporation and public carrier, however, the railroad itself could claim eminent domain. Foregoing lengthy commendation proceedings, the committee, prodded into action, engaged in heavy-handed persuasion and deceit to quickly obtain a right-of-way for Hammond's railroad.²⁵ Pleased at their action, Hammond wrote to McLeod, "All my arrangements are made to commence work on the Astoria R. R. I have succeeded both in subsidy and right of way matters beyond my expectations, and have all other matters in first class shape."²⁶

With construction slated to begin in August, Hammond and his family were feted in the biggest celebration Astoria had ever seen. In contrast to his reputation in Missoula, Hammond was lionized in Astoria. Newspaper accounts invariably referred to him as "President Hammond" of the A&CRR. Merchants and manufacturers capitalized on his popularity by linking his name with brand products: "The Magic Word! Hammond," "The Hammond Typewriter is claimed to be the best for the office," "The Hammond RAILROAD is the best thing for Astoria," "The Hammond SUITS fit best, wear best and cost the least, considering quality," and "We have a large supply of those new, stylish HAMMOND SUITS."²⁷ On July 25, 1895, the Astoria newspaper evoked royal or at least presidential connotations as it proclaimed across its banner, "Entire Community Celebrates Inauguration by the Noise of Cannon, Fireworks, Music and Speeches. Hammond Addresses the People." Hammond brought his wife Florence and their four children as well as his old friends Richard and Edwina Eddy for the celebration to kick off construction of the railroad. "Almost the entire town was waiting to give Mr. Hammond a welcome" with fireworks and a twenty-one-gun salute by the National Guard. A parade of police and fire departments, the football club, bands, and citizens marched through the streets. "The citizens one and all were a joyful lot of people because they realize that at last their city was to be connected with the rest of the world," proclaimed the newspaper.²⁸

That evening, Hammond addressed the people of Astoria from his hotel balcony. He announced, "I did not come here to talk but to build the railroad (applause), besides for sometime past I have been doing the talking and the committee have been doing the work. Now I want to do the work and will let them do the talking." Whereby someone in the crowd shouted out, "There will be plenty of it." Undeterred, Hammond continued, demonstrating that he could play the populist as well as anyone:

It is not easy for a committee such as yours to raise the amount of property it has done on the promise of one man to do something. I am here today to carry out that promise.... We propose to give you value received when this railroad is built. It will be second to none on the coast. We propose to put the money into the road and not into our pockets (applause). When the railroad is operated it will be operated for the interest of the people (applause).²⁹

After all the false hopes, promises, and half-finished efforts, it is surprising the locals were not more cynical. No doubt some were, but Hammond apparently inspired confidence in many townspeople as a man who got things done.

With construction of the A&CRR to begin in August 1895, Astoria turned out in force to celebrate. A.B. Hammond is in the top row just to the right of the locomotive headlight.

OHS photo file 56-C, b9008320

Hammond's name had also been greeted with cheers and celebration two days earlier in Corvallis, Oregon, when the state supreme court announced it had approved the sale of the Oregon Pacific to Hammond and Bonner. In this case, the months Hammond had spent in New York paid off. He succeeded in getting financial backing from John Claflin, president of H.B. Claflin and Company, one of the nation's leading wholesale and retail dry goods concerns. Here again, the MMC figured prominently, as Bonner and Hammond had already established a long term relationship with Claflin through the mercantile business.³⁰ Bonner and Hammond had paid only $100,000 for the Oregon Pacific, which they reincorporated as the Oregon Central and Eastern — capitalized at $3 million — and issued only $1,500,200 in stock. Claflin had provided much of the capital and received two thirds of the stock, with the rest split between Bonner, McLeod, and Hammond. Unlike the Astoria and Columbia, Hammond drew heavily on the finances of the MMC to provide the necessary cash to run the Oregon Central line, which was badly in need of repair.³¹

The poor condition of the Oregon Central became evident when one of the bridges collapsed, smashing up a train, killing two men, breaking the legs of the conductor, and causing $25,000 in property damage. Hammond had been riding on the train but had gotten off at a station before the bridge. Rattled by his narrow escape, he dashed off an angry note to McLeod, blaming his partners for unwillingness to spend the $80,000 needed to upgrade the railroad. "I would have made improvements before but have been kept from it by Bonner and Claflin," he wrote. "I suppose they will quit trying to run a railroad from New York."³² Six months later, Hammond asked Claflin and Bonner to pony up $20,000 each to cover Oregon Central expenses.³³

The Astoria line demanded even more attention and capital, but Hammond was alone on this venture and pressured the Astoria committee to secure title to the pledged 3000 acres of Astoria real estate that comprised part of the subsidy. Once the subsidy was assured, Hammond promised the line would be finished the following year. Even as the Astoria railroad line was being surveyed, Hammond lost no time cashing in on his subsidy and began "carefully and scientifically" platting a city on the peninsula across Young's Bay from Astoria, including lots for houses, warehouses, factories, and wharves. This new city included the subdivisions of Warrenton, Flavel, and New Astoria. Hammond announced that a massive bridge across the bay linking the new city with Astoria would be completed by December 1, 1895. The following spring, Hammond incorporated the Flavel Land Development Company, partnering with several of the Astoria businessmen who had donated lands for the subsidy. The Oregonian believed New Astoria was the "greatest harbor on the Pacific coast north of San Francisco" and raved to its readers, "considering the position and its advantage, this point is unequalled in the United States as a site for a great city." By the end of 1896, New Astoria already housed six hundred people.³⁴

Railroad construction began in August 1895. Although the Astorians were banking on freight traffic, the tourist trade from Portland to the coastal resorts proved to be a mainstay of the railroad business. Hammond noted that "a great rush is now going on from this section of the country to the seaside." With this in mind, he arranged for first-class steamer connections from Portland to New Astoria and upgraded the railroad (which had been completed in 1890 by William Reid) on to the Seaside beach resorts.³⁵

A year after beginning construction, in September 1896, Hammond laid off his construction crew. With the presidential election between William Jennings Bryan and William McKinley looming, Hammond, like other industrialists, feared Bryan's election would instigate social upheaval and economic chaos. Engaging in a business ploy common during the 1896 election, Hammond applied economic coercion, announcing that he and other capitalists were unwilling to invest in the railroad with the prospect of free silver on the horizon — a prospect they believed would be an economic disaster. Hammond publicly proclaimed that if Bryan was elected the road would never be built, but if McKinley won they would continue work. In December, with McKinley's decisive triumph and the shift to a Republican Congress, work on the railroad resumed.³⁶

In building the A&CRR, workers used hand-hewn railroad ties cut from the nearby forests.

OHS photo file 56-C, ba008324

With railroad construction proceeding, Hammond began casting about for investors and brought C.P. Huntington, president of the Southern Pacific, to Astoria to interest him in the A&CRR. Huntington and his wife Arabella joined Hammond and his wife Florence and other dignitaries on a steamer from Portland to Astoria. By now well acquainted with the ship's captain and eager to impress, Hammond took Huntington into the pilot house and actively charted progress of the railroad along the shore and on maps. Astoria Mayor Alfred Kinney and prominent businessmen met the party at the docks and drove them around the city for an hour before they retired to the newly opened, luxurious Hotel Flavel in New Astoria, where Hammond entertained his guests in grand style. The next day, the party continued on to Seaside on a special train car. Huntington was suitably impressed to invest in the railroad. Thus began a long association between the Hammond and the Huntington families, one that would be of vital financial importance to both.³⁷

For forty-five years, Astoria had waited for a railroad connection to the outside world. Finally, in May 1898, cheering crowds greeted the first train to Portland. Both passengers and lumber would be the mainstay of the railroad.

OHS photo file 56-C, ba008328

Astorians were so pleased with the progress on the railroad that, even before it was completed, a movement began in Astoria to create a natural public park on Tongue Point, just east of town, as a "monument in honor of President A.B. Hammond in recognition of the great services he has rendered this city ... so that when Astoria reaches the greatness that is expected, the coming generations may have something to reveal the name of the man whose business foresight and energy made the upbuilding of Astoria possible."³⁸ For several hours, town leaders escorted Hammond on a walking tour through the hills and forests of "Hammond Park," which included "some of the finest specimens of Oregon timber."³⁹ For a lumberman like Hammond, these trees were exciting more as a commodity than for their aesthetics. In just a few years, Tongue Point would become the site of an immense sawmill owned by the Hammond Lumber Company and a shantytown where mill workers lived.

The completion of the A&CRR rekindled the hopes of Astoria boosters that the city would eclipse Portland as the nucleus of the Pacific Northwest. Yet, this 1906 promotional booklet extols Seaside as a tourist destination, with Astoria just a stopover, albeit a large one.

Courtesy of the Clatsop County Historical Society

Finally, in May 1898, the subsidy committee boarded the first train from Astoria to Portland, stopping at each station along the way to cheering crowds. At Clatskanie, where the last spike had been driven six weeks earlier, the committee adopted an impromptu resolution, congratulating and thanking Hammond. They noted with satisfaction that "no finer or more substantial piece of railroad building has ever been put up in this country. Expensive fills were made where cheap trestles would have temporarily answered the purpose."⁴⁰ The A&CRR became an immediate hit for Portlanders who sought to escape the summer heat, enabling them to travel to the coast for two or three dollars round trip. Since 1873, when the Holladay House and the Grimes Hotel were constructed on the banks of the Necanicum River, Portland families had spent much of their summers at Seaside. Instead of taking two days by steamer and train, the entire journey could now be made in four hours. Railroad advertisement promoted Seaside as a place where "the pleasure seeker — impatient of limitations — can bathe in the surf, loiter on the sands, dig for the succulent razor clam, net the elusive crab, cast a fly for leaping mountain trout, hunt for bear, philosophize in sylvan groves or clamber over rugged heights just as the fancy seizes him."⁴¹ The A&CRR quickly initiated special weekend service in what became known as the "Daddy Train." Businessmen could now leave Portland on Saturday, spend the weekend with their families on the coast, and be back at work Monday morning. The emerging middle class, with its increased leisure time, coincided with the new rail access to form the beginning of a major tourism industry along Oregon's coast. During the following six years, the population of Seaside tripled.⁴²

Although the A&CRR's builders and promoters had planned it as an industrial line to carry freight, passenger service dominated its early years. The weekend service known as the "Daddy Train" became a big hit with the emerging middle class.

OHS photo file 56-C, ba008327

Because steamers were slower than trains, their operators generally discounted rates by forty percent whenever navigable waters were paralleled by railroads — a tradition begun on the Hudson. Hammond, however, was not someone who held much stock in tradition when profits were concerned, and in the summer of 1899, he dropped the railroad rate to match that of steamboats. The steamship company, Oregon Railway and Navigation Co. (O.R.&N.), responded by cutting its fares. Hammond retaliated, slicing his fares to two bits for the Sunday excursion trains; the A&CRR recouped some of those losses by charging an additional seventy-five cents from Astoria to Seaside. Finally, the O. R. & N. negotiated with Hammond to establish fares of $2 for the railroad and $1.75 for steamers. The rate war lasted twenty-two months and cost the two companies a combined $600,000.⁴³

Since the O. R. & N. was a subsidiary of the Union Pacific, this rate war may have been an attempt by Hammond to demonstrate the value of his railroad to E.H. Harriman, president of the Union Pacific, to whom he hoped to sell the line. Hammond could also have conducted the rate war in retaliation over common point rates. Lumber, a bulky commodity, was expensive to ship; thus, transportation costs factored heavily in accessing markets. Although the Union Pacific charged a single rate for freight from Portland to the Midwest (known as a common point rate), the company refused to extend it to Astoria. This led to the cancellation of a contract between the A&CRR and Astoria lumber mills to haul five million feet of spruce logs from Necanicum River to Astoria. As a result, Hammond had to suspend freight service between Portland and Astoria for the winter and transfer business to passenger trains. Shortly before C.P. Huntington died in 1900, however, he assured Hammond he would extend the common point rate on his Southern Pacific lines to Astoria and the Willamette Valley.⁴⁴

Like Huntington, Hammond sought total control of his companies, but he also wished to conceal his ownership, possibly because he was still under federal indictment for timber poaching in Montana. Thus, Hammond set up a "dummy" board of directors when he incorporated the A&CRR in 1895, a model he would use repeatedly. Two years later, Bonner, Hammond, and Claflin dissolved the Oregon Central and Eastern and reincorporated it as the Corvallis and Eastern with Hammond holding all but three shares, which were each held by local directors. Hammond tapped Edwin Stone, the former Missoulian who had first drawn his attention to the Oregon Pacific Railroad in 1894, to serve as a director for both railroads. J.K. Weatherford, who served as Hammond's attorney in Oregon, became president of the Corvallis and Eastern with one share. Hammond also employed T.H. Curtis as chief engineer on the A&CRR and made him treasurer of the Corvallis and Eastern. As Curtis later admitted, "the local people as stockholders were simply figureheads."⁴⁵

In 1907, as part of a Progressive Era reform effort, the Railroad Commission of Oregon investigated the murky finances of the Corvallis and Eastern. They discovered that in February 1898, Hammond had mortgaged the railroad for $1.4 million, ostensibly intending to complete the line through the Cascades and then south to California. These bonds appeared rather inflated, however, as T.H. Curtis accepted $1 million in bonds in exchange for his stock worth $200,268. Testifying under oath, Curtis and Weatherford both evaded questions and lied repeatedly in order to obstruct the inquiry, denying they knew anything about the corporate organization of the Corvallis and Eastern or who the principal stockholders were. Demonstrating his loyalty to Hammond, Curtis told the commission that Hammond "had very little stock," but under repeated questioning, he acknowledged that he had heard that it was "common knowledge that nothing was ever paid for the stock that was issued or for the bonds; if money was ever realized from the sale of them it went to the Bonner and Hammond interests." Failing to overcome the obstruction of the officers of the Corvallis and Eastern, the commission ended their investigation.⁴⁶

Hammond was at heart a lumberman, not a railroad magnate, and it appears that he never intended to extend the Corvallis and Eastern into eastern Oregon; instead, he used that proposition as a ploy to bolster the railroad's value. His real purpose was to access the vast timber resources of the west slope of the Cascades. Even more appealing were the immense Douglas firs of the Oregon Coast Range that were previously "shut off by an impenetrable wall" of rugged mountains and twisting river valleys.⁴⁷ Even with Hammond's two railroads, 130 miles of coastal forest, from Seaside to Newport, remained inaccessible by rail. Beginning in 1899, however, Hammond began to acquire timberlands throughout the Coast Range in parcels ranging from 40 to 50,000 acres.⁴⁸

Shooting down the coast, the A&CRR provided access to the timber of the Necanicum River spruce belt, a watershed twenty-five miles long by ten miles wide that held a staggering eight million board feet per square mile.⁴⁹ Hammond began buying timberlands along his railroad lines, constantly adding to the original Astoria subsidy. In 1901, the Oregonian recognized him as having "invested more millions in Oregon than any other man who has come into the state in the past 20 years." That year, Hammond, in conjunction with Charles Winton of Wisconsin, made the largest purchase of unbroken timberland in Oregon to that date. For half a million dollars, they acquired 50,000 acres from Southern Pacific in the Tualatin and Trask drainages. Combined with nearly 20,000 acres in Clatsop and Tillamook counties, the purchase made Hammond one of the largest owners of timberland in Oregon's Coast Range. Along with C.A. Smith and the Booth-Kelly Lumber Company, Hammond formed the first tier of timber holdings behind Southern Pacific and Weyerhaeuser. The newspaper closed its article on Hammond's purchase with a prophetic statement: "Much as we may regret to see the passing of the great forests which have made Oregon famous ... Posterity may not bless the present generation for turning a forest into a field, but while the change is being made the lumber business will place in circulation an immense amount of money."⁵⁰

Ultimately, Hammond's Oregon railroads opened the Coast Range to his logging operations. Spur lines headed up the Necanicum and Nehalem rivers. Geared locomotives, like this Hammond Lumber Co. Shay with its vertical pistons, were well suited for steep inclines and heavy loads.

OHS digital image no. bb004325

The temperate rainforest of the Oregon Coast Range provides some of the world's most productive timberlands. High precipitation, mild winters, lack of hardwood competition, and a genetic pressure for height all combined to produce a zone of Douglas fir unequalled in size and density. With rainfall between 60 and 140 inches per year along the coast and an average winter temperature of forty-three degrees in Astoria, these forests grew trees that often exceeded three hundred feet in height and thirteen feet in diameter — so large that seven men with arms outstretched could not encircle one.⁵¹ In addition to climate and genetics, a unique suite of historical events converged to create these particularly immense trees. About five hundred years ago, a catastrophic fire swept through the Coast Range and Cascades. In the wake of this monumental disturbance, alder — which has the ability to fix nitrogen in the soil — quickly sprang up in the newly created clearings. Scattered among the alder were young Douglas fir seedlings that profited from the increased nitrogen in the soil. Because of the dense brush, however, only a few scattered seedlings managed to overtop the alder. Once they did, those trees had nitrogen, abundant sunlight, and virtually no competition from other trees; consequently, they grew quickly to enormous size.⁵²

Oregon's greatest concentration of timber was in the four northwestern counties (Tillamook, Clatsop, Washington, and Columbia), which contained an estimated 56 billion feet of timber. Until the 1890s, loggers focused on timber along the Columbia River that could easily be brought to the rivers and floated downstream, rarely venturing more than a mile or so inland. Technology and access limited the extent of the logging; even so, timber was Oregon's number one industry. When Hammond completed the A&CRR in 1896, Oregon had 300 lumber establishments with $7.3 million in capital invested and $1.6 million in wages paid to 3777 employees. Clatsop County alone was already producing 20 million feet per year.⁵³ Hammond's two railroads opened previously inaccessible timberlands, and lumber figures skyrocketed. By the turn of the century, Oregon's timber industry was cutting 550 million board feet per year, and boosters believed there was enough to last 500–700 years at that rate. With 500 sawmills in 1906, Oregon doubled the previous year's lumber production to two billion feet, valued at $30 million. Without a trace of irony, the Oregonian proclaimed, "While the timber of the Eastern States is rapidly becoming exhausted, that of Oregon stands almost intact, and this state is prepared to head the list in its lumber output for an indefinite number of years to come."⁵⁴

The A&CRR — and the logging it enabled — certainly brought prosperity to Astoria. By 1910, the city had grown to 15,000 people and its lumber mills were running day and night, cranking out more than 263 million feet of lumber a year, almost all for export. Hammond's massive Tongue Point Lumber Mill was producing 250,000 feet of lumber on every shift. Astoria also boasted twenty-seven salmon canneries, eleven of which belonged to Hammond's Columbia River Packers Association, an organization he had patched together in 1896 to consolidate the salmon industry. Neighboring Columbia County's population nearly doubled from 6237 in 1900 to 10,580 ten years later.⁵⁵ As the Oregonian concluded in 1904, "it was the timber resources of the country which it traversed that made the Astoria road a profitable enterprise, but incidentally its construction brought into existence passenger traffic of larger and steadily increasing dimensions." The A&CRR actively promoted the Necanicum River as a trout fishing Mecca. It acknowledged, however, that

breaking in upon the calm of woodland and murmuring song of the sea that penetrates its recesses, come the hum of machinery, for industry, too, prevails amid this realm of unalloyed attractions of sea and land. Hidden in the forest is a milling plant that manufactures all classes of lumber for commercial purposes, converting the latent wealth of the interior into products for building homes.⁵⁶

In 1906, Hammond's timberlands in the Tillamook Forest and the Nehalem drainage were still isolated, but the extension of the common railroad rate to the Oregon Coast now made expansion of the A&CRR attractive. Hammond began laying plans to lengthen the line to Tillamook with branch lines up the 150-mile-long Nehalem drainage, thus proving access to 33 billion feet of timber.⁵⁷ In January 1907, Hammond publically announced significant expansions of both his railroads, over 350 miles at a cost of $10 million. He would build the A&CRR from Seaside, 138 miles south to Newport (with spurs up the Nehalem River), where it would hook up with the Corvallis and Eastern. Hammond's largest project would complete the Corvallis and Eastern from Detroit, at the foot of the Cascades, to the Snake River in Eastern Oregon. Hammond actually had no intention of extending either line; he was trying to get out of the railroad business, but by publicly extolling the potential of his railroads, he hoped to make them more attractive to buyers. As early as 1903, Hammond had been negotiating the sale of the A&CRR with E.H. Harriman, president of both the Union Pacific and Southern Pacific. Harriman, however, thought the $3 million price tag a bit too high. Playing Harriman and James J. Hill of the Great Northern against each other enabled Hammond to sell the Corvallis and Eastern to Harriman for $1.4 million, while Hill purchased the Astoria and Columbia. The sale of these two lines in early 1907 left Oregon with no independent railroads of any considerable length.⁵⁸

UNTIL THE 1870S, America was dominated by small, local, or at most, regional businesses, primarily single-owner enterprises or partnerships — like the MMC. Bonner and Hammond personally knew their customers, distributors, wholesalers, and even the freighters who slept on the store counters. Exchange was a social as well as an economic transaction based on credit, and credit was based on a person's character. In agrarian America, customers and suppliers were often one in the same: farmers or ranchers who both bought goods from and sold their products to the local mercantile.

The railroads changed everything, catalyzing the profound transformation from a regional agrarian society to an industrial one. Railroads themselves formed the first national market for industrial products such as steel, copper, and lumber. The vast national railroad network, in turn, fostered the rise of urbanization and urban markets. Perhaps even more important, railroads provided the model for the modern corporation with centralized bureaucracies. In less than a decade, from 1895 to 1904, America moved from a nation of small-scale entrepreneurs to corporate giants. As the U.S. economy shifted from mercantilism to industrialism, Hammond followed the trajectory of American business, moving from store keeper to railroad entrepreneur.⁵⁹

Promoted as a transcontinental line, the Corvallis and Eastern headed up the North Fork of the Santiam River. Although the railroad never crossed the Cascades, it opened the area to extensive logging.

OHS org. lot 770, bb004327. John Smith, photographer

In Montana, however, Hammond's domination of Missoula County's economy combined with Anaconda Copper's stranglehold on central Montana caused residents to be much more apprehensive of the emerging order than their Oregon brethren. The pioneer entrepreneur embodied the nineteenth-century ideal of economic individualism — that is, the pursuit of private wealth as a positive social ethic. In the isolated communities of Montana, however, too much wealth and too vigorous a pursuit of it had the opposite effect. While not opposed to an individual's pursuit of wealth through resource exploitation, locals often resented and resisted the rise of corporate control over the economic system.

Nevertheless, A.B. Hammond not only survived the Panic of '93 financially, he was also able to turn the depression to his advantage. The consolidation of mercantile business by both Hammond and Claflin, brought about by railroad transportation networks and the rise of consumer goods, provided the capital to build more railroads. This, in turn, opened previously inaccessible timberlands and instigated a boom in tourism. Hammond's Oregon railroads, however, reversed the usual progression of western development in which railroads brought access to urban markets and fostered development. Although Hammond's financial capital ultimately originated in New York, it was the hinterland economy of scattered settlements in western Montana that, in the wake of the Panic of '93, provided the credit backing enabling Hammond to build (or rebuild, in the case of the Corvallis and Eastern) two railroads in the more developed region of western Oregon. Furthermore, it was the growth of Astoria's real estate based on tourism and timber that financed the A&CRR, not the other way around. Extending the rail lines into the rugged Coast Range allowed Hammond to exploit Oregon's most valuable natural resource; he converted trees into more capital and began a process that would nearly eliminate the ancient forests of the Pacific Northwest over the next century and propel A.B. Hammond into the top tier of West Coast lumbermen.

NOTES

I gratefully acknowledge the accommodating and helpful staff of the Oregon Historical Society, the financial support of the Field Foundation, and the previous research of Jack Blanchard. The valuable manuscript suggestions of Monika Bilka, David Brooks, Dan Flores, Delia Hagen, William Robbins, John Robertson, and an anonymous reviewer and the fine editing of Eliza Canty-Jones proved most valuable.

^1.� Alfred D. Chandler, Jr., "The Beginnings of 'Big Business' in American Industry" Business History Review 37:1 (Spring 1959): 1–31; John W. Hakola, "Samuel T. Hauser and the Economic Development of Montana: A case study in nineteenth-century frontier capitalism" (Ph.D. diss., Indiana University, 1961).

^2.�Weekly Missoulian, October 28, 1891; Dale Johnson, "Andrew B. Hammond: Education of a Capitalist on the Montana Frontier" (Ph.D. diss., University of Montana, 1976); Shirley Jay Coon, "The Economic Development of Missoula, Montana" (Ph.D. diss., University of Chicago, 1926); A.B. Hammond Card File in Audra Browman Papers, Archives & Special Collections, The University of Montana-Missoula.

^3.� A.B. Hammond to C.H. McLeod, January 10, 1895, in Charles Herbert McLeod Papers, series I, box 16, folder 7, MSS 001, University of Montana [hereafter McLeod Papers]; Hakola, "Samuel T. Hauser."

^4.� Chandler, "The Beginnings"; William G. Robbins, Colony and Empire: The Capitalist Transformation of the American West (Lawrence: University Press of Kansas, 1994), 103.

^5.� Robbins, Colony and Empire, 103. See also William Cronon, Nature's Metropolis: Chicago and the Great West (New York: Norton, 1991).

^6.� Bill Taylor, Rails to Gold and Silver: Lines to Montana's Mining Camps, vol. 1 (Missoula: Pictorial Histories, 1999).

^7.� George B. McLeod, "The Story of the Hammond Lumber Company," Oral history manuscript, Forest History Society, Durham, N.C., 10.

^8.� Leslie Scott, "The Yaquina Railroad," Oregon Historical Quarterly 16:3 (September 1915): 228–45; Oregonian, December 15, 1893.

^9.�Astoria Daily Budget, December 1, 1894; Oregonian, December 26, 1894; "Transcript of Railroad Commission of Oregon Investigation of the C. and E.R.R," October 14, 1907, in John Knox Weatherford Papers, MSS 1693, box 13, Oregon Historical Society Research Library, Portland [hereafter Weatherford Papers].

^10.�Daily Astorian, July 26, 1895, December 17, 1897; Oregonian, July 25, 1895; Scott, "The Yaquina Railroad."

^11.� Leslie Scott, "History of Astoria Railroad," Oregon Historical Quarterly 15:4 (December 1914): 221–40.

^12.� Scott, "History of Astoria Railroad"; "Classified List and Estimated Value of Lots and Acreage in the Astoria Railroad Subsidy Map," vol. 25 in Hammond Lumber Company files, MSS 1716, Oregon Historical Society Research Library [hereafter Hammond Lumber Company files].

^13.�Daily Astorian, April 21, 1894.

^14.� "History of Subsidy Transfers to A B. Hammond for building A. & C. R. R. R.," Hammond Lumber Company vol. 25, Hammond Lumber Company files.

^15.�Astoria Daily Budget, December 1, 1984.

^16.� Hammond to McLeod, December 5, 1894, McLeod Papers, box 16, folder 7.

^17.� Ibid.

^18.� Hammond to McLeod, January 22, 1895, McLeod Papers, box 16, folder 7.

^19.�Oregonian, December 26, 1894, January 3, 1895.

^20.� Hammond to McLeod, February 20, 1895, McLeod Papers, box 16, folder 7.

^21.� Hammond to McLeod, September 9, 1895, March 7, 1895, McLeod Papers, box 16 folder 7; Scott, "History of the Astoria Railroad."

^22.� Hammond to McLeod, December 5, 1894, April 5, 1895, McLeod Papers, box 16, folder 7. Although many businessmen of the time occasionally used coded telegrams, Hammond was rather obsessive in his desire for secrecy.

^23.� Hammond to McLeod, March 7, 1895; Scott, "History of the Astoria Railroad"; "History of Subsidy Transfers to A.B. Hammond for building A. & C.R. R. R.," vol. 25, Hammond Lumber Company files.

^24.�Daily Astorian, May 4, 1895.

^25.� Ibid; "History of Subsidy Transfers," Hammond Lumber Company files; Astoria Daily Budget, April 11, 1895.

^26.� Hammond to McLeod, July 15, 1895, McLeod Papers, box 16, folder 7.

^27.�Daily Astorian, May 21, 1894.

^28.� Ibid., July 26, 1895; Oregonian July 26, 1895.

^29.�Daily Astorian, July 26, 1895.

^30.�Oregonian, July 24, 1895; McLeod, "Story of the Hammond Lumber Company," 24.

^31.�Oregonian, July 24, 1895; "Report of the Railroad Commission of Oregon in the matter of the Corvallis and Eastern Railroad Company," Weatherford Papers; Hammond to McLeod, March 5, 1895, April 5, 1895, McLeod Papers.

^32.� Hammond to McLeod, April 16, 1985, April 30, 1895, McLeod Papers, box 16, folder 7.

^33.� Hammond to McLeod, October 15, 1895, Ibid.

^34.�Oregonian, July 24, 1895, December 19, 1896; Daily Astorian April 25, 1896, August 7, 1895, May 16, 1896.

^35.� Hammond to McLeod July 15, 1895, McLeod Papers, box 16, folder 7; Daily Astorian July 4, 1895.

^36.�Oregonian, September 18, 1896, December 18, 1896.

^37.�Daily Astorian, May 23, 1897.

^38.� Ibid., June 13, 1897.

^39.� Ibid.

^40.�Oregonian, May 17, 1898.

^41.� Astoria and Columbia River Railroad, The Oregon Coast: From Portland to a Summer Paradise in Four Hours (Portland, Ore.: Glass & Prudhomme, 1904).

^42.�Oregonian, September 7, 1904.

^43.�Daily Astorian September 22, 1899, May 28, 1901.

^44.�Oregonian, September 13, 1896, November 4, 1900.

^45.�Daily Astorian, April 3, 1895; "Transcript of the Railroad Commission of Oregon investigation of the Corvallis and Eastern Railroad, October 14, 1907,"12–16, box 13, and Director's minutes, Corvallis and Eastern, box 5, Weatherford papers.

^46.� "Report of the Railroad Commission of Oregon in the matter of the Corvallis and Eastern Railroad Company," and "Transcript of the Railroad Commission of Oregon investigation of the Corvallis and Eastern Railroad, October 14, 1907,"12–16, box 13, and Director's minutes, Corvallis and Eastern, box 5, Weatherford papers; Daily Astorian, April 3, 1895.

^47.�Oregonian, September 7, 1904.

^48.�Columbia River and Oregon Timberman, November 1899, Astoria Company, box 3, p. 9, Hammond Lumber Company files.

^49.�Oregonian, April 9, 1906.

^50.�Oregonian, November 4, 1900, January 5, 1901; U. S. Bureau of Corporations, The Lumber Industry, part 2 (Washington, D.C.: GPO, 1914), 57.

^51.� Edmond Meany, Jr., "The History of the Lumber Industry in the Pacific Northwest to 1917" (Ph.D. diss., Harvard, 1935), 8–9.

^52.� Paul Alaback, personal communication, November 4, 2007; Sarah E. Green and Jerry F. Franklin, "Middle Santiam Research Natural Area," Supplement no. 24 to Federal Research National Areas in Oregon and Washington: A Guidebook for Scientists and Educators (Portland, Ore.: USDA, 1987); Nathan Poage and John Tappeiner, "Long-term patterns of Diameter and Basal Area Growth of Old-growth Douglas-fir Trees in Western Oregon," Canadian Journal of Forest Research 32 (2002): 1232–243.

^53.� P. Donan, The Columbia River Empire (Portland: Oregon Railroad and Navigation Company, 1902), 39; Meany, "History of the Lumber Industry," 27; Oregonian, December 19, 1896.

^54.� Donan, The Columbia River Empire, 38; Oregonian, January 7, 1907.

^55.�Astoria and Clatsop County Oregon, (Astoria Chamber of Commerce, ca. 1911); Pacific Lumber Trade Journal, February 1907, 44; Albion Gile, "Notes of Columbia River Salmon," Oregon Historical Quarterly 35:2 (June 1934): 144; William G. Robbins, Landscapes of Promise: The Oregon Story, 1800–1940 (Seattle: University of Washington Press, 1997), 220.

^56.�Oregonian, September 7, 1904; Astoria and Columbia River Railroad, The Oregon Coast.

^57.�Timberman, November 1906, 40; Robbins, Landscapes of Promise, 220–21.

^58.�Oregonian, January 1, 1907, October 22, 1903; "Report of Oregon Railroad Commission," Weatherford files; Timberman, March 1906, 37. A few months previously, Hammond had sold substantial stock in the C & E to H.E. Huntington. See Weatherford files, box 5.

^59.� See Robert Wiebe, The Search for Order 1877–1920 (New York: Hill and Wang, 1967); Alfred D. Chandler, Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge: Harvard University Press, 1977); Glen Porter, The Rise of Big Business: 1860–1920 (Wheeling, Ill.: Harlan Davidson, 1973); and Naomi Lamoreaux, The Great Merger Movement in American Business: 1895–1904 (Cambridge: Cambridge University Press, 1985).

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