CHAPTER XIX

BUILDING THE ATLANTIC AND GREAT WESTERN RAILWAY

1857-1858

The great project of a connecting railway between the Eastern and the Middle Western States had been in my mind for some years. Queen Maria Cristina's fortune, which was then the greatest possessed by any woman in the world, seemed to me to offer a solution of the problem. I had no idea, of course, of attempting to use her fortune in any schemes of my own and for my own interest, but I saw at once that I could utilize her idle wealth to the tremendous advantage of the United States and, at the same time, render a service to her.

The Queen had had a large quantity of funds in the old United States Bank that President Jackson smashed, and James McHenry, who was connected with me in many enterprises, learned that she had taken as securities some coal lands in Pennsylvania. I saw the Duke of Rianzares, the guardsman Fernando Muñoz, whom Maria Cristina had fallen in love with and made a grandee of her kingdom, and finally married in '44. He had his headquarters at Lillo's in the Square Clary, and he introduced me to the Queen's secretary, Salerno. I suggested to the Spaniards the advisability of hunting up these coal lands of the Queen. McHenry had already made arrangements for me to go to America with her assistant secretary, Don Rodrigo de Questa, who did not know a word of English. The preliminaries were arranged, and we set out for Liverpool and America.

One of the first of many difficulties into which poor de Questa fell because of his ignorance of English occurred the first day out from Liverpool. The Spaniard, with a fatuous assumption common to Europeans, thought that whenever he failed to find the exact word he wanted in another tongue than his own, all that was necessary was to use French. The Spaniard asked the steward to get him some fish for breakfast. He knew the Spanish word would not answer, and could not think of the English word, though he had tried to master it for some time. He then fell back upon the French, and asked for "poisson." Of course, the steward thought he wanted poison, and reported the matter to headquarters, thinking suicide was contemplated.

De Questa would have had serious trouble but for the thoughtfulness of the steward, who remembered that I was traveling with him and came to me for advice. "When did he ask for poison?" I inquired. "At breakfast-time," said the steward. "Oh, then, he merely wants fish," and I explained as well as I could to an English steward the meaning of the French word.

The English of the ignorant classes look upon French very much as a clergyman does upon profanity, or as a missionary regards the muttered charms and incantations of a "voodoo" priestess. De Questa finally got his fish, but he had long before lost his appetite. This adventure discouraged him so much that he refused thenceforth to try to convey in English, Castilian, or French, any of his desires concerning food, but resorted to the primitive sign language. When he wanted eggs, he would flap his arms together and cackle like a hen that has just laid an egg. The steward who, perhaps, had never seen two square inches of countryside in his life, thought he was imitating a rooster and laughed until he almost had a fit. De Questa nearly starved. He had, at last, to eat whatever he could find, without trying to seek what he wanted. I explained to him that roosters did not lay eggs!

Our destination was Philadelphia. It was there that the Spaniards who were living upon Queen Maria Cristina's property had their headquarters. I found two of them, Christopher and John Fallon, living in fine houses, with something of a court about them. They had control of about forty thousand acres of coal lands belonging to the Queen. This large tract was situated at a place to which the Fallons had given their name, Fallonville. I at once consulted several of the best lawyers of Philadelphia, among them William B. Reed, later Minister to China, and was advised to go immediately to the lands and see what had been done with them. I made an appointment with John Fallon, and we went out to the mines. I can not now recall exactly where they were, but I remember that we passed through a wilderness, after leaving the train that took us from Philadelphia, and that we had a very long drive in carriages. A railway track had been built through the forest to the mines, and it seemed to me about fifteen miles long. I appeared to John Fallon as a foreigner who was interested in mines and in coal lands in particular, but not, of course, as representing the Queen.

As soon as I returned to Philadelphia and reported what I had learned, my lawyers advised me to go back to Paris and report to the Queen. De Questa and I, therefore, returned as soon as possible. McHenry met me in London, and we went on to Paris together. We had a conference with Lillo and with Don José de Salamanca, the Queen's banker, and it was decided that the Queen should take active possession of her immense property at once. I saw that there was a great deal of money in the land, and that there was a fine opportunity for the Atlantic and Great Western Railway, if I could in some way get the use of a portion of this vast coal domain.

I saw also that my connection with the affair had already given me a lever with which I could work to some purpose upon Don José de Salamanca, and that this was the best card to play.

As soon as possible I went to his banking office and asked for a conference. I had learned enough, in my dealings with bankers and financiers, to know that you must approach them on the right side, from the side of money, and not from that of a mere wish. Accordingly I wrote on my card that I wished to propose a loan of $1,000,000. I really came as a borrower, but circumstances permitted me to play the rôle of the lender. I was admitted at once, but if I had asked outright for a loan I should have been shown the door. As soon as I was in his presence I said, without preface: "I have no cash in my pockets, nor would you wish it if I had; but I want to show you something."

"I understood that you wanted to lend me a million," said the Spaniard. "I do not see the million."

"You will, when I explain," I said. "I want to use your credit." (I knew that he had none in London and that he could do nothing there.) "I propose to deposit with you $2,000,000 of the bonds of the Atlantic and Great Western Railway for $1,000,000 of your notes."

I knew that the bait of a credit in London would affect him, as the Spanish bankers had long tried in vain to establish their credit in the financial metropolis of the world.

"Where is this property?" he asked.

I drew a diagram of the property for him, explaining its location and its relation to other properties and enterprises. I told him of the Erie Railway, ending at Olean, and the Ohio and Mississippi Railway from Cincinnati to St. Louis. "There is no connection between these two great highways," I said, "and a highway that will connect them will prove a fortune-maker to every one associated with the project." I explained that there were only four hundred miles between the two, and how I purposed filling in this gap. Between the two ends of the completed railways lay three wealthy States. This road has since been reorganized under the name of the New York, Pennsylvania and Ohio, or as it is colloquially called, the "Nyp. and O." Near Olean now exists a town that has the name of my Spanish friend, Salamanca.

My arguments touched Salamanca, but did not capture him. They paved the way, however, for his complete capitulation a little later. My next step was to go to London and confer with the Kennards, famous bankers of that city. We arranged that a nephew of the Kennards, a son of Robert William Kennard, then a member of Parliament, and an engineer of note, should accompany me to America and go over the entire ground of the proposed route.

We came to New York in October, '57, and shortly after we arrived had a conference at the St. Nicholas Hotel, in Broadway, with the men who were most interested in the proposed road. Maps were exhibited, and the plans fully explained. We then left for Olean, where we were met by the contractor in charge of the road, whose name was Doolittle, by Morton the local engineer, and by General C. L. Ward, the president of the road. The whole party took wagons for Jamestown, forty miles away. At this point we were met by a committee appointed to take care of us and to show us what had been done, and what could be done. This was the program throughout, as we passed on from point to point. Among the men who met us at Jamestown was Reuben E. Fenton, who had just been elected Representative in Congress from that district, and was afterward Governor and United States Senator. The line of the road was followed as far as Dayton, Ohio, where it was proposed to connect with the Cleveland and Cincinnati Railway.

At Mansfield there was a great gathering in honor of the occasion. The committees of the three States--New York, Pennsylvania, and Ohio, were present, and there was speech-making. I made a speech, which is printed in full in "Spread-Eagleism," published in '58. Judge Bartley, afterward famous on the Federal bench, was chairman of the meeting. I asked if there were not some one present from Ohio who could give us a clear statement as to what we could expect. Judge Bartley called on "Mr. Sherman." A tall, spare man arose. It was John Sherman. He made a speech that was clear, direct, and forcible. Among the other speakers were Robert E. Schenck, of "Emma Mine" fame, who had been elected to Congress recently, and Senator Benjamin F. Wade.

Just before the close of the meeting I introduced Thomas Kennard, the civil engineer, and told the crowd that the road was to be built, and that it would be aided by the money of Queen Maria Cristina of Spain and the great Spanish banker, Salamanca.

I made a report in London of the work accomplished in America, and at once began to purchase material for the road. I sought out Mr. Crawshay Bailey, then a member of Parliament, and a great Welsh iron-master, and he invited me to dine with him and his wife. He had just married a charming young lady. At dinner, I found that Mrs. Bailey spoke French very fluently and that Mr. Bailey did not understand a word of it. So I asked permission of the iron-worker to carry on a conversation in French with Mrs. Bailey. This delighted him very much, for he liked to see that his wife was mistress of a language of which he did not know a single word. This subtle flattery of his judgment and taste so pleased him that I was able to close a bargain with him for 25,000 tons of iron at $40 the ton--$1,000,000--pledging for the debt bonds of the Atlantic and Great Western Railway, at two to one. This was the first great purchase made after the panic of '57.

My second purchase was made from the Ebwvale Company, of Wales. Through Manager Robinson I negotiated for 30,000 tons of iron at $40 the ton--$1,200,000--pledging bonds of the road at two to one, as with Bailey.

I have already spoken of Salamanca, the Spanish Rothschild, and how I had tried to obtain his notes for $1,000,000. I finally succeeded in getting this loan, pledging $2,000,000 bonds of the road as security. At this time, no Spanish securities had been negotiated in Lombard Street for years. It was highly necessary for me that these notes of Salamanca should be negotiated. I went to Mathew Marshall, Jr., of the Bank of London. He was the son of the old Mathew Marshall who had signed the notes of the Bank of England for fifty years. I asked him what $50,000 of the notes of Salamanca would be accepted at by the bank. He replied that they would not be accepted at all. "No Spanish paper can be used in London," he said.

I then had recourse to a scheme that I had previously worked out with some degree of elaboration. I asked Marshall if he would not oblige me by telling me, as a friend, what sixty-day bills of the kind I held would be worth if they could be used. He said they should be handled at six per centum. I telegraphed immediately to McHenry, in Liverpool, as follows: "Marshall will not touch this paper under six per cent. Will Moseley" (the big financier there) "do it for five?" McHenry answered that Moseley would not handle it for less than Marshall's rate, but would take $50,000 at six per centum.

Upon the strength of this, four hundred miles of railway were built, through three great States, opening up a vast territory, and bringing in fortunes to a large number of men. My arrangement with McHenry was that I was to receive £100,000 as commission. No papers were signed, but I asked McHenry to give me a paper settling $100,000 on my wife, Willie Davis Train, which was done. After the road was built, Sir Morton Peto came over from England with some London bankers, on McHenry's invitation. McHenry believed in playing the part of a prince when it came to giving an entertainment, and he invited the visitors to a banquet at Delmonico's, then at Fourteenth Street and Fifth Avenue. It cost him $15,000.

As I had not yet secured my commission, I thought this was a good time to collect it, and instructed my lawyer, Clark Bell, now of No. 39 Broadway, to present and press my claim. McHenry was so afraid he would be arrested while these moneyed men were with him that he settled at once, giving me his notes at four months for the balance due. Gold was very high at this time, being $1.90, and as the notes were on London, I found they could be negotiated through McHenry's agents, McAudrey & Wann. It happened that these agents had lost some $7,000 on information that I had given to them about the result of the battle of Gettysburg; so I agreed to reimburse them for the loss, if they would cash the notes at once, which they did.

This was in '66, and a singular thing happened. When the notes fell due in London on the 6th May, that comparatively small amount of gold precipitated something of a panic in the unsteady market of the day. Everything went with a crash. Moseley, the banker of Liverpool, failed for a large sum; Lemuel Goddard, of London, followed with a loss of as much more; Lunnon & Company failed for a greater amount; McHenry for some millions; Sir Morton Peto for other millions; and Overend, Gurney & Company for another large amount. This showed to me the real shallowness and insubstantiality of the great world of finance. It is built upon straw and paper. The secret of its great masters and "Napoleons" is nothing but what is known among other gamblers as "bluff."