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The Kansas City Southern Railway and the Dutch Connection

Published online by Cambridge University Press:  11 June 2012

Augustus J. Veenendaal Jr.
Augustus J. Veenendaal Jr.
Affiliation:
Augustus J. Veenendaal, Jr., is editor of the Correspondence of Anthonie Heinsius (1702–20) for the Government Commission on National History in The Hague, Netherlands.
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Abstract

While the fact of Dutch capitalist involvement in building and operating the American railroad network in the nineteenth century is relatively well known, the ways in which the Amsterdam capital market was tapped by American railroad companies or their representatives have remained relatively obscure. In this article, Dr. Veenendaal, using hitherto unknown archival material, explains how the promoter of the Kansas City, Pittsburg & Gulf Railroad (now the Kansas City Southern), Arthur E. Stilwell, set out to procure the millions he needed to realize his dream, a direct railroad from the Midwest to the Gulf.

Type
Articles
Information
Business History Review , Volume 61 , Issue 2 , Summer 1987 , pp. 291 - 316
Copyright
Copyright © The President and Fellows of Harvard College 1987

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References

1 On Dutch investment in the United States generally, see Bosch, K. D., De Nederlandse beleggingen in de Verenigde Staten (Amsterdam, 1948)Google Scholar; on Dutch investment in railroads specifically, see Santilhano, J. D., Amerikaansche spoorwegen: Overzicht van de in Nederland verhandeld wordende Amerikaansche spoorwegfondsen (Rotterdam, 1884)Google Scholar.

2 Abdill, George B., Rails West (New York, 1960), 12Google Scholar; Berghuis, W. H., Ontstaan en ontwikkeling van de Nederlandse beleggingsfondsen tot 1914 (Assen, 1967), 121Google Scholar.

3 Clark, Ira G., Then Came the Railroads: The Century from Steam to Diesel in the Southwest (Norman, Okla., 1958)Google Scholar; Huizenga, T. A., Amerikaansche spoorwegtoestanden No.3: De Missouri, Kansas en Texas Spoorweg-Maatschappij (Groningen, 1873)Google Scholar.

4 Veenendaal, Augustus J., “Railroads, Oil and Dutchmen: Investing in the Oklahoma Frontier,” The Chronicles of Oklahoma 63 (1985): 4–27Google Scholar; Veenendaal, A. J., “De Oklahoma Central Railway: Een ‘Nederlandse’ spoorweg in de Verenigde Staten,” in Jaarboek voor de Geschiedenis van Bedrijf en Techniek 2 (1985): 188–209Google Scholar. The Dutch spelling of the names mentioned is Middelberg for Middleberg and Van Oss for Vanoss.

5 Riley, J. C., International Government Finance and the Amsterdam Capital Market, 1740–1815 (Cambridge, England, 1980)CrossRefGoogle Scholar.

6 Buist, M. G., At Spes non Fracta: Hope & Co., 1770–1815: Merchant Bankers and Diplomats at Work ('s-Gravenhage, 1974)Google Scholar; van Winter, P. J., Het aandeel van den Amsterdamschen handel aan den opbouw van het Amerikaansche Gemeenebest, 2 vols. ('s-Gravenhage, 1927–1933), 2: 416, 417Google Scholar. The Baltimore and Susquehanna was incorporated into the Northern Central in 1854, which in its turn was taken over by the Pennsylvania Railroad in 1874. Edson, W., Railroad Names: A Directory of Common Carrier Railroads Operating in the United States, 1826–1982 (Potomac, 1984), 15, 91Google Scholar; B. H. Meyer, History of Transportation in the United States before 1860 (1915; reprint, n.p., 1948), 224, 412.

7 Corliss, Carlton J., Main Line of Mid-America: The Story of the Illinois Central (New York, 1950Google Scholar). On British investment in American railroads, see Adler, Dorothy R., British Investment in American Railways (Charlottesville, Va., 1970)Google Scholar.

8 Bosch, Beleggingen, 156.

9 Ibid., 159.

10 de Vries, Max, Tien jaren geschiedenis van het Nederlandsche bankwezen en de Nederlandsche conjunctuur, 1866–1877 ('s-Gravenhage, 1921), 87–88CrossRefGoogle Scholar.

11 For the difference between portfolio and direct investment, see Buckley, P. J. and Roberts, B. R., European Direct Investment in the U.S.A. before World War I (New York, 1982)CrossRefGoogle Scholar. J. L. ten Have, a banker from Amsterdam, was elected to the board of the Chicago & North Western in 1872.

12 F. W. Oewel, stockbroker from Amsterdam, was the Dutch member of the English A & GW committee for some years. He traveled to the United States many times. Daggett, Stuart, Railroad Reorganization (Boston, 1908), 242–48CrossRefGoogle Scholar; Athearn, Robert G., Union Pacific Country (Lincoln, Nebr., 1976), 367–68Google Scholar.

13 File no. 31 (Denver Pacific), 17, Historical Archives of the Amsterdam Stock Exchange [hereafter cited as AASE]. For a recent appraisal of Gould's character see Klein, Maury, “In Search of Jay Gould,” Business History Review 52 (Summer 1978): 166–99CrossRefGoogle Scholar, and his book, The Life and Legend of Jay Gould (Baltimore, Md., 1986)Google Scholar.

14 Santilhano, Amerikaansche spoorwegwaarden, 455–68. For James J. Hill, see Martin, Albro, James J. Hill and the Opening of the Pacific Northwest (New York, 1976)Google Scholar.

15 Bosch, Beleggingen, 139.

16 For a survey of the different estimates see Bosch, Beleggingen, 478–82.

17 Kabisch, Thomas R., Deutsches Kapital in den USA, von der Reichsgründung bis zur Sequestrierung (1917), Beiträge zur Wirtschaftsgeschichte no. 17 (Stuttgart, 1982), 115–17Google Scholar.

18 British figures in Adler, British Investment, vi.

19 Bryant, Keith L. Jr., Arthur Stilwell: Promoter with a Hunch (Nashville, Tenn., 1971)Google Scholar.

20 Bryant, Stilwell, 59–64. On the capitalization of railroads in general, see Cleveland, Frederick A. and Powell, Fred W., Railroad Promotion and Capitalization in the United States (New York, 1909Google Scholar), and Carosso, Vincent P., Investment Banking in America (Cambridge, Mass., 1970)Google Scholar.

21 Daggett, Railroad Reoganization.

22 Bosch, Beleggingen, 117.

23 On the Tutein Nolthenius family see Het Nederland's Patriciaat (1917), 325–26.

24 Clark, Then Came the Railroads, 219–20; Cochran, T. C., Railroad Leaders, 1845–1890: The Business Mind in Action (Cambridge, Mass., 1953), 111Google Scholar; Fogel, Robert W., The Union Pacific Railroad: A Case in Premature Enterprise (Baltimore, Md., 1960), 57–62Google Scholar.

25 Details on the Syndicate may be found in Van Oss' Effectenboek (1904), 531–32, and file no. 359, AASE. At this time one U.S. dollar was worth 2.50 Dutch guilders (Dfl). Total capitalization of the ACC was $4.5 million common and $1 million preferred stock.

26 File no. 402, AASE, and Van Oss' Effectenboek (1904), 535–36; total share capital of the KCTCC was $3.5 million.

27 Gerardus Mathias Titsingh (1852–1910), Dutch naval officer and from 1899 partner in the Amsterdam stockbroker firm of Rutgers & De Beaufort. Het Nederland's Patriciaat (1960), 383.

28 They were caught once more on the Oklahoma Central business, when the participants in the construction company took all the profits and the Dutch bondholders were left with worthless stock in the bankrupt railroad. Veenendaal, “Railroads, Oil and Dutchmen,” 22.

29 de Vries, Johan, Een Eeuw vol Effecten: Historische Schets van de Vereniging voor de Effectenhandel en de Amsterdamse Effectenbeurs, 1876–1976 ([Amsterdam, 1976]), 103Google Scholar.

30 A biography of Salomon Frederik van Oss (1868–1949) is to be found in Biografisch Woordenboek van Nederland (Amsterdam, 1985), 2: 413–14Google Scholar; van Oss, S. F., American Railroads as Investments (New York, 1893)Google Scholar, and Stock Exchange Values: A Decade of Finance, 1885–1895 (London, 1895)Google Scholar; van Oss, S. F., Vijftig jaren journalist (The Hague, 1956), 254Google Scholar.

31 File no. 454, AASE.

32 van Oss, S. F., Amerikaansche spoorwegwaarden (Groningen, 1903), 33–34, 81Google Scholar.

33 File no. 370, AASE.

34 Bryant, Stilwell, 136.

35 Van Oss' Effectenboek (1903), 268.

36 Bryant, Stilwell, 89–93; Clark, Then Came the Railroads, 198.

37 Nolthenius, R. P. J. Tutein, Nieuwe Wereld: Indrukken en aanteekeningen tijdens eene reis door de Vereenigde Staten van Noord Amerika (2d ed., Haarlem, 1902)Google Scholar.

38 Jones, Stanley L., The Presidential Election of 1896 (Madison, Wis., 1964)Google Scholar; Studenski, Paul and Kroos, Herman E., Financial History of the United States (2d ed., New York, 1963), 218–34Google Scholar.

39 Wendt, Lloyd and Kogan, Herman, Bet a Million! The Life Story of John W. Gates (Indianapolis, Ind., 1948)Google Scholar; Kennan, George, E. H. Harriman: A Biography (Boston, 1922)Google Scholar.

40 Bosch, Beleggingen, 673.

41 On the reorganization of the KCPG see Van Oss' Effectenboek (1903), 499–506, and file no. 578, AASE.

42 The official name was “Nederlandsche Vereeniging ter behartiging van de belangen van houders van 5% obligaties der KCPG,” founded 25 September 1900, file no. 454, nos. 37–42, AASE.

43 Report of meetings of KCSB shareholders, Sept. 1899, file no. 370, 28–29; report of meeting of “KCSB Vereeniging,” 5 Oct. 1899, file no. 370a, 1, both AASE.

44 Details of the reorganization may he found in Van Oss' Effectenboek (1903), 499–506.

45 Letter from J. de Goeijen's Amsterdam office to J. L. N. de Gijselaar, one of the bankers involved in the reorganization, 16 July 1900, file no. 370a, AASE. Bosch, Beleggingen, 674, gives De Goeijen's provision as 1/8 percent of all stock over the first $10 million and says that De Goeijen himself had expected 3/8 percent for his troubles. The letter to De Gijselaar clearly states that he got 1/4 percent.

46 These prices have been taken from the annual surveys in Van Oss' Effectenboek over these years. Van Oss, Amerikaansche spoorwegwaarden, 193.

47 Van Oss' Effectenboek (1910), 1228. Daniel Gideon Boissevain was a partner in the Amsterdam banking house of that name. Athanase A. H. Boissevain, of Union Pacific fame, was his uncle. Het Nederland's Patriciaat (1924), 21.

48 Clark, Then Came the Railroads, 213–14.

49 On the growth of the Texas oil industry, see Richardson, Rupert N., Texas: The Lone Star State (New York, 1947), 440–49Google Scholar; on the organization of the “Internationaal Landsyndicaat” see Van Oss' Effectenboek (1904), 533–35.

50 van Hinte, Jacob, Netherlanders in America: A Study of Emigration and Settlement in the Nineteenth and Twentieth Centuries in the United States of America (Grand Rapids, Mich., 1985), 706–16Google Scholar.

51 For details of the “Holland-Texas Hypotheek Bank” see Van Oss' Effectenboek (1914), 463–65 and 1294–96; Van Hinte, Netherlander in America, 1078.

52 Bryant, Stilwell, 169–223; Kerr, John L., Destination Topolobambo: The Kansas City, Mexico & Orient Railway (San Marino, Calif., 1968)Google Scholar.

53 Bryant, Stilwell, 181, gives $31 million, but Van Oss' Effectenboek (1910), 1047, mentions only $7 million as the total capital of the ICC, raised to $10 million in 1903. Van Oss's figures seem more reasonable.

54 To call the KCPG an English company, as is done by Adler, British Investment, 188, seems an exaggeration. English money was involved in all of Stilwell's companies, but to a much lesser extent than Dutch money. The Orient, however, was dominated by British share and bond holders.