Thomas Durant: Influence to the Railroad Map in the US

Thomas Durant was an American railroad promoter and financier. He was a major figure in the Union Pacific Railroad. As a railroad builder, Durant helped build the railroads in the Midwest. After the US Congress ratified the creation of the Union Pacific Railroad, John Dix was the company’s president and Durant became the vice president.

Durant was born in Lee, Massachusetts on February 6, 1820. He is a Doctor of Medicine by profession which he earned after graduating from Albany Medical College as cum laude in 1840. For a short while, he worked as assistant professor of surgery. He retired early from his profession and worked with his uncle’s grain company, the Durant, Lathrop & Co.

While with his uncle’s company, Durant was faced with the need of an improved inland transportation. He saw that the railroad was the best solution to the problem. He started his work in the railroad industry as Chicago and Rock Island railroad broker. There, he met Henry Farnam.

Durant and Farnam formed the Farnam and Durant, a contracting company. The new company’s first project was to raise the finances and construct the Mississippi and Missouri Railroad (M&M) after the railroad received major land grants for the construction of the first railroad for the state of Iowa. As planned, M&N will run between Davenport on the Mississippi River and Council Bluffs on Missouri River.

M&M constructed the first bridge that crossed the Mississippi River through a wooden railroad. However, a steamboat hit the bridge and the steamboat owner petitioned for the dismantling of the bridge. Durant hired an attorney named Abraham Lincoln to defend him. This relationship was the beginning of what would become a partnership in future. When Lincoln got the presidency and the US Congress legislated for the creation of the Union Pacific Railroad, Lincoln chose Durant to manage the projects of the railroad.

During his stint with the Union Pacific Railroad, Durant carried the burden of raising and managing the company’s finances. He used his power as the company’s financial czar to lobby with legislators some legislative agenda such as the increase in privileges and grants for railroads.

James Duke’s Contribution to the Growing Tobacco Industry

James Duke was an American businessman and industrialist who was known for modern cigarette production and the Duke University. James was exposed to the tobacco industry at an early age because his father, Washington, owned a tobacco manufacturing facility.

When James and his brother Benjamin took over the family business in the 1880s, James was awarded with the license for the exclusive use of first automated cigarette maker. By 1890, James and his company were supplying 40% of US demands for cigarettes. In a move to secure his position in the industry, James consolidated four competitors into a corporate entity and named it American Tobacco Company. James held a monopoly of the US cigarette market.

Soon, James moved to conquer the British cigarette market. British cigarette manufacturers were forced to merge into one company named Imperial Tobacco Company of Great Britain and Ireland Ltd. Two years into the intense competition between the two companies, Imperial took the competition to the US market. Wanting to settle the competition, American tobacco entered into an agreement with Imperial. American Tobacco held the American market, Imperial tobacco held the British market, and the British-American Tobacco Company held the tobacco market in the rest of the world.

Know “Watered Stock” from the One Who Practiced It

Daniel Drew was an American finance expert who became popular in the financial district of New York for the term “watered stock” which would refer to the issuance of false or counterfeit certificates of shares, or the unauthorized issuance of shares which would dilute ownership. It was supposed that the term came from Drew’s times with his cattle business when he would let his cattle drink water to create a temporary increase in their weight before they are sold. “Watered stock” was first used by Drew in the 1860s in his battle with Cornelius Vanderbilt in the ownership of Erie Railroad.

Drew was born on July 29, 1797 in Carmel, New York. He did not have a very good education. Drew drilled and enlisted with Army at fifteen after his father died. However, he was not deployed in the War of 1812 because he enlisted late.

When the war was over, he started one of the most successful cattle-driving businesses at that time. Drew started a steamboat business in 1834 when he was able to purchase a small share of a steamboat sailing on the Hudson River.

At this time, Drew explored stock trading. He founded a brokerage company in 1844 which he named Drew, Robinson & Co. Ten years later, Drew was on his own and dissolved his company because his partners died. He became a part of Erie Railroad’s board. He manipulated the Railroad’s stock prices. At the brink of bankruptcy, Drew and Vanderbilt rescued the company.

Drew also became a member of the board of New York and Harlem Railroad. He collaborated with Vanderbilt to prop up the finances of the company. This began the greatest struggles between Drew and Vanderbilt. Drew speculated with New York and Harlem Railroad stocks and sold them short but Vanderbilt and his associates bought each share Drew sold. In five months, the stocks were sold from $95 to $285. Drew lost about $500,000.

The years between 1866 and 1868 were the period of the so called Erie war. In a conspiracy with fellow directors Jay Gould and James Fisk, Drew kept Vanderbilt from gaining full control of Erie Railroad. He increased the company’s outstanding shares without the knowledge of Vanderbilt. On his part, Vanderbilt kept buying Erie shares. His loses were huge and the trio gained control of the Railroad.

Later, Gould and Fisk also betrayed Drew by manipulating the stock prices. Drew lost $1.5 million. Drew lost more in the so called Panic of 1873. He filed for bankruptcy in 1876 when his debts reached more than a million dollars.

Elias Derby: From a Revolution Supporter to a Sea Trader

Elias Derby is one of the richest merchants in the post-revolution Massachusetts. He owned the Grand Turk, the vessel from New England that made the first direct trade with China.

Being the son of a sea captain, Derby was exposed to sea trade at an early age. Before the Revolution, the Derbys owned a fleet of thirteen vessels. Like many locals in Salem, the Derbys profited from the ongoing Revolution.

Derby was in charge of equipping privateers during the Revolution. The Grand Turk, the privateer which the Derbys owned, became the largest and the most successful of its kind. It was the recipient of seventeen prizes from 1781 to 1782.

After the death of his father in 1783, Derby took over the family’s sea trading business. When the Revolution was over, Derby was the second wealthiest man in New England. Derby explored new markets like Russia, Europe, the Baltic region and the East Indies in 1784.

From being a privateer, the Grand Turk was converted into a cargo ship. Using its capacity of 300 tons, Derby sailed to Canton to trade with Chinese businessmen. The ship arrived in Salem harbor from its maiden trip to Canton on May 22, 1787, making Grand Turk one of the first five American vessels to reach the port of Canton, and the first from New England.

William Deming and his Management Theories

William Deming was an American statistician. He was born into a poor family which made it difficult for him to decide to proceed to college education. When he was in his senior years, Deming was encouraged by his mathematics teachers to attend a university. With much determination, Deming earned his PhD in Theoretical Physics at Yale University.

Deming received many job offers after college but he chose to work with the Department of Agriculture doing laboratory research. In ten years, Deming was able to develop nitrate fertilizers which resulted in huge agricultural yields. Modern Statistics offered a big boost to this milestone.

After his stint at the Department of Agriculture, Deming moved to the Bureau of Census. He used his knowledge in Statistics to develop a new breed of survey which is based on sampling. This technique was later used worldwide. When he retired, Deming worked with the New York University as Statistics professor.

During the World War II, Deming used Statistics to serve in the arms industry. With his friend and fellow statistician Walter Shewhart, he sponsored management seminars that would improve the quality and productivity of military armaments. Thousands of managers and engineers from the arms industry attended the seminars. However, the seminar was not well attended by the senior executives.

After the War, Deming was called to apply his sampling techniques to the Allied Forces Headquarters in Tokyo. While there, Deming met several Japanese managers who were interested to know his management theories. He gave lectures and seminars with the condition that the senior managers would attend his seminars. Deming held his first lecture in July 1950.

Deming’s lecture led to revolution that became a turning point in Japan’s recovery after the War. Japanese products which were the result of Deming’s management theories flooded the US markets. These products were easily accepted in American markets because they were cheaper and better.

Many American companies held on to the Taylor management principles. They prohibited Deming’s management theories until 1980. A TV program entitled “If Japan can, why can’t we?” opened the eyes of many American executives. Later, Deming started giving lectures.

Deming’s management theories are encapsulated in the following: “Management means placing the processes under control, coordinating operations and preparing for the future”.