The Railroad & Bank Building — Joy in Minnesota

James J. Hill’s mansion on Summit Avenue in Saint Paul is a symbol of his massive wealth and is a fascinating home to get a glimpse of what a wealthy lifestyle in the Victorian era would look like. However, if you really want to understand James J. Hill’s historical relevance in the business realm, there is another building that you should see.

First, some backstory: James J. Hill got massively rich through building and owning railroads, right? But before that, he was already in shipping, shipbuilding, storage, coal, and lumber. The core of his business was about making the transportation of goods as efficient and profitable as possible. It was a natural progression for him to get into railroads when they reached Minnesota in the late 1800s.

He bought the St. Paul and Pacific Railroad and brought it out of bankruptcy. Then it was all about expanding the routes and keeping up with competition from other railroads. He built the Great Northern Railway by combining several smaller roads and creating a transcontinental railroad.

As he bought and built more railroads, train depots, bridges and infrastructure he also got into every business that would support the railroads. He got into real estate and hospitality, creating passengers and destinations. He got into farming, ranching, and owning grain elevators, experimenting and learning best practices to share with others to increase the goods shipped on his railroads. He got into mining - not just for fuel to burn in the engines, but again - to ship on his railroads and ore to make rails. He got into banking to help finance his projects and investments. This makes sense, right?

Here’s the thing: at that time, there was NO federal regulation on business and Hill was just doing what he could to ensure his businesses’ success. It was all legal. Like other major industrialists of the time, he started consolidating all of his businesses as one entity, called a trust, the Northern Securities Company.

The problem was that he was creating a monopoly. To Hill, his massive operation was about efficiency, but the power that such a giant business wielded also meant he could control markets, labor rates, supply costs, everything. Smaller businesses couldn’t compete and consumers had no other choice than to use his railroads. He had amassed a whole lot of money (almost 2 billion dollars today) and a whole lot of power. Maybe too much.

Some would say that Hill was an example of using that kind of corporate power for good. He didn’t take a salary (No really, he didn’t. He was compensated through stock ownership) and consistently reinvested profits into his businesses. He believed that improving infrastructure and efficiency provided better service and product and lower prices which made him more competitive. He also donated huge amounts to philanthropic causes and charities like schools, churches, farmers, and more.

Men like Hill and other corporate titans of the age (Morgan, Rockefeller, Carnegie and Vanderbilt) were using rate-pooling, price fixing, unfair labor practices and other dirty tactics to eliminate competition and keep profits high. It was because of these abuses that the first federal regulation of business, the Interstate Commerce Commission, was created.

When Hill and Morgan planned to merge and buy another railroad, it meant that basically all of the railroads in the western half of the US would be owned by one company. His “enemies” were those who saw the smaller businesses failing and in Minnesota, Governors Knute Nelson and Samuel Van Sant sought to stop them in their tracks. The “trust buster”, President Teddy Roosevelt, led the progressive anti-trust movement who knew that a lack of competition would hurt workers and consumers. The Sherman Anti-Trust Act of 1890 made monopolies illegal and Hill was sued by the government.

The Supreme Court case, US Government v. Northern Securities, ruled against Hill stating that great concentrations of power are bad in and of themselves. It wasn’t that they had conspired to reduce competition, it was that they could. So Hill was forced to dissolve the trust and separate his businesses. That’s where the Railroad and Bank Building comes in.

Built in downtown St. Paul in 1916, the 16-story building was purposely designed to house all of Hill’s businesses, BUT keep them physically separated. Each business separately owned their section of the building and they had separate entrances and elevators. On the tenth floor, there were separate offices for the President - connected by a door that was always kept locked. This arrangement allowed for the cost-saving and efficiency enhancing arrangements that Hill preferred while still following the letter of the law and keeping the businesses separate.

That was who James J. Hill was. He saw no limits to what his business could be and he would find a way to complete the task as efficiently as possible even pushing right up to the limits of regulation and legality to do so.

We can see how the laws enacted in Hill’s time come into play today while tech companies like Apple and Microsoft or companies like Meta and Amazon flirt with the definition of “monopoly” and the government has to decide whether to intercede for the sake of competition or if it stands back for the sake of capitalism.

James J. Hill is a reminder that in America there are opportunities for enormous success but a free market has to stay free.

The Railroad and Bank Building was the tallest office building in the Upper Midwest until the IDS Center was built in 1973. It was remodeled several times and was renamed the Great Northern Building in 2019. On the first floor, the railroad’s cafeteria has been turned into an atrium and there is a movie theater named after the building’s original owner.

The Great Northern Railway and the Northern Pacific tried to merge four times, in 1896, 1901, 1927, and 1955. The last attempt struggled from 1955 until the final Supreme Court approval and merger in March 1970, which created the Burlington Northern Railroad. In 1995, Burlington Northern merged with the Atchison, Topeka and Santa Fe Railway to become the Burlington Northern and Santa Fe Railway. Today, the BNSF Railway still has offices in the Great Northern Building.