The center and eastern arches just before the engineers succeeded in the difficult challenge of fitting the final sections into place . That climactic moment happened at 7:40 am on December 18 , 1873 — the date of Junius Morgan ’ s deadline . Photograph by Robert Benecke , in Woodward , History , plate 44 .
bridge — arguably his bridge . And his news turned worse : “ The competition with [ the ] ferry co . is severe [ and the railroads ] are taking advantage of it to force lower terms from the bridge . Scott was there with me , and I tried hard to get him to order his trains over .” All hung on the PRR ’ s president . Scott did not come through . A February 1875 telegram from the Morgan bank in New York to its London affiliate conveyed the grim truth : “ Satisfied foreclosure inevitable .”
Turnaround
After foreclosure , the bond trustees took over management of the bridge , and Junius Morgan persuaded the president of the Illinois Central Railroad to chair its board of directors . Finally , an experienced railroad man took charge . Morgan also financed new freight and passenger facilities in downtown St . Louis . By June 1875 , he had invested an additional $ 250,000 ($ 7.2 million in 2024 ) to create a dedicated railroad to haul freight and passenger trains over the bridge . Soon 200 passenger cars were crossing daily .
The price war between St . Louis Bridge and Wiggins Ferry lasted two years . On
April 23 , 1877 , the companies signed a price-fixing agreement and immediately raised their rates , charging the same tolls for passengers and each class of freight . In 1877 , such collusion was not illegal .
“ Morganization ” came to describe how Pierpont Morgan guided his debtor railroad clients to negotiate pools or mergers , ending rate wars to assure steady returns to capital . He offered no apology for imposing oligopoly or monopoly on the commerce of St . Louis or America ’ s railroads . He sought profitable stability , which he claimed would benefit laboring men , managers and investors .
The price-fixing succeeded . For four years , the St . Louis Bridge operated in foreclosure under the oversight of the Morgan banks . Once the pooling / pricefixing agreement brought profits , the bankers crafted a plan to restructure the debts and reorganize the bridge company .
Approved by the court in March 1879 , the new capital structure made no provision for the old stockholders . Those experienced investors , enticed by Eads ’ s prospectus a decade earlier , forfeited the entire $ 3 million par value of their shares . Junius and Pierpont lost $ 125,000 on their equity stakes .
By 1881 , however , the reorganized St . Louis Bridge and Tunnel Railroad , enjoyed the prosperity that Morgan had envisioned . A million rail passengers crossed that year . Each day , nearly 400 freight cars trundled back and forth ( up from 64 in 1875 ). Gross earnings exceeded $ 1.1 million and net profits serviced the company ’ s securities .
This prosperity attracted Jay Gould , who negotiated a lease for the entire property . The bridge would cinch his 10,000- mile rail system , running from Lake Erie to Mexico . Junius Morgan ’ s prosperous assessment proved accurate in the long run .
The bridge powered vibrant growth for St . Louis , which grew from 6th to 4th among US cities ( 1880-1900 ). But the cost overruns , bond interest and monopoly pricing were ultimately paid by the passengers , shippers and citizens of St . Louis .
Thanks to the Illinois legislature , St . Louis Bridge garnered monopoly profits until 1892 . Widespread in the Gilded Age , such chartered monopolies served a legitimate purpose , encouraging investors to fund these costly projects . But 25 years was a long time to derive monopoly rents from America ’ s fourth-largest city .
36 FINANCIAL HISTORY | Summer 2024 | www . MoAF . org