John Stewart Kennedy
John Stewart Kennedy
Although most of his contributions to railroad building, finance, and charity took place in the late 1800s, the works of John Stewart Kennedy (1830-1909) carried well into the 20th century.
John Stewart Kennedy supplied and financed American railroads during the great age of railroad building, becoming James J. Hill's financial intermediary when Hill obtained control of the St. Paul, Minneapolis & Manitoba Railway in 1878. From the early 1880s until his death in 1909 Kennedy was a director of the Bank of the Manhattan Company and other financial institutions.
Born in 1830 near Glasgow, Scotland, Kennedy first visited the United States in 1850 as a representative for an iron firm that sold railroad-related products. On that trip he met his future partner, Morris Ketchum Jesup, a railroad commission merchant and private banker. Kennedy became a significant player in American economic and business history as a partner in M.K. Jesup & Co. from 1857 to 1867. During the decade of their partnership the firm dealt with several southern and western developmental railroads.
In 1868 Kennedy opened his own railroad commission merchant and private banking firm, J.S. Kennedy & Co. It combined credit with trade and specialized in the discounting and creation of commercial paper; growth allowed specialization in the banking function. J.S. Kennedy & Co. bought and sold railway bonds and stocks and negotiated loans, drew bills in London, and was a fiscal agent and banker for railroads. Engaging in the process of financing Anglo-American trade and financial intermediation, Kennedy mobilized and funneled the capital of a multitude of American and European investors to promote American economic development. He emerged as an independent entrepreneur just as changes in the railroads, the manufacturers of specific railroad products, and the capital market combined to make the railroad commission merchant obsolescent.
Consequently, he and his competitors gradually shifted from an emphasis on acting as a commission merchant to financing as a private banker. Kennedy had business relations in his own name with southern and western developmental railroads, especially the St. Paul, Minneapolis & Manitoba. Also, he represented both British and American iron manufacturers.
In 1878 Kennedy completed the sale of the two bankrupt St. Paul & Pacific railroads to George Stephen Associates. A year later the property was reorganized as the St. Paul, Minneapolis & Manitoba. This railroad transaction transformed Kennedy from merely rich to one of the most wealthy Americans of his time.
Like other private international banking houses, J.S. Kennedy & Company mobilized and transferred the savings of numerous European investors to the United States. Kennedy participated in 1873 in the launching of the Scottish American Investment Company. Kennedy acted as its New York agent from 1873 to 1883 and for 15 years thereafter remained a member of the advisory board.
During his 15 years as a railroad commission merchant and private international banker, J.S. Kennedy & Co. took large risks, and Kennedy amassed an ever larger personal fortune. J.S. Kennedy & Co. reorganized and supplied railroads. It acted as agent for bankers and railroads, issuing commercial credits and letters of credit and collecting dividends, coupons, and foreign and inland drafts. Kennedy liquidated his firm in 1883, owing to nervous and physical exhaustion.
Kennedy's 1883 "retirement" broadened his role as a financier with diverse interests in leading New York financial intermediaries. Kennedy held the post of president pro tem of the Bank of the Manhattan Company, 1883-1884, when he became vice president until he resigned for reasons of health in 1888.
Kennedy also served as a trustee of the Central Trust Company from 1882 until he died. Kennedy held similar positions with the National Bank of Commerce (1887-1909), the New York Life Insurance Company (1903-1906), the Title Guarantee and Trust Company (1895-1909), and the United States Trust Company of New York (1896-1909). As a result of his varied banking activities, Kennedy became a central figure in the history of American banking and in the New York business community.
The scale of Kennedy's bequests dwarfs that of many of his contemporaries with comparable financial resources, perhaps because he had no children. Although the magnitude of his gifts certainly warranted it, by his own choice nothing was ever named after Kennedy to perpetuate his name. Equally important, unlike many contemporary philanthropists, he did much more than merely dole out his millions with an open hand. Instead, Kennedy took an active part in the management of those institutions (the New York Public Library, the Metropolitan Museum of Art, and the Presbyterian Hospital) to which he entrusted his funds, becoming a member of their boards of trustees and an officer. His contributions to New York City and national cultural, social, and civic institutions were consequential. He enriched libraries and universities, hospitals and charities with his money, his presence, and his administrative skill.
Kennedy died in 1909 as one of America's richest men. He accumulated a fortune of $60 million and gave away roughly half this sum in his will to institutions in which he had been involved.
For additional information on Kennedy and his times see Albro Martin, James J. Hill and the Opening of the Northwest (1976) and Ralph W. Hidy, Muriel E. Hidy, and Roy V. Scott with Don L. Hofsommer, The Great Northern Railway: A History (1988).
Engelbourg, Saul, The man who found the money: John Stewart Kennedy and the financing of the the western railroads, East Lansing: Michigan State University Press, 1996. □