American railroad magnate Samuel Spencer (1847–1906) began his career in the industry as a mere engineer, but rose to become one of the country's most powerful transportation tycoons. Associated with Wall Street financier J. P. Morgan, Spencer helped arrange the consolidation of dozens of railroad lines in the southern United States into the mighty Southern Railway. His career was cut short by tragedy when he died in a crash on his own line in the early–morning hours of Thanksgiving Day of 1906.
Spencer's early life carried scant portent of the future wealth and prestige he would later attain. He was born on March 2, 1847, in Columbus, Georgia, to Lambert and Vernona (Mitchell) Spencer, their only child. His father's family was known to have its roots in Talbot County, Maryland, where they descended from a 1670 settler there named James Spencer. While still a teenager, Spencer dropped out of the Georgia Military Institute in Marietta to join the Southern states' battle to secede from the Union in American Civil War. He served in Captain Thomas Nelson's Rangers, an independent cavalry unit that fought on the Confederate Army side, and then with Nathan Bedford Forrest's cavalry, which had some success in disrupting the communications lines of the Union Army.
Earned Engineering Degree
When the war ended in 1865 with the Northern victory, Spencer left military service and enrolled in the University of Georgia at Athens. He earned his first degree in 1867, and went on to the engineering program at the University of Virginia, where he graduated at the top of his class in 1869. His first job was with the Savannah & Memphis Railroad as a "rod man" with its surveying unit, but quickly advanced through the various ranks until he had become a principal assistant engineer. He wed in 1872 and headed north that same year to take a post in Long Branch, New Jersey, as the clerk to the superintendent of the New Jersey Southern Railroad.
Before long, Spencer had moved on again, this time to the Baltimore & Ohio Railroad, which serviced the Atlantic seaboard. He spent four years with the company, and in 1877 was offered another promotion with another line, this time as superintendent of the Virginia Midland railroad. He headed north once again in 1878 to become general superintendent of the Long Island Railroad, an impressive post for a man still in his early thirties, but transferred back to the Baltimore & Ohio (B&O) a year later when he became assistant to its president.
Joined House of Morgan
Spencer spent almost a decade with the B&O, rising to the post of vice president and then president in December of 1887. His tenure in that office was brief, however: one of his duties was to reduce the B&O's immense floating debt of $8 million, and the various schemes to move it around aroused some bad feelings among other directors, who believed the powerful Wall Street banking house of Drexel, Morgan & Company were trying to use Spencer to wrest control of the railroad from them. Out of work only temporarily, Spencer was hired by Drexel, Morgan & Co. as its railroad expert, and was made a partner in 1890.
Drexel, Morgan & Company, which became J.P. Morgan & Company in 1895, was one of the most powerful banking houses in the world at the time, amassing large amounts of capital and funding various projects of merit under the guidance of its immensely wealthy chief, J.P. Morgan. It had already been involved in the reorganization of various American railroad entities, but Morgan had set his sights on the disorganized post–Civil War South and its 150 separate lines. Spencer provided crucial input at the company for the byzantine plan, thanks in part to his experience as an executive. "No move in the railroad world was made by the financier without the counsel of Mr. Spencer," noted a New York Times tribute published after his 1906 death. "It was said of him that there was no man in the country so thoroughly well posted on every detail of a railroad from the cost of a car brake to the estimate for a terminal."
The railroad industry in the southern United States had actually boasted a few notable firsts in the era before the Civil War. The first regularly scheduled passenger service, the "Best Friend of Charleston," began operation in 1830, and its owner, the South Carolina Canal & Rail Road Company, had been the first in the nation to run trains during the nighttime hours. The numerous railroad lines that crisscrossed the region were mostly linked by 1857, but the war wreaked havoc on the South's transportation infrastructure, and the rebuilding process was slow. By the time Spencer joined the Morgan house, "the Southern transportation interests were in the hands of a large number of poorly constructed and poorly operated lines," his New York Times obituary noted. "Money was lacking for improvements, and the country was held back in every way by the chaos which prevailed among its railroads."
Credited with Reviving Company's Fortunes
Some of the lines fell into the hands of creditors, and in 1893 the Morgan house appointed Spencer as one of the receivers for the Richmond & Danville Railroad. He was later given similar duties with the East Tennessee, Virginia & Georgia Railway. Morgan wanted to consolidate these and others into a single, easy to manage, and thus more profitable company. After gaining control of several of the lines, by 1894 Morgan's bank had reorganized these and others into the Southern Railway. Morgan named the able Spencer as its first president.
Spencer proved up to the job. He was a shrewd manager and made sound financial decisions on behalf of the Morgan bank, which was still its parent company. From 1894 until his death a dozen years later, the system's mileage increased from 4,391 to 7,515 miles of lines, and the number of passengers carried from 3.4 million to more than 11 million; its freight tonnage also quadrupled. Earnings, not surprisingly, rose at a corresponding rate, from $17 million to $53 million.
The American railroad industry proved so lucrative that it ran afoul of politicians in Washington during this era. Some of the lines offered rebates to favored shippers, and public discontent—especially from small farmers, who seemed to pay the heaviest freight charges—grew over rates, which fluctuated wildly. At the time, the federal government had little regulatory power over such companies, but that began to change when the Interstate Commerce Commission (ICC) was established, the first federal regulatory agency. Though it outlawed rebates in the railroad industry, the ICC remained somewhat toothless until President Theodore Roosevelt was elected to the White House, and made good on his threats to curb railroad–rate abuses.
Argued Against Regulation
Spencer became one of the leading opponents of the Roosevelt Administration's plan to set railroad rates, and argued strenuously in the first years of the century against the proposed laws. He defended Southern Railway's business practices before the House Committee on Interstate and Foreign Commerce, claiming that other costs of operating the line had risen in recent years, and the company needed to be able to set its rates in order to remain profitable. "It is un–American and unfair, not to say, outrageous because it is alleged there are such" abuses, he said in a 1903 Pittsburgh speech quoted by the New York Times, "that every manager, that every President and Director, shall be subject to indiscriminate public condemnation, and that the innocent investors shall have their property jeopardized and their rights infringed because those to whom the prosecution of the law is entrusted fail to find the offender and to punish him." In the end, his efforts failed to prevent the passage of the Hepburn Act of June 29, 1906, which gave the federal government the power to enforce ICC rules and regulations.
Spencer was an illustrious figure in his era. He held the presidencies of the Alabama Great Southern, the Cincinnati, New Orleans, & Texas Pacific, the Mobile & Ohio, the Georgia Southern and Florida, and the Northern Alabama railroads. He also was a director of 11 other railroad lines, and held similar rank with the Hanover National Bank, Old Dominion Steamship Company, Pennsylvania Coal Company, Standard Trust Company, and Western Union Telegraph Company. He and several other titans of industry were avid quail and partridge hunters, and had leased a 12,000–acre preserve near Greensboro, North Carolina, that was stocked with expensive quail imported from Hungary.
Human Error Led to Death
Yet Spencer was also a casualty of the times: he died in a pre–dawn collision of two trains near Lawyers, Virginia on November 29, 1906. Spencer was sleeping in a private rail car attached to the Jacksonville express train. He and some business associates were on their way to a hunting expedition at the Greensboro lodge. His car and several others became detached from the engine, and had stalled on the tracks. Another train, the Washington and Southwestern Vestibule Limited, was behind it and bound for Atlanta, but apparently a station operator did not notice that the engine car had passed by without the rest of the train. The other train was allowed to proceed onto the block, and it slammed into the stalled cars. Spencer was one of seven casualties, among them his hunting companions General Philip Schuyler of New York City and Charles D. Fisher of Baltimore.
Spencer's son had been waiting to meet the train at Greensboro station, and was informed of the tragedy. The railroad executive's untimely death made the front page of the New York Times, and a day later the same paper eulogized him in a lengthy tribute that asserted "the South has lost one of the moving spirits in its recent revival, and America one of its leading railroad experts." All Southern Railway trains were halted briefly on the day of his funeral in his honor. His wife Louisa Benning Spencer, another son, and a daughter survived him. The Southern Railway also proved an enduring testament to his talents: it exists as the Norfolk Southern line nearly a century after Spencer's passing. There is a bronze figure of him located in Hardy Ivy Park in downtown Atlanta, the work of noted artist Daniel Chester French, and the town of Spencer, North Carolina, is named in his honor. It was once the site of the immense Spencer Shops, the railroad–car repair facility of the Southern Railway.
Dictionary of American Biography, American Council of Learned Societies, 1928–1936.
New York Times, November 30, 1906; December 1, 1906.
News & Record (Piedmont Triad, NC), December 29, 2002.