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| Home > Topics > USA > Northern Pacific Railway |
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On the Northern Pacific Railway |
In the 1880s, Deutsche Bank began a deliberate policy of financing major projects abroad. The policy centred on railways, with the bank undertaking commitments in the Balkans, in the Middle East, in Africa, and in South and North America. For Georg von Siemens, the twin focuses of his work were the Northern Pacific Railroad and the Baghdad Railway. Both projects kept Siemens extremely busy throughout the 1890s, involving repeated "site visits" whenever his direct intervention proved necessary.
Railroad construction in the United States had been attracting foreign capital since the 1830s, and after 1875 canvassing for investments increased. The stretches currently planned and under construction would make it possible to open up and settle this vast continent, laying the foundations for the meteoric rise of the United States as an economic power, but to build them American resources alone were insufficient. Particularly in the last third of the nineteenth century, foreigners held large blocks of shares in the principal railroad companies. Deutsche Bank, too, financed many North American lines.
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| Georg von Siemens |
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Siemens was aware of the enormous economic potential of the United States and was keen for the bank to have a share of the profits that would surely be made there. "I believe that we in Berlin must also get involved in things American," he wrote in June 1883. "After all, America is closer to us than Italy, the Gotthard notwithstanding." It was around that time that the traditional orientation of Deutsche Bank turned westward, across the ocean. The idea of the banker as "Atlantiker" was born. Simultaneously, Siemens complained of obstacles being placed in his way by politicians, in whose eyes there was nothing to be gained in foreign-policy terms from any involvement in the USA.
In the middle of August 1883, Siemens travelled to the opening ceremonies staged by Northern Pacific Railroad, the famous line running from Lake Superior to Vancouver Sound. So impressed was he by the development opportunities represented by Northern Pacific that Deutsche Bank acquired a substantial holding.
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Henry Villard |
As things turned out, however, the bank's involvement in Northern Pacific was a costly transaction resulting in some loss of prestige. Here Siemens came up against a man who, through sheer personal magnetism and with the help of some skilful publicity, contrived to attract new backers and constantly mobilise fresh loans but whose enterprises basically rested on shaky foundations.
The president of Northern Pacific, Henry Villard, was undoubtedly one of the most interesting American "railroad kings" of the period. Of German origin (his real name was Heinrich Hilgard), Villard was not only bursting with pioneering spirit; he also had a recklessly speculative approach to business. The combination was not an unusual one at the time, nor was it by any means wholly negative in its effects.
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| Completion of the Northern Pacific Railway 1883 |
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During the grandiose Northern Pacific opening ceremonies, Villard played the generous host in the hope of gaining new investors. Yet even before the festivities were over, the railroad company's stock had shed almost half its value. Siemens was well aware of the financial problems besetting the enterprise. Nevertheless, in spite of the risk he spoke out in favour of getting involved in Northern Pacific, because in his view a successful consolidation of the railroad company would enhance the international reputation of Deutsche Bank.
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