- Historic Sites
Charles Tyson Yerkes: The Streetcar Baron Who Got Rich Twice
August/september 1983 | Volume 34, Issue 5
A TELESCOPE FULLY six stories high turns its forty-inch lens to the skies above Williams Bay, Wisconsin, where the University of Chicago operates the Yerkes Observatory. Any reasonably sophisticated person, seeing that enormous instrument, would conclude that the observatory is less likely to be named for a noted Midwestern astronomer than for whoever put up the money to build it. But no one would guess this particular donor’s motives.
In 1892 Charles Tyson Yerkes found himself in trouble. A bank had unexpectedly called in a million-dollar loan. He had paid up immediately, but his business rivals smelled blood, and now he couldn’t get a dollar’s worth of credit anywhere. Yerkes thought it over and called on William Rainey Harper, first president of the year-old University of Chicago. Would President Harper be interested in a million dollars to build an observatory? Yes? Fine, it was his. There were only two conditions: he would have to wait a few months for the money, and he must announce immediately that his school had received a magnificent gift from Mr. Yerkes.
The announcement was made. Yerkes’s credit was instantly restored; able once again to borrow the great sums necessary to fuel his complex business affairs, he was soon invulnerable. And five years later President Harper could survey the local heavens through what is still the largest refracting telescope in the world.
Yerkes had been in tighter spots than that; in fact, he was perhaps the only great capitalist of those untrammeled post-Civil War years to actually spend some time in jail. Yerkes was as coolly ruthless as any of his more famous counterparts, but he had not risen, in the classic pattern, from poverty. He was no Cornelius Vanderbilt fighting his way up from the wharves; his family had settled in Pennsylvania three-quarters of a century before the Revolution, and his father was president of a Philadelphia bank when Charles was born in 1837.
The young man began his business career in the proper fashion when, at seventeen, he entered a firm of commission brokers. Five years later he got a seat on the stock exchange and went on to open his own brokerage. Somewhere along the line he discovered that he had a particular genius, an instinctive understanding of how to squeeze riches out of a city. The secret was a fusion between finance and ward politics, and Yerkes could handle politicians as well as any man living. He was famous throughout Philadelphia while still in his twenties, and by 1871 he stood a hair’s breadth away from seizing financial control of the entire city. But the Chicago fire triggered a panic on the Philadelphia exchange, and it caught Yerkes overextended. He had reinvested funds he’d gotten selling bonds for the city; he couldn’t come up with the money and, found guilty of “technical embezzlement,” he went to prison.
If Scott Fitzgerald’s dictum about there being no second acts in American lives were true, that would certainly have been the end of Yerkes. He emerged seven months later to confront a closed and hostile financial community that was grimly pleased the young firebrand had been quenched in his own overweening ambition. But Yerkes wasn’t beaten. He saw where he’d been wrong. He went back to work, and when the banking house of Jay Cooke & Company failed and precipitated the Panic of 1873, Yerkes was not overextended. Instead, as Theodore Dreiser said in The Financier , the first of three novels he devoted to Yerkes’s career, “like a wolf prowling under glittering, bitter stars in the night, he was looking down into the humble folds of simple men and seeing what their ignorance and their unsophistication would cost them.” He kept calm, sold short, and while more than five thousand businesses failed around him, he made a fortune.
Soon he had climbed back to where he d been before his fall, but he was restless. He’d grown weary of the wife who had borne his six children, and in 1881 he divorced her. That was the end of any chance he might have to move in Philadelphia society, but he didn’t care. He married a local beauty named Mary Adelaide Moore and the next year moved to Chicago.
It was a good place for a man who liked money and knew politics—“the only great city in the world,” according to a local novelist, “to which all its citizens have come for the avowed purpose of making money. ” The town was booming. During the decade Yerkes lived there, the number of factories would triple and the amount of capital invested in them swell by more than 300 percent. Yerkes started out quietly, assessed the situation, and saw that as this voracious city swallowed up its suburbs, it would need more and more streetcar lines. He knew it was altogether better to give an alderman a quarter of a million dollars to swing him a franchise than it was to pay the city a million to secure one in the accepted manner. In 1886 he got an option on the North Chicago City Railway Company, raised $6 million in capital stock to build a new line, let the job out to a construction company he controlled, which did the work for $3 million, and pocketed the difference. Thus launched, he absorbed more lines, set to work on them through a maze of interconnecting companies, broke his competitors with lawsuits and injunctions, watered stock and watered it again—and, to be sure, made some real improvements. He scrapped some fifty horsecar lines and replaced them with cable traction, electrified two hundred and forty miles of right-of-way, put down five hundred miles of new track, and built the famous Downtown Union Loop. But none of this won him the love of the populace. The equipment was inadequate, there was never enough of it, and often two companies would cover the same stretch of track, so that a passenger had to come up with two fares for one ride. There were complaints. Yerkes answered them with an epigram that became as famous in its day as William Henry Vanderbilt’s “the public be damned”: “It’s the strap-hangers that pay the dividends.”
Mr. Dooley felt Yerkes and the fire had the same effect on Chicago.
Protests reached a peak in 1895 when the complaisant legislature passed the Humphrey bill, which extended Yerkes’s franchises for a solid century without a penny of financial return to the city. Despite the offer of half a million dollars in cash, Gov. John Altgeld vetoed the bill. “I admire that man!” exclaimed Yerkes, and then went on to publicize the governor’s “radicalism” so effectively that it helped lose him the 1896 election.
Yerkes foresaw no trouble with Altgeld’s successor, but the financier had at last become just too gaudy. On the night his pet aldermen were debating a law that would reinstate the Humphrey bill’s provisions, an armed crowd surrounded City Hall. Yerkes lost.
By the turn of the century his power had eroded. He was no pauper, however; when he finally cashed in his chips, he got something on the order of $20 million. Then, in a gesture of superb contempt, he turned over his business records to the city before going East. They revealed, among other things, that of the $118 million securities of Yerkes’s companies, $72 million had been pure water.
Yerkes had not forgotten how to consolidate municipal transportation, and he spent his last years, until his death in 1905, putting together the mighty underground system of the city of London.
He was best remembered, however, in Chicago—and remembered as a force on somewhat the same order as the fire. Commenting on a proposal to commemorate that catastrophe, Finley Peter Dunne’s Mr. Dooley said: “We’ve had manny other misfortunes an’ they’re not cillybrated. Why don’t we have a band out an’ illuminated sthreet cars f’r to commimerate th’ day that Yerkuss came to Chicago? An’ there’s cholera. What’s th matter with cholera?”