After two years of his resourceful and energetic management, Van Horne decided to leave the St. Louis, Kansas City & Northern Railroad. On June 28, 1874, he told Addie that he intended to submit his resignation the following day. “The bitter feeling towards the Chicago & Alton & everyone who was ever connected with it is the principal cause,” he wrote. “This together with the ill feeling of those interested in this company who are also interested in some of the ‘side shows’ — branch lines etc and whose toes have been trodden on has made my position since the election very unpleasant.” Soon after he penned this letter, the company’s board of directors met and unanimously recorded “their high appreciation of his faithful and industrious administration of the duties of his office.” They then authorized the president to grant him a month’s salary as severance pay.
For the first time in over fifteen years Van Horne was unemployed. The hard-driving, thirty-one-year-old executive found the transition difficult, and he sunk into a bout of self-questioning and despondency. That summer, while his wife and children were visiting Bloomington and Joliet, Van Horne found the family home in St. Louis so desolate and cheerless that he wrote to Addie: “Whatever misfortunes may come in a business way I cannot be unhappy while my dear treasures are left to me. You cannot imagine how lonely I feel without you here. Sometimes I feel as if I could fly to you.” The once confident railway official even began to question whether his future lay in railroading.
At that point John Mitchell came to the rescue. As a director of the Chicago and Alton, he had become aware of a small, financially weak railway that a man with Van Horne’s expertise might be able to save — the Southern Minnesota Railroad. This unfinished railway ran from the Wisconsin-Minnesota boundary opposite La Crosse, Wisconsin, westward through one hundred and sixty-seven miles of sparsely settled southern Minnesota to Winnebago City. When Mitchell learned that the Southern Minnesota was in receivership, he persuaded its New York bondholders that Van Horne was just the person to build up the line and transform it into a profitable enterprise. He then persuaded Van Horne to leave St. Louis and become general manager of the Southern Minnesota, whose offices were located in La Crosse, a Mississippi River town that owed much of its prosperity to the lumber industry.
When Van Horne took over the management of the railway on October 1, 1874, he faced an intimidating challenge: to increase the company’s earnings so it could meet its expenses and interest charges and, at the same time, pay off its old debts and free the railway’s right-of-way of the claims against it. He had to meet this challenge at a time of crippling depression in the country, brought on by the 1873 failure of banker Jay Cooke.
With his characteristic gusto, Van Horne set out to turn around the fortunes of the railway. It took him about three years to accomplish this goal — years of frustration, setbacks, and triumph. He recorded the highlights of these years in large letter books which reveal the vital role that correspondence played in the years before the telephone linked major centres. When not on the road, Van Horne often wrote letters every day to his reporting superior, Cornelius Gold, the head of the Southern Minnesota’s executive committee and later the railway’s president. When major developments were breaking, he often dispatched two letters a day to this New York–based official. And, in addition to this correspondence, Van Horne would fire off missives to other railroading officials and colleagues, always in his own handwriting.
The first change Van Horne made at the Southern Minnesota was to replace some of the key staff with men who had worked with him before. Next he introduced stringent economies and settled all the outstanding claims for the right of way by dealing directly with the owners. By August 1876, less than two years after he became manager, he was able to predict a surplus for the coming three months that would make a “big hole” in the claims against the railway. Looking to the future, Van Horne had new snow fences built along the track and improved the railway’s rolling stock and roadbed. The following year he spent lavishly on repairs to the track, bridges, and roadbed and in the construction of new buildings. And he accomplished all these improvements despite periodic rate wars that were designed to grab business from competing divisions of rival railways.
Wheat was the principal commodity carried by the railway, so Van Horne offered inducements for the erection of flour mills and suitable grain elevators along the line. In order to restrain competition and to further increase the Southern Minnesota’s earnings, he arranged with rival lines to divide either the traffic or the earnings realized from the traffic of the participating railways.
In the summer of 1876, however, the Southern Minnesota faced a natural calamity of nature’s making — a plague of Rocky Mountain locusts (commonly known as grasshoppers) that wreaked havoc in northern Minnesota before moving into the southern part of the state. As the insects moved from east to west, they dropped periodically to the surrounding fields to lay their eggs and munch their way through huge swaths of wheat and other grains. Van Horne knew that depleted wheat crops spelled smaller freight loads for the railway, and that deposited eggs would invariably hatch the following spring to unleash new destruction. While farm families offered up public prayers for the banishment of this “terrible engine of destruction,” Van Horne used his ingenuity to devise an effective “hopperdozer” to destroy the pests. This invention — a piece of sheet iron or stretched canvas thickly smeared with tar — was dragged through an infected field by a horse. When the disturbed grasshoppers flew upwards from the ground, they become entangled in the tar. Farmers eagerly adopted Van Horne’s invention, the state supplied free tar, and the Southern Minnesota cooperated by carrying both the iron and the tar free of charge. Soon Van Horne had the satisfaction of seeing huge heaps of dead hoppers dotting the prairie.
The general manager knew that good staff morale was essential to efficiency and productivity, and he did everything he could to foster it. He believed that tasty, well-prepared food was a powerful inducement to performance on the job, and he made it clear that no eating house along the line would be patronized unless it provided the best possible meals. Frequently he carried out taste tests himself when he was on the road, telegraphing an order to the next eating stop for two dinners — and then devouring them both. If his appetite was prodigious, so was his energy. A glutton for work, Van Horne toiled away in his office from nine-thirty or ten in the morning until eleven or twelve at night, taking time off only for dinner.
As part of a program to involve every employee in the Southern Minnesota’s regeneration, he introduced contests in many areas of the railway’s operations, from track repairing to engine driving. He gave a prize, along with a personal letter from him, to every man who did the best work at the least cost. The Southern Minnesota’s auditor recalled that “Van Horne created on that old Minnesota Road an esprit de corps rarely equalled…. We had to look twice at every cent. But we all enjoyed working on that road. Van Horne was full of ways to get around difficulties, and as full of ideas for improving every branch of the work.”
After three full years with the Southern Minnesota, Van Horne was shocked when Peter Myers, his highly respected vice-president, threatened to resign because of inadequate pay. Van Horne immediately resolved to make more money available for salary increases by taking a cut in his own pay. As he wrote to Myers, “I have thought it all over and made up my mind to reduce my own salary materially on January 1st [1878] no matter what action the board takes in regard to the others.”
Van Horne’s efforts to rehabilitate the line soon began to pay off. Gross earnings for the first year of his management were the highest in the railway’s history. Moreover, operating expenses had slid from 72 to 56 percent of earnings, and there was a respectable sum in the railway’s coffers.
Van Horne also mounted a tireless campaign to have the Southern Minnesota extend its line westward, believing that strategic expansion was essential if his railway was to keep ahead of its competitors. The executive committee’s failure to act swiftly on the matter was a source of great frustration to him, especially after he realized that a “good class” of settlers were pouring into the country west of the Southern Minnesota and that, if his company did not
