Money and Power Part 2

Originally a fad, tulips were soon the subject of a growing demand; and with a supply chain as long as that of tulips in the mid- to late sixteenth century, demand quickly created scarcity. It wasn't long after the first shipment of bulbs arrived in Antwerp that demand for tulips began to outstrip supplies. As that happened, prices rose, and as prices rose, tulips began to a.s.sume an economic value out of proportion to their intrinsic worth. Inevitably, domestic cultivation of tulips flourished, and the price of the most common solid-colored varieties fell. But domestic cultivation also produced more and greater "broken" varieties, ironically driving up the value of uniqueness.

By the start of the seventeenth century things had gotten so out of control that single bulbs of new tulip varieties were considered acceptable dowry payments for brides in many parts of western Europe. One story tells of a French businessman who exchanged his flourishing brewery for a bulb of the variety Tulipe Bra.s.serie. But what was true generally of Europe struck with special force in the Netherlands. Part of the reason was simply the onset of ma.s.s hysteria: In a small, relatively closed, and h.o.m.ogeneous society word travels fast, and greedy impulse always feeds the fear of being left behind. The panic the mania that was to take such root in Holland, though, had deep and varied roots of its own.

Geology, for one thing, favored the Dutch. Tulips flourish best in sandy, well-drained soil, and for eons, the old mountains of Europe had been eroding into sand and flowing with the waterways of the Rhine out to the Low Countries. Large tracts of the Netherlands were a tulip field waiting to happen when tulips finally arrived in western Europe.

For the Netherlands, political and social history, and the madness for tulips, met at the right moment, too. Dutch maritime traders were already raising the general level of prosperity of the country and the people by the time the Netherlands won its independence from Spain in the late 1500s. Bitter religious wars would punctuate the decades ahead, including a brief reascendance by Spain, but by the start of the 1600s, Amsterdam long one of the princ.i.p.al trading centers of northern Europe and happily free of much of the sectarian strife would be ready to lead the Netherlands to continental ascendance.

Across the Channel, the Golden Age of Elizabethan England had been marked by great writers, Shakespeare foremost among them. In the Low Countries, the Golden Age was marked by great painters, and great painters in profusion always suggest great wealth and patronage to support them. Among Dutch painters, Frans Hals, dean of what became known as the Haarlem School of painting, was born in 1580; the great Rembrandt, in 1606; Pieter de Hooch, in 1629; and perhaps the most technically accomplished of them all, Jan Vermeer, in 1632. Next door were the Flemish giants: Peter Paul Rubens, born in 1577, and Anthony van Dyck (1599).

Amsterdam itself became the outward and visible manifestation of the nation's mounting riches: Beginning in 1612, the town was ringed by the Buitensingel, a moat with 26 bastions. Within, a secession of memorable buildings were soon being raised: the Mint Tower, built into an old medieval gate; the Westerkerk, or West Church, with its 282-foot tower, where Rembrandt is buried; and the town hall, now the royal palace.

In a lesser but far more pervasive way, tulips also became an outward and visible sign of mounting riches. Had they been merely pretty, tulips might well have graced many Dutch gardens. But their beauty came at an increasingly steep cost, and thus tulips not only pleased the eye but became tokens of prosperity and measures of prestige both nationally and individually. A country that could afford to so indulge itself was indeed wealthy and so too was any citizen who could so bedeck his own property. An expansive tulip patch, a party in a conservatory decked out with tulips, even window boxes lavishly decorated with tulips, became a way of announcing social standing, like country club memberships and the number of Mercedes in the driveway.

Nations, of course, survive fads all the time. The Netherlands, though, had in abundance a third and vital component for feeding the coming mania: a propensity to trade in the pursuit of profit and a tolerance for risk.

At the low end of the risk spectrum, Dutch investors of the early 1600s could put their money into publicly regulated banks or insurance companies, or they could invest it in the trade through the Baltic Sea, effectively a Dutch monopoly. Such investment routes and instruments were the Treasury notes and corporate bonds of the day. The two "Indias" the Dutch East and Dutch West trading companies offered the promise of much higher return, especially the Dutch East; but that had to be set against the higher risk inherent in distant and perilous travel and the great time lag between investment and payout. "Daytrading" in voyages that could take years to complete was neither prudent nor possible.

If the Dutch East and West trading companies were the IBMs and General Electrics of their day, the Bourse was much closer to a combination of the young NASDAQ and the Chicago commodities market. In addition to all the risks of moving rapidly in and out of investment positions, the Bourse offered what were, in effect, stock options and futures trades. Inevitably, too, it attracted short-sellers and manipulators who attempted to drive down prices through the spread of negative news and rumors. As early as 1610, edicts had been issued proscribing a whole variety of shady activities on the Bourse, most notably the practice of windliandel that is, "trading in the wind," or dealing shares not in the possession of the seller. If the Dutch had come a long way from the days when the acc.u.mulation of any excessive profit was considered G.o.dless, they seem to have drawn the moral line at profiting without anything in hand. Tellingly, though, there was no prescribed penalty for such futures trading: Contracts were simply deemed to be legally unenforceable. Private enforcement mechanisms allowed for unlimited futures trading for those who were willing to work without the net of official sanction.

It was this tension between safe and speculative investment that both sustained and nurtured the Dutch economy. Safe investments in banks and the Baltic trade created value; speculative investments on the Bourse sp.a.w.ned growth. In between the two extremes, the trading companies acted as an even keel keeping the ship on course. And it was this tension that tulips were to so upset.

The more people became interested in attaining wealth and growing it rapidly, the more they turned to the high-risk model of the Bourse, both in Amsterdam and at its regional locations throughout the country. And the more tulips came to be treated not as flowers but as a.s.sets that is, the more their extrinsic value became divorced from their intrinsic use and worth the more happy and anxious people were to trade in them. By the 1620s the best banks in Amsterdam were boasting tulip vaults. As befits any good and valuable a.s.set, bulbs could be used to secure loans, and the rarer the bulb, the greater the surety offered. There were even rumblings of going off the gold standard and on to a tulip one.

Increasingly, as the 1620s drew to a close, the tulip sector dominated the entire Dutch economy. Among a people already conditioned to a.s.sume risk in the pursuit of reward, there were fewer and fewer places left to turn. As the frenzy mounted, there was also no other place that offered the promise of such returns, and thanks to the endless inventiveness of capital markets, there were also constantly expanding opportunities to pursue return. Tulips offered one further advantage: Unlike gold or diamonds, they didn't have to be dug out of the ground in distant climes, and unlike stocks in joint-share corporations like the Dutch East India Company, they weren't out of the range of the average working man. Common bulbs, those that produced flowers of solid and common color, were relatively inexpensive, and while they had little worth in the state they sold in, there was always the hope that a mosaic virus would break the color in a unique, and uniquely valuable, way. The Bourse traders had conditioned the populace to the equations of trading and to the psychology of the trader, and the populace had learned its lesson well. Common bulbs weren't quite the penny stocks of the Tulipmania they cost more than that but they provided a point of entry for would-be traders and speculators who had previously been shut out of the action. For building a bubble economy, there couldn't be a much better plan.

A possible fourth contributing factor to Tulpenwoede needs mentioning as well. In a paper delivered to a Salomon Brothers conference on market crashes and panics, University of Providence economist Peter Garber writes: "External to the bulb market, one important event in the period 163437 may have driven the speculation. From 1635 to 1637, the bubonic plague ravaged the Netherlands." More than seventeen thousand died of the plague in Amsterdam in 1636 alone, Garber notes, a seventh of the population of the city. In Leiden, it was even worse: One in three people died in 1635, more than fourteen thousand five hundred in all. In Haarlem, then (as now) a center of the tulip trade, and perhaps the epicenter of Tulpenwoede, one in seven people died in four horrible months alone, despite drastic health measures.

"These and other precautions could not prevent the progress of the outbreak that caused 5723 to die during August, September, October, and November 1636, so many that the number of graveyards was too small," one Haarlem historian cited in Garber's paper writes. "So great was the misery and sorrow of citizens and inhabitants that the best description would only be a weak image of the great misery of those unhappy days.... In the midst of all this misery that made our city suffer, people were caught by a special fever, by a particular anxiety to get rich in a very short period of time. The means to this were thought to be found in the tulip trade."

Whatever the causes of the mania and even allowing for some exaggeration in the historical accounts that came down to us the simple fact is that beginning in the mid-1630s, the people of the Netherlands pretty much took leave of their senses where flowers were concerned. As tulips came to dominate public consciousness, more and more of the agricultural life of the country was taken up with planting and cultivating them, more and more of the social life of the country was taken up with the status power of tulips, and more and more of the economic life of the country was taken up with buying and trading them. As the latter happened, the markets expanded in sophistication to satisfy demand.

Tulip a.n.a.lysts and consultants made a nice business in parsing stem quality and pigmentation. Tulip "riggers" what British writer Rhymer Rigby calls "the Ivan Boeskys of their era" meanwhile tried to drive the market by manipulating demand. 'A typical tactic was to invest heavily in bulbs from an area, then have cattle stampede those fields to create a shortage," Rigby writes in the June 1997 issue of Management Today. "One peasant, having grown a rare black tulip, sold it for 1,500 guilders to a trader who promptly crushed it underfoot. Such measures, explained the trader, were necessary: He, too, had a black tulip and would cheerfully have paid up to 10,000 guilders to protect its singularity and price." Ten thousand guilders, it should be noted, was a near fortune. Rigby goes on to tell the story of a farmer, bankrupted when a cow ate its way through his tulip patch, who tried to recoup his fortune by creating a market in "tulip-milk" futures.

At the height of the frenzy in 1636 and early 1637, one man was said to have traded several acres of prime farmland for a handful of rare bulbs; another man, his house for the same. A wealthy merchant apparently paid 2,500 guilders for a single Viceroy tulip bulb equivalent to the annual output of a good-sized farm. A single Semper Augustus bulb went for more than twice that.

Professional tulip traders continued to deal with one another, and to reap the benefits of the boom, but beginning in about 1634, amateurs flooded into tulip trading. Foreign capital followed in 1635 and 1636, and the combination of the two new money and a vast pool of new players seemed to bring the tulip market to critical ma.s.s. Throughout the Netherlands in every strata of society, people began liquidating their a.s.sets in order to be able to partic.i.p.ate in the boom. By then, Garber writes, the trade in tulips had separated into "piece" and "pound" goods.

Piece goods rare and highly prized flowers sold by the bulb weight, with contracts specifying both the particular bulb and the site of its planting. For the most part they were the blue chips of the tulip bubble market, bought and sold by moneyed interests. Pound goods the cheaper, common bulbs sold by the lot and could come from any stock and any location, and as the market swelled and the second-tier players came tumbling in, it was the pound goods that most benefited. The price of piece goods had risen steadily tripling over the course of several years. By November 1636, the action had moved to pound goods, and as it did, they raced to catch up with their exquisite cousins. In the first month of 1637, the price of pound goods multiplied as much as twenty-five times. By then, there was no need for an actual tulip on either side of the trading equation.

By their very nature, tulips had a truncated trading season: They bloomed in the spring, and the flowers would bespeak the quality of the bulbs and their offshoot bulbets, which would then be harvested by late summer and sold off soon thereafter. But that was only if you dealt with what actually existed with actual bulbs and actual guilders. If you extended the trading season to trade what you didn't currently possess and in fact never intended to possess, you could trade year round. This happened to the tulip trade. A futures market in bulbs began to develop in the Netherlands early in 1636. By summer, the trading in futures became so intense and extensive that groups of traders began meeting regularly in taverns, in what became known as colleges.

Tulip futures contracts commonly involved neither cash on the barrel head nor tulips in hand; nor was there any expectation of delivering an actual bulb on any actual date. (Nor, for that matter, was there any notarization of the terms deals were commonly sealed by the payment to the seller of a fractional sum of the arrangement known as wine money.) Just as futures contracts in our own time are buyer bets on the eventual fetching price of pork bellies and petroleum, not offers to purchase a train-car load of pig parts or crude oil at some specific date, so the futures contracts on tulips were buyer bets on the eventual fetching price of the bulbs. Like all futures markets, the one in tulips was also-at least on the surface -a way to offset the existing risks of the business for the seller: If the price rises beyond what you agree to provide the commodity for, you lose; if it falls, you win; but either way, you know what to expect.

Futures trading a.s.sumes a rational market, but by the summer and fall of 1636, any last vestige of rationality had long fled from the Dutch tulip market. Instead of betting on the eventual price of tulips, investors were betting on the Greater Fool Theory that is, that there would always be someone further down the road willing to pay even more than you had paid for a product the price of which had become completely disconnected from any intrinsic worth. Somewhere between February 5 and February 6, 1637, four years after the Tulip Mania began in earnest, the Greatest Fool was finally found.

Typically, bubble economies collapse in a heap-that's where their name comes from especially in the absence of a strong central authority to cushion the fall. Manias create their own logic, but at the very moment the last fool gets into a mania market, everyone else seems to suddenly realize that the potential for risk so greatly outweighs the possibility of reward that it's time to cut and run. In the Netherlands, in February 1637, the tulip traders cut and ran in droves.

Peter Garber estimates that the price of a White Groonen tulip bulb had risen 2,600 percent duringJanuary 1637. By the end of the first week of February, it had lost 95 percent of its peak value. Switsers, another common bulb, appear to have lost two-thirds of their value in only four days, between February 4 and February 9. Nor would history offer much redemption for those who had overpaid. Records show that an Admiral Liefkens bulb had sold for 2,968 guilders on February 5, 1637; 85 years later, in 1722, Admiral Liefkens were commanding.2 guilders on the open market.

For the Netherlands, the collapse was devastating: A people who had risen to the crest of prosperity by sharing the opportunity to ama.s.s wealth and by aggregating and spreading risk had lost their bearings in the face of a simple flower. No risk, they had learned, equals no reward. What they seem to have forgotten was that all risk equals no reward, too, once the Greatest Fool is found.

Moneyed burghers who had purchased rare piece-good bulbs as prices soared in the final weeks of the bubble found themselves in possession of utterly wasted a.s.sets. It was as if they had bought a 24-carat gold hula hoop on the last day of that fad, but at least a gold hula hoop would have had melt-down value. All you could do with a radically devalued bulb was plant it and enjoy the brief annual flower. The poorer Dutch who had been trading in futures contracts on common pound-goods bulbs fared no better without a further and greater fool down the purchase chain to relieve them of their obligations.

Nor were local governments much inclined to offer relief. Having taken their stand with Bourse officials that futures trading was, if not evil, then at least morally lax, officials generally let the pain fall where it would. Haarlem did pa.s.s a regulation that said buyers could settle their contracts on payment of 3.5 percent of its price, but the contracts themselves were so legally suspect that many buyers just walked away from them. Sellers who had a.s.sumed great debt in expectation of grossly inflated future returns still had their debt, but they had little recourse to climb out from under it. Ordinary men and women who had gone to bed on the night of February 5 thinking they were rich woke up penniless, forced into workhouses to pay off their debts, and those ordinary people collectively formed a substantial part of the adult population.

For the market moralists, Tulpenwoede would prove a field day. In the years directly after the panic subsided, the Netherlands was flooded by pamphlets cautioning against such high-risk economic behavior and urging the Dutch instead to put their money into lower-risk, lower-return instruments. (The pamphlets seem to have been backed, at least in part, by the direc tors and beneficiaries of those lower-risk, lower-return instruments.) In the centuries to come, Tulpenwoede would frequently be invoked whenever it seemed that ma.s.s hysteria had driven prices out of whack. Even in the twentieth century, Bernard Baruch had lobbied hard for the re-issue of a nineteenthcentury history of the Tulip Panic as a way of teaching the investing public about the role of crowd psychology.

Humans, though, are a hard-headed lot. Less than a century after the Dutch bubble burst, the British saw their own version the South Sea Bubble explode. In the summer of 1720, stock in the South Sea Company, which held a largely useless monopoly on British trade with South America and the Pacific, climbed to 1,000 a share. By December, the price had fallen to 124. Not to be outdone, the French earlier that year had run up the price of land in the Mississippi River Valley to insane, and completely unsustainable, levels. Two centuries later, land bubbles were still building, and bursting. Crowd mania has even made its way into fiction. George Webber, the protagonist of Thomas Wolfe's famous novel You Can't Go Home Again, falls into the middle of real-estate mania on the eve of the Great Depression when he tries going back to a thinly veiled version of Wolfe's own hometown, Asheville, North Carolina. And in the present, the new millennium began with shares in high-flying high-tech businesses like priceline.com losing more than 95 percent of their value in months, not years.

In a market-oriented society, people can drive up the price of any commodity from tulips to impressionist paintings to IPOs-to levels that cannot be rationally justified. Value, after all, is defined finally by time and place, by what someone is willing to pay, not by what something is inherently worth. For a relatively few short years in the time of the seventeenth century, in the place known as the Netherlands, the people who make up the market decided that tulips were akin in value to the purest gold.

5.

JAMES WATT and MATTHEW BOULTON.

Turning Evolution into Revolution.

*Y THE CLOSING DECADES OF THE EIGHTEENTH century all the elements were in place for an industrial revolution, save for one. Improvements in agricultural production and in the storage and transportation of food meant that for the first time in human history, average people could live at a significant distance from basic food sources. In Western Europe, urban populations had begun to explode. London was nearing a million residents. Paris had started the century with a population in excess of six hundred thousand. More people living more closely together also meant a concentrated work force and, just as important, a concentrated marketplace.

As we've already seen, banking and finance generally were pa.s.sing beyond adolescence into a maturity at least beginning to resemble the sophisticated capital mechanisms of today. A stock market had been in existence in Amsterdam for nearly two centuries. Capital wasn't the problem, or capital structures. Nor was there any absence of facilities for manufacturing. The use of the word "factory" to indicate a building for the production of goods dates back to 1618. "Industry," in the sense of systematic work or labor, had entered the English language seven years earlier. People in short, had already begun to accli mate themselves to the habits of time management and repet.i.tive work that the coming century would so magnify and ingrain.

Of all the nations of western Europe, none was more primed for change than England. France had the greater capital despite losing much of its empire, it was still the richest nation in Europe but Great Britain had the better monetary system and lower interest rates, and it was governed by a Parliament that, because it was controlled in large part by commercial magnates, favored legislation that promoted the growth of business.

England also had in abundance what other European countries had only sporadically: an industry ripe for revolution and one predisposed to technological innovation. It was geography that gave textile manufacturers their leg up in England: The moist air served to make the thread more supple and less likely to break than in drier climes. But it was native inventiveness that had caused the textile industry to grow so rapidly during the middle half of the eighteenth century. John Kay's flying shuttle dramatically increased the speed with which weaving could be done. James Hargreaves's spinning jenny, introduced three decades later in 1769, meant spinners could finally keep up with weavers.

What was missing from this picture what was needed to jump start this evolution into a revolution was a cheap and reliable source of power, a way to turn the machines more quickly so that more goods could be produced in a briefer time frame and thus market demand could be both increased and served, and economies of scale could be achieved. For that to be found required an almost serendipitous meeting of two radically different men and the wisdom in both to see that the other offered the fulfillment of a dream.

James Watt is known to us as the father of the Industrial Revolution, and indeed the steam engine he brought to such perfection is the defining invention of the movement. Yet without Matthew Boulton, it seems likely that Watt would have wandered through the wilderness of history as a kind of reallife Gyro Gearloose, a brilliant mind without the necessary practicality to turn his brilliance to utility. He needed to partner in order to transform his genius into a product and to bring the product to a market where fortunes were waiting to be made.

Matthew Boulton almost disappears from history, and indeed, without James Watt he would have been just another very rich and admired man of his time, hardly worthy of note by future generations. But it was Boulton who took Watt and his steam contraption in hand, Boulton who knew almost intuitively the potentials in Watt's work, and Boulton who unlocked the utility in Watt's genius so both men could profit from it.

Had Matthew Boulton and James Watt never met, the Industrial Revolution certainly would have come about too many forces were pointing in the same direction to have missed it but who knows how long the revolution would have been delayed. But Watt and Boulton did meet, the steam engine was launched, and with it began something remarkable: the single most important happening in the history of the world economy.

On July 4, 1776, the first Continental Congress, meeting in Philadelphia, approved a Declaration of Independence from England and began to rewrite the history of global wealth and power. Four months earlier, on March 8, 1776, a crowd gathered in Birmingham, a little more than a hundred miles northwest of London, saw the first public demonstration of a machine that would prove, once it had been refined, to be a declaration of independence from running water. No longer would factories be held ransom to the vagaries of drought or freeze. No longer, for that matter, would industries have to locate themselves on the banks of rivers or streams. Power would come to them, in the form of steam, instead of their having to go to the power source. And what muscle this new power had: Even the relatively primitive steam pump being put through its paces that day could do the work of a hundred men. No one who witnessed the moment could have possibly known it such moments always get designated in retrospect but the right man and the right idea had just intersected with exactly the right moment in history, in just the right place, to give birth to the Industrial Revolution.

The machine that James Watt demonstrated March 8, 1776, was far from the first steam-powered engine. A hundred years before Watt began his tinkering, Edward Somerset had produced an "atmospheric engine" that helped establish many of the broad principles of steam power. In 1698, Thomas Savory had obtained a patent for what's generally considered the first practical steam engine, one capable of raising water, and for several decades afterwards, Savery's engine was put to wide use to pump water out of mines, for example, where it pooled from underground streams, or to supply towns with water, or drive waterwheels for factories. Savery's engine would be supplanted by Thomas Newcomen's, the first steam engine to use a piston and cylinder, and Newcomen's, in turn, would become the standard in England for the bulk of the eighteenth century. Savery and Newcomen's engines, though, suffered two defects: Both were huge, as large as four-story houses, and thus imminently unportable, and because they used heat so inefficiently, both were enormously wasteful. Even the mining companies that dug coal had trouble affording the coal the engines needed to burn to keep the mines dry.

James Watt would solve both problems, increasing not just the power of the steam engine but multiplying its utility, too, and in doing so, he would change manufacturing forever. But for all that to happen required a convergence of circ.u.mstance.

Born in Greenock, Scotland, on January 19, 1736, Watt seems to have been both high-strung he was subject to migraines his whole life and fragile by nature. His paternal grandfather, Thomas, had been a teacher of surveying and navigation; his father, James, was a shipwright and both a maker and supplier of nautical instruments. Scientifically inclined himself and a perfectionist in his work, Watt learned craftsmanship in his father's shop before going off to London, at age 19, to apprentice himself to a maker of scientific instruments. A year later he was back in Scotland, worn out by his apprenticeship and by the mean living conditions it subjected him to. In Glasgow, now all of 20 years old, he tried again to set himself up as an instrument maker, but the local guilds would hear nothing of it since Watt had failed to complete his apprenticeship tour in London.

The first big break of James Watt's life came a year after his rejection by the guilds when Glasgow University more interested in the young man's talents than his credentials appointed him "mathematical instrument maker" to the University. Watt soon became close friends with a chemistry lecturer at the university named Joseph Black, who later discovered latent heat, and also with an undergraduate named John Robison, who went on to a distinguished professorship in natural philosophy at the University of Edinburgh. Among the forces drawing the three together was a mutual attraction to the possibilities of steam power.

By 1761, Watt was experimenting with steam on his own, to no great avail. Then, in 1764, Watt was instructed to repair a faltering part of the school's mechanical collection: a model of John Newcomen's steam engine. His successful work on the model acquainted him intimately with not just the parts of the engine, but with its epic wastefulness of heat. That, in turn, led him to theorize that the temperature of the condensed steam should be kept as low as possible and that the cylinder should be as hot as the steam that entered it, and both realizations led him to the act of genius that would result in his breakthrough: a separate condenser where the steam could be held distinct from the main cylinder. Happily, too, metallurgy had just recently advanced to a state where boring machines could achieve the fine tolerance Watt's specifications demanded. As little as five years earlier, no one could have made the machine Watt envisioned.

James Watt left the employ of the university not long after his breakthrough. He was working in Glasgow as a civil engineer in 1768 when he completed a radical new design for a steam engine that would be three times cheaper to operate than any on the market. The following year, he secured his first patent and almost simultaneously his first patron: John Roebuck, a Scottish iron manufacturer who bought a twothirds interest in Watt's patent. For Watt, it must have seemed like a moment of deliverance. After years of increasingly single-minded pursuit, he had finally created a steam engine worthy of market dominance, and in Roebuck, Watt had found someone who purportedly could supply what he so clearly lacked: business sense, and a capacity for the technicalities of finance and marketplace maneuvering.

In fact, the union didn't work at all. While Watt fiddled endlessly with his creation, Roebuck fumed. "You are letting the most part of your life insensibly glide away," he once wrote to his inventor. In truth, though, Roebuck didn't bring much to the table either he lacked true money and, in the end, he lacked sense as well. An investment in a risky mining adventure drove Roebuck deeply into debt, and the economic depression of 1773 finished him off. Four years after he had entered into a partnership with the man who would help to change the global economy forever, John Roebuck declared bankruptcy. It was the second big break for James Watt.

The third and biggest break of Watt's life came when a Birmingham businessman named Matthew Boulton, seeking to satisfy his own claims against Roebuck, picked through his slim portfolio of a.s.sets and plucked the one that no one else seemed to want: the steam-engine patent the intellectual capital, that is, of James Watt. Partnership with Roebuck had been a marriage made, if not in h.e.l.l, then in its close-in suburbs. In Boulton, though, Watt would find the perfect life's partner, and in Birmingham both would find the ideal city to turn the world on its ear.

What Florence is to the Renaissance, Birmingham arguably is to the Industrial Revolution. Almost new by English standards-the city barely existed in the time of G.o.dric Birmingham nonetheless had an old history in what might be thought of as an early version of heavy industry. A "golde- smythe" is known to have lived in the town in the mid-fifteenth century, and a 1538 account by the historian Leland describes it as "a good market towne ... with many smithes... that use to make knives and all manner of cuttynge tools and many lorimers that make byts and a great many naylors." (Lorimers made bits and metal mountings for horses' bridles and, more generally, small iron wares. Naylors manufactured just what their name implies iron nails.) During the English Civil War (1642-1649), the anti-royalist craftsmen, smithies, and forges of Birmingham turned out fifteen thousand sword blades for the Parliamentary forces, while declining to manufacture any for the armies of the crown.

The reason for such a predilection to metal work and machinery lies in the soil: Both iron ore and coal were locally available. Skills have a way of migrating to resources, and industry takes root where the skills and materials to serve it are in great profusion. But raw materials and industrial capacity alone don't make a revolution. To do that the new power of technology had to be wed to intellectual capacity and the raw power of ideas, and by the 1760s, Birmingham was prepared to provide those in abundance, too.

The Birmingham-based Lunar Society brought together a collection of civic boosters, captains of commerce, scientists, doctors, and out-and-out intellectuals such as the world has seldom seen. The group gathered monthly for dinner and conversation, at the time of the full moon so, weather permitting, there would be light for the walk home afterwards. (Thus the group's name, and the name by which members referred to themselves: Lunatics.) The society's meetings were devoted to discussing the great scientific and philosophical questions of the day, but this was no a.s.semblage of dilettantes or abstract academicians. As much proto-Rotarian as they were protoMensa, Lunatics also meant to raise the image of Birmingham and of the products turned out there both because they themselves stood to benefit directly in many cases and because for many of them the true test of an idea was its utility in the marketplace.

Among the Lunatics were John Baskerville, perhaps the foremost printer of his day and the creator of a singularly beautiful type face that still bears his name; Erasmus Darwin (grandfather of Charles Darwin), a scientist, poet, and among the foremost physicians of the late eighteenth century; Richard Lovell Edgeworth, a leading educational theorist whose granddaughter, Maria Edgeworth, would achieve fame for such novels as The Absentee, Castle Rackrent, and Ormond; Joseph Priestley, famous in his own time as a dissenting minister (he'd come to Birmingham to be cominister at the New Meeting Church) but more famous in history as the discoverer of oxygen; John Smeaton, who, like James Watt, started his career as a maker of mathematical instruments and who went on to found the civil engineering profession in England; andJosiah Wedgwood, the great potter. (Wedgwood's daughter, Susannah, would be the mother of Erasmus Darwin's grandson, the famous Charles.) William Murdoch was a Lunatic, too. A leading inventor who came to Birmingham to work for Matthew Boulton and James Watt, Murdoch nearly ended up out-thinking the latter. It was Murdoch whose experiments with the distillation of coal led to the widespread use of coal gas for lighting, Murdoch who perfected the compression of air to make a functioning steam gun, and Murdoch who, as we'll later see, might have led Boulton and Watt to even greater triumphs had they only listened to him.

Others in the group included SirJohn Whitehurst, perhaps the most famous clock maker of his time in England, and the physician William Withering, whom Erasmus Darwin asked to join after his own doctor and fellow original member William Small died. (Small himself had been a friend of Benjamin Franklin.) Seeking to cure what appeared to be a fatally ill patient, Withering pursued a familiar gypsy remedy for heart disease the foxglove plant and thus discovered digitalis, which remains the most widely used drug for the treatment of the condition. By most accounts, he also became the richest physician in England working outside of London. Though he was never more than transient in Birmingham, Sir William Herschel was a Lunatic as well, and among the most distinguished of them all. German born, he'd come to Bath in the mid-1760s to work as an organist and ended up the best known astronomer of his time. Herschel founded sidereal astronomy; he was the first to theorize that Mars had icecaps marked by polar snow, much like Earth; and for good measure, he discovered the planet Ura.n.u.s, using a telescope laughable by today's standards.

And then there was Matthew Boulton. An entrepreneur and industrialist, he was perhaps among the least accomplished members of the Lunar Society, at least as judged by intellectual output. He was also absolutely central to the group: He and Erasmus Darwin had been the founders, and the group met over dinner at his s.p.a.cious home, Soho House. Because Boulton manufactured everything from b.u.t.tons to buckles, coins, and fancy ornamentation, he also had the most to gain by elevating the image of Birmingham and its products.

Like other Lunatics, Matthew Boulton appears to have been unable to resist innovation. Set on three hundred acres of landscaped parkland, his neocla.s.sical mansion was thought to be the most technologically advanced house in England by the end of the eighteenth century. A central heating system, almost unheard of since the Roman legions retreated from Great Britain, used a network of ducts to distribute hot air from a cellar furnace small holes even warmed the stairs. As late as 1995, when the mansion (now reduced to one acre) was being restored by the Birmingham City Council, the furnace was still in working order. Outside, Boulton used a novel slate siding covered with paint and sand to preserve a uniform appearance to the mansion even as he added wing after wing. To fill the dimples made by the hammer where it secured the slates, Boulton used b.u.t.tons from his factory. He even experimented with alloy window frames, and he was also a cook, fond of serving the Lunatics a hearty dish called "Birmingham Soup." (The directions call for, among other ingredients, "one leg of beef.") The endless improving, the love of innovation almost for its own sake, the house filled with geegaws, even the attention to food, call to mind Thomas Jefferson at Monticello, his mountainside home just south of Charlottesville, Virginia. Indeed there was much in the spirit of the times that appealed to forward-thinking visionaries on both sides of the ocean. Among Lunar Society members, Joseph Priestley fiercely advocated the colonies' side and would spend the last decade of his life in America, where his sons had already settled. But whereas Jefferson clung to something close to the agrarian ideal the n.o.bility of those who work the soil Matthew Boulton believed in the n.o.bility of machines. He liked to make things, almost anything. And he had the factory to do it.

A maker of commercial b.u.t.tons at the start of his career and the beneficiary of several financially providential marriages Boulton was running almost a conglomerate by the time he met James Watt. Not one to shy away from high-end items, and not cowed by the difficulty of doing business abroad, Boulton had been in the ormolu business from mid-century, turning out highly ornamented, imitation-gold clock cases for sale domestically and on the continent. He moved into the silver trade as well, hiring some of the best known artists of his day to do designs, including Robert Adam. For his fellow LunaticJosiah Wedgwood, Boulton's factory manufactured the metal frames for Wedgwood cameos. (Wedgwood, in turn, would describe Boulton in 1769 as the "first manufacturer in England.") Sword hilts, shoe buckles, and watch fobs also poured from Boulton's works whatever forms metal could take for profit, it seemed, including coins. It was with his minting business in mind that Boulton once lamented to the Lords of the Privy Council that, "The public has sustained great loss by the illegal practice of counterfeiting halfpence which has lately been carried to a great height than was ever before known and seems still to increase." Nor did Boulton shy away from promoting his wares. There's more than a hint of a modern direct-mail campaign in the printed letters Boulton blanketed the countryside with in advance of a 1771 auction of his goods.

By the time he secured the rights to fames Watt's first steam engine patent in the mid-1770s, Matthew Boulton owned the biggest and most modern manufacturing plant in Britain. The plant, known as the Soho Manufactory, used dozens of machines and employed six hundred workers, in conditions that powerfully presaged the world to come. Boulton's many products moved down a.s.sembly lines, forbearers of the ones Henry Ford's Model Ts would move down a century and a quarter later. To retain and protect his most skilled workers, Boulton also provided an early form of medical insurance. Little wonder both man and factory became so famous in their day. Boulton's Manufactory attracted so many visitors that he had to schedule guided tours, and he liked to use the tours to further enhance his reputation and promote his products. When SamuelJohnson arrived in 1774 for a look at the works, Boulton commented to the famous literary czar: "I sell here, Sir, what all the world desires to have power." Even taken metaphorically, it was no idle boast. Matthew Boulton stood at the center of industrial Birmingham, and Birmingham stood at the center of the industrial world.

James Watt would give Boulton yet another product line, what was to become his best one of all. Almost no sooner had he secured the rights to Watt's patent than Boulton formed a new enterprise Boulton & Watt to produce the engine. At Boulton's urging (and arguably solely because of his urging) the methodical Watt completed a working engine in only five months, just as the coal industry in England was reaching a crisis point. The further into the earth men dug for coal, the more underground springs they tapped, and the greater the expense of keeping both the men and work areas dry. Newcomen's steam-driven mine pumps used so much fuel that they were driving mine owners to abandon their holdings. Watt's engine offered an economical alternative that helped rescue an entire industry. As product and need merged, the coal business turned around, and as that happened, Boulton & Watt began selling steam-driven pumps as fast as it could turn them out. By 1783, the two men had cornered the market in Cornwall, home of England's richest coal mines. Boulton & Watt's engine required only a quarter as much fuel as Newcomen's had; in return, the firm took one-third of the savings. For years James Watt had lived on the edge of poverty in Glasgow. Now, suddenly, he was rich.

For his part, Boulton gave Watt what John Roebuck had only promised to give: real business savvy, an entrepreneur's instinct for opportunity and promotion, some of the deepest pockets in England, and a pleasing public face. Watt once described himself as "out of my sphere when I have anything to do with mankind." The buoyant Boulton, by contrast, seems almost always to have been involved with mankind. While Boulton saw to the day-to-day matters, Watt could fiddle with his engine in private, and fiddle he still needed to do. Boulton & Watt had cornered the mining market to be sure, but neither the firm nor its inventive genius had solved the fundamental problem of powering the Industrial Revolution.

James Watt's engine was reciprocating: It moved up and down, and only up and down. For all its refinements, the engine was still a pump, capable of doing only the things a pump can do and removing water from mines was perhaps the most profitable of those things in late eighteenth century England. Matthew Boulton wanted a rotary engine, one that could turn things. Until then, even his great Manufactory would have to continue depending on running water and waterwheels.

If the history of James Watt and the stream engine is relatively clear up to the moment his smart steam-powered pump became a smart engine, the record tends to cloud over at the actual moment of translation. Patent applications, which might in other circ.u.mstances help clarify the sequence of events, instead have the opposite effect. In an age rife with industrial espionage and patent litigation, specifications were written broadly enough to discourage imitators and obscurely enough to be all-inconclusive. ("I cannot pretend to say what ingenious vagaries engineers might run into after reading B&W's specifications," a rival wrote of one of Boulton & Watt steam-engine patent applications. "Perhaps they would have a nice and warm water closet.") Certainly, Boulton pushed Watt to make the leap from reciprocation to rotation; always open to new ideas, Boulton couldn't have stopped himself if he wanted to. Certainly, Watt kept on inventing he couldn't have stopped that either. And certainly, the critical changes got made, beginning with the "sun-and-planet" gearing system that translated Watt's up-anddown engine motion into a rotary one. What is unknown is the role of William Murdoch in the great translation. Murdoch was as much an inventor as Watt a millwright's son, he walked two hundred and fifty miles to Birmingham in 1777 just to land a job with Soho Manufactory and he could be every bit as annoying as Watt, too, with his own tinkering and incessant questioning. (Watt once complained of Murdoch in a letter that he "always said when anything was proposed to be done, however well contrived, 'ay, but there is another way of doing it"' -a case, perhaps, of the pot calling the kettle black.) But Watt and Boulton were owners; Murdoch, though admitted to the Lunar Society, was only a worker; and in practical terms, it really doesn't matter all that much.

With a rotary engine, Boulton could power his own machinery independently of running water his mint, most especially and what Soho Manufactory could do, others quickly aspired to do as well. Soon, Boulton & Watt engines were powering iron foundries, other manufacturing plants, and the critical textile industry all across England. The country, Boulton once said, was "steam mill mad." A small island nation was on its way to becoming the strongest economic power in the world, and Matthew Boulton and James Watt were riding the crest of wealth and fame. By the start of the new nineteenth century, it wasn't just literary lords who were calling on Boulton, but literal lords and ladies from all over Europe. When Lord Nelson, the naval commander and greatest national hero of his time, visited Birmingham in 1802, Soho House was his first stop.

The two founders retired from Boulton & Watt in 1800 good friends and two of the richest men in England and turned the business over to their sons. Not surprisingly, for Watt retirement was just a continuation of what he had always done. In his later years, he patented a machine for drawing perspectives, a letter-copying process, and a steam wheel that he had hoped would produce rotary motion directly from steam power, without the intervening gear system. (He never completed the work.) One of Watt's last inventions, at age 83, was a machine for copying sculptures. Boulton, for his part, kept welcoming the grand and the curious to his estate and the factory he had begun so many years earlier. Glad-handing was another of his many skills. Watt died at his estate outside Birmingham in 1819, at age 83; Boulton had died on his own estate 10 years earlier, just shy of his 81st birthday.

Who was the greater of the two friends? History has already cast that vote, resoundingly. The Dictionary of Scientific Biogra- ply, published under the auspices of the American Council of Learned Societies and edited by a blue-ribbon panel of academicians, barely mentions Boulton in its entry on Watt. The Encyclopedia Britannica devotes less than half a column to its entry on Boulton, while it lavishes two columns on Watt. Watt is also the subject of numerous children's science books meant to inspire young minds. To some degree history is right. All great new inventions and applications begin with great new ideas.

Sir Nicholas Goodison, the former chairman of London's International Stock Exchange and the author of a book-length study of Boulton and his output, disagrees. "It's typical of Britain and British culture to glorify Watt the inventor and not Boulton the entrepreneur," he told Inst.i.tutional Investor magazine. Without getting into the subtleties of British culture, Goodison has a point, too. Even a great idea is only an idea until someone comes along with the practical skills to turn it into a product and to acquaint the world with its uses. For James Watt, that person was Matthew Boulton.

But maybe the larger point is that history was never right to separate the two men in the first place. Like the company they founded, Boulton & Watt should always be joined by an ampersand. Without the entrepreneurial Boulton to bring buzz and energy and a broader vision of how the technology should be applied, James Watt had on his hands a really terrific method for getting water out of deep holes hardly the stuff of history. It was Boulton who pushed Watt forward, who drove him to consider how to turn reciprocation into rotation, and who forced him to stop theorizing and start realizing. Unable to temper Watt's in-born pessimism, Boulton lent him his own optimism when it most counted. Thus, the argument for Boulton. Yet without the inventive Watt to take an existing technology and move it a quantum leap forward, Matthew Boulton had no ultimate product to apply his entrepreneurial and business skills to. He was a zealot in search of a cause. What was most maddening in Watt his epic single-mindedness and grinding persistence was also what was most invaluable, and much as he wanted product, Boulton had the native sense to understand that. As partnerships go, theirs was a model of success. Divided, they might have stood just fine; united, they helped change the world, although not quite as thoroughly as they might have.

It was in 1784 that Boulton apparently first suggested Watt develop a steam engine capable of powering a moving carriage. William Murdoch, the silent partner in the Soho Manufactory, would take the suggestion to heart: Murdoch "has mentioned to me a new scheme which you may be a.s.sured he is very intent upon, but which he is afraid of mentioning to you for fear of your laughing at him," Boulton wrote to Watt. "It is no less than drawing carriages upon the road with steam engines." As it turned out, Boulton, like any great leader, knew his players well: Murdoch did go on to build a working miniature of his engine, and Watt dismissed the whole business out of hand, telling his partner that he held "small hopes that a wheel carriage would ever become useful."

The steam engine that would power the first locomotive would radically alter transportation across England and throughout Europe. Across the ocean, it would even pull a continent together. But its invention and manufacture would be left to other minds and hands.

6.

THE.

TRANSCONTINENTAL.

RAILROAD.

Rogues and Visionaries.

*ICTURE, FOR A MOMENT, A MAP OF THE UNITED States in 1860. Civil war is about to transform the nation you are looking at. Nearly half a million Americans on both sides of the conflict will be killed, either in combat or at its fringes. About one in every sixty people alive at the start of the war will be dead at the end of it. But if tragedy waits in the wings, the map itself should look very familiar. America's contiguous borders have remained the same ever since the Gadsden Purchase of 1853. The last great territorial addition, the purchase of Alaska from Russia, is only seven years in the future.

Not only has the outline of the nation been fixed; from the East Coast to the Mississippi River, America is beginning to grow in population and fill itself. Boston has been around for almost two and a half centuries, and Philadelphia for nearly as long. By the mid-1680s, Philadelphia contained about six hundred houses, many of them brick; almost a century later, when the Continental Congress met there, the population stood at forty thousand people. To the South, the Charleston of 1860 boasts perhaps the nation's most cosmopolitan a.s.semblage, including America's largest Jewish community. A late starter among major urban centers, New York City is roaring ahead of everyone else. In 1850, it had finally crossed the half-million mark in residents; now, it seems there's no stopping the place. Chicago has only thirty thousand residents, but its location at the foot of Lake Michigan makes it the nation's largest railroad center. Eleven states Illinois, Indiana, Kentucky, and Missouri, among them all have more than a million residents. Slavery and states' rights issues are splitting the country, but at least they are forcing Americans to think about their own nationhood and what it means.

Life is bustling on the other side of the continent, too. In July 1850, five hundred ghost ships had crowded San Francis...o...b..y, all of them deserted by their sailors in favor of the inland streams lined so legend had it with gold. By 1860, the gold rush is over, but the prospectors and the businessmen who profited from them linger on. The census of 1850 had counted 92,597 people living in California; by 1860, that number has swelled more than four-fold, to nearly 380,000. By the start of the Civil War, San Francisco already boasts newspapers, magazines, theaters, and libraries. Back east, the city has gained a reputation for something approaching sophistication, if only one could get there. And therein lies the problem.

Maps of the time show an Eastern United States nearing adulthood and a West Coast rippling with new energy separated by both nothing and everything. Cartographers of the time commonly referred to the vast stretch between the Mississippi River and the California mountains as the Great American Desert. The most spectacular part of it, the Grand Canyon, they didn't bother to map at all: Until a one-armed Civil War vet named John Wesley Powell undertook a deathdefying run through the canyon on the Colorado River in August 1869, no European-American had ever tried even to define its boundaries.

It wasn't that transportation technology was lacking; the problem was distance and a forbidding terrain. By 1829, Englishman George Stephenson's Rocket had shown that a steam-propelled locomotive could provide reliable, highvolume transportation at a low enough cost to make it economically feasible for people and products. Suddenly, the Industrial Revolution had wheels and rolling stock. The first steam-locomotive built for regular duty in the United States went into service in Charleston in 1830. Thirty years later, a spider web of thirty thousand miles of track crisscrossed the East clear to the Mississippi and in some rare cases beyond it. The Chicago and Rock Island railroad, which had linked Chicago to the Mississippi in 1854, was the first to build a rail bridge across that river. Downstream, a locomotive that was to become part of the Missouri Pacific line had made a fivemile foray west of St. Louis as early as 1852. By 1859, the Hannibal and St. Joseph Railroad had reached the Missouri River. But that was as far as even the pioneer rails went. Ahead lay nearly two thousand miles of plains, scorching desert, and towering mountains cut by deep canyons, and protected by native Americans ready to take a last stand against the loss of their tribal lands.

Lead the iron horse across that majestic, terrifying expanse, and you would connect the two economic loci of America and create a powerhouse such as the world had never seen. The great American breadbasket was waiting to be planted; the Rockies harbored one of the world's great mineral reserves. Horse-drawn wagons could cross from one side of the country to the other, and ships could carry goods and pa.s.sengers around Cape Horn, or from ocean to ocean via a land portage across Nicaragua or Panama. But wagons lacked volume, and both modes of transportation were too slow. Only trains could carry in settlers and supplies, and carry out grain, silver, timber, oil, and more. Bring East and West together, and market would feed market and sp.a.w.n new markets as surely as day follows dawn. What was needed wasn't engines. What was needed was track, and people with the will and gumption to lay it.

The Transcontinental Railroad was the Apollo Project of the nineteenth century one of those rare moments in history when discovery and technology seems to be colliding with destiny. National pride was at stake, and national aspiration, and something bigger still: Just as the manned landing on the moon would do, the railroad conquered an unknown world, planted a first tentative foot in an unknown s.p.a.ce. Only those present could see the final spike of iron, clad in silver and gold, being driven into the last link of rail at Promontory Summit, Utah, on May 10, 1869, but the event was broadcast by telegraph and followed by Americans as avidly and greeted as enthusiastically as Neil Armstrong's lunar "giant step for mankind" almost exactly one hundred years later, on July 20, 1969.

Getting the two rail lines to Promontory Summit had involved six years and $200 million dollars more than l 0 percent of all the money the federal government took in during those years, and this despite huge outlays for the final years of the Civil War. Thousands of men had worked in sometimes deplorable conditions across a perilous landscape, and more than one hundred of them had perished in the effort. Yet despite the rigor, even at times the horror, of the enterprise, contemporary dispatches make its final moments seem almost like a ballet: 'At 2:20 this afternoon, Washington time, all the telegraph offices in the country were notified by the Omaha telegraph office to be ready to receive the signals corresponding to the blows of the hammer that drove the last spike in the last rail that united New York and San Francisco with a band of iron," the Washington Evening Star reported on the front page of its May 10, 1869, edition.

Accordingly Mr. Tinker, Manager of the W.U. telegraph office in this city, placed a magnetic bell-sounder in the public office of that company, corner 14th street and [Pennsylvania] avenue, connected the same with the main lines, and notified the various offices that he was ready. New Orleans instantly responded, the answer being read from the bell-taps, 'that he was ready.' New York did the same. At 2:27 offices over the country began to make all sorts of inquiries of Omaha, to which that office replied: 'To Everybody: Keep quiet. When the last spike is driven at Promontory Point, they will say "done." Don't break the circuit, but watch for the signals of the blows of the hammer.'

Just as Omaha was hushing the rest of the nation, the Promontory Summit telegraph office began to weigh in with its own blow by blow of the events, according to the Evening Star account: 'Almost ready," the word came from Utah, "Hats off. Prayer is being offered." A silence for the prayer ensued. At 2:40 the bell tapped again, and the office at the Point said: "We have got done praying. The spike is about to be presented."

Chicago replied, "We understand. All are ready in the East." Promontory Point: 'All ready now The spike will be driven. The signal will be three dots for the commencement of the blows." For a moment the instrument was silent, then the hammer of the magnet tapped the bellone-two-three the signal! Another pause for a few seconds, and the lightning came flashing Eastward, vibrating over twenty-four hundred miles between the junction of the two roads and Washington and the blows of the hammer upon the spike were measured instantly in telegraphic accents on the bell here. At 2:47 pm, Promontory Point gave the signal, "done," and the continent was spanned with iron!

In New York the Times of May 11, 1869, reported the driving of the final spike was met with the "booming of cannon, peals from Trinity chimes, and general rejoicing over the completion of the great enterprise, in the success of which not only this country, but the whole civilized world, is directly interested." Philadelphia marked the historic moment by tolling the bells of Independence Hall, where the nation had begun. Although undermanned in population, Chicagoans spontaneously formed a parade line said to be seven miles in length. In California, anxious celebrants ignored some last minute delays in completing the track and went on with the planned festivities. In San Francisco what was supposed to have been a "done" signal snaked along a telegraph wire that had been laid under the city streets out to Fort Point, where it detonated a 15inch cannon. In Sacramento, 23 Central Pacific locomotives let loose with their whistles for a good 15 minutes, at the time the last spike was scheduled to have been driven in back in Utah.

At Promontory Summit itself, the work of driving the final gold-clad spike with a ceremonial silver hammer was done by representatives of the two railroads that had done all the work. The Central Pacific Railroad, which had laid the track east from Sacramento across the Sierra Nevadas and into the Rocky Mountains, was represented along the south track by its president, Leland Stanford, who doubled at the time as governor of California. Along the north track stood Dr. Thomas C. Durant, vice president of and the driving force behind the Union Pacific, which had laid the track west more than a thousand miles from Omaha, Nebraska. Only days earlier, "Doc" Durant he liked the appellation even though he hadn't practiced opthamology in decades had been taken hostage by his own workers, or so the story went.

At the signal "O.K." from the telegraph office, Stanford took a whack, Durant finished off the job, and the Atlantic and Pacific oceans were joined across the continent by rail for the first time. Soon thereafter, Grenville M. Dodge, the chief engineer of the project on the Union Pacific side, wired Secretary of War General John A. Rawlins from Promontory Summit that, "... today the last rail was laid at this point. 1,086 miles from Missouri River and 690 miles from Sacramento. The great work, commenced during the Administration of LINCOLN, in the middle of a great rebellion, is completed under that of GRANT, who conquered the peace."

Later in the day back in Washington, D.C., the Evening Star editorialized for its readers that "Today, May 10th, 1869, witnesses an event which must pa.s.s into history as one of the most important of the century, as well in respect to its immediate as its future effects upon this country and the human race."