flag mail “There's  History  in  every  Story” mail flag

HENRY MEIGGS (1811-1877)
USA, Chile, Peru: Fortunes Made — Fortunes Lost

Ottawa Free Trader (Illinois), 20 October 1877


His Wonderful and Romantic Career.

From the New York Sun.


Henry Meiggs, who died at Lima on the 29th ultimo, and whose death necessarily occasions a most profound sensation in Peru and, indeed, throughout South America, was born in Green county, N. Y. in the year 1811. Of his early life little is known. He first emerged from obscurity in Boston while he was still a young man. He became noted as one who could handle heavy interests easily, and gained a reputation as a successful lumber dealer and contractor. From Boston he came to New York. He soon became a magnate of the lumber trade, and was organizing vast schemes of traffic when the financial earthquake of 1837 shook all his plans to ruin. He was one of the first to get on his feet again in the troublesome days, and, had it not been for his boundless generosity, he would soon have become enormously rich. But he lavished his resources without stint on his struggling friends, and repeatedly crippled himself to save others from ruin. He also spent large sums to encourage and develop art. He founded the American Musical Institute in this city, which had a brilliant success so long as he remained here to direct it.

The discovery of gold in California gave a new direction to Mr. Meiggs's energy. Determining to try his fortunes in that then almost unknown region, he loaded the ship Ni[...] with lumber, and, taking his brother J[ohn] Meiggs with him, he set sail for San Francisco, where he arrived in July, 1849. He sold his shipload of lumber at twenty times its cost, making a clear profit of $[...]00 on the venture. Then with consummate discretion he took a subordinate position in a lumber yard, and studied all the phases and prom[...] of the situation before he risked a dollar of his capital. Foreseeing the future greatness of San Francisco, and the inevitable demand for lumber, he quietly matured schemes for grand success. When everything was ready he hired five hundred men, sent them into the forests of Contra Costa county, felled the choicest trees in that then densely wooded region, hauled them in saw logs to the shore of the bay of San Francisco, built them into huge rafts, floated them to a wharf which he had constructed into the city, converted them into lumber by the agency of a steam sawmill which he had erected, and made $500,000 in gold by the operation.

Thenceforth until he fell, Henry Meiggs was a foremost man in California in business, in municipal politics, and in social life. He had three manias—land, lumber and music. His land and lumber operations were conducted on a scale of unprecedented magnitude, and he was popularly believed to be the richest man on the western coast of America. But when the great financial pressure of 1854 seized California with its paralyzing grip, bankruptcy came upon him like an armed man. He rose to the contest with such enormous strength and such resourceful genius that, had he sought only to save himself, he might have come off victorious: but, with the ill-judged generosity which was a pervading element of his character, he attempted to save all his friends, and was by them dragged down into bottomless ruin.

In the frenzy of that death struggle Mr. Meiggs committed forgeries of commercial paper and city warrants amounting in the aggregate to over $9,000,000. At last, finding the struggle hopeless, and fearing detection, he, on Thursday, the 5th day of October, 1854, with his wife and three children, secretly left San Francisco, and going on board the bark American—which he had bought three days before and which was lying at anchor on a point three miles south of the city—set sail for a destination not known to himself. The discovery of his flight and of his forgeries occasioned wild excitement and widespread grief, and in some bosoms excited sentiments of vengeance which were destined never to be either gratified or placated.

Daily Alta California

8 October 1854

 Meiggs Swindle — San Francisco 

The next that was heard of Mr. Meiggs he was superintendent of bridges on the Valparaiso and Santiago Railroad in Chile. The road bed from Valparaiso to Llay-Llay—sixty miles—had been completed. The road had been under construction for years, had ruined every contractor who had undertaken to build it, and had become the despair of the Chilean Government. Meiggs constructed his bridges with masterly skill, and while he was building them he studied the situation critically and profoundly, with a view to obtaining a contract to complete the road. From Llay-Llay to Santiago, a distance of thirty-three miles, the engineering difficulties were stupendous. There was a rise of 4,800 feet, huge masses of rock seemed piled to the clouds, and wide and deep abysses yawned along the way. Every engineer that figured on that thirty-three miles estimated that it would cost over $27,000,000, and that it would take from six to eight years to complete it—if, indeed, it could be built at all. After a thorough analysis of the work, Meiggs offered to build the road from Llay-Llay to Santiago for $12,000,000, and to complete it in four years. Tocornal, the Secretary of State for Chile and the richest man in that republic, who had become an ardent admirer and warm friend of Meiggs, secured the contract for him, went security on his bond, and got him an advance of a million of dollars from the Government.

And now began a most wonderful piece of work. Hitherto contractors had brought their laborers from Europe. Meiggs had studied the Chilenos, won their confidence, and now, with the aid of able American overseers brought from the States, he transformed them into an army of skilled workmen, at a cost to him of only thirteen cents a day per man. Meiggs's way of disposing of obstructions to his progress astounded the Chilenos to such a degree that they talk about it to this day. He tunnelled into the mountains, filled the tunnel with explosives, discharged them with a patent fuse, and sent the whole superincumbent mass roaring into the air. As he approached Santiago, the terrific explosions shook the city like earthquakes. The ladies and gentlemen of Santiago used to come out by thousands to witness the stupendous operations. The enthusiasm for Meiggs was unparalleled. Everybody was eager to help him. He was looked upon as a demigod. He completed the road in two years, instead of four, and cleared $1,320,000 on his contract.

On the 5th of July, 1860, the first train of cars ran over the road from Valparaiso to Santiago. Perez, the President of Chile, with his Cabinet, the Archbishop, and other eminent citizens, stood on the locomotive with Meiggs and received the ovations of the people along the route. A temporary track was laid along the Alameda, and the cars were run over it clear to the upper end of Santiago. A large painting of the scene, with the locomotive and the clustering magnates thereon in the foreground, was executed and placed in the capital in Santiago. The whole country rejoiced. Meiggs was solicited to become a naturalized citizen of Chile, and was offered any station in the republic except that of President, which no foreigner can hold. But he respectfully repelled all temptations to surrender his American citizenship, although he never hoped to see his native land again. He took up his residence at Santiago, where he lived on a scale of princely profusion and splendor until 1868, when he accepted overtures from the Government of Peru to develop a railroad system in that country.

His first contract with the Peruvian Government was to build a railroad from Mollendo, on the coast, to Arequipa, ninety miles inland in the mountains, for $12,000,000. As soon as it became known in Chile that Meiggs had begun work on a railroad in Peru, a great excitement arose among his old Chilean laborers. Hundreds of them at once started for Peru, and thousands of others began to prepare to go. Finally the Chilean Government issued a decree interdicting this emigration, which threatened to expand to such proportions as would seriously embarrass the defense of the country. Meiggs was allowed to take a number of the most skilful of the Chilenos with him to act as chiefs of sections, and they instructed the Peruvian peasants in the use of the pick, shovel, and crowbar, and in other mysteries of railroad making.

The Arequipa road was completed early in January, 1871. The most formidable drawback to his enterprise which Meiggs encountered was the great earthquake which on Aug. 13 and 14, 1867 [1868?], shook up all South America ?? was especially severe in Peru, and overthrew [...] deal of good work which had been done on the road. But Meiggs immediately rallied, and, notwithstanding his own vast losses, [...]ded a subscription for the sufferers with ?? 0,000, and then went ahead with his work, which he pushed with prodigious vigor to completion. To commemorate this event, he had $250,000 worth of gold medals and $250,[...] worth of silver medals struck off, which he distributed among his friends. He also [...] magnificent entertainment at Mollendo a grand fete at Arequipa in honor of the completion of the road. He invited 600 guests from Lima, the capital of Peru, including the President, Gen. Balta, and the elite of Peruvian Society. To bring the 600 guests from Callao, the seaport of Lima, Meiggs chartered the Panama, one of the British South Pacific Steamship Company's steamers. President Balta was accompanied by a regiment of [...] troops one thousand strong. It took [3?] Peruvian war steamers to carry the Government party, the President and Cabinet going in one, and the soldiers in the other two. At Mollendo the Archbishop of Arequipa, [...]ly blessed the twelve locomotives which [...] draw the excursionists 107 miles up [...] of 8,000 feet. The fete at Arequipa was magnificent beyond description. Everyone was filled with delight and gratification, The affair cost Meiggs $2,000,000 in [...] He could well afford the outlay, however — he made within a trifle of $4,000,000 [...] contract.

[...] Meiggs continued to reside in Lima, where he fully sustained his reputation for [...]cence and hospitality. His house, two floors in height, has over seventy rooms on the second floor. The first floor is occupied by stores for the most part, except an entrance, which is exceedingly capacious. The residence was fitted up and furnished with great splendor. The princely host always sat down to a dinner prepared for any number of guests that might drop in on him. As Callao, the seaport, is but seven miles from Lima, it was a common thing for naval officers in port to run over and dine with Meiggs, and he often had twenty-five or thirty off-hand guests at dinner. Everything was in readiness for them ; and if, as sometimes happened, nobody came, he gave the food prepared for his dinner to the poor of the city.

When Meiggs first went to Lima he found the city surrounded by an old and dilapidated adobe wall, and all around the wall, and stretching out into the country, was a vast mass of refuse and cloaca of the city, which had been accumulating for a century. Meiggs undertook to clear all this away, in consideration of receiving a certain share of the redeemed land. He accomplished this work with his usual speed and thoroughness, and soon a magnificent park was created where the old wall and refuse had been, with avenues and flowers and shrubbery, and hundreds of valuable building lots, belonging to Meiggs, on either side of the avenues.

Mr. Meiggs not only was a great railroad maker, but he became a politician also. Prior to his advent in Peru that unhappy country was repeatedly ravaged by revolutions. In fact, revolution had become a regular line of business in that republic. Whenever the "outs" ran low in funds, they would drive out the "ins," and take their turn at the treasury. The ins always went out rich, and were never called to an account by their successors, who were almost invariably too well bred to know anything about arithmetic, bookkeeping, or accounts, or about anything except looting the treasury. Besides, it was understood all around that there was to be no inconvenient investigation of a gorged and surfeited party who retired with courteous alacrity before the hostile approach of a lean and hungry one. Such a state of things would never do for Meiggs. In order to build his railroads and have his contracts carried out promptly by the Peruvian Government, that Government must be stable and respected, and the public credit be kept at par. Meiggs's method of procedure was very simple; he paid the ringleaders of the revolutionists so well to keep quiet that they could not overthrow the Government without loss to themselves. There has been but one attempt at revolution since his advent in Peru. In that disturbance his friend, Gen. Balta was killed.

This system of wholesale bribery and blackmail, and Meigg's enormous success with the Arequipa road, stimulated the adventurers and conspirators of Peru to strike for higher bribes than they had yet received. They secretly formed a combination against Meiggs, who had planned a vast scheme of railroads for Peru, so that when he sought to get his his contracts from the Government, he encountered a formidable opposition. To overcome this he resorted to colossal bribery. Officers of the Government and competitors whom he bought off made fortunes out of him. In this way he secured contracts for building railroads which altogether were 1,007 miles in extent, and for which he was to receive $126,000,000. He set to work to construct the roads with characteristic energy, but the cost in many cases exceeded his estimates, and, on the whole, his vast scheme turned out to be a financial failure, both to himself and the Government. Nearly all the roads are, in fact, useless. They run through regions which furnish neither passengers nor freight, and the receipts do not begin to pay the running expenses. On the Ilo and Moquegua road there is only one train a week. On the Arequipa and Puno road there are usually but two trains a week. The Pacasmayo road is also a failure, and the Chimbote road— which was projected to open up what was supposed to be a rich mining region that has since been discovered lo be of little value—remains unfinished.

The most disastrous failure of all was the Callao, Lima and Oroya road, which is completed to within about forty miles of Oroya. The entire length or the road is 130 miles. This road was originally projected under the pretext that the grain and rich product of the interior could be brought over it to the coast at small cost for transportation. The work of constructing the road was enormously difficult and costly. The grades average four and a half per cent., which engineers say will preclude it from ever being a paying road. The expense of constructing this road absorbed the entire contract price, and, in addition, Meiggs was obliged to consume in the work the profits of other contracts and the advances made to him by the Government on agreements for new roads.

In the latter part of 1874, British capitalists who had lent the money to Peru for all these enterprises, and the British public that had bought Peruvian bonds, began to feel great anxiety about their investments. This anxiety was stimulated and kept alive by English engineers and travellers in Peru, who began to write to the British papers about the real character of the roads, and their worthlessness in a financial point of view. This rendered it difficult for the agents of Peru in London to sell their bonds, the price or which, in December, 1874, ran down to 57 and 55. Meiggs had taken these bonds from the Government at from 76 to 80, which was the original price of issue, and had sent them to London to be disposed of at the best procurable rates. As they were for the most part not sold till 1875, when the price had dropped very low, and as he had to pay heavy commissions, he lost enormously by the transaction. The Government then gave him a large amount in engineers' certificates of work done, which he hypothecated with bankers in Lima at exorbitant rates. There are no usury laws in Peru. In 1876 the price of Peruvian bonds in London fell to 13, and at last they became unsalable at any price. Work on the Meiggs roads was then actually, though not nominally, suspended.

At this crisis Meiggs projected the plan of continuing the Oroya road over the Andes to the famous mines of Cerro de Pasco, and to tunnel the mountains for the purpose of draining the old mines which had been drowned out for ages. He got a contract with the Government for this purpose, on which he received an advance of their internal bonds of the nominal value of $5,000,000. It is stated that he had to pay enormous bribes to get this project through. Meiggs now deposited $1,500, [000?] with the Tribunal of Commerce, and through one of his companies, called the Public Works Company, issued about a million dollars in paper payable on demand.

In order to make this paper acceptable to the people, he proposed to raise the value of the paper currency by selling exchange on London at better rates than any of the bankers or merchants gave, and held out the idea that, to procure financial support both in New York and London, and caused it to be understood in Lima that such support had been secured. Failing to get the co-operation of any banker, he began to draw bills on his brother in London at ninety days' sight, which were accepted to some extent by the smaller buyers of exchange, and the current of confidence began to run in Meigg's favor at Lima. But in August last it became known that drafts made by Meiggs on his brother in London were not paid at maturity. This was a terrible shock. Meiggs then made his last rally, and succeeded in getting the government to guarantee his emission of paper money to the amount of five millions, he returning to them the five millions of bonds which they had advanced to him on account of the Oroya and Cerro de Pasco road. But the relief came too late. The prestige and the credit of Meiggs had received a severe blow. The value of a Peruvian paper dollar, or sol, in 1875, was ninety cents in gold. After the government had guaranteed the issue of paper by Meiggs, the value of the sol fell to thirty-six cents.

The breaking down of his schemes and of his credit broke down Mr. Meiggs's health. He had previously had two strokes of paralysis, and the shock which this last blow gave him struck to his vitals. In the crisis of his illness his enormous jobbery began to be exposed. The people discovered that the decree of the government guaranteeing his paper had been bought and paid for. Dr. La Puente, a lawyer, was accused of having received half a million of dollars to get the decree through, and it is reported that the president of Peru, Gen. Mariano Ignacio Prado, compelled La Puente to disgorge nearly four hundred thousand dollars.

As Meiggs had no moral sense himself, he continually made the mistake of selecting unscrupulous men for his most intimate confederates. These men never hesitated to betray him when they imagined it to be to their interest to do so. He was absurdly generous. He had no sound business habits, nor was he guided by sound business principles. He would take the most reckless risks and trust to his audacity and luck to bring him through. His career in Peru was a calamity to the country. The extravagance of living which he initiated and developed, the recklessness of expenditure into which he led the government, the unnatural expansion of trade which the disbursement of such vast sums of money occasioned, caused the financial crisis which came upon Peru in 1874, and under which she is still suffering.

There is likely to be discord among the many executors of Meiggs's will, as their interests are pretty certain to clash. The executors are his sons Henry H. and Minor K. Meiggs, J. Buckus, his nephew, and Alexander Robertson, a merchant of Lima, married to Meiggs's daughter; Wm. H. Cilley, the superintendent of all of Meiggs's railroad and mining enterprises ; Charles Rand, an old attache and friend of Meiggs: and Charles Watson, who lately married Meiggs's niece. At the time of Meiggs's death, Watson held his power of attorney, and was his office and financial manager: but it is well known that his views are not in harmony with those of the other executors.

No one ever knew just how much Mr. Meiggs was worth. His income was supposed to be exceedingly large. He was called Monte Cristo all along the western coast of South America. He had a large amount of real estate, which was bought for the purpose of turning it into villa residences in the vicinity of Callao and Lima. At the time of his death this property had ceased to be of much practical value. He also had boulevard property, on which he had spent a good deal of money. His immense sugar estates were disposed of some time before his death. It is expected that his fortune will turn out to be a gigantic wreck, from which but little can be saved.

Mr. Meiggs was a man of imposing appearance. He was about five feet eight inches in height, broad shouldered, muscular, weighed about 225 pounds, and had the biggest fists and largest head in South America. His eyes were gray, deep set, piercing, and kindly in expression. He had a square jaw and chin, a big nose, a large mouth, and firm-closed lips. His countenance bore the impress of power. He would have been singled out in any company as a superior man. He was a great mathematician, and so remarkably quick at figures that the Chileans and Peruvians are fond of telling stories about his wonderful arithmetical performances.

Mr. Meiggs longed to return to the United States, but could never get all of his forged paper retired, so as to secure him against prosecution. He paid all the poor people in San Francisco who had claims upon him, and large sums to others. After many years the Legislature of California, under the pressure of influences which Meiggs knew so well how to bring to bear, passed a special act relieving him from the penal consequences of his crimes. But when he was thus free to return to the United States, he did not avail himself of the privilege, for his fortunes had begun to wane, and without the prestige of great success and vast wealth, he could not face the odium which he believed his presence among those whom he had wronged would evoke. He has always had friends in California among those who were young or poor at the time of his flight. These friends have always taken pleasure in telling how for two days before he disappeared he went about town paying up his bills to tradespeople and employees; how, having $1,200 in his hands belonging to a young man in the office of Page, Bacon & Co., who had a widowed mother dependent upon him, he paid that young man the day before he left; and how a sum of money from Meiggs was handed to a firm in Montgomery street a few days after his departure, with a request that it should be applied to the payment of a number of small debts to parties whom he had not been able to see personally. Such reminiscences, as is too often the case, overbear in the popular mind the memory of the criminal acts which compelled Mr. Meiggs to flee from California and to live and die an exile from his native land.

Source: Illinois Digital Newspaper Collection, http://idnc.library.illinois.edu
Studio Photograph: UC Berkeley, Bancroft Library, retrieved from http://oac.cdlib.org/
Page created: 27-VI-2016
Last updated: 9-IX-2018