Pony Express Historic Resource Study

THE FIRM OF RUSSELL, MAJORS, AND WADDELL

Beginning in 1846, the federal government supplied military posts west of the Missouri by letting contracts to "individuals or firms with small outfits hastily thrown together after the contract was signed." Because there were few military posts, this system proved satisfactory. But by 1854, the number of posts needing regular supplies multiplied and the old contracting system could no longer meet the needs of the War Department. Hiring numerous small outfits to supply the many posts was cumbersome, time-consuming, and inefficient in the eyes of government officials and bullwhackers alike. [19]

To remedy the situation, Quartermaster General Thomas Jesup decided to implement a new system of contracting. Instead of awarding yearly individual contracts to lowest bidding small companies for particular deliveries to certain forts, Jesup let one two-year contract for supplying most of the posts in the West and Southwest. As one historian pointed out, this new contracting arrangement raised the freighting business from "a highly speculative venture into a solid business enterprise." The new contracting system also changed from one of competitive bid to one based on monopoly. The new contracting arrangement drew William H. Russell, Alexander Majors, and William B. Waddell into a partnership. Alone they could not compete, but together they possessed the respected freighting business skills and finances to undertake this new type of government contract work. [20]

In December 1854, the three men combined their capital and other resources amounting to $60,000, and drew up a partnership agreement to engage in the business of transporting merchandise under various names. Responsibilities in the new firm of Russell, Majors, and Waddell were divided among the three men and their roles in the firm clearly suited each individual's unique talents and temperament. William Waddell supervised the business activities of the office and headquarters of the firm in Lexington, Missouri, and later Leavenworth, Kansas. Waddell made sure that "local affairs ran smoothly." William H. Russell acted as the firm's representative in Washington, D.C., Philadelphia, and New York. He sought out contracts with the War Department, and cultivated other contracts as well as financing from government officials and banks. His affability and his polished ways made him effective in dealing with "bankers, department heads in Washington, congressmen, and senators." Finally, Alexander Major managed the freighting operations of the firm, including "hiring the teamsters, loading the trains, and overseeing them on the road." Major's job was to see that the "firm's trains got through on time." [21]

Three months after the formation of their partnership (March 27, 1855), the firm of Russell, Majors, and Waddell entered into a two-year contract with the War Department to transport supplies to the posts west of the Missouri River. This contract was the largest single contract for transporting supplies let by the quartermaster at Fort Leavenworth. It gave Russell, Majors, and Waddell a virtual monopoly on all western freighting contracting in that part of the country. [22]

FREIGHTING EXPERIENCE

With its first contract with the War Department, the firm of Russell, Majors, and Waddell succeeded in becoming the largest freighting company in western Missouri. From this contract to supply military stores between Fort Union and Salt Lake City and all intermediate military points, Russell, Majors, and Waddell gained important managerial and organizational experience that served them later in organizing the Pony Express. Running this freighting business meant building warehouses, bunkhouses, stables, corrals, blacksmith and wagon shops, and then managing these properties and their operation. William Waddell assumed a good deal of the overall management responsibilities for the firm. Additionally, the firm had to assemble men (wagon masters, bullwhackers, muleskinners, herders, freight handlers, and roustabouts), oxen, wagons from Pittsburgh, St. Louis, and Philadelphia, and other essential equipment, and then maneuver them into place. This job fell to Alexander Majors. Finally, someone had to promote their freighting company and extol their capabilities in Washington, D.C., New York, and elsewhere in order to secure financing from investors and cash loans for their enterprise. This task naturally fell to William Russell. [23]

Relations between the three men within the partnership were "generally harmonious." One historian described them in this manner:

Both Majors and Waddell leaned decidedly toward the conservative side of things. Russell was exactly the opposite. He was quick to make decisions, bold in carrying them out, and implicitly believed that every enterprise with which he was connected would turn out to be a bonanza. Majors and Waddell were deliberate, conservative, slow to make decisions, and unwilling to take long chances. [24]

Nevertheless, there were problems—mostly between Waddell and Russell. Waddell was an impatient person, thought Russell spent too much time back East, and oftentimes, he "questioned Russell's judgment and expenditures." On the other hand, Russell disregarded Waddell's "requests for instructions" and "neglected important details." [25]

Despite personality conflicts, for the first two years (1855 to 1856), the firm of Russell, Majors, and Waddell prospered. In his memoirs, Alexander Majors reported that during the early years they made a profit of $300,000 from their first government contract. With their profits, they diversified, first buying squatters' claims on the former Delaware Indian Reservation in Kansas, and second operating a general dry goods store in Leavenworth. In addition to these investments, Russell individually invested in a bank, a hotel, an insurance company, and in a large river steamboat, christened the William H. Russell. [26]

Successfully completing the first contract all but guaranteed them to be the natural choice for the next one. In February 1857, the firm of Russell, Majors, and Waddell signed their second major contract with the War Department. Their prospects never looked brighter. Yet, this contract did not bring fortune for the western Missouri freighting firm, primarily because the outbreak of the "Utah War" created problems that eventually set them on the road to bankruptcy.

In May 1857, after Russell, Majors, and Waddell's wagon trains had been placed, loaded, and already on the road a month or more, the Utah War erupted between the Mormons and the United States government. Accordingly, the United States mustered and assembled 2,500 troops to march on Utah, for which they needed supplies. In addition to the supplies already on the road, on very short notice, Russell, Majors, and Waddell were required to send along with the departing troops sufficient additional "wagons to transport two and half to three million pounds of military freight." [27]

While this addition to their contract seemed like a bonanza, it proved otherwise for several reasons. First, it overextended the firm's credit (they were heavily into debt for the wagon supply trains on the road already). Second, during the Utah War, the firm lost three wagon trains (valued at $72,000), three hundred head of oxen (worth $13,260), as well as the supplies they carried (300,000 pounds of provisions at $14.28 per hundred pounds or $42,840), all of which the Mormons either captured, destroyed, or confiscated. Russell, Majors, and Waddell also lost seven hundred head of beef cattle the firm brought with them to deliver to the federal army in Utah. The development of the Utah War practically bankrupted the firm because Russell, Majors, and Waddell were forced to borrow extensively in order to meet their War Department contract obligations. [28]

Before Russell, Majors, and Waddell learned of the Mormon attack on their wagon supply trains—they negotiated and signed another contract with the Department of War to supply the army in Utah and in New Mexico for the coming year. The firm expected to finance the 1858 contract based on payments from the 1857 contract. However, to add to their financial difficulties, Congress neglected to make the usual appropriation to the War Department because of controversies associated with the Utah War. As a result, Russell, Majors, and Waddell had even great difficulty finding financing for their 1858 contract obligations. [29]

Fortunately for the firm, since the War Department needed the supplies forwarded to Utah as soon as possible, the Secretary of the War, John B. Floyd authorized the writing of acceptances or obligations against the 1857 contract. With Floyd's signature as security and backing, bankers and financiers willingly lent Russell large sums of money. This was a highly unusual situation. Eventually, borrowing money in this way haunted the financial situation of Russell, Majors, and Waddell, and ultimately led to their downfall. [30]