Founders - #247 Henry Flagler (Rockefeller's partner)

Starting point is 00:00:00 When Henry Flagler, co-founder of Standard Oil and one of the world's most famous and powerful men, announced that he would extend his far-flung empire by building a railroad across the ocean, few could have anticipated how things would ultimately turn out. Many immediately dismissed Flagler's intentions as impossible. They were hard-headed scientists, engineers, and businessmen who thought what Flagler proposed, to build a railroad 153 miles from Miami to Key West, much of it over open water, was a crackpot notion on the face of it. Flagler's folly, the press dubbed the project, though the man who proposed it was undeterred. He would press on. The story behind the very being of this railroad

Starting point is 00:00:48 may be its most amazing aspect. It is a story that concerns one of the world's richest men, one of the most difficult engineering feats ever conceived, and the most powerful storm ever to strike American shores. In a sense, this railway is what remains of one of the last great gasps of the era of manifest destiny and an undertaking that marked the true closing of the American frontier. The building of the railroad across the ocean was a colossal piece of work, born of the same impulse that made individuals believe that pyramids could be raised, cathedrals erected, and continents tamed. The highway is a ghost, really, all that remains of an era where men still lived who believed that with enough will and energy and money

Starting point is 00:01:40 that anything could be accomplished. That is an excerpt from the book that I'm going to talk to you about today, which is Last Train to Paradise, Henry Flagler and the Spectacular Rise and Fall of the Railroad that Crossed an Ocean, and it was written by Les Standiford. Okay, before I jump back into the book, I just want to tell you how this fits into everything else that you and I have been talking about. I've had this book for a very long time. I haven't gotten around to reading it, and I think now is the perfect opportunity to do so because I'm rereading. And the very next podcast I'm working on is I'm rereading the fantastic biography of John D. Rockefeller called Titan. I read it for all the way back on podcast number 16, but I didn't really know how to make a podcast back then.

Starting point is 00:02:18 And that book is way too important. And so I figured before I reread that biography, let me go ahead and find a biography on Rockefeller's partner. And I'm glad I did because this book is absolutely incredible. And I should have known it was good because I had read one of Les' books in the past. In fact, one of my favorite books I've ever read for the podcast was all the way back on Founders number 73. It's called Meet You in Hell, Andrew Carnegie, Henry Clay Frick, and the Bitter Partnership that Transformed America. That was part of a three-part series I did on Andrew Carnegie and his partner, Henry Clay Frick and the Bitter Partnership that Transformed America. That was part of a three-part series I did on Andrew Carnegie and his partner, Henry Clay Frick, and that was my favorite book. It's an absolutely fantastic story. So what this book is about is exactly what that excerpt said.

Starting point is 00:02:55 It's about one of the world's richest men at the time, so that's Henry Flagler, one of the most difficult engineering feats, which is the second career that he does after Standard Oil. He becomes a developer and builds essentially like most of the state of Florida. And then the most powerful hurricane to ever strike the American shores. So I'm going to focus mainly on Henry Flagler and the work he's doing, but it's an absolute fantastic book. So if you like the podcast, make sure you pick up the book. So at the very beginning, the author is doing the drive from Miami down to Key West. I've done this drive myself about probably at least 10 times in my life. And so this is fantastic because it gives you an idea of how insane Flagler's undertaking was. And so this is two people talking in modern day because you can still see some of the remnants of the railway. It's going to wind up being

Starting point is 00:03:39 destroyed by a hurricane in 1935. This is many years after Flagler died though. So it says much of the original railroad bridge was left standing. Some of it now serves as a fishing pier. Massive stretches jutting out from the water, pilings and arches, which are as mystifying to the modern traveler as Stonehenge. And so now you have a conversation between two people. So it says, what's that over there anyway? That's an old railroad bridge. Railroad? Yeah. Across the ocean? That's what it is. Who would build a railroad across the ocean? Now that's another story. And that is where I want to start because the author does an incredible job describing who exactly Henry Flagler was. He was an incredible, formidable individual. Let's jump right into it.

Starting point is 00:04:24 In early 1904, when Henry Flagler made his fateful decision to begin the building of the overseas railroad, he was already 74. The drive to make money had little to do with his decisions in those days, even if money or the lack of it had been the central force in the first part of his life. And this is absolutely incredible. A million ideas came to my mind when I got to this section. So it says, Flagler had grown up poor, the son of a minister. Henry was only 14 when the family's Spartan existence prompted him to leave home in 1844

Starting point is 00:04:57 and join his half-brother Dan in northern Ohio. And he does this because he's going to want to be a salesman in a general store that his uncle owns. It says, Flagler, who arrived with a few pennies in his pocket, was determined to make the most of his opportunity, working long hours to save his money and often refusing invitations to join friends on weekend getaways. His hard-working, sober-sided ways would persist through much of his life, earning him the trust of employers and later of influential investors and partners who would change his life beyond his dreams. So that's the first thing that pops to mind.

Starting point is 00:05:36 This is the importance of not only being industrious and hardworking, but also appearing industrious and hardworking intentionally. That is a very, very old idea. When I got to that section, the person that popped my mind was the autobiography of Benjamin Franklin. I covered this all the way back on Founders number 62. And in his autobiography, Ben talks about this. He was obviously one of the greatest marketers to ever live as well. And this is Benjamin Franklin writing in his autobiography.

Starting point is 00:06:03 He says, I took care not only to be in reality industrious and frugal, but to avoid all appearances to the contrary. I dressed plainly. I was seen at no places of idle diversion. And to show that I was not above my business, I sometimes bought home the paper I purchased at the stores through the streets in a wheelbarrow. So I'm going to switch to, that is Franklin's autobiography. Now let's go to Isaacson's, Walter Isaacson's biography of Benjamin Franklin. This is, I think, Founders Number 115, and he's going to describe why is Franklin doing

Starting point is 00:06:35 this, or he's going to elaborate on why Franklin is doing this. Franklin became an apostle of being, and just as important, of appearing to be, industrious. Even after he became successful, he made a show of personally carting the rolls of paper he bought in a wheelbarrow down the street to his shop rather than having a hired hand do it. And this is what Franklin said about it. The industry visible to our neighbors began to give us character and credit. So he's saying that's an interesting way to say, hey, I'm working hard and other people are noticing that I'm working hard and that opens up opportunities for you.

Starting point is 00:07:07 And so he says one of the town's most prominent merchants said of Franklin, the industry of that Franklin is superior to anything I ever saw of the kind. I see him still at work when I go home from the club and he has to work again before his neighbors are out of bed. And so at that point in Franklin's life, when he's still coming up as an entrepreneur, all the people that are older, more successful, they have more money, they open up all these opportunities because they see, oh, Franklin is one of us. That's exactly what happens to Flagler. And part of the fact that he was always about his business, always focused on the task at hand, is what is going to have him link up with John D. Rockefeller later on. And obviously the creation of Standard Oil changes his life forever. And it's the reason that we

Starting point is 00:07:49 know his name to this day and that I'm holding this book about his life in my hand. So let's continue. Not only is he working hard, he studies intentionally. Check this out. Part of the ambitious young Flagler's duties came to involve the brokering of corn to shipping agents in nearby Cleveland. Though he knew nothing of the grain business at the outset, he threw himself into its study with his characteristic devotion to the job at hand. His single-minded approach was so successful that he was able to buy into the Harkness, that's his half-brother's family, into the Harkness family business within a few years, and shortly afterward made the acquaintance of one of his Cleveland counterparts in the grain brokerage business. That person's name was John D. Rockefeller. Gotta pause there. That part is so important. Let's go back to that. Though he knew nothing of the grain business at

Starting point is 00:08:42 the outset, he threw himself into its study with his characteristic devotion to the job at hand. When I got to that section, this paragraph that I read a long time ago, written by David Ogilvie in the book, Ogilvie on Advertising, that's Founders No. 82, it's the good ones no more. He just gives us great advice for life. You can be the best informed. You don't have to be the smartest. You can just simply collect more information than other people.

Starting point is 00:09:09 That is a completely achievable task. So let's go to what Ogilvy recommended. At this point, he's writing. He's super successful. He's already built this gigantic advertising empire, and he's giving advice to younger people on the way up. And this is what Ogilvy said. Set yourself to becoming the best informed person in the agency on the account to which you are assigned. And this is what Ogilvy said. to motorists. Visit your clients' refineries and research laboratories. At the end of your first

Starting point is 00:09:45 year, you will know more about the oil business than your boss. And so a combination of those ideas is what produces Henry Flagler's first fortune. Remember, he arrived in town with pennies in his pocket. All you have is energy and enthusiasm. And so he's going to also be in a right place at the right time. This is going to be the beginning of the Civil War. And it says the onset of the Civil War proved to be a boon to Flagler. Why is that? He's a grain merchant, right? He's in the merchandising of corn. A grain merchant, Flagler, a grain merchant began to realize the truth of the maxim that an army travels on its stomach. Business boomed and Flagler was soon rich by his own standards. Rich but bored. He had $50,000 in his bank account and it was 1862. And this is where he makes his first catastrophic

Starting point is 00:10:36 mistake as a young man. He's just going to repeat. History doesn't repeat. Human nature does. This happened back then. It's happening today. It will happen in the future and is the dangers of margin. I love the way that Warren Buffett writes about this in his shareholder letters. And he says, over the years, a number of very smart people have learned the hard way that a long string of impressive numbers multiplied by a single zero always equals zero. That is not an equation whose effects I would like to experience personally. That is exactly what Flagler is about to feel right here. Casting about for something more interesting to do, Flagler had hit upon the idea of salt. Intrigued by a discovery of vast deposits of salt in nearby Michigan and an act on that state's legislator that made the business tax exempt, Flagler sank every penny he had into the venture along with an equal amount that he

Starting point is 00:11:26 borrowed. But the Great Salt Rush had drawn a horde of competitors, some of who actually knew a few things about the business, unlike Flagler, right? When the end of the Civil War brought a collapse in prices, Flagler's operation fell apart. He found himself not only penniless, but now $50,000 in debt. It was a lesson the ambitious young man would never forget. But he also does something smart here. He does not compound one bad mistake with another. Okay, I shouldn't have done that. Now I'll know that for the future. And what does he do? Flagler was resolute. He might have been beaten, but he would not move backwards. So now he's negative $50,000 in his bank account. He's got to borrow a few hundred dollars to try to get back on his feet. With a few hundred dollars in his pocket,

Starting point is 00:12:07 advanced to him by his father-in-law, he moved in with Mary, his wife of 11 years, and he goes back to Cleveland, to Cleveland and renewed his old acquaintances in the grain dealing world. So that's where he made all his money. He's like, oh, I'm bored. I'm going to jump into some other business I don't know that well. And then that obviously didn't work out well. So he goes back. And why is that important? Because he takes a post in a firm that had just been vacated by his old friend Rockefeller, who had just left grain for an intriguing new substance called oil. And so Rockefeller and Flagler are going to find themselves at the right place at the right time with the right set of skills

Starting point is 00:12:43 because of its position on Lake Erie and its proximity to the newly discovered oil fields in western Pennsylvania, Cleveland, where they are, had developed over the past dozen or so years into a shipping and refining center for oil, which at the time was still competing with whale oil and lard for supremacy as a fuel and lubricant. And so that is where Rockefeller was going to set up his business. This is the business that Flagler is eventually going to be invited into. Rockefeller had invested in a refining business during the Civil War. And by the time of Flagler's arrival in Cleveland, he had decided to devote all of his energies to the business of making and shipping oil.

Starting point is 00:13:21 Rockefeller did not believe in diversification. He said they had no outside interest. That is an immense task task building a successful company. It's silly to go out and diversify into other lines or to make other investments. Focus on your business. If Rockefeller, later in his life, he had a ton of other investments, right? But if he never had a single investment other than his own company, he still would have been one of the richest people alive. What does that tell you? Back to the book. Because Flagler had rented a house on the same street as Rockefeller and kept his offices in the same building, the two often walked to and from work together,

Starting point is 00:13:52 comparing notes and sharing their chief binding passion, the desire to make large sums of money. Around this time, Rockefeller is going to be about 25, and I think Flagler is either 32 or 34. I can't remember if he's about seven or nine years older than Rockefeller is going to be about 25 and I think I think Flagler is either 32 or 34 I can't remember if he's he's about seven or nine years older than Rockefeller but when I got to that part I was I read Rockefeller's autobiography too a while back I think it's like founders 155 or something like that but the reason that I that came to mind when I was reading this section is because when Rockefeller wrote that autobiography when he's a very old man well after Flagler died and

Starting point is 00:14:24 he's writing his in well as he's writing the autobiography he he's a very old man, well after Flagler died. And he's writing as in, as he's writing the autobiography, he says that this right here, walking back and forth, working every day with Flagler, he says this was some of the best times of his life. And so when I got to that section, I left a note to myself, reminder, you are in the prime of your life. Now, do not take this for granted. The old vert older version of you is going to look back on what you are experiencing right now fondly, which means that you must go after what you want in life like your life depends on it. Why? Because it does. I don't want to get to the end of my life and look back at this precious time and be like,

Starting point is 00:15:03 wow, you played it safe. And now I'm about to go to my grave, never achieving what I wanted in life. That is why I think autobiographies especially are such gifts to humanity because you see they're just further down the path than you and I are, usually by a few decades. It's foolish to think all these smart and formidable people, like we're going to avoid their fates. They're not writing about how great it is to be 75. They're writing about, man, I wish I could go back in time in my 20s, my 30s and my 40s as I was building this business. And so I try to wake up every day with gratitude. It's like, I'm in it right now. The older version of me, the happiness, I should say, of the older version of me depends on my decisions and what I do right now. So that's

Starting point is 00:15:43 exactly where we're in the story. Rockefeller was convinced. Oh, this is so this is part two. I'll tell you what I was thinking about when I got to this section of the book to Rockefeller was convinced that oil was the conduit to a to success and had joined forces with a chemist by the name of Andrews, who possessed technical expertise upon which the refining process was founded. So this again, what Rockefeller does is really smart, that you need to find partners that have skills that you lack. If both of you are doing the same thing, one of you isn't necessary, right? Rockefeller himself was the consummate manager, but he was well aware of his own shortcomings as a marketer, and that is where Flagler came in. So he's like, I'm not technical and I'm not a marketer,

Starting point is 00:16:15 so let me go find people that are, right? Flagler was one of the most successful grain brokers Rockefeller had known before the war. So that goes back to where this section started, the importance of him, of Flagler being hardworking, single-minded, learning as much as he could, and not only being industrious, but appearing to be industrious. Because now Rockefeller's like, hey, I need help. He doesn't know this yet, but he's about to build maybe the most profitable company that ever existed. Who do I know that can help me? Imagine the difference in Flagler's life if he had messed up that opportunity when he was a young man, if he was lazy, if he was drinking all the time, if he wasn't studying. He's just basically an average

Starting point is 00:16:55 human being. That opportunity that Rockefeller is going to offer him, let's say five years into the future or thereabouts, that would have been foreclosed. That is why it's so important. It's so crazy how these things connect together. So Rockefeller is going to recruit them and really think about Standard Oil. I know it's funny from like our perspective, you know, what is it, 120 years later, something like that, maybe even more, 150. I try not to do public math. But it's really funny from our perspective, like they're building the most valuable technology company of the day, of their day. That's what they're doing rockefeller valued flagler's undying optimism and drive as well as his relative maturity which would come in handy for a fledgling business founded upon

Starting point is 00:17:33 a new technology and seeking to attract investment from others and so it says for the next 15 years flagler and rockefeller work side by side walking to the office together in the mornings passing drafts of letter and detailed business documents between their desks during the day, and walking home together at night, always planning and calculating. Yeah, that's an understatement. These are two of the most calculated humans I've ever read about. The result of their efforts was Standard Oil, the largest, most powerful, most profitable, and perhaps most notorious corporation ever created. Rockefeller would come to freely attribute the secret of their firm's success to his partner, for they were not long in the business before Flagler realized that the negotiation of a lower freight rate was the

Starting point is 00:18:17 key to the entire matter. So there's a lot to admire about Flagler that we're going to get to in the book, but one thing you have to know about him up front, you would not want to deal with them. He was absolutely completely ruthless, business and personal wise. And I want to read about people like that. I want to constantly remind these people are walking the earth today. We have to have defense against them. So this is a, they're like, okay, well, we figure, okay, the low freight rate. So the actual transportation of their product, right? Was the key to the entire matter. What does that mean? If oil could be brought to their refineries at a rate below that offered to competitors, it would create an unassailable competitive advantage.

Starting point is 00:18:52 In the highly competitive oil market, no other factor in the process could differentiate one player from the next to such a degree. And that's why you see over and over again throughout history, Sam Walton, Andrew Carnegie, Jeff Bezos, they all say, gentlemen, watch your costs. That's a direct quote from Carnegie. He was obsessed. And his partner, Henry Kelly Frick, watch your costs. Actually, it might be Frick's quote.

Starting point is 00:19:15 I can't remember. Carnegie or one of them said it, but they said, gentlemen, watch your costs. That's what they would tell up and down their entire business. We will have an unassailable competitive advantage if we can produce, in their case, steel at a cheaper rate than anybody else. Rockefeller does a similar thing. As a result, Flagler soon became a master at the negotiation of rebates from the major rail carriers who serve the oil fields. And so the author does a fantastic job here. This is just really, in like two or three sentences, this is a basic, very basic description of their future moat. And so just in case you don't already know,

Starting point is 00:19:45 that's a term from Warren Buffett. This is how he defines it. When our long-term competitive position improves as a result of our almost unnoticeable actions, we describe the phenomenon as widening the moat. And in doing that, it's essential if we are to have the kind of business we want a decade or two from now. When short-term and long-term conflict, widening the moat must take precedence. So this is just a fancy way of saying, why are you difficult to compete with? decade or two from now when short-term and long-term conflict widening the moat must take presence so this is just a fancy way of saying why are you difficult to compete with that is your moat that is the way i think about it at least so let's go back to this he's like okay he flagler's uh negotiating with all the major rail carriers who serve the oil fields and it says in return

Starting point is 00:20:18 for lower rates flagler would guarantee massive shipments to the railroad so i'm giving you something in return to meet these goals flagler would in turn have to acquire more crude and increase his refining capacity. In order to make that happen, he and Rockefeller would need money and a lot of it. So that is when they incorporate Standard Oil. They raise, it says Standard Oil went public in January of 1870 at a capitalization of $1 million. It was divided into 10,000 shares. Rockefeller took about 26% of the shares and Flagler had about half that. Why is that important? Inside a dozen years, the worth of that company

Starting point is 00:20:50 would grow to $82 million. You're talking about 1882. That is insane. $82 million, a staggering rate of increase and one fueled largely by Flagler's remorseless goal to control completely the production of refined oil in Cleveland. And so they keep widening the moat. We're going to get to this thing called the Cleveland Massacre. This is just one paragraph. I'll talk more about this next week in Rockefeller's biography. But it says Flagler was a ferocious tactician at the office. Within a few months, he and Rockefeller had either bought out or scared off 20 of their 25 competitors. The choice offered to their competitors was simple, except what they always insisted was a fair price for your company or go broke trying to compete

Starting point is 00:21:34 with a powerhouse, that's Standard Oil obviously, with a powerhouse that could do business more cheaply. And so again, that's why they're obsessed with low cost. They can make money at a lower price than their competitors. They are willing to drive down that price to make you go bankrupt. Low cost can bankrupt your competitors. And Rockefeller and Flagler are both ruthless enough to make sure that that happens. And there's a great story in Titan where Rockefeller is told from the story of one of their competitors. Where Rockefeller shows them, shows the guy he's trying to buy out that was competing with Rockefeller and Flagler at the time, shows them his books, shows them their

Starting point is 00:22:09 cost structure. And I forgot exactly what the guy said, but essentially he's like, oh no, like these guys can make money at prices that'll bankrupt me. I have no choice but to sell to them. And so once they consolidated on the refinery aspect, they said, okay, how can we control oil prices? Now you have to remember when we're dealing with people like Rockefeller, Flagler, J.P. Morgan, Vanderbilt, they did not look at competition as something in a similar vein that we might look at today. Most people think, oh, businesses are competing. That's usually good. Direct competition between businesses is usually good for the end consumer, right?

Starting point is 00:22:39 They thought of competition as something to get rid of. And one of the funniest descriptions of their mindset that's very different, I think, from most people's is like when J.P. Morgan was advising clients about they were having problems with. It might have been Moet and Hennessy. I can't remember that they were they were manufacturing champagne. And so J.P. Morgan's like, well, have you thought about just buying up the whole champagne region, Not buying up your competitor, literally buying up the entire industry. And he said this because then you could just control prices. So it just gives you insight into how these people thought. Flagler, so now they're about to like, okay, we're going to control the price of oil.

Starting point is 00:23:17 Flagler's tactics were not limited to his fellow refiners. In 1872, he took advantage of a fall in oil prices to persuade most of the Pennsylvania oil producers to join with him in a scheme directed at the entire railway industry. In what may sound familiar to those accustomed to today's OPEC shenanigans, Flagler proposed an industry-wide agreement to limit oil production, thereby guarding against price fluctuations and also forcing rate concessions from railway carriers who would have to play ball or be frozen out. So that is part one of his idea. But part two is where the leverage actually comes to be able to do this idea. What is stopping the railway saying, no, you're going to pay the prices because you have no way to get your oil out. Standard Oil, because they'd been making so much money because they knocked out all their refinery competitors, right? Standard Oil could afford to construct its own transportation systems, including a newly developed network of pipelines.

Starting point is 00:24:14 So the railway had a choice. Transport our product at the lower price that we're all going to agree on, or we're just going to run it through our own network. And we're just going to use pipelines instead. By 1877, the company had become a behemoth that had far outgrown its Cleveland roots. Rockefeller and Flagler determined to move their operations to the burgeoning city of New York. Flagler was not keen, even when he lived in New York, his schedule didn't really change much. He kept the same schedule that he did when he was Cleveland. He was not keen to join the New York City social swirl. Even in Cleveland, he had virtually no social life. His wife had been plagued by a lifetime of chronic bronchitis,

Starting point is 00:24:51 and when Flagler was not at his office, he was with her. Her condition continued to worsen, and in May of 1881, she died. Her death was a stunning blow to Flagler. And I'm almost done giving this brief overview about it because I want to get to his second career, which is what the meaning of the book is about. And so at this point, he's like, I'm really rich. My wife died. He's going to get remarried and he's looking for his next adventure. Flagler was a wealthy man.

Starting point is 00:25:15 His net worth was nearly 20 million dollars and climbing with every barrel of crude oil that the vast standard oil company pumped out of the ground. He had made it beyond his wildest expectations. This poor, puritanical boy from the sticks. And it seemed he was ready to enjoy the fruits of his labor at last. Wrong. Somebody like Flagler is incapable of just sitting down on a beach. He's a builder at his heart, at his core. So the reason they're saying, oh, he's going to enjoy himself.

Starting point is 00:25:41 He's got to remarry. He's really rich. He's spending a lot of time in Florida, which is completely undeveloped at the time. And so he's like, oh, OK, I guess I'll just start developing real estate. I like hotels. Why don't I build one? And he liked hanging out in St. Augustine so much, he decided, OK, this is where I'm going to build a hotel. So in short order, he had brought up a large section of unproductive orange groves and hired himself an architect

Starting point is 00:26:00 and embarked upon building a lavish Mediterranean themed hotel called the Ponce de Leon in St. Augustine. And so this confused everybody. It's like, why is the standard oil guy building? He's like, you make a ton of money on oil. You're not going to make nearly as much on hotels. And I just love his answers. He's like, I do it because I want to. No degree of success in hotel management could ever provide an income rivaling what he had from oil. Flagler was asked to explain why on earth a man with a major

Starting point is 00:26:28 interest in the most powerful company on earth would want to get into the hotel business. Flagler responded by telling a story that he'd grow fond of. That of the elderly church deacon asked to explain a sudden unaccountable bout of drunkenness. The deacon explained to his pastor that he had spent all his days before in the Lord's service, Flagler said, and now he was finally taking one for himself. And so Flagler's about to say, I'm doing the same thing. For the last 14 or 15 years, I've devoted myself exclusively to my business, and now I am pleasing myself. So essentially, I'm doing it because I want to. He says, I want something to last for all time to come. I would hate to think that I'm investing money that will not bring a return in the future.

Starting point is 00:27:10 But I will, however, have a hotel that suits me in every respect. And one that I can thoroughly enjoy, cost what it may. And so why am I bringing this up? Because it's the very first step in developing Florida. That is going to lead him eventually to say, hey, I'll just run a... I built a hotel in St. Augustine. I need to bring people from the north. So I got to build my own railway. And then he's like, oh, I'll just keep going down. So he's going to run rail lines all the way down the state of Florida to the very tip when he gets to Key West, which is what the book is about. And even at an advanced age, he's almost 70 years old at this time. He was still

Starting point is 00:27:43 very hands-on. It took nearly a year and a half to build the 540 room hotel, a process that Flagler himself oversaw down to the opening of crated furniture alongside his crew. So once he completes the hotel, he's like, wow, I enjoyed that. I want to do more of this. So he says he had learned something from the building of the Ponce de Leon. He had become a creator instead of an accumulator, and he had found much more satisfaction in such an accomplishment. And so he makes the point later, it's like, yeah, we're taking oil from the ground. It's very useful. You know, people have energy needs, but we're taking it out of the ground and we're shipping it and it goes all over the world. But a

Starting point is 00:28:18 hotel, like I can see, I can touch, I can feel, I can actually experience it myself. But it's during the construction of the hotel that his wife, his wife goes crazy she starts to believe spirits are talking to her she starts to believe that her purpose in life i guess is to be the lover of the czar of russia she's obsessed with like the the ouija board and talking to spirits she winds up getting committed then she comes out and i need to bring this part up because what he's going to do soon is it's just really ruthless. So it says it was not long before Ida Alice, so that's his wife, was again begging for her Ouija board. This is after she got out of the mental institute the first time. And friends were advising Flagler to have her committed once more.

Starting point is 00:28:59 Flagler stood firm. He's like, no, she's not going to. But he had to change his mind because Ida Alice attacked her doctor with a pair of kitchen shears. The matter was then decided. Ida Alice was removed to a private asylum. Flagler would never see her again. And so remember that part. I'm going to circle around back to that part. Just keep that in your mind. I love this idea, though. This is actually one of the most exciting parts about reading all these biographies. You see like the same idea, something like an insight they learned previously. And then you see like that idea or that premise behind that idea applied to a different industry. So it says hardly had he embarked upon a career in hotel building.

Starting point is 00:29:35 Then he realized that transporting customers to his hotels was as important a link in the process as moving crude oil to his refineries had been so many years before. All that experience in railroading was about to be put to use in an entirely different context, as he tried to make sense of one of the most chaotic rail systems in the United States. So the existing lines that he found in Florida made no sense. So of course, Flagler being the kind of person he is, like, I gotta, I'm gonna fix this, I'll just do it myself. The lines that did exist had been built without regulation and with no regard for consistency of track. It was a situation that a man who had worked with peerless organizer John D. Rockefeller could scarcely comprehend. So at first, he tries to work with them to try to make

Starting point is 00:30:18 a uniform, and he's like, oh, these guys just don't get it. I'm just going to buy you out. When talks with existing line owners proved fruitless, Flagler did what anyone with resources might. He ponied up half a million dollars and bought the railroad. And then as soon as he owns a railroad, he starts expanding. And this is where we get, like, why would somebody try to build a railroad over the ocean? The only way to get to the Keys at this point, and this is, I talked about this a little bit

Starting point is 00:30:40 about the Ernest Hemingway podcast I did, because this book, I held my hand, actually starts out from the perspective of Ernest Hemingway because he's in the Keys in 1935, and he's discovering all these dead bodies, these people that were sent down by the U.S. government to do construction in the Keys. There was no advanced warning system. Hurricanes just happened. You'd see a drop in the pressure, and then it'd be unpredictable.

Starting point is 00:31:02 Twelve hours later, you're being pounded to death people are drowning everything like that but before flagler came about the only way to get to the keys was by boat there was no bridge there was no uh railroad and he's going to change all that and so this is kind of a precursor to the mentality he has this is years before he's going to get to the keys so he stopped he's still up in like central to northern Florida. And he says his first decision was to build a bridge across the St. John's River. The moment that the company's engineers heard of Flagler's plans, they came forward quickly announcing that no one had ever sunk railroad support piers in 90 feet of water,

Starting point is 00:31:38 the depth that they would have to cross. And so they're saying, no, no, this is impossible. And his point is, well, how different is it to build a pier than a bridge? I just want a bridge to put my railroad on. And so it says, Flagler pondered this information for a moment, then turned back to the engineers. Can you not build a pier in 90 feet of water? After a brief huddle, the engineers said, yeah, we can. Then build it. And so I bring that to attention because there's going to be multiple paragraphs, multiple conversations in the book where Flagler's constantly telling the world.

Starting point is 00:32:07 He just pauses, tries to break down things into like the smallest units, attacks them one at one. He's like, just combine those units together and you can do it. And I'll get to more about that when we get to the keys. So now he starts to start in St. Augustine. He's like, all right, I'll just keep moving down. And so he's actually discovers Palm Beach,

Starting point is 00:32:23 which is like this super wealthy enclave in present day. And it says he took to writing his own railroad railroad incognito, the better to scout out likely targets for acquisition with a route without arousing the attention of local speculators certain to jack their prices sky high, should it be known that the great Henry Flagler might be interested. So that's another thing that he does over and over again. He's always disguising his true intentions. What is he searching up and down? Like, what's his primary goal? Like, why is he going further south? He wants to build more hotels. And once he gets to Palm Beach, he's like, oh, I'll just stop here. He loved it so much. He thought it was paradise on earth. He's like, actually went to building his giant home there.

Starting point is 00:33:00 And to this day, like you can go to West Palm, or excuse me, Palm Beach, and there's a Flagler Museum all over South Florida. There's Flagler Museums. His street, he's got little towns named after him, buildings, streets. So he's considered, along with Julia Tuttle, the founder of Miami, which we'll get to in a minute. In 1982, he had visited Palm Beach in such a manner and had returned to St. Augustine in a lather. And this is what he said, I had found a ver in such a manner and had returned to St. Augustine in a lather. And this is what he said. I had found a veritable paradise. So that's eventually where he's going to move his operations.

Starting point is 00:33:33 And so he's going to run this playbook. He scouts out places, hides his intention, buys land, builds a hotel. Once the hotel's there, then he just keeps moving that line down further down south. Hardly had he completed his line to Palm Beach than people living in Miami, which is not called Miami at the time, I'll get there, were begging him to extend the rails southward to Miami, even though there was no such thing as Miami at that time. And so now we get to the chapter called The City That Flagler Built, and this is all about Miami. This is remarkable. In the 1890s, all that existed where the modern metropolis of Miami sprawls today was a muddy settlement of fewer than 500 souls. The place was called Fort Dallas at the time.

Starting point is 00:34:13 Those who moved to Fort Dallas to seek their fortunes were interested and encouraged others to join them. Among the most active of those pioneers was a woman from Cleveland named Julia Tuttle. So she is important. She's considered one of the founders of Miami as well. If you have ever flown into Miami and driven from Miami International Airport to Miami Beach, which is where most people come when they visit. I happen to live in Miami. I've lived in Miami a long time. The path you most likely took from the airport to get to the beach, you go over a causeway. It's called the Julia Tuttle Causeway. And so she was also a remarkable person in her own right. She was intending from the outset to carve a city from the wilderness. There

Starting point is 00:34:48 was nothing here but 500 people. She went to work remodeling one of the original settlement structures into a home for herself and her two children. It's insane that she brought her children there. Mindful of what it would take to turn their sleepy settlement into a city, she approached Flagler's rival, Henry Plant. So at the same time that Flagler is building all these hotels and rail lines on the east coast of Florida, there's this guy, Plant, that's doing so on the west coast. And so she's like, hey, why don't you extend your railroad from Tampa across the Everglades to Fort Dallas? Remember, Fort Dallas is what Miami is called at the time. Flagler's actually going to rename it Miami. And so you can think about Julia Tuttle's intentions. It's

Starting point is 00:35:30 simple. We need a way to get people to the new city that we're building. Really, it's a metaphor for creating a new product. But this plant guy is completely different from Flagler. He's like, it's impossible to build because you have to go through Everglades. It's essentially just swampland. It's disgusting over there, actually. He just dismissed the idea that it was impossible to build a railroad across such territory now and forever. And then this is where you just have to admire Tuttle because she's relentlessly persistent. Tuttle, undaunted, turned to the other great railroad builder in Florida, offering Henry Flagler half of her land if he would only bring his railroad southward to Miami along the East Coast route.

Starting point is 00:36:10 When Tuttle began her campaign, Flagler was also not interested. And the reason he wasn't interested is because he said Flagler saw no immediate reason to press his road beyond Palm Beach. Not when the quote unquote city was little more than a squatter's outpost. So that is a description of what Miami was when Julia Tuttle approached Henry Flagler. But things changed fast. Flagler is, one, he likes to keep his options open, and two, he reacts to new information. And then fortune intervened. In the winter of 1894, one of the worst freezes in Florida history swept across the state,

Starting point is 00:36:40 wiping out crops and citrus groves all the way to Palm Beach. The suffering that Flagler saw among farmers, growers, and laborers stunned him. He sent one of his employees out on a private relief mission with $100,000 in cash, instructing him to disperse it all. And so Julia Tuttle sees an opportunity here. Flagler was mindful of the news that was sent to him by the indefatigable Julia Tuttle that Fort Dallas had not been touched by the freeze. And so that's where Flagler sees an opportunity. He is 66 years old this time. And even at 66 years old, Flagler moves fast.

Starting point is 00:37:18 How many times have you and I discussed the importance of speed when talking about the history of entrepreneurship? It is insane that they all just move rapidly. The decision did not take long. Three days later, that's how fast he goes. And then check out how crazy it was just to get from West Palm Beach at this point in history down to Miami. This is insane. And he's 66. Flagler had made plans for what was then an arduous trip.

Starting point is 00:37:42 He'd take rail to West Palm Beach, then launch into a boat in Fort Lauderdale, and then travel more than 30 miles from Fort Lauderdale to Miami by horse and carriage. This is when he finally agrees, I'm going to extend my rail south. He's going to build this gigantic hotel right on Biscayne Bay.

Starting point is 00:38:01 And so the city, and I'm putting cities in quotation marks, they try to reward him by naming it after him. He's like, no, no, no. And I didn't know this. This was fascinating. Within three months, the city had been incorporated as Miami. Flagler had to gently urge the new town council

Starting point is 00:38:14 to choose the original Native American name for the new city over his own name. So Flagler is actually the one that chose to name it instead of Flagler, Miami. And so he builds this fantastic hotel. It's completely out of, it doesn't make sense in its surroundings, which is essentially like just a swamp at this point. And we see his formula. I already mentioned this earlier, but I'm going to read it to you. The hotel is called the Royal Palm. The Royal Palm was not only an impressive feature of the new city, but virtually the very reason for Miami's being.

Starting point is 00:38:43 Flagler was not dismayed at this, of course over the past dozen years he had seen development thrive in the wake of his method so this is his formula build a railroad to a place erect a destination worthy resort hotel there and other development was sure to follow and so he felt comfortable he's like this i'll put the money up i know people essentially like i if you build it they will come is what he's thinking about but then it says but even flagler could not have predicted the events that would cause miami's growth to explode in exponential terms and part of that explosion is going to be caused by the spanish-american war so he had no intention he's going to stay in miami and then he got the idea to go all the way down to the keys which crazy this time just blew my mind that the key

Starting point is 00:39:22 the key west remember you can only get there by boat is still the largest city in florida at the time i think it's like 2 000 people 20 000 people i can't remember exactly we'll get there so we'll figure it out but this is what caused like why would a why would he think that a railway that he has to construct over an ocean is actually going to be valuable so it says um the the ending of the Spanish-American war reawakened his interest in the matter. In the treaty that concluded the war, Spain agreed to give up its authority over Cuba, virtually assuring that the United States' interests would prevail in Cuba. And so the first idea is like, well, you're going to have all these goods traveling from the Caribbean, Central and South America. The place that it makes sense to land is in this bustling

Starting point is 00:40:05 little town of Key West. But we can't get the goods out. We can dredge deep water ports. And then what we'll do is we'll just run a railroad up and connect it to the mainland. And so this is 1898. He's around 60. It says he's 68 years old at this point. The railway is not going to be finished for quite a bit of time. but I want to just, I'm going to read this section to you because I really think it helps you understand like who this person is, right? And I admire this. He was, even though he was 68 years old and while his investments in Florida had not prospered to the degree that those in oil business had, he was still one of the most wealthy and influential men in the United States. Despite his familiar jest, and he would say over and over again at this point, that I would have been a

Starting point is 00:40:43 rich man if it hadn't been for Florida. That part is technically true. He's still obviously rich. I think he leaves behind – it's insane how wealthy he was. I think he leaves behind like $100 million, and that's in like early 1900 dollars, so I think multiple billions if I'm not mistaken. But he winds up dumping $30 to $40 million into the development of Florida, and he never turned a profit on it. So he says that in jest, but it's accurate. He's like, I would have been a rich man if it hadn't been for Florida.

Starting point is 00:41:09 He could have chosen at that moment to retire and live out his years in luxury, basking all the while in the gratitude of an entire state citizenry. So he's been developed, like he developed an entire railway down the east coast of Florida. He's developed all these resorts. He's promoting it. A lot of people are moving there. That's what they're talking about. But Flagler's not, he's not going to let the foot off the gas until he dies.

Starting point is 00:41:29 And so I don't want to laugh at myself here. The only exit strategy is death. But Flagler was not about to quit. Not when he had come so close to the accomplishment of a goal that only a decade before had been dismissed as an utter fancy. Even in his late 60s, he was still a vigorous and powerful man. He had great wealth and technical expertise at his disposal, and laid before him was an engineering task that had galvanized the minds of every professional in the field, even as its magnitude sobered the more practical-minded. So this is the idea of, I'm going to just, this line I started all the way in northern Florida, that's going to run right over the ocean into the Keys, and if you've ever done that drive before, the author, so me and him might have a little bit of disagreement. I can

Starting point is 00:42:08 understand why he thinks it's a beautiful drive. He thinks it's one of the best drives in the United States. Maybe I'm jaded because I've done it so many times. There are some cool parts of it, like the seven mile bridge, which at the time is constructed. I'm pretty sure it was the largest, longest bridge over an open water in the world. and you know you are literally driving on like a four-lane bridge if i'm not mistaken directly in the ocean it is kind of beautiful but it's very flat and the keys are just in general just a very strange like it's got like a pirate uh history and you still see that even key west it's very small but like i've tried to have a good time in the keys i just i'm incapable because i don't really drink and I don't fish.

Starting point is 00:42:46 And everybody there is drunk all the time. And so the thing I just happen to enjoy the most, the best thing I've ever done is I rented a tandem bike. And me and my daughter love this because we just, Key West, I think it's like two by four miles. It's real small. And we just biked over the entire city. So that was fun. But if you don't really drink and if you don't fish, there's just not much to do. So anyways, back to this.

Starting point is 00:43:09 They're saying, hey, you're taking on a task. It's galvanizing the people that are super ambitious, but the sober-minded and practical people are like, oh, you're a little crazy. It was a time. And I love what – this is why I love Les' writing. And I just love that he draws the parallel. It's all the same dream. He says, It was a time in history when men were tempted no longer to regard themselves as the mercy of the fates,

Starting point is 00:43:31 but as masters of their environment. To think of young rocket scientists at the middle of the 20th century, staring up at the moon, equally inspired and awed at the prospect of someday reaching that destination, is not unlike a similar conjuring a railroad engineer 50 years before, And again, I think that's really important because from our vantage point, okay, what's the big deal? Like it's a bunch of bridges. This is the 1898. We're talking about before the invention of widespread automobiles obviously existed. But before the widespread adoption of automobiles, before the Wright brothers,

Starting point is 00:44:13 it's just insane to think that you're going to build a railroad over the ocean. And what's even more insane is the last part, the last chapter of the book is all about the gigantic storm. It's a fantastic, it's like 20 pages. I highly encourage you reading it. I'm obviously not going to include it in the podcast because it's after Flagler dies. But what's crazy is like this most powerful hurricane to ever come destroys most of the railway, right? But there's still parts that survived, like the bridges and the arches and everything else. Like the engineering feat that they figured out 40 years earlier

Starting point is 00:44:46 survived the most powerful storm to ever hit the United States. That's incredible to me. So I already mentioned this earlier. Like this is really his, like, why would he do this? This is the reason he thought his work would be valuable to others. Really, the thing about this is like you can have a reasonable assumption, but it wound up being wrong. And he's just saying, hey, what I just said earlier, Cuba, Caribbean nations, South and Central America,

Starting point is 00:45:09 they're going to have all these goods that Americans are going to want. This is the port they're going to come through. Never materializes. He builds the port. He builds the railroad. The goods never materialize. So I think that's the important part. I just want to pull out something here.

Starting point is 00:45:19 Key West was no undiscovered town. They had more than 20,000 residents. It was the largest city in Florida at the time and had been for more than 50 years. That is insane. In 1900, Key West was a large, had 20,000 people, a place you could only get to by boat, largest city in Florida at the time and had been for more than 50 years. And so the author was talking about, hey, this is a time when people thought you could be masters of your own environment. They were way more ambitious, ambitious in his opinion and he talks about this over and over again the book that just more ambitious back then than we are today and it's also like that kind of person also just thinks

Starting point is 00:45:53 like not only is the environment malleable but my entire world is malleable and so this is what i mean i asked you to remember it earlier this is ruthless ruthless and a reminder that you need good you need a good defense that's something i learned from ed thorpe i recently reread his fantastic autobiography it's founders number 222 the first time i covered it was all the way back on founders number 93 i'd always listen to the latest ones you can listen to both of them if you want but 222 is where i would start with that and something he taught me is the fact that he talks about you know he's been in the financial markets for half a century at that point. He's writing the book and he's like getting rich and staying rich are two separate skills.

Starting point is 00:46:32 And so he's like a good offense is the way you get rich and a good defense is the way you stay rich. And he talks about, you know, there's all kinds of people trying to scam you out of money. Always you can lose your money. All types of ruthless individuals out there that will take your money. So you have to have a good defense. This is, again, when I'm about to read to you, like you just realize like there's some people just feel they have no limits. And if you happen to get in these people's way, they will run you over. My own personal choice is avoiding these people at all costs.

Starting point is 00:47:00 And so his second wife is – his first wife is dead. His second wife is in asylum. He's, I think he's dating, he's like seven years old at the time. He's dating like some girl that's like 30. To give you an idea, maybe 34. Her family's like, hey, can you please marry our daughter? He can't marry their daughter because divorce is illegal at that point. The only way he could get a divorce is if he could prove adultery.

Starting point is 00:47:23 So let's go to the book. Flagler was feeling pressure from Mary Lilly's family and the public, so he decided to make an honest woman of her. There was one obstacle, however. Flagler was still a married man. In typical fashion, Flagler went immediately to work on the problem. In 1899, three weeks after proposing to marry, Flagler announced that he was moving his legal residence from New York to Florida.

Starting point is 00:47:43 Why is he doing that? He allowed another two months to pass, and then petitioned the Supreme Court of New York that Ida, which is his second wife, should be certified insane and thus incompetent, a matter that could scarcely be contested, as she had for more than two years been locked in a private asylum, carrying on a one-sided conversation with the Tsar of Russia. New York's divorce law was similar to that of Florida in that divorce could only be granted where adultery could be proven.

Starting point is 00:48:11 While Ida had stated that she had indeed committed adultery on several occasions, she's saying this, that she committed adultery with the Tsar of Russia. The Tsar of Russia is in Russia. He's not in her asylum. So this stuff is happening in her mind, okay? It was not the sort of contention that would hold up in court. So Flagler turned to more practical methods. It took considerable doing, but on April 9, 1901, two years later,

Starting point is 00:48:34 a bill was introduced into the Florida legislature to be entitled an act making incurable insanity a ground for divorce. He changed the law to get divorced before the month was out the bill had sailed through both houses and had been signed into law by the governor how do you think he convinced him to do that he convinced him to do it the same way they convinced him to do it today with money it was rumored that it cost him twenty thousand dollars in bribes to see the bill passed and a number of quote-unquote gifts made to by flagler to florida's public universities That's ruthless. and his marriage from Ida and his marriage to Mary, Flagler's actions were genuinely undertaken as the culmination of a meticulous process of preparation on his part. And so let's get another insight into his personality and what dealing with Henry Flagler would be like.

Starting point is 00:49:35 In the 1890s, when Flagler had announced his intention to extend his railway along the central coast of Palm Beach, a group of landowners from the then prosperous town of Juneau, I'm going to say that on purpose, remember then used to be prosperous. What happened to them? I wonder. And the then prosperous town of Juneau had formed a consortium. Pooling their real estate holdings in order to force up the price, Flagler would have to pay for his right of way. The group was certain that Flagler would have to meet their inflated price in order to avoid sending his line through a broad swath of marsh and swamp that would drive the cost of construction through the roof. Presented with their demands, Flagler ordered his railroad built exactly where his foes had

Starting point is 00:50:17 assumed it could not be done. At tremendous expense, Flagler's railroad went southward to Palm Beach nonetheless, and the town of Juneau withered and died. Now keep in mind, where we are in this story, Flagler is almost 70. And this is what he's got going on in his life. He was still a member of the Board of Directors of Standard Oil, the largest corporation in the world at the time and as the chief executive officer of the florida east coast railway railway and its various subsidiaries he was called upon to oversee a vast network of undertakings that stretch the entire length of florida including extensive freight and passenger operations the management of a wide variety of hotels and resorts the direction of massive land sales and development

Starting point is 00:50:59 operation and much more and what i love is there's i'm going to read a paragraph, I'm going to extend this, because there's like several paragraphs in the book like this. He is not at all interested in retiring. And it's in fact, if you think about what he is, he's choosing to run directly towards more difficulties. That is actually one of his admirable traits, in my opinion. He could retire long at last, join his new bride at their fabulous new mansion in Palm Beach where he could rest and enjoy the fruits of his labors. Instead, he continued on, that Flagler chose the latter path says more about the man than any other action undertaken in his lifetime. And so now I have a question for you. What does Jay-Z and Henry Flagler have in common? They know the value of a feint. And so this is something that Jay talked about in his autobiography, back on episode 238, and Henry uses over and over again in this book.

Starting point is 00:51:55 It says, company records, meaning Henry's company records, indicate that since reaching Miami in 1896, Flagler had been making tentative moves southward, feinting here and there like a fighter waiting for the right time to wade in for real. That's exactly what Henry said. This is what Jay-Z said. Every hustler knows the value of a faint. It keeps you one step ahead of whoever's listening in. And so to get to his end goal, which is to build the line all the way to the Keys, he's going to have to go through this swampland. Now, when i told you julia tuttle went and talked to uh to flagler's rival

Starting point is 00:52:30 plant and plant had like no you can't like he sent an expedition down there he's like you can't it's a swamp it's every way you can't the whole area is like there's no way you can build a railroad through there well flagler wants to investigate for himself he sends his people down there and they found oh it's hell but really that i'm just going to read two paragraphs to you, a little longer, two and a half have several points where all of the options in front of you would not be described as good, right? Flagler, at this point, is trying to figure out, okay, I have two ways to build the railroad. Neither is good. But he has to do this, this part, right, where most people fail and trip up. He's got to actually solve this problem just to have the opportunity

Starting point is 00:53:25 to get to an even more difficult problem, which is that of the building in the road actually in the Keys. So it's really insane. And if you're building, especially if you're engineering physical difficult products, this book is probably interesting

Starting point is 00:53:39 because, again, it's one of the most challenging engineering feats that humans have done, especially at the time. So it said, his surveying party were to encounter the same daunting conditions that James Ingram and his men met while crossing the Everglades in the opposite direction. So those are plants, guys. OK, a decade before endless stretches of marshland and muck, dense stands of 10 foot high sawgrass with edges as sharp as razors, clouds of stinging insects so thick you could swing a can about the end of a string and come up with a court of mosquitoes. This is the guy's name is Chrome.

Starting point is 00:54:13 This is the guy that Flagler sent down there. This is just fantastic writing. So this is why I'm going to read you this whole section. A distance that can be traveled by car in an hour or so today took Chrome and his men 13 days. I found a most godforsaken region, he wrote in a report to his supervisor. It's going to take us much longer to get a survey than I had expected. Chrome did press on, often forced to drag his shallow bottom boat that they had brought along over terrain that was an indefinable mix of muck and water, sucking at every footstep. Now, how crazy is this? So it's hard to walk on, but it's not liquid enough to cross by boat. I mean, it's a swamp, right? The men were tortured

Starting point is 00:54:51 by heat, humidity, insects, and often lost their way in the featureless landscape. If not for the aid of the occasional backcountry hunter or a member of the native tribe, Chrome's only memorial might have been a long-forgotten pile of bones. And so again, he's got to solve a series of extremely difficult problems just for the opportunity to then tackle the final boss, like the most difficult problem. It's just remarkable. But this is one of his most admirable qualities, in my opinion, based on the reading of this book. To a pragmatist like Flagler, the route seemed possible. When questioned, so now they're talking about building across open water, okay? When

Starting point is 00:55:34 questioned how he would cross those mammoth stretches of open water, Flagler replied, it is perfectly simple. All you have to do is build one concrete arch and then another and then another. And pretty soon you'll find yourself in Key West. And so he's like, all right, who's going to build this thing for me? He searches the entire world for a quote unquote concrete expert. He finds this guy named Meredith. Meredith is actually going to die on the job a few years from now. He winds up being diabetic. But Meredith, I want to read Meredith's interpretation of Flagler, which I thought was really, really fascinating. So it says, Meredith remember being summoned directly from Mexico where he was working to St. Augustine

Starting point is 00:56:14 for his interview. And so now he's talking about Flagler. Permanence appeals to him more strongly than any other man I ever met. He often told me to build for all time. The interview was brief and to the point. Once Meredith has assured Flagler that nothing about his plans seemed impossible, the matter was settled. When can you start? Flagler asked Meredith, fully expecting that he might ask for a month or so to settle his affairs. What Flagler, excuse me, what Meredith's about to do here is exactly what Andrew Carnegie said to do. Andrew Carnegie did this when he was trying to find an opportunity. Young person didn't have a bunch of money. He gets hired a job. He's like, I'm going right now. If there's an opportunity, go now. And so Meredith says, I'm ready to go to work this afternoon. And then he

Starting point is 00:56:58 asks, he's like, if it's okay, I'd like a few days though. Let me go home to Kansas City, pack some things, see my family, because I'm going to be on this job for several years. All right, my boy, go see your family, Flagler said. So the people that knew Flagler well, and he was very difficult to get to know, they actually described him as a supremely stoic man. And so as part of the promotion for this project, there's a reporter that goes down, and his intention was to write a hit piece on a robber baron.

Starting point is 00:57:28 And he gets there, and he discovers something different. So it says, he embarked upon his assignment ready to deliver a portrait of a robber baron facing his just desserts. He was to spend several weeks inspecting Flagler's vast holdings and several more days in conversation with the man. However, he came away with a vastly revised assessment of Flagler. And this is what he said about him. You realize that you are before a man who has suffered and has never wept, who has undergone intense pain and has never sobbed, who has never bent under stress. Keep in mind, Flagler is 74 at this point. In a letter written to an associate at the time, Flagler provides a glimpse of his own self-image. Remember, he's 74, okay? I was born with an oak constitution. The only excess I believe I have indulged in has been that of hard

Starting point is 00:58:18 work. He's 74. This part was actually kind of inspiring to me. Because the idea, you never know. What am I going to feel like when I'm 74? Am I going to have the energy? Are you going to want to actually continue working and contributing to your fellow humans and to society? And if we're like Flagler, if we're lucky enough to be like Flagler, he's like, yeah. So he says, the only excess I believe I've indulged in has been that of hard work. I have, however, one ailment which is uncurable, old age, and that I am submitting to as gracefully as possible. I am quite sure, however, that I possess as much vitality and can do as much work as the average man of 45.

Starting point is 00:59:00 Hard work, energy and accomplishment. For Flagler, it seemed to be all he knew and all he needed to know. And so the book describes, I mean, just unbelievable amount of obstacles, as you can imagine trying to do this. But one of them I just want to pull out is one of the hardest challenges was actually finding enough workers. This is undeveloped, largely undeveloped swampland. The trip made a profound impact upon Flagler, who understood that a steady supply of labor

Starting point is 00:59:27 was crucial to the success of his undertaking. Labor shortages, which had always plagued his road-building efforts in a sparsely populated Florida, would be greatly exacerbated here. One of our most trying problems has been to take a big body of low-grade men, take care of them, and build them into a capacity for performing high-class work. And so people would come down on the rail line looking to make money.

Starting point is 00:59:52 Most of them are from northern states and they get into the hot, the heat, the humidity, and the insects. And they would last a day, maybe two days, and they would just desert. And I think at that point, this point in the story, where he's realizing, oh, I got a giant problem, he had hired 400 workers and they had dwindled down to 150 so at this point that guy

Starting point is 01:00:09 meredith the concrete expert that said hey i can go to work right now he's in charge of the project he's the one that's reporting directly at flagler so this gives you an insight the reason i want to pull out this one paragraph gives you an insight into how flagler managed for while the undertaking was guided by flagler's vision the commander-in-chief was wise enough to give his field general free reign when it came to the devising of the day-to-day tactics here is the goal the wise commander says how you achieve it is precisely up to you and again i don't think i can ever reiterate enough just how difficult this task was so not only do you have like it's undeveloped you have a hard time getting supplies you have a hard time getting workers the the the conditions are inhospitable some of this is taking over giant swaths of open uh open sea but not only that during the construction i think it takes 10 or 12 years

Starting point is 01:00:56 uh just the keys part now he's in florida for like 26 i think something like that but they get hit by three different hurricanes and i'm not talking talking about the massive hurricane that happens in 1935 that destroys the railway. I'm talking during the actual construction of what they're doing. So there's many times where it's just like we made progress and the hurricane comes through and destroys everything else. We've got to do it over again. And it happens multiple times. And there's a lot of just descriptions of, obviously, hurricanes in this book. These storms are a major part. They're like it's a supporting hurricanes in this book that's these storms are a major part

Starting point is 01:01:25 they're like it's a supporting character in the book and i just want to give you a great description of some of the dangers of hurricanes he's got a ton of great writing but this is this gives you an idea so it says it's impossible to stand upright in such winds and even if it were remaining outside for long would be suicidal roger clemens might manage to throw a fastball in the high 90 miles per hour, and some major leaguers have suffered fractured skulls when they've been too slow to duck such a pitch. These winds were running somewhere between 150 miles an hour. A baseball weighs five ounces. Actually, I was mistaken. This isn't a description of one of the hurricanes they had to deal with. They're actually talking about the difference between the massive storm that hits in 1935 and then Hurricane Andrew, which hit in 1992. Hurricane Andrew

Starting point is 01:02:09 was the most property damage. I think this is before Hurricane Katrina, but the hurricane in 1935 was the one with the strongest wind. So this is about what it would be like if you were outside during Hurricane Andrew. So it says, Roger Clemens might manage to throw a fastball in the high 90 miles per hour, and some major leaguers have suffered fractured skulls when they've been too slow to duck such a pitch. Hurricane Andrew's winds were running somewhere between 150 and 175 miles an hour. A baseball weighs 5 ounces. Now try to imagine taking a hurricane-tossed 5-pound clay roof tile to the face. For those who have never lain prone beneath the passage of such a monster,

Starting point is 01:02:49 there is no way of knowing beforehand. And so it was for the men encamped on the Northern Keys on October 17, 1906. A few pages later, again, this is just one of three hurricanes that hit the Keys during the construction of Flagler's Railway. There's a ton of paragraphs like this in the book. And it says, Sanders watched another plank, wooden plank, come screaming through the air towards the man who was next to him,

Starting point is 01:03:12 who looked up in time to take its blow full force. The man's chest split open as though it had been cut with a giant pair of shears and so there's all kinds of crazy stories there's interviews that that less does in the book about some people that that survived the 1935 hurricane there's also some stories about the ones that are that take place during construction so while that guy that's happening in 1906 it just got cut open um so while that's going on i'm going to read you there's actually people risking their life they're experiencing the hurricane too they're in a boat and it's just a reminder there's just good people in the world the people i'm about to describe to

Starting point is 01:03:52 that on that are on this boat are actually risking their lives to save others and they wind up doing that it says they relayed the news to to jenny which is the ship to to Jenny's captain, who ordered the ship into a full-fledged search. By 1.30 in the morning, the Jenny had pulled 49 men from the water and delivered them safely to Key West. And so there's all kinds of stories about families being separated, mothers and daughters being separated, and fathers and sons. This is one of the happy endings. One of the guys get pulled out of the water it says the son was fortunate enough to grab hold of a plank and managed to keep himself afloat until he was rescued the following day where when he was finally delivered to safety the son told a railroad official the heart-wrenching story of the loss of his father so he thought his father drowned he thought he was swept away by the storm tell me your name again son said the listener the son did so the official then smiled and clapped the young

Starting point is 01:04:49 man on the shoulder you can relax your father's safe he told the same story when he was brought in a couple hours ago imagine the relief by both father and son the father's telling the story thinking his son is dead that he watched his son die in a hurricane. The son had the exact same experience. I cannot believe my father's dead. And then there's like, no, you were actually reunited the next day. And so after every hurricane, they're forced to rebuild. They're forced to proceed to work again. Flavio's still having a giant problem with personnel.

Starting point is 01:05:18 And he realizes, okay, we're taking northern people from the northeast in America. They're not acclimated to this condition and so he winds up finding people uh from the cayman islands and from some like tropical central american and caribbean islands and once he starts importing them he's like oh they're used to these conditions they can their humidity and heat is just natural they've been born and raised in this environment so that was like a major breakthrough that he discovered just the importance of finding people that are have already been accustomed and adapted to the to the uh the work level that you that you that you require right and so it says the spanish workers had always been stayers and flagler's eyes meaning that they don't desert they don't leave and as

Starting point is 01:06:02 word got back to their country countrymen about improved living and working conditions on the project, more and more of them came to sign on. Native Cayman Islanders, likewise, accustomed to the climate and insects, also had come to constitute a significant part of the workforce. And this is their typical day. A writer visiting the work camps for the Railroad Gazette noted that while mosquitoes were large and fierce, all the bunkhouses and porches were screened. The men get up at 5 in the morning, take a bath, have breakfast at 5.30, and then work from 6 a.m. to 11 a.m., have lunch, then go back to work at 12

Starting point is 01:06:36 and get off at 5 p.m. with supper from 5.30 to 6, Sundays are rest days. Many workers reported that conditions at the camp were superior to those at their own homes. So they're essentially working from 6 in the morning to 5 in the afternoon. One of Flagler's executives is on a boat. He goes from his, like, underneath the boat to try to go talk to the captain of the boat about, hey, we should schedule a stop. I got to check on something. And he goes out, and at the same time he goes to the,

Starting point is 01:07:06 to he's trying to walk on the side of the boat to where the captain is. The boat gets like hit by wave and he falls over. And the engine's so loud that the boat, like he's screaming for help, but they can't hear him. And so this story is about how not panicking can save your life. So it says, as he worked and willed himself to stay afloat,

Starting point is 01:07:22 Ko kept his mind on a story that had always stayed with him, in large part because of his very fear of what had just befallen him. A friend had once told Coe about being on board a small ferry boat that was crossing Lake Michigan. The ferry had sunk, and the friend had found himself flailing about in frigid waters

Starting point is 01:07:39 along with his wife and young daughter, neither of whom could swim. Terrifying, right? Coe's friend had reasoned, but Coe's friend could swim. His wife and his daughter, neither of whom could swim. Terrifying, right? Ko's friend had reasoned, but Ko's friend could swim. His wife and his daughter could not, but the water's really cold. Ko's friend had reasoned firmly, but reassuringly with his wife and daughter, telling them not to panic and to simply keep their hands on his shoulders. He insisted that he could keep all three of them afloat, and if they would simply trust him and stay calm, they would be saved. Coe's friend had been successful.

Starting point is 01:08:08 And the message behind the story burned fiercely in Coe's brain as he floated there in the lonely waters. And so he's like, I'm not going to panic. And he tries to be positive. He had certain things going for him, he told himself. There's plenty of daylight left. And compared to the choppy and frigid Lake Michigan, he might as well have been bobbing in a calm, if enormous, tub of bathwater. And so he's treading water. He's like, I got plenty of daylight. I'm going to stay calm.

Starting point is 01:08:32 I'm not going to panic. If I panic, I'm going to die. Eventually, the people driving the boat go back and try to figure out, hey, where did Co go? They realize he's not in his room. That's weird. He's on the boat. Then they see where he fell off.

Starting point is 01:08:44 It kind of like broke a part of the boat so they immediately turn around and it says and then he saw the approaching craft his engineer waving and shouting relief washed over him in moments he was being pulled to safety and so that reminded me I had this crazy story a few years ago on a podcast there's a former Miami Dolphins football player named Rob Conrad, and he was on his boat nine miles off the coast of Florida by himself, and his boat had autopilot, like, I guess cruise control. And so he set it up, it kept going, and so he goes to the back of the boat to check something, and it, like, hit a wave or something, and it knocked him out of the boat. And normally, if he fell out of the boat, like, the engine stop. And he just realized, oh, my God, the thing's going to keep going. And so on this podcast,

Starting point is 01:09:28 he is telling the story where he takes 16 hours to swim nine miles to safety. The whole time, he's just thinking of it. I think he has young daughters and his wife. And he's just like, I can't give up. You know, you're beyond fatigued so like he's severely sunburned by the time he gets to shore like all the skin on his neck and his shoulders and everything else are completely gone from the grinding of the the salt water it was just an unbelievable story about human will just like i cannot die my family needs me and it just pushed him i just could not imagine swimming for 16 hours straight another Another hurricane hits the island, interrupts the construction, kills a bunch of people. There's just one story. This is just incredible that this guy survives. One foreman was caught in a storm and tried to save himself

Starting point is 01:10:14 from being swept out to sea by tying himself to the trunk of a tree with his own belt. He was still being buffeted by the winds when the man began to sense that he might live. Then he began to feel a terrible burning sensation at his hands. The searing pain had moved to his face and lips, which were pressed tight against the trunk of the tree. His eyes had begun to burn and in moments were nearly swollen shut. So this is about the intense human desire to survive, to live, right? Not only is he about to be blown out by the wind, there's a storm surge. He's tying himself to a tree.

Starting point is 01:10:52 He's like, okay, okay, maybe I won't get blown off this tiny little island and I'll actually survive. And he winds up tying himself to a poisonous tree, right? And he still survives. Like, this is crazy. So now his face is on fire fire his hands are on fire his eyes are shut and he's in 100 100 plus mile an hour winds he realized the terrible irony of what he had done he had lashed himself to a manicheal tree most likely pronouncing it correctly manicheal tree one of the most poisonous plants that grows in the tropic the indigenous key keys native

Starting point is 01:11:21 americans had used the manicheal to poison the wells of invading spanish conquistadors hundreds So it says Flagler's next birthday would be his 82nd, and those closest to him had come to feel that the only thing that kept the old man alive was his dream of seeing the project completed. Yes, he's getting old. He's starting to get hunched over he's getting a little weaker but he's still got that fire in the belly and we see that because this is when he sends one of his executives down they're like okay we're almost we know we can do this where is the train going to terminate at we got to build a terminal and so it says the by then the keys was the most popular city in Florida, with its port ranked as the 13th busiest in the nation.

Starting point is 01:12:10 And so it says, it's one by four miles of territory had been built and overbuilt already. By the time Joseph Parrott arrived, that's the guy that Flagler sent, there was simply no more land to be had. Certainly not enough for Flagler's ambitious plans. There's no more dry land in Key West, Parrott reported to his boss. Then not enough for Flagler's ambitious plans. There's no more dry land in Key West, Parrot reported to his boss. Then make some, Flagler replied. And Parrot did. He constructed a bulkhead above the northwest corner of the island and dredged thousands of cubic yards of marl. I had to look that up. That is unconsolidated sedimentary rock or soil

Starting point is 01:12:42 consisting of clay and lime. So he takes a bunch of this from the bottom of the ocean and starts building land, right? So it says thousands of cubic yards of maul from the adjoining flats to fill in a breakwater and foundation for a rail yard, terminal building, and docks. The United States Navy tried to block the project, complaining that they were removing fill from submerged lands under their control and that they might need that fill for defense purposes someday. Parrot's response was classic Flagler. If the time ever came when the Navy needed its mud Parrot said they had his word that it would be returned from whence it came. And this idea that I'm going to build a railway from the top of Florida all the way to the end takes over 20 years, but damn it, he did it. On the afternoon of January 21st, 1912, almost seven years after work on the Key West extension of the line had begun,

Starting point is 01:13:38 the project's equivalent of driving of the Golden Spike took place. For the first time, traffic was open across the Seven Mile Bridge, at the time the world's longest continuous bridge. The process of rail building that had begun in 1892 was complete. There were now 366 miles of track linking Jacksonville with Miami and 156 more connecting Miami with Key West. The same morning, Henry Flagler, now 82, left his home in Palm Beach. He was frail and his sight was failing, but nothing was about to stop him.

Starting point is 01:14:20 Not after spending $12 million on hotels, $18 million on a land-based railroad, and another $20 million more on his railroad across the sea. On this day, he would board his private railroad car at the West Palm Beach station for a 220-mile trip that would culminate in Key West and punctuate the dream of a lifetime. At 10.34 a.m., Henry Flagler, his back bent with age and his dim eyes brimming with tears, stepped out onto the observation platform to an ovation the likes of which he had never encountered. He had ridden his own iron to Key West at last. A military band played and a children's chorus of 1,000 voices sang patriotic songs in Flagler's honor. A choked up Flagler turned to Parrot and whispered, I can hear the children, but I cannot see them. Parrot, nearly overcome himself, simply gripped

Starting point is 01:15:12 his old friend's arm and squeezed. When finally called upon to speak, Flagler managed to rally. We have been trying to anchor Key West to the mainland, he said, and anchor it, we have done. The project that so many had turned away from and others had derided became a reality. Few people in history have accomplished so great a task or lived to experience such a moment as Flagler did. On his way off the platform, Flagler placed a hand on Parrot's shoulder and whispered, Now I can die happy. My dream is fulfilled. And that is where I'll leave it for the full story. I highly recommend reading the book. It's just fantastically written.

Starting point is 01:15:55 Wonderful story. A ton of interesting information in here. If you buy the book using the link that's in the show notes in your podcast player, you'll be supporting the podcast at the same time. Another way to support the podcast is to give a gift subscription to a friend, coworker, or family member. That link is always down below in the show notes in your podcast player. It's also available at founderspodcast.com. That is 247 books down, 1,000 to go. And I'll talk to you again soon.

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Founders - #247 Henry Flagler (Rockefeller's partner)

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