Russell Starts New Companies Instead of Paying Debts

Fortune favored them in 1855 and 1856, and their profits from freighting military supplies those two years amounted to about $300,000. That was the only period of unbroken prosperity they would ever know. The year 1857 began auspiciously. By the time it ended, 14 entire trains, including 1,906 oxen, which had hauled supplies to Utah for Gen. Albert S. Johnston’s army were destroyed. This disaster cost Russell, Majors & Waddell $230,208.20. Additional cost for agents and teamsters who had to spend the winter in Utah amounted to $35,167.15 making a total of $265,375.35. Russell prepared a claim against the United States, which included $228,378.26 extra compensation for trans-porting supplies to Utah over and above that for which their con-tract called. The total amount of the claim was $493,772.61. It was presented to congress in February, 1860, but none of it was ever paid. All the financial troubles Russell, Majors & Waddell encountered from 1857 on had their roots in the losses in Utah and the failure of the government to reimburse them.

Russell made many mistakes in his career, but the one which proved fatal in the end was that instead of paying the firm’s debts he used whatever funds were available to launch new and profitless enterprises. Chief among these were the Leavenworth & Pike’s Peak Express Co., the Central Overland California & Pike’s Peak Express Co., Miller, Russell & Co., and the Pony Express. In fact the only concern which made a profit after 1855 was the freighting firm of Russell, Majors & Waddell. It not only more than paid its own way, but also financed the undertakings which proved to be nothing more than liabilities. Waddell and Majors saw the folly of Russell’s policy and protested again and again, but he never aban-doned it. Being inextricably bound to him by business ties, and moved by a misguided sense of loyalty, they followed him in a course that could only lead to ruin.