THE DOWNSIDE OF ACADEMIC SPECIALIZATION. Market Power recommends an article by Cornelius Vanderbilt's biographer that compares Warren Buffett, the recent purchaser of BNSF Railway with ... Cornelius Vanderbilt.

The American railroad produced the nation's original corporate capitalists—the ones we call tycoons, moguls, or robber barons. The first and greatest was "Commodore" Cornelius Vanderbilt, who amassed the New York Central system between New York and Chicago in the 1860s and '70s. This week's purchase of Burlington Northern by Warren Buffett seems to make Mr. Buffett a worthy successor.

"It's an all-in wager on the economic future of the United States," Mr. Buffett said of his purchase. "I love these bets." So did Vanderbilt. And Mr. Buffett's wager is on a Vanderbiltian scale. His company, Berkshire Hathaway, is paying $26.3 billion in cash and stock for 77.4% of the enormous railroad. (It already owned the rest.) In the Information Age, this is a startling endorsement of the oldest of the old economy.

Nineteenth century railroads largely created the modern corporate economy. Led by Vanderbilt, they landscaped the playing field that Mr. Buffett now strides across. The tale of the two titans, then, is a tangled story rather than a mere contrast of then and now.

The tangled story neglects meaningful differences in the railroad system the Commodore put together, by connecting independent short lines into a single trunk line ultimately linking New York to Chicago and St. Louis, with BNSF, a combination of the easiest freight route from Chicago to Los Angeles with the easiest freight route from Chicago to Seattle. The latter route was the vision of James J. Hill, who financed the railroad without any government land grants and acquired rights-of-way from Indian tribes by negotiation rather than force. His civil engineer, John Stevens, followed up on a legend brought back by the Lewis and Clark expedition of an easy crossing of the northern Rockies. That's the substance behind Mr Buffett's purchase.
Mr. Buffett is betting on good old fashioned stuff—such as grain, coal for power plants and consumer goods imported from Asia—and the need to move it.
And the infrastructure to move it. And, perhaps, that the best use of the electricity from Great Plains wind farms is as the power source for electrically operated railroads to move the grain and the coal and the ethanol to locations less suited to wind farms.

The editor of Trains once asked, in a reflection on James J. Hill, "where is Yim when we need him?" Perhaps Mr Buffett is this era's Yim.

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