27 Fighting for Survival
In the short time of Harriman’s rise he has succeeded in making himself the most cordially disliked man, personally, in the whole financial community Men who are associated with him in great enterprises make no bones of commenting on it, probably because no one has ever heard that Harriman cared whether people liked him or not. His brusqueness of manner, inversely proportional to his physical size, has gone along with an absolute intolerance of dissenting opinion and a sheer inability to see that any one else cannot grasp a point as quickly as he does, to make a board meeting with Harriman at the table something to be looked upon in the same light as a visit to the dentist. Having jumped to his conclusion by performing in a minute the mental processes that might require a day in average men, he considers it time wasted to sit around while other slower mortals are pondering the things out, and the marvellous clearness of perception and accuracy of his thinking have made his conclusions right so often that the possibility of being mistaken does not enter his mind.
—New York Times, May 13, 1906
All the disparate forces bearing down on Harriman in this worst year of his life came together in December 1906 like strands of a tapestry woven by a malevolent fate. Against this inescapable weave Harriman fought with dwindling strength but undiminished resolution. To his friends he made no complaint regardless of how much pain and frustration he endured, but those near him saw the agony in his eyes and the drawn, pinched features. The fight was taking its toll; for the first time Harriman began to look like an old man.
The month opened on a gloomily prophetic note with the funeral of Samuel Spencer, the brilliant president of Morgans Southern Railway, who had died in a shocking accident when one of his passenger trains smashed into the rear of another. Harriman had known Spencer for years and thought highly of him. On a crisp December afternoon he slipped unobtrusively into St. John’s Episcopal Church, one of the last to arrive, and brooded through the service, his mind flashing from the image of an old friend departed to the grisly accident that killed him. It was the kind of carelessness Harriman had fought against for years, and it was a harbinger of the year to come, the bloodiest in railroad history.1
The railroads got a bad name that winter as overtaxed crews and equipment tried to move a record traffic under trying conditions. Shortly after Spencer’s death, another collision killed more than forty people in Maryland; an investigation showed the engineer who caused the crash had been on duty for thirty- three hours and had slept for only eight out of the past fifty-seven hours. Even the proud Union Pacific was not immune to this rash of tragedies. Two of its crack passenger trains collided in Nebraska and killed three passengers, one of them a well-known actor. A few days later the Los Angeles Limited caught fire in a bizarre accident that claimed one life.2
Harriman raged against these tragedies but could not stop them. Public resentment against the carriers was rising and transferred easily to the men who ran them, whose arrogance of power and control of vast resources seemingly made them indifferent to the needs and safety of those who patronized the railroads. This assumption led easily to the belief that only the federal government could curb their excesses and abuses. Politicians were not alone in hopping on this bandwagon. On December 7 a federal grand jury in Utah indicted some subsidiary companies owned by the Harriman and Gould systems for alleged fraud in their control of coal lands. Although the charges did not involve Harriman directly, they splashed his name across the headlines and fed the growing image of him as a corporate predator.3
The cloud of suspicion gathering about Harriman tainted even his triumphs. Everyone conceded his genius as a railroad man, but few realized how much the Union Pacific’s success owed to his masterful handling of finances. To the public he remained a pawn of the powerful money interests behind him: Schiff, Stillman, William Rockefeller, Rogers, and the dark empire of Standard Oil. In fact, Harriman had formulated the policies that enriched the Union Pacific with help from his friends but not as their pawn. Two policies in particular had proved spectacularly successful: the convertible bonds of 1901 and the investment in Northern Securities.
The $100 million in bonds Harriman had issued in 1901 to buy Southern Pacific and Northern Pacific stock paid 4 percent and could be converted into stock any time before May 1906. No one expected many shares to be converted because the stock paid only a 4 percent dividend, but the spectacular growth of earnings over the next two years made higher dividends inevitable. The result was a stampede by bondholders to convert before the dividend rose; by the summer of 1906 nearly all the bonds had been converted to stock. In effect, Harriman had reduced the fixed debt by $100 million and released the collateral on the bonds for other use. This saved $4 million a year in interest and put $83 million of the company’s unpledged bonds into its treasury for other use.4
Through these and other steps, Harriman revamped the asset base of the Union Pacific into a tower of strength. Yet this major achievement was overshadowed by another spectacular move. By 1906 the prices of the Great Northern and Northern Pacific shares received in the dismantling of Northern Securities had soared to record levels. Harriman decided the time had come to sell them off and put the money to other use. Altogether the Union Pacific had invested $89 million in Northern Securities; the sales eventually brought back $144 million, a profit of 62 percent from what had been universally hailed as a ringing defeat for Harriman. Any financial wizard could make success pay handsomely, but none matched Harriman’s profits from a losing battle. While this coup did much to enhance the Harriman legend, it attracted less attention than what Harriman did with the proceeds.
The sale of these stocks in 1906 alone put nearly $100 million into the company treasury. Harriman invested this money in the stock of other railroads friendly to the Union Pacific. This brought the Union Pacific income from dividends, created a closer harmony of interest among the roads, and gave Harriman leverage in their management. By the end of 1906 he had acquired large blocks of Atchison, Baltimore & Ohio, Illinois Central, Milwaukee, New York Central, Northwestern, and Railroad Securities Company stock.5
From a purely financial point of view the moves were bold and brilliant strokes. The investments paid the Union Pacific an income of nearly $16 million by 1909. In 1906 the road earned more from this outside income than its entire gross receipts had been for the year before Harriman took control. No carrier in America, not even the Pennsylvania, boasted so diversified a portfolio. Good financial policy, however, proved to be political dynamite; the purchases drew immediate cries of alarm. One analyst depicted the Union Pacific as a railroad, a bank, and a holding company. Why a bank? By the end of 1906 the company had outstanding nearly $35 million in demand loans, a figure exceeded only by six or seven of the largest banks in New York. It also had large cash reserves even after making the stock purchases.6
To public eyes this hydra-headed monster took on a sinister aura as the Standard Oil of railroads, its tentacles of power and influence coiling far and deep into the economy under Harrimans direction. This image emerged on the eve of the ICC investigation into the Harriman roads. It built on the shocking (and distorted) revelations that erupted out of the insurance investigation, the Fish imbroglio, and the other controversies that implanted Harriman in the headlines.
The ICC investigation culminated this invention of a new public enemy. As Harriman well knew, observers were smacking their lips in anticipation over the disclosures the inquiry would elicit. Like the Armstrong sessions, which had vaulted Charles Evans Hughes into the governor’s office in New York, it was going to be a messy affair with reporters gleefully sensationalizing every nugget of information dropped in their path. Harriman also had the problem of a runaway river that had yet to hit the New York dailies but would quickly be linked to his name when it did. Then there was the pain, the constant drain on his energy that grew steadily worse, like the gap in the levee through which the Colorado had again poured its waters in recent days.
While the papers fashioned their portrait of him as an invincible titan, the gaunt Harriman felt more like a fugitive being pushed into a corner by his gathering enemies. Whatever his feelings about Roosevelt’s behavior, he could not afford a prolonged vendetta with so powerful a foe. He and Roosevelt were among the dignitaries invited to the annual Gridiron dinner on December 8. Harriman’summoned Maxwell Evarts and asked if he remembered the earlier talk with James Sherman. Evarts said that he recalled it perfectly. Harriman then asked if he would be willing to see Roosevelt. Evarts said yes. “Well, we are going to Washington to the Gridiron dinner,” Harriman told him.7
The dinner was a glittering affair at the New Willard Hotel, where, in a banquet room filled with cigar smoke and bonhomie, enemies put aside their feuds for an evening of fun. Roosevelt roared his approval at a skit bashing his handling of Panama and Cuba, and Harriman laughed at a “bulletin” announcing that William Howard Taft had resigned as secretary of war to act as peacemaker between Harriman and Stuyvesant Fish, who was also present. Next day Harriman arranged for Evarts to visit the White House. Evarts arrived at five in the afternoon and found Roosevelt polishing up a letter that was his rejoinder in another controversy. “I suppose you know what Harriman wanted you to come to see me about?” he said.8
“Yes,” replied Evarts. He related his version of the interview between Harriman and Sherman. Roosevelt interrupted to ask what Harriman had said about him. Nothing, Evarts assured him, that could not have been repeated to him or anybody else. What about the remarks Harriman made as to getting anything he wanted by buying it? Roosevelt demanded. “Nothing of that kind was ever talked about,” Evarts insisted. “Mr. Sherman must have misunderstood the conversation.”
“Why, my conversation with Mr. Sherman would show Harriman to be the most wicked, cynical man in the world,” cried Roosevelt. “It was so bad that I had Mr. Sherman repeat it to Root, and then I had Sherman write out the whole conversation in a letter to me. Now, why did Sherman tell me all this?”
Evarts shrugged. A misunderstanding, surely.
“I want party harmony in New York,” Roosevelt emphasized, “and… I want you to see Sherman and get him to write me that his conversation was all a misunderstanding.”
After Evarts agreed to do this, Roosevelt asked his views on the forthcoming investigation. Evarts protested that it had gone public too fast, that there should have been a quiet private inquiry to determine whether a public investigation was warranted. That might be true, Roosevelt conceded, but the matter was in the hands of the ICC, over which he had no power. Roosevelt did not mention that two weeks after penning his letter to Sherman, he had written an ICC commissioner applauding the idea of an inquiry into the Union Pacific- Southern Pacific systems. The idea had been prompted by the commissioners recent report on coal land abuses and a string of shipper complaints over high rates. “It seems to me,” Roosevelt added pointedly, “that these complaints are sufficiently widespread to justify a thoro investigation.”9
Evarts left the White House convinced that Roosevelt had lied about having a letter from Sherman and had merely written down what Sherman had told him—or what he claimed Sherman had told him. Yet Evarts also thought there was no hurry about asking Sherman to put his version of events on paper. On that point events proved him tragically wrong.10
Fate took Harriman and Roosevelt in opposite directions that month. The president was in an expansive mood, having learned the day after seeing Evarts that he had been awarded the Nobel Peace Prize. By contrast, everything went wrong for Harriman. He felt so poorly that he asked Roosevelt to use his influence to delay the investigation for a few weeks. Roosevelt made a gesture in that direction without success. On December 13, the day after receiving Roosevelt’s reply to his request, Harriman’sent the telegram notifying Roosevelt of the runaway river and asking for federal assistance.11
Sending this second plea for help was the last thing Harriman wanted to do, but he had little choice. The presidents tough reply did not surprise him. Six days later he tried another lengthy telegram outlining the work to be done and offering to put all his men and facilities at the disposal of the government’s Reclamation Service. Roosevelt shot back an even longer reply the next day rejecting the offer. The Reclamation Service could not act without authority from Congress and permission from Mexico, neither of which could be obtained fast enough. “It is incumbent upon you to close break again,” admonished Roosevelt. The CDC had caused the crisis and should be responsible for solving it. There was not “the slightest excuse for the California Development Company waiting an hour for the action of the Government. It is its duty to meet the present danger immediately.” Later the government would do what it could about compensation.12
Harriman read this telegram with clenched teeth. The president had done it to him again. He had taken a public position throwing the blame squarely on the CDC, which deserved it, but also holding Harriman responsible for the CDC as a Southern Pacific subsidiary. It was another magnificently contrived piece of grandstanding. The papers treated it exactly as Harriman feared they would, praising Roosevelt for his forceful handling of the crisis and for pinning responsibility on the reckless business interests who had caused it; linking Harriman to the issue as somehow to blame for it with no recognition of what his actual role had been or what he had already done to keep the river at bay.13
The only thing Harriman could do was make the best of a bad situation because the river would not wait. That same day he sent Roosevelt a long reply adamantly denying that the Southern Pacific was in any way responsible for the CDC or the crisis. “However, in view of your message,” he added, “I am giving authority to the Southern Pacific officers in the West to proceed at once with efforts to repair the break, trusting that the Government… will assist us with the burden.” Roosevelt pronounced this decision “very satisfactory.”14
Most newspapers portrayed Harriman as marching to a tune whistled by the president, yet it is hard to dispute Epes Randolphs belief that Harriman would have tackled the challenge even if Roosevelt had explicitly refused any aid. By then the break in the levee exceeded eleven hundred feet and was forty feet deep at points. The engineers threw a pair of trestles over the breach despite losing three sets of pilings to the raging water, and late in January the first dump cars rolled across to deposit their load of rock.15
To push the work, Harriman all but shut down two entire divisions of the Southern Pacific for three weeks to deliver equipment and supplies to the crews toiling around the clock. “We handled rock faster than it was ever handled before,” boasted one engineer. Gradually the rising wall of rock turned the river back until it resumed its old course on February 10. After filling the rock dam with finer material, the crews began erecting a double row of dikes twelve miles long behind it. If another break occurred, these would trap the flow long enough for workers to put up a defense.16
But there was no other break. The Imperial Valley had been saved to blossom into the garden of the West. As a bonus it kept the newly filled Salton Sea, which did not evaporate as some experts predicted. Roosevelt kept his promise by seeking compensation for the work from Congress. Harriman asked only for $1.6 million, the amount spent in the last phase of the work. Congress held hearings, received a clear picture of events, delayed action for years, then refused to pay a dime because the work had benefited the railroad. Nor did it bother thanking Harriman with a resolution.
Settlers in the valley took a more generous view. “We believe,” one farmer told a congressional committee, “that Mr. Harriman felt a very human interest in our troubles.” Besides singing his praise, they offered the Southern Pacific a package of land and irrigation bonds to help defray the cost. Most of the engineers who took part in the work agreed that it would never have been done without Harriman behind it. “Those of us who actually handled the work,” murmured Randolph, “were merely instruments in the hands of the Master Builder.”17
The Master Builder himself felt a keen sense of pride even if his labor went unrecognized at the time. “The best single thing we did and which gave me most satisfaction was this,” he told Otto Kahn. “I used every ounce of driving power I possessed to hustle the job as I have never hustled any job before.” Near the end of his life Harriman paid a visit to the Imperial Valley and took a last, lingering look at the levee. On his way back a reporter from the Los Angeles Examiner asked, “Mr. Harriman, the Government hasn’t paid you that money and your work here does not seem to be duly appreciated. Do you not, under the circumstance, regret having made this large expenditure?”18
Harriman turned to the reporter, his tired eyes gleaming with certainty. “No,” he said softly. “This Valley was worth saving, wasn’t it?”
“Yes,” said the reporter.
“Then we have the satisfaction of knowing we have saved it, haven’t we?”
As Christmas of 1906 drew near, two distasteful prospects still faced Harriman: a grilling at the hands of the ICC and another operation to relieve him of the pain that wracked him daily. Of necessity the surgery came first, though not before one last sorrow intervened. For Harriman the month closed as it had begun, with the funeral of a friend. This time it was A. J. Cassatt, president of the Pennsylvania Railroad, who had died suddenly of heart disease. Some said he had died of a broken heart from recent revelations of graft in the proud Pennsylvania system.19
On the day of Cassatt’s funeral in Philadelphia, Harriman was in New York submitting to the knife. It did not go as well this time. The impatient patient was slow to recover, and he chafed against Dr. Lyle’s dictum of strict rest. A friend visiting him nearly a month after the operation was alarmed to find him “looking wretchedly and suffering intensely.” Harriman did not leave the house until the month’s end. When he finally ventured downtown on February 7, reporters flocked to him at once. His manner was relaxed, his mind as sharp as ever, and his humor in fine form. Asked when he was coming downtown again, he teased, “What is the use? I have been away for a month or more. Everything has been going along smoothly and they appear to be able to get along just as well without me as with me. Why should I not stay home altogether?”20
The reporters knew Harriman was incapable of staying home unless held prisoner there. Besides, he had a date with the ICC that could not be ducked. Rumor hinted that the commission’s target was much broader than coal lands, that it wanted an entry into the whole of Harriman’s empire. The order called for an inquiry into “the consolidation and combination of carriers; relation between such carriers and community of interest therein, their rates, facilities and practices.” This title gave the commissioners ample room for fishing expeditions.21
Everyone understood the order was aimed at Harriman’s roads. The basic target was assumed to be the relationship between the Union Pacific and Southern Pacific as well as the investments made by the Union Pacific in other railroads. But the commissioners displayed a keen interest in a wholly unrelated topic: the Alton deal. To neutral eyes this seemed an odd choice. The Alton episode was old business; the road had never been a major player and had no significance in the present relationship of roads. But Harriman knew why the subject was being exhumed: it was the most vulnerable chink in his armor, the one deviation from his usual business practices and therefore the most inviting target.
The hearings opened on January 4, 1907, and produced good copy for two months, vying for headline space with the lurid murder trial of Harry K. Thaw, the slayer of architect Stanford White. The mood on Wall Street was apprehensive. Apart from the Harriman inquiry, there was raging debate over railroad rates at both the state and federal levels, snarling talk of strikes, the government suit against Standard Oil, and other incidents that led even moderate businessmen to suspect the government of harassing corporations. Some lashed out angrily at Roosevelt, who tried vainly to convince business leaders that he was doing them a favor.22
The trusts had become a political issue of astonishing virulence, bringing together in improbable alliance the unwashed masses and the overwashed gentility, who viewed the new economic order as a menace not only in its concentration of power but also as a distasteful form of new barbarism. In this war of social and political images Harriman found himself thrust into the role of icon for all the fears and hatreds of those opposed to the new corporate world.
Since Harriman was still recuperating from his operation, the ICC summoned his colleagues and officials to testify before going after the star witness. For seven weeks a parade of prominent rail men and financiers marched before the commissioners to tell their tales in the veiled language elicited by such inquiries. Long before Harrimans appearance it was a foregone conclusion that the government would bring suit to separate the Union Pacific and Southern Pacific roads after the hearings concluded. Even the sympathetic Railroad Gazette conceded that the evidence showed that “Mr. Harriman’s power in the conduct of railroads of which he is the head is to all intents absolute.” The papers wrung every dollop of sensationalism they could from the testimony, thereby whetting appetites for whatever pearls Harriman himself might drop.23
On February 25, his fifty-ninth birthday, Harriman’strode into the oppressive gloom of the Federal Building and took the stand for the first time. Those who expected fireworks were not disappointed. Despite his recent illness, Harriman was his old feisty, combative self, frank and stubborn by equal turns, trading repartee with the lawyers, giving information freely but dictating the terms on which he gave it, pulling back only when his own counsel insisted that the question poked unduly into his private affairs. At the prompting of his lawyer, Harriman read a long statement explaining his role in the Alton and justifying the syndicate’s actions.
After he stepped down, a reporter asked him which birthday he was celebrating. “The fifty-ninth,” Harriman’shot back. “When I’m sixty, I’ll retire.” It was a flippant remark, but he came to regret it.24
The next day sparks flew in earnest. Harriman was kept on the stand all day, and the strain wore on him. One line of inquiry pursued Harriman’s purchase of stocks in other roads during 1906 and arrived at the doorstep of the Illinois Central fight. Before the questioning got far, Harriman insisted on relating the entire story behind the fight to remove Fish from the presidency. Both the ICC and his own counsel tried to restrain him, but he would not be stopped. As with the reading of the Webster letter to Sherman, it spilled out of him like a torrent of rage and frustration dammed up too long and demanding an outlet.25
“In view of serious charges you have made in regard to Mr. Fish—,” began one commissioner after he had finished.
“I have not made any charges,” retorted Harriman. “I have only stated facts. I do not want to be put in the position of making charges.” Moments later he noted pointedly, “The funds of the Union Pacific have never been used by any Director for their own personal benefit.”
While the commissioners fumbled with papers on their desk and the lawyers fumbled for a new line of questioning, reporters scribbled furiously. Most accounts portrayed it as a bitter personal assault on Fish, who refused to comment on the matter. Frank Vanderlip thought Harriman had acquitted himself well “with the glaring exception of the attack on Mr. Fish which was something he insisted upon.” At least it showed Harriman in fighting trim, no longer on the defensive but meeting questions with his old slashing style, yearning to say more than his lawyers wished him to say and restrained only by their insistent pleas, trying at every turn to orchestrate not only his answers but the questions as well.
“Now, wait a minute,” he told chief examiner Frank B. Kellogg repeatedly, “let me have my way about this.”
“You always have it your way,” sighed Kellogg wearily.26
Harriman wrapped up his appearance the next morning. As he mounted the stand, he quipped to reporters that he would rather be a newspaperman than a witness and was promptly offered a job. He was detained only briefly, then stepped down and took a seat among the reporters to watch Otto Kahn testify. Afterward he chatted for nearly an hour with the newsmen and seemed so affable that some suspected him of “cultivating pleasant relations.” He obliged one photographer by whipping off his silk hat for a picture.27
From the crossfire emerged one clear issue that lay near the heart of the trust issue: how much power should any one man be allowed? Ironically, the issue had come to public attention less through the behavior of individuals than through the power amassed by their creations, the giant corporations. Few men had become so closely or conspicuously identified with the performance of his companies as Harriman, who forced people to confront this oldest of questions in its newest guise of the industrial setting, where wealth and power had accumulated on a scale never before witnessed.
It was easy to condemn scoundrels who had accumulated power, but Harriman was the most benevolent of despots. Even his harshest critics conceded that he had wrought miracles of productivity with the railroads under his command. The worst of his ideas had more value than the best of ordinary men, and the ideas kept flowing in endless, surging procession. His response to the earthquake (little was yet known of his work in the Imperial Valley) was only the most recent display of what a good citizen he could be. He was the most ardent of patriots, the most dedicated of servants, who asked only that he be allowed to do things his way without interference.
There was the rub. He asked for the one thing that could not be granted. Fearing nothing more than the concentration of power in individual hands, the public had just begun to grasp the distinction between corporations and the men who dominated them. The age of titans had entered its twilight when Harriman appeared, and to most observers he was literally too much of a good thing. “No one man should have so great power to speculate with the resources of a great and rich system of railroads,” declared the Railroad Gazette. “It is wrong economically and morally, if not legally.” Harriman was, added the genteel Nation, the “feudal lord of our ancien regime, crushing the individual by an irresistible weight.”28
While the hearings droned on and pundits pondered this paradox, Harriman took his family off to Virginia for a few days’ vacation. On the way home he paused in Washington to show Roland the sights, including the White House. Roosevelt received them politely if briefly and took Roland by the hand for a whirlwind tour through his store of bearskin rugs, heads, and other trophies. That night Harriman hosted a dinner for some of his comrades from the Alaska expedition.29
To reporters Harriman dismissed the visit as purely social. The papers rang with rumors that Roosevelt planned to chastise the Harriman’system as a “horrible example” of the evils of overcapitalization by bringing suit against it and that the ICC might extend its inquiry to the Northern Pacific panic. Pressed for a response, Harriman muttered ruefully, “I’ve been a pack-horse all my life, and if I am to be required to pack this new burden, I will be able to do it.”30
But he was plainly tired of packing both burdens. Some accommodation had to be reached with Roosevelt and the ICC. He had not ambled into Washington just to see the sights but had summoned Maxwell Evarts to meet him there. On Monday, March 4, Harriman and Evarts paid a surprise call on the ICC. The commissioners were assembled in chairman Martin A. Knapp’s office when Harriman and Evarts walked in. One of them broke an awkward silence by asking Harriman what was the most important engineering feat he had undertaken. Harriman launched enthusiastically into a description of the Colorado River fight, which had just reached its climax. Everyone settled into a pleasant conversation in which Harriman made a strong impression on the commissioners.31
Encouraged by this visit, Harriman asked Evarts to see Roosevelt again and arrange a meeting between them. Evarts telephoned for an appointment and went over to the White House on Wednesday. “Here comes Harriman’s ambassador,” Roosevelt bawled out as he liked to do when he spotted Evarts. They went into Roosevelts office, where Evarts asked him to sit down with Harriman and discuss the railroad situation.32
“How can I do it?” Roosevelt cried, throwing up his arms. “What will the newspapers say?”
What could the newspapers do about it, countered Evarts. The burning issue of the day was railroad regulation. Roosevelt had crucial decisions to make on the carriers, and who could better advise him than Harriman? “No man has the knowledge of this subject that he has,” Evarts reminded him, “and no man knows better what ought to be done.”
“Well, you don’t know what Morgan and some of these other people say about Harriman,” Roosevelt demurred.
“Mr. President,” replied Evarts, “I know one thing: you never heard Harriman’say one word about Morgan or any of the rest of them.” Besides, Morgan was a banker, not a railroad man. If the president wanted information on the railroads, why was he reluctant to see the man who knew more about the subject than anyone else?
Roosevelt nodded assent and promised to discuss the matter with his cabinet. Evarts left with the belief that the wound was on its way to healing. Next day Roosevelt wrote Evarts that he would be glad to see Harriman, but as usual there was a hook. “The visit is evidently expected by the outside world,” Roosevelt added, “as numerous newspaper correspondents have been inquiring about it.” He asked that when the meeting took place, nothing said in it be released without his prior approval.33
The overtures to Roosevelt and the ICC marked a dramatic change of front by Harriman. He finally accepted that a new climate of opinion had emerged and that his imperious ways had become a serious liability. If he could not alter his personality, he could at least temper its roughest edges by invoking in word and deed the theme he had sounded so emphatically at the exposition in 1904: the necessity for cooperation. To that end he announced a stunning reversal of past policy: hereafter he would make himself more accessible to reporters and speak out on the issues.
Harriman’s ambassador: Maxwell Evarts, who tried in vain to mediate the quarrel between Harriman and Theodore Roosevelt. (Union Pacific Museum Collection)
“HARRIMAN ENDS POLICY OF SILENCE,” blared the New York Times after receiving the announcement on March 6, the same day Evarts saw Roosevelt. “It has never been my idea to concern myself much about the relations of the public to the railroads,” Harriman admitted in his clumsy way, “but I propose hereafter to give the public information; to take it into my confidence as to matters it is entitled to know about.” He went so far as to invite reporters into his home for an interview, gathering them in the library to scribble furiously while he paced the thick carpet firing observations at them, pausing only to pound his fist on the desk for emphasis. This was a Harriman the boys had never seen and quickly came to relish. Having come in from the cold, Harriman too discovered that he liked this new role.34
He offered opinions on a wide range of topics from the tariff to the needs of the railroads in a time of crisis. Yes, the government should regulate, but it must not destroy the roads’ ability to do their job in the most efficient way. “Unless we can educate people up to this proposition,” he lectured, “we might just as well stop trying to do our share in the development of the country. I said in Washington, and I say now, that there has got to be co-operation on the part of the railroads on the one hand and the public and the Government on the other.” Later, Harriman took the interview, revised it, and let it appear under his name as an article called “The Railroads and the People.”35
This new role captivated many listeners because it seemed as alien to Harriman as it did natural to Hill. Asked why he had changed, Harriman’said with disarming candor, “The creating of public sentiment by our enemies, has reached such a stage that we will have to take the matter in charge for ourselves. It can no longer be left to subordinates and others.” A few railroad presidents chimed agreement with Harriman’s remarks. For a moment the door to reconciliation seemed open; then something peculiar happened.36
On March 11 J. P. Morgan hurried to Washington for a meeting with Roosevelt. Later it was said he had gone at the urging of several railroad presidents who knew that Morgan was about to depart on his annual pilgrimage to Europe and were nervous about what the administration might do in his absence. Afterward, Morgan told reporters that Roosevelt had agreed to meet with four prominent rail presidents “to allay the public anxiety as to the relations between the railroads and the Government.” Uncertain as to where this left his own meeting with Roosevelt, Harriman asked Evarts’s advice. “We will wait until after these fellows get through,” Evarts suggested, “and when the matter quiets down we will go down on our trip.” Privately Evarts believed that the real reason for Morgans sudden visit was his fear that Harriman was scoring too many points in the right circles.37
Events then took a series of bizarre, unexpected turns that left everyone confused. Morgan departed for Europe and Harriman went to work preparing maps and tables for his meeting with Roosevelt. The highly touted session between the rail presidents and Roosevelt never took place; no explanation was offered. On March 13, the day Morgan sailed, the market suffered a contraction so severe that many observers thought it signaled a panic. The convulsion lasted two days, long enough for wild rumors to spread and strong men to waver in their judgment.38
When Harriman told Frank Vanderlip that he thought the worst had passed, he should have called the president instead. Roosevelt interpreted the decline as “a demonstration arranged by Mr. Harriman to impress the administration,” and he smelled a concerted effort by Wall Street to put pressure on him. A procession of financial men had visited him to urge that he do nothing to disturb the market in general and railroad securities in particular. The collapse seemed too timely to be coincidental, and it snapped something in Roosevelt. His attitude toward businessmen hardened that week. On March 15 he asked the ICC for recommendations on how best to strengthen the agency’s regulation of railroads.39
Word spread that Roosevelt blamed Harriman for the market break and was out to get him. The temperate Jacob Schiff tried to ease tensions with two long letters to Roosevelt pleading for conferences to iron out differences before the situation exploded. “It is difficult for me to understand,” came the exasperated reply, “… why there should be this belief in Wall Street that I am a wild-eyed revolutionist.” On March 21 Senator Shelby Cullom of Illinois called on Roosevelt to discuss Harriman’s activities in his state and told reporters afterward, “If I could have my way and there was a law to do it, I would put Harriman in the penitentiary for his work in the Alton deal.”40
Harriman was at Sherry’s that evening, hosting a dinner for his Boys’ Club. A reporter found him there and repeated Cullom’s remark. “If Senator Cullom said that,” snapped Harriman, “he could not have been sober.”41
Harriman had emerged as the point man in the worsening feud between Roosevelt and the financial community. As the skirmishing grew heavier, both sides sought ways to avoid a pitched battle. The long-deferred meeting between Harriman and Roosevelt offered one hope of clearing the air. With the mood in both New York and Washington darkening, something had to be done fast. Unfortunately, the something turned out to be an explosion no one could have anticipated.42
The detonator was a disgruntled stenographer named Frank W. Hill, who had been discharged by Harriman. Hill took away with him notes of some letters he had taken down, including the one to Sidney Webster. In March he made the rounds of the New York papers trying to peddle the Webster letter. Evidently one editor alerted Harriman, who asked all the papers not to print it. The Times obliged with a notice saying only that some of Harriman’s papers had been stolen. William Randolph Hearst’s New York American bought the letter but did not print it. Hill then sold it again, this time to the World. Pulitzer was not only willing to print it but sent a reporter to get Harriman’s reaction before publication.43
The reporter found Harriman in conference with John G. Milburn, one of his lawyers and the man in whose house President McKinley had died in Buffalo. After Milburn left, Harriman came out to see the reporter. He shook hands, sat down, crossed his legs, and said abruptly, “That letter must not be printed.”
“Didn’t you write it to Mr. Webster?”
“Yes; I wrote it, but I went further than the copy you have there. You only have part of it. You have it about as imperfectly as an inferior stenographer could get it from old notes. Now, I know you got that from a discharged employee of mine. You’re not the only ones that have it. He has been to others with it and I warn you not to print it.”
Harriman emphasized again and again that the letter would do “irreparable harm,” but to no avail. Sidney Webster, hunted down in Newport by the paper for his response, was so shaken by the news that he left for New York despite his poor health. The World printed the letter on April 2 along with a full account of Harriman’s reaction to it.
Roosevelt responded in predictable fashion by hauling out the “letter” he had written after his talk with Sherman and releasing it to the papers along with a barrage of rhetoric about a “rich man’s conspiracy” against him by Harriman, Hearst, and William Rockefeller. The object, he hissed, was to shatter the Republican Party and put the reactionary Hearst in the White House in 1908. Harriman himself had longed to be elected senator in 1904, Roosevelt added, to help defeat adverse legislation.44
In one stroke the road to reconciliation gave way to a shooting war of the sort at which the president excelled. Publication of the letters embarrassed everyone involved. The president spouted charges and denials with the regularity of Old Faithful but never succeeded in removing doubts about his role. The controversy came back to haunt him again in 1912, when he made another run at the presidency. Harriman was also badly tarred, especially by Roosevelt’s lumping of him with three labor leaders under the label of “undesirable citizen.” Worst of all, the image of Harriman as a cynical corruptionist willing to buy judges or legislators reinforced the caricature of him that had recently emerged in the public mind.
This was a war neither side could win. At first, Harriman tried to duck the fire. Asked his response to Roosevelt’s charges, he said blandly, “This has been an unusual Winter, both as to politics and as to weather.” But Roosevelt would not relent. Harriman, he wrote a senator, “lies about private conversations just as he swindles in railway transactions…. The real trouble with Harriman and his associates is that they have found themselves absolutely powerless to control any action by the national government. There is no form of mendacity or bribery or corruption that they will not resort to in the effort to take vengeance.”45
In Roosevelt’s personal iconography Harriman became the leading symbol for the evils in American business, the wicked example he invoked in his frequent tirades against the forces impeding progress in American life. Harriman could do little to counter this attack, for he lacked the forum and the immense personal popularity at Roosevelts command. At home the land rang with denunciations of Harriman; in Europe, where investors owned vaults full of American securities, abuse was heaped on the man who had been wildly praised only months earlier. None of this was an accident in Otto Kahns view: “A few of [Harrimans] bitterest enemies had set out the year before on a carefully planned, astutely prepared, campaign of destruction against him…. The Harriman Extermination League—if I may so call it—played the trump-card by poisoning President Roosevelt’s mind against Mr. Harriman… which caused him to see in Mr. Harriman the embodiment of everything which his own moral sense most abhorred and the archetype of a class whose exposure and destruction he looked upon as a solemn patriotic duty.”46
Kahn’s charge of an Extermination League can neither be proven nor easily dismissed. Certainly Roosevelt’s mind was receptive to being poisoned against others, especially when it served his own needs. Harriman was aware of the forces arrayed against him, whether separately or in a league of conspirators. Tired, haggard, coping yet again with pain that surgery had failed to alleviate, he plodded doggedly onward, asking no one’s sympathy and issuing no complaints except about government policy. The strain made him even more irascible than usual, more impatient in his dealings with everyone. Critics denounced his manner as well as his crimes, derided his utter lack of grace and tact, his handling of men like cattle, and his insistence on having his own way.47
The critics did not understand that Harriman had no time to waste on pleasantries, that time was now more than ever his true enemy. Nor did they understand how the pain lashed and drove him like a spur. Life had stripped away the amenities for Harriman, yet his appetite for challenge was as unquenchable as ever. Near the end of his testimony before the ICC there occurred a remarkable exchange when the ICC interrogator asked what would happen if Harriman got hold of the Santa Fe.
“You would not let me get it,” retorted Harriman.
“How could we help it?”
“How could you help it? I think you would bring out your power to enforce the conditions of the Sherman Anti-Trust Act pretty quick.” Harriman paused, then added, “If you will let us, I will go and take the Santa Fe tomorrow.”
“You would take it tomorrow?”
“Why, certainly I would; I would not have any hesitation; it is a pretty good property.”
“Then it is only the restriction of the law that keeps you from taking it?”
“I would go on as long as I lived.”
“Then, after you had gotten through with the Santa Fe and had taken it, you would also take the Northern Pacific and Great Northern, if you could get them?”
“If you would let me.”48
To some extent, Harriman was toying with his inquisitor, but the commission and the press took these remarks at face value and paraded them as an example of his unquenchable lust for power. In one sense Harriman was deadly serious: he would go on as long as he lived. For the moment, however, the president and the ICC and the Extermination League held him at bay. In the public mind he had become a monster pounding savagely against the door of conquest held shut by Roosevelt and the antibusiness reformers. Privately Harriman was no longer fighting for empire; he was fighting for survival.