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Overview
Product Details
| ISBN-13: | 9780807865538 |
|---|---|
| Publisher: | The University of North Carolina Press |
| Publication date: | 04/01/2011 |
| Edition description: | 1 |
| Pages: | 544 |
| Product dimensions: | 5.90(w) x 8.80(h) x 1.50(d) |
| Lexile: | 1310L (what's this?) |
About the Author
Read an Excerpt
From Chapter 25: Fighting a Formidable Friend
[Harriman] was a dominant factor in the inner circles of the greatest banking institutions. The vast resources of the New York life insurance companies were at his disposition. Ramifications of his political power, Federal and State, extended to every quarter of the land. State and even national conventions took his orders. Members of Congress did his bidding. Laws were enacted at his will. Only two men ever dared to block his path. The late J. P. Morgan stood between him and the possession of the Northern Pacific Railroad in 1901; and Theodore Roosevelt thwarted his purpose to become an absolute dictator of the transportation affairs of the United States.--William Z. Ripley, "Federal Financial Railway Regulation"
On a wall in Harriman's office hung a picture taken during an inspection trip through Mexico. The party had paused to examine a small railroad servicing a copper mine, and the photographer captured a dozen men, including Stillman, William Rockefeller, and Epes Randolph. By far the most inconspicuous figure in the group was Harriman, who was ignoring the camera in favor of a Mexican policeman with whom he was shaking hands. The policeman towering above the slight man in the baggy clothes and battered felt hat looked far more important and impressive.[1]
Anonymity had served Harriman well for many years, but now it was gone just when he needed it most. He had become a public target at a time when he needed to husband his fading strength for the work at hand but instead had to spend it fending off attacks. The economy had turned sluggish and many financiers thought hard times lay ahead. Harriman's properties required close attention to remain at the high standard of performance he had established. He was approaching the age when many leaders think of retirement or begin grooming a successor. Harriman did neither. Time had not slaked his ambition nor attacks dented his determination. He knew only one way to fight, and that was to stand his ground until the right prevailed. "I would give up the whole business," he told Alex Millar, "if I could be sure my plans would be carried out."[2]
But Harriman knew there was no one able to carry out his plans. Far from looking to get out, he was looking to get deeper in. The problem was that his way of doing things consumed enormous amounts of energy. He relied on an assertive personality that took command in everything; on a bulldog tenacity that argued for a policy until he wore others down; on knowing more than anyone else by doing his homework; and on sound judgment that required clear, fresh thinking. The Harriman style taxed both mental and physical stamina, and it permitted no shortcuts. To maintain this high level of dedication while engaged in prolonged controversies and blocking out constant pain asked much of his ebbing vitality.
The drain on his strength forced him to economize in every way, made him more imperious and impatient, more curt even to his friends and more peevish when thwarted. A man already renowned for his lack of charm grew even more brutal as he pared every action down to its essence. Eventually, of course, death would block his plans, but death was a subject he scrupulously avoided. It was not to be thought of or discussed. In fact, Harriman had lived with the fear of death all his life, only he knew it by another name: failure.
During 1906 two incidents occurred amid the Equitable and Illinois Central fights that twisted what should have been personal triumphs into examples of how the prevailing climate of public opinion warped everything Harriman touched. Both arose as protests to Harriman's dividend policy, which one critic labeled "conservatism run mad." The first involved the Wells Fargo company. Few people knew that Harriman had anything to do with this fabled banking and express firm until headlines blared the news in the summer of 1906. He had gained control of it shortly after buying into the Southern Pacific. The big four express companies--Adams, American, United States, and Wells Fargo--depended on railroad contracts for their business. Harriman wanted Wells Fargo to handle the express business on all his western roads. The fact that it owned a bank especially appealed to him.[3]
After taking charge of Wells Fargo, Harriman separated the bank from the express business and in April 1905 merged it with a Nevada bank run by an associate. The bank stopped issuing annual reports and gave out no information on its assets, earnings, and activities. It was an open secret that Harriman tapped Wells Fargo's surplus for loans to finance his rail operations. Rumors about these low-interest loans exposed him to the same charges that arose in the Equitable scandal then unfolding. No one accused him of damaging Wells Fargo; on the contrary, trouble arose when some stockholders complained that he was paying only an 8 percent dividend while the company netted more than 30 percent on its stock.[4]
In May 1906 some minority holders launched a drive for higher dividends and access to financial information. Harriman grudgingly hiked the dividend to 10 percent and released some figures, but neither move appeased the dissidents. A proxy battle with a novel twist erupted. The minority holders had no desire to change the management; they wished only to compel it to pay larger dividends. As the fight heated up, however, it developed what one observer delicately called "glimpses of feeling entirely outside of the matter at issue." A minority circular bluntly defined the struggle as one "between Mr. Harriman on the one hand and the entire body of 1,900 stockholders on the other."[5]
Here was a fight Harriman neither wanted nor needed, yet he could not avoid it or keep it from overlapping the other controversies splashing his name across headlines. One group of Wells Fargo holders filed suit against him and engaged the flamboyant Samuel Untermyer, who had defended Hyde in the Equitable fight. Harriman countered with William Nelson Cromwell, a high-powered attorney capable of dueling Untermyer in any battle of mouths. When the stockholders convened early in August, Harriman won a decisive but costly victory. During the meeting, Cromwell delivered an impassioned defense of the management in which he said of Harriman, "It is not on the business acumen of the officers but on his wonderful executive genius on which the stockholders must rely if the prosperity of the company is to continue. He cannot be replaced, for he moves in a higher world into which we may not enter."[6]
Critics across America pounced gleefully on Cromwell's "higher world" phrase as the perfect emblem of Harriman's aloofness, arrogance, and high-handed methods. Wells Fargo flourished while the other express companies struggled, but public attention ignored performance in favor of an image that fit the current perception of Harriman. A second incident at almost exactly the same time reinforced the impression, this one involving a dividend on the Union Pacific. For years analysts had heaped praise on Harriman's handling of the Union Pacific. While most of this attention went to its operation and reconstruction, thoughtful observers recognized that its financial record was no less brilliant.[7]
Early in 1906, as the road rolled up new records in traffic hauled and the surplus mushroomed, Harriman let the dividend go from 5 percent to 6 percent and fended off the clamor for more with his usual lecture on the need for conservatism. During the spring and summer, however, record earnings continued to pile up on both Pacific systems. The Union Pacific produced a surplus exceeding $25 million; it also owned $90 million worth of Southern Pacific stock on which Harriman had finally decided to pay a 5 percent dividend. This would put another $4.5 million into the Union Pacific treasury, and the securities acquired in the breakup of Northern Securities also poured dividends into the Union Pacific's coffers.[8]
At a board meeting on August 15 the directors absorbed these figures and agreed with Harriman to raise the dividend to 10 percent. Although the Union Pacific had never paid so large a dividend, the size provoked less of an uproar than the circumstances.[9]
Normally the board released news of a dividend at once, but several key directors missed the meeting and Harriman wished to inform them before it went public. The board left the timing of the release to the executive committee, which was to meet the next morning. That session was postponed until three in the afternoon so that Harriman could attend the funeral of an old friend. By then the absent directors had been contacted, but the New York Stock Exchange had closed. If the news went out at once, the London market would get the benefit of it before New York. "We decided that it was best to have the announcement made in New York before it was in London," Harriman explained, "that is, while the New York market was open." The "We" consisted of Harriman, Stillman, and Judge Lovett, the only members present that day.[10]
Normally news of a dividend was hardly the stuff of headlines, but in this case rumors of a major increase in the payment had excited Wall Street for weeks. When the announcement was delayed, two dozen reporters flocked to the Union Pacific office in the Equitable Building on the morning of the sixteenth only to learn that Harriman was absent and the meeting would be held later. When at last the news went out the next morning, an already boiling market sent Union Pacific and Southern Pacific soaring. Those who had lost heart over the delays and sold out or sold short howled in protest.[11]
Angry voices crying fraud soon drowned out the message of the remarkable dividends. "Harriman dividends amaze wall street," blared a Times headline, while beneath it in smaller caps ran the accusation that "the insiders made millions." Harriman was charged with delaying the announcement so that he and his friends could buy Union Pacific stock heavily and profit from the rise they knew the dividend would bring. The Times estimated that Harriman alone pocketed $10 million from this maneuver, which even a moderate journal deplored as a "wrongful use of corporate power." Criticism rained down on Harriman from every quarter even though no one had produced a shred of evidence that any director had bought stock.[12]
The fact that the dividends for both roads represented a sharp reversal of Harriman's past policy lent a veneer of plausibility to the charges. This was exactly the sort of insensitivity to public opinion that made Harriman's friends shudder. Schiff, Kahn, and Stillman tried repeatedly to warn Harriman that he lived in a world where the presence of smoke always heralded fire. "A man at the head of a great corporation," stressed Otto Kahn, "must not only do right, but he must be very careful to avoid even appearances tending to arouse the suspicion of his not doing right." But none of them could curb Harriman's tendency to ride "roughshod over conventionalities and amenities."[13]
Together these episodes imprinted on the public an image of Harriman as a sinister force worthy of the legendary Jay Gould. This negative image completely reversed his actual role and could not have been more distorted, yet it gained credence. Instead of rewarding him for his vision, the march of events elevated him into an unwitting symbol for a host of ills, real and imagined, in the body politic.
Table of Contents
Acknowledgments
Introduction
Prologue. Mr. Kennan Writes a Biography
Part I. Duchy, 1848-1898
Chapter 1. Sources of Pride and Strength
Chapter 2. Sources of Advancement
Chapter 3. Sources of Growth
Chapter 4. Sources of Education
Chapter 5. Sources of Revelation
Chapter 6. Sources of Opportunity
Part II. Kingdom, 1898-1900
Chapter 7. Going West
Chapter 8. Going for Broke
Chapter 9. Going Modern
Chapter 10. Going Back Together
Chapter 11. Going Elsewhere
Chapter 12. Going North
Part III. Empire, 1900-1904
Chapter 13. Seeking Order
Chapter 14. Seeking an Advantage
Chapter 15. Seeking Trump
Chapter 16. Seeking Hegemony
Chapter 17. Seeking the Perfect Machine
Chapter 18. Seeking the Perfect Organization
Chapter 19. Seeking the World
Chapter 20. Seeking Relief
Part IV. Immolation, 1904-1909
Chapter 21. Fighting the Tide
Chapter 22. Fighting Formidable Foes
Chapter 23. Fighting Others' Fights
Chapter 24. Fighting a Former Friend
Chapter 25. Fighting a Formidable Friend
Chapter 26. Fighting Nature
Chapter 27. Fighting for Survival
Chapter 28. Fighting Back
Chapter 29. Fighting the Inevitable
Epilogue. The Good That Men Do
Notes
Index
Illustrations
George Kennan in 1903
Mary and E. H. Harriman in 1909
Stuyvesant Fish
Map of the Illinois Central system
Jacob Schiff
E. H. Harriman at his desk
Steam shovel near Buford, Wyoming
A track crew, 1900
The tunnel at Sherman Hill
The "spider web" bridge
The new Dale Creek fill
Shale backdrop of the Fish cut
Cars dumping their loads onto a large fill
The ninety-five-foot-high fill for the Lane cutoff
The refurbished Omaha machine shop in 1903
Union Pacific system, 1900
A. L. Mohler
James Stillman
Union Pacific and part of the Southern Pacific system
George J. Gould
James J. Hill
J. P. Morgan
W. A. Clark
Julius Kruttschnitt
Map of the Lucin cutoff line
A gravel car dumps its load
The Lucin cutoff line to the sink
E. H. Harriman and guests at the Lucin cutoff opening ceremony
Horace G. Burt
J. C. Stubbs
E. H. Harriman in 1906
Harriman as the czar of railroads
Imperial Valley, the Colorado River, and the Salton Sink
Channel cut by the Colorado River
Submerged towns of Calexico and Mexicala
Maxwell Evarts
Judge Robert S. Lovett
Harriman with his sons at the Omaha Field Club, 1908
Harriman in Denver, 1909
Harriman returning from Europe, 1909
What People are Saying About This
No one else has written so well or so comprehensively about this major American figure.
— Jean Strouse, author of Morgan: American Financier
A highly accessible and readable account of Harriman's role in the complex world of turn-of-the-century railroads.—Enterprise & Society
This volume is more than a biography of an important historical figure. . . . Those who are not necessarily students of the period will finish this book knowing a great deal about how society, politics, and business were intertwined as the United States entered the twentieth century. . . . A first-rate book that explains an interesting era through the eyes of one of its leading participants.—American Historical Review
Klein brings a wealth of knowledge about railroad and financial history to his biography. . . . Harriman comes alive in Klein's sympathetic account as a man dedicated both to his family and to his business career.—Journal of American History
A book that should be read by anyone interested in United States financial history or in the history of American railroads. . . . Clearly the definitive work on Edgar Henry Harriman (1848 to 1909) and . . . a fascinating look at big business of the dawn of the twentieth century.—Journal of Economic History
This is a fine biography. Maury Klein presents a balanced portrait of Harriman by examining his strengths and weaknesses as well as his successes and failures. This book will set the standard for future work on Harriman. It will certainly prove valuable reading for historians, but because it is such an interesting story, wonderfully told, it should also find a wider, popular audience.—Business History Review
The subject of this book, Edward H. Harriman, at long last has found its author. . . . No one else could even be imagined as being better qualified to author such a stunning biography of this preeminent railroad leader. Many who read this book will wish they had written it. . . . Exceptionally well written, this biography merits prizes and a wide readership.—The Pennsylvania Magazine of History & Biography
Klein . . . gives us a fuller, more historically based understanding of his subject. The Life and Legend of E. H. Harriman is a well-written, highly readable, noteworthy contribution both as a biography of the individual and an analysis of the restructuring of railroads. It is a commendable effort to understand a man who drove himself to the heights of his chosen profession and put him within the complicated business history of his times. . . . Obviously well researched, this book gives us an intimate understanding of a complex man and should remain a standard biography for generations.—American History
[A] first-class biography. . . . Klein's The Life and Legend of E. H. Harriman is a largely sympathetic portrait of a misunderstood titan, but it is not unduly flattering, either. It may be the most even-handed treatment of Harriman ever to appear. And as with his previous writing, Klein wisely refuses to judge the past by the standards of the present.—Trains
Harriman (1847-1909) receives authoritative treatment at the hands of well-known railroad historian Klein. . . . Klein succeeds in making Harriman and his associates like Theodore Roosevelt, Jacob Schiff, Stuyvesant Fish, and James J. Hill come to life. . . . Well written and easy to read, this volume allows the reader to learn much painlessly, even pleasantly, about national railroad history.—Choice
A very fine biography. . . . These tales are well-told by Mr. Klein, who brings them together skillfully to create a picture of the whole man. But the author does not presume that the reader has unlimited time. At a little under 450 pages of text, the book is none too long for so richly filled a life. Further, it is handsomely and readably designed. . . . A vastly informative and entertaining biography of a major figure in American history who made a great fortune without losing a sense of the vitality of life outside business.—Wall Street Journal