[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.
This transmutation of Harriman in the public mind did not go unnoticed by
the first citizen of the land, who had his own quarrel with the little
man. If there was one American who exceeded Harriman in physical and
mental vigor, it was Theodore Roosevelt. Whatever one thought of him--and
the range of opinions could not have been wider--Roosevelt was one of the
most remarkable men who ever lived. His mind was less deep than cavernous,
a vast closet of information through which he rattled at lightning speed
to fetch what he needed. There was scarcely a topic on which he did not
hold strong views and scarcely a prominent figure on whom he had not
pressed them.[14]
He looked as much larger than life as he seemed. His body resembled an
Easter Island icon with its square, solid head atop a squat but powerful
trunk hardened by the outdoor life on which he thrived and which he
relished as the supplicant embraced the cleansing blows of flagellation.
His hair was short and thick, like his neck, and his complexion ruddy. The
one flaw in his appearance, a pair of pitifully weak eyes, darted
restlessly behind wire glasses or a pince-nez and were overshadowed by the
famous, formidable teeth--shining rows of white tile that came together so
perfectly they reminded one of a row of dominoes.[15]
They were strikingly alike in many ways, Roosevelt and Harriman. One had
been born the child of privilege, the other of privilege denied. Both had
come into the world frail and weak-eyed and challenged their physical
limitations with a defiance bordering on recklessness. Both had voracious
appetites for work and play. Their minds moved at speeds incomprehensible
to most men, stoked by sources of energy that were apparently unlimited.
They bristled with great plans which they were impatient to realize and
hurtled toward them without regard for obstacles or setbacks, inspiring
their followers to match the impossible pace they set, contemptuous of the
weak, the slow, and the incompetent who fell by the wayside. They were
unabashed in their hunger for power and delight in using it; full of
themselves and their work, which they linked always to the greater good of
patriotic duty.
One major difference separated them and proved decisive in their conflict:
Roosevelt was a politician and Harriman was not. He knew how to manipulate
and placate people as Harriman did not. And he could never conceal the
colossus that was his ego. While Harriman subsumed his vanity beneath the
work at hand, content to operate in the wings, Roosevelt craved the
limelight. It was once said of him that he had to be the bride at every
wedding and the corpse at every funeral. Ultimately his hunger for center
stage cost him as dearly as Harriman's arrogance and remoteness did him.
But it served Roosevelt well in politics. He had that gift of solipsism,
so necessary to politicians, for standing firmly on principles that could
later be bent or broken when necessary under the guise of some belligerent
denial or earnest rationalization. It was this quality that led his
detractors to regard him as a fraud and charlatan if not a demagogue.
Ironically, Harriman and Roosevelt were alike in realizing how radically
industrialization had altered American life and institutions and how
necessary it was to devise new instruments for harnessing these forces.
But Roosevelt came later than Harriman to this revelation and never got
past a tendency to put political expediency above his larger visions.
During the 1880s the two men had lived only a few blocks apart in New
York, Roosevelt at 6 West 57th Street and Harriman at 14 East 55th Street.
But they were distant neighbors with little in common beyond their
membership in the Republican Party. State politics was what drew them
together, which meant that most of their relationship was played out on
Roosevelt's turf. Harriman was a neophyte in politics. No businessman with
large concerns could avoid politics, but Harriman never grew comfortable
with it. The nether world of dealing and compromise was too slippery in
its footing and spongy in its results. He could not help viewing
politicians as the Luddites of their age, ever willing to smash the
machinery of progress if it threatened them.
Harriman owed his connection with New York State politics to Benjamin B.
Odell Jr., who had grown up in the Orange County city of Newburgh. Six
years younger than Harriman, the bright, ambitious Odell had taken early
to politics and climbed onto the Republican state committee at the age of
thirty. He served two forgettable terms in Congress, during which his eye
never strayed far from the state arena. In 1898 he came home purged of
national ambitions and happily installed as chairman of the state
executive committee, which put him near the throne of state Republican
rule occupied by the wily Senator Thomas C. Platt.[16]
The relationship between Harriman and Odell began with their mutual
interest in Orange County affairs and ripened into a close personal
friendship. By coincidence, the year 1898 marked a crucial juncture in the
careers of both men. Harriman made his decisive move into the Union
Pacific; Odell decided to back Theodore Roosevelt, who had just come home
from Cuba a national hero, as the candidate for governor of a troubled
Republican Party. He persuaded a reluctant Platt that Roosevelt was the
only man who could save the party that fall, and his instincts proved
sound. An arduous campaign enabled the Rough Rider to squeak out a narrow
victory.[17]
Harriman had little to do with the campaign, but shortly after the
election he hosted a dinner in honor of Odell at the Metropolitan Club.
The guest list ranged from political heavyweights like Platt, Mark Hanna,
Chauncey Depew, and Elihu Root to businessmen like Stillman, Schiff, and
D. O. Mills. Harriman sat at the center on one side of the banquet table
flanked by Odell and Roosevelt. It was an impressive position for a man
who played no major role in politics and had only that month joined the
board of the reorganized Union Pacific. His presence at the dinner
suggests that Harriman occupied a prominent place in New York financial
and political circles before the public even knew his name.[18]
The celebration turned out to have a deeper significance, for both
Harriman and Roosevelt launched the national phase of their careers during
that November of 1898. Roosevelt's term as governor led to his being put
on the Republican ticket in 1900. Some said the nomination as
vice-president was intended more to bury than to praise him, but fate
transformed it into an early residence in the White House. His successor
as governor was none other than Odell, who served two terms and became a
vital conduit for the political support Roosevelt counted on at home.
Odell in turn relied heavily on men like Harriman to keep the Republican
organization well financed.[19]
As governor, Odell stressed reform, economy, and pro-business policies. He
struck impressive blows against waste and corruption and pushed through
controversial changes in the tax system. On appointments he boldly
separated himself from the aging Platt and strengthened his own power base
by resuming his post as party chairman. While this dual role enabled Odell
to maintain his independence from Platt, it drew harsh criticism and made
the support of men like Harriman all the more vital.[20]
Harriman needed no invitation to gravitate toward any center of power,
even one he did not personally wish to occupy. So interlaced were the
worlds of finance and politics in New York that he could not have escaped
the pull. Most of his friends were rock-ribbed Republicans, and few
rivaled Harriman in their patriotic ardor. He was a regular contributor to
the party coffers and did not hesitate to ask for favors or to express his
views on legislation. Occasionally the Democratic papers linked his name
to some local scandal or power play, as the New York Herald did in
April 1901 when it charged Harriman with using Odell's help to grab
control of a strategic bridge.[21]
Party leaders formed the habit of consulting Harriman on financial and
economic questions. Roosevelt did not hesitate to sound his views along
with other Wall Street men like Morgan. Harriman received frequent
invitations to the White House for a meal and conversation. Always eager
to pick the best brains he could find, Roosevelt considered Harriman a key
figure in New York and the top man in his field. For his part Harriman
asked an occasional favor and sought appointments for men he favored or
had been asked by friends to support.[22]
All this was the normal stuff of politics, yet things had a way of never
being quite normal with Roosevelt. While his left hand stroked the big
business interests, the right hand attacked Northern Securities or
Standard Oil as well as the character of the men who ran them. "The big
New York capitalists seem to me to have gone partially insane in their
opposition to me," Roosevelt complained late in 1903, "but I have long
been convinced that the men of very great wealth in too many instances
totally failed to understand the temper of the country and its needs, as
well as their own needs."[23]
No mention was made here of Roosevelt's own needs, especially his burning
desire to capture the presidency on his own in 1904. It was this ambition
that led to the disastrous break between Roosevelt and Harriman. Like most
political divorces, it was neither clean nor clear-cut. The muck dredged
up by their quarrel clung more to Harriman than to Roosevelt only because
the latter was the most artful dodger.
By 1904 New York State politics were in the throes of transition. Odell
was at the height of his power, having dethroned Platt and taken charge of
the party slate for the fall elections. Over Platt's bitter objections, he
chose Frank Higgins, his dutiful lieutenant governor, to head the ticket
and drummed up support for Roosevelt's reelection campaign. That spring
Odell coaxed Harriman into serving as a delegate to the Republican
national convention. Harriman had been asked, claimed one Roosevelt man,
because he was "a little cool toward the Roosevelt cause." The reason for
Harriman's coolness was no mystery: the Supreme Court had just handed down
its decision on Northern Securities. Roosevelt welcomed Harriman's
support, invited him down to Washington before the convention met, and
took care to solicit his views on some appointments in which Harriman had
an interest.[24]
Roosevelt had compelling reasons for courting Harriman. Teddy the Trust
Buster needed money to finance his campaign, and he looked privately to
the very business leaders he had savaged in public for the funds to keep
the nation safely in Republican hands. A Senate inquiry later found that
corporate donors provided nearly three-fourths of the party war chest in
1904. Harriman was a key figure in a key state whose influence extended
through a wide circle of businessmen. But he sailed off to Europe on June
29 and did not return for two months. "As soon as you come home I shall
want to see you," Roosevelt wrote him. "The fight will doubtless be hot
then. It has been a real pleasure to see you this year."[25]
After his return, Harriman cleared his desk and on September 20 offered to
run down to Washington even though it seemed to him "that the situation
could not be in better shape." Evidently Roosevelt agreed, for he told
Harriman not to trouble himself. By early October, however, things had
changed radically. Roosevelt learned that the campaign in New York State
had run out of money and was floundering. Raising funds proved more tricky
than usual. Earlier Odell had agreed with Republican national chairman
George B. Cortelyou and national treasurer Cornelius N. Bliss that the
national committee would do all fund-raising and disburse the proceeds to
individual states as needed. New York needed $200,000, but the national
committee had no money to give it.[26]
Roosevelt was aghast at the news. "I would rather lose the election in the
country than be defeated in my own State," he growled at Senator Nathan
Scott on the phone. After being told that his own campaign was safe but
that Higgins was in danger of losing, Roosevelt dashed off a note asking
Harriman to come talk to him about "the trouble over the State ticket in
New York." Harriman was already aware of the problem and had delayed a
trip west to do some work for the party. "I am giving a very large part of
my time to correcting the trouble here," he told Roosevelt, and offered to
come to Washington in a few days if conditions did not improve.[27]
Two days later Harriman received from Roosevelt one of those cryptic
letters that sound as if they had been written more for the record than
for the recipient:
A suggestion has come to me in a roundabout way that you do not think it
wise to come on to see me in these closing weeks of the campaign, but that
you are reluctant to refuse, inasmuch as I have asked you. Now, my dear
sir, you and I are practical men, and you are on the ground and know the
conditions better than I do. If you think there is any danger of your
visit to me causing trouble, or if you think there is nothing special I
should be informed about, or no matter in which I could give aid, why of
course give up the visit for the time being and then a few weeks hence,
before I write my message, I shall get you to come down to discuss certain
government matters not connected with the campaign.[28]
The "government matters" referred to the railroad question and what
Roosevelt planned to say about it in his annual message. Harriman had been
led to believe that he would be consulted on the draft of this statement.
Two items, then, were on the agenda of any meeting between them: the
campaign in New York and Roosevelt's views on railroad regulation.
Well might Harriman have puzzled over this adroit piece of circumlocution.
He had suggested no such uneasiness and probably had no inkling of what
the president was driving at. The object was to create evidence that any
visit to Washington was being made on Harriman's initiative for business
of his own. Roosevelt was responding to a series of attacks launched by
the New York World on October 1, when Joseph Pulitzer noted in a
signed editorial that the Bureau of Corporations had been in existence for
583 days and accomplished nothing. Was it a coincidence that the bureau's
chief, George B. Cortelyou, happened also to be head of the Republican
national committee? Were the corporations pouring money into the
Republican war chest buying protection? Could a man soliciting money from
corporations also regulate them?[29]
Day after day Pulitzer hammered at this theme. The New York Times
and the Brooklyn Eagle joined the attack, which grew steadily more
shrill. Never a man to leave his flank unguarded, Roosevelt created the
letter to Harriman as a form of protection. Harriman could not go to
Washington at once anyway; he had to be in Rochester for a funeral. After
his return, he telephoned Roosevelt for another appointment to see him. By
then Pulitzer's crusade had begun to sputter.[30]
But the problems in New York remained. When Harriman came back from
Washington, he told Judge Lovett, "They are in a hole, and the President
wants me to help them out. I've got to do it, and I'm going to raise the
money." He told the same thing to Odell, Charles Peabody, and other
friends, all of whom recalled this fact later when Roosevelt denied that
he had ever asked Harriman to raise money for the campaign. True to his
word, Harriman came up with $250,000 for the national committee, including
$50,000 from his own pocket. Of this sum, $200,000 went back to the New
York State committee and helped Higgins eke out a victory.[31]
All should have been well that ended well, but one item of unfinished
business still clouded New York's political agenda. Chauncey Depew hoped
to retain his Senate seat and had the support of Platt and Roosevelt;
Odell preferred former governor Frank S. Black. To devise a graceful exit
for Depew, Odell got Harriman to extract a quid pro quo from Roosevelt
during their conference in late October: Harriman would raise money for
the party in New York if Roosevelt promised to make Depew ambassador to
France after the election.[32]
Largely on the basis of this pledge, Odell announced that Black was his
choice for the Senate seat. The wily Platt, fortified by a talk with
Roosevelt, rose gleefully from his political grave to drum up support for
Depew. Harriman had taken his family to Virginia on a short vacation trip.
On the return trip he stopped in Washington to see Roosevelt, who blithely
told him that he favored Depew's reelection to the Senate. This position
was remarkable in two respects: it violated a pledge Roosevelt had given
(though he later denied giving it), and it put him behind a man who,
whatever his other credentials, was exactly the type of corporate Hessian
Roosevelt was fond of railing against in public.[33]
Harriman found himself in an impossible position. Depew could not be
pushed out of the Senate without having another place to go. He was a
friend, a colleague on several boards, and an officer in the New York
Central system. But Odell had already come out for Black; if Depew kept
his seat, Odell would be left out on a limb that Platt was waiting eagerly
to saw. As a reward for the service he had rendered, Harriman had to
disappoint one of his closest friends. The grand irony was that none of it
had to do with anything Harriman wanted for himself. Seething with
resentment, he saw no choice but to persuade Odell to eat crow by
switching to Depew. Only a close friend could have asked such a favor or
agreed to it. Odell swallowed his pride and withdrew his support of Black,
allowing Platt to hail the change as proof of his resurrection. Some
papers unwittingly rubbed salt in the wound by charging that Harriman had
inspired Odell's change of front as part of a secret deal: Depew kept his
Senate seat while Harriman got one on the board of the New York
Central.[34]
Harriman walked away with his reputation soiled and Odell with his
prestige and power in New York badly damaged. Although Harriman said
little about it, this act of duplicity soured him on Roosevelt and
politics. Nor was it an isolated incident. The president had said
repeatedly that he wanted Harriman's input on that part of his annual
message dealing with railroad affairs, but he never got around to
consulting him. "When you were down here," Roosevelt explained in another
of those letters that sound as if they were written to be read by someone
else, "both you and I were so interested in certain of the New York
political developments that I hardly, if at all, touched on governmental
matters."[35]
"It was natural," retorted Harriman, "for me to suppose that railroad
matters would be included in any discussion you and I might have before
writing your message." At issue was a paragraph urging Congress to
strengthen the ICC's power over rates. Harriman wanted it left out,
arguing that it would cause more harm than good. "While, as I say, I
should have been delighted to go over it with you," declared Roosevelt in
his inimitable way, "I must also frankly say that my mind was definitely
made up."[36]
Harriman remained on friendly terms with Roosevelt and that winter
arranged to have his portrait done for the state capitol in Albany. He
also advised the president on some appointments but found his views
ignored. Then in 1905 the Equitable bombshell exploded, dragging Harriman,
Odell, and Depew through the heat of publicity that scorched the entire
New York political machine with allegations of influence peddling. It did
not help that Francis Hendricks, the state superintendent of insurance who
so infuriated Harriman, owed his place to Roosevelt and remained a staunch
loyalist.[37]
The Armstrong investigation set in motion a series of fateful changes in
New York. As public indignation swelled in the wake of revelations from
the hearings, Roosevelt smelled political blood. He saw an opportunity to
deal the old machine a death blow by allying with Higgins against Odell
and Platt. The investigation delivered him a perfect reform candidate for
governor in the person of Charles Evans Hughes, who had gained wide
respect for his handling of the hearings. At the Republican convention in
September 1906 the Roosevelt-Higgins forces won a sweeping victory over
Odell and what one Buffalo paper called the "corporation pirates."[38]
Harriman watched these events with mounting anger. His own distrust of
Roosevelt had grown during 1905, and now the president had gone after his
good friend Odell. After a visit by Harriman to Oyster Bay in July,
contact between the two men dwindled; after the wedding of Alice Roosevelt
in February 1906, which the Harrimans attended, it ceased almost entirely.
Still another issue soured relations between them: railroad
regulation.[39]
After ignoring Harriman's advice to drop the subject from his 1904
message, Roosevelt launched a concerted effort to get a railroad act. By
the winter of 1906 the president was trying to herd through Congress the
Hepburn bill, which would increase the ICC's power over rail rates.
Harriman opposed the bill and lashed out at what he called an
"anti-railroad conspiracy" bent on destroying the credit of the railroads
in order to promote Roosevelt's pet project, the Panama Canal. "I am not
opposed to the canal," he insisted, "but the attack on railroads,
apparently, is to create a sentiment in favor of some other method of
transportation."[40]
These remarks did not endear Harriman to Roosevelt or slow the bill's
progress. During 1906 the president's keen political nose sniffed the
shift of public sentiment against Harriman as the Armstrong investigation
unfolded its sordid revelations, the fight with Fish splashed through the
daily headlines, and a furor erupted over the timing of the Union Pacific
10 percent dividend. The fact that Harriman and Odell were close friends
made it easy for Roosevelt to lump them together in his own thinking.
Apart from the real issues that separated the two men, Harriman had become
to Roosevelt that most dreaded of creatures: a political liability.
As the state campaign of 1906 approached, the Republican convention
nominated Hughes as a reform candidate for governor and dumped Odell as
party chairman. In this strange campaign Hughes was pitted against William
Randolph Hearst, whose papers had long blasted the corrupt Republican
machine. Republicans running for state office made a display of shunning
corporate contributions in favor of direct appeals to the voters, but the
congressional candidates had no intention of jettisoning the big donors.
James S. Sherman, head of the Republican Congressional Committee,
remembered Harriman's key role in the 1904 campaign and decided to ask his
help again.[41]
Sherman's timing could not have been worse. For months Harriman had been
brooding over Roosevelt's breaches of faith and the problems they had
spawned. Late in 1905 he had received a letter from Sidney Webster, his
old friend from the Illinois Central board, warning him against being
drawn into politics because he was not fit for it. The advice struck a
chord in Harriman and prompted a lengthy reply that revealed his curious
mix of naïveté and guile:
The trouble originated in my allowing myself to be drawn into other
people's affairs, and partly from a desire to help them and at their
request. I seemed to be like the fellow who got in between the man and his
wife in their quarrel. As to my political instincts . . . I am quite sure
I have none, and my being made at all prominent in the political situation
is entirely due to President Roosevelt and because of my taking an active
part in the autumn of 1904 at his request, and his taking advantage of
conditions then created to further his own interests. If it had been a
premeditated plot it could not have been better started or carried out.
With this preface Harriman launched into a detailed account of his role in
the 1904 campaign and Roosevelt's reneging on his pledge to appoint Depew.
"So you see," he concluded, "I was brought forward by Roosevelt in an
attempt to help him, at his request, the same as I was in the insurance
matter by Hyde and Ryan by their request for my help."[42]
Clearly Harriman was venting months of frustration and anger toward
Roosevelt's behavior as well as the insurance fiasco, which was then
marching toward the Armstrong hearings. Both episodes represented to him
something sordid and unclean, and he wanted desperately to wash his hands
of them. Yet he was also taking care to protect himself the same way
Roosevelt had, by putting down his version of events as a matter of
record. Behind his well-known impulsiveness lay a layer of guile he took
pains to conceal as best he could. He sent the letter to Webster but kept
a copy for himself.
James Sherman knew nothing about this letter, but he did know that
Harriman still harbored resentments from the 1904 campaign. Before
approaching him for a contribution, he asked Maxwell Evarts, who was
counsel for the Southern Pacific, to see Harriman about it. Evarts
broached the matter several times only to be rebuffed. Harriman declared
irritably that he had better uses for his money; privately he was also
bitter over Odell's ouster from the inner circles of the party. Roosevelt
had managed this by getting Higgins, who had ridden Odell's coattail to
the statehouse, to defect and join the president. In a letter to Harriman,
Odell denounced Higgins as "the worst ingrate I know of . . . a weak-kneed
& spineless man." Neither Odell nor Harriman cared for Hughes as a
candidate, and both were tired of being made scapegoats by men they
considered nothing more than rank opportunists.[43]
This was Harriman's mood when he finally agreed to see Sherman.
Fortunately for Harriman, Evarts came along as well. The meeting took
place in September, less than a month after Harriman had received Odell's
letter blasting Higgins and at a time when criticism of the 10 percent
dividend still rang in his ears. In this combative mood, eager to give
someone a piece of his mind, Harriman wasted no time on amenities when the
unsuspecting Sherman walked in. He reached into his desk, pulled out a
copy of the letter to Sidney Webster, read it to Sherman in his flat
voice, and said again that he would not give one dollar to the Republican
campaign.[44]
Evarts's jaw dropped almost as far as Sherman's at this performance; he
could not fathom what bearing the letter had on the issue at hand. Why
Harriman chose this peculiar way to refuse Sherman can be explained only
by the circumstances. He was a tired man wracked with pain and forced to
endure in silence one frustrating controversy after another. Here was a
chance to unleash some of his deep resentment over the shabby treatment
accorded him and his friend Odell. He had poured those frustrations into
the letter and now the letter exploded out of him to Sherman, who was
merely a surrogate target. In fact, Harriman had once before hauled out
the Webster letter and read it to an old friend after swearing him to
silence.[45]
Unfortunately, there was no vow of secrecy this time. A short time later,
Sherman told Roosevelt about the interview with Harriman. The president
took so keen an interest in the account that he sat down that same
afternoon and wrote Sherman a letter restating what Sherman had told him.
Here was yet another of those letters written for the record, and this one
recorded hearsay with a vengeance. It summarized what Roosevelt said
Sherman had said about what Harriman had said.
In Roosevelt's version, Sherman described Harriman as being so
dissatisfied with the president that he said in effect that "as long as I
[Roosevelt] was at the head of the Republican party or as it was dominated
by policies which I advocate and represent, he would not support it, and
was quite indifferent whether Hearst beat Hughes or not, whether Democrats
carried Congress or not." Roosevelt adamantly denied that he had made any
promise to appoint Depew or asked Harriman to help raise money. Choosing
his words carefully, he said, "I never requested Mr. Harriman to raise a
dollar for the presidential campaign of 1904." This was true; the money
had been solicited for the New York State campaign.[46]
The account Roosevelt set down was hardly casual. It filled more than six
pages and included copies of his correspondence with Harriman except for
one crucial omission betraying his assertion that he had asked Harriman
for help in raising money. Then, in an astonishing paragraph, Roosevelt
quoted Sherman as having told him that Harriman did not care who won the
election because "those people were crooks and he could buy them; that
whenever he wanted legislation from a State legislature he could buy it;
that he 'could buy Congress' and that if necessary he 'could buy the
judiciary.'" This remarkable allegation allowed Roosevelt to rise to the
full height of his well-practiced indignation: "It shows a cynicism and
deepseated corruption which make the man uttering such sentiments, and
boasting, no matter how falsely, of his power to perform such sentiments,
at least as undesirable a citizen as Debs, or Moyer, or Haywood. It is
because we have capitalists capable of uttering such sentiments and
capable of acting on them that there is strength behind sinister agitators
of the Hearst type. . . . I was horrified, as was Root, when you told us
today what Harriman had said to you." After this pious and patently
calculated outburst, Roosevelt authorized Sherman to show the letter to
Harriman but not to make it public without the president's permission.
In the bizarre annals of American politics there are few controversies
stranger than this one. Harriman had written a private letter to a friend
and read it to someone else who repeated its contents and accompanying
remarks by memory to the president some days later. Roosevelt then penned
a private letter summarizing what Sherman had told him and adding his own
rebuttal of Harriman's alleged charges along with a vigorous denunciation
of Harriman. How much Roosevelt embellished on Sherman's remarks, or how
accurate Sherman's report was in the first place, cannot be established.
Sherman left no account of the episode; his version comes entirely from
Roosevelt's hands. Some years later, however, Evarts released a statement
denying that Harriman had said much of what Roosevelt claimed Sherman said
he had said.[47]
Since neither letter had been made public, no one knew about the
controversy except those directly involved. That fall the bad blood
between Harriman and Roosevelt grew worse. Hughes eked out a victory over
Hearst, but most of the other Republicans on the ticket were defeated.
Three days after the election, rumors circulated that the ICC was
considering an investigation of the Harriman roads. Early in December the
ICC announced it would examine "relations between the Union Pacific and
Southern Pacific Railway systems growing out of their common management
and control."[48]
The news caught Harriman at a bad time. He spent much of November on a
trip west, going more public than usual, giving interviews to reporters
and talks to business and civic groups. Early one morning he arrived in
Chicago and had his car switched to a side track to conduct business until
his connection arrived. Four stenographers and secretaries took down the
letters and telegrams he rattled off while welcoming a procession of rail
officials and bankers. Breakfast sat cooling in the galley, unable to
penetrate the flow of business. A reporter slid through a seam in the line
of visitors and was rewarded with a brief interview on the platform.
Harriman stood before him draped in an oversized steamer coat "of loud
pattern, such as can be bought for $15 or $16," the inevitable derby
jammed down over his forehead.[49]
Despite the crush of business and lack of breakfast, Harriman showed
unusual patience and courtesy. No, he was not a financial king and had no
desire to be. He didn't run a single railroad by himself. Yes, he had
bought into the Chicago subway because it would help reduce the cost of
transportation, but he had no plans to move to Chicago. "Do you understand
that?" Harriman asked often. "Do I make that clear?" He tolerated the
interruptions because he was anxious to get across a message he repeated
everywhere he went: the railroads were crucial to national prosperity and
should not be hamstrung by suspicion and regulation.[50]
The trip wore Harriman down just as he faced a major investigation. Young
Roland added to his worries by breaking his collarbone at school when his
pony stumbled and rolled over him. Harriman himself was fighting intense
pain from the hemorrhoids, which had grown worse. He tried to get the ICC
to postpone the hearings and was told the commission had too crowded an
agenda to change its schedule. He went so far as to appeal to Roosevelt,
who spoke to the chairman but told Harriman he could do nothing.[51]
Disappointed, Harriman decided to try a more personal approach. He had no
way of knowing what role Roosevelt had played in urging the investigation,
but the timing seemed more than coincidence. For once Harriman was in no
mood to fight. Leaving aside his personal feelings, a prolonged feud with
a popular, newly elected president meant disaster for his interests, the
interests of his friends, the Republican Party, and perhaps the country as
well. The time had come for overtures of peace.