U.S. President Theodore Roosevelt’s Second Term (1905-1909): Federal Regulation of Railroads

During President Theodore Roosevelt’s second term (March 4, 1905—March 4, 1909) the major developments regarding federal regulation of railroads were congressional enactment of the Hepburn Act in 1906 and proposed increases in such freight rates in 1907-1908.

The main provision of the Hepburn Act empowered the Interstate Commerce Commission to impose “just and reasonable” freight rates while banning rebates and preferential rates.The debate over this legislation and its terms were covered in prior posts.[1]

Now we look at the controversy over proposed increases in such freight rates in 1908.[2]

Following the Financial Panic of late 1907 [3] and  the continued economic recession in the first half of 1908, railroads felt pressured by Roosevelt not to cut wages while believing they could raise profits only by raising freight rates. As a result, some roads announced such increases. Roosevelt did not like this, especially in advance of the November 1908 presidential election.

During this new battle over freight rates, President Roosevelt met at the White House with W. C. Brown, now the Senior Vice President of the New York Central Railroad and my great-great uncle, who through letters and speeches had been the most vocal advocate for raising rates. Indeed, Brown provided the President with a collection of Brown’s speeches and other materials, Freight Rates and Railway Conditions. One was the Freight Rate Primer, which in comic-book form argued that an increase in rates would have minimal impact on the common man. Comic Book Propaganda!

Afterwards in an August 6, 1908, letter, Roosevelt told Brown that raising rates just before the election was very unwise, and instead the issue should be addressed later “purely on its merits.”

=========================================

[1] See these posts to dwkcommentaries.com: Federal Regulation of the Railroads in U.S. President Theodore Roosevelt’s Second Term (1905-1909): Introduction (Aug. 19, 2014); Federal Regulation of the Railroads in U.S. President Theodore Roosevelt’s Second Term (1905-1909): The Hepburn Act (Aug. 29, 2014); Reactions to the Hepburn Act Regarding Railroads’ Freight Rates, July-December 1906 (Sept. 8, 2014); Public Debate About U.S. Regulation of Railroads, January-May 1907 (Sept. 12, 2014); President Theodore Roosevelt’s “Decoration Day” Speech About the Railroads (May 30, 1907) (Sept. 14, 2014).

[2] See Edmund Morris, Theodore Rex  (Random House; New York; 2001).

[3]   See U.S. President Roosevelt’s Second Term: The Economy and Securities Markets of 1906-1907, dwkcommentaries.com  (Sept. 11, 2014).

Edward B. Burling: The Chicago Attorney, 1895-1917

This series about the life of Edward B. (“Ned”) Burling commenced with a post about his connections with Katherine Graham, the owner and publisher of the Washington Post, and then retreated in time to a post about his birth and early years in Iowa, 1870-1890, followed by a post about his four years at Harvard University in Cambridge, Massachusetts, 1890-1894.[1]

The Chicago Attorney

After finishing Harvard Law School with such a distinguished record, Ned had high hopes of obtaining a job as a young lawyer and earning good money. But that did not happen, given the law firm practices of the day.

Instead in 1895 he started with a Chicago firm at barely more money than he had made in 1887 at the Eldora grocery store. He continued to engage in the private practice of law in Chicago plus serving as Assistant Corporation Counsel for the City of Chicago through 1917, eventually making more money doing the typical work of most lawyers of the time and engaging in profitable real estate development in the Winnetka area on the North Shore.

He got married in 1902 to Louisa Green Peasley, the daughter of a wealthy and well connected Chicago businessman, and they had two sons, Edward Burling Jr. (1908) and John L. Burling (1912). But Ned was bored with his Chicago life.

In his efforts to leave Chicago, Burling in 1915 sought the Washington, D.C. position of General Counsel of the then new Federal Trade Commission with the support of Louis D. Brandeis, then a practicing Boston attorney, and Cyrus McCormick, the son of the inventor of the grain reaper and the owner of the International Harvester Company. But Ned did not receive the appointment and thus remained in Chicago for the next two  years.

During his Chicago years, however, Burling got a taste of politics. In 1896 he was a spectator at the Democratic National Convention in Chicago to hear William Jennings Bryan’s “Cross of Gold” speech, and in 1912 Burling was active in the Bull Moose Party that nominated Theodore Roosevelt for President. His allegiance to “the Rough Rider” persisted. In 1921, he told Learned Hand that Ned agreed “with everything that T.R. ever said” on political subjects, and throughout his life Ned often joked that he was  that Party’s sole survivor.

In the summer of 1911 Burling and his family spent the summer at the Cornish Colony in Cornish/Plainfield, New Hampshire and later bought a summer home in the Colony where they went every summer. It was a gathering place for artists, musicians, writers, journalists, lawyers and businessmen, including Judge Learned Hand (Ned’s great friend), Ethel Barrymore and President Woodrow Wilson.

Shortly before Burling left Chicago in 1917, he made an investment that proved to be one of the most important events in his life. He started a small surplus trading company that eventually became one of the largest metal-cutting tool manufacturers in the U.S.[1]

Conclusion

The next chapter of this recounting of the life of Burling will cover his two years as a federal government attorney in Washington, D.C.

=======================================

[1] Citations to the sources for this post are found in this blogger’s Edward Burnham Burling, The College’s Quiet Benefactor (April 2008)(18-page essay and bibliography; on file in Grinnell College’s Special Collections and Archives).

 

 

The 1901 Contest for Control of the Northern Pacific Railway

A previous post discussed the November 13, 1901, formation of the Northern Securities Company by J. P. Morgan and James J. Hill to be a holding company for the common stock of two competing railroads (the Great Northern and the Northern Pacific) and the subsequent successful lawsuit by the President Theodore Roosevelt Administration alleging that this combination violated the Sherman Act’s prohibition of combinations in restraint of interstate trade and commerce.

The prequel to all of that was first the battle for control of the Chicago, Burlington and Quincy Railroad that provided access to Chicago. The contestants were (a) the Great Northern/Northern Pacific Railways, which were controlled by Hill and Morgan, and (b) the Union Pacific Railroad, which was controlled by Edward H. Harriman and Jacob Schiff. Hill and Morgan won that round, in April 1901, and they put the Quincy stock into the Northern Pacific.[1]

Harriman with the backing of Schiff of the Wall Street banking firm of Kuehn Loeb in April-May 1901 then surreptitiously started to buy Northern Pacific common and preferred stock on the open market in an effort to gain control of the Northern Pacific and thereby the Quincy. Once Hill and Morgan realized what was happening, they started to buy Northern Pacific shares. This buying activity resulted in large and continued increases in the price of the stock.

Others in the stock market obviously noticed this activity and the upward jumps in price. Many started to sell Northern Pacific stock ‘short,” i.e., selling more shares than they owned at what many believed to be unsustainable high prices with the expectation they could buy the stock later at a lower price and thereby make a profit. That did not happen. The market was ‘cornered” with more shares committed to be sold than could be delivered. This forced speculators to sell other stocks to raise cash to buy Northern Pacific shares, resulting in the destabilization of the entire stock market.

This Wall Street Panic ended on May 9, 1901, when Harriman and Schiff capitulated to the victory of Hill and Morgan over Northern Pacific with an agreement for Hill and Morgan to bail out the shorts and thus restore market stability in return for Harriman and Schiff ‘s agreeing to end their effort to gain control of the Northern Pacific.

George F. Baker
George F. Baker

Larry Haeg’s book—Harriman vs. Hill—is the most comprehensive telling of this remarkable story. It reads like a novel, and his descriptions of the participants in this stock market contest make the reader feel like an actual observer of the events. I was especially fascinated by the book’s following description of George F. Baker, a financial backer of Hill and Morgan: [2]

  • Baker then was 61 years old “and the unquestioned dean of New York banking [as the] president of the First National Bank of New York [which] he has helped found in 1863 as a mere twenty-three year old and had become its president in 1877. Also, as a venture capitalist he had bought and rejuvenated several railroads, and now, among America’s half dozen wealthiest men, served on the finance committee of Morgan’s new U.S. Steel, on the board of the Northern Pacific, and on the boards of some thirty banks, railways and insurance companies.”
  • “At a word from Baker, it was later said, ‘the 20th century would halt on its tracks. Indeed, the railroad came to Baker’s door. When he built a mansion further north at Ninety-Third and Park he had his own underground railroad siding in the basement where a train could stop to attach his private car.”
  • Baker had a “four-story, double row-house mansion at 256-258 Madison Avenue between Thirty-Eighth and Thirty-Ninth.” The “dark-paneled mansion [contained] eighteenth-century tapestries, paintings of the Barbizon school, Persian rugs, cabinets glistening with jade and Japanese enamel [and a] library with its hefty, upholstered chairs.”

Haeg book

The Wall Street Journal carried a favorable review of the Haeg book by Roger Lowenstein, the author of “The End of Wall Street” and “Buffett: The Making of an American Capitalist.” The review said Haeg’s book covered “a corporate dust-up that takes us back to the beginning of the 20th century, when tycoons who traveled by private rail merrily raided each other’s empires while the world around them cringed.” The book “conveys a vivid picture of the Gilded Age in splendor and in turmoil. Champagne still flowed in Peacock Alley in the Waldorf-Astoria, but fistfights erupted on the floor of the exchange, and a young trader named Bernard Baruch skirted disaster with the help of an inside tip, then perfectly legal. There were scant rules governing stock trading, the author reminds us—no taxes, either. ‘If you won in the market, you kept it all.’”

Warren Buffett added his praise for Haeg’s book with these words. “I first read about the Northern Pacific Corner when I was ten years old. When I opened my office on January 1, 1962, I put on the wall a framed copy of the New York Times of May 10, 1901, describing the fateful prior day. Larry Haeg now tells the full story, and I enjoyed every word of it.”

Haeg set out to write this book as “a character study of Hill and the businessmen known as the ‘robber barons.’ As he advanced in his research, however, [Haeg] found the true test of their character came during what is known today as the Northern Pacific Corner, a four-day run on the railroad company’s stock that roiled Wall Street and set off the country’s first stock market panic.”

=======================================================

[1] This post is based upon Larry Haeg, Harriman vs. Hill: Wall Street’s Great Railroad War (Univ. Minn. Press; Minneapolis, MN; 2013); Michael P. Malone, James J. Hill: Empire Builder of the Northwest, ch. 6 (Univ. Okla. Press; Norman OK; 1996); Albro Martin, James J. Hill & the Opening of the Northwest , ch. 17 ((MN. Historical Soc’y Press; St. Paul MN; 1976).

[2] Haeg at 79-80, 106. Baker is of particular interest for me because I wan awarded a George F. Baker Scholarship for my four years at Grinnell College in Iowa.

An Enjoyable Thanksgiving Day In Nebraska City, Nebraska

On a beautiful, sunny, crisp Thanksgiving Day this year my wife, two of her sisters and I were in Nebraska City, 40 miles south of Omaha on the western bank of the Missouri River near the southeastern corner of the State of Nebraska.[1]

Lied Lodge & Conference Center
Lied Lodge &  Center
Lied Lodge
Lied Lodge
Lied Lodge
Lied Lodge

 

 

 

The main reason for going there was to have a delicious and enjoyable holiday meal at the handsome Lied Lodge & Conference Center as shown in the above photographs courtesy of the Arbor Day Foundation; the center photo shows at the end of the central atrium the tapestry that says “Plant trees!” in many different languages. Here are the details of the Thanksgiving Day buffet menu:

  • Appetizers: shrimp, crab claws, oysters, mussels, fruits, cheeses and various salads.
  • Entries: slow-roasted turkey, prime rib, glazed butternut squash, apple sage stuffing, whipped potatoes, baked yams, vegetable medley, baby carrots and rolls.
  • Desserts: pumpkin, pecan and fruit pies; cupcakes; and other classic items.

The Lodge & Center is owned and operated by the Arbor Day Foundation, which seeks to “inspire people to plant, nurture and celebrate trees.” In so doing, the Foundation celebrates the life and vision of one of the town’s most famous citizens, J. Sterling Morton.

The day in Nebraska City also unexpectedly became a fascinating lesson in late 19th and early 20th century U.S. history.

Julius Sterling Morton[2]

Sterling & Caroline Morton,ca. 1854
Sterling & Caroline Morton,  ca. 1854

In 1854, the Kansas-Nebraska Act of that year created the two territories with those names and opened them for settlement.[3] Enticed by the prospect of owning land in this new Territory, Morton at age 22 came to Nebraska City, really a village of less than 2,000 and the Territory’s first city, with his wife, Caroline (“Carrie”) Ann Joy French Morton, an accomplished artist, musician and gardener.[4] Mr. Morton, who was a graduate of Union College, started the Territory’s first newspaper, the Nebraska City News, and served as its Editor.

He also immediately bought land in the town, presumably under the Preemption Act of 1841 permitting “squatters” who were living on federal government-owned land to purchase up to 160 acres at a very low price (not less than $1.25 per acre), before the land was to be offered for sale to the general public.

As a nature lover with a passion for horticulture, Morton was appalled by the lack of trees in Nebraska, but soon planted various kinds of trees on his own property. In order to attract people to the Territory (and then State in 1867), Mr. Morton endeavored to encourage others in the area to plant trees. He did that first as Editor of the local newspaper and then as President of the Territory’s Agricultural Board. In 1872, he proposed that the state declare April 10 as Arbor Day, and his proposal was accepted. On that day in 1872, it is said that Nebraskans planted one million trees. In 1885, Nebraska declared his birthday, April 22, as Arbor Day and made it a legal holiday.

He voiced his love of trees when he said, “There is no aristocracy in trees. They are not haughty. They will thrive near the humblest cabin on our fertile prairies, just as well and become just as refreshing to the eye and as fruitful as they will in the shadow of a king’s palace.”

Morton also was engaged in public service as a member of the Nebraska Territorial House of Representatives (1855-1858); Acting Governor of the Territory (1858-1859); and Secretary of the Nebraska Territory (1858-1861). In 1860 Morton won an election to Congress, but lost a challenge to his election in the Republican-controlled House. He also ran four unsuccessful campaigns for governor after Nebraska became a state in 1867.

J. Sterling Morton
J. Sterling Morton

In 1893 President Grover Cleveland, with widespread acclaim, appointed Morton as U.S. Secretary of Agriculture. In his four years in that position he expanded and improved the Department’s programs while turning back to the Treasury over 20% of its appropriated funds.[5]

ArborLodgedistance

ArborLodgedistance2

ArborLodgeDK2

 

 

 

 

Before our Thanksgiving dinner at the Lodge, my wife and I went out on its north-facing balcony to see the beautiful valley full of trees and a test plot of hybrid hazelnut bushes. We were surprised to see on the opposite hill a strikingly handsome pillared white house peaking out through the trees as shown in the top photographs (the middle one is courtesy of the Arbor Day Foundation.) We then discovered that this was the 52-room mansion of Mr. Morton that is a reasonable facsimile of the White House in Washington, D.C. as shown in the third photograph.

The mansion is now called the Arbor Lodge in the Arbor Lodge State Historical Park and Arboretum, which we drove by after dinner. Unfortunately the Lodge was not open for visitors that day to see its Victorian and Edwardian furnishings, Tiffany skylight and collection of artifacts of early Nebraska history.

Sterling and Joy Morton had four sons: Joy (1855-1934), Paul (1857-1911), Mark (1858-1951), who was involved in various family businesses, including the Morton Salt company; and Carl (1865-1901), who was a businessman with another family business, the Argo Starch Co., and with the Glucose Sugar Co. Mrs. Morton died in 1881; J. Sterling Morton, in 1902.

Joy Morton[6]

Joy Morton
Joy Morton

Sterling and Joy Morton’s first son, Joy Morton, was born in Nebraska City in 1855. At age 15 he began to manage the family farm and estate and to work in a local bank. Later he worked for railroads in Nebraska and Illinois before joining a Chicago salt distribution company in 1880. By 1899 he had acquired majority control of the firm and renamed it “Joy Morton & Company,” and in 1910 he incorporated it as the subsequently famous Morton Salt Company. He was its president until 1930 when he became its chairman of the board, a position he held until his death in 1934. His brother Mark also was involved in the salt company.

MortonSalt

While driving around the town of Nebraska City this Thanksgiving Day I was amused to see these large signs for Morton-family businesses brightly painted on the brick wall of a downtown building: “Morton Salt” and “Morton–Gregson Co.“ The latter was a hog packing plant that was organized in 1901 and after financial problems was sold in 1917 to Wilson & Company.

Carrying on his parents’ interest in trees and gardening, Joy Morton in 1922 established The Morton Arboretum on 178 acres of land adjacent to his estate in Lisle, Illinois, roughly 26 miles west of Chicago, to display woody plants that grow in temperate zones around the world, to educate the public about them and to conduct research on their management and preservation.[7]

After his father’s death in 1902, Joy Morton redesigned and enlarged the family mansion in Nebraska City into its current size and used it as his family’s summer home until after 1922 when he donated the mansion (now the Arbor Lodge) and surrounding property to the State of Nebraska to be its first state park.

Paul Morton[8]

Paul Morton
Paul Morton

Paul Morton was born in Detroit, Michigan in 1857 and grew up in Nebraska City.

After turning 18, he moved to Chicago, where he worked for the Chicago, Burlington and Quincy Railroad, attaining the position of General Freight Agent. He then was an officer and director of Colorado Fuel and Iron Company before he joined the Atchison, Topeka, and Santa Fe Railway, where he became a Vice President.

Paul, like his father, was a Bourbon (and then a Gold) Democrat, but that Party’s nomination of Bryan in 1896, he said later, “left him out.” As a result he voted for McKinley that year and in 1900 worked openly for the election of McKinley and Theodore Roosevelt. Indeed, Morton said he “had always been a staunch supporter of Roosevelt.”

The close connection between Paul Morton and Roosevelt is shown after the Republican convention had nominated Roosevelt as its vice presidential candidate in June 1900. Roosevelt visited Chicago as a guest of Morton in order for both of them to board the latter’s private Santa Fe railroad car to go to Oklahoma with two Republican National Committeemen and three fellow Rough Riders for a reunion of the Rough Riders Regiment as Morton and Roosevelt had done the prior year for another such reunion in Las Vegas. When and how the two of them first became acquainted are intriguing questions I was unable to answer.

In September 1900, as discussed in a prior post, he and two other railroad executives accompanied candidate Roosevelt on his campaign train from Quincy, Illinois to Chicago. The other railroad executives on the train were my maternal great-great-uncle, William Carlos Brown, then General Manager of the Chicago Burlington & Quincy Railroad; and Theodore P. Shonts, then the President of the Illinois & Iowa Railroad.

I have not been able to discover the substance of the conversations the four of them had on the train, but perhaps they discussed the issue of federal regulation of business, especially railroads. The three railroaders presumably were present at the end of the train ride in Chicago on Labor Day to hear candidate Roosevelt’s “The Labor Question” speech, in which he said he had been “thrown into intimate contact with railroad men [and] . . . gradually came to the conclusion that [they] . . . were about the finest citizens there were anywhere around.” Teddy must have included these three railroad executives in that illustrious group.

Four years later, Roosevelt, now the President after the 1901 assassination of McKinley, appointed Paul Morton to be Secretary of the Navy. An article about the appointment said that the President and Morton had a “strong friendship,” that Morton and his father had voted for McKinley and Roosevelt in 1900 and that Paul “some weeks ago decided to accept the Republican faith.”

Though he knew next to nothing about naval affairs, the Senate confirmed Morton’s nomination in December 1904.

A problem for Morton emerged early the next year when the Interstate Commerce Commission asked the Justice Department to investigate charges that Morton had acted illegally as an officer of the Atchison, Topeka & Santa Fe when it paid rebates to the Colorado Fuel and Iron Company, Morton’s prior employer, from 1902 though 1904. Morton subsequently admitted the rebates had been paid even though he had no knowledge of them at the time and even though he had instructed subordinates to not pay any rebates. These charges never resulted in his prosecution, but they did force Morton to resign quietly on June 30, 1905.

In all of this, President Roosevelt supported Morton and had Morton with him on a private railroad car trip early the next month and later that month had Morton for a private over-night visit at Roosevelt’s Sagamore Hill home at Oyster Bay, New York.

Indeed, Roosevelt in his 1913 Autobiography refers to this period when he said that with the help of “a first-class railway man, Paul Morton …. I was able to stop the practice of [railroad rebates]. Mr. Morton volunteered to aid the Government in abolishing rebates” by testifying before the ICC that the Santa Fe had granted rebates because all railroads did so. In so doing, he had “shown courage and sense of obligation to the public . . . in order that we might successfully put an end to the practice . . . because of the courage and patriotism he had shown. . . . [Some people] “wished me to prosecute him, although such prosecution would have been a piece of unpardonable ingratitude and treachery on the part of the public toward him. . . . I stood by him; and later he served me as Secretary of the Navy, and a capital Secretary he made too.”

In any event, Morton immediately after leaving the Navy became the President of the Equitable Life Assurance Society in New York City, and in 1909, he was appointed as the vice chairman of a commission to reorganize the Navy. Paul Morton died in 1911.

Conclusion

After leaving Nebraska City and doing research for this post, I discovered that this town, current population of nearly 7,300, also is home to the Mayhew Cabin, the only site in the state of the Underground Railroad in the 19th century, and the Missouri River Lewis and Clark Center, which focuses on the natural history achievements of that 1804-1806 expedition. The town sounds worth another visit to see these sights as well as the interior of the Arbor Lodge.

-===============================================================

[1] As a non-Nebraskan, I earnestly solicit comments and corrections. I also give thanks to Amy Stouffer, Marketing Director of the Arbor Day Foundation, for her assistance.

[2] This section is based upon Anderson, Julius Sterling Morton, Forest History Today at 31 (Fall 2000); Wikipedia, Julius Sterling Morton; Will Be in the Cabinet: J. Sterling Morton for Secretary of Agriculture, N. Y. Times (Feb. 18, 1893); Morton A Man of Strength, N. Y. Times (Feb. 19, 1893); John R. Thomas and Congressman Harter Praise Mr. Morton, N.Y. Times (Feb. 19, 1893); The Cabinet Selections, N.Y. Times (Feb. 20, 1893); Editorial, Julius Sterling Morton, N.Y. Times (Feb. 20, 1893); Praise for the New Cabinet, N.Y. Times (Feb. 23, 1893); Editorial, Mr. Cleveland’s Cabinet, N.Y. Times (Feb. 23, 1893); Mr. Cleveland’s Cabinet, N.Y. Times (Feb. 26, 1893); Julius Sterling Morton of Nebraska, N.Y. Times (Mar. 5, 1893); Gold Democrats Banquet, N.Y. Times (Jan. 9, 1897); Elections in Other States, N.Y. Times (Oct. 31, 1897); Palmer Democrats Speak, N.Y. Times (May 13, 1900); Abram S. Hewitt on Bryan, N.Y. Times (July 1, 1900); Bryan’s Impeded Veracity, N.Y. Times (Oct. 8, 1900); Anti-Imperialists’ July 4 Manifesto, N.Y. Times (July 4, 1901); J. Sterling Morton Dead, N.Y. Times (April 28, 1902). I have not yet read James C. Olson, J. Sterling Morton—Pioneer Statesman and Founder of Arbor Day (1942).

[3] The Kansas-Nebraska Act of 1854 allowed the future white male settlers of the territories determine through popular sovereignty whether each would allow slavery within its borders. The principal supporter of the Act was Democratic Senator Stephen A. Douglas of Illinois who saw the Act as a compromise to gain Southern support in order to promote the eventual construction of a transcontinental railroad from Chicago The opponents of the Act saw it as a betrayal of the Missouri Compromise of 1820, which had banned slavery in Kansas. In opposition to the Act, the Republican Party was created to stop the expansion of slavery. In the famous 1858 debates between Senator Douglas and Abraham Lincoln, the latter argued that Douglas was part of a conspiracy to nationalize slavery and that the Kansas-Nebraska Act was the first step in that direction. OI course, two years later (1860), Lincoln was the Republicans’ successful presidential candidate. In the meantime, after passage of the Act, pro- and anti-slavery adherents flooded into Kansas to vote slavery up or down, leading to a low-intensity civil war that became known as “Bleeding Kansas.” In 1860 the Kansas territorial legislature passed, over a governor’s veto, a bill banning slavery and in 1861 Kansas entered the Union as a State. In Nebraska the territorial legislature in 1861 passed, over a governor’s veto, a similar bill prohibiting slavery although Nebraska limited the vote to “free white males,” a provision that delayed Nebraska’s becoming a state until 1867 after the elimination of this provision.

[4] I have not read In Memory of Caroline Joy French Morton, Wife of J. Sterling Morton (1882); Margaret V. Ott’s biography of Mrs. Morton: Sterling’s Carrie: Caroline Ann Joy French, Mrs. J. Sterling Morton, 1833-1881 (1992).

[5] Grover Cleveland and Morton were prominent conservative or Bourbon Democrats, opposing imperialism and U.S. overseas expansion and supporting the gold standard for U.S. currency. Public support for this philosophy was damaged by the Panic of 1893 when Cleveland refused to expand the money supply with silver. This lead to the Party’s granting its 1896 presidential nomination to Nebraskan William Jennings Bryan after his “Cross of Gold” speech urging silver as an additional backing for the currency. In response, some of the Bourbon Democrats formed their own unsuccessful political party (National Democratic Party) to advance their policies; but their presidential and vice presidential candidates were badly defeated in the 1896 election. These conservative Democrats often were referred to as the “Gold Democrats” for their support of the gold standard. In 1900 Democrat Morton endorsed Republican William McKinley because Morton detested Bryan’s bimetallism and admired Teddy Roosevelt, the Republican vice presidential candidate; Morton deemed these reasons more important than his strong disagreement with McKinley’s trade protectionism.

[6] This section is based upon Wikipedia, Joy Morton and Wepman, Joy Morton, American National Biography Online. I have not yet read Ballowe, A Man of Salt and Trees: The Life of Joy Morton (2009).

[7] Now 1,700 acres, the Arboretum’s current mission “is to collect and study trees, shrubs, and other plants from around the world, to maintain living collections on display across naturally beautiful landscapes for people to study, enjoy and learn how to grow them in ways that enhance the environment.” The town of Lisle, by the way, now calls itself “The Arboretum Village.”

[8] This section is based upon Wikipedia, Paul Morton; University of Virginia Miller Center, Paul Morton (1904-1905) Secretary of the Navy; The Governor’s [Roosevelt’s] Western Trip, N. Y. Times (June 26, 1900); Governor [Roosevelt] Goes West, N. Y. Times (June 30, 1900); Roosevelt in Chicago, N. Y. Times (July 1, 1900); Roosevelt Going West, N. Y. Times (July 2, 1900); Roosevelt Leaves Chicago, N. Y. Times (Sept. 2, 1901); Changes in Cabinet Officially Announced, N. Y. Times (June 25, 1904); Morton Enlisted in Navy, N.Y. Times (June 26, 1904); Mr. Morton’s Case, N. Y. Times (June 23, 1905); Morton’s Rebate Testimony, N. Y. Times (June 23, 1905); Bryan on Roosevelt, N. Y. Times (June 25, 1905) ; President at Home Again, N. Y. Times (July 7, 1905); Knapp Praises Morton, N.Y. Times (July 9, 1905); Taft To Run the Canal, N.Y. Times (July 23, 1905); Theodore Roosevelt, Autobiography (1913).

Andrew Carnegie’s Quest for Peace

Andrew Carnegie
Andrew Carnegie

 

Andrew Carnegie (November 25, 1835 – August 11, 1919) was a Scottish-American industrialist who led the enormous expansion of the American steel industry in the late 19th century.[1] He also was one of the highest profile philanthropist of his era who had given away almost 90 percent of his large fortune to charities and foundations by the time of his death.[2]

 

Carnegie also was a pacifist at heart, and starting in 1903 devoted significant time and money to promoting peaceful resolution of international disputes, especially by arbitration pursuant to treaties.

Hague Peace Palace
Hague             Peace Palace

He helped to create the Palace of Peace at the Hague in the Netherlands with his 1903 formation of a Dutch foundation and his funding of the Palace’s construction that was completed in 1913. It initially was the site for the Permanent Court of Arbitration, which was established in 1899 and which now is an intergovernmental organization with 115 member states that provides dispute-resolution services for various combinations of states, state entities, intergovernmental organizations, and private parties.[3] From 1922 to 1946 it also was the site for the Permanent Court of International Justice of the League of Nations and since 1946 the International Court of Justice, the principal judicial organ of the United Nations.

Carnegie also funded the construction of the headquarters building for the Pan-American Union (later the main building for the Organization of American States) in Washington, D.C. and the building for the Central American Court of Justice in Costa Rica.

In 1910 he funded the establishment of the Carnegie Endowment for International Peace, whose trustees were charged to use the fund to “hasten the abolition of international war, the foulest blot upon our civilization.” The Endowment is still operating today with its headquarters in Washington, D.C. Now it describes itself as “a unique global network of policy research centers in Russia, China, Europe, the Middle East, and the [U.S.]. Our mission . . . is to advance the cause of peace through analysis and development of fresh policy ideas and direct engagement and collaboration with decision makers in government, business, and civil society. Working together, our centers bring the inestimable benefit of multiple national viewpoints to bilateral, regional, and global issues.”

Carnegie Hall
Carnegie Hall

Another activity Carnegie organized to promote peace was the April 1907 National Arbitration and Peace Congress at Carnegie Hall in New York City. The Hall, as its name suggests, was another Carnegie-financed project that opened in 1891 in Midtown Manhattan.[4]

The Congress with over 1,200 registered delegates was described as the “greatest gathering ever held in advocacy for the abolition of war as a means of settling national disputes.”

Carnegie himself, of course, gave a major speech at the Congress that in retrospect can be seen as an outline of the United Nations created after World War II. Carnegie said, “[W]e are met to urge the speedy removal of the foulest stain that remains to disgrace humanity, since slavery was abolished—the killing of man by man in battle as a mode of settling international disputes.” He also expressed his support for “the League of Peace idea—the formation of an International Police, never for aggression, always for protection to the peace of the civilized world. . . . “ States should agree “that no nation shall be permitted to disturb the peace.” Before use of the international police, there should be a proclamation of “non-intercourse [“sanctions” in our parlance] with the offending nation.”

President Theodore Roosevelt did not attend the Congress, but sent a letter that embraced its purpose. It said, “[I]t is our bounden duty to work for peace, yet it is even more our duty to work for righteousness and justice.” Moreover, the President stated,“[T]here can be at this time a very large increase in the classes of cases which [could ] . . .be arbitrated, and . . .provision can be made for greater facility and certainty of arbitration. I hope to see adopted a general arbitration treaty.” Roosevelt added that  the Hague court [of Arbitration] should be greatly increased in power and permanency.”

On the other hand, Roosevelt cautioned the delegates to not insist “upon the impossible [and thereby] put off the day when the possible can be accomplished.” “[G]eneral disarmament would do harm and not good if it left the civilized and peace-loving peoples . . . unable to check the other peoples who have no such standards.” Indeed, according to the President, “[T]here are few more mischievous things than the custom of uttering or applauding sentiments which represent mere oratory, and which are not, and cannot be, and have not been, translated from words into deeds.”

The Congress adopted resolutions endorsing international peace and international law; calling for permanency for the Hague Court of Arbitration open to all nations; the adoption of a general international arbitration treaty; the creation of a committee to investigate international disputes and attempt to mediate them before the parties resort to war; the establishment of the neutrality of personal property at sea; and limitations on armaments. [5]

Baron de Constant de Rebecque & Andrew Carnegie
Baron de Constant de Rebecque &     Andrew Carnegie

At the end of the Congress Carnegie was presented with the French Cross of the Legion of Honor by France’s Baron de Constant de Rebecque (nee Paul Henri Benjamin Balluet), a member of the Permanent Court of Arbitration and the 1909 winner of the Nobel Peace Prize. The Baron praised Carnegie for “his interest and energy in behalf of the peace movement” and for being “a good citizen of the whole world.”

According to the New York Times, Europeans were not interested in, or impressed by, this Congress. First, they did not have “a large number of peace propagandists.” Instead their prevailing view was that “universal, permanent peace is a long way off” and that the major issue was the practical one of adopting an agreement on the manner in which wars should be conducted. Second, many Europeans believe that U.S. policies regarding the Western Hemisphere threaten world peace, especially with respect to Germany’s interests in that part of the world. Indeed, The Times of London called Carnegie “an ardent but ill-informed amateur” and had “rushed in where sagacious statesmen fear to tread.” Another European critic said Carnegie should “endow a chair of contemporary history for his own instruction.”

Carnegie Mansion
Carnegie Mansion

Preceding the Congress, Carnegie hosted a large dinner at his beautiful mansion at Fifth Avenue and 91st Street in New York City to celebrate industrial peace in the U.S. and the upcoming Congress. In attendance were 100 “sons of toil” or workers’ representatives; prominent merchants; manufacturers’ executives; bankers; leaders of universities and other educational institutions; church leaders; publishers and editors; lawyers; and railroad executives, including William C. Brown, then Senior Vice President of the New York Central Railroad (and my maternal great-great uncle).[6]

===============================================

[1] This post is based in substantial part on Chapter XXIII (“The Quest for Peace, 1901-1910”) in Joseph F. Wall’s Andrew Carnegie (Oxford Univ. Press 1970), which won the 1971 Bancroft Prize for best book about history of the Americas (or diplomacy). Professor Wall was a revered History Professor at my alma mater, Grinnell College, and I was fortunate to have known him and learned from him.

[2] One of Carnegie’s philanthropic endeavors was funding the establishment of public libraries throughout the U.S. and other countries. My mother was the Librarian at the Carnegie Library in Perry, Iowa, and I studied at Grinnell College’s Carnegie Library during my first two student years.

[3] I have had two “contacts” with the Permanent Court of Arbitration. First, a Minnesota company had suggested arbitration of its claim against my client, an Asian manufacturer, under the UNCITRAL Arbitration Rules. Because my client and I did not believe that there was a valid arbitration clause and the claimant had not appointed the first arbitrator, we did not appoint a second arbitrator and then were surprised to receive a letter from the Permanent Court designating an appointing authority to appoint a second arbitrator. There eventually was a three-person arbitration panel that issued an award in favor of my client. Second, I have researched the life and career of Edward Burnham Burling, a fellow Grinnell alumnus (Class of 1890), whose gift funded the College’s library (the Burling Library) that replaced its Carnegie Library. Burling was the co-founder of the eminent Washington, D.C. law firm of Covington & Burling and represented the Kingdom of Norway against the U.S. over expropriation of shipping contracts during World War I with the Permanent Court of Arbitration in 1922 issuing an award in favor of Norway. Writing blog posts about Burling and the Norway case are on my list of future posts.

[4] This account of the Congress is based upon Andrew Carnegie’s Plea for Peace, N. Y. Times (April 7, 1907); Stead Recommends a Peace Pilgrimage, N. Y. Times (April 8, 1907); Frenchmen Arrive for Peace Congress, N. Y. Times (April 9, 1907); Prelude to Peace Congress To-Night, N. Y. Times (April 14, 1907); Women’s Part in Peace, N. Y. Times (April 14, 1907); War Talk Opens Peace Congress, N. Y. Times (April 15, 1907); The Afternoon Session, N. Y. times (April 16, 1907); Editorial, Peace on Earth, N. Y. Times (April 16, 1907); Peace Conference Not All Harmony, N. Y. Times (April 17, 1907); Honor Carnegie Friend of Peace, N. Y. Times (April 17, 1907); Editorial, Peace Congress Resolutions, N. Y. Times (April 18, 1907); Editorial, Peace Congress Sequels, N. Y. Times (April 21, 1907); Europe Is Amused at Peace Congress, N. Y. Times (April 21, 1907); Proceedings of the National Arbitration and Peace Congress, New York, April 14th to 17th, 1907 (1907).

[5] Roosevelt became a hero for Carnegie, but Roosevelt never liked Carnegie.

[6] Unique Party Carnegie Host, N. Y. Times (April 6, 1907). About one week before this special dinner, Carnegie, after a luncheon meeting with President Roosevelt at the White House, made a statement supporting the President’s policies regarding the railroads. The Carnegie Mansion now is the home for the Cooper Hewitt, Smithsonian Design Museum.

President Theodore Roosevelt’s “Decoration Day” Speech About the Railroads (May 30, 1907)

President Roosevelt, Indianapolis, May 30, 1907
President Roosevelt, Indianapolis, May 30, 1907

In Indianapolis, Indiana, on Decoration Day (May 30, 1907), President Theodore Roosevelt gave a major speech to a crowd of 150,000. He began with a short introduction honoring Indiana’s Major-General Henry W. Lawton, who served in the Civil War and the Spanish-American War and whose statue was dedicated that day, as well as the state’s brave soldiers in the Civil War. (Pp. 1-2)

Roosevelt then spent the rest of the speech discussing U.S. railroads and their regulation by the federal government. He thereby responded to the many comments he had received on this subject over the past several months from prominent people and railroad executives, including William C. Brown, the Executive Vice President of the New York Central Railroad (and my maternal great-great uncle).

With approximately 7,000 words in dense, lengthy paragraphs and with Roosevelt’s style of mixing statements and counter-statements, this part of the speech is not easy to read and analyze. I do not see how any one in the audience that day could have engaged in any such analysis. The following is my deconstruction of that part of the speech into introductory remarks, positive and negative comments about the railroads and comments about their federal regulation.[1]

Introductory Remarks

“Great social and industrial problems confront us, and their solution depends on our . . . unfaltering courage, and yet a wise, good-natured self-restraint . . . . Let us try as a people to show the same qualities . . . that Abraham Lincoln showed when with indomitable resolution, but with a kindliness, patience, and common-sense . . . he faced four weary years of open war . . . .” (P. 2)

We must “preserve the rights of property . . . in jeopardy from . . . the predatory man of wealth . . . .The power of the Nation must be exerted to stop crimes of cunning no less than crimes of violence.” (P. 2)

“There can be no halt in . . . the policy of asserting the right of the Nation . . . to supervise and control the business use of wealth, especially in its corporate form . . . . [The] first and most important feature of this task . . . [is] the control of the common carriers doing an interstate business.” (Pp. 2-3)

Positive Comments About the Railroads

The initial development of railroads in the U.S. “demanded men of the utmost daring and resourcefulness; men like that great gallant soldier and real captain of industry, Granville M. Dodge.” (P. 9)

“The man who builds a great railway and those who invest in it render a great public service; for adequate transportation facilities are a vital necessity to the country.” (P. 5) “We favor full and ample return to such men.” (P. 5)

Our “hearty commendation is due those owners and mangers representing . . . the large majority who have year after year worked faithfully, patiently, and honestly in building up our great system of railways, which has knitted together in close commercial and social intercourse widely removed sections of the country and stands second only to the great business of agriculture itself in contribution to national growth and development.” (P. 7)

The “railroad men of the United States . . . are public servants in the highest and fullest sense. . . . [This includes] those who [make] the determination of railroad policies. These men are entitled to great rewards. . . . [There] is sufficient ingenuity and executive genius in the operating officials of the roads greatly to diminish [their operating] troubles.” (Pp. 12-13)

“We favor the railway man who operates his railway on a straightforward and open business basis, from the standpoint of permanent investment, and who has an interest in its future . . . . We favor the railway manager who keeps in close touch with the people along his line . . ., who operates his line with a view to the advantage he can legitimately can get out of his railway as a permanent investment by giving a fair return to stockholders and to the public good service with reasonable rates.” (Pp. 5-6)

The “bulk of our [railroad] business is honestly done.” (P. 11)

Evidence shows that “as a whole the railroad property of the country is worth as much as the securities representing it” and that “the total value of stocks and bonds is greater than their total face value . . . . [The] great mass of railroad securities rest upon safe and solid foundations.” (P. 6) Such “valuation and supervision cannot be retroactive. Existing securities should be tested, by the laws in existence at the time of their issue.” (P. 8)

”The great need of the hour . . . is the need for better transportation facilities, for additional tracks, additional terminals, and improvements in the actual handling of the railroads. . . . . Ample, safe, and rapid transportation facilities are even more important than cheap transportation. The prime need is for the investment of money which will provide better terminal facilities, additional tracks, and a greater number of cars and locomotives, while at the same time securing, if possible, better wages and shorter hours for the employees.” (P.11)

“There must be just and reasonable regulation of rates, but any arbitrary and unthinking movement to cut them down may be equivalent to putting a complete stop to the effort to provide better transportation.” (P. 11)

Our “railway facilities should be so increased as to meet the imperative demands of our internal commerce. This . . . can be met only by private capital, and the vast expenditure necessary for such purpose will not be incurred unless private capital is afforded reasonable incentive and protection. It is therefore a prime necessity to allow investments in railway properties to earn a liberal return, a return sufficiently liberal to cover all risks.” (P. 12)

“We wish to make it in the interest of the investor to put his money into the honest development of the railroads.” (P. 6) It “is necessary to the enduring prosperity and development of the country that railroads shall yield reasonable profits to investors.” (P. 7)

“[A]ll I ask of [the railroads] is a willingness to comply fully with [the laws’] spirit, and a readiness to move along the lines indicated by those who are charged with administering [the law].” (P. 6)

“It is plainly inadvisable for the Government to undertake to direct the physical operation of the railways, save in exceptional cases . . . . “ (P. 12)

Negative Comments About the Railroads

Only “the men more anxious to manipulate [the railroads’] stocks than to make the management of their roads efficient and honest” will oppose the Government’s laws and policies. (P. 4) Similarly opposed will be “the man who cares nothing about the property after his speculative deal in its securities has been closed.” (P. 5)

There are “isolated instances of unconscionable stock-watering” and of “gross and flagrant stock inflation” and “overcapitalization.” (P. 6)

Comments About Federal Regulation of the Railroads

“Every honestly managed railway will gain and not lose by [federal regulation].” (P. 4)

“Every Federal law dealing with corporations or with railroads . . . [enacted in the last six years] has been a step in . . . the right direction. All action taken by the Administration under these and the preexisting laws has been just and proper. Every [lawsuit in these six years] has been . . .not merely warranted, but required.” (P. 3)

The Hepburn Act of 1906 gave the ICC “absolute control over the accounts of railways,” and the ICC has issued an order, effective July 1st that all railroads subject to the ICC “must standardize their accounting methods.” (P. 8)

“There must be progressive legislative and administrative action for the correction of the evils which . . . have existed in railroad management in the past. Such additional legislation as that for which I have asked in the past, . . . [especially] in my message at the opening of the last session of Congress, [2] is not merely in the interest of every honest railway manager and of all the investors or would-be investors in railway securities.” (P. 3)

“There must be vested in the Federal Government a full power of supervision and control over the railways doing interstate business . . . . It must possess the power to exercise supervision over the future issuance of stocks and bonds, . . .[including] the frank publicity of everything which would-be investors and the public have a right to know. The Federal Government will thus be able to prevent all overcapitalization in the future . . . [and it should be a criminal offense for anyone to load a railroad] with obligations and pocketing the money instead of spending it on improvements and in legitimate corporate purposes.” (Pp. 3-4)

This is “the new era of the widest publicity, and of fair dealing on the part of railroads with stockholders, passengers, and shippers.” (P. 4)

The Federal Government must have the “power to exercise a jealous care against the inflation of securities.” (P. 5)

“The business of railroad organization and management should be kept entirely distinct from investment or brokerage business especially of the speculative type, and the credit and property of the corporation should be devoted to the extension and betterment of its railroads, and to the development of the country naturally tributary to the lines.”(P. 4)

“Railroads should not be prohibited from acquiring connecting lines, by acquiring stocks, bonds, or other securities of such lines.” (P. 4) (Emphasis added.)

“[R]ailroads [should be] permitted and encouraged to make traffic agreements when these are in the interest of the general public as well as the [railroads].” (P. 4)

“[T]here should be nothing done under the guise of regulating roads to destroy property without just compensation or without due process of law.” The “rights of innocent investors should not be jeopardized by legislation or executive action,” (P. 5) (Emphasis added.)

“There must be no such rigid laws as will prevent the development of the country, and such development can only be had if investors are offered an ample reward for the risk they take.” (P. 5)

Congress should provide funds to the ICC to employ “a sufficient force of experts, to undertake the physical valuation of each and any road in the country.” (P. 7) Such physical valuation will be “an essential instrument in administrative supervision.” It will be used to help determine the “reasonableness of future capitalization” and “equitable rates.” Such valuation will “help to protect the railroads “against the [ICC’s] making of inadequate and unjust rates.” (P. 7)

This “movement for national supervision and control over railways will [not] be for . . . [the] detriment [of investors].” (P. 9) With federal supervision, people will not be afraid to invest in railroad securities, thereby opening “a new reservoir [of] capital now so much needed for the extension and betterment of the railroads.” (P. 9)

Conclusion

Reading and deconstructing this speech forces one to recognize that the means of communication in 1907 were vastly different from 2014. Presidential speeches were not broadcast on television and radio. There were no personal electronic devices for people in the audience to record the words of the speeches or images of the speaker or others. Nor were there pundits to provide immediate commentary and analysis of what was just said.

I also wonder about Theodore Roosevelt’s famous saying that as President he had the “bully pulpit.” For the reasons just noted, he did have the undivided attention of the immediate audience before him, more so than presidents of our time, and this put Roosevelt in the position to be a “bully” forcing the audience to listen only to him. His use of the word “pulpit” obviously refers to the pulpit used by preachers to preach to their congregations. Was Roosevelt’s style of long, dense paragraphs with statements and counter-statements unique or was it one used by preachers or other politicians of the time? I welcome informed comments on this and any other issue raised in this discussion.

==============================================

[1] A subsequent post will examine the public reactions to this speech and further developments regarding railroad regulation.

[2] In his Annual Message to Congress on December 2, 1906, the President said there will “ultimately be need of enlarging the powers of the [ICC] . . . to give it a larger and more efficient control over the railroads.” Such enhanced control will “prevent the evils of excessive overcapitalization, and will compel the disclosure by each big corporation of its stockholders and of its properties and business, whether owned directly or through subsidiary or affiliated corporations.”

President Theodore Roosevelt and William C. Brown’s Interactions Regarding Railroad Regulation, January-May 1907

As we have seen in a prior post, William C. Brown, the Senior Vice President of the New York Central Railway (and my maternal great-great-uncle), was a major public spokesman for the interests of the railroads in 1907.

Brown also interacted privately with President Theodore Roosevelt over these issues in February 1907 and again in April-May 1907.This post will look at these interactions.

Theodore Roosevelt
Theodore Roosevelt
William C. Brown
William C. Brown

 

 

 

 

 

 

 

February 1907

Brown’s January 28th letter to Theodore P. Shonts

Brown’s interaction with the President started with the former’s private letter of January 28th to Theodore P. Shonts, the Roosevelt-appointed Chairman of the Isthmian [Panama] Canal Affairs Commission,[1] who recently had announced his resignation from that position effective March 4th.[2]

This seven-page letter’s going into great detail about the current position of the railroads is very unusual. Presumably Shonts knew all of the railroad problems and issues and by virtue of his government position had opportunities for presidential meetings. It is as if the letter really was written to be read by someone else, namely President Roosevelt. This interpretation, in my opinion, is confirmed by Brown’s immediately making the letter public.[3]

Brown’s letter emphasized the challenges facing the railroads. He said the recent “tremendous increase in the commerce of the country has almost swamped the railroads. Terminal facilities . . . are . . . inadequate; single track lines must be double-tracked; double-track roads must have three or four tracks; grades must be reduced, and the equipment of the roads must be greatly increased.” To remedy these inadequacies will be very expensive. For the New York Central, he said, in 1907 alone this will require capital investment of $130 to $ 140 million.

According to Brown, railroads also were facing increased labor costs for 1907 of 8% to 14% or an increase of $75 million for all railroads. Other costs also had increased, and total costs, including labor, were up 40% from 1897.

On the other hand, said Brown, “there is a continuous, organized and persistent effort on the part of shippers to reduce the [railroads’] revenues” which may lead to requests for the ICC to reduce freight rates. In addition, Congress probably will reduce compensation for the railroads’ carrying the mails.

However, without increased freight rates, said Brown, railroads will be forced to substantially reduce the capital improvements that are so necessary.

As a result, in Brown’s judgment, there is growing opinion in the U.S. and abroad that “the President and both the great political parties are prejudiced against the railroads,” thereby “making it almost impossible to sell any kind of railroad security except at a rate of interest and discount that make it almost prohibitive.” If the railroads are forced to halt their needed capital improvements, “the growth and development of the country will soon be stopped by the inability of the transportation lines to handle the products of mine, factory and field.”

Although Brown favored the past “regulation of the railroads by Federal authority, supplemented by state regulation” and regarded “the legislation thus far enacted . . . necessary and wise,” Brown asserted that President Roosevelt must publicly declare that:

  • “the railroads are an important and inseparable part of the wealth of the Nation;
  • “they have contributed more than any other agency in its upbuilding, growth and prosperity;”
  • “the future growth and prosperity of the country depends on, and will . . . be measured by the growth of the great lines of transportation, both rail and water;”
  • “disaster cannot come to them without serious injury to every business interest in the Country;” and
  • the people must give “fair, unprejudiced, and friendly consideration . . . of the interests, the rights, and the welfare of the railroads.”

Shonts’ February 1st letter to Brown.

Seeing Brown’s January 28th letter as really intended for other eyes, in my opinion, is also confirmed by Shonts immediately responding to Brown with a report that Shonts had discussed Brown’s letter with the President and had provided him with a copy of the letter.[4]

According to Shonts, Roosevelt had said he “would have no difficulty in treating with the railroads of the Country if the managing officials were all imbued with the same spirit as [Brown].” In addition, the President had the following specific comments on Brown’s letter:

  • Roosevelt “entirely agreed” with Brown’s statement, ‘I am not an alarmist, and . . . disposed to take a hopeful view of any situation; but the increase in expense and reduction in rates cannot continue much longer without bringing the lines of cost and compensation too near together as to stop all improvement in present, or the creation of additional, transportation facilities.’
  • According to Roosevelt, the “movement for increased pay for employees, and shorter hours of labor, carried with it the necessity for the maintenance of remunerative rates.”
  • The President believed “the public was [not] so much interested in cheaper transportation as in adequate facilities.”
  • The Government, said Roosevelt, had not contended for reduced rates, but the prevention of “unjust discrimination in rates.”
  • The President suggested there be a “safe-guard . . . [for] issuance of future securities, by requiring the railroads to specify the use to which the proceeds of such would be put [to enhance the railroad], not to the buying of parallel or competing lines.”
  • The President also was “heartily in favor of protecting the owners of railroad securities so that purchasers might rely on the security of their investments.”

Brown’s February 3rd letter to Roosevelt’s Secretary.

Responding to this indirect word from the President, Brown on February 3rd sent a letter to Roosevelt’s secretary, William Loeb, Jr.,[5] with enclosed copies of Brown’s previously mentioned January 28th letter to Shonts, a February 1st Wall Street Journal editorial about railroads[6] and Brown’s correspondence with the Journal about same.[7]

Brown did so, he said, because he cares “so much for the President’s approval” and because he believes “our views so nearly coincide on almost all the great questions . . . at the present time.”

In addition, Brown thought “the President and every good citizen of the United States, regardless of party, can say ‘Amen’ to the sentiments” in the February 2nd letter to Brown from Sereno S. Pratt, the Editor of the Wall Street Journal,[8] who said the following:

  • “The movement for corporate reform . . . has accomplished an immense amount of good, and I do not believe that the corporations as a whole will ultimately suffer from it.”
  • On the other hand, this movement “has awakened a spirit of hostility to all corporations, a spirit of hatred of wealth, so that it is full time for the defenders of individual liberty and the rights of private property to get together . . . for the purpose of impressing upon the country the need for wise discrimination. We certainly do not want to destroy wealth and make honest enterprise impossible.”

The Serano Pratt letter was prompted by Brown’s February 1st letter to Dow, Jones & Company with thanks for the editorial. It was for “most railroad men in the country, a ‘cup of cold water to a thirsty traveler.’ Its “words of kindly commendation are appreciated by . . . the railroad men.” For Brown, “Nothing can be more discouraging and disheartening that the wholesale, indiscriminate censure and criticism . . . to which railroads as a whole have been subjected during the last two years.” After all, railroads “are not, even taken as a whole, entirely without virtue and merit; and, in some cases, some roads are entitled to a very great deal of credit for the manner in which they have been operated, and their contribution to the growth and prosperity of the country through which they run.”[9]

Brown concluded his letter to Roosevelt’s secretary with a reference to these words on Grant’s Tomb: ‘Let us have peace.’ Now, said Brown, “it would be a gracious thing if the President would accept the almost unconditional surrender of the roads, and say to the public and to the thousands of disheartened, discouraged railroad men of the Country, ‘Let us have commercial and industrial tranquility and peace.’”

Another enclosure with the letter to Loeb was Brown’s January 22, 1907, letter to Joseph Nimmo, Jr., a statistician for the Interstate Commerce Commission, responding to a request for Brown’s opinions on various issues regarding railroad regulation. Brown said “no [enacted] legislation . . . will result in injury to the railroads . . . unless the [ICC] shall deplete their revenue by reducing freight rates.” Brown said, the “spirit of hostility against the railroads which seems to be felt by member of both parties, and by the [Roosevelt] administration, whether real or not, is rapidly creating a feeling of distrust, and is discrediting the railroads . . . to such an extent as to make it very difficult at the present time to secure any money for needed improvements and promises to make it almost impossible to do so in the near future.” Brown added that he agreed with Hill’s estimate of $5 billion as the amount of needed capital investment by all the railroads over the next five years.[10]

April-May 1907

As mentioned in a prior post, on April 18th Brown was a featured speaker at a banquet in Buffalo, New York where he talked about the railroads’ difficulties in raising capital for improvements due to public agitation against the railroads and his belief that President Roosevelt would exert his “powerful influence . . . fearlessly and forcefully in protecting the railroads from injustice.”[11]

The New York Times article about Brown’s speech came to the attention of Roosevelt. The next day (April 19th) Roosevelt wrote a letter to Brown saying he “heartedly” agreed with the part he had seen and inviting him to the White House the next week. The President especially wanted to hear Brown’s views on the issue of the valuation of railroads.[12]

That White House meeting took place on April 29th, and the nature of their discussion that day is revealed by their subsequent correspondence.[13]

The next day (April 30th) Brown in a letter to the President discussed his upcoming Decoration Day Address about railroads. Brown said he knew Roosevelt did “not want to do any one an injustice or say anything go unnecessarily increase or prolong a feeling of bitterness, which in the interest of all should be eliminated.” The President, however, had suggested (in their April 29th conversation (or in a draft of the speech shared with Brown?) that railroad owners mistakenly or selfishly had not been “doing all that could be done in . . . furnishing additional facilities” to alleviate public inconvenience. Any such suggestion, said Brown, was “mistaken” and “unjust to the directors, officers, and owners of the railroads.” In fact, the “railroads have done everything possible to meet conditions which the tremendous increase in business has forced upon them.”[14]

Brown’s April 30th letter also said that any announcement of the President’s idea of valuation of railroad properties should “be accompanied by some statement that will reassure timid investors.” Otherwise, such an announcement could leave the calamitous impression that such valuations will be used “to decrease [freight] rates, increase taxation, or both.” Enclosed with the letter was a document with Brown’s thoughts on the valuation issue, but this document was not available from the archives. Brown closed the letter with assurances of his “very high personal regard” for the President.

The President’s May 1st responsive letter said he had deleted the sentence of the speech, to which Brown had objected (railroad owners had mistakenly or selfishly failed to furnish additional facilities??). Roosevelt thought Brown’s ideas on valuation were better than the President’s draft on the subject and that the Director of the Census Bureau had cautioned the President on using its statistics on valuation of railroad securities.[15]

On May 2nd Brown replied to the President. Brown sent a page from a draft of his forthcoming (May 13th) speech in Syracuse, New York that had certain statistics. (This enclosure was not available from the archives.) After consulting with others at the New York Central Railroad, Brown said they all thought that his statistics along with those from the Interstate Commerce Commission “will do much to restore confidence and reassure investors in regard to the safety and stability of railway securities.” Finally, Brown urged the President to call if he can be of service in any way. Again he closed with assurances of his “very high personal regard” for the President.[16]

The next day (May 3rd), Brown again wrote to Roosevelt. He said the enclosure he had sent with his prior letter “should be made a little stronger in its characterization of stock watering jobbery” and include “a commendation of those roads that have not been guilty of this thing.” Again, Brown expressed his “very high personal regard.”[17]

On May 4th, the President responded to these two letters from Brown. He thanked him for the statistics he had provided, but urged Brown to make “full use of them in [his] Syracuse speech” and that if Roosevelt used them in his Decoration Day speech, it would be in a different form.[18]

The next missive from Brown was a handwritten letter of May 8th enclosing a recent letter he had received from General Granville M. Dodge[19] (which is not available from the archives). Brown said that the following Dodge statement “voices the sentiment of the railroads almost without exception: ‘Obey the law. Build up the country.’” Brown closed with “I know the railroads have no stauncher friend than yourself” and assurances of his “high regard.”[20]

The final letter in this exchange came from the President on May 9th. He said he liked the Dodge letter and already had referred to Dodge as “a railroad man who was a type of what a good citizen should be.” Roosevelt also said the final version of his Decoration Day speech will include some of Brown’s suggestions.[21]

Conclusion

These interactions show an amazing collaboration between a president and a private citizen. As a result of this collaboration and of Roosevelt’s discussions with other railroad executives in this time period, the President’s Decoration Day speech, which will covered in a subsequent post, contained many points that helped to alleviate the railroads angst.

==============================================

[1] Letter, Brown to “My dear T.P. [Shonts] (Jan. 28, 1907) (Image # 71-0572 through 0578 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, www.theodorerooseveltcenter.org). As noted in a prior post, in 1900 Brown and Shonts and another Midwestern railroad executive (Paul Morton) joined Roosevelt, then Republican vice presidential candidate, on his campaign train from Quincy, Illinois to Chicago.

[2] Shonts Quits Canal; Heads Interborough, N.Y. Times (Jan. 24, 1907); Shonts Quits Canal Work, N.Y. Times (Mar. 5, 1907). In accepting the resignation, Roosevelt said Shonts had shown “energy, administrative capacity, fertility of resource, and judgment in handling men . . . [and] entire devotion to your work.” (President Not Indignant, N. Y. Times (Jan. 24, 1907).)

[3] On February 2nd, Brown released to at least the New York Times a copy of his letter to Shonts, and the next day the Times published an article about the letter. (Says Railroad Whacking Menaces the Country, N.Y. Times (Feb. 3, 1907). The Times said Brown’s letter was believed to be part of an organized campaign by “important business interests” to convince Roosevelt that the “movement against corporations is going beyond bounds” and ”threatens seriously to handicap further development of the country’s industries and transportation systems.”

[4] Letter, Shonts to “My dear W. C.” Brown (Feb. 1, 1907) (Image # 71-0642 & 0643 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, http://www.theodorerooseveltcenter.org). The Theodore Roosevelt Center at Dickinson State University has advised me that through an unpublished analysis of several sources, including the presidential desk diaries, that on January 29, 1907, the President had a “Canal conference with Theodore Shonts.” This probably was the occasion when Shonts discussed Brown’s letter with the President.

[5] Letter, Brown to “My dear Mr. Loeb” (Feb. 3, 1907)(Image # 71-066 & 067 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, http://www.theodorerooseveltcenter.org).

[6] Editorial, Railroads Need Encouragement, W.S.J. (Feb. 1, 1907). The editorial said the railroads need “material and moral encouragement.” More specifically they need coal, cars and engines, more trackage, money and mercy. “They have been hammered and hammered by their critics,” but now need “human appreciation of their concern and their predicaments.”

[7] Letter, Brown to Dow Jones & Co. (Feb. 1, 1907)(Image # 71-0626 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, http://www.theodorerooseveltcenter.org); letter, Serano S. Pratt to Brown (Feb. 2, 1907)(Image # 71-0657 & 0658 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, http://www.theodorerooseveltcenter.org). Brown’s letter to the Journal said the editorial was like a ‘”cup of cold water to a thirsty traveler’” because “[n]othing can be more discouraging and disheartening than the wholesale, indiscriminate censure and criticism . . . to which railroads as a whole have been subjected during the last two years.”

[8] Letter, Sereno S. Pratt to W. C. Brown (Feb. 2, 1907)(Image # 71-0657 & 0658 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, http://www.theodorerooseveltcenter.org).

[9] Letter, Brown to Dow Jones & Co. (Feb. 1, 1907)(Image # 71-0626 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, http://www.theodorerooseveltcenter.org).

[10] Letter, William C. Brown to Joseph Nimmo (Jan. 22, 1907) (Image # 71-0489 through 0493 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, http://www.theodorerooseveltcenter.org). I wonder if this letter’s being in the Theodore Roosevelt collection at the Miller Center indicates that the letter somehow was obtained by the White House and reviewed by the President or one of his aides.

[11] William C. Brown, Address to the Buffalo Chamber of Commerce (April 18, 1907); Hughes Tells of Republic’s Foes, N.Y. Times (April 19, 1907).

[12] Letter, Roosevelt to Brown (April 19, 1907) (Image # 345-0665 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, www.theodorerooseveltcenter.org).

[13] W.C. Brown at the White House, N.Y. Times (Apr. 30, 1907).

[14] Letter, Brown to Roosevelt (April 30, 1907)(Image #308-0873 & 0874 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, www.theodorerooseveltcenter.org).

[15] Letter, Roosevelt to Brown (May 1, 1907) (Image # 345-0779 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, http://www.theodorerooseveltcenter.org). Roosevelt apparently was referring to one or all of the following letters to the President from the Director of the Census Bureau, all of which were provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, http://www.theodorerooseveltcenter.org): letter, North to Roosevelt (April 22, 1907)(Image # 308-0863 through 0867); letter, North to Roosevelt (April 22, 1907)(Image # 73-0348); letter, North to Roosevelt (April 30, 1907)(Image # 308-0875 & 0876).

[16] Letter, Brown to Roosevelt (May 2, 1907)(Image # 308-0777 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, www.theodorerooseveltcenter.org). In fact, Brown did give a speech on May 13, 1907, to the Syracuse, New York Chamber of Commerce that made many of the same points as the Buffalo speech. He again supported federal and state regulation of railroads so long as it was “undertaken in a spirit of the most liberal conservatism; the radical, the agitator, the reactionist on both sides should be suppressed.” (For Government Control, N. Y. Times (May 15, 1907).)

[17] Letter, Brown to Roosevelt (May 3, 1907)(Image # 308-0878 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, www.theodorerooseveltcenter.org).

[18] Letter, Roosevelt to Brown (May 4, 1907)(Image # 345-0822 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, www.theodorerooseveltcenter.org).

[19] Dodge was a Major General for the Union Army in the Civil War (1861-1866), an Iowa Congressman (1867-1869) and an engineer for the Union Pacific Railroad who was a leading figure in the construction of the transcontinental railway. During the 1880s and 1890s, he served as president or chief engineer of dozens of railroad companies.

[20] Letter, Brown to Roosevelt (May 8, 1907) (Image # 308-0884 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, www.theodorerooseveltcenter.org).

[21] Letter, Roosevelt to Brown (May 9, 1907) (Image # 345-0867 provided courtesy of the Library of Congress Prints and Photographs Divisions and Theodore Roosevelt Center at Dickinson State University, www.theodorerooseveltcenter.org).