Theodore Rex (15 page)

That attitude, however, had always been skeptical.
Sensing Roosevelt’s need for reassurance, Washington wrote again to say that the controversy was “providential,” even therapeutic. “I cannot help but feel … that good is going to come out of it.”

Some good, certainly, accrued to himself. His reception by the President had transformed him into a political force of the first magnitude. Booker T. Washington now commanded the fear, as well as the love, of black Americans. Eventually the former emotion might qualify the latter, but for the time being he was “King of a captive people.”

Roosevelt’s gains were more negative. He had learned the evanescence of presidential popularity, the complexity of race prejudice, and “
the infinite capacity of the newspaper press to manufacture sensations.” He had to accept that he had no real constituency in the South, and stood little chance of assembling one, so united were Democrats against him. Perhaps his dream of bipartisan reform had always been quixotic. The most he could hope was that Southern blacks would reward his goodwill at the next national convention.

The summer of 1904, however, seemed far away in the fall of 1901. Roosevelt could only lament his sudden misfortune, and the revival of old doubts about his maturity. A forty-third candle on his birthday cake on 27 October
did not console him, nor the gift of a possum from some black admirers.
He dutifully announced that he would wait until “the first frosty day” before eating his critter, “well browned, and with sweet potatoes on the side.” But his private melancholy persisted through the first week of November:

As the famous dinner receded into memory and mythology, Roosevelt grew more conciliatory toward his critics, admitting that he might, just possibly, have made a mistake. But only in the political sense: morally speaking, “my action was absolutely proper.”

He kept his vow to consult Booker T. Washington on matters of race and patronage, but never again asked him to dinner.
And when Washington next visited the White House, George Cortelyou was careful to schedule the appointment at ten o’clock on a regular business morning.

THE NIGHT OF MONDAY, 11
November 1901, was moonless, and shadows drowned the canyons of downtown New York City. Wall Street, darkest canyon of all, was deserted except for a group of carriages waiting outside the House of Morgan. Midnight struck, then one o’clock.

Inside the gloomy building, behind successive ramparts of granite, mahogany, and ground glass,
three financiers conferred. James J. Hill and E. H. Harriman habitually shunned the light of day, the flash and glare of publicity. As for J. Pierpont Morgan, the third party to the business at hand, his aloofness was so Olympian that he was not even present. An aide, George W. Perkins, negotiated in his stead.

This common need for seclusion had little to do with shyness, although Morgan’s carbuncled nose, Hill’s bald pate, and Harriman’s wire-spectacled features twitching around a
huge damp mustache brought out the worst in small boys and cartoonists. Had the financiers been as gorgeous as gods, their desire would likely still be to operate in private. Combinations, they felt, were best put together quietly.

Decent, driven men, they had enriched themselves beyond imagination by anonymous deals in railroad stocks. They had built up great transportation systems, stimulated interstate commerce, and improved life for uncounted millions of people. Their philanthropies were legion, their senses of social responsibility sincere.

Yet they had learned with chagrin that the wages of large achievement were public scrutiny and malice. This only made them retreat deeper into themselves. At the heights of their careers, they were a bruised, petulant trio,
bent on further organization of the economy—its “Morganization,” in popular parlance.

Their meeting tonight demanded especial discretion. It marked the climax of a secret seven-month war between Hill’s Great Northern and Harriman’s Union Pacific railroads for control of Morgan’s Northern Pacific. Also at stake was the Burlington & Quincy road, connecting the three systems with Chicago. Mere rumors of this “battle of titans,” earlier in the year, had precipitated the worst panic in Wall Street history; Morgan had been obliged to pump sixteen million dollars into the market to save the stock exchange from collapse.

Right now, Hill seemed to be winning. Harriman had managed to amass a majority of Northern Pacific preferred shares, but they were due to be retired by forced exchange for common shares on New Year’s Day 1902, and Hill (with Morgan’s connivance) owned a majority of those. There was no guarantee, however, that Harriman would not challenge the power of those shares in court. If successful, he would end up controlling four of America’s six western rail networks. That thought was enough to whiten what was left of James J. Hill’s hair.

At sixty-three, Hill was ten years older than Harriman. The strain of fighting a ruthless adversary had taken its toll. One horizon-filling vision still haunted him: the combination of the Great Northern, the Northern Pacific, and the Burlington into a rail megasystem covering seventeen states and thirty-two thousand miles of track. Harriman alone could prevent that dream from becoming reality. Hill therefore had to seduce “the little man,” as he called him, into some sort of partnership.

What lay before them and Perkins was a proposal to create a trust so immense as to absorb the stock of all three railroads—some four hundred million dollars’ worth. These securities would be invested in a “holding company,” which would act as a conduit for profits, and protect the component roads. Harriman would be rewarded with board seats proportionate to his Northern Pacific holdings, free access to the Burlington system, and a huge sum of cash. Hill proposed calling their new trust “The Northern Securities Company Limited.”

Anybody could see from the draft charter that Northern Securities, if incorporated, would be the greatest combination in the world, second only to U.S. Steel. It would earn one hundred million dollars a year. Its commerce would extend from Chicago to Seattle, and thence, via Hill shipping lines, as far as China.

The flaw in this Columbian scheme was that the Great Northern and Northern Pacific were competitive roads. Mutually operated, they might seem to be acting in restraint of interstate trade, as defined by the Sherman Antitrust Act.

But Hill was confident of the legality of his charter. The finest trust attorneys in the country had researched the Supreme Court’s interpretation of the Sherman Act, and found no precedent to threaten Northern Securities. Indeed, the decision in
U.S. v. E. C. Knight
seemed to affirm the right of a holding company to acquire competing stocks, whether the result was monopoly or not.

The bells of Trinity Church struck two o’clock. It was time for a decision. Harriman weighed the cost of further warfare against the profits of truce, and pronounced himself “perfectly satisfied” with Hill’s offer.

George Perkins agreed to join them on the board of the new trust, as representative of the House of Morgan. The three men voted to file for immediate incorporation. Then they went into the night.

THE NEXT DAY
, Tuesday, 12 November, Roosevelt finished drafting his first Annual Message to Congress. The task had occupied him, on and off, for more than seven weeks. He had taken particular pains with the subsection on trusts, and was looking forward to reading it to his Cabinet.

SECRECY SURROUNDING THE
formation of Northern Securities lasted a further twenty-four hours. Not until Wednesday morning did a prominent but vaguely worded announcement of “a settlement” in “the Northern Pacific matter” appear in the New York
Sun
, Morgan’s mouthpiece. There was no hint of the formation of a new trust, but more details were promised later in the day. Clearly, the story was so big Morgan wanted to delay it until after the stock exchange closed.

Roosevelt worked until lunchtime. At 1:15 he called for the White House barber—he had an eccentric fondness for being shaved in the early afternoon—then marched with glowing cheeks into the dining room. He asked the Attorney General of the United States to accompany him.

ROOSEVELT HAD TAKEN
to calling Philander C. Knox his “playmate.” At first sight, the little lawyer seemed an unlikely candidate for friendship. He was short, smooth, pale, and expressionless, a porcelain egg of a man, weighted in place, yet tilting to the slightest touch. His dark blue eyes stared in different directions. No spoon could crack him open for inspection.
In the words of a frustrated interviewer, “He offers no point of attack.”

Knox was the quintessential attorney, ready to argue any brief for a fee. The larger the fee, the better he argued. Happily for him, corporations in his home state of Pennsylvania could afford very large fees indeed. By the time he
joined the second McKinley Administration, Knox had argued himself into the highest income bracket of the law, and his client list boasted such names as Carnegie, Mellon, and Frick.

The Attorney General spent his money well, in
nouveau-riche
style. His first gesture on coming to Washington had been to beat the Count of Monte Cristo’s price for a pair of high-stepping horses. He established himself in a lavishly redecorated mansion on K Street, wore pearls at cuffs and collar, and entertained all comers to magnums of Moët & Chandon Impérial. Although he affected to be bored by his own splendor, Knox worked behind the biggest desk in town, and was lobbying for a new, palatial Department of Justice building. “I think I shall need a large appropriation.… It should be built entirely of marble.”