Harriman vs. Hill: Wall Street’s Great Railroad War

by Larry Haeg

In 1901, the Northern Pacific was an unlikely prize: a twice-bankrupt construction of the federal government, it was a two-bit railroad (literally—five years back, its stock traded for twenty-five cents a share). But it was also a key to connecting eastern markets through Chicago to the rising West. Two titans of American railroads set their sights on it: James J. Hill, head of the Great Northern and largest individual shareholder of the Northern Pacific, and Edward Harriman, head of the Union Pacific and the Southern Pacific. The subsequent contest was unprecedented in the history of American enterprise, pitting not only Hill against Harriman but also Big Oil against Big Steel and J. P. Morgan against the Rockefellers, with a supporting cast of enough wealthy investors to fill the ballroom of the Waldorf Astoria.


The story, told here in full for the first time, transports us to the New York Stock Exchange during the unfolding of the earliest modern-day stock market panic. Harriman vs. Hill re-creates the drama of four tumultuous days in May 1901, when the common stock of the Northern Pacific rocketed from one hundred ten dollars a share to one thousand in a mere seventeen hours of trading—the result of an inadvertent “corner” caused by the opposing forces. Panic followed and then, in short order, a calamity for the “shorts,” a compromise, the near-collapse of Wall Street brokerages and banks, the most precipitous decline ever in American stock values, and the fastest recovery. Larry Haeg brings to life the ensuing stalemate and truce, which led to the forming of a holding company, briefly the biggest railroad combine in American history, and the U.S. Supreme Court ruling against the deal, launching the reputation of Justice Oliver Wendell Holmes as the “great dissenter” and President Theodore Roosevelt as the “trust buster.” The forces of competition and combination, unfettered growth, government regulation, and corporate ambition—all the elements of American business at its best and worst—come into play in the account of this epic battle, whose effects echo through our economy to this day.

Genres: History, American History, Business, Nonfiction, Railway History

384 pages, Kindle Edition

First published January 1, 2013

Reviews

[Room Temperature Coffee · Rating 4 out of 5]

Fascinating book about a subject rarely talked about. Seems to be well researched and even handed with bias, but there is little other material to compare with about this time period.

The writing can drag at points, but was overall fascinating and worth the read.

[Max Grogg · Rating 5 out of 5]

Haeg really knows how to set a scene. He puts you right there in the room with the characters, like you are witnessing the events in real time. Meticulously researched, there isn’t a single detail about the battle for the Burlington/Great Northern that gets by Haeg. While the book would have benefited from a better pace and sequencing of events to keep the reader engaged (the author sometimes gets sidetracked with details that don’t exactly move the story along), it’s clear the author has a tremendous passion for the subject matter. Lastly, the author does a great job explaining why we should care about these events; in the epilogue, he provides one of the best summaries of the last 100 years of railroading and seamlessly connects the events of 1900 to the modern era.

[Mark Higgins · Rating 5 out of 5]

This is a very entertaining book on an epic battle that pitted Edward Harriman and Jacob Schiff against J. Pierpont, Morgan and James Hill for control of the critical northern route in America’s transcontinental railroad network. The battle for control of the Northern Pacific resulted in an accidental cornering of the stock at the turn of the 20th century. It was not the most critical event in US financial history, but it was an entertaining one. Rumor has it that Warren Buffett has a newspaper article on this famous event framed in his office.

[Patrick Koroly · Rating 4 out of 5]

Haeg ties this all together into a wonderful narrative. Not always the deftest prose stylist, but his tremendously detailed research turns this into a play of characters with incredible depth and vigor.

[Jim Ramnes · Rating 3 out of 5]

Way more Wall Street than Railroads.

[Андрей С. · Rating 4 out of 5]

Из плюсов, что попытался описать корнер в Northern Pacific, из минусов-вставки -предложения, как могло бы быть (за не имением фактов)

[Eapen Chacko · Rating 4 out of 5]

Larry Haeg was the top communications executive at Wells Fargo. He had read about something called the "Northern Pacific Corner" that almost collapsed the New York Stock Exchange and would have taken down many dealers and brokers at the heart of financial system in 1901. When Haeg tried to find details about the stock raid, he didn't find a coherent account: so he wrote one. The amount of research, the variety of sources, and assiduous citations are a testament to his efforts.

At the heart of the book is the confrontation between James J. Hill, a legendary figure in Minnesota and the upper Midwest, and Edward Harriman, an Eastern mogul whose son was W. Averell Harriman, a famous Democratic Part politician and global statesman.

The book paints portraits of two men who intuitively understood the importance of a transcontinental railway to help the country grow both its internal commerce as well as export to Asia. Since the existing railway spider webs were seeded, granted land, taken over, mismanaged and sold off by the government, these two businessmen and financial backers like J.P. Morgan and Kuhn Loeb put together the vision, the track and the financing to make the dream come true. Today, Warren Buffett of Berkshire Hathaway's biggest deal has been to acquire the Burlington Northern Santa Fe Railroad, predecessors of which were owned by Hill and Harriman.

It's a book about life in New York City, where America's moguls were required to have a presence and about the financiers who were connected to Europe which supplied much of the capital for our American deals. Hill and Harriman were railroad men who knew every inch of their tracks and were relentlessly focused on efficiency and not afraid of investing vast sums in the risky venture of creating a route from the East to Chicago to Seattle and San Francisco.

This was the era before the SEC, and the description of the markets and trading that led to the corner are incredibly detailed. In fact, the book spends too much time in the day to day fluctuations of the market and on arcane matters to most readers. I'd have liked more on the personalities, which include Teddy Roosevelt, the trust busting, accidental President who created the Sherman Act which took apart the consolidated company created from the Harriman-Hill feud to control the transcontinental railroad.

There are great business lessons in the book, but the reader has to work through a lot to get them. Without visionary, capable and indefatigable businessmen like Hill and Harriman big dreams don't become reality. Without financial deal makers, the dreams will remain only dreams. Without property rights and a strong legal framework, deals could descend into anarchy. Governments shouldn't run railroads, but they can provide the backdrop that allows private projects to create private wealth and social capital. Sometimes it's hard to tell the heroes from the villains, and sometimes the same person is both, depending on the time and event.

These tumultuous events weren't that long ago. It's a book worth investing time in to understand an important era in the development of our nation. Here is a link to some related content that might be helpful: http://www.pbs.org/wgbh/americanexper...

[Rex Libris · Rating 3 out of 5]

This book was several stories in one, primarily the battle between Hill and Harriman over the Northern Pacific. The second, lesser story was the growth of anti-trust law after this grand battle.

In order to make his system more efficient, Hill sought to control the Burlington through the Northern Pacific, which would give Hill a better route into Chicago. Harriman did not like the competition for his Union Pacific, and secretly tried to buy away the NP from Hill. A grand battle went on over NP outstanding stock, causing a near collapse in the stock market.

After the stock battle, Hill sought to protect his empire by the creation of a holding corporation. The Roosevelt administration disallowed it. Prophecies of government control coming out of the suit proved true. Under the guise of interstate commerce the government can now make anyone do anything it wants, a la the requirement to buy certain products, and to reward or destroy companies favored or not favored by the current administration. The solution to the power of corporatuions is instead to submit to the power of government?

The quality of this book is uneven. some of it moves slowly or what could be interesting parts are entirely omitted. The author said very little about the legal theories in the anti-trust case.

At the same time, it was well-researched and he provided a great visual description of the physical world atthe turn of the century. Haeg has a great command of language.

[Keenan Johnston · Rating 3 out of 5]

One of the great forgotten stories of American history is the battle over the Union Pacific railroad between James J Hill and Ed Harriman. Hill controlled the Great Northern Railroad connecting St. Paul to the west coast through the Dakotas and northwest. Harriman controlled the Union and Southern Pacific which ran from the gulf of mexico along the southern US and up California. The middle link was the Union Pacific which ran along the middle United States, and both parties attempted to purchase majority control of the railroad in a stock buying spree.

The battle for custody of this essential railroad was Big Oil versus Big Steel, JP Morgan against the Rockefellers. The book details the trading of the railroad stocks before insider trading was illegal in the United States and the fortunes that were made and lost essentially gambling on railroad stocks.

The battle for the Union Pacific led to one of the biggest, and unintended corners of the Union Pacific stock in stock market history, seeing the stock rise from $100 to $1,000 within 24 hours. The book chronicles how short sellers who were long railroad stocks were forced to cover their positions by selling their other stock holdings leading to a crash of the entire stock market and crippling the livelihood of so many Americans.

Overall it was a really good book if you can get through the technical aspects of stock trading.

[Stuart Bobb · Rating 5 out of 5]

I thoroughly enjoyed this book.

Very insightful on so many fronts, including the railroads of my childhood (Great Northern and Northern Pacific both cross North Dakota, the NP through the middle of my home town). Since I have family that works at BNSF (which is built from the Great Northern, the Northern Pacific, the Santa Fe and the Burlington, plus others) this book was also an insight into the history of their world. They read it and highly endorsed it, which moved it up my queue.

Also, I find JP Morgan absolutely fascinating as a character of history and he plays a big role in this book as well. I came away pretty impressed with James J Hill as well. Here was somebody that knew how to manage for efficiency!

Finally, the author is not afraid to pick up some rocks and toss them at Theodore Roosevelt. Since I've read so much which is nearly hagiography of Teddy, it was refreshing to see somebody stand up and point out that the man truly was a politician in all senses of the word. He and Knox's prosecution of the Northern Securities trust has a strong political flavor to it, for sure. (I would agree it probably did violate the Sherman anti-trust act - but so did a lot of other things they didn't pursue).

It is not often that events from 115 years ago can be told so compellingly and engagingly that the phrase "can't put it down page turner!" applies. This is a case of that.

[Mike Alkhazov · Rating 4 out of 5]

well research, full of interesting details, the writing style is serious but vivid and at times one can almost imagine the characters on a movie screen. Haeg explores an interesting moment in american business/stock market history which happened during the latter half of the Gilded Age.

this books is first and foremost a detailed account of what happened during the Great Norther corner. two well funded parties wanted control of the Great Norther and as they acquired control in the open market they bought every available share (they "cornered" the market in the stock) forcing the shorts to pay incredible prices to cover and took down the entire stock market as those shorts had to liquidate their other positions.

along with telling this story, Haeg touches on greater picture or railroads and business during the 1900's. also, Haeg explores the histories/personalities/tactics of "the big 4" in the book (Harriman, Hill, Morgan, Schiff) and gives a front row seat to what a ibankers/traders/asset managers day to day professional life would be like in very late 1800's and very early 1900's.

this book deserves a read just for the story Haeg is telling but i think for many (like myself) who are students of the market and the interaction between business and politics, this story will reinforce the old adage of "history doesn't repeat itself, but it rhymes."

[Jack Laschenski · Rating 4 out of 5]

An interesting journal of the battles for the control of America's railroads at the turn of the 19th century.

Edward Harriman and banker Jacob Schiff vs. James Hill and financier John Pierpoint Morgan.

These men controlled, through the railroads and U.S Steel much of the U.S. Economy.

They each wanted it all.

The railroads were a mess - there were too many of them.

Consolidation was rational - but placed control in just a few (non-governmental) hands.

Enter President Teddy Roosevelt.

A great saga.

A little tedious too - too much daily stock price description.

[Sherry · Rating 5 out of 5]

I picked up the book because I have met Larry Haeg, not knowing what to expect, and it blew me away! This book deserves to be read. There is an enormous amount of information, detail and data, including minute by minute descriptions of days at the stock exchange. He made it a cliffhanger. Whether you are interested in commerce, government regulation, the stock market, Minnesota history, railroads or politics, you will find great material in Harriman vs. Hill. Bonus: Justice Holmes' dissent in Northern Securities is reprinted as an appendix. That man could think and write!

[Michael Denoncourt]

Finely researched. The cast of characters are so vividly portrayed it's like cinema.
This battle between railroad and investment banker titans is a lesson for all times.
Although the transportation system mix has changed greatly over time the vision of the railroad consolidators has not.

A must read!