I’m reading Maury Klein’s The Life and Legend of E. H. Harriman and I’m wondering why Harriman ever tried to gain control of the Chicago Burlington and Quincy RR. Can anyone shed any light on it?
Chronology
Harriman buys the Union Pacific RR which includes the Oregon Short Line which in turn owns substantial stock in the Oregon Railroad and Navigation Co. The Navigation gives access to the Pacific Ocean at Portland and Seattle. James J. Hill owns the Great Northern RR and Andrew Mellon represents J. P. Morgan who has a substantial interest in the Northern Pacific RR. Harriman, Hill and Mellon meet to discuss the Navigation. They are agreeable to keeping it as a neutral line equally available to all but cannot agree on the building of branch lines so they adjourn with no agreement at all. Later Harriman and Mellon meet secretly and come to an agreement where Mellon will build no branches for 6 months. Hill, who is shut out of the meeting, becomes bitterly angry with Harriman and will remain his enemy for the rest of his life.
Harriman not looks for a Chicago connection at the eastern end of the UP. He decided to connect with the Chicago Burlington and Quincy. Hill finds out, out foxes Harriman and with Morgan buys up all of the stock. Harriman then tries to buy a controlling interest in the Northern Pacific. He buy a substantial amount driving the price up but again Hill finds out, wires Morgan (who is in Europe) and Morgan buys enough to keep him and HIll in control. The activity has caused a corner on Northern Pacific stock and the country is in an uproar. Harriman gets a lot of bad publicity. He will get more bad publicity later as a result of putting his stock in the first holding company, the Northern Securities Company.
This is speculation, but that is what you asked for.
Yes the IC would have provided a connection to Chicago for the UP, but it was single track and roundabout. I am not sure it was even done by 1900.
The Q also would have provided a connection to Chicago, but the real reason for the UP to buy the Q was to eliminate a competitor in Nebraska, and as far west as Denver. This was before the era of effective rate regulation and the Q was the UP’s most formidable competitor in the UP’s heartland, Nebraska.
The Illinois Central reached Council Bluffs in December 1899. The difficulty for the UP in trying to get the Q was that the Q had a financial interest in the Manitoba/Great Northern and v.v. since 1890. And J.J. Hill and both Charles Perkins (President) and especially John M. Forbes (Chairman) of the Q were close personal friends.
As for the Northern Pacific, J.J. Hill and Mount Stephen owned a majority of the stock by 1896 but their ownership was complicated by the trusteeship set up by J. P. Morgan, who kept operational control until the death of J.H. Coster, who was Morgan’s railroad specialist. Shortly after that Morgan realized he needed more than Hill’s money to rebuild the NP, He needed Hill’s knowledge and trusted operating people also.
J. P. Morgan was an ally of J.J. Hill, but to describe him as a friend would be going much too far, Hill saw himself as a man of the Northwest, and Morgan saw Hill as a powerful businessman and a railroad expert, but in no way as equal to himself.
According to Klein the Fish and the IC were eager to have the connection with the UP and they did build a connection from Sioux Falls, Iowa for that purpose. But no doubt you are right and it was only one track.
Certainly the CB&Q Nebraska competition would be a concern. However, Klein emphasizes that what Harriman really needed was a Chicago connection. In fact at that time the UP was very successful even with the Nebraska competition.
For all of that your explanation is consistent with the facts. I appreciate your response.
I disagree, E.H. Harriman bought into the C, B & Q, never holding a controlling interest for a purpose, that was to stimulate a stock market war with J.J. Hill and his silent partner J.P. Morgan. There was never any “real” interest interest in the IC, starting what was called the “Northern Pacific Panic” and causing them to offer him a buy in to their Northern Securities Company. That company, in its brief three year life (1899-1902) controlled everything that moved that was north of what is today I-70 from Chicago to the Pacific and north to Canada. Though they were in a position to charge exorbitant rates Hill and Harriman were too good business men to to do so.
None the less, Teddy Roosevelt, who hated “Trusts” sued, citing “Restraint of Trade” under the Sherman Anti-Trust Act to justify his actions. Called the Northern Securities Case, it went all the way to Supreme Court where Roosevelt edged out a narrow 5-4 victory.
I cannot see where we disagree. It seems to me everything you say is consistent with my understanding of the whole affair. The only thing I might add is that Klein reports James J. Hill believed E. H. Harriman was dishonest because of the way Harriman had shut him out of the Oregon Short Line and the Oregon Railway and Navigation. Hill became a bitter enemy of Harriman and the two never came to terms with each other.