My Amazon Review of Greg Steinmetz's "American Rascal: How Jay Gould............"

Robber Baron

 

Greg Steinmetz has written a biography of one of Matthew Josephson’s robber barons. I must confess I read Josephson’s “The Robber Barons” in junior high and to me they were heroes in the sense that these mostly self-made men built America in the latter half of the 1800’s. We cannot look at the life of Jay Gould through 21^st Century eyes, but rather we have to look at his life in the context of America being an emerging market with all of the corruption that entails.

 

To be sure much of what Gould did in markets would be illegal today, but was not in the 1860’s. Nevertheless, his collusion with New York City Boss Tweed was illegal then and Gould got away with it.

 

We see Gould rising from humble beginning to running a tannery operation to becoming a major factor on the New York Stock and Gold exchanges. We see him puling off a corner in the gold market in 1869 that unfairly implicated President Grant. To me the most interesting factoid in that development was that the young Thomas Edison was the telegraph operator who telegraphed the changing price of gold throughout the Nation.

 

We next see Gould becoming a railroad baron where he ended up controlling 16% of the nation’s track mileage through strategic stock purchases. Far from being only a stock jobber, Gould was responsible for laying 4,000 miles of new track throughout the country. Too many of his contemporaries, Gould was the smartest person in the room.

 

Steinmetz highlights the role of reformer and Adams family scion Charles Francis Adams in pushing for railroad regulation, yet we see him later running the Union Pacific Railroad for a decade. He too wanted to make a buck. We also learn contrary to the populist myth American railroads suffered from too much competition, rather than too little.

 

Through it all Gould was a family man who loved his wife and six children who died to young in his mid-fifties. In this brief biography Steinmetz tells a riveting story about Jay Gould and his times.

For the full amazon URL see: Robber Baron (amazon.com)

My Amazon Review of Brian McGinty's "Lincoln's Greatest Case: The River, the Bridge and the Making of America"

Lincoln as Railroad Lawyer

Abraham Lincoln made his living as a railroad lawyer specifically for the Illinois Central and the Chicago and Rock Island. Lawyer/historian Brian McGinty turns his keen eye on the now obscure struggle between steamboat and rail interests for dominance over Midwest transportation that chrystalized with sinking of the steamboat Effie Afton at the Rock Island Bridge. The owners of the Effie Afton supported by the St. Louis river interests sued for damages and argued that the bridge should come down because it was a hazard to navigation. Lincoln’s role in the case was to assist Norman Judd in defending the bridge and its railroad owners. This is a book more for history nerds than for the general reader.

The Rock Island Bridge was the first to cross the Mississippi in 1853 and sinking occurred in 1856. The steamboat interests rightly feared the railroads and fought tooth and nail against them with a strong ally in Washington, Secretary of War Jefferson Davis. Davis was not anti-railroad; he just wanted a more southern route to extend slavery into the southwest. As a Secretary of War he surveyed the west and came up with four potential routes. Although not mentioned in the book, those routes ultimately became the backbones of the Union Pacific, Southern Pacific, Santa Fe and Northern Pacific railroads, but that was to come later.

Lincoln’s main role at the trial was in his summation where without notes he demonstrated his knowledge about all things mechanical and his deep understanding of the currents of the Mississippi River. Although the jury verdict was not unanimous, the 9-3 vote in favor of the bridge opened the way for railroad penetration west of the Mississippi. Norman Judd, the lead counsel, ultimately would become one of the key backers of Lincoln’s presidential run three years later.

McGinty tells a good story, but there is lots of trial stuff here that only a lawyer would love.

The Amazon URL is: http://www.amazon.com/review/R1VEG3F3LNPRXH

My Amazon Review of Larry Haeg's, "Harriman vs. Hill: Wall Street's Great Railroad War"

Larry Haeg brings to life an era when Wall Street was the wild west and regulation was nonexistent. The giants of finance and industry dominated the stage like never before or after. The great railroad war arises out of the the strategic dilemma faced by both Harriman's Union Pacific and Hill's Great Northern. The eastern terminus of the Union Pacific is St. Louis and the eastern terminus of the the Great Northern is St. Paul. In order to efficiently bring grain from the west and trade to and from China both needed access to the the great railroad hub of Chicago. That access could be provided by the Chicago, Burlington and Quincy which was controlled by the Northern Pacific. Each fears that control by the other would lock them out of Chicago.

Harriman starts the war by quietly gobbling up common and preferred shares of Northern Pacific though his banker Jacob Schiff of Kuhn Loeb. Hill seeing the activity in Northern Pacific starts buying too through his banker, J.P. Morgan. The war is on. Soon more stock is bought than can actually be delivered because short sellers seeing the rise in Northern Pacific stock come in and short the stock. A corner, where no deliveries can be made, ensues driving the stock of Northern Pacific up from $110 a share to an astounding $1000 a share in two days. Realizing a corner had taken place, Schiff and Morgan agree to settle at $150 a share and Northern Pacific drops precipitously to $150 a share.

The titans then settle there dispute with a three way merger bringing the railroads under the roof of a newly formed holding company, Northern Securities controlled by Hill and Harriman's Union Pacific. It is here where President Theodore Roosevelt intervenes with an antitrust lawsuit that goes all the way to the Supreme Court dissolving Northern Securities. Quite a yarn.

Along the way we get a peak into New York society, especially at the old Waldorf Astoria. There are aslo cameo appearances by Bernard Baruch and Jesse Livermore. Haeg's sympathy is with the titans and against the government and the crippling railroad rate legislation that was to come. However, he fails to fully appreciate that that the railroads of 1900 were quasi-monopolies that were in need of regulation. However, over time with federal subsidies for barges and the advent of trucking the rail monopolies would wither away and force much of the industry into bankruptcy.

Over the long run Harriman and Hill had it right. Consolidation was necessary and the Great Northern, Northern Pacific, and Chicago Burlington and Quincy along with the Santa Fe are now under one roof, the Burlington Northern owned by Warren Buffett's Berkshire Hathaway.

For those readers interested in getting a very real sense of what Wall Street was like in 1901, this book is a great read. My one and very real criticism of the book is that stock charts would have been very helpful to clarify the text.

See the full Amazon URL at:http://www.amazon.com/Harriman-vs-Hill-Streets-Railroad-ebook/product-reviews/B00G9JU1RI/ref=sr_1_1_cm_cr_acr_img?ie=UTF8&showViewpoints=1