#142 Teddy Roosevelt and J.P. Morgan

Summary Notes


In "The Hour of Fate," Susan Berfield explores the intense conflict between President Theodore Roosevelt and financier J.P. Morgan during the transformative era of American capitalism. Roosevelt, a proponent of big business but a staunch advocate for public accountability, aimed to ensure the government's primacy over business and the application of laws to the elite and the poor alike. Morgan, on the other hand, believed in the power of capital, trade, and economic efficiency, considering regulation unnecessary and harmful to America's growth. Their clash came to a head with the antitrust lawsuit against Morgan's Northern Securities Company, which Roosevelt saw as a necessary check on concentrated power. Despite their differences, both men had to cooperate during a critical coal strike, highlighting their complex relationship. Berfield's narrative illuminates the intersection of politics, economics, and personalities at a pivotal moment in history.

Summary Notes

Accumulation of Wealth by Industrialists and Financiers

  • Industrialists were understood by Americans for their tangible contributions such as mining, discovery, and construction.
  • Financiers, on the other hand, amassed wealth through the flow of money, which was a less tangible concept for many Americans.
  • J.P. Morgan was noted as the most influential financier, although not the wealthiest.
  • Morgan's command and influence were unmatched, and he held an aristocratic disdain for public opinion, believing his actions were beneficial for the country without needing to provide explanations.

"These industrialists accumulated their wealth in ways most Americans could understand. They dug up something, they discovered something, they built something. But the financiers backing these industrialists, as Americans were just learning, found their riches in the flow of money itself."

This quote explains the contrast between how industrialists and financiers gained their fortunes, with the former being more relatable to the public due to the physical nature of their work.

The Dynamics between Roosevelt and Morgan

  • Roosevelt and Morgan both believed in the inevitability and necessity of big business but had different views on its regulation.
  • Roosevelt aimed for the government to assert control over businesses to ensure fairness, while Morgan saw regulation as unnecessary and potentially harmful.
  • Morgan required order and stability, along with political predictability, to ensure America's growth and global power.
  • Both men knew privilege and loss and were similar in many ways, though they would not have admitted it.
  • Their differing views on business and government roles were bound to lead to conflict.

"Morgan and Roosevelt both knew privilege and loss, though they would have balked if anyone had pointed out their similarities."

This quote highlights the shared backgrounds of Morgan and Roosevelt, despite their contrasting views on government and business interactions.

The Hour of Fate: Roosevelt, Morgan, and American Capitalism

  • The book discussed is "The Hour of Fate: Theodore Roosevelt, J.P. Morgan, and the Battle to Transform American Capitalism" by Susan Berfield.
  • The book delves into the relationship between Roosevelt and Morgan and their impact on American capitalism.
  • It provides insights into historical figures' personalities by examining their conflicts and alliances.
  • The book draws parallels to other historical business rivalries and competitions.

"Roosevelt and Morgan were bound for conflict. Roosevelt was a new kind of president. He believed American capitalism needed a guiding hand. So did Morgan. Each assumed it should be his own."

This quote summarizes the central conflict in the book, highlighting the clash between Roosevelt's and Morgan's visions for guiding American capitalism.

Backgrounds and Personalities of Morgan and Roosevelt

  • J.P. Morgan was heavily influenced by his father, Junius, who guided his career and decisions.
  • Morgan's personality was characterized by a need for control and a lack of tolerance for challenges to his authority.
  • Roosevelt was known for his 'get action' approach, his vitality, and his ability to absorb information quickly.
  • Both men were similar in their imperious natures and certainty in their beliefs, but they channeled these traits toward different ends.

"Morgan had trusted his father to set him on the right path and steer his career. And even when his father was overbearing, Morgan never mounted a challenge."

This quote illustrates Morgan's respect for his father's guidance and his reluctance to oppose his father's wishes, which shaped his career and personality.

Early Political Career and Learning Curve of Roosevelt

  • Roosevelt's early political career was marked by his brashness and inability to create alliances.
  • He learned from his initial failures and began to embrace compromise and cooperation to achieve his goals.

"I rose like a rocket, he said. But it didn't take long, though, before he sputtered. Roosevelt was unskilled at creating alliances. He shouted and paced the aisles. He harangued. I would listen to no argument, no advice. I took the isolated peak on every issue and my people left me."

This quote describes Roosevelt's initial political struggles due to his uncompromising stance and lack of tact in dealing with others, which he later adjusted to become more effective.

The Coal Strike of 1902 and the Convergence of Interests

  • The coal strike of 1902 occurred during a period of conflict over antitrust violations involving Morgan's Northern Securities railroad trust.
  • The strike represented a significant challenge as it affected Morgan's railroads and the public's access to coal.
  • The situation required cooperation between Roosevelt and Morgan, despite their ongoing battle over business regulation.
  • The book provides a detailed account of this pivotal moment, which necessitated collaboration between two powerful figures with opposing ideologies.

"With millions of dollars on the line, winter bearing down, and revolution in the air, it was a crisis that neither man could solve alone."

This quote encapsulates the gravity of the coal strike crisis and the necessity for Roosevelt and Morgan to work together, despite their differences, to resolve the issue.

Personal Tragedy of Teddy Roosevelt

  • Teddy Roosevelt experienced the devastating loss of his mother and wife on the same day.
  • His mother died of typhoid fever, and his wife died shortly after giving birth.
  • Roosevelt expressed his grief by marking his diary with a "big black X" and writing a poignant statement about his loss.

"His mother and his wife die on the same day. So it says at three in the morning. His mother, 48 years old, died of acute typhoid fever. Alice, that's his wife, she was giving birth to his child. Alice died less than 12 hours later. She was 22. Theodore drew a big black x on that page in his diary and wrote, the light has gone out of my life."

The quote describes the tragic events that led to Roosevelt's profound grief. The death of his mother and wife on the same day was a pivotal moment that deeply affected his personal life.

Coping with Tragedy

  • Roosevelt retreated to the Dakota Badlands to cope with his depression after his personal losses.
  • He immersed himself in nature and physical challenges to help manage his grief.
  • The wilderness experience included building a house, ranching, and hunting, which provided a distraction from his despair.

"He goes out into the wilderness. A huge part of Teddy Roosevelt's life is his love of nature. So it says. The Dakota Badlands, a curious, forbidding wonder of time worn rocks and water, held the last grassy stretches of a vanishing frontier. It was there that Roosevelt retreated in the summer of 1884."

This quote highlights Roosevelt's love for nature and how he used the wilderness as a refuge to help him cope with his overwhelming grief and depression.

J.P. Morgan's Business Strategy

  • J.P. Morgan favored cooperation over competition in the railroad industry to avoid financial ruin.
  • Morgan aimed to create an unofficial trust to control the railroad industry and maintain profits.
  • The Northern Pacific Railroad was a key area where Morgan sought to establish this control.

"JPMorgan does not want competition. He wants cooperation, and he wants control."

This quote summarizes J.P. Morgan's business philosophy in the railroad industry, emphasizing his desire for control and cooperation to avoid destructive competition.

Establishing Trusts and Competition

  • Morgan's strategy involved reorganizing financially troubled railroads to create a more stable industry.
  • The creation of trusts was a means to encourage cooperation among railroad owners and prevent financial chaos.
  • Despite Morgan's efforts, the inherent competitiveness of the railroad men made lasting cooperation difficult.

"An unofficial trust here."

The quote refers to the informal agreements and strategic alliances that J.P. Morgan was orchestrating in the railroad industry to manage competition and promote financial stability.

J.P. Morgan's Influence and Opposition

  • Morgan had significant influence over the railroad industry, but not all companies were under his control.
  • The Burlington railroad managed to remain independent and was a target for inclusion in Morgan's Northern Securities Trust.
  • The competitiveness of the industry led to various conflicts and the eventual need for reorganization.

"Your roads belong to my clients."

This quote demonstrates the extent of J.P. Morgan's influence and control over the railroad industry, where he considered the railroads to be under the ownership of his clients, thus asserting his dominance.

The Power of Financial Strength

  • Financially strong businesses were less susceptible to outside influence or control.
  • James J. Hill was an example of a railroad operator who did not need Morgan's assistance due to his profitable and well-run business.
  • The narrative suggests that financial strength allows businesses to maintain autonomy and resist external pressures.

"If you have a well run business and you're financially strong, Morgan's of no use to you."

This quote reflects the idea that financial stability and good management practices protect businesses from needing the intervention of financiers like J.P. Morgan.

  • Trusts became synonymous with concentrated power and income inequality, leading to public distrust.
  • The Sherman Antitrust Act was passed in response to these concerns, but businesses found ways to circumvent it, such as through the creation of holding companies.
  • New Jersey was criticized for enabling holding companies, which were seen as a way to avoid antitrust laws.

"Trust had come to represent everything skeptical, restless Americans feared about the influence of Wall Street, concentrated power, and income inequality."

The quote captures the public's perception of trusts and their association with economic disparities and the centralization of power, which was a significant concern at the time.

The Rise of Teddy Roosevelt

  • Roosevelt dedicated himself to public service and held various political positions before becoming vice president.
  • His political beliefs and strategies were widely reported in the press, which he used to his advantage.
  • Roosevelt's popularity with the public was instrumental in his landslide reelection, despite opposition from within his own party.

"Theodore courted. He was the opposite of Morgan in the sense that he used the press as his ally."

The quote illustrates Roosevelt's strategic use of the press to connect with the public and gain widespread support, contrasting with Morgan's more reserved approach to public relations.

Teddy Roosevelt's Character and Public Service

  • Teddy Roosevelt was not only a political figure but also an author who wrote several books.
  • Roosevelt was known for his voracious reading habits, which far exceeded the average pace.
  • His speeches contained impactful lines, likely influenced by his extensive writing experience.
  • Roosevelt's philosophy emphasized the importance of a challenging life, believing that an easy life that impairs one's capabilities is not worth living.
  • As governor of New York, Roosevelt aimed to dismantle the secretive operations of politicians and high capitalists.
  • He implemented reforms such as stricter regulations on working conditions, more authority for factory inspectors, and an 8-hour workday for state employees.

"A soft, easy life is not worth living if it impairs the fiber of brain and the heart and the muscle. We must dare to be great."

This quote encapsulates Roosevelt's belief in the value of hard work and the pursuit of greatness, which was reflected in his policies and public service.

Roosevelt's Reluctance to Become Vice President

  • Roosevelt initially did not wish to be vice president; he hoped for a second term as governor to fulfill his reform promises.
  • High-ranking political figures and influential fundraisers found Roosevelt difficult to control, referring to him as a "damn cowboy."
  • Thomas C. Platt, a powerful party boss, saw Roosevelt's independent streak as a liability and sought to move him to the vice presidency.
  • The political elite, including J.P. Morgan, saw Roosevelt's vice-presidential candidacy as a way to sideline him, not anticipating President McKinley's assassination which would elevate Roosevelt to greater power.

"All the big moneyed interests that make campaign contributions of large size and feel they should have favors in return are extremely anxious to get me out of this state."

Roosevelt recognized the pressure from wealthy donors and political influencers to remove him from a position where he could affect their interests, which contributed to their support for his vice-presidential nomination.

The Struggle for Power in the Railroad Industry

  • Edward H. Harriman, Jacob H. Schiff, James J. Hill, and J.P. Morgan were key figures in the railroad industry power struggle.
  • Harriman's aggressive tactics included buying stock in railroads controlled by Morgan, an unprecedented challenge to Morgan's authority.
  • Despite not owning a majority of shares, Morgan and Hill effectively controlled the Northern Pacific Railroad, a testament to their influence.
  • Harriman's actions forced a negotiation, leading to the formation of the Northern Securities Company to consolidate control over several railroads.
  • The Northern Securities Company was intended to circumvent antitrust laws, reflecting Morgan's belief that the law did not apply to him.

"This is an invasion of Union Pacific territory, which is a railway that he controlled at the time and a hostile act, and you will have to take the consequences."

Harriman's bold confrontation with Hill and Morgan over the control of railroads exemplifies the intense competition and power plays within the industry.

Roosevelt's Presidency and Domestic Policies

  • Upon becoming president, Roosevelt maintained a simple and active lifestyle, consuming large amounts of coffee and engaging in physical activities.
  • Roosevelt's popularity was bolstered by his status as a war hero from the Spanish-American War.
  • Despite the risk of assassination, Roosevelt insisted on personal freedom, carrying his own revolver for protection.
  • His first State of the Union address outlined the need for federal regulation of trusts, acknowledging the inadequacy of old laws to manage modern wealth distribution.
  • Roosevelt's actions expanded the executive power, with many of his initiatives requiring Supreme Court adjudication.
  • He called for the national government to regulate trusts that operated across state lines, a direct challenge to big business practices.

"The old laws and old customs which had almost binding force of law were once quite sufficient to regulate the accumulation and distribution of wealth. Since the industrial changes which have so enormously increased the productive power of mankind, they are no longer sufficient."

Roosevelt's quote reflects his belief in the necessity of updating laws to address the economic changes of the industrial age, setting the stage for his regulatory policies.

Roosevelt vs. Morgan: A Clash of Titans

  • Roosevelt's administration prosecuted the Northern Securities Company for violating the Sherman Act, signaling a change in the relationship between the presidency and wealthy industrialists.
  • Morgan expected to negotiate in private with the president, a norm Roosevelt disrupted.
  • The conflict between Roosevelt and Morgan extended to other industrialists, including James J. Hill, who openly threatened the president.
  • Roosevelt's assertive approach to regulation and his willingness to confront powerful figures like Morgan and Hill marked a significant shift in presidential conduct.

"Roosevelt should have warned him. Morgan grumbled. They could have worked it out. A deal in private. Presidents didn't keep secrets from the captains of industry and the House of Morgan had never before been surprised by the White House."

Morgan's expectation of private negotiations and his surprise at Roosevelt's direct action illustrate the changing dynamics of power between the government and big business during Roosevelt's presidency.

Cooperation and Conflict Amongst Industry Titans

  • Despite their conflicts, Roosevelt and Morgan occasionally cooperated when their interests aligned.
  • Roosevelt and Morgan's relationship was complex, characterized by both antagonism and pragmatic alliances.
  • The book details the multifaceted interactions between these powerful men, including Roosevelt's eventual acceptance of a campaign donation from Morgan.

"Morgan grudgingly donates, I think, $100,000 to Roosevelt's reelection campaign."

Even amidst their struggles for control, Morgan's contribution to Roosevelt's campaign shows the intricate and sometimes cooperative nature of their relationship.

Coal Miner Strike and Roosevelt's Concerns

  • A massive coal miner strike involves 147,000 coal miners.
  • Roosevelt is worried about the dire consequences of the coal strike, including a winter of misery, sickness, starvation, darkness, and potential social upheaval.
  • The strike could lead to lawlessness, requiring force, and if other workers joined, it could escalate to a crisis comparable to the Civil War.

Roosevelt worried about a winter of misery, of sickness, starvation, and darkness. People might freeze to death. Others could riot. And this is a great sentence. He understood how panic could outrun reality. Lawlessness would demand force. He wouldn't take the chance of it leading to social upheaval. If other workers went on strike, too, the nation could face a crisis that he feared could be almost as serious as the civil war.

This quote illustrates Roosevelt's deep concerns about the fallout from the coal strike, fearing it could lead to a national crisis.

Roosevelt's Limited Executive Power and Morgan's Influence

  • Roosevelt has limited executive power to resolve the coal strike and calls in union leaders and coal mine executives to broker a deal.
  • Coal mine executives refuse to listen to Roosevelt, highlighting Morgan's greater influence due to his financing of the coal mines.
  • Morgan is initially hands-off but intervenes when the coal miners and executives fail to resolve the conflict.

And that's where Teddy realizes that Morgan actually has more power than he does in the situation. And why is that? Because Morgan has financed a lot of these coal mines.

The quote underlines Roosevelt's realization that Morgan holds more sway in the situation due to his financial investments in the coal mines.

The Corsair Agreement and Resolution of the Coal Strike

  • The Corsair Agreement is brokered with the help of Roosevelt and Morgan during the Northern Securities antitrust lawsuit.
  • Roosevelt and Morgan set aside their differences to prevent the devastation of a winter without coal.
  • The strike resolution is costly for both sides, with significant financial losses and public standing damage.

Later that evening, Morgan committed a surprising act of diplomacy. He presented the corsair agreement to Roosevelt in person.

This quote describes Morgan's pivotal role in presenting the Corsair Agreement, which was instrumental in resolving the coal strike.

Roosevelt's Gratitude and the Aftermath of the Strike

  • Roosevelt expresses his gratitude to Morgan for his role in resolving the strike, recognizing the dreadful consequences of an unresolved strike.
  • The arbitration commission sets conditions for the coal miners for the next three years, which is crucial for Roosevelt's presidential election.

My dear sir, Roosevelt wrote in a letter, let me thank you for the service you have rendered the whole people.

Roosevelt's letter to Morgan signifies his acknowledgment of Morgan's crucial contribution to settling the coal strike.

Supreme Court's Decision and Political Maneuvering

  • The Supreme Court rules that Northern Securities is illegal, but Morgan and Hill's influence persists through their shareholdings.
  • Hill and Morgan's partnership was one of convenience, and they begin to back different political candidates.
  • Roosevelt remains popular for holding the rich accountable, and Morgan continues to exert influence pragmatically.

And Roosevelt undoubtedly benefited from this because this one line, it says people loved him for the enemies he has made.

The quote captures the public's admiration for Roosevelt's stance against powerful financial figures like Morgan.

Panic of 1907 and Morgan's Last Public Influence

  • During the Panic of 1907, Morgan locks financial leaders in a room to orchestrate a rescue loan, showcasing his commanding presence.
  • Morgan's influence wanes in his later years as he works privately on a system to regulate the money supply.
  • Morgan remains optimistic about America's growth despite challenges, reflecting the advice from his father.

And Morgan, 70 years old, was still commanding. No one could leave. He had locked the library's doors and put the key in his pocket.

This quote emphasizes Morgan's dominant role in resolving the financial panic of 1907 through his decisive actions.

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