America's Money Machine

The Lapping at the Dikes 17
per cent for call loans reported the same day, as well as the rising premium
on sterling and an urgent enquiry for bills. Moreover, the charge
that the tight money market was due to Wall Street speculation was
stoutly challenged by others who pointed out that the market generally
-except for the Harriman issues-was lower than a year earlier, and that
the bull market had reached its high point in January, 1906.
"The times are paradoxical," commented the Times. "The country is
brimming over with material prosperity, and yet in Wall Street four in
every seven men you meet are looking for the top of the bull market,
bending their mental energies to the task of catching the psychological
moment at which to layout a bear campaign."1
The Interstate Commerce Commission investigation into the Harriman
affairs opened on January 4, and its disclosures were meat for the
stock market bears. Fish had announced his willingness to lay before the
Commission all information he had, and it was assumed that he knew a
great deal. There were other enemies of Harriman who could no doubt
make things uncomfortable for the financier. "Mr. Harriman has always
seemed to feel that he could afford to make enemies," gossiped the Times'
"Topics in Wall Street," and mentioned in particular Mr. Stickney, president
ofthe Chicago Great Western which Harriman had beaten out ofthe
Omaha terminal by one legal maneuver after another. Union Pacific stock
was under pressure all day long before the investigation opened. Nevertheless,
the Times thought it could be overdone, since a stock yielding 10
per cent and selling at 177 must be regarded as cheap.
The first day's hearings confounded the pessimists on Union Pacific
stock at the same time that they confirmed suspicionsofrailway manipulation.
For the first time the actual grip ofHarriman on the railway world
was fully revealed. The Union Pacific was shown to hold large blocks of
stock of railway companies as remote as the New York Central-aU paid
for, incidentally, from earnings and without recourse to borrowing.
The hearings continued until the end of February, reaching their climax
on February 26. The chief inquisitor of the Commission was an
attorney named Frank B. Kellogg who was later to become even more
famous as Secretary of Stale.
The hostility of the Commission toward Harriman was so evident that
the correspondent of The Economist (ofLondon) commented: "The members
of the Commission surprised many present by their manifestly hos:tile
spirit toward Mr. Harriman ... the Commission's lawyers acted
toward Mr. Harriman and Mr. [Otto] Kahn quite as ifthey were prosecut-