with those more powerful than he (in this case the House of Morgan) sug-
gested a negotiated peace:
I went to Mr. Hill [during the first week in May 1901] and told him what we
had done, at the same time informing him that we preferred peace and har-
mony to strife, and that if he and Morgans would appreciate the situation,
there would be no effort on the part of the Union Pacific to displace the ex-
isting Board and management, or even to get representation, but that under
all circumstances we must have a controlling voice in the Burlington lines
and the policy of the Burlington management in Union Pacific territory. Mr.
Hill thereupon assured me that he, on his part, would do everything to bring
about what we wanted.At a second meeting with Schiff that same day, Hill repeated his assu-
rances, but instead of working out a reconciliation “he evidently went to
the Morgans and induced them to go in the market in a frantic effort to se-
cure enough stock to restore the control, which they had permitted to slip
from them.”^50
Now on full alert, the Hill group began an intensive search to locate and
buy up Northern Pacific stock. An uneasy Harriman placed an order with
Kuhn, Loeb to continue buying for their side, but it was countermanded by
Schiff. He might have been persuaded had Harriman reached him before
the noon closing of the stock exchange on Saturday, but Schiff was at the
synagogue. A junior partner at Kuhn, Loeb, Otto Kahn, recalled that
Schiff was unmoved by the arguments of Harriman and Kahn for the pur-
chase of additional common stock. Adhering to the interpretation that the
total capital stock, not the common stock, determined control, Kuhn,
Loeb bought only a modest amount of additional preferred stock. Despite
Hill’s deception, Schiff confidently believed, at least according to Kahn,
that his former friend would turn cooperative.^51 Instead, the struggle was
magnified on the floor of the stock exchange.
The story of the panic of May 9, 1901, has often been recounted—how
the price of Northern Pacific common stock began to soar as soon as Hill’s
side rushed to buy significant lots; how the public, without any inkling of
the Hill-Harriman rivalry, eagerly followed the principals; how the brokers
who sold “short” (without the stock in hand and unable to deliver unless
the price fell) faced financial ruin; how buyers who dumped other stocks in
order to join the wild spree thereby depressed the market in general; how
on Blue Thursday, May 9, the price of a share of Northern Pacific reached
$1,000, roughly a tenfold increase in a week; and how the Wall Street con-
ditions adversely affected European markets.^52
During that hectic week, Kuhn, Loeb was more spectator than partici-
pant. To be sure, Otto Kahn suggested that the firm buy up depressed
The Making of a Leader 17