rights over both the Burlington and the Union Pacific. Of greater signifi-
cance, the rivals agreed to combine the three major lines (Union Pacific,
Northern Pacific, Great Northern) under a holding company, and in No-
vember the Northern Securities Company was duly incorporated. The set-
tlement satisfied Schiff, who, like Harriman, was put on the boards of the
Northern Pacific, the Burlington, and the Northern Securities.^56 He told
Cassel that the outcome vindicated his earlier efforts to safeguard the
Union Pacific against Hill:
The result is that the Burlington Railroad, the real point in dispute, will
come under the mutual control of the Union Pacific... and the Northern
Pacific–Great Northern.... Although the Union Pacific is in the minority in
this Holding Co. it will nevertheless exercise a potential influence upon the
management of the two Northern lines.... In addition, the Union Pacific
has made a territorial agreement with these two companies which protects it
against an invasion and opens to it extensive use of important lines on the
Northern Pacific Coast.^57The public was less sanguine about the outcome. Many regarded the hold-
ing company as but another example of the giant combinations out to
fleece the consumer. In 1902 the attorney-general advised Theodore
Roosevelt that the Northern Securities Company violated provisions of
the Sherman Act (1890) forbidding restraint of trade. Eager to affirm the
government’s power over big business, the president thereupon ordered a
suit against the company.
Schiff did not share the mounting popular resentment of the major rail-
road lines for their abuses, the arbitrary rates in particular. Nor did he see
anything ominous in the railroad-banker connection brought about by re-
organization. In testimony before the Industrial Commission of 1901 he
was primarily the defender of the status quo. He spoke out against govern-
ment ownership of the railroads; and although he acknowledged govern-
ment’s right to regulate businesses that were its “servants,” he refused to
say that railroad owners would welcome public supervision. “I believe that
the silent laws of nature are better correctives than any written laws can
ever become.” More forthcoming on the subject of railroad competition
versus railroad cooperation, Schiff advocated what he called a “community
of interest.” It meant neither mergers nor absorption of certain lines by
others but rather cooperation between competing lines by the purchase of
each other’s stock. He said that only by a “coming together of the railroad
interests,” which he thought was developing quite naturally, would eco-
nomic benefits accrue to labor as well as to producers and shippers. He
added confidently that if the public was correctly informed, it would wel-
come the suggestion.
The Making of a Leader 19one line long