hostile president now referred to Harriman as “an undesirable citizen.”^65
In the matter of the ICC’s investigation, Schiff was strongly critical of
the administration. He told Roosevelt directly that Harriman’s methods
were admittedly “reckless,” but TR’s sensationalism and the way in which
the investigation was conducted only increased the tension. Instead of try-
ing to make political capital out of the investigation, the president should
have worked for harmony between the public and the railroads. Roosevelt’s
determination to break Harriman, Schiff confided to Cassel, was sending
the message to business that success brought enmity, that “large fortunes
are prohibited, and that the influence and power which wealth brings are
considered dangerous to the state and are therefore constantly open to at-
tack.” The banker thought that the president had gone much too far, but
Roosevelt’s antibusiness stance hardened still further during his second
term.^66
Since Kuhn, Loeb had been and still was Harriman’s fiscal agent, several
partners were summoned to testify before the ICC. How much did Schiff
and the other Union Pacific directors pay for the stock that they later sold
to the railroad, the New York Times wanted to know. While the newspaper
reported on Harriman’s “unlimited power” and the far-reaching “tenta-
cles” of his empire, Schiff defended his firm to Roosevelt: Should it be dis-
closed that Kuhn, Loeb profited considerably in its dealings with the
Union Pacific, it had to be remembered that “the risks connected with the
various transactions, made under difficult conditions, have been exception-
ally great.” Moreover, when compared to profits usually made in large
transactions, Kuhn, Loeb had earned only a moderate return.^67
The banker, who was also concerned about his European friends’ sizable
holdings in the Union Pacific, was doubtless relieved by Cassel’s reassu-
rance that federal intervention in railroad affairs was no great evil. A few
months later the ICC’s report, which ended the official case against Harri-
man, satisfied Schiff. He found a parallel in the biblical story of Balaam—
“I have come to curse, and I must bless.” Nevertheless, in deference to
public opinion, he persuaded Harriman to divest the Union Pacific of
some shares that it held in other lines.^68
Although Schiff opposed rate fixing by the ICC, he preferred “reason-
able” regulation by the government—to which he thought the major rail-
road men would agree—above uncertainty and distrust. Such conditions,
he advised Roosevelt in 1907, not only impeded the sale of securities but
presaged dire results for the general economy. Hoping to avert drastic leg-
islation, Schiff suggested a meeting between representatives of the railroads
and the ICC to deliberate possible solutions to abuses by the roads. He
urged Roosevelt to consider the idea. In an “I told you so” letter, he said
that had the president followed his earlier advice and followed a more “pru-
dent” course against the Northern Securities Company, a difficult situation
22 Jacob H. Schiff