Harnessing the Growth of Corporate Capitalism: Sullivan & Cromwell and its influence on late Nineteenth-century American business

Abstract

Historians have long noted that late nineteenth-century America witnessed an “organizational revolution,” which led to an unprecedented concentration of wealth and political power due to the business activity of its growing number of corporations. Thus, a closer look at key organizations that played a role in this process of corporate consolidation can explain the historical dynamics at play. This paper will reveal that the law firm Sullivan & Cromwell was one of these important actors for at least four reasons: It had a major influence in the invention of the “holding company,” which allowed the large trusts to evolve into companies that could evade regulation designed to limit their growing size and leverage; it facilitated the monopolization of America’s railroad industry, which led to some of the most violent labor struggles in the nation’s history; it oversaw an enormous increase of international investment, particularly from Germany, which added major momentum to the growth of certain industrial syndicates like General Electric; and it helped drive major American foreign policy initiatives designed to benefit its commercial clients – for example, by securing investment and legal authorization of the construction of the Panama Canal. Little has been written about Sullivan & Cromwell, and it has produced no comprehensive history of its own, despite the fact that it continues to serve the interests of some of the most powerful corporations today. This paper will argue that, under the direction of William Nelson Cromwell at the end of the nineteenth century, the firm pushed itself into a privileged position among American business and governmental elites, thereby setting a precedent for its influence in later eras.

The explosive growth of corporate business in late nineteenth-century America in many ways defines the period. Terms like “the Gilded Age” or “Robber Barons” symbolize the enormous consolidation of wealth and power in the hands of the few.[1] These expansive corporate conglomerates set precedents for labor relations, national politics, and business practices. Today, we live in a world shaped in part by the actions of, and responses to corporate business. Therefore, it is imperative that we continue to study the development of these activities in order to better understand the present.

If we are to assume that corporate expansion was among the most important features of late nineteenth-century America, who were the central actors in this period? While corporations may have been busy building and buying up factories and railroads, who facilitated this process? One key group worth a closer examination are lawyers. Not only were they the envoys between powerful interests, governmental organizations, and citizens, they were also often times the directors and managers of the corporations themselves. According to legal scholar Walter Werner, the battle for control of the American business landscape was every bit as profound as the worker struggles that were spawned by it. Werner states, “Corporate control is a topic dear to the hearts of lawyers. They are the generals – and courts often the battlegrounds – in struggles for the control of economic empires.”[2] In an appraisal of the most important and influential of these “generals,” the law firm Sullivan & Cromwell looms large.

From its humble beginnings interpreting wills and mortgages in the late nineteenth-century from its offices in New York City, Sullivan & Cromwell’s client list has grown into a veritable “who’s who” of the most influential corporations in American history. The firm has a long standing historical relationship with many major banks, including JP Morgan and the Chase Bank. Sullivan & Cromwell has also served the interests of several large industrial conglomerates, including Standard Oil, General Motors, and Ford Motor Company. As of November 2010, the firm has been working with its longtime client, British Petroleum, to offset the costs associated with the enormous oil spill the energy company caused in the Gulf of Mexico earlier in the year.[3] The question then remains: How did Sullivan & Cromwell come into a position of collaborating with such powerful business interests?

Late nineteenth-century America was a crucial time for Sullivan & Cromwell, and for corporations and lawyers more generally, who experienced a dual revolution: an organizational revolution and a corresponding legal revolution. The legal revolution manifested itself in legislative attempts, both at the state and federal level, to control the tremendous growth of corporate capitalism. These efforts were challenged in America’s courts by corporations seeking to circumvent regulation, which led to the creation of new legal protections for monopolistic business practices by business-friendly judges.[4] On the other side, the organizational revolution was more subtle; one of the most widely influential human technologies, the bureaucracy, created wide-ranging, efficient new structures that were able to dramatically expand the capabilities of business institutions. Legal historian Charles Perrow noted that the ubiquity of bureaucracies has created a unique problem for historians and requires some digging in order to expose their historical significance: “In many accounts of social change, wealth and power are not associated with organizations; wealth is resident in an individual, a family or a class, and power is resident in persons or ideologies. Organizations are at best unproblematic resources for other expressions of wealth and power.”[5] In other words, bureaucratic structures are embedded in our everyday experiences, and special attention is needed by historians to tease out their activities in relation to larger historical dynamics. Little has been written about Sullivan & Cromwell for precisely this reason; significant effects of the law firm’s activities fall mostly within the purview of its clients’ businesses, rather than demonstrating the significance of the firm’s role in both of these revolutions.

The purpose of this paper is to analyze the importance of Sullivan & Cromwell, despite its relatively light historical treatment, as an instrumental organization in driving government policy, legal precedents, and business practices in late nineteenth-century America. Through its business activities, this paper will argue that the firm came to occupy a privileged position among governmental and corporate elites, setting a precedent for its influence in later years. Three aspects of Sullivan & Cromwell’s work distinguished it from its peers by the turn of the twentieth century: The legal invention of the “holding company,” which encouraged tremendous corporate growth; the consolidation of industries, as with the Northern Pacific Railroad as a case study; and the firm’s cooperation with the U.S. government to secure investment and diplomacy in the development of the Panama Canal. In all three cases it will be demonstrated that Sullivan & Cromwell, under the purposeful management of William Nelson Cromwell, became a uniquely powerful player in this process, well beyond any comparable institutions.

A brief analysis of the relevant historiography will help lay the groundwork for this argument. Texts that reference Sullivan & Cromwell directly are few. The only detailed (and unauthorized) history is A Law Unto Itself: The Untold Story of Sullivan & Cromwell by legal scholars Nancy Lisagor and Frank Lipsius.[6] Lisagor and Lipsius have charted out a somewhat comprehensive history of Sullivan & Cromwell, attempting to position the firm among other venerable American legal institutions in the 1980s. For this reason, brief analysis is given to the firm’s early years in the late nineteenth-century in favor of its twentieth-century activities. Additionally, this paper will provide some contrast to Lisagor and Lipsius’ work by isolating the voice of William Nelson Cromwell in order to provide some critical analysis of his personal intentions for the early course of the firm. Sullivan & Cromwell itself has provided a handful of self-published material, including a biography of Cromwell, which understandably portrays him and the firm in a positive light.[7]

Other texts are useful in providing the legal, business, and political contexts of the period. Works of legal history, which argue for the significance of innovation and effects of corporate law are quite numerous and varied.[8] Corporations and Society: Power and Responsibility, a collection of essays by legal historians such as Martin J. Sklar, Michael Horwitz, Aviam Soifer, and Samuel Loescher is a useful text for explaining the legal development of the corporate business model and exploring the moral implications of this structure. The main drawback of the work, and others like it, is that its focus is on court cases and legal precedents, rather than on the law firms themselves as significant historical actors.

Legal history intersects haphazardly with business history as well, producing a diverse backdrop for the study located here. One of the classic texts associated with American business history is The Visible Hand: The Managerial Revolution in American Business, by Alfred D. Chandler, Jr.[9] Chandler provides a highly detailed history of the development of corporate models of mass production and the associated development of modern management structures. Problematically, critiques of the socio-political effects of this activity are almost completely absent in the text. Drawing inspiration from Chandler, Big Business and the State by Harland Prechel and Constructing Corporate America: History Politics, Culture, which is another collection of essays edited by Kenneth Lipartito and David B. Sicilia, both provide a more revisionist approach to the field of American corporate law, but also do little to isolate law firms as instrumental participants.[10]

American nineteenth-century political history has a rich and varied historiography that can help elucidate the political climate in late nineteenth-century America and are worthy of integrating into the argument presented in this paper.[11] Recent histories have helped provide agency to workers in response to employer abuses, such as Labor and Urban Politics: Class Conflict and the Origins of Modern Liberalism in Chicago: 1864-1897, by Richard Schneirov, is a detailed account of the relationship between party politics, labor, and political machines.[12] A recent useful work that attempts to create a synthesis of earlier histories and provide a socio-political overview for the period is A Government Out of Sight: The Mystery of national Authority in Nineteenth–Century America by Brian Balogh.[13] While neither of these texts mentions Sullivan & Cromwell directly, both analyze important industries, popular movements, and prominent politicians that will be described here. Therefore, the task of this paper is to integrate Sullivan & Cromwell into these larger historical narratives.

Who were Sullivan & Cromwell?

Algernon Sydney Sullivan was born in Madison, Indiana in 1826 and, following in his father’s footsteps, became a lawyer and was admitted to the bar in 1848.[14] Looking for an opportunity to satisfy his ambition to become more involved in public politics, he moved to New York City to start a legal practice there. With a reputation for honesty and eloquent oration, Sullivan volunteered to represent the crew of the Savannah, the first vessel to be captured during the Civil War.[15] Charged as pirates, the Confederate prisoners were in danger of being executed. Because Sullivan had some sympathy for the Southern Confederacy, in part because his wife was southern, he passionately argued that the accused men be considered prisoners of war, and be treated more humanely.[16] Public passions were enflamed by the case, and Sullivan was arrested and imprisoned for treason by Secretary of State William H. Seward.[17] Luckily, Seward changed his mind about Sullivan and had him released after an oath of allegiance to the Union. Sullivan passionately argued the case and ultimately the defendants were exchanged as prisoners of war.[18] After the war, lingering anger over Sullivan’s sympathy for the south was matched by praise for his courage and bravery in the face of public outcry. Sullivan worked his way up in New York city politics fighting the Tweed ring, eventually becoming assistant district attorney in 1870.[19] Sullivan also ran a successful firm, Sullivan, Kobbe & Fowler, which handled real estate cases, specializing in assisting southern clients who had moved to New York City. At the height of his popularity, Sullivan was proposed as a candidate for Mayor of New York City in 1873, but humbly declined.[20]

In 1870 Sullivan noticed an ambitious man, William Nelson Cromwell, who had been working for his firm as an accountant. Sullivan decided to support this man’s education at Columbia law school and made him a junior partner.[21] Cromwell was born in Brooklyn in 1854 to a large, working class family. After graduating high school, he worked as an accountant in a railroad office to support his family before joining the law firm of Sullivan, Kobbe & Fowler.[22] In 1879, Herman Kobbe and Robert Ludlow Fowler decided to move on to other institutions, leaving Sullivan to invite Cromwell into a full partnership to create the firm Sullivan & Cromwell.[23] Sullivan’s social contacts helped bring in big clients, such as Lennox family, which hired the firm in 1882 to split up one of the largest and most sought-after real estate plots in New York City.[24] Sullivan, who was advanced in age and in poor health after the Confederate piracy case, left much of the work to Cromwell.

Cromwell proved himself to be a driven and industrious partner for Sullivan. Helping to develop corporate clients, Cromwell developed skills in corporate consolidation even as his partner Sullivan had misgivings about the emerging business strategies that Cromwell would eventually become known for. For instance, when a mining business in Colorado retained the firm in 1879, Cromwell gained experience filing articles of incorporation in multiple states, which was a new business practice at the time.[25] When this practice became more widespread in the following decade, this meant that Sullivan & Cromwell was ahead of the curve. In the era of cutthroat corporate competition, speed and efficiency gave the firm’s clients an edge over their rivals. As Sullivan became less involved in the firm, Cromwell pressed ahead with his corporate clients, many of whom were constructing trusts to consolidate their holdings. Essentially trusts were monopolies, in which shareholders of various companies in the same industry were convinced (or coerced) by a board of trustees to exchange their shares for dividend-payment certificates. The board of trustees, which usually represented the most powerful people in a particular industry, would often use their majority control in order to restrain competition and fix prices.[26] Two years before Sullivan died in 1889, he noted to a client that “I expect to express some opinions about the combination of ‘trusts’ at a public meeting…I regard them with apprehension. I think it is good public policy to restrict and regulate them and I shall so speak.”[27] His partner Cromwell had a different attitude. Once Sullivan was gone, Cromwell’s vision of the firm as a leader in corporate consolidation could be realized.

The Holding Company: A Legal Revolution and Catalyst for Monopoly

While the industrial revolutions of the nineteenth century pushed innovation in manufacturing, transportation, and communication, a legal revolution was occurring in tandem as businesses organized themselves to deal with the explosive growth associated with these developments. Sullivan & Cromwell would play an important role in this process through its direct involvement in writing some of this corporate law. In order to explain this, some historical context of how these changes came about is needed.

One of the first crucial legal innovations to facilitate business growth in America in the latter half of the nineteenth century was the formulation of “corporate personhood.” The idea behind this concept was that a business could be constituted as a single entity representing the interests and aspirations of its shareholders. The implications of this idea were, however, more far reaching than a mere organizational strategy. Essentially, “corporate personhood” meant that corporations were considered to have the same rights as flesh and blood persons: the right to own property, the right to free speech, including political campaigning, and perhaps most importantly, the right to due process in court proceedings.[28]

Ironically, this crucial corporate legal precedent stems from the 14th amendment to the Constitution, which was adopted on July 9, 1868, primarily to prevent the Supreme Court from declaring the Civil Rights act of 1866 unconstitutional and as a response to violence against newly freed slaves in the southern states in the wake of the Union victory of the Civil War. The amendment further underpinned political enfranchisement of all males within the United States of 21 years and older; key groups left out of the provision were women and Native Americans.[29] The linkage between corporations and the 14th amendment first occurred during the Santa Clara County v. Southern Pacific R.R. case of 1886, which concerned the right of California to tax the railroad as a single entity. While the subject of this litigation seems fairly banal, during the proceedings the justices came to the profound conclusion that corporations constituted “legal persons,” and were subject to the same rights and responsibilities.[30]

Corporations seeking to expand their businesses zeroed in on the right to due process, specifically in the protection of private contracts, as an important legal mechanism to do so.[31] The well known 1819 case, Dartmouth College v. Woodward, focused on the binding nature of contracts, which provided an important legal precedent for corporations wishing to defend their business arrangements.[32] The Santa Clara decision built upon this legal foundation and dramatically increased the scope of liberty and freedom for corporate property and operations. Corporations could already own property, such as land, infrastructure, such as roads and bridges, and other companies, but now they could also more easily defend these contractual arrangements in court. According to historian Martin J. Sklar, “The Court thereby set limits on the reach of the law while extending the reach of the corporation.”[33]

Combined with the products of the industrial revolution, such as faster travel, communication, and new industrial products like steel and electricity, the floodgates for corporate consolidation opened. Huge trusts were formed by some of the richest and most powerful members of American society such as John D. Rockefeller, Andrew Carnegie, William H. Vanderbilt, Jay Gould, and John Pierpont Morgan.[34] The trust structure allowed these owners to buy up most of the competing businesses and combine them into a single monopoly. This activity had a profound effect on the nation’s inhabitants, particularly its working people. Corporate growth led to inhumane and brutal treatment, which spawned violent labor struggles and the formation of unions, as well as fomenting a general transformation of the country with rapid urbanization.[35] Popular sentiment and anger over anticompetitive practices led to legal attacks on railroad, steamship, and manufacturing companies in several states such as New York and Ohio, and culminated with the passage of the Sherman Antitrust Act, which attempted to regulate corporate capitalism.[36] Meanwhile, corporate leaders testing the limits of horizontal consolidation by monopolizing individual industries saw a weakness in their strategy: Effective control of industries required some degree of vertical consolidation, such as the buying up of distribution and marketing firms.[37] A new legal formation was needed.

Where corporate leaders saw attempts to block business growth, William Nelson Cromwell saw opportunity. He came up with a new legal mechanism, “the holding company,” which would both help trusts avoid legal attacks and provide them more leverage to invest in multiple industries. The main feature of this legal innovation, as Cromwell envisioned it, would be a law that would allow one corporation to own the stocks and bonds of others. Cromwell had his junior partner William J. Curtis convince the New Jersey legislature to have Sullivan & Cromwell write their state’s new corporation law to include this new provision. Cromwell’s inducement for New Jersey was that it would bring new business and tax revenue to the state.[38] For Cromwell, the financial benefits were immediate: Sullivan & Cromwell’s helped its client, the Southern Cotton Oil Trust, transform into the first New Jersey corporation literally overnight. Sullivan & Cromwell lawyers drew up 175 agreements in one evening and reaped a profit of at least $50,000 in 1892.[39] This allowed the new corporation, now named the Southern Cotton Oil Company, to both skirt the Sherman Antitrust Act and fully integrate into its markets by buying up marketing and distribution companies without fear of legal reprisals.[40]

The rewriting of New Jersey corporation law had a tremendous and rapid effect. The business historian Alfred D. Chandler noted that “Immediately the ‘New Jersey holding company’ took the place of the trust as the legal form used to merge a number of single-unit enterprises operating facilities in several states into a single, large consolidated enterprise.”[41] This type of legal maneuvering was perfectly suited to Sullivan & Cromwell, which had invented the process of multiple simultaneous filings of corporate paperwork for various businesses, such as the Consolidated Bonanza and Union Tunnel and Mining Co.[42] New Jersey became the national epicenter of mergers and monopolies, as the old trusts transformed themselves into New Jersey corporations, and new businesses jumped in to be part of the action.[43]

But what, exactly, were these businesses taking part in? Although the obvious advantage for most companies was avoiding the Sherman Act, there were also other benefits. Most importantly, the holding company extended the idea of corporate personhood, in the sense that it allowed one corporation to buy the shares of another, reopening the door to a cartelization of various industries.[44] Insidiously, holding companies also allowed their activities to be obscured from the public and competitors. Aside from hiding their potentially anticompetitive or predatory practices that might elicit complaints, holding companies also created a liability firewall, which created a legal separation from the company’s subsidiaries in case of lawsuits. Among other advantages, the holding company model also allowed corporations to control other firms in geographically disparate areas, another aspect to New Jersey law that was well suited to monopolies.[45]

Sullivan & Cromwell’s contribution to the wave of mergers that brought so many corporations to New Jersey was profound. According to the statistics compiled by legal scholar Charles Yanblon, 2,186 companies were incorporated in New Jersey by 1899; of those, 354 had capitalized stock of $1 million dollars, and fifty of these were capitalized at over $20 million dollars.[46] Sullivan & Cromwell bragged that the value of all the corporations doing business in New Jersey in the decade after Cromwell wrote the idea of the holding company into the state’s corporate laws was over $1 billion dollars.[47] Others looking at the wave of mergers saw it as a less than positive development as Lawyer William W. Cook observed, “[T]he relation of the state toward the corporations resembles that between a feudal baron and the burghers of old, who paid for protection.”[48] Meanwhile, journalist Lincoln Steffens dubbed New Jersey “the traitor state.”[49] Neither man noticed that it was Cromwell who wrote the law. Other states, such as Delaware, copied Cromwell’s legislation in order to attract business as well. Ultimately, the legal innovation of the holding company put Sullivan & Cromwell in a class of its own. Sullivan & Cromwell did not simply assist its corporate clients to monopolize their own industries; it fundamentally altered the law to benefit all monopolies.

Northern Pacific Railroad: A Case Study in Corporate Consolidation

Railroads were at the center of corporate consolidation in America in the latter half of the nineteenth-century. They unified regional markets into a national economy, set precedents for labor relations, and revolutionized management structures.[50] While a summary of the growth of railroads and the various results of this process in the U.S. is beyond the scope of this paper, we can look more closely at specific examples involving Sullivan & Cromwell as an instrumental partner in this process. It is also worth noting that outside of railroads, the firm also organized and consolidated U.S. Steel and General Electric in the same time period, both of which have a large body of literature written about them.[51] The story of the Northern Pacific Railroad is less well known. It started innocuously, but ended up at the center of major conflicts between the great investment houses, the government, and the public.

Any discussion of the Northern Pacific Railroad is incomplete without a description of Henry Villard, the most prominent investor and manager of this institution.[52] Born Heinrich Gustav Hilgard in 1835, Villard was raised in a prominent aristocratic family in western Bavaria. He emigrated to the U.S. following a major disagreement with his father, a conservative justice on the Bavarian Supreme Court, over Villard’s sympathy for the 1848 revolution in Germany. Working his way up as a journalist covering the American Civil War, he took on the name Villard to conceal any identification with his family. After the war, gaining some wealth and prominence for himself due to his work, he married Fanny Garrison, the daughter of famous abolitionist William Lloyd Garrison, and returned to Germany. Utilizing his family contacts, Villard joined the committees of several German bondholders, who were keenly interested in investing in American railroads following the financial panic of 1873, which left many of the institutions bankrupt and in need of new capital.[53]

Villard’s financiers were poised to purchase a significant amount of infrastructure in America’s booming northwest. Organized as the Oregon Railroad and Navigation Co., this institution, under Villard’s management, they purchased a number of steamships and small railroads lines being developed between Oregon, Washington, and California.[54] This company came to national prominence when its bondholders clashed with the infamous railroad speculator Jay Gould over its right to connect this growing rail network to those in Kansas. After this victory, Villard’s reputation in leading American financial circles became well known.[55] This emboldened Villard to expand his business empire.

In 1883, Cromwell entered the picture as Villard’s attorney. With Cromwell’s help, Villard reorganized his companies into the Oregon and Transcontinental Company, in order to buy a majority interest in Northern Pacific, thus joining the two together in a huge transportation network.[56] Villard saw the promise of the Northern Pacific, even though it had been left bankrupt and incomplete, and endeavored to have the railroad completed on an ambitious schedule. When Villard had assumed the presidency in 1881, the gap between the finished portions of the railroad was still 800 miles apart. The most difficult portion had to be built through the Belt Range of the Rocky Mountains and eventually necessitated the construction of two large tunnels. Over 20,000 men were utilized to complete this job.[57]

Financial problems would eventually lead Villard to rely heavily on Cromwell. It slowly became evident to Villard that the engineer’s accounting reports had been grossly understated. Borrowing millions of dollars to remain afloat, Villard finally completed the rail line to much fanfare in the fall of 1883. The stock of Northern Pacific railroad crashed almost immediately afterward as it became evident that not only was the company hopelessly in debt, but also that the line’s terminus, Portland, Oregon was woefully underdeveloped. [58] Villard staked much of his own personal fortune in the Northern Pacific venture and creditors eyed his opulent Madison Avenue home for possible seizure. Cromwell frustrated Villard’s creditors by securing a $1.125 million dollar loan from Drexel, Morgan & Co., cleverly taken out in Villard’s wife’s name, in order to protect his property. In response to investor anger at Cromwell’s action, Cromwell stated, “That will not be regarded as tricky…[Northern Pacific and its related companies] had the benefit of Mr.s V’s generous action.”[59] Villard was impressed with Cromwell’s deft legal maneuvering and left him in charge of Northern Pacific.

Cromwell had more than just the interest of his client Villard at heart. It had not been lost on Cromwell that Villard had access to deep pockets in Germany. As Villard resigned the presidency of Northern Pacific and left again for Germany to rest after a nervous breakdown, Cromwell and Drexel, Morgan & Co. worked to consolidate their control of Northern Pacific.[60] After Villard recovered, he began another attempt to corral investors in order to rebuild his business portfolio. Cromwell took notice of Villard’s ability to bring in new investment and heaped praise upon him: “…I was imbued with an abiding faith in your future…Your desire for a continuance of my connection with your affairs…is appreciated. I could not carry you and your affairs over in my mind for a year, without catching fire and becoming so interested in them…”[61] Cromwell was true to his word on bringing Villard, and his investors, back into business with Northern Pacific. This time, however, Cromwell would remain fully in control. Cromwell wanted direct access to Villard’s prized contact, George Siemens, the president of Deutsche Bank.

Armed with managerial control and new investment capital for Northern Pacific, Cromwell turned to the new mechanism he had personally tailored to expand this business empire, the New Jersey holding company model. In 1890, Cromwell incorporated Oregon & Transcontinental and Co. as a holding company, so that it could consolidate control over Northern Pacific and then continue to spread out into the Midwest.[62] Meanwhile, the press lauded Villard for his return to prominence.[63] Ironically, it was Cromwell, not Villard, who was clearly in control of the business. Behind the scenes, Cromwell forcefully justified his management: “What we needed most was a leader…through whom alone negotiations could be conducted… I had my own methods of working…in carrying out my own views and plans…I must be allowed my own way of working it out.”[64] Cromwell’s statement demonstrates that he was no ordinary lawyer, content to simply facilitate his clients’ business. Both in word and deed, Cromwell was the central actor in these events, shaping them according to his own agenda. Villard needed Cromwell more than ever, as Northern Pacific was now dealing with its first major competition, the Great Northern Railway, to connect its rail lines with Chicago, the all-important transportation hub.[65]

In the chaotic and rapidly changing environment of industrial and financial competition, the financial panic of 1893 caught Villard by surprise. Dealing with cost overruns, this time due to its building of new parallel railroad lines to compete with the Great Northern Railway, Northern Pacific declared bankruptcy again. This time, Villard decided he wanted nothing more to do with managing railroads. In a personal letter to another director, on March 1, 1893 Villard stated, “my connection with Northern Pacific has been a misfortune to me from the beginning to end…Had I never had anything to do with the company…I certainly would have enjoyed far greater peace of mind.”[66] Luckily for Villard, Cromwell made sure he was taken care of, helping Villard sell a large amount of stock. Suspicion arose immediately that Villard had advanced knowledge of the railroad’s demise and sold off all his shares right before it collapsed.[67] Mounting an unassailable legal defense, Cromwell protected Villard from angry investors seeking damages for their losses. Even though Villard escaped the repercussions for his alleged misdeeds, even his brother-in-law William Garrison, Jr. suspected Villard of fraud.[68]

Although the story ends here for Villard, Cromwell’s involvement in the Northern Pacific Railroad continued. Cromwell succeeded in gaining direct access to George Siemens, the director of Deutsche Bank, whose investment in the railroad now fell to Cromwell’s management. Armed with this investment capital, Cromwell busied himself with centralizing his control of Northern Pacific and preparing the ground for further expansion. Cromwell’s first order of business was to remove all managerial rivalries within Northern Pacific. In a duplicitous move, Cromwell argued that due to the other directors’ previous associations with Villard, whom the shareholders now regarded negatively, they could no longer be trusted and should be removed.[69] By directly lobbying shareholder groups, Cromwell outflanked the more recalcitrant managers. In a remarkably lucid letter to Siemens, Cromwell noted about one such manager, “I succeeded in having each of these [shareholder] Committees…serve notice [to the manager] of their withdrawal of their support from him. This left him in a helpless and, I may say, ridiculous position, so that he was forced to withdraw his own motion without argument.”[70] In this way, Cromwell ruthlessly removed any potential competitors for leadership within the corporation.

Cromwell was aware, as many were in the face of widespread unrest, that railroad consolidation and boom-bust cycles were having a negative effect on workers and common people by disrupting prices, causing mass layoffs, and creating unfair labor practices.[71] Whether Cromwell made the connection between his own involvement in monopolizing the railroad industry or not, he was clearly unsympathetic to the plight of the people that were harmed by this activity. In response to the Pullman strike that was affecting much of the railway industry at the time Cromwell was communicating with Siemens in 1894, Cromwell expressed his sentiments in no uncertain terms: “…the Government has been instructed to institute vigorous proceedings to enforce the law and protect mail and commerce…there is no such thing as a lawful strike…I have not the least confidence, however, that the outcome will give fresh evidence of the supremacy of the law…”[72] Although the strike signaled a sea change in American popular politics, Cromwell was clearly disgusted with any attempt for labor to assert itself.

The major results of Cromwell’s involvement in the Northern Pacific Railroad are threefold: First, Cromwell revolutionized corporate bankruptcy procedures, which he called the “Cromwell Plan.” Cromwell’s method was to threaten to liquidate the company knowing that its creditors would back off, viewing financial downturns as the worst time to sell off assets due to their diminished returns. Second, Cromwell set a precedent for efficient multi-state communications in order to outmaneuver his corporate rivals. According to writers Nancy Lisagor and Frank Lipsius, “Cromwell developed the reputation of being a clever lawyer ‘who taught the robber barons how to rob.’”[73] When Northern Pacific declared bankruptcy in 1893, Cromwell sent lawyers to every state the railroad operated in and had them all file bankruptcy papers simultaneously via telegraph, further frustrating the railroad’s creditors.[74] Third, and perhaps most ironically, the entire Northern Pacific Railroad Company would end up in the hands of J.P. Morgan, who had originally lent Villard the money to survive the first bankruptcy via Drexel, Morgan & Co. The Northern Pacific Railroad would end up part of the Great Northern Securities Company, the largest holding company in U.S. history, which would be forced to break up in 1904 by the Supreme Court.[75] Historian Mathew Josepshson insinuates that Sullivan & Cromwell had been the client of J.P. Morgan all along.[76] Conspiracy or not, this case study demonstrates that Cromwell was an independent and capable actor in the business world, who utilized his firm to lead the way in innovating the practice of corporate law. The case of Northern Pacific also shows that the forceful manager of Sullivan & Cromwell was not above duplicity and ruthlessness in order to achieve his goals.

From National Business to International Diplomacy: The Panama Canal

As a result of his involvement with developing the Panama Canal, Cromwell was portrayed as an enlightened leader, who simply wanted what was best for America. Here it will be demonstrated that his involvement was highly profitable to him, and his firm, both monetarily and politically. While we cannot be certain of Cromwell’s motivations in how he directed his firm, we can examine the chain of events.

It was the railroad business that helped capture Cromwell’s interest in the Panama Canal. One of his clients was C.P. Huntington, who owned a majority of stock in the Panama Railroad. When the Panama Railroad was reorganized, Cromwell became a director in the new organization, called the New Panama Canal Company.[77] In Cromwell’s management of the Central American Railroad, he learned that a French company had gone bankrupt attempting to build a canal in Panama and decided to travel to Paris to investigate the matter. What Cromwell found was that the Compagnie Nouvelle, the French Panama Canal firm in Paris, had been floundering. This company, managed by the engineer Ferdinand Lesseps, had tried to reproduce its success in building the Suez Canal in 1869. Unfortunately for Lesseps and his team, the Panama project was a disaster, leading to the deaths of over 4,000 French workers due to malaria.[78] After spending more than $260 million dollars on the project, the company halted the project and funding dried up. Cromwell sensed an opportunity for an enormous amount of money to be made and began devising a plan to sell the company, and more importantly, the large amount of land it owned in Panama, to the U.S. Working with the new chief of the syndicate, Philippe Bunau-Varilla, Cromwell endeavored to expand his business expertise into the realm of government lobbying.[79]

The major problem for Cromwell was that the U.S. was already in the process of planning its own canal project in Nicaragua. Cromwell set to work lobbying Senator Marc Hanna, who was already known for his influence on McKinley.[80] Cromwell elicited the help of junior partner William Curtis, and journalist Roger Farnham to convince Hanna to look into the Panama Canal project. Previously, Curtis had helped Cromwell persuade the New Jersey legislature to write the state’s corporation law and again proved his usefulness to Cromwell and the firm.[81] Cromwell’s most tangible achievement in these matters was the Isthmian Canal Commission. Cromwell made sure that three engineers that could be influenced by him would be placed on the commission, including railroad engineer George S. Morrison.[82] This produced complaints from the Army corps of engineers, a majority of which supported the Nicaragua plan, releasing a statement that Cromwell’s influence on McKinley was “too powerful for ordinary mortals to counteract.”[83] Cromwell used his leverage on the McKinley administration to insure that the Commission would go to Paris, rather than Central America, to conduct their study.[84] This episode evidences Cromwell’s growing influence beyond the business world into the U.S. government itself.

The Isthmian Canal Commission was sent to Paris to look at the Compagnie Nouvelle’s plans and determine if its project was still feasible. Cromwell had cleverly already been busy for months putting together maps, engineers’ reports, hydrographic studies, geologic profiles, projected dam and lock sites, reports on excavation expenses, and inventories of equipment.[85] As a result, the commission gained a positive impression of the Panama plan in the public relations coup Cromwell had put together. Interestingly, the commission’s final report makes no mention of Cromwell. It only states that the officers at the Compagnie Nouvelle “received the commissioners with great courtesy and were ready at all times to assist them in making a study of this [Panama] route in all its aspects.”[86]

A major challenge for Cromwell was to negotiate the price for the excavation. Admiral John Walker, the head of the Isthmian Commission, recommended a price of $40 million, which was only a fraction of the money the original French canal company had spent. At the first shareholders’ meeting in Paris January of 1902, police had to break up a riot that broke out when stockholders were informed of the price Cromwell was offering. In the end, a deeply disappointed Bunau-Varilla, who had already invested $200,000 in the project, relented and agreed to Cromwell’s terms.[87]

The battle for the canal, however, was not over. Debate on the Nicaragua plan continued, even as Cromwell utilized his firm to delay it. Cromwell decided to use a direct measure on Senator Hanna, “donating” $60,000 to the Republican Party campaign fund, which Hanna personally managed.[88] Disaster struck for Cromwell and Bunau-Varilla when McKinley was assassinated in Buffalo in September, 1901. Neither Cromwell nor Hanna, for that matter, knew how Roosevelt would fall on the issue of the canal. As it turned out, Roosevelt was interested in continuing the canal project and wanted it done quickly. The problem for Cromwell was that Roosevelt quickly appropriated $140 million for the canal in Nicaragua.[89]

Cromwell and Hanna devised a new strategy. Deriving inspiration from increased volcanic activity in the Caribbean in 1902, they decided to attempt to dissuade Congress by convincing them that the proposed Nicaragua canal path was rife with volcanic activity.[90] Hanna made deeply impassioned speeches on the subject. When debate in Congress finally ended in June of 1902, the Panama side won by just eight votes.

Emboldened by victory, Cromwell was set to the task of working with Roosevelt and Secretary of State John Hay in providing the diplomatic framework for the transfer of sovereignty. According to journalist Mark Sullivan, Cromwell gained the confidence of Roosevelt through Senator Hanna’s recommendation: “this is very ticklish business. You had better be guided by Cromwell; he knows all about the subject and all about those people down there.” Roosevelt supposedly replied, “The trouble with Cromwell is he overestimates his relation to [the] cosmos.” “Cosmos?” said Hanna, “I don’t know him-I don’t know any of those South Americans; but Cromwell knows them all; you stick close to Cromwell.”[91] Whether or not Mark Sullivan’s account of this conversation was accurate, Roosevelt did follow Cromwell’s lead. In the end it was Cromwell that drafted the treaty with Secretary Hay’s Columbian counterpart Thomás Herrán.[92] However, there remained the significant problem of dealing with a Columbia that did not want to give up Panama without a cut of the $40 million that was paid for the excavation. Cromwell decided that the only way to deal with the situation was to have Panama secede and he met with both Roosevelt and Panamanian revolutionary Dr. Manuel Amador to discuss this political strategy.[93] Although there was some brief political maneuvering when the Panamanian rebels threatened to revolt against Amador and Cromwell’s plans, in the end Cromwell’s treaty was adopted and Amador became Panama’s first president. On November 3, 1903 American warships provided support for a bloodless Panamanian coup. Secretary Hay signed the final treaty with Bunau-Varilla shortly thereafter. Neither of Cromwell’s meetings with Roosevelt nor Amador has ever been published. Amador’s son hosted a celebration at the Waldor-Astoria hotel in New York for the Panama Railroad officials and Sullivan & Cromwell. He gave the first Panamanian flag to Cromwell to present to Roosevelt.

What was the final outcome? According to Sullivan & Cromwell lawyer and biographer Arthur Dean, Cromwell’s work on the Panama Canal was “unselfish and patriotic.”[94] There were, however, important benefits to Cromwell: First of all, Cromwell billed his French client $800,000. Utilizing Raymond Poincaré, lawyer and future French president, to represent Sullivan & Cromwell in France, the company eventually settled on $200,000.[95] More importantly, Sullivan & Cromwell now had access to the highest offices in the U.S., as well as significant political connections in France. Legal historian Nancy Lisagor noted that Washington “blossom[ed] as a lobbyists’ delight, where determination and contacts could do wonders for clients. [Cromwell] was half a century ahead of his time, and so had the field to himself.”[96] The Panama chapter not only speaks to Sullivan & Cromwell’s growing influence, but also the expanding link between corporate policy and foreign policy in America. Through Cromwell’s leadership, the law firm Sullivan & Cromwell had gained access to the highest offices in the U.S. This meant that the firm’s clients stood to benefit from this significant influence left by Cromwell’s legacy going forward into the following century.

Conclusion

Where did the aforementioned events leave this little-noticed, yet highly influential law firm at the beginning of the twentieth century? Sullivan & Cromwell was now in a position to work with whomever it wanted. Starting with local business in New York City in the 1880s, to the national scene in the wave of mergers in the 1890s, and finally on a global scale with the Panama Canal affair, Sullivan & Cromwell’s rise to prominence was both rapid and profound. Although William Nelson Cromwell would play an active role for years afterwards, his involvement in day-to-day affairs peaked with his work on the Panama Canal. Cromwell started hunting for new blood to lead the group of nearly two dozen lawyers working for the firm in the first decade of the twentieth century. Corporate power in America continued to expand as automotive, telecommunication, and radio industries entered the scene. Sullivan & Cromwell’s place as one of the most influential arbiters of corporate activity in America was assured.

Cromwell eventually hired John Foster Dulles in 1911. Fifteen years later, Dulles would become Cromwell’s successor. Just like Cromwell before him, Dulles showed tremendous ambition and drive for both business and diplomacy. John Foster Dulles’ younger brother Allen would become a partner as well. In the proceeding three decades, the Dulles brothers would make clients of the world’s most powerful corporations and financial institutions, including Ford Motor Company, General Motors, International Business Machines, Chase Bank, International Telephone and Telegraph, Brown Brothers Harriman, IG Farben, Standard Oil, and the Bank for International Settlements. The reach of these businesses into the realm of U.S. foreign policy would have a significant global impact during World War II and beyond under Sullivan & Cromwell’s stewardship.[97] After World War II, John Foster Dulles would hold a forceful position in the Eisenhower administration as the Secretary of State, while his brother Allen would become the longest serving director of the Central Intelligence Agency, respectively. The Dulles brothers’ tremendous influence on twentieth-century U.S. diplomacy and geopolitical strategy further blurred the line between the corporate policy of Sullivan & Cromwell, its clients, and U.S. foreign policy itself. In a sense, William Nelson Cromwell’s dream of working to serve the interests of the most dominant corporations while expanding Sullivan & Cromwell’s influence to the highest offices in America was fulfilled.

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[1] The idea of the “Gilded Age” comes from the text by Mark Twain and Charles Dudley Warner, The Gilded Age: A Tale of Today (1873). The term “Robber Baron” was derived from the book The Robber Barons by Mathew Josephson (1934). [2] Walter Werner, Reviewed work(s): Corporate Control, Corporate Power by Edward S. Herman, Columbia Law Review Vol. 83, No. 1 (Jan., 1983): 238-247. [3] Nick Rummell, “S&C, Akin Gump, Baker & McKenzie Lead on 47.1 Billion BP Asset Sale,” The AM Law Daily, November 29, 2010, http://amlawdaily.typepad.com/amlawdaily/2010/11/bpassetsale.html [accessed December 4, 2010]. [4] Lawrence M. Friedman, The History of American Law (New York: Simon & Schuster, 1985), 520-2. [5] Charles Perrow, Organizing America: Wealth, Power, and the Origins of Corporate Capitalism (New Jersey: Princeton University Press, 2002), 10. [6] Nancy Lisagor and Frank Lipsius, A Law Unto Itself: The Untold Story of Sullivan & Cromwell (New York: William and Morrow, 1988). [7] Arthur H. Dean, William Nelson Cromwell 1854-1948: An American Pioneer in Corporation, Comparative and International Law (New York: Ad Press, 1957). See also William Piel, Lamplighters: The Sullivan & Cromwell Lawyers April 2, 1879 to April 2, 1979 (New York: Sullivan & Cromwell, 1979); Sullivan & Cromwell, Sullivan & Cromwell, 1879-1979: A Century at Law (New York: Sullivan & Cromwell, 1979), this is a truncated version of the Piel text also published on its centennial anniversary. [8] Warren J. Samuels and Arthur S. Miller, eds., Corporations and Society: Power and Responsibility (New York: Greenwood Press, 1987); Sources on the development of corporate law in the late nineteenth-century also include Michael Horwitz, The Transformation of American Law 1870-1960: The Crisis of Legal Orthodoxy (Oxford: Oxford University Press, 1992), which challenges the traditional ideals of public/private legislation and focuses on the creation of “corporate personhood.” See also Adolf A. Berle and Gardiner C. Means, The Modern Corperation and Private Property (New Brunswick: Transaction Publishers, 1968, 1991), which, in addition to be a classic repository of statistical data, situates the corporation at the center of modern business activity and focuses specifically on property law. The overarching legal history by Lawrence M. Friedman, The History of American Law (New York: Simon & Schuster, 1985) is a useful overview for any investigation into American legal developments. [9] Alfred D. Chandler, Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge: Harvard University Press, 1977). [10] Harland Prechel, Big Business and the State: Historical Transitions and Corporate Transformation, 1880s-1990s (Albany: SUNY press, 2000) and Kenneth Lipartito and David B. Sicilia, eds., Constructing Corporate America: History Politics, Culture (Oxford: Oxford University Press, 2004). Both texts take a more critical approach, updating and expanding on Chandler’s management and distribution models. Constructing Corporate America includes essays by prominent economic historians Colleen Dunlavy and Gerald Berk. For a more firmly revisionist perspective, see also Charles Perrow, Organizing America: Wealth, Power, and the Origins of Corporate Capitalism (New Jersey: Princeton University Press, 2002). This text deals specifically with tracing the concentration of economic power in the U.S. throughout the nineteenth-century. [11] American nineteenth-century political history has a rich and varied historiography with major contributions such as Richard Hofstadter, The Age of Reform: from Bryan to FDR (New York: Alfred Knopf, 1955), whose work touched off historiographical debates based on his portrayal of Progressive Era political participation, in which he utilized an innovative psychological methodology. This debate morphed into one regarding political organization and modernization theory exemplified in the texts, by Samuel Hays The Response to Industrialism, 1885-1914 (Chicago: Chicago University Press, 1957); Norman Pollack, The Populist Response to Industrial America: Midwestern Populist Thought (Cambridge: Harvard University Press, 1962), and Lawrence Goodwyn, Democratic Promise: the Populist Moment in America (Oxford: Oxford University Press, 1976). All three of these texts trace the growth of social history in America, which demonstrates a striving toward equilibrium between populist leaders and industrialization. [12] Richard Schneirov, Labor and Urban Politics: Class Conflict and the Origins of Modern Liberalism in Chicago: 1864-1897 (Chicago: University of Illinois Press, 1998); on the Marxist side, many of the works like Schneirov’s draw upon E.P. Thompson, The Making of the English Working Class (New York: Vintage Press, 1966), which has influenced many subsequent works to focus on working class agency. [13] Brian Balogh, A Government Out of Sight: The Mystery of national Authority in Nineteenth–Century America (Cambridge: Cambridge University Press, 2009). [14] Piel, Lamplighters, 34-6. [15] Mark A. Weitz, The Confederacy on Trial: The Piracy and Sequestration Cases of 1861 (Kansas: University of Kansas, 2009), 73. [16] Piel, Lamplighters, 35. [17] Weitz, The Confederacy on Trial, 80. [18] Ibid. 181-83,196. [19] Lisagor and Lipsius, A Law Unto Itself, 19. [20] Piel, Lamplighters, 36-9. [21] Ibid, 36. [22] Dean, William Nelson Cromwell, 4-7 [23] Lisagor and Lipsius, A Law Unto Itself, 20. [24] Hamilton Odell to Algernon Sullivan, October 1887, Box “Sullivan & Cromwell – Lenox Family – Colorado Mines,” Colorado File, Sullivan & Cromwell Misc. Papers, New York Historical Society , NYC. [25] Sullivan & Cromwell, Articles of Incorporation for Bonanza Tunnel and Mining Co. and Union Tunnel and Mining Co., July 18, 1879., Box “Sullivan & Cromwell – Lenox Family – Colorado Mines,” Colorado File, Sullivan & Cromwell Misc. Papers, New York Historical Society in Manhattan, NY. In A Law Unto Itself (20) note that the reason there are multiple articles of incorporation for New York was a mistake in the filing. [26] A simplified explanation of trusts can also be found in Chandler, The Visible Hand, 319. [27] Algernon Sullivan to Henry Villard, September 3, 1887, Henry Villard Papers, Box 73, Folder 496, Harvard Business School, Baker Library Historical Collections. [28] Friedman, A History of American Law, 521. [29] The citizenship clause of the 14th amendment complicated the status of immigrants, for which there was little coherent legal status. Children of immigrants born in the U.S. would agitate for the rights of citizenship as illustrated by the 1898 case United States v. Wong Kim Ark. [30] Morton J. Horowitz, “Santa Clara Revisited: The Development of Corporate Theory,” in Samuels and Miller, Corporations and Society: Power and Responsibility,16-19. [32] Friedman, History of American Law, 197. [33] Martin J. Sklar, The Sherman Antitrust Act and the corporate reconstruction of American Capitalism 1890-1914,” in Samuels and Miller, Corporations and Society: Power and Responsibility, 66. [34] Mathew Josephson, The Robber Barons: The Great American Capitalists 1861-1901 (New York: Harcourt, 1962), 100-177, 253-315. [35] Account of the growth and experience of the American working classes, include John Commons, et al., A History of Labor in the United States (New York: Agustus M. Kelley, 1966), see also Philip Foner, History of the Labor Movement in the United States (New York: International Publishers, 1991); Paul Krause, The Battle for Homestead, 1880-1892: Politics, Culture and Steel (Pittsburgh: Pittsburgh University Press, 1992). [36] Samuels and Miller, Corporations and Society, 68-72. [37] Chandler, The Visible Hand, 317-19. Chandler demonstrates the efforts by trusts to include distribution and marketing companies to their corporate empires. [38] Lisagor and Lipsius, A Law Unto Itself, 27. [39] See Josephson, The Robber Barrons, 382; Lisagor and Lipsius, A Law Unto Itself, 27; Dean, William Nelson Cromwell, 100-1. [40] Chandler, The Visible Hand, 326-7. [41] Ibid., 319-20. [42] William Nelson Cromwell, memo to William Curtis, March 1881, Sullivan & Cromwell Miscellaneous Papers, Box “Sullivan & Cromwell – Lenox Family – Colorado Mines,” Colorado File, Sullivan & Cromwell Misc. Papers, New York Historical Society , NYC. See also Lisagor and Lipsius, A Law Unto Itself, 31. [43] Lipartito and Sicilia, Constructing Corporate America, 33-35. [44] Prechel, Big Business and the State, 53. [45] Ibid., 54-5. [46] Charles M. Yanblon, “Historical Race Competition for Corporate Charters and the Rise and Decline of New Jersey: 1880-1910,” Journal of Corporation Law, Vol. 32, No.2 (Winter 2007): 355. [47] Dean, William Nelson Cromwell, 101. [48] William W. Cook, Treatise on Stock and Stockholders, Bonds, Mortgages, and General Corporation Law (3d ed. 1894), 971-73. [49] Lincoln Steffens, “New Jersey: A Traitor State,” McClure’s Magazine, Vol. 25 (1899), 41. [50] Perrow, Organizing America, 20-1. [51] Piel, Lamplighters, 37. For US Steel, see also Charles R. Morris, The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J.P. Morgan invented the American Supereconomy (New York: H. Holt and Co., 2005), 255-258; See also Josephson, The Robber Barons, 417-430. For General Electric see John Winthrop Hammond, Men and Volts: The Story of General Electric (New York: J.B. Lippincot, 1941), 141-229. [52] Pittsburgh Leader, May 5, 1904. Henry Villard Papers, Box 111, Folder 857, Harvard Business School, Baker Library Historical Collections. Many obituaries portrayed Villard life as the quintessential “Horatio Alger” story. Villard came to America poor and unknown and rose to prominence as a business tycoon. [53] Boston Massachusetts Evening Transcript, Nov. 12, 190; Henry Villard Papers, Box 111, Folder 857, Harvard Business School, Baker Library Historical Collections. [54] Henry Villard, Memoirs Of Henry Villard Vol.2: Journalist And Financier 1835-1900; 1863-1900 (Montana: Kessinger Publishing, 2007) 272-77. Also located online at http://www.archive.org/details/memoirshenry02villrich [accessed Nov. 7, 2010]. [55] Villard, Memoirs Of Henry Villard Vol.2, 277-83; See also Boston Massachusetts Evening Transcript, Nov. 12, 1900. Henry Villard Papers, Box 111, Folder 857, Harvard Business School, Baker Library Historical Collections. [56] Henry Villard, “Statement to Stockholders of Northern Pacific Railroad,” 1884, Henry Villard Papers, Box 61, Folder 425, Harvard Business School, Baker Library Historical Collections. See also Dean, William Nelson Cromwell,100. [57] Henry Villard, “Statement to Stockholders of Northern Pacific Railroad,” 1884, Henry Villard Papers, Box 61, Folder 425, Harvard Business School, Baker Library Historical Collections. [58] Lisagor and Lipsius, A Law Unto Itself, 30. Illustrating shareholder anger, an article appeared in the New York Tribune on August 19, 1893, which stated that Villard left the company to avoid financial ruin. “In September, 1883, under the presidency of Mr. Villard, the last spike, a golden one, was driven, which joined the great lakes to the Pacific. It was a fatal spike apparently for President Villard, for to free himself from the weight of waste and debt he was compelled to resign.” The author of the article blamed Villard, among others, for “hopeless speculation” and creating “another cycle of extravagance and folly.” Henry Villard Papers, Box 43, Folder 317, Harvard Business School, Baker Library Historical Collections, “Bureau of Press Clippings – The Northern Pacific RR.” [59] William Nelson Cromwell to C.A. Spofford, Esq, March 24, 1885,Henry Villard Papers, Box 23, Folder 199,Harvard Business School, Baker Library Historical Collections. [60] William Nelson Cromwell to C.A. Spofford, Esq, June 9, 1885, Henry Villard Papers, Box 23, Folder 199, Harvard Business School, Baker Library Historical Collections. This letter demonstrates that Cromwell was in the dominant position of directing all parties toward a settlement, brokering a deal between the creditors at his office. [61] William Nelson Cromwell to Henry Villard, February 28, 1886, Henry Villard Papers, Box 23, Folder 202, Harvard Business School, Baker Library Historical Collections. [62] Dean, William Nelson Cromwell, 100. [63] “Henry Villard: A Remarkable Man,” The Albany Journal , September 16, 1887. Henry Villard Papers, Box 43, Folder 322, Harvard Business School, Baker Library Historical Collections. The article states, “For the second time Mr. Henry Villard finds himself at the head, or almost at the head, of the great Northern Pacific railroad company… There was no loss of confidence in him among his friends. The best proof of this is the fact that he returned after a few years as the representative of German capital sufficient to put him in control…” [64] William Nelson Cromwell to Henry Villard, Nov. 15, 1885, Henry Villard Papers, Box 23, Folder 198, Harvard Business School, Baker Library Historical Collections. [65] Henry Villard, “Statement to Stockholders of Northern Pacific Railroad,” 1884, Henry Villard Papers, Box 61, Folder 425, Harvard Business School, Baker Library Historical Collections. [66] William Nelson Cromwell to Thomas F. Oakes, March. 1, 1883, Henry Villard Papers, Box 34, Folder 232, Harvard Business School, Baker Library Historical Collections. [67] New York Times, Nov. 3, 1893. “Statement by Mr. Villard – As a Director He Always Acted Cautiously and in Northern Pacific’s Interest.” In the article Villard states, “The statement that I have sold short the stocks and bonds of companies in which I have been interested is absolutely false…I have not been connected, or in any other way taken advantage of my position as an officer or Director to the injury of the stock and bond holders.” [68] Henry Villard to William L. Garrison, Jr., July 23, 1894, Henry Villard Papers, Box 43, Folder 323, Harvard Business School, Baker Library Historical Collections. [69] William Nelson Cromwell to George Siemens, July 7, 1894. Henry Villard Papers, Box 43, Folder 323. Harvard Business School, Baker Library Historical Collections. [70] Ibid. [71] For a brief overview of labor unrest in the rail industry see Balogh, A Government Out of Sight, 313-329. [72] William Nelson Cromwell to George Siemens, July 7, 1894, Henry Villard Papers, Box 43, Folder 323, Harvard Business School, Baker Library Historical Collections. [73] Lisagor and Lipsius, A Law Unto Itself, 31. [74] Ibid. [75] Chandler, The Visible Hand, 174-75. See also Dean, William Nelson Cromwell, 101-4. [76] Josephson, The Robber Barons, 382. [77] David McCullough, The Path between the Seas : The Creation of the Panama Canal, 1870-1914 (New York: Simon & Schuster, 1977), 273. [78] Lisagor and Lipsius, A Law Unto Itself, 40-1. [79] Stephen Kinzer, Overthrow: America’s Century of Regime Change from Hawaii to Iraq (New York: Henry Holt & Co., 2006), 58-9. [80] Richard F. Hamilton, President McKinley’s New Empire (New Jersey: Transaction Publishers, 2006), xiv. [81] Piel, Lamplighters, 40-2. [82] McCullough, The Path between the Seas, 274. [83] House Committee on Foreign Affairs, The Story of Panama: Hearings on the Rainey Resolution before the Committee on Foreign Affairs of the House of Representatives (Washington: Government Printing Office, 1913), 152, 227. [84] McCullough, The Path between the Seas, 274. [85] McCullough, 275. McCullough describes the five week event in Paris via the account in George Morison’s diaries. [86] Report of the Board of the Isthmian Canal Commission, 1889-1901 (Sen. Doc. 222, 58th Cong., 2nd Sess.), (Washington: Government Printing Office, 1906). [87] Lisagor and Lipsius, A Law Unto Itself, 43-44; McCullough, Path Between the Seas, 293-94. [88] The Story of Panama, 70-71. [89] Kinzer, Overthrow, 58. [90] Kinzer, Overthrow, 589-9. [91] Mark Sullivan, Our Times, Vols. I and II. New York: Scribner’s Sons, 1928. [92] McCullough, The Path between the Seas, 337. [93] Lisagor and Lipsius, A Law Unto Itself, 47. [94] Dean, William Nelson Cromwell, 120. [95] Lisagor and Lipsius, A Law Unto Itself, 50. [96] Ibid. 52. [97] Ibid. passim. See also Jason Weixelbaum, “Following the Money: An Exploration of the Link between American Finance and Nazi Germany,” and “The Contradiction of Neutrality and International Finance: The Presidency of Thomas H. McKittrick at the Bank for International Settlements in Basle, Switzerland 1940-46,” jasonweixelbaum.wordpress.com [accessed December 3, 2010].