Warren Watch: Harriman vs. Hill on Warren Buffett's reading list
Among the writings making Warren Buffett's reading list lately is “Harriman vs. Hill: Wall Street's Great Railroad War” by Larry Haeg.
The book published by the University of Minnesota Press is an account of the Northern Pacific Corner, the 1901 struggle for control of U.S. railroads between Edward H. Harriman of the Union Pacific and James J. Hill of the Great Northern, which eventually became the Berkshire Hathaway-owned BNSF.
The Northern Pacific was a minor rail line, but the key to connecting eastern markets to Chicago and the American West. Competition between Harriman and Hill ended up involving J.P. Morgan and the Rockefellers, the nation's oil and steel industries and a legion of wealthy investors.
Wild price swings, a market panic and a near-collapse of Wall Street banks and brokerages followed, with the Supreme Court and President Theodore Roosevelt taking lead roles in what Haeg, former communications director for Wells Fargo & Co., calls “this epic battle.”
The situation is called a “corner” because investors tried to corner the market for the railroad's shares.
In 16 hours, Northern Pacific's stock price went from $110 a share to $1,000, even though it had twice been bankrupt and sold five years earlier as low as 25 cents a share.
Modern government regulation can be traced to the incident, the book says, as well as Supreme Court Justice Oliver Wendell Holmes' reputation as “the great dissenter.”
On the back cover, Buffett is quoted as saying he first read about the Northern Pacific Corner when he was 10 years old. His office wall has a framed copy of a New York Times story on the Corner, published on May 10, 1991.
Buffett read a pre-published version of the book, which he said “now tells the full story, and I enjoyed every word of it.”
On CNBC, Buffett once said, “I like history. I like financial history particularly,” and remarked that former Federal Reserve Chairman Alan Greenspan knows all about the Northern Pacific Corner.
“It's useful to realize how extraordinary things can happen occasionally,” Buffett said. “You should know financial history.”
In his preface, Haeg notes that Buffett told him most MBA students don't know about the Northern Pacific Corner. “Now they have no excuse,” Haeg wrote.
The book includes 47 pages of end notes, a 12½-page bibliography and material from 26 newspapers, including The World-Herald and the Omaha Bee.