On one day in 1901, the attention of America was fixated on the price of the stock of the Northern Pacific Railroad, as Edward Harriman and James Hill, two of the nation’s greatest railroad emperors, surreptitiously made bids to control the Northern Pacific. The victor would control this old transcontinental route—and, more important, its attached Burlington line, which constituted a key link between the Chicago and the Pacific for both systems. Miscalculations and poor communication on both sides of this struggle led to an “accidental corner” of the market, and as desperate shorts scrambled to recoup shares of the road, affectionately nicknamed the “Nipper,” the price shot higher and higher, hitting $1,000 at the height of the bubble. From these heights, the price quickly came crashing back down, taking most of the market with it before stabilizing, like a “bungee-cord jump off the Brooklyn Bridge” (p. xii). Many of the principal actors in this financial drama are the subjects of biographies, but, for the first time, this dramatic day has received a book-length study in Larry Haeg’s Harriman vs. Hill.

The story builds slowly, as Haeg recreates the social world of the rail barons, the geography of the nation’s rail network, and the escalating tensions between the Harriman and Hill camps. The turn of the century saw the railroad industry at the tail end of a disruptive period of consolidation and system building; these transformations sparked a vigorous debate over how big these new systems should be. The story also crystallized one of the greatest impacts of the increasing financialization of the American economy—the disjuncture between market values and the tangible worth or profitability of a property—as the beleaguered Northern Pacific was hardly a jewel. The old transcontinental route was born in corruption, was hardly ever profitable, crashed the economy in 1873, and had to be rescued from the railroad scrap heap in 1896, selling for 50 cents a share. However, it still was a marvel to travel on, as Haeg reconstructs in a recapitulation of Hill’s journey east on the line at the height on the crisis, one of the more evocative points in Haeg’s narrative.

As Haeg argues, the 1901 corner was unique in American financial history—in contrast with earlier panics, the Northern Pacific corner was a “stock gamblers’ panic,” induced largely by the bets of short-sellers attempting to game the market (p. 3). Furthermore, it came at a pivotal moment in the history of investment. Increasing numbers of Americans were turning to the stock market to make a fortune, and telegraph lines carrying up-to-date stock prices stretched from New York to small outposts in the countryside. The dramatic rise and fall of the stock price makes for a gripping narrative, as Haeg pairs the top-down story of Hill and Harriman’s rivalry with anecdotes of traders and common investors whose lives were made or ruined in this wild swing. Haeg further fleshes out the story by giving intimate details on the workings of the trading floor, from the tumultuous move to a temporary location to the illegitimate “bucket shops” in Hell’s Kitchen. A former Wells Fargo executive, Haeg is at his best in capturing the frenzied nature of Wall Street on this fateful day in May. He also does an admirable job of explaining the workings of financial terminology, such as shorts and corners, and in distilling these complicated events into an accessible story for even those without finance degrees.

Haeg is a little less convincing on the implications of this bubble. In the end, he concludes, the market worked its magic through this panic, puncturing a dangerous bubble in railroad stocks and saving the nation from a potentially larger crisis (p. 206). Unsurprisingly, the aftermath of the crash led to widespread denunciations of “stock gamblers,” out-of-control speculators, and the closely interlocked “community of interest” that ran American railroads. After Morgan and Hill created the Northern Securities holding company as a compromise to this tangled battle for control, the company became the first bogeyman in Theodore Roosevelt’s crusade against the trusts. For Haeg, the real tragedy of the day was that it attracted the ire of Theodore Roosevelt and the Progressives, who, he argues, seized on the panic for opportunistic political gain.

In seeking to counteract Depression-era “robber baron” stereotypes, Haeg goes a little too far in defending men such as Hill, Harriman, and Morgan, and at times he echoes verbatim their arguments on the virtues of consolidation. Not only is this a straw man argument—the “robber baron” school of Gilded Age historiography has been long buried—but it also distorts the motives of the Progressives, who appear here as naïve partisans of class warfare and disruptive meddlers in the free market. Whether or not the Progressives doomed the railway industry is certainly an important question, but it seems beyond the scope of Haeg’s narrowly focused research on the 1901 corner. Given the shocking implications of the day’s events—that all it took were a few minor miscalculations to bring the country’s economy to its knees—the reaction from the Progressives and the general public seems entirely legitimate, and not out of line with responses to other panics. Financial panics historically have shed light on some ugly truths about American capitalism, from the 1837 panic’s devastation of sketchy wildcat banks and the Southwest slave economy to the 1873 panic’s exposure of the corrupt workings of America’s transcontinental lines; engaging more of this broader history would have strengthened Haeg’s arguments about the importance of the 1901 corner.

Despite these analytical shortcomings, this is an important story with haunting lessons for us today. The episode addresses a fundamental question in the history of American capitalism: To what extent should the government intervene to regulate the size of corporations and the workings of financial markets? Just as Wall Street was being remade by faster communication and increased public participation at the turn of the twentieth century, the growth of the Internet and high-speed trading is bringing revolutionary changes today, and the importance of the connections between Wall Street and Main Street should be readily apparent to Americans mucking through the wreckage of the Great Recession. Harriman vs. Hill should become the definitive work on this sadly overlooked crisis. It is a worthwhile read not just for historians of railroads and capitalism, but for aspiring Wall Street warriors as well.