Louis D. Brandeis Versus the New Haven Railroad, Part I

08Apr16

Picture of Louis D. Brandeis and David E. Brown from the April 23, 1913 issue of the Boston American.

One of Brandeis’s biggest progressive fights before he joined the Supreme Courts was his opposition to the merger of the Boston and Maine Railroad with the New Haven Railroad. In many ways, the New Haven fight was the genesis of much of Brandeis’s economic philosophy.

In an era of big business and monopolies, the New Haven Railroad stood out by virtue of its size and ruthlessness. Under the leadership of Charles S. Mellen, and the with financial backing of the banking house of J. P. Morgan, the New Haven acquired a near total ownership of all transportation of the New England states surrounding Massachusetts — not just the railroads, but also trolley and steamship lines. Most of the states acquiesced without much of a struggle, but the New Haven stirred a hornet’s nest when they entered Massachusetts

In 1905, the New Haven began purchasing trolley lines in Massachusetts despite a state law that forbade railroad companies from owning stock in other railroad companies in that state. The new Haven lobbied against the law while simultaneously ignoring it and buying more trolley lines. Public outcry really began, though, when the New Haven took their strategy further and began buying stock in the Massachusetts railroad line the Boston and Maine.

Brandeis was hired to represent some stock owners of the Boston and Maine. (Eventually, Brandeis would sever his connection with the railroad and pursue the matter as a private citizen.) Brandeis helped draft a bill that would have made the New Haven’s actions even more explicitly illegal, but the Massachusetts legislature failed to pass it and the New Haven quickly gained control of the Boston and Maine.

The New Haven argued that consolidation was necessary and that the combined railroads would be more efficient and profitable. And at first, the latter claim seemed to be true. The New Haven claimed to be making a profit and paid high dividends to its stockholders.

Brandeis, however, was skeptical and started poring over all of New Haven’s stock reports and records. In 1907, he published a pamphlet titled Financial Condition of the New York, New Haven and Hartford Railroad Company and of the Boston and Maine Railroad, in which he claimed that the New Haven was using shady accounting tricks to make it appear that it was operating at a profit, when it was actually losing money.

The lead to years of accusations against Brandeis’s character and counter-accusations of chicanery on the part of the New Haven. Meanwhile the service on the Boston and Maine got worse and deadly accidents started happening because of the New Haven’s inability to pay for repairs. (But the stockholders continued to receive their dividends.) Matters came to a head in 1913 when the Interstate Commerce Commission held hearings to investigate the real financial condition of the New Haven.

In the scrapbooks relating to the merger issue here at the University of Louisville, I found the following editorial cartoons from the Boston Post that give a (nearly) day by day description of the hearings. Since the cartoons have not been republished since 1913, I thought it would be to post them here with descriptions of the events being illustrated.

The cartoons are all signed “Norman,” which was the pseudonym for William Ritchie. I don’t know much about Mr. Ritchie, but fellow WordPress blog Tattered Fabric has an interesting post about him and his coverage of the Lizzie Borden trial. I also posted a couple of his cartoons in my post Editorial Cartoons About Louis D. Brandeis (all of the cartoons in which, incidentally, are about the New Haven controversy.) One of them I am reprinting below and the other is a great one that depicts Mellen as a cubist painter.

New Haven's Losses Hidden in Accounts

The first cartoon is from the April 23 issue of the Post, which was the day after the first day of the hearings and it depicts many of the main players of the day’s proceedings. Besides Brandeis, there is Charles A. Prouty, the commissioner from the ICC conducting the hearings; David E. Brown, the ICC’s “Expert Examiner,” (he is the person standing next to Brandeis in the picture from the Boston American at the top of the post); and Sylvester Baxter, journalist and poet, who wrote many articles defending Mellen and the New Haven.

The cartoon also depicts 2 events from the first day. New Haven vice president Edward G. Buckland requested that the hearings be held in private, but Prouty refused, stating, “Sub rosa investigations never achieved anything.” The bombshell of the day was the revealing of a stock transfer involving one J. L. Billard. For a while, the New Haven needed to hide its stock shares of the Boston and Maine. It “sold” the shares to Billard for safe keeping using money it gave to Billard to make the sale look legitimate. When it wanted the stocks back, the New Haven paid Billard 2.7 million dollars, which he kept. In other words, Billard earned close to 3 million dollars on a transaction in which he put up no money of his own. The revelation of this and accounting stunts ended up being key in turning public opinion against the New Haven.

Scenes at the Hearing

Most of the testimony on April 23 centered on the Hampden County line: a 15-16 mile line built by the Boston and Maine after its purchase by the New Haven. The line paralleled another line which was owned by the Boston and Albany Railroad, which was another railroad company owned by the New Haven. The duplicative line cost 4 million dollars to build, which as Commissioner Prouty pointed out, cost as much per mile as it did to cut through the mountains of Panama for the canal.

Find Mellen Secret Builder of Costly Westchester Road

Brandeis was originally hired by the Boston Fruit and Produce Exchange to represent them at the hearing. For reasons that were never made clear (although it was largely suspected that it was due to pressure from Mellen), the Exchange formally discharged Brandeis. Instead of going away, however, Brandeis showed up on the 25th, claiming to represent the people of Massachusetts as a citizen.

New Haven lawyer Charles F. Choate, Jr. also showed up that day, and following Brandeis’s example, announced that he too was there to represent the people of Massachusetts as a private citizen. When Brandeis asked him if he was still in the employ of the New Haven, he flatly denied it. Brandeis then asked Brown if there were any records of recent payments by the New Haven to Choate, which Brown promptly provided to the amusement of the spectators of the court.

Citizen Brandeis in Repose

Brandeis did little on April 30 as most of the day was spent by Choate (who by this time had identified himself as an attorney for Mellen) cross-examining Brown in an effort to refute the points made by Brandeis.

Mellen himself appeared in the hearing on May 2 to give a statement that took up most of the afternoon. However, neither Brandeis nor any of the other lawyers were allowed to cross-examine him.

Mr. Brandeis Cross Examining

The testimony wound down on May 3 with the highlight being Brandeis’s cross-examination of New Haven lawyer Edward D. Robbins, who angrily resented many of Brandeis’s questions.

The ICC released its report on the hearings in July, in which it endorsed many of the demands Brandeis had been making for years regarding the break up of the New Haven conglomerate of railway lines. The Commission did not have the authority to enforce its findings, but the release of its report, along with the resignation of Mellen which happened around the same time, and the continued deterioration of service on the line all lead to the eventual disintegration of the New Haven empire.

Note: I gathered much of the information for this post from newspaper articles in the Brandeis collection and the book The Fall if a Railroad Empire: Brandeis and the New Haven Merger Battle by Henry Lee Staples and Alpheus Thomas Mason.

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One Response to “Louis D. Brandeis Versus the New Haven Railroad, Part I”


  1. 1 Louis D. Brandeis Versus the New Haven Railroad, Part II | Brandeis and Harlan Watch

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