Buoyed by his warm reception everywhere he traveled, Taft took Roosevelt’s ominous musings in stride. “Nellie was out of patience with the President’s letter,” he told Charles, “but I understand exactly his state of mind. Under the hammering of the New York papers, and the disposition to press Hughes on, he has become a little more discouraged,” Taft explained, claiming, “I don’t think he knows as much about the matter as I do, for I have crossed the country and been in all parts of it.” Regardless of his current optimism, he promised his brother that he was “not getting into a situation where a failure to get the nomination” would render him “bitter or indeed disappointed.” Rather, he assured Charles, “I think that in your general earnestness and zeal on my behalf, a defeat would be more disappointing to you than to me.”
The day before his scheduled departure for a long-promised visit to the Philippines, Taft responded to Roosevelt’s letter. “I fully understand the difficulties of your position, and exactly how you feel in respect to the candidacy of myself and the others,” he began; “I have been, however, agreeably surprised to receive the expressions of good will which I found in the trip across the Continent.” Acknowledging that “one hears the things he likes to hear,” he had found overwhelming evidence of “affirmative support” across the nation. Nonetheless, he was “prepared to learn at any time” during his Pacific journey that his “boom” had “busted.” Whatever the outcome, Taft insisted, he would remain grateful “for the great compliment you have paid me in taking an interest in the matter, and for making my boom at all possible.”
WILL AND NELLIE, WITH TEN-YEAR-OLD Charlie in tow, sailed for the Philippines on September 13. Taft met with officials in Japan and China for several weeks before heading to Manila. The former governor general was scheduled to open the first Philippine Assembly. Taft had long considered creation of a popularly elected assembly a vital step toward eventual Filipino sovereignty. Though the Philippine Commission still exercised executive powers, the new assembly would have the “right to initiate legislation” or “to modify, amend, shape, or defeat legislation proposed by the Commission.” As “the first parliament ever freely elected in Asia,” the historian Stanley Karnow explains, the assembly “was a tribute to the liberalism of U.S. colonial rule,” but “American democracy it was not.” Only those who owned land, paid taxes, and demonstrated literacy were allowed to vote.
Taft feared he would encounter “a chill” upon reaching Manila rather than the exuberant welcome of two years earlier. Since that time, the movement for independence had gained momentum, casting an unfavorable light on his prediction that it would take generations to prepare the people for self-rule. But his misgivings proved unfounded. “The enthusiasm of the welcome,” he related to Charles, exceeded anything he had experienced before, “and it was the more delightful in that it was unexpected.” The reception was particularly gratifying, he added, because it showed that the “common people,” along with the “wealthier classes,” celebrated his role in creating the National Assembly.
He began his address by frankly admitting that he had not changed his mind about the duration required to achieve genuine sovereignty, but conceded that the question would be determined largely by the success of the new assembly. He wisely acknowledged that the United States, unused to the undertaking of colonial rule and lacking a “trained body of colonial administrators and civil servants,” had made serious missteps. Adventurers and military men unsuited “by character or experience” for the serious work of public service had delayed effective government in the islands. In addition, he lamented the dilatory pace of American investment and roundly criticized the U.S. Congress for failing to reduce the tariff on the major Philippine exports of tobacco products and sugar. Yet, despite these obstacles, he believed the islands had made great advancements: hundreds of thousands of Filipino children were attending school; sanitation services and general public health had significantly improved; and a judicial system was now in place. Furthermore, he noted, miles of new roads and street railways had been built, a civil service had been established, and the problems with the Catholic Church had been largely settled. Taft ended his oration by extending his “congratulations upon the auspicious beginning of your legislative life” and conveying his “heartfelt sympathy in the work which you are about to undertake.”
At the Inaugural Ball, Taft once again won hearts with his graceful execution of the complex national dance, the rigadon. Will and Nellie attended a “thousand and one events” in the days that followed, inspecting projects that had been completed since their last visit and renewing old friendships and acquaintances at a succession of dances, parties, and banquets. “Everybody,” Nellie happily noted, “was glad to see us.” The Tafts remained in the Philippines from mid-October through the first week of November, far removed from the stock market collapse that threatened both Roosevelt’s legacy and Taft’s candidacy.
IN OCTOBER, A SERIES OF difficulties on Wall Street escalated into what later became known as the Roosevelt Panic of 1907. Stock prices had been slumping since the previous March; in July and August, a number of companies, including a mining firm and a major street railway company, fell into bankruptcy. As industrial production slackened toward summer’s end, experts calculated that stock market losses approached $1 billion. Wall Street blamed Theodore Roosevelt’s “crusades against business” for the decline, arguing that his excessive regulation had paralyzed the economy. “By slow and insidious degrees,” the Sun editorialized, “he has upset the public confidence, arrayed class against class, and fomented mistrust and hatred.” The New York Times concurred, tracing the country’s ills to the administration’s “deep-seated, undiscriminating hostility” to business. By “going up and down the country, planting the doctrine of discontent,” another critic charged, Roosevelt had “sowed the wind, and we will reap the whirlwind.” Union Pacific Railroad president E. H. Harriman, a lifelong Republican, bitterly claimed that he would “take Bryan or Hearst rather than Roosevelt. We cannot be worse off than we are now with that man in the White House.”
In a defiant rejoinder, Roosevelt dispensed with his characteristic even-handed rhetoric. He stridently railed against “certain malefactors of great wealth,” who conspired “to bring about as much financial distress as they possibly can in order to discredit the policy of the government, and thereby to secure a reversal of that policy so that they may enjoy the fruits of their own evil-doing.” These plutocrats, he charged, would even “welcome hard times or a panic” to install “a safe type” in the White House. “They are as blind to some of the tendencies of the time, as the French noblesse was before the French Revolution.” Those business interests that shrank from regulation, the president suggested, should examine their own operations. He was “responsible for turning on the light,” he noted proudly, not “for what the light showed.” Curiously, Roosevelt omitted all mention of the muckraking journalists who had proven so instrumental in illuminating industrial abuses.
As summer turned to early fall, Roosevelt continued to frame the downturn as “a temporary period of weakness,” part of a worldwide contraction after a period of great prosperity. Unwilling to cancel his agenda, he left Washington on September 29 to deliver a series of speeches in the West, a trip that would culminate in a ten-day bear hunt in northeast Louisiana. Yet, while Roosevelt hunted bear, the bear market savaged Wall Street and the financial crisis deepened.
In early October, banking moguls F. Augustus Heinze and Charles W. Morse drove up copper prices in an attempt to corner the market. Their sensational failure—and the resulting depression of stock value—might have remained an isolated incident if news had not leaked that their costly speculation had been funded by the stately Knickerbocker Trust Company, the second largest investment bank in New York. Spooked by rumors that the venerable institution might fail, investors stood in queues outside the bank doors from dawn till dusk attempting to reclaim their funds. On the afternoon of October 22, the Knickerbocker
ran out of money and was forced to shutter its offices. Three weeks later, the bank’s president, Charles T. Barney, committed suicide. Evidence that the respected firm had abandoned sound banking practices to gamble with customers’ deposits shattered confidence in other financial institutions. In the days that followed, customers rushed to retrieve money, some standing all night on the sidewalks, others sleeping in the vestibules. Reports indicated that “hardly a bank or trust company” was spared, as the Panic threatened to compromise the nation’s entire financial structure.
In the absence of a centralized banking system, seventy-year-old J. P. Morgan served as “a one-man Federal Reserve.” The magnificent library at his Madison Avenue house was designated “Panic Headquarters.” Surrounded by rare books, Renaissance paintings, and exquisite tapestries, Morgan and his partners met with a carefully selected group of leading bankers. Day after day, often late into the night, this financial cabal monitored the precarious situation, transferring monies from one bank to another, declaring which institutions to save and then raising sufficient funds to rescue them. Within two days the bankers had pledged nearly $10 million.
As Roosevelt hurried back to Washington, Treasury Secretary George Cortelyou took a day train to New York. Meeting with Morgan’s group that evening, he promised that the government would add $25 million to the bankers’ fund to be distributed at Morgan’s discretion. “It was an extraordinary transference of power to a private banker,” the biographer Ron Chernow observes. The next day, reporters noted that immense bags of bank securities were delivered to the U.S. subtreasury and J. P. Morgan’s headquarters. This quick action saved dozens of banks and trust companies, including the venerable Trust Company of America.
Despite these efforts to stabilize the banking system, stock prices continued to tumble. On Thursday, October 24, the president of the New York Stock Exchange broke the news to Morgan that his brokers no longer had the cash to continue trading. Determined to avoid a shutdown that would likely precipitate the wholesale collapse of financial institutions across the city, Morgan called an emergency meeting. Less than thirty minutes had elapsed before a messenger brought word that Morgan’s group had pledged $25 million to keep the exchange open. Elated at this reprieve, exuberant stockbrokers hooted and cheered, hailing J. P. Morgan as “the Man of the Hour.” The crisis had proven that Morgan “was still the chief among the country’s financiers,” the New York Evening Mail observed, “the one leader who could inspire the confidence of the multitude and command the resources of the nation.”
Just as one firestorm was contained a new blaze erupted. On November 1, Morgan learned that Moore & Schley, a leading brokerage house, was on the verge of bankruptcy. Understanding that the firm’s failure “would bring down a few more stories of the tottering financial pyramid,” Morgan evolved an ingenious plan. The troubled brokerage house owned a large stake in the Tennessee Coal and Iron Company (TC&I), one of the few significant combinations to escape the grip of United States Steel. In a meeting with U.S. Steel’s chairman, Judge Elbert Gary, Morgan proposed that U.S. Steel purchase TC&I, exchanging its own solid bonds for TC&I bonds to redeem Moore & Schley. As a precondition, Gary insisted on Roosevelt’s assurance that the purchase would not trigger an anti-trust suit. “Can you go at once?” Morgan demanded.
That evening, Judge Gary and Henry Clay Frick took the overnight train to Washington. Meeting with the president at eight o’clock the following morning, the two U.S. Steel representatives maintained that “under ordinary circumstances they would not consider purchasing the stock,” which was priced “somewhat in excess” of the firm’s true value. Nevertheless, they believed it was “to the interest of every responsible businessman” to avoid a “general industrial smashup.” Roosevelt assured them that he “felt . . . no public duty” to file suit under the Sherman Anti-Trust Act.
The announcement of the deal not only saved Moore & Schley; it also helped restore confidence in the market. But when the terms of the TC&I purchase were made public, Roosevelt came under heavy criticism. John Moody, a respected financial analyst, termed the $45 million purchase price “the best bargain . . . ever made in the purchase of a piece of property”; the coal and iron ore deposits alone, he estimated, were worth “hardly less than $1 billion.” Some suspected that Roosevelt had been hoodwinked into legitimizing U.S. Steel’s bid to “swallow up a lively competitor, while wrapping itself in the cloak of public spirit.”
Roosevelt adamantly denied such charges. “The Nation trembled on the brink,” he contended, justifying his decision by pointing to the speed and volatility of the financial markets: “Events moved with such speed that it was necessary to decide and to act on the instant, as each successive crisis arose.” A decision had been necessary before the stock market opened that morning. “I would have showed myself a timid and unworthy public servant, if in that extraordinary crisis, I had not acted precisely as I did.” In the years ahead, however, the contentious decision would open a painful rift in Roosevelt’s friendship with William Howard Taft.
ALTHOUGH THE IMMEDIATE DANGER OF the financial panic subsided, a general malaise began to seep into every sector of the economy, costing laborers their jobs and farmers their livelihood. “Whether I am or am not in any degree responsible for the panic, I shall certainly be held responsible,” Roosevelt grumbled to his physician, Dr. Alexander Lambert. “The big moneyed men” had long since “reached a pitch of acute emotional insanity,” he told Kermit. That anger-fueled hysteria would begin to infect even friends and supporters, he suspected, “because when the average man loses his money he is simply like a wounded snake and strikes right and left at anything, innocent or the reverse, that presents itself as conspicuous in his mind.”
“From all sides,” Ida Tarbell observed, “the business world, the press, leaders of public opinion—there came such a berating of the President as a man has rarely had to endure.” No longer simply a “destroyer of credit,” Roosevelt had now become an “assassin of property.” From Kansas, William Allen White wrote to cheer his friend. “I feel personally hurt by all this abuse that is being heaped on you,” he began. “The whole system is bending its energy to turn back the clock, and the prayers and the assistance of every good American should be with you in this crisis.” Roosevelt found some consolation in White’s words but remained pessimistic about his prospects. “I care a great deal more for such a letter as you have written to me than I do for the attacks that are being made upon me,” he replied. “If there is much depression, if we meet hard times, then a great number of honest and well-meaning people will gradually come to believe in the truth of these attacks, and I shall probably end my term of service as President under a more or less dark cloud of obloquy. If so, I shall be sorry, of course; but I shall neither regret what I have done nor alter my line of conduct.”
On the morning of November 16, Ray Baker arrived at the White House for a scheduled discussion about his series on race in America. Instead, when Baker noticed a thin red pamphlet called The Roosevelt Panic on the president’s desk, the conversation quickly turned to the economy. Wall Street, Roosevelt explained, had circulated this incendiary tract “to destroy his program of reform.” For two hours, Roosevelt shared his vantage on the troubling situation. “It looks now,” he told Baker, “as though there would be let down in business throughout the country for some time to come. I shall be blamed for it: my enemies will make capital of it. It is probable that before next summer I shall be the bête noir of the country.” While still hopeful for Taft’s nomination, the president feared that “the country at the next election would have to choose between an extreme radical like Bryan and a republican reactionary; that in either event the moderate reform movement which he advocates would be lost sight of.” Continuing the conversation with Baker the next morning, Roosevelt repeatedly insisted that “the fight must be carried through.” The idea of either a reactionary or Bryan as the next president, Baker observed, seemed to set “his fighting blood to runn
ing!” The journalist departed with a growing conviction that Roosevelt was seriously considering another run. “A man may sometimes have to jeopardize his own soul,” the president had cryptically commented, “when the interests of the country are at stake.”
And in truth, Roosevelt was still brooding over the prospects of another term. “I hate for personal reasons to get out of the fight here,” he told one friend. “I have the uncomfortable feeling that I may possibly be shirking a duty.” The leader who quits “the fight before it is finished” deserves little respect, he confided to another supporter. Nevertheless, he countered, a political leader “must understand the temper and convictions of the people.” And while he believed he could win the Republican nomination, Roosevelt had misgivings about the general election. Nothing would be more humiliating than to break his word and then lose.
The time had come, Roosevelt finally decided, to make clear that he would not seek a third term under any circumstance. On the evening of December 11, he released an unusually succinct statement: “On the night after my election I made the following announcement.” Verbatim, he repeated his pledge renouncing a third term and concluded with an equally curt finality: “I have not changed and shall not change the decision thus announced.”
The Bully Pulpit: Theodore Roosevelt, William Howard Taft, and the Golden Age of Journalism Page 76
