Chapter 1
Boy Wonder
Paul Cravath was only twenty-six and barely out of law school when George Westinghouse hired him to take on the world's most famous inventor, Thomas Alva Edison.
The Pittsburgh-based Westinghouse, then in his thirties, was already well known for his invention of the railroad air brake and his innovations in railway switching and signaling. Reserved and courteous in public, charmingly blunt in private, he was driven by an idealistic desire to improve the lot of his fellow man. Although a forceful and successful entrepreneur, he disdained financiers and moneymen. He paid his employees beyond the going rate, gave them pensions and days off, and provided a safe working environment. An engineer's engineer, he pursued his work with boundless energy, imagination, and resourcefulness. By the mid-1880s Westinghouse had thrown himself fully into the burgeoning industry of electrical power and was looking forward to a free and fair contest over how best to distribute it to people.
Westinghouse's rival in that endeavor was Thomas Edison, the Wizard of Menlo Park and world-renowned inventor of the light bulb and phonograph. Just a few months younger than Westinghouse, Edison cultivated a folksy manner that belied a ruthless win-at-all-costs attitude. A garrulous man who quite enjoyed his celebrity status, Edison had a genius for self-promotion and moneymaking in addition to invention. He resented the intrusion of Westinghouse-a railway engineer-into a field that Edison had pioneered and felt belonged to him alone.
Westinghouse and Edison faced off in two separate but related disputes: One, the light bulb war, concerned Edison's claim that Westinghouse, among many other competitors, was infringing on his 1879 incandescent light bulb patent. Edison filed hundreds of patent suits against Westinghouse, and Cravath was charged with their defense. The light bulb war would drag on for years because a large part of Westinghouse's strategy, and hence Cravath's job, was to stall for time until Edison's patent expired in 1894.
But while the highly technical patent litigation brought Cravath steady business, it was the second war-the so-called War of (Electric) Currents-that first brought Cravath to public attention. This one was less a legal battle than a full-scale commercial war, fought on many fronts, that pitted Westinghouse's alternating current (AC) transmission system against Edison's direct current (DC) system. The winner would determine how electricity would be delivered to homes and businesses in the coming century-and guarantee billions for its parent company.
The Westinghouse AC system was based on the innovations of an eccentric genius, Nicola Tesla, the Serbian inventor whose patents Westinghouse licensed. Under this system, alternating current was transmitted at high voltage (1000 to 2000 volts) from a central generating station over very long distances for use in the bright arc lamps that lit city streets, including New York's Great White Way, starting in 1880. At the point of commercial or residential consumption, transformers reduced the current to low voltage (50 watts) to light indoor incandescent lamps and bulbs.
By contrast, the Edison DC system ran at 110 volts, which was insufficient to illuminate large outdoor spaces and could not deliver current to consumers more than a mile from each of the many generating plants Edison placed in the middle of dense population centers. But the Edison system had one major perceived advantage: safety. Edison buried his low-voltage lines underground, a costly and labor-intensive exercise that eliminated the risk of electric shock. Westinghouse's high-voltage AC lines, on the other hand, were strung up on utility poles for street lighting, intersecting with thousands of telephone and telegraph wires. In the 1880s, the skylines of New York and other major cities came to resemble a giant spiderweb. Besides their unsightliness, the suspended wires were susceptible to being blown down in a storm and, more ominously, posed a danger of electrocution.
In New York alone, dozens of people were killed by live high-voltage AC wires between 1888 and 1890-mainly electrical and other utility workers, but also unsuspecting children who touched downed wires. The outcry over this danger-known as the Electric Wire Panic-created a public relations nightmare for Westinghouse, whose AC lines were often blamed. By recent law, the AC wires were supposed to be buried underground, like Edison's. But due to neglect and lethargy on the part of the company the city hired to dig the conduits, and corruption within the Tammany-dominated board of electrical control, not enough underground conduits had been built to house the lines.
Cravath spent much of his first few years as Westinghouse's lawyer fending off attempts-many of them instigated or supported by Edison-to cripple or kill the AC system because of the safety issues. Frequently quoted in the newspapers, Cravath would dispute that Westinghouse's lines were the ones at fault, arguing that they were all safely insulated while promising to get them buried underground just as quickly as the city could complete the conduits. While Westinghouse's prior counsel had contested the city's power to compel the company to bury its wires, Cravath offered to have his clients build the conduits themselves if adequately compensated, and Westinghouse was awarded a contract to do so-at least until the courts gave the job back to the original company in a suit brought by Elihu Root.
Injunctions in the War of Currents flew back and forth; no sooner would Cravath obtain a restraining order preventing the city from arbitrarily cutting down his client's overhead wires than the injunction would be dissolved and city workers would take their axes and clippers to the lines. In October 1889, a Western Union lineman named John Feeks was roasted in a network of wires, as the New York Times headline put it, when some dead wires he was trying to cut from a telegraph pole crossed with some AC wires a mile away. As a horrified lunch crowd of pedestrians looked on from below, Feeks literally caught on fire, blue flames shooting from his mouth and nostrils and sparks flying about his feet. His body was so tangled with wires that he was suspended aloft for forty-five minutes, dangling pitiably until his coworkers managed to cut him loose and lower his charred body to the ground.
Cravath immediately agreed, on his client's behalf, to turn off the "death currents" until they could be pronounced safe by experts (this resulted in darkening the city streets, which created its own set of problems). Reacting to the crisis, Westinghouse came at once from Pittsburgh to New York and set up quarters in the Hotel Brunswick on Fifth Avenue, where Cravath moved his force of young lawyers and worked day and night and all day on Sundays.
As part of his propaganda war against Westinghouse, Edison had lobbied to have alternating current used in the first execution by electric chair in New York State-ostensibly to institute a more humane form of capital punishment than hanging, but really to associate AC with electrocution in the public's mind. He sponsored experiments in which dogs, calves, and a horse were instantly killed when zapped with as little as 300 to 750 volts of AC, less than half the voltage used in the wires strung above city streets. Although Edison had previously opposed the death penalty, he now urged the use of high-voltage AC to execute convicted murderer William Kemmler. When Bourke Cockran, a high-priced New York lawyer-politician, intervened to try to halt the execution, it was commonly assumed that Westinghouse was behind the effort, and although both he and Cravath denied it, the fact that Cravath often hired Cockran to work with him on litigated matters lent credence to the notion.
The execution did go forward in August 1890 but was bungled: Kemmler was declared dead after receiving seventeen seconds of AC charge, but as it turned out he was still alive, requiring another eight agonizing minutes of jolts at 2,000 volts that burned him to death. Cravath told the press this would surely end the electric chair as an execution method because "the mysterious character of electricity itself, about which even experts have much to learn," counseled against "further experiments at the expense of human life." Westinghouse merely quipped that "they would have done better using an axe."
Cravath, who was assisted by Charles Evans Hughes, lost almost all the Westinghouse litigation with New York City and with Edison, who was better financed and had better press. But Westinghouse ended up winning the war. As the superiority of his AC system became increasingly apparent, and the safety issues abated, the stubbornly resistant Edison was draining his company's resources by continuing the costly legal battles. In 1892 Edison was ousted from control of the Edison General Electric Company through the machinations of banker J. P. Morgan, by then a large owner of Edison stock. Morgan, represented by Francis Lynde Stetson, engineered a merger with the Thomson-Houston Electric Company, which utilized AC power in competition with Westinghouse. Managerial power of the renamed General Electric Company was transferred to the Thomson-Houston group.
After Cravath helped a financially bleeding Westinghouse raise enough new money to stave off a bankruptcy proceeding in 1891, Westinghouse went on to demonstrate the advantages of AC power by illuminating the Chicago World's Fair in 1893. Two years later he successfully ran AC power all the way to Buffalo, more than twenty miles from the new Niagara Falls hydroelectric plant, a project initiated some years earlier by Stetson. The War of Currents was over, and AC had won.
In 1896 Westinghouse and General Electric agreed to cross-license patents and share royalties to end their remaining patent disputes. Cravath became one of the two Westinghouse nominees on the private board of patent control created to supervise the agreement.
The Westinghouse experience taught Cravath that representation of a corporate client involved neither strictly law nor strictly business, but a mixture of the two. The law needed to be respected but also melded to the client's business and public relations needs. It was said of Cravath that he was "not so much a great lawyer as he was a brilliant business man and promoter endowed with a legal mind."
Cravath had left Walter Carter in 1891 to form his own two-partner firm, where he continued his legal work for Westinghouse. In 1892 he married an opera singer from Kalamazoo, Michigan, Agnes Huntington, who had first made her name on the London stage. Depending on which story one believed, she either had considered suing her ex-fiancŽ, a wealthy Philadelphia man, for breach of promise, or had merely asked for her letters back from him before marrying the thirty-one-year-old Cravath. With a shared love of music and theater, the Cravaths would eagerly take part in high society in Manhattan, where they owned an architecturally commissioned town house on East Thirty-Ninth Street in the fashionable Murray Hill district. They were also members of the exclusive horsing set on the North Shore of Long Island-later Great Gatsby country-where they built a series of magnificent estates and became founding members of the legendary Piping Rock Club.
In 1899 Cravath moved to the Seward firm, then headed by a rising star of the bar named William Dameron Guthrie, a railroad litigator and specialist in constitutional law. Like almost all the white shoe lawyers, who were self-made men, Guthrie became a millionaire by earning his wealth rather than inheriting it. Suave and slender, with a black mustache and buttoned-down look, Guthrie was born to a San Francisco port surveyor and newspaper owner and received his early education in England and France. When his father died, young Guthrie was brought to America and sent to New York City's public schools.
Guthrie began as a messenger and stenographer with the Seward firm before joining it as a lawyer out of Columbia Law School. He came to prominence by persuading the US Supreme Court to declare the 1894 federal income tax unconstitutional, one of the most important policy-making lawsuits of the era. It would take the Sixteenth Amendment to the Constitution, ratified in 1913, to overrule the Supreme Court's decision and authorize the income tax.
Guthrie was a brilliant lawyer (and workaholic) whose perfectionism caused him great nervous strain. A conservative-indeed reactionary-Republican, he longed for a political career, for which his oratorical skills suited him. Invited by William Tecumseh Sherman to give the leading address on the general's trip to Denver in 1891, Guthrie earned Sherman's approval as well as praise from the Denver papers as "the most eloquent and interesting speaker of the day . . . with commanding presence, a clear voice, and distinct enunciation."
But Guthrie, an inconsiderate and contentious man, lacked the personal warmth necessary to run for office; his overwork kept him in a constant state of irritation. A Harper's Weekly profile called him aggressive and "frank to the point of brusqueness." Guthrie would often butt heads with Cravath, who nonetheless was one of the few people who was able to work with him. In 1898 they became Long Island neighbors and on January 1, 1901, full-fledged partners in Guthrie, Cravath & Henderson. It was here that Cravath put his pioneering notions of law firm management into practice.
Eventually the Cravath name would become the most recognized one in the world of white shoe Wall Street law firms. In the meantime, two other high-powered corporate lawyers stood atop their profession as builders of the new industrialized society.
Chapter 2
"Send Your Man to My Man"
As J. P. Morgan prepared to meet with President Theodore Roosevelt on the morning of February 22, 1902, Frank Stetson had every reason to be proud of the legal work he had performed for Morgan over the past year. In early 1901 he had helped Morgan create United States Steel, the first billion-dollar corporation in world history. Later that year Stetson represented Morgan in forming the second-biggest company on the globe: the Northern Securities Company, a combination of major railroads. Both deals had helped cement Morgan's status as one of the most powerful and richest men in America, and Stetson's as its highest-paid lawyer.
But by the time Morgan arrived for his White House appointment on this particular Saturday morning, he was boiling over with anger. He was there to discuss a new antitrust lawsuit that Roosevelt's attorney general, Philander K. Knox, had just filed to stop the giant Northern Securities merger. Three days earlier, over dinner at his large brownstone on Madison Avenue in Manhattan, the sixty-four-year-old Morgan had professed shock to his guests when he received a telephone call informing him that the government was bringing the lawsuit to stop the alleged monopoly. How could this be? Morgan thought-he'd had his lawyers, including Frank Stetson, the best in the business, put the deal together to make it invulnerable to legal attack. Besides, Morgan, a loyal Republican, had been a friend of the president's father and had backed the young Roosevelt in his first run for state office twenty years earlier. As vice president, Roosevelt had even given Morgan a testimonial dinner as a means of cultivating ties with the influential classes.
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