CHAPTER 16
THE SANTA FE HAD BEEN WARNED AGAINST COMING INTO CHICAGO; even William Strong’s closest friends told him he was laying track too close to the sun. For the first few months, it looked as if he had proved his critics wrong. But it soon was clear he had badly miscalculated how hard it would be to earn back the millions he had spent expanding the Santa Fe from Chicago to Los Angeles. He also misjudged just how far his competitors would cut prices to make his life miserable.
Now that the government didn’t allow pooling to stabilize prices, nobody knew how to stop passenger fares and shipping rates from bottoming out. The rates for shipping cattle or dressed beef would be cut in half overnight, then in half again. Passenger rates started to include all kinds of rebates and inducements. The Santa Fe lost one big party traveling from Iowa to California when a competing road offered “a private car and free beer all the way.” In less than six months, the Santa Fe went from being the darling of the financial markets to a possible takeover target for financier Jay Gould, who owned the competing Missouri Pacific but had made so much money financing other railroads that there was a constant threat that he would destroy, or buy, anything in his path.
When the Santa Fe announced it needed to borrow millions to make ends meet, financial markets became wary. “Unless confidence is restored in some way,” the Chicago Tribune reported, “a great slaughter of stock is predicted.” Within weeks, the New York Times was reporting on its front page that Strong was in New York, huddled in a conference room with Gould trying to figure out a way to stabilize freight rates or consolidate the competing western railroad companies before they drove each other out of business. There were rumors the Santa Fe might go into receivership.
Just after Christmas, in the year that was supposed to be the most triumphant and satisfying of his career, William Strong announced he might resign as president of the Santa Fe. While his health was blamed, everyone knew he was being pressured by board members who wanted a more fiscally conservative strategy, among them financier Oliver Peabody, whose Boston brokerage house, Kidder, Peabody, handled the Santa Fe’s bonds.
Suddenly Fred Harvey’s empire was in grave danger. He still had nothing but a handshake agreement with the railroad. That had been fine for all these years, because the hands he shook belonged to friends. But if William Strong was forced out, the railroad could snatch his entire eating house business away at a moment’s notice.
In the meantime, the fare wars hurt Santa Fe ridership, and eating house business was off. Fred returned to England for his health, but as he sat in the guest bedroom of his sister Annie’s house in London reading letters and telegrams from home, he was antsy—and often bored out of his mind.
“I almost wish sometimes some business matter would call me home,” he wrote to his wife in March 1889, as the Santa Fe board pondered Strong’s fate. “When I am feeling well, as I do now, I hate to be loafing around London. Ford and Benjamin both write me that business is very dull and that we still continue losing money. This I do not fret about, however, for were I home, I could not alter that.”
Fred was finally summoned home by Strong, in mid-April, to discuss the future of his eating house chain. His ship arrived in New York on April 22, a day when many of his employees were more focused on an extraordinary drama unfolding outside the Harvey eating house in tiny Arkansas City, Kansas.
Nearly 100,000 people were descending on the town in southeastern Kansas, all of them waiting for the biggest land giveaway in American history. Fred’s depot hotel was filled to capacity, people were camped on the streets, and there were four miles of tent cities leading all the way to the border between Kansas and what is now Oklahoma but was then called Indian Territory (because the government had forced the major tribes of the Southeast to relocate there in the 1830s). As Harvey Girls tried to serve the endless stream of customers, they would occasionally peer through the venetian blinds of the dining room to watch the spectacle. The streets teemed with panhandlers, con men, patent-medicine salesmen, and anxious boomers brandishing pistols and whiskey bottles.
The government was opening Indian Territory to white settlers at exactly noon on April 22—and because the Santa Fe controlled the major rail line through the territory and into Texas, it was coordinating with army battalions out of Fort Leavenworth to make sure everything went smoothly. The trains pulling out of Arkansas City that morning were so packed, they looked like “giant centipedes with hundreds of arms and legs and heads sticking out everywhere,” according to one eyewitness. They left every fifteen minutes, carrying thousands of homesteaders to Guthrie, where many of them leaped out of train windows or climbed through roof ventilators to jump off and dash to open plots first.
By day’s end, as Fred was checking in with his office from New York, the land rush had finished, and his manager in Arkansas City was trying to restore some normalcy. Over 1.9 million acres had been claimed. There were now more than ten thousand people living in Guthrie who hadn’t been there the previous day. Almost all of them had arrived on the Santa Fe.
WILLIAM STRONG AGREED to go quietly: He would be routinely voted out of office at the next board of directors meeting. Before he left, however, there was one more thing he wanted: a last-minute reprieve for Fred Harvey. The two old friends secretly met and negotiated a deal that would finally give Fred a written contract, committing the Santa Fe to let him manage its eating houses for at least the next five years. On May 1, 1889, they signed an agreement that formalized the thirteen-year-old handshake deal. It also appears Strong arranged for a secret cash payment to his friend’s company—equal or close to the $100,000 ($2.4 million) Fred had recently been forced to invest in the new western eating houses—which may have been kept quiet to avoid the scrutiny of the Interstate Commerce Commission.
Within months, Strong was out. His successor, Allen Manvel, was brought in from the St. Paul, Minneapolis & Manitoba Railroad because of his reputation for fiscal restraint. Hired to reverse what were seen as Strong’s excesses, Manvel considered Fred Harvey and his operation to be an unnecessary extravagance. He couldn’t believe the railroad had let Strong make an eleventh-hour deal protecting the Harvey restaurant and hotel franchise.
However, since he couldn’t cancel the contract, the Santa Fe’s new president tried to make Fred’s life miserable by exploiting what he believed to be a loophole in the agreement. Strong had given Fred exclusive control of Santa Fe restaurants and hotels west of the Missouri River; there was no mention of dining cars, since at the time the railroad had only a couple of them, servicing the “airline” between Chicago and Kansas City. Manvel decided he would buy dining cars for his western trains and stop making thirty-minute meal stops at depots with Harvey eating houses. His excuse was that he wanted to cut travel times on competitive western routes.
Manvel quietly fired Fred from the dining car service on the Chicago-to-Kansas City train, and the Santa Fe ordered a fleet of new dining cars to be built, which the company announced it would run itself.
Fred was outraged. So was George Pullman, who believed that if Harvey didn’t control the Santa Fe dining cars, then he should. Pullman reportedly threatened to sue the railroad, but then pulled back. Fred consulted with his local lawyer, William Hook, and they decided to hire a high-powered Chicago attorney, George Washington Kretzinger, a former railroad general counsel who had argued in front of the U.S. Supreme Court, to represent his interests. Kretzinger’s negotiations with the railroad continued for more than a year. While they argued, the railroad waited to deploy its new dining cars in the West, so it was nearly business as usual for the Harvey eating houses—except that Dave Benjamin and Ford Harvey were changing roles and taking on more responsibilities.
Now that Ford was married and living in Kansas City, he spent almost every day with Dave, who remained Fred’s second-in-command. Dave was only eight years older than Ford, but the gap was significant. He was thirty-three, long married with two children, and already well established as a businessman and budding civic leader. In his personal life, he and his siblings were becoming active in Kansas City’s expanding Jewish community—particularly his brother Alfred, who now had a position similar to Dave’s with Fred’s friend Colonel Abernathy, whose furniture company had also relocated there from Leavenworth.
Ford and Dave had been in an unusual situation for some time. Both had grown up revering Fred Harvey, whose success and vision had brought them wealth and prestige. Now they were in the same plush foxhole together, faced with the complex dynamics of family business. Dave had to respect Ford not only as the boss’s son but as someone who was one Fred health crisis away from becoming his boss, too. Yet Ford still looked up to Dave, in part as the older brother he never had but also as a substitute for the father he didn’t see very much. It was not surprising that when Ford marked his adulthood with facial hair, he grew a full mustache like Dave’s rather than copy his father’s Van Dyke. But it was also a sign of the times: As American men became more civilized, they preferred to be less hairy.
Dave and Ford shared one other thing: They were the only ones who realized the full impact of Fred spending so much time away from his family and his business. While he still made all the major decisions—many via coded telegram from England—it was amazing how many day-to-day choices each of them was making for, or rather as, Fred Harvey.
Ford was gaining confidence in his increasing independence. He no longer needed a mentor to travel with him to inspect the eating houses or the ranches. Mostly, he took the long train rides only with his assistant, Tim Cooper, the company’s first black office employee—who had started as a messenger for the bookkeeper and worked his way up.
While the daily pressures of handling the eating house business were unchanged, emotions ran high at the Kansas City office as Fred’s lawyer wrestled with the Santa Fe’s attorneys. Everyone knew what was at stake: At any moment, they could go to war with the railroad or be forced to close the entire Fred Harvey system overnight. The fear could be seen in the telegraph codes that Dave added to Fred’s pocket cipher book whenever the boss left for England—to cover every possible worst-case scenario. According to the cipher book, the word “Quandary” meant “Indications are that Company are getting ready to put [dining] Cars on the road but can get nothing official,” “Quarrel” meant “Mr. Manvel declines to delay the matter until you can get back.”
And “Quench” meant “Kretzinger advises us to bring suit at once.” When Fred read that word in a telegram he received in London at the end of July 1891, he immediately booked passage back to the United States. As he sailed home on the City of Paris, his lawyers filed suit against the railroad with which he had risen to greatness.
FRED HARVEY V. AT& SF RR CO. was the talk of the railroad industry and the restaurant business. People had been wondering for years just how Fred Harvey did it, how he ran what were essentially marketplace restaurants in remote, arid locations using a train refrigerator car as his greengrocer. While the Fred Harvey name was well-known, Fred himself was a mysterious figure—“a peculiar character,” according to the Chicago Herald, who “always keeps his whereabouts a secret, and is liable to jump from a train at one of his eating houses at any moment and without warning.” He did not like people knowing his business. Now his relationship with the railroad was national news, splashed across the pages of major newspapers in New York, Chicago, and Los Angeles.
The papers were especially taken by Fred’s frontier saga, which they gobbled up like any great cowboy yarn. His lawsuit told the story of how, for the past fifteen years, he had run his company “at great risk and loss and with many disadvantages,” because his eating houses were “frequently invaded by desperate desperadoes” and “constantly menaced by incursion of hostile Indians and infested by gamblers and other dangerous and lawless persons.” His employees were “subjected to indignities” and often found themselves at the wrong end of a gun, driven from the eating houses “and at times from the town at the point of revolvers.”
The lawsuit revealed the full scope of Fred Harvey’s very private business. He now ran Santa Fe eating houses, lunchrooms, and hotels in twenty-four towns across five states. He had a huge cattle ranch in Granada, Colorado, where he had also started raising milk cows and chickens for his eating houses. And he had recently bought a second farm in Emporia, Kansas. He had four hundred employees and an annual payroll of nearly $250,000 ($6.1 million). He was serving five thousand meals a day. He had a lot to lose.
But Fred was well connected in Chicago. He had many prominent friends there, and he had comped meals and hotel rooms for many a Chicago politician and businessman venturing out to see the West. His attorney was also influential, and they were able to find a sympathetic judge. The day after the lawsuit was filed, a temporary injunction was issued against the Santa Fe. The railroad challenged it, but the judge denied the appeal and made the injunction permanent.
The railroad appealed again, claiming that the local courts had no jurisdiction and the Interstate Commerce Commission should get involved in the case. That challenge was also denied. The judge left it to Fred and Santa Fe president, Allen Manvel, to work out their differences. In the meantime, the railroad was not allowed to replace Fred Harvey meal stops with dining cars.
It was an embarrassing defeat for the Santa Fe. The largest railroad in the world, with reported annual earnings of nearly $25 million ($610 million) and stock valued at over $200 million ($4.9 billion), was being held hostage by its small, privately held food concessionaire. The caboose was wagging the train.