HiJ W ~ T on the Soatberg R d w y compdny

BY JEFFREY J. CROW”

HE reform movements embracing the South between 1890 and 1910 have long intrigued historians. 1 In an important new study, Populism to Progressivism in Alabama (Prince- T ton, 1969), Sheldon Hackney has found that Populism and

Progressivism were discrete movements emanating from different socioeconomic groups and that Populist and Progressive goals con- trasted sharply. The Alabama Populists, Hackney argues, were neither revolutionaries nor reformers, while the Progressives - the true innovators in Alabama politics -were various elites with a significantly higher status than Populists. According to Hackney, a Progressive coalition of urban businessmen, planters, and other men of property and social standing took shape with an attack on Northern-controlled railroads traversing the state and the conse- quent demand for stricter regulation of the Yankee-dominated lines.

T h e Alabama experience, as presented by Hackney, raises troublesome questions about Populism as a reform movement and the kinds of groups which ultimately formed a Progressive coalition in the first decade of the twentieth century. The case of North Carolina offers perhaps a different set of answers.

Unlike their agrarian brethren in A41abama, Tar Heel Populists, allied with the Republican party, compiled an impressive record of reform. In 1894 the Populists and Republicans combined to overturn the Democracy for the first time since Reconstruction and win control of the General Assembly and two United States Senate seats. During the 1595 legislature, the “fusionists,” as the Populist

+ The author is Heritage Consultant, Department of Cultural Resources, North Carolina Bicentennial.

XSee, for example, Arthur S. Link, “The Progressive Movement in the South, 1870-1914,” North Carolina Historical Review, XXIII (April 1916), 172-95; C. Vann Woodward, Origins of the New South, 1877-1913 (Baton Rouge, 1951).

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The Historian and Republican collaborators were called, undertook sweeping reforms including a fairer election law which permitted an in- creasing number of Negro Republicans to register and vote, an act limiting interest rates to 6 per cent, and the restoration of “home-rule” or local self-government in the counties. Joining forces once again in 1896, the fusionists retained control of the legislature, and Tar Heel voters chose Republican Daniel L. Russell governor over Populist and Democratic candidates.2

The only Republican elected to statewide office between Re- construction and 1972, Russell began his term with a reformer’s zeal. Indeed, the Russell administration bridged the gap between Populism and Progressivism in North Carolina, for the Republican governor boldly attempted to build a coalition of reformers from all parties. Challenging J. Pierpont Morgan’s Southern Railway and its right to rent the state-owned North Carolina Railroad for ninety-nine years, Russell aligned agrarian Populists with Pro- gressive Democrats and Republicans to wage an aggressive war against the lease in a legislative and legal struggle that lasted for more than a year and foreshadowed the railroad reforms of twenti- e th-century Progressivism.

No woolly-haired, pitchfork-wielding Populist, Russell sprang from the planter aristocracy of eastern North Carolina. The son and grandson of prominent Whig unionists, Russell entered Re- publican ranks during Reconstruction and spent the next three decades upbraiding the Democracy for its use of the race issue and searching for a viable coalition to defeat the Bourbons. That search included his election to Congress in 1878 as a Greenbacker and his support of the Liberal Republican movement during the 1 8 8 0 ~ . ~ The emergence of the People’s party in 1892, in Russell’s opinion, offered the best opportunity ever to defeat Bourbon con-

e Among the most important studies of the Populist-Progressive era in North Carolina are Helen Edmonds, The Negro and Fusion Politics in Nor th Carolina, 1894- 1901 (Chapel Hill, 1951); Joseph L. Morrison, Josephus Dnniels Snys . . .: An Editor’s Political Odyssey from Bryan to Wilson ai7d F . D. R., 1894-1913 (Chapel Hill, 1962); Oliver H. Orr, Jr.. Charles Brnntlry Aycock (Chapel Hill, 1061); and Joseph F. Steelman, “The Progressive Era in North Carolina, 1884-1917” (unpublished Ph.D. dissertation, University of North Carolina, 1955).

aWilliam Lamb to Daniel Russell, November 25, 1881: Oliver H. Dockery to Russell, July 21, August 7, 1882; Edward R. Brink to Russell, August 19, 1882; Daniel L. Russcll Papers, Southern Hktorical Collection, University of North Carolina, Chapel Hill. Hereinafter cited as Russell Papers. There is no biography of Daniel Russell, although one is mi-rently being prepared by the author arid Robert F. Durden. A brief biographical sketch may be found in chapter oi1e of Robert F. Durrlen’s Recomtruction Bonds F i Twentieth-Century Politics: South Dakota v. h’orth Carolina (Durham, 1962). Also see Louis Goodrnari and Alice Sawyer Cooper, “Daniel Lindsay Russell, Governor of North Carolilia, 1897-1901: A Family and Friend’s hfenioir,” unpublished typewritteu manuscript in the Russell Papers.

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“Populism to Progressivism” servatism and carry out electoral and economic reforms, and so he enthusiastically took up the cause of fusion. An alliance of Popu- lists and Republicans also held the promise of a party realignment on issues other than ‘ ‘ C O ~ O ~ . ” ~ During the 1896 campaign for the governorship, Russell stressed not only the fusionist reforms of the 1895 legislature but the Populist panacea - free silver - as well. Though he also defended a Republican protective tariff, many conservative Democrats, Republicans, and Negroes regarded him as a dangerous radical. In fact, one Republican supporter characterized Russell as “a 16 to 1 Republican, a free silver man out and out, an enemy of trusts and monopolies and a true friend to the Populi~ts.’’~ It was not until after his election, however, that Russell revealed the crusading direction he intended for his ad- ministration by attacking the Southern Railway’s ninety-nine-year lease of the North Carolina Railroad.

The history of the ninety-nine-year lease was confusing and complex. The state owned three out of the four million dollars of the capital stock in the North Carolina Railroad. To raise that three million dollars, the state had issued its own 6 per cent bonds during the 1850s with the railroad stock as collateral. In 1871 the North Carolina Railroad was leased to the Richmond and Danville Railroad for 6 per cent. During the depression-ridden 1S9Os, however, the Richmond and Danville was racked with scandals of mismanagement and forced into receivership. With the rail- road apparently on the verge of collapse, frantic security holders agreed to have J. P. Morgan, the Wall Street financier, reorganize the Richmond and Danville and other associated railroads that were near dissolution. In 1894 Morgan established the Southern Railway Company by consolidating many of the roads. T o combat declining rates and rising costs which had narrowed profits, he immediately undertook a program to modernize the line and transform it from an opportunistic to a developmental investment through increased efficiency and interterritorial expansion. As a result, the North Carolina Railroad figured prominently in the Southern’s future, for the Tar Heel line was the most direct route from deep-water terminals in Norfolk through the Carolinas to the lower South. However, the Richmond and Dandle’s lease of the North Carolina road was due to expire in 1901. Determined to obtain some guarantee that it could use the road after that date, the Southern concluded a new lease for the North Carolina Rail-

4 See Joseph F. Steelman, “Vicissitudes of Republican Party Politics: T h e Campaign of 1892 in North Carolina,” North Carolina Hi.rtorical Review, XLIII (Autumn, 1966), 430-42, and “Republican Party Strategists and the Issue of Fusion with Populists in North Carolina, 1893-1894,” ibid., XLVII (Summer, 1970), 244-69.

6 Charlotte Observer, July 18, 19, 1896.

65 I

The Historian road with Democratic Governor Elias Can: in August 1895. Cam did not consult the adjourned fusionist legislature, although pri- vate stockholders ratified the agreement. Under the new contract the Southern Railway was permitted to lease the North Carolina Railroad for ninety-nine years at a rate of 61/, per cent for the first six years and 7 per cent thereafter.6

The ninety-nine-year lease infuriated the antirailroad forces in the state, not the least of whom turned out to be the newly elected Republican governor. In a widely publicized interview soon after his election, Russell announced his intention to challenge the validity of the Southern’s lease. According to the governor-elect, the long-term lease amounted to a sale of the state’s railroad without the people’s consent. Moreover, he believed that the North Carolina Railroad had appreciated in value since the establishment of the Southern Railway, yet Morgan’s railroad had offered to pay an “inconsiderable amount” for a “golden link” that tied the Southern’s main stem in Virginia with thousands of miles of track south of North Carolina.‘

Nor would Russell be intimidated by the same threats that had impelled his predecessor to accept a ninety-nine-year lease from the Southern Railway. The Southern had the capability of paralleling the North Carolina Railroad since it owned the roads from Greens- boro to Mocksville and from Mooresville to Charlotte. By building a thirty-mile link between Mocksville and Mooresville, the Southern could parallel the North Carolina Railroad from Norfolk through Dandle , Greensboro, and finally Charlotte. Addressing himself to that threat, Russell declared: “They have not paralleled it and if our Legislature is equal to its duties, they will not be allowed to do it.” Indeed, the Republican governor-elect appealed to the Populist party, which had denounced the ninety-nine-year lease in its 1896 platform, to support his fight against the Southern Railway. In a bold challenge to the lawmakers, Russell urged the General Assembly to cancel the lease.*

Several weeks later in his inaugural speech, Russell again as- sailed the ninety-nine-year lease. Noting that railroads were the

*Cecil K. Brown, A State Movement in Railroad Development (Chapel Hill, 1928), 183.87; John F. Stover, The Railroads of the South, 1865-1900: A Study of Finance and Control (Chapel Hill, 1955), 233-74: Maury Klein, The Great Richmond Terminal: A Study in Businessmen and Business Strategy (Charlottesville, 1970), 259-94. Also see Rosalie F. McNeill, “The First Fifteen Months of Governor Daniel Lindsay Russell‘s Administration” (unpublished M.A. thesis, University of North Carolina, 1939); and Josephus Daniels, Editor in Politics (Chapel Hill, 1941), 202-18. and 259-63.

‘Raleigh News and Observer, December 1, 1896. Hereinafter cited as News and Ohserver.

“ I b i d .

652

“Populism to Progressivism” ‘’servants of the public” and subject to governmental control, the governor predicted the “conversion” of railroads into “public highways, owned and controlled by the nation.” As for the ninety- nine-year lease, Russell urged the legislature to pass a law that would forbid a nonresident corporation to hold or operate a rail- road in North Carolina without a license. Furthermore, he warned that any charter permitting the paralleling of the North Carolina Railroad should be repealed, and the absorption of one railroad by another outlawed as well. Competition, the governor observed, engendered lower rates.9

Not content merely to exhort the General Assembly, Russell diligently worked to build a legal case against the ninety-nine-year lease and to draft an omnibus bill that would effectively annul the contraict. Wishing to make his railroad fight a nonpartisan effort, he consulted lawyers of every political stripe, including Republican Charles A. Cook, whom he later appointed to the state Supreme Court, Populist John Graham, the president of the North Carolina Farmers’ Alliance, and Democrats Alphonso C. Avery and Walter Clark. Avery was a former justice on the state’s highest bench, while Clark, elected to the state Supreme Court in 1594, would win nrtional acclaim as a reformer and Progressive over the next three decades.1°

The bill fashioned by this legal brain trust encompassed the salient points concerning the lease outlined by Russell in his inaugural address. On January 29, 1897, Charles Cook, as a member of the state assembly, introduced the governor’s bill. The bill forbade any nonresident corporation from owning or operat- ing a railroad in North Carolina or building a parallel line without a license. Under the terms of the license, the railroad was sub- ject to state sovereignty and barred from removing litigation from state to federal courts. All previous charters allowing for the extension or construction of track in certain specified areas were repealed. Finally, the Cook bill declared the North Carolina lease to the Southern Railway null and void and further announced that open, competitive bidding for a new lease limited to twenty years should take p1ace.l‘

Reaction to the Cook bill presaged difficulties for the Re-

DPublic Documents of the State of North Carolina, 1897, doc. A, 3-15. John Graham to Daniel Russell, December 9, 21, 1896, Russell Papers. Also

see Aubrey L. Brooks, Walter Clark: Fighting Iudge (Chapel Hill, 1944); and Aubrey L. Brooks and Hugh T. Lefler, eds., The Papers of Walter C h k (2 vols.; Chapel Hill, 1948-1950).

UNews and Observer, January 30, 1897; John Graham to Marion Butler, [January 29, 18971, Marion Butler Papers, Southern Historical Collection, University of North Carolina, Chapel Hill. Hereinafter cited as Butler Papers.

653

The Historian publican governor with his party. The ardently Democratic Raleigh News and Obseruer, edited by the Progressive if partisan rosephus Daniels, welcomed “Governor Russell as a laborer in the contest against powerful agencies that are seeking to give away the heritage of the people to a rich syndicate.” The Republican press, however, was less than enthusiastic toward the Cook bill. The Raleigh Tribune, reputedly the organ of the railroads and the American Tobacco Company trust, asserted that the governor’s scheme would “frighten capital from the State.” Vowing that “a Republican Governor and a Republican newspaper may differ without in any wise compromising their devotion to the party,” the GOP journal castigated Russell’s plan as “revolutionary State legislation” that would compel “railroad companies to surrender their constitutional rights and pay for the privilege” while can- celling the Southern Railway’s lease.12

Nor did Governor Russell possess an impregnable majority in the legislature. The Republicans controlled seventy-two seats and the Populists sixty-four, while the Democrats held only thirty-three. But the fusionist coalition had been badly shaken by the reelection of Republican Senator Jeter C. Pritchard. The majority Populists, as they were called, led by Senator Marion Butler, had strenuously opposed Pritchard, whose free-silver views had allegedly softened since 1894. The bitter struggle climaxed when seventeen Populists bolted their party caucus and voted with the Republicans to elect Pritchard.13 Russell needed solid Populist support to pass his antilease measure, for conservative elements within the GOP and Democracy were certain to oppose any reform measures aimed at the railroads. With the Populists feuding with each other as well as with the Republicans, the Cook bill faced an uncertain future.

T o bolster the Cook bill, Governor Russell exploded a bomb- shell on February 4, 1897, with a message to the legislature. Rus- sell revealed that R. C. Hoffman, president of the Seaboard Air Line Railroad, had offered to lease the North Carolina Railroad €or $400,000, that is, 10 per cent of the railroad’s capital stock. Moreover, Hoffman had claimed that in 1895 the board of directors of the North Carolina Railroad had refused to entertain his bid and instead had consummated a lease with the Southern Railway. Eagerly seizing upon Hoffman’s damning allegation, Russell charged that the president and directors of the North Carolina Railroad might be guilty of “fraud” for virtually selling the state’s property in a ninety-nine-year lease “at a price less than was of-

“News a n d Observe?; January 30, 1897; Raleigh Tr ibune , January 31, February 2, 6, 7, 1897.

The Caucasian (Raleigh), January 21, 28, 1897. Hereinafter cited as the Caucasian.

654

“Populism to Progressivism” fered by responsible bidders.’’ T h e governor urged the lawmakers to pass the Cook bill so that the state could earn the greatest return from its property and apply such funds toward North Carolina’s schools. Competitive bidding, Russell believed, would secure a lease with better terms for the ~ ta te .1~

Prodded by Russell’s message, both the House and Senate con- ducted public hearings on the lease and its possible annulment. The governor’s lawyers attacked the lease as illegal, unconstitution- al, and fraudulent. In rebuttal, attorneys and officials of the North Carolina Railroad rejected the claim that the Seaboard had ever offered a bid. Hoffman, they insisted, had feared that the Southern would remove the road’s betterments if the Seaboard obtained the property, and so he had decided not to submit a bid. For the same reason, the North Carolina Railroad officers explained, they had felt compelled to sign a long-term lease with the Southern, for Morgan’s railroad could remove the improvements or paralle! the line. No less vehemently, officials of the Southern Railway denied any coercion or collusion in bargaining for the 1ea~e. l~

The hearings failed to settle the issue, but even so Russell had managed to build a tenuous coalition for his bill. On February 16, 1897, the House passed the Cook bill by a vote of 60 to 54. Twenty Republicans, eight Democrats, and thirty-two Populists had supported the governor’s measure. But the majority of Re- publicans and Democrats had voted against the bi11.16

In the Senate, the Cook bill never reached a vote. Instead, Republican stalwarts, led by Hiram L. Grant, an old carpetbagger, offered a substitute bill. The Grant bill, as it became known, proposed to reduce the length of the 1895 lease to thirty-six years but to endorse the Southern’s claims in all other major respects, including the interest rate. Although the outraged governor termed the bill a “monstrous iniquity,” the Senate narrowly adopted the Grant measure by a vote of 26 to 24. Only three Republicans could be found on the governor’s side along with twenty-one Populists, while fifteen Republicans, four Populists, and seven Democrats had supported the Grant bill. The portents were clear: Russell had lost the backing of his party.17

Since the introduction of the Cook bill, an acrimonious and bitter split had been growing in the T a r Heel GOP. Old Guard

14News and Obseruer, February 4, 6, 1897; R. C. Hoffman to Russell, February 2, 1897, the Executive Papers of Daniel L. Russell, 1897-1901, North Carolina Department of Archives and History, Raleigh. Hereinafter cited as Governor’s Papers.

1s News and Observer, February 7, 8, 9,26,27, 1897. IeIbid., February 17,1897. i7 Ibid., February 26,27, 1897.

655

The Historian Republicans resented Russell’s increasing drift toward Progressive Democrats and radical Populists. Republican Congressman Rich- mond Pearson suggested that the governor sought to “Russellize the Populist party in the State,” while another s’talwart warned that Russell was “playing a dangerous game” when he consorted with such “Ishmaelites as Avery, Daniels 8c Co. . . .”18 The Raleigh Tribune had become the governor’s sternest critic. Calling on Republicans to defeat Russell’s “populistic, communistic, . . . tendency to fight railroads,” the Republican journal maligned the governor in editorials daily.lg

Moreover, the schism in the Republican party had developed a sectional dimension. The Wilmington Messenger perceptively reported: “The Republican fight over the matter of the lease of the North Carolina railway is assuming a sort of sectional char- acter; in other words the Russell men in the east are against the Pritchard men in the west.” This hypothesis gained some credence, for the Seaboard Air Line controlled a number of roads in the eastern section of the state while the Southern Railway cut through the Piedmont in the western portion of North Carolina. Clearly, an economic boom was anticipated for that railroad and that part of the state which controlled the North Carolina Railroad with its monopoly on the state’s through traffic.20

Significantly, Piedmont businessmen, who were already chafing a t the freight rate discriminations imposed by Northern-controlled railroads, were yet unwilling in 1897 to support railroad regulation when sponsored by purportedly anticapitalist fusionists.21 T o many North Carolinians, the lease fight was shaping into a struggle between two railroads for a monopoly, and if the state must choose between the two, then it should deal with the giant, Morgan- financed Southern Railway.22

Perplexed by the party rift, estranged from Republican stal- warts, and worried that the lower house might adopt the Grant

lR Raleigh Tribune, Fcbruary 6, 10, 1897. lo Ibid. , February 5 , 7, 11, 1897. One Republican stalwart complained: “Old

man Russell has raised Cain and split up things terribly.” B. C. Sharpe to Thomas Settle, February 24, 1897, Thomas Settle Papers, MS no. 2, Southern Historical Collection, University of North Carolina, Chapel Hill.

za Wilmington Messenger, February 13, 1897. The Winston Union-Reimblican, organ of the North Carolina Republican party, had suggested as much two days rarlier.

Joseph F. Stcelman argues that Piedmont businessmen were not opposed to railroad regulation, but they were betier organized, more porvcrful, and able to exert greater pressure against the railroads than the farmers in the 1890s had been able to do. Steelman, “Edward J. Justice: Profile of a Progressive Legislator, 1899-1913,” North Carolina Historical Review, XLVIII (Spring, 1971), 148-60.

?2 WiImington Alesseizger, February 16, 17, 1897.

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“Populism to Progressivism” substitute, Governor Russell urgently turned to Senator Marion Butler and the majority Populists. Now “virtually a populist,” according to George Butler, the senator’s brother, Russell hoped to “arrange a new combination” of Progressive Republicans, Democrats, and Populists who opposed monopolies and trusts and who favored his fight against the lease. As George Butler ex- plained: “Russell is disgusted with his crowd and can control [only] three or four of his folks and he is inclined to go with us [Populists] 8c protect us, in all future legi~lation.”~3

T o prevent passage of the Grant biII in the House, Governor Russell, a coterie of Republican supporters, and the Populists staged a filibuster in the last days of the General Assembly. Russell’s strategy employed parliamentary tactics and “gag rule” to block a vote on the Grant substitute. With Charles Cook con- veniently serving as temporary Speaker of the House, prorailroad assemblymen were denied recognition. After two days of stormy sessions, one of which lasted until midnight, the Grant substitute was tabled.24

Both sides claimed a victory. The Raleigh Tribune excoriated the “revolutionists of North Carolina of 1897” for attempting to encroach upon the railroads with the infamous Cook bill. But Russell did not believe that his efforts were in vain. Although disappointed that the state’s educational fund would not be augmented by a new lease, the governor expressed his pleasure that “combined capital” had failed to debauch the legislature and deliver the state to the “myrmidons of the money kings.” The colorful governor predicted that the “assault of combined capital against popular rights” would cause North Carolinians to settle “with these alien money nabobs in 1898.”26

Unbeknown to Russell, however, his war on the Southern Railway had already entered a new stage. On March 10, 1897, Federal Judge Charles H. Simonton issued a subpoena command- ing the governor, attorney general, and directors of the North Carolina Railroad to appear before the United States District Court at Greensboro on April 6. The Southern Railway Company had filed a bill in equity - a complaint or petition for relief from a potentially injurious act - against the North Carolina Railroad to prevent the cancellation of the ninety-nine-year lease. In grant- ing relief, Simonton enjoined Russell and the other parties cited in the summons from bringing suit or otherwise interfering with

=George Butler to Marion Butler, February 28, March 1, 1897, Butler Papers; W. E. Fountain to Butler, March 2, 5, 1897, ibid. Also see the New Bern Weekly lournal, March 4, 1897.

News and Obsewer, March 6, 7, 1897; Raleigh Tribune, March 6, 7, 1897. agRaleigh Tribune, March 7, 9, 1897; News and Observer, March 9, 1897.

65 7

The Historian the Southern’s possession of the North Carolina road. Josephus Daniels’ Nezus and Observer termed the order “government by injunction.”26

In its suit, the Southern contended that the lease was a valid contract but that the governor intended to “impair the rights and property of the plaintiff and the value of its bonds” by bringing “vexatious and inequitable litigation” against it. According to the Southern, Russell would use “his power to appoint directors and a State proxy, illegally and contrary to equity, who will seek to annul said lease, and cloud the title of the plaintiff.”27

Russell’s response to the injunction was bold and decisive. Ignoring Simonton’s order to desist from acting against the South- ern Railway, the governor summarily dismissed the board of directors of the North Carolina Railroad. In a telegram to Simon- ton, Russell asserted that he had “lawfully removed” the railroad officials because his power to do so was in no way constrained by the injunction, for that would be “unauthorized, collusive and fraudulent.” 28

What enraged Russell most was the Southern’s effort to avoid North Carolina courts so that a federal court might handle the case. In Russell’s opinion, federal judges were ”notoriously the partisans of plutocracy.” The defiant governor alleged that the Southern Railway was attempting to deprive the state of its right to bring suit in its own courts. Morgan’s monopoly, charged Russell, planned to leave North Carolina “defrauded and prostrate.”29

Progressive Democrats and Populists rushed to Russell’s defense and hailed his intrepid stand against Judge Simonton’s injunction. Josephus Daniels praised the governor’s resistance “to this attempt to make the Southern Railway more powerful than the sovereign State of North Carolina.” Senator Butler, national chairman of the Populist Party, hurried to Raleigh “to take a hand in the most important railroad fight we have ever had in that state.” According to the Populist chieftain, Russell’s war on the lease would determine “whether the roads will own the Gov- ernment or the Government will own them.’’3o

Russell moved rapidly to appoint sturdy antilease men to the A’ews and Obseruer, March 10, 1897.

n Zbld. **Zbzd., March 11, 1897. esRussell to the Editor of the North Carolina Christian Advocate, March 29,

1897, as quoted in the Caucasian, May 27, 1897. T h e Christian -4dvocate refused to puhlish the goverlior’s letter.

News and Observer, March 10, 12, 1897; Butler to J. H. Ferris, March 11, 1897, Butler Letterbook, Butler Papers. Also see the Caucasian, March 18, 1897.

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“Populism to Progressivism” board of directors of the North Carolina Railroad. Continuing his railroad fight on a nonpartisan basis, he appointed Republicans, Democrats, and Populists to the new board. Justice Walter Clark, Progressive Democrat on the state Supreme Court, privately recruited Democrats to the governor’s cause, for he believed that “this was a fight between the people and Pierpont Morgan as to who should rule N.C. . . .” While conducting such a fight, Clark said, Russell deserved the people’s full support without regard to “party fealty or party question^."^^

Disregarding Simonton’s order to appear in Greensboro on April 6, 1897, Russell instead sent the judge a searing message. Striking a strident posture, the governor averred: “This is the first time . . . when corporate arrogance has arraigned a Governor for his communications to the Legislature and to the people, whose servant he is.” Defiantly challenging the court’s authority, Russell hinted that he might test the legality of the lease by bringing a suit before a North Carolina court and argued stoutly that no court had the power to control his “conduct as Governor in the execution of the laws of the State.” Russell’s bravado performance forced Judge Simonton to postpone any further hearing until June 1897 at Asheville. 32

Working closely with Josephus Daniels, Russell intensified his attack on the Southern Railway. In April 1897 the News and Observer published an interview about the railroad situation in the South with a “well informed gentleman” who may have been Ru~sel l .3~ The gentleman, identified as Mr. X, claimed that J. P. Morgan was seeking to gain mastery of every railroad from the Potomac to the Mississippi. If the financial titan successfully erected such a monopoly, asserted Mr. X, Morgan could “squeeze merchants, manufacturers and farmers by forcing freight rates that will wring from them every dollar of profit.” Only Governor Russell, he declared, had challenged Morgan’s scheme and re- pudiated Simonton’s injunction. It now remained to the Southern legislatures, according to Mr. X, to support Russell and break up the “Railroad Trust.”

Still to be decided, however, before the next North Carolina

81Walter Clark to Russell, March 12, 1897, Russell Papers: Clark to A. W. Graham, March 10, 15, 1897, Augustus W. Graham Papers, Southern Historical Collection, University of North Carolina, Chapel Hill.

News and Observer, April 7, 1897; Raleigh Tribune, April 7, 8, 1897. 58 News and Observer, April 18, 1897. A typewritten memorandum in the Russell

Papers containing a good deal of marginalia indicates that Russell probably knew about the “interview” if he did not write or revise it. The memorandum and published interview are nearly identical.

s4 Ibid.

659

?’he Historian legislature convened was the Southern’s bill in equity. At Asheville in June 1897 the governor’s lawyers argued that the Southern’s suit against the North Carolina Railroad violated the Eleventh Amendment, which prohibited a private person or corporation from suing a state. Furthermore, they did not believe that a bill in equity could prevent a governor from testing the legality of a contract in a state court. Alphonso Avery, counselor to the gover- nor, told Russell that Simonton had been “shaken by the arguments on our side. . . .” The Southern’s attorneys, on the other hand, contended that the 1895 lease was valid and that the federal court had the right to hear a bill in equity since a North Carolina court might irreparably damage the contract, unless a permanent in- junction were brought against Tar Heel officials. 36

On June 30, 1897, Judge Simonton rendered his decision. He determined that the North Carolina Railroad lease was valid and that it had been executed in conformity with the requirements of the road’s charter. Seeking refuge in the “last ditch,” as Avery put it, Simonton then appointed attorney Kerr Craig as “special master” to conduct an inquiry into the question of fraud. Until Craig filed a report, the restraining order remained in effect.36

Russell’s reaction to Simonton’s decision was passionate and graphic. Characterizing the opinion as “Federalistic,” the governor declared that State’s rights and private rights were being infringed upon by “corporate power,” which was wantonly epitomized by “railroad judges” and “railroad nabobs.” The people had lost confidence in the courts, Russell insisted, because judges habitually favored “railroad kings, bank barons, and nioney princes. . . .” Displaying little regard for decorum, the irascible governor ful- minated: “If the plebeians and middle classes get control of this country in 1900 they may take these capitalists and corporation judges, . . . and chuck them into the manure pile, a fitting sepulchure.” 37

Russell’s pungent, if inelegant, attack on the federal judiciary and the railroads hardly helped his legal position during Craig’s hearings, which ranged from North Carolina to New York over the next six months. The governor’s attorneys charged that the Southern had systematically discouraged any investigation crf the 1995 lease in order to cover up the alleged fraud involved. For example, the Southern had reportedly paid the board of directors of the North Carolina Railroad over $2,700 to lobby against the

w A . C. Awry to Russell, June 12, 1897, Governor’s Papers; Charlotte Observer,

SaCharlotte Observer, July 1, 3, 1897. 87 Meuls and Observer, July 3, 1897.

June 9, 10, 1897.

660

“Populism to Progressivism” Cook bill in 1897, while Alexander B. Andrews, vice president of the Southern, had been the moving force behind the bitterly anti-Russell Raleigh Tribune. But Craig refused to admit any evidence pertaining to the period after 1895. as Thus, by February 1898, when the last hearing was held, the allegation of fraud appeared to be lost. As a result, Simonton’s injunction would permanently restrain Tar Heels officials from challenging the lease in the state’s courts. Such a grim prospect portended trouble for Russell’s political plans. After a year of legal turmoil and at a cost of thousands of dollars to the state, Russell had nothing to show for his efforts.

The lease fight had become an integral part of the governor’s political strategy. Since the last days of the 1897 legislature, a Russell-Butler alliance had been gradually taking form. Considered a “rank Populist” by Old Guard Republicans, Russell had tied his fortunes increasingly to those of Senator Butler and the People’s Party. There were persistent rumors that Russell and Butler would use the Populist organization as the nucleus of a “new party” to attract reformers from the GOP and Democracy in an effort to realign the party structure in North Carolina. The war on the lease typified the kind of policies that the “new party” would pursue. 39

Gambling that the new party could rectify any concessions he made to the Southern Railway by winning the election of 1898 and controlling the 1899 legislature, Russell quietly began probing for a compromise that would secure some small political advantage out of the matter. The key to a compromise centered on the leasing of the Atlantic and North Carolina Railroad, a state-owned line with a marginal profit, by the Southern. Reportedly, the Southern had offered to lease the Atlantic and North Carolina for thirty years at a rental of 2 per cent of the capital stock that was valued at $1.8 million, of which the state owned $1.2 million. In addition the Southern had promised to buy the railroad’s rolling stock and pay all the legal fees incurred by the state in the lease fight. Gover- nor Russell had supposedly countered with a demand of 2% per

:m Ibid., July 28, September 8, 9, 30, 1S97; Charlotte Obserwer, September 29, 30, 1897; Cac~casian, October 28, 1897; J. A. Smith to Butler, November 6, 1897, Butler Papers. When the Tribune folded in May 1897, Josephus Daniels bought the news- paper’s property at an auction. The Republican journal’s business records revealed that A. B. Andrews had been a major stockholder in the newspaper. Daniels, Editor in Politics, 208-9.

88 See, for example, the News and O b ~ 7 7 ~ P r , August 1 1 , 1897, and The Hayseeder (Rdleigh), October 21, 1897.

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The Historian cent for the lease of the Atlantic and North Carolina road.40

Before any such deal could be concluded, however, an unex- pected development undermined Russell’s bargaining strength. Since April 1897, Russell had been pressuring the North Carolina Railroad Commission to lower passenger rates and to increase the taxation on railroads. The commission had failed to grant the governor’s requests. *l Moreover, in September 1897 Russell had removed two of the three commissioners because they jointly owned with A. B. Andrews a hotel that the Southern Railway had conveniently designated as an eating stop. Russell had then appointed two commissioners - a Democrat and Populist - who he believed would support his policies toward railroads.42 With unfortunate timing, the Railroad Commission decided in February 1898 to reduce passenger rates by as much as 20 per cent. Russell’s compromise with the Southern collapsed. The tough-minded Andrews demanded that the commission rescind the rate reduc- tions. In return the Southern would reportedly rent the Atlantic and North Carolina for 2% per cent.43

The commission’s ruling truly left Russell on the horns of a dilemma. Now his lease fight had become entangled with his struggle to reduce railroad rates. Apparently clinging to his hope for a new party of T a r Heel Progressives which would settle the lease and rate questions in the 1899 legislature, Russell backed down and urged John Pearson and Leroy Caldwell, the two commissioners who had voted for the reduction, to restore the old rates until the 1899 legislature met. Alarmed allies of the governor pleaded with Senator Butler to intervene. “We are absolutely dependent this off year on Russell’s Rail Road policy,” asserted one Russell Republican to the Populist senator. Commissioner Pearson intimated to Butler that Russell was “making a mistake in not declaring the whole transaction off & letting the people through the next Legislature settle with the corrupt gang.”44

George Morton to Builer, January 17 , 1898, Butler Papers; Russell to Fabius H. Busbee, May 9, 1902, Russell Papers: News and Observer, February 22, 1898; Charlotte Observer, March 14, lG, 1898; Daniels, Editor in Politics, 259-63.

41See Ruse11 to Butler, May 5 , 1897, Butler Papers; Caucasian, April 8, 1897; News and Obseruer, July 11, 12, 13, 1897; CharIotte Obxrver, July 13, 14, 1897.

“See Johu Graham to Butler, April 17, 1897, Butler Papers; Russell to B. N. Duke, February 19, 1901, Benjamin Newton Duke Papers, Duke University; Russell to J. W. Wilsori, August 24, 1897, and Russell to S. 0. Wilsou, August 24, 1897, Russell Papers; News and Obsen~er, August 26, 31, September 2, 24, 1897.

News and Obsemer, Fehruary 22, 1898; Cnucasian, March 3, 1898; Raleigh Morning Post, February 23, 1898. Hereinafter cited as Morning Post.

‘‘Walter Clark to Butler, February 28, 1898, Butler Papers: John J. Mort to Uutler, February 24, 1898, ibid.; John 13. Pearson to Butler, March 3, 1898, ibid. L. C. Caldwell, in contradistinction to what. Clark and Pearson were saying, insisted that Russell was not pressuring him. Caldwell to Butler, March 9, 1898, ibid.

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“Populism to Progressivism” Russell, however, continued to seek a settlement with the

Southern Railway Company, and he proved to be a stubborn negotiator. After weeks of secret conferences, Samuel Spencer, president of the Southern, confided to his wife: “The Gov. has declined to carry out his agreements and all negotiations are off. If he continues in this mood, we will make money and finally whip him after considerable work and annoyance. 1 am quite satisfied with the

Negotiations had reached an impasse because Russell, with an eye cocked toward the 1898 campaign, planned to publish a letter in which he explained his reasons for compromising the lease question. The Southern did not want the governor to “flagrantly inject the railway matter into politics,’’ but Russell was determined to make a strong statement calling for the 1899 legislature to act on the lease and other railroad matters. When the crusty governor refused to meet the Southern’s demand, the negotiations ceased, and the quid pro quo involving the leasing of the Atlantic and North Carolina and the restoration of the old passenger rates died. 46

Russell’s willingness to treat with the Southern, however, left him suspect in the minds of many reformers. One disappointed Populist told Butler: “I don’t believe he [Russell] could be bought but it really looks as if he can be scared. Is it not just possible that the R.R.’s have threatened him [with impeachment] if they secure a corporation Legislature for ’991’’ The Populist still con- sidered the governor the “people’s friend,” but he was “not the courageous man I had taken him to be.”47

On March 29, 1898, Russell’s war on the lease was terminated by a series of resolutions passed by the board of directors of the North Carolina Railroad. The quid pro quo involving the leasing of the Atlantic and North Carolina and the restoration of the old passenger rates was conspicuously absent. The directors asserted, however, that they would not contest the lease issue beyond Simonton’s court and would accept his ruling, which would undoubtedly exonerate the Southern of any fraud in obtaining the contract. In return the Southern would pay all the expenses incurred by the defendant - the North Carolina Railroad - which possibly amounted to $14,000. Moreover, although Simonton’s injunction would constrain the governor, attorney general, and board of directors from challenging the lease, the legislature was supposedly “left free to act.” In a resolution drafted by John

‘tj Samuel Speiicer to his wife, March 18, 1898, Samuel Spencer Papers, Southern

a Charlotte Observer, March 19, 1898; Wilmington Messeizger, March 19, 1838. (‘Charles €I. Utley to Butler, March 26, 1898, Butler Papers.

Historical Collection, University of North Carolina, Chapel Hill.

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r 7 I he Historian Graham aind approved by Russell, the directors declared that the “settlement does not in any way affect or impair the rights of the State to adopt any policy that may be determined upon by its legislature with regard to the ownership, management and opera- tion ~f domestic railroads by Zoreign or nonresident corporations. , . . ” 4 x Obviously, the governor hoped to leave the path open for the next legislature, controlled by a new party of Progressives, to determine the final disposition of the lease.

The reaction to the so-called “Russell-Andrew? compromise assumed a partisan coloring. Charles Cook termed the agrereernent an “excellent arrangement” and a “victory for the Governor.” Walter Clark, however, privately told Butler that Russell was a “poor trader.” Daniels’ News and 0 bserver, which had supported the Republican governor in his railroad fight, charged that Rnssell’s alleged “surrender” to the Southern Railway established “his character as an unstable, choleric and ‘wobbling’ officer.” Even Butler’s organ, the Cuz~casiun, hestitated a week before finally endorsing the compromise and vowing that the Populists and “Governor Russell will urge the ncxt legislature to use all lawful mean5 to 5et aside the fraudulent midnight ninety-nine-year

Though Russell had lost the legal battle, he had managed to u v e the state thousands of dollars in lawyers’ fees by compromising with the Southern. That small victory, however, was quickly forgotten when Populist Commissioner Leroy Caldwell voted the day after the lease matter was settled to restore the old passenger rates. Plainly disconcerted, Russell rushed to the commissioners’ offices and confronted Caldwell. By abandoning the “anti-mo- nopoly” forces in the state, Russell asserted, Caldwell had given “( olor to slanders and libels upon me.” Denying that Caldwell’s vote was any part of a deal with the Southern, the governor ‘idmitted that he had once favored the rate restoration as long as the Soutlierii leased the Atlantic and North Carolina. Negotiations had stopped because he wanted to submit the lease question and retluction of rates to the people in the coming election. The Southern had balked at such an agreement. “Since then,” the governor averred, “I have urged that the rate reduction be main- tzined and fought out in the courts.” Responding simply, Caldwell qgrgreed with Russell that his vote had had nothing to do

“Rrews uiid Observer, March SO, 31. 1898; Morlaing Posl, March 30, 1898. 4Q Walter Claik to Butler, March 23, 1898, Butler Papers; N e u ~ rrnd Observer,

9Ia1ch S O , 31, 1898; Cuucasian, April 14, 1898.

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“Populism to Progressivism” with the lease matter. It was Russell, however, who would pay the political price. 50

The Russell-Caldwell encounter climaxed the railroad fight. On April 13, 1898, Kerr Craig issued his report which, as expected, stated that no fraud had accompanied the execution of the ninety- nine-year lease. Judge Simonton thereupon made the injunction against the state officers of North Carolina permanent. The governor’s frustrating but gallant fight against the Southern Railway had come to an end.

The reasons for Russell’s seemingly feeble compromise after months of strident rhetoric and daring decisions baffled reformers and conservatives alike. Josephus Daniels alleged that Russell gave up the fight because of his fear of impeachment and the personal financial pressures he was experiencing. Undoubtedly, such fears weighed upon the governor. I t might even be speculated that he “sold out” to the Southern.5f However, that seems unlikely since Russell never escaped his financial problems despite a shrewd legal scheme after his governorship to force North Carolina to fund repudiated Reconstruction bonds.s2 No pliant tool of the rail- roads, Russell gambled, after it became clear in early 1898 that he had lost the legal struggle, that he, Butler, and Progressive Democrats like Walter Clark and Josephus Daniels could forge a new coalition of reformers that would win control of the 1899 legislature. During the spring of 1898, the governor worked assiduously behind the scenes to effect fusion of the Populist and Democratic parties though he never renounced his Republican ties. But conservative Democrats, backed by powerful business interests in the state, ignored the urgings of Josephus Daniels to fuse with the Populists and turned instead to another tactic. i;dunching a violent white-supremacy campaign that culminated ill the Wilmington race riot, the Democrats united white North Carolinians, brushed aside controversial economic issues, and smashed Russell’s ambitious dreams as Red Shirts terrorized

Mornzng Post, March 31, 1898. Caldwell’s “flop” did not surprise most political observers since there had been xumors for a week that he would change his vote. See the Morning Post, Match 24, 1898, and Charlotte Obsrruer March 23, 24, 1898

“During the 1897 legislature, Russell had spurned three attempts by the Southern Railway to offer him a judgeship if he ceased his war on the lease. Two different sources agree on this point. John Graham told Marion Butler that he “admired” Russell’s courage in the face of the Southern’s efforts to bribe him. Graham to Butler, April 17, 1897, Butler Papers. Family tradition states that Russell threatened to shoot the next envoy fiom the Southern who tried to bribe him Goodman and Cooper, “Russell Memoir,” Russell Papers.

;a See Durden, Reconstiuction Bonds 6 Twentreth-Centuty Politics.

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T h e Historian Republicans, Populists, and Afro-Americans while “redeeming” the state once again53

Nevertheless, Russell’s war on the Southern Railway demon- strated that, at least in terms of railroad reform, Tar Heel Populists and Progressives shared similar, if not identical, goals. In Alabama, as Hackney shows, the Populists repeatedly voted against reforms to which they were pledged and never mounted a sustained attack against the railroads. In fact, Alabama Populists displayed scant enthusiasm for railroad regulation. 54 In North Carolina, on the other hand, the Populists engineered fundamental reforms during the 1595 legislature and two years later joined Progressive Demo- ( rats and a Republican governor to fight Northern-controlled railroads. When the Republicans, abetted by conservative Democrats, scuttled Russell’s railroad bill in the 1897 legislature, t!ie Populists, with few exceptions, remained steadfast. Thus, in contrast to the political structure of Alabama, the North Carolina Pxperience suggested the feasibility and potentiality of a Pro- gressive coalition, based on railroad regulation, which included agrarian reformers.

Two obstacles ultimately thwarted Russell’s bold initiatives. Especially pernicious was the festering race issue. Hackney termed disfranchisement the “prerequisite” of Progressivism in Alabama. Threatening white solidarity as it did, as well as one-party Democratic rule, Populism, or fusionism as it was known in North Carolina, had to be uprooted in order to remove the “stigma from reformism,” as C . Vann Woodward contends. 56 Freed of the sti,ma, the reform movement attracted new adherents.

The Progressive coalition that emerged in the first decade of the twentieth century in North Carolina drew much of its strength from powerful business groups - the same interests identified by Hackney in Alabama. In 1897 Piedmont manufacturers and merchants were yet unwilling to champion railroad regulation when sponsored by a Republican governor who mouthed anti- capitalist slogans and looked to Populists and the Negro-supported GOP for political backing. These businessmen recognized, how- ever, that their prosperity depended on an end to rate discriminations imposed by Northern-controlled railroads, and by 1907 they had joined older reformers in the Democratic party, men such as Josephus Daniels and Walter Clark, to contest the

63 See, for example, Russell to Butler, April 20, 30, 1898, Butler Papers; Russell to B. K . Duke, February 19, 1901, B. N. Duke Papers; J . Fred Rippy, ed., Furnifold %mmons: Slatcinan of the Ne7u South; Memoirs and Addresses (Durham, 1936), 23-29.

Hackney, Populism to Progressivism in Alnharna, 71-75, 129-37, 309-10. ’.z Woodward, Origins of the New South, 372.

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“Populism to Progressivism” railroads. That year the General Assembly, besides enacting antitrust and antilobby statutes, reduced passenger rates, and state officials refused to comply with a subsequent injunction against the reduction obtained by the Southern Railway. The Southern eventually capitulated to state authority, and the issue was com- promised. 56 Ten years earlier Daniel R.ussel1 had fought the same battles against “corporate arrogance” and the “Railroad Trust” in an attempt to build a Progressive coalition that finally chal- lenged too many Southern taboos concerning race, class, and party.

Ibid., 381-82; Steelman, “Justice: Profile of a Progressive.” A similar struggle with the Southern Railway took place in Alabama in 1907. Hackney, Populism to Progrrssivism in Alabama, 290-91.

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