White Shoe | John Oller

Summary of: White Shoe: How a New Breed of Wall Street Lawyers Changed Big Business and the American Century
By: John Oller


Get ready to dive into the world of ‘White Shoe: How a New Breed of Wall Street Lawyers Changed Big Business and the American Century’ by John Oller. This compelling narrative delves into the influential roles played by America’s top Ivy League-educated lawyers in the late 19th and early 20th centuries. Explore how white shoe lawyers like Paul Cravath and William Nelson Cromwell helped shape modern corporate America and navigate the challenges of regulation, antitrust, and international affairs. Through their work on major business deals, landmark policies, and transformative legislation, these lawyers left a lasting impact on the American economy and legal landscape.

The Rise of “White Shoe” Lawyers

After the Civil War, the United States experienced industrial and urban growth, giving rise to large corporations and their representation by the Ivy League-educated “white shoe” lawyers. Rather than litigating cases, these lawyers negotiated deals for big business and proposed effective regulations. Among them was Paul Cravath, who developed the “Cravath system” still in use today by top law firms. Cravath represented businessman George Westinghouse in a patent infringement lawsuit, leading to a cross-licensing agreement between Westinghouse and General Electric.

The Rise and Fall of Northern Securities

Stetson, Morgan’s lawyer, established the billion-dollar US Steel and oversaw the creation of the Northern Securities Company. The NSC’s merger created the second-largest company globally with a $400 million cap. However, President Theodore Roosevelt sought to end anti-competitive behavior through legislation like the Sherman Antitrust Act of 1890. The company’s dissolution was ultimately ordered by the Supreme Court with a 5-4 vote, which halted Wall Street mergers and ended protections for holding companies. The holding company model had been created by William Nelson Cromwell in 1888 to circumvent antitrust laws.

Cromwell’s “Napoleonic Strategy” for the Panama Canal

A captivating story of Cromwell’s effort and lobbying techniques to prevent building the canal in Nicaragua and ensure its construction in Panama, ultimately making him America’s most talked-about lawyer and leading to the Panama takeover by the United States.

The book revolves around the famous lawyer Cromwell and his efforts to ensure the construction of the Panama Canal, leading to the United States’ eventual takeover. Representing French investors who sold the canal rights to the US, Cromwell adopted a “Napoleonic strategy” to prevent legislative attempts to build the canal in Nicaragua. To steer Congress to support Panama, Cromwell and French engineer Bunau-Varilla used a postage stamp showcasing Nicaragua’s active volcanoes and treated commission members to a six-course lunch with European engineers who endorsed the Panama project.

Cromwell’s success made him the most talked-about lawyer in America, but experts are unclear about his role in inciting the Panamanian revolution leading to the US takeover. Cromwell was the unofficial intermediary between Colombia and the US, negotiating a treaty to build the canal. After negotiations failed, Panama split from Colombia to become its own country, and the US rushed the Hay-Bunau-Varilla Treaty, giving Panama $10 million and a $250,000 annuity originally planned for Colombia. This historical account of Cromwell’s lobbying techniques and his involvement in the construction and takeover of the Panama Canal makes for a fascinating read.

The Rise and Fall of Equitable Life Assurance Society

Life insurance was once the only means of safeguarding oneself from disability and death. However, it was not immune to corruption. The Equitable Life Assurance Society was one of the largest companies at the time, with an asset of $1.2 billion, but James Hazen Hyde’s misconduct and exorbitant Palace of Versailles themed costume party threatened its survival. The company’s deputy tried to resist Hyde and empower policyholders through mutualization but failed. However, a critical moment came when Thomas Fortune Ryan bought and took over Hyde’s shares in a blind trust, keeping Morgan and Harriman from controlling the company. Afterward, an investigation by the Armstrong Committee led by Charles Evans Hughes uncovered the mismanagement of policyholder funds donated for the Republican Party’s campaigns. The investigation brought about legislation reforms, and Hughes also rose to become a governor, a Supreme Court Justice, and even a presidential candidate.

The Legal Legacy of Paul Cravath

Paul Cravath’s legacy as a lawyer who balanced aggressive protection of his clients with ethical professionalism is explored in this book. The book covers Cravath’s notable cases, including his push for tighter restrictions in a railroad merger financing scheme in 1907, and his role in rescuing struggling banks during the Panic of 1907. The book also delves into the lawsuits and ethics complaints that Cravath faced, and how he responded by implementing strict rules to maintain his firm’s objectivity. Despite the challenges, Cravath’s legal philosophy of balancing client advocacy with ethical standards still resonates with Cravath Swaine & Moore, the law firm he co-founded in 1819.

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