Born in Waitsfield, Vermont, Waterman graduated from the University of Vermont in 1885 and taught school before attending the University of Michigan Law School. Following his 1889 graduation, Waterman moved to Denver, where he became a successful corporate and railroad attorney and was active in politics as a Republican. After serving as a delegate to the 1916 Republican National Convention and running unsuccessfully for the Republican U.S. Senate nomination in 1918, Waterman was the Colorado manager for Calvin Coolidge's 1924 presidential campaign. After Coolidge won, he appointed Waterman general counsel for the federal Oil Conservation Board. He was a delegate to the 1924 Republican National Convention, and later that year ran unsuccessfully for the U.S. Senate in a special election, losing the Republican nomination for a two-year term to Rice W. Means, who went on to win the general election.