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+Project Gutenberg's Great Fortunes from Railroads, by Gustavus Myers
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+Title: Great Fortunes from Railroads
+
+Author: Gustavus Myers
+
+Release Date: September, 2004 [EBook #6495]
+[Yes, we are more than one year ahead of schedule]
+[This file was first posted on December 22, 2002]
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+Edition: 10
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+Language: English
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+Character set encoding: ASCII
+
+*** START OF THE PROJECT GUTENBERG EBOOK GREAT FORTUNES FROM RAILROADS ***
+
+
+
+
+Produced by Charles Franks and the Online Distributed Proofreading Team.
+
+
+
+
+
+HISTORY OF THE GREAT AMERICAN FORTUNES
+
+
+BY GUSTAVUS MYERS
+
+AUTHOR OF "THE HISTORY OF TAMMANY HALL," "HISTORY OF PUBLIC
+FRANCHISES IN NEW YORK CITY," ETC.
+
+
+
+
+VOL. II
+
+GREAT FORTUNES FROM RAILROADS
+
+
+
+
+   I.  THE SEIZURE OF THE PUBLIC DOMAIN
+
+  II.  A NECESSARY CONTRAST
+
+ III.  THE BEGINNINGS OF THE VANDERBILT FORTUNE
+
+  IV.  THE ONRUSH OF THE VANDERBILT FORTUNE
+
+   V.  THE VANDERBILT FORTUNE INCREASES MANIFOLD
+
+  VI.  THE ENTAILING OF THE VANDERBILT FORTUNE
+
+ VII.  THE VANDERBILT FORTUNE IN THE PRESENT GENERATION
+
+VIII.  FURTHER ASPECTS OF THE VANDERBILT FORTUNE
+
+  IX.  THE RISE OR THE GOULD FORTUNE
+
+   X.  THE SECOND STAGE OF THE GOULD FORTUNE
+
+  XI.  THE GOULD FORTUNE BOUNDS FORWARD
+
+ XII.  THE GOULD FORTUNE AND SOME ANTECEDENT FACTORS
+
+XIII.  FURTHER ASPECTS OF THE VANDERBILT FORTUNE 260
+
+
+
+
+PART III
+
+THE GREAT FORTUNES FROM RAILROADS
+
+
+
+
+CHAPTER I
+
+THE SEIZURE OF THE PUBLIC DOMAIN
+
+
+Before setting out to relate in detail the narrative of the amassing
+of the great individual fortunes from railroads, it is advisable to
+present a preliminary survey of the concatenating circumstances
+leading up to the time when these vast fortunes were rolled together.
+Without this explanation, this work would be deficient in clarity,
+and would leave unelucidated many important points, the absence of
+which might puzzle or vex the reader.
+
+Although industrial establishments, as exemplified by mills,
+factories and shops, much preceded the construction of railroads, yet
+the next great group of fortunes to develop after, and along with,
+those from land were the fortunes plucked from the control and
+manipulation of railroad systems.
+
+
+THE LAGGING FACTORY FORTUNES.
+
+Under the first stages of the old chaotic competitive system, in
+which factory warred against factory, and an intense struggle for
+survival and ascendency enveloped the whole tense sphere of
+manufacturing, no striking industrial fortunes were made.
+
+Fortunate was that factory owner regarded who could claim $250,000
+clear. All of those modern and complex factors offering such
+unbounded opportunities for gathering in spoils mounting into the
+hundreds of millions of dollars, were either unknown or in an
+inchoate or rudimentary state. Invention, if we may put it so, was
+just blossoming forth. Hand labor was largely prevalent. Huge
+combinations were undreamed of; paper capitalization as embodied in
+the fictitious issues of immense quantities of bonds and stocks was
+not yet a part of the devices of the factory owner, although it was a
+fixed plan of the bankers and insurance companies.
+
+The factory owner was the supreme type of that sheer individualism
+which had burst forth from the restraints of feudalism. He stood
+alone fighting his commercial contests with persistent personal
+doggedness. Beneath his occasional benevolence and his religious
+professions was a wild ardor in the checkmating or bankruptcy of his
+competitors. These were his enemies; he fought them with every
+mercantile weapon, and they him; and none gave quarter.
+
+Apart from the destructive character of this incessant warfare,
+dooming many of the combatants, other intervening factors had the
+tendency of holding back the factory owners' quick progress--
+obstacles and drawbacks copiously described in later and more
+appropriate parts of this work.
+
+
+MIGHT OF THE RAILROAD OWNERS.
+
+In contrast to the slow, almost creeping pace of the factory owners
+in the race for wealth, the railroad owners sprang at once into the
+lists of mighty wealth-possessers, armed with the most comprehensive
+and puissant powers and privileges, and vested with a sweep of
+properties beside which those of the petty industrial bosses were
+puny. Railroad owners, we say; the distinction is necessary between
+the builders of the railroads and the owners. The one might
+construct, but it often happened that by means of cunning, fraud and
+corruption, the builders were superseded by another set of men who
+vaulted into possession.
+
+Looking back and summing up the course of events for a series of
+years, it may be said that there was created over night a number of
+entities empowered with extraordinary and far-reaching rights and
+powers of ownership.
+
+These entities were called corporations, and were called into being
+by law. Beginning as creatures of law, the very rights, privileges
+and properties obtained by means of law, soon enabled them to become
+the dictators and masters of law. The title was in the corporation,
+not in the individual; hence the men who controlled the corporation
+swayed the substance of power and ownership. The factory was usually
+a personal affair, owned by one man or in co-partnership; to get
+control of this property it was necessary to get the owner in a
+financial corner and force him to sell out, for, as a rule, he had no
+bond or stock issues. But the railroad corporation was a stock
+corporation; whoever secured control of a majority of the stock
+became the legal administrator of its policies and property. By
+adroit manipulation, intimidation, superior knavery, and the corrupt
+domination of law, it was always easy for those who understood the
+science of rigging the stock market, and that of strategic
+undermining, to wrest the control away from weak, or (treating the
+word in a commercial sense) incompetent, holders. This has been long
+shown by a succession of examples.
+
+
+THE LEGALIZING OF CUNNING
+
+Thus this situation, so singularly conflicting with the theoretical
+majesty of the law, was frequently presented: A band of men styling
+themselves a corporation received a perpetual charter with the most
+sweeping rights and properties. In turn, the law interposed no
+effective hindrance to the seizing of their possessions by any other
+group proving its power to grasp them. All of this was done under
+nominal forms of law, but differed little in reality from the methods
+during medieval times when any baron could take another baron's
+castle and land by armed force, and it remained his until a stronger
+man came along and proved his title likewise.
+
+Long before the railroad had been accepted commercially as a feasible
+undertaking, the trading and land-owning classes, as has been
+repeatedly pointed out, had demonstrated very successfully how the
+forms of government could be perverted to enrich themselves at the
+expense of the working population.
+
+Taxation laws, as we have seen, were so devised that the burden in a
+direct way fell lightly on the shipping, manufacturing, trading,
+banking and land-owning classes, while indirectly it was shoved
+almost wholly upon the workers, whether in shop, factory or on farm.
+Furthermore, the constant response of Government, municipal, State
+and National, to property interests, has been touched upon; how
+Government loaned vast sums of public money, free of interest, to the
+traders, while at the same time refusing to assist the impoverished
+and destitute; how it granted immunity from punishment to the rich
+and powerful, and inflicted the most drastic penalties upon poor
+debtors and penniless violators of the law; how it allowed the
+possessing classes to evade taxation on a large scale, and effected
+summarily cruel laws permitting landlords to evict tenants for non-
+payment of rent. These and many other partial and grievously
+discriminative laws have been referred to, as also the refusal of
+Government to interfere in the slightest with the commercial frauds
+and impositions constantly practiced, with all their resulting great
+extortions, upon the defenceless masses.
+
+Of the long-prevailing frauds on the part of the capitalists in
+acquiring large tracts of public land, some significant facts have
+been brought out in preceding chapters. Those facts, however, are only
+a few of a mass. When the United States Government was organized, most
+of the land in the North and East was already expropriated. But
+immense areas of public domain still remained in the South and in the
+Middle West. Over much of the former Colonial land the various
+legislatures claimed jurisdiction, until, one after another, they
+ceded it to the National Government. With the Louisiana purchase, in
+1805, the area of public domain was enormously extended, and
+consecutively so later after the Mexican war.
+
+
+THE LAND LAWS AGAINST THE POOR
+
+From the very beginning of the government, the land laws were
+arranged to discriminate against the poor settler. Instead of laws
+providing simple and inexpensive ways for the poor to get land, the
+laws were distorted into a highly effective mechanism by which
+companies of capitalists, and individual capitalists, secured vast
+tracts for trivial sums. These capitalists then either held the land,
+or forced settlers to pay exorbitant prices for comparatively small
+plots. No laws were in existence compelling the purchaser to be a
+_bona fide_ settler. Absentee landlordism was the rule. The
+capitalist companies were largely composed of Northern, Eastern and
+Southern traders and bankers. The evidence shows that they employed
+bribery and corruption on a great scale, either in getting favorable
+laws passed, or in evading such laws as were on the statute books by
+means of the systematic purchase of the connivance of Land Office
+officials.
+
+By act of Congress, passed on April 21, 1792, the Ohio Land Company,
+for example, received 100,000 acres, and in the same year it bought
+892,900 acres for $642,856.66. But this sum was not paid in money.
+The bankers and traders composing the company had purchased, at a
+heavy discount, certificates of public debt and army land warrants,
+and were allowed to tender these as payment. [Footnote: U. S. Senate
+Executive Documents, Second Session, Nineteenth Congress, Doc. No.
+63.] The company then leisurely disposed of its land to settlers at
+an enormous profit. Nearly all of the land companies had banking
+adjuncts. The poor settler, in order to settle on land that a short
+time previously had been national property, was first compelled to
+pay the land company an extortionate price, and then was forced to
+borrow the money from the banking adjuncts, and give a heavy
+mortgage, bearing heavy interest, on the land. [Footnote: U. S.
+Senate Documents, First Session, Twenty-fourth Congress, 1835-36,
+Doc. No. 216: 16.] The land companies always took care to select the
+very best lands. The Government documents of the time are full of
+remonstrances from legislatures and individuals complaining of these
+seizures, under form of law, of the most valuable areas. The tracts
+thus appropriated comprised timber and mineral, as well as
+agricultural, land.
+
+
+VAST TRACTS SECURED BY BRIBERY.
+
+One of the most scandalous land-company transactions was that
+involving a group of Southern and Boston capitalists. In January,
+1795, the Georgia Legislature, by special act, sold millions of acres
+in different parts of the State of Georgia to four land companies.
+The people of the State were convinced that this purchase had been
+obtained by bribery. It was made an election issue, and a
+Legislature, comprising almost wholly new members, was elected. In
+February, 1796, this Legislature passed a rescinding act, declaring
+the act of the preceding year void, on the ground of its having been
+obtained by "improper influence." In 1803 the tracts in question were
+transferred by the Georgia Legislature to the United States
+Government.
+
+The Georgia Mississippi Land Company was one of the four companies.
+In the meantime, this company had sold its tract, for ten cents an
+acre, to the New England Mississippi Land Company. Although committee
+after committee of Congress reported that the New England Mississippi
+Land Company had paid little or no actual part of the purchase price,
+yet that company, headed by some of the foremost Boston capitalists,
+lobbied in Congress for eleven years for an act giving it a large
+indemnity. Finally, in 1814, Congress passed an indemnification act,
+under which the eminent Bostonians, after ten years more lobbying,
+succeeded in getting an award from the United States Treasury of
+$1,077,561.73. The total amount appropriated by Congress on the
+pretense of settling the claims of the various capitalists in the
+"Yazoo Claims" was $1,500,000. [Footnote: Senate Documents,
+Eighteenth Congress, Second Session, 1824-25, Vol. ii, Doc. No. 14,
+and Senate Documents, Twenty-fourth Congress, 1836-37, Vol. ii, No.
+212. After the grants were secured, the companies attempted to
+swindle the State of Georgia by making payments in depreciated
+currency. Georgia refused to accept it. When the grant was rescinded,
+both houses of the Georgia Legislature marched in solemn state to the
+Capitol front and burned the deed.] The ground upon which this
+appropriation was made by Congress was that the Supreme Court of the
+United States had decided that, irrespective of the methods used to
+obtain the grant from the Georgia Legislature, the grant, once made,
+was in the nature of a contract which could not be revoked or
+impaired by subsequent legislation. This was the first of a long line
+of court decisions validating grants and franchises of all kinds
+secured by bribery and fraud.
+
+It was probably the scandal arising from the bribery of the Georgia
+Legislature that caused popular ferment, and crystallized a demand
+for altered laws. In 1796 Congress declared its intention to abandon
+the prevailing system of selling millions of acres to companies or
+individuals. The new system, it announced, was to be one adapted to
+the interests of both capitalist and poor man. Land was thereafter to
+be sold in small quantities on credit. Could the mechanic or farmer
+demand a better law? Did it not hold out the opportunity to the
+poorest to get land for which payment could be gradually made?
+
+But this law worked even better to the advantage of the capitalist
+class than the old. By bribing the land officials the capitalists
+were able to cause the choicest lands to be fraudulently withheld,
+and entered by dummies. In this way, vast tracts were acquired.
+Apparently the land entries were made by a large number of intending
+settlers, but these were merely the intermediaries by which
+capitalists secured great tracts in the form of many small
+allotments. Having obtained the best lands, the capitalists then
+often held them until they were in demand, and forced actual settlers
+to pay heavily for them. During all of this time the capitalists
+themselves held the land "on credit." Some of them eventually paid
+for the lands out of the profits made from the settlers, but a great
+number of the purchasers cheated the Government almost entirely out
+of what they owed. [Footnote: On Sept. 30, 1822, "credit purchasers"
+owed the Government: In Ohio, $1,260,870.87; in Indiana,
+$1,212,815.28; in Illinois, $841,302.80; in Missouri, $734,108.87; in
+Alabama, $5,760,728.01; in Mississippi, $684,093.50; and in Michigan,
+$50,584.82--a total of nearly $10,550,000. (Executive Reports, First
+Session, Eighteenth Congress, 1824, Report No. 61.) Most of these
+creditors were capitalist land speculators.]
+
+The capitalists of the period contrived to use the land laws wholly
+to their own advantage and profit. In 1824, the Illinois Legislature
+memorialized Congress to change the existing laws. Under them, it
+recited, the best selections of land had been made by non-resident
+speculators, and it called upon Congress to pass a law providing for
+selling the remaining lands at fifty cents an acre. [Footnote: U. S.
+Senate Documents, Second Session, Eighteenth Congress, 1824-25, Vol.
+ii, Doc. No. 25.] Other legislatures petitioned similarly. Yet,
+notwithstanding the fact that United States officials and committees
+of Congress were continually unearthing great frauds, no real change
+for the benefit of the poor settler was made.
+
+
+GREAT EXTENT OF THE LAND FRAUDS.
+
+The land frauds were great and incessant. In a long report, the
+United States Senate Committee on Public Lands, reporting on June 20,
+1834, declared that the evidence it had taken established the fact
+that in Ohio and elsewhere, combinations of capitalist speculators,
+at the public sales of lands, had united for the purpose of driving
+other purchasers out of the market and in deterring poor men from
+bidding. The committee detailed how these companies and individuals
+had fraudulently bought large tracts of land at $1.25 an acre, and
+sold the land later at exorbitant prices. It showed how, in order to
+accomplish these frauds, they had bought up United States Land Office
+Registers and Receivers. [Footnote 8: U. S. Senate Documents, First
+Session, Twenty-third Congress, 1833-34, Vol. vi, Doc. No. 461:1-91.]
+
+Another exhaustive report was handed in by the United States Senate
+Committee on Lands, on March 3, 1835. Many of the speculators, it
+said, filled high offices in States where public lands bought by them
+were located; others were people of "wealth and intelligence." All of
+them "naturally united to render this investigation odious among the
+people." The committee told how an attempt had been made to
+assassinate one of its members. "The first step," it set forth,
+"necessary to the success of every scheme of speculation in the
+public lands, is to corrupt the land officers, by a secret
+understanding between the parties that they are to receive a certain
+portion of the profits." [Footnote: U. S. Senate Documents, Second
+Session, Twenty-third Congress, Vol. iv, Doc. No. 151: 2.] The
+committee continued:
+
+The States of Alabama, Mississippi and Louisiana have been the
+principal theatre of speculations and frauds in buying up the public
+lands, and dividing the most enormous profits between the members of
+the different companies and speculators. The committee refers to the
+depositions of numerous respectable witnesses to attest the various
+ramifications of these speculations and frauds, and the means by
+which they have been carried into effect.... [Footnote: Ibid., 3]
+
+Describing the great frauds in Louisiana, Benjamin F. Linton, U. S.
+District Attorney for the Western District of Louisiana, wrote, on
+August 25, 1835, to President Jackson: "Governments, like
+corporations, are considered without souls, and according to the code
+of some people's morality, should be swindled and cheated on every
+occasion." Linton gave this picture of "a notorious speculator who
+has an immense extent of claims":
+
+He could be seen followed to and from the land office by crowds of
+free negroes, Indians and Spaniards, and the very lowest dregs of
+society, in the counties of Opelousas and Rapides, with their
+affidavits already prepared by himself, and sworn to before some
+justice of the peace in some remote county. These claims, to an
+immense extent, are presented and allowed. And upon what evidence?
+Simply upon the evidence of the parties themselves who desire to make
+the entry! [Footnote: U. S. Senate Documents, Second Session, Twenty-
+fourth Congress, 1836-37, Vol. ii, Doc. No. 168: 5.]
+
+The "credit" system was gradually abandoned by the Government, but
+the auction system was retained for decades. In 1847, the Government
+was still selling large tracts at $1.25 an acre, nominally to
+settlers, actually to capitalist speculators or investors. More than
+two million acres had been sold every year for a long period. The
+House Committee on Public Lands, reporting in 1847, disclosed how
+most of the lands were bought up by capitalists. It cited the case of
+the Milwaukee district where, although 6,441 land entries had been
+made, there were only forty actual settlers up to 1847. "This clearly
+shows," the committee stated, "that those who claimed the land as
+settlers, are either the tools of speculators, to sequester the best
+lands for them... or the claim is made on speculation to sell out."
+[Footnote: Reports of Committees, First Session, Thirtieth Congress,
+1847-48, Vol. iii, Report No. 732:6.]
+
+The policy of granting enormous tracts of land to corporations was
+revived for the benefit of canal and railroad companies. The first
+railroad company to get a land grant from Congress was the Illinois
+Central, in 1850. It received as a gift 2,595,053 acres of land in
+Illinois. Actual settlers had to pay the company from $5 to $15 an
+acre.
+
+Large areas of land bought from the Indian tribes by the Government,
+almost at once became the property of canal or railroad corporations
+by the process of Government grants. A Congressional document in 1840
+(Senate Document No. 616) made public the fact that from the
+establishment of the Federal Government to 1839, the Indian tribes
+had ceded to the Government a total of 442,866,370 acres. The Indian
+tribes were paid either by grants of land elsewhere, or in money and
+merchandise. For those 442,866,370 acres they received exchange land
+valued at $53,757,400, and money and merchandise amounting to
+$31,331,403.
+
+
+THE SWAYING OF GOVERNMENT.
+
+The trading, banking and landed class had learned well the old, all-
+important policy of having a Government fully susceptible to their
+interests, whether the governing officials were put in office by
+them, and were saturated with their interests, views and ideals, or
+whether corruption had to be resorted to in order to attain their
+objects. At all events, the propertied classes, in the main, secured
+what they wanted. And, as fast as their interests changed, so did the
+acts and dicta of Government change.
+
+While the political economists were busy promulgating the doctrine
+that it was not the province of Government to embark in any
+enterprise other than that of purely governing--a doctrine precisely
+suiting the traders and borrowed from their demands--the commercial
+classes, early in the nineteenth century, suddenly discovered that
+there was an exception. They wanted canals built; and as they had not
+sufficient funds for the purpose, and did not see any immediate
+profit for themselves, they clamored for the building of them by the
+States. In fine, they found that it was to their interest to have the
+States put through canal projects on the ground that these would
+"stimulate trade." The canals were built, but the commercial classes
+in some instances made the blunder of allowing the ownership to rest
+in the people.
+
+Never again was this mistake repeated. If it proved so easy to get
+legislatures and Congress to appropriate millions of the public funds
+for undertakings profitable to commerce, why would it not be equally
+simple to secure the appropriation plus the perpetual title? Why be
+satisfied with one portion, when the whole was within reach?
+
+True, the popular vote was to be reckoned with; it was a time when
+the people scanned the tax levy with far greater scrutiny than now;
+and they were not disposed to put up the public funds only that
+private individuals might reap the exclusive benefit. But there was a
+way of tricking and circumventing the electorate. The trading and
+land-owning classes knew its effectiveness. It was they who had
+utilized it; who from the year 1795 on had bribed legislatures and
+Congress to give them bank and other charters. Bribery had proved a
+signal success. The performance was extended on a much wider scale,
+with far greater results, and with an adroitness revealing that the
+capitalist class had learned much by experience, not only in reaching
+out for powers that the previous generation would not have dared to
+grant, but in being able to make plastic to its own purposes the
+electorate that believed itself to be the mainspring of political
+power.
+
+
+GRANTS TO CANAL CORPORATIONS.
+
+The first great canal, built in response to the demands of the
+commercial class, was the Erie Canal, completed in 1825. This
+waterway was constructed at public expense, and was owned by New York
+State. The commercial men could succeed in having it managed for
+their purposes and profit, and the politicians could often extract
+plunder from the successive contracts, but there was no opportunity
+or possibility for the exercise of the usual capitalist methods of
+fraudulent diversion of land, or of over-capitalization and
+exorbitant rates with which to pay dividends on fictitious stock.
+
+Very significantly, from about the very time when the Erie Canal was
+finished, the era of the private canal company, financed by the
+Government, began. One after another, canal companies came forward to
+solicit public funds and land grants. These companies neither had any
+capital of their own, nor was capital necessary. The machinery of
+Government, both National and State, was used to supply them with
+capital.
+
+The Chesapeake and Ohio Canal Company received, up to 1839, the sum
+of $2,500,000 in funds appropriated by the United States Government,
+and $7,197,000 from the State of Maryland.
+
+In 1824 the United States Government began giving land grants for
+canal projects. The customary method was the granting by Congress of
+certain areas of land to various States, to be expressly given to
+designated canal companies. The States in donating them, sometimes
+sold them to the canal companies at the nominal rate of $1.25 an
+acre. The commuting of these payments was often obtained later by
+corrupt legislation.
+
+From 1924 to 1834, the Wabash and Erie Canal Company obtained land
+grants from the Government amounting to 826,300 acres. The Miami and
+Dayton Canal Company secured from the Government, in 1828 and 1833, a
+total grant of 333,826 acres. The St. Mary's Falls Ship Canal Company
+received 750,000 acres in 1852; the Portage Lake and Lake Superior
+Ship Canal Company, 400,000 acres in 1865-66; and the Lac La Belle
+Ship Canal Company, 100,000 acres in 1866. Including a grant by
+Congress in 1828 of 500,000 acres of public land for general canal
+purposes, the land grants given by the National Government to aid
+canal companies, totalled 4,224,073.06 acres, mostly in Indiana,
+Ohio, Illinois, Wisconsin and Michigan.
+
+Whatever political corruption accompanied the building of such State-
+owned canals as the Erie Canal, the primary and fundamental object
+was to construct. In the case of the private canal companies, the
+primary and fundamental object was to plunder. The capitalists
+controlling these companies were bent upon getting rich quickly; it
+was to their interest to delay the work as long as possible, for by
+this process they could periodically go to Legislatures with this
+argument: That the projects were more expensive and involved more
+difficulties than had been anticipated; that the original
+appropriations were exhausted, and that if the projects were to be
+completed, fresh appropriations were imperative. A large part of
+these successive appropriations, whether in money, or land which
+could be sold for money, were stolen in sundry indirect ways by the
+various sets of capitalist directors. The many documents of the
+Maryland Legislature, and the messages of the successive Governors of
+Maryland, do not tell the full story of how the Chesapeake and Ohio
+Canal project was looted, but they give abundantly enough
+information.
+
+
+THE GRANTS FRAUDULENTLY MANIPULATED
+
+Many of the canal companies, so richly endowed by the Government with
+great land grants, made little attempt to build canals. What some of
+them did was to turn about and defraud the Government out of
+incalculably valuable mineral deposits which were never included in
+the original grants.
+
+In his annual report for 1885, Commisioner Sparks, of the United
+States General Land Office told (House Executive Documents, 1885-86,
+Vol. II) how, by 1885, the Portage Lake "canal" was only a worthless
+ditch and a complete fraud. What had the company done with its large
+land grant? Instead of accepting the grant as intended by Congress,
+it had, by means of fraudulent surveys, and doubtless by official
+corruption, caused at least one hundred thousand acres of its grant
+to be surveyed in the very richest copper lands of Wisconsin.
+
+The grants originally made by Congress were meant to cover swamp
+lands--that is, lands not particularly valuable for agricultural
+uses, but which had a certain value for other purposes. Mineral lands
+were strictly excluded. Such was the law: the practice was very
+different. The facility with which capitalists caused the most
+valuable mineral, grazing, agricultural and timber lands to be
+fraudulently surveyed as "swamp" lands, is described at length a
+little later on in this work. Commissioner Sparks wrote that the one
+hundred thousand acres appropriated in violation of explicit law
+"were taken outside of legal limits, and that the lands selected both
+without and within such limits were interdicted lands on the copper
+range" (p. 189). Those stolen copper deposits were never recovered by
+the Government nor was any attempt made to forfeit them. They
+comprise to-day part of the great copper mines of the Copper Trust,
+owned largely by the Standard Oil Company.
+
+The St. Mary's Falls Canal Company likewise stole large areas of rich
+copper deposits. This fact was clearly revealed in various official
+reports, and particularly in the suit, a few years ago, of Chandler
+vs. Calumet and Hecla Mining Company (U. S. Reports, Vol. 149, pp.
+79-95). This suit disclosed the fact that the mines of the Calumet
+and Hecla Mining Company were located on part of the identical
+alleged "swamp" lands, granted by Congress in 1852. The plaintiff,
+Chandler, claimed an interest in the mines. Concluding the court's
+decision, favoring the Calumet and Hecla Mining Company, this
+significant note (so illustrative of the capitalist connections of
+the judiciary), appears: "Mr. Justice Brown, being interested in the
+result, did not sit in this case and took no part in its decision."
+
+Whatever superficial or partial writers may say of the benevolent
+origin of railroads, the fact is that railroad construction was
+ushered in by a widespread corruption of legislators that put to
+shame the previous debauchery in getting bank charters. In nearly
+every work on the subject the assertion is dwelt upon that railroad
+builders were regarded as public benefactors; that people and
+legislatures were only too glad to present them with public
+resources. There is just a slight substance of truth in this alleged
+historical writing, but nothing more. The people, it is true, were
+eager, for their own convenience, to have the railroads built, but
+unwilling to part with their hard-wrung taxes, their splendid public
+domain, and their rights only that a few men, part gamblers and part
+men of energy and foresight, should divert the entire donation to
+their own aggrandizement. For this attitude the railroad promoters
+had an alluring category of arguments ready.
+
+
+CASH THE GREAT PERSUADER
+
+Through the public press, and in speeches and pamphlets, the people
+were assured in the most seductive and extravagant language that
+railroads were imperative in developing the resources of the country;
+that they would be a mighty boon and an immeasurable stimulant to
+progress. These arguments had much weight, especially with a
+population stretched over such a vast territory as that of the United
+States. But alone they would not have accomplished the ends sought,
+had it not been for the quantities of cash poured into legislative
+pockets. The cash was the real eloquent persuader. In turn, the
+virtuous legislators, on being questioned by their constituents as to
+why they had voted such great subsidies, such immense land grants and
+such sweeping and unprecedented privileges to private corporations,
+could fall back upon the justification (and a legitimate one it
+seemed) that to get the railroads built, public encouragement and aid
+were necessary.
+
+Many of the projectors of railroads were small tradesmen, landlords,
+mill owners, merchants, bankers, associated politicians and lawyers.
+Not infrequently, however, did it happen that some charters and
+grants were obtained by politicians and lawyers who, at best, were
+impecunious sharpers. Their greatest asset was a devious knowledge of
+how to get something for nothing. With a grandiloquent front and a
+superb bluff they would organize a company to build a railroad from
+this to that point; an undertaking costing millions, while perhaps
+they could not pay their board bill. An arrangement with a printer to
+turn out stock issues on credit was easy; with the promise of batches
+of this stock, they would then get a sufficient number of legislators
+to vote a charter, money and land.
+
+After that, the future was rosy. Bankers, either in the United States
+or abroad, could always be found to buy out the franchise or finance
+it. In fact, the bankers, who themselves were well schooled in the
+art of bribery and other forms of corruption, [Footnote: "Schooled in
+the art of bribery."--In previous chapters many facts have been
+brought out showing the extent of corrupt methods used by the
+bankers. The great scandal caused in Pennsylvania in 1840 by the
+revelations of the persistent bribery carried on by the United States
+Bank for many years, was only one of many such scandals throughout
+the United States. One of the most characteristic phases of the
+reports of the various legislative investigating committees was the
+ironical astonishment that they almost invariably expressed at the
+"superior class" being responsible for the continuous bribery. Thus,
+in reporting in 1840, that $130,000 had been used in bribery in
+Pennsylvania by the United States Bank, an investigating committee of
+the Pennsylvania House of Representatives commented: "It is hard to
+come to the conclusion that men of refined education, and high and
+honorable character, would wink at such things, yet the conclusion is
+unavoidable." [Pa. House Journal, 1842, Vol. ii, Appendix, 172-531.]
+were often outwitted by this class of adventurers, and were only too
+glad to treat with them as associates, on the recognized commercial
+principle that success was the test of men's mettle, and that the
+qualities productive of such success must be immediately availed of.
+
+In other instances a number of tradesmen and landowners would
+organize a company having, let us say, $250,000 among them. If they
+had proceeded to build a railroad with this sum, not many miles of
+rail would have been laid before they would have found themselves
+hopelessly bankrupt.
+
+Their wisdom was that of their class; they knew a far better method.
+This was to use the powers of government, and make the public provide
+the necessary means. In the process of construction the $250,000
+would have been only a mite. But it was quite enough to bribe a
+legislature. By expending this sum in purchasing a majority of an
+important committee, and a sufficient number of the whole body, they
+could get millions in public loans, vast areas of land given
+outright, and a succession of privileges worth, in the long run,
+hundreds upon hundreds of millions of dollars.
+
+
+A WELTER OF CORRUPTION.
+
+So the onslaught of corruption began and continued. Corruption in
+Ohio was so notorious that it formed a bitter part of the discussion
+in the Ohio Constitutional Convention of 1850-51. The delegates were
+droning along over insertions devised to increase corporation power.
+Suddenly rose Delegate Charles Reemelin and exclaimed: "Corporations
+always have their lobby members in and around the halls of
+legislation to watch and secure their interests. Not so with the
+people--they cannot act with that directness and system that a
+corporation can. No individual will take it upon himself to go to the
+Capitol at his own expense, to watch the representatives of the
+people, and to lobby against the potent influences of the
+corporation. But corporations have the money, and it is to their
+interest to expend it to secure the passage of partial laws."
+[Footnote: Ohio Convention Debates, 1850-51, ii: 174.]
+
+Two years later, at one of the sessions of the Massachusetts
+Constitutional Convention, Delegate Walker, of North Brookfield, made
+a similar statement as to conditions in that State. "I ask any man to
+say," he asked, "if he believes that any measure of legislation could
+be carried in this State, which was generally offensive to the
+corporations of the Commonwealth? It is very rarely the case that we
+do not have a majority in the legislature who are either presidents,
+directors or stockholders in incorporated companies. This is a fact
+of very grave importance." [Footnote: Debates in the Massachusetts
+Convention, 1853, iii: 59.] Two-thirds of the property in
+Massachusetts, Delegate Walker pointed out, was owned by
+corporations.
+
+In 1857 an acrimonious debate ensued in the Iowa Constitutional
+Convention over an attempt to give further extraordinary power to the
+railroads. Already the State of Iowa had incurred $12,000,000 in
+debts in aiding railroad corporations. "I fear," said Delegate Traer,
+"that it is very often the case that these votes (on appropriations
+for railroads) are carried through by improper influences, which the
+people, if left alone, would, upon mature reflection, never have
+adopted." [Footnote: Constitutional Debates, Iowa, 1857, ii: 777.]
+
+
+IMPOTENCE OF THE PEOPLE.
+
+These are but a very few of the many instances of the debauching of
+every legislature in the United States. No matter how furiously the
+people protested at this giving away of their resources and rights,
+the capitalists were able to thwart their will on every occasion. In
+one case a State legislature had been so prodigal that the people of
+the State demanded a Constitutional provision forbidding the bonding
+of the State for railroad purposes. The Constitutional Convention
+adopted this provision. But the members had scarcely gone to their
+homes before the people discovered how they had been duped. The
+amendment barred the State from giving loans, but (and here was the
+trick) it did not forbid counties and municipalities from doing so.
+Thereupon the railroad capitalists proceeded to have laws passed, and
+bribe county and municipal officials all over the State to issue
+bonds and to give them terminal sites and other valuable privileges
+for nothing. In every such case the railroad owners in subsequent
+years sneaked legislation through in practically every State, or
+resorted to subterfuges, by which they were relieved from having to
+pay back those loans.
+
+Hundreds of millions of dollars, exacted from the people in taxation,
+were turned over to the railroad corporations, and little of it was
+ever returned. As for the land grants to railroads, they reached
+colossal proportions. From 1850 to 1872 Congress gave not less than
+155,504,994.59 acres of the public domain either direct to railroad
+corporations, or to the various States, to be transferred to those
+corporations.
+
+Much of this immense area was given on the condition that unless the
+railroads were built, the grants were to be forfeited. But the
+capitalists found no difficulty in getting a thoroughly corrupt
+Congress to extend the period of construction in cases where the
+construction had not been done. Of the 155,000,000 acres, a
+considerable portion of it valuable mineral, coal, timber and
+agricultural land, only 607,741 acres were forfeited by act of
+Congress, and even much of these were restored to the railroads by
+judicial decisions. [Footnote: The principal of these decisions was
+that of the Supreme Court of the United States in the case of
+Schluenberg vs. Harriman (Wallace's Supreme Court Reports, xxi:44).
+In many of the railroad grants it was provided that in case the
+railroad lines were not completed within certain specified times, the
+lands unsold or unpatented should revert to the United States. The
+decision of the Supreme Court of the United States practically made
+these provisions nugatory, and indirectly legalized the crassest
+frauds.
+
+The original grants excluded mineral lands, but by a subsequent
+fraudulent official construction, coal and iron were declared not to
+be covered by the term mineral.
+
+Commissioner Sparks of the U. S. General Land Office estimated in
+1885 that, in addition to the tens of millions of acres the railroad
+corporations had secured by fraud under form of law, they had
+overdrawn ten million acres, "which vast amount has been treated by
+the corporations as their absolute property, but is really public
+land of the United States recoverable to the public domain." (House
+Executive Docs., First Session, Forty-ninth Congress, 1885-86,
+ii:184.) It has never been recovered.]
+
+That Congress, not less than the legislatures, was honeycombed with
+corruption is all too evident from the disclosures of many
+investigations--disclosures to which we shall have pertinent occasion
+to refer later on. Not only did the railroad corporations loot in a
+gigantic way under forms of law, but they so craftily drafted the
+laws of both Nation and the States that fraud at all times was easy.
+
+DEFRAUDING THE NATION OF TAXES.
+
+Not merely were these huge areas of land obtained by fraud, but after
+they were secured, fraud was further used to evade taxation. And by
+donations of land is not meant only that for intended railroad use or
+which could be sold by the railroads. In some cases, notably that of
+the Union Pacific Railroad, authority was given to the railroad by
+acts passed in 1862 and 1864 to take all of the material, such as
+stone, timber, etc., needed for construction, from the public lands.
+So, in addition to the money and lands, much of the essential
+material for building the railroads was supplied from the public
+resources. No sooner had they obtained their grants, than the
+railroad corporations had law after law passed removing this
+restriction or that reservation until they became absolute masters of
+hundreds of millions of acres of land which a brief time before had
+been national property.
+
+"These enormous tracts," wrote (in 1886) William A. Phillips, a
+member of the Committee on Public Lands of the Forty-third Congress,
+referring to the railroad grants, "are in their disposition subject
+to the will of the railroad companies. They can dispose of them in
+enormous tracts if they please, and there is not a single safeguard
+to secure this portion of the national domain to cultivating
+yeomanry." The whole machinery of legislation was not only used to
+exclude the farmer from getting the land, and to centralize its
+ownership in corporations, but was additionally employed in relieving
+these corporations from taxation on the land thus obtained by fraud.
+"To avoid taxation," Phillips goes on, "the railroad land grant
+companies had an amendment enacted into law to the effect that they
+should not obtain their patents until they had paid a small fee to
+defray the expense of surveying. This they took care not to pay, or
+only to pay as fast as they could sell tracts to some purchasers, on
+which occasions they paid the surveying fee and obtained deeds for
+the portion they sold. In this way they have held millions of acres
+for speculative purposes, waiting for a rise in prices, without
+taxation, while the farmers in adjacent lands paid taxes." [Footnote:
+"Labor, Land and Law": 338-339.]
+
+Phillips passes this fact by with a casual mention, as though it were
+one of no great significance.
+
+It is a fact well worthy of elaboration. Precisely as the
+aristocracies in the Old World had gotten their estates by force and
+fraud, and then had the laws so arranged as to exempt those estates
+from taxation, so has the money aristocracy of the United States
+proceeded on the same plan. As we shall see, however, the railroad
+and other interests have not only put through laws relieving from
+direct taxation the land acquired by fraud, but also other forms of
+property based upon fraud.
+
+This survey, however, would be prejudicial and one-sided were not the
+fact strongly pointed out that the railroad capitalists were by no
+means the only land-graspers. Not a single part of the capitalist
+class was there which could in any way profit from the theft of
+public domain that did not wallow in corruption and fraud.
+
+The very laws seemingly passed to secure to the poor settler a
+homestead at a reasonable price were, as Henry M. Teller, Secretary
+of the Interior, put it, perverted into "agencies by which the
+capitalists secures large and valuable areas of the public land at
+little expense." [Footnote: Report of the Secretary of the Interior
+for 1883. Reporting to Secretary of the Interior Lamar, in response
+to a U. S. Senate resolution for information, William A. J. Sparks,
+Commissioner of the General Land Office, gave statistics showing an
+enormous number of fraudulent land entries, and continued:
+
+"It was the ease with which frauds could be perpetrated under
+existing laws, and the immunity offered by a hasty issue of patents,
+that encouraged the making of fictitious and fraudulent entries. The
+certainty of a thorough investigation would restrain such practices,
+but fraud and great fraud must inevitably exist so long as the
+opportunity for fraud is preserved in the laws, and so long as it is
+hoped by the procurers and promoters of fraud that examinations may
+be impeded or suppressed." If, Commissioner Sparks urged, the
+preëmption, commuted-homestead, timber-land, and desert-land laws
+were repealed, then, "the illegal appropriation of the remaining
+public lands would be reduced to a minimum."--U. S. Senate Documents,
+First Session, Forty-ninth Congress, 1885-1886, Vol. viii, Doc. No.
+134:4.] The poor were always the decoys with which the capitalists of
+the day managed to bag their game. It was to aid and encourage "the
+man of small resources" to populate the West that the Desert Land Law
+was apparently enacted; and many a pathetic and enthusiastic speech
+was made in Congress as this act was ostentatiously going through.
+Under this law, it was claimed, a man could establish himself upon
+six hundred and forty acres of land and, upon irrigating a portion of
+it, and paying $1.25 an acre, could secure a title. For once, it
+seemed, Congress was looking out for the interests of the man of few
+dollars.
+
+
+VAST THEFTS OF LAND.
+
+But plaudits were too hasty. To the utter surprise of the people the
+law began to work in a perverse direction. Its provisions had read
+well enough on a casual scrutiny. Where lay the trouble? It lay in
+just a few words deftly thrown in, which the crowd did not notice.
+This law, acclaimed as one of great benefit to every man aspiring for
+a home and land, was arranged so that the capitalist cattle
+syndicates could get immense areas. The lever was the omission of any
+provision requiring _actual settlement_. The livestock corporations
+thereupon sent in their swarms of dummies to the  "desert" lands
+(many of which, in reality, were not desert but excellent grazing lands),
+had their dummies get patents from the Government and then transfer
+the lands. In this way the cattlemen became possessed of enormous
+areas; and to-day these tracts thus gotten by fraud are securely held
+intact, forming what may be called great estates, for on many of them
+live the owners in expansive baronial style.
+
+In numerous instances, law was entirely dispensed with. Vast tracts
+of land were boldly appropriated by sheep and cattle rangers who had
+not even a pretense of title. Enclosing these lands with fences, the
+rangers claimed them as their own, and hired armed guards to drive
+off intruders, and kill if necessary. [Footnote: "Within the cattle
+region," reported Commissioner Sparks, "it is notorious that actual
+settlements are generally prevented and made practically impossible
+outside the proximity of towns, through the unlawful control of the
+country, maintained by cattle companies."--U. S. Senate Docs., 1885-
+86, Vol. viii, No. 134:4 and 5.
+
+Acting Commissioner Harrison of the General Land Office, reporting on
+March 14, 1884, to Secretary of the Interior Teller, showed in detail
+the vast extent of the unlawful fencing of public lands. In the
+Arkansas Valley in Colorado at least 1,000,000 acres of public domain
+were illegally seized. The Prairie Cattle Company, composed of Scotch
+capitalists, had fenced in more than a million acres in Colorado, and
+a large number of other cattle companies in Colorado had seized areas
+ranging from 20,000 to 200,000 acres. "In Kansas," Harrison went on,
+"entire counties are reported as [illegally] fenced. In Wyoming, one
+hundred and twenty-five cattle companies are reported having fencing
+on the public lands. Among the companies and persons reported as
+having 'immense' or 'very large' areas inclosed . . . are the
+Dubuque, Cimarron and Renello Cattle [companies] in Colorado; the
+Marquis de Morales in Colorado; the Wyoming Cattle Company (Scotch)
+in Wyoming; and the Rankin Live Stock Company in Nebraska.
+
+"There is a large number of cases where inclosures range from 1,000
+to 25,000 acres and upwards.
+
+"The reports of special agents show that the fraudulent entries of
+public land within the enclosures are extensively made by the
+procurement and in the interest of stockmen, largely for the purpose
+of controlling the sources of water supply."--"Unauthorized Fencing
+of Public Lands," U. S. Senate Docs., First Session, Forty-eighth
+Congress, 1883-84, Vol. vi, Doc. No. 127:2.] Murder after murder was
+committed. In this usurpation the august Supreme Court of the United
+States upheld them. And the grounds of the decision were what?
+
+The very extraordinary dictum that a settler could not claim any
+right of preëmption on public lands in possession of another who had
+enclosed, settled upon and improved them. This was the very reverse
+of every known declaration of common and of statute law. No court,
+supreme or inferior, had ever held that because the proceeds of theft
+were improved or were refurbished a bit, the sufferer was thereby
+estopped from recovery. This decision showed anew how, while the
+courts were ever ready to enforce the law literally against the
+underlings and penniless, they were as active in fabricating tortuous
+constructions coinciding not always, but nearly always, with the
+demands and interests of the capitalist class.
+
+It has long been the fashion on the part of a certain prevalent
+school of writers and publicists to excoriate this or that man, this
+or that corporation, as the ringleader in the orgy of corruption and
+oppression. This practice, arising partly from passionate or ill-
+considered judgment, and in part from ignorance of the subject, has
+been the cause of much misunderstanding, popular and academic.
+
+No one section of the capitalist class can be held solely
+responsible; nor were the morals and ethics of any one division
+different from those of the others. The whole capitalist class was
+coated with the same tar. Shipping merchants, traders in general,
+landholders, banking and railroad corporations, factory owners,
+cattle syndicates, public utility companies, mining magnates, lumber
+corporations--all were participants in various ways in the subverting
+of the functions of government to their own fraudulent ends at the
+expense of the whole producing class.
+
+While the railroad corporations were looting the public treasury and
+the public domain, and vesting in themselves arbitrary powers of
+taxation and proscription, all of the other segments of the
+capitalist class were, at the same time, enriching themselves in the
+same way or similar ways. The railroads were much denounced; but
+wherein did their methods differ from those of the cattle syndicates,
+the industrial magnates or the lumber corporations? The lumber barons
+wanted their predacious share of the public domain; throughout
+certain parts of the West and in the South were far-stretching,
+magnificent forests covered with the growth of centuries. To want and
+to get them were the same thing, with a Government in power
+representative of capitalism.
+
+
+SPOLIATION ON A GREAT SCALE.
+
+The "poor settler" catspaw was again made use of. At the behest of
+the lumber corporations, or of adventurers or politicians who saw a
+facile way of becoming multimillionaires by the simple passage of an
+act, the "Stone and Timber Act" was passed in 1878 by Congress. An
+amendment passed in 1892 made frauds still easier. This measure was
+another of those benevolent-looking laws which, on its face, extended
+opportunities for the homesteader. No longer, it was plausibly set
+forth, could any man say that the Government denied him the right to
+get public land for a reasonable sum. Was ever a finer, a more
+glorious chance presented? Here was the way open for any individual
+homesteader to get one hundred and sixty acres of timber land for the
+low price of $2.50 an acre. Congress was overwhelmed with outbursts
+of panegyrics for its wisdom and public spirit.
+
+Soon, however, a cry of rage went up from the duped public. And the
+cause? The law, like the Desert Land Law, it turned out, was filled
+with cunningly-drawn clauses sanctioning the worst forms of
+spoliation. Entire trainloads of people, acting in collusion with the
+land grabbers, were transported by the lumber syndicates into the
+richest timber regions of the West, supplied with the funds to buy,
+and then each, after having paid $2.50 per acre for one hundred and
+sixty acres, immediately transferred his or her allotment to the
+lumber corporations.
+
+Thus, for $2.50 an acre, the lumber syndicates obtained vast tracts
+of the finest lands worth, at the least, according to Government
+agents, $100 an acre, at a time, thirty-five years ago, when lumber
+was not nearly so costly as now.
+
+The next development was characteristic of the progress of onsweeping
+capitalism. Just as the traders, bankers, factory owners, mining and
+railroad magnates had come into their possessions largely (in varying
+degrees) by fraud, and then upon the strength of those possessions
+had caused themselves to be elected or appointed to powerful offices
+in the Government, State or National, so now some of the lumber
+barons used a part of the millions obtained by fraud to purchase
+their way into the United States Senate and other high offices. They,
+as did their associates in the other branches of the capitalist
+class, helped to make and unmake judges, governors, legislatures and
+Presidents; and at least one, Russell A. Alger, became a member of
+the President's Cabinet in 1897.
+
+Under this one law,--the Stone and Timber Act--irrespective of other
+complaisant laws, not less than $57,000,000 has been stolen in the
+last seven years alone from the Government, according to a statement
+made in Congress by Representative Hitchcock, of Nebraska, on May 5,
+1908. He declared that 8,000,000 acres had been sold for $20,000,000,
+while the Department of the Interior had admitted in writing that the
+actual aggregate value of the land, at prevailing commercial prices,
+was $77,000,000. These lands, he asserted, had passed into the hands
+of the Lumber Trust, and their products were sold to the people of
+the United States at an advance of seventy per cent. This theft of
+$57,000,000 simply represented the years from 1901 to 1908; it is
+probable that the entire thefts for 10,395,689.96 acres sold during
+the whole series of years since the Stone and Timber Act was passed
+reaches a much vaster amount.
+
+Stupendous as was the extent of the nation's resources already
+appropriated by 1876, more remained to be seized. The Government
+still owned 40,000,000 acres of land in the South, mainly in Alabama,
+Louisiana, Florida, Arkansas and Mississippi. Much of this area was
+valuable timber land, and a part of it, especially in Alabama, was
+filled with great coal and iron deposits,--a fact of which certain
+capitalists were well aware, although the general public did not know
+it.
+
+During the Civil War nothing could be attempted in the war-ravaged
+South. That conflict over, a group of capitalists set about to get
+that land, or at least the valuable part of it. At about the time
+that they had their plans primed to juggle a bill through Congress,
+an unfortunate situation arose. A rancid public scandal ensued from
+the bribery of members of Congress in getting through the charters
+and subsidies of the Union Pacific railroad and other railroads.
+Congress, for the sake of appearance, had to be circumspect.
+
+
+THE "CASH SALES" ACT.
+
+By 1876, however, the public agitation had died away. The time was
+propitious. Congress rushed through a bill carefully worded for the
+purpose. The lands were ordered sold in unlimited areas for cash. No
+pretense was made of restricting the sale to a certain acreage so
+that all any individual could buy was enough for his own use. Anyone,
+if he chose, could buy a million or ten million acres, provided he
+had the cash to pay $1.25 an acre. The way was easy for capitalists
+to get millions of acres of the coveted iron, coal and timber lands
+for practically nothing. At that very time the Government was selling
+coal lands in Colorado at $10 to $20 an acre, and it was recognized
+that even that price was absurdly low.
+
+Hardly was this "cash sales" law passed, than the besieging
+capitalists pounced upon these Southern lands and scooped in eight
+millions of acres of coal, iron and timber lands intrinsically worth
+(speaking commercially) hundreds of millions of dollars. The fortunes
+of not a few railroad and industrial magnates were instantly and
+hugely increased by this fraudulent transaction. [Footnote:
+"Fraudulent transaction," House Ex. Doc. 47, Part iv, Forty-sixth
+Congress, Third Session, speaks of the phrasing of the act as a mere
+subterfuge for despoilment; that the act was passed specifically "for
+the benefit of capitalists," and "that fraud was used in sneaking it
+through Congress."] Hundreds of millions of dollars in capitalist
+bonds and stock, representing in effect mortgages on which the people
+perpetually have to pay heavy interest, are to-day based upon the
+value of the lands then fraudulently seized.
+
+Fraud was so continuous and widespread that we can here give only a
+few succinct and scattering instances. "The present system of laws,"
+reported a special Congressional Committee appointed in 1883 to
+investigate what had become of the once vast public domain, "seem to
+invite fraud. You cannot turn to a single state paper or public
+document where the subject is mentioned before the year 1883, from
+the message of the President to the report of the Commissioner of the
+Land Office, but what statements of 'fraud' in connection with the
+disposition of public lands are found." [Footnote: House Ex. Doc. 47:
+356.] A little later, Commissioner Sparks of the General Land
+Office pointed out that "the near approach of the period when the
+United States will have no land to dispose of has stimulated the
+exertions of capitalists and corporations to acquire outlying regions
+of public land in mass, by whatever means, legal or illegal." In the
+same report he further stated, "At the outset of my administration I
+was confronted with overwhelming evidence that the public domain was
+made the prey of unscrupulous speculation and the worst forms of land
+monopoly." [Footnote: Report of the Commissioner of the General Land
+Office for October, 1885: 48 and 79.]
+
+THE "EXCHANGE OF LAND" LAW. Not pausing to deal with a multitude of
+other laws the purport and effect of all of which were the same--to
+give the railroad and other corporations a succession of colossal
+gifts and other special privileges--laws, many of which will be
+referred to later--we shall pass on to one of the final masterly
+strokes of the railroad magnates in possessing themselves of many of
+such of the last remaining valuable public lands as were open to
+spoliation.
+
+This happened in 1900. What were styled the land-grant railroads,
+that is to say, the railroad corporations which received subsidies in
+both money and land from the Government, were allotted land in
+alternate sections. The Union Pacific manipulated Congress to "loan"
+it about $27,000,000 and give it outright 13,000,000 acres of land.
+The Central Pacific got nearly $26,000,000 and received 9,000,000
+acres. To the Northern Pacific 47,000,000 acres were given; to the
+Kansas Pacific, 12,100,000; to the Southern Pacific about 18,000,000
+acres. From 1850 the National Government had granted subsidies to
+more than fifty railroads, and, in addition to the great territorial
+possessions given to the six railroads enumerated, had made a cash
+appropriation to those six of not less than about $140,000,000. But
+the corruptly obtained donations from the Government were far from
+being all of the bounty. Throughout the country, States, cities and
+counties contributed presents in the form of franchises, financial
+assistance, land and terminal sites.
+
+The land grants, especially in the West, were so enormous that
+Parsons compares them as follows: Those in Minnesota would make two
+States the size of Massachusetts; in Kansas they were equal to two
+States the size of Connecticut and New Jersey; in Iowa the extent of
+the railroad grants was larger than Connecticut and Rhode Island, and
+the grants in Michigan and Wisconsin nearly as large; in Montana the
+grant to one railroad alone would equal the whole of Maryland, New
+Jersey and Massachusetts. The land grants in the State of Washington
+were about equivalent to the area of the same three States. Three
+States the size of New Hampshire could be carved out of the railroad
+grants in California. [Footnote: "The Railways, the Trusts and the
+People": 137.]
+
+The alternate sections embraced in these States might be good or
+useless land; the value depended upon the locality. They might be the
+richest and finest of agricultural grazing, mineral or timber land or
+barren wastes and rocky mountain tops.
+
+For a while the railroad corporations appeared satisfied with their
+appropriations and allotments. But as time passed, and the powers of
+government became more and more directed by them, this plan naturally
+occurred: Why not exchange the bad, for good, land? Having found it
+so easy to possess themselves of so vast and valuable an area of
+former public domain, they calculated that no difficulty would be
+encountered in putting through another process of plundering. All
+that was necessary was to go through the formality of ordering
+Congress to pass an act allowing them to exchange bad, for good,
+lands.
+
+This, however, could not be done too openly. The people must be
+blinded by an appearance of conserving public interests. The
+opportunity came when the Forest Reservation Bill was introduced in
+Congress--a bill to establish national forest reservations. No better
+vehicle could have been found for the project traveling in disguise.
+This bill was everywhere looked upon as a wise and statesmanlike
+measure for the preservation of forests; capitalist interests, in the
+pursuit of immediate profit, had ruthlessly denuded and destroyed
+immense forest stretches, causing, in turn, floods and destruction of
+life, property and of agriculture. Part of the lands to be taken for
+the forest reservations included territory settled upon; it was
+argued as proper, therefore, that the evicted homesteaders should be
+indemnified by having the choice of lands elsewhere.
+
+So far, the measure looked well. But when it went to the conference
+committee of the two houses of Congress, the railroad representatives
+artfully slipped in the four unobtrusive words, "or any other
+claimant." This quartet of words allowed the railway magnates to
+exchange millions of acres of desert and of denuded timber lands,
+arid hills and mountain tops covered with perpetual snow, for
+millions of the richest lands still remaining in the Government's
+much diminished hold.
+
+So secretly was this transaction consummated that the public knew
+nothing about it; the subsidized newspapers printed not a word; it
+went through in absolute silence. The first protest raised was that
+of Senator Pettigrew, of South Dakota, in the United States Senate on
+May 31, 1900. In a vigorous speech he disclosed the vast thefts going
+on under this act. Congress, under the complete domination of the
+railroads, took no action to stop it. Only when the fraud was fully
+accomplished did the railroads allow Congress to go through the forms
+of deferring to public interests by repealing the law. [Footnote: In
+a letter to the author Senator Pettigrew instances the case of the
+Northern Pacific Railroad. "The Northern Pacific," he writes, "having
+patented the top of Mount Tacoma, with its perpetual snow and the
+rocky crags of the mountains elsewhere, which had been embraced
+within the forest reservation, could now swap these worthless lands,
+every acre, for the best valley and grazing lands owned by the
+Government, and thus the Northern Pacific acquired about two million
+acres more of mineral, forest and farming lands."]
+
+
+COAL LANDS EXPROPRIATED
+
+Not merely were the capitalist interests allowed to plunder the
+public domain from the people under these various acts, but another
+act was passed by Congress, the "Coal Land Act," purposely drawn to
+permit the railroads to appropriate great stretches of coal deposits.
+"Already," wrote President Roosevelt in a message to Congress urging
+the repeal of the Stone and Timber Act, the Desert Land Law, the Coal
+Land Act and similar enactments, "probably one-half of the total area
+of high-grade coals in the West has passed under private control.
+Including both lignite and the coal areas, these private holdings
+aggregate not less than 30,000,000 acres of coal fields." These
+urgings fell flat on a Congress that included many members who had
+got their millions by reason of these identical laws, and which, as a
+body, was fully under the control of the dominant class of the day--
+the Capitalist class. The oligarchy of wealth was triumphantly,
+gluttonously in power; it was ingenuous folly to expect it to yield
+where it could vanquish, and concede where it could despoil.
+[Footnote: Nor did it yield. Roosevelt's denunciations in no way
+affected the steady expropriating process. In the current seizure
+(1909) of vast coal areas in Alaska, the long-continuing process can
+be seen at work under our very eyes. A controversy, in 1909, between
+Secretary of the Interior Ballinger and U. S. Chief Forester Gifford
+Pinchot brought a great scandal to a head. It was revealed that
+several powerful syndicates of capitalists had filed fraudulent
+claims to Alaskan coal lands, the value of which is estimated to be
+from $75,000,000 to $1,000,000,000. At the present writing their
+claims, it is announced, are being investigated by the Government.
+The charge has been made that Secretary of the Interior Ballinger,
+after leaving the Land Commissioner's office--a post formerly held by
+him--became the attorney for the most powerful of these syndicates.
+
+At a recent session of the Irrigation Congress at Spokane,
+Washington, Gov. Pardee of California charged that the timber, the
+minerals and the soil had long since become the booty of corporations
+whose political control of public servants was notorious.]
+
+The thefts of the public domain have continued, without intermission,
+up to this present day, and doubtless will not cease until every
+available acre is appropriated.
+
+A recent report of H. H. Schwartz, chief of the field service of the
+Department of the Interior, to Secretary Garfield, of that
+Department, showed that in the two years from 1906 to 1908 alone,
+approximately $110,000,000 worth of public land in States,
+principally west of the Mississippi River, had been fraudulently
+acquired by capitalist corporations and individuals. This report
+disclosed more than thirty-two thousand cases of land fraud. The
+frauds on the part of various capitalist corporations in obtaining
+vast mineral deposits in Alaska, and incalculably rich water power
+sites in Montana and elsewhere, constitute one of the great current
+public scandals. It will be described fully elsewhere in this work.
+
+Overlooking the petty, confusing details of the last seventy years,
+and focusing attention upon the large developments, this is the
+striking result beheld: A century ago no railroads existed; to-day
+the railroads not only own stupendous natural resources, expropriated
+from the people, but, in conjunction with allied capitalist
+interests, they dictate what the lot, political, economic and social,
+of the American people shall be. All of this transformation has come
+about within a relatively short period, much of it in our own time.
+But a little while ago the railroad projectors begged and implored,
+tricked and bribed; and had the law been enforced, would have been
+adjudged criminals and consigned to prison. And now, in the blazing
+power of their wealth, these same men or their successors are
+uncrowned kings, swaying the full powers of government, giving
+imperial orders that Congress, legislatures, conventions and people
+must obey.
+
+
+AN ARRAY OF COMMANDING FACTS.
+
+But this is not the only commanding fact. A much more important one
+lies in the astonishing ease with which the masses of the people have
+been discriminated against, exploited and oppressed. Theoretically
+the power of government resides in the people, down to the humblest
+voter. This power, however, has been made the instrument for
+enslaving the very people supposed to be the wielders of political
+action.
+
+While Congress, the legislatures and the executive and administrative
+officials have been industriously giving away public domain, public
+funds and perpetual rights to railroad and other corporations, they
+have almost entirely ignored the interests of the general run of
+people.
+
+The more capitalists they created, the harder it became for the poor
+to get settler's land on the public domain. Congress continued
+passing acts by which, in most cases, the land was turned over to
+corporations. Intending settlers had to buy it at exorbitant prices.
+This took place in nearly all of the States and Territories. Large
+numbers of people could not afford to pay the price demanded by the
+railroads, and consequently were compelled to herd in industrial
+centers. They were deliberately shut off from possession of the land.
+This situation was already acute twenty-five years ago. "The area of
+arable land open to settlement," pointed out Secretary of the
+Interior Teller in a circular letter of May 22, 1883, "is not great
+when compared with the increasing demand and is rapidly decreasing."
+All other official reports consistently relate the same conditions.
+[Footnote: "The tract books of my office show," reported Commissioner
+Sparks, "that available public lands are already largely covered by
+entries, selections and claims of various kinds." The actual settler
+was compelled to buy up these claims, if, indeed, he was permitted to
+settle on the land.--U. S. Senate Ex. Docs., 1885-86, Vol. viii, Doc.
+No. 134:4.]
+
+At the same time, while being excluded from soil which had been
+national property, the working and farming class were subjected to
+either neglect or onerous laws. As a class, the capitalists had no
+difficulty at any time in securing whatever laws they needed; if
+persuasion by argument was not effective, bribery was. Moreover, over
+and above corrupt purchase of votes was the feeling ingrained in
+legislators by the concerted teachings of society that the man of
+property should be looked up to; that he was superior to the common
+herd; that his interests were paramount and demanded nursing and
+protection. Whenever a commercial crisis occurred, the capitalists
+secured a ready hearing and their measures were passed promptly. But
+millions of workers would be in enforced idleness and destitution,
+and no move was made to throw open public lands to them, or
+appropriate money, or start public works. Such a proposed policy was
+considered "paternalism"--a catchword of the times implying that
+Governmental care should not be exercised for the unfortunate, the
+weak and the helpless.
+
+And here was the anomaly of the so-called American democratic
+Government. It was held legitimate and necessary that capital should
+be encouraged, but illegitimate to look out for the interests of the
+non-propertied. The capitalists were very few; the non-propertied,
+holding nominally the overwhelming voting power, were many.
+Government was nothing more or less than a device for the nascent
+capitalist class to work out its inevitable purposes, yet the
+majority of the people, on whom the powers of class government
+severely fell, were constantly deluded into believing that the
+Government represented them. Whether Federalist or anti-Federalist,
+Whig, Republican or Democratic party was in power, the capitalist
+class went forward victoriously and invincibly, the proof of which is
+seen in its present almost limitless power and possessions.
+
+
+
+
+CHAPTER II
+
+A NECESSARY CONTRAST
+
+
+If the whole might of Government was used in the aggrandizement and
+perpetuation of a propertied aristocracy, what was its specific
+attitude toward the working class? Of the powerful few, whether
+political or industrial, the conventional histories hand down grossly
+biased and distorted chronicles. These few are isolated from the
+multitude, and their importance magnified, while the millions of
+obscure are nowhere adequately described. Such sterile historians
+proceed upon the perfunctory plan, derived from ancient usage in the
+days when kingcraft was supremely exalted, that it is only the mighty
+few whose acts are of any consequence, and that the doings of the
+masses are of no account.
+
+
+GOVERNMENT BY PROPERTY INTERESTS.
+
+Hence it is that most histories are mere registers of names and
+dates, dull or highly-colored hackneyed splurges of print giving no
+insight into actual conditions.
+
+In this respect most of the prevailing histories of the United States
+are the most egregious offenders. They fix the idea that this or that
+alleged statesman, this or that President or politician or set of
+politicians, have been the dominating factors in the decision and
+sway of public affairs. No greater error could be formulated. Behind
+the ostentatious and imposing public personages of the different
+periods, the arbiters of laws and policies have been the men of
+property. They it was who really ruled both the arena and the arcana
+of politics.
+
+It was they, sometimes openly, but more usually covertly, who
+influenced and manipulated the entire sphere of government.
+
+It was they who raised the issues which divided the people into
+contesting camps and which often beclouded and bemuddled the popular
+mind. It was their material ideals and interests that were engrafted
+upon the fabric of society and made the prevailing standards of the
+day.
+
+From the start the United States Government was what may be called a
+regime swayed by property.
+
+The Revolution, as we have seen, was a movement by the native
+property interests to work out their own destiny without interference
+by the trading classes of Great Britain. The Constitution of the
+United States, the various State Constitutions, and the laws, were,
+we have set forth, all reflexes of the interests, aims, castes and
+prejudices of the property owners, as opposed to the non-propertied.
+At first, the landholders and the shipping merchants were the
+dictators of laws. Then from these two classes and from the tradesmen
+sprang a third class, the bankers, who, after a continuous orgy of
+bribery, rose to a high pitch of power. At the same time, other
+classes of property owners were sharers in varying degrees in
+directing Government. One of these was the slaveholders of the South,
+desperately increasing their clutch on government administration the
+more their institutions were threatened. The factory owners were
+likewise participants. However bitterly some of these propertied
+interests might war upon one another for supremacy, there was never a
+time when the majority of the men who sat in Congress, the
+legislatures or the judges did not represent, or respond to, either
+the interests or the ideals of one or more of these divisions of the
+propertied classes.
+
+Finally, out of the landowners, slaveowners, bankers, shippers,
+factory masters and tradesmen a new class of great power developed.
+This was the railroad-owning class. From about the year 1845 to 1890
+it was the most puissant governing class in the United States, and
+only ceased being distinctly so when the industrial trusts became
+even mightier, and a time came when one trust alone, the Standard Oil
+Company, was able to possess itself of vast railroad systems.
+
+These different components of the railroad-owning class had gathered
+in their money by either outright fraud or by the customary
+exploitative processes of the times. We have noted how many of the
+landholders secured their estates at one time or another by bribery
+or by invidiously fraudulent transactions; and how the bankers, who
+originally were either tradesmen, factory owners or landowners, had
+obtained their charters and privileges by widespread bribery. A
+portion of the money thus acquired was often used in bribing Congress
+and legislatures for railroad charters, public funds, immense areas
+of land including forests and mines, and special laws of the most
+extraordinary character.
+
+
+CONDITIONS OF THE NON-PROPERTIED.
+
+Since Government was actually, although not avowedly or apparently, a
+property regime, what was the condition of the millions of non-
+propertied?
+
+In order to get a correct understanding of both the philosophy and
+the significance of what manner of property rule was in force, it is
+necessary to give an accompanying sketch of the life of the millions
+of producers, and what kind of laws related to them. Merely to
+narrate the acts of the capitalists of the period is of no enduring
+value unless it be accompanied by a necessary contrast of how
+Government and capitalist acted toward the worker. It was the worker
+who tilled the ground and harvested the produce nourishing nations;
+whose labor, mental or manual, brought forth the thousand and one
+commodities, utensils, implements, articles and luxuries necessary to
+the material wants of civilization. Verily, what of the great hosts
+of toilers who have done their work and shuffled off to oblivion?
+What were their aspirations, difficulties, movements and struggles?
+While Government, controlled by both the men and the standards of
+property, was being used as a distributing instrument for centering
+resources and laws in the hands of a mere minority, what were its
+methods in dealing with the lowly and propertyless?
+
+Furthermore, this contrast is indispensable for another reason.
+Posterity ever has a blunt way of asking the most inquisitive
+questions. The inquirer for truth will not be content with the simple
+statement that many of the factory owners and tradesmen bribed
+representative bodies to give them railroad charters and bountiful
+largess. He will seek to know how, as specifically as the records
+allow, they got together that money. Their nominal methods are of no
+weight; it is the portrayal of their real, basic methods which alone
+will satisfy the delver for actual facts.
+
+This is not the place for a voluminous account of the industrial
+development of the United States. We cannot halt here to give the
+full account of the origin and growth of that factory system which
+has culminated in the gigantic trusts of to-day. Nor can we pause to
+deal with the manifold circumstances and methods involved in that
+expansion. The full tale of the rise and climax of industrial
+establishments; how they subverted the functions of government to
+their own ends; stole inventions right and left and drove inventors
+to poverty and to the grave; defrauded the community of incredible
+amounts by evading taxation; oppressed their workers to a degree that
+in future times will read like the acts of a class outsavaging the
+savage; bribed without intermission; slaughtered legions of men,
+women and children in the pursuit of profit; exploited the peoples of
+the globe remorselessly--all of this and more, constituting a weird
+chapter of horrors in the progress of the race, will be fully
+described in a later part of this work. [Footnote: See "Great
+Fortunes from Industries."]
+
+But in order to contribute a clear perspective of the methods and
+morals of a period when Government was but the mannikin of property--
+a period even more pronounced now--and to give a deeper insight into
+the conditions against which millions had to contend at a time when
+the railroad oligarchy was blown into life by Government edict, a few
+important facts will be presented here.
+
+The sonorous doctrines of the Declaration of Independence read well,
+but they were not meant to be applied to the worker. The independence
+so much vaunted was the independence of the capitalist to do as he
+pleased. Few, if any, restrictions were placed upon him; such pseudo
+restrictions as were passed from time to time were not enforced. On
+the other hand, the severest laws were enacted against the worker.
+For a long time it was a crime for him to go on a strike. In the
+first strike in this country of which there is any record--that of a
+number of sailors in New York City in 1803, for better wages--the
+leader was arrested, indicted and sent to prison. The formidable
+machinery of Government was employed by the ruling commercial and
+landed classes for a double purpose. On the one hand, they insisted
+that it should encourage capital, which phrase translated into action
+meant that it should confer grants of land, immense loans of public
+funds without interest, virtual immunity from taxation, an extra-
+legal taxing power, sweeping privileges, protective laws and clearly
+defined statute rights.
+
+
+THE SUPREMACY OF EMPLOYERS.
+
+At the same time, while enriching themselves in every direction by
+transferring, through the powers of Government, public resources to
+themselves, the capitalists declared it to be a settled principle
+that Government should not be paternalistic; they asserted that it
+was not only not a proper governmental function to look out for the
+interests of the masses of workers, but they went even further.
+
+With the precedents of the English laws as an example, they held that
+it devolved upon Government to keep the workers sternly within the
+bounds established by employers. In plain words, this meant that the
+capitalist was to be allowed to run his business as he desired. He
+could overwork his employees, pay them the lowest wages, and kill
+them off by forcing them to work under conditions in which the
+sacrifice of human life was held subordinate to the gathering of
+profits, or by forcing them to work or live in disease-breeding
+places. [Footnote: The slum population of the United States increased
+rapidly. "According to the best estimates," stated the "Seventh
+Special Report of the U. S. Commissioner of Labor--The Slums of Great
+Cities, 1894," "the total slum population of Baltimore is about
+25,000; of Chicago, 162,000; of New York, 360,000; of Philadelphia,
+35,000" (p. 12). The figures of the average weekly wages per
+individual of the slum population revealed why there was so large a
+slum population. In Baltimore these wages were $8.65-1/2 per week; in
+Chicago, $9.88-1/2; in New York, $8.36, and in Philadelphia, $8.68
+per week (p. 64).
+
+In his "Modern Social Conditions," Bailey, basing his statements upon
+the U. S. Census of 1900, asserted that 109,750 persons had died from
+tuberculosis in the United States in 1900. "Plenty of fresh air and
+sunlight," he wrote, "will kill the germs, and yet it is estimated
+that there are eight millions of people who will eventually die from
+consumption unless strenuous efforts are made to combat the disease.
+Working in a confined atmosphere, and living in damp, poorly
+ventilated rooms, the dwellers in the tenements of the great cities
+fall easy victims to the great white plague." (p. 265).]
+
+The law, which was the distinct expression of the interests of the
+capitalist, upheld his right to do all this. Yet if the workers
+protested; if they sought to improve their condition by joining in
+that community of action called a strike, the same code of laws
+adjudged them criminals. At once, the whole power of law, with its
+police, military and judges, descended upon them, and either drove
+them back to their tasks or consigned them to prison.
+
+The conditions under which the capitalists made their profits, and
+under which the workers had to toil, were very oppressive to the
+workers. The hours of work at that period were from sunrise to
+sunset. Usually this rule, especially in the seasons of long days,
+required twelve, and very often fourteen and sixteen, hours a day.
+Yet the so-called statesmen and the pretentious cultured and refined
+classes of the day, saw nothing wrong in this exploitation. The
+reason was obvious. Their power, their elegant mansions, their silks
+and satins, their equipage and superior opportunities for enjoyment
+all were based upon the sweat and blood of these so-called free white
+men, women and children of the North, who toiled even harder than the
+chattel black slave of the South, and who did not receive a fraction
+of the care and thought bestowed, as a corrollary of property, upon
+the black slave. Already the capitalists of the North had a slavery
+system in force far more effective than the chattel system of the
+South--a system the economic superiority of which was destined to
+overthrow that of black slavery.
+
+Most historians, taking their cue from the intellectual subserviency
+demanded of them by the ruling propertied classes, delight in
+picturing those times as "the good old times," when the capitalists
+were benevolent and amiable, and the workers lived in peace and
+plenty.
+
+
+AN INCESSANT WARFARE.
+
+History in the main, thus far, has been an institution for the
+propagation of lies. The truth is that for thousands of years back,
+since the private property system came into existence, an incessant,
+uncompromising warfare has been going on between oppressors and
+oppressed. Apart from the class distinctions and the bitterness
+manifested in settlement and colonial times in this country--
+reference to which has been given in earlier chapters--the whole of
+the nineteenth century, and thus far of this century, has been a
+continuous industrial struggle. It has been the real warfare of
+modern times.
+
+In this struggle the propertied classes had the great advantage from
+the start. Centuries of rulership had taught them that the control of
+Government was the crux of the mastery. By possession of Government
+they had the power of making laws; of the enforcement or non-
+enforcement of those laws; of the directorship of police, army, navy,
+courts, jails and prisons--all terrible instruments for suppressing
+any attempt at protest, peaceful or otherwise. Notwithstanding this
+massing of power and force, the working class has at no time been
+passive or acquiescent. It has allowed itself to be duped; it has
+permitted its ranks to be divided by false issues; it has often been
+blind at critical times, and has made no concerted effort as yet to
+get intelligent possession of the great strategic point,--
+governmental power. Nevertheless, despite these mistakes, it has been
+in a state of constant rebellion; and the fact that it has been so,
+that its aspirations could not be squelched by jails, prisons and
+cannon nor by destitution or starvation, furnishes the sublimest
+record in all the annals of mankind.
+
+
+THE WORKERS' STRUGGLE FOR BETTER CONDITIONS.
+
+Again and again the workers attempted to throw off some of their
+shackles, and every time the whole dominant force of society was
+arrayed against them. By 1825 an agitation developed for a ten-hour
+workday. The politicians denounced the movement; the cultured classes
+frowned upon it; the newspapers alternately ridiculed and abused it;
+the officials prepared to take summary action to put it down. As for
+the capitalists--the shipping merchants, the boot and shoe
+manufacturers, the iron masters and others--they not only denied the
+right of the workers to organize, while insisting that they
+themselves were entitled to combine, but they inveighed against the
+ten-hour demand as "unreasonable conditions which the folly and
+caprice of a few journeymen mechanics may dictate." "A very large sum
+of money," says McNeill, "was subscribed by the merchants to defeat
+the ten-hour movement." [Footnote: "The Labor Movement": 339.] And as
+an evidence of the intense opposition to the workers' demands for a
+change from a fourteen to a ten-hour day, McNeill quotes from a
+Boston newspaper of 1832:
+
+Had this unlawful combination had for its object the enhancement of
+daily wages, it would have been left to its own care; but it now
+strikes the very nerve of industry and good morals by dictating the
+hours of labor, abrogating the good old rule of our fathers and
+pointing out the most direct course to poverty; for to be idle
+several of the most useful hours of the morning and evening will
+surely lead to intemperance and ruin.
+
+These, generally speaking, were the stock capitalists arguments of
+the day, together with the further reiterated assertion that it was
+impossible to conduct business on a ten-hour day system. The effect
+of the fourteen-hour day upon the workers was pernicious. Having no
+time for reading, self-education, social intercourse or acquainting
+themselves with refinement, they often developed brutal propensities.
+In proportion to the length of time and the rigor with which they
+were exploited, they degenerated morally and intellectually. This was
+a well-known fact, and was frequently commented upon by
+contemporaneous observers. Their employers could not fail to know it,
+yet, with few exceptions, they insisted that any movement to shorten
+the day's labor was destructive of good morals.
+
+This pronouncement, however, need not arouse comment. Ever has the
+propertied class set itself up as the lofty guardian of morals
+although actuated by sordid self-interest and nothing more. Many
+workers were driven to drink, crime and suicide by the exasperating
+and deteriorating conditions under which they had to labor. The
+moment that they overstepped the slightest bounds of law, in rushed
+the authorities with summary punishment. The prisons of the period
+were full of mechanics whom serfdom or poverty had stung on to commit
+some crime or other. However trifling the offence, or whatever the
+justifiable provocation, the law made no trades-union memorialized
+Congress to limit the hours of labor of those employed on the public
+works to ten hours a day. The pathos of this petition! So unceasingly
+had the workers been lied to by politicians, newspapers, clergy and
+employers, that they did not realize that in applying to Congress or to
+any legislature, that they were begging from men who represented
+the antagonistic interests of their own employers. After a short debate
+Congress laid the petition on the table. Congress at this very time was
+spinning out laws in behalf of capitalist interests; granting public
+lands, public funds, protective tariffs and manifold other measures
+demanded or lobbied for by existing or projected corporations.
+
+A memorial of a "Portion of the Laboring Classes of the City of New
+York in Relation to The Money Market" complained to Congress in 1833
+that the powers of the Government were used against the working
+class.
+
+"You are not ignorant," they petitioned,
+
+That our State Legislatures have, by a usurpation of power which is
+expressly withheld by our Federal Constitution, chartered many
+companies to engage in the manufacture of paper money; and that the
+necessities of the laboring classes have compelled them to give it
+currency.
+
+The strongest argument against this measure is, that by licensing any
+man or set of men to manufacture money, instead of earning it, we
+virtually license them to take so much of the property of the
+community as they may happen to fancy, without contributing to it at
+all--an injustice so enormous that it is incapable of any defense and
+therefore needs no comment.
+
+... That the profits of capital are abstracted from the earnings of
+labor, and that these deductions, like any other tax on industry,
+tend to diminish the value of money by increasing the price of all
+the fruits of labor, are facts beyond dispute; it is equally
+undeniable that there is a point which capitalists cannot exceed
+without injuring themselves, for when by their exertions they so far
+depreciate the value of money at home that it is sent abroad, many
+are thrown out of employ, and are not only disabled from paying their
+tribute, _but are forced to betake to dishonest courses or
+starve_.
+
+This memorial was full of iron and stern truths, although much of its
+political economy was that of its own era; a very different petition,
+it will be noticed, from the appealing, cringing petitions sent
+timidly to Congress by the conservative, truckling labor leaders of
+later times. The memorial continued;
+
+The remaining laborers are then loaded with additional burdens to
+provide laws and prisons and standing armies to keep order; expensive
+wars are created merely to lull for a time the clamors for
+employment; each new burden aggravates the disease, and national
+death finally ends it.
+
+The power of capital, was, the memorial read on, "in the nature of
+things, regulated by the proportion that the numbers of, and
+competition among, capitalists bears to the number and destitution of
+laborers." The only sure way of benefiting labor, "and the way best
+calculated to benefit all classes," was to diminish the destitution
+among the working classes. And the remedy proposed in the memorial? A
+settled principle of national policy should be laid down by Congress
+that the whole of the remaining of the public lands should forever
+continue to be the public property of the nation "and accordingly,
+cause them to be laid out from time to time, as the wants of the
+population might require, in small farms with a suitable proportion
+of building lots for mechanics, for the free use of any native
+citizen and his descendants who might be at the expense of clearing
+them." This policy "would establish a perpetual counterpoise to the
+absorbing power of capital." The memorial concluded:
+
+These lands have been bought with public money every cent of which is
+in the end derived from the earnings of the laboring classes.
+
+And while the public money has been liberally employed to protect and
+foster trade, Government has never, to our knowledge, adopted but one
+measure (the protective tariff system) with a distinct view to
+promote the interests of labor; and all of the advantages of this one
+have been absorbed by the preponderating power of capital. [Footnote:
+Executive Documents, First Session, Twenty-third Congress, 1834, Doc.
+No. 104.]
+
+
+EMPLOYMENT OF MILITIA AGAINST THE WORKERS.
+
+But it was not only the National Government which used the entire
+governing power against the workers. State and municipal authorities
+did likewise. In 1836 the longshoremen in New York City struck for an
+increase of wages. Their employers hurriedly substituted non-union
+men in their places. When the union men went from dock to dock,
+trying to induce the newcomers to side with them, the shipping
+merchants pretended that a riot was under way and made frantic calls
+upon the authorities for a subduing force. The mayor ordered out the
+militia with loaded guns. In Philadelphia similar scenes took place.
+Naturally, as the strikers were prevented by the soldiers from
+persuading their fellow workers, they lost the strikes.
+
+Although labor-saving machinery was constantly being devised and
+improved to displace hand labor, and although the skilled worker was
+consequently producing far more goods than in former years, the
+masters--as the capitalists were then often termed--insisted that
+employees must work for the same wages and hours as had long
+prevailed.
+
+By 1840, however, the labor unions had arrived at a point where they
+were very powerful in some of the crafts, and employers grudgingly
+had to recognize that the time had passed by when the laborer was to
+be treated like a serf. A few enlightened employers voluntarily
+conceded the ten-hour day, not on any humane grounds, but because
+they reasoned that it would promote greater efficiency on the part of
+their workers. Many capitalists, perforce, had to yield to the
+demand. Other capitalists determined to break up the unions on the
+ground that they were a conspiracy. At the instigation of several
+boot and shoe manufacturers, the officials of Boston brought a suit
+against the Boston Journeymen Bootmakers' Society. The court ruled
+against the bootmakers and the jury brought in a verdict of guilty.
+On appeal to the Supreme Court, Robert Rantoul, the attorney for the
+society, so ably demolished the prosecution's points, that the court
+could not avoid setting aside the judgment of the inferior court.
+[Footnote: Commonwealth vs. Hunt and others; Metcalf's Supreme Court
+Reports, iv: III. The prosecution had fallen back on the old English
+law of the time of Queen Elizabeth, making it a criminal offence for
+workingmen to refuse to work under certain wages. This law, Rantoul
+argued, had not been specifically adopted as common law in the United
+States after the Revolution.]
+
+Perhaps the growing power of the labor unions had its effect upon
+those noble minds, the judiciary. The worker was no longer detached
+from his fellow workmen: he could no longer be scornfully shoved
+aside as a weak, helpless individual. He now had the strength of
+association and organization. The possibility of such strength
+transferred to politics affrighted the ruling classes. Where before
+this, the politicians had contemptuously treated the worker's
+petitions, certain that he could always be led blindly to vote the
+usual partisan tickets, it now dawned upon them that it would be
+wiser to make an appearance of deference and to give some concessions
+which, although of a slight character, could be made to appear
+important. The Workingmen's party of 1829 had shown a glimmer of what
+the worker could do when aroused to class-conscious action.
+
+
+CAJOLING THE LABOR VOTE.
+
+Now it was that the politicians began the familiar policy of
+"catering to the labor vote." Some rainbow promises of what they
+would do, together with a few scraps of legislation now and then--
+this constituted the bait held out by the politicians. That adroit
+master of political chicanery, President Van Buren, hastened to issue
+an executive order on April 10, 1840, directing the establishment of
+a ten-hour day, between April and September, in the navy yards. From
+the last day of October, however, until March 31, the "working hours
+will be from the rising to the setting of the sun"--a length of time
+equivalent, meal time deducted, to about ten hours.
+
+The political trick of throwing out crumbs to the workers long proved
+successful. But it was supplemented by other methods. To draw the
+labor leaders away from a hostile stand to the established political
+parties, and to prevent the massing of workers in a party of their
+own, the politicians began an insidious system of bribing these
+leaders to turn traitors. This was done by either appointing them to
+some minor political office or by giving them money. In many
+instances, the labor unions in the ensuing decades were grossly
+betrayed.
+
+Finally, the politicians always had large sums of election funds
+contributed by merchants, bankers, landowners, railroad owners--by
+all parts of the capitalist class. These funds were employed in
+corrupting the electorate and legislative bodies. Caucuses and
+primaries were packed, votes bought, ballot boxes stuffed and
+election returns falsified. It did not matter to the corporations
+generally which of the old political parties was in power; some
+manufacturers or merchants might be swayed to one side or the other
+for the self-interest involved in the reenactment of the protective
+tariff or the establishment of free trade; but, as a rule, the
+corporations, as a matter of business, contributed money to both
+parties.
+
+
+THE BASIS OF POLITICAL PARTIES.
+
+However these parties might differ on various issues, they both stood
+for the perpetuation of the existing social and industrial system
+based upon capitalist ownership. The tendency of the Republican
+party, founded in 1856, toward the abolition of negro chattel slavery
+was in precise harmony with the aims and fundamental interests of the
+manufacturing capitalists of the North. The only peril that the
+capitalist class feared was the creation of a distinct, disciplined
+and determined workingmen's party. This they knew would, if
+successful, seriously endanger and tend to sweep away the injustices
+and oppressions upon which they, the capitalists, subsisted. To avert
+this, every ruse and expedient was resorted to: derision,
+undermining, corruption, violence, imprisonment--all of these and
+other methods were employed by that sordid ruling class claiming for
+itself so pretentious and all-embracing a degree of refinement,
+morality and patriotism.
+
+Surveying historical events in a large way, however, it is by no
+means to be regretted that capitalism had its own unbridled way, and
+that its growth was not checked. Its development to the unbearable
+maximum had to come in order to prepare the ripe way for a newer
+stage in civilization. The capitalist was an outgrowth of conditions
+as they existed both before, and during, his time. He fitted as
+appropriate a part in his time as the predatory baron in feudal days.
+
+But in this sketch we are not dealing with historical causes or
+sequences as much as with events and contrasts. The aim is to give a
+sufficient historical perspective of times when Government was
+manipulated by the capitalist class for its own aggrandizement, and
+to despoil and degrade the millions of producers.
+
+The imminence of working-class action was an ever present and
+disturbing menace to the capitalists. To give one of many instances
+of how the workers were beginning to realize the necessity of this
+action, and how the capitalists met it, let us instance the
+resolutions of the New England Workingmen's Association, adopted in
+1845. With the manifold illustrations in mind of how the powers of
+Government had been used and were being increasingly used to
+expropriate the land, the resources and the labor and produce of the
+many, and bond that generation and future generations under a
+multitude of law-created rights and privileges, this association
+declared in its preamble:
+
+Whereas, we, the mechanics and workingmen of New England are
+convinced by the sad experience of years that under the present
+arrangement of society labor is and must be the slave of wealth; and,
+whereas, the producers of all wealth are deprived not merely of its
+enjoyment, but also of the social and civil rights which belong to
+humanity and the race; and, whereas, we are convinced that reform of
+those abuses must depend upon ourselves only; and, whereas, we
+believe that in intelligence alone is strength, we hereby declare our
+object to be union for power, power to bless humanity, and to further
+this object resolve ourselves into an association.
+
+One of the leading spirits in this movement was Charles A. Dana, a
+young professional man of great promise and exceptional attainments.
+Subsequently he was bought off with a political office; he became not
+only a renegade of the most virulent type, but he leagued himself
+with the greatest thieves of the day--Tweed and Jay Gould, for
+example--received large bribes for defending them and their interests
+in a newspaper of which he became the owner--the New York _Sun_
+--and spent his last years bitterly and cynically attacking,
+ridiculing and misrepresenting the labor movement, and made himself
+the most conspicuous editorial advocate for every thieving plutocrat
+or capitalist measure.
+
+The year 1884 about marked the zenith of the era of the capitalist
+seizing of the public domain. By that time the railroad and other
+corporations had possessed themselves of a large part of the area now
+vested in their ownership. At that very time an army of workers,
+estimated at 2,000,000, was out of employment. Yet it was not
+considered a panic year; certainly the industrial establishments of
+the country were not in the throes of a commercial cataclysm such as
+happened in 1873 and previous periods. The cities were overcrowded
+with the destitute and homeless; along every country road and
+railroad track could be seen men, singly or in pairs, tramping from
+place to place looking for work.
+
+Many of those unemployed were native Americans. A large number were
+aliens who had been induced to migrate by the alluring statements of
+the steamship companies to whose profit it was to carry large
+batches; by the solicitations of the agents of American corporations
+seeking among the oppressed peoples of the Old World a generous
+supply of cheap, unorganized labor; or by the spontaneous prospect of
+bettering their condition politically or economically.
+
+Millions of poor Europeans were thus persuaded to come over, only to
+find that the promises held out to them were hollow. They found that
+they were exploited in the United States even worse industrially than
+in their native country. As for political freedom their sanguine
+hopes were soon shattered. They had votes after a certain period of
+residence, it was true, but they saw--or at least the intelligent of
+them soon discerned--that the personnel and laws of the United States
+Government were determined by the great capitalists. The people were
+allowed to go through the form of voting; the moneyed interests, by
+controlling the machinery of the dominant political parties, dictated
+who the candidates, and what the so-called principles, of those
+parties should be. The same program was witnessed at every election.
+The electorate was stimulated with excitement and enthusiasm over
+false issues and dominated candidates. The more the power and wealth
+of the capitalist class increased, the more openly the Government
+became ultra-capitalistic.
+
+
+WEALTH AND THE SWAY OF DIRECT POWER
+
+It was about this time that the Senate of the United States was
+undergoing a transformation clearly showing how impatient the great
+capitalists were of operating Government through middlemen
+legislators. Previously, the manufacturing, railroad and banking
+interests had, on the whole, deemed it wise not to exercise this
+power directly but indirectly. The representatives sent to Congress
+were largely lawyers elected by their influence and money. The people
+at large did not know the secret processes back of these legislators.
+The press, advocating, as a whole, the interests of the capitalist
+class, constantly portrayed the legislators as great and patriotic
+statesmen.
+
+But the magnates saw that the time had arrived when some empty
+democratic forms of Government could be waved aside, and the power
+exercised openly and directly by them. Presently we find such men as
+Leland Stanford, of the Pacific railroad quartet, and one of the
+arch-bribers and thieves of the time, entering the United States
+Senate after debauching the California legislature; George Hearst, a
+mining magnate, and others of that class.
+
+More and more this assumption of direct power increased, until now it
+is reckoned that there are at least eighty millionaires in Congress.
+Many of them have been multimillionaires controlling, or representing
+corporations having a controlling share in vast industries,
+transportation and banking systems--men such as Senator Elkins, of
+West Virginia; Clark, of Montana; Platt and Depew, of New York;
+Guggenheim, of Colorado; Knox, of Pennsylvania; Foraker, of Ohio, and
+a quota of others. The popular jest as to the United States Senate
+being a "millionaires' club" has become antiquated; much more
+appropriately it could be termed a "multimillionaires' club." While
+in both houses of Congress are legislators who represent the almost
+extinguished middle class, their votes are as ineffective as their
+declamations are flat. The Government of the United States, viewing
+it as an entirety, and not considering the impotent exceptions, is
+now more avowedly a capitalist Government than ever before. As for
+the various legislatures, the magnates, coveting no seats in those
+bodies, are content to follow the old plan of mastering them by
+either direct bribery or by controlling the political bosses in
+charge of the political machines.
+
+Since the interests of the capitalists from the start were acutely
+antagonistic to those of the workers and of the people in general
+from whom their profits came, no cause for astonishment can be found
+in the refusal of Government to look out, even in trifling ways, for
+the workers' welfare. But it is of the greatest and most instructive
+interest to give a succession of contrasts. And here some complex
+factors intervene. Those cold, unimpassioned academicians who can
+perpetuate fallacies and lies in the most polished and dispassionate
+language, will object to the statement that the whole of governing
+institutions has been in the hands of thieves--great, not petty,
+thieves. And yet the facts, as we have seen (and will still further
+see), bear out this assertion. Government was run and ruled at basis
+by the great thieves, as it is conspicuously to-day.
+
+
+THE PASSING OF THE MIDDLE CLASS.
+
+Yet let us not go so fast. It is necessary to remember that the last
+few decades have constituted a period of startling transitions.
+
+The middle class, comprising the small business and factory men,
+stubbornly insisted on adhering to worn-out methods of doing
+business. Its only conception of industry was that of the methods of
+the year 1825. It refused to see that the centralization of industry
+was inevitable, and that it meant progress. It lamented the decay of
+its own power, and tried by every means at its command to thwart the
+purposes of the trusts. This middle class had bribed and cheated and
+had exploited the worker. For decades it had shaped public opinion to
+support the dictum that "competition was the life of trade." It had,
+by this shaping of opinion, enrolled on its side a large number of
+workers who saw only the temporary evils, and not the ultimate good,
+involved in the scientific organization and centralization of
+industry. The middle class put through anti-trust laws and other
+measure after measure aimed at the great combinations.
+
+These great combinations had, therefore, a double fight on their
+hands. On the one hand they had to resist the trades unions, and on
+the other, the middle class. It was necessary to their interests that
+centralization of industry should continue. In fact, it was
+historically and economically necessary. Consequently they had to
+bend every effort to make nugatory any effort of Government, both
+National and State, to enforce the anti-trust laws. The thing had to
+be done no matter how. It was intolerable that industrial development
+could be stopped by a middle class which, for self-interest, would
+have kept matters at a standstill. Self-interest likewise demanded
+that the nascent combinations and trusts get and exercise
+governmental power by any means they could use. For a while
+triumphant in passing certain laws which, it was fatuously expected,
+would wipe the trusts out of existence, the middle class was
+hopelessly beaten and routed. By their far greater command of
+resources and money, the great magnates were able to frustrate the
+execution of those laws, and gradually to install themselves or their
+tools in practically supreme power. The middle class is now becoming
+a mere memory. Even the frantic efforts of President Roosevelt in its
+behalf were of absolutely no avail; the trusts are mightier than ever
+before, and hold a sway the disputing of which is ineffective.
+
+
+THE TRUSTS AND THE UNEMPLOYED.
+
+With this newer organization and centralization of industry the
+number of unemployed tremendously increased. In the panic of 1893 it
+reached about 3,000,000; in that of 1908 perhaps 6,000,000, certainly
+5,000,000. To the appalling suffering on every hand the Government
+remained indifferent. The reasons were two-fold: Government was
+administered by the capitalist class whose interest it was not to
+allow any measure to be passed which might strengthen the workers, or
+decrease the volume of surplus labor; the second was that Government
+was basically the apotheosis of the current commercial idea that the
+claims of property were superior to those of human life.
+
+It can be said without exaggeration that high functionary after high
+functionary in the legislative or executive branches of the
+Government, and magnate after magnate had committed not only one
+violation, but constant violations, of the criminal law. They were
+unmolested; having the power to prevent it they assuredly would not
+suffer themselves to undergo even the farce of prosecution. Such few
+prosecutions as were started with suspicious bluster by the
+Government against the Standard Oil Company, the Sugar Trust, the
+Tobacco Trust and other trusts proved to be absolutely harmless, and
+have had no result except to strengthen the position of the trusts.
+The great magnates reaped their wealth by an innumerable succession
+of frauds and thefts. But the moment that wealth or the basis of that
+wealth were threatened in the remotest by any law or movement, the
+whole body of Government, executive, legislative and judicial,
+promptly stepped in to protect it intact.
+
+The workers, however, from whom the wealth was robbed, were regarded
+in law as criminals the moment they became impoverished. If homeless
+and without visible means of support, they were subject to arrest as
+vagabonds. Numbers of them were constantly sent to prison or, in some
+States, to the chain-gang. If they ventured to hold mass meetings to
+urge the Government to start a series of public works to relieve the
+unemployed, their meetings were broken up and the assembled brutally
+clubbed, as happened in Tompkins square in New York City in the panic
+of 1873, in Washington in 1892, and in Chicago and in Union square,
+New York City, in the panic of 1908. The newspapers represented these
+meetings as those of irresponsible agitators, inciting the "mob" to
+violence. The clubbing of the unemployed and the judicial murder of
+their spokesman, has long been a favorite repression method of the
+authorities. But as for allowing them freedom of speech, considering
+the grievances, putting forth every effort to relieve their
+condition,--these do not seem to have come within the scope of that
+Government whose every move has been one of intense hostility--now
+open, again covert--to the working class.
+
+This running sketch, which is to be supplemented by the most specific
+details, gives a sufficient insight into the debasement and
+despoiling of the working class while the capitalists were using the
+Government as an expropriating machine. Meanwhile, how was the great
+farming class faring? What were the consequences to this large body
+of the seizure by a few of the greater part of the public domain?
+
+
+THE STATE OF THE FARMING POPULATION.
+
+The conditions of the farming population, along with that of the
+working class, steadily grew worse. In the hope of improving their
+condition large numbers migrated from the Eastern States, and a
+constant influx of agriculturists poured in from Europe.
+
+A comparatively few of the whole were able to get land direct from
+the Government. Naturally the course of this extensive migration
+followed the path of transportation, that is to say, of the
+railroads. This was exactly what the railroad corporations had
+anticipated. As a rule the migrating farmers found the railroads or
+cattlemen already in possession of many of the best lands. To give a
+specific idea of how vast and widespread were the railroad holdings
+in the various States, this tabulation covering the years up to 1883
+will suffice: In the States of Florida, Louisiana, Alabama and
+Mississippi about 9,000,000 acres in all; in Wisconsin, 3,553,865
+acres; Missouri, 2,605,251 acres; Arkansas, 2,613,631 acres;
+Illinois, 2,595,053 acres; Iowa, 4,181,929 acres; Michigan, 3,355,943
+acres; Minnesota, 9,830,450 acres; Nebraska, 6,409,376 acres;
+Colorado, 3,000,000 acres; the State of Washington, 11,700,000 acres;
+New Mexico, 11,500,000 acres; in the Dakotas, 8,000,000 acres;
+Oregon, 5,800,000 acres; Montana, 17,000,000 acres; California,
+16,387,000; Idaho, 1,500,000, and Utah, 1,850,000. [Footnote: "The
+Public Domain," House Ex. Doc. No. 47, Third Session, Forty-sixth
+Congress: 273.]
+
+Prospective farmers had to pay the railroads exorbitant prices for
+land. Very often they had not sufficient funds; a mortgage or two
+would be signed; and if the farmer had a bad season or two, and could
+no longer pay the interest, foreclosure would result. But whether
+crops were good or bad, the American farmer constantly had to compete
+in the grain markets of the world with the cheap labor of India and
+Russia. And inexorably, East or West, North or South, he was caught
+between a double fire.
+
+On the one hand, in order to compete with the immense capitalist
+farms gradually developing, he had to give up primitive implements
+and buy the most improved agricultural machines. For these he was
+charged five and six times the sum it cost the manufacturers to make
+and market them. Usually if he could not pay for them outright, the
+manufacturers took out a mortgage on his farm. Large numbers of these
+mortgages were foreclosed.
+
+In addition, the time had passed when the farmer made his own clothes
+and many other articles. For everything that he bought he had to pay
+excessive prices. He, even more than the industrial working classes,
+had to pay an enormous manufacturer's profit, and additionally the
+high freight railroad rate.
+
+On the other hand, the great capitalist agencies directly dealing
+with the crops--the packing houses, the gambling cotton and produce
+exchanges--actually owned, by a series of manipulations, a large
+proportion of his crops before they were out of the ground. These
+crops were sold to the working class at exorbitant prices. The small
+farmer labored incessantly, only to find himself getting poorer. It
+served political purpose well to describe glowingly the farmer's
+prosperity; but the greater crops he raised, the greater the profit
+to the railroad companies and to various other divisions of the
+capitalist class. His was the labor and worry; they gathered in the
+financial harvest.
+
+
+METHODS OF THE GREAT LANDOWNERS.
+
+While thus the produce of the farmer's labor was virtually
+confiscated by the different capitalist combinations, the farmers of
+many States, particularly of the rich agricultural States of the
+West, were unable to stand up against the encroachments, power, and
+the fraudulent methods of the great capitalist landowners.
+
+The land frauds in the State of California will serve as an example.
+Acting under the authority of various measures passed by Congress--
+measures which have been described--land grabbers succeeded in
+obtaining possession of an immense area in that State. Perjury,
+fraudulent surveys and entries, collusion with Government officials--
+these were a few of the many methods.
+
+Jose Limantour, by an alleged grant from a Mexican Governor, and
+collusion with officials, almost succeeded in stealing more than half
+a million acres. Henry Miller, who came to the United States as an
+immigrant in 1850, is to-day owner of 14,539,000 acres of the richest
+land in California and Oregon. It embraces more than 22,500 square
+miles, a territory three times as large as New Jersey. The stupendous
+land frauds in all of the Western and Pacific States by which
+capitalists obtained "an empire of land, timber and mines" are amply
+described in numerous documents of the period. These land thieves, as
+was developed in official investigations, had their tools and
+associates in the Land Commissioner's office, in the Government
+executive departments, and in both houses of Congress. The land
+grabbers did their part in driving the small farmer from the soil.
+Bailey Millard, who extensively investigated the land frauds in
+California, after giving full details, says:
+
+When you have learned these things it is not difficult to understand
+how one hundred men in the great Sacramento Valley have come to own
+over 17,000,000 acres, while in the San Joaquin Valley it is no
+uncommon thing for one man's name to stand for 100,000 acres. This
+grabbing of large tracts has discouraged immigration to California
+more than any other single factor. A family living on a small holding
+in a vast plain, with hardly a house in sight, will in time become a
+very lonely family indeed, and will in a few years be glad to sell
+out to the land king whose domain is adjacent. Thousands of small
+farms have in this way been acquired by the large holders at nominal
+prices. [Footnote: "The West Coast Land Grabbers." Everybody's
+Magazine, May, 1905.]
+
+
+SEIZURE OF IMMENSE AREAS BY FRAUD.
+
+Official reports of the period, contemporaneous with the original
+seizure of these immense tracts of land, give far more specific
+details of the methods by which that land was obtained. Of the
+numerous reports of committees of the California Legislature, we will
+here simply quote one--that of the Swamp Land Investigating Committee
+of the California Assembly of 1873. Dealing with the fraudulent
+methods by which huge areas of the finest lands in California were
+obtained for practically nothing as "swamp" land, this committee
+reported, citing from what it termed a "mighty mass of evidence,"
+"That through the connivance of parties, surveyors were appointed who
+segregated lands as 'swamp,' which were not so in fact. The
+corruption existing in the land department of the General Government
+has aided this system of fraud."
+
+Also, the committee commented with deep irony, "the loose laws of the
+State, governing all classes of State lands, has enabled wealthy
+parties to obtain much of it under circumstances which, in some
+countries, where laws are more rigid and terms less refined, would be
+termed fraudulent, but we can only designate it as keen foresight and
+wise (for the land grabbers) construction of loose, unwholesome
+laws." [Footnote: Report of the Swamp Land Investigating Committee,
+Appendix to California Journals of Senate and Assembly. Twentieth
+Session, 1874, Vol. iv, Doc. No. 5:3. ]
+
+After recording its findings that it was satisfied from the evidence
+that "the grossest frauds have been committed in swamp matters in
+this State, "the committee went on:
+
+Formerly it was the custom to permit filings upon real or alleged
+swamp lands, and to allow the applications to lie unacted upon for an
+indefinite number of years, at the option of the applicants. In these
+cases, parties on the "inside" of the Land Office "ring" had but to
+wait until some one should come along who wanted to take up these
+lands in good faith, and they would "sell out" to them their "rights"
+to land on which they had never paid a cent, nor intended to pay a
+cent.
+
+Or, if the nature of the land was doubtful, they would postpone all
+investigation until the height of the floods during the rainy season,
+when surveyors, in interest with themselves, would be sent out to
+make favorable reports as to the "swampy" character of the land. In
+the mountain valleys and on the other side of the Sierras, the lands
+are overflowed from melting snow exactly when the water is most
+wanted; but the simple presence of the water is all that is necessary
+to show to the speculators that the land is "swamp," and it therefore
+presents an inviting opportunity for this grasping cupidity.
+[Footnote: Report of the Swamp Land Investigating Committee, etc.,
+5.]
+
+In his exhaustive report for 1885, Commissioner Sparks, of the
+General Land Office, described at great length the vast frauds that
+had continuously been going on in the granting of alleged "swamp"
+lands, and in fraudulent surveys, in many States and Territories.
+[Footnote: House Documents, First Session, Forty-ninth Congress,
+1885-86, Vol. ii.] "I thus found this office," he wrote, "a mere
+instrumentality in the hands of 'surveying rings.'" [Footnote: Ibid.,
+166] "Sixteen townships examined in Colorado in 1885 were found to
+have been surveyed on paper only, no actual surveying having been
+done. [Footnote: Ibid., 165 ] In twenty-two other townships examined
+in Colorado, purporting to have been surveyed under a "special-
+deposit" contract awarded in 1881, the surveys were found wholly
+fraudulent in seven, while the other fifteen were full of fraud."
+[Footnote: House Documents, etc., 1885-86, ii: 165]
+
+These are a very few of the numerous instances cited by Commissioner
+Sparks. Although the law restricted surveys to agricultural lands and
+for homestead entries, yet the Land Office had long corruptly allowed
+what it was pleased to term certain "liberal regulations." Surveys
+were so construed as to include any portion of townships the "larger
+portion" of which was not "known" to be of a mineral character. These
+"regulations," which were nothing more or less than an extra-legal
+license to land-grabbers, also granted surveys for desert lands and
+timber lands under the timber-land act. By the terms of this act, it
+will be recalled, those who entered and took title to desert and
+timber lands were not required to be actual settlers. Thus, it was
+only necessary for the surveyors in the hire of the great land
+grabbers to report fine grazing, agricultural, timber or mineral land
+as "desert land," and vast areas could be seized by single
+individuals or corporations with facility.
+
+Two specific laws directly contributed to the effectiveness of this
+spoliation. One act, passed by Congress on May 30, 1862, authorized
+surveys to be made at the expense of settlers in the townships that
+those settlers desired surveyed. Another act, called the Deposit Act,
+passed in 1871, provided that the amounts deposited by settlers
+should be partly applied in payment for the lands thus surveyed.
+Together, these two laws made the grasping of land on an extensive
+scale a simple process. The "settler" (which so often meant, in
+reality, the capitalist) could secure the collusion of the Land
+Office, and have fraudulent surveys made. Under these surveys he
+could lay claim to immense tracts of the most valuable land and have
+them reported as "swamp" or "desert" lands; he could have the
+boundaries of original claims vastly enlarged; and the fact that part
+of his disbursements for surveying was considered as a payment for
+those lands, stood in law as virtually a confirmation of his claim.
+
+
+ACTUAL SETTLERS EXCLUDED FROM PUBLIC DOMAIN.
+
+"Wealthy speculators and powerful syndicates," reported Commissioner
+Sparks,
+
+covet the public domain, and a survey is the first step in the
+accomplishment of this desire. The bulk of deposit surveys have been
+made in timber districts and grazing regions, and the surveyed lands
+have immediately been entered under the timber land, preëmption,
+commuted homestead, timber-culture and desert-land acts. So
+thoroughly organized has been the entire system of procuring the
+survey and making illegal entry of lands, that agents and attorneys
+engaged in this business have been advised of every official
+proceeding, and enabled to present entry applications for the lands
+at the very moment of the filing of the plots of survey in the local
+land offices.
+
+Prospectors employed by lumber firms and corporations seek out and
+report the most valuable timber tracts in California, Oregon,
+Washington Territory or elsewhere; settler's applications are
+manufactured as a basis for survey; contracts are entered into and
+pushed through the General Land Office in hot haste; a skeleton
+survey is made... entry papers, made perfect in form by competent
+attorneys, are filed in bulk, and the manipulators enter into
+possession of the land. . . . This has been the course of proceeding
+heretofore. [Footnote: House Documents, etc., 1885-86, ii: 167.]
+
+Commissioner Sparks described a case where it was discovered by his
+special agents in California that an English firm had obtained
+100,000 acres of the choicest red-wood lands in that State. These
+lands were then estimated to be worth $100 an acre. The cost of
+procuring surveys and fraudulent entries did not probably exceed $3
+an acre. [Footnote: House Ex. Docs., etc., 1885-86, ii: 167.]
+
+"In the same manner," Commissioner Sparks continued, "extensive coal
+deposits in our Western territory are acquired in mass through
+expedited surveys, followed by fraudulent pre-emption and commuted
+homestead entries." [Footnote: Ibid.] He went on to tell that nearly
+the whole of the Territory (now State) of Wyoming, and large portions
+of Montana, had been surveyed under the deposit system, and the lands
+on the streams fraudulently taken up under the desert land act, to
+the exclusion of actual settlers. Nearly all of Colorado, the very
+best cattle-raising portions of New Mexico, the rich timber lands of
+California, the splendid forest lands of Washington Territory and the
+principal part of the extensive pine lands of Minnesota had been
+fraudulently seized in the same way. [Footnote: Ibid., 168.] In all
+of the Western States and Territories these fraudulent surveys had
+accomplished the seizure of the best and most valuable lands. "To
+enable the pressing tide of Western immigration to secure homes upon
+the public domain," Commissioner Sparks urged, "it is necessary...
+that hundreds of millions of acres of public lands now appropriated
+should be wrested from illegal control." [Footnote: Ibid.] But
+nothing was done to recover these stolen lands. At the very time
+Commissioner Sparks--one of the very few incorruptible Commissioners
+of Public Lands,--was writing this, the land-grabbing interests were
+making the greatest exertions to get him removed. During his tenure
+of office they caused him to be malevolently harassed and assailed.
+After he left office they resumed complete domination of the Land
+Commissioner's Bureau. [Footnote: The methods of capitalists in
+causing the removal of officials who obstructed or exposed their
+crimes and violent seizure of property were continuous and long
+enduring. It was a very old practice. When Astor was debauching and
+swindling Indian tribes, he succeeded, it seems, by exerting his
+power at Washington, in causing Government agents standing in his way
+to be dismissed from office. The following is an extract from a
+communication, in 1821, of the U. S. Indian agent at Green Bay,
+Wisconsin, to the U. S. Superintendent of Indian Trade:
+
+"The Indians are frequently kept in a state of intoxication, giving
+their furs, etc., at a great sacrifice for whiskey.... The agents of
+Mr. Astor hold out the idea that they will, ere long be able to break
+down the factories [Government agencies]; and they menace the Indian
+agents and others who may interfere with them, with dismission from
+office through Mr. Astor. They say that a representation from Messrs.
+Crooks and Stewart (Mr. Astor's agents) led to the dismission of the
+Indian agent at Mackinac, and they also say that the Indian agent
+here is to be dismissed...."--U.S. Senate Documents, First Session,
+Seventeenth Congress, 1821-22, Vol. i, Doc. No. 60:52-53.]
+
+
+THE GIGANTIC PRIVATE LAND CLAIM FRAUDS.
+
+The frauds in the settlement of private land claims on alleged grants
+by Spain and Mexico were colossal. Vast estates in California, New
+Mexico, Arizona, Colorado and other States were obtained by collusion
+with the Government administrative officials and Congress. These were
+secured upon the strength of either forged documents purporting to be
+grants from the Spanish or Mexican authorities, or by means of
+fraudulent surveys.
+
+One of the most notorious of these was the Beaubin and Miranda grant,
+otherwise famous thirty years ago as the Maxwell land grant. A
+reference to it here is indispensable. It was by reason of this
+transaction, as well as by other similar transactions, that one of
+the American multimillionaires obtained his original millions. This
+individual was Stephen B. Elkins, at present a powerful member of the
+United States Senate, and one of the ruling oligarchy of wealth. He
+is said to possess a fortune of at least $50,000,000, and his
+daughter, it is reported, is to marry the Duke of the Abruzzi, a
+scion of the royal family of Italy.
+
+The New Mexico claim of Beaubin and Miranda transferred to L. B.
+Maxwell, was allowed by the Government in 1869, but for ninety-six
+thousand acres only. The owner refused to comply with the law, and in
+1874 the Department of the Interior ordered the grant to be treated
+as public lands and thrown open to settlement. Despite this order,
+the Government officials in New Mexico, acting in collusion with
+other interested parties, illegally continued to assess it as private
+property. In 1877 a fraudulent tax sale was held, and the grant,
+fraudulently enlarged to 1,714,764.94 acres, was purchased by M. M.
+Mills, a member of the New Mexico Legislature. He transferred the
+title to T. B. Catron, the United States Attorney for New Mexico.
+Presently Elkins turned up as the principal owner. The details of how
+this claim was repeatedly shown up to be fraudulent by Land
+Commissioners and Congressional Committees; how the settlers in New
+Mexico fought it and sought to have it declared void, and the law
+enforced; [Footnote: "Land Titles in New Mexico and Colorado," House
+Reports First Session, Fifty-second Congress, 1891-92, Vol. iv,
+Report No. 1253. Also, House Reports, First Session, Fifty-second
+Congress, 1891-92, Vol. vii, Report No. 1824. Also, House Reports,
+First Session, Forty-ninth Congress, 1885-86, ii: 170.] and how
+Elkins, for some years himself a Delegate in Congress from New
+Mexico, succeeded in having the grant finally validated on technical
+grounds, and "judicially cleared" of all taint of fraud, by an
+astounding decision of the Supreme Court of the United States--a
+decision contrary to the facts as specifically shown by successive
+Government officials--all of these details are set forth fully in
+another part of this work. [Footnote: See "The Elkins Fortune," in
+Vol. iii.]
+
+The forgeries and fraudulent surveys by which these huge estates were
+secured were astoundingly bold and frequent. Large numbers of private
+land claims, rejected by various Land Commissioners as fraudulent,
+were corruptly confirmed by Congress. In 1870, the heirs of one
+Gervacio Nolan applied for confirmation of two grants alleged to have
+been made to an ancestor under the colonization laws of New Mexico.
+They claimed more than 1,500,000 acres, but Congress conditionally
+confirmed their claim to the extent of forty-eight thousand acres
+only, asserting that the Mexican laws had limited to this area the
+area of public lands that could be granted to one individual. In 1880
+the Land Office re-opened the claim, and a new survey was made by
+surveyors in collusion with the claimants, and hired by them. When
+the report of this survey reached Washington, the Land Office
+officials were interested to note that the estate had grown from
+forty-eight thousand acres to five hundred and seventy-five thousand
+acres, or twelve times the legal quantity. [Footnote: House Reports,
+First Session, Forty-ninth Congress, 1885-86, ii: 171.] The actual
+settlers were then evicted. The romancer might say that the officials
+were amazed; they were not; such fraudulent enlargements were common.
+
+The New Mexico estate of Francis Martinez, granted under the Mexican
+laws restricting a single grant to forty-eight thousand acres, was by
+a fraudulent survey, extended to 594,515.55 acres, and patented in
+1881. [Footnote: Ibid., 172.] A New Mexico grant said to have been
+made to Salvador Gonzales, in 1742, comprising "a spot of land to
+enable him to plant a cornfield for the support of his family." was
+fraudulently surveyed and enlarged to 103,959.31 acres--a survey
+amended later by reducing the area to 23,661 acres. [Footnote: House
+Reports, etc, 1885-86, ii: 172.] The B. M. Montaya grant in New
+Mexico, limited to forty-eight thousand acres, under the Mexican
+colonization laws, was fraudulently surveyed for 151,056.97 acres.
+The Estancia grant in New Mexico also restricted under the
+colonization act to forty-eight thousand acres, was enlarged by a
+fraudulent survey to 415,036.56 acres. [Footnote: Ibid., 173.] In
+1768, Ignacio Chaves and others in New Mexico petitioned for a tract
+of about two and one-fourth superficial leagues, or approximately a
+little less than ten thousand acres. A fraudulent survey magnified
+this claim to 243,036.43 acres. [Footnote: Ibid.]
+
+These are a very few of the large number of forged or otherwise
+fraudulent claims.
+
+Some were rejected by Congress; many, despite Land Office protests,
+were confirmed. By these fraudulent and corrupt operations, enormous
+estates were obtained in New Mexico, Colorado and in other sections.
+The Pablo Montaya grant comprised in all, 655,468.07 acres; the Mora
+grant 827,621.01 acres; the Tierra Amarilla grant 594,515 acres, and
+the Sangre de Cristo grant 998,780.46 acres. All of these were
+corruptly obtained. [Footnote: See Resolution of House Committee on
+Private Land Claims, June, 1892, demanding a thorough investigation.
+The House took no action.--Report No. 1824, 1892.] Scores of other
+claims were confirmed for lesser areas. During Commissioner Sparks'
+tenure of office, claims to 8,500,000 acres in New Mexico alone were
+pending before Congress. A comprehensive account of the operations of
+the land-grabbers, giving the explicit facts, as told in Government
+and court records, of their system of fraud, is presented in the
+chapter on the Elkins fortune.
+
+
+FORGERY, PERJURY AND FRAUDULENT SURVEY.
+
+Reporting, in 1881, to the Commissioner of the General Land Office,
+Henry M. Atkinson, U. S. Surveyor-General of New Mexico, wrote that
+"the investigation of this office for the past five years has
+demonstrated that some of the alleged grants are forgeries." He set
+forth that unless the court before which these claims were
+adjudicated could have full access to the archives, "it is much more
+liable to be imposed upon by fraudulent title papers." [Footnote:
+"The Public Domain," etc. 1124. Also see next Footnote.] In fact, the
+many official reports describe with what cleverness the claimants to
+these great areas forged their papers, and the facility with which
+they bought up witnesses to perjure for them. Finding it impossible
+to go back of the aggregate and corroborative "evidence" thus
+offered, the courts were frequently forced to decide in favor of the
+claimants. To use a modern colloquial phrase, the cases were "framed
+up." In the case of Luis Jamarillo's claim to eighteen thousand acres
+in New Mexico, U. S. Surveyor-General Julian of New Mexico, in
+recommending the rejection of the claim and calling attention to the
+perjury committed, said:
+
+When these facts are considered, in connection with the further and
+well-known fact that such witnesses can readily be found by grant
+claimants, and that in this way the most monstrous frauds have been
+practiced in extending the lines of such grants in New Mexico, it is
+not possible to accept the statement of this witness as to the west
+boundary of this grant, which he locates at such a distance from the
+east line as to include more than four times the amount of land
+actually granted. [Footnote: Senate Executive Documents, First
+Session, Fiftieth Congress, 1887-88, Vol. i, Private Land Claim No.
+103, Ex. Doc. No. 20:3. Documents Nos. 3 to 11, 13 to 23, 25 to 29
+and 38 in the same volume deal with similar claims.]
+
+"The widespread belief of the people of this country," wrote
+Commissioner Sparks in 1885, "that the land department has been
+largely conducted to the advantage of speculation and monopoly,
+private and corporate, rather than in the public interest, I have
+found supported by developments in every branch of the service.... I
+am satisfied that thousands of claims without foundation in law or
+equity, involving millions of acres of public land, have been
+annually passed to patent upon the single proposition that nobody but
+the Government had any _adverse_ interest. The vast machinery of
+the land department has been devoted to the chief result of conveying
+the title of the United States to public lands upon fraudulent
+entries under loose construction of law." [Footnote: House Ex. Docs.,
+1885-86, ii: 156.] Whenever a capitalist's interest was involved, the
+law was always "loosely construed," but the strictest interpretation
+was invariably given to laws passed against the working population.
+
+It was estimated, in 1892, that 57,000,000 acres of land in New
+Mexico and Colorado had, for more than thirty years, been unlawfully
+treated by public officers as having been ceded to the United States
+by Mexico. The Maxwell, Sangre de Cristo, Nolan and other grants were
+within this area. The House Committee on Private Land Claims reported
+on April 29, 1892: "A long list of alleged Mexican and Spanish grants
+within the limits of the Texas cession have been confirmed, or quit
+claimed by Congress, under the false representation that said alleged
+grants were located in the territory of New Mexico ceded by the
+treaty; an enormous area of land has long been and is now held as
+confirmed Mexican and Spanish grants, located in the territory of
+Mexico ceded by the treaty when such is not the fact." [Footnote:
+House Report, 1892, No. 1253:8.]
+
+In Texas the fraudulent, and often, violent methods of the seizure of
+land by the capitalists were fully as marked as those used elsewhere.
+
+Upon its admittance to the Union, Texas retained the disposition of
+its public lands. Up to about the year 1864, almost the entire area
+of Texas, comprising 274,356 square miles, or 175,587,840 acres, was
+one vast unfenced feeding ground for cattle, horses and sheep. In
+about the year 1874, the agricultural movement began; large numbers
+of intending farmers migrated to Texas, particularly with the
+expectation of raising cattle, then a highly profitable business.
+They found huge stretches of the land already preempted by individual
+capitalists or corporations. In a number of instances, some of these
+individuals, according to the report of a Congressional Committee, in
+1884, dealing with Texas lands, had each acquired the ownership of
+more than two hundred and fifty thousand acres.
+
+"It is a notorious fact," this committee reported, "that the public
+land laws, although framed with the special object of encouraging the
+public domain, of developing its resources and protecting actual
+settlers, have been extensively evaded and violated. Individuals and
+corporations have, by purchasing the proved-up claims, or purchases
+of ostensible settlers, employed by them to make entry, extensively
+secured the ownership of large bodies of land." [Footnote: House
+Reports, Second Session, Forty-eighth Congress, 1884-85, Vol. xxix,
+Ex. Doc. No. 267:43.] The committee went on to describe how, to a
+very considerable extent, "foreigners of large means" had obtained
+these great areas, and had gone into the cattle business, and how the
+titles to these lands were se-cured not only by individuals but by
+foreign corporations. "Certain of these foreigners are titled
+noblemen. Some of them have brought over from Europe, in considerable
+numbers, herdsmen and other employees who sustain to them a dependent
+relationship characteristic of the peasantry on the large landed
+estates of Europe." Two British syndicates, for instance, held
+7,500,000 acres in Texas. [Footnote: House Reports, etc., 1884-85,
+Doc. No. 267:46.]
+
+This spoliation of the public domain was one of the chief grievances
+of the National Greenback-Labor party in 1880. This party, to a great
+extent, was composed of the Western farming element. In his letter
+accepting the nomination of that party for President of the United
+States, Gen. Weaver, himself a member of long standing in Congress
+from Iowa, wrote:
+
+An area of our public domain larger than the territory occupied by
+the great German Empire has been wantonly donated to wealthy
+corporations; while a bill introduced by Hon. Hendrick B. Wright, of
+Pennsylvania, to enable our poor people to reach and occupy the few
+acres remaining, has been scouted, ridiculed, and defeated in
+Congress. In consequence of this stupendous system of land-grabbing,
+millions of the young men of America, and millions more of
+industrious people from abroad, seeking homes in the New World, are
+left homeless and destitute. The public domain must be sacredly
+reserved to actual settlers, and where corporations have not complied
+strictly with the terms of their grants, the lands should be at once
+reclaimed.
+
+
+INCREASE OF FARM TENANTRY.
+
+Without dwelling upon all the causative factors--involving an
+extended work in themselves--some significant general results will be
+pointed out.
+
+The original area of public domain amounted to 1,815,504,147 acres,
+of which considerably more than half, embracing some of the very best
+agricultural, grazing, mineral and timber lands, was already
+alienated by the year 1880. By 1896 the alienation reached
+806,532,362 acres. Of the original area, about 50,000,000 acres of
+forests have been withdrawn from the public domain by the Government,
+and converted into forest reservations. Large portions of such of the
+agricultural, grazing, mineral and timber lands as were not seized by
+various corporations and favored individuals before 1880, have been
+expropriated west of the Mississippi since then, and the process is
+still going, notably in Alaska. The nominal records of the General
+Land Office as to the number of homesteaders are of little value and
+are very misleading. Immense numbers of alleged homesteaders were, as
+we have copiously seen, nothing but paid dummies by whose entries
+vast tracts of land were seized under color of law. It is
+indisputably clear that hundreds of millions of acres of the public
+domain have been obtained by outright fraud.
+
+Notwithstanding the fact that only a few years before, the Government
+had held far more than enough land to have provided every
+agriculturist with a farm, yet by 1880, a large farm tenant class had
+already developed. Not less than 1,024,061 of the 4,008,907 farms in
+the United States were held by renters. One-fourth of all the farms
+in the United States were cultivated by men who did not own them.
+Furthermore, and even more impressive, there were 3,323,876 farm
+laborers composed of men who did not even rent land. Equally
+significant was the increasing tendency to the operating of large
+farms by capitalists with the hired labor. Of farms under
+cultivation, extending from one hundred to five hundred acres, there
+were nearly a million and a half--1,416,618, to give the exact
+number--owned largely by capitalists and cultivated by laborers.
+[Footnote: Tenth Census, Statistics of Agriculture: 28.]
+
+Phillips, who had superior opportunities for getting at the real
+facts, and whose volume upon the subject issued at the time is well
+worthy of consideration, thus commented upon the census returns:
+
+It will thus be seen that of the 7,670,493 persons in our country
+engaged in agriculture, there are 1,024,601 who pay rent to persons
+not cultivating the soil; 1,508,828 capitalist or speculating owners,
+who own the soil and employ laborers; 804,522 of well-to-do farmers
+who hire part of their work or employ laborers, and 670,944 who may
+be said to actually cultivate the soil they own: the rest are hired
+workers.
+
+Phillips goes on to remark:
+
+Another fact must be borne in mind, that a large number of the
+2,984,306 farmers who own land are in debt for it to the money
+lenders. From the writer's observation it is probable that forty per
+cent, of them are so deeply in debt as to pay a rent in interest.
+This squeezing process is going on at the rate of eight and ten per
+cent., and in most cases can terminate in but one way. [Footnote:
+"Labor, Land and Law": 353. It is difficult to get reliable
+statistics on the number of mortgages on farms, and on the number of
+farm tenants. The U.S. Industrial Commission estimated, in 1902, that
+fifty per cent, of the homesteads in Eastern Minnesota were
+mortgaged. Although admitting that such a condition had been general,
+it represented in its Final Report that a large number of mortgages
+in certain States had been paid off. According to the "Political
+Science Quarterly" (Vol. xi, No. 4, 1896) the United States Census of
+1890 showed a marked increase, not only absolutely, but relatively in
+the number of farm tenants. It can hardly be doubted that farm
+tenantry is rapidly increasing and will under the influence of
+various causes increase still more.]
+
+
+A LARGELY DISPOSSESSED NATION.
+
+These are the statistics of a Government which, it is known, seeks to
+make its showing as favorable as possible to the existing regime.
+They make it clear that a rapid process of the dispossession of the
+industrial working, the middle and the small farming classes has been
+going on unceasingly. If the process was so marked in 1900 what must
+it be now? All of the factors operating to impoverish the farming
+population of the United States and turn them into homeless tenants
+have been a thousandfold intensified and augmented in the last ten
+years, beginning with the remarkable formation of hundreds of trusts
+in 1898. Even though the farmer may get higher prices for his
+products, as he did in 1908 and 1909, the benefits are deceptively
+transient, while the expropriating process is persistent.
+
+There was a time when farm land in Ohio, Illinois, Minnesota,
+Indiana, Wisconsin, and many other States was considered of high
+value. But in the last few years an extraordinary sight has been
+witnessed. Hundreds of thousands of American farmers migrated to the
+virgin fields of Northwest Canada and settled there--a portentous
+movement significant of the straits to which the American farmer has
+been driven.
+
+Abandoned farms in the East are numerous; in New York State alone
+22,000 are registered. Hitherto the farmer has considered himself a
+sort of capitalist: if not hostile to the industrial working classes,
+he has been generally apathetic. But now he is being forced to the
+point of being an absolute dependant himself, and will inevitably
+align his interests with those of his brothers in the factories and
+in the shops.
+
+With this contrast of the forces at work which gave empires of public
+domain to the few, while dispossessing the tens of millions, we will
+now proceed to a consideration of some of the fortunes based upon
+railroads.
+
+
+
+
+CHAPTER III
+
+THE BEGINNINGS OF THE VANDERBILT FORTUNE
+
+
+The first of the overshadowing fortunes to develop from the ownership
+and manipulation of railroads was that of Cornelius Vanderbilt. The
+Havemeyers and other factory owners, whose descendants are now
+enrolled among the conspicuous multimillionaires, were still in the
+embryonic stages when Vanderbilt towered aloft in a class by himself
+with a fortune of $105,000,000. In these times of enormous individual
+accumulations and centralization of wealth, the personal possession
+of $105,000,000 does not excite a fraction of the astonished comment
+that it did at Cornelius Vanderbilt's death in 1877. Accustomed as
+the present generation is to the sight of billionaires or semi-
+billionaires, it cannot be expected to show any wonderment at
+fortunes of lesser proportions.
+
+
+NINETY MILLIONS IN FIFTEEN YEARS.
+
+Yet to the people of thirty years ago, a round hundred million was
+something vast and unprecedented. In 1847 millionaires were so
+infrequent that the very word, as we have seen, was significantly
+italicised. But here was a man who, figuratively speaking, was a
+hundred millionaires rolled in one. Compared with his wealth the
+great fortunes of ten or fifteen years before dwindled into
+bagatelles. During the Civil War a fortune of $15,000,000 had been
+looked upon as monumental. Even the huge Astor fortune, so long far
+outranking all competitors, lost its exceptional distinction and
+ceased being the sole, unrivalled standard of immense wealth. Nearly
+a century of fraud was behind the Astor fortune. The greater part of
+Cornelius Vanderbilt's wealth was massed together in his last fifteen
+years.
+
+This was the amazing, unparalleled feature to his generation. Within
+fifteen brief years he had possessed himself of more than
+$90,000,000. His wealth came rushing in at the rate of $6,000,000 a
+year. Such an accomplishment may not impress the people of these
+years, familiar as they are with the ease with which John D.
+Rockefeller and other multimillionaires have long swept in almost
+fabulous annual revenues. With his yearly income of fully $80,000,000
+or $85,000,000 [Footnote: The "New York Commercial," an ultra-
+conservative financial and commercial publication, estimated in
+January, 1905, his annual income to be $72,000,000. Obviously it has
+greatly increased every year.] Rockefeller can look back and smile
+with superior disdain at the commotion raised by the contemplation of
+Cornelius Vanderbilt's $6,000,000.
+
+Each period to itself, however. Cornelius Vanderbilt was the golden
+luminary of his time, a magnate of such combined, far-reaching wealth
+and power as the United States had never known. Indeed, one overruns
+the line of tautology in distinguishing between wealth and power. The
+two were then identical not less than now. Wealth was the real power.
+None knew or boasted of this more than old Vanderbilt when, with
+advancing age, he became more arrogant and choleric and less and less
+inclined to smooth down the storms he provoked by his contemptuous
+flings at the great pliable public. When threatened by competitors,
+or occasionally by public officials, with the invocation of the law,
+he habitually sneered at them and vaunted his defiance. In terse
+sentences, interspersed with profanity, he proclaimed the fact that
+money was law; that it could buy either laws or immunity from the
+law.
+
+       *       *       *       *       *       *       *
+
+Since wealth meant power, both economic and political, it is not
+difficult to estimate Vanderbilt's supreme place in his day.
+
+Far below him, in point of possessions, stretched the 50,000,000
+individuals who made up the nation's population. Nearly 10,000,000
+were wage laborers, and of the 10,000,000 fully 500,000 were child
+laborers. The very best paid of skilled workers received in the
+highest market not more than $1,040 a year. The usual weekly pay ran
+from $12 to $20 a week; the average pay of unskilled laborers was
+$350 a year. More than 7,500,000 persons ploughed and hoed and
+harvested the farms of the country; comparatively few of them could
+claim a decent living, and a large proportion were in debt. The
+incomes of the middle class, including individual employers, business
+and professional men, tradesmen and small middlemen, ranged from
+$1,000 to $10,000 a year.
+
+How immeasurably puny they all seemed beside Vanderbilt! He beheld a
+multitude of many millions struggling fiercely for the dollar that
+meant livelihood or fortune; those bits of metal or paper which
+commanded the necessities, comforts and luxuries of life; the
+antidote of grim poverty and the guarantees of good living; which
+dictated the services, honorable or often dishonorable, of men, women
+and children; which bought brains not less than souls, and which put
+their sordid seal on even the most sacred qualities. Now by these
+tokens, he had securely 105,000,000 of these bits of metal or wealth
+in some form equivalent to them. Millions of people had none of these
+dollars; the hundreds of thousands had a few; the thousands had
+hundreds of thousands; the few had millions. He had more than any.
+
+Even with all his wealth, great as it was in his day, he would
+scarcely be worth remembrance were it not that he was the founder of
+a dynasty of wealth. Therein lies the present importance of his
+career.
+
+
+A FORTUNE OF $700,000,000
+
+From $105,000,000 bequeathed at his death, the Vanderbilt fortune has
+grown until it now reaches fully $700,000,000. This is an approximate
+estimate; the actual amount may be more or less. In 1889 Shearman
+placed the wealth of Cornelius and William K. Vanderbilt, grandsons
+of the first Cornelius, at $100,000,000 each, and that of Frederick
+W. Vanderbilt, a brother of those two men, at $20,000,000. [Footnote:
+"Who Owns the United States?"--The Forum Magazine, November, 1889.]
+Adding the fortunes of the various other members of the Vanderbilt
+family, the Vanderbilts then possessed about $300,000,000. Since that
+time the population and resources of the United States have vastly
+increased; wealth in the hold of a few has become more intensely
+centralized; great fortunes have gone far beyond their already
+extraordinary boundaries of twenty years ago; the possessions of the
+Vanderbilts have expanded and swollen in value everywhere, although
+recently the Standard Oil oligarchy has been encroaching upon their
+possessions. Very probable it is that the combined Vanderbilt fortune
+reaches fully $700,000,000, actually and potentially.
+
+But the incidental mention of such a mass of money conveys no
+adequate conception of the power of this family. Nominally it is
+composed of private citizens with theoretically the same rights and
+limitations of citizenship held by any other citizen and no more. But
+this is a fanciful picture. In reality, the Vanderbilt family is one
+of the dynasties of inordinately rich families ruling the United
+States industrially and politically. Singly it has mastery over many
+of the railroad and public utility systems and industrial
+corporations of the United States. In combination with other powerful
+men or families of wealth, it shares the dictatorship of many more
+corporations. Under the Vanderbilts' direct domination are 21,000
+miles of railroad lines, the ownership of which is embodied in
+$600,000,000 in stocks and $700,000,000 in bonds. One member alone,
+William K. Vanderbilt, is a director of seventy-three transportation
+and industrial combinations or corporations.
+
+
+BONDS THAT HOLD PRESENT AND POSTERITY.
+
+Behold, in imagination at least, this mass of stocks and bonds. Heaps
+of paper they seem; dead, inorganic things. A second's blaze will
+consume any one of them, a few strokes of the fingers tear it into
+shapeless ribbons Yet under the institution of law, as it exists,
+these pieces of paper are endowed with a terrible power of life and
+death that even enthroned kings do not possess. Those dainty prints
+with their scrolls and numerals and inscriptions are binding titles
+to the absolute ownership of a large part of the resources created by
+the labors of entire peoples.
+
+Kingly power at best is shadowy, indefinite, depending mostly upon
+traditional custom and audacious assumption backed by armed force. If
+it fall back upon a certain alleged divine right it cannot produce
+documents to prove its authority. The industrial monarchs of the
+United States are fortified with both power and proofs of possession.
+Those bonds and stocks are the tangible titles to tangible property;
+whoso holds them is vested with the ownership of the necessities of
+tens of millions of subjected people. Great stretches of railroad
+traverse the country; here are coal mines to whose products some
+ninety million people look for warmth; yonder are factories; there in
+the cities are street car lines and electric light and power supply
+and gas plants; on every hand are lands and forests and waterways--
+all owned, you find, by this or that dominant man or family.
+
+The mind wanders back in amazement to the times when, if a king
+conquered territory, he had to erect a fortress or castle and station
+a garrison to hold it. They that then disputed the king's title could
+challenge, if they chose, at peril of death, the provisions of that
+title, which same provisions were swords and spears, arrows and
+muskets.
+
+But nowhere throughout the large extent of the Vanderbilt's
+possessions or those of other ruling families are found warlike
+garrisons as evidence of ownership. Those uncouth barbarian methods
+are grossly antiquated; the part once played by armed battalions is
+now performed by bits of paper. A wondrously convenient change has it
+been; the owners of the resources of nations can disport themselves
+thousands of miles away from the scene of their ownership; they need
+never bestir themselves to provide measures for the retention of
+their property. Government, with its array of officials, prisons,
+armies and navies, undertakes all of this protection for them. So
+long as they hold these bits of paper in their name, Government
+recognizes them as the incontestable owners and safeguards their
+property accordingly. The very Government established on the taxation
+of the workers is used to enforce the means by which the workers are
+held in subjection.
+
+
+THEY DECREE TAXES AT WILL.
+
+These batches of stocks and bonds betoken as much more again. A
+pretty fiction subsists that Government, the creator of the modern
+private corporation, is necessarily more powerful than its creature.
+This theoretical doctrine, so widely taught by university professors
+and at the same time so greatly at variance with the palpable facts,
+will survive to bring dismay in the near future to the very classes
+who would have the people believe it so. Instead of now being the
+superior of the corporation the Government has long since definitely
+surrendered to private corporations a tremendous taxing power
+amounting virtually to a decree authorizing enslavement. Upon every
+form of private corporation--railroad, industrial, mining, public
+utility--is conferred a peculiarly sweeping and insidious power of
+taxation the indirectness of which often obscures its frightful
+nature and effects.
+
+Where, however, the industrial corporation has but one form of
+taxation the railroad has many forms. The trust in oil or any other
+commodity can tax the whole nation at its pleasure, but inherently
+only on the one product it controls. That single taxation is of
+itself confiscatory enough, as is seen in the $912,000,000 of profits
+gathered in by the Standard Oil Company since its inception. The
+trust tax is in the form of its selling price to the public. But the
+railroad puts its tax upon every product transported or every person
+who travels. Not a useful plant grows or an article is made but that,
+if shipped, a heavy tax must be paid on it. This tax comes in the
+guise of freight or passenger rates.
+
+The labor of hundreds of millions of people contributes incessantly
+to the colossal revenues enriching the railroad owners. For their
+producing capacity the workers are paid the meagerest wages, and the
+products which they make they are compelled to buy back at exorbitant
+prices after they pass through the hands of the various great
+capitalist middlemen, such as the trusts and the railroads. How
+enormous the revenues of the railroads are may be seen in the fact
+that in the ten years from 1898 to 1908 the dividends declared by
+thirty-five of the leading railroads in the United States reached the
+sum of about $1,800,000,000. This railroad taxation is a grinding,
+oppressive one, from which there is no appeal. If the Government
+taxes too heavily the people nominally can have a say; but the people
+have absolutely no voice in altering the taxation of corporations.
+Pseudo attempts have been made to regulate railroad charges, but
+their futility was soon evident, for the reason that owning the
+instruments of business the railroads and the allied trusts are in
+actual possession of the governmental power viewing it as a working
+whole.
+
+
+AND EXERCISE UNRESTRAINED POWER.
+
+Visualizing this power one begins to get a vivid perception of the
+comprehensive sway of the Vanderbilts and of other railroad magnates.
+They levy tribute without restraint--a tribute so vast that the
+exactions of classic conquerors become dwarfed beside it. If this
+levying entailed only the seizing of money, that cold, unbreathing,
+lifeless substance, then human emotion might not start in horror at
+the consequences. But beneath it all are the tugging and tearing of
+human muscles and minds, the toil and sweat of an unnumbered
+multitude, the rending of homes, the infliction of sorrow, suffering
+and death.
+
+The magnates, as we have said, hold the power of decreeing life and
+death; and time never was since the railroads were first built when
+this power was not arbitrarily exercised.
+
+Millions have gone hungry or lived on an attenuated diet while
+elsewhere harvests rotted in the ground; between their needs and
+nature's fertility lay the railroads. Organized and maintained for
+profit and for profit alone, the railroads carry produce and products
+at their fixed rates and not a whit less; if these rates are not paid
+the transportation is refused. And as in these times transportation
+is necessary in the world's intercourse, the men who control it have
+the power to stand as an inflexible barrier between individuals,
+groups of individuals, nations and international peoples. The very
+agencies which should under a rational form of civilization be
+devoted to promoting the interests of mankind, are used as their
+capricious self-interest incline them by the few who have been
+allowed to obtain control of them. What if helpless people are swept
+off by starvation or by diseases superinduced by lack of proper food?
+What if in the great cities an increasing sacrifice of innocents goes
+on because their parents cannot afford the price of good milk--a
+price determined to a large extent by railroad tariff? All of this
+slaughter and more makes no impress upon the unimpressionable
+surfaces of these stocks and bonds, and leaves no record save in the
+hospitals and graveyards.
+
+The railroad magnates have other powers. Government itself has no
+power to blot a town out of existence. It cannot strew desolation at
+will. But the railroad owners can do it and do not hesitate if
+sufficient profits be involved. One man sitting in a palace in New
+York can give an order declaring a secret discriminative tariff
+against the products of a place, whereupon its industries no longer
+able to compete with formidable competitors enjoying better rates,
+close down and the life of the place flickers and sometimes goes out.
+
+These are but a very few of the immensity of extravagant powers
+conferred by the ownership of these railroad bonds and stocks. Bonds
+they assuredly are, incomparably more so than the clumsy yokes of
+olden days. Society has improved its outwards forms in these passing
+centuries. Clanking chains are no longer necessary to keep slaves in
+subjection. Far more effective than chains and balls and iron collars
+are the ownership of the means whereby men must live. Whoever
+controls them in large degree, is a potentate by whatever name he be
+called, and those who depend upon the owner of them for their
+sustenance are slaves by whatever flattering name they choose to go.
+
+
+HIGH AND MIGHTY POTENTATES.
+
+The Vanderbilts are potentates. Their power is bounded by no law;
+they are among the handful of fellow potentates who say what law
+shall be and how it shall be enforced. No stern, masterful men and
+women are they as some future moonstruck novelist or historian bent
+upon creating legendary lore may portray them. Voluptuaries are most
+of them, sunk in a surfeit of gorgeous living and riotous pleasure.
+Weak, without distinction of mind or heart, they have the money to
+hire brains to plan, plot, scheme, advocate, supervise and work for
+them. Suddenly deprived of their stocks and bonds they would find
+themselves adrift in the sheerest helplessness. With these stocks and
+bonds they are the direct absolute masters of an army of employees.
+On the New York Central Railroad alone the Vanderbilt payroll
+embraces fifty thousand workers. This is but one of their railroad
+systems. As many more, or nearly as many, men work directly for them
+on their other railroad lines.
+
+One hundred thousand men signify, let us say, as many families.
+Accepting the average of five to a family, here are five hundred
+thousand souls whose livelihood is dependent upon largely the will of
+the Vanderbilt family. To that will there is no check. To-day it may
+be expansively benevolent; to-morrow, after a fit of indigestion or a
+night of demoralizing revelry, it may flit to an extreme of
+parsimonious retaliation. As the will fluctuates, so must be the fate
+of the hundred thousand workers. If the will decides that the pay of
+the men must go down, curtailed it is, irrespective of their protests
+that the lopping off of their already slender wages means still
+keener hardship. Apparently free and independent citizens, this army
+of workers belong for all essential purposes to the Vanderbilt
+family. Their jobs are the hostages held by the Vanderbilts. The
+interests and decisions of one family are supreme.
+
+The germination and establishment of this immense power began with
+the activities of the first Cornelius Vanderbilt, the founder of this
+pile of wealth. He was born in 1794. His parents lived on Staten
+Island; his father conveyed passengers in a boat to and from New
+York--an industrious, dull man who did his plodding part and allowed
+his wife to manage household expenses. Regularly and obediently he
+turned his earnings over to her. She carefully hoarded every
+available cent, using an old clock as a depository.
+
+
+THE FOUNDER'S START.
+
+Vanderbilt was a rugged, headstrong, untamable, illiterate youth. At
+twelve years of age he could scarcely write his own name. But he knew
+the ways of the water; when still a youth he commenced ferrying
+passengers and freight between Staten Island and New York City. For
+books he cared nothing; the refinements of life he scorned. His one
+passion was money. He was grasping and enterprising, coarse and
+domineering. Of the real details of his early life little is known
+except what has been written by laudatory writers. We are informed
+that as he gradually made and saved money he built his own schooners,
+and went in for the coasting trade. The invention and success of the
+steamboat, it is further related, convinced him that the day of the
+sailing vessel would soon be over. He, therefore, sold his interest
+in his schooners, and was engaged as captain of a steamboat plying
+between New York and points on the New Jersey coast. His wife at the
+same time enlarged the family revenues by running a wayside tavern at
+New Brunswick, N. J., whither Vanderbilt had moved.
+
+In 1829, when his resources reached $30,000, he quit as an employee
+and began building his own steamboats. Little by little he drove many
+of his competitors out of business. This he was able to do by his
+harsh, unscrupulous and strategic measures. [Footnote: Some glimpses
+of Vanderbilt's activities and methods in his early career are
+obtainable from the court records. In 1827 he was fined two penalties
+of $50 for refusing to move a steamboat called "The Thistle,"
+commanded by him, from a wharf on the North River in order to give
+berth to "The Legislature," a competing steamboat. His defence was
+that Adams, the harbor master, had no authority to compel him to
+move. The lower courts decided against him, and the Supreme Court, on
+appeal, affirmed their judgment. (Adams vs. Vanderbilt. Cowen's
+Reports. Cases in Supreme Court of the State of New York, vii: 349-
+353.)
+
+In 1841 the Eagle Iron Works sued Vanderbilt for the sum of $2,957.15
+which it claimed was due under a contract made by Vanderbilt on March
+8, 1838. This contract called for the payment by Vanderbilt of
+$10,500 in three installments for the building of an engine for the
+steamboat "Wave." Vanderbilt paid $7,900, but refused to pay the
+remainder, on the ground that braces to the connecting rods were not
+supplied. These braces, it was brought out in court, cost only $75 or
+$100. The Supreme Court handed down a judgment against Vanderbilt. An
+appeal was taken by Vanderbilt, and Judge Nelson, in the Supreme
+Court, in October, 1841, affirmed that judgment.--Vanderbilt vs.
+Eagle Iron Works, Wendell's Reports, Cases in the Supreme Court of
+the State of New York, xxv: 665-668.] He was severe with the men who
+worked for him, compelling them to work long hours for little pay. He
+showed a singular ability in undermining competitors. They could not
+pay low wages but what he could pay lower; as rapidly as they set
+about reducing passenger and freight rates he would anticipate them.
+His policy at this time was to bankrupt competitors, and then having
+obtained a monopoly, to charge exorbitant rates. The public, which
+welcomed him as a benefactor in declaring cheaper rates and which
+flocked to patronize his line, had to pay dearly for their premature
+and short-sighted joy. For the first five years his profits,
+according to Croffut, reached $30,000 a year, doubling in successive
+years. By the time he was forty years old he ran steamboats to many
+cities on the coast, and had amassed a fortune of half a million
+dollars.
+
+
+DRIVING OUT COMPETITORS.
+
+Judging from the records of the times, one of his most effective
+means for harassing and driving out competitors was in bribing the
+New York Common Council to give him, and refuse them, dock
+privileges. As the city owned the docks, the Common Council had the
+exclusive right of determining to whom they should be leased. Not a
+year passed but what the ship, ferry and steamboat owners, the great
+landlords and other capitalists bribed the aldermen to lease or give
+them valuable city property. Many scandals resulted, culminating in
+the great scandal of 1853, when the Grand Jury, on February 26,
+handed up a presentment showing in detail how certain aldermen had
+received bribes for disposal of the city's water rights, pier
+privileges and other property, and how enormous sums had been
+expended in bribes to get railroad grants in the city. [Footnote:
+Proceedings of the New York Board of Aldermen, xlviii: 423-431.]
+Vanderbilt was not openly implicated in these frauds, no more than
+were the Astors, the Rhinelanders, the Goelets and other very rich
+men who prudently kept in the background, and who managed to loot the
+city by operating through go-betweens.
+
+Vanderbilt's eulogists take great pains to elaborate upon his
+tremendous energy, sagacity and constructive enterprise, as though
+these were the exclusive qualities by which he got his fortune. Such
+a glittering picture, common in all of the usual biographies of rich
+men, discredits itself and is overthrown by the actual facts. The
+times in which Vanderbilt lived and thrived were not calculated to
+inspire the masses of people with respect for the trader's methods,
+although none could deny that the outcropping capitalists of the
+period showed a fierce vigor in overcoming obstacles of man and of
+nature, and in extending their conquests toward the outposts of the
+habitable globe.
+
+If indomitable enterprise assured permanency of wealth then many of
+Vanderbilt's competitors would have become and remained
+multimillionaires. Vanderbilt, by no means possessed a monopoly of
+acquisitive enterprise; on every hand, and in every line, were men
+fully as active and unprincipled as he. Nearly all of these men, and
+scores of competitors in his own sphere--dominant capitalists in
+their day--have become well-nigh lost in the records of time; their
+descendants are in the slough of poverty, genteel or otherwise. Those
+times were marked by the intensest commercial competition; business
+was a labyrinth of sharp tricks and low cunning; the man who managed
+to project his head far above the rest not only had to practice the
+methods of his competitors but to overreach and outdo them. It was in
+this regard that Vanderbilt showed superior ability.
+
+In the exploitation of the workers--forcing them to work for low
+wages and compelling them to pay high prices for all necessities--
+Vanderbilt was no different from all contemporaneous capitalists.
+Capitalism subsisted by this process. Almost all conventional
+writers, it is true, set forth that it was the accepted process of
+the day, implying that it was a condition acquiesced in by the
+employer and worker. This is one of the lies disseminated for the
+purpose of proving that the great fortunes were made by legitimate
+methods. Far from being accepted by the workers it was denounced and
+was openly fought by them at every auspicious opportunity.
+
+Vanderbilt became one of the largest ship and steamboat builders in
+the United States and one of the most formidable employers of labor.
+At one time he had a hundred vessels afloat. Thousands of
+shipwrights, mechanics and other workers toiled for him fourteen and
+sixteen hours a day at $1.50 a day for many years. The actual
+purchasing power of this wage kept declining as the cost of rent and
+other necessaries of life advanced. This was notably so after the
+great gold discoveries in California, when prices of all commodities
+rose abnormally, and the workers in every trade were forced to strike
+for higher wages in order to live. Most of these strikes were
+successful, but their results as far as wages went were barren; the
+advance wrung from employers was by no means equal to the increased
+cost of living.
+
+
+REGARDED AS A COMMERCIAL BUCCANEER.
+
+The exploitation of labor, however, does not account for his success
+as a money maker. Many other men did the same, and yet in the
+vicissitudes of business went bankrupt; the realm of business was
+full of wrecks. Vanderbilt's success arose from his destructive
+tactics toward his competitors. He was regarded universally as the
+buccaneer of the shipping world. He leisurely allowed other men to
+build up profitable lines of steamboats, and he then proceeded to
+carry out methods which inevitably had one of two terminations:
+either his competitor had to buy him off at an exorbitant price, or
+he was left in undisputed possession. His principal biographer,
+Croffut, whose effusion is one long chant of praise, treats these
+methods as evidences of great shrewdness, and goes on: "His foible
+was 'opposition;' wherever his keen eye detected a line that was
+making a very large profit on its investment, he swooped down on it
+and drove it to the wall by offering a better service and lower
+rates." [Footnote: "The Vanderbilts and the Story of Their Fortune,"
+by W. A. Croffut, 1886: 45-46.] This statement is only partially
+true; its omissions are more significant than its admissions.
+
+Far from being the "constructive genius" that he is represented in
+every extant biographical work and note, Vanderbilt was the foremost
+mercantile pirate and commercial blackmailer of his day.
+
+Harsh as these terms may seem, they are more than justified by the
+facts. His eulogists, in line with those of other rich men, weave a
+beautiful picture for the edification of posterity, of a broad,
+noble-minded man whose honesty was his sterling virtue, and whose
+splendid ability in opening up and extending the country's resources
+was rewarded with a great fortune and the thanks of his generation.
+This is utterly false. He who has the slightest knowledge of the low
+practices and degraded morals of the trading class and of the
+qualities which insured success, might at once suspect the
+spuriousness of this extravagant presentation, even if the vital
+facts were unavailable.
+
+But there is no such difficulty. Obviously, for every one fraudulent
+commercial or political transaction that comes to public notice,
+hundreds and thousands of such transactions are kept in concealment.
+Enough facts, however, remain in official records to show the
+particular methods Vanderbilt used in getting together his millions.
+Yet no one hitherto seems to have taken the trouble to disinter them;
+even serious writers who cannot be accused of wealth worship or
+deliberate misstatement have all, without exception, borrowed their
+narratives of Vanderbilt's career from the fiction of his literary,
+newspaper and oratorical incense burners. And so it is that
+everywhere the conviction prevails that whatever fraudulent methods
+Vanderbilt employed in his later career, he was essentially an
+honest, straightforward man who was compelled by the promptings of
+sheer self-preservation to fight back at unscrupulous competitors or
+antagonists, and who innately was opposed to underhand work or fraud
+in any form. Vanderbilt is in every case portrayed as an eminently
+high-minded man who never stooped to dissimulation, deceit or
+treachery, and whose first millions, at any rate, were made in the
+legitimate ways of trade as they were then understood.
+
+
+EXTORTION AND THEFT COMMON.
+
+The truth is that the bulk of Vanderbilt's original millions were the
+proceeds of extortion, blackmail and theft.
+
+In the established code of business the words extortion and theft had
+an unmistakable significance. Business men did not consider it at all
+dishonorable to oppress their workers; to manufacture and sell goods
+under false pretenses; to adulterate prepared foods and drugs; to
+demand the very highest prices for products upon which the very life
+of the people depended, and at a time when consumers needed them
+most; to bribe public officials and to hold up the Government in
+plundering schemes. These and many other practices were looked upon
+as commonplaces of ordinary trade.
+
+But even as burglars will have their fine points of honor among
+themselves, so the business world set certain tacit limitations of
+action beyond which none could go without being regarded as violating
+the code. It was all very well as long as members of their own class
+plundered some other class, or fought one another, no matter how
+rapaciously, in accordance with understood procedure. But when any
+business man ventured to overstep these limitations, as Vanderbilt
+did, and levy a species of commercial blackmail to the extent of
+millions of dollars, then he was sternly denounced as an arch thief.
+If Vanderbilt had confined himself to the routine formulas of
+business, he might have gone down in failure. Many of the bankrupts
+were composed of business men who, while sharp themselves, were
+outgeneraled by abler sharpers. Vanderbilt was a master hand in
+despoiling the despoilers.
+
+[Illustration: COMMODORE CORNELIUS VANDERBILT, The Founder of the
+Vanderbilt Fortune.]
+
+How did Vanderbilt manage to extort millions of dollars? The method
+was one of great simplicity; many of its features were brought out in
+the United States Senate in the debate of June 9, 1858, over the Mail
+Steamship bill. The Government had begun, more than a decade back,
+the policy of paying heavy subsidies to steamship companies for the
+transportation of mail. This subsidy, however, was not the only
+payment received by the steamship owners. In addition they were
+allowed what were called "postages"--the full returns from the amount
+of postage on the letters carried. Ocean postage at that time was
+enormous and burdensome, and was especially onerous upon a class of
+persons least able to bear it. About three-quarters of the letters
+transported by ships were written by emigrants. They were taxed the
+usual rate of twenty-four or twenty-nine cents for a single letter.
+In 1851 the amount received for trans-Atlantic postages was not less
+than a million dollars; three-fourths of this sum came directly from
+the working class.
+
+
+THE CORRUPTION OF OFFICIALS.
+
+To get these subsidies, in conjunction with the "postages," the
+steamship owners by one means or another corrupted postal officials
+and members of Congress. "I have noticed," said Senator Toombs, in a
+speech in the United States Senate on June 9, 1858, that there has
+never been a head of a Department strong enough to resist steamship
+contracts. I have noticed them here with your Whig party and your
+Democratic party for the last thirteen years, and I have never seen
+any head of a Department strong enough to resist these influences. ...
+Thirteen years' experience has taught me that wherever you allow
+the Postoffice or Navy Department to do anything which is for the
+benefit of contractors you may consider the thing as done. I could
+point to more than a dozen of these contracts. ... A million dollars
+a year is a power that will be felt. For ten years it amounts to ten
+million dollars, and I know it is felt. I know it perverts
+legislation. I have seen its influence; I have seen the public
+treasury plundered by it. ... [Footnote: The Congressional Globe,
+First Session, Thirty-fifth Congress, 1857-58, iii: 2839.]
+
+By means of this systematic corruption the steamship owners received
+many millions of dollars of Government funds. This was all virtually
+plunder; the returns from the "postages" far more than paid them for
+the transportation of mails. And what became of these millions in
+loot? Part went in profits to the owners, and another part was used
+as private capital by them to build more and newer ships constantly.
+Practically none of Vanderbilt's ships cost him a cent; the
+Government funds paid for their building. In fact, a careful tracing
+of the history of all of the subsidized steamship companies proves
+that this plunder from the Government was very considerably more than
+enough to build and equip their entire lines.
+
+One of the subsidized steamship lines was that of E. K. Collins &
+Co., a line running from New York to Liverpool. Collins debauched the
+postal officials and Congress so effectively that in 1847 he obtained
+an appropriation of $387,000 a year, and subsequently an additional
+appropriation of $475,000 for five years. Together with the
+"postages," these amounts made a total mail subsidy for that one line
+alone during the latter years of the contract of about a million
+dollars a year. The act of Congress did not, however, specify that
+the contract was to run for ten years. The postal officials, by what
+Senator Toombs termed "a fraudulent construction," declared that it
+did run for ten years from 1850, and made payments accordingly. The
+bill before Congress in the closing days of the session of 1858, was
+the usual annual authorization of the payment of this appropriation,
+as well as other mail-steamer appropriations.
+
+
+VANDERBILT'S HUGE LOOT.
+
+In the course of this debate some remarkable facts came out as to how
+the Government was being steadily plundered, and why it was that the
+postal system was already burdened with a deficit of $5,000,000.
+While the appropriation bill was being solemnly discussed with
+patriotic exclamations, lobbyists of the various steamship companies
+busied themselves with influencing or purchasing votes within the
+very halls of Congress.
+
+Almost the entire Senate was occupied for days with advocating this
+or that side as if they were paid attorneys pleading for the
+interests of either Collins or Vanderbilt. Apparently a bitter
+conflict was raging between these two millionaires. Vanderbilt's
+subsidized European lines ran to Southampton, Havre and Bremen;
+Collins' to Liverpool. There were indications that for years a secret
+understanding had been in force between Collins and Vanderbilt by
+which they divided the mail subsidy funds. Ostensibly, however, in
+order to give no sign of collusion, they went through the public
+appearance of warring upon each other. By this stratagem they were
+able to ward off criticism of monopoly, and each get a larger
+appropriation than if it were known that they were in league. But it
+was characteristic of business methods that while in collusion,
+Vanderbilt and Collins constantly sought to wreck the other.
+
+One Senator after another arose with perfervid effusion of either
+Collins or Vanderbilt. The Collins supporters gave out the most suave
+arguments why the Collins line should be heavily subsidized, and why
+Collins should be permitted to change his European port to
+Southampton. Vanderbilt's retainers fought this move, which they
+declared would wipe out of existence the enterprise of a great and
+patriotic capitalist.
+
+It was at this point that Senator Toombs, who represented neither
+side, cut in with a series of charges which dismayed the whole lobby
+for the time being. He denounced both Collins and Vanderbilt as
+plunderers, and then, in so many words, specifically accused
+Vanderbilt of having blackmailed millions of dollars. "I am trying,"
+said Senator Toombs, to protect the Government against collusion,
+not against conflict. I do not know but that these parties have colluded
+now. I have not the least doubt that all these people understand one
+another. I am  struggling against collusion. If they have colluded,
+why should Vanderbilt run to Southampton for the postage when
+Collins can get three hundred and eighty-seven thousand dollars for
+running to the same place? Why may not Collins, then, sell his ships,
+sit down in New York, and say to Vanderbilt, 'I will give you two hundred
+and thirty thousand dollars and pocket one hundred and fifty-seven
+thousand dollars a year.' That is the plain, naked case. The Senator
+from Vermont says the Postmaster General will protect us. It is my
+duty, in the first place, to prevent collusion, and prevent the
+country from being plundered; to protect it by law as well as I can.'
+
+Regarding the California mails, Senator Toombs reminded the Senate of
+the granting eleven years before of enormous mail subsidies to the
+two steamship lines running to California--the Pacific Mail Steamship
+Company and the United States Mail Steamship Company, otherwise
+called the Harris and the Sloo lines. He declared that Vanderbilt,
+threatening them with both competition and a public agitation such as
+would uncover the fraud, had forced them to pay him gigantic sums in
+return for his silence and inactivity. Responsible capitalists,
+Senator Toombs said, had offered to carry the mails to California for
+$550,000. "Everybody knows," he said, "that it can be done for half
+the money we pay now. Why, then, should we continue to waste the
+public money?" Senator Toombs went on:
+
+You give nine hundred thousand dollars a year to carry the mails to
+California; and Vanderbilt compels the contractors to give him
+$56,000 a month to keep quiet. This is the effect of your
+subventions. Under your Sloo and Harris contracts you pay about
+$900,000 a year (since 1847); and Vanderbilt, by his superior skill
+and energy, compelled them for a long time, to disgorge $40,000 a
+month, and now $56,000 a month. ... They pay lobbymen, they pay
+agencies, they go to law, because everybody is to have something; and
+I know this Sloo contract has been in chancery in New York for years.
+[Footnote: The case referred to by Senator Toombs was doubtless that
+of Sloo et al. vs. Law et al. (Case No. 12,957, Federal Cases, xxii:
+355-364.)
+
+In this case, argued before Judge Ingersoll in the United States
+Circuit Court, at New York City, on May 16, 1856, many interesting
+and characteristic facts came out both in the argument and in the
+Court decision.
+
+From the decision (which went into the intricacies of the case at
+great length) it appeared that although Albert G. Sloo had formed the
+United States Mail Steamship Company, the incorporators were George
+Law, Marshall O. Roberts, Prosper M. Wetmore and Edwin Crosswell.
+Sloo assigned his contract to them. Law was the first president, and
+was succeeded by Roberts. A trust fund was formed. Law fraudulently
+(so the decision read) took out $700,000 of stock, and also
+fraudulently appropriated large sums of money belonging to the trust
+fund. This was the same Law who, in 1851 (probably with a part of
+this plunder) bribed the New York Board of Aldermen, with money, to
+give him franchises for the Second and Ninth Avenue surface railway
+lines. Roberts appropriated $600,000 of the United States Mail
+Steamship Company's stock. The huge swindles upon the Government
+carried on by Roberts during the Civil War are described in later
+chapters in this work. Wetmore was a notorious lobbyist. By fraud,
+Law and Roberts thus managed to own the bulk of the capital stock of
+the United States Mail Steamship Company. The mail contract that it
+had with the Government was to yield $2,900,000 in ten years.
+
+Vanderbilt stepped in to plunder these plunderers. During the time
+that Vanderbilt competed with that company, the price of a single
+steerage passage from California to New York was $35. After he had
+sold the company the steamship "North Star" for $400,000, and had
+blackmailed it into paying heavily for his silence and non-
+competition, the price of steerage passage was put up to $125 (p.
+364).
+
+The cause of the suit was a quarrel among the trustees over the
+division of the plunder. One of the trustees refused to permit
+another access to the books. Judge Ingersoll issued an injunction
+restraining the defendant trustees from withholding such books and
+papers.] The result of this system is that here comes a man--as old
+Vanderbilt seems to be--I never saw him, but his operations have
+excited my admiration--and he runs right at them and says disgorge
+this plunder. He is the kingfish that is robbing these small
+plunderers that come about the Capitol. He does not come here for
+that purpose; but he says, 'Fork over $56,000 a month of this money
+to me, that I may lie in port with my ships,' and they do it.
+[Footnote: The Congressional Globe, 1857-58, iii: 2843-2844.
+
+The acts by which the establishment of the various subsidized ocean
+lines were authorized by Congress, specified that the steamers were
+to be fit for ships of war in case of necessity, and that these
+steamers were to be accepted by the Navy Department before they could
+draw subsidies. This part of the debate in the United States Senate
+shows the methods used in forcing their acceptance on the Government:
+
+Mr. Collamer.--The Collins line was set up by special contract?
+
+Mr. Toombs.--Yes, by special contract, and that was the way with the
+Sloo contract and the Harris contract. They were to build ships fit
+for war purposes. I know when the Collins vessels were built; I was a
+member of the Committee on Ways and Means of the other House, and I
+remember that the men at the head of our bureau of yards and docks
+said that they were not worth a sixpence for war purposes; that a
+single broadside would blow them to pieces; that they could not stand
+the fire of their own guns; but newspapers in the cities that were
+subsidized commenced firing on the Secretary of the Navy, and he
+succumbed and took the ships. That was the way they got here.
+
+Senator Collamer, referring to the subsidy legislation, said: "As
+long as the Congress of the United States makes contracts, declare
+who they shall be with, and how much they shall pay for them, they
+can never escape the generally prevailing public suspicion that there
+is fraud and deceit and corruption in those contracts."]
+
+Thus, it is seen, Vanderbilt derived millions of dollars by this
+process of commercial blackmail. Without his having to risk a cent,
+or run the chance of losing a single ship, there was turned over to
+him a sum so large every year that many of the most opulent merchants
+could not claim the equal of it after a lifetime of feverish trade.
+It was purely as a means of blackmailing coercion that he started a
+steamship line to California to compete with the Harris and the Sloo
+interests. For his consent to quit running his ships and to give them
+a complete and unassailed monopoly he first extorted $480,000 a year
+of the postal subsidy, and then raised it to $612,000.
+
+The matter came up in the House, June 12, 1858. Representative Davis,
+of Mississippi, made the same charges. He read this statement and
+inquired if it were true:
+
+These companies, in order to prevent all competition to their line,
+and to enable them, as they do, to charge passengers double fare,
+have actually paid Vanderbilt $30,000 per month, and the United
+States Mail Steamship Company, carrying the mail between New York and
+Aspinwall, an additional sum of $10,000 per month, making $40,000 per
+month to Vanderbilt since May, 1856, which they continued to do. This
+$480,000 are paid to Vanderbilt per annum simply to give these two
+companies the entire monopoly of their lines--which sum, and much
+more, is charged over to passengers and freight.
+
+Representative Davis repeatedly pressed for a definite reply as to
+the truth of the statement. The advocates of the bill answered with
+evasions and equivocations. [Footnote: The Congressional Globe, part
+iii, 1857-58:3029. The Washington correspondent of the New York
+"Times" telegraphed (issue of June 2, 1858) that the mail subsidy
+bill was passed by the House "Without twenty members knowing its
+details."]
+
+
+BLACKMAIL CHARGES TRUE.
+
+The mail steamer appropriation bill, as finally passed by Congress,
+allowed large subsidies to all of the steamship interests. The
+pretended warfare among them had served its purpose; all got what
+they sought in subsidy funds. While the bill allowed the Postmaster-
+General to change Collins' European terminus to Southampton, that
+official, so it was proved subsequently, was Vanderbilt's plastic
+tool.
+
+But what became of the charges against Vanderbilt? Were they true or
+calumniatory? For two years Congress made no effort to ascertain
+this. In 1860, however, charges of corruption in the postal system
+and other Government departments were so numerously made, that the
+House of Representatives on March 5, 1860, decided, as a matter of
+policy, to appoint an investigatng committee. This committee, called
+the "Covode Committee," after the name of its chairman, probed into
+the allegations of Vanderbilt's blackmailing transactions. The
+charges made in 1858 by Senator Toombs and Representative Davies were
+fully substatiated.
+
+Ellwood Fisher, a trustee of the United States Mail Steamship
+Company, testified on May 2 that during the greater part of the time
+he was trustee, Vanderbilt was paid $10,000 a month by the United
+States Mail Steamship company, and that the Pacific Mail Steamship
+Company paid him $30,000 a month at the same time and for the same
+purpose. The agreement was that if competition appeared payment was
+to cease. In all, $480,000 a year was paid during this time. On June
+5, 1860, Fisher again testified: "During the period of about four
+years and a half that I was one of the trustees, the earnings of the
+line were very large, but the greater part of the money was
+wrongfully appropriated to Vanderbilt for blackmail, and to others on
+various pretexts." [Footnote: House Reports, Thirty-sixth Congress,
+First Session 1859-60 v:785-86 and 829. "Hence it was held,"
+explained Fisher, in speaking of his fellow trustees, "that he
+[Vanderbilt] was interested in preventing competition, and the terror
+of his name and capital would be effectual upon others who might be
+disposed to establish steamship lines" (p. 786).] William H. Davidge,
+president of the Pacific Mail Steamship Company, admitted that the
+company had long paid blackmail money to Vanderbilt. "The
+arrangement," he said, "was based upon there being no competition,
+and the sum was regulated by that fact." [Footnote: Ibid., 795-796.
+The testimony of Fischer, Davidge and other officials of the
+steamship lines covers many pages of the investigating committee's
+report. Only a few of the most vital parts have been quoted here.]
+Horace F. Clark, Vanderbilt's son-in-law, one of the trustees of the
+United States Mail Steamship Company, likewise admitted the
+transaction. [Footnote: Ibid., 824.
+
+But Roberts and his associate trustees succeeded in making the
+Government recoup them, to a considerable extent, for the amount out
+of which Vanderbilt blackmailed them. They did it in this way:
+
+A claim was trumped up by them that the Government owed a large sum,
+approximating about two million dollars, to the United States Mail
+Steamship Company for services in carrying mail in addition to those
+called for under the Sloo contract. In 1859 they began lobbying in
+Congress to have this claim recognized. The scheme was considered so
+brazen that Congress refused. Year after year, for eleven years, they
+tried to get Congress to pass an act for their benefit. Finally, on
+July 14, 1870, at a time when bribery was rampant in Congress, they
+succeeded. An act was passed directing the Court of Claims to
+investigate and determine the merits of the claim.] It is quite
+useless [Footnote: The Court of Claims threw the case out of court.
+Judge Drake, in delivering the opinion of the court, said that the
+act was to be so construed "as to prevent the entrapping of the
+Government by fixing upon it liability where the intention of the
+legislature [Congress] was only to authorize an investigation of the
+question of liability" (Marshall O. Roberts et al., Trustees, vs. the
+United States, Court of Claims Reports, vi: 84-90). On appeal,
+however, the Supreme Court of the United States held that the act of
+Congress in referring the case to the Court of Claims was in effect
+_a ratification of the claim_. (Court of Claims Reports, xi:
+198-126.) Thus this bold robbery was fully validated.] to ask whether
+Vanderbilt was criminally prosecuted or civilly sued by the
+Government. Not only was he unmolested, but two years later, as we
+shall see, he carried on another huge swindle upon the Government
+under peculiarly heinous conditions.
+
+This continuous robbery of the public treasury explains how
+Vanderbilt was able to get hold of millions of dollars at a time when
+millionaires were scarce. Vanderbilt is said to have boasted in 1853
+that he had eleven million dollars invested at twenty-five per cent.
+A very large portion of this came directly from his bold system of
+commercial blackmail. [Footnote: Undoubtedly so, but the precise
+proportion it is impossible to ascertain.] The mail subsidies were
+the real foundation of his fortune. Many newspaper editorials and
+articles of the time mention this fact. Only a few of the important
+underlying facts of the character of his methods when he was in the
+steamboat and steamship business can be gleaned from the records. But
+these few give a clear enough insight. With a part of the proceeds of
+his plan of piracy, he carried on a subtle system of corruption by
+which he and the other steamer owners were able time after time not
+only to continue their control of Congress and the postal
+authorities, but to defeat postal reform measures. For fifteen years
+Vanderbilt and his associates succeeded in stifling every bill
+introduced in Congress for the reduction of the postage on mail.
+
+
+HE QUITS STEAMSHIPS.
+
+The Civil War with its commerce-preying privateers was an
+unpropitious time for American mercantile vessels. Vanderbilt now
+began his career as a railroad owner.
+
+He was at this time sixty-nine years old, a tall, robust, vigorous
+man with a stern face of remarkable vulgar strength. The illiteracy
+of his youth survived; he could not write the simplest words
+correctly, and his speech was a brusque medley of slang, jargon,
+dialect and profanity. It was said of him that he could swear more
+forcibly, variously and frequently than any other man of his
+generation. Like the Astors, he was cynical, distrustful, secretive
+and parsimonious. He kept his plans entirely to himself. In his
+business dealings he was never known to have shown the slightest
+mercy; he demanded the last cent due. His close-fistedness was such a
+passion that for many years he refused to substitute new carpets for
+the scandalous ones covering the floors of his house No. 10
+Washington place. He never read anything except the newspapers, which
+he skimmed at breakfast. To his children he was unsympathetic and
+inflexibly harsh; Croffut admits that they feared him. The only
+relaxations he allowed himself were fast driving and playing whist.
+
+This, in short is a picture of the man who in the next few years used
+his stolen millions to sweep into his ownership great railroad
+systems. Croffut asserts that in 1861 he was worth $20,000,000; other
+writers say that his wealth did not exceed $10,000,000. He knew
+nothing of railroads, not even the first technical or supervising
+rudiments. Upon one thing he depended and that alone: the brute force
+of money with its auxiliaries, cunning, bribery and fraud.
+
+
+
+
+CHAPTER IV
+
+THE ONRUSH OF THE VANDERBILT FORTUNE
+
+
+With the outbreak of the Civil War, and the scouring of the seas by
+privateers, American ship owners found themselves with an assortment
+of superfluous vessels on their hands. Forced to withdraw from marine
+commerce, they looked about for two openings. One was how to dispose
+of their vessels, the other the seeking of a new and safe method of
+making millions.
+
+Most of their vessels were of such scandalous construction that
+foreign capitalists would not buy them at any price. Hastily built in
+the brief period of ninety days, wholly with a view to immediate
+profit and with but a perfunctory regard for efficiency, many of
+these steamers were in a dangerous condition. That they survived
+voyages was perhaps due more to luck than anything else; year after
+year, vessel after vessel similarly built and owned had gone down to
+the bottom of the ocean. Collins had lost many of his ships; so had
+other steamship companies. The chronicles of sea travel were a long,
+grewsome succession of tragedies; every little while accounts would
+come in of ships sunk or mysteriously missing. Thousands of
+immigrants, inhumanly crowded in the enclosures of the steerage, were
+swept to death without even a fighting chance for life. Cabin
+passengers fared better; they were given the opportunity of taking to
+the life-boats in cases where there was sufficient warning, time and
+room. At best, sea travel is a hazard; the finest of ships are liable
+to meet with disaster. But over much of this sacrifice of life hung
+grim, ugly charges of mismanagement and corruption, of insufficient
+crews and incompetent officers; of defective machinery and rotting
+timber; of lack of proper inspection and safeguards.
+
+
+THE ANSWER FOUND.
+
+The steamboat and steamship owners were not long lost in perplexity.
+Since they could no longer use their ships or make profit on ocean
+routes why not palm off their vessels upon the Government? A highly
+favorable time it was; the Government, under the imperative necessity
+of at once raising and transporting a huge army, needed vessels
+badly. As for the other question momentarily agitating the
+capitalists as to what new line of activity they could substitute for
+their own extinguished business, Vanderbilt soon showed how railroads
+could be made to yield a far greater fortune than commerce.
+
+The titanic conflict opening between the North and the South found
+the Federal Government wholly unprepared. True, in granting the mail
+subsidies which established the ocean steamship companies, and which
+actually furnished the capital for many of them, Congress had
+inserted some fine provisions that these subsidized ships should be
+so built as to be "war steamers of the first class," available in
+time of war. But these provisions were mere vapor. Just as the Harris
+and the Sloo lines had obtained annual mail subsidy payments of
+$900,000 and had caused Government officials to accept their inferior
+vessels, so the Collins line had done the same. The report of a board
+of naval experts submitted to the Committee of Ways and Means of the
+House of Representatives had showed that the Collins steamers had not
+been built according to contract; that they would crumble to pieces
+under the fire of their own batteries, and that a single hostile gun
+would blow them to splinters. Yet they had been accepted by the Navy
+Department.
+
+In times of peace the commercial interests had practiced the grossest
+frauds in corruptly imposing upon the Government every form of shoddy
+supplies. These were the same interests so vociferously proclaiming
+their intense patriotism. The Civil War put their pretensions of
+patriotism to the test. If ever a war took place in which Government
+and people had to strain every nerve and resource to carry on a great
+conflict it was the Civil War. The result of that war was only to
+exchange chattel slavery for the more extensive system of economic
+slavery. But the people of that time did not see this clearly. The
+Northern soldiers thought they were fighting for the noblest of all
+causes, and the mass of the people behind them were ready to make
+every sacrifice to win a momentous struggle, the direct issue of
+which was the overthrow or retention of black slavery.
+
+How did the capitalist class act toward the Government, or rather, let
+us say, toward the army and the navy so heroically pouring out their
+blood in battles, and hazarding life in camps, hospitals, stockades
+and military prisons?
+
+
+INDISCRIMINATE PLUNDERING DURING THE CIVIL WAR.
+
+The capitalists abundantly proved their devout patriotism by making
+tremendous fortunes from the necessities of that great crisis. They
+unloaded upon the Government at ten times the cost of manufacture
+quantities of munitions of war--munitions so frequently worthless
+that they often had to be thrown away after their purchase.
+[Footnote: In a speech on February 28, 1863, on the urgency of
+establishing additional government armories and founderies,
+Representative J. W. Wallace pointed out in the House of
+Representatives: "The arms, ordnance and munitions of war bought by
+the Government from private contractors and foreign armories since
+the commencement of the rebellion have doubtless cost, over and above
+the positive expense of their manufacture, ten times as much as would
+establish and put into operation the armory and founderies
+recommended in the resolution of the committee. I understand that the
+Government, from the necessity of procuring a sufficient quantity of
+arms, has been paying, on the average, about twenty-two dollars per
+musket, when they could have been and could be manufactured in our
+national workshops for one-half that money."--Appendix to The
+Congressional Globe, Thirty-seventh Congress, Third Session, 1862-63.
+Part ii: 136. Fuller details are given in subsequent chapters. ] They
+supplied shoddy uniforms and blankets and wretched shoes; food of so
+deleterious a quality that it was a fertile cause of epidemics of
+fevers and of numberless deaths; they impressed, by force of
+corruption, worn-out, disintegrating hulks into service as army and
+naval transports. Not a single possibility of profit was there in
+which the most glaring frauds were not committed. By a series of
+disingenuous measures the banks plundered the Treasury and people and
+caused their banknotes to be exempt from taxation. The merchants
+defrauded the Government out of millions of dollars by bribing Custom
+House officers to connive at undervaluations of imports. [Footnote:
+In his report for 1862 Salmon P. Chase, Secretary of the Treasury,
+wrote: "That invoices representing fraudulent valuation of
+merchandise are daily presented at the Custom Houses is well
+known...."] The Custom House frauds were so notorious that, goaded on
+by public opinion, the House of Representatives was forced to appoint
+an investigating committee. The chairman of this committee,
+Representative C. H. Van Wyck, of New York, after summarizing the
+testimony in a speech in the House on February 23, 1863, passionately
+exclaimed: "The starving, penniless man who steals a loaf of bread to
+save life you incarcerate in a dungeon; but the army of magnificent
+highwaymen who steal by tens of thousands from the people, go
+unwhipped of justice and are suffered to enjoy the fruits of their
+crimes. It has been so with former administrations: unfortunately it
+is so with this." [Footnote: Appendix to the Congressional Globe,
+Thirty-seventh Congress, Third Session, 1862-63. Part ii: 118.]
+
+The Federal armies not only had to fight an open foe in a desperately
+contested war, but they were at the same time the helpless targets
+for the profit-mongers of their own section who insidiously slew
+great numbers of them--not, it is true, out of deliberate lust for
+murder, but because the craze for profits crushed every instinct of
+honor and humanity, and rendered them callous to the appalling
+consequences. The battlefields were not more deadly than the supplies
+furnished by capitalist contractors. [Footnote: This is one of many
+examples: Philip S. Justice, a gun manufacturer of Philadelphia,
+obtained a contract in 1861, to supply 4,000 rifles. He charged $20
+apiece. The rifles were found to be so absolutely dangerous to the
+soldiers using them, that the Government declined to pay his demanded
+price for a part of them. Justice then brought suit. (See Court of
+Claims Reports, viii: 37-54.) In the court records, these statements
+are included:
+
+William H. Harris, Second Lieutenant of Ordnance, under orders
+visited Camp Hamilton, Va., and inspected the arms of the Fifty-
+Eighth Regiment, Pennsylvania Volunteers, stationed there. He
+reported: "This regiment is armed with rifle muskets, marked on the
+barrel, 'P. S. Justice, Philadelphia,' and vary in calibre from .65
+to .70. I find many of them unserviceable and irreparable, from the
+fact that the principal parts are defective. Many of them are made up
+of parts of muskets to which the stamp of condemnation has been
+affixed by an inspecting officer. None of the stocks have ever been
+approved by an officer, nor do they bear the initials of any
+inspector. They are made up of soft, unseasoned wood, and are
+defective in construction. ... The sights are merely soldered on to
+the barrel, and come off with the gentlest handling. Imitative screw-
+heads are cut on their bases. The bayonets are made up of soft iron,
+and, of course, when once bent remain 'set,'" etc., etc. (p. 43).
+
+Col. (later General) Thomas D. Doubleday reported of his inspection:
+"The arms which were manufactured at Philadelphia, Penn., are of the
+most worthless kind, and have every appearance of having been
+manufactured from old condemned muskets. Many of them burst; hammers
+break off; sights fall off when discharged; the barrels are very
+light, not one-twentieth of an inch thick, and the stocks are made of
+green wood which have shrunk so as to leave the bands and trimmings
+loose. The bayonets are of such frail texture that they bend like
+lead, and many of them break off when going through the bayonet
+exercise. You could hardly conceive of such a worthless lot of arms,
+totally unfit for service, and dangerous to those using them" (p.
+44).
+
+Assistant Inspector-General of Ordnance John Buford reported: "Many
+had burst; many cones were blown out; many locks were defective; many
+barrels were rough inside from imperfect boring; and many had
+different diameters of bore in the same barrel. ... _At target
+practice so many burst that the men became afraid to fire them_"
+(p. 45).
+
+The Court of Claims, on strict technical grounds, decided in favor of
+Justice, but the Supreme Court of the United States reversed that
+decision and dismissed the case. The Supreme Court found true the
+Government's contention that "the arms were unserviceable and unsafe
+for troops to handle."
+
+Many other such specific examples are given in subsequent chapters of
+this work.] These capitalists passed, and were hailed, as eminent
+merchants, manufacturers and bankers; they were mighty in the marts
+and in politics; and their praise as "enterprising" and "self-made"
+and "patriotic" men was lavishly diffused.
+
+It was the period of periods when there was a kind of adoration of
+the capitalist taught in press, college and pulpit. Nothing is so
+effective, as was remarked of old, to divert attention from
+scoundrelism as to make a brilliant show of patriotism. In the very
+act of looting Government and people and devastating the army and
+navy, the capitalists did the most ghastly business under the mask of
+the purest patriotism. Incredible as it may seem, this pretension was
+invoked and has been successfully maintained to this very day. You
+can scarcely pick up a volume on the Civil War, or a biography of the
+statesmen or rich men of the era, without wading in fulsome accounts
+of the untiring patriotism of the capitalists.
+
+
+PATRIOTISM AT A SAFE DISTANCE.
+
+But, while lustily indulging in patriotic palaver, the propertied
+classes took excellent care that their own bodies should not be
+imperilled. Inspired by enthusiasm or principle, a great array of the
+working class, including the farming and the professional elements,
+volunteered for military service. It was not long before they
+experienced the disappointment and demoralization of camp life. The
+letters written by many of these soldiers show that they did not
+falter at active campaigning. The prospect, however, of remaining in
+camp with insufficient rations, and (to use a modern expressive word)
+graft on every hand, completely disheartened and disgusted many of
+them. Many having influence with members of Congress, contrived to
+get discharges; others lacking this influence deserted. To fill the
+constantly diminishing ranks caused by deaths, resignations and
+desertions, it became necessary to pass a conscription act.
+
+With few exceptions, the propertied classes of the North loved
+comfort and power too well to look tranquilly upon any move to force
+them to enlist. Once more, the Government revealed that it was but a
+register of the interests of the ruling classes. The Draft Act was so
+amended that it allowed men of property to escape being conscripted
+into the army by permitting them to buy substitutes. The poor man who
+could not raise the necessary amount had to submit to the
+consequences of the draft. With a few of the many dollars wrung,
+filched or plundered in some way or other, the capitalists could
+purchase immunity from military service.
+
+As one of the foremost capitalists of the time, Cornelius Vanderbilt
+has been constantly exhibited as a great and shining patriot.
+Precisely in the same way as Croffut makes no mention of Vanderbilt's
+share in the mail subsidy frauds, but, on the contrary, ascribes to
+Vanderbilt the most splendid patriotism in his mail carrying
+operations, so do Croffut and other writers unctuously dilate upon
+the old magnate's patriotic services during the Civil War. Such is
+the sort of romancing that has long gone unquestioned, although the
+genuine facts have been within reach. These facts show that
+Vanderbilt was continuing during the Civil War the prodigious frauds
+he had long been carrying on.
+
+When Lincoln's administration decided in 1862 to send a large
+military and naval force to New Orleans under General Banks, one of
+the first considerations was to get in haste the required number of
+ships to be used as transports. To whom did the Government turn in
+this exigency? To the very merchant class which, since the foundation
+of the United States, had continuously defrauded the public treasury.
+The owners of the ships had been eagerly awaiting a chance to sell or
+lease them to the Government at exorbitant prices. And to whom was
+the business of buying, equipping and supervising them intrusted? To
+none other than Cornelius Vanderbilt.
+
+Every public man had opportunities for knowing that Vanderbilt had
+pocketed millions of dollars in his fraudulent hold-up arrangement
+with various mail subsidy lines. He was known to be mercenary and
+unscrupulous. Yet he was selected by Secretary of War Stanton to act
+as the agent for the Government. At this time Vanderbilt was posing
+as a glorious patriot. With much ostentation he had loaned to the
+Government for naval purposes one of his ships--a ship that he could
+not put to use himself and which, in fact, had been built with stolen
+public funds. By this gift he had cheaply attained the reputation of
+being a fervent patriot. Subsequently, it may be added, Congress
+turned a trick on him by assuming that he gave this ship to the
+Government, and, to his great astonishment, kept the ship and
+solemnly thanked him for the present.
+
+
+VANDERBILT'S METHODS IN WAR.
+
+The outfitting of the Banks expedition was of such a rank character
+that it provoked a grave public scandal. If the matter had been
+simply one of swindling the United States Treasury out of millions of
+dollars, it might have been passed over by Congress. On all sides
+gigantic frauds were being committed by the capitalists. But in this
+particular case the protests of the thousands of soldiers on board
+the transports were too numerous and effective to be silenced or
+ignored. These soldiers were not regulars without influence or
+connections; they were volunteers who everywhere had relatives and
+friends to demand an inquiry. Their complaints of overcrowding and of
+insecure, broken-down ships poured in, and aroused the whole country.
+A great stir resulted. Congress appointed an investigating committee.
+
+The testimony was extremely illuminative. It showed that in buying
+the vessels Vanderbilt had employed one T. J. Southard to act as his
+handy man. Vanderbilt, it was testified by numerous ship owners,
+refused to charter any vessels unless the business were transacted
+through Southard, who demanded a share of the purchase money before
+he would consent to do business. Any ship owner who wanted to get rid
+of a superannuated steamer or sailing vessel found no difficulty if
+he acceded to Southard's terms.
+
+The vessels accepted by Vanderbilt, and contracted to be paid for at
+high prices, were in shockingly bad condition. Vanderbilt was one of
+the few men in the secret of the destination of Banks' expedition; he
+knew that the ships had to make an ocean trip. Yet he bought for
+$10,000 the Niagara, an old boat that had been built nearly a score
+of years before for trade on Lake Ontario. "In perfectly smooth
+weather," reported Senator Grimes, of Iowa, "with a calm sea, the
+planks were ripped out of her, and exhibited to the gaze of the
+indignant soldiers on board, showing that her timbers were rotten.
+The committee have in their committee room a large sample of one of
+the beams of this vessel to show that it has not the slightest
+capacity to hold a nail." [Footnote: The Congressional Globe, Thirty-
+seventh Congress, Third Session, 1862-63, Part 1: 610.] Senator
+Grimes continued:
+
+If Senators will refer to page 18 of this report, they will see that
+for the steamer Eastern Queen he (Vanderbilt) paid $900 a day for the
+first thirty days, and $800 for the residue of the days; while she
+(the Eastern Queen) had been chartered by the Government, for the
+Burnside expedition at $500 a day, making a difference of three or
+four hundred dollars a day. He paid for the Quinebang $250 a day,
+while she had been chartered to the Government at one time for $130 a
+day. For the Shetucket he paid $250 a day, while she had formerly
+been in our employ for $150 a day. He paid for the Charles Osgood
+$250 a day, while we had chartered her for $150. He paid $250 a day
+for the James S. Green, while we had once had a charter of her for
+$200. He paid $450 a day for the Salvor, while she had been chartered
+to the Government for $300. He paid $250 a day for the Albany, while
+she had been chartered to the Government for $150. He paid $250 a day
+for the Jersey Blue, while she had been chartered to the Government
+for $150. [Footnote: The Congressional Globe, etc., 1862-63, Part
+i:610.]
+
+There were a few of the many vessels chartered by Vanderbilt through
+Southard for the Government. For vessels bought outright, extravagant
+sums were paid. Ambrose Snow, a well-known shipping merchant,
+testified that "when we got to Commodore Vanderbilt we were referred
+to Mr. Southard; when we went to Mr. Southard, we were told that we
+should have to pay him a commission of five per cent." [Footnote:
+Ibid. See also Senate Report No. 84, 1863, embracing the full
+testimony.]
+
+Other shipping merchants corroborated this testimony. The methods and
+extent of these great frauds were clear. If the ship owners agreed to
+pay Southard five--and very often he exacted ten per cent. [Footnote:
+Senator Hale asserted that he had heard of the exacting of a
+brokerage equal to ten per cent, in Boston and elsewhere.]--
+Vanderbilt would agree to pay them enormous sums. In giving his
+testimony Vanderbilt sought to show that he was actuated by the most
+patriotic motives. But it was obvious that he was in collusion with
+Southard, and received the greater part of the plunder.
+
+
+HORRORS DONE FOR PROFIT.
+
+On some of the vessels chartered by Vanderbilt, vessels that under
+the immigration act would not have been allowed to carry more than
+three hundred passengers, not less than nine hundred and fifty
+soldiers were packed. Most of the vessels were antiquated and
+inadequate; not a few were badly decayed. With a little superficial
+patching up they were imposed upon the Government. Despite his
+knowing that only vessels adapted for ocean service were needed,
+Vanderbilt chartered craft that had hitherto been almost entirely
+used in navigating inland waters. Not a single precaution was taken
+by him or his associates to safeguard the lives of the soldiers.
+
+It was a rule amoung commercial men that at least two men capable of
+navigating should be aboard, especially at sea. Yet, with the lives
+of thousands of soldiers at stake, and with old and bad vessels in
+use at that, Vanderbilt, in more than one instance, as the testimony
+showed, neglected to hire more than one navigator, and failed to
+provide instruments and charts. In stating these facts Senator Grimes
+said: "When the question was asked of Commodore Vanderbilt and of
+other gentlemen in connection with the expedition, why this was, and
+why they did not take navigators and instruments and charts on board,
+the answer was that the insurance companies and owners of the vessel
+took that risk, as though"--Senator Grimes bitingly continued--"the
+Government had no risk in the lives of its valiant men whom it has
+enlisted under its banner and set out in an expedition of this kind."
+[Footnote: The Congressional Globe, Thirty-seventh Congress, Third
+Session, 1862-63, Part i: 586.] If the expedition had encountered a
+severe storm at Cape Hatteras, for instance, it is probable that most
+of the vessels would have been wrecked. Luckily the voyage was fair.
+
+
+FRAUDS REMAIN UNPUNISHED.
+
+Did the Government make any move to arrest, indict and imprison
+Vanderbilt and his tools? None. The farcical ending of these
+revelations was the introduction in the United States Senate of a
+mere resolution censuring them as "guilty of negligence."
+
+Vanderbilt immediately got busy pulling wires; and when the
+resolution came up for vote, a number of Senators, led by Senator
+Hale, sprang up to withdraw Vanderbilt's name. Senator Grimes
+thereupon caustically denounced Vanderbilt. "The whole transaction,"
+said he, "shows a chapter of fraud from beginning to end." He went
+on: "Men making the most open professions of loyalty and of
+patriotism and of perfect disinterestedness, coming before the
+committee and swearing that they acted from such motives solely, were
+compelled to admit--at least one or two were--that in some instances
+they received as high as six and a quarter per cent ... and I believe
+that since then the committee are satisfied in their own mind that
+the per cent. was greater than was in testimony before them." Senator
+Grimes added that he did not believe that Vanderbilt's name should be
+stricken from the resolution.
+
+In vain, however, did Senator Grimes plead. Vanderbilt's name was
+expunged, and Southard was made the chief scapegoat. Although
+Vanderbilt had been tenderly dealt with in the investigation, his
+criminality was conclusively established. The affair deeply shocked
+the nation. After all, it was only another of many tragic events
+demonstrating both the utter inefficiency of capitalist management,
+and the consistent capitalist program of subordinating every
+consideration of human life to the mania for profits. Vanderbilt was
+only a type of his class; although he was found out he deserved
+condemnation no more than thousands of other capitalists, great and
+small, whose methods at bottom did not vary from his. [Footnote: One
+of the grossest and most prevalent forms of fraud was that of selling
+doctored-up horses to the Union army. Important cavalry movements
+were often delayed and jeoparded by this kind of fraud. In passing
+upon the suit of one of these horse contractors against the
+Government (Daniel Wormser vs. United States) for payment for horses
+supplied, in 1864, for cavalry use, the Supreme Court of the United
+States confirmed the charge made by the Government horse inspectors
+that the plaintiff had been guilty of fraud, and dismissed the case.
+"The Government," said Justice Bradley in the court's decision,
+"clearly had the right to proscribe regulations for the inspection of
+horses, and there was great need for strictness in this regard, for
+frauds were constantly perpetrated. . . . It is well known that
+horses may be prepared and fixed up to appear bright and smart for a
+few hours."--Court of Claims Reports, vii: 257-262.]
+
+Yet such was the network of shams and falsities with which the
+supreme class of the time enmeshed society, that press, pulpit,
+university and the so-called statesmen insisted that the wealth of
+the rich man had its foundation in ability, and that this ability was
+indispensable in providing for the material wants of mankind.
+
+Whatever obscurity may cloud many of Vanderbilt's methods in the
+steamship business, his methods in possessing himself of railroads
+are easily ascertained from official archives.
+
+Late in 1862, at about the time when he had added to the millions
+that he had virtually stolen in the mail subsidy frauds, the huge
+profits from his manipulation of the Banks expedition, he set about
+buying the stock of the New York and Harlem Railroad.
+
+
+THE STORY OF A FRANCHISE.
+
+This railroad, the first to enter New York City, had received from
+the New York Common Council in 1832 a franchise for the exclusive use
+of Fourth avenue, north of Twenty-third street--a franchise which, it
+was openly charged, was obtained by distributing bribes in the form
+of stock among the aldermen. [Footnote: "The History of Tammany
+Hall": 117.]
+
+The franchise was not construed by the city to be perpetual; certain
+reservations were embodied giving the city powers of revocation. But
+as we shall see, Vanderbilt not only corrupted the Legislature in
+1872 to pass an act saddling one-half of the expense of depressing
+the tracks upon the city, but caused the act to be so adroitly worded
+as to make the franchise perpetual. Along with the franchise to use
+Fourth avenue, the railroad company secured in 1832 a franchise, free
+of taxation, to run street cars for the convenience of its passengers
+from the railroad station (then in the outskirts of New York City)
+south to Prince street. Subsequently this franchise was extended to
+Walker street, and in 1851 to Park Row. These were the initial stages
+of the Fourth Avenue surface line, which has been extended, and has
+grown into a vested value of tens of millions of dollars. In 1858 the
+New York and Harlem Railroad Company was forced by action of the
+Common Council, arising from the protests of the rich residents of
+Murray Hill, to discontinue steam service below Forty-second street.
+It, therefore, now had a street car line running from that
+thoroughfare to the Astor House.
+
+This explanation of antecedent circumstances allows a clearer
+comprehension of what took place after Vanderbilt had begun buying
+the stock of the New York and Harlem Railroad. The stock was then
+selling at $9 a share. This railroad, as was the case with all other
+railroads, without exception, was run by the owners with only the
+most languid regard for the public interests and safety. Just as the
+corporation in the theory of the law was supposed to be a body to
+whom Government delegated powers to do certain things in the
+interests of the people, so was the railroad considered theoretically
+a public highway operated for the convenience of the people. It was
+upon this ostensible ground that railroad corporations secured
+charters, franchises, property and such privileges as the right of
+condemnation of necessary land. The State of New York alone had
+contributed $8,000,000 in public funds, and various counties, towns
+and municipalities in New York State nearly $31,000,000 by investment
+in stocks and bonds. [Footnote: Report of the Special Committe on
+Railroads of the New York Assembly, 1879, i:7.] The theory was indeed
+attractive, but it remained nothing more than a fiction.
+
+No sooner did the railroad owners get what they wanted, than they
+proceeded to exploit the very community from which their possessions
+were obtained, and which they were supposed to serve. The various
+railroads were juggled with by succeeding groups of manipulators.
+Management was neglected, and no attention paid to proper equipment.
+Often the physical layout of the railroads--the road-beds, rails and
+cars--were deliberately allowed to deteriorate in order that the
+manipulators might be able to lower the value and efficiency of the
+road, and thus depress the value of the stock. Thus, for instance,
+Vanderbilt aiming to get control of a railroad at a low price, might
+very well have confederates among some of the directors or officials
+of that railroad who would resist or slyly thwart every attempt at
+improvement, and so scheme that the profits would constantly go down.
+As the profits decreased, so did the price of the stock in the stock
+market. The changing combinations of railroad capitalists were too
+absorbed in the process of gambling in the stock market to have any
+direct concern for management. It was nothing to them that this
+neglect caused frequent and heartrending disasters; they were not
+held criminally responsible for the loss of life. In fact, railroad
+wrecks often served their purpose in beating down the price of
+stocks. Incredible as this statement may seem, it is abundantly
+proved by the facts.
+
+
+VANDERBILT GETS A RAILROAD.
+
+After Vanderbilt, by divers machinations of too intricate character
+to be described here, had succeeded in knocking down the price of New
+York and Harlem Railroad shares and had bought a controlling part,
+the price began bounding up. In the middle of April, 1863, it stood
+at $50 a share. A very decided increase it was, from $9 to $50;
+evidently enough, to occasion this rise, he had put through some
+transaction which had added immensely to the profits of the road.
+What was it?
+
+Sinister rumors preceded what the evening of April 21, 1863,
+disclosed. He had bribed the New York City Common Council to give to
+the New York and Harlem Railroad a perpetual franchise for a street
+railway on Broadway from the Battery to Union Square. He had done
+what Solomon Kipp and others had done, in 1852, when they had spent
+$50,000 in bribing the aldermen to give them a franchise for surface
+lines on Sixth avenue and Eighth avenue; [Footnote: See presentment
+of Grand Jury of February 26, 1853, and accompanying testimony,
+Documents of the (New York) Board of Aldermen, Doc. No. XXI, Part II,
+No. 55.] what Elijah F. Purdy and others had done in the same year in
+bribing aldermen with a fund of $28,000 to give them the franchise
+for a surface line on Third avenue; [Footnote: Ibid., 1333-1335.]
+what George Law and other capitalists had done, in 1852, in bribing
+the aldermen to give them the franchises for street car lines on
+Second avenue and Ninth avenue. Only three years before--in 1860--
+Vanderbilt had seen Jacob Sharp and others bribe the New York
+Legislature (which in that same year had passed an act depriving the
+New York Common Council of the power of franchise granting) to give
+them franchises for street car lines on Seventh avenue, on Tenth
+avenue, on Forty-second street, on Avenue D and a franchise for the
+"Belt" line. It was generally believed that the passage of these five
+bills cost the projectors $250,000 in money and stock distributed
+among the purchasable members of the Legislature. [Footnote: See "The
+History of Public Franchises in New York City": 120-125.]
+
+Of all the New York City street railway franchises, either
+appropriated or unappropriated, the Broadway line was considered the
+most profitable. So valuable were its present and potential prospects
+estimated that in 1852 Thomas E. Davies and his associates had
+offered, in return for the franchise, to carry passengers for a
+three-cent fare and to pay the city a million-dollar bonus. Other
+eager capitalists had hastened to offer the city a continuous payment
+of $100,000 a year. Similar futile attempts had been made year after
+year to get the franchise. The rich residents of Broadway opposed a
+street car line, believing it would subject them to noise and
+discomfort; likewise the stage owners, intent upon keeping up their
+monopoly, fought against it. In 1863 the bare rights of the Broadway
+franchise were considered to be worth fully $10,000,000. Vanderbilt
+and George Law were now frantically competing for this franchise.
+While Vanderbilt was corrupting the Common Council, Law was
+corrupting the legislature. [Footnote: The business rivalry between
+Vanderbilt and Law was intensified by the deepest personal enmity on
+Law's part. As one of the chief owners of the United States Mail
+Steamship Company, Law was extremely bitter on the score of
+Vanderbilt's having been able to blackmail him and Roberts so heavily
+and successfully.] Such competition on the part of capitalists in
+corrupting public bodies was very frequent.
+
+
+THE ALDERMEN OUTWITTED BY VANDERBILT.
+
+But the aldermen were by no means unschooled in the current sharp
+practices of commercialism. A strong cabal of them hatched up a
+scheme by which they would take Vanderbilt's bribe money, and then
+ambush him for still greater spoils. They knew that even if they gave
+him the franchise, its validity would not stand the test of the
+courts. The Legislature claimed the exclusive power of granting
+franchises; astute lawyers assured them that this claim would be
+upheld. Their plan was to grant a franchise for the Broadway line to
+the New York and Harlem Railroad. This would at once send up the
+price of the stock. The Legislature, it was certain, would give a
+franchise for the same surface line to Law. When the courts decided
+against the Common Council that body, in a spirit of showy deference,
+would promptly pass an ordinance repealing the franchise. In the
+meantime, the aldermen and their political and Wall Street
+confederates would contract to "sell short" large quantities of New
+York and Harlem stock.
+
+The method was simple. When that railroad stock was selling at $100 a
+share upon the strength of getting the Broadway franchise, the
+aldermen would find many persons willing to contract for its delivery
+in a month at a price, say, of $90 a share. By either the repealing
+of the franchise ordinance or affected by adverse court decisions,
+the stock inevitably would sink to a much lower price. At this low
+price the aldermen and their confederates would buy the stock and
+then deliver it, compelling the contracting parties to pay the agreed
+price of $90 a share. The difference between the stipulated price of
+delivery and the value to which the stock had fallen--$30, $40 or $50
+a share--would represent the winnings.
+
+Part of this plan worked out admirably. The Legislature passed an act
+giving Law the franchise. Vanderbilt countered by getting Tweed, the
+all-powerful political ruler of New York City and New York State, to
+order his tool, Governor Seymour, to veto the measure. As was
+anticipated by the aldermen, the courts pronounced that the Common
+Council had no power to grant franchises. Vanderbilt's franchise was,
+therefore, annulled. So far, there was no hitch in the plot to pluck
+Vanderbilt.
+
+But an unlooked for obstacle was encountered. Vanderbilt had somehow
+got wind of the affair, and with instant energy bought up secretly
+all of the New York and Harlem Railroad stock he could. He had masses
+of ready money to do it with; the millions from the mail subsidy
+frauds and from his other lootings of the public treasury proved an
+unfailing source of supply. Presently, he had enough of the stock to
+corner his antagonists badly. He then put his own price upon it,
+eventually pushing it up to $170 a share. To get the stock that they
+contracted to deliver, the combination of politicians and Wall Street
+bankers and brokers had to buy it from him at his own price; there
+was no outstanding stock elsewhere. The old man was pitiless; he
+mulcted them $179 a share. In his version, Croffut says of
+Vanderbilt: "He and his partners in the bull movement took a million
+dollars from the Common Council that week and other millions from
+others." [Footnote: "The Vanderbilts," etc: 75.]
+
+The New York and Harlem Railroad was now his, as absolutely almost as
+the very clothes he wore. Little it mattered that he did not hold all
+of the stock; he owned a preponderance enough to rule the railroad as
+despotically as he pleased. Not a foot it had he surveyed or
+constructed; this task had been done by the mental and manual labor
+of thousands of wage workers not one of whom now owned the vestige of
+an interest in it. For their toil these wage workers had nothing to
+show but poverty. But Vanderbilt had swept in a railroad system by
+merely using in cunning and unscrupulous ways a few of the millions
+he had defrauded from the national treasury.
+
+
+HE ANNEXES A SECOND RAILROAD.
+
+Having found it so easy to get one railroad, he promptly went ahead
+to annex other railroads. By 1864 he loomed up as the owner of a
+controlling mass of stock in the New York and Hudson River Railroad.
+This line paralleled the Hudson River, and had a terminal in the
+downtown section of New York City. In a way it was a competitor of
+the New York and Harlem Railroad.
+
+The old magnate now conceived a brilliant idea. Why not consolidate
+the two roads? True, to bring about this consolidation an authorizing
+act of the New York Legislature was necessary. But there was little
+doubt of the Legislature balking. Vanderbilt well knew the means to
+insure its passage. In those years, when the people were taught to
+look upon competition as indispensable, there was deep popular
+opposition to the consolidating of competing interests. This, it was
+feared, would inflict monopoly.
+
+The cost of buying legislators to pass an act so provocative of
+popular indignation would be considerable, but, at the same time, it
+would not be more than a trifle compared with the immense profits he
+would gain. The consolidation would allow him to increase, or, as the
+phrase went, water, the stock of the combined roads. Although
+substantially owner of the two railroads, he was legally two separate
+entities--or, rather, the corporations were. As owner of one line he
+could bargain with himself as owner of the other, and could determine
+what the exchange purchase price should be. So, by a juggle, he could
+issue enormous quantities of bonds and stocks to himself. These many
+millions of bonds and stocks would not cost him personally a cent.
+The sole expense--the bribe funds and the cost of engraving--he would
+charge against his corporations. Immediately, these stocks and bonds
+would be vested with a high value, inasmuch as they would represent
+mortgages upon the productivity of tens of millions of people of that
+generation, and of still greater numbers of future generations. By
+putting up traffic rates and lowering wages, dividends would be paid
+upon the entire outpouring of stock, thus beyond a doubt insuring its
+permanent value. [Footnote: Even Croffut, Vanderbilt's foremost
+eulogist, cynically grows merry over Vanderbilt's methods which he
+thus summarizes: "(1) Buy your railroad; (2) stop the stealing that
+went on under the other man; (3) improve the road in every
+practicable way within a reasonable expenditure; (4) consolidate it
+with any other road that can be run with it economically; (5) water
+its stock; (6) make it pay a large dividend."]
+
+
+CUNNING AGAINST CUNNING.
+
+A majority of the New York Legislature was bought. It looked as if
+the consolidation act would go through without difficulty.
+Surreptitiously, however, certain leading men in the Legislature
+plotted with the Wall Street opponents of Vanderbilt to repeat the
+trick attempted by the New York aldermen in 1863. The bill would be
+introduced and reported favorably; every open indication would be
+manifested of keeping faith with Vanderbilt. Upon the certainty of
+its passage the market value of the stock would rise. With their
+prearranged plan of defeating the bill at the last moment upon some
+plausible pretext, the clique in the meantime would be busy selling
+short.
+
+Information of this treachery came to Vanderbilt in time. He
+retaliated as he had upon the New York aldermen; put the price of New
+York and Harlem stock up to $285 a share and held it there until
+after he was settled with. With his chief partner, John Tobin, he was
+credited with pocketing many millions of dollars. To make their
+corner certain, the Vanderbilt pool had bought 27,000 more shares
+than the entire existing stock of the road. "We busted the whole
+Legislature," was Vanderbilt's jubilant comment, "and scores of the
+honorable members had to go home without paying their board bills."
+
+The numerous millions taken in by Vanderbilt in these transactions
+came from a host of other men who would have plundered him as quickly
+as he plundered them. They came from members of the Legislature who
+had grown rich on bribes for granting a continuous succession of
+special privileges, or to put it in a more comprehensible form,
+licenses to individuals and corporations to prey in a thousand and
+one forms upon the people. They came from bankers, railroad, land and
+factory owners, all of whom had assiduously bribed Congress,
+legislatures, common councils and administrative officials to give
+them special laws and rights by which they could all the more easily
+and securely grasp the produce of the many, and hold it intact
+without even a semblance of taxation.
+
+The very nature of that system of gambling called stock-market or
+cotton or produce exchange speculation showed at once the sharply-
+defined disparities and discriminations in law.
+
+Common gambling, so-called, was a crime. The gambling of the
+exchanges was legitimate and legalized, and the men who thus gambled
+with the resources of the nation were esteemed as highly respectable
+and responsible leaders of the community. For a penniless man to sell
+anything he did not own, or which was not in existence, was held a
+heinous crime and was severely punished by a long prison term. But
+the members of the all-powerful propertied class could contract to
+deliver stocks which they did not own or which were non-existent, or
+they could gamble in produce often not yet out of the ground, and the
+law saw no criminal act in their performances.
+
+Far from being under the inhibition of law, their methods were duly
+legalized. The explanation was not hard to find. These same
+propertied classes had made the code of laws as it stood; and if any
+doubter denies that laws at all times have exactly corresponded with
+the interest and aims of the ruling class, all that is necessary is
+to compare the laws of the different periods with the profitable
+methods of that class, and he will find that these methods, however
+despicable, vile and cruel, were not only indulgently omitted from
+the recognized category of crimes but were elevated by prevalent
+teaching to be commercial virtues and ability of a high order.
+
+With two railroads in his possession Vanderbilt cast about to drag in
+a third. This was the New York Central Railroad, one of the richest
+in the country.
+
+Vanderbilt's eulogists, in depicting him as a masterful
+constructionist, assert that it was he who first saw the waste and
+futility of competition, and that he organized the New York Central
+from the disjointed, disconnected lines of a number of previously
+separate little railroads. This is a gross error.
+
+The consolidation was formed in 1853 at the time when Vanderbilt was
+plundering from the United States treasury the millions with which he
+began to buy in railroads nine years later. The New York Central
+arose from the union of ten little railroads, some running in the
+territory between Albany and Buffalo, and others merely projected,
+but which had nevertheless been capitalized as though they were
+actually in operation.
+
+The cost of construction of these eleven roads was about $10,000,000,
+but they were capitalized at $23,000,000. Under the consolidating act
+of 1853 the capitalization was run up to about $35,000,000. This
+fictitious capital was partly based on roads which were never built,
+and existing on paper only. Then followed a series of legislative
+acts giving the company a further list of valuable franchises and
+allowing it to charge extortionate rates, inflate its stock, and
+virtually escape taxation. How these laws were procured may be judged
+from the testimony of the treasurer of the New York Central railroad
+before a committee of the New York State Constitutional Convention.
+This official stated that from about 1853 to 1867 the New York
+Central had spent hundreds of thousands of dollars for "legislative
+purposes,"--in other words, buying laws at Albany.
+
+
+ACQUISITION BY WRECKING.
+
+Vanderbilt considered it unnecessary to buy New York Central stock to
+get control. He had a much better and subtler plan. The Hudson River
+Railroad was at that time the only through road running from New York
+to Albany. To get its passengers and freight to New York City the New
+York Central had to make a transfer at Albany. Vanderbilt now
+deliberately began to wreck the New York Central. He sent out an
+order in 1865 to all Hudson River Railroad employees to refuse to
+connect with the New York Central and to take no more freight. This
+move could not do otherwise than seriously cripple the facilities and
+lower the profits of the New York Central. Consequently, the value of
+its stock was bound to go precipitately down.
+
+The people of the United States were treated to an ironic sight. Here
+was a man who only eight years before had been shown up in Congress
+as an arch plunderer; a man who had bought his railroads largely with
+his looted millions; a man who, if the laws had been drafted and
+executed justly, would have been condoning his frauds in prison;--
+this man was contemptuously and openly defying the very people whose
+interests the railroads were supposed to serve. In this conflict
+between warring sets of capitalists, as in all similar conflicts,
+public convenience was made sport of. Hudson River trains going north
+no longer crossed the Hudson River to enter Albany; they stopped half
+a mile east of the bridge leading into that city. This made it
+impossible to transfer freight. There in the country the trains were
+arbitrarily stopped for the night; locomotive fires were banked and
+the passengers were left to shift into Albany the best they could,
+whether they walked or contrived to hire vehicles. All were turned
+out of the train--men, women and children--no exceptions were made
+for sex or infirmity.
+
+The Legislature went through a pretense of investigating what public
+opinion regarded as a particularly atrocious outrage. Vanderbilt
+covered this committee with undisguised scorn; it provoked his wrath
+to be quizzed by a committee of a body many of whose members had
+accepted his bribes. When he was asked why he had so high-handedly
+refused to run his trains across the river, the old fox smiled
+grimly, and to their utter surprise, showed them an old law (which
+had hitherto remained a dead letter) prohibiting the New York Hudson
+Railroad from running trains over the Hudson River. This law had been
+enacted in response to the demand of the New York Central, which
+wanted no competitor west of Albany. When the committee recovered its
+breath, its chairman timidly inquired of Vanderbilt why he did not
+run trains to the river.
+
+"I was not there, gentlemen," said Vanderbilt.
+
+"But what did you do when you heard of it?"
+
+"I did not do anything."
+
+"Why not? Where were you?"
+
+"I was at home, gentlemen," replied Vanderbilt with serene impudence,
+"playing a rubber of whist, and I never allow anything to interfere
+with me when I am playing that game. It requires, as you know,
+undivided attention."
+
+As Vanderbilt had foreseen, the stock of the New York Central went
+down abruptly; at its lowest point he bought in large quantities. His
+opponents, Edward Cunard, John Jacob Astor, John Steward and other
+owners of the New York Central thus saw the directorship pass from
+their hands. The dispossession they had worked to the Pruyns, the
+Martins, the Pages and others was now being visited upon them. They
+found in this old man of seventy-three too cunning and crafty a man
+to defeat. Rather than lose all, they preferred to choose him as
+their captain; his was the sort of ability which they could not
+overcome and to which they must attach themselves. On November 12,
+1867, they surrendered wholly and unreservedly. Vanderbilt now
+installed his own subservient board of directors, and proceeded to
+put through a fresh program of plunder beside which all his previous
+schemes were comparatively insignificant.
+
+
+
+
+CHAPTER V
+
+THE VANDERBILT FORTUNE INCREASES MANIFOLD
+
+
+Vanderbilt's ambition was to become the richest man in America. With
+three railroads in his possession he now aggressively set out to
+grasp a fourth--the Erie Railroad. This was another of the railroads
+built largely with public money. The State of New York had
+contributed $3,000,000, and other valuable donations had been given.
+
+At the very inception of the railroad corruption began [Footnote:
+Report of the New York State and Erie Railroad Company, New York
+State Assembly Document No. 50, 1842.] The tradesmen, landowners and
+bankers who composed the company bribed the Legislature to relinquish
+the State's claim, and then looted the railroad with such consummate
+thoroughness that in order to avert its bankruptcy they were obliged
+to borrow funds from Daniel Drew. This man was an imposing financial
+personage in his day. Illiterate, unscrupulous, picturesque in his
+very iniquities, he had once been a drover, and had gone into the
+steamboat business with Vanderbilt. He had scraped in wealth partly
+from that line of traffic, and in part from a succession of
+buccaneering operations. His loan remaining unpaid, Drew indemnified
+himself by taking over, in 1857, by foreclosure, the control of the
+Erie Railroad.
+
+For the next nine years Drew manipulated the stock at will, sending
+the price up or down as suited his gambling schemes. The railroad
+degenerated until travel upon it became a menace; one disaster
+followed another. Drew imperturbably continued his manipulation of
+the stock market, careless of the condition of the road. At no time
+was he put to the inconvenience of even being questioned by the
+public authorities. On the contrary, the more millions he made the
+greater grew his prestige and power, the higher his standing in the
+community. Ruling society, influenced solely by money standards,
+saluted him as a successful man who had his millions, and made no
+fastidious inquiries as to how he got them. He was a potent man; his
+villainies passed as great astuteness, his devious cunning as
+marvelous sagacity.
+
+
+GOULD OVERREACHES VANDERBILT
+
+Vanderbilt resolved to wrest the Erie Railroad out of Drew's hands.
+By secretly buying its stock he was in a position in 1866 to carry
+out his designs. He threw Drew and his directors out, but
+subsequently realizing Drew's usefulness, reinstated him upon
+condition that he be fully pliable to the Vanderbilt interests.
+Thereupon Drew brought in as fellow directors two young men, then
+obscure but of whom the world was to hear much--James Fisk, Jr., and
+Jay Gould. The narrative of how these three men formed a coalition
+against Vanderbilt; how they betrayed and then outgeneraled him at
+every turn; proved themselves of a superior cunning; sold him large
+quantities of spurious stock; excelled him in corruption; defrauded
+more than $50,000,000, and succeeded--Gould, at any rate--in keeping
+most of the plunder--this will be found in detail where it more
+properly belongs--in the chapter of the Gould fortune describing that
+part of Gould's career connected with the Erie Railroad.
+
+Baffled in his frantic contest to keep hold of that railroad--a hold
+that he would have turned into many millions of dollars of immediate
+loot by fraudulently watering the stock, and then bribing the
+Legislature to legalize it as Gould did--Vanderbilt at once set in
+motion a fraudulent plan of his own by which he extorted about
+$44,000,000 in plunder, the greater portion of which went to swell
+his fortune.
+
+The year 1868 proved a particularly busy one for Vanderbilt. He was
+engaged in a desperately devious struggle with Gould. In vain did his
+agents and lobbyists pour out stacks of money to buy legislative
+votes enough to defeat the bill legalizing Gould's fraudulent issue
+of stock. Members of the Legislature impassively took money from both
+parties. Gould personally appeared at Albany with a satchel
+containing $500,000 in greenbacks which were rapidly distributed. One
+Senator, as was disclosed by an investigating committee, accepted
+$75,000 from Vanderbilt and then $100,000 from Gould, kept both
+sums,--and voted with the dominant Gould forces. It was only by means
+of the numerous civil and criminal writs issued by Vanderbilt judges
+that the old man contrived to force Gould and his accomplices into
+paying for the stock fraudulently unloaded upon him. The best terms
+that he could get was an unsatisfactory settlement which still left
+him to bear a loss of about two millions. The veteran trickster had
+never before been overreached; all his life, except on one occasion,
+[Footnote: In 1837 when he had advanced funds to a contractor
+carrying the mails between Washington and Richmond, and had taken
+security which proved to be worthless.] he had been the successful
+sharper; but he was no match for the more agile and equally sly,
+corrupt and resourceful Gould. It took some time for Vanderbilt to
+realize this; and it was only after several costly experiences with
+Gould, that he could bring himself to admit that he could not hope to
+outdo Gould.
+
+
+A NEW CONSOLIDATION PLANNED
+
+However, Vanderbilt quickly and multitudinously recouped himself for
+the losses encountered in his Erie assault. Why not, he argued,
+combine the New York Central and the Hudson River companies into one
+corporation, and on the strength of it issue a vast amount of
+additional stock?
+
+The time was ripe for a new mortgage on the labor of that generation
+and of the generations to follow. Population was wondrously
+increasing, and with it trade. For years the New York Central had
+been paying a dividend of eight per cent. But this was only part of
+the profits. A law had been passed in 1850 authorizing the
+Legislature to step in whenever the dividends rose above ten per
+cent, on the railroad's actual cost, and to declare what should be
+done with the surplus. This law was nothing more or less than a blind
+to conciliate the people of the State, and let them believe that they
+would get some returns for the large outlay of public funds advanced
+to the New York Central. No returns ever came. Vanderbilt, and the
+different groups before him, in control of the road had easily evaded
+it, just as in every direction the whole capitalist class pushed
+aside law whenever law conflicted with its aims and interests. It was
+the propertyless only for whom the execution of law was intended.
+Profits from the New York Central were far more than eight per cent.;
+by perjury and frauds the directors retained sums that should have
+gone to the State. Every year they prepared a false account of their
+revenues and expenditures which they submitted to the State
+officials; they pretended that they annually spent millions of
+dollars in construction work on the road--work, in reality, never
+done. [Footnote: See Report of New York Special Assembly Committee on
+Railroads, 1879, iv: 3,894.] The money was pocketed by them under
+this device--a device that has since become a favorite of many
+railroad and public utility corporations.
+
+Unenforced as it was, this law was nevertheless an obstacle in the
+way of Vanderbilt's plans. Likewise was another, a statute
+prohibiting both the New York Central Railroad and the Hudson River
+Railroad from increasing their stock. To understand why this latter
+law was passed it is necessary to remember that the middle class--the
+factory owners, jobbers, retail tradesmen and employing farmers--were
+everywhere seeking by the power of law to prevent the too great
+development of corporations. These, they apprehended, and with
+reason, would ultimately engulf them and their fortunes and
+importance. They knew that each new output of watered stock meant
+either that the prevailing high freight rates would remain unchanged
+or would be increased; and while all the charges had to be borne
+finally by the working class, the middle class sought to have an
+unrestricted market on its own terms.
+
+
+ALARM OF THE TRADING CLASS
+
+It was the opposition of the various groups of this class that
+Vanderbilt expected and provided against. He was fully aware that the
+moment he revealed his plan of consolidation boards of trade
+everywhere would rise in their wrath, denounce him, call together
+mass meetings, insist upon railroad competition and send pretentious,
+firebreathing delegates to the State Capitol. Let them thunder, said
+Vanderbilt placidly. While they were exploding in eruptions of talk
+he would concentrate at Albany a mass of silent arguments in the form
+of money and get the necessary legislative votes, which was all he
+cared about.
+
+Then ensued one of the many comedies familiar to observers of
+legislative proceedings. It was amusing to the sophisticated to see
+delegations indignantly betake themselves to Albany, submit
+voluminous briefs which legislators never read, and with immense
+gravity argue away for hours to committees which had already been
+bought. The era was that of the Tweed regime, when the public funds
+of New York City and State were being looted on a huge scale by the
+politicians in power, and far more so by the less vulgar but more
+crafty business classes who spurred Tweed and his confederates on to
+fresh schemes of spoliation.
+
+Laws were sold at Albany to the highest bidder. "It was impossible,"
+Tweed testified after his downfall, "to do anything there without
+paying for it; money had to be raised for the passing of bills."
+[Footnote: Statement of William M. Tweed before Special Investigating
+Committee of the New York Board of Aldermen. Documents of the Board
+of Aldermen, 1877, Part II. Document No. 8:15-16.] Decades before
+this, legislators had been so thoroughly taught by the landowners and
+bankers how to exchange their votes for cash that now, not only at
+Albany and Washington, but everywhere in the United States, both
+legislative and administrative officials haggled in real astute
+business style for the highest price that they could get.
+
+One noted lobbyist stated in 1868 that for a favorable report on a
+certain bill before the New York Senate, $5,000 apiece was paid to
+four members of the committee having it in charge. On the passage of
+the bill, a further $5,000 apiece with contingent expenses was added.
+In another instance, where but a solitary vote was needed to put a
+bill through, three Republicans put their figures up to $25,000 each;
+one of them was bought. About thirty Republicans and Democrats in the
+New York Legislature organized themselves into a clique (long styled
+the "Black Horse Cavalry"), under the leadership of an energetic
+lobbyist, with a mutual pledge to vote as directed. [Footnote:
+Documents of the Board of Aldermen, 1877, Part II, No. 8; 212-213.]
+"Any corporation, however extensive and comprehensive the privileges
+it asked"--to quote from "The History of Tammany Hall"--"and however
+much oppression it sought to impose upon the people in the line of
+unjust grants, extortionate rates or monopoly, could convince the
+Legislature of the righteousness of its request upon 'producing' the
+proper sum."
+
+
+A LEGALIZED THEFT OF $44,000,000
+
+One act after another was slipped through the Legislature by
+Vanderbilt in 1868 and 1869. On May 20, 1869, Vanderbilt secured, by
+one bill alone, the right to consolidate railroads, a free grant of
+franchises, and other rights worth hundreds of millions of dollars,
+and the right to water stock and bonds to an enormous extent.
+
+The printing presses were worked overtime in issuing more than
+$44,000,000 of watered stock. The capital stock of the two roads was
+thus doubled. Pretending that the railroads embraced in the
+consolidation had a great surplus on hand, Vanderbilt, instead of
+distributing this alleged surplus, apportioned the watered stock
+among the stockholders as a premium. The story of the surplus was, of
+course, only a pretense. Each holder of a $100 share received a
+certificate for $180--that is to say, $80 in plunder for every $100
+share that he held. [Footnote: Report of Assembly Committee on
+Railroads, testimony of Alexander Robertson, an expert accountant,
+1879, i:994-999.] "Thus," reported the "Hepburn Committee" (the
+popular name for the New York State Assembly investigating committee
+of 1879), "as calculated by this expert, $53,507,060 were wrongfully
+added to the capital stock of these roads." Of this sum $44,000,000
+was issued in 1869; the remainder in previous years. "The only answer
+made by the roads was that the legislature authorized it," the
+committee went on. "It is proper to remark that the people are quite
+as much indebted to the venality of the men elected to represent them
+in the Legislature as to the rapacity of the railroad managers for
+this state of affairs." [Footnote: Ibid., i:21.]
+
+Despite the fact that the report of the committee recorded that the
+transaction was piracy, the euphemistic wording of the committee's
+statement was characteristic of the reverence shown to the rich and
+influential, and the sparing of their feelings by the avoidance of
+harsh language. "Wrongfully added" would have been quickly changed
+into such inconsiderate terms as theft and robbery had the case been
+even a trivial one of some ordinary citizen lacking wealth and power.
+The facts would have immediately been presented to the proper
+officials for criminal prosecution.
+
+But not a suggestion was forthcoming of haling Vanderbilt to the
+criminal bar; had it been made, nothing except a farce would have
+resulted, for the reason that the criminal machinery, while
+extraordinarily active in hurrying petty lawbreakers to prison, was a
+part of the political mechanism financed by the big criminals and
+subservient to them.
+
+"The $44,000,000," says Simon Sterne, a noted lawyer who, as counsel
+for various commercial organizations, unravelled the whole matter
+before the "Hepburn Committee," in 1879, "represented no more labor
+than it took to print the script." It was notorious, he adds, "that
+the cost of the consolidated railroads was less than $44,000,000,"
+[Footnote: "Life of Simon Sterne," by John Foord, 1903:179-181.] In
+increasing the stock to $86,000,000 Vanderbilt and his confederates
+therefore stole the difference between the cost and the maximum of
+the stock issue. So great were the profits, both open and concealed,
+of the consolidated railroads that notwithstanding, as Charles
+Francis Adams computed, "$50,000 of absolute water had been poured
+out for each mile of road between New York and Buffalo," the market
+price of the stock at once shot up in 1869 from $75 a share to $120
+and then to $200.
+
+And what was Vanderbilt's share of the $44,000,000? His inveterate
+panegyrist, Croffut, in smoothly defending the transaction gives this
+illuminating depiction of the joyous event: "One night, at midnight,
+he (Cornelius Vanderbilt) carried away from the office of Horace F.
+Clark, his son-in-law, $6,000,000 in greenbacks as a part of his
+share of the profits, and he had $20,000,000 more in new stock."
+[Footnote: "The Vanderbilts": 103. Croffut in a footnote tells this
+anecdote: "When the Commodore's portrait first appeared on the bonds
+of the Central, a holder of some called one day and said: 'Commodore,
+glad to see your face on them bonds. It's worth ten per cent. It
+gives everybody confidence.' The Commodore smiled grimly, the only
+recognition he ever made of a compliment. ''Cause,' explained the
+visitor, 'when we see that fine, noble brow, it reminds us that
+you'll never let anybody else steal anything.'"]
+
+By this coup Vanderbilt about doubled his previous wealth. Scarcely
+had the mercantile interests recovered from their utter bewilderment
+at being routed than Vanderbilt, flushed with triumph, swept more
+railroads into his inventory of possessions.
+
+His process of acquisition was now working with almost automatic
+ease.
+
+First, as we have narrated, he extorted millions of dollars in
+blackmail. With these millions he bought, or rather manipulated into
+his control, one railroad after another, amid an onslaught of bribery
+and glaring violations of the laws. Each new million that he seized
+was an additional resource by which he could bribe and manipulate;
+progressively his power advanced; and it became ridiculously easier
+to get possession of more and more property. His very name became a
+terror to those of lesser capital, and the mere threat of pitting his
+enormous wealth against competitors whom he sought to destroy was
+generally a sufficient warrant for their surrender. After his
+consummation of the $44,000,000 theft in 1869 there was little
+withstanding of him. By the most favorable account--that of Croffut--
+his own allotment of the plunder amounted to $26,000,000. This sum,
+immense, and in fact of almost inconceivable power in that day, was
+enough of itself, independent of Vanderbilt's other wealth, to force
+through almost any plan involving a seizing of competing property.
+
+       *       *       *       *       *       *       *
+
+HE SCOOPS UP MORE RAILROADS.
+
+Vanderbilt did not wait long. The ink on the $44,000,000 had barely
+dried, before he used part of the proceeds to buy a controlling
+interest in the Lake Shore Railroad, a competing line. Then rapidly,
+by the same methods, he took hold of the Canada Southern and Michigan
+Central.
+
+The commercial interests looked on dumfounded. Under their very eyes
+a process of centralization was going on, of which they but dimly,
+stupidly, grasped the purport. That competition which they had so
+long shouted for as the only sensible, true and moral system, and
+which they had sought to buttress by enacting law after law, was
+being irreverently ground to pieces.
+
+Out of their own ranks were rising men, trained in their own methods,
+who were amplifying and intensifying those methods to shatter the
+class from which they had sprung. The different grades of the
+propertied class, from the merchant with his fortune of $250,000 to
+the retail tradesman, felt very comfortable in being able to look
+down with a conscious superiority upon the working class from whom
+their money was wrung. Scoffing at equality, they delighted in
+setting themselves up as a class infinitely above the toilers of the
+shop and factory; let him who disputes this consult the phrases that
+went the rounds--phrases, some of which are still current--as, for
+instance, the preaching that the moderately well-to-do class is the
+solid, substantial element of any country.
+
+Now when this mercantile class saw itself being far overtopped and
+outclassed in the only measurement to which it attached any value--
+that of property--by men with vast riches and power, it began to feel
+its relegation. Although its ideal was money, and although it set up
+the acquisition of wealth as the all-stimulating incentive and goal
+of human effort, it viewed sullenly and enviously the development of
+an established magnate class which could look haughtily and
+dictatorially down upon it even as it constantly looked down upon the
+working class. The factory owner and the shopkeeper had for decades
+commanded the passage of summary legislation by which they were
+enabled to fleece the worker and render him incapable of resistance.
+To keep the worker in subjection and in their power they considered a
+justifiable proceeding. But when they saw the railroad magnates
+applying those same methods to themselves, by first wiping out
+competition, and then by enforcing edicts regardless of their
+interests, they burst out in furious rage.
+
+
+VANDERBILT AND HIS CRITICS.
+
+They denounced Vanderbilt as a bandit whose methods were a menace to
+the community. To the onlooker this campaign of virulent assault was
+extremely suggestive. If there was any one line of business in which
+fraud was not rampant, the many official reports and court
+proceedings of the time do not show it.
+
+This widespread fraud was not occasional; it was persistent. In one
+of the earlier chapters, the prevalence, more than a century ago, of
+the practise of fraudulent substitution of drugs and foods was
+adverted to. In the middle of the nineteenth century it was far more
+extensive. In submitting, on June 2, 1848, a mass of expert evidence
+on the adulteration of drugs, to the House of Representatives, the
+House Select Committee on the Importation of Drugs pointed out:
+
+For a long series of years this base traffic has been constantly
+increasing, until it has become frightfully enormous. It would be
+presumed, from the immense quantities, and the great variety of
+inferior drugs that pass our custom houses, and particularly the
+custom-house at New York, in the course of a single year, that this
+country had become the great mart and receptacle of all of the refuse
+merchandise of that description, not only from the European
+warehouses, but from the whole Eastern market. [Footnote: Reports of
+Committees, First Session, Thirtieth Congress, 1847-48, Vol. iii,
+Report No. 664:3--The committee reported that opium was adulterated
+with licorice paste and bitter vegetable extract; calomel, with chalk
+and sulphate of barytes; quinine, with silicine, chalk and sulphate
+of barytes; castor, with dried blood, gum and ammonia; gum
+assafoetida with inferior gums, chalk and clay, etc., etc. (pp. 10
+and 11).]
+
+In presenting a formidable array of expert testimony, and in giving a
+list of cases of persons having died from eating foods and drugs
+adulterated with poisonous substances, the House Committee on
+Epidemic Diseases, of the Forty-Sixth Congress, reported on February
+4 1881:
+
+That they have investigated, as far as they could ... the injurious
+and poisonous compounds used in the preparation of food substances,
+and in the manufacture of wearing apparel and other articles, and
+find from the evidence submitted to them that the adulteration of
+articles used in the every day diet of vast numbers of people has
+grown, and is now practised, to such an extent as to seriously
+endanger the public health, and to call loudly for some sort of
+legislative correction. Drugs, liquors, articles of clothing, wall
+paper and many other things are subjected to the same dangerous
+process. [Footnote: House Reports, Third Session, Forty-sixth
+Congress, 1880-81, Vol. i, Report No. 199: 1. The committee drafted a
+bill for the prevention of these frauds; the capitalists concerned
+smothered it.]
+
+The House Committee on Commerce, reporting the next year, on March 4,
+stated that "the evidence regarding the adulterations of food
+indicates that they are largely of the nature of frauds upon the
+consumer ... and injure both the health and morals of the people."
+The committee declared that the practise of fraudulent substitutions
+"had become universal." [Footnote: House Reports, First Session,
+Forty-seventh Congress, 1881-82, Vol. ii, Report No. 634: 1-5.]
+
+These few significant extracts, from a mass of official reports, show
+that the commercial frauds were continuous, and began long before
+Commodore Vanderbilt's time, and have prevailed up to the present.
+
+Everywhere was fraud; even the little storekeepers, with their smug
+pretensions to homely honesty, were profiting by some of the vilest,
+basest forms of fraud, such as robbing the poor by the light-weight
+and short-weight trick, [Footnote: These forms of cheating exist at
+present to a greater extent than ever before. It is estimated that
+manufacturers and shopkeepers cheat the people of the United States
+out of $200,000,000 a year by the light-weight and short-weight
+frauds. In 1907 the New York State Sealer of Weights and Measures
+asserted that, in that State alone, $20,000,000 was robbed from the
+consumers annually by these methods. Recent investigations by the
+Bureau of Standards of the United States Department of Commerce and
+Labor have shown that immense numbers of "crooked" scales are in use.
+It has been conclusively established by the investigations of
+Federal, State and municipal inspectors of weights and measures that
+there is hardly an article put up in bottled or canned form that is
+not short of the weight for which it is sold, nor is there scarcely a
+retail dealer who does not swindle his customers by the light-weight
+fraud. There are manufacturers who make a specific business of
+turning out fraudulent scales, and who freely advertise the cheating
+merits of these scales.] or (far worse) by selling skim milk, or
+poisonous drugs or adulterated food or shoddy material. These
+practises were so prevalent, that the exceptions were rarities
+indeed.
+
+If any administration had dared seriously to stop these forms of
+theft the trading classes would have resisted and struck back in
+political action. Yet these were the men--these traders--who
+vociferously come forth with their homiletic trades against
+Vanderbilt's criminal transactions, demanding that the power of him
+and his kind be curbed.
+
+It was not at all singular that they put their protests on moral
+grounds. In a form of society where each man is compelled to fight
+every other man in a wild, demoralizing struggle for self-
+preservation, self-interest naturally usurps the supreme functions,
+and this self-interest becomes transposed, by a comprehensible
+process, into moralities. That which is profitable is perverted into
+a moral code; the laws passed, the customs introduced and persisted
+in, and the weight of the dominant classes all conspire to put the
+stamp of morality on practices arising from the lowest and most
+sordid aims. Thus did the trading class make a moral profession of
+its methods of exploitation; it congratulated and sanctified itself
+on its purity of life and its saving stability.
+
+From this class--a class interpenetrated in every direction with
+commercial frauds--was largely empanelled the men who sat on those
+grand juries and petit juries solemnly passing verdict on the poor
+wretches of criminals whom environment or poverty had driven into
+crime. They were the arbiters of justice, but it was a justice that
+was never allowed to act against themselves. Examine all the penal
+codes of the period; note the laws proscribing long sentences in
+prison for thefts of property; the larceny of even a suit of clothes
+was severely punishable, and begging for alms was a misdemeanor. Then
+contrast these asperities of law with the entire absence of adequate
+protection for the buyer of merchandise. Following the old dictum of
+Roman jurisprudence, "Let the buyer beware," the factory owner could
+at will oppress his workers, and compel them, for the scantiest
+wages, to make for his profit goods unfit for consumption. These
+articles the retailer sold without scruple over his counter; when the
+buyer was cheated or overcharged, as happened with great frequency,
+he had practically no redress in law. If the merchant were robbed of
+even ever so little he could retaliate by sending the guilty one to
+prison. But the merchant himself could invidiously and continuously
+rob the customer without fear of any law. All of this was converted
+into a code of moralities; and any bold spirit who exposed its cant
+and sham was denounced as an agitator and as an enemy of law and
+order. [Footnote: A few progressive jurists in the International
+Prison Congress are attempting to secure the recognition in law of
+the principle that society, as a supreme necessity, is obligated to
+protect its members from being made the victims of the cunning and
+unscrupulous. They have received no encouragement, and will receive
+none, from a trading class profiting from the very methods which it
+is sought to place under the inhibition of criminal law.]
+
+Vanderbilt did better than expose it; he improved upon, and enlarged,
+it and made it a thing of magnitude; he and others of his quality
+discarded petty larceny and ascended into a sphere of superlative
+grand larceny. They knew with a cynical perception that society, with
+all its pompous pretensions to morality, had evolved a rule which
+worked with almost mathematical certainty. This rule was the
+paradoxical, but nevertheless true, one that the greater the theft
+the less corresponding danger there was of punishment.
+
+
+THE WISDOM OF GRAND LARCENY.
+
+Now it was that one could see with greater clearness than ever
+before, how the mercenary ideal of the ruling class was working out
+to its inevitable conclusion. Society had made money its god and
+property its yardstick; even in its administration of justice,
+theoretically supposed to be equal, it had made "justice" an
+expensive luxury available, in actual practice, to the rich only. The
+defrauder of large sums could, if prosecuted, use a part of that
+plunder, easily engage a corps of shrewd, experienced lawyers, get
+evidence manufactured, fight out the case on technicalities, drag it
+along for years, call in political and social influence, and almost
+invariably escape in the end.
+
+But beyond this power of money to make a mockery of justice was a
+still greater, though more subtle, factor, which was ever an
+invaluable aid to the great thief. Every section of the trading class
+was permeated with a profound admiration, often tangibly expressed,
+for the craft that got away with an impressive pile of loot. The
+contempt felt for the pickpocket was the antithesis of the general
+mercantile admiring view of the man who stole in grand style,
+especially when he was one of their own class. In speaking of the
+piratical operations of this or that magnate, it was common to hear
+many business men interject, even while denouncing him, "Well, I wish
+I were as smart as he." These same men, when serving on juries, were
+harsh in their verdicts on poor criminals, and unctuously flattered
+themselves with being, and were represented as, the upholders and
+conservers of law and moral conduct.
+
+ Departing from the main facts as this philosophical digression may
+seem, it is essential for a number of reasons. One of these is the
+continual necessity for keeping in mind a clear, balanced
+perspective. Another lies in the need of presenting aright the
+conditions in which Vanderbilt and magnates of his type were
+produced. Their methods at basis were not a growth independent of
+those of the business world and isolated from them. They were simply
+a development, and not merely one of standards as applied to morals,
+but of the mechanism of the social and industrial organization
+itself. Finally it is advisable to give flashlight glimpses into the
+modes and views of the time, inasmuch as it was in Vanderbilt's day
+that the great struggle between the old principle of competition, as
+upheld by the small capitalists, and the superseding one of
+consolidation, as incarnated in him and others, took on vigorous
+headway.
+
+
+HE CONTINUES THE BUYING OF LAWS
+
+Protest as it did against Vanderbilt's merging of railroads, the
+middle class found itself quite helpless. In rapid succession he put
+through one combination after another, and caused theft after theft
+to be legalized, utterly disdainful of criticism or opposition. In
+State after State he bought the repeal of old laws, or the passage of
+new laws, until he was vested with authority to connect various
+railroads that he had secured between Buffalo and Chicago, into one
+line with nearly 1,300 miles of road. The commercial classes were
+scared at the sight of such a great stretch of railroad--then
+considered an immense line--in the hands of one man, audacious, all-
+conquering, with power to enforce tribute at will. Again, Vanderbilt
+patronized the printing presses, and many more millions of stock, all
+fictitious capital, were added to the already flooded capital of the
+Lake Shore and Michigan Southern Railroad Company. Of the total of
+$62,000,000 of capital stock in 1871, fully one-half was based upon
+nothing but the certainty of making it valuable as a dividend payer
+by the exaction of high freight and passenger rates. A little later,
+the amount was run up to $73,000,000, and this was increased
+subsequently.
+
+Vanderbilt now had a complete railroad system from New York to
+Chicago, with extensive offshoots. It is at this point that we have
+to deal with a singular commendation of his methods thrust forward
+glibly from that day to this. True, his eulogists admitted then, as
+they admit now, Vanderbilt was not overscrupulous in getting property
+that he wanted. But consider, they urge, the improvements he brought
+about on the railroads that came into his possession; the renovation
+of the roadbed, the institution of new locomotives and cars, the
+tearing down of the old, worn-out stations. This has been the praise
+showered upon him and his methods.
+
+Inquiry, however, reveals that this appealing picture, like all
+others of its sort, has been ingeniously distorted. The fact was, in
+the first place, that these improvements were not made out of regard
+to public convenience, but for two radically different reasons. The
+first consideration was that if the dividends were to be paid on the
+huge amount of fabricated stock, the road, of necessity, had to be
+put into a condition of fair efficiency to meet or surpass the
+competing facilities of other railroads running to Chicago. Second,
+the number of damage claims for accident or loss of life arising
+largely from improper appliances and insufficient safeguards, was so
+great that it was held cheaper in the long run to spend millions for
+improvements.
+
+
+PUBLIC FUNDS FOR PRIVATE USE
+
+Instead of paying for these improvements with even a few millions of
+the proceeds of the watered stock, Vanderbilt (and all other railroad
+magnates in like cases did the same) forced the public treasury to
+defray a large part of the cost. A good illustration of his methods
+was his improvement of his passenger terminus in New York City. The
+entrance of the New York Central and the Harlem Railroads is by way
+of Park (formerly Fourth) avenue. This franchise, as we have seen,
+was obtained by bribery in 1832. But it was a qualified franchise. It
+reserved certain nominal restrictions in behalf of the people by
+inserting the right of the city to order the removal of the tracks at
+any time that they became an obstruction. These terms were
+objectionable to Vanderbilt; a perpetual franchise could be
+capitalized for far more than a limited or qualified one. A perpetual
+franchise was what he wanted.
+
+The opportunity came in 1872. From the building of the railroad, the
+tracks had been on the surface of Fourth avenue. Dozens of dangerous
+crossings had resulted in much injury to life and many deaths. The
+public demand that the tracks be depressed below the level of the
+street had been resisted.
+
+Instead of longer ignoring this demand, Vanderbilt now planned to
+make use of it; he saw how he could utilize it not only to foist a
+great part of the expense upon the city, but to get a perpetual
+franchise. Thus, upon the strength of the popular cry for reform, he
+would extort advantages calculated to save him millions and at the
+same time extend his privileges. It was but another illustration of
+the principle in capitalist society to which we have referred before
+(and which there will be copious occasion to mention again and again)
+that after energetically contesting even those petty reforms for
+which the people have contended, the ruling classes have ever deftly
+turned about when they could no longer withstand the popular demands,
+and have made those very reforms the basis for more spoliation and
+for a further intrenchment of their power. [Footnote: Commodore
+Vanderbilt's descendants, the present Vanderbilts, have been using
+the public outcry for a reform of conditions on the West Side of New
+York City, precisely as the original Vanderbilt utilized that for the
+improvement of Fourth avenue. The Hudson River division of the New
+York Central and Hudson River Railroad has hitherto extended downtown
+on the surface of Tenth and Eleventh Avenues and other thoroughfares.
+Large numbers of people have been killed and injured. For decades
+there has been a public demand that these dangerous conditions be
+remedied or removed. The Vanderbilts have as long resisted the
+demand; the immense numbers of casualties had no effect upon them.
+When the public demand became too strong to be ignored longer, they
+set about to exploit it in order to get a comprehensive franchise
+with incalculable new privileges.]
+
+The first step was to get the New York City Common Council to pass,
+with an assumption of indignation, an ordinance requiring Vanderbilt
+to make the desired improvements, and committing the city to bear
+one-half the expense and giving him a perpetual franchise. This was
+in Tweed's time when the Common Council was composed largely of the
+most corrupt ward heelers, and when Tweed's puppet, Hall, was Mayor.
+Public opposition to this grab was so great as to frighten the
+politicians; at any rate, whatever his reasons, Mayor Hall vetoed the
+ordinance.
+
+Thereupon, in 1872, Vanderbilt went to the Legislature--that
+Legislature whose members he had so often bought like so many cattle.
+This particular Legislature, however, was elected in 1871, following
+the revelations of the Tweed "ring" frauds. It was regarded as a
+"model reform body." As has already been remarked in this work, the
+pseudo "reform" officials or bodies elected by the American people in
+the vain hope of overthrowing corruption, will often go to greater
+lengths in the disposition of the people's rights and interests than
+the most hardened politicians, because they are not suspected of
+being corrupt, and their measures have the appearance of being
+enacted for the public good. The Tweed clique had been broken up, but
+the capitalists who had assiduously bribed its members and profited
+so hugely from its political acts, were untouched and in greater
+power than ever before. The source of all this corruption had not
+been struck at in the slightest. Tweed, the politician, was
+sacrificed and went to prison and died there; the capitalists who had
+corrupted representative bodies everywhere in the United States,
+before and during his time, were safe and respected, and in a
+position to continue their work of corruption. Tweed made the
+classic, unforgivable blunder of going into politics as a business,
+instead of into commercialism. The very capitalists who had profited
+so greatly by his corruption, were the first to express horror at his
+acts.
+
+From the "reform" Legislature of 1982 Vanderbilt secured all that he
+sought. The act was so dexterously worded that while not nominally
+giving a perpetual franchise, it practically revoked the qualified
+parts of the charter of 1832. It also compassionately relieved him of
+the necessity of having to pay out about $4,000,000, in replacing the
+dangerous roadway, by imposing that cost upon New York City. Once
+these improvements were made, Vanderbilt bonded them as though they
+had been made with private money.
+
+
+"REFORM" AS IT WORKS OUT.
+
+But these were not his only gifts from the "reform" Legislature. The
+Harlem Railroad owned, as we have seen, the Fourth avenue surface
+line of horse cars. Although until this time it extended to Seventy-
+ninth street only, this line was then the second most profitable in
+New York City. In 1864, for instance, it carried nearly six million
+passengers, and its gross earnings were $735,000. It did not pay, nor
+was required to pay, a single cent in taxation. By 1872 the city's
+population had grown to 950,000. Vanderbilt concluded that the time
+was fruitful to gather in a few more miles of the public streets.
+
+The Legislature was acquiescent. Chapter 325 of the Laws of 1872
+allowed him to extend the line from Seventy-ninth street to as far
+north as Madison avenue should thereafter be opened. "But see," said
+the Legislature in effect, "how mindful of the public interests we
+have been. We have imposed a tax of five per cent, on all gross
+receipts above Seventy-ninth street." When, however, the time came to
+collect, Vanderbilt innocently pretended that he had no means of
+knowing whether the fares were taken in on that section of the line,
+free of taxation, below Seventy-ninth street, or on the taxed portion
+above it. Behind that fraudulent subterfuge the city officials have
+never been inclined to go, nor have they made any effort. As a
+consequence the only revenue that the city has since received from
+that line has been a meager few thousand dollars a year.
+
+At the very time that he was watering stock, sliding through
+legislatures corrupt grants of perpetual franchises, and swindling
+cities and States out of huge sums in taxes, [Footnote: Not alone he.
+In a tabulated report made public on February 1, 1872, the New York
+Council of Political Reform charged that in the single item of
+surface railways, New York City for a long period had been swindled
+annually out of at least a million dollars. This was an
+underestimate. All other sections of the capitalist class swindled
+likewise in taxes.] Vanderbilt was forcing the drivers and conductors
+on the Fourth avenue surface line to work an average of fifteen hours
+out of twenty-four, and reducing their daily wages from $2.25 to $2.
+
+Vanderbilt made the pretense that it was necessary to economize; and,
+as was the invariable rule of the capitalists, the entire burden of
+the economizing process was thrown upon the already overloaded
+workers. This subtraction of twenty-five cents a day entailed upon
+the drivers and conductors and their families many severe
+deprivations; working for such low wages every cent obviously counted
+in the management of household affairs. But the methods of the
+capitalist class in deliberately pyramiding its profits upon the
+sufferings of the working class were evidenced in this case (as they
+had been, and since have been, in countless other instances) by the
+announcement in the Wall Street reports that this reduction in wages
+was followed by an instant rise in the price of the stock of the
+Fourth avenue surface line. The lower the wages, the greater the
+dividends.
+
+The further history of the Fourth avenue surface line cannot here be
+pursued in detail. Suffice to say that the Vanderbilts, in 1894,
+leased this line for 999 years to the Metropolitan Street Railway
+Company, controlled by those eminent financiers, William C. Whitney
+and others, whose monumental briberies, thefts and piracies have
+frequently been uncovered in official investigations. For almost a
+thousand years, unless a radical change of conditions comes, the
+Vanderbilts will draw a princely revenue from the ownership of this
+franchise alone.
+
+It is not necessary to enter into a narrative of all the laws that
+Vanderbilt bribed Legislature after Legislature, and Common Council
+after Common Council, into passing--laws giving him for nothing
+immensely valuable grants of land, shore rights and rights to land
+under water, more authorizations to make further consolidations and
+to issue more watered stock. Nor is it necessary to deal with the
+numerous bills he considered adverse to his interests, that he caused
+to be smothered in legislative committees by bribery.
+
+
+VANDERBILT'S CHIEF OF STAFF
+
+His chief instrument during all those years was a general utility
+lawyer, Chauncey M. Depew, whose specialty was to hoodwink the public
+by grandiloquent exhibitions of mellifluent spread-eagle oratory,
+while bringing the "proper arguments" to bear upon legislators and
+other public officials. [Footnote: Roscoe Conkling, a noted
+Republican politician, said of him: "Chauncey Depew? Oh, you mean the
+man that Vanderbilt sends to Albany every winter to say 'haw' and
+'gee' to his cattle up there."] Every one who could in any way be
+used, or whose influence required subsidizing, was, in the phrase of
+the day, "taken care of." Great sums of money were distributed
+outright in bribes in the legislatures by lobbyists in Vanderbilt's
+pay. Supplementing this, an even more insidious system of bribery was
+carried on. Free passes for railroad travel were lavishly
+distributed; no politician was ever refused; newspaper and magazine
+editors, writers and reporters were always supplied with free
+transportation for the asking, thus insuring to a great measure their
+good will, and putting them under obligations not to criticise or
+expose plundering schemes or individuals. All railroad companies used
+this form, as well as other forms, of bribery.
+
+It was mainly by means of the free pass system that Depew, acting for
+the Vanderbilts, secured not only a general immunity from newspaper
+criticism, but continued to have himself and them portrayed in
+luridly favorable lights. Depending upon the newspapers for its
+sources of information, the public was constantly deceived and
+blinded, either by the suppression of certain news, or by its being
+tampered with and grossly colored. This Depew continued as the
+wriggling tool of the Vanderbilt family for nearly half a century.
+Astonishing as it may seem, he managed to pass among the uninformed
+as a notable man; he was continuously eulogized; at one time he was
+boomed for the nomination for President of the United States, and in
+1905 when the Vanderbilt family decided to have a direct
+representative in the United States Senate, they ordered the New York
+State Legislature, which they practically owned, to elect him to that
+body. It was while he was a United States Senator that the
+investigations, in 1905, of a committee of the New York Legislature
+into the affairs of certain life insurance companies revealed that
+Depew had long since been an advisory party to the gigantic swindles
+and briberies carried on by Hyde, the founder and head of the
+Equitable Life Assurance Society.
+
+The career of Depew is of no interest to posterity, excepting in so
+far as it shows anew how the magnates were able to use intermediaries
+to do their underground work for them, and to put those
+intermediaries into the highest official positions in the country.
+This fact alone was responsible for their elevation to such bodies as
+the United States Senate, the President's Cabinet and the courts.
+Their long service as lobbyists or as retainers was the surest
+passport to high political or judicial position; their express duty
+was to vote or decide as their masters' interest bid them. So it was
+(as it is now) that men who had bribed right and left, and who had
+put their cunning or brains at the complete disposal of the magnates,
+filled Congress and the courts. These were, to a large extent, the
+officials by whose votes or decisions all measures of value to the
+working class were defeated; and reversely, by whose actions all or
+nearly all bills demanded by the money interests, were passed and
+sustained.
+
+Here we are again forced to notice the truism thrusting itself
+forward so often and conspicuously; that law was essentially made by
+the great criminals of society, and that, thus far it has been a
+frightful instrument, based upon force, for legalizing theft on a
+large scale. By law the great criminals absolve themselves and at the
+same time declare drastic punishment for the petty criminals. The
+property obtained by theft is converted into a sacred vested
+institution; the men who commit the theft or their hirelings sit in
+high places, and pass laws surrounding the proceeds of that theft
+with impregnable fortifications of statutes; should any poor devil,
+goaded on by the exasperations of poverty, venture to help himself to
+even the tiniest part of that property, the severest penalty, enacted
+by those same plunderers, is mercilessly visited upon him.
+
+After having bribed legislatures to legalize his enormous issue of
+watered stock, what was Vanderbilt's next move? The usual fraudulent
+one of securing exemption from taxation. He and other railroad owners
+sneaked through law after law by which many of their issues of stock
+were made non-taxable.
+
+So now old shaggy Vanderbilt loomed up the richest magnate in the
+United States. His ambition was consummated; what mattered it to him
+that his fortune was begot in blackmail and extortion, bribery and
+theft? Now that he had his hundred millions he had the means to
+demand adulation and the semblance of respect, if not respect itself.
+The commercial world admired, even while it opposed, him; in his
+methods it saw at bottom the abler application and extension of its
+own, and while it felt aggrieved at its own declining importance and
+power, it rendered homage in the awed, reverential manner in which it
+viewed his huge fortune.
+
+Over and over again, even to the point of wearisome repetition, must
+it be shown, both for the sake of true historical understanding and
+in justice to the founders of the great fortunes, that all mercantile
+society was permeated with fraud and subsisted by fraud. But the
+prevalence of this fraud did not argue its practitioners to be
+inherently evil. They were victims of a system inexorably certain to
+arouse despicable qualities. The memorable difference between the two
+classes was that the workers, as the sufferers, were keenly alive to
+the abominations of the system, while the capitalists not only
+insisted upon the right to benefit from its continuance, but harshly
+sought to repress every attempt of the workers to agitate for its
+modification or overthrow.
+
+
+REPRESSION BY STARVATION.
+
+These repressive tactics took on a variety of forms, some of which
+are not ordinarily included in the definitions of repression.
+
+The usual method was that of subsidizing press and pulpit in certain
+subtle ways. By these means facts were concealed or distorted, a
+prejudicial state of public opinion created, and plausible grounds
+given for hostile interference by the State. But a far more powerful
+engine of repression was the coercion exercised by employers in
+forcing their workers to remain submissive on instant peril of losing
+their jobs. While, at that time, manufacturers, jobbers and
+shopkeepers throughout the country were rising in angry protest
+against the accumulation of plundering power in the hands of such men
+as Vanderbilt, Gould and Huntington, they were themselves exploiting
+and bribing on a widespread scale. Their great pose was that of a
+thorough commercial respectability; it was in this garb that they
+piously went to legislatures and demanded investigations into the
+rascally methods of the railroad magnates. The facts, said they,
+should be made public, so as to base on them appropriate legislation
+which would curtail the power of such autocrats. Contrasted with the
+baseness and hypocrisy of the trading class, Vanderbilt's qualities
+of brutal candor and selfishness shine out as brilliant virtues.
+[Footnote: No observation could be truer. As a class, the
+manufacturers were flourishing on stolen inventions. There might be
+exceptions, but they were very rare. Year after year, decade after
+decade, the reports of the various Commissioners of Patents pointed
+out the indiscriminate theft of inventions by the capitalists. In
+previous chapters we have referred to the plundering of Whitney and
+Goodyear. But they were only two of a vast number of inventors
+similarly defrauded.
+
+In speaking of the helplessness of inventors, J. Holt, Commissioner
+of Patents, wrote in his Annual Report for 1857: "The insolence and
+unscrupulousness of capital, subsidizing and leading on its minions
+in the work of pirating some valuable invention held by powerless
+hands, can scarcely by conceived by those not familiar with the
+records of such cases as I have referred to. Inventors, however
+gifted in other respects, are known to be confiding and thriftless;
+and being generally without wealth, and always without knowledge of
+the chicaneries of law, they too often prove but children in those
+rude conflicts which they are called on to endure with the stalwart
+fraud and cunning of the world." (U. S. Senate Documents, First
+Session, Thirty-fifth Congress, 1857-58, viii: 9-10). In his Annual
+Report for 1858, Commissioner Holt described how inventors were at
+the mercy of professional perjurers whom the capitalists hired to
+give evidence.
+
+The bribing of Patent office officials was a common occurrence. "The
+attention of Congress," reported Commissioner of Patents Charles
+Mason in 1854, "is invited to the importance of providing some
+adequate means of preventing attempts to obtain patents by improper
+means." Several cases of "attempted bribery" had occurred within the
+year, stated Commissioner Mason. (Executive Documents, First Session,
+Thirty-third Congress, 1853-54, Vol. vii, Part I: 19-20.) Every
+successive Commissioner of Patents called upon Congress to pass laws
+for the prevention of fraud, and for the better protection of the
+inventor, but Congress, influenced by the manufacturers, was deaf to
+these appeals.]
+
+These same manufacturers objected in the most indignant manner, as
+they similarly do now, to any legislative investigations of their own
+methods. Eager to have the practices of Vanderbilt and Gould probed
+into, they were acrimoniously opposed to even criticism of their
+factory system. For this extreme sensitiveness there was the amplest
+reason. The cruelties of the factory system transcended belief. In,
+for instance, the State of Massachusetts, vaunting itself for its
+progressiveness, enlightenment and culture, the textile factories
+were a horror beyond description. The Convention of the Boston Eight
+Hour League, in 1872, did not overstate when it declared of the
+factory system that "it employs tens of thousands of women and
+children eleven and twelve hours a day; owns or controls in its own
+selfish interest the pulpit and the press; prevents the operative
+classes from making themselves felt in behalf of less hours, through
+remorseless exercise of the power of discharge; and is rearing a
+population of children and youth of sickly appearance and scanty or
+utterly neglected schooling."...
+
+As the factory system was in Massachusetts, so it was elsewhere. Any
+employee venturing to agitate for better conditions was instantly
+discharged; spies were at all times busy among the workers; and if a
+labor union were formed, the factory owners would obtain sneak
+emissaries into it, with orders to report on every move and disrupt
+the union if possible. The factory capitalists in Massachusetts, New
+York, Illinois and every other manufacturing State were determined to
+keep up their system unchanged, because it was profitable to work
+children eleven and a half hours a day in a temperature that in
+summer often reached 108 degrees and in an atmosphere certain to
+breed immorality; [Footnote: "Certain to breed immorality." See
+report of Carrol D. Wright, Massachusetts Bureau of Statistics of
+Labor, 1881. A cotton mill operative testified: "Young girls from
+fourteen and upward learn more wickedness in one year than they would
+in five out of a mill." See also the numerous recent reports of the
+National Child Labor Committee.] it was profitable to compel adult
+men and women having families to work for an average of ninety cents
+a day; it was profitable to avoid spending money in equipping their
+factories with life-saving apparatus. Hence these factory owners,
+forming the aristocracy of trade, savagely fought every move or law
+that might expose or alter those conditions; the annals of
+legislative proceedings are full of evidences of bribery.
+
+Having no illusions, and being a severely practical man, Vanderbilt
+well knew the pretensions of this trading class; with many a cynical
+remark, aptly epitomizing the point, he often made sport of their
+assumptions. He knew (and none knew better) that they had dived deep
+in bribery and fraud; they were the fine gentlemen, he well recalled,
+who had generally obtained patents by fraud; who had so often bribed
+members of Congress to vote for a high tariff; the same, too, who had
+bribed legislatures for charters, water rights, exemptions from
+taxation, the right to work employees as long as, and under whatever
+conditions, they wanted to. This manufacturing aristocracy professed
+to look down upon Vanderbilt socially as a coarse sharper; and in New
+York a certain ruling social element, the native aristocracy,
+composed of old families whose wealth, originating in fraud, had
+become respectable by age, took no pains to conceal their opinion of
+him as a parvenu, and drew about their sacred persons an amusing
+circle of exclusiveness into the rare precincts of which he might not
+enter.
+
+Vanderbilt now proceeded to buy social and religious grace as he had
+bought laws. The purchase of absolution has ever been a convenient
+and cheap method of obtaining society's condonation of theft. In
+medieval centuries it took a religious form; it has become transposed
+to a social traffic in these superior days. Let a man steal in
+colossal ways and then surrender a small part of it in charitable,
+religious and educational donations; he at once ceases being a thief
+and straightway becomes a noble benefactor. Vanderbilt now shed his
+life-long irreverence, and gave to Deems, a minister of the
+Presbyterian Church, as a gift, the Church of the Strangers on Mercer
+street, and he donated $1,000,000 for the founding of the Vanderbilt
+University at Nashville, Tenn. The press, the church and the
+educational world thereupon upon hailed him as a marvel of saintly
+charity and liberality.
+
+
+THE SERMONIZING OF THE "BEST CLASSES."
+
+One section of the social organization declined to accept the views
+of the class above it. This was the working class. Superimposed upon
+the working class, draining the life blood of the workers to provide
+them with wealth, luxuries and power, were those upper strata of
+society known as the "best classes." These "best classes," with a
+monstrous presumption, airily proclaimed their superiority and
+incessantly harped upon the need of elevating and regenerating the
+masses.
+
+And who, it may be curiously asked, were the classes self destined or
+self selected to do this regenerating? The commercial and financial
+element, with its peculiar morals so adjusted to its interests, that
+it saw nothing wrong in the conditions by which it reaped its wealth
+--conditions that made slaves of the workers, threw them into
+degradation and poverty, drove multitudes of girls and women into
+prostitution, and made the industrial field an immense concourse of
+tears, agony and carnage. Hanging on to this supreme class of wealth,
+fawning to it, licking its very feet, were the parasites and
+advocates of the press, law, politics, the pulpit, and, with a few
+exceptions, of the professional occupations. These were the
+instructors who were to teach the working class what morals were;
+these were the eminences under whose guidance the working class was
+to be uplifted!
+
+ Let us turn from this sickening picture of sordid arrogance and
+ignorance so historically true of all aristocracies based upon money,
+from the remotest time to this present day, and contemplate how the
+organized part of the working class regarded the morals of its
+"superiors."
+
+While the commercial class, on the one hand, was determined on
+beating down the working class at every point, it was, on the other,
+unceasingly warring among itself. In business dealings there was no
+such recognized thing as friendship. To get the better of the other
+was held the quintessence of mercantile shrewdness. A flint-hard,
+brute spirit enveloped all business transactions. The business man
+who lost his fortune was generally looked upon without emotion or
+pity, and condemned as an incapable. For self interest, business men
+began to combine in corporations, but these were based purely upon
+mercenary aims. Not a microscopic trace was visible of that spirit of
+fellow kindness, sympathy, collective concern and brotherhood already
+far developed among the organized part of the working class.
+
+As the supereminent magnate of his day, Vanderbilt was invested with
+extraordinary publicity; he was extensively interviewed and quoted;
+his wars upon rival capitalists were matters of engrossing public
+concern; his slightest illness was breathlessly followed by
+commercialdom dom and its outcome awaited. Hosts of men, women and
+children perished every year of disease contracted in factories,
+mines and slums; but Vanderbilt's least ailment was given a
+transcending importance, while the scourging sweep of death among the
+lowly and helpless was utterly ignored.
+
+ Precisely as mercantile society bestowed no attention upon the
+crushed and slain, except to advance roughshod over their stricken
+bodies while throwing out a pittance in charity here and there, so
+Vanderbilt embodied in himself the qualities that capitalist society
+in mass practiced and glorified. "It was strong men," says Croffut,
+"whom he liked and sympathized with, not weak ones; the self-reliant,
+not the helpless. He felt that the solicitor of charity was always a
+lazy or drunken person, trying to live by plundering the sober and
+industrious." This malign distrust of fellow beings, this acrid
+cynicism of motives, this extraordinary imputation of evil designs on
+the part of the penniless, was characteristic of the capitalist class
+as a whole. Itself practicing the lowest and most ignoble methods,
+governed by the basest motives, plundering in every direction, it
+viewed every member of its own class with suspicion and rapacity.
+Then it turned about, and with immense airs of superiority,
+attributed all of its own vices and crimes to the impoverished masses
+which its own system had created, whether in America or elsewhere.
+
+The apologist may hasten forward with the explanation that the
+commercial class was not to be judged by Vanderbilt's methods and
+qualities. In truth, however, Vanderbilt was not more inhuman than
+many of the contemporary shining lights of the business world.
+
+
+"HONESTY AND INDUSTRY" ANALYZED.
+
+If there is any one fortune commonly praised as having been acquired
+"by honesty and industry," it is the Borden millions, made from
+cotton factories. At the time Vanderbilt was blackmailing, the
+founder of this fortune, Colonel Borden, was running cotton mills in
+Fall River. His factory operatives worked from five o'clock in the
+morning to seven in the evening, with but two half hours of
+intermission, one for breakfast, the other for dinner. The workday of
+these men, women and children was thus thirteen hours; their wages
+were wretchedly low, their life was one of actual slavery.
+Insufficient nourishment, overwork, and the unsanitary and disgusting
+conditions in the mills, prematurely aged and debilitated them, and
+were a constant source of disease, killing off considerable numbers,
+especially the children.
+
+In 1850, the operatives asked Borden for better wages and shorter
+hours. This was his reply: "I saw that mill built stone by stone; I
+saw the pickers, the carding engines, the spinning mules and the
+looms put into it, one after the other, and I would see every machine
+and stone crumble and fall to the floor again before I would accede
+to your wishes." Borden would not have been amiss had he added that
+every stone in that mill was cemented with human blood. His
+operatives went on a strike, stayed out ten months, suffered
+frightful hardships, and then were forced back to their tasks by
+hunger. Borden was inflexible, and so were all the other cotton mill
+owners. [Footnote: The heroism of the cotton operatives was
+extraordinary. Slaves themselves, they battled to exterminate negro
+slavery. "The spinner's union," says McNeill, "was almost dead during
+the [Civil] war, as most of its members had gone to shoulder the
+musket and to fight... to strike the shackles from the negro. A large
+number were slain in battle."-"The Labor Movement": 216-217.] It was
+not until 1874, after many further bitterly-contested strikes, that
+the Masachusetts Legislature was prevailed upon to pass a ten-hour
+law, twenty-four years after the British Parliament had passed such
+an enactment.
+
+The commercial class, high and low, was impregnated with deceit and
+dissimulation, cynicism, selfishness and cruelty. What were the
+aspirations of the working class which it was to uplift? The contrast
+stood out with stark distinctness. While business men were
+frantically sapping the labor and life out of their workers, and then
+tricking and cheating one another to seize the proceeds of that
+exploitation, the labor unions were teaching the nobility of
+brotherly cooperation. "Cultivate friendship among the great
+brotherhood of toil," was the advice of Uriah Stevens, master workman
+of the Knights of Labor, at the annual meeting of that organization
+on January 12, 1871. And he went on:
+
+And while the toiler is thus engaged in creating the world's value,
+how fares his own interest and well-being? We answer, "Badly," for he
+has too little time, and his faculties become too much blunted by
+unremitting labor to analyze his condition or devise and perfect
+financial schemes or reformatory measures. The hours of labor are too
+long, and should be shortened. I recommend a universal movement to
+cease work at five o'clock Saturday afternoon, as a beginning. There
+should be a greater participation in the profits of labor by the
+industrious and intelligent laborer. In the present arrangements of
+labor and capital, the condition of the employee is simply that of
+wage slavery--capital dictating, labor submitting; capital superior,
+labor inferior.
+
+This is an artificial and man-created condition, not God's
+arrangement and order; for it degrades man and ennobles mere pelf. It
+demeans those who live by useful labor, and, in proportion, exalts
+all those who eschew labor and live (no matter by what pretence or
+respectable cheat--for cheat it is) without productive work.
+
+
+LABOR'S PRINCIPLES IGNORED.
+
+Such principles as these evoked so little attention that it is
+impossible to find them recorded in most of the newspapers of the
+time; and if mentioned it was merely as the object of venomous
+attacks. In varying degrees, now in outright abuse and again in
+sneering and ridicule, the working class was held up as an ignorant,
+discontented, violent aggregation, led by dangerous agitators, and
+arrogantly seeking to upset all business by seeking to dictate to
+employers what wages and hours of labor should be.
+
+And, after all, little it mattered to the capitalists what the
+workers thought or said, so long as the machinery of government was
+not in their hands. At about the very time Master Workman Stevens was
+voicing the unrest of the laboring masses, and at the identical time
+when the panic of 1873 saw several millions of men workless, thrown
+upon soup kitchens and other forms of charity, and battered wantonly
+by policemen's clubs when they attempted to hold mass meetings of
+protest, an Iowa writer, D. C. Cloud, was issuing a work which showed
+concretely how thoroughly Government was owned by the commercial and
+financial classes. This work, obscurely published and now scarcely
+known except to the patient delver, is nevertheless one of the few
+serious books on prevailing conditions written at that time, and is
+in marked contrast to the reams of printed nonsense then circulated.
+Although Cloud was tinged greatly with the middle class point of
+view, and did not see that all successful business was based upon
+deceit and fraud, yet so far as his lights carried him, he wrote
+trenchantly and fearlessly, embodying series after series of facts
+exposing the existing system. He observed:
+
+... A measure without any merit save to advance the interest of a
+patentee, or contractor, or railroad company, will become a law,
+while measures of interest to the whole people are suffered to
+slumber, and die at the close of the session from sheer neglect. It
+is known to Congressmen that these lobbyists are paid to influence
+legislation by the parties interested, and that dishonest and corrupt
+means are resorted to for the accomplishment of the object they have
+undertaken ... Not one interest in the country nor all other
+interests combined are as powerful as the railroad interest ... With
+a network of roads throughout the country; with a large capital at
+command; with an organization perfect in all its parts, controlled by
+a few leading spirits like Scott, Vanderbilt, Jay Gould, Tracy and a
+dozen others, the whole strength and wealth of this corporate power
+can be put into operation at any moment, and Congressmen are bought
+and sold by it like any article of merchandise. [Footnote:
+"Monopolies and the People:" 155-156.]
+
+
+
+
+CHAPTER VI
+
+THE ENTAILING OF THE VANDERBILT FORTUNE
+
+
+The richer Commodore Vanderbilt grew, the more closely he clung to
+his old habits of intense parsimony. Occasionally he might
+ostentatiously give a large sum here or there for some religious or
+philanthropic purpose, but his general undeviating course was a
+consistent meanness. In him was united the petty bargaining traits of
+the trading element and the lavish capacities for plundering of the
+magnate class. While defrauding on a great scale, pocketing tens of
+millions of dollars at a single raid, he would never for a moment
+overlook the leakage of a few cents or dollars. His comprehensive
+plans for self-aggrandizement were carried out in true piratical
+style; his aims and demands were for no paltry prize, but for the
+largest and richest booty. Yet so ingrained by long development was
+his faculty of acquisition, that it far passed the line of a passion
+and became a monomania.
+
+
+VANDERBILT'S CHARACTERISTICS.
+
+To such an extent did it corrode him that even when he could boast
+his $100,000,000 he still persisted in haggling and huckstering over
+every dollar, and in tricking his friends in the smallest and most
+underhand ways. Friends in the true sense of the word he had none;
+those who regarded themselves as such were of that thrifty, congealed
+disposition swayed largely by calculation. But if they expected to
+gain overmuch by their intimacy, they were generally vastly mistaken;
+nearly always, on the contrary, they found themselves caught in some
+unexpected snare, and riper in experience, but poorer in pocket, they
+were glad to retire prudently to a safe distance from the old man's
+contact. "Friends or foes," wrote an admirer immediately after his
+death, "were pretty much on the same level in his estimation, and if
+a friend undertook to get in his way he was obliged to look out for
+himself."
+
+On one occasion, it is related, when a candidate for a political
+office solicited a contribution, Vanderbilt gave $100 for himself,
+and an equal sum for a friend associated with him in the management
+of the New York Central Railroad. A few days later Vanderbilt
+informed this friend of the transaction, and made a demand for the
+hundred dollars. The money was paid over. Not long after this, the
+friend in question was likewise approached for a political
+contribution, whereupon he handed out $100 for himself and the same
+amount for Vanderbilt. On being told of his debt, Vanderbilt declined
+to pay it, closing the matter abruptly with this laconic
+pronunciamento, "When I give anything, I give it myself." At another
+time Vanderbilt assured a friend that he would "carry" one thousand
+shares of New York Central stock for him. The market price rose to
+$115 a share and then dropped to $90. A little later, before setting
+out to bribe an important bill through the Legislature--a bill that
+Vanderbilt knew would greatly increase the value of the stock--the
+old magnate went to the friend and represented that since the price
+of the stock had fallen it would not be right to subject the friend
+to a loss. Vanderbilt asked for the return of the stock and got it.
+Once the bill became a law, the market price of the stock went up
+tremendously, to the utter dismay of the confiding friend who saw a
+profit of $80,000 thus slip out of his hands into Vanderbilt's.
+[Footnote: These and similar anecdotes are to be found incidentally
+mentioned in a two-page biography, very laudatory on the whole, in
+the New York "Times," issue of January 5, 1877.]
+
+In his personal expenses Vanderbilt usually begrudged what he looked
+upon as superfluous expense. The plainest of black clothes he wore,
+and he never countenanced jewelry. He scanned the table bill with a
+hypercritical eye. Even the sheer necessities of his physical
+condition could not induce him to pay out money for costly
+prescriptions. A few days before his death his physician recommended
+champagne for some internal trouble. "Champagne!" exclaimed
+Vanderbilt with a reproachful look, "I can't afford champagne. A
+bottle every morning! Oh, I guess sody water'll do!"
+
+From all accounts it would seem that he diffused about him the same
+forbidding environment in his own house. He is described as stern,
+obstinate, masterful and miserly, domineering his household like a
+tyrant, roaring with fiery anger whenever he was opposed, and flying
+into fits of fury if his moods, designs and will were contested. His
+wife bore him thirteen children, twelve of whom she had brought up to
+maturity. A woman of almost rustic simplicity of mind and of habits,
+she became obediently meek under the iron discipline he administered.
+Croffut says of her that she was "acquiescent and patient under the
+sway of his dominant will, and in the presence of his trying moods."
+He goes on: "The fact that she lived harmoniously with such an
+obstinate man bears strong testimony to her character." [Footnote:
+"The Vanderbilts": 113.]
+
+If we are to place credibility in current reports, she was forced
+time and time again to undergo the most violent scenes in interceding
+for one of their sons, Cornelius Jeremiah. For the nervous
+disposition and general bad health of this son the father had not
+much sympathy; but the inexcusable crime to him was that Cornelius
+showed neither inclination nor capacity to engage in a business
+career. If Cornelius had gambled on the stock exchange his father
+would have set him down as an exceedingly enterprising, respectable
+and promising man. But he preferred to gamble at cards. This
+rebellious lack of interest in business, joined with dissipation, so
+enraged the old man that he drove Cornelius from the house and only
+allowed him access during nearly a score of years at such rare times
+as the mother succeeded in her tears and pleadings. Worn out with her
+long life of drudgery, Vanderbilt's wife died in 1868; about a year
+later the old magnate eloped with a young cousin, Frank A. Crawford,
+and returning from Canada, announced his marriage, to the unbounded
+surprise and utter disfavor of his children.
+
+
+THE OLD MAGNATE'S DEATH.
+
+An end, however, was soon coming to his prolonged life. A few more
+years of money heaping, and then, on May 10, 1876, he was taken
+mortally ill. For eight months he lay in bed, his powerful vitality
+making a vigorous battle for life; two physicians died while in the
+course of attendance on him; it was not until the morning of January
+4, 1877, that the final symptoms of approaching death came over him.
+When this was seen the group about his bed emotionally sang: "Come,
+Ye Sinners, Poor and Needy," "Nearer, My God, To Thee," and "Show Ye
+Pity, Lord." He died with a conventional religious end of which the
+world made much; all of the property sanctities and ceremonials were
+duly observed; nothing was lacking in the piety of that affecting
+deathbed scene. It furnished the text for many a sermon, but while
+ministerial and journalistic attention was thus eulogistically
+concentrated upon the loss of America's greatest capitalist, not a
+reference was made in church or newspaper to the deaths every year of
+a host of the lowly, slain in the industrial vortex by injury and
+disease, and too often by suicide and starvation. Except among the
+lowly themselves this slaughter passed unprotested and unnoticed.
+
+Even as Vanderbilt lay moribund, speculation was busy as to the
+disposition of his fortune. Who would inherit his aggregation of
+wealth? The probating of his will soon disclosed that he had
+virtually entailed it. About $90,000,000 was left to his eldest son,
+William H., and one-half of the remaining $15,000,000 was bequeathed
+to the chief heir's four sons. [Footnote: To Cornelius J. Vanderbilt,
+the Commodore's "wayward" son, only the income derived from $200,000
+was bequeathed, upon the condition that he should forfeit even this
+legacy if he contested the will. Nevertheless, he brought a contest
+suit. William H. Vanderbilt compromised the suit by giving to his
+brother the income on $1,000,000. On April 2, 1882, Cornelius J.
+Vanderbilt shot and killed himself. Croffut gives this highly
+enlightening account of the compromising of the suit:
+
+"At least two of the sisters had sympathized with 'Cornele's' suit,
+and had given him aid and comfort, neither of them liking the
+legatee, and one of them not having been for years on speaking terms
+with him; but now, in addition to the bequests made to his sisters,
+William H. voluntarily [sic] added $500,000 to each from his own
+portion.
+
+"He drove around one evening, and distributed this splendid largess
+from his carriage, he himself carrying the bonds into each house in
+his arms and delivering them to each sister in turn. The donation was
+accompanied by two interesting incidents. In one case the husband
+said, 'William, I've made a quick calculation here, and I find these
+bonds don't amount to quite $500,000. They're $150 short, at the
+price quoted today.' The donor smiled, and sat down and made out his
+check for the sum to balance.
+
+"In another case, a husband, after counting and receipting for the
+$500,000, followed the generous visitor out of the door, and said,
+'By the way, if you conclude to give the other sisters any more,
+you'll see that we fare as well as any of them, won't you?' The donor
+jumped into his carriage and drove off without replying, only saying,
+with a laugh, to his companions, 'Well, what do you think o' that'"--
+"The Vanderbilts": 151-152.] A few millions were distributed among
+the founder's other surviving children, and some comparatively small
+sums bequeathed to charitable and educational institutions. The
+Vanderbilt dynasty had begun.
+
+       *       *       *       *       *       *       *
+
+PERSONALITY OF THE CHIEF HEIR.
+
+At this time William H. Vanderbilt was fifty-six years old. Until
+1864 he had been occupied at farming on Staten Island; he lived at
+first in "a small, square, plain two-story house facing the sea, with
+a lean-to on one end for a kitchen." The explanation of why the son
+of a millionaire betook himself to truck farming lay in these facts:
+The old man despised leisure and luxury, and had a correspondingly
+strong admiration for "self-made" men. Knowing this, William H.
+Vanderbilt made a studious policy of standing in with his father,
+truckling to his every caprice and demand, and proving that he could
+make an independent living. He is described as a phlegmatic man of
+dull and slow mental processes, domestic tastes and of kindly
+disposition to his children. His father (so the chronicles tell) did
+not think that he "would ever amount to anything," but by infinite
+plodding, exacting the severest labor from his farm laborers, driving
+close bargains and turning devious tricks in his dealings, he
+gradually won the confidence and respect of the old man, who was
+always pleased with proofs of guile. Croffut gives a number of
+instances of William's craft and continues: "From his boyhood he had
+given instant and willing submission to the despotic will of his
+father, and had made boundless sacrifices to please him. Most men
+would have burst defiantly away from the repressive control and
+imperious requirements; but he doubtless thought that for the chance
+of becoming heir to $100,000,000 he could afford to remain long in
+the passive attitude of a distrusted prince." (sic.)
+
+[Illustration: WILLIAM H. VANDERBILT, He Inherited the Bulk of His
+Father's Fortune and Doubled It]
+
+The old autocrat finally modified his contemptuous opinion, and put
+him in an executive position in the management of the New York and
+Harlem Railroad. Later, he elevated him to be a sort of coadjutor by
+installing him as vice president of the New York Central Railroad,
+and as an associate in the directing of other railroads. It was said
+to be painful to note the exhausting persistence with which William
+H. Vanderbilt daily struggled to get some perceptions of the details
+of railroad management. He did succeed in absorbing considerable
+knowledge. But his training at the hands of his father was not so
+much in the direction of learning the system of management. Men of
+ability could always be hired to manage the roads. What his father
+principally taught him was the more essential astuteness required of
+a railroad magnate; the manipulation of stocks and of common councils
+and legislatures; how to fight and overthrow competitors and extend
+the sphere of ownership and control; and how best to resist, and if
+possible to destroy, the labor unions. In brief, his education was a
+duplication of his father's scope of action: the methods of the sire
+were infused into the son.
+
+From the situation in which he found himself, and viewing the
+particular traits required in the development of capitalistic
+institutions, it was the most appropriate training that he could have
+received. Book erudition and the cultivation of fine qualities would
+have been sadly out of place; his father's teachings were precisely
+what were needed to sustain and augment his possessions. On every
+hand he was confronted either by competitors who, if they could get
+the chance, would have stripped him without scruple, or by other men
+of his own class who would have joyfully defrauded him. But
+overshadowing these accustomed business practices, new and startling
+conditions that had to be met and fought were now appearing.
+
+Instead of a multitude of small, detached railroads, owned and
+operated by independent companies, the period was now being reached
+of colossal railroad systems. In the East the small railroad owners
+had been well-nigh crushed out, and their properties joined in huge
+lines under the ownership of a few controlling men, while in the
+West, extensive systems, thousands of miles long, had recently been
+built. Having stamped out most of the small owners, the railroad
+barons now proceeded to wrangle and fight among themselves. It was a
+characteristic period when the railroad magnates were constantly
+embroiled in the bitterest quarrels, the sole object of which was to
+outdo, bankrupt and wreck one another and seize, if possible, the
+others' property.
+
+
+THE RISE OF THE FIRST TRUST.
+
+It was these conflicts that developed the auspicious time and
+opportunity for a change of the most world--wide importance, and one
+which had a stupendous ultimate purport not then realized. The wars
+between the railroad magnates assumed many forms, not the least of
+which was the cutting of freight rates. Each railroad desperately
+sought to wrench away traffic from the others by offering better
+inducements. In this cutthroat competition, a coterie of hawk-eyed
+young men in the oil business, led by John D. Rockefeller, saw their
+fertile chance.
+
+The drilling and the refining of oil, although in their comparative
+infancy, had already reached great proportions. Each railroad was
+eager to get the largest share of the traffic of transporting oil.
+Rockefeller, ruminating in his small refinery at Cleveland, Ohio, had
+conceived the revolutionary idea of getting a monopoly of the
+production and distribution of oil, obliterating the middleman, and
+systematizing and centralizing the whole business.
+
+Then and there was the modern trust born; and from the very inception
+of the Standard Oil Company Rockefeller and his associates
+tenaciously pursued their design with a combined ability and
+unscrupulousness such as had never before been known since the rise
+of capitalism. One railroad after another was persuaded or forced
+into granting them secret rates and rebates against which it was
+impossible to compete. The railroad magnates--William H. Vanderbilt,
+for instance--were taken in the fold of the Standard Oil Company by
+being made stockholders. With these secret rates the Standard Oil
+Company was enabled to crush out absolutely a myriad of competitors
+and middlemen, and control the petroleum trade not only of the United
+States but of almost the entire world. Such fabulous profits
+accumulated that in the course of forty years, after one unending
+career of industrial construction on the one hand, and crime on the
+other, the Standard Oil Company was easily able to become owners of
+prodigious railroad and other systems, and completely supplant the
+scions of the magnates whom three or four decades before they had
+wheedled or brow-beaten into favoring them with discriminations.
+
+
+CORPORATE WEALTH AND LABOR UNIONS.
+
+The effects of this great industrial transition were clearly visible
+by 1877, so much so that two years later, Vanderbilt, more
+prophetically than he realized, told the Hepburn Committee that "if
+this thing keeps up the oil people will own the roads." But other
+noted industrial changes were concurrently going on. With the up-
+springing and growth of gigantic combinations or concentrations of
+capital, and the gradual disappearance of the small factors in
+railroad and other lines of business, workers were compelled by the
+newer conditions to organize on large and compact national lines.
+
+At first each craft was purely local and disassociated from other
+trades unions. But comprehending the inadequacy and futility of
+existing separately, and of acting independently of one another, the
+unions had some years back begun to weld themselves into one powerful
+body, covering much of the United States. Each craft union still
+retained its organization and autonomy, but it now became part of a
+national organization embracing every form of trades, and centrally
+officered and led. It was in this way that the workers, step by step,
+met the organization of capital; the two forces, each representing a
+conflicting principle, were thus preparing for a series of great
+industrial battles.
+
+Capital had the wealth, resources and tools of the country; the
+workers their labor power only. As it stood, it was an uneven
+contest, with every advantage in favor of capital. The workers could
+decline to work, but capital could starve them into subjection.
+These, however, were but the apparent differences. The real and
+immense difference between them was that capital was in absolute
+control of the political governing power of the nation, and this
+power, strange to say, it secured by the votes of the very working
+class constantly fighting it in the industrial arena. Many years were
+to elapse before the workers were to realize that they must organize
+and vote with the same political solidarity that they long had been
+developing in industrial matters. With political power in their hands
+the capitalists could, and did, use its whole weight with terrific
+effect to beat down the working class, and nullify most of the few
+concessions and laws obtained by the workers after the severest and
+most self-sacrificing struggles.
+
+One of the first memorable battles between the two hostile forces
+came about in 1877. In their rate wars the railroad magnates had cut
+incisively into one another's profits. The permanent gainers were
+such incipient, or fairly well developed, trusts or combinations as
+the Standard Oil Company. Now the magnates set about asserting the
+old capitalist principle of recouping themselves by forcing the
+workers to make up their losses.
+
+But these deficits were merely relative. Practically every railroad
+had issued vast amounts of bonds and watered stock, on which fixed
+charges and dividends had to be paid. Judged by the extent of this
+inflated stock, the profits of the railroads had certainly decreased.
+Despite, however, the prevailing cutthroat competition, and the slump
+in general business following the panic of 1873, the railroads were
+making large sums on their actual investment, so-called. Most of this
+investment, it will be recalled, was not private money but was public
+funds, which were later stolen by corrupt legislation. It was shown
+before the Hepburn Committee in 1879, as we have noted, that from
+1869 the New York Central Railroad had been making sixteen, and
+perhaps more than twenty per cent., on the actual cost of the road.
+
+Moreover, apart from the profits from ordinary traffic, the railroads
+were annually fattening on immense sums of public money gathered in
+by various fraudulent methods. One of these--and is well worth
+adverting to, for it exists to a greater degree than ever before--was
+the robbery of the people in the transportation of mails. By a
+fraudulent official construction, in 1873, of the postal laws, the
+railroads without cessation have cheated huge sums in falsifying the
+weight of mail carried, and since that time have charged ten times as
+much for mail carrying as have the express companies (the profits of
+which are very great) for equal haulage. But these are simply two
+phases of the postal plunder. In addition to the regular mail
+payments, the Government has long paid to the railroad companies an
+extra allowance of $6,250 a year for the rent of each postal car
+used, although official investigation has proved that the whole cost
+of constructing such a car averages but from $2,500 to $5,000. In
+rent alone, five millions a year have been paid for cars worth, all
+told, about four millions. From official estimates it would clearly
+seem that the railroads have long cheated the people out of at least
+$20,000,000 a year in excess rates--a total of perhaps half a billion
+dollars since 1873. The Vanderbilt family have been among the chief
+beneficiaries of this continuous looting. [Footnote: Postmaster
+General Vilas, Annual Report for 1887:56. In a debate in the United
+States Senate on February 11, 1905, Senator Pettigrew quoted
+Postmaster General Wanamaker as saying that "the railroad companies
+see to it that the representatives in Congress in both branches take
+care of the interests of the railway people, and that it is
+practically impossible to procure legislation in the way of reducing
+expenses."] Occasionally the postal officials have made pretences at
+stopping the plunder, but with no real effect.
+
+
+THE GREAT STRIKE OF 1877.
+
+Making a loud and plaintive outcry about their declining revenues,
+some of the railroad systems prepared to assess their fictitious
+losses upon the workers by cutting down wages. They had already
+reduced wages to the point of the merest subsistence; and now they
+decreed that wages must again be curtailed ten cents on every dollar.
+The Baltimore and Ohio Railroad, then in the hands of the Garrett
+family, with a career behind it of consecutive political corruption
+and fraud, in some ways surpassing that of the Vanderbilts, led in
+reducing the wages of its workers. The Pennsylvania Railroad
+followed, and then the Vanderbilts gave the order for another
+reduction.
+
+At once the Baltimore and Ohio Railroad employees retaliated by
+declaring a strike; the example was followed by the Pennsylvania men.
+In order to alienate the sympathy of the general public and to have a
+pretext for suppressing the strike with armed force, the railroads,
+it is quite certain, instigated riots at Martinsburg, W. Va., and at
+Pittsburg. Troops were called out and the so-called mobs were fired
+on, resulting in a number of strikers being killed and many wounded.
+
+That the railroads deliberately destroyed their own property and then
+charged the culpability to the strikers, was common report. So
+conservative an authority as Carroll D. Wright, for a long time
+United States Commissioner of Labor, tells of the railroad agents
+setting a large number of old, decayed, worthless freight cars at
+Pittsburg on fire, and accusing the strikers of the act. He further
+tells of the Pennsylvania Railroad subsequently extorting millions of
+dollars from the public treasury on the ground that the destruction
+of these cars resulted from riot. Wright says that from all that he
+has been able to gather, he believes the reports of the railroads
+manufacturing riots to have been true. [Footnote: "The Battles of
+Labor": 122. In all, the railroad companies secured approximately
+$22,000,000 from the public treasury in Pennsylvania as indemnity for
+property destroyed during these "riots." In a subsequent chapter, the
+corruption of the operation is described.] Vanderbilt acted with
+greater wisdom than his fellow magnates. Adopting a conciliatory
+stand, he averted a strike on his lines by restoring the old rate of
+wages and by other mollifying measures.
+
+He was now assailed from a different direction. The long gathering
+anger and enmity of the various sections of the middle class against
+the corporate wealth which had possessed itself of so dictatorial a
+power, culminated in a manner as instructive as it was ineffective.
+
+In New York State, the Legislature was prevailed upon, in 1879, to
+appoint an investigating committee. Vanderbilt and other railroad
+owners, and a multitude of complaining traders were haled up to give
+testimony; the stock-jobbing transactions of Vanderbilt and Gould
+were fully and tediously gone into, as also were the methods of the
+railroads in favoring certain corporations and mercantile
+establishments with secret preferential freight rates.
+
+Not in the slightest did this long-drawn investigation have any
+result calculated to break the power of the railroad owners, or their
+predominant grip upon governmental functions.
+
+The magnate class preferred to have no official inquiries; there was
+always the annoying possibility that in some State or other
+inconvenient laws might be passed, or harrassing legal actions begun;
+and while revocation or amendment of these laws could be put through
+subsequently when the popular excitement had died away, and the suits
+could be in some way defeated, the exposures had an inflaming effect
+upon a population as yet ill-used to great one-man power of wealth.
+But if the middle class insisted upon action against the railroad
+magnates, there was no policy more suitable to these magnates than
+that of being investigated by legislative committees. They were not
+averse to their opponents amusing themselves, and finding a vent for
+their wrath, in volumes of talk which began nowhere and ended
+nowhere. In reply to charges, the magnates could put in their
+skillful defense, and inject such a maze of argument, pettifoggery
+and technicalities into the proceedings, that before long the public,
+tired of the puzzle, was bound to throw up its hands in sheer
+bewilderment, unable to get any concrete idea of what it was all
+about.
+
+
+FRAUD BECOMES RESPECTABLE WEALTH
+
+So the great investigation of 1879 passed by without the least
+deterrent effect upon the constantly-spreading power and wealth of
+such men as Vanderbilt and Gould. Every new development revealed that
+the hard-dying middle class was being gradually, yet surely, ground
+out. But the investigation of 1879 had one significant unanticipated
+result.
+
+What William H. Vanderbilt now did is well worth noting. As the owner
+of four hundred thousand shares of New York Central stock he had been
+rabidly denounced by the middle class as a plutocrat dangerous to the
+interests of the people. He decided that it would be wise to sell a
+large part of this stock; by this stroke he could advantageously
+exchange the forms of some of his wealth, and be able to put forward
+the plausible claim that the New York Central Railroad, far from
+being a one-man institution, was owned by a large number of
+investors. In November, 1879, he sold through J. Pierpont Morgan more
+than two hundred thousand shares to a syndicate, chiefly, however, to
+British aristocrats.
+
+This sale in no way diminished his actual control of the New York
+Central Railroad; not only did he retain a sufficient number of
+shares, but he owned an immense block of the railroad's bonds. The
+sale of the stock brought him $35,000,000. What did he do with this
+sum? He at once reinvested it in United States Government bonds.
+Thus, the proceeds of a part of the stock obtained by outright fraud,
+either by his father or himself, were put into Government bonds. This
+surely was a very sagacious move. Stocks do not have the solid,
+honest air that Government bonds do; nothing is more finely and
+firmly respectable than a Government bondholder.
+
+From the blackmailer, corruptionist and defrauder of one generation
+to the stolid Government bondholder of the next, was not a long step,
+but it was a sufficient one. The process of investing in Government
+bonds Vanderbilt continued; in a few years he owned not less than
+$54,000,000 worth of four per cents. In 1884 he had to sell
+$10,000,000 of them to make good the losses incurred by his sons on
+the Stock Exchange, but he later bought $10,000,000 more. Also he
+owned $4,000,000 in Government three and one-half per cent. bonds,
+many millions of State and city bonds, several millions of dollars in
+manufacturing stocks and mortgages, and $22,000,000 of railroad
+bonds. The same Government of which his father had defrauded millions
+of dollars now stood as a direct guarantee behind at least
+$70,000,000 of his bonded wealth, and the whole population of the
+United States was being taxed to pay interest on bonds, the purchase
+of which was an outgrowth of the theft of public money committed by
+Cornelius Vanderbilt.
+
+In the years following his father's death, William H. Vanderbilt
+found no difficulty in adding more extended railroad lines to his
+properties, and in increasing his wealth by tens of millions of
+dollars at a leap.
+
+
+MORE RAILROADS ACQUIRED.
+
+The impact of his vast fortune was well-nigh resistless. Commanding
+both financial and political power, his money and resources were used
+with destructive effect against almost every competitor standing in
+his way. If he could not coerce the owners of a railroad, the
+possession of which he sought, to sell to him at his own price, he at
+once brought into action the wrecking tactics his father had so
+successfully used.
+
+The West Shore Railroad, a competing line running along the west bank
+of the Hudson River, was bankrupted by him, and finally, in 1883,
+bought in under foreclosure proceedings. By lowering his freight
+rates he took away most of its business; through a series of years he
+methodically caused it to be harrassed and burdened by the exercise
+of his great political power; he thwarted its plans and secretly
+hindered it in its application for money loans or other relief. Other
+means, open and covert, were employed to insure its ruination. When
+at last he had driven its owners into a corner, he calmly stepped in
+and bought up its control cheaply, and then turned out many millions
+of dollars of watered stock.
+
+He attempted to break in upon the territory traversed by the
+Pennsylvania Railroad by building a competing line, the South
+Pennsylvania Railroad. In the construction of this road he had an
+agreement with the Philadelphia and Reading Railroad, an intense
+competitor of the Pennsylvania; and, as a precedent to building his
+line, he obtained a large interest in the Reading Railroad. Out of
+this arrangement grew a highly important sequence which few then
+foresaw--the gradual assumption by the Vanderbilt family of a large
+share of the ownership and control of the anthracite coal mines of
+Pennsylvania.
+
+Vanderbilt, aiming at sharing in the profits from the rich coal, oil
+and manufacturing traffic of Pennsylvania, went ahead with his
+building of the South Pennsylvania line. But there was an easy way of
+getting millions of dollars before the road was even opened. This was
+the fraudulent one, so widely practiced, of organizing a bogus
+construction company, and charging three and four times more than the
+building of the railroad actually cost. Vanderbilt got together a
+dummy construction company composed of some of his clerks and
+brokers, and advanced the sum, about $6,500,000, to build the road.
+In return, he ordered this company to issue $20,000,000 in bonds, and
+the same amount in stock. Of this $40,000,000 in securities, more
+than $30,000,000 was loot. [Footnote: Van Oss' "American Railroads As
+Investments": 126. Professor Frank Parsons, in his "Railways, the
+Trusts and the People," incorrectly ascribes this juggling to
+Commodore Vanderbilt.]
+
+If, however, Vanderbilt anticipated that the Pennsylvania Railroad
+would remain docile or passive while his competitive line was being
+built, he soon learned how sorely mistaken he was. This time he was
+opposing no weak, timorous or unsophisticated competitors, but a
+group of the most powerful and astute organizers and corruptionists.
+Their methods in Pennsylvania and other States were exactly the same
+as Vanderbilt's in New York State; their political power was as great
+in their chosen province as his in New York. His incursion into the
+territory they had apportioned to themselves for exploitation was not
+only resented but was fiercely resisted. Presently, overwhelmed by
+the crushing financial and political weapons with which they fought
+him, Vanderbilt found himself compelled to compromise by disposing of
+the line to them.
+
+
+THE SEQUEL TO A "GENTLEMEN'S AGREEMENT."
+
+Vanderbilt's methods and his duplicity in the disposition of this
+project were strikingly revealed in the court proceedings instituted
+by the State of Pennsylvania. It appeared from the testimony that he
+had made a "gentlemen's agreement" with the Reading Railroad, the
+bitterest competitor of the Pennsylvania Railroad, for a close
+alliance of interests. Vanderbilt owned eighty-two thousand shares of
+Reading stock, much of which he had obtained on this agreement.
+Strangely confiding in his word, the Reading management proceeded to
+expend large sums of money in building terminals at Harrisburg and
+elsewhere to make connections with his proposed South Pennsylvania
+Railroad.
+
+The Pennsylvania Railroad, however, set about retaliating in various
+effective ways. At this point, J. Pierpont Morgan--whose career we
+shall duly describe--stepped boldly in. Morgan was Vanderbilt's
+financial agent; and it was he, according to his own testimony on
+October 13, 1885, before the court examiner, who now suggested and
+made the arrangements between Vanderbilt and the Pennsylvania
+Railroad magnates, by which the South Pennsylvania Railroad was to
+become the property of the Pennsylvania system, and the Reading
+Railroad magnates were to be as thoroughly thrown over by as deft a
+stroke of treachery as had ever been put through in the business
+world.
+
+To their great astonishment, the Reading owners woke up one morning
+to find that Vanderbilt and his associates had completely betrayed
+them by disposing of a majority of the stock of the partly built
+South Pennsylvania line to the Pennsylvania Railroad system for
+$5,600,000 in three per cent. railroad debenture bonds. It is
+interesting to inquire who Vanderbilt's associates were in this
+transaction. They were John D. Rockefeller, William Rockefeller, D.
+O. Mills, Stephen B. Elkins, William C. Whitney and other founders of
+large fortunes. For once in his career, Vanderbilt met in the
+Pennsylvania Railroad a competitor powerful enough to force him to
+compromise.
+
+Elsewhere, Vanderbilt was much more successful. Out through the
+fertile wheat, corn and cattle sections of Wisconsin, Minnesota,
+Iowa, Dakota and Nebraska ran the Chicago and Northwestern Railroad,
+a line 4,000 miles long which had been built mostly by public funds
+and land grants. Its history was a succession of corrupt acts in
+legislatures and in Congress, and comprised the usual process of
+stock watering and exploitation.
+
+[Illustration: THE ORIGINAL VANDERBILT HOMESTEAD, Near New Dorp,
+Staten Island, N. Y.]
+
+[Illustration: PALACES BUILT BY WILLIAM H. VANDERBILT, And Resided in
+by Him and His Descendants.]
+
+By a series of manipulations ending in 1880, Vanderbilt secured a
+controlling interest in this railroad, so that he had a complete line
+from New York to Chicago, and thence far into the Northwest. During
+these years he also secured control of other railroad lines.
+
+
+HE EXPANDS IN SPLENDOR.
+
+It was at this time that he, in accord with the chrysalid tendency
+manifested by most other millionaires, discarded his long-followed
+sombre method of life, and invested himself with a gaudy
+magnificence. On Fifth avenue, at Fifty-first and Fifty-second
+streets, he built a spacious brown-stone mansion. In reality it was a
+union of two mansions; the southern part he planned for himself, the
+northern part for his two daughters. For a year and a half more than
+six hundred artisans were employed on the interior; sixty
+stoneworkers were imported from Europe. The capaciousness, the
+glitter and the cluttering of splendor in the interior were regarded
+as of unprecedented lavishness in the United States.
+
+All of the luxury overloading these mansions was, as was well known,
+the fruit of fraud piled upon fraud; it represented the spoliation,
+misery and degradation of the many; but none could deny that
+Vanderbilt was fully entitled to it by the laws of a society which
+decreed that its rulers should be those who could best use and abuse
+it. And rulers must ever live imperiously and impressively; it is not
+fitting that those who command the resources, labor and Government of
+a nation should issue their mandates from pinched and meager
+surroundings. Mere pseudo political rulers, such as governors and
+presidents, are expected to be satisfied with the plain, unornamental
+official residences provided by the people; thereby they keep up the
+appearance of that much-bespoken republican simplicity which is part
+of the mask of political formulas. Luckily for themselves, the
+financial and industrial rulers are bound by no circumscribing
+tradition; hence they have no set of buckramed rules to stick close
+to for fear of an indignant electorate.
+
+The same populace that glowers and mutters whenever its political
+officials show an inclination to pomp, regards it as perfectly
+natural that its financial and industrial rulers should body forth
+all of the most obtrusive evidences of grandeur. Those Vanderbilt
+twin palaces, still occupied by the Vanderbilt family, were
+appropriately built and fitted, and are more truly and specifically
+historic as the abode of Government than official mansions; for it is
+the magnates who have in these modern times been the real rulers of
+nations; it is they who have usually been able to decide who the
+political rulers should be; political parties have been simply their
+adjuncts; the halls of legislation and the courts their mouthpieces
+and registering bureaus. Theirs has been the power, under cover
+though it has lurked, of elevating or destroying public officials,
+and of approving or cancelling legislation. Why, indeed, should they
+not have their gilded palaces?
+
+
+A SUDDEN TRANSFORMATION.
+
+The President of the United States lived in the subdued simplicity of
+the White House. But William H. Vanderbilt ate in a great, lofty
+dining room, twenty-six by thirty-seven feet, wrought in Italian
+Renaissance, with a wainscot of golden-hued, delicately-carved
+English oak around all four sides, and a ceiling with richly-painted
+hunting-scene panels. When he entertained it was in a vast drawing-
+room, palatially equipped, its walls hung with flowing masses of pale
+red velvet, embroidered with foliage flowers and butterflies, and set
+with crystals and precious stones.
+
+It was his art gallery, however, which flattered him most. He knew
+nothing of art, and underneath his pretentions cared less, for he was
+a complete utilitarian; but it had become fashionable to have an
+elaborate art gallery, and he forthwith disbursed money right and
+left to assemble an aggregation of paintings.
+
+He gave orders to agents for their purchase with the same equanimity
+that he would contracts for railroad supplies. And, as a rule, the
+more generous in size the canvasses, the more satisfied he was that
+he was getting his money's worth; art to him meant buying by the
+square foot. Not a few of the paintings unloaded upon him were,
+despite their high-sounding reputations, essentially commonplace
+subjects, and flashy and hackneyed in execution; but he gloried in
+the celebrity that came from the high prices he was decoyed into
+paying for them. For one of Meissionier's paintings, "The Arrival at
+the Chateau," he paid $40,000, and on one of his visits to Paris he
+enriched Meissionier to the extent of $188,000 for seven paintings.
+Not until his corps of art advisers were satisfied that a painter
+became fashionably talked about, could Vanderbilt be prevailed upon
+to buy examples of his work. There was something intensely magical in
+the ease and cheapness with which he acquired the reputation of being
+a "connoisseur of art." Neither knowledge nor appreciation were
+required; with the expenditure of a few hundred thousand dollars he
+instantaneously transformed himself from a heavy-witted, uncultured
+money hoarder into the character of a surpassing "judge and patron of
+art." And his pretensions were seriously accepted by the uninformed,
+absorbing their opinions from the newspapers.
+
+
+"THE PUBLIC BE DAMNED."
+
+If he had discreetly comported himself in other respects he might
+have passed tolerably well as an extremely public-spirited and
+philanthropic man. After every great fraud that he put through he
+would usually throw out to the public some ostentatious gift or
+donation. This would furnish a new ground to the sycophantic chorus
+for extolling his fine qualities. But he happened to inherit his
+father's irascibility and extreme contempt for the public whom he
+exploited. Unfortunately for him, he let out on one memorable
+occasion his real sentiments. Asked by a reporter why he did not
+consider public convenience in the running of his trains, he blurted
+out, "The public be damned!"
+
+It was assuredly a superfluous question and answer; but expressed so
+sententiously, and published, as it was, throughout the length and
+breadth of the land, it excited deep popular resentment. He was made
+the target for general denunciation and execration, although
+unreasonably so, for he had but given candid and succinct utterance
+to the actuating principle of the whole capitalist class. The moral
+of this incident impressed itself sharply upon the minds of the
+masterly rich, and to this day has greatly contributed to the politic
+manner of their exterior conduct. They learned that however in
+private they might safely sneer at the mass of the people as created
+for their manipulation and enrichment, they must not declare so
+publicly. Far wiser is it, they have come to understand, to confine
+spoliation to action, while in outward speech affirming the most
+mellifluous and touching professions of solicitude for public
+interests.
+
+
+ADDS $100,000,000 IN SEVEN YEARS.
+
+But William H. Vanderbilt was little affected by this outburst of
+public rage. He could well afford to smile cynically at it, so long
+as no definite move was taken to interfere with his privileges, power
+and possessions. Since his father's death he had added fully
+$100,000,000 to his wealth, all within a short period. It had taken
+Commodore Vanderbilt more than thirty years to establish the fortune
+of $105,000,000 he left. With a greater population and greater
+resources to prey upon, William H. Vanderbilt almost doubled the
+amount in seven years. In January, 1883, he confided to a friend that
+he was worth $194,000,000. "I am the richest man in the world," he
+went on. "In England the Duke of Westminster is said to be worth
+$200,000,000, but it is mostly in land and houses and does not pay
+two per cent." [Footnote: Related in the New York "Times," issue of
+December 9, 1885.] In the same breath that he boasted of his wealth
+he would bewail the ill-health condemning him to be a victim of
+insomnia and indigestion.
+
+Having a clear income of $10,350,000 a year, he kept his ordinary
+expenses down to $200,000 a year. Whatever an air of indifference he
+would assume in his grandee role of "art collector," yet in most
+other matters he was inveterately closefisted. He had a delusion that
+"everybody in the world was ready to take advantage of him," and he
+regarded "men and women, as a rule, as a pretty bad lot." [Footnote:
+"The Vanderbilts": 127.] This incident--one of many similar incidents
+narrated by Croffut--reveals his microscopic vigilance in detecting
+impositions: When in active control of affairs at the office he
+followed the unwholesome habit of eating the midday lunch at his
+desk, the waiter bringing it in from a neighboring restaurant.
+
+He paid his bill for this weekly, and he always scrutinized the items
+with proper care. "Was I here last Thursday?" he asked of a clerk at
+an adjoining desk.
+
+"No, Mr. Vanderbilt; you stayed at home that day."
+
+"So I thought," he said, and struck that day from the bill. Another
+time he would exclaim, sotto voce, "I didn't order coffee last
+Tuesday," and that item would vanish.
+
+Up to the very last second of his life his mind was filled with a
+whirl of business schemes; it was while discussing railroad plans
+with Robert Garrett in his mansion, on December 8, 1885, that he
+suddenly shot forward from his chair and fell apoplectically to the
+floor, and in a twinkling was dead. Servants ran to and fro
+excitedly; messengers were dispatched to summon his sons; telegrams
+flashed the intelligence far and wide.
+
+The passing away of the greatest of men could not have received a
+tithe of the excitement and attention caused by William H.
+Vanderbilt's death. The newspaper offices hotly issued page after
+page of description, not without sufficient reason. For he, although
+untitled and vested with no official power, was in actuality an
+autocrat; dictatorship by money bags was an established fact; and
+while the man died, his corporate wealth, the real director and
+center, to a large extent, of government functions, survived
+unimpaired.
+
+He had abundantly proved his autocracy. Law after law had he
+violated; like his father he had corrupted and intimidated, had
+bought laws, ignored such as were unsuited to his interests, and had
+decreed his own rules and codes. Progressively bolder had the money
+kings become in coming out into the open in the directing of
+Government. Long had they prudently skulked behind forms, devices and
+shams; they had operated secretly through tools in office, while
+virtuously disclaiming any insidious connection with politics. But no
+observer took this pretence seriously. James Bryce, fresh from
+England, delving into the complexities and incongruities of American
+politics at about this time, wrote that "these railway kings are
+among the greatest men, perhaps I may say, the greatest men in
+America," which term, "greatest," was a ludicrously reverent way of
+describing their qualities. "They have power," he goes on in the same
+work, "more power--that is, more opportunity to make their will
+prevail, than perhaps any one in political life except the President
+or the Speaker, who, after all, hold theirs only for four years and
+two years, while the railroad monarch holds his for life." [Footnote:
+"The American Commonwealth." First Ed.: 515.] Bryce was not well
+enough acquainted with the windings and depths of American political
+workings to know that the money kings had more power than President
+or Speaker, not nominally, but essentially. He further relates how
+when a railroad magnate traveled, his journey was like a royal
+progress; Governors of States and Territories bowed before him;
+Legislatures received him in solemn session; cities and towns sought
+to propitiate him, for had he not the means of making or marring a
+city's fortunes? "You cannot turn in any direction in American
+politics," wrote Richard T. Ely a little later, "without discovering
+the railway power. It is the power behind the throne. It is a correct
+popular instinct which designates the leading men in the railways,
+railroad magnates or kings. ... Its power ramifies in every
+direction, its roots reaching counting rooms, editorial sanctums,
+schools and churches which it supports with a part of its revenues,
+as well as courts and Legislatures." ... [Footnote: "The
+Independent," issue of August 28, 1890.]
+
+
+HIS DEATH A NOTABLE EVENT.
+
+Vanderbilt's death, as that of one of the real monarchs of the day,
+was an event of transcendent importance, and was treated so. The
+vocabulary was ransacked to find adjectives glowing enough to
+describe his enterprise, foresight, sagacity and integrity. Much
+elaborated upon was the fiction that he had increased his fortune by
+honest, legitimate means--a fiction still disseminated by those
+shallow or mercenary writers whose trade is to spread orthodox belief
+in existing conditions. The underlying facts of his career and
+methods were purposely suppressed, and a nauseating sort of panegyric
+substituted. Who did not know that he had bribed Legislature after
+Legislature, and had constantly resorted to conspiracy and fraud? Not
+one of his eulogists was innocent of this knowledge; the record of it
+was too public and palpable to justify doubts of its truth. The
+extent of his possessions and the size of his fortune aroused
+wonderment, but no effort was made to contrast the immense wealth
+bequeathed by one man with the dire poverty on every hand, nor to
+connect those two conditions.
+
+At the very time his wealth was being inventoried at $200,000,000,
+not less than a million wage earners were out of employment,
+[Footnote: "It is probably true," said Carroll D. Wright in the
+United States Labor Report for 1886, "that this total (in round
+numbers 1,000,000) as representing the unemployed at any one time in
+the United States, is fairly representative."] while the millions at
+work received the scantiest wages. Nearly three millions of people
+had been completely pauperized, and, in one way or another, had to be
+supported at public expense. Once in a rare while, some perceptive
+and unshackled public official might pierce the sophistries of the
+day and reveal the cause of this widespread poverty, as Ira Steward
+did in the fourth annual report of the Massachusetts Bureau of
+Statistics of Labor for 1873.
+
+"It is the enormous profits," he pointedly wrote, "made directly upon
+the labor of the wage classes, and indirectly through the results of
+their labor, that, first, keeps them poor, and, second, furnishes the
+capital that is finally loaned back to them again" at high rates of
+interest. Unquestionably sound and true was this explanation, yet of
+what avail was it if the causes of their poverty were withheld from
+the active knowledge of the mass of the wage workers? It was the
+special business of the newspapers, the magazines, the pulpit and the
+politicians to ignore, suppress or twist every particle of
+information that might enlighten or arouse the mass of people; if
+these agencies were so obtuse or recalcitrant as not to know their
+expected place and duty at critical times, they were quickly reminded
+of them by the propertied classes. To any newspaper owner, clergyman
+or politician showing a tendency to radicalism, the punishment came
+quickly. The newspaper owner was deprived of advertisements and
+accommodations, the clergyman was insidiously hounded out of his
+pulpit by his own church associations, the funds of which came from
+men of wealth, and the politician was ridiculed and was summarily
+retired to private life by corrupt means. As for genuinely honest
+administrative officials (as distinguished from the _apparently_
+honest) who exposed prevalent conditions and sought to remedy them in
+their particular departments, they were eventually got rid of by a
+similar campaign of calumny and corrupt influences.
+
+
+HIS FRAUDS IN EVADING TAXES.
+
+As in the larger sense all criticism of conditions was systematically
+smothered, so were details of the methods of the rich carefully
+obscured or altogether passed by in silence. At Vanderbilt's death
+the newspapers laved in gorgeous descriptions of his mansion. Yet
+apart from the proceeds of his great frauds, the amounts out of which
+he had cheated the city and State in taxation were alone much more
+than enough to have paid for his splendor of living. Like the Astors,
+the Goelets, Marshall Field and every other millionaire without
+exception, he continuously defrauded in taxes.
+
+We have seen how the Vanderbilts seized hold of tens of millions of
+dollars of bonds by fraud. Certain of their railroad stocks were
+exempted from individual taxation, but railroad bonds ranked as
+taxable personal property. Year after year William H. Vanderbilt had
+perjured himself in swearing that his personal property did not
+exceed $500,000. On more than this amount he would not pay. When at
+his death his will revealed to the public the proportions of his
+estate, the New York City Commissioners of Assessments and Taxes made
+an apparent effort to collect some of the millions of dollars out of
+which he had cheated the city. It was now that the obsequious and
+time-serving Depew, grown gray and wrinkled in the retainership of
+the Vanderbilt generations, came forward with this threat: "He
+informed us," testified Michael Coleman, president of the commission,
+"that if we attempted to press too hard he would take proceedings by
+which most of the securities would be placed beyond our reach so that
+we could not tax them. The Vanderbilt family could convert everything
+they had into non-taxable securities, such as New York Central,
+Government and city bonds, Delaware and Lackawanna, and Delaware and
+Western Railroad stocks, and pay not a dollar provided they wished to
+do so." [Footnote: The New York Senate Committee on Cities, 1890,
+iii: 2355-2356.]
+
+The Vanderbilt estate compromised by paying the city a mere part of
+the sum owed. It succeeded in keeping the greatest part of its
+possessions immune from taxation, in doing which it but did what the
+whole of the large propertied class was doing, as was disclosed in
+further detailed testimony before the New York Senate Committee on
+Cities in 1890.
+
+
+HIS WILL TRANSMITS $200,000,000.
+
+Unlike his father, William H. Vanderbilt did not bequeath the major
+portion of his fortune to one son. He left $50,000,000 equally to
+each of his two sons, Cornelius and William K. Vanderbilt.
+Supplementing the fortunes they already had, these legacies swelled
+their individual fortunes to approximately $100,000,000 each--about
+the same amount as their father had himself inherited. The remaining
+$100,000,000 was thus disposed of in William H. Vanderbilt's will:
+$40,000,000, in railroad and other securities, was set apart as a
+trust fund, the income of which was to be apportioned equally among
+each of his eight children. This provided them each with an annual
+income of $500,000. In turn, the principal was to descend to their
+children, as they should direct by will. Another $40,000,000 was
+shared outright among his eight children. The remaining $20,000,000
+was variously divided: the greater part to his widow; $2,000,000 as
+an additional gift to Cornelius; $1,000,000 to a favorite grandson;
+sundry items to other relatives and friends, and about $1,000,000 to
+charitable and public institutions.
+
+He was buried in a mausoleum costing $300,000, which he himself had
+ordered to be built at New Dorp, Staten Island; and there to-day his
+ashes lie, splendidly interred, while millions of the living
+plundered and disinherited are suffered to live in the deadly
+congestion of miserable habitations.
+
+
+
+
+CHAPTER VII
+
+THE VANDERBILT FORTUNE IN THE PRESENT GENERATION
+
+
+With the demise of William H. Vanderbilt the Vanderbilt fortune
+ceased being a one-man factor. Although apportioned among the eight
+children, the two who inherited by far the greater part of it--
+Cornelius and William K. Vanderbilt--were its rulers paramount. To
+them descended the sway of the extensive railroad systems
+appropriated by their grandfather and father, with all of the allied
+and collateral properties. Both of these heirs had been put through a
+punctilious course of training in the management of railroad affairs;
+all of the subtle arts and intricacies of finance, and the grand
+tactical and strategic strokes of railroad manipulation, had been
+drilled into them with extraordinary care.
+
+Their first move upon coming into their inheritance was to surround
+themselves with the magnificence of imposing residences, as befitted
+their state and estate. A signatory stroke of the pen was the only
+exertion required of them; thereupon architects and a host of
+artisans yielded service and built palaces for them, for the one at
+Fifth avenue and Fifty-second street, for the other at Fifth avenue
+and Fifty-seventh street.
+
+Millions were spent with prodigal lavishness. On his Fifth avenue
+mansion alone, Cornelius expended $5,000,000. To get the space for
+three beds of blossoms and a few square yards of turf, a brownstone
+house adjoining his mansion was torn down, and the garden created at
+an expense of $400,000. George, a brother of Cornelius and of William
+K. Vanderbilt, and a man of retiring disposition, spent $6,000,000 in
+building a palatial home in the heart of the North Carolina
+mountains. For three years three hundred stonemasons were kept busy;
+and he gradually added land to his surrounding estate until it
+embraced one hundred and eighty square miles. His game preserves were
+enlarged until they covered 20,000 acres. So, within thirty years
+from the time their grandfather, Commodore Vanderbilt, was extorting
+his original millions by blackmailing, did they live like princes,
+and in greater luxury and power than perhaps any of the titular
+princes of ancient or modern days. But the splendor of these abodes
+was intended merely for partial use. At their command spacious,
+majestic palaces arose at Newport, whither in the torrid season some
+of the Vanderbilts transferred their august seat of power and
+pleasure.
+
+Hardly had they settled themselves down in the vested security of
+their great fortunes when an ominous situation presented itself to
+shake the entire propertied class into a violent state of uneasiness.
+Hitherto the main antagonistic movement perturbing the magnates was
+that of the obstreperous and still powerful middle class. Dazed and
+enraged at the certain prospect of their complete subjugation and
+eventual annihilation, these small capitalists had clamored for laws
+restricting the power of the great capitalists. Some of their demands
+were constantly being enacted into law, without, however, the
+expected results.
+
+
+THE GREAT LABOR MOVEMENT OF 1886
+
+Now, to the intense alarm of all sections of the capitalist class, a
+very different quality of movement reared itself upward from the
+deeps of the social formation. [Footnote: It may be asked why an
+extended description of this movement is interposed here. Because,
+inasmuch as it is a part of the plan of this work to present a
+constant succession of contrasts, this is, perhaps, as appropriate a
+place as any to give an account of the highly important labor
+movement of 1886. Of course, it will be understood that this movement
+was not the result of any one capitalist fortune or process, but was
+a general revolt to compel all forms of capitalist control to concede
+better conditions to the workers.]
+
+This time it was the laboring masses preparing for the most vigorous
+and comprehensive attack that they had ever made upon capitalism's
+intrenchments. Long exploited, oppressed and betrayed, starved or
+clubbed into intervals of apathy or submission, they were again in
+motion, moving forward with a set deliberation and determination
+which disconcerted the capitalist class. No mere local conflict of
+class interests was it on this occasion, but a general cohesive
+revolt of the workers against some of the conditions and laws under
+which they had to labor.
+
+In 1884 the Federation of Trades and Labor Unions of the United
+States and Canada had issued a manifesto calling upon all trades to
+unite in the demand for an eight-hour workday. The date for a general
+strike was finally fixed for May 1, 1886. The year 1886, therefore,
+was one of general agitation throughout the United States. With
+rapidity and enthusiasm the movement spread. Presently it took on a
+radical character. Realizing it to be at basis the first national
+awakening of the proletariat, progressive men and women of every
+shade of opinion hastened forward to support it and direct it into
+one of opposition, not merely to a few of the evils of wage slavery,
+but to what they considered the fundamental cause itself--the
+capitalist system.
+
+The propertied classes were not deceived. They knew that while this
+labor movement nominally confined itself to one for a shorter
+workday, yet its impetus was such that it contained the fullest
+potentialities for developing into a mighty uprising against the very
+system by which they were enabled to enrich themselves and enslave
+the masses.
+
+The moment this fact was discerned, both great and small capitalists
+instinctively suspended hostilities. They tacitly agreed to hold
+their bitter warfare for supremacy in abeyance, and unite in the face
+of their common danger. The triangular conflict between the large and
+small capitalists and the trades unions now resolved into a duel
+between the propertied classes of all descriptions on the one hand,
+and, on the other, the workingmen's organizations. The Farmers'
+Alliance, essentially a middle-class movement of the employing
+farmers in the South and West, was counted upon as aligned with the
+propertied classes. On the part of the capitalists there was no unity
+of organization in the sense of selected leaders or committees. It
+was not necessary. A stronger bond than that of formal organization
+drove them into acting in conscious unison--namely, the immediate
+peril involved to their property interests. Apprehension soon gave
+way to grim decision. This formidable labor movement had to be broken
+and dispersed at any cost.
+
+But how was the work of destruction to be done? This was the
+predicament. Vested wealth could succeed in bribing a labor leader
+here and there; but the movement had bounded far beyond the elemental
+stage, and had become a glowing agitation which no traitor or set of
+traitors could have stopped.
+
+One effective way of discrediting and suppressing it there was; the
+ancient one of virtually outlawing it, and throwing against it the
+whole brute force of Government. The task of putting it down was
+preëminently one for the police, army and judiciary. They had been
+used to stifle many another protest of the workers; why not this? As
+the great labor movement rolled on, enlisting the ardent attachment
+of the masses, denouncing the injustices, corruption and robberies of
+the existing industrial system, the propertied classes more acutely
+understood that they must hasten to stamp it out by whatever means.
+The municipal and State governments and the National Government,
+completely representing their interests and ideas, and dominated by
+them, stood ready to use force. But there had to be some kind of
+pretext. The hosts of labor were acting peacefully and with
+remarkable self control and discipline.
+
+       *       *       *       *       *       *       *
+
+THE PROPERTIED CLASSES STRIKE BACK.
+
+The propitious occasion soon came. It was in Chicago that the blow
+was struck which succeeded in discrediting the cause of the workers,
+stayed the progress of their movement, and covered it with a
+prejudice and an odium lasting for years. There, in that maddening
+bedlam, called a city, the acknowledged inferno of industrialism, the
+agitation was tensest. With its brutalities, cruelties, corruptions
+and industrial carnage, its hideous contrasts of dissolute riches and
+woe-begone poverty, its arrogant wealth lashing the working
+population lower and lower into squalor, pauperism and misery,
+Chicago was overripe for any movement seeking to elevate conditions.
+
+In the first months of 1886, strike followed strike throughout the
+United States for an eight-hour day. At McCormick's reaper works in
+Chicago [Footnote: The McCormick fortune was the outgrowth, to a
+large extent, of a variety of frauds and corruptions. Later on in
+this work, the facts are given as to how Cyrus H. McCormick, the
+founder of the fortune, bribed Congress, in 1854, to give him a time
+extension of his patent rights.] a prolonged strike of many months
+began in February. Determined not only to refuse shorter hours, but
+to force his twelve hundred wage workers to desert labor unions,
+McCormick drove them from his factory, hired armed mercenaries,
+called Pinkerton detectives, and substituted in the place of the
+union workers those despised irresponsibles called "scabs"--
+signifying laborers willing to help defeat the battles of organized
+labor, and, if the unions won, share in the benefits without
+incurring any of the responsibilities, risks or struggles. On May 1,
+1886, forty thousand men and women in Chicago went on strike for an
+eight-hour day. Thus far, the aim of inciting violence on the part of
+the strikers had completely failed everywhere.
+
+The Knights of Labor were conducting their strikes with a coolness,
+method and sober sense of order, giving no opportunity for the
+exercise of force. On May 2, a great demonstration of the McCormick
+workers was held near that company's factories to protest against the
+employment of armed Pinkertons. The Pinkerton detective bureau was a
+private establishment, founded during the Civil War; in the ensuing
+contests between labor and capital it was alleged to have made a
+profitable business of supplying spies and armed men to capitalists
+under the pretense of safeguarding property. These armed bands really
+constituted private armies; recruited often from the most debased and
+worthless part of the population, as well as from the needy and
+shifty, they were, it was charged, composed largely of men who would
+perjure themselves, fabricate evidence, provoke trouble, and
+slaughter without scruple for pay. Some, as was well established,
+were ex-convicts, others thugs, and still others were driven to the
+ignoble employment by necessity. [Footnote: The prevailing view of
+the working class toward the Pinkerton detectives was thus expressed
+at the time in a chapter on the mine workers by John McBride, one of
+the trade union leaders: "They have awakened," he wrote, "the hatred
+and detestation of the workingmen of the United States; and this
+hatred is due, not only to the fact that they protect the men who are
+stealing the bread from the mouths of the families of strikers, but
+to the fact that as a class they seem rather to invite trouble than
+to allay it.... They are employed to terrorize the workingmen, and to
+create in the minds of the public the idea that the miners are a
+dangerous class of citizens that have to be kept down by armed force.
+These men had an interest in keeping up and creating troubles which
+gave employers opportunity to demand protection from the State
+militia at the expense of the State, and which the State has too
+readily granted."--"The Labor Movement": 264-265.] During the course
+of the meeting in the afternoon the factory bell rung, and the
+"scabs" were seen leaving. Some boys in the audience began throwing
+stones and there was hooting. Fully aware of the combustible accounts
+wanted by their offices, the reporters immediately telephoned
+exaggerated, inflammatory stories of a riot being under way; the
+police on the spot likewise notified headquarters. [Footnote: In a
+statement published in the Chicago "Daily News," issue of May 10,
+1889, Captain Ebersold, chief of police in 1886, charged that Captain
+Schaack, who had been the police official most active in proceeding
+against the labor leaders and causing them to be executed and
+imprisoned, had deliberately set about concocting "anarchist"
+conspiracies in order to get the credit for discovering and breaking
+them up.] Police in large numbers soon arrived; the boys kept
+throwing stones; and suddenly, without warning, the police drew their
+revolvers and indiscriminately opened a general fire upon the men,
+women and children in the crowd, killing four and wounding many.
+Terror stricken and in horror the crowd fled.
+
+There was a group of radical spirits in Chicago, popularly branded as
+anarchists, but in reality men of advanced ideas who, while differing
+from one another in economic views, agreed in denouncing the existing
+system as the prolific cause of bitter wrongs and rooted injustices.
+Sincere, self-sacrificing, intellectual, outspoken, absolutely
+devoted to their convictions, burning with compassion and noble
+ideals for suffering humanity, they had stepped forward and had
+greatly assisted in arousing the militant spirit in the working class
+in Chicago. At all of the meetings they had spoken with an ardor and
+ability that put them in the front ranks of the proletarian leaders;
+and in two newspapers published by them, the "Alarm," in English, and
+the "Arbeiter Zeitung," in German, they unceasingly advocated the
+interests of the working class. These men were Albert R. Parsons, a
+printer, editor of the "Alarm;" August Spies, an upholsterer by
+trade, and editor of the "Arbeiter Zeitung;" Adolph Fischer, a
+printer; Louis Lingg, a carpenter; Samuel Fielden, the son of a
+British factory owner; George Engel, a painter; Oscar Neebe, a well-
+to-do business man, and Michael Schwab, a bookbinder. All of them
+were more or less deep students of economics and sociology; they had
+become convinced that the fundamental cause of the prevalent
+inequalities of opportunity and of the widespread misery was the
+capitalist system itself. Hence they opposed it uncompromisingly.
+[Footnote: The utterances of these leaders revealed the reasons why
+they were so greatly feared by the capitalist class. Fischer, for
+instance, said: "I perceive that the diligent, never-resting human
+working bees, who create all wealth and fill the magazines with
+provisions, fuel and clothing, enjoy only a minor part of this
+product, while the drones, the idlers, keep the warehouses locked up,
+and revel in luxury and voluptuousness." Engel said: "The history of
+all times teaches us that the oppressing always maintain their
+tyrannies by force and violence. Some day the war will break out;
+therefore all workingmen should unite and prepare for the last war,
+the outcome of which will be the end forever of all war, and bring
+peace and happiness to mankind."]
+
+The newspapers, voicing the interests and demands of the intrenched
+classes, denounced these radicals with a sinister emphasis as
+destructionists. But it was not ignorance which led them to do this;
+it was intended as a deliberate poisoning and inflaming of public
+opinion. Themselves bribing, corrupting, intimidating, violating laws
+and slaying for profit everywhere, the propertied classes ever
+assumed, as has so often been pointed out, the pose of being the
+staunch conservers of law and order. To fasten upon the advanced
+leaders of the labor movement the stigma of being sowers of disorder,
+and then judicially get rid of them, and crush the spirit and
+movement of the aroused proletariat--this was the plan determined
+upon. Labor leaders who confined their programme to the industrial
+arena were not feared so much; but Parsons, Spies and their comrades
+were not only pointing out to the masses truths extremely unpalatable
+to the capitalists, but were urging, although in a crude way, a
+definite political movement to overthrow capitalism. With the finest
+perception, fully alert to their danger, the propertied classes were
+intent upon exterminating this portentous movement by striking down
+its leaders and terrifying their followers.
+
+
+THE HAYMARKET TRAGEDY.
+
+Fired with indignation at the slaughter at the McCormick meeting,
+Spies and others of his group issued a call for a meeting on the
+night of May 4, at the Haymarket, to protest against the police
+assaults. Spies opened the meeting, and was followed by Fielden.
+Observers agreed that the meeting was proceeding in perfect quiet, so
+quietly that the Mayor of Chicago, who was present to suppress it if
+necessary, went home--when suddenly one hundred and eighty policemen,
+with arms in readiness, appeared and peremptorily ordered the meeting
+to disperse. It seems that without pausing for a reply they
+immediately charged, and began clubbing and mauling the few hundred
+persons present. At this juncture a small bomb, thrown by someone,
+exploded in the ranks of the police, felling sixty and killing one.
+The police instantly began firing into the crowd.
+
+No one has ever been able to find out definitely who threw the bomb.
+Suspicions were not lacking that it was done by a mercenary of
+corporate wealth. At Pittsburg, in 1877, as we have seen, the
+Pennsylvania railroad hirelings deliberately destroyed property and
+incited riot in order to charge the strikers with crime. In the coal
+mining regions of Pennsylvania, subsidized detectives had provoked
+trouble during the strikes, and by means of bogus evidence and packed
+juries had hung some labor leaders and imprisoned others.
+
+The hurling of the bomb, whether done by a secret emissary, or by a
+sympathizer with labor, proved the lever which the propertied classes
+had been feverishly awaiting. Spies, Fielding and their comrades were
+at once cast into jail; the newspapers invented wild yarns of
+conspiracies and midnight plots, and raucously demanded the hanging
+of the leaders. The trifling formality of waiting until their guilt
+had been proved was not considered. The most significant event,
+however, was the secret meeting of about three hundred leading
+American capitalists to plan the suppression of "anarchy." Very
+horrified they professed themselves to be at violent outrages and
+destruction of property and life. Their views were given wide
+circulation and commendation; they were the finest types of
+commercial success and prestige. They were the owners of railroads
+that slaughtered thousands of human beings every year, because of the
+demands of profit; of factories which sucked the very life out of
+their toilers, and which filled the hospitals, slums, brothels and
+graveyards with an ever-increasing assemblage; every man in that
+conclave, as a beneficiary of the existing system, had drained his
+fortune from the sweat, sorrow, miseries and death agonies of a
+multitude of workers. [Footnote: This seems a very sweeping and
+extraordinary prejudicial statement. It should be remembered,
+however, that these capitalists, both individually and collectively,
+had contested the passage of every proposed law, the aim of which was
+to improve conditions for the workers on the railroads and in mines
+and factories. Time after time they succeeded in defeating or
+ignoring this legislation. Although the number of workers killed or
+injured in accidents every year was enormous, and although the number
+slain by diseases contracted in workshops or dwellings was even
+greater, the capitalists insisted that the law had no right to
+interfere with the conduct of their "private business."] These were
+the men who came forth to form the "Citizens' Association," and
+within a few hours subscribed $100,000 as a fighting fund.
+
+
+JUDICIAL MURDER OF LABOR'S LEADERS.
+
+The details of the trial will not be gone into here. The trial itself
+is now everywhere recognized as having been a tragic farce. The jury,
+it is clear, was purposely drawn from the employing class, or their
+dependents; of a thousand talesmen summoned, only five or six
+belonged to the working class. The malignant class nature of the
+trial was revealed by the questions asked of the talesmen; nearly all
+declared that they had a prejudice against Socialists, Anarchists and
+Communists. Soon the blindest could see that the conviction of the
+group was determined upon in advance, and that it was but the visible
+evidence of a huge conspiracy to terrorize the whole working class.
+
+The theory upon which the group was prosecuted was that they were
+actively engaged in a conspiracy against the existing authorities,
+and that they advocated violence and bloodshed. No jurist would now
+presume to contend that the slightest evidence was adduced to prove
+this. But all were rushed to conviction: Spies, Parsons, Fischer, and
+Engel were hanged on November 11, 1887, after fruitless appeals to
+the higher courts; Lingg committed suicide in prison, and Fielden,
+Neebe and Schwab were sentenced to long terms in prison. The four
+executed leaders met their death with the heroic calmness of
+martyrdom. "Let the voice of the people be heard!" were Parsons' last
+words. Fielden, Neebe and Schwab might have rotted away in prison,
+were it not that one of the noblest-minded and most maligned men of
+his time, in the person of John P. Altgeld, was Governor of Illinois
+in 1893. Governor Altgeld pardoned them on these grounds, which he
+undoubtedly proved in an exhaustive review: (1) The jury was a packed
+one selected to convict; (2) the jurors were prejudiced; (3) no guilt
+was proved; (4) the State's attorney had admitted no case against
+Neebe, yet he had been imprisoned; (5)the trial judge (Gary) was
+either so prejudiced or subservient to class influence that he did
+not or could not give a fair trial. Even many of those who denounced
+Altgeld for this action, now admit that his grounds were justified.
+
+
+THE LABOR UPRISING IN NEW YORK.
+
+In the meanwhile, between the time of the Haymarket episode and the
+hanging and imprisonment of the Chicago group, the labor movement in
+New York City had assumed so strong a political form that the ruling
+class was seized with consternation. The Knights of Labor, then at
+the summit of organization and solidarity, were ripe for independent
+political action; the effects of the years of active propaganda
+carried on in their ranks by the Socialists and Single-Tax advocates
+now began to show fruit. At the critical time, when the labor unions
+were wavering in the decision as to whether they ought to strike out
+politically or not, the ruling class supplied the necessary vital
+impulsion. While in Chicago the courts were being used to condemn the
+labor leaders to death or prison, in the East they were used to
+paralyze the weapons of offense and defence by which the unions were
+able to carry on their industrial warfare.
+
+The conviction, in New York City, of certain members of a union for
+declaring a boycott, proved the one compelling force needed to mass
+all of the unions and radical societies and individuals into a mighty
+movement resulting in an independent labor party. To meet this
+exigency an effort was made by the politicians to buy off Henry
+George, the distinguished Single-Tax advocate, who was recognized as
+the leader of the labor party. But this flanking attempt at bribing
+an incorruptible man failed; the labor unions proceeded to nominate
+George for Mayor, and a campaign was begun of an ardor, vigor and
+enthusiasm such as had not been known since the Workingmen's party
+movement in 1829.
+
+The election was for local officers of the foremost city in the
+United States--a point of vantage worth contending for, since the
+moral effect of such a victory of the working class would be
+incalculable, even if short-lived. To the ruling classes the triumph
+of the labor unions, while restricted to one city, would unmistakably
+denote the glimmerings of the beginning of the end of their regime.
+Such rebellious movements are highly contagious; from the confines of
+one municipality they sweep on to other sections, stimulating action
+and inspiring emulation. The New York labor campaign of 1886 was an
+intrinsic part and result of the general labor movement throughout
+the United States. And it was the most significant manifestation of
+the onward march of the workers; elsewhere the labor unions had not
+gone beyond the stage of agitation and industrial warfare; but in New
+York, with the most acute perception of the real road it must
+traverse, the labor movement had plunged boldly into political
+action. It realized that it must get hold of the governmental powers.
+Its antagonists, the capitalists, had long had a rigid grip on them,
+and had used them almost wholly as they willed.
+
+But the capitalist class was even more doggedly determined upon
+retaining and intensifying those powers. Government was an essential
+requisite to its plans and development. The small capitalists
+bitterly fought the great; but both agreed that Government with its
+legislators, laws, precedents, and the habits of thought it created,
+must be capitalistic. Both saw in the uprising of labor a prospective
+overturning of conditions.
+
+From this identity of interest a singular concrete alliance resulted.
+The great capitalists, whom the middle-class had denounced as
+pirates, now became the decorous and orthodox "saviors of society,"
+with the small capitalists trailing behind their leadership, and
+shouting their praises as the upholders of law and the conservators
+of order. In Chicago the same men who had bribed legislators and
+common councils to give them public franchises, and who had hugely
+swindled and stolen under guise of law, had been the principals in
+calling for the execution and imprisonment of the group of labor
+leaders, and this they had decreed in the name of law. In New York
+City a pretext for dealing similarly with the labor leaders was
+entirely lacking, but another method was found effective in the
+subjugation and dispersion of the movement.
+
+
+CAPITALIST TRIUMPH BY FRAUD.
+
+This was the familiar one of corruption and fraud. It was a method in
+the exercise of which the capitalists as a class had proved
+themselves adepts; they now summoned to their aid all of the ignoble
+and subterranean devices of criminal politics.
+
+In the New York City election of 1886 three parties contested, the
+Labor party, Tammany Hall and the Republican party. Steeped in
+decades of the most loathsome corruption, Tammany Hall was chosen as
+the medium by which the Labor party was to be defrauded and effaced.
+Pretending to be the "champion of the people's rights," and boasting
+that it stood for democracy against aristocracy, Tammany Hall had
+long deceived the mass of the people to plunder them. It was a
+powerful, splendidly-organized body of mercenaries and selfseekers
+which, by trading on the principles of democracy, had been able to
+count on the partisan votes of a predominating element of the wage-
+working class. In reality, however, it was absolutely directed by a
+leader or "boss," who, with his confederates, made a regular traffic
+of selling legislation to the capitalists, on the one hand, and who,
+on the other, enriched themselves by a colossal system of blackmail.
+They sold immunity to pickpockets, confidence men and burglars,
+compelled the saloonkeepers to pay for protection, and even extorted
+from the wretched women of the street and brothels. This was the
+organization that the ruling class, with its fine assumptions of
+respectability, now depended upon to do its work of breaking up the
+political labor revolt.
+
+The candidate of Tammany Hall was the ultra-respectable Abram S.
+Hewitt, a millionaire capitalist. The Republican party nominated a
+verbose, pushful, self-glorifying young man, who, by a combination of
+fortuitous circumstances, later attained the position of President of
+the United States. This was Theodore Roosevelt, the scion of a
+moderately rich New York family, and a remarkable character whose
+pugnacious disposition, indifference to political conventionalities,
+capacity for exhortation, and bold political shrewdness were mistaken
+for greatness of personality. The phenomenal success to which he
+subsequently rose was characteristic of the prevailing turgidity and
+confusion of the popular mind. Both Hewitt and Roosevelt were, of
+course, acceptable to the capitalist class. As, however, New York was
+normally a city of Democratic politics, and as Hewitt stood the
+greater chance of winning, the support of those opposed to the labor
+movement was concentrated upon him.
+
+Intrenched respectability, for the most part, came forth to join
+sanctimony with Tammany scoundrelism. It was an edifying union, yet
+did not comprise all of the forces linked in that historic coalition.
+The Church, as an institution, cast into it the whole weight of its
+influence and power. Soaked with the materialist spirit while
+dogmatically preaching the spiritual, dominated and pervaded by
+capitalist influences, the Church, of all creeds and denominations,
+lost no time in subtly aligning itself in its expected place. And woe
+to the minister or priest who defied the attitude of his church!
+Father McGlynn, for example, was excommunicated by the Pope,
+ostensibly for heretical utterances, but in actuality for espousing
+the cause of the labor movement.
+
+Despite every legitimate argument coupled with venomous ridicule and
+coercive and corrupt influence that wealth, press and church could
+bring to bear, the labor unions stood solidly together. On election
+day groups of Tammany repeaters, composed of dissolutes, profligates,
+thugs and criminals, systematically, under directions from above,
+filled the ballot boxes with fraudulent votes. The same rich class
+that declaimed with such superior indignation against rule by the
+"mob" had poured in funds which were distributed by the politicians
+for these frauds. But the vote of the labor forces was so
+overwhelming, that even piles of fraudulent votes could not suffice
+to overcome it. One final resource was left. This was to count out
+Henry George by grossly tampering with the election returns and
+misrepresenting them. And this is precisely what was done, if the
+testimony of numerous eye-witnesses is to be believed. The Labor
+party, it is quite clear, was deliberately cheated out of an election
+won in the teeth of the severest and most corrupt opposition. This
+result it had to accept; the entire elaborate machinery of elections
+was in the full control of the Labor party's opponents; and had it
+instituted a contest in the courts, the Labor party would have found
+its efforts completely fruitless in the face of an adverse judiciary.
+
+
+THE LABOR PARTY EVAPORATES.
+
+By the end of the year 1887 the political phase of the labor movement
+had shrunk to insignificant proportions, and soon thereafter
+collapsed. The capitalist interests had followed up their onslaught
+in hanging and imprisoning some of the foremost leaders, and in
+corruption and fraud at the polls, by the repetition of other tactics
+that they had long so successfully used.
+
+Acting through the old political parties they further insured the
+disintegration of the Labor party by bribing a sufficient number of
+its influential men. This bribery took the form of giving them
+sinecurist offices under either Democratic or Republican local, State
+or National administrations. Many of the most conspicuous organizers
+of the labor movement were thus won over, by the proffer of well-
+paying political posts, to betray the cause in the furtherance of
+which they had shown such energy. Deprived of some of its leaders,
+deserted by others, the labor political movement sank into a state of
+disorganization, and finally reverted to its old servile position of
+dividing its vote between the two capitalist parties.
+
+From now one, for many years, the labor movement existed purely as an
+industrial one, disclaiming all connection with politics. Voting into
+power either of the old political parties, it then humbly begged a
+few crumbs of legislation from them, only to have a few sops thrown
+to it, or to receive contemptuous kicks and humiliations, and, if it
+grew too importunate or aggressive, insults backed with the strong
+might of judicial, police and military power.
+
+When it was jubilantly seen by the coalesced propertied classes that
+the much-dreaded labor movement had been thrust aside and shorn, they
+resumed their interrupted conflict.
+
+The small capitalist evinced a fierce energy in seeking to hinder in
+every possible way the development of the great. It was in these
+years that a multitude of middle-class laws were enacted both by
+Congress and by the State legislatures; the representatives of that
+class from the North and East joined with those of the Farmers'
+Alliance from the West and South. Laws were passed declaring
+combinations conspiracies in restraint of trade and prohibiting the
+granting of secret discriminative rates by the railroads. In 1889 no
+fewer than eighteen States passed anti-trust laws; five more followed
+the next year. Every one of these laws was apparently of the most
+explicit character, and carried with it drastic penal provisions.
+"Now," exulted the small capitalists in high spirits of elation, "we
+have the upper hand. We have laws enough to throttle the monopolists
+and preserve our righteous system of competition. They don't dare
+violate them, with the prospects of long terms in prison staring them
+in the face."
+
+
+THE SMALL CAPITALISTS' LOSING FIGHT.
+
+The great capitalists both dared and did. If specific statutes were
+against them, the impelling forces of economic development and the
+power of might were wholly on their side. The competitive system was
+already doomed; the middle class was too blind to realize that what
+seemed to be victory was the rattle of the slow death struggle. At
+first, the great capitalists made no attempt to have these laws
+altered or repealed. They adopted a slyer and more circuitous mode of
+warfare. They simply evaded them. As fast as one trust was dissolved
+by court decision, it nominally complied, as did, for instance, the
+Standard Oil Trust and the Sugar Trust, and then furtively caused
+itself to be reborn into a new combination so cunningly sheltered
+within the technicalities of the law that it was fairly safe from
+judicial overthrow.
+
+But the great capitalists were too wise to stake their existence upon
+the thin refuge of technicalities. With their huge funds they now
+systematically struck out to control the machinery of the two main
+political parties; they used the ponderous weight of their influence
+to secure the appointment of men favorable to them as Attorneys
+General of the United States, and of the States, and they carried on
+a definite plan of bringing about the appointment or election of
+judges upon whose decisions they could depend. The laws passed by the
+middle class remained ornamental encumbrances on the statute books;
+the great capitalists, although harassed continually by futile
+attacks, triumphantly swept forward, gradually in their consecutive
+progress strangling the middle class beyond resurrection.
+
+Such was the integral impotence of the warfare of the small against
+the great capitalists that, during this convulsive period, the
+existing magnates increased their wealth and power on every hand, and
+their ranks were increased by the accession of new members. From the
+chaos of middle-class industrial institutions, one trust after
+another sprang full-armed, until presently there was a whole array of
+them. The trust system had proved itself immensely superior in every
+respect to the competitive, and by its own superiority it was bound
+to supplant the other.
+
+Where William H. Vanderbilt had thought himself compelled to
+temporize with the middle class agitation by making a show of
+dividing the stock ownership of the New York Central Railroad, his
+sons Cornelius and William ignored or defied it. Utterly disdainful
+of the bitter feeling, especially in the West, against the
+consolidation of railroads in the hands of the powerful few, they
+tranquilly went ahead to gather more railroads in their ownership.
+The Cleveland, Cincinnati, Chicago and St. Louis Railroad (popularly
+dubbed the "Big Four") acquired by them in 1890 was one of these. It
+would be tiresome, however, to enter into a narrative of the complex,
+tortuous methods by which they possessed themselves of these
+railroads. By the beginning of the year 1893 the Vanderbilt system
+embraced at least 12,000 miles of railways, with a capitalized value
+of several hundred million dollars, and a total gross earning power
+of more than $60,000,000 a year. "All of the best railroad
+territory," says John Moody in his sketch entitled "The Romance of
+the Railways," "outside of New England, Pennsylvania and New Jersey
+was penetrated by the Vanderbilt lines, and no other railroad system
+in the country, with the single notable exception of the Pennsylvania
+Railroad, covered anything like the same amount of rich and settled
+territory, or reached so many towns and cities of importance. New
+York, Buffalo, Chicago, Cleveland, St. Louis, Cincinnati, Detroit,
+Indianapolis, Omaha--these were a few of the great marts which were
+embraced in the Vanderbilt preserves." So impregnably rich and
+powerful were the Vanderbilts, so profitable their railroads, and
+their command of resources, financial institutions and legislation so
+great, that the panic of 1893 instead of impairing their fortunes
+gave them extraordinary opportunities for getting hold of the
+properties of weaker railroads.
+
+It was now, acting jointly with other puissant interests, that they
+saw their chance to get control of a large part of the fabulously
+rich coal mines of Pennsylvania. These coal mines had originally been
+owned by separate companies or operators, each independent of the
+other. But by about the year 1867 the railroads penetrating the coal
+regions had conceived the plan of owning the mines themselves. Why
+continue to act as middlemen in transporting the coal? Why not vest
+in themselves the ownership of these vast areas of coal lands, and
+secure all the profits instead of those from merely handling the
+coal?
+
+The plan ingratiated itself as a capital one; it could be easily
+carried out with little expenditure. All that was necessary for the
+railroad to do was to burden down the operators with exorbitant
+charges, and hamper and beleaguer them in a variety of compressing
+ways. [Footnote: See testimony before the committee to investigate
+the Philadelphia and Reading Railroad Company, and the Philadelphia
+and Reading Coal and Iron Company, Pennsylvania Legislative Docs.
+1876, Vol. v, Doc. No. 2. This investigation fully revealed how the
+railroads detained the cars of the "independent" operators, and
+otherwise used oppressive methods.] As was proved in subsequent
+lawsuits, the railroads frequently declined to carry coal for this or
+that mine, on the pretext that they had no cars available. Every
+means was used to crush the independent operators and depreciate the
+selling value of their property. It was a campaign of ruination; in
+law it stood as criminal conspiracy; but the railroads persisted in
+it without any further molestation than prolix civil suits, and they
+finally forced a number of the well-nigh bankrupted independent
+operators to sell out to them for comparatively trifling sums.
+[Footnote: Spahr quotes an independent operator in 1900 as saying
+that the railroads charged the independents three times as much for
+handling hard coal as they charged for handling soft coal from the
+West--"America's Working People": 122-223.]
+
+By these methods such railroads as the Philadelphia and Reading, the
+Delaware, Lackawana and Western, the Central Railroad of New Jersey,
+the Lehigh Valley and others gradually succeeded, in the course of
+years, in extending an ownership over the coal mines. The more
+powerful independent operators struck back early at them by getting a
+constitutional provision passed in Pennsylvania, in 1873, prohibiting
+railroads from owning and operating coal mines. The railroads evaded
+this law with facility by an illegal system of leasing, and by
+organizing nominally separate and independent companies the stock of
+which, in reality, was owned by them.
+
+To the men who did the actual labor of working in the mines--the coal
+miners--this change of ownership was not regarded with alarm. Indeed,
+they at first cherished the pathetic hope that it might benefit their
+condition, which had been desperate and intolerable enough under the
+old company system. The small coal-owning capitalists, who had
+emitted such wailings at their own oppression by the railroads, had
+long relentlessly exploited their tens of thousands of workers. One
+abuse had been piled upon another. The miners were paid by the ton;
+the companies had fraudulently increased the size of the ton, so that
+the miners had to perform much more labor while wages remained
+stationary or were reduced.
+
+But one of the most serious grievances was that against what were
+called "company or truck stores." Ingenious contrivances for getting
+back the miserable wages paid out, these were company-owned
+merchandise stores in which the miners were compelled to buy their
+supplies. In many collieries the mine worker was not paid in money
+but was given an order on the company store, where he was forced to
+purchase inferior goods at exorbitant prices.
+
+To blast in the mines powder was necessary; the miner had to buy it
+at his own expense, and was charged $2.75 a keg, although its selling
+value was not more than $1.10 or 90 cents. In every direction the
+mine worker was defrauded and plundered. "Often," says John Mitchell,
+long the leader of the miners, and a compromiser whose career proves
+that he cannot be charged with any deep-seated antagonism to
+capitalist interests, "a man together with his children would work
+for months without receiving a dollar of money, and not infrequently
+he would find at the end of the month nothing in his envelope but a
+statement that his indebtedness to the company had increased so many
+dollars." [Footnote: "Organized Labor": 359. Mitchell's comments were
+fully supported by the vast mass of testimony taken by the United
+States Anthracite Coal Commission in 1902. Mitchell is, at this
+writing (1909), in the employ of the Civic Federation, an
+organization financed by capitalists. Its alleged purpose is to bring
+about "harmony" between capital and labor.] Mitchell adds that the
+Legislature of Pennsylvania passed anti-truck store laws, "but the
+operators who have always cried out loudest against illegal action by
+miners openly and unhesitatingly violated the act and subsequently
+evaded it by various devices." [Footnote: Ibid.] The wretched houses
+the miners occupied "also," says Mitchell, "served as a means of
+extortion, and, in other instances, as a weapon to be used against
+the miners." In case they complained or struck, the miners were
+evicted under the most cruel circumstances. Many other media of
+extortion were common. In the entire year the miners averaged only
+one hundred and ninety working days of ten hours each, and, of
+course, were paid for working time only. According to Spahr 350,000
+miners drudged for an average wage of $350 a year. [Footnote: "The
+Present Distribution of Wealth in the United States": 110-111.]
+
+
+SEIZING RAILROADS AND COAL MINES.
+
+This system of abject slavery was in full force when the railroads
+ousted many of the small operators, and largely by pressure of power
+took possession of the mines. In vain did the miners' unions implore
+the railroad magnates for redress of some kind. The magnates abruptly
+refused, and went on extending and intrenching their authority. The
+Vanderbilts manipulated themselves into being important factors in
+the Delaware and Hudson Railroad, and in the Delaware, Lackawana and
+Western Railroad, which had deviously obtained title to some of the
+richest coal deposits in Wyoming County, and they also became
+prominent in the directing of the Lehigh Valley Railroad.
+
+The most important coal-owning railroad, however, which they and
+other magnates coveted was the Philadelphia and Reading Railroad. At
+least one-half of the anthracite coal supply of Pennsylvania was
+owned or controlled by this railroad. The ownership of the Reading
+Railroad, with its subordinate lines, was the pivotal requisite
+towards getting a complete monopoly of the anthracite coal deposits.
+William H. Vanderbilt had acquired an interest in it years before,
+but the actual controlling ownership at this time was held by a group
+of Philadelphia capitalists of the second rank with their three
+hundred thousand shares.
+
+Unfortunately for this group, the Philadelphia and Reading Railroad
+was afflicted with a president, one Arthur A. McLeod, who was not
+only too recklessly ambitious, but who was temerarious enough to
+cross the path of the really powerful magnates. With immense
+confidence in his plans and in his ability to carry them out, he set
+out to monopolize the anthracite coal supply and to make the Reading
+Railroad a great trunk line. To perfect this monopoly he leased some
+coal-carrying railroads and made "a gentlemen's agreement" with
+others; and in line with his policy of raising the importance of the
+road, he borrowed large sums of money for the construction of new
+terminals and approaches and for equipment.
+
+Now, all of these plans interfered seriously with the aims and
+ambition of magnates far greater than he. These magnates quickly saw
+the stupendous possibilities of a monopoly of the coal supply--the
+hundreds of millions of dollars of profits it held out--and decided
+that it was precisely what they themselves should control and nobody
+else. Second, in his aim to have his own railroad connections with
+the rich manufacturing and heavily-populated New England districts,
+McLeod had arranged with various small railroads a complete line from
+the coal fields of Pennsylvania into the heart of New England. In
+doing this he overreached his mark. He was soon taught the folly of
+presuming to run counter to the interests of the big magnates.
+
+
+AND THE WAY IN WHICH IT WAS DONE.
+
+The two powers controlling the large railroads traversing most of the
+New England States were the Vanderbilts and J. Pierpont Morgan. The
+one owned the New York Central, the other dominated the New York, New
+Haven and Hartford Railroad. The Pennsylvania Railroad likewise had
+no intention of allowing such a powerful competitor in its own
+province. These magnates viewed with intense amazement the effrontery
+of what they regarded as an upstart interloper. Although they had
+been constantly fighting one another for supremacy, these three
+interests now made common cause.
+
+They adroitly prepared to crush McLeod and bankrupt the railroad of
+which he was the head. By this process they would accomplish three
+highly important objects; one the wresting of the Philadelphia and
+Reading Railroad into their own divisible ownership; second, the
+securing of their personal hold on the connecting railroads that
+McLeod had leased; and, finally, the obtaining of undisputed
+sovereignty over a great part of the anthracite coal mines. The
+warfare now began without those fanciful ceremonials, heralds or
+proclamations considered so necessary by Governments as a prelude to
+slaughter. These formalities are dispensed with by business
+combatants.
+
+First, the Morgan-Vanderbilt interest caused the publication of
+terrifying reports that grave legislation hostile to the coal
+combination was imminent. The price of Reading stock on the Stock
+Exchange immediately declined. Then, following up their advantage,
+this dual alliance inspired even more ruinous reports. The credit of
+the Philadelphia and Reading Railroad was represented as being in a
+very bad state. As the railroad had borrowed immense sums of money
+both to finance its coal combination and to build extensive terminals
+and other equipment, large payments to creditors were due from time
+to time. To pay these creditors the railroad had to borrow more; but
+when the credit of the railroad was assailed, it found that its
+sources of borrowing were suddenly shut off. The group of
+Philadelphia capitalists had already borrowed large sums of money,
+giving Reading shares as collateral. When the market price of the
+stock kept going down they were called upon to pay back their loans.
+Declining or unable to do so, their fifty thousand shares of pledged
+stock were sold. This sale still more depressed the price of Reading
+stock.
+
+In this group of Philadelphia capitalist were men who were reckoned
+as very astute business lights--George M. Pullman, Thomas Dolan, one
+of the street railway syndicate whose briberies of legislatures and
+common councils, and whose manipulation of street railways in
+Philadelphia and other cities were so notorious a scandal; John
+Wanamaker, combining piety and sharp business;--these were three of
+them. But they were no match for the much more powerful and wily
+Vanderbilt-Morgan forces. They were compelled under resistless
+pressure to throw over their Reading stock at a great loss to
+themselves. Most of it was promptly bought up by J. P. Morgan and
+Company and the Vanderbilts, who then leisurely arranged a division
+of the spoils between themselves.
+
+This transaction (strict interpreters of the law would have styled it
+a conspiracy) opened a facile way for a number of extremely important
+changes. The Vanderbilts and the Morgan interests apportioned between
+them much of the ownership of the Philadelphia and Reading Railroad
+with its vast ownership of coal deposits and its coal carrying
+traffic. [Footnote: An investigation, in 1905, showed that the
+"Baltimore and Ohio Railroad and the New York Central and Hudson
+River Railroad owned about 43.3 per cent. of the entire capital stock
+of the Philadelphia and Reading Railroad Company." "Report on
+Discriminations and Monopolies in Coal and Oil, Interstate Commerce
+Commission, January 25, 1907": 46.] The New York, New Haven and
+Hartford Railroad grasped the New York and New England Railroad from
+the Reading's broken hold, and there were further far-reaching
+changes militating to increase the railroad, and other, possessions
+of both parties. [Footnote: A good account of this expropriating
+transaction is that of Wolcott Drew, "The Reading Crash in 1903" in
+"Moody's Magazine" (a leading financial periodical), issue of
+January, 1907.] It was but another of the many instances of the
+supreme capitalists driving out the smaller fry and seizing the
+property which they had previously seized by fraud. [Footnote: One of
+the particularly indisputable examples of the glaring fraud by which
+immense areas of coal fields were originally obtained was that of the
+disposition of the estate of John Nicholson.
+
+Dying in December, 1800, Nicholson left an estate embracing land, the
+extent of which was variously estimated at from three to five million
+acres. Some of the Pennsylvania legislative documents place the area
+at from three to four million acres, while others, notably a report
+in 1842, by the judiciary committee of the Pennsylvania House of
+Representatives, state that it was 5,000,000 acres. Nicholson was a
+leading figure in the Pennsylvania Land Company which had obtained
+most of its vast land possessions by fraud. Some of Nicholson's
+landed estate lay in Virginia, Kentucky, North Carolina, South
+Carolina, Georgia and other States, but the bulk of it was in
+Pennsylvania, and included extensive regions containing the very
+richest coal deposits.
+
+The State of Pennsylvania held a lien upon Nicholson's estate for
+unpaid taxes amounting to $300,000. Notwithstanding this lien,
+different individuals and corporations contrived to get hold of
+practically the whole of the estate in dispute. How they did it is
+told in many legislative documents; the fraud and theft connected
+with it were a great scandal in Pennsylvania for forty-five years. We
+will quote only one of these documents. Writing on January 24, 1842,
+to William Elwell, chairman of the Judiciary Committee of the
+Pennsylvania House of Representatives, Judge J. B. Anthony, of the
+Nicholson Court (a court especially established to pass upon
+questions arising from the disposition of the estate), said:
+
+"On the 11th of April, 1825, an act passed the Governor to appoint
+agents to discover and sell the Nicholson lands at auction, for which
+they were allowed _twenty-five per cent_. A Special Board of
+Property was also formed to compromise and settle with claimants.
+From what has come to my knowledge in relation to this Act, I am
+satisfied that the commonwealth was seriously injured by the manner
+in which it was carried out by some of the agents. It was made use of
+principally for the benefit of land speculators; and the very small
+sums received by the State treasurer for large and valuable tracts
+sold and compromised, show that the cunning and astute land jobbers
+could easily overreach the Board of Property at Harrisburg. ... Many
+instances of gross fraud might be enumerated, but it would serve no
+useful purpose." Judge Anthony further said that "very many of the
+most influential, astute and intelligent inhabitants" and "gentlemen
+of high standing" were participants in the frauds.--Pennsylvania
+House Journal, 1842, Vol. ii, Doc. No. 127: 700-704.]
+
+The Vanderbilts' ownership of a large part of the shares of
+railroads, which, in turn, own and control the coal mines, may be
+summed up as follows: Through the Lake Shore Railroad, which they
+have owned almost absolutely, they own, or until recently did own,
+$30,000,000 of shares in the Philadelphia and Reading Railroad with
+its stupendous anthracite coal deposits, and they owned, for a long
+time, large amounts of stock in the Lehigh Valley Railroad with its
+unmined coal deposits of 400,000,000 tons. In 1908 they disposed of
+their Lehigh Valley Railroad ownings, receiving an equivalent in
+either money or some other form of property. The ownership of the
+Delaware, Lackawana and Western Railroad with its equally large
+unmined coal deposits is divided between the Vanderbilt family and
+the Standard Oil interests. The Vanderbilts, according to the latest
+official reports, also own heavy interests in the Delaware and Hudson
+Railroad, the New York, Ontario and Western Railroad, $12,500,000 of
+stock in the Chesapeake and Ohio Railroad, and large amounts of stock
+in other coal mining and coal carrying railroads. [Footnote: See
+Special Report No. 1 of the Interstate Commerce Commission on
+Intercorporate Relationship of Railroads: 39. Also Carl Snyder's
+"American Railways as Investments": 473.]
+
+Here, then is another important step in the acquisition of a large
+part of the country's resources by the Vanderbilts. A recapitulation
+will not be out of place. His first millions obtained by
+blackmailing, Commodore Vanderbilt then uses those millions to buy a
+railroad. By further fraudulent methods, based upon bribery of
+lawmaking bodies, he obtains more railroads and more wealth. His son,
+following his methods, adds other railroads to the inventory, and
+converts tens of millions of fraudulently-acquired millions into
+interest-bearing Government, State, city and other bonds. The third
+generation (in point of order from the founder) continues the methods
+of the father and grandfather, gets hold of still more railroads, and
+emerges as one of the powers owning the great coal deposits of
+Pennsylvania.
+
+
+THE DICTATION OF THE COAL FIELDS.
+
+The Vanderbilt and Morgan interest at once increased the price of
+anthracite coal, adding to it $1.25 to $1.35 a ton. In 1900 they
+appeared in the open with a new and gigantic plan of consolidation by
+which they were able to control almost absolutely the production and
+prices. That the Vanderbilt family and the Morgan interests were the
+main parties to this combination was well established. [Footnote:
+Final Report of the U. S. Industrial Commission, 1902, xix: 462-463.]
+Already high, a still heavier increase of price at once was put on
+the 40,000,000 tons of anthracite then produced, and the price was
+successively raised until consumers were taxed seven times the cost
+of production and transportation.
+
+The population was completely at the mercy of a few magnates; each
+year, as the winter drew on, the Coal Trust increased its price. In
+the needs and suffering of millions of people it found a ready means
+of laying on fresher and heavier tribute. By the mandate of the Coal
+Trust, housekeepers were taxed $70,000,000 in extra impositions a
+year, in addition to the $40,000,000 annually extorted by the
+exorbitant prices of previous years. At a stroke the magnates were
+able to confiscate by successive grabs the labor of the people of the
+United States at will. Neither was there any redress; for those same
+magnates controlled all of the ramifications of Government.
+
+What, however, of the workers in the mines? While the combination was
+high-handedly forcing the consumer to pay enormous prices, how was it
+acting toward them? The question is almost superfluous. The railroads
+made little concealment of their hostility to the trades unions, and
+refused to grant reforms or concessions. Consequently a strike was
+declared in 1900 by which the mine workers obtained a ten per cent
+increase in wages and the promise of semi-monthly wages in cash. But
+they had not resumed work before they discovered the hollowness of
+these concessions. Two years of futile application for better
+conditions passed, and then, in 1902, 150,000 men and boys went on
+strike. This strike lasted one hundred and sixty-three days. The
+magnates were generally regarded as arrogant and defiant; they
+contended that they had nothing to arbitrate; [Footnote: It was on
+this occasion that George F. Baer, president of the Philadelphia and
+Reading Railroad, in scoring the public sympathy for the strikers,
+justified the attitude of the railroads in his celebrated utterance
+in which he spoke "of the Christian men and women to whom God in His
+infinite wisdom has intrusted the property interests of the country,"
+which alleged divine sanction he was never able to prove.] and only
+yielded to an arbitration board when President Roosevelt threatened
+them with the full punitive force of Government action.
+
+By the decision of this board the miners secured an increase of wages
+(which was assessed on the consumer in the form of higher prices) and
+several minor concessions. Yet at best, their lot is excessively
+hard. Writing a few years later, Dr. Peter Roberts, who, if anything,
+is not partial to the working class, stated that the wages of the
+contract miners were (in 1907) about $600 a year, while adults in
+other classes of mine workers, who formed more than sixty per cent,
+of the labor forces, did not receive an annual wage of $450. Yet
+Roberts quotes the Massachusetts Bureau of Statistics as saying that
+"a family of five persons requires $754 a year to live on." The
+average number in the family of a mine worker is five or six. "This
+small income," Roberts observes, "drives many of our people to live
+in cheap and rickety houses, where the sense of shame and decency is
+blunted in early youth, and where men cannot find such home comforts
+as will counteract the attractions of the saloon." Hundreds of
+company houses, according to Roberts, are unfit for habitation, and
+"in the houses of mine employees, of all nationalities, is an
+appalling infant mortality." [Footnote: "The Anthracite Coal
+Communities": 346-347.]
+
+
+THE BITUMINOUS COAL MINES ALSO.
+
+The sway of the Vanderbilts, however, extends not only over the
+anthracite, but over a great extent of the bituminous coal fields in
+Pennsylvania, Maryland, West Virginia, Ohio and other States. By
+their control of the New York Central Railroad, they own various
+ostensibly independent bituminous coal mining companies. The
+Clearfield Corporation, the Pennsylvania Coal and Coke Co., and the
+West Branch Coal Company are some of these. By their great holdings
+in other railroads traversing the soft coal regions, the Vanderbilts
+control about one-half of the bituminous coal supply in the Eastern,
+and most of the Middle-Western, States.
+
+According to the Interstate Commerce Commission's report, in 1907,
+the New York Central Railroad and the Pennsylvania Railroad owned in
+that year about forty-five per cent. of the stock of the Chesapeake
+and Ohio Railroad, and the New York Central owned large amounts of
+stock in other railroads. "The Commission, therefore, reaches the
+conclusion," the report reads on after going into the question of
+ownership in detail, "that, as a matter of fact, the Baltimore and
+Ohio Railroad Company, the Norfolk and Western Railroad Company, and
+the Philadelphia and Reading Railway Company were practically
+controlled by the Pennsylvania Railroad Company and the New York
+Central and Hudson River Railroad Company, and that the result was to
+practically abolish substantial competition between the carriers of
+coal in the territories under consideration." Although the Standard
+Oil oligarchy now owns considerable stock in the Vanderbilt
+railroads, it is an undoubted fact that the Vanderbilts share to a
+great extent the mastery of both hard and soft coal fields.
+
+It is not possible here to present even in condensed form the
+outline, much less the full narrative, of the labyrinth of tricks,
+conspiracies and frauds which the railroad magnates have resorted to,
+and still practice, in the throttling of the small capitalists, and
+in guaranteeing themselves a monopoly. A great array of facts are to
+be found in the reports of the exhaustive investigations made by the
+United States Industrial Commission in 1901-1902, and by the
+Interstate Commerce Commission in 1907.
+
+Thousands of times was the law glaringly violated yet the magnates
+were at all times safe from prosecution. Periodically the Government
+would make a pretense of subjecting them to an inquiry, but in no
+serious sense were they interfered with. These investigations all
+have shown that the railroads first crushed out the small operators
+by a conspiracy of rates, blockades and reprisals, and then by a
+juggling process of stocks and bonds, bought in the mines with the
+expenditure of scarcely any actual money. Having done this they
+formed a monopoly and raised prices which, in law, was a criminal
+conspiracy. The same weapons destructively used against the small
+coal operators years ago are still being employed against the few
+independent companies remaining in the coal fields, as was disclosed,
+in 1908, in the suit of the Government to dissolve the workings of
+the various railroad companies in the anthracite coal combination.
+[Footnote: See testimony brought out before Charles H. Guilbert,
+Examiner appointed by the United States District Court in
+Philadelphia. The Government's petition charged the defendants with
+entering into a conspiracy contrary to the letter and the spirit of
+the Sherman act.]
+
+
+THE HUGE PROFITS FROM THE COAL MINES.
+
+No one knows or can ascertain the exact profits of the Vanderbilts
+and of other railroad owners from their control of both the
+anthracite, and largely the bituminous, coal mines. As has been
+noted, the railroad magnates cloud their trail by operating through
+subsidiary companies. That their extortions reach hundreds of
+millions of dollars every year is a patent enough fact. Some of the
+accompaniments of this process of extortion have been referred to;--
+the confiscation, on the one hand, of the labor of the whole
+consuming population by taxing from them more and more of the
+products of their labor by repeated increases in the price of coal,
+and, on the other, the confiscation of the labor of the several
+hundred thousand miners who are compelled to work for the most
+precarious wages, and in conditions worse, in some respects, than
+chattel slavery.
+
+But not alone is labor confiscated. Life is also immolated. The
+yearly sacrifice of life in the coal mines of the United States is
+steadily growing. The report for 1908 of the United States Geological
+Survey showed that 3,125 coal miners were killed by accidents in the
+current year, and that 5,316 were injured. The number of fatalities
+was 1,033 more than in 1906. "These figures," the report explains,
+"do not represent the full extent of the disasters, as reports were
+not received from certain States having no mine inspectors." Side by
+side with these appalling figures must be again brought out the fact
+adverted to already: that the owners of the coal mines have at all
+times violently opposed the passage of laws drafted to afford greater
+safeguard for life in the working of the mines. Being the owners, at
+the same time, of the railroads, their opposition in that field to
+life-saving improvements has been as consistent.
+
+Improvements are expensive; human life is contemptibly cheap; so long
+as there is a surplus of labor it is held to be commercial folly to
+go to the unnecessary expense of protecting an article of merchandise
+which can be had so cheaply. Human tragedies do not enter into the
+making of profit and loss accounts; outlays for mechanical appliances
+do. Assuredly this is a business age wherein profits must take
+precedence over every other consideration, which principle has been
+most elaborately enunciated and established by a long list of exalted
+court decisions. Yea, and the very magnates whose power rests on
+force and fraud are precisely those who insidiously dictate what men
+shall be appointed to these omniscient courts, before whose edicts
+all men are expected to bow in speechless reverence. [Footnote: This
+is far from being a rhetorical figure of speech. Witness the
+dictating of the appointment and nominations of judges by the
+Standard Oil Company (which now owns immense railroad systems and
+industrial plants) as revealed by certain authentic correspondence of
+that trust made public in the Presidential campaign of 1908.]
+
+
+
+
+CHAPTER VIII
+
+FURTHER ASPECTS OF THE VANDERBILT FORTUNE
+
+
+The juggling of railroads and the virtual seizure of coal mines were
+by no means the only accomplishments of the Vanderbilt family in the
+years under consideration. Colorless as was the third generation,
+undistinguished by any marked characteristic, extremely commonplace
+in its conventions, it yet proved itself a worthy successor of
+Commodore Vanderbilt. The lessons he had taught of how to appropriate
+wealth were duly followed by his descendants, and all of the
+ancestral methods were closely adhered to by the third generation.
+Whatever might be its pretensions to a certain integrity and to a
+profound respectability, there was really no difference between its
+methods and those of the Commodore. Times had changed; that was all.
+What had once been regarded as outright theft and piracy were now
+cloaked under high-sounding phrases as "corporate extension" and
+"high finance" and other catchwords calculated to lull public
+suspicion and resentment. A refinement of phraseology had set in; and
+it served its purpose.
+
+Concomitantly, while executing the transactions already described,
+the Vanderbilts of the third generation put through many others, both
+large and small, which were converted into further heaps of wealth.
+An enumeration of all of these diverse frauds would necessitate a
+tiresome presentation. A few examples will suffice.
+
+The small frauds were but lesser in relation to the larger. At this
+period of the economic development of the country, when immense
+thefts were being consummated, a fraud had to rise to the dignity of
+at least fifty million dollars to be regarded a large one. The law,
+it is true, proscribed any theft involving more than $25 as grand
+larceny, but it was law applying to the poor only, and operative on
+them exclusively. The inordinately rich were beyond all law, seeing
+that they could either manufacture it, or its interpretation, at
+will. Among the conspicuous, audacious capitalists the fraud of a few
+paltry millions shrank to the modesty of a small, cursory, off-hand
+operation. Yet, in the aggregate, these petty frauds constituted
+great results, and for that reason were valued accordingly.
+
+
+AN $8,000,000 AREA CONFISCATED.
+
+Such a slight fraud was, for instance, the Vanderbilts' confiscation
+of an entire section of New York City. In 1887 they decided that they
+had urgent and particular need for railroad yard purposes of a sweep
+of streets from Sixtieth street to Seventy-second street along the
+Hudson River Railroad division. What if this property had been
+bought, laid out and graded by the city at considerable expense? The
+Vanderbilts resolved to have it and get it for nothing. Under special
+forms of law dictated by them they thereupon took it. The method was
+absurdly easy.
+
+Ever compliant to their interests, and composed as usual of men
+retained by them or responsive to their influences, the Legislature
+of 1887 passed an act compelling the city authorities to close up the
+required area of streets. Then the city officials, fully as
+accommodating, turned the property over to the exclusive, and
+practically perpetual, use of the New York Central and Hudson River
+Railroad. With the profusest expressions of regard for the public
+interests, the railroad officials did not in the slightest demur at
+signing an agreement with the municipal authorities. In this paper
+they pledged themselves to cooperate with the city in conferring upon
+the Board of Street Openings the right to reopen any of the streets
+at any time. This agreement was but a decoy for immediate popular
+effect. No such reopening ordinance was ever passed; the streets
+remained closed to the public which, theoretically at least, was left
+with the title. In fact, the memorandum of the agreement strangely
+disappeared from the Corporation Counsel's office, and did not turn
+up until twenty years later, when it was accidentally and most
+mysteriously discovered in the Lenox Library. Whence came it to this
+curious repository? The query remains unanswered.
+
+For seventeen and a half acres of this confiscated land, comprising
+about three hundred and fifty city lots, now valued at a round
+$8,000,000, the New York Central and Hudson River Railroad has not
+paid a cent in rental or taxes since the act of 1887 was passed. On
+the island of Manhattan alone 70,000 poor families are every year
+evicted for inability to pay rent--a continuous and horribly tragic
+event well worth comparing with the preposterous facility with which
+the great possessing classes everywhere either buy or defy law, and
+confiscate when it suits them. So cunningly drafted was the act of
+1887 that while New York City was obliged to give the exclusive use
+of this large stretch of property to the company, yet the title to
+the property--the empty name--remained vested in the city. This being
+so, a corporation counsel complaisantly decided that the railroad
+company could not be taxed so long as the city owned the title.
+[Footnote: Minutes of the New York City Board of Estimate and
+Apportionment--Financial and Franchise Matters, 1907:1071-1085. "It
+will thus be seen," reported Harry P. Nichols, Engineer-in-Charge of
+the Franchise Bureau, "that the railroad is at present, and has been
+for twenty years, occupying more than three hundred city lots, or
+something less than twenty acres, without compensation to the city."]
+
+Another of what may be called--for purposes of distinction--the
+numerous small frauds at this time, was that foisting upon New York
+City the cost of replacing the New York Central's masonry viaduct
+approaches with a fine steel elevated system. This fraud cost the
+public treasury about $1,200,000, quite a sizable sum, it will be
+admitted, but one nevertheless of pitiful proportions in comparison
+with previous and later transactions of the Vanderbilt family.
+
+We have seen how, in 1872, Commodore Vanderbilt put through the
+Legislature an act forcing New York City to pay $4,000,000 for
+improving the railroad's roadway on Park avenue. His grandsons now
+repeated his method. In 1892 the United States Government was engaged
+in dredging a ship canal through the Harlem River. The Secretary of
+War, having jurisdiction of all navigable waters, issued a mandate to
+the New York Central to raise its bridge to a given height, so as to
+permit the passing under of large vessels.
+
+To comply with this order it was necessary to raise the track
+structure both north and south of the Harlem River. Had an ordinary
+citizen, upon receiving an order from the authorities to make
+improvements or alterations in his property, attempted to compel the
+city to pay all or any part of the cost, he would have been laughed
+at or summarily dealt with. The Vanderbilts were not ordinary
+property holders. Having the power to order legislatures to do their
+bidding, they now proceeded to imitate their grandfather, and compel
+the city to pay the greater portion of the cost of supplying them
+with a splendid steel elevated structure.
+
+
+PUBLIC TAXATION TO SUPPLY PRIVATE CAPITAL.
+
+The Legislature of 1892 was thoroughly responsive. This was a
+Legislature which was not merely corrupt, but brazenly and frankly
+so, as was proved by the scandalous openness with which various
+spoliative measures were rushed through.
+
+An act was passed compelling New York City to pay one-half of the
+cost of the projected elevated approaches up to the sum of
+$1,600,000. New York City was thus forced to pay $800,000 for
+constructing that portion south of the Harlem River. If, so the law
+read on, the cost exceeded the estimate of $800,000, then the New
+York Central was to pay the difference. Additional provision was made
+for the compelling of New York City to pay for the building of the
+section north of the Harlem River. But who did the work of
+contracting and building, and who determined what the cost was? The
+railroad company itself. It charged what it pleased for material and
+work, and had complete control of the disbursing of the
+appropriations. The city's supervising commissions had, perforce, to
+accept its arbitrary demands, and lacked all power to question, or
+even scrutinize, its reports of expenditures. Apart from the New York
+Central's officials, no one to-day knows what the actual cost has
+been, except as stated by the company.
+
+South of the Harlem River this report cost has been $800,000, north
+of the Harlem River $400,000. At practically no expense to
+themselves, the Vanderbilts obtained a massive four-track elevated
+structure, running for miles over the city streets. The people of the
+city of New York were forced to bear a compulsory taxation of
+$1,200,000 without getting the slightest equivalent for it. The
+Vanderbilts own these elevated approaches absolutely; not a cent's
+worth of claim or title have the people in them. Together with the
+$4,000,000 of public money extorted by Commodore Vanderbilt in 1872,
+this sum of $1,200,000 makes a total amount of $5,200,000 plucked
+from the public treasury under form of law to make improvements in
+which the people who have footed the bill have not a moiety of
+ownership. [Footnote: The facts as to the expenses incurred under the
+act of 1892 were stated to the author by Ernest Harvier, a member of
+the Change of Grade Commission representing New York City in
+supervising the work.] The Vanderbilts have capitalized these
+terminal approaches as though they had been built with private money.
+[Footnote: The New York Central has long compelled the New York, New
+Haven and Hartford Railroad to pay seven cents toll for every
+passenger transported south of Woodlawn, and also one-third of the
+maintenance cost, including interest, of the terminal. In reporting
+an effort of the New York, New Haven and Hartford Railroad to have
+these terms modified, the New York "Times" stated in its financial
+columns, issue of December 25, 1908: "As matters now stand the New
+Haven, without its consent, is forced to bear one-third of the charge
+arising from _the increased capital invested in the Central's
+terminal"_]
+
+[Illustration: CORNELIUS VANDERBILT Grandson of Commodore
+Vanderbilt.]
+
+At this point a significant note may be made in passing. While these
+and other huge frauds were going on, Cornelius Vanderbilt was
+conspicuously presenting himself as a most ardent "reformer" in
+politics. He was, for instance, a distinguished member of the
+Committee of Seventy, organized in 1894, to combat and overthrow
+Tammany corruption! Such, as we have repeatedly observed, is the
+quality of the men who compose the bourgeois reform movements. For
+the most part great rogues, they win applause and respectability by
+virtuously denouncing petty, vulgar political corruption which they
+themselves often instigate, and thus they divert attention from their
+own extensive rascality.
+
+
+A MULTITUDE OF ACQUISITIONS
+
+Why tempt exhaustion by lingering upon a multitude of other frauds
+which went to increase the wealth and possessions of the Vanderbilt
+family? One after another--often several simultaneously--they were
+put through, sometimes surreptitiously, again with overt effrontery.
+Legislative measures in New York and many other States were drafted
+with such skill that sly provisions allowing the greatest frauds were
+concealed in the enactments; and the first knowledge that the
+plundered public frequently had of them was after they had already
+been accomplished. These frauds comprised corrupt laws that gave, in
+circumstances of notorious scandal, tracts of land in the Adirondack
+Mountains to railroad companies now included in the Vanderbilt
+system. They embraced laws, and still more laws, exempting this or
+that stock or property from taxation, and laws making presents of
+valuable franchises and allowing further consolidations. Laws were
+enacted in New York State the effects of which were to destroy the
+Erie Canal (which has cost the people of New York State $100,000,000)
+as a competitor of the New York Central Railroad. All of these and
+many other measures will be skimmed over by a simple reference, and
+attention focussed on a particularly large and notable transaction by
+which William K. Vanderbilt in 1898 added about $59,000,000 to his
+fortune at one superb swoop.
+
+The Vanderbilt ownership of various railroad systems has been of an
+intricate, roundabout nature. A group of railroads, the majority of
+the stock of which was actually owned by the Vanderbilt family, were
+nominally put under the ownership of different, and apparently
+distinct, railroad companies. This devious arrangement was intended
+to conceal the real ownership, and to have a plausible claim in
+counteracting the charge that many railroads were concentrated in one
+ownership, and were combined in monopoly in restraint of trade. The
+plan ran thus: The Vanderbilts owned the New York Central and Hudson
+River Railroad. In turn this railroad, as a corporation, owned the
+greater part of the $50,000,000 stock of the Lake Shore Railroad. The
+Lake Shore, in turn, owned the control, or a chief share of the
+control, of other railroads, and thus on.
+
+In 1897, William K. Vanderbilt began clandestinely campaigning to
+combine the New York Central and the Lake Shore under one definite,
+centralized management. This plan was one in strict harmony with the
+trend of the times, and it had the undoubted advantage of promising
+to save large sums in managing expenses. But this anticipated
+retrenchment was not the main incentive. A dazzling opportunity was
+presented of checking in an immense amount in loot. The grandson
+again followed his eminent grandfather's teachings; his plan was
+nothing more than a repetition of what the old Commodore had done in
+his consolidations.
+
+During the summer and fall of 1897 the market gymnastics of Lake
+Shore stock were cleverly manipulated. By the declaration of a seven
+per cent. dividend the market price of the stock was run up from 115
+to about 200. The object of this manipulation was to have a
+justification for issuing $100,000,000 in three and one-half per
+cent. New York Central bonds to buy $50,000,000 of Lake Shore seven
+per cent. capital stock. By his personal manipulation, William K.
+Vanderbilt at the same time ballooned the price of New York Central
+stock.
+
+The purpose was kept a secret until shortly before the plan was
+consummated on February 4, 1898. On that day William K. Vanderbilt
+and his subservient directors of the New York Central gathered their
+corpulent and corporate persons about one table and voted to buy the
+Lake Shore stock. With due formalities they then adjourned, and
+moving over to another table, declared themselves in meeting as
+directors of the Lake Shore Railroad, and solemnly voted to accept
+the offer.
+
+Presently, however, an awkward and slightly annoying defect was
+discovered. It turned out that the Stock Corporation law of New York
+State specifically prohibited the bonded indebtedness of any
+corporation being more than the value of the capital stock. This
+discovery was not disconcerting; the obstacle could be easily
+overcome with some well-distributed generosity. A bill was quickly
+drawn up to remedy the situation, and hurried to the Legislature then
+in session at Albany. The Assembly balked and ostentatiously refused
+to pass it. But after the lapse of a short time the Assembly saw a
+great new light, and rushed it through on March 3, on which same day
+it passed the Senate. It was at this precise time that a certain
+noted lobbyist at Albany somehow showed up, it was alleged, with a
+fund of $500,000, and members of the Assembly and Senate suddenly
+revealed evidences of being unusually flush with money. [Footnote:
+The author is so informed by an official who represented New York
+City's legal interests at this session and successive Legislative
+sessions, and who was thoroughly conversant with every move. See
+Chapter 80, Laws of 1898, Laws of New York, 1898, ii: 142. The
+amendment declared that Section 24 of the Stock Corporation Law did
+not apply to a railroad corporation.]
+
+A very illuminating transaction, surely, and well deserving of
+philosophic comment. This, however, will be eschewed, and attention
+next turned to the manner in which the Vanderbilts, in 1899, obtained
+control of the Boston and Albany Railroad.
+
+
+THE BOSTON AND ALBANY RAILROAD BECOMES THEIRS.
+
+To a great extent, this railroad had been built with public funds
+raised by enforced taxation, the city of Albany contributing
+$1,000,000, and the State of Massachusetts $4,300,000 of public
+funds. Originally it looked as if the public interests were fully
+conserved. But gradually, little by little, predatory corporate
+interests got in their delicate work, and induced successive
+legislatures and State officials to betray the public interests. The
+public holdings of stock were entirely subordinated, so that in time
+a private corporation secured the practical ownership.
+
+Finally, in 1899, the Legislature of Massachusetts effaced the last
+vestige of State ownership by giving the Vanderbilts a perpetual
+lease of this richly profitable railroad for a scant two million
+dollars' payment a year. During the debate over this act
+Representative Dean charged in the Legislature that "it is common
+rumor in the State House that members are receiving $300 apiece for
+their votes." The acquisition of this railroad enabled the New York
+Central to make direct connection with Boston, and with much of the
+New England coast, and added about four hundred miles to the
+Vanderbilt system. Most of the remainder of the New England territory
+is subservient to the Boston and Maine Railroad system in which the
+American Express Company, controlled by the Vanderbilts, owns 30,000
+shares.
+
+To pay interest and dividends on the hundreds of millions of dollars
+of inflated bonds and stock which three generations of the
+Vanderbilts had issued, and to maintain and enhance their value, it
+was necessary to keep on increasingly extorting revenues. The sources
+of the profits were palpable. Time after time freight rates were
+raised, as was more than sufficiently proved in various official
+investigations, despite denials. Conjunctively with this process,
+another method of extortion was the ceaseless one of beating down the
+wages of the workers to the very lowest point at which they could be
+hired. While the Vanderbilts and other magnates were manufacturing
+law at will, and boldly appropriating, under color of law, colossal
+possessions in real and personal property, how was the law, as
+embodied in legislatures, officials and courts acting toward the
+working class?
+
+
+THE GOVERNMENT AN ENGINE OF TYRANNY.
+
+The grievances and protests of the workers aroused no response save
+the ever-active one of contumely, coercion and violent reprisals. The
+treasury of Nation, States and cities, raised by a compulsory
+taxation falling heavily upon the workers, was at all times at the
+complete disposal of the propertied interests, who emptied it as fast
+as it was filled. The propertiless and jobless were left to starve;
+to them no helping arm was outstretched, and if they complained, no
+quarter given. The State as an institution, while supported by the
+toil of the producers, was wholly a capitalist State with the
+capitalists in complete supremacy to fashion and use it as they
+chose. They used the State political machinery to plunder the masses,
+and then, at the slightest tendency on the part of the workers to
+resist these crushing injustices and burdens, called upon the State
+to hurry out its armed forces to repress this dangerous discontent.
+
+In Buffalo, in 1890-1891, thirty-one in every hundred destitutes were
+impoverished because of unemployment, and in New York City twenty-
+nine in every hundred. [Footnote: "Encyclopedia of Social Reform,"
+Edition of 1897: 1073.] Hundreds of millions of dollars of public
+funds were given outright to the capitalists, but not a cent
+appropriated to provide work for the unemployed. In the panic of
+1893, when millions of men, women and children were out of work, the
+machinery of government, National, State and municipal, proffered not
+the least aid, but, on the contrary, sought to suppress agitation and
+prohibit meetings by flinging the leaders into jail. Basing his
+conclusions upon the (Aldrich) United States Senate Report of 1893--a
+report highly favorable to capitalist interests, and not unexpectedly
+so, since Senator Aldrich was the recognized Senatorial mouthpiece of
+the great vested interests--Spahr found that the highest daily wage
+for all earners, taken in a mass, was $2.O4 [Footnote: "The Present
+Distribution of Wealth in The United States."]
+
+More than three-quarters of all the railroad employees in the United
+States received less than two dollars a day. Large numbers of
+railroad employees were forced to work from twelve to fourteen hours
+a day, and their efficiency and stamina thus lowered. Periodically
+many were laid off in enforced idleness; and appalling numbers were
+maimed or killed in the course of duty. [Footnote: The report of the
+Wisconsin Railway Commissioners for 1894, Vol. xiii., says: "In a
+recent year more railway employees were killed in this country than
+three times the number of Union men slain at the battle of Lookout
+Mountain, Missionary Ridge and Orchard Knob combined. ... In the
+bloody Crimean War, the British lost 21,000 in killed and wounded--
+not as many as are slain, maimed and mangled among the railroad men
+injured [Footnote: of the country in a single year." Various reports
+of the Interstate Commerce Commission state the same facts.] or slain
+largely because the railroad corporations refused to expend money in
+the introduction of improved automatic coupling devices, these
+workers or their heirs were next confronted by what? The unjust and
+oppressive provisions of worthless employers' liability laws drafted
+by corporation attorneys in such a form that the worker or his family
+generally had almost no claim. The very judges deciding these suits
+were, as a rule, put on the bench by the railroad corporations.
+
+
+MACHINE GUNS FOR THE OVERWORKED.
+
+These deadly conditions prevailed on the Vanderbilt railroads even
+more than on any others; it was notorious that the Vanderbilt system
+was not only managed in semi-antiquated ways so far as the operation
+was concerned, but also that its trainmen were terribly underpaid and
+overworked. [Footnote: "Semi-antiquated ways." Only recently the
+"Railway Age Gazette," issue of January, 1909, styled the New York
+Central's directors as mostly "concentrated absurdities, physically
+incompetent, mentally unfit, or largely unresident and inattentive."]
+In reply to a continued agitation for better hours on the part of the
+Vanderbilt employees, the New York Legislature passed an act, in
+1892, which apparently limited the working hours of railroad
+employees to ten a day. There was a gleam of sunshine, but lo! when
+the act was critically examined after it had become a law, it was
+found that a "little joker" had been sneaked into its mass of
+lawyers' terminology. The surreptitious clause ran to this effect:
+That railroad companies were permitted to exact from their employees
+overtime work for extra compensation. This practically made the whole
+law a negation.
+
+So it turned out; for in August, 1892, the switchmen employed by
+various railroad lines converging at Buffalo struck for shorter hours
+and more pay. The strike spread, and was meeting with tactical
+success; the strikers easily persuaded men who had been hired to fill
+their jobs to quit. What did the Vanderbilts and their allies now do?
+They fell back upon the old ruse of invoking armed force to suppress
+what they proclaimed to be violence. They who had bought law and had
+violated the law incessantly now represented that their property
+interests were endangered by "mob violence," and prated of the need
+of soldiers to "restore law and order." It was a serviceable pretext,
+and was immediately acted upon.
+
+The Governor of New York State obediently ordered out the entire
+State militia, a force of 8,000, and dispatched it to Buffalo. The
+strikers were now confronted with bayonets and machine guns. The
+soldiery summarily stopped the strikers from picketing, that is to
+say, from attempting to persuade strikebreakers to refrain from
+taking their places. Against such odds the strike was lost.
+
+If, however, the Vanderbilts could not afford to pay their workers a
+few cents more in wages a day, they could afford to pay millions of
+dollars for matrimonial alliances with foreign titles. These
+excursions into the realm of high-caste European nobility have thus
+far cost the Vanderbilt family about $15,000,000 or $20,000,000. When
+impecunious counts, lords, dukes and princes, having wasted the
+inheritance originally obtained by robbery, and perpetuated by
+robbery, are on the anxious lookout for marriages with great
+fortunes, and the American money magnates, satiated with vulgar
+wealth, aspire to titled connections, the arrangement becomes easy.
+[Footnote: More than 500 American women have married titled
+foreigners. The sum of about $220,000,000, it is estimated (1909),
+has followed them to Europe.] Romance can be dispensed with, and the
+lawyers depended upon to settle the preliminaries.
+
+
+TEN MILLIONS FOR A DUKEDOM.
+
+The announcement was made in 1895 that "a marriage had been arranged"
+between Consuelo, a young daughter of William K. Vanderbilt, and the
+Duke of Marlborough. The wedding ceremony was one of showy splendor;
+millions of dollars in gifts were lavished upon the couple. Other
+millions in cash, wrenched also from the labor of the American
+working population, went to rehabilitate and maintain Blenheim House,
+with its prodigal cost of reconstruction, its retinue of two hundred
+servants, and its annual expense roll of $100,000. Millions more
+flowed out from the Vanderbilt exchequer in defraying the cost of
+yachts and of innumerable appurtenances and luxuries. Not less than
+$2,500,000 was spent in building Sutherland House in London. Great as
+was this expense, it was not so serious as to perturb the duchess'
+father; his $50,000,000 feat of financial legerdemain, in 1898, alone
+far more than made up for these extravagant outlays. The Marlborough
+title was an expensive one; it turned out to be a better thing to
+retain than the man who bore it; after a thirteen years' compact, the
+couple decided to separate for "good and sufficient reasons," into
+which it is not our business to inquire. All told, the Marlborough
+dukedom had cost William K. Vanderbilt, it was said, fully
+$10,000,000.
+
+Undeterred by Cousin Consuelo's experience, Gladys Vanderbilt, a
+daughter of Cornelius, likewise allied herself with a title by
+marrying, in 1908, Count Laslo Szechenyi, a sprig of the Hungarian
+feudal nobility. "The wedding," naively reported a scribe, "was
+characterized by elegant simplicity, and was witnessed by only three
+hundred relatives and intimate friends of the bride and bridegroom."
+The "elegant simplicity" consisted of gifts, the value of which was
+estimated at fully a million dollars, and a costly ceremony. If the
+bride had beauty, and the bridegroom wit, no mention of them was
+made; the one fact conspicuously emphasized was the all-important one
+of the bride having a fortune "in her own right" of about
+$12,000,000.
+
+[Illustration: THE DUCHESS OF MARLBOROUGH, Daughter of William K.
+Vanderbilt.]
+
+The precise sum which made the Count eager to share his title, no one
+knew except the parties to the transaction. Her father had died, in
+1899, leaving a fortune nominally reaching about $100,000,000. Its
+actual proportions were much greater. It had long been customary on
+the part of the very rich, as the New York State Board of Tax
+Commissioners pointed out, in 1903, to evade the inheritance tax in
+advance by various fraudulent devices. One of these was to inclose
+stocks or money in envelopes and apportion them among the heirs,
+either at the death bed, or by subsequent secret delivery. [Footnote:
+See Annual Report of the New York State Board of Tax Commissioners,
+New York Senate Document, No. 5, 1903: 10.]
+
+Like his father, Cornelius Vanderbilt had died of apoplexy. In his
+will he had cut off his eldest son, Cornelius, with but a puny
+million dollars. And the reason for this parental sternness? He had
+disapproved of Cornelius' choice in marriage. To his son, Alfred, the
+unrelenting multimillionaire left the most of his fortune, with a
+showering of many millions upon his widow, upon Reginald, another
+son, and upon his two daughters. Cornelius objected to the injustice
+and hardship of being left a beggar with but a scanty million, and
+threatened a legal contest, whereupon Alfred, pitying the dire
+straits to which Brother Cornelius had been reduced, presented him
+with six or seven millions with which to ease the biting pangs of
+want.
+
+Marriages with titled foreigners have proved a drain upon the
+Vanderbilt fortune, although, thanks to their large share in the
+control of laws and industrial institutions, the Vanderbilts possess
+at all times the power of recouping themselves at volition. The
+American marriages, on the other hand, contracted by this family,
+have interlinked other great fortunes with theirs.
+
+One of the Vanderbilt buds married Harry Payne Whitney, whose father,
+William C. Whitney, left a large fortune, partly drawn from the
+Standard Oil Company, and in part from an industrious career of
+corruption and theft. The elder Whitney, according to facts revealed
+in many official investigations and lawsuits, debauched legislatures
+and common councils into giving him and his associates public
+franchises for street railways and for other public utilities, and he
+stole outright tens of millions of dollars in the manipulation of the
+street railways in various cities. His crimes, and those of his
+associates, were of such boldness and magnitude that even the cynical
+business classes were moved to astonishment. [Footnote: For a
+detailed account see that part of this work, "Great Fortunes from
+Public Franchises."] Cornelius Vanderbilt, jr., married a daughter of
+R. T. Wilson, a multimillionaire, whose fortune came to a great
+extent from the public franchises of Detroit. The initial and
+continued history of the securing and exploitation of the street
+railway and other franchises of that city has constituted a solid
+chapter of the most flagrant fraud. William K. Vanderbilt, jr.,
+married a daughter of the multimillionaire Senator Fair, of
+California, whose fortune, dug from mines, bought him a seat in the
+United States Senate. Thus, various multi-millionaire fortunes have
+been interconnected by these American marriages.
+
+[Illustration: CORNELIUS VANDERBILT, Great-Grandson of Commodore
+Vanderbilt.]
+
+
+DIVERSITY OF THE VANDERBILT POSSESSIONS.
+
+The fortune of the Vanderbilt family, at the present writing, is
+represented by the most extensive and different forms of property.
+Railroads, street railways, electric lighting systems, mines,
+industrial plants, express companies, land, and Government, State and
+municipal bonds--these are some of the forms. From one industrial
+plant alone--the Pullman Company--the Vanderbilts draw millions in
+revenue yearly. Formerly they owned their own palace car company, the
+Wagner, but it was merged with the Pullman. The frauds and extortions
+of the Pullman Company have been sufficiently dealt with in the
+particular chapter on Marshall Field. In the far-away Philippine
+Islands the Vanderbilts are engaged, with other magnates, in the
+exploitation of both the United States Government and the native
+population. The Visayan Railroad numbers one of the Vanderbilts among
+its directors. This railroad has already received a Government
+subsidy of $500,000, in addition to the free gift of a perpetual
+franchise, on the ground that "the railroad was necessary to the
+development of the archipelago."
+
+But the Vanderbilts' principal property consists of the New York
+Central Railroad system. The Union Pacific Railroad, controlled by
+the Harriman-Standard Oil interests, now owns $14,000,000 of stock in
+the New York Central system, and has directors on the governing
+board. The probabilities are that the voting power of the New York
+Central, the Lake Shore and other Vanderbilt lines is passing into
+the hands of the Standard Oil interests, of which Harriman was both a
+part and an ally. This signifies that it is only a question of a
+short time when all or most of the railroads of the United States
+will be directed by one all-powerful and all-embracing trust.
+
+But this does not by any means denote that the Vanderbilts have been
+stripped of their wealth. However much they may part with their
+stock, which gives the voting power, it will be found that, like
+William H. Vanderbilt, they hold a stupendous amount in railroad, and
+other kinds of, bonds. As the Astors and other rich families were
+perfectly willing, in 1867, to allow Commodore Vanderbilt to assume
+the management of the New York Central on the ground that under his
+bold direction their profits and loot would be greater, so the
+lackadaisical Vanderbilts of the present generation perhaps likewise
+looked upon Harriman, who proved his ability to accomplish vast
+fraudulent stock-watering operations and consolidations, and to oust
+lesser magnates. The New York Central, at this writing, still remains
+a Vanderbilt property, not so distinctively so as it was twenty years
+ago, yet strongly enough under the Vanderbilt domination. According
+to Moody, this railroad's net annual income in 1907 was $34,000,000.
+[Footnote: "Moody's Magazine," issue of August, 1908] In alluringly
+describing its present and prospective advantages and value Moody
+went on:
+
+"To begin with, it has entry into the heart of New York City, with
+extensive passenger and freight terminals, all of which are bound to
+be of steadily increasing worth as the years go by, as New York
+continues to grow in population and wealth. It has, in addition, a
+practically 'water grade' line all the way from New York to Chicago,
+and, therefore, for all time must necessarily have a great advantage
+over lines like the Erie, the Lackawanna and others with heavy
+grades, many curves, etc. It has a myriad of small feeders and
+branches in growing and populous parts of the State of New York, as
+well as in the sections further to the west. It touches the Great
+Lakes at various points, operates water transportation for freight to
+all parts of the lakes; enters Chicago over its own tracks and
+competes aggressively with the Pennsylvania for all traffic to and
+from all parts of the Mississippi Valley and the West and Southwest.
+It is in no danger from disastrous competition in its own chosen
+territory, therefore, and constantly receives income of vast
+importance through a network of feeders which penetrate the territory
+of some of the largest of its rivals."
+
+
+THE SORT OF ABILITY DISPLAYED.
+
+The particular kind of ability by which one man, followed by his
+descendants, obtained the controlling ownership of this great
+railroad system, and of other properties, has been herein adequately
+set forth. Long has it been the custom to attribute to Commodore
+Vanderbilt and successive generations of Vanderbilts an almost
+supernatural "constructive genius," and to explain by that glib
+phrase their success in getting hold of their colossal wealth. This
+explanation is clumsy fiction that at once falls to pieces under
+historical scrutiny. The moment a genuine investigation is begun into
+the facts, the glamour of superior ability and respectability
+evaporates, and the Vanderbilt fortune stands out, like all other
+fortunes, as the product of a continuous chain of frauds.
+
+Just as fifty years ago Commodore Vanderbilt was blackmailing his
+original millions without molestation by law, so today the
+Vanderbilts are pursuing methods outside the pale of law. Not all of
+the facts have been given, by any means; only the most important have
+been included in these chapters. For one thing, no mention has been
+made of their repeated violations of a law prohibiting the granting
+of rebates--a law which was stripped of its imprisonment clause by
+the railroad magnates, and made punishable by fine only. Time and
+time again in recent years has the New York Central been proved
+guilty in the courts of violating even this emasculated law. From the
+very inception of the Vanderbilt fortune the chronicle is the same,
+and ever the same--legalized theft by purchase of law, and
+lawlessness by evasion or defiance of law. With fraud it began, by
+fraud it has been increased and extended and perpetuated, and by
+fraud it is held.
+
+
+
+
+CHAPTER IX
+
+THE RISE OF THE GOULD FORTUNE
+
+
+The greater part of this commanding fortune was originally heaped up,
+as was that of Commodore Vanderbilt, in about fifteen years, and at
+approximately the same time. One of the most powerful fortunes in the
+United States, it now controls, or has exercised a dominant share of
+the control, over more than 18,000 miles of railway, the total
+ownership of which is represented by considerably more than a billion
+dollars in stocks and bonds. The Gould fortune is also either openly
+or covertly paramount in many telegraph, transatlantic cable, mining,
+land and industrial corporations.
+
+Its precise proportions no one knows except the Gould family itself.
+That it reaches many hundreds of millions of dollars is fairly
+obvious, although what is its exact figure is a matter not to be
+easily ascertained. In the flux of present economic conditions,
+which, so far as the control of the resources of the United States is
+concerned, have simmered down to desperate combats between individual
+magnates, or contesting sets of magnates, the proportions of great
+fortunes, especially those based upon railroads and industries,
+constantly tend to vary.
+
+In the years 1908 and 1909 the Gould fortune, if report be true, was
+somewhat diminished by the onslaughts of that catapultic railroad
+baron, E. H. Harriman, who unceremoniously seized a share of the
+voting control of some of the railroad systems long controlled by the
+Goulds. Despite this reported loss, the Gould fortune is an active,
+aggressive and immense one, vested with the most extensive power, and
+embracing hundreds of millions of dollars in cash, land, palaces, or
+profit-producing property in the form of bonds and stocks. Its
+influence and ramifications, like those of the Vanderbilt and of
+other huge fortunes, penetrate directly or indirectly into every
+inhabited part of the United States, and into Mexico and other
+foreign countries.
+
+
+JAY GOULD'S BOYHOOD
+
+The founder of this fortune was Jay Gould, father of the present
+holding generation. He was the son of a farmer in Delaware County,
+New York, and was born in 1836. As a child his lot was to do various
+chores on his father's farm. In driving the cows he had to go
+barefoot, perforce, by reason of poverty, and often thistles bruised
+his feet--a trial which seems to have left such a poignant and
+indelible impression upon his mind that when testifying before a
+United States Senate investigating committee forty years later he
+pathetically spoke of it with a reminiscent quivering. His father
+was, indeed, so poor that he could not afford to let him go to the
+public school. The lad, however, made an arrangement with a
+blacksmith by which he received board in return for certain clerical
+services. These did not interfere with his attending school. When
+fifteen, he became a clerk in a country store, a task which, he
+related, kept him at work from six o'clock in the morning until ten
+o'clock at night. It is further related that by getting up at three
+o'clock in the morning and studying mathematics for three years, he
+learned the rudiments of surveying.
+
+According to Gould's own story, an engineer who was making a map of
+Ulster County hired him as an assistant at "twenty dollars a month
+and found." This engagement somehow (we are not informed how) turned
+out unsatisfactorily. Gould was forced to support himself by making
+"noon marks" for the farmers. To two other young men who had worked
+with him upon the map of Ulster County, Gould (as narrated by
+himself) sold his interest for $500, and with this sum as capital he
+proceeded to make maps of Albany and Delaware counties. These maps,
+if we may believe his own statement, he sold for $5,000.
+
+
+HE GOES INTO THE TANNING BUSINESS.
+
+Subsequently Gould went into the tanning business in Pennsylvania
+with Zadoc Pratt, a New York merchant, politician and Congressman of
+a certain degree of note at the time. [Footnote: Pratt was regarded
+as one of the leading agricultural experts of his day. His farm of
+three hundred and sixty-five acres, at Prattsville, New York, was
+reputed to be a model. A paper of his, descriptive of his farm, and
+containing woodcut engravings, may be found in U. S. Senate
+Documents, Second Session, Thirty-seventh Congress, 1861-62, v:411-
+415.] Pratt, it seems, was impressed by young Gould's energy, skill
+and smooth talk, and supplied the necessary capital of $120,000.
+Gould, as the phrase goes, was an excellent bluff; and so dexterously
+did he manipulate and hoodwink the old man that it was quite some
+time before Pratt realized what was being done. Finally, becoming
+suspicious of where the profits from the Gouldsboro tannery (named
+after Gould) were going, Pratt determined upon some overhauling and
+investigating.
+
+Gould was alert in forestalling this move. During his visits to New
+York City, he had become acquainted with Charles M. Leupp, a rich
+leather merchant. Gould prevailed upon Leupp to buy out Pratt's
+interest. When Gould returned to the tannery, he found that Pratt had
+been analyzing the ledger. A scene followed, and Pratt demanded that
+Gould buy or sell the plant. Gould was ready, and offered him
+$60,000, which was accepted. Immediately Gould drew upon Leupp for
+the money. Leupp likewise became suspicious after a time, and from
+the ascertained facts, had the best of grounds for becoming so. The
+sequel was a tragic one. One night, in the panic of 1857, Leupp shot
+and killed himself in his fine mansion at Madison avenue and Twenty-
+fifth street. His suicide caused a considerable stir in New York
+City. [Footnote: Although later in Gould's career it was freely
+charged that he had been the cause of Leupp's suicide, no facts were
+officially brought out to prove the charge. The coroner's jury found
+that Leupp had been suffering from melancholia, superinduced,
+doubtless, by business reverses.
+
+Even Houghton, however, in his flamboyantly laudatory work describes
+Gould's cheating of Pratt and Leupp, and Leupp's suicide. According
+to Houghton, Leupp's friends ascribed the cause of the act to Gould's
+treachery. See "Kings of Fortune," 265-266.]
+
+
+HE BUYS RAILROAD BONDS WITH HIS STEALINGS.
+
+Three years later, in 1860, Gould set up as a leather merchant in New
+York City; the New York directory for that year contains this entry:
+"Jay Gould, leather merchant, 39 Spruce street; house Newark." For
+several years after this his name did not appear in the directory.
+
+He had been, however, edging his way into the railroad business with
+the sums that he had stolen from Pratt and Leupp. At the very time
+that Leupp committed suicide, Gould was buying the first mortgage
+bonds of the Rutland and Washington Railroad--a small line, sixty-two
+miles long, running from Troy, New York, to Rutland, Vermont. These
+bonds, which he purchased for ten cents on the dollar, gave him
+control of this bankrupt railroad. He hired men of managerial
+ability, had them improve the railroad, and he then consolidated it
+with other small railroads, the stock of which he had bought in.
+
+With the passing of the panic of 1857, and with the incoming of the
+stupendous corruption of the Civil War period, Gould was able to
+manipulate his bonds and stock until they reached a high figure. With
+a part of his profits from his speculation in the bonds of the
+Rutland and Washington Railroad, he bought enough stock of the
+Cleveland and Pittsburg Railroad to give him control of that line.
+This he manipulated until its price greatly rose, when he sold the
+line to the Pennsylvania Railroad Company. In these transactions
+there were tortuous substrata of methods, of which little to-day can
+be learned, except for the most part what Gould himself testified to
+in 1883, which testimony he took pains to make as favorable to his
+past as possible.
+
+His career from 1867 onward stood out in the fullest prominence; a
+multitude of official reports and investigations and court records
+contribute a translucent record. He became invested with a sinister
+distinction as the most cold-blooded corruptionist, spoliator, and
+financial pirate of his time; and so thoroughly did he earn this
+reputation that to the end of his days it confronted him at every
+step, and survived to become the standing reproach and terror of his
+descendants. For nearly a half century the very name of Jay Gould has
+been a persisting jeer and by-word, an object of popular contumely
+and hatred, the signification of every foul and base crime by which
+greed triumphs.
+
+
+WHY THIS BIASED VIEW OF GOULD'S CAREER?
+
+Yet, it may well be asked now, even if for the first time, why has
+Jay Gould been plucked out as a special object of opprobrium? What
+curious, erratic, unstable judgment is this that selects this one man
+as the scapegoat of commercial society, while deferentially allowing
+his business contemporaries the fullest measure of integrity and
+respectability?
+
+Monotonous echoes of one another, devoid of understanding, writer has
+followed writer in harping undiscriminatingly upon Jay Gould's
+crimes. His career has been presented in the most forbidding colors;
+and in order to show that he was an abnormal exception, and not a
+familiar type, his methods have been darkly contrasted with those of
+such illustrious capitalists as the Astors, the Vanderbilts, and
+others.
+
+Thus, has the misinformed thing called public opinion been shaped by
+these scribbling purveyors of fables; and this public opinion has
+been taught to look upon Jay Gould's career as an exotic, "horrible
+example," having nothing in common with the careers of other founders
+of large fortunes. The same generation habitually addicted to cursing
+the memory of Jay Gould, and taunting his children and grandchildren
+with the reminders of his thefts, speaks with traditional respect of
+the wealth of such families as the Astors and the Vanderbilts. Yet
+the cold truth is, as has been copiously proved, John Jacob Astor was
+proportionately as notorious a swindler in his day as Gould was in
+his; and as for Commodore Vanderbilt, he had already made
+blackmailing on a large scale a safe art before Gould was out of his
+teens.
+
+Gould has been impeached as one of the most audacious and successful
+buccaneers of modern times. Without doubt he was so; a freebooter
+who, if he could not appropriate millions, would filch thousands; a
+pitiless human carnivore, glutting on the blood of his numberless
+victims; a gambler destitute of the usual gambler's code of fairness
+in abiding by the rules; an incarnate fiend of a Machiavelli in his
+calculations, his schemes and ambushes, his plots and counterplots.
+
+But it was only in degree, and not at all in kind, that he differed
+from the general run of successful wealth builders. The Vanderbilts
+committed thefts of as great an enormity as he, but they gradually
+managed to weave around themselves an exterior of protective
+respectability. All sections of the capitalist class, in so fiercely
+reviling Gould, reminded one of the thief, who, to divert attention
+from himself, joins with the pursuing crowd in loudly shouting, "Stop
+thief!" We shall presently see whether this comparison is an
+exaggerated one or not.
+
+
+THE TEACHINGS OF HIS ENVIRONMENT.
+
+To understand the incentives and methods of Gould's career, it is
+necessary to know the endemic environment in which he grew up and
+flourished, and its standards and spirit. He, like others of his
+stamp, were, in a great measure, but products of the times; and it is
+not the man so much as the times that are of paramount interest, for
+it is they which supply the explanatory key. In preceding chapters
+repeated insights have been given into the methods not merely of one
+phase, but of all phases, of capitalist formulas and processes. At
+the outset, however, in order to approach impartially this narrative
+of the Gould fortune, and to get a clear perception of the dominant
+forces of his generation, a further presentation of the business-
+class methods of that day will be given.
+
+As a young man what did Jay Gould see? He saw, in the first place,
+that society, as it was organized, had neither patience nor
+compassion for the very poverty its grotesque system created. Prate
+its higher classes might of the blessings of poverty; and they might
+spread broadcast their prolix homilies on the virtues of a useful
+life, "rounded by an honorable poverty." But all of these teachings
+were, in one sense, chatter and nonsense; the very classes which so
+unctuously preached them were those who most strained themselves to
+acquire all of the wealth that they possibly could. In another sense,
+these teachings proved an effective agency in the infusing into the
+minds of the masses of established habits of thought calculated to
+render them easy and unresisting victims to the rapacity of their
+despoilers.
+
+From these "upper classes" proceeded the dictation of laws; and the
+laws showed (as they do now) what the real, unvarnished attitude of
+these fine, exhorting moralists was towards the poor. Poverty was
+virtually prescribed as a crime. The impoverished were regarded in
+law as paupers, and so repugnant a term of odium was that of pauper,
+so humiliating its significance and treatment, that great numbers of
+the destitute preferred to suffer and die in want and silence rather
+than avail themselves of the scanty and mortifying public aid
+obtainable only by acknowledging themselves paupers.
+
+Sickness, disability, old age, and even normal life, in poverty were
+a terrifying prospect. The one sure way of escaping it was to get and
+hold wealth. The only guarantee of security was wealth, provided its
+possessor could keep it intact against the maraudings of his own
+class. Every influence conspired to drive men into making desperate
+attempts to break away from the stigma and thraldom of poverty, and
+gain economic independence and social prestige by the ownership of
+wealth.
+
+But how was this wealth to be obtained? Here another set of
+influences combined with the first set to suppress or shatter
+whatever doubts, reluctance or scruples the aspirant might have. The
+acquisitive young man soon saw that toiling for the profit of others
+brought nothing but poverty himself; perhaps at the most, some small
+savings that were constantly endangered. To get wealth he must not
+only exploit his fellow men, he found, but he must not be squeamish
+in his methods. This lesson was powerfully and energetically taught
+on every hand by the whole capitalist class.
+
+Conventional writers have descanted with a show of great indignation
+upon Gould's bribing of legislative bodies and upon his cheatings and
+swindlings. Without adverting again to the corruption, reaching far
+back into the centuries, existing before his time, we shall simply
+describe some of the conditions that as a young man he witnessed or
+which were prevalent synchronously with his youth.
+
+Whatever sphere of business was investigated, there it was at once
+discovered that wealth was being amassed, not only by fraudulent
+methods, but by methods often a positive peril to human life itself.
+Whether large or small trader, these methods were the same, varying
+only in degree.
+
+       *       *       *       *       *       *       *
+
+ALL BUSINESS REEKED WITH FRAUD.
+
+A Congressional committee, probing, in 1847-1848, into frauds in the
+sale of drugs found that there was scarcely a wholesale or retail
+druggist who was not consciously selling spurious drugs which were a
+menace to human life. Dr. M. J. Bailey, United States Examiner of
+Drugs at the New York Custom House, was one of the many expert
+witnesses who testified. "More than one-half of many of the most
+important chemical and medicinal preparations," Dr. Bailey stated,
+"together with large quantities of crude drugs, come to us so much
+adulterated as to render them not only worthless as a medicine, but
+often dangerous." These drugs were sold throughout the United States
+at high prices. [Footnote: Report of Select Committee on the
+Importation of Drugs. House Reports, Thirtieth Congress, First
+Session, 1847-48, Report No. 664:9. In a previous chapter, other
+extracts from this report have been given showing in detail what many
+of these fraudulent practices were.] There is not a single record of
+any criminal action pressed against those who profited from selling
+this poisonous stuff.
+
+The manufacture and sale of patent medicines were attended with the
+grossest frauds. At that time, to a much greater extent than now, the
+newspapers profited more (comparatively) from the publication of
+patent medicine advertisements; and even after a Congressional
+committee had fully investigated and exposed the nature of these
+nostrums, the newspapers continued publishing the alluring and
+fraudulent advertisements.
+
+After showing at great length the deceptive and dangerous ingredients
+used in a large number of patent medicines, the Committee on the
+Judiciary of the House of Representatives went on in its report of
+February 6, 1849: "The public prints, without exception, published
+these promises and commendations. The annual [advertising] fee for
+publishing Brandeth's pills has amounted to $100,000. Morrison paid
+more than twice as much for the advertisement of his never-dying
+hygiene." The committee described how Morrison's nostrums often
+contained powerful poisons, and then continued: "Morrison is
+forgotten, and Brandeth is on the high road to the same distinction.
+T. W. Conway, from the lowest obscurity, became worth millions from
+the sale of his nostrums, and rode in triumph through the streets of
+Boston in his coach and six. A stable boy in New York was enrolled
+among the wealthiest in Philadelphia by the sale of a panacea which
+contains both mercury and arsenic. Innumerable similar cases can be
+adduced." [Footnote: Report No. 52. Reports of Committees, Thirtieth
+Congress, Second Sess., i: 31.] Not a few multimillionaire families
+of to-day derive their wealth from the enormous profits made by their
+fathers and grandfathers from the manufacture and sale of these
+poisonous medicines.
+
+       *       *       *       *       *       *       *
+
+SUCCESS AS GOULD LEARNED IT.
+
+The frauds among merchants and manufacturers reached far more
+comprehensive and permeating proportions. In periods of peace these
+fraudulent methods were nauseating enough, but in times of war they
+were inexpressibly repellant and ghastly. During the Mexican War the
+Northern shoe manufacturers dumped upon the army shoes which were of
+so inferior a make that they could not be sold in the private market,
+and these shoes were found to be so absolutely worthless that it is
+on record that the American army in Mexico threw them away upon the
+sands in disgust. But it was during the Civil War that Northern
+capitalists of every kind coined fortunes from the national
+disasters, and from the blood of the very armies fighting for their
+interests shown how Commodore Vanderbilt and other shipping
+merchants fraudulently sold or leased to the Government for
+exorbitant sums, ships for the transportation of soldiers--ships so
+decayed or otherwise unseaworthy, that they had to be condemned. In
+those chapters such facts were given as applied mainly to Vanderbilt;
+in truth, however, they constituted but a mere part of the gory
+narrative. While Vanderbilt, as the Government agent, was leasing or
+buying rotten ships, and making millions of dollars in loot by
+collusion, the most conspicuous and respectable shipping merchants of
+the time were unloading their old hulks upon the Government at
+extortionate prices.
+
+One of the most ultra-respectable merchants of the time, ranked of
+high commercial standing and austere social prestige, was, for
+instance, Marshall O. Roberts. This was the identical Roberts so
+deeply involved in the great mail-subsidy frauds. This was also the
+same sanctimonious Roberts, who, as has been brought out in the
+chapters on the Astor fortune, joined with John Jacob Astor and
+others in signing a testimonial certifying to the honesty of the
+Tweed Regime. A select Congressional committee, inquiring into
+Government contracts in 1862-63, brought forth volumes of facts that
+amazed and sickened a committee accustomed to ordinary political
+corruption. Here is a sample of the testimony: Samuel Churchman, a
+Government vessel expert engaged by Welles, Secretary of the Navy,
+told in detail how Roberts and other merchants and capitalists had
+contrived to palm off rotten ships on the Government; and, in his
+further examination on January 3, 1863, Churchman was asked:
+
+Q. Did Roberts sell or chatter any other boats to the Government?
+
+A. Yes, sir. He sold the Winfield Scott and the Union to the
+Government.
+
+Q. For how much?
+
+A. One hundred thousand dollars each, and one was totally lost and
+the other condemned a few days after they went to sea. [Footnote:
+Report of Select Committee to Inquire into Government Contracts,
+House Reports, Thirty-seventh Congress, Third Session, 1862-63,
+Report No. 49:95.]
+
+In the course of later inquiries in the same examination, Churchman
+testified that the Government had been cheated out of at least
+$25,000,000 in the chartering and purchase of vessels, and that he
+based his judgment upon "the chartered and purchased vessels I am
+acquainted with, and the enormous sums wasted there to my certain
+knowledge." [Footnote: Ibid, 95-97.] This $25,000,000 swindled from
+the Government in that one item of ships alone formed the basis of
+many a present plutocratic fortune.
+
+       *       *       *       *       *       *       *
+
+FRAUD UNDERLIES RESPECTABILITY.
+
+But this was not by any means the only schooling Gould received from
+the respectable business element. It can be said advisedly that there
+was not a single avenue of business in which the most shameless
+frauds were not committed upon both Government and people. The
+importers and manufacturers of arms scoured Europe to buy up
+worthless arms, and then cheated the Government out of millions of
+dollars in supplying those guns and other ordnance, all notoriously
+unfit for use. "A large proportion of our troops," reported a
+Congressional Commission in 1862, "are armed with guns of very
+inferior quality, and tens of thousands of the refuse arms of Europe
+are at this moment in our arsenals, and thousands more are still to
+arrive, all unfit." [Footnote: House Reports of Committees, Thirty-
+seventh Congress, Second Session, 1861-62, vol. ii, Report No. 2:
+lxxix.] A Congressional committee appointed, in 1862, to inquire into
+the connection between Government employees on the one hand, and
+banks and contractors on the other, established the fact
+conclusively, that the contractors regularly bribed Government
+inspectors in order to have their spurious wares accepted. [Footnote:
+House Reports of Committees, Thirty-seventh Congress, 1862-63, Report
+No. 64. The Chairman of this committee, Representative C. H. Van
+Wyck, of New York, in reporting to the House of Representatives on
+February 23, 1863, made these opening remarks:
+
+"In the early history of the war, it was claimed that frauds and
+peculations were unavoidable; that the cupidity of the avaricious
+would take advantage of the necessities of the nation, and for a time
+must revel and grow rich amidst the groans and griefs of the people;
+that pressing wants must yield to the extortion of the base; that
+when the capital was threatened, railroad communication cut off, the
+most exorbitant prices could safely be demanded for steam and sailing
+vessels; that when our arsenals had been robbed of arms, gold could
+not be weighed against cannon and muskets; that the Government must
+be excused if it suffered itself to be overreached. Yet, after the
+lapse of two years, we find the same system of extortion prevailing,
+and robbery has grown more unblushing in its exactions as it feels
+secure in its immunity from punishment, and that species of fraud
+which shocked the nation in the spring of 1861 has been increasing.
+The fitting out of each expedition by water as well as land is but a
+refinement upon the extortion and immense profits which preceded it.
+The freedom from punishment by which the first greedy and rapacious
+horde were suffered to run at large with ill-gotten gains seems to
+have demoralized too many of those who deal with the Government."--
+Appendix to The Congressional Globe, Third Session, Thirty-seventh
+Congress, 1862-63, Part ii: 117.]
+
+In fact, the ramifications of the prevalent frauds were so extensive
+that a number of Congressional committees had to be appointed at the
+same time to carry on an adequate investigation; and even after long
+inquiries, it was admitted that but the surface had been scratched.
+
+During the Civil War, prominent merchants, with eloquent outbursts of
+patriotism, formed union defense committees in various Northern
+cities, and solicited contributions of money and commodities to carry
+on the war. It was disclosed before the Congressional investigating
+committees that not only did the leading members of these union
+defense committees turn their patriotism to thrifty account in
+getting contracts, but that they engaged in great swindles upon the
+Government in the process. Thus, Marcellus Hartley, a conspicuous
+dealer in military goods, and the founder of a multimillionaire
+fortune, [Footnote: When Marcellus Hartley died in 1902, his personal
+property alone was appraised at $11,000,000. His entire fortune was
+said to approximate $50,000,000. His chief heir, Marcellus Hartley
+Dodge, a grandson, married, in 1907, Edith Geraldine Rockefeller, one
+of the richest heiresses in the world. Hartley was the principal
+owner of large cartridge, gun and other factories.] admitted that he
+had sold a large consignment of Hall's carbines to a member of the
+New York Union Defense Committee. In a sudden burst of contrition he
+went on, "I think the worst thing this Government has been swindled
+upon has been these confounded Hall's carbines; they have been
+elevated in price to $22.50, I think." [Footnote: House Report No.2,
+etc., 1861-62, vol. ii: 200-204] He could have accurately added that
+these carbines were absolutely dangerous; it was found that their
+mechanism was so faulty that they would shoot off the thumbs of the
+very soldiers using them. Hartley was one of the importers who
+brought over the refuse arms of Europe, and sold them to the
+Government at extortionate prices. He owned up to having contracts
+with various of the States (as distinguished from the National
+Government) for $600,000 worth of these worthless arms. [Footnote:
+Ibid.] That corruscating patriot and philanthropic multimillionaire
+of these present times, J. Pierpont Morgan, was, as we shall see,
+profiting during the Civil War from the sale of Hall's carbines to
+the Government.
+
+One of the Congressional committees, investigating contracts for
+other army material and provisions, found the fullest evidences of
+gigantic frauds. Exorbitant prices were extorted for tents "which
+were valueless"; these tents, it appeared, were made from cheap or
+old "farmers'" drill, regarded by the trade as "truck." Soldiers
+testified that they "could better keep dry out of them than under."
+[Footnote: House Report No. 64, etc., 1862-63: 6.] Great frauds were
+perpetrated in passing goods into the arsenals. One manufacturer in
+particular, Charles C. Roberts, was awarded a contract for 50,000
+haversacks and 50,000 knapsacks. "Every one of these," an expert
+testified, "was a fraud upon the Government, for they were not linen;
+they were shoddy." [Footnote: Ibid.] A Congressional committee found
+that the provisions supplied by contractors were either deleterious
+or useless. Captain Beckwith, a commissary of subsistence, testified
+that the coffee was "absolutely good for nothing and is worthless. It
+is of no use to the Government."
+
+Q. Is the coffee at all merchantable?
+
+A. It is not.
+
+Q. Describe that coffee as nearly as you can.
+
+A. It seems to be a compound of roasted peas, of licorice, and a
+variety of other substances, with just coffee enough to give it a
+taste and aroma of coffee. [Footnote: House Report No. 2, etc. 1861-
+62, ii: 1459.]
+
+This committee extracted much further evidence showing how all other
+varieties of provisions were of the very worst quality, and how
+"rotten and condemned blankets" in enormous quantities were passed
+into the army by bribing the inspectors. It disclosed, at great
+length, how the railroads in their schedule of freight rates were
+extorting from the Government fifty per cent. more than from private
+parties. [Footnote: House Report No. 2, etc., 1861-62, xxix.] Don
+Cameron, leader of the corrupt Pennsylvania political machine, and a
+railroad manipulator, [Footnote: He had been involved in at least one
+scandal investigated by a Pennsylvania Legislative Committee, and
+also in several dubious railroad transactions in Maryland.] was at
+that time Secretary of War. Whom did he appoint as the supreme
+official in charge of railroad transportation? None other than Thomas
+A. Scott, the vice-president of the Pennsylvania Railroad. Scott, it
+may be said, was another capitalist whose work has so often been
+fulsomely described as being that of "a remarkable constructive
+ability." The ability he displayed during the Civil War was
+unmistakable. With his collusion the railroads extorted right and
+left. The committee described how the profits of the railroads after
+his appointment rose fully fifty per cent in one year, and how
+quartermasters and others were bribed to obtain the transportation of
+regiments. "This," stated the committee, "illustrates the immense and
+unnecessary profits which was spirited from the Government and
+secured to the railroads by the schedule fixed by the vice-president
+of the Pennsylvania Central under the auspices of Mr. Cameron."
+[Footnote: House Report No. 2, etc., 1861-62, xix. The Pennsylvania
+Railroad, for example, made in 1862 the sum of $1,350,237.79 more in
+profits than it did in the preceding year.]
+
+These many millions of dollars extorted in frauds "came," reported
+the committee, "out of the impoverished and depleted Treasury of the
+United States, at a time when her every energy and resources were
+taxed to the utmost to maintain the war." [Footnote: Ibid., 4.]
+
+These are but a few facts of the glaring fraud and corruption
+prevailing in every line of mercantile and financial business. Great
+and audacious as Gould's thefts were later, they could not be put on
+the same indescribably low plane as those committed during the Civil
+War by men most of whom succeeded in becoming noted for their fine
+respectability and "solid fortunes." So many momentous events were
+taking place during the Civil War, that amid all the preparations,
+the battles and excitement, those frauds did not arouse that general
+gravity of public attention which, at any other time, would have
+inevitably resulted. Consequently, the men who perpetrated them
+contrived to hide under cover of the more absorbing great events of
+those years. Gould committed his thefts at a period when the public
+had little else to preoccupy its attention; hence they loomed up in
+the popular mind as correspondingly large and important.
+
+
+A SPECIMEN OF GOULD'S TUITION.
+
+At the very dawn of his career in 1857, as a railroad owner, Gould
+had the opportunity of securing valuable and gratuitous instruction
+in the ways by which railroad projects and land grants were being
+bribed through Congress. He was then only twenty-one years old, ready
+to learn, but, of course, without experience in dealing with
+legislative bodies. But the older capitalists, veterans at bribing,
+who for years had been corrupting Congress and the Legislatures,
+supplied him with the necessary information. Not voluntarily did they
+do it; their greatest ally was concealment; but one crowd of them had
+too baldly bribed Congress to vote for an act giving an enormous land
+grant in Iowa, Minnesota and other states, to the Des Moines
+Navigation and Railroad Company. The facts unearthed must have been a
+lasting lesson to Gould as to how things were done in the exalted
+halls of Congress. The charges made an ugly stir throughout the
+United States, and the House of Representatives, in self defense, had
+to appoint a special committee to investigate itself.
+
+This committee made a remarkable and unusual report. Ordinarily in
+charges of corruption, investigating committees were accustomed to
+reporting innocently that while it might have been true that
+corruption was used, yet they could find no evidence that members had
+received bribes; almost invariably such committees put the blame, and
+the full measure of their futile excoriations, on "the iniquitous
+lobbyists." But this particular committee, surprisingly enough,
+handed in no such flaccid, whitewashing report. It found conclusively
+that corrupt combinations of members of Congress did exist; and in
+recommended the expulsion of four members whom it declared guilty to
+receiving either money or land in exchange for their votes. One of
+these four expelled member, Orasmus B. Matteson, it appeared, was a
+leader of a corrupt combination; the committee branded him as having
+arranged with the railroad capitalists to use "a large sum of money
+[$100,000] and other valuable considerations corruptly." [Footnote:
+Reports of Committees, House of Representatives, Thirty-fourth
+Congress, Third Session, 1856/57. Report No. 243, Vol. iii. In
+subsequent chapters many further details are given of the corruption
+during this period.]
+
+ But it was essentially during the Civil War that Gould received his
+completest tuition in the great art of seizing property and
+privileges by bribing legislative bodies. While many sections of the
+capitalist class were, as we have seen, swindling manifold hundreds
+of millions of dollars from a hard-pressed country, and reaping
+fortunes by exploiting the lives of the very defenders of their
+interests, other sections, equally mouthy with patriotism, were
+sneaking through Congress and the Legislatures act after act, further
+legalizing stupendous thefts.
+
+
+PATRIOTISM AT FIFTY PER CENT.
+
+Some of these acts, demanded by the banking interests, made the
+people of the United States pay an almost unbelievable usurious
+interest for loans. These banking statutes were so worded that
+nominally the interest did not appear high; in reality, however, by
+various devices, the bankers, both national and international, were
+often able to extort from twenty to fifty, and often one hundred per
+cent., in interest, and this on money which had at some time or
+somehow been squeezed out of exploited peoples in the United States
+or elsewhere.
+
+By these laws the bankers were allowed to get annual payment from the
+Government of six per cent. interest in gold on the Government bonds
+that they bought. They could then deposit those same bonds with the
+Government, and issue their own bank notes against ninety per cent.
+of the bonds deposited. They drew interest from the Government on the
+deposited bonds, and at the time charged borrowers an exorbitant rate
+of interest for the use of the bank notes, which passed as currency.
+
+It was by this system of double interest that they were able to sweep
+into their coffers hundreds upon hundreds of millions of dollars, not
+a dollar of which did they earn, and all of which were sweated out of
+the adversities of the people of the United States. From 1863 to 1878
+alone the Government paid out to national banks as interest on bonds
+the enormous sum of $252,837,556.77. [Footnote: House Documents,
+Forty-fifth Congress, Second Session, Ex. Document No. 34, Vol. xiv.,
+containing the reply of Secretary of the Treasury Sherman, in answer
+to a resolution of the House of Representatives.] On the other hand,
+the banks were entirely relieved from paying taxes; they secured the
+passage of a law exempting Government bonds from taxation. Armies
+were being slaughtered and legions of homes desolated, but it was a
+rich and safe time for the bankers; a very common occurrence was it
+for banks to declare dividends of twenty, forty, and sometimes one
+hundred, per cent.
+
+It was also during the stress of this Civil War period, when the
+working and professional population of the nation was fighting on the
+battlefield, or being taxed heavily to support their brothers in
+arms, that the capitalists who later turned up as owners of various
+Pacific railroad lines were bribing through Congress acts giving them
+the most comprehensive perpetual privileges and great grants of money
+and of land.
+
+Gould saw how all of the others of the wealth seekers were getting
+their fortunes; and the methods that he now plunged into use were but
+in keeping with theirs, a little bolder and more brutally frank,
+perhaps, but nevertheless nothing more than a repetition of what had
+long been going on in the entire sphere of capitalism.
+
+
+
+
+CHAPTER X
+
+THE SECOND STAGE OF THE GOULD FORTUNE
+
+
+The first medium by which Jay Gould transferred many millions of
+dollars to his ownership was by his looting and wrecking of the Erie
+Railroad. If physical appearance were to be accepted as a gauge of
+capacity none would suspect that Gould contained the elements of one
+of the boldest and ablest financial marauders that the system in
+force had as yet produced. About five feet six inches in height and
+of slender figure, he gave the random impression of being a mild,
+meek man, characterized by excessive timidity. His complexion was
+swarthy and partly hidden by closely-trimmed black whiskers; his eyes
+were dark, vulpine and acutely piercing; his forehead was high. His
+voice was very low, soft and insinuating.
+
+
+PRIVATE CONFISCATION OF THE ERIE RAILROAD.
+
+The Erie Railroad, running from New York City to Buffalo and thence
+westward to Chicago, was started in 1832. In New York State alone,
+irrespective of gifts in other States, it received what was virtually
+a gift of $3,000,000 of State funds, and $3,217,000 interest, making
+$6,217,000 in all. Counties, municipalities and towns through which
+it passed were prevailed upon to contribute freely donations of
+money, lands and rights. From private proprietors in New York State
+it obtained presents of land then valued at from $400,000 to
+$500,000, [Footnote: Report on the New York and Erie Railroad
+Company, New York State Assembly Document, No. 50, 1842. See also,
+Investigation of the Railroads of the State of New York, 1879, I:
+100.] but now worth tens of millions of dollars. In addition, an
+extraordinary series of special privileges and franchises was given
+to it. This process was manifolded in every State through which the
+railroad passed. The cost of construction and equipment came almost
+wholly from the grants of public funds. [Footnote: "The Erie railway
+was built by the citizens of this State with money furnished by its
+people. The State in its sovereign capacity gave the corporation
+$3,000,000. The line was subsequently captured, or we may say stolen,
+by the fraudulent issue of more than $50,000,000 of stock." ... "An
+analysis of the Erie Reorganization bill, etc., submitted to the
+Legislature by John Livingston, Esq., counsel for the Erie Railway
+Shareholders, 1876."]
+
+Confiding in the fair promises of its projectors, the people
+credulously supposed that their interests would be safeguarded. But
+from time to time, Legislature after Legislature was corrupted or
+induced to enact stealthy acts by which the railroad was permitted to
+pass without restriction into the possession of a small clique of
+exploiters and speculators. Not only were the people cheated out of
+funds raised by public taxation and advanced to build the road--a
+common occurrence in the case of most railroads--but this very money
+was claimed by the capitalist owners as private capital, large
+amounts of bonds and stocks were issued against it, and the producers
+were assessed in the form of high freight and passenger rates to pay
+the necessary interest and dividends on those spurious issues.
+
+
+THE SPECULATOR, DREW, GETS CONTROL.
+
+Not satisfied with the thefts of public funds, the successive cliques
+in control of the Erie Railroad continually plundered its treasury,
+and defrauded its stockholders. So little attention was given to
+efficient management that shocking catastrophies resulted at frequent
+intervals. A time came, however, when the old locomotives, cars and
+rails were in such a state of decay, that the replacing of them could
+no longer be postponed. To do this money was needed, and the treasury
+of the company had been continuously emptied by looting.
+
+The directors finally found a money loaner in Daniel Drew, an uncouth
+usurer. He had graduated from being a drover and tavern keeper to
+being owner of a line of steamboats plying between New York and
+Albany. He then, finally, had become a Wall street banker and broker.
+For his loans Drew exacted the usual required security. By 1855 he
+had advanced nearly two million dollars--five hundred thousand in
+money, the remainder in endorsements. The Erie directors could not
+pay up, and the control of the railroad passed into his hands. As
+ignorant of railroad management as he was of books, he took no pains
+to learn; during the next decade he used the Erie railroad simply as
+a gambling means to manipulate the price of its stocks on the Stock
+Exchange. In this way he fleeced a large number of dupes decoyed into
+speculation out of an aggregate of millions of dollars.
+
+Old Cornelius Vanderbilt looked on with impatience. He foresaw the
+immense profits which would accrue to him if he could get control of
+the Erie Railroad; how he could give the road a much greater value by
+bettering its equipment and service, and how he could put through the
+same stock-watering operations that he did in his other transactions.
+Tens of millions of dollars would be his, if he could only secure
+control. Moreover, the Erie was likely at any time to become a
+dangerous competitor of his railroads. Vanderbilt secretly began
+buying stock; by 1866 he had obtained enough to get control. Drew and
+his dummy directors were ejected, Vanderbilt superseding them with
+his own.
+
+       *       *       *       *       *       *       *
+
+VANDERBILT OUSTS DREW, THEN RESTORES HIM.
+
+The change was worked with Vanderbilt's habitual brusque rapidity.
+Drew apparently was crushed. He had, however, one final resource, and
+this he now used with histrionic effect. In tears he went to
+Vanderbilt and begged him not to turn out and ruin an old, self-made
+man like himself. The appeal struck home. Had the implorer been
+anyone else, Vanderbilt would have scoffed. But, at heart, he had a
+fondness for the old illiterate drover whose career in so many
+respects resembled his own. Tears and pleadings prevailed; in a
+moment of sentimental weakness--a weakness which turned out to be
+costly--Vanderbilt relented. A bargain was agreed upon by which Drew
+was to resume directorship and represent Vanderbilt's interests and
+purposes.
+
+Reinstated in the Erie board, Drew successfully pretended for a time
+that he was fully subservient. Ostensibly to carry out Vanderbilt's
+plans he persuaded that magnate to allow him to bring in as directors
+two men whose pliancy, he said, could be depended upon. These were
+Jay Gould, demure and ingratiating, and James Fisk, Jr., a portly,
+tawdry, pompous voluptuary. In early life Fisk had been a peddler in
+Vermont, and afterwards had managed an itinerant circus. Then he had
+become a Wall street broker. Keen and suspicious as old Vanderbilt
+was, and innately distrustful of both of them, he nevertheless, for
+some inexplicable reason, allowed Drew to install Gould and Fisk as
+directors. He knew Gould's record, and probably supposed him, as well
+as Fisk, handy tools (as was charged) to do his "dirty work" without
+question. He put Drew, Gould and Fisk on Erie's executive committee.
+In that capacity they could issue stock and bonds, vote improvements,
+and generally exercise full authority.
+
+       *       *       *       *       *       *       *
+
+DREW, GOULD AND FISK BETRAY VANDERBILT.
+
+At first, they gave every appearance of responding obediently to
+Vanderbilt's directions. Believing it to his interest to buy as much
+Erie stock as he could, both as a surer guarantee of control, and to
+put his own price upon it, Vanderbilt continued purchasing. The trio,
+however, had quietly banded to mature a plot by which they would
+wrest away Vanderbilt's control.
+
+This was to be done by flooding the market with an extra issue of
+bonds which could be converted into stock, and then by running down
+the price, and buying in the control themselves. It was a trick that
+Drew had successfully worked several years before. At a certain
+juncture he was apparently "caught short" in the Stock Exchange, and
+seemed ruined. But at the critical moment he had appeared in Wall
+street with fifty-eight thousand shares of stock, the existence of
+which no one had suspected. These shares had been converted from
+bonds containing an obscure clause allowing the conversion. The
+projection of this large number of shares into the stock market
+caused an immediate and violent decline in the price. By selling
+"short"--a Wall street process which we have described elsewhere--
+Drew had taken in large sums as speculative winnings.
+
+The same ruse Drew, Gould and Fisk now proceeded to execute on
+Vanderbilt. Apparently to provide funds for improving the railroad,
+they voted to issue a mass of bonds. Large quantities of these they
+turned over to themselves as security for pretended advances of
+moneys. These bonds were secretly converted into shares of stock, and
+then distributed among brokerage houses of which the three were
+members. Vanderbilt, intent upon getting in as much as he could,
+bought the stock in unsuspectingly. Then came revelations of the
+treachery of the three men, and reports of their intentions to issue
+more stock.
+
+Vanderbilt did not hesitate a moment. He hurried to invoke the
+judicial assistance of Judge George C. Barnard, of the New York State
+Supreme Court. He knew that he could count on Barnard, whom at this
+time he corruptly controlled. This judge was an unconcealed tool of
+corporate interests and of the plundering Tweed political "ring"; for
+his many crimes on the bench he was subsequently impeached.
+[Footnote: At his death $1,000,000 in bonds and cash were found among
+his effects.] Barnard promptly issued a writ enjoining the Erie
+directors from issuing further stock, and ordered them to return to
+the Erie treasury one-fourth of that already issued. Furthermore, he
+prohibited any more conversion of bonds into stock on the ground that
+it was fraudulent.
+
+So pronounced a victory was this considered for Vanderbilt, that the
+market price of Erie stock went up thirty points. But the plotters
+had a cunning trick in reserve. Pretending to obey Barnard's order,
+they had Fisk wrench away the books of stock from a messenger boy
+summoned ostensibly to carry them to a deposit place on Pine street.
+They innocently disclaimed any knowledge of who the thief was; as for
+the messenger boy, he "did not know." These one hundred thousand
+shares of stock Drew, Gould and Fisk instantly threw upon the stock
+market. No one else had the slightest suspicion that the court order
+was being disobeyed. Consequently, Vanderbilt's brokers were busily
+buying in this load of stock in million-dollar bunches; other persons
+were likewise purchasing. As fast as the checks came in, Drew and his
+partners converted them into cash.
+
+
+GOULD AND HIS PARTNERS FLEE WITH MILLIONS.
+
+It was not until the day's activity was over that Vanderbilt, amazed
+and furious, realized that he had been gouged out of $7,000,000.
+Other buyers were also cheated out of millions. The old man had been
+caught napping; it was this fact which stung him most. However, after
+the first paroxysm of frenzied swearing, he hit upon a plan of
+action. The very next morning warrants were sworn out for the arrest
+of Drew, Fisk and Gould. A hint quickly reached them; they thereupon
+fled to Jersey City out of Barnard's jurisdiction, taking their cargo
+of loot with them. According to Charles Francis Adams, in his
+"Chapters of Erie," one of them bore away in a hackney coach bales
+containing $6,000,000 in greenbacks. [Footnote: "Chapters of Erie":
+30.] The other two fugitives were loaded down with valises crammed
+with bonds and stocks.
+
+Here in more than one sense was an instructive and significant
+situation. Vanderbilt, the foremost blackmailer of his time, the
+plunderer of the National Treasury during the Civil War, the arch
+briber and corruptionist, virtuously invoking the aid of the law on
+the ground that he had been swindled! Drew, Gould and Fisk
+sardonically jested over it. But joke as they well might over their
+having outwitted a man whose own specialty was fraud, they knew that
+their position was perilous. Barnard's order had declared their sales
+of stock to be fraudulent, and hence outlawed; and, moreover, if they
+dared venture back to New York, they were certain, as matters stood,
+of instant arrest with the threatened alternative of either
+disgorging or of a criminal trial and possibly prison. To themselves
+they extenuated their thefts with the comforting and self-sufficient
+explanation that they had done to Vanderbilt precisely what he had
+done to others, and would have done to them. But it was not with
+themselves that the squaring had to be done, but with the machinery
+of law; Vanderbilt was exerting every effort to have them imprisoned.
+
+How was this alarming exigency to be met? They speedily found a way
+out. While Vanderbilt was thundering in rage, shouting out streaks of
+profanity, they calmly went ahead to put into practice a lesson that
+he himself had thoroughly taught. He controlled a sufficient number
+of judges; why should not they buy up the Legislature, as he had
+often done? The strategic plan was suggested of getting the New York
+Legislature to pass an act legalizing their fraudulent stock issues.
+Had not Vanderbilt and other capitalists often bought up Congress and
+Legislatures and common councils? Why not now do the same? They well
+knew the approved method of procedure in such matters; an onslaught
+of bribing legislators, they reckoned, would bring the desired
+result.
+
+
+GOULD BRIBES THE LEGISLATURE WITH $500,000.
+
+Stuffing $500,000 in his satchel, Gould surreptitiously hurried to
+Albany. Detected there and arrested, he was released under heavy bail
+which a confederate supplied. He appeared in court in New York City a
+few days later, but obtained a postponement of the action. No time
+was lost by him. "He assiduously cultivated," says Adams, "a thorough
+understanding between himself and the Legislature." In the face of
+sinister charges of corruption, the bill legalizing the fraudulent
+stock issues was passed. Ineffectually did Vanderbilt bribe the
+legislators to defeat it; as fast as they took and kept his money,
+Gould debauched them with greater sums. One Senator in particular, as
+we have seen, accepted $75,000 from Vanderbilt, and $100,000 from
+Gould, and pocketed both amounts.
+
+A brisk scandal naturally ensued. The usual effervescent expedient of
+appointing an investigating committee was adopted by the New York
+State Senate on April 10, 1868. This committee did not have to
+investigate to learn the basic facts; it already knew them. But it
+was a customary part of the farce of these investigating bodies to
+proceed with a childlike assumption of entire innocence.
+
+Many witnesses were summoned, and much evidence was taken. The
+committee reported that, according to Drew's testimony, $500,000 had
+been drawn out of the Erie railroad's treasury, ostensibly for
+purposes of litigation, and that it was clear "that large sums of
+money did come from the treasury of the Erie Railroad Company, which
+were expended for some purpose in Albany, for which no vouchers seem
+to have been filed in the offices of the company." The committee
+further found that "large sums of money were expended for corrupt
+purposes by parties interested in legislation concerning railways
+during the session of 1868."
+
+But who specifically did the bribing? And who were the legistators
+bribed? These facts the committee declared that it did not know. This
+investigating sham resulted, as almost always happened in the case of
+similar inquisitions, in the culpability being thrown upon certain
+lobbyists "who were enriched." These lobbyists were men whose trade
+it was to act as go-betweens in corrupting legistators. Gould and
+Thompson--the latter an accomplice--testified that they had paid
+"Lon" Payn, a lobbyist who subsequently became a powerful Republican
+politician, $10,000 "for a few days' services in Albany in advocating
+the Erie bill"; and it was further brought out that $100,000 had been
+given to the lobbyists Luther Caldwell and Russell F. Hicks, to
+influence legislation and also to shape public opinion through the
+press. Caldwell, it appeared, received liberal sums from both
+Vanderbilt and Gould. [Footnote: Report of the Select Committee of
+the New York Senate, appointed April 10, 1868, in Relation to Members
+Receiving Money from Railway Companies. Senate Document No. 52,
+1869:3-12, and 137, 140-146. ] A subsequent investigation committee
+appointed, in 1873, to inquire into other charges, reported that in
+one year of 1868 the Erie railroad directors, comprising Drew, Gould,
+Fisk and their associates, had spent more than a million dollars for
+"extra and legal services," and that it was "their custom from year
+to year to spend large sums to control elections and to influence
+legislation." [Footnote: Report of the Select Committee of the
+Assembly, Assembly Documents, 1873, Doc. No. 98: xix.] [Footnote:
+"What the Erie has done," the Committee reported, "other great
+corporations are doubtless doing from year to year. Combined as they
+are, the power of the great moneyed corporations of this country is a
+standing menace to the liberties of the people.
+
+"The railroad lobby flaunts its ill-gotten gains in the faces of our
+legislatures, and in all our politics the debasing effect of its
+influence is felt" (p. 18).]
+
+Vanderbilt later succeeded in compelling the Erie Railroad to
+reimburse him for the sums that he thus corruptly spent in fighting
+Drew, Gould and Fisk. [Footnote: Railroad Investigation of the State
+of New York, 1879, ii: 1654.]
+
+Their huge thefts having been legalized, Drew, Gould and Fisk
+returned to Jersey City. But their path was not yet clear. Vanderbilt
+had various civil suits in New York against them; moreover they were
+adjudged in contempt of court. Parleying now began. With the severest
+threats of what the courts would do if they refused, Vanderbilt
+demanded that they buy back the shares of stock that they had
+unloaded upon him.
+
+Drew was the first to compromise; Gould and Fisk shortly afterward
+followed. They collectively paid Vanderbilt $2,500,000 in cash,
+$1,250,000 in securities for fifty thousand Erie shares, and another
+million dollars for the privilege of calling upon him for the
+remaining fifty thousand shares at any time within four months.
+Although this settlement left Vanderbilt out of pocket to the extent
+of almost two million dollars, he consented to abandon his suits. The
+three now left their lair in Jersey City and transferred the Erie
+offices to the Grand Opera House, at Eighth avenue and Twenty-third
+street, New York City. In this collision with Vanderbilt, Gould
+learned a sharp lesson he thereafter never overlooked; namely, that
+it was not sufficient to bribe common councils and legislatures; he,
+too, must own his judges. Events showed that he at once began
+negotiations.
+
+
+GOULD AND FISK THROW OVER DREW.
+
+The next development was characteristic. Having no longer any need
+for their old accomplice, Gould and Fisk, by tactics of duplicity,
+gradually sheared Drew and turned him out of the management to
+degenerate into a financial derelict. It was Drew's odd habit,
+whenever his plans were crossed, or he was depressed, to rush off to
+his bed, hide himself under the coverlets and seek solace in sighs
+and self-compassion, or in prayer--for with all his unscrupulousness
+he had an orthodox religious streak. When Drew realized that he had
+been plundered and betrayed, as he had so often acted to others, he
+sought his bed and there long remained in despair under the blankets.
+The whimsical old extortionist never regained his wealth or standing.
+Upon Drew's effacement Gould caused himself to be made president and
+treasurer of the Erie Railroad, and Fisk vice-president and
+controller.
+
+When Gould and Fisk began to turn out more watered stock various
+defrauded malcontent stockholders resolved to take an intervening
+hand. This was a new obstacle, but it was coolly met. Gould and Fisk
+brought in gangs of armed thugs to prevent these stockholders from
+getting physical possession of the books of the company. Then the New
+York Legislature was again corrupted.
+
+A bill called the Classification Act, drafted to insure Gould and
+Fisk's legal control, was enacted. This bill provided that only one-
+fifth of the board of directors should be retired in any year. By
+this means, although the majority of stockholders might be opposed to
+the Gould-Fisk management, it would be impossible for them to get
+possession of the road for at least three years, and full possession
+for not less than five years.
+
+But to prevent the defrauded large stockholders from getting
+possession of the railroad through the courts, another act was
+passed. This provided that no judgement to oust the board of
+directors could be rendered by any court unless the suit was brought
+by the Attorney-General of the State. It was thus only necessary for
+Gould and Fisk to own the Attorney-General entirely (which they took
+pains, of course, to do) in order to close the courts to the
+defrauded stockholders. On a trumped-up suit, and by an order of one
+of the Tweed judges, a receiver was appointed for the stock owned by
+foreign stockholders; and when any of it was presented for record in
+the transfer book of the Erie railroad, the receiver seized it. In
+this way Gould and Fisk secured practical possesssion of $6,000,000
+of the $50,000,000 of stock held abroad.
+
+
+ALLIANCE WITH CORRUPT POLITICS AND JUDICIARY.
+
+From 1868 to 1872 Gould, abetted by subservient directors, issued two
+hundred and thirty-five thousand more shares of stock. [Footnote:
+Fisk was murdered by a rival in 1872 in a feud over Fisk's mistress.
+His death did not interrupt Gould's plans.] The frauds were made
+uncommonly easy by having Tweed machine as an auxiliary; in turn,
+Tweed, up to 1871, controlled the New York City and State dominant
+political machine, including the Legislature and many of the judges.
+To insure Tweed's connivance, they made him a director of the Erie
+Railroad, besides heavily bribing him. [Footnote: "Did you ever
+receive any money from either Fisk or Gould to be used in bribing the
+Legislature?" Tweed was asked by an aldermanic committee in 1877,
+after his downfall.
+
+A. "I did sir! They were of frequent occurrence. Not only did I
+receive money but I find by an examination of the papers that
+everybody else who received money from the Erie railroad charged it
+to me."--Documents of the Board of Aldermen, 1877, Part II, No.
+8:49.] With Tweed as an associate they were able to command the
+judges who owed their elevation to him. Barnard, one of Tweed's
+servile tools, was sold over to Gould and Fisk, and so throughly did
+this judge prostitute his office at their behest that once, late at
+night, at Fisk's order, he sportively held court in the apartment of
+Josie Mansfield, Fisk's mistress. [Footnote: The occasion grew out of
+an attempt of Gould and Fisk in 1869 to get control of the Albany and
+Sesquehanna Railroad. Two parties contested--The Gould and the
+"Ramsey," headed by J. Pierpont Morgan. Each claimed the election of
+its officers and board of directors. One night, at half-past ten
+o'clock, Fisk summoned Barnard from Poughkeepsie to open chambers in
+Josie Mansfield's rooms. Barnard hurried there, and issued an order
+ousting Ramsey from the presidency. Judge Smith at Rochester
+subsequently found that Ramsey was legally elected, and severely
+denounced Gould and Fisk--"Letters of General Francis C. Barlow,
+Albany": 1871.
+
+The records of this suit (as set forth in Lansing's Reports, New York
+Supreme Court. I:308, etc.) show that each of the contesting parties
+accused the other of gross fraud, and that the final decision was
+favorable to the "Ramsey" party. See the chapters on J. Pierpont
+Morgan in Vol. III of this work.] When the English stockholders sent
+over a large number of shares to be voted in for a new management, it
+was Barnard who allowed this stock to be voted by Gould and Fisk. At
+another time Gould and Fisk called at Barnard's house and obtained an
+injunction while he was eating breakfast.
+
+It was largely by means of his corrupt alliance with the Tweed "ring"
+that Gould was able to put through his gigantic frauds from 1868 to
+1872.
+
+Gould was, indeed, the unquestioned master mind in these
+transactions; Fisk and the others merely executed his directions. The
+various fraudulent devices were of Gould's origination. A biographer
+of Fisk casually wrote at the time: "Jay Gould and Fisk took William
+M. Tweed into their board, and the State Legislature, Tammany Hall
+and the Erie 'ring' were fused together and have contrived to serve
+each other faithfully." [Footnote: "A Life of James Fisk, Jr.," New
+York, 1871.] Gould admitted before a New York State Assembly
+investigating committee in 1873 that, in the three years prior to
+1873, he had paid large sums to Tweed and to others, and that he had
+also disbursed large sums "which might have been used to influence
+legislation or elections." These sums were facetiously charged on the
+Erie books to "India Rubber Account"--whatever that meant.
+
+Gould cynically gave more information. He could distinctly recall, he
+said, "that he had been in the habit of sending money into various
+districts throughout the State," either to control nominations or
+elections for Senators or members of the Assembly. He considered
+"that, as a rule, such investments paid better than to wait until the
+men got to Albany." Significantly he added that it would be as
+impossible to specify the numerous instances "as it would be to
+recall the number of freight cars sent over the Erie Railroad from
+day to day." His corrupt operations, he indifferently testified,
+extended into four different States. "In a Republican district I was
+a Republican; in a Democratic district, a Democrat; in a doubtful
+district I was doubtful; but I was always for Erie." [Footnote:
+Report of, and Testimony Before, the Select Assembly Committee, 1873,
+Assembly Documents, Doc. No. 98: xx, etc.] The funds that he thus
+used in widespread corruption came obviously from the proceeds of his
+great thefts; and he might have added, with equal truth, that with
+this stolen money he was able to employ some of the most eminent
+lawyers of the day, and purchase judges.
+
+
+GOULD'S TRADING CLASS SUPPORT
+
+Those writers who are content with surface facts, or who lack
+understanding of popular currents, either state, or leave the
+inference, that it was solely by bribing and trickery that Gould was
+able to consummate his frauds. Such assertions are altogether
+incorrect. To do what he did required the support, or at least
+tolerance, of a considerable section of public opinion. This he
+obtained. And how? By posing as a zealous anti-monopolist.
+
+The cry of anti-monopoly was the great fetich of the entire middle
+class; this class viewed with fear the growing concentration of
+wealth; and as its interests were reflected by a large number of
+organs of public opinion, it succeeded in shaping the thoughts of no
+small a section of the working class.
+
+While secretly bribing, Gould constantly gave out for public
+consumption a plausible string of arguments, in which act, by the
+way, he was always fertile. He represented himself as the champion of
+the middle and working classes in seeking to prevent Vanderbilt from
+getting a monopoly of many railroads. He played adroitly upon the
+fears, the envy and the powerful mainsprings of the self interest of
+the middle class by pointing out how greatly it would be at the mercy
+of Vanderbilt should Vanderbilt succeed in adding the Erie Railroad
+and other railroads to his already formidable list.
+
+It was a time of all times when such arguments were bound to have an
+immense effect; and that they did was shown by the readiness with
+which the trading class excused his corruption and frauds on the
+ground that he seemed to be the only man who proved that he could
+prevent Vanderbilt from gobbling up all of the railroads leading from
+New York City. With a great fatuousness the middle class supposed
+that he was fighting for its cause.
+
+The bitterness of large numbers of the manufacturing, jobbing and
+agricultural classes against Commodore Vanderbilt was deep-seated. By
+an illegal system of preferential freight rates to certain
+manufacturers, Vanderbilt put these favorites easily in a position
+where they could undersell competitors. Thus, A. T. Stewart, one of
+the noted millionaire manufacturers and merchants of the day, instead
+of owing his success to his great ability, as has been set forth,
+really derived it, to a great extent, from the secret preferential
+freight rates that he had on the Vanderbilt railroads. A variety of
+other coercive methods were used by Vanderbilt. Special freight
+trains were purposely delayed and run at snail's pace in order to
+force shippers to pay the extraordinary rates demanded for shipping
+over the Merchant's Dispatch, a fast freight line owned by the
+Vanderbilt family.
+
+These were but a few of the many schemes for their private graft that
+the Vanderbilts put in force. The agricultural class was taxed
+heavily on every commodity shipped; for the transportation of milk,
+for example, the farmer was taxed one-half of what he himself
+received for milk. These taxes, of course, eventually fell upon the
+consumer, but the manufacturer and the farmer realized that if the
+extortions were less, their sales and profits would be greater. They
+were in a rebellious mood and gladly welcomed a man such as Gould who
+thwarted Vanderbilt at every turn. Gould well knew of this bitter
+feeling against Vanderbilt; he used it, and thrust himself forward
+constantly in the guise of the great deliverer.
+
+As for the small stockholders of the Erie railroad, Gould easily
+pacified them by holding out the bait of a larger dividend than they
+had been getting under the former regime. This he managed by the
+common and fraudulent expedient of issuing bonds, and paying
+dividends out of proceeds. So long as the profits of these small
+stockholders were slightly better than they had been getting before,
+they were complacently satisfied to let Gould continue his frauds.
+This acquiescence in theft has been one of the most pronounced
+characteristics of the capitalistic investors, both large and small.
+Numberless instances have shown that they raise no objections to
+plundering management provided that under it their money returns are
+increased.
+
+The end of Gould's looting of the Erie railroad was now in sight.
+However the small stockholders might assent, the large English
+stockholders, some of whom had invidious schemes of their own in the
+way of which Gould stood, were determined to gain control themselves.
+
+
+GOULD'S DIRECTORS BRIBED TO RESIGN.
+
+They made no further attempt to resort to the law. A fund of $300,000
+was sent over by them to their American agents with which to bribe a
+number of Gould's directors to resign. As Gould had used these
+directors as catspaws, they were aggrieved because he had kept all of
+the loot himself. If he had even partly divided, their sentiments
+would have been quite different. The $300,000 bribery fund was
+distributed among them, and they carried out their part of the
+bargain by resigning. [Footnote: Assembly Document No. 98, 1873: xii
+and xiii. The English stockholders took no chances on this occasion.
+The committee reported that not until the directors had resigned did
+they "receive their price." ] The Assembly Investigating Committee of
+1873 referred carelessly to the English stockholders as being
+"impatient at the law's delay" and therefore taking matters into
+their own hands. If a poor man or a trade union had become "impatient
+at the law's delay" and sought an illegal remedy, the judiciary would
+have quickly pronounced condign punishment and voided the whole
+proceeding. The boasted "majesty of law" was a majesty to which the
+underdogs only were expected to look up to in fear and trepidation.
+
+When the English stockholders elected their own board Gould obtained
+an injunction from the courts. This writ was absolutely disregarded,
+and the anti-Gould faction on March 11, 1872, seized possession of
+the offices and books of the company by physical force. Did the
+courts punish these men for criminal contempt? No effort was made to.
+Many a worker or labor union leader had been sent to jail (and has
+been since), for "contempt of court," but the courts evidently have
+been willing enough to stomach all of the contempt profusely shown
+for them by the puissant rich. The propertyless owned nothing, not to
+speak of a judge, but the capitalists owned whole strings of judges,
+and those whom they did not own or corrupt were generally influenced
+to their side by association or environment. "All of this," reported
+the Assembly Investigating Committee of 1873, speaking of the means
+employed to overthrow Gould, "has been done without authority of
+law." But no law was invoked by the officials to make the
+participants account for their illegal acts.
+
+
+THE LEGISLATURE BRIBED AGAIN.
+
+It seems that the entire amount, including the large fees paid to
+agents and lawyers, corruptly expended by the English capitalists in
+ousting Gould, was $750,000. Did they foot this bill out of their own
+pockets? By no means. They arranged the reimbursements by voting this
+sum to themselves out of the Erie Railroad treasury; [Footnote:
+Assembly Document No. 98, 1873: xii and xvi.] that is to say, they
+compelled the public to shoulder it by adding to the bonded burdens
+on which the people were taxed to pay interest.
+
+To complete their control they bribed the New York Legislature to
+repeal the Classification Act. As has been shown, the Legislature of
+1872 was considered a "reform" body, and it also has been brought out
+how Vanderbilt bribed it to give him invaluable public franchises and
+large grants of public money. In fact, other railroad magnates as
+well as he systematically bribed; and it is clear that they
+contributed jointly a pool of money both to buy laws and to prevent
+the passage of objectionable acts. "It appears conclusive," reported
+the Assembly Investigating Committee of 1873, "that a large amount--
+reported by one witness at $100,000--was appropriated for legislative
+purposes by the railroad interest in 1872, and that this [$30,000]
+was Erie's proportion." [Footnote: Ibid., xvii.] One of the
+lobbyists, James D. Barber, "a ruling spirit in the Republican
+party," admitted receiving $50,000 from the Vanderbilts. [Footnote:
+Ibid., 633.] While uniting to suppress bills feared by them all, each
+of the magnates bribed to foil the others' purposes.
+
+
+GOULD'S DIRECT ERIE THEFTS WERE $12,000,000.
+
+What did Gould's plunder amount to? His direct thefts, by reason of
+his Erie frauds, seem to have reached more than twelve million
+dollars, all, or nearly all, of which he personally kept.
+
+That sum, considering the falling prices of commodities after the
+panic of 1873, and comparable with current standards of cost and
+living, was equivalent to perhaps double the amount at present.
+Various approximations of his thefts were made. After a minute
+examination of the Erie railroad's books, Augustus Stein, an expert
+accountant, testified before the "Hepburn Committee" (the New York
+Assembly Investigating Committee of 1879) that Gould had himself
+pocketed twelve or thirteen million dollars. [Footnote: Q.--Do you
+think you could remember the aggregate amount of wrong-doing on the
+part of Mr. Gould that you have discovered?
+
+A.--I could give an estimate throwing off a couple of millions here
+and there; I could say that it amounted to--that is, what we
+discovered--amounted to about twelve or thirteen million dollars.--
+Railroad Investigation of the State of New York, 1879, ii: 1765.]
+
+This, however, was only one aspect. Between 1868 and 1873 Gould and
+his accomplices had issued $64,000,000 of watered stock. Gould, so
+the Erie books revealed, had charged $12,000,000 as representing the
+outlay for construction and equipment, yet not a new rail had been
+laid, nor a new engine put in use, nor a new station built. These
+twelve millions or more were what he and his immediate accomplices
+had stolen outright from the Erie Railroad treasury. Considerable
+sums were, of course, paid corruptly to politicians, but Gould got
+them all back, as well as the plunder of his associates, by
+personally manipulating Erie stock so as to compel them to sell at a
+great loss to themselves, and a great profit to himself. Furthermore,
+in these manipulations of stock, he scooped in more millions from
+other sources.
+
+Had it not been for his intense greed and his constitutional
+inability to remain true to his confederates, Gould might have been
+allowed to retain the proceeds of his thefts. His treachery to one of
+them, Henry N. Smith, who had been his partner in the brokerage firm
+of Smith, Gould and Martin, resulted in trouble. Gould cornered the
+stock of the Chicago and Northwestern Railroad; to put it more
+plainly, he bought up the outstanding available supply of shares, and
+then ran the price up from 75 to 250. Smith was one of a number of
+Wall Street men badly mulcted in this operation, as Gould intended.
+Seeking revenge, Smith gave over the firm's books, which were in his
+possession, to General Barlow, counsel for the Erie Railroad's
+protesting stockholders. [Footnote: Railroad Investigation, etc.,
+v:531] Evidence of great thefts was quickly discovered, and an action
+was started to compel Gould to disgorge about $12,000,000. A criminal
+proceeding was also brought, and Gould was arrested and placed under
+heavy bonds.
+
+
+AN EXTRAORDINARY "RESTITUTION."
+
+Apparently Gould was trapped. But a wonderful and unexpected
+development happened which filled the Wall Street legion with
+admiration for his craft and audacity. He planned to make his very
+restitution the basis for taking in many more millions by
+speculation; he knew that when it was announced that he had concluded
+to disgorge, the market value of the stock would instantly go up and
+numerous buyers would appear.
+
+Secretly he bought up as much Erie stock as he could. Then he
+ostentatiously and with the widest publicity declared his intension
+to make restitution. Such a cackling sensation it made! The price of
+Erie stock at once bounded up, and his brokers sold quantities of it
+to his great accruing profit. The pursuing stockholders assented to
+his offer to surrender his control of the Erie Railroad, and to
+accept real estate and stocks seemingly worth $6,000,000. But after
+the stockholders had withdrawn their suits, they found that they had
+been tricked again. The property that Gould had turned over to them
+did not have a market value of more than $200,000. [Footnote:
+Railroad Investigation, etc. 1879, iii: 2503. One of the very rare
+instances in which any of Gould's victims was able to compel him to
+disgorge, was that described in the following anecdote, which went
+the rounds of the press: "An old friend had gone to Gould telling him
+that he had managed to save up some $20,000, and asking his advice as
+to how he should invest it in such a manner as to be absolutely safe,
+for the benefit of his family. Gould told him to invest it in a
+certain stock, and assured him that the investment would be
+absolutely safe as to income, and, besides, its market value would
+shortly be greatly enhanced.
+
+"The man did as advised by Gould, and the stock promptly started to
+go down. Lower and lower it went, and seeing the steady depreciation
+in the price of the stock, and hearing stories to the effect that the
+dividends were to be passed, the man wrote to Gould asking if the
+investment was still good. Gould replied to his friend's letter,
+assuring him that the stories had no foundation in fact and were
+being circulated purely for market effect.
+
+"But still the stock declined. Each day the price went to new lower
+figures on the Stock Exchange, and finally the rumors became fact,
+and the Directors passed the dividend. The man had seen the savings
+of years vanish in a few months and realized that he was a ruined
+man.
+
+"Goaded to an almost insane frenzy, he rushed into Gould's office the
+afternoon the Directors announced the passing of the dividend, and
+told Gould that he had been deliberately and grossly deceived and
+that he was ruined. He wound up by announcing his intention of
+shooting Gould then and there.
+
+"Gould heard his quondam friend through. There could be no mistaking
+the man's intent. He was evidently half crazed and possessed of an
+insane desire to carry out his threat. Gould turned to him and said:
+'My dear Mr.---' calling him by name, 'you are laboring under a most
+serious misapprehension. Your money is not lost. If you will go down
+to my bank tomorrow morning, you will find there a balance of $25,000
+to your credit. I sold out your stock some time ago, but had
+neglected to notify you.' The man looked at him in amazement and,
+half doubting, left the office.
+
+"As soon as he had left the office Gould sent word to his bank to
+place $25,000 to this man's credit. The man spent a sleepless night,
+torn by doubts and fears. When the bank opened for business he was
+the first man in line, and was nearly overcome when the cashier
+handed him the sum that Gould had named the previous afternoon.
+
+"Gould had evidently decided in his own mind that the man was
+determined to kill him, and that the only way to save his life and
+his name was to pay the man the sum he had lost plus a profit, in the
+manner he did. But as a sidelight on the absolutely cold-blooded
+self-possession of the man, it is interesting."]
+
+
+THE SECOND STAGE OF THE GOULD FORTUNE
+
+Gould's thefts from the Erie railroad were, however, only one of his
+looting transactions during those busy years. At the same time, he
+was using these stolen millions to corner the gold supply. In this
+"Black Friday" conspiracy (for so it was styled) he fradulently
+reaped another eleven million dollars to the accompaniment of a
+financial panic, with a long train of failures, suicides and much
+disturbance and distress.
+
+
+
+
+CHAPTER XI
+
+THE GOULD FORTUNE BOUNDS FORWARD
+
+
+The "gold conspiracy" as plotted and consummated by Gould was in its
+day denounced as one of the most disgraceful events in American
+history. To adjudge it so was a typical exaggeration and perversion
+of a society caring only about what was passing in its upper spheres.
+The spectacular nature of this episode, and the ruin it wrought in
+the ranks of the money dealers and of the traders, caused its
+importance to be grossly misrepresented and overdrawn.
+
+
+THE ABUSE OF GOULD OVERDONE
+
+It was not nearly as discreditable as the gigantic and repulsive
+swindles that traders and bankers had carried on during the dark
+years of the Civil War. The very traders and financiers who beslimed
+Gould for his "gold conspiracy" were those who had built their
+fortunes on blood-soaked army contracts. Nor could the worst aspects
+of Gould's conspiracy, bad as they were, begin to vie in disastrous
+results with the open and insidious abominations of the factory and
+landlord system. To repeat, it was a system in which incredible
+numbers of working men, women and children were killed off by the
+perils of their trades, by disease superinduced and aggravated by the
+wretchedness of their work, and by the misery of their lot and
+habitations. Millions more died prematurely because of causes
+directly traceable to the withering influences of poverty.
+
+But this unending havoc, taking place silently in the routine
+departments of industry, and in obscure alleyways, called forth
+little or no notice. What if they did suffer and perish? Society
+covered their wrongs and injustices and mortal throes with an
+inhibitive silence, for it was expected that they, being lowly,
+should not complain, obtrude grievances, or in any way make
+unpleasant demonstrations. Yet, if the prominent of society were
+disgruntled, or if a few capitalists were caught in the snare of ruin
+which they had laid for others, they at once bestirred themselves and
+made the whole nation ring with their outcries and lamentations.
+Their merest whispers became thunderous reverberations. The press,
+the pulpit, legislative chambers and the courts became their strident
+voices, and in all the influential avenues for directing public
+opinion ready advocates sprang forth to champion their plaints, and
+concentrate attention upon them. So it was in the "gold conspiracy."
+
+
+GOULD EMBARKS ON HIS CONSPIRACY
+
+After the opening of the Civil War, gold was exceedingly scarce, and
+commanded a high premium. The supply of this metal, this yellow
+dross, which to a considerable degree regulated the world's relative
+values of wages and commodities, was monopolized by the powerful
+banking interests. In 1869 but fifteen million dollars of gold was in
+actual circulation in the United States.
+
+Notwithstanding the increase of industrial productive power, the
+continuous displacement of obsolete methods by the introduction of
+labor-saving machinery, and the consecutive discovery of new means
+for the production of wealth, the task of the worker was not
+lightened. He had, for the most part, after great struggles, secured
+a shorter workday, but if the hours were shorter the work was more
+tense and racking than in the days before steam-driven machinery
+supplanted the hand tool. The mass of the workers were in a state of
+dependence and poverty. The land, industrial and financial system,
+operating in the three-fold form of rent, interest and profit, tore
+away from the producer nearly the whole of what he produced. Even
+those factory-owning capitalists exercising a personal and direct
+supervision over their plants, were often at the mercy of the clique
+of bankers who controlled the money marts.
+
+Had the supply of money been proportionate to the growth of
+population and of business, this process of expropriation would have
+been less rapid. As it was, the associated monopolies, the
+international and national banking interests, and the income classes
+in general, constricted the volume of money into as narrow a compress
+as possible. As they were the very class which controlled the law-
+making power of Government, this was not difficult.
+
+The resulting scarcity of money produced high rates of interest.
+These, on the one hand, facilitated usury, and, on the other, exacted
+more labor and produce for the privilege of using that money.
+Staggering under burdensome rates of interest, factory owners,
+business men in general, farmers operating on a large scale, and
+landowners with tenants, shunted the load on to the worker. The
+producing population had to foot the additional bill by accepting
+wages which had a falling buying power, and by having to pay more
+rent and greater prices for necessities. Such conditions were certain
+to accelerate the growth of poverty and the centralization of wealth.
+
+Gould's plan was to get control of the outstanding fifteen millions
+of dollars of gold and fix his own price upon them. Not only from
+what was regarded as legitimate commerce would he exact tribute, but
+he would squeeze to the bone the whole tribe of gold speculators--for
+at that time gold was extensively speculated in to an intensive
+degree.
+
+With the funds stolen from the Erie Railroad treasury, he began to
+buy in gold. To accommodate the crowd of speculators in this metal,
+the Stock Exchange had set apart a "Gold Room," devoted entirely to
+the speculative purchase and sale of gold. Gould was confident that
+his plan would not miscarry if the Government would not put in
+circulation any part of the ninety-five million dollars in gold
+hoarded as a reserve in the National Treasury. The urgent and all-
+important point was to ascertain whether the Government intended to
+keep this sum entirely shut out from circulation.
+
+
+HE BRIBES GOVERNMENT OFFICIALS.
+
+To get this inside information he succeeded in corruptly winning over
+to his interests A. R. Corbin, a brother-in-law of President Grant.
+The consideration was Gould's buying of two million dollars' worth of
+gold bonds, without requiring margin or security for Corbin's account
+[Footnote: Gold Panic Investigation, House Report: No 32, Forty-first
+Congress, Second Session, 1870:157. Corbin's venality in lobbying for
+corrupt bills was notorious; he admitted his complicity before a
+Congressional Investigating Committee in 1857.] Thus Gould thought he
+had surely secured an intimate spy within the authoritative
+precincts of the White House. As the premium on gold constantly
+rose, these bonds yielded Corbin as much sometimes as $25,000 a week
+in profits. To insure the further success of his plan, Gould
+subsidized General Butterfield, whose appointment as sub-treasurer at
+New York Corbin claimed to have brought about. Gould testified in
+1870 that he had made a private loan to Butterfield, and that he had
+carried speculatively $1,500,000 for Butterfield's benefit. These
+statements Butterfield denied. [Footnote: Gold Panic Investigation,
+etc., 160.]
+
+Through Corbin, Gould attempted to pry out Grant's policies, and with
+Fisk as an interlocutor, Gould personally attempted to draw out the
+President. To their consternation they found that Grant was not
+disposed to favor their arguments. The prospect looked very black for
+them. Gould met the situation with matchless audacity. By spreading
+subtle rumors, and by inspiring press reports through venal writers,
+he deceived not only the whole of Wall Street, but even his own
+associates, into believing that high Government officials were in
+collusion with him. The report was assiduously disseminated that the
+Government did not intend to release any of its hoard of gold for
+circulation. The premium, accordingly, shot up to 146. Soon after
+this, certain financial quarters suspected that Gould was bluffing.
+The impression spreading that he could not depend upon the
+Government's support, the rate of the premium declined, and Gould's
+own array of brokers turned against him and sold gold.
+
+
+GOULD BETRAYS HIS PARTNERS.
+
+Entrapped, Gould realized that something had to be done, and done
+quickly, if he were to escape complete ruin, holding as he did the
+large amount of gold that he had bought at steep prices. By plausible
+fabrications he convinced Fisk that Grant was really an ally. Gould
+had bought a controlling interested in the Tenth National Bank. This
+institution Gould and Fisk now used as a fraudulent manufactory of
+certified checks. These they turned out to the amount of tens of
+millions of dollars. With the spurious checks they bought from thirty
+to forty millions in gold. [Footnote: Gold Panic Investigation: 13.]
+Such an amount of gold did not, of course, exist in circulation. But
+the law permitted gambling in it as though it really existed.
+Ordinary card gamblers, playing for actual money, were under the ban
+of law; but the speculative gamblers of the Stock Exchange who bought
+and sold goods which frequently did not exist, carried on their huge
+fraudulent operations with the full sanction of the law. Gould's plan
+was not intricate. Extensive purchases of gold naturally--as the laws
+of trade went--were bound to increase constantly its price.
+
+By September, 1869, Gould and his partners not only held all of the
+available gold in circulation, but they held contracts by which they
+could call upon bankers, manufacturers, merchants, brokers and
+speculators for about seventy millions of dollars more of the metal.
+To the banking, manufacturing and importing interests gold, as the
+standard, was urgently required for various kinds of interfluent
+business transactions: to pay international debts, interest on bonds,
+customs dues or to move the crops. They were forced to borrow it at
+Gould's own price. This price was added to the cost of operation,
+manufacture and sale, to be eventually assessed upon the consumer.
+Gould publicly announced that he would show no mercy to anyone. He
+had a list, for example, of two hundred New York merchants who owed
+him gold; he proposed to print their names in the newspapers,
+demanding settlement at once, and would have done so, had not his
+lawyers advised him that the move might be adjudged criminal
+conspiracy. [Footnote: Gold Panic Investigation, etc., 13.]
+
+The tension, general excitement and pressure in business circles were
+such that President Grant decided to release some of the Government's
+gold, even though the reserve be diminished. In some mysterious way a
+hint of this reached Gould. The day before "Black Friday" he resolved
+to betray his partners, and secretly sell gold before the price
+abruptly dropped. To do this with success it was necessary to keep on
+buying, so that the price would be run up still higher.
+
+Such methods were prohibited by the code of the Stock Exchange which
+prescribed certain rules of the game, for while the members of the
+Exchange allowed themselves the fullest latitude and the most
+unchecked deception in the fleecing of outside elements, yet among
+themselves they decreed a set of rules forbidding any sort of double-
+dealing in trading with one another. To draw an analogy, it was like
+a group of professional card sharps deterring themselves by no
+scruples in the cheating of the unwary, but who insisted that among
+their own kind fairness should be scrupulously observed. Yet, rules
+or no rules, no one could gainsay the fact that many of the foremost
+financiers had often and successfully used the very enfillading
+methods that Gould now used.
+
+While Gould was secretly disposing of his gold holdings, he was
+goading on his confederates and his crowd of fifty or more brokers to
+buy still more. [Footnote: "Gould, the guiltier plotter of all these
+criminal proceedings," reported the Congressional Investigating
+Committee of 1870, "determined to betray his own associates, and
+silent, and imperturbable, by nods and whispers directed all."-Gold
+Panic Investigation: 14.] By this time, it seems, Fisk and his
+partner in the brokerage business, Belden, had some stray inklings of
+Gould's real plan; yet all that they knew were the fragments Gould
+chose to tell them, with perhaps some surmises of their own. Gould
+threw out just enough of an outline to spur on their appetite for an
+orgy of spoils. Undoubtedly, Gould made a secret agreement with them
+by which he could repudiate the purchases of gold made in their
+names. Away from the Stock Exchange Fisk made a ludicrous and
+dissolute enough figure, with his love of tinsel, his show and
+braggadacio, his mock military prowess, his pompous, windy airs and
+his covey of harlots. But in Wall Street he was a man of affairs and
+power; the very assurance that in social life made him ridiculous to
+a degree, was transmuted into a pillar of strength among the throng
+of speculators who themselves were mainly arrant bluffs. A dare-devil
+audacity there was about Fisk that impressed, misled and intimidated;
+a fine screen he served for Gould plotting and sapping in the
+background.
+
+
+THE MEMORABLE "BLACK FRIDAY"
+
+The next day, "Black Friday," September 24, 1869, was one of
+tremendous excitement and gloomy apprehension among the money
+changers. Even the exchanges of foreign countries reflected the
+perturbation. Gould gave orders to buy all gold in Fisk's name;
+Fisk's brokers ran the premium up to 151 and then to 161. The market
+prices of railroad stocks shrank rapidly; failure after failure of
+Wall Street firms was announced, and fortunes were swept away.
+Fearing that the price of gold might mount to 200, manufacturers and
+other business concerns throughout the country frantically directed
+their agents to buy gold at any price. All this time Gould, through
+certain brokers, was secretly selling; and while he was doing so,
+Fisk and Belden by his orders continued to buy.
+
+The Stock Exchange, according to the descriptions of many eye-
+witnesses, was an extraordinary sight that day. On the most
+perfunctory occasions the scenes enacted there might have well filled
+the exotic observer with unmeasured amazement. But never had it
+presented so thoroughly a riotous, even bedlamic aspect as on this
+day, Black Friday; never had greed and the fear born of greed,
+displayed themselves in such frightful forms.
+
+Here could be seen many of the money masters shrieking and roaring,
+anon rushing about with whitened faces, indescribably contorted, and
+again bellowing forth this order or that curse with savage energy and
+wildest gesture. The puny speculators had long since uttered their
+doleful squeak and plunged down into the limbo of ruin, completely
+engulfed; only the big speculators, or their commission men, remained
+in the arena, and many of these like trapped rats scurried about from
+pillar to post. The little fountain in the "Gold Room" serenely
+spouted and bubbled as usual, its cadence lost in the awful uproar;
+over to it rushed man after man splashing its cooling water on his
+throbbing head. Over all rose a sickening exhalation, the dripping,
+malodorous sweat of an assemblage worked up to the very limit of
+mental endurance.
+
+What, may we ask, were these men snarling, cursing and fighting over?
+Why, quite palpably over the division of wealth that masses of
+working men, women and children were laboriously producing, too often
+amid sorrow and death. While elsewhere pinioned labor was humbly
+doing the world's real work, here in this "Gold Room," greed
+contested furiously with greed, cunning with cunning over their share
+of the spoils. Without their structure of law, and Government to
+enforce it, these men would have been nothing; as it was, they were
+among the very crests of society; the makers of law, the wielders of
+power, the pretenders to refinement and culture.
+
+Baffled greed and cunning outmatched and duplicity doubled against
+itself could be seen in the men who rushed from the "Gold Room"
+hatless and frenzied--some literally crazed--when the price of gold
+advanced to 162. In the surrounding streets were howling and
+impassable crowds, some drawn thither by curiosity and excitement,
+others by a fancied interest; surely, fancied, for it was but a war
+of eminent knaves and knavish gamblers. Now this was not a
+"disorderly mob" of workers such as capitalists and politicians
+created out of orderly workers' gatherings so as to have a pretext
+for clubbing and imprisoning; nay it all took place in the
+"conservative" precincts of sacrosanct Wall Street, the abiding place
+of "law and order." The participants were composed of the "best
+classes;" therefore, by all logic it was a scene supereminently sane,
+respectable and legitimate; the police, worthy defenders of the
+peace, treated it all with an awed respect.
+
+Suddenly, early in the afternoon, came reports that the United States
+Treasury was selling gold; they proved to be true. Within fifteen
+minutes the whole fabric of the gold manipulation had gone to pieces.
+It is narrated that a mob, bent on lynching, searched for Gould, but
+that he and Fisk had sneaked away through a back door and had gone
+uptown.
+
+The general belief was that Gould was irretrievably ruined. That he
+was secretly selling gold at an exorbitant price was not known; even
+his own intimates, except perhaps Fisk and Belden, were ignorant of
+it. All that was known was that he had made contracts for the
+purchase of enormous quantities of fictitious gold at excessive
+premiums. As a matter of fact, his underhand sales had brought him
+eleven or twelve million dollars profit. But if his contracts for
+purchase were enforced, not only would these profits be wiped out,
+but also his entire fortune.
+
+
+ELEVEN MILLIONS POCKETED BY JUDICIAL COLLUSION.
+
+Ever agile and resourceful, Gould quickly extricated himself from
+this difficulty. He fell back upon the corrupt judiciary. Upon
+various flimsy pretexts, he and Fisk, in a single day, procured
+twelve sweeping injunctions and court orders. [Footnote: Gold Panic
+Investigation, etc. 18.] These prohibited the Stock Exchange and the
+Gold Board from enforcing any rules of settlement against them, and
+enjoined Gould and Fisk's brokers from settling any contracts. The
+result, in brief, was that judicial collusion allowed Gould to pocket
+his entire "profits," amounting, as the Congressional Committee of
+1870 reported, to about eleven million dollars, while relieving him
+from any necessity of paying up his far greater losses. Fisk's share
+of the eleven millions was almost nothing; Gould retained practically
+the entire sum. Gould's confederates and agents were ruined,
+financially and morally; scores of failures, dozens of suicides, the
+despoilment of a whole people, were the results of Gould's handiwork.
+
+[Illustration: JAY GOULD, Who, in a Brief Period, Possessed Himself
+of a Vast Fortune.]
+
+       *       *       *       *       *       *       *
+
+From his Erie railroad thefts, the gold conspiracy and other
+maraudings, Gould now had about twenty-five or thirty million
+dollars. Perhaps the sum was much more. Having sacked the Erie
+previous to his being ousted in 1873, he looked out for further
+instruments of plunder.
+
+Money was power; the greater the thief the greater the power; and
+Gould, in spite of abortive lawsuits and denunciations, had the
+cardinal faculty of holding on to the full proceeds of his piracies.
+In 1873 there was no man more rancorously denounced by the mercantile
+classes than Gould. If one were to be swayed by their utterances, he
+would be led to believe that these classes, comprising the wholesale
+and retail merchants, the importers and the small factory men, had an
+extraordinarily high and sensitive standard of honesty. But this
+assumption was sheer pretense, at complete variance with the facts.
+It was a grim sham constantly shattered by investigation. Ever, while
+vaunting its own probity and scoring those who defrauded it, the
+whole mercantile element was itself defrauding at every opportunity.
+
+       *       *       *       *       *       *       *
+
+SOME COMPARISONS WITH GOULD.
+
+One of the numberless noteworthy and conclusive examples of the
+absolute truth of this generalization was that of the great frauds
+perpetrated by the firm of Phelps, Dodge and Company, millionaire
+importers of tin, copper, lead and other metals.
+
+So far as public reputation went, the members of the house were the
+extreme opposites of Gould. In the wide realm of commercialism a more
+stable and illustrious firm could not be found. Its wealth was
+conventionally "solid and substantial;" its members were lauded as
+"high-toned" business men "of the old-fashioned school," and as
+consistent church communicants and expansive philanthropists. Indeed,
+one of them was regarded as so glorious and uplifting a model for
+adolescent youth, that he was chosen president of the Young Men's
+Christian Association; and his statue, erected by his family, to-day
+irradiates the tawdry surroundings of Herald Square, New York City.
+In the Blue Book of the elect, socially and commercially, no names
+could be found more indicative of select, strong-ribbed, triple-dyed
+respectability and elegant social poise and position.
+
+In the dying months of 1872, a prying iconoclast, unawed by the
+glamor of their public repute and the contemplation of their wealth,
+began an exhaustive investigation of their custom house invoices.
+This inquiring individual was B. G. Jayne, a special United States
+Treasury agent. He seems to have been either a duty-loving servant of
+the people, stubbornly bent upon ferreting out fraud wherever he
+found it, irrespective of whether the criminals were powerful or not,
+or he was prompted by the prospect of a large reward. The more he
+searched into this case, the more of a mountainous mass of perjury
+and fraud revealed itself. On January, 3, 1873, Jayne set the full
+facts before his superior, George S. Boutwell, Secretary of the
+Treasury.
+
+". . . Acording to ordinary modes of reckoning," he wrote, "a house
+of the wealth and standing of Phelps, Dodge and Company would be
+above the influences that induce the ordinary brood of importers to
+commit fraud. That same wealth and standing became an almost
+impenetrable armor against suspicion of wrong-doing and diverted the
+attention of the officers of the Government, preventing that scrutiny
+which they give to acts of other and less favored importers." Jayne
+went on to tell how he had proceeded with great caution in
+"establishing beyond question gross under-valuations," and how United
+States District Attorney Noah Davis (later a Supreme Court Justice)
+concurred with him that fraud had been committed.
+
+       *       *       *       *       *       *       *
+
+THE GREAT FRAUDS OF PHELPS, DODGE AND COMPANY.
+
+The Government red tape showed signs at first of declining to unwind,
+but further investigation proved the frauds so great, that even the
+red tape was thrilled into action, and the Government began a suit in
+the United States District Court at New York for $1,000,000 for
+penalties for fraudulent custom-house under-valuations. It sued
+William E. Dodge, William E. Dodge, Jr., D. Willis James, Anson
+Phelps Stokes, James Stokes and Thomas Stokes as the participating
+members of the firm.
+
+The suit was a purely civil one; influential defrauders were not
+inconvenienced by Government with criminal actions and the prospect
+of prison lodging and fare; this punishment was reserved exclusively
+for petty offenders outside of the charmed circle. The sum of
+$1,000,000 sued for by the Government referred to penalties due since
+1871 only; the firm's duplicates of invoices covering the period
+before that could not be found; "they had probably been destroyed;"
+hence, it was impossible to ascertain how much Phelps, Dodge and
+Company had defrauded in the previous years.
+
+The firm's total importations were about $6,000,000 a year; it was
+evident, according to the Government officials, that the frauds were
+not only enormous, but that they had been going on for a long time.
+These frauds were not so construed "by any technical construction, or
+far-fetched interpretation," but were committed "by the firm's
+deliberately and systematically stating the cost of their goods below
+the purchase price for no conceivable reason but to lessen the duties
+to be paid to the United States."
+
+These long-continuing frauds could not have been possible without the
+custom-house officials having been bribed to connive. The practice of
+bribing customs officers was an old and common one. In his report to
+the House of Representatives on February 23, 1863, Representative Van
+Wyck, chairman of an investigating committee, fully described this
+system of bribery. In summarizing the evidence brought out in the
+examination of fifty witnesses he dealt at length with the custom
+house officials who for large bribes were in collusion with brokers
+and merchants. "No wonder," he exclaimed, "the concern [the custom
+house] is full of fraud, reeking with corruption." [Footnote: The
+Congrssional Globe, Appendix, Thirty-seventh Congress, Third Session,
+1862-3, Part ii: 118.
+
+"During the last session the Secretary had the honor of transmitting
+the draft of a bill for the detection and prevention of fraudulent
+entries at the custom-houses, and he adheres to the opinion that the
+provisions therein embodied are necessary for the protection of the
+revenue.... For the past year the collector, naval officer, and
+surveyor of New York have entertained suspicions that fraudulent
+collusions with some of the customs officers existed. Measures were
+taken by them to ascertain whether these suspicions were well
+founded. By persistent vigilance facts were developed which have led
+to the arrest of several parties and the discovery that a system of
+fraud has been successfully carried on for a series of years. These
+investigations are now being prosecuted under the immediate direction
+of the Solicitor of the Treasury, for the purpose of ascertaining the
+extent of those frauds and bringing the guilty parties to punishment.
+It is believed that the enactment at the last session of the bill
+referred to would have arrested, and that its enactment now will
+prevent hereafter, the frauds hitherto successfully practiced."--
+Annual Report for 1862 of Salmon P. Chase, Secretary of the Treasury.
+No matter what laws were passed, however, the frauds continued, and
+the importers kept on bribing.]
+
+Great was the indignation shown at the charges by the flustered
+members of the firm; most stoutly these "eminently proper" men
+asserted their innocence. [Footnote: If the degree of the scandal
+that the unearthing of the frauds created is to be judged by the
+extent of space given to it by the newspapers, it must have been
+large and sensational. See issues of the New York "Times" and other
+newspapers of January 11, 1873, January 29, 1873, March 20, 1873, and
+April 20, 1873. A full history of the case, with the official
+correspondence from the files of the Treasury Department, is to be
+found in the New York "Times," issue of April 28, 1873.] In point of
+fact (as has been shown in the chapters on the Astor fortune) several
+of them had long been slyly defrauding in other fields, particularly
+by the corrupt procuring of valuable city land before and during the
+Tweed regime. They had also been enriching themselves by the corrupt
+obtaining of railroad grants. There was a scurrying about by Phelps,
+Dodge and Company to explain that some mistake had been made; but the
+Government steadfastly pressed its action; and Secretary Boutwell
+curtly informed them that if they were innocent of guilt, they had
+the opportunity of proving so in court. After this ultimatum their
+tone changed; they exerted every influence to prevent the case from
+coming to trial, and they announced their willingness to compromise.
+The Government was induced to accept their offer; and on February 24,
+1873, Phelps, Dodge and Company paid to the United States Treasury
+the sum of $271,017.23 for the discontinuance of the million-dollar
+suit for custom-house frauds. [Footnote: See Houses Executive
+Documents, Forty-third Congress, First Session, 1874, Doc. No.
+124:78. Of the entire sum of $271,017.23 paid by Phelps, Dodge and
+Company to compromise the suit, Chester A. Arthur, then Collector of,
+the Port, later President of the United States, received $21,906.01
+as official fees; the Naval Officer and the Surveyor of the Port each
+were paid the same sum by the Government, and Jayne received
+$65,718.03 as his percentage as informer.
+
+One of the methods of defrauding the Government was peculiar. Under
+the tariff act there was a heavy duty on imported zinc and lead,
+while works of art were admitted free of duty. Phelps, Dodge and
+Company had zinc and lead made into Europe into crude Dianas, Venuses
+and Mercurys and imported them in that form, claiming exemption from
+the customs duty on the ground of their being "works of art."]
+
+
+THEIR PRESENT WEALTH TRACED TO FRAUD.
+
+From these persistent frauds came, to a large extent, the great
+collective and individual wealth of the members of this firm, and of
+their successors. It was also by reason of these frauds that Phelps,
+Dodge and Company were easily able to outdo competitors. Only
+recently, let it be added, they formed themselves into a corporation
+with a capital of $50,000,000. With the palpably great revenues from
+their continuous frauds, they were in an advantageous position to buy
+up many forms of property. Beginning in 1880 the mining of copper,
+they obtained hold of many very rich mining properties; their copper
+mines yield at present (1909) about 100,000,000 pounds a year.
+Phelps, Dodge and Company also own extensive coal mines and lines of
+railroads in the southwest Territories of the United States. Ten
+thousand employees are directly engaged in their copper and coal
+mines and smaller works, and on the 1,000 miles of railroad directly
+owned and operated by them.
+
+So greatly were the members of the firm enriched by their frauds that
+when D. Willis James, one of the partners sued by the Government for
+fraudulent undervaluations, died on September 13, 1907, he left an
+estate of not less than $26,967,448. John F. Farrel, the appraiser,
+so reported in his report filed on March 28, 1908, in the transfer
+tax department of the Surrogate's department, New York City. But as
+the transfer tax has been, and is, continuously evaded by ingenious
+anticipatory devices, the estate, it is probable, reached much more.
+
+James owned (accepting the appraiser's specific report at a time when
+panic prices prevailed) tens of millions of dollars worth of stock in
+railroad, mining, manufacturing and other industries. He owned, for
+instance, $2,750,000 worth of shares in the Phelps-Dodge Copper Queen
+Mining Company; $1,419,510 in the Old Dominion Company, and millions
+more in other mining companies. His holdings in the Great Northern
+Railway, the history of which is one endless chain of fraud, amounted
+to millions of dollars--$3,840,000 of preferred stock; $3,924,000 of
+common stock; $1,715,000 of stock in the Great Northern iron ore
+properties; $1,405,000 of Great Northern Railway shares in the form
+of subscription receipts, and so on. He was a large holder of stock
+in the Northern Pacific Railway, the development of which, as we
+shall see, has been one of incessant frauds. His interest in the
+"good will" of Phelps, Dodge and Company was appraised at $180,000;
+his interest in the same firm at $945,786; his cash on deposit with
+that firm at $475,000. [Footnote: At his death he was eulogistically
+described as "the merchant philanthropist." On the day after the
+appraiser's report was filed, the New York "Times," issue of March
+29, 1908, said: "Mr. James was a senior member of the firm of Phelps,
+Dodge & Co., of 99 John Street. His interest in educational and
+philanthropic work was very deep, and by his will he left bequests
+amounting to $1,195,000 to various charitable and religious
+institutions. The residue of the estate, amounting to $24,482,653, is
+left in equal shares to his widow and their son." On the same day
+that the appraiser's report was filed a large gathering of unemployed
+attempted to hold a meeting in Union Square to plead for the starting
+of public work, but were brutally clubbed, ridden down and dispersed
+by the police.]
+
+In the defrauding of the United States Government however, Phelps,
+Dodge and Company were doing no uncommon thing. The whole importing
+trade was incessantly and cohesively thriving upon this form of
+fraud. In his annual report for 1874, Henry C. Johnson, United States
+Commissioner of Customs, estimated that tourists returning from
+Europe yearly smuggled in as personal effects 257,810 trunks filled
+with dutiable goods valued at the enormous sum of $128,905,000. "It
+is well known," he added, "that much of this baggage is in reality
+intended to be put upon the market as merchandise, and that still
+other portions are brought over for third parties who have remained
+at home. Most of those engaged in this form of importation are people
+of wealth"... [Footnote: Executive Documents, Forty-third Congress,
+Second Session, 1874, No. 2: 225.] Similar and additional facts were
+brought out in great abundance by a United States Senate committee
+appointed, in 1886, to investigate customs frauds in New York. After
+holding many sessions this committee declared that it had found
+"conclusive evidence that the undervaluation of certain kinds of
+imported merchandise is persistently practiced to an alarming extent
+at the port of New York." [Footnote: U.S. Senate Report, No. 1990,
+Forty-ninth Congress, Second Session, Senate Reports, iii, 1886-87.]
+At all other ports the customs frauds were notorious.
+
+The frauds of the whiskey distillers in cheating the Government out
+of the internal revenue tax were so enormous as to call forth several
+Congressional investigations; [Footnote: Reports of Committees,
+Fortieth Congress, Third Session, 1869-70. Report No. 3, etc.] the
+millions of dollars thus defrauded were used as private capital in
+extending the distilleries; virtually all of the fortunes in the
+present Whiskey Trust are derived in great part from these frauds.
+The banks likewise cheated the Government out of large sums in their
+evasion of the stamp tax. "This stamp tax," reported the Comptroller
+of Currency in 1874, "is to a considerable extent evaded by banks and
+more frequently by depositors, by drawing post notes, or bills of
+exchange at one day's sight, instead of on demand, and by
+substituting receipts for checks." [Footnote: Executive Document, No.
+2, 1874:140.]
+
+It was from these various divisions of the capitalist class that the
+most caustic and virtuous tirades against Gould came. The boards of
+trade and chambers of commerce were largely made up of men who, while
+assuming the most vaniloquent pretensions, were themselves malodorous
+with fraud. To read the resolutions passed by them, and to observe
+retrospectively the supreme airs of respectability and integrity they
+individually took on, one would conclude that they were all men of
+whitest, most irreproachable character. But the official reports
+contradict their pretensions at every turn; and they are all seen in
+their nakedness as perjurers, cheats and frauds, far more sinister in
+their mask than Gould in his carelessly open career of theft and
+corruption. Many of the descendants of that sordid aggregation live
+to-day in the luxury of inherited cumulative wealth, and boast of a
+certain "pride of ancestry" and "refinement of social position;" it
+is they from whom the sneers at the "lower classes" come; and they it
+is who take unto themselves the ordaining of laws and of customs and
+definitions of morality. [Footnote: It is worthy of note that several
+of the descendants of the Phelps-Dodge-Stokes families are men and
+women of the highest character and most radical principles. J. G.
+Phelps Stokes, for instance, joined the Socialist party to work for
+the overthrow of the very system on which the wealth of his family is
+founded. A man more devoted to his principles, more keenly alive to
+the injustices and oppressions of the prevailing system, more
+conscientious in adhering to his views, and more upright in both
+public and private dealings, it would be harder to find than J. G.
+Phelps Stokes. He is one of the very few distinguished exceptions
+among his class.]
+
+From the very foundation of the United States Government, not to
+mention what happened before that time, the custom-house frauds have
+been continuous up to the very present, without any intermission. The
+recent suits brought by the Government against the Sugar Trust for
+gigantic frauds in cheating in the importation of sugar, were only an
+indication of the increasing frauds. The Sugar Trust was compelled to
+disgorge about $2,000,000, but this sum, it was admitted, was only a
+part of the enormous total out of which it had defrauded the
+Government. The further great custom-house scandals and court
+proceedings in 1908 and 1909 showed that the bribery of custom-house
+weighers and inspectors had long been in operation, and that the
+whole importing class, as a class, was profiting heavily by this
+bribery and fraud. While the trials of importers were going on in the
+United States Circuit Court at New York, despatches from Washington
+announced, on October 22, 1909, that the Treasury Department
+estimated that the same kind of frauds as had been uncovered at New
+York, had flourished for decades, although in a somewhat lesser
+degree, at Boston, Philadelphia, Norfolk, New Orleans, San Francisco
+and at other ports.
+
+"It is probable," stated these subdued despatches, "that these
+systematic filchings from the Government's receipts cover a period of
+more than fifty years, and that in this, the minor officials of the
+New York Custom House have been the greatest offenders, although
+their nefarious profits have been small in comparison with the
+illegitimate gains of their employers, the great importers. These are
+the views of responsible officials of the Treasury Department." These
+despatches stated the truth very mildly. The frauds have been going
+on for more than a century, and the Government has been cheated out
+of a total of hundreds upon hundreds of millions of dollars, perhaps
+billions.
+
+And the thieving importers of these times comprise the respectable
+and highly virtuous chambers of commerce and boards of trade, as was
+the case in Gould's day. They are ever foremost in pompously
+denouncing the very political corruption which they themselves cause
+and want and profit from; they are the fine fellows who come together
+in their solemn conclaves and resolve this and resolve that against
+"law-defying labor unions," or in favor of "a reform in our body
+politic," etc., etc. A glorious crew they are of excellent, most
+devout church members and charity dispensers; sleek, self-sufficient
+men who sit on Grand Juries and Trial Juries, and condemn the petty
+thieves to conviction carrying long terms of imprisonment. Viewing
+commercial society, one is tempted to conclude that the worthiest
+members of society, as a whole, are to be found within the prisons;
+yes, indeed, the time may not be far away, when the stigma of the
+convict may be considered a real badge of ancestral honor.
+
+But the comparison of Gould and the trading classes is by no means
+complete without adding anew a contrast between how the propertied
+plunderers as a class were immune from criminal prosecution, and the
+persecution to which the working class was subjected.
+
+Although all sections of the commercial and financial class were
+cheating, swindling and defrauding with almost negligible molestation
+from Government, the workers could not even plead for the right to
+work without drawing down upon themselves the full punitive animosity
+of governing powers whose every move was one of deference to the
+interests of property. Apart from the salient fact that the prisons
+throughout the United States were crowded with poor criminals, while
+the machinery of the criminal courts was never seriously invoked
+against the commercial and financial classes, the police and other
+public functionaries would not even allow the workers to meet
+peacefully for the petitioning of redress. Organized expressions of
+discontent are ever objectionable to the ruling class, not so much
+for what is said, as for the movements and reconstructions they may
+lead to--a fact which the police authorities, inspired from above,
+have always well understood.
+
+
+THE CLUBBING OF THE UNEMPLOYED.
+
+"The winter of 1873-74," says McNeill, was one of extreme suffering.
+Midwinter found tens of thousands of people on the verge of
+starvation, suffering for food, for the need of proper clothing, and
+for medical attendance. Meetings of the unemployed were held in many
+places, and public attention called to the needs of the poor. The men
+asked for work and found it not, and children cried for bread.... The
+unemployed and suffering poor of New York City determined to hold a
+meeting and appeal to the public by bringing to their attention the
+spectacle of their poverty. They gained permission from the Board of
+Police to parade the streets and hold a meeting in Tompkins Square on
+January 13, 1874, but on January 12 the Board of Police and Board of
+Parks revoked the order and prohibited the meeting. It was impossible
+to notify the scattered army of this order, and at the time of the
+meeting the people marched through the gates of Tompkins Square....
+When the square was completely filled with men, women and children,
+without a moment's warning, the police closed in upon them on all
+sides.
+
+One of the daily papers of the city confessed that the scene could
+not be described. People rushed from the gates and through the
+streets, followed by the mounted officers at full speed, charging
+upon them without provocation. Screams of women and children rent the
+air, and the blood of many stained the streets, and to the further
+shame of this outrage it is to be added that when the General
+Assembly of New York State was called to this matter they took
+testimony, but made no sign. [Footnote: "The Labor Movement":147-148.
+In describing to the committee on grievances the horrors of this
+outrage, John Swinton, a writer of great ability, and a man whose
+whole heart was with the helpless, suffering and exploited, closed
+his address by quoting this verse:
+
+     "There is a poor blind Samson in our land,
+       Shorn of his strength and bound with bonds of steel,
+     Who may in some grim revel raise his hand,
+       And shake the pillars of the Commonweal."]
+
+Thus was the supremacy of "law and order" maintained. The day was
+saved for well-fed respectability, and starving humanity was forced
+back into its despairing haunts, there to reflect upon the club-
+taught lesson that empty stomachs should remain inarticulate. For the
+flash of a second, a nameless fright seized hold of the gilded
+quarters, but when they saw how well the police did their dispersing
+work, and choked up with their clubs the protests of aggregated
+suffering, self-confidence came back, revelry was resumed, and the
+saturnalia of theft went on unbrokenly.
+
+And a lucky day was that for the police. The methods of the ruling
+class were reflected in the police force; while perfumed society was
+bribing, defrauding and expropriating, the police were enriching
+themselves by a perfected system of blackmail and extortion of their
+own. Police Commissioners, chiefs, inspectors, captains and sergeants
+became millionaires, or at least, very rich from the proceeds of this
+traffic. Not only did they extort regular payments from saloons,
+brothels and other establishments on whom the penalties of law could
+be visited, but they had a standing arrangement with thieves of all
+kinds, rich thieves as well as what were classed as ordinary
+criminals, by which immunity was sold at specified rates. [Footnote:
+The very police captain, one Williams, who commanded the police at
+the Tompkins Square gathering was quizzed by the "Lexow Committee" in
+1893 as to where he got his great wealth. He it was who invented the
+term "Tenderloin," signifying a district from which large collections
+in blackmail and extortion could be made. By 1892, the annual income
+derived by the police from blackmailing and other sources of
+extortion was estimated at $7,000,000. (See "Investigation of the
+Police Department of New York City," 1894, v:5734.) With the
+establishment of Greater New York the amount about doubled, or,
+perhaps, trebled.] The police force did not want this system
+interfered with; hence at all times toadied to the rich and
+influential classes as the makers of law and the creators of public
+opinion. To be on the good side of the rich, and to be praised as the
+defenders of law and order, furnished a screen of incalculable
+utility behind which they could carry on undisturbedly their own
+peculiar system of plunder.
+
+
+
+
+CHAPTER XII
+
+THE GOULD FORTUNE AND SOME ANTECEDENT FACTORS
+
+
+With his score or more of millions of booty, Jay Gould now had much
+more than sufficient capital to compete with many of the richest
+magnates; and what he might lack in extent of capital when combated
+by a combination of magnates, he fully made up for by his pulverizing
+methods. His acute eye had previously lit upon the Union Pacific
+Railroad as offering a surpassingly prolific field for a new series
+of thefts. Nor was he mistaken. The looting of this railroad and
+allied railroads which he, Russell Sage and other members of the
+clique proceeded to accomplish, added to their wealth, it was
+estimated perhaps $60,000,000 or more, the major share of which Gould
+appropriated.
+
+It was commonly supposed in 1873 that the Union Pacific Railroad had
+been so completely despoiled that scarcely a vestige was left to prey
+upon. But Gould had an extraordinary faculty for devising new and
+fresh schemes of spoliation. He would discern great opportunities for
+pillage in places that others dismissed as barren; projects that
+other adventurers had bled until convinced nothing more was to be
+extracted, would be taken up by Gould and become plethora of plunder
+under his dexterous touch. Again and again Gould was charged with
+being a wrecker of property; a financial beachcomber who destroyed
+that he might profit. These accusations, in the particular exclusive
+sense in which they were meant, were distortions. In almost every
+instance the railroads gathered in by Gould were wrecked before he
+secured control; all that he did was to revive, continue and
+elaborate the process of wrecking. It had been proved so in the case
+of the Erie Railroad; he now demonstrated it with the Union Pacific
+Railroad.
+
+
+THE MISLEADING ACCOUNTS HANDED DOWN.
+
+This railroad had been chartered by Congress in 1862 to run from a
+line on the one hundredth meridian in Nebraska to the western
+boundary of Nevada. The actual story of its inception and
+construction is very different from the stereotyped accounts shed by
+most writers. These romancers, distinguished for their sycophancy and
+lack of knowledge, would have us believe that these enterprises
+originated as splendid and memorable exhibitions of patriotism,
+daring and ability. According to their version Congress was so
+solicitous that these railroads should be built that it almost
+implored the projectors to accept the great gifts of franchises, land
+and money that it proffered as assistance. A radiantly glowing
+description is forged of the men who succeeded in laying these
+railroads; how there stretched immense reaches of wilderness which
+would long have remained desolate had it not been for these
+indomitable pioneers; and how by their audacious skill and
+persistence they at last prevailed, despite sneers and ridicule, and
+gave to the United States a chain of railroads such as a few years
+before it had been considered folly to attempt.
+
+Very limpidly these narratives flow; two generations have drunk so
+deeply of them that they have become inebriated with the
+contemplation of these wonderful men. When romance, however, is
+hauled to the archives, and confronted with the frigid facts, the old
+dame collapses into shapeless stuffing.
+
+[Illustration: RESIDENCE OF JAY GOULD, 759 Fifth Avenue, New York]
+
+In the opening chapter of the present part of this work it was
+pointed out by a generalization (to be frequently itemized by
+specifications later on) that the accounts customarily written of the
+origin of these railroads have been ridiculously incorrect. To prove
+them so it is only necessary to study the debates and the reports of
+Congress before, and after, the granting of the charters.
+
+
+SECTIONAL INTERESTS IN CONFLICT.
+
+Far greater forces than individual capitalists, or isolated groups of
+capitalists, were at work to promote or prevent the construction of
+this or that Pacific road. In the struggle before the Civil War
+between the capitalist system of the North and the slave oligarchy of
+the South, the chattel slavery forces exerted every effort to use the
+powers of Government to build railroads in sections where their power
+would be extended and further intrenched. Their representatives in
+Congress feverishly strained themselves to the utmost to bring about
+the construction of a trans-continental railroad passing through the
+Southwest. The Northern constituents stubbornly fought the project.
+In reprisal, the Southern legislators in Congress frustrated every
+move for trans-continental railroads which, traversing hostile or too
+doubtful territory, would add to the wealth, power, population and
+interests of the North. The Government was allowed to survey routes,
+but no comprehensive trans-continental Pacific railroad bills were
+passed.
+
+The debates in Congress during the session of 1859 over Pacific
+railroads were intensely aciduous. Speaking of the Southern slave
+holders, Senator Wilson, of Massachusetts, denounced them as
+"restless, ambitious gentlemen who are organizing Southern leagues to
+open the African slave trade, and to conquer Mexico and Central
+America." He added with great acerbity: "They want a railroad to the
+Pacific Ocean; they want to carry slavery to the Pacific and have a
+base line from which they can operate for the conquest of the
+continent south." [Footnote: The Congressional Globe. Thirty-fifth
+Congress, Second Session, 1858-59, Part II, Appendix: 291.] In fiery
+verbiage the Southern Senators slashed back, taunting the Northerners
+with seeking to wipe out the system of chattel slavery, only to
+extend and enforce all the more effectually their own system of white
+slavery. The honorable Senators unleashed themselves; Senatorial
+dignity fell askew, and there was snarling and growling, retorts and
+backtalk and bad blood enough.
+
+The disclosures that day were extremely delectable. In the exchange
+of recriminations, many truths inadvertently came out. The
+capitalists of neither section, it appeared, were faithful to the
+interests of their constituencies. This was, indeed, no discovery;
+long had Northern representatives been bribed to vote for land and
+money grants to railroads in the South, and vice versa. But the
+charges further brought out by Senator Wilson angered and exasperated
+his Southern colleagues. "We all remember," said he, "that Texas made
+a grant of six thousand dollars and ten thousand acres of land a mile
+to a Pacific railway company." Yes, in truth, they all remembered;
+the South had supported that railroad project as one that would aid
+in the extension of her power and institutions. "I remember," Wilson
+went on, "that when that company was organized the men who got it up
+could not, by any possibility, have raised one hundred thousand
+dollars if they paid their honest debts. Many of them were political
+bankrupts as well as pecuniary bankrupts--men who had not had a
+dollar; and some of them were men who not only never paid a debt, but
+never recognized an obligation."
+
+At this thrust a commotion was visible in the exalted chamber; the
+blow had been struck, and not far from where Wilson stood.
+
+"Years have passed away," continued the Senator, "and what has Texas
+got?" Twenty-two or twenty-three miles of railway, with two cars upon
+it, with no depot, the company owning everything within hailing
+distance of the road; and they have imported an old worn-out engine
+from Vermont. And this is part of your grand Southern Pacific
+Railroad. These gentlemen are out in pamphlets, proving each other
+great rascals, or attempting to do so; and I think they have
+generally succeeded. ... The whole thing from the beginning has been
+a gigantic swindle. [Footnote: The Congressional Globe, etc., 1858-9,
+Part II, Appendix, 291.]
+
+What Senator Wilson neglected to say was that the capitalists of his
+own State and other Northern States had effected even greater
+railroad swindles; the owners of the great mills in Massachusetts
+were, as we shall see, likewise bribing Congress to pass tariff acts.
+
+
+A MYTH OF MODERN FABRICATION
+
+The myth had not then been built up of putative great construction
+pioneers, risking their every cent, and racking their health and
+brains, in the construction of railways. It was in the very heyday of
+the bribing and swindling, as numerous investigating committees
+showed; there could be no glamour or illusion then.
+
+The money lavishly poured out for the building of railroads was
+almost wholly public money drawn from compulsory taxation of the
+whole people. At this identical time practically every railroad
+corporation in the country stood indebted for immense sums of public
+money, little of which was ever paid back. In New York State more
+than $40,000,000 of public funds had gone into the railroads; in
+Vermont $8,000,000 and large sums in every other State and Territory.
+The whole Legislature and State Government of Wisconsin had been
+bribed with a total of $800,000, in 1856, to give a large land grant
+to one company alone, details of which transaction will be found
+elsewhere. [Footnote: See the chapters on the Russell Sage
+fortune.]The State of Missouri had already disbursed $25,000,000 of
+public funds; not content with these loans and donations two of its
+railroads demanded, in 1859, that the State pay interest on their
+bonds.
+
+In both North and South the plundering was equally conspicuous. Some
+of the Northern Senators were fond of pointing out the incompetency
+and rascality of the Southern oligarchy, while ignoring the acts of
+the capitalists in their own section. Senator Wilson, for instance,
+enlarged upon the condition of the railroads in North and South
+Carolina, describing how, after having been fed with enormous
+subsidies, they were almost worthless. And if anything was calculated
+to infuriate the Southerners it was the boast that the capitalists of
+Massachusetts had $100,000,000 invested in railroads, for they knew,
+and often charged, that most of this sum had been cheated by
+legislation out of the National, State or other public treasury, and
+that what had not been so obtained had been extracted largely from
+the underpaid and overworked laborers of the mills. Often they had
+compared the two systems of labor, that of the North and that of the
+South, and had pointedly asked which was really the worse.
+
+Not until after the Civil War was under way, and the North was in
+complete control of Congress, was it that most of the Pacific
+railroad legislation was secured. The time was exceedingly
+propitious. The promoters and advocates of these railroads could now
+advance the all-important argument that military necessity as well as
+popular need called for their immediate construction.
+
+No longer was there any conflict at Washington over legislation
+proposed by warring sectional representatives. But another kind of
+fight in Congress was fiercely set in motion. Competitive groups of
+Northern capitalists energetically sought to outdo one another in
+getting the charters and appropriations for Pacific railroads. After
+a bitter warfare, in which bribery was a common weapon, a compromise
+was reached by which the Union Pacific Railroad Company was to have
+the territory west of a point in Nebraska, while to other groups of
+capitalists, headed by John I. Blair and others, charters and grants
+were given for a number of railroads to start at different places on
+the Missouri River, and converge at the point from which the Union
+Pacific ran westward.
+
+In the course of the debate on the Pacific Railroads bill, Senator
+Pomeroy introduced an amendment providing for the importation of
+large numbers of cheap European laborers, and compelling them to
+stick to their work in the building of the railroads under the
+severest penalties for non-compliance. It was, in fact, a proposal to
+have the United States Government legalize the peonage system of
+white slavery. Pomeroy's amendment specifically provided that the
+troops should be called upon to enforce these civil contracts. "It
+strikes one as the most monstrous proposition I ever heard of,"
+interjected Senator Rice. "It is a measure to enslave white men, and
+to enforce that slavery at the point of the bayonet. I begin to
+believe what I have heard heretofore in the South, that the object of
+some of these gentlemen was merely to transfer slavery from the South
+to the North; and I think this is the first step toward it."
+[Footnote: The Congressional Globe, Thirty-seventh Congress, Third
+Session, 1862-63. Part ii: 1241-1243.]
+
+The amendment was defeated. The act which Congress passed authorized
+the chartering of the Union Pacific Railroad with a capital of
+$100,000,000. In addition to granting the company the right of way,
+two hundred feet wide, through thousands of miles of the public
+domain, of arbitrary rights of condemnation, and the right to take
+from the public lands whatever building material was needed, Congress
+gave as a gift to the company alternate sections of land twenty miles
+wide along the entire line. Still further, the company was empowered
+to call upon the Government for large loans of money.
+
+
+CONGRESS BRIBED FOR THE UNION PACIFIC CHARTER.
+
+It was highly probable that this act was obtained by bribery. There
+is not the slightest doubt that the supplementary act of 1864 was.
+The directors and stockholders of the company were not satisfied with
+the comprehensive privileges that they had already obtained. It was
+very easy, they saw, to get still more. Among these stockholders were
+many of the most effulgent merchants and bankers in the country; we
+find William E. Dodge, for instance, on the list of stockholders in
+1863. The pretext that they offered as a public bait was that
+"capital needed more inducements to encourage it to invest its
+money." But this assuredly was not the argument prevailing in
+Congress. According to the report of a Senate committee of 1873--the
+"Wilson Committee"--nearly $436,000 was spent in getting the act of
+July, 1864, passed. [Footnote: Reports of Committees, Credit Mobilier
+Reports, Forty-second Congress, Third session, 1873; Doc. No.
+78: xviii. The committee reported that the evidence proved that this
+sum had been disbursed in connection with the passage of the
+amendatory act of July 2, 1864.]
+
+For this $436,000 distributed in fees and bribes, the Union Pacific
+Railroad Company secured the passage of a law giving it even more
+favorable government subsidies, amounting to from $16,000 to $48,000
+a mile, according to the topography of the country. The land grant
+was enlarged from twenty to forty miles wide until it included about
+12,000,000 acres, and the provisions of the original act were so
+altered and twisted that the Government stood little or no chance of
+getting back its outlays.
+
+The capitalists behind the project now had franchises, gifts and
+loans actually or potentially worth many hundreds of millions of
+dollars. But to get the money appropriated from the National
+Treasury, it was necessary by the act that they should first have
+constructed certain miles of their railroads. The Eastern capitalists
+had at home so many rich avenues of plunder in which to invest their
+funds--money wrung out of army contracts, usury and other sources--
+that many of them were indisposed to put any of it in the unpopulated
+stretches of the far West. The banks, as we have seen, were glutting
+on twenty, and often fifty, and sometimes a hundred per cent.; they
+saw no opportunity to make nearly as much from the Pacific railroads.
+
+
+THE CREDIT MOBILIER JOBBERY.
+
+All the funds that the Union Pacific Railroad Company could privately
+raise by 1865 was the insufficient sum of $500,000. Some greater
+incentive was plainly needed to induce capitalists to rush in. Oakes
+Ames, head of the company, and a member of Congress, finally hit upon
+the auspicious scheme. It was the same scheme that the Vanderbilts,
+Gould, Sage, Blair, Huntington, Stanford, Crocker and other railroad
+magnates employed to defraud stupendous sums of money.
+
+Ames produced the alluring plan of a construction company. This
+corporation was to be a compact affair composed of himself and his
+charter associates; and, so far as legal technicalities went, was to
+be a corporation apparently distinct and separate from the Union
+Pacific Railroad Company. Its designed function was to build the
+railroad, and the plan was to charge the Union Pacific exorbitant and
+fraudulent sums for the work of construction. What was needed was a
+company chartered with comprehensive powers to do the constructing
+work. This desideratum was found in the Credit Mobilier Company of
+America, a Pennsylvania corporation, conveniently endowed with the
+most extensive powers. The stock of this company was bought in for a
+few thousand dollars, and the way was clear for the colossal frauds
+planned.
+
+The prospects for profit and loot were so unprecedentedly great that
+capitalists now blithely and eagerly darted forward. One has only to
+examine the list of stockholders of the Credit Mobilier Company in
+1867 to verify this fact. Conspicuous bankers such as Morton, Bliss
+and Company and William H. Macy; owners of large industrial plants
+and founders of multimillionaire fortunes such as Cyrus H. McCormick
+and George M. Pullman; merchants and factory owners and landlords and
+politicians--a very edifying and inspiring array of respectable
+capitalists was it that now hastened to buy or get gifts of Credit
+Mobilier stock. [Footnote: The full lists of these stockholders can
+be found in Docs. No. 77 and No. 78, Reports of U. S. Senate
+Committees, 1872-73. Morton, Bliss & Co. held 18,500 shares; Pullman,
+8,400 shares, etc. The Morton referred to--Levi P. Morton--was later
+(1888-1892) made Vice President of the United States by the money
+interests.]
+
+The contract for construction was turned over to the Credit Mobilier
+Company. This, in turn, engaged subcontractors. The work was really
+done by these subcontractors with their force of low-paid labor.
+Oakes Ames and his associates did nothing except to look on
+executively from a comfortable distance, and pocket the plunder. As
+fast as certain portions of the railroad were built the Union Pacific
+Railroad Company received bonds from the United States Treasury. In
+all, these bonds amounted to $27,213,000, out of much of which sum
+the Government was later practically swindled.
+
+
+GREAT CORRUPTION AND VAST THEFTS.
+
+Charges of enormous thefts committed by Credit Mobilier Company, and
+of corruption of Congress, were specifically made by various
+individuals and in the public press. A sensational hullabaloo
+resulted; Congress was stormed with denunciations; it discreetly
+concluded that some action had to be taken. The time-honored,
+mildewed dodge of appointing an investigating committee was decided
+upon.
+
+Virtuously indignant was Congress; zealously inquisitive the
+committee appointed by the United States Senate professed to be. Very
+soon its honorable members were in a state of utter dismay. For the
+testimony began to show that some of the most powerful men in
+Congress were implicated in Credit Mobilier corruption; men such as
+James G. Blaine, one of the foremost Republican politicians of the
+period, and James A. Garfield, who later was elevated into the White
+House. Every effort was bent upon whitewashing these men; the
+committee found that as far as their participation was concerned
+"nothing was proved," but, protest their innocence as they vehemently
+did, the tar stuck, nevertheless.
+
+As to the thefts of the Credit Mobilier Company, the committee freely
+stated its conclusions. Ames and his band, the evidence showed, had
+stolen nearly $44,000,000 outright, more than half of which was in
+cash. The committee, to be sure, was not so brutal as to style it
+theft; with a true parliamentarian regard for sweetness and
+sacredness of expression, the committee's report described it as
+"profit."
+
+After holding many sessions, and collating volumes of testimony, the
+committee found, as it stated in its report, that the total cost of
+building the Union Pacific Railroad was about $50,000,000. And what
+had the Credit Mobilier Company charged? Nearly $94,000,000 or, to be
+exact, $93,546,287.28. [Footnote: Doc. No. 78, Credit Mobilier
+Investigation: xiv.] The committee admitted that "the road had been
+built chiefly with the resources of the Government." [Footnote:
+Ibid., xx.] A decided mistake; it had been entirely built so. The
+committee itself showed how the entire cost of building the road had
+been "wholly reimbursed from the proceeds of the Government bonds and
+first mortgage bonds," and that "from the stock, income bonds, and
+land grant bonds, the builders received in cash value $23,366,000 as
+profit--about forty-eight per cent. on the entire cost." [Footnote:
+Ibid., xvii.]
+
+The total "profits" represented the difference between the cost of
+building the railroad and the amount charged--about $44,000,000 in
+all, of which $23,000,000 or more was in immediate cash. It was more
+than proved that the amount was even greater; the accounts had been
+falsified to show that the cost of construction was $50,000,000.
+Large sums of money, borrowed ostensibly to build the road, had at
+once been seized as plunder, and divided in the form of dividends
+upon stock for which the clique had not paid a cent in money,
+contrary to law.
+
+
+THRIFTY, SAGACIOUS PATRIOTISM.
+
+Who could deny that the phalanx of capitalists scrambling forward to
+share in this carnival of plunder were not gifted with unerring
+judgment? From afar they sighted their quarry. Nearly all of them
+were the fifty per cent. "patriot" capitalists of the Civil War; and,
+just as in all extant biographies, they are represented as heroic,
+self-sacrificing figures during that crisis, when in historical fact,
+they were defrauding and plundering indomitably, so are they also
+glorified as courageous, enterprising men of prescience, who hazarded
+their money in building the Pacific railroads at a time when most of
+the far West was an untenanted desert. And this string of arrant
+falsities has passed as "history!"
+
+If they had that foresight for which they were so inveterately
+lauded, it was a foresight based upon the certainty that it would
+yield them forty-eight per cent. profit and more from a project on
+which not one of them did the turn of a hand's work, for even the
+bribing of Congress was done by paid agents. Nor did they have to
+risk the millions that they had obtained largely by fraud in trade
+and other channels; all that they had to do was to advance that money
+for a short time until they got it back from the Government
+resources, with forty-eight per cent profit besides.
+
+The Senate Committee's report came out at a time of panic when many
+millions of men, women and children were out of work, and other
+millions in destitution. It was in that very year when the workers in
+New York City were clubbed by the police for venturing to hold a
+meeting to plead for the right to work. But the bribing of Congress
+in 1864, and the thefts in the construction of the railroad, were
+only parts of the gigantic frauds brought out--frauds which a people
+who believed themselves under a democracy had to bear and put up
+with, or else be silenced by force.
+
+
+THE BRIBERY PERSISTENTLY CONTINUES.
+
+When the act of 1864 was passed, Congress plausibly pointed out the
+wise, precautionary measures it was taking to insure the honest
+disbursements of the Government's appropriations. "Behold," said in
+effect this Congress, "the safeguards with which we are surrounding
+the bill. We are providing for the appointment of Government
+directors to supervise the work, and see to it that the Government's
+interests do not suffer." Very appropriate legislation, indeed, from
+a Congress in which $436,000 of bribe money had been apportioned to
+insure its betrayal of the popular interests.
+
+Buts Ames and his brother capitalists bribed at least one of the
+Government directors with $25,000 to connive at the frauds:
+[Footnote: Document No. 78, Credit Mobilier Investigation: xvii] he
+was a cheaply bought tool, that director. And immediately after the
+railroad was built and in operation, its owners scented more millions
+of plunder if they could get a law enacted by Congress allowing them
+exorbitant rates for the transportation of troops and Government
+supplies and mails. They corruptly paid out, it seems, $126,000 to
+get this measure of March 3, 1871, passed. [Footnote: Doc. No. 78,
+etc., xvii.]
+
+What was the result of all this investigation? Mere noise. The
+oratorial tom-toms in Congress resounded vociferously for the gulling
+of home constituencies, and of palaver and denunciations there was a
+plenitude. The committee confined itself to recommending the
+expulsion of Oakes Ames and James Brooks from Congress. The
+Government bravely brought a civil action, upon many specified
+charges, against the Union Pacific Railroad Company for
+misappropriation of funds. This action the company successfully
+fought; the United States Supreme Court, in 1878, dismissed the suit
+on the ground that the Government could not sue until the company's
+debt had matured in 1895. [Footnote: 98 U.S. 569.]
+
+Thus these great thieves escaped both criminal and civil process, as
+they were confident that they would, and as could have been
+accurately foretold. The immense plunder and the stolen railroad
+property the perpretrators of these huge frauds were allowed to keep.
+Congress could have forfeited upon good legal grounds the charter of
+the Union Pacific Railroad Company then and there. So long as this
+was note done, and so long as they were unmolested in the possession
+of their loot, the participating capitalists could well afford to be
+curiously tolerant of verbal chastisement which soon passed away, and
+which had no other result than to add several more ponderous volumes
+to the already appallingly encumbered archives of Government
+investigations of the stock of the Union Pacific Railroad was at a
+very low point. The excessive amount of plunder appropriated by Ames
+and his confederates had loaded it down with debt. With fixed charges
+on enormous quantities of bonds to pay, few capitalists saw how the
+stock could be made to yield any returns--for some time, at any rate.
+Now was seen the full hollowness of the pretensions of the
+capitalists that they were inspired by a public-spirited interest in
+the development of the Far West. This pretext had been jockeyed out
+for every possible kind of service. As soon as they were convinced
+that the Credit Mobilier clique had sacked the railroad of all
+immediate plunder, the participating capitalists showed a sturdy
+alacrity in shunning the project and disclaiming any further
+connection with it. Their stock, for the most part, was offered for
+sale.
+
+
+JAY GOULD COMES FORWARD
+
+It was now that Jay Gould eagerly stepped in. Where others saw
+cessation of plunder, he spied the richest possibilities for a new
+onslaught. For years he had been a covetous spectator of the
+operations of the Credit Mobilier; and, of course, had not been able
+to contain himself from attempting to get a hand in its stealings. He
+and Fisk had repeatedly tried to storm their way in, and had carried
+trumped-up cases into the courts, only to be eventually thwarted. Now
+his chance came.
+
+What if $50,000,000 had been stolen? Gould knew that it had other
+resources of very great value; for, in addition to the $27,000,000
+Government bonds that the Union Pacific Railroad had received, it
+also had as asset about 12,000,000 acres of land presented by
+Congress. Some of this land had been sold by the railroad company at
+an average of about $4.50 an acre, but the greater part still
+remained in its ownership. And millions of acres more could be
+fraudulently seized, as the sequel proved.
+
+Gould also was aware--for he kept himself informed--that, twenty
+years previously, Government geologists had reported that extensive
+coal deposits lay in Wyoming and other parts of the West. These
+deposits would become of incalculable value; and while they were not
+included in the railroad grants, some had already been stolen, and it
+would be easy to get hold of many more by fraud. And that he was not
+in error in this calculation was shown by the fact that the Union
+Pacific Railroad and other allied railroads under his control, and
+under that of his successors, later seized hold of many of these coal
+deposits by violence and fraud. [Footnote: The Interstate Commerce
+Commission reported to the United States Senate in 1908 that the
+acquisition of these coal lands had "been attended with fraud,
+perjury, violence and disregard of the rights of individuals," and
+showed specifically how. Various other Government investigations
+fully supported the charges.] Gould also knew that every year
+immigration was pouring into the West; that in time its population,
+agriculture and industries would form a rich field for exploitation.
+By the well-understood canons of capitalism, this futurity could be
+capitalized in advance. Moreover, he had in mind other plans by which
+tens of millions could be stolen under form of law.
+
+Fisk had been murdered, but Gould now leagued himself with much abler
+confederates, the principal of whom was Russell Sage. It is well
+worth while pausing here to give some glimpses of Sage's career, for
+he left an immense fortune, estimated at considerably more than
+$100,000,000, and his widow, who inherited it, has attained the
+reputation of being a "philanthropist" by disbursing a few of those
+millions in what she considers charitable enterprises. One of her
+endowed "philanthropies" is a bureau to investigate the causes of
+poverty and to improve living conditions; another for the propagation
+of justice. Deeply interested as the benign Mrs. Sage professes to be
+in the causes producing poverty and injustice, a work such as this
+may peradventure tend to enlighten her. This highly desirable
+knowledge she can thus herein procure direct and gratuitously.
+Furthermore, it is necessary, before describing the joint activities
+of Gould and Sage, to give a prefatory account of Sage's career; what
+manner of man he was, and how he obtained the millions enabling him
+to help carry forward those operations.
+
+
+
+
+
+
+End of Project Gutenberg's Great Fortunes from Railroads, by Gustavus Myers
+
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