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diff --git a/.gitattributes b/.gitattributes new file mode 100644 index 0000000..6833f05 --- /dev/null +++ b/.gitattributes @@ -0,0 +1,3 @@ +* text=auto +*.txt text +*.md text diff --git a/6495.txt b/6495.txt new file mode 100644 index 0000000..bc25e85 --- /dev/null +++ b/6495.txt @@ -0,0 +1,11569 @@ +Project Gutenberg's Great Fortunes from Railroads, by Gustavus Myers + +Copyright laws are changing all over the world. Be sure to check the +copyright laws for your country before downloading or redistributing +this or any other Project Gutenberg eBook. + +This header should be the first thing seen when viewing this Project +Gutenberg file. Please do not remove it. Do not change or edit the +header without written permission. + +Please read the "legal small print," and other information about the +eBook and Project Gutenberg at the bottom of this file. Included is +important information about your specific rights and restrictions in +how the file may be used. You can also find out about how to make a +donation to Project Gutenberg, and how to get involved. + + +**Welcome To The World of Free Plain Vanilla Electronic Texts** + +**eBooks Readable By Both Humans and By Computers, Since 1971** + +*****These eBooks Were Prepared By Thousands of Volunteers!***** + + +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] + +Edition: 10 + +Language: English + +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 + +*** END OF THE PROJECT GUTENBERG EBOOK GREAT FORTUNES FROM RAILROADS *** + +This file should be named 6495.txt or 6495.zip + +Produced by Charles Franks and the Online Distributed Proofreading Team. + +Project Gutenberg eBooks are often created from several printed +editions, all of which are confirmed as Public Domain in the US +unless a copyright notice is included. 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