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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
preŽmption, 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 preŽmption 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, preŽmption,
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
preŽminently 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