HISTORY OF THE GREAT AMERICAN FORTUNES

BY GUSTAVUS MYERS

AUTHOR OF "THE HISTORY OF TAMMANY HALL, " "HISTORY OF PUBLICFRANCHISES 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 amassingof the great individual fortunes from railroads, it is advisable topresent a preliminary survey of the concatenating circumstancesleading 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 ofwhich might puzzle or vex the reader. 

Although industrial establishments, as exemplified by mills, factories and shops, much preceded the construction of railroads, yetthe next great group of fortunes to develop after, and along with, those from land were the fortunes plucked from the control andmanipulation of railroad systems. 

THE LAGGING FACTORY FORTUNES. 

Under the first stages of the old chaotic competitive system, inwhich factory warred against factory, and an intense struggle forsurvival and ascendency enveloped the whole tense sphere ofmanufacturing, no striking industrial fortunes were made. 

Fortunate was that factory owner regarded who could claim $250, 000clear. All of those modern and complex factors offering suchunbounded opportunities for gathering in spoils mounting into thehundreds of millions of dollars, were either unknown or in aninchoate or rudimentary state. Invention, if we may put it so, wasjust blossoming forth. Hand labor was largely prevalent. Hugecombinations were undreamed of; paper capitalization as embodied inthe fictitious issues of immense quantities of bonds and stocks wasnot yet a part of the devices of the factory owner, although it was afixed plan of the bankers and insurance companies. 

The factory owner was the supreme type of that sheer individualismwhich had burst forth from the restraints of feudalism. He stoodalone fighting his commercial contests with persistent personaldoggedness. Beneath his occasional benevolence and his religiousprofessions was a wild ardor in the checkmating or bankruptcy of hiscompetitors. These were his enemies; he fought them with everymercantile 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 thetendency of holding back the factory owners' quick progress--obstacles and drawbacks copiously described in later and moreappropriate parts of this work. 

MIGHT OF THE RAILROAD OWNERS. 

In contrast to the slow, almost creeping pace of the factory ownersin the race for wealth, the railroad owners sprang at once into thelists of mighty wealth-possessers, armed with the most comprehensiveand puissant powers and privileges, and vested with a sweep ofproperties beside which those of the petty industrial bosses werepuny. Railroad owners, we say; the distinction is necessary betweenthe builders of the railroads and the owners. The one mightconstruct, but it often happened that by means of cunning, fraud andcorruption, the builders were superseded by another set of men whovaulted into possession. 

Looking back and summing up the course of events for a series ofyears, it may be said that there was created over night a number ofentities empowered with extraordinary and far-reaching rights andpowers of ownership. 

These entities were called corporations, and were called into beingby law. Beginning as creatures of law, the very rights, privilegesand properties obtained by means of law, soon enabled them to becomethe dictators and masters of law. The title was in the corporation, not in the individual; hence the men who controlled the corporationswayed the substance of power and ownership. The factory was usuallya personal affair, owned by one man or in co-partnership; to getcontrol of this property it was necessary to get the owner in afinancial corner and force him to sell out, for, as a rule, he had nobond or stock issues. But the railroad corporation was a stockcorporation; whoever secured control of a majority of the stockbecame the legal administrator of its policies and property. Byadroit manipulation, intimidation, superior knavery, and the corruptdomination of law, it was always easy for those who understood thescience of rigging the stock market, and that of strategicundermining, to wrest the control away from weak, or (treating theword in a commercial sense) incompetent, holders. This has been longshown by a succession of examples. 

THE LEGALIZING OF CUNNING

Thus this situation, so singularly conflicting with the theoreticalmajesty of the law, was frequently presented: A band of men stylingthemselves a corporation received a perpetual charter with the mostsweeping rights and properties. In turn, the law interposed noeffective hindrance to the seizing of their possessions by any othergroup proving its power to grasp them. All of this was done undernominal forms of law, but differed little in reality from the methodsduring medieval times when any baron could take another baron'scastle and land by armed force, and it remained his until a strongerman came along and proved his title likewise. 

Long before the railroad had been accepted commercially as a feasibleundertaking, the trading and land-owning classes, as has beenrepeatedly pointed out, had demonstrated very successfully how theforms of government could be perverted to enrich themselves at theexpense of the working population. 

Taxation laws, as we have seen, were so devised that the burden in adirect way fell lightly on the shipping, manufacturing, trading, banking and land-owning classes, while indirectly it was shovedalmost wholly upon the workers, whether in shop, factory or on farm. Furthermore, the constant response of Government, municipal, Stateand National, to property interests, has been touched upon; howGovernment loaned vast sums of public money, free of interest, to thetraders, while at the same time refusing to assist the impoverishedand destitute; how it granted immunity from punishment to the richand powerful, and inflicted the most drastic penalties upon poordebtors and penniless violators of the law; how it allowed thepossessing classes to evade taxation on a large scale, and effectedsummarily cruel laws permitting landlords to evict tenants for non-payment of rent. These and many other partial and grievouslydiscriminative laws have been referred to, as also the refusal ofGovernment to interfere in the slightest with the commercial fraudsand impositions constantly practiced, with all their resulting greatextortions, upon the defenceless masses. 

Of the long-prevailing frauds on the part of the capitalists inacquiring large tracts of public land, some significant facts havebeen brought out in preceding chapters. Those facts, however, are onlya few of a mass. When the United States Government was organized, mostof the land in the North and East was already expropriated. Butimmense areas of public domain still remained in the South and in theMiddle West. Over much of the former Colonial land the variouslegislatures claimed jurisdiction, until, one after another, theyceded it to the National Government. With the Louisiana purchase, in1805, the area of public domain was enormously extended, andconsecutively so later after the Mexican war. 

THE LAND LAWS AGAINST THE POOR

From the very beginning of the government, the land laws werearranged to discriminate against the poor settler. Instead of lawsproviding simple and inexpensive ways for the poor to get land, thelaws were distorted into a highly effective mechanism by whichcompanies of capitalists, and individual capitalists, secured vasttracts for trivial sums. These capitalists then either held the land, or forced settlers to pay exorbitant prices for comparatively smallplots. No laws were in existence compelling the purchaser to be a_bona fide_ settler. Absentee landlordism was the rule. Thecapitalist companies were largely composed of Northern, Eastern andSouthern traders and bankers. The evidence shows that they employedbribery and corruption on a great scale, either in getting favorablelaws passed, or in evading such laws as were on the statute books bymeans of the systematic purchase of the connivance of Land Officeofficials. 

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 bought892, 900 acres for $642, 856. 66. But this sum was not paid in money. The bankers and traders composing the company had purchased, at aheavy discount, certificates of public debt and army land warrants, and were allowed to tender these as payment. [Footnote: U. S. SenateExecutive Documents, Second Session, Nineteenth Congress, Doc. No. 63. ] The company then leisurely disposed of its land to settlers atan enormous profit. Nearly all of the land companies had bankingadjuncts. The poor settler, in order to settle on land that a shorttime previously had been national property, was first compelled topay the land company an extortionate price, and then was forced toborrow the money from the banking adjuncts, and give a heavymortgage, 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 thevery best lands. The Government documents of the time are full ofremonstrances from legislatures and individuals complaining of theseseizures, under form of law, of the most valuable areas. The tractsthus appropriated comprised timber and mineral, as well asagricultural, land. 

VAST TRACTS SECURED BY BRIBERY. 

One of the most scandalous land-company transactions was thatinvolving a group of Southern and Boston capitalists. In January, 1795, the Georgia Legislature, by special act, sold millions of acresin different parts of the State of Georgia to four land companies. The people of the State were convinced that this purchase had beenobtained by bribery. It was made an election issue, and aLegislature, comprising almost wholly new members, was elected. InFebruary, 1796, this Legislature passed a rescinding act, declaringthe act of the preceding year void, on the ground of its having beenobtained by "improper influence. " In 1803 the tracts in question weretransferred by the Georgia Legislature to the United StatesGovernment. 

The Georgia Mississippi Land Company was one of the four companies. In the meantime, this company had sold its tract, for ten cents anacre, to the New England Mississippi Land Company. Although committeeafter committee of Congress reported that the New England MississippiLand 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 largeindemnity. 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 thepretense 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 toswindle the State of Georgia by making payments in depreciatedcurrency. Georgia refused to accept it. When the grant was rescinded, both houses of the Georgia Legislature marched in solemn state to theCapitol front and burned the deed. ] The ground upon which thisappropriation was made by Congress was that the Supreme Court of theUnited States had decided that, irrespective of the methods used toobtain the grant from the Georgia Legislature, the grant, once made, was in the nature of a contract which could not be revoked orimpaired by subsequent legislation. This was the first of a long lineof court decisions validating grants and franchises of all kindssecured by bribery and fraud. 

It was probably the scandal arising from the bribery of the GeorgiaLegislature that caused popular ferment, and crystallized a demandfor altered laws. In 1796 Congress declared its intention to abandonthe prevailing system of selling millions of acres to companies orindividuals. The new system, it announced, was to be one adapted tothe interests of both capitalist and poor man. Land was thereafter tobe sold in small quantities on credit. Could the mechanic or farmerdemand a better law? Did it not hold out the opportunity to thepoorest to get land for which payment could be gradually made?

But this law worked even better to the advantage of the capitalistclass than the old. By bribing the land officials the capitalistswere 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 intendingsettlers, but these were merely the intermediaries by whichcapitalists secured great tracts in the form of many smallallotments. Having obtained the best lands, the capitalists thenoften held them until they were in demand, and forced actual settlersto pay heavily for them. During all of this time the capitaliststhemselves held the land "on credit. " Some of them eventually paidfor the lands out of the profits made from the settlers, but a greatnumber of the purchasers cheated the Government almost entirely outof 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; inAlabama, $5, 760, 728. 01; in Mississippi, $684, 093. 50; and in Michigan, $50, 584. 82--a total of nearly $10, 550, 000. (Executive Reports, FirstSession, Eighteenth Congress, 1824, Report No. 61. ) Most of thesecreditors were capitalist land speculators. ]

The capitalists of the period contrived to use the land laws whollyto their own advantage and profit. In 1824, the Illinois Legislaturememorialized Congress to change the existing laws. Under them, itrecited, the best selections of land had been made by non-residentspeculators, and it called upon Congress to pass a law providing forselling 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 committeesof Congress were continually unearthing great frauds, no real changefor 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, theUnited States Senate Committee on Public Lands, reporting on June 20, 1834, declared that the evidence it had taken established the factthat in Ohio and elsewhere, combinations of capitalist speculators, at the public sales of lands, had united for the purpose of drivingother purchasers out of the market and in deterring poor men frombidding. The committee detailed how these companies and individualshad fraudulently bought large tracts of land at $1. 25 an acre, andsold the land later at exorbitant prices. It showed how, in order toaccomplish these frauds, they had bought up United States Land OfficeRegisters and Receivers. [Footnote 8: U. S. Senate Documents, FirstSession, Twenty-third Congress, 1833-34, Vol. Vi, Doc. No. 461:1-91. ]

Another exhaustive report was handed in by the United States SenateCommittee on Lands, on March 3, 1835. Many of the speculators, itsaid, filled high offices in States where public lands bought by themwere located; others were people of "wealth and intelligence. " All ofthem "naturally united to render this investigation odious among thepeople. " The committee told how an attempt had been made toassassinate one of its members. "The first step, " it set forth, "necessary to the success of every scheme of speculation in thepublic lands, is to corrupt the land officers, by a secretunderstanding between the parties that they are to receive a certainportion of the profits. " [Footnote: U. S. Senate Documents, SecondSession, Twenty-third Congress, Vol. Iv, Doc. No. 151: 2. ] Thecommittee continued:

The States of Alabama, Mississippi and Louisiana have been theprincipal theatre of speculations and frauds in buying up the publiclands, and dividing the most enormous profits between the members ofthe different companies and speculators. The committee refers to thedepositions of numerous respectable witnesses to attest the variousramifications of these speculations and frauds, and the means bywhich 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, onAugust 25, 1835, to President Jackson: "Governments, likecorporations, are considered without souls, and according to the codeof some people's morality, should be swindled and cheated on everyoccasion. " Linton gave this picture of "a notorious speculator whohas an immense extent of claims":

He could be seen followed to and from the land office by crowds offree negroes, Indians and Spaniards, and the very lowest dregs ofsociety, in the counties of Opelousas and Rapides, with theiraffidavits already prepared by himself, and sworn to before somejustice of the peace in some remote county. These claims, to animmense extent, are presented and allowed. And upon what evidence?Simply upon the evidence of the parties themselves who desire to makethe 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, butthe auction system was retained for decades. In 1847, the Governmentwas still selling large tracts at $1. 25 an acre, nominally tosettlers, actually to capitalist speculators or investors. More thantwo million acres had been sold every year for a long period. TheHouse Committee on Public Lands, reporting in 1847, disclosed howmost of the lands were bought up by capitalists. It cited the case ofthe Milwaukee district where, although 6, 441 land entries had beenmade, there were only forty actual settlers up to 1847. "This clearlyshows, " the committee stated, "that those who claimed the land assettlers, are either the tools of speculators, to sequester the bestlands 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 wasrevived for the benefit of canal and railroad companies. The firstrailroad company to get a land grant from Congress was the IllinoisCentral, in 1850. It received as a gift 2, 595, 053 acres of land inIllinois. Actual settlers had to pay the company from $5 to $15 anacre. 

Large areas of land bought from the Indian tribes by the Government, almost at once became the property of canal or railroad corporationsby the process of Government grants. A Congressional document in 1840(Senate Document No. 616) made public the fact that from theestablishment of the Federal Government to 1839, the Indian tribeshad ceded to the Government a total of 442, 866, 370 acres. The Indiantribes were paid either by grants of land elsewhere, or in money andmerchandise. For those 442, 866, 370 acres they received exchange landvalued 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 theirinterests, whether the governing officials were put in office bythem, and were saturated with their interests, views and ideals, orwhether corruption had to be resorted to in order to attain theirobjects. At all events, the propertied classes, in the main, securedwhat they wanted. And, as fast as their interests changed, so did theacts and dicta of Government change. 

While the political economists were busy promulgating the doctrinethat it was not the province of Government to embark in anyenterprise other than that of purely governing--a doctrine preciselysuiting the traders and borrowed from their demands--the commercialclasses, early in the nineteenth century, suddenly discovered thatthere was an exception. They wanted canals built; and as they had notsufficient funds for the purpose, and did not see any immediateprofit for themselves, they clamored for the building of them by theStates. In fine, they found that it was to their interest to have theStates put through canal projects on the ground that these would"stimulate trade. " The canals were built, but the commercial classesin some instances made the blunder of allowing the ownership to restin the people. 

Never again was this mistake repeated. If it proved so easy to getlegislatures and Congress to appropriate millions of the public fundsfor undertakings profitable to commerce, why would it not be equallysimple to secure the appropriation plus the perpetual title? Why besatisfied with one portion, when the whole was within reach?

True, the popular vote was to be reckoned with; it was a time whenthe people scanned the tax levy with far greater scrutiny than now;and they were not disposed to put up the public funds only thatprivate individuals might reap the exclusive benefit. But there was away of tricking and circumventing the electorate. The trading andland-owning classes knew its effectiveness. It was they who hadutilized it; who from the year 1795 on had bribed legislatures andCongress to give them bank and other charters. Bribery had proved asignal success. The performance was extended on a much wider scale, with far greater results, and with an adroitness revealing that thecapitalist class had learned much by experience, not only in reachingout for powers that the previous generation would not have dared togrant, but in being able to make plastic to its own purposes theelectorate that believed itself to be the mainspring of politicalpower. 

GRANTS TO CANAL CORPORATIONS. 

The first great canal, built in response to the demands of thecommercial class, was the Erie Canal, completed in 1825. Thiswaterway was constructed at public expense, and was owned by New YorkState. The commercial men could succeed in having it managed fortheir purposes and profit, and the politicians could often extractplunder from the successive contracts, but there was no opportunityor possibility for the exercise of the usual capitalist methods offraudulent diversion of land, or of over-capitalization andexorbitant rates with which to pay dividends on fictitious stock. 

Very significantly, from about the very time when the Erie Canal wasfinished, the era of the private canal company, financed by theGovernment, began. One after another, canal companies came forward tosolicit public funds and land grants. These companies neither had anycapital of their own, nor was capital necessary. The machinery ofGovernment, both National and State, was used to supply them withcapital. 

The Chesapeake and Ohio Canal Company received, up to 1839, the sumof $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 forcanal projects. The customary method was the granting by Congress ofcertain areas of land to various States, to be expressly given todesignated canal companies. The States in donating them, sometimessold them to the canal companies at the nominal rate of $1. 25 anacre. The commuting of these payments was often obtained later bycorrupt legislation. 

From 1924 to 1834, the Wabash and Erie Canal Company obtained landgrants from the Government amounting to 826, 300 acres. The Miami andDayton Canal Company secured from the Government, in 1828 and 1833, atotal grant of 333, 826 acres. The St. Mary's Falls Ship Canal Companyreceived 750, 000 acres in 1852; the Portage Lake and Lake SuperiorShip Canal Company, 400, 000 acres in 1865-66; and the Lac La BelleShip Canal Company, 100, 000 acres in 1866. Including a grant byCongress in 1828 of 500, 000 acres of public land for general canalpurposes, the land grants given by the National Government to aidcanal 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 objectwas to construct. In the case of the private canal companies, theprimary and fundamental object was to plunder. The capitalistscontrolling these companies were bent upon getting rich quickly; itwas to their interest to delay the work as long as possible, for bythis process they could periodically go to Legislatures with thisargument: That the projects were more expensive and involved moredifficulties than had been anticipated; that the originalappropriations were exhausted, and that if the projects were to becompleted, fresh appropriations were imperative. A large part ofthese successive appropriations, whether in money, or land whichcould be sold for money, were stolen in sundry indirect ways by thevarious sets of capitalist directors. The many documents of theMaryland Legislature, and the messages of the successive Governors ofMaryland, do not tell the full story of how the Chesapeake and OhioCanal project was looted, but they give abundantly enoughinformation. 

THE GRANTS FRAUDULENTLY MANIPULATED

Many of the canal companies, so richly endowed by the Government withgreat land grants, made little attempt to build canals. What some ofthem did was to turn about and defraud the Government out ofincalculably valuable mineral deposits which were never included inthe original grants. 

In his annual report for 1885, Commisioner Sparks, of the UnitedStates General Land Office told (House Executive Documents, 1885-86, Vol. II) how, by 1885, the Portage Lake "canal" was only a worthlessditch and a complete fraud. What had the company done with its largeland grant? Instead of accepting the grant as intended by Congress, it had, by means of fraudulent surveys, and doubtless by officialcorruption, caused at least one hundred thousand acres of its grantto be surveyed in the very richest copper lands of Wisconsin. 

The grants originally made by Congress were meant to cover swamplands--that is, lands not particularly valuable for agriculturaluses, but which had a certain value for other purposes. Mineral landswere strictly excluded. Such was the law: the practice was verydifferent. The facility with which capitalists caused the mostvaluable mineral, grazing, agricultural and timber lands to befraudulently surveyed as "swamp" lands, is described at length alittle later on in this work. Commissioner Sparks wrote that the onehundred thousand acres appropriated in violation of explicit law"were taken outside of legal limits, and that the lands selected bothwithout and within such limits were interdicted lands on the copperrange" (p. 189). Those stolen copper deposits were never recovered bythe Government nor was any attempt made to forfeit them. Theycomprise 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 richcopper deposits. This fact was clearly revealed in various officialreports, and particularly in the suit, a few years ago, of Chandlervs. Calumet and Hecla Mining Company (U. S. Reports, Vol. 149, pp. 79-95). This suit disclosed the fact that the mines of the Calumetand Hecla Mining Company were located on part of the identicalalleged "swamp" lands, granted by Congress in 1852. The plaintiff, Chandler, claimed an interest in the mines. Concluding the court'sdecision, favoring the Calumet and Hecla Mining Company, thissignificant note (so illustrative of the capitalist connections ofthe judiciary), appears: "Mr. Justice Brown, being interested in theresult, did not sit in this case and took no part in its decision. "

Whatever superficial or partial writers may say of the benevolentorigin of railroads, the fact is that railroad construction wasushered in by a widespread corruption of legislators that put toshame the previous debauchery in getting bank charters. In nearlyevery work on the subject the assertion is dwelt upon that railroadbuilders were regarded as public benefactors; that people andlegislatures were only too glad to present them with publicresources. There is just a slight substance of truth in this allegedhistorical writing, but nothing more. The people, it is true, wereeager, for their own convenience, to have the railroads built, butunwilling to part with their hard-wrung taxes, their splendid publicdomain, and their rights only that a few men, part gamblers and partmen of energy and foresight, should divert the entire donation totheir own aggrandizement. For this attitude the railroad promotershad an alluring category of arguments ready. 

CASH THE GREAT PERSUADER

Through the public press, and in speeches and pamphlets, the peoplewere assured in the most seductive and extravagant language thatrailroads were imperative in developing the resources of the country;that they would be a mighty boon and an immeasurable stimulant toprogress. These arguments had much weight, especially with apopulation stretched over such a vast territory as that of the UnitedStates. But alone they would not have accomplished the ends sought, had it not been for the quantities of cash poured into legislativepockets. The cash was the real eloquent persuader. In turn, thevirtuous legislators, on being questioned by their constituents as towhy they had voted such great subsidies, such immense land grants andsuch sweeping and unprecedented privileges to private corporations, could fall back upon the justification (and a legitimate one itseemed) that to get the railroads built, public encouragement and aidwere 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 andgrants were obtained by politicians and lawyers who, at best, wereimpecunious sharpers. Their greatest asset was a devious knowledge ofhow to get something for nothing. With a grandiloquent front and asuperb bluff they would organize a company to build a railroad fromthis to that point; an undertaking costing millions, while perhapsthey could not pay their board bill. An arrangement with a printer toturn out stock issues on credit was easy; with the promise of batchesof this stock, they would then get a sufficient number of legislatorsto vote a charter, money and land. 

After that, the future was rosy. Bankers, either in the United Statesor abroad, could always be found to buy out the franchise or financeit. In fact, the bankers, who themselves were well schooled in theart of bribery and other forms of corruption, [Footnote: "Schooled inthe art of bribery. "--In previous chapters many facts have beenbrought out showing the extent of corrupt methods used by thebankers. The great scandal caused in Pennsylvania in 1840 by therevelations of the persistent bribery carried on by the United StatesBank for many years, was only one of many such scandals throughoutthe United States. One of the most characteristic phases of thereports of the various legislative investigating committees was theironical 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 inPennsylvania by the United States Bank, an investigating committee ofthe Pennsylvania House of Representatives commented: "It is hard tocome to the conclusion that men of refined education, and high andhonorable character, would wink at such things, yet the conclusion isunavoidable. " [Pa. House Journal, 1842, Vol. Ii, Appendix, 172-531. ]were often outwitted by this class of adventurers, and were only tooglad to treat with them as associates, on the recognized commercialprinciple that success was the test of men's mettle, and that thequalities productive of such success must be immediately availed of. 

In other instances a number of tradesmen and landowners wouldorganize a company having, let us say, $250, 000 among them. If theyhad proceeded to build a railroad with this sum, not many miles ofrail would have been laid before they would have found themselveshopelessly 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 providethe necessary means. In the process of construction the $250, 000would have been only a mite. But it was quite enough to bribe alegislature. By expending this sum in purchasing a majority of animportant committee, and a sufficient number of the whole body, theycould get millions in public loans, vast areas of land givenoutright, 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 inOhio was so notorious that it formed a bitter part of the discussionin the Ohio Constitutional Convention of 1850-51. The delegates weredroning along over insertions devised to increase corporation power. Suddenly rose Delegate Charles Reemelin and exclaimed: "Corporationsalways have their lobby members in and around the halls oflegislation to watch and secure their interests. Not so with thepeople--they cannot act with that directness and system that acorporation can. No individual will take it upon himself to go to theCapitol at his own expense, to watch the representatives of thepeople, and to lobby against the potent influences of thecorporation. But corporations have the money, and it is to theirinterest 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 MassachusettsConstitutional Convention, Delegate Walker, of North Brookfield, madea similar statement as to conditions in that State. "I ask any man tosay, " he asked, "if he believes that any measure of legislation couldbe carried in this State, which was generally offensive to thecorporations of the Commonwealth? It is very rarely the case that wedo not have a majority in the legislature who are either presidents, directors or stockholders in incorporated companies. This is a factof very grave importance. " [Footnote: Debates in the MassachusettsConvention, 1853, iii: 59. ] Two-thirds of the property inMassachusetts, Delegate Walker pointed out, was owned bycorporations. 

In 1857 an acrimonious debate ensued in the Iowa ConstitutionalConvention over an attempt to give further extraordinary power to therailroads. Already the State of Iowa had incurred $12, 000, 000 indebts in aiding railroad corporations. "I fear, " said Delegate Traer, "that it is very often the case that these votes (on appropriationsfor railroads) are carried through by improper influences, which thepeople, if left alone, would, upon mature reflection, never haveadopted. " [Footnote: Constitutional Debates, Iowa, 1857, ii: 777. ]

IMPOTENCE OF THE PEOPLE. 

These are but a very few of the many instances of the debauching ofevery legislature in the United States. No matter how furiously thepeople protested at this giving away of their resources and rights, the capitalists were able to thwart their will on every occasion. Inone case a State legislature had been so prodigal that the people ofthe State demanded a Constitutional provision forbidding the bondingof the State for railroad purposes. The Constitutional Conventionadopted this provision. But the members had scarcely gone to theirhomes before the people discovered how they had been duped. Theamendment barred the State from giving loans, but (and here was thetrick) it did not forbid counties and municipalities from doing so. Thereupon the railroad capitalists proceeded to have laws passed, andbribe county and municipal officials all over the State to issuebonds and to give them terminal sites and other valuable privilegesfor nothing. In every such case the railroad owners in subsequentyears sneaked legislation through in practically every State, orresorted to subterfuges, by which they were relieved from having topay 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 wasever returned. As for the land grants to railroads, they reachedcolossal proportions. From 1850 to 1872 Congress gave not less than155, 504, 994. 59 acres of the public domain either direct to railroadcorporations, or to the various States, to be transferred to thosecorporations. 

Much of this immense area was given on the condition that unless therailroads were built, the grants were to be forfeited. But thecapitalists found no difficulty in getting a thoroughly corruptCongress to extend the period of construction in cases where theconstruction had not been done. Of the 155, 000, 000 acres, aconsiderable portion of it valuable mineral, coal, timber andagricultural land, only 607, 741 acres were forfeited by act ofCongress, and even much of these were restored to the railroads byjudicial decisions. [Footnote: The principal of these decisions wasthat of the Supreme Court of the United States in the case ofSchluenberg vs. Harriman (Wallace's Supreme Court Reports, xxi:44). In many of the railroad grants it was provided that in case therailroad lines were not completed within certain specified times, thelands unsold or unpatented should revert to the United States. Thedecision of the Supreme Court of the United States practically madethese provisions nugatory, and indirectly legalized the crassestfrauds. 

The original grants excluded mineral lands, but by a subsequentfraudulent official construction, coal and iron were declared not tobe covered by the term mineral. 

Commissioner Sparks of the U. S. General Land Office estimated in1885 that, in addition to the tens of millions of acres the railroadcorporations had secured by fraud under form of law, they hadoverdrawn ten million acres, "which vast amount has been treated bythe corporations as their absolute property, but is really publicland of the United States recoverable to the public domain. " (HouseExecutive Docs. , First Session, Forty-ninth Congress, 1885-86, ii:184. ) It has never been recovered. ]

That Congress, not less than the legislatures, was honeycombed withcorruption is all too evident from the disclosures of manyinvestigations--disclosures to which we shall have pertinent occasionto refer later on. Not only did the railroad corporations loot in agigantic way under forms of law, but they so craftily drafted thelaws 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 afterthey were secured, fraud was further used to evade taxation. And bydonations of land is not meant only that for intended railroad use orwhich could be sold by the railroads. In some cases, notably that ofthe Union Pacific Railroad, authority was given to the railroad byacts passed in 1862 and 1864 to take all of the material, such asstone, timber, etc. , needed for construction, from the public lands. So, in addition to the money and lands, much of the essentialmaterial for building the railroads was supplied from the publicresources. No sooner had they obtained their grants, than therailroad corporations had law after law passed removing thisrestriction or that reservation until they became absolute masters ofhundreds of millions of acres of land which a brief time before hadbeen national property. 

"These enormous tracts, " wrote (in 1886) William A. Phillips, amember of the Committee on Public Lands of the Forty-third Congress, referring to the railroad grants, "are in their disposition subjectto the will of the railroad companies. They can dispose of them inenormous tracts if they please, and there is not a single safeguardto secure this portion of the national domain to cultivatingyeomanry. " The whole machinery of legislation was not only used toexclude the farmer from getting the land, and to centralize itsownership in corporations, but was additionally employed in relievingthese corporations from taxation on the land thus obtained by fraud. "To avoid taxation, " Phillips goes on, "the railroad land grantcompanies had an amendment enacted into law to the effect that theyshould not obtain their patents until they had paid a small fee todefray the expense of surveying. This they took care not to pay, oronly to pay as fast as they could sell tracts to some purchasers, onwhich occasions they paid the surveying fee and obtained deeds forthe portion they sold. In this way they have held millions of acresfor speculative purposes, waiting for a rise in prices, withouttaxation, 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 wereone of no great significance. 

It is a fact well worthy of elaboration. Precisely as thearistocracies in the Old World had gotten their estates by force andfraud, and then had the laws so arranged as to exempt those estatesfrom taxation, so has the money aristocracy of the United Statesproceeded on the same plan. As we shall see, however, the railroadand other interests have not only put through laws relieving fromdirect taxation the land acquired by fraud, but also other forms ofproperty based upon fraud. 

This survey, however, would be prejudicial and one-sided were not thefact strongly pointed out that the railroad capitalists were by nomeans the only land-graspers. Not a single part of the capitalistclass was there which could in any way profit from the theft ofpublic domain that did not wallow in corruption and fraud. 

The very laws seemingly passed to secure to the poor settler ahomestead at a reasonable price were, as Henry M. Teller, Secretaryof the Interior, put it, perverted into "agencies by which thecapitalists secures large and valuable areas of the public land atlittle expense. " [Footnote: Report of the Secretary of the Interiorfor 1883. Reporting to Secretary of the Interior Lamar, in responseto a U. S. Senate resolution for information, William A. J. Sparks, Commissioner of the General Land Office, gave statistics showing anenormous number of fraudulent land entries, and continued:

"It was the ease with which frauds could be perpetrated underexisting laws, and the immunity offered by a hasty issue of patents, that encouraged the making of fictitious and fraudulent entries. Thecertainty of a thorough investigation would restrain such practices, but fraud and great fraud must inevitably exist so long as theopportunity for fraud is preserved in the laws, and so long as it ishoped by the procurers and promoters of fraud that examinations maybe impeded or suppressed. " If, Commissioner Sparks urged, thepreëmption, commuted-homestead, timber-land, and desert-land lawswere repealed, then, "the illegal appropriation of the remainingpublic 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 ofthe day managed to bag their game. It was to aid and encourage "theman of small resources" to populate the West that the Desert Land Lawwas apparently enacted; and many a pathetic and enthusiastic speechwas made in Congress as this act was ostentatiously going through. Under this law, it was claimed, a man could establish himself uponsix hundred and forty acres of land and, upon irrigating a portion ofit, and paying $1. 25 an acre, could secure a title. For once, itseemed, Congress was looking out for the interests of the man of fewdollars. 

VAST THEFTS OF LAND. 

But plaudits were too hasty. To the utter surprise of the people thelaw began to work in a perverse direction. Its provisions had readwell enough on a casual scrutiny. Where lay the trouble? It lay injust a few words deftly thrown in, which the crowd did not notice. This law, acclaimed as one of great benefit to every man aspiring fora home and land, was arranged so that the capitalist cattlesyndicates could get immense areas. The lever was the omission of anyprovision requiring _actual settlement_. The livestock corporationsthereupon 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 transferthe lands. In this way the cattlemen became possessed of enormousareas; and to-day these tracts thus gotten by fraud are securely heldintact, forming what may be called great estates, for on many of themlive the owners in expansive baronial style. 

In numerous instances, law was entirely dispensed with. Vast tractsof land were boldly appropriated by sheep and cattle rangers who hadnot even a pretense of title. Enclosing these lands with fences, therangers claimed them as their own, and hired armed guards to driveoff intruders, and kill if necessary. [Footnote: "Within the cattleregion, " reported Commissioner Sparks, "it is notorious that actualsettlements are generally prevented and made practically impossibleoutside the proximity of towns, through the unlawful control of thecountry, 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 onMarch 14, 1884, to Secretary of the Interior Teller, showed in detailthe vast extent of the unlawful fencing of public lands. In theArkansas Valley in Colorado at least 1, 000, 000 acres of public domainwere illegally seized. The Prairie Cattle Company, composed of Scotchcapitalists, had fenced in more than a million acres in Colorado, anda large number of other cattle companies in Colorado had seized areasranging from 20, 000 to 200, 000 acres. "In Kansas, " Harrison went on, "entire counties are reported as [illegally] fenced. In Wyoming, onehundred and twenty-five cattle companies are reported having fencingon the public lands. Among the companies and persons reported ashaving 'immense' or 'very large' areas inclosed . . . Are theDubuque, Cimarron and Renello Cattle [companies] in Colorado; theMarquis 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, 000to 25, 000 acres and upwards. 

"The reports of special agents show that the fraudulent entries ofpublic land within the enclosures are extensively made by theprocurement and in the interest of stockmen, largely for the purposeof controlling the sources of water supply. "--"Unauthorized Fencingof Public Lands, " U. S. Senate Docs. , First Session, Forty-eighthCongress, 1883-84, Vol. Vi, Doc. No. 127:2. ] Murder after murder wascommitted. In this usurpation the august Supreme Court of the UnitedStates upheld them. And the grounds of the decision were what?

The very extraordinary dictum that a settler could not claim anyright of preëmption on public lands in possession of another who hadenclosed, settled upon and improved them. This was the very reverseof every known declaration of common and of statute law. No court, supreme or inferior, had ever held that because the proceeds of theftwere improved or were refurbished a bit, the sufferer was therebyestopped from recovery. This decision showed anew how, while thecourts were ever ready to enforce the law literally against theunderlings and penniless, they were as active in fabricating tortuousconstructions coinciding not always, but nearly always, with thedemands and interests of the capitalist class. 

It has long been the fashion on the part of a certain prevalentschool of writers and publicists to excoriate this or that man, thisor that corporation, as the ringleader in the orgy of corruption andoppression. This practice, arising partly from passionate or ill-considered judgment, and in part from ignorance of the subject, hasbeen the cause of much misunderstanding, popular and academic. 

No one section of the capitalist class can be held solelyresponsible; nor were the morals and ethics of any one divisiondifferent from those of the others. The whole capitalist class wascoated with the same tar. Shipping merchants, traders in general, landholders, banking and railroad corporations, factory owners, cattle syndicates, public utility companies, mining magnates, lumbercorporations--all were participants in various ways in the subvertingof the functions of government to their own fraudulent ends at theexpense of the whole producing class. 

While the railroad corporations were looting the public treasury andthe public domain, and vesting in themselves arbitrary powers oftaxation and proscription, all of the other segments of thecapitalist class were, at the same time, enriching themselves in thesame way or similar ways. The railroads were much denounced; butwherein did their methods differ from those of the cattle syndicates, the industrial magnates or the lumber corporations? The lumber baronswanted their predacious share of the public domain; throughoutcertain parts of the West and in the South were far-stretching, magnificent forests covered with the growth of centuries. To want andto get them were the same thing, with a Government in powerrepresentative of capitalism. 

SPOLIATION ON A GREAT SCALE. 

The "poor settler" catspaw was again made use of. At the behest ofthe lumber corporations, or of adventurers or politicians who saw afacile way of becoming multimillionaires by the simple passage of anact, the "Stone and Timber Act" was passed in 1878 by Congress. Anamendment passed in 1892 made frauds still easier. This measure wasanother of those benevolent-looking laws which, on its face, extendedopportunities for the homesteader. No longer, it was plausibly setforth, could any man say that the Government denied him the right toget public land for a reasonable sum. Was ever a finer, a moreglorious chance presented? Here was the way open for any individualhomesteader to get one hundred and sixty acres of timber land for thelow price of $2. 50 an acre. Congress was overwhelmed with outburstsof panegyrics for its wisdom and public spirit. 

Soon, however, a cry of rage went up from the duped public. And thecause? The law, like the Desert Land Law, it turned out, was filledwith cunningly-drawn clauses sanctioning the worst forms ofspoliation. Entire trainloads of people, acting in collusion with theland grabbers, were transported by the lumber syndicates into therichest timber regions of the West, supplied with the funds to buy, and then each, after having paid $2. 50 per acre for one hundred andsixty acres, immediately transferred his or her allotment to thelumber corporations. 

Thus, for $2. 50 an acre, the lumber syndicates obtained vast tractsof the finest lands worth, at the least, according to Governmentagents, $100 an acre, at a time, thirty-five years ago, when lumberwas not nearly so costly as now. 

The next development was characteristic of the progress of onsweepingcapitalism. Just as the traders, bankers, factory owners, mining andrailroad magnates had come into their possessions largely (in varyingdegrees) by fraud, and then upon the strength of those possessionshad caused themselves to be elected or appointed to powerful officesin the Government, State or National, so now some of the lumberbarons used a part of the millions obtained by fraud to purchasetheir way into the United States Senate and other high offices. They, as did their associates in the other branches of the capitalistclass, helped to make and unmake judges, governors, legislatures andPresidents; and at least one, Russell A. Alger, became a member ofthe President's Cabinet in 1897. 

Under this one law, --the Stone and Timber Act--irrespective of othercomplaisant laws, not less than $57, 000, 000 has been stolen in thelast seven years alone from the Government, according to a statementmade 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 theactual aggregate value of the land, at prevailing commercial prices, was $77, 000, 000. These lands, he asserted, had passed into the handsof the Lumber Trust, and their products were sold to the people ofthe United States at an advance of seventy per cent. This theft of$57, 000, 000 simply represented the years from 1901 to 1908; it isprobable that the entire thefts for 10, 395, 689. 96 acres sold duringthe whole series of years since the Stone and Timber Act was passedreaches a much vaster amount. 

Stupendous as was the extent of the nation's resources alreadyappropriated by 1876, more remained to be seized. The Governmentstill owned 40, 000, 000 acres of land in the South, mainly in Alabama, Louisiana, Florida, Arkansas and Mississippi. Much of this area wasvaluable timber land, and a part of it, especially in Alabama, wasfilled with great coal and iron deposits, --a fact of which certaincapitalists were well aware, although the general public did not knowit. 

During the Civil War nothing could be attempted in the war-ravagedSouth. That conflict over, a group of capitalists set about to getthat land, or at least the valuable part of it. At about the timethat they had their plans primed to juggle a bill through Congress, an unfortunate situation arose. A rancid public scandal ensued fromthe bribery of members of Congress in getting through the chartersand 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 waspropitious. Congress rushed through a bill carefully worded for thepurpose. The lands were ordered sold in unlimited areas for cash. Nopretense was made of restricting the sale to a certain acreage sothat all any individual could buy was enough for his own use. Anyone, if he chose, could buy a million or ten million acres, provided hehad the cash to pay $1. 25 an acre. The way was easy for capitaliststo get millions of acres of the coveted iron, coal and timber landsfor practically nothing. At that very time the Government was sellingcoal lands in Colorado at $10 to $20 an acre, and it was recognizedthat even that price was absurdly low. 

Hardly was this "cash sales" law passed, than the besiegingcapitalists pounced upon these Southern lands and scooped in eightmillions of acres of coal, iron and timber lands intrinsically worth(speaking commercially) hundreds of millions of dollars. The fortunesof not a few railroad and industrial magnates were instantly andhugely increased by this fraudulent transaction. [Footnote:"Fraudulent transaction, " House Ex. Doc. 47, Part iv, Forty-sixthCongress, Third Session, speaks of the phrasing of the act as a meresubterfuge for despoilment; that the act was passed specifically "forthe benefit of capitalists, " and "that fraud was used in sneaking itthrough Congress. "] Hundreds of millions of dollars in capitalistbonds and stock, representing in effect mortgages on which the peopleperpetually have to pay heavy interest, are to-day based upon thevalue of the lands then fraudulently seized. 

Fraud was so continuous and widespread that we can here give only afew succinct and scattering instances. "The present system of laws, "reported a special Congressional Committee appointed in 1883 toinvestigate what had become of the once vast public domain, "seem toinvite fraud. You cannot turn to a single state paper or publicdocument where the subject is mentioned before the year 1883, fromthe message of the President to the report of the Commissioner of theLand Office, but what statements of 'fraud' in connection with thedisposition of public lands are found. " [Footnote: House Ex. Doc. 47:356. ] A little later, Commissioner Sparks of the General LandOffice pointed out that "the near approach of the period when theUnited States will have no land to dispose of has stimulated theexertions of capitalists and corporations to acquire outlying regionsof public land in mass, by whatever means, legal or illegal. " In thesame report he further stated, "At the outset of my administration Iwas confronted with overwhelming evidence that the public domain wasmade the prey of unscrupulous speculation and the worst forms of landmonopoly. " [Footnote: Report of the Commissioner of the General LandOffice for October, 1885: 48 and 79. ]

THE "EXCHANGE OF LAND" LAW. Not pausing to deal with a multitude ofother laws the purport and effect of all of which were the same--togive the railroad and other corporations a succession of colossalgifts and other special privileges--laws, many of which will bereferred to later--we shall pass on to one of the final masterlystrokes of the railroad magnates in possessing themselves of many ofsuch of the last remaining valuable public lands as were open tospoliation. 

This happened in 1900. What were styled the land-grant railroads, that is to say, the railroad corporations which received subsidies inboth money and land from the Government, were allotted land inalternate 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, 000acres. To the Northern Pacific 47, 000, 000 acres were given; to theKansas Pacific, 12, 100, 000; to the Southern Pacific about 18, 000, 000acres. From 1850 the National Government had granted subsidies tomore than fifty railroads, and, in addition to the great territorialpossessions given to the six railroads enumerated, had made a cashappropriation to those six of not less than about $140, 000, 000. Butthe corruptly obtained donations from the Government were far frombeing all of the bounty. Throughout the country, States, cities andcounties contributed presents in the form of franchises, financialassistance, land and terminal sites. 

The land grants, especially in the West, were so enormous thatParsons compares them as follows: Those in Minnesota would make twoStates the size of Massachusetts; in Kansas they were equal to twoStates the size of Connecticut and New Jersey; in Iowa the extent ofthe railroad grants was larger than Connecticut and Rhode Island, andthe grants in Michigan and Wisconsin nearly as large; in Montana thegrant to one railroad alone would equal the whole of Maryland, NewJersey and Massachusetts. The land grants in the State of Washingtonwere about equivalent to the area of the same three States. ThreeStates the size of New Hampshire could be carved out of the railroadgrants in California. [Footnote: "The Railways, the Trusts and thePeople": 137. ]

The alternate sections embraced in these States might be good oruseless land; the value depended upon the locality. They might be therichest and finest of agricultural grazing, mineral or timber land orbarren wastes and rocky mountain tops. 

For a while the railroad corporations appeared satisfied with theirappropriations and allotments. But as time passed, and the powers ofgovernment became more and more directed by them, this plan naturallyoccurred: Why not exchange the bad, for good, land? Having found itso easy to possess themselves of so vast and valuable an area offormer public domain, they calculated that no difficulty would beencountered in putting through another process of plundering. Allthat was necessary was to go through the formality of orderingCongress to pass an act allowing them to exchange bad, for good, lands. 

This, however, could not be done too openly. The people must beblinded by an appearance of conserving public interests. Theopportunity came when the Forest Reservation Bill was introduced inCongress--a bill to establish national forest reservations. No bettervehicle could have been found for the project traveling in disguise. This bill was everywhere looked upon as a wise and statesmanlikemeasure for the preservation of forests; capitalist interests, in thepursuit of immediate profit, had ruthlessly denuded and destroyedimmense forest stretches, causing, in turn, floods and destruction oflife, property and of agriculture. Part of the lands to be taken forthe forest reservations included territory settled upon; it wasargued as proper, therefore, that the evicted homesteaders should beindemnified by having the choice of lands elsewhere. 

So far, the measure looked well. But when it went to the conferencecommittee of the two houses of Congress, the railroad representativesartfully slipped in the four unobtrusive words, "or any otherclaimant. " This quartet of words allowed the railway magnates toexchange millions of acres of desert and of denuded timber lands, arid hills and mountain tops covered with perpetual snow, formillions of the richest lands still remaining in the Government'smuch diminished hold. 

So secretly was this transaction consummated that the public knewnothing about it; the subsidized newspapers printed not a word; itwent through in absolute silence. The first protest raised was thatof Senator Pettigrew, of South Dakota, in the United States Senate onMay 31, 1900. In a vigorous speech he disclosed the vast thefts goingon under this act. Congress, under the complete domination of therailroads, took no action to stop it. Only when the fraud was fullyaccomplished did the railroads allow Congress to go through the formsof deferring to public interests by repealing the law. [Footnote: Ina letter to the author Senator Pettigrew instances the case of theNorthern Pacific Railroad. "The Northern Pacific, " he writes, "havingpatented the top of Mount Tacoma, with its perpetual snow and therocky crags of the mountains elsewhere, which had been embracedwithin the forest reservation, could now swap these worthless lands, every acre, for the best valley and grazing lands owned by theGovernment, and thus the Northern Pacific acquired about two millionacres more of mineral, forest and farming lands. "]

COAL LANDS EXPROPRIATED

Not merely were the capitalist interests allowed to plunder thepublic domain from the people under these various acts, but anotheract was passed by Congress, the "Coal Land Act, " purposely drawn topermit the railroads to appropriate great stretches of coal deposits. "Already, " wrote President Roosevelt in a message to Congress urgingthe repeal of the Stone and Timber Act, the Desert Land Law, the CoalLand Act and similar enactments, "probably one-half of the total areaof high-grade coals in the West has passed under private control. Including both lignite and the coal areas, these private holdingsaggregate not less than 30, 000, 000 acres of coal fields. " Theseurgings fell flat on a Congress that included many members who hadgot their millions by reason of these identical laws, and which, as abody, 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 yieldwhere it could vanquish, and concede where it could despoil. [Footnote: Nor did it yield. Roosevelt's denunciations in no wayaffected the steady expropriating process. In the current seizure(1909) of vast coal areas in Alaska, the long-continuing process canbe seen at work under our very eyes. A controversy, in 1909, betweenSecretary of the Interior Ballinger and U. S. Chief Forester GiffordPinchot brought a great scandal to a head. It was revealed thatseveral powerful syndicates of capitalists had filed fraudulentclaims to Alaskan coal lands, the value of which is estimated to befrom $75, 000, 000 to $1, 000, 000, 000. At the present writing theirclaims, 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 byhim--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, theminerals and the soil had long since become the booty of corporationswhose 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 everyavailable acre is appropriated. 

A recent report of H. H. Schwartz, chief of the field service of theDepartment of the Interior, to Secretary Garfield, of thatDepartment, 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 fraudulentlyacquired by capitalist corporations and individuals. This reportdisclosed more than thirty-two thousand cases of land fraud. Thefrauds on the part of various capitalist corporations in obtainingvast mineral deposits in Alaska, and incalculably rich water powersites in Montana and elsewhere, constitute one of the great currentpublic 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 thestriking result beheld: A century ago no railroads existed; to-daythe railroads not only own stupendous natural resources, expropriatedfrom the people, but, in conjunction with allied capitalistinterests, they dictate what the lot, political, economic and social, of the American people shall be. All of this transformation has comeabout 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 beenadjudged criminals and consigned to prison. And now, in the blazingpower of their wealth, these same men or their successors areuncrowned kings, swaying the full powers of government, givingimperial orders that Congress, legislatures, conventions and peoplemust obey. 

AN ARRAY OF COMMANDING FACTS. 

But this is not the only commanding fact. A much more important onelies in the astonishing ease with which the masses of the people havebeen discriminated against, exploited and oppressed. Theoreticallythe power of government resides in the people, down to the humblestvoter. This power, however, has been made the instrument forenslaving the very people supposed to be the wielders of politicalaction. 

While Congress, the legislatures and the executive and administrativeofficials have been industriously giving away public domain, publicfunds and perpetual rights to railroad and other corporations, theyhave almost entirely ignored the interests of the general run ofpeople. 

The more capitalists they created, the harder it became for the poorto get settler's land on the public domain. Congress continuedpassing acts by which, in most cases, the land was turned over tocorporations. Intending settlers had to buy it at exorbitant prices. This took place in nearly all of the States and Territories. Largenumbers of people could not afford to pay the price demanded by therailroads, and consequently were compelled to herd in industrialcenters. They were deliberately shut off from possession of the land. This situation was already acute twenty-five years ago. "The area ofarable land open to settlement, " pointed out Secretary of theInterior Teller in a circular letter of May 22, 1883, "is not greatwhen 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 CommissionerSparks, "that available public lands are already largely covered byentries, selections and claims of various kinds. " The actual settlerwas compelled to buy up these claims, if, indeed, he was permitted tosettle 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 beennational property, the working and farming class were subjected toeither neglect or onerous laws. As a class, the capitalists had nodifficulty at any time in securing whatever laws they needed; ifpersuasion by argument was not effective, bribery was. Moreover, overand above corrupt purchase of votes was the feeling ingrained inlegislators by the concerted teachings of society that the man ofproperty should be looked up to; that he was superior to the commonherd; that his interests were paramount and demanded nursing andprotection. Whenever a commercial crisis occurred, the capitalistssecured a ready hearing and their measures were passed promptly. Butmillions of workers would be in enforced idleness and destitution, and no move was made to throw open public lands to them, orappropriate money, or start public works. Such a proposed policy wasconsidered "paternalism"--a catchword of the times implying thatGovernmental care should not be exercised for the unfortunate, theweak and the helpless. 

And here was the anomaly of the so-called American democraticGovernment. It was held legitimate and necessary that capital shouldbe encouraged, but illegitimate to look out for the interests of thenon-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 nascentcapitalist class to work out its inevitable purposes, yet themajority of the people, on whom the powers of class governmentseverely fell, were constantly deluded into believing that theGovernment represented them. Whether Federalist or anti-Federalist, Whig, Republican or Democratic party was in power, the capitalistclass went forward victoriously and invincibly, the proof of which isseen in its present almost limitless power and possessions. 

CHAPTER II

A NECESSARY CONTRAST

If the whole might of Government was used in the aggrandizement andperpetuation of a propertied aristocracy, what was its specificattitude toward the working class? Of the powerful few, whetherpolitical or industrial, the conventional histories hand down grosslybiased and distorted chronicles. These few are isolated from themultitude, and their importance magnified, while the millions ofobscure are nowhere adequately described. Such sterile historiansproceed upon the perfunctory plan, derived from ancient usage in thedays when kingcraft was supremely exalted, that it is only the mightyfew whose acts are of any consequence, and that the doings of themasses are of no account. 

GOVERNMENT BY PROPERTY INTERESTS. 

Hence it is that most histories are mere registers of names anddates, dull or highly-colored hackneyed splurges of print giving noinsight into actual conditions. 

In this respect most of the prevailing histories of the United Statesare the most egregious offenders. They fix the idea that this or thatalleged statesman, this or that President or politician or set ofpoliticians, have been the dominating factors in the decision andsway of public affairs. No greater error could be formulated. Behindthe ostentatious and imposing public personages of the differentperiods, the arbiters of laws and policies have been the men ofproperty. They it was who really ruled both the arena and the arcanaof politics. 

It was they, sometimes openly, but more usually covertly, whoinfluenced and manipulated the entire sphere of government. 

It was they who raised the issues which divided the people intocontesting camps and which often beclouded and bemuddled the popularmind. It was their material ideals and interests that were engraftedupon the fabric of society and made the prevailing standards of theday. 

From the start the United States Government was what may be called aregime swayed by property. 

The Revolution, as we have seen, was a movement by the nativeproperty interests to work out their own destiny without interferenceby the trading classes of Great Britain. The Constitution of theUnited States, the various State Constitutions, and the laws, were, we have set forth, all reflexes of the interests, aims, castes andprejudices of the property owners, as opposed to the non-propertied. At first, the landholders and the shipping merchants were thedictators of laws. Then from these two classes and from the tradesmensprang a third class, the bankers, who, after a continuous orgy ofbribery, rose to a high pitch of power. At the same time, otherclasses of property owners were sharers in varying degrees indirecting Government. One of these was the slaveholders of the South, desperately increasing their clutch on government administration themore their institutions were threatened. The factory owners werelikewise participants. However bitterly some of these propertiedinterests might war upon one another for supremacy, there was never atime when the majority of the men who sat in Congress, thelegislatures or the judges did not represent, or respond to, eitherthe interests or the ideals of one or more of these divisions of thepropertied 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 1890it was the most puissant governing class in the United States, andonly ceased being distinctly so when the industrial trusts becameeven mightier, and a time came when one trust alone, the Standard OilCompany, was able to possess itself of vast railroad systems. 

These different components of the railroad-owning class had gatheredin their money by either outright fraud or by the customaryexploitative processes of the times. We have noted how many of thelandholders secured their estates at one time or another by briberyor by invidiously fraudulent transactions; and how the bankers, whooriginally were either tradesmen, factory owners or landowners, hadobtained their charters and privileges by widespread bribery. Aportion of the money thus acquired was often used in bribing Congressand legislatures for railroad charters, public funds, immense areasof land including forests and mines, and special laws of the mostextraordinary character. 

CONDITIONS OF THE NON-PROPERTIED. 

Since Government was actually, although not avowedly or apparently, aproperty regime, what was the condition of the millions of non-propertied?

In order to get a correct understanding of both the philosophy andthe significance of what manner of property rule was in force, it isnecessary to give an accompanying sketch of the life of the millionsof producers, and what kind of laws related to them. Merely tonarrate the acts of the capitalists of the period is of no enduringvalue unless it be accompanied by a necessary contrast of howGovernment and capitalist acted toward the worker. It was the workerwho tilled the ground and harvested the produce nourishing nations;whose labor, mental or manual, brought forth the thousand and onecommodities, utensils, implements, articles and luxuries necessary tothe material wants of civilization. Verily, what of the great hostsof 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 ofproperty, was being used as a distributing instrument for centeringresources and laws in the hands of a mere minority, what were itsmethods 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 inquisitivequestions. The inquirer for truth will not be content with the simplestatement that many of the factory owners and tradesmen bribedrepresentative bodies to give them railroad charters and bountifullargess. He will seek to know how, as specifically as the recordsallow, they got together that money. Their nominal methods are of noweight; it is the portrayal of their real, basic methods which alonewill satisfy the delver for actual facts. 

This is not the place for a voluminous account of the industrialdevelopment of the United States. We cannot halt here to give thefull account of the origin and growth of that factory system whichhas culminated in the gigantic trusts of to-day. Nor can we pause todeal with the manifold circumstances and methods involved in thatexpansion. The full tale of the rise and climax of industrialestablishments; how they subverted the functions of government totheir own ends; stole inventions right and left and drove inventorsto poverty and to the grave; defrauded the community of incredibleamounts by evading taxation; oppressed their workers to a degree thatin future times will read like the acts of a class outsavaging thesavage; bribed without intermission; slaughtered legions of men, women and children in the pursuit of profit; exploited the peoples ofthe globe remorselessly--all of this and more, constituting a weirdchapter of horrors in the progress of the race, will be fullydescribed in a later part of this work. [Footnote: See "GreatFortunes from Industries. "]

But in order to contribute a clear perspective of the methods andmorals of a period when Government was but the mannikin of property--a period even more pronounced now--and to give a deeper insight intothe conditions against which millions had to contend at a time whenthe railroad oligarchy was blown into life by Government edict, a fewimportant 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 independenceso much vaunted was the independence of the capitalist to do as hepleased. Few, if any, restrictions were placed upon him; such pseudorestrictions as were passed from time to time were not enforced. Onthe 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 thefirst strike in this country of which there is any record--that of anumber of sailors in New York City in 1803, for better wages--theleader was arrested, indicted and sent to prison. The formidablemachinery of Government was employed by the ruling commercial andlanded classes for a double purpose. On the one hand, they insistedthat it should encourage capital, which phrase translated into actionmeant that it should confer grants of land, immense loans of publicfunds without interest, virtual immunity from taxation, an extra-legal taxing power, sweeping privileges, protective laws and clearlydefined statute rights. 

THE SUPREMACY OF EMPLOYERS. 

At the same time, while enriching themselves in every direction bytransferring, through the powers of Government, public resources tothemselves, the capitalists declared it to be a settled principlethat Government should not be paternalistic; they asserted that itwas not only not a proper governmental function to look out for theinterests of the masses of workers, but they went even further. 

With the precedents of the English laws as an example, they held thatit devolved upon Government to keep the workers sternly within thebounds established by employers. In plain words, this meant that thecapitalist was to be allowed to run his business as he desired. Hecould overwork his employees, pay them the lowest wages, and killthem off by forcing them to work under conditions in which thesacrifice of human life was held subordinate to the gathering ofprofits, or by forcing them to work or live in disease-breedingplaces. [Footnote: The slum population of the United States increasedrapidly. "According to the best estimates, " stated the "SeventhSpecial Report of the U. S. Commissioner of Labor--The Slums of GreatCities, 1894, " "the total slum population of Baltimore is about25, 000; of Chicago, 162, 000; of New York, 360, 000; of Philadelphia, 35, 000" (p. 12). The figures of the average weekly wages perindividual of the slum population revealed why there was so large aslum population. In Baltimore these wages were $8. 65-1/2 per week; inChicago, $9. 88-1/2; in New York, $8. 36, and in Philadelphia, $8. 68per week (p. 64). 

In his "Modern Social Conditions, " Bailey, basing his statements uponthe U. S. Census of 1900, asserted that 109, 750 persons had died fromtuberculosis in the United States in 1900. "Plenty of fresh air andsunlight, " he wrote, "will kill the germs, and yet it is estimatedthat there are eight millions of people who will eventually die fromconsumption unless strenuous efforts are made to combat the disease. Working in a confined atmosphere, and living in damp, poorlyventilated rooms, the dwellers in the tenements of the great citiesfall easy victims to the great white plague. " (p. 265). ]

The law, which was the distinct expression of the interests of thecapitalist, upheld his right to do all this. Yet if the workersprotested; if they sought to improve their condition by joining inthat community of action called a strike, the same code of lawsadjudged them criminals. At once, the whole power of law, with itspolice, military and judges, descended upon them, and either drovethem back to their tasks or consigned them to prison. 

The conditions under which the capitalists made their profits, andunder which the workers had to toil, were very oppressive to theworkers. The hours of work at that period were from sunrise tosunset. 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 refinedclasses of the day, saw nothing wrong in this exploitation. Thereason was obvious. Their power, their elegant mansions, their silksand satins, their equipage and superior opportunities for enjoymentall were based upon the sweat and blood of these so-called free whitemen, women and children of the North, who toiled even harder than thechattel black slave of the South, and who did not receive a fractionof the care and thought bestowed, as a corrollary of property, uponthe black slave. Already the capitalists of the North had a slaverysystem in force far more effective than the chattel system of theSouth--a system the economic superiority of which was destined tooverthrow that of black slavery. 

Most historians, taking their cue from the intellectual subserviencydemanded of them by the ruling propertied classes, delight inpicturing those times as "the good old times, " when the capitalistswere benevolent and amiable, and the workers lived in peace andplenty. 

AN INCESSANT WARFARE. 

History in the main, thus far, has been an institution for thepropagation 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 andoppressed. Apart from the class distinctions and the bitternessmanifested in settlement and colonial times in this country--reference to which has been given in earlier chapters--the whole ofthe nineteenth century, and thus far of this century, has been acontinuous industrial struggle. It has been the real warfare ofmodern times. 

In this struggle the propertied classes had the great advantage fromthe start. Centuries of rulership had taught them that the control ofGovernment was the crux of the mastery. By possession of Governmentthey 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 suppressingany attempt at protest, peaceful or otherwise. Notwithstanding thismassing of power and force, the working class has at no time beenpassive or acquiescent. It has allowed itself to be duped; it haspermitted its ranks to be divided by false issues; it has often beenblind at critical times, and has made no concerted effort as yet toget intelligent possession of the great strategic point, --governmental power. Nevertheless, despite these mistakes, it has beenin a state of constant rebellion; and the fact that it has been so, that its aspirations could not be squelched by jails, prisons andcannon nor by destitution or starvation, furnishes the sublimestrecord in all the annals of mankind. 

THE WORKERS' STRUGGLE FOR BETTER CONDITIONS. 

Again and again the workers attempted to throw off some of theirshackles, and every time the whole dominant force of society wasarrayed against them. By 1825 an agitation developed for a ten-hourworkday. The politicians denounced the movement; the cultured classesfrowned upon it; the newspapers alternately ridiculed and abused it;the officials prepared to take summary action to put it down. As forthe capitalists--the shipping merchants, the boot and shoemanufacturers, the iron masters and others--they not only denied theright of the workers to organize, while insisting that theythemselves were entitled to combine, but they inveighed against theten-hour demand as "unreasonable conditions which the folly andcaprice of a few journeymen mechanics may dictate. " "A very large sumof money, " says McNeill, "was subscribed by the merchants to defeatthe ten-hour movement. " [Footnote: "The Labor Movement": 339. ] And asan evidence of the intense opposition to the workers' demands for achange from a fourteen to a ten-hour day, McNeill quotes from aBoston newspaper of 1832:

Had this unlawful combination had for its object the enhancement ofdaily wages, it would have been left to its own care; but it nowstrikes the very nerve of industry and good morals by dictating thehours of labor, abrogating the good old rule of our fathers andpointing out the most direct course to poverty; for to be idleseveral of the most useful hours of the morning and evening willsurely lead to intemperance and ruin. 

These, generally speaking, were the stock capitalists arguments ofthe day, together with the further reiterated assertion that it wasimpossible to conduct business on a ten-hour day system. The effectof the fourteen-hour day upon the workers was pernicious. Having notime for reading, self-education, social intercourse or acquaintingthemselves with refinement, they often developed brutal propensities. In proportion to the length of time and the rigor with which theywere exploited, they degenerated morally and intellectually. This wasa well-known fact, and was frequently commented upon bycontemporaneous observers. Their employers could not fail to know it, yet, with few exceptions, they insisted that any movement to shortenthe day's labor was destructive of good morals. 

This pronouncement, however, need not arouse comment. Ever has thepropertied class set itself up as the lofty guardian of moralsalthough actuated by sordid self-interest and nothing more. Manyworkers were driven to drink, crime and suicide by the exasperatingand deteriorating conditions under which they had to labor. Themoment that they overstepped the slightest bounds of law, in rushedthe authorities with summary punishment. The prisons of the periodwere full of mechanics whom serfdom or poverty had stung on to commitsome crime or other. However trifling the offence, or whatever thejustifiable provocation, the law made no trades-union memorializedCongress to limit the hours of labor of those employed on the publicworks to ten hours a day. The pathos of this petition! So unceasinglyhad the workers been lied to by politicians, newspapers, clergy andemployers, that they did not realize that in applying to Congress or toany legislature, that they were begging from men who representedthe antagonistic interests of their own employers. After a short debateCongress laid the petition on the table. Congress at this very time wasspinning out laws in behalf of capitalist interests; granting publiclands, public funds, protective tariffs and manifold other measuresdemanded or lobbied for by existing or projected corporations. 

A memorial of a "Portion of the Laboring Classes of the City of NewYork in Relation to The Money Market" complained to Congress in 1833that the powers of the Government were used against the workingclass. 

"You are not ignorant, " they petitioned, That our State Legislatures have, by a usurpation of power which isexpressly withheld by our Federal Constitution, chartered manycompanies to engage in the manufacture of paper money; and that thenecessities of the laboring classes have compelled them to give itcurrency. 

The strongest argument against this measure is, that by licensing anyman or set of men to manufacture money, instead of earning it, wevirtually license them to take so much of the property of thecommunity as they may happen to fancy, without contributing to it atall--an injustice so enormous that it is incapable of any defense andtherefore needs no comment. 

. . . That the profits of capital are abstracted from the earnings oflabor, and that these deductions, like any other tax on industry, tend to diminish the value of money by increasing the price of allthe fruits of labor, are facts beyond dispute; it is equallyundeniable that there is a point which capitalists cannot exceedwithout injuring themselves, for when by their exertions they so fardepreciate the value of money at home that it is sent abroad, manyare thrown out of employ, and are not only disabled from paying theirtribute, _but are forced to betake to dishonest courses orstarve_. 

This memorial was full of iron and stern truths, although much of itspolitical economy was that of its own era; a very different petition, it will be noticed, from the appealing, cringing petitions senttimidly to Congress by the conservative, truckling labor leaders oflater times. The memorial continued;

The remaining laborers are then loaded with additional burdens toprovide laws and prisons and standing armies to keep order; expensivewars are created merely to lull for a time the clamors foremployment; each new burden aggravates the disease, and nationaldeath finally ends it. 

The power of capital, was, the memorial read on, "in the nature ofthings, regulated by the proportion that the numbers of, andcompetition among, capitalists bears to the number and destitution oflaborers. " The only sure way of benefiting labor, "and the way bestcalculated to benefit all classes, " was to diminish the destitutionamong the working classes. And the remedy proposed in the memorial? Asettled principle of national policy should be laid down by Congressthat the whole of the remaining of the public lands should forevercontinue to be the public property of the nation "and accordingly, cause them to be laid out from time to time, as the wants of thepopulation might require, in small farms with a suitable proportionof building lots for mechanics, for the free use of any nativecitizen and his descendants who might be at the expense of clearingthem. " This policy "would establish a perpetual counterpoise to theabsorbing power of capital. " The memorial concluded:

These lands have been bought with public money every cent of which isin the end derived from the earnings of the laboring classes. 

And while the public money has been liberally employed to protect andfoster trade, Government has never, to our knowledge, adopted but onemeasure (the protective tariff system) with a distinct view topromote the interests of labor; and all of the advantages of this onehave 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 entiregoverning power against the workers. State and municipal authoritiesdid likewise. In 1836 the longshoremen in New York City struck for anincrease of wages. Their employers hurriedly substituted non-unionmen in their places. When the union men went from dock to dock, trying to induce the newcomers to side with them, the shippingmerchants pretended that a riot was under way and made frantic callsupon the authorities for a subduing force. The mayor ordered out themilitia with loaded guns. In Philadelphia similar scenes took place. Naturally, as the strikers were prevented by the soldiers frompersuading their fellow workers, they lost the strikes. 

Although labor-saving machinery was constantly being devised andimproved to displace hand labor, and although the skilled worker wasconsequently producing far more goods than in former years, themasters--as the capitalists were then often termed--insisted thatemployees must work for the same wages and hours as had longprevailed. 

By 1840, however, the labor unions had arrived at a point where theywere very powerful in some of the crafts, and employers grudginglyhad to recognize that the time had passed by when the laborer was tobe treated like a serf. A few enlightened employers voluntarilyconceded the ten-hour day, not on any humane grounds, but becausethey reasoned that it would promote greater efficiency on the part oftheir workers. Many capitalists, perforce, had to yield to thedemand. Other capitalists determined to break up the unions on theground that they were a conspiracy. At the instigation of severalboot and shoe manufacturers, the officials of Boston brought a suitagainst the Boston Journeymen Bootmakers' Society. The court ruledagainst the bootmakers and the jury brought in a verdict of guilty. On appeal to the Supreme Court, Robert Rantoul, the attorney for thesociety, so ably demolished the prosecution's points, that the courtcould not avoid setting aside the judgment of the inferior court. [Footnote: Commonwealth vs. Hunt and others; Metcalf's Supreme CourtReports, iv: III. The prosecution had fallen back on the old Englishlaw of the time of Queen Elizabeth, making it a criminal offence forworkingmen to refuse to work under certain wages. This law, Rantoulargued, had not been specifically adopted as common law in the UnitedStates after the Revolution. ]

Perhaps the growing power of the labor unions had its effect uponthose noble minds, the judiciary. The worker was no longer detachedfrom his fellow workmen: he could no longer be scornfully shovedaside as a weak, helpless individual. He now had the strength ofassociation and organization. The possibility of such strengthtransferred to politics affrighted the ruling classes. Where beforethis, the politicians had contemptuously treated the worker'spetitions, certain that he could always be led blindly to vote theusual partisan tickets, it now dawned upon them that it would bewiser to make an appearance of deference and to give some concessionswhich, although of a slight character, could be made to appearimportant. The Workingmen's party of 1829 had shown a glimmer of whatthe 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 theywould do, together with a few scraps of legislation now and then--this constituted the bait held out by the politicians. That adroitmaster of political chicanery, President Van Buren, hastened to issuean executive order on April 10, 1840, directing the establishment ofa ten-hour day, between April and September, in the navy yards. Fromthe last day of October, however, until March 31, the "working hourswill be from the rising to the setting of the sun"--a length of timeequivalent, meal time deducted, to about ten hours. 

The political trick of throwing out crumbs to the workers long provedsuccessful. But it was supplemented by other methods. To draw thelabor leaders away from a hostile stand to the established politicalparties, and to prevent the massing of workers in a party of theirown, the politicians began an insidious system of bribing theseleaders to turn traitors. This was done by either appointing them tosome minor political office or by giving them money. In manyinstances, the labor unions in the ensuing decades were grosslybetrayed. 

Finally, the politicians always had large sums of election fundscontributed by merchants, bankers, landowners, railroad owners--byall parts of the capitalist class. These funds were employed incorrupting the electorate and legislative bodies. Caucuses andprimaries were packed, votes bought, ballot boxes stuffed andelection returns falsified. It did not matter to the corporationsgenerally which of the old political parties was in power; somemanufacturers or merchants might be swayed to one side or the otherfor the self-interest involved in the reenactment of the protectivetariff or the establishment of free trade; but, as a rule, thecorporations, as a matter of business, contributed money to bothparties. 

THE BASIS OF POLITICAL PARTIES. 

However these parties might differ on various issues, they both stoodfor the perpetuation of the existing social and industrial systembased upon capitalist ownership. The tendency of the Republicanparty, founded in 1856, toward the abolition of negro chattel slaverywas in precise harmony with the aims and fundamental interests of themanufacturing capitalists of the North. The only peril that thecapitalist class feared was the creation of a distinct, disciplinedand determined workingmen's party. This they knew would, ifsuccessful, seriously endanger and tend to sweep away the injusticesand oppressions upon which they, the capitalists, subsisted. To avertthis, every ruse and expedient was resorted to: derision, undermining, corruption, violence, imprisonment--all of these andother methods were employed by that sordid ruling class claiming foritself so pretentious and all-embracing a degree of refinement, morality and patriotism. 

Surveying historical events in a large way, however, it is by nomeans to be regretted that capitalism had its own unbridled way, andthat its growth was not checked. Its development to the unbearablemaximum had to come in order to prepare the ripe way for a newerstage in civilization. The capitalist was an outgrowth of conditionsas they existed both before, and during, his time. He fitted asappropriate a part in his time as the predatory baron in feudal days. 

But in this sketch we are not dealing with historical causes orsequences as much as with events and contrasts. The aim is to give asufficient historical perspective of times when Government wasmanipulated by the capitalist class for its own aggrandizement, andto despoil and degrade the millions of producers. 

The imminence of working-class action was an ever present anddisturbing menace to the capitalists. To give one of many instancesof how the workers were beginning to realize the necessity of thisaction, and how the capitalists met it, let us instance theresolutions of the New England Workingmen's Association, adopted in1845. With the manifold illustrations in mind of how the powers ofGovernment had been used and were being increasingly used toexpropriate the land, the resources and the labor and produce of themany, and bond that generation and future generations under amultitude of law-created rights and privileges, this associationdeclared in its preamble:

Whereas, we, the mechanics and workingmen of New England areconvinced by the sad experience of years that under the presentarrangement of society labor is and must be the slave of wealth; and, whereas, the producers of all wealth are deprived not merely of itsenjoyment, but also of the social and civil rights which belong tohumanity and the race; and, whereas, we are convinced that reform ofthose abuses must depend upon ourselves only; and, whereas, webelieve that in intelligence alone is strength, we hereby declare ourobject to be union for power, power to bless humanity, and to furtherthis object resolve ourselves into an association. 

One of the leading spirits in this movement was Charles A. Dana, ayoung professional man of great promise and exceptional attainments. Subsequently he was bought off with a political office; he became notonly a renegade of the most virulent type, but he leagued himselfwith the greatest thieves of the day--Tweed and Jay Gould, forexample--received large bribes for defending them and their interestsin 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 himselfthe most conspicuous editorial advocate for every thieving plutocrator capitalist measure. 

The year 1884 about marked the zenith of the era of the capitalistseizing of the public domain. By that time the railroad and othercorporations had possessed themselves of a large part of the area nowvested in their ownership. At that very time an army of workers, estimated at 2, 000, 000, was out of employment. Yet it was notconsidered a panic year; certainly the industrial establishments ofthe country were not in the throes of a commercial cataclysm such ashappened in 1873 and previous periods. The cities were overcrowdedwith the destitute and homeless; along every country road andrailroad track could be seen men, singly or in pairs, tramping fromplace to place looking for work. 

Many of those unemployed were native Americans. A large number werealiens who had been induced to migrate by the alluring statements ofthe steamship companies to whose profit it was to carry largebatches; by the solicitations of the agents of American corporationsseeking among the oppressed peoples of the Old World a generoussupply of cheap, unorganized labor; or by the spontaneous prospect ofbettering their condition politically or economically. 

Millions of poor Europeans were thus persuaded to come over, only tofind that the promises held out to them were hollow. They found thatthey were exploited in the United States even worse industrially thanin their native country. As for political freedom their sanguinehopes were soon shattered. They had votes after a certain period ofresidence, it was true, but they saw--or at least the intelligent ofthem soon discerned--that the personnel and laws of the United StatesGovernment were determined by the great capitalists. The people wereallowed to go through the form of voting; the moneyed interests, bycontrolling the machinery of the dominant political parties, dictatedwho the candidates, and what the so-called principles, of thoseparties should be. The same program was witnessed at every election. The electorate was stimulated with excitement and enthusiasm overfalse issues and dominated candidates. The more the power and wealthof the capitalist class increased, the more openly the Governmentbecame ultra-capitalistic. 

WEALTH AND THE SWAY OF DIRECT POWER

It was about this time that the Senate of the United States wasundergoing a transformation clearly showing how impatient the greatcapitalists were of operating Government through middlemenlegislators. Previously, the manufacturing, railroad and bankinginterests had, on the whole, deemed it wise not to exercise thispower directly but indirectly. The representatives sent to Congresswere largely lawyers elected by their influence and money. The peopleat large did not know the secret processes back of these legislators. The press, advocating, as a whole, the interests of the capitalistclass, constantly portrayed the legislators as great and patrioticstatesmen. 

But the magnates saw that the time had arrived when some emptydemocratic forms of Government could be waved aside, and the powerexercised openly and directly by them. Presently we find such men asLeland Stanford, of the Pacific railroad quartet, and one of thearch-bribers and thieves of the time, entering the United StatesSenate after debauching the California legislature; George Hearst, amining magnate, and others of that class. 

More and more this assumption of direct power increased, until now itis reckoned that there are at least eighty millionaires in Congress. Many of them have been multimillionaires controlling, or representingcorporations having a controlling share in vast industries, transportation and banking systems--men such as Senator Elkins, ofWest Virginia; Clark, of Montana; Platt and Depew, of New York;Guggenheim, of Colorado; Knox, of Pennsylvania; Foraker, of Ohio, anda quota of others. The popular jest as to the United States Senatebeing a "millionaires' club" has become antiquated; much moreappropriately it could be termed a "multimillionaires' club. " Whilein both houses of Congress are legislators who represent the almostextinguished middle class, their votes are as ineffective as theirdeclamations are flat. The Government of the United States, viewingit as an entirety, and not considering the impotent exceptions, isnow more avowedly a capitalist Government than ever before. As forthe various legislatures, the magnates, coveting no seats in thosebodies, are content to follow the old plan of mastering them byeither direct bribery or by controlling the political bosses incharge of the political machines. 

Since the interests of the capitalists from the start were acutelyantagonistic to those of the workers and of the people in generalfrom whom their profits came, no cause for astonishment can be foundin the refusal of Government to look out, even in trifling ways, forthe workers' welfare. But it is of the greatest and most instructiveinterest to give a succession of contrasts. And here some complexfactors intervene. Those cold, unimpassioned academicians who canperpetuate fallacies and lies in the most polished and dispassionatelanguage, will object to the statement that the whole of governinginstitutions has been in the hands of thieves--great, not petty, thieves. And yet the facts, as we have seen (and will still furthersee), bear out this assertion. Government was run and ruled at basisby 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 lastfew 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 doingbusiness. Its only conception of industry was that of the methods ofthe year 1825. It refused to see that the centralization of industrywas inevitable, and that it meant progress. It lamented the decay ofits own power, and tried by every means at its command to thwart thepurposes of the trusts. This middle class had bribed and cheated andhad exploited the worker. For decades it had shaped public opinion tosupport the dictum that "competition was the life of trade. " It had, by this shaping of opinion, enrolled on its side a large number ofworkers who saw only the temporary evils, and not the ultimate good, involved in the scientific organization and centralization ofindustry. The middle class put through anti-trust laws and othermeasure after measure aimed at the great combinations. 

These great combinations had, therefore, a double fight on theirhands. On the one hand they had to resist the trades unions, and onthe other, the middle class. It was necessary to their interests thatcentralization of industry should continue. In fact, it washistorically and economically necessary. Consequently they had tobend every effort to make nugatory any effort of Government, bothNational and State, to enforce the anti-trust laws. The thing had tobe done no matter how. It was intolerable that industrial developmentcould be stopped by a middle class which, for self-interest, wouldhave kept matters at a standstill. Self-interest likewise demandedthat the nascent combinations and trusts get and exercisegovernmental power by any means they could use. For a whiletriumphant in passing certain laws which, it was fatuously expected, would wipe the trusts out of existence, the middle class washopelessly beaten and routed. By their far greater command ofresources and money, the great magnates were able to frustrate theexecution of those laws, and gradually to install themselves or theirtools in practically supreme power. The middle class is now becominga mere memory. Even the frantic efforts of President Roosevelt in itsbehalf were of absolutely no avail; the trusts are mightier than everbefore, and hold a sway the disputing of which is ineffective. 

THE TRUSTS AND THE UNEMPLOYED. 

With this newer organization and centralization of industry thenumber of unemployed tremendously increased. In the panic of 1893 itreached about 3, 000, 000; in that of 1908 perhaps 6, 000, 000, certainly5, 000, 000. To the appalling suffering on every hand the Governmentremained indifferent. The reasons were two-fold: Government wasadministered by the capitalist class whose interest it was not toallow any measure to be passed which might strengthen the workers, ordecrease the volume of surplus labor; the second was that Governmentwas basically the apotheosis of the current commercial idea that theclaims of property were superior to those of human life. 

It can be said without exaggeration that high functionary after highfunctionary in the legislative or executive branches of theGovernment, and magnate after magnate had committed not only oneviolation, but constant violations, of the criminal law. They wereunmolested; having the power to prevent it they assuredly would notsuffer themselves to undergo even the farce of prosecution. Such fewprosecutions as were started with suspicious bluster by theGovernment against the Standard Oil Company, the Sugar Trust, theTobacco Trust and other trusts proved to be absolutely harmless, andhave had no result except to strengthen the position of the trusts. The great magnates reaped their wealth by an innumerable successionof frauds and thefts. But the moment that wealth or the basis of thatwealth were threatened in the remotest by any law or movement, thewhole body of Government, executive, legislative and judicial, promptly stepped in to protect it intact. 

The workers, however, from whom the wealth was robbed, were regardedin law as criminals the moment they became impoverished. If homelessand without visible means of support, they were subject to arrest asvagabonds. Numbers of them were constantly sent to prison or, in someStates, to the chain-gang. If they ventured to hold mass meetings tourge the Government to start a series of public works to relieve theunemployed, their meetings were broken up and the assembled brutallyclubbed, as happened in Tompkins square in New York City in the panicof 1873, in Washington in 1892, and in Chicago and in Union square, New York City, in the panic of 1908. The newspapers represented thesemeetings as those of irresponsible agitators, inciting the "mob" toviolence. The clubbing of the unemployed and the judicial murder oftheir spokesman, has long been a favorite repression method of theauthorities. But as for allowing them freedom of speech, consideringthe grievances, putting forth every effort to relieve theircondition, --these do not seem to have come within the scope of thatGovernment whose every move has been one of intense hostility--nowopen, again covert--to the working class. 

This running sketch, which is to be supplemented by the most specificdetails, gives a sufficient insight into the debasement anddespoiling of the working class while the capitalists were using theGovernment as an expropriating machine. Meanwhile, how was the greatfarming class faring? What were the consequences to this large bodyof 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 theworking class, steadily grew worse. In the hope of improving theircondition large numbers migrated from the Eastern States, and aconstant influx of agriculturists poured in from Europe. 

A comparatively few of the whole were able to get land direct fromthe Government. Naturally the course of this extensive migrationfollowed the path of transportation, that is to say, of therailroads. This was exactly what the railroad corporations hadanticipated. As a rule the migrating farmers found the railroads orcattlemen already in possession of many of the best lands. To give aspecific idea of how vast and widespread were the railroad holdingsin the various States, this tabulation covering the years up to 1883will suffice: In the States of Florida, Louisiana, Alabama andMississippi about 9, 000, 000 acres in all; in Wisconsin, 3, 553, 865acres; Missouri, 2, 605, 251 acres; Arkansas, 2, 613, 631 acres;Illinois, 2, 595, 053 acres; Iowa, 4, 181, 929 acres; Michigan, 3, 355, 943acres; 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: "ThePublic Domain, " House Ex. Doc. No. 47, Third Session, Forty-sixthCongress: 273. ]

Prospective farmers had to pay the railroads exorbitant prices forland. Very often they had not sufficient funds; a mortgage or twowould be signed; and if the farmer had a bad season or two, and couldno longer pay the interest, foreclosure would result. But whethercrops were good or bad, the American farmer constantly had to competein the grain markets of the world with the cheap labor of India andRussia. And inexorably, East or West, North or South, he was caughtbetween a double fire. 

On the one hand, in order to compete with the immense capitalistfarms gradually developing, he had to give up primitive implementsand buy the most improved agricultural machines. For these he wascharged five and six times the sum it cost the manufacturers to makeand market them. Usually if he could not pay for them outright, themanufacturers took out a mortgage on his farm. Large numbers of thesemortgages were foreclosed. 

In addition, the time had passed when the farmer made his own clothesand many other articles. For everything that he bought he had to payexcessive prices. He, even more than the industrial working classes, had to pay an enormous manufacturer's profit, and additionally thehigh freight railroad rate. 

On the other hand, the great capitalist agencies directly dealingwith the crops--the packing houses, the gambling cotton and produceexchanges--actually owned, by a series of manipulations, a largeproportion of his crops before they were out of the ground. Thesecrops were sold to the working class at exorbitant prices. The smallfarmer labored incessantly, only to find himself getting poorer. Itserved political purpose well to describe glowingly the farmer'sprosperity; but the greater crops he raised, the greater the profitto the railroad companies and to various other divisions of thecapitalist class. His was the labor and worry; they gathered in thefinancial harvest. 

METHODS OF THE GREAT LANDOWNERS. 

While thus the produce of the farmer's labor was virtuallyconfiscated by the different capitalist combinations, the farmers ofmany States, particularly of the rich agricultural States of theWest, were unable to stand up against the encroachments, power, andthe 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 inobtaining 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, andcollusion with officials, almost succeeded in stealing more than halfa million acres. Henry Miller, who came to the United States as animmigrant in 1850, is to-day owner of 14, 539, 000 acres of the richestland in California and Oregon. It embraces more than 22, 500 squaremiles, a territory three times as large as New Jersey. The stupendousland frauds in all of the Western and Pacific States by whichcapitalists obtained "an empire of land, timber and mines" are amplydescribed in numerous documents of the period. These land thieves, aswas developed in official investigations, had their tools andassociates in the Land Commissioner's office, in the Governmentexecutive departments, and in both houses of Congress. The landgrabbers did their part in driving the small farmer from the soil. Bailey Millard, who extensively investigated the land frauds inCalifornia, after giving full details, says:

When you have learned these things it is not difficult to understandhow one hundred men in the great Sacramento Valley have come to ownover 17, 000, 000 acres, while in the San Joaquin Valley it is nouncommon thing for one man's name to stand for 100, 000 acres. Thisgrabbing of large tracts has discouraged immigration to Californiamore than any other single factor. A family living on a small holdingin a vast plain, with hardly a house in sight, will in time become avery lonely family indeed, and will in a few years be glad to sellout to the land king whose domain is adjacent. Thousands of smallfarms have in this way been acquired by the large holders at nominalprices. [Footnote: "The West Coast Land Grabbers. " Everybody'sMagazine, May, 1905. ]

SEIZURE OF IMMENSE AREAS BY FRAUD. 

Official reports of the period, contemporaneous with the originalseizure of these immense tracts of land, give far more specificdetails of the methods by which that land was obtained. Of thenumerous reports of committees of the California Legislature, we willhere simply quote one--that of the Swamp Land Investigating Committeeof the California Assembly of 1873. Dealing with the fraudulentmethods by which huge areas of the finest lands in California wereobtained for practically nothing as "swamp" land, this committeereported, citing from what it termed a "mighty mass of evidence, ""That through the connivance of parties, surveyors were appointed whosegregated lands as 'swamp, ' which were not so in fact. Thecorruption existing in the land department of the General Governmenthas aided this system of fraud. "

Also, the committee commented with deep irony, "the loose laws of theState, governing all classes of State lands, has enabled wealthyparties to obtain much of it under circumstances which, in somecountries, where laws are more rigid and terms less refined, would betermed fraudulent, but we can only designate it as keen foresight andwise (for the land grabbers) construction of loose, unwholesomelaws. " [Footnote: Report of the Swamp Land Investigating Committee, Appendix to California Journals of Senate and Assembly. TwentiethSession, 1874, Vol. Iv, Doc. No. 5:3. ]

After recording its findings that it was satisfied from the evidencethat "the grossest frauds have been committed in swamp matters inthis State, "the committee went on:

Formerly it was the custom to permit filings upon real or allegedswamp lands, and to allow the applications to lie unacted upon for anindefinite number of years, at the option of the applicants. In thesecases, parties on the "inside" of the Land Office "ring" had but towait until some one should come along who wanted to take up theselands 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 acent. 

Or, if the nature of the land was doubtful, they would postpone allinvestigation until the height of the floods during the rainy season, when surveyors, in interest with themselves, would be sent out tomake favorable reports as to the "swampy" character of the land. Inthe mountain valleys and on the other side of the Sierras, the landsare overflowed from melting snow exactly when the water is mostwanted; but the simple presence of the water is all that is necessaryto show to the speculators that the land is "swamp, " and it thereforepresents 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 theGeneral Land Office, described at great length the vast frauds thathad 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 mereinstrumentality in the hands of 'surveying rings. '" [Footnote: Ibid. , 166] "Sixteen townships examined in Colorado in 1885 were found tohave been surveyed on paper only, no actual surveying having beendone. [Footnote: Ibid. , 165 ] In twenty-two other townships examinedin Colorado, purporting to have been surveyed under a "special-deposit" contract awarded in 1881, the surveys were found whollyfraudulent 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 CommissionerSparks. Although the law restricted surveys to agricultural lands andfor homestead entries, yet the Land Office had long corruptly allowedwhat it was pleased to term certain "liberal regulations. " Surveyswere so construed as to include any portion of townships the "largerportion" of which was not "known" to be of a mineral character. These"regulations, " which were nothing more or less than an extra-legallicense to land-grabbers, also granted surveys for desert lands andtimber lands under the timber-land act. By the terms of this act, itwill be recalled, those who entered and took title to desert andtimber lands were not required to be actual settlers. Thus, it wasonly necessary for the surveyors in the hire of the great landgrabbers to report fine grazing, agricultural, timber or mineral landas "desert land, " and vast areas could be seized by singleindividuals or corporations with facility. 

Two specific laws directly contributed to the effectiveness of thisspoliation. One act, passed by Congress on May 30, 1862, authorizedsurveys to be made at the expense of settlers in the townships thatthose settlers desired surveyed. Another act, called the Deposit Act, passed in 1871, provided that the amounts deposited by settlersshould be partly applied in payment for the lands thus surveyed. Together, these two laws made the grasping of land on an extensivescale a simple process. The "settler" (which so often meant, inreality, the capitalist) could secure the collusion of the LandOffice, and have fraudulent surveys made. Under these surveys hecould lay claim to immense tracts of the most valuable land and havethem reported as "swamp" or "desert" lands; he could have theboundaries of original claims vastly enlarged; and the fact that partof his disbursements for surveying was considered as a payment forthose lands, stood in law as virtually a confirmation of his claim. 

ACTUAL SETTLERS EXCLUDED FROM PUBLIC DOMAIN. 

"Wealthy speculators and powerful syndicates, " reported CommissionerSparks, covet the public domain, and a survey is the first step in theaccomplishment of this desire. The bulk of deposit surveys have beenmade in timber districts and grazing regions, and the surveyed landshave immediately been entered under the timber land, preëmption, commuted homestead, timber-culture and desert-land acts. Sothoroughly organized has been the entire system of procuring thesurvey and making illegal entry of lands, that agents and attorneysengaged in this business have been advised of every officialproceeding, and enabled to present entry applications for the landsat the very moment of the filing of the plots of survey in the localland offices. 

Prospectors employed by lumber firms and corporations seek out andreport the most valuable timber tracts in California, Oregon, Washington Territory or elsewhere; settler's applications aremanufactured as a basis for survey; contracts are entered into andpushed through the General Land Office in hot haste; a skeletonsurvey is made. . . Entry papers, made perfect in form by competentattorneys, are filed in bulk, and the manipulators enter intopossession of the land. . . . This has been the course of proceedingheretofore. [Footnote: House Documents, etc. , 1885-86, ii: 167. ]

Commissioner Sparks described a case where it was discovered by hisspecial agents in California that an English firm had obtained100, 000 acres of the choicest red-wood lands in that State. Theselands were then estimated to be worth $100 an acre. The cost ofprocuring surveys and fraudulent entries did not probably exceed $3an acre. [Footnote: House Ex. Docs. , etc. , 1885-86, ii: 167. ]

"In the same manner, " Commissioner Sparks continued, "extensive coaldeposits in our Western territory are acquired in mass throughexpedited surveys, followed by fraudulent pre-emption and commutedhomestead entries. " [Footnote: Ibid. ] He went on to tell that nearlythe whole of the Territory (now State) of Wyoming, and large portionsof Montana, had been surveyed under the deposit system, and the landson the streams fraudulently taken up under the desert land act, tothe exclusion of actual settlers. Nearly all of Colorado, the verybest cattle-raising portions of New Mexico, the rich timber lands ofCalifornia, the splendid forest lands of Washington Territory and theprincipal part of the extensive pine lands of Minnesota had beenfraudulently seized in the same way. [Footnote: Ibid. , 168. ] In allof the Western States and Territories these fraudulent surveys hadaccomplished the seizure of the best and most valuable lands. "Toenable the pressing tide of Western immigration to secure homes uponthe public domain, " Commissioner Sparks urged, "it is necessary. . . That hundreds of millions of acres of public lands now appropriatedshould be wrested from illegal control. " [Footnote: Ibid. ] Butnothing was done to recover these stolen lands. At the very timeCommissioner Sparks--one of the very few incorruptible Commissionersof Public Lands, --was writing this, the land-grabbing interests weremaking the greatest exertions to get him removed. During his tenureof office they caused him to be malevolently harassed and assailed. After he left office they resumed complete domination of the LandCommissioner's Bureau. [Footnote: The methods of capitalists incausing the removal of officials who obstructed or exposed theircrimes and violent seizure of property were continuous and longenduring. It was a very old practice. When Astor was debauching andswindling Indian tribes, he succeeded, it seems, by exerting hispower at Washington, in causing Government agents standing in his wayto be dismissed from office. The following is an extract from acommunication, 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, givingtheir furs, etc. , at a great sacrifice for whiskey. . . . The agents ofMr. Astor hold out the idea that they will, ere long be able to breakdown the factories [Government agencies]; and they menace the Indianagents and others who may interfere with them, with dismission fromoffice through Mr. Astor. They say that a representation from Messrs. Crooks and Stewart (Mr. Astor's agents) led to the dismission of theIndian agent at Mackinac, and they also say that the Indian agenthere 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 grantsby Spain and Mexico were colossal. Vast estates in California, NewMexico, Arizona, Colorado and other States were obtained by collusionwith the Government administrative officials and Congress. These weresecured upon the strength of either forged documents purporting to begrants from the Spanish or Mexican authorities, or by means offraudulent surveys. 

One of the most notorious of these was the Beaubin and Miranda grant, otherwise famous thirty years ago as the Maxwell land grant. Areference to it here is indispensable. It was by reason of thistransaction, as well as by other similar transactions, that one ofthe American multimillionaires obtained his original millions. Thisindividual was Stephen B. Elkins, at present a powerful member of theUnited States Senate, and one of the ruling oligarchy of wealth. Heis said to possess a fortune of at least $50, 000, 000, and hisdaughter, it is reported, is to marry the Duke of the Abruzzi, ascion 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-sixthousand acres only. The owner refused to comply with the law, and in1874 the Department of the Interior ordered the grant to be treatedas public lands and thrown open to settlement. Despite this order, the Government officials in New Mexico, acting in collusion withother interested parties, illegally continued to assess it as privateproperty. 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 thetitle to T. B. Catron, the United States Attorney for New Mexico. Presently Elkins turned up as the principal owner. The details of howthis claim was repeatedly shown up to be fraudulent by LandCommissioners and Congressional Committees; how the settlers in NewMexico fought it and sought to have it declared void, and the lawenforced; [Footnote: "Land Titles in New Mexico and Colorado, " HouseReports First Session, Fifty-second Congress, 1891-92, Vol. Iv, Report No. 1253. Also, House Reports, First Session, Fifty-secondCongress, 1891-92, Vol. Vii, Report No. 1824. Also, House Reports, First Session, Forty-ninth Congress, 1885-86, ii: 170. ] and howElkins, for some years himself a Delegate in Congress from NewMexico, succeeded in having the grant finally validated on technicalgrounds, and "judicially cleared" of all taint of fraud, by anastounding decision of the Supreme Court of the United States--adecision contrary to the facts as specifically shown by successiveGovernment officials--all of these details are set forth fully inanother part of this work. [Footnote: See "The Elkins Fortune, " inVol. Iii. ]

The forgeries and fraudulent surveys by which these huge estates weresecured were astoundingly bold and frequent. Large numbers of privateland claims, rejected by various Land Commissioners as fraudulent, were corruptly confirmed by Congress. In 1870, the heirs of oneGervacio Nolan applied for confirmation of two grants alleged to havebeen made to an ancestor under the colonization laws of New Mexico. They claimed more than 1, 500, 000 acres, but Congress conditionallyconfirmed their claim to the extent of forty-eight thousand acresonly, asserting that the Mexican laws had limited to this area thearea of public lands that could be granted to one individual. In 1880the Land Office re-opened the claim, and a new survey was made bysurveyors in collusion with the claimants, and hired by them. Whenthe report of this survey reached Washington, the Land Officeofficials were interested to note that the estate had grown fromforty-eight thousand acres to five hundred and seventy-five thousandacres, or twelve times the legal quantity. [Footnote: House Reports, First Session, Forty-ninth Congress, 1885-86, ii: 171. ] The actualsettlers were then evicted. The romancer might say that the officialswere amazed; they were not; such fraudulent enlargements were common. 

The New Mexico estate of Francis Martinez, granted under the Mexicanlaws restricting a single grant to forty-eight thousand acres, was bya fraudulent survey, extended to 594, 515. 55 acres, and patented in1881. [Footnote: Ibid. , 172. ] A New Mexico grant said to have beenmade to Salvador Gonzales, in 1742, comprising "a spot of land toenable him to plant a cornfield for the support of his family. " wasfraudulently surveyed and enlarged to 103, 959. 31 acres--a surveyamended later by reducing the area to 23, 661 acres. [Footnote: HouseReports, etc, 1885-86, ii: 172. ] The B. M. Montaya grant in NewMexico, limited to forty-eight thousand acres, under the Mexicancolonization laws, was fraudulently surveyed for 151, 056. 97 acres. The Estancia grant in New Mexico also restricted under thecolonization act to forty-eight thousand acres, was enlarged by afraudulent survey to 415, 036. 56 acres. [Footnote: Ibid. , 173. ] In1768, Ignacio Chaves and others in New Mexico petitioned for a tractof about two and one-fourth superficial leagues, or approximately alittle less than ten thousand acres. A fraudulent survey magnifiedthis claim to 243, 036. 43 acres. [Footnote: Ibid. ]

These are a very few of the large number of forged or otherwisefraudulent claims. 

Some were rejected by Congress; many, despite Land Office protests, were confirmed. By these fraudulent and corrupt operations, enormousestates were obtained in New Mexico, Colorado and in other sections. The Pablo Montaya grant comprised in all, 655, 468. 07 acres; the Moragrant 827, 621. 01 acres; the Tierra Amarilla grant 594, 515 acres, andthe Sangre de Cristo grant 998, 780. 46 acres. All of these werecorruptly obtained. [Footnote: See Resolution of House Committee onPrivate Land Claims, June, 1892, demanding a thorough investigation. The House took no action. --Report No. 1824, 1892. ] Scores of otherclaims were confirmed for lesser areas. During Commissioner Sparks'tenure of office, claims to 8, 500, 000 acres in New Mexico alone werepending before Congress. A comprehensive account of the operations ofthe land-grabbers, giving the explicit facts, as told in Governmentand court records, of their system of fraud, is presented in thechapter 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 hasdemonstrated that some of the alleged grants are forgeries. " He setforth that unless the court before which these claims wereadjudicated could have full access to the archives, "it is much moreliable to be imposed upon by fraudulent title papers. " [Footnote:"The Public Domain, " etc. 1124. Also see next Footnote. ] In fact, themany official reports describe with what cleverness the claimants tothese great areas forged their papers, and the facility with whichthey bought up witnesses to perjure for them. Finding it impossibleto go back of the aggregate and corroborative "evidence" thusoffered, the courts were frequently forced to decide in favor of theclaimants. To use a modern colloquial phrase, the cases were "framedup. " In the case of Luis Jamarillo's claim to eighteen thousand acresin New Mexico, U. S. Surveyor-General Julian of New Mexico, inrecommending the rejection of the claim and calling attention to theperjury committed, said:

When these facts are considered, in connection with the further andwell-known fact that such witnesses can readily be found by grantclaimants, and that in this way the most monstrous frauds have beenpracticed in extending the lines of such grants in New Mexico, it isnot possible to accept the statement of this witness as to the westboundary of this grant, which he locates at such a distance from theeast line as to include more than four times the amount of landactually granted. [Footnote: Senate Executive Documents, FirstSession, 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 29and 38 in the same volume deal with similar claims. ]

"The widespread belief of the people of this country, " wroteCommissioner Sparks in 1885, "that the land department has beenlargely conducted to the advantage of speculation and monopoly, private and corporate, rather than in the public interest, I havefound supported by developments in every branch of the service. . . . Iam satisfied that thousands of claims without foundation in law orequity, involving millions of acres of public land, have beenannually passed to patent upon the single proposition that nobody butthe Government had any _adverse_ interest. The vast machinery ofthe land department has been devoted to the chief result of conveyingthe title of the United States to public lands upon fraudulententries under loose construction of law. " [Footnote: House Ex. Docs. , 1885-86, ii: 156. ] Whenever a capitalist's interest was involved, thelaw was always "loosely construed, " but the strictest interpretationwas invariably given to laws passed against the working population. 

It was estimated, in 1892, that 57, 000, 000 acres of land in NewMexico and Colorado had, for more than thirty years, been unlawfullytreated by public officers as having been ceded to the United Statesby Mexico. The Maxwell, Sangre de Cristo, Nolan and other grants werewithin this area. The House Committee on Private Land Claims reportedon April 29, 1892: "A long list of alleged Mexican and Spanish grantswithin the limits of the Texas cession have been confirmed, or quitclaimed by Congress, under the false representation that said allegedgrants were located in the territory of New Mexico ceded by thetreaty; an enormous area of land has long been and is now held asconfirmed Mexican and Spanish grants, located in the territory ofMexico 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 ofland by the capitalists were fully as marked as those used elsewhere. 

Upon its admittance to the Union, Texas retained the disposition ofits public lands. Up to about the year 1864, almost the entire areaof Texas, comprising 274, 356 square miles, or 175, 587, 840 acres, wasone vast unfenced feeding ground for cattle, horses and sheep. Inabout the year 1874, the agricultural movement began; large numbersof intending farmers migrated to Texas, particularly with theexpectation of raising cattle, then a highly profitable business. They found huge stretches of the land already preempted by individualcapitalists or corporations. In a number of instances, some of theseindividuals, according to the report of a Congressional Committee, in1884, dealing with Texas lands, had each acquired the ownership ofmore than two hundred and fifty thousand acres. 

"It is a notorious fact, " this committee reported, "that the publicland laws, although framed with the special object of encouraging thepublic domain, of developing its resources and protecting actualsettlers, have been extensively evaded and violated. Individuals andcorporations have, by purchasing the proved-up claims, or purchasesof ostensible settlers, employed by them to make entry, extensivelysecured the ownership of large bodies of land. " [Footnote: HouseReports, Second Session, Forty-eighth Congress, 1884-85, Vol. Xxix, Ex. Doc. No. 267:43. ] The committee went on to describe how, to avery considerable extent, "foreigners of large means" had obtainedthese great areas, and had gone into the cattle business, and how thetitles to these lands were se-cured not only by individuals but byforeign corporations. "Certain of these foreigners are titlednoblemen. Some of them have brought over from Europe, in considerablenumbers, herdsmen and other employees who sustain to them a dependentrelationship characteristic of the peasantry on the large landedestates of Europe. " Two British syndicates, for instance, held7, 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 grievancesof the National Greenback-Labor party in 1880. This party, to a greatextent, was composed of the Western farming element. In his letteraccepting the nomination of that party for President of the UnitedStates, Gen. Weaver, himself a member of long standing in Congressfrom Iowa, wrote:

An area of our public domain larger than the territory occupied bythe great German Empire has been wantonly donated to wealthycorporations; while a bill introduced by Hon. Hendrick B. Wright, ofPennsylvania, to enable our poor people to reach and occupy the fewacres remaining, has been scouted, ridiculed, and defeated inCongress. In consequence of this stupendous system of land-grabbing, millions of the young men of America, and millions more ofindustrious people from abroad, seeking homes in the New World, areleft homeless and destitute. The public domain must be sacredlyreserved to actual settlers, and where corporations have not compliedstrictly with the terms of their grants, the lands should be at oncereclaimed. 

INCREASE OF FARM TENANTRY. 

Without dwelling upon all the causative factors--involving anextended work in themselves--some significant general results will bepointed 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 bestagricultural, grazing, mineral and timber lands, was alreadyalienated by the year 1880. By 1896 the alienation reached806, 532, 362 acres. Of the original area, about 50, 000, 000 acres offorests have been withdrawn from the public domain by the Government, and converted into forest reservations. Large portions of such of theagricultural, grazing, mineral and timber lands as were not seized byvarious corporations and favored individuals before 1880, have beenexpropriated west of the Mississippi since then, and the process isstill going, notably in Alaska. The nominal records of the GeneralLand Office as to the number of homesteaders are of little value andare very misleading. Immense numbers of alleged homesteaders were, aswe have copiously seen, nothing but paid dummies by whose entriesvast tracts of land were seized under color of law. It isindisputably clear that hundreds of millions of acres of the publicdomain have been obtained by outright fraud. 

Notwithstanding the fact that only a few years before, the Governmenthad held far more than enough land to have provided everyagriculturist with a farm, yet by 1880, a large farm tenant class hadalready developed. Not less than 1, 024, 061 of the 4, 008, 907 farms inthe United States were held by renters. One-fourth of all the farmsin the United States were cultivated by men who did not own them. Furthermore, and even more impressive, there were 3, 323, 876 farmlaborers composed of men who did not even rent land. Equallysignificant was the increasing tendency to the operating of largefarms by capitalists with the hired labor. Of farms undercultivation, extending from one hundred to five hundred acres, therewere nearly a million and a half--1, 416, 618, to give the exactnumber--owned largely by capitalists and cultivated by laborers. [Footnote: Tenth Census, Statistics of Agriculture: 28. ]

Phillips, who had superior opportunities for getting at the realfacts, and whose volume upon the subject issued at the time is wellworthy of consideration, thus commented upon the census returns:

It will thus be seen that of the 7, 670, 493 persons in our countryengaged in agriculture, there are 1, 024, 601 who pay rent to personsnot cultivating the soil; 1, 508, 828 capitalist or speculating owners, who own the soil and employ laborers; 804, 522 of well-to-do farmerswho hire part of their work or employ laborers, and 670, 944 who maybe said to actually cultivate the soil they own: the rest are hiredworkers. 

Phillips goes on to remark:

Another fact must be borne in mind, that a large number of the2, 984, 306 farmers who own land are in debt for it to the moneylenders. From the writer's observation it is probable that forty percent, 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 percent. , and in most cases can terminate in but one way. [Footnote:"Labor, Land and Law": 353. It is difficult to get reliablestatistics on the number of mortgages on farms, and on the number offarm tenants. The U. S. Industrial Commission estimated, in 1902, thatfifty per cent, of the homesteads in Eastern Minnesota weremortgaged. Although admitting that such a condition had been general, it represented in its Final Report that a large number of mortgagesin certain States had been paid off. According to the "PoliticalScience Quarterly" (Vol. Xi, No. 4, 1896) the United States Census of1890 showed a marked increase, not only absolutely, but relatively inthe number of farm tenants. It can hardly be doubted that farmtenantry is rapidly increasing and will under the influence ofvarious causes increase still more. ]

A LARGELY DISPOSSESSED NATION. 

These are the statistics of a Government which, it is known, seeks tomake its showing as favorable as possible to the existing regime. They make it clear that a rapid process of the dispossession of theindustrial working, the middle and the small farming classes has beengoing on unceasingly. If the process was so marked in 1900 what mustit be now? All of the factors operating to impoverish the farmingpopulation of the United States and turn them into homeless tenantshave been a thousandfold intensified and augmented in the last tenyears, beginning with the remarkable formation of hundreds of trustsin 1898. Even though the farmer may get higher prices for hisproducts, as he did in 1908 and 1909, the benefits are deceptivelytransient, 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 highvalue. But in the last few years an extraordinary sight has beenwitnessed. Hundreds of thousands of American farmers migrated to thevirgin fields of Northwest Canada and settled there--a portentousmovement significant of the straits to which the American farmer hasbeen driven. 

Abandoned farms in the East are numerous; in New York State alone22, 000 are registered. Hitherto the farmer has considered himself asort of capitalist: if not hostile to the industrial working classes, he has been generally apathetic. But now he is being forced to thepoint of being an absolute dependant himself, and will inevitablyalign his interests with those of his brothers in the factories andin the shops. 

With this contrast of the forces at work which gave empires of publicdomain to the few, while dispossessing the tens of millions, we willnow proceed to a consideration of some of the fortunes based uponrailroads. 

CHAPTER III

THE BEGINNINGS OF THE VANDERBILT FORTUNE

The first of the overshadowing fortunes to develop from the ownershipand manipulation of railroads was that of Cornelius Vanderbilt. TheHavemeyers and other factory owners, whose descendants are nowenrolled among the conspicuous multimillionaires, were still in theembryonic stages when Vanderbilt towered aloft in a class by himselfwith a fortune of $105, 000, 000. In these times of enormous individualaccumulations and centralization of wealth, the personal possessionof $105, 000, 000 does not excite a fraction of the astonished commentthat it did at Cornelius Vanderbilt's death in 1877. Accustomed asthe present generation is to the sight of billionaires or semi-billionaires, it cannot be expected to show any wonderment atfortunes of lesser proportions. 

NINETY MILLIONS IN FIFTEEN YEARS. 

Yet to the people of thirty years ago, a round hundred million wassomething vast and unprecedented. In 1847 millionaires were soinfrequent that the very word, as we have seen, was significantlyitalicised. But here was a man who, figuratively speaking, was ahundred millionaires rolled in one. Compared with his wealth thegreat fortunes of ten or fifteen years before dwindled intobagatelles. During the Civil War a fortune of $15, 000, 000 had beenlooked upon as monumental. Even the huge Astor fortune, so long faroutranking all competitors, lost its exceptional distinction andceased being the sole, unrivalled standard of immense wealth. Nearlya century of fraud was behind the Astor fortune. The greater part ofCornelius Vanderbilt's wealth was massed together in his last fifteenyears. 

This was the amazing, unparalleled feature to his generation. Withinfifteen brief years he had possessed himself of more than$90, 000, 000. His wealth came rushing in at the rate of $6, 000, 000 ayear. Such an accomplishment may not impress the people of theseyears, familiar as they are with the ease with which John D. Rockefeller and other multimillionaires have long swept in almostfabulous annual revenues. With his yearly income of fully $80, 000, 000or $85, 000, 000 [Footnote: The "New York Commercial, " an ultra-conservative financial and commercial publication, estimated inJanuary, 1905, his annual income to be $72, 000, 000. Obviously it hasgreatly increased every year. ] Rockefeller can look back and smilewith superior disdain at the commotion raised by the contemplation ofCornelius Vanderbilt's $6, 000, 000. 

Each period to itself, however. Cornelius Vanderbilt was the goldenluminary of his time, a magnate of such combined, far-reaching wealthand power as the United States had never known. Indeed, one overrunsthe line of tautology in distinguishing between wealth and power. Thetwo were then identical not less than now. Wealth was the real power. None knew or boasted of this more than old Vanderbilt when, withadvancing age, he became more arrogant and choleric and less and lessinclined to smooth down the storms he provoked by his contemptuousflings 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 tersesentences, interspersed with profanity, he proclaimed the fact thatmoney was law; that it could buy either laws or immunity from thelaw. 

 * * * * * * *

Since wealth meant power, both economic and political, it is notdifficult to estimate Vanderbilt's supreme place in his day. 

Far below him, in point of possessions, stretched the 50, 000, 000individuals who made up the nation's population. Nearly 10, 000, 000were wage laborers, and of the 10, 000, 000 fully 500, 000 were childlaborers. The very best paid of skilled workers received in thehighest market not more than $1, 040 a year. The usual weekly pay ranfrom $12 to $20 a week; the average pay of unskilled laborers was$350 a year. More than 7, 500, 000 persons ploughed and hoed andharvested the farms of the country; comparatively few of them couldclaim a decent living, and a large proportion were in debt. Theincomes of the middle class, including individual employers, businessand 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 amultitude of many millions struggling fiercely for the dollar thatmeant livelihood or fortune; those bits of metal or paper whichcommanded the necessities, comforts and luxuries of life; theantidote of grim poverty and the guarantees of good living; whichdictated the services, honorable or often dishonorable, of men, womenand children; which bought brains not less than souls, and which puttheir sordid seal on even the most sacred qualities. Now by thesetokens, he had securely 105, 000, 000 of these bits of metal or wealthin some form equivalent to them. Millions of people had none of thesedollars; the hundreds of thousands had a few; the thousands hadhundreds of thousands; the few had millions. He had more than any. 

Even with all his wealth, great as it was in his day, he wouldscarcely be worth remembrance were it not that he was the founder ofa dynasty of wealth. Therein lies the present importance of hiscareer. 

A FORTUNE OF $700, 000, 000

From $105, 000, 000 bequeathed at his death, the Vanderbilt fortune hasgrown until it now reaches fully $700, 000, 000. This is an approximateestimate; the actual amount may be more or less. In 1889 Shearmanplaced the wealth of Cornelius and William K. Vanderbilt, grandsonsof the first Cornelius, at $100, 000, 000 each, and that of FrederickW. 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 Vanderbiltfamily, the Vanderbilts then possessed about $300, 000, 000. Since thattime the population and resources of the United States have vastlyincreased; wealth in the hold of a few has become more intenselycentralized; great fortunes have gone far beyond their alreadyextraordinary boundaries of twenty years ago; the possessions of theVanderbilts have expanded and swollen in value everywhere, althoughrecently the Standard Oil oligarchy has been encroaching upon theirpossessions. Very probable it is that the combined Vanderbilt fortunereaches fully $700, 000, 000, actually and potentially. 

But the incidental mention of such a mass of money conveys noadequate conception of the power of this family. Nominally it iscomposed of private citizens with theoretically the same rights andlimitations of citizenship held by any other citizen and no more. Butthis is a fanciful picture. In reality, the Vanderbilt family is oneof the dynasties of inordinately rich families ruling the UnitedStates industrially and politically. Singly it has mastery over manyof the railroad and public utility systems and industrialcorporations of the United States. In combination with other powerfulmen or families of wealth, it shares the dictatorship of many morecorporations. Under the Vanderbilts' direct domination are 21, 000miles 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 transportationand industrial combinations or corporations. 

BONDS THAT HOLD PRESENT AND POSTERITY. 

Behold, in imagination at least, this mass of stocks and bonds. Heapsof paper they seem; dead, inorganic things. A second's blaze willconsume any one of them, a few strokes of the fingers tear it intoshapeless ribbons Yet under the institution of law, as it exists, these pieces of paper are endowed with a terrible power of life anddeath that even enthroned kings do not possess. Those dainty printswith their scrolls and numerals and inscriptions are binding titlesto the absolute ownership of a large part of the resources created bythe labors of entire peoples. 

Kingly power at best is shadowy, indefinite, depending mostly upontraditional custom and audacious assumption backed by armed force. Ifit fall back upon a certain alleged divine right it cannot producedocuments to prove its authority. The industrial monarchs of theUnited 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 oftens of millions of subjected people. Great stretches of railroadtraverse the country; here are coal mines to whose products someninety million people look for warmth; yonder are factories; there inthe cities are street car lines and electric light and power supplyand 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 kingconquered territory, he had to erect a fortress or castle and stationa garrison to hold it. They that then disputed the king's title couldchallenge, if they chose, at peril of death, the provisions of thattitle, which same provisions were swords and spears, arrows andmuskets. 

But nowhere throughout the large extent of the Vanderbilt'spossessions or those of other ruling families are found warlikegarrisons as evidence of ownership. Those uncouth barbarian methodsare grossly antiquated; the part once played by armed battalions isnow performed by bits of paper. A wondrously convenient change has itbeen; the owners of the resources of nations can disport themselvesthousands of miles away from the scene of their ownership; they neednever bestir themselves to provide measures for the retention oftheir property. Government, with its array of officials, prisons, armies and navies, undertakes all of this protection for them. Solong as they hold these bits of paper in their name, Governmentrecognizes them as the incontestable owners and safeguards theirproperty accordingly. The very Government established on the taxationof the workers is used to enforce the means by which the workers areheld in subjection. 

THEY DECREE TAXES AT WILL. 

These batches of stocks and bonds betoken as much more again. Apretty fiction subsists that Government, the creator of the modernprivate corporation, is necessarily more powerful than its creature. This theoretical doctrine, so widely taught by university professorsand at the same time so greatly at variance with the palpable facts, will survive to bring dismay in the near future to the very classeswho would have the people believe it so. Instead of now being thesuperior of the corporation the Government has long since definitelysurrendered to private corporations a tremendous taxing poweramounting virtually to a decree authorizing enslavement. Upon everyform of private corporation--railroad, industrial, mining, publicutility--is conferred a peculiarly sweeping and insidious power oftaxation the indirectness of which often obscures its frightfulnature and effects. 

Where, however, the industrial corporation has but one form oftaxation the railroad has many forms. The trust in oil or any othercommodity can tax the whole nation at its pleasure, but inherentlyonly on the one product it controls. That single taxation is ofitself confiscatory enough, as is seen in the $912, 000, 000 of profitsgathered in by the Standard Oil Company since its inception. Thetrust tax is in the form of its selling price to the public. But therailroad puts its tax upon every product transported or every personwho 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 theguise of freight or passenger rates. 

The labor of hundreds of millions of people contributes incessantlyto the colossal revenues enriching the railroad owners. For theirproducing capacity the workers are paid the meagerest wages, and theproducts which they make they are compelled to buy back at exorbitantprices after they pass through the hands of the various greatcapitalist middlemen, such as the trusts and the railroads. Howenormous the revenues of the railroads are may be seen in the factthat in the ten years from 1898 to 1908 the dividends declared bythirty-five of the leading railroads in the United States reached thesum of about $1, 800, 000, 000. This railroad taxation is a grinding, oppressive one, from which there is no appeal. If the Governmenttaxes too heavily the people nominally can have a say; but the peoplehave absolutely no voice in altering the taxation of corporations. Pseudo attempts have been made to regulate railroad charges, buttheir futility was soon evident, for the reason that owning theinstruments of business the railroads and the allied trusts are inactual possession of the governmental power viewing it as a workingwhole. 

AND EXERCISE UNRESTRAINED POWER. 

Visualizing this power one begins to get a vivid perception of thecomprehensive sway of the Vanderbilts and of other railroad magnates. They levy tribute without restraint--a tribute so vast that theexactions of classic conquerors become dwarfed beside it. If thislevying entailed only the seizing of money, that cold, unbreathing, lifeless substance, then human emotion might not start in horror atthe consequences. But beneath it all are the tugging and tearing ofhuman muscles and minds, the toil and sweat of an unnumberedmultitude, the rending of homes, the infliction of sorrow, sufferingand death. 

The magnates, as we have said, hold the power of decreeing life anddeath; and time never was since the railroads were first built whenthis power was not arbitrarily exercised. 

Millions have gone hungry or lived on an attenuated diet whileelsewhere harvests rotted in the ground; between their needs andnature's fertility lay the railroads. Organized and maintained forprofit and for profit alone, the railroads carry produce and productsat their fixed rates and not a whit less; if these rates are not paidthe transportation is refused. And as in these times transportationis necessary in the world's intercourse, the men who control it havethe power to stand as an inflexible barrier between individuals, groups of individuals, nations and international peoples. The veryagencies which should under a rational form of civilization bedevoted to promoting the interests of mankind, are used as theircapricious self-interest incline them by the few who have beenallowed to obtain control of them. What if helpless people are sweptoff by starvation or by diseases superinduced by lack of proper food?What if in the great cities an increasing sacrifice of innocents goeson because their parents cannot afford the price of good milk--aprice determined to a large extent by railroad tariff? All of thisslaughter and more makes no impress upon the unimpressionablesurfaces of these stocks and bonds, and leaves no record save in thehospitals and graveyards. 

The railroad magnates have other powers. Government itself has nopower to blot a town out of existence. It cannot strew desolation atwill. But the railroad owners can do it and do not hesitate ifsufficient profits be involved. One man sitting in a palace in NewYork can give an order declaring a secret discriminative tariffagainst the products of a place, whereupon its industries no longerable 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 powersconferred by the ownership of these railroad bonds and stocks. Bondsthey assuredly are, incomparably more so than the clumsy yokes ofolden days. Society has improved its outwards forms in these passingcenturies. Clanking chains are no longer necessary to keep slaves insubjection. Far more effective than chains and balls and iron collarsare the ownership of the means whereby men must live. Whoevercontrols them in large degree, is a potentate by whatever name he becalled, and those who depend upon the owner of them for theirsustenance 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 lawshall be and how it shall be enforced. No stern, masterful men andwomen are they as some future moonstruck novelist or historian bentupon creating legendary lore may portray them. Voluptuaries are mostof them, sunk in a surfeit of gorgeous living and riotous pleasure. Weak, without distinction of mind or heart, they have the money tohire brains to plan, plot, scheme, advocate, supervise and work forthem. Suddenly deprived of their stocks and bonds they would findthemselves adrift in the sheerest helplessness. With these stocks andbonds they are the direct absolute masters of an army of employees. On the New York Central Railroad alone the Vanderbilt payrollembraces fifty thousand workers. This is but one of their railroadsystems. As many more, or nearly as many, men work directly for themon 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 hundredthousand souls whose livelihood is dependent upon largely the will ofthe Vanderbilt family. To that will there is no check. To-day it maybe expansively benevolent; to-morrow, after a fit of indigestion or anight of demoralizing revelry, it may flit to an extreme ofparsimonious retaliation. As the will fluctuates, so must be the fateof the hundred thousand workers. If the will decides that the pay ofthe men must go down, curtailed it is, irrespective of their proteststhat the lopping off of their already slender wages means stillkeener hardship. Apparently free and independent citizens, this armyof workers belong for all essential purposes to the Vanderbiltfamily. Their jobs are the hostages held by the Vanderbilts. Theinterests and decisions of one family are supreme. 

The germination and establishment of this immense power began withthe activities of the first Cornelius Vanderbilt, the founder of thispile of wealth. He was born in 1794. His parents lived on StatenIsland; his father conveyed passengers in a boat to and from NewYork--an industrious, dull man who did his plodding part and allowedhis wife to manage household expenses. Regularly and obediently heturned his earnings over to her. She carefully hoarded everyavailable cent, using an old clock as a depository. 

THE FOUNDER'S START. 

Vanderbilt was a rugged, headstrong, untamable, illiterate youth. Attwelve years of age he could scarcely write his own name. But he knewthe ways of the water; when still a youth he commenced ferryingpassengers and freight between Staten Island and New York City. Forbooks he cared nothing; the refinements of life he scorned. His onepassion was money. He was grasping and enterprising, coarse anddomineering. Of the real details of his early life little is knownexcept what has been written by laudatory writers. We are informedthat as he gradually made and saved money he built his own schooners, and went in for the coasting trade. The invention and success of thesteamboat, it is further related, convinced him that the day of thesailing vessel would soon be over. He, therefore, sold his interestin his schooners, and was engaged as captain of a steamboat plyingbetween New York and points on the New Jersey coast. His wife at thesame time enlarged the family revenues by running a wayside tavern atNew Brunswick, N. J. , whither Vanderbilt had moved. 

In 1829, when his resources reached $30, 000, he quit as an employeeand began building his own steamboats. Little by little he drove manyof his competitors out of business. This he was able to do by hisharsh, unscrupulous and strategic measures. [Footnote: Some glimpsesof Vanderbilt's activities and methods in his early career areobtainable from the court records. In 1827 he was fined two penaltiesof $50 for refusing to move a steamboat called "The Thistle, "commanded by him, from a wharf on the North River in order to giveberth to "The Legislature, " a competing steamboat. His defence wasthat Adams, the harbor master, had no authority to compel him tomove. The lower courts decided against him, and the Supreme Court, onappeal, affirmed their judgment. (Adams vs. Vanderbilt. Cowen'sReports. 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. 15which it claimed was due under a contract made by Vanderbilt on March8, 1838. This contract called for the payment by Vanderbilt of$10, 500 in three installments for the building of an engine for thesteamboat "Wave. " Vanderbilt paid $7, 900, but refused to pay theremainder, on the ground that braces to the connecting rods were notsupplied. These braces, it was brought out in court, cost only $75 or$100. The Supreme Court handed down a judgment against Vanderbilt. Anappeal was taken by Vanderbilt, and Judge Nelson, in the SupremeCourt, in October, 1841, affirmed that judgment. --Vanderbilt vs. Eagle Iron Works, Wendell's Reports, Cases in the Supreme Court ofthe State of New York, xxv: 665-668. ] He was severe with the men whoworked for him, compelling them to work long hours for little pay. Heshowed a singular ability in undermining competitors. They could notpay low wages but what he could pay lower; as rapidly as they setabout reducing passenger and freight rates he would anticipate them. His policy at this time was to bankrupt competitors, and then havingobtained a monopoly, to charge exorbitant rates. The public, whichwelcomed him as a benefactor in declaring cheaper rates and whichflocked to patronize his line, had to pay dearly for their prematureand short-sighted joy. For the first five years his profits, according to Croffut, reached $30, 000 a year, doubling in successiveyears. By the time he was forty years old he ran steamboats to manycities on the coast, and had amassed a fortune of half a milliondollars. 

DRIVING OUT COMPETITORS. 

Judging from the records of the times, one of his most effectivemeans for harassing and driving out competitors was in bribing theNew York Common Council to give him, and refuse them, dockprivileges. As the city owned the docks, the Common Council had theexclusive right of determining to whom they should be leased. Not ayear passed but what the ship, ferry and steamboat owners, the greatlandlords and other capitalists bribed the aldermen to lease or givethem valuable city property. Many scandals resulted, culminating inthe great scandal of 1853, when the Grand Jury, on February 26, handed up a presentment showing in detail how certain aldermen hadreceived bribes for disposal of the city's water rights, pierprivileges and other property, and how enormous sums had beenexpended 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 thanwere the Astors, the Rhinelanders, the Goelets and other very richmen who prudently kept in the background, and who managed to loot thecity by operating through go-betweens. 

Vanderbilt's eulogists take great pains to elaborate upon histremendous energy, sagacity and constructive enterprise, as thoughthese were the exclusive qualities by which he got his fortune. Sucha glittering picture, common in all of the usual biographies of richmen, discredits itself and is overthrown by the actual facts. Thetimes in which Vanderbilt lived and thrived were not calculated toinspire the masses of people with respect for the trader's methods, although none could deny that the outcropping capitalists of theperiod showed a fierce vigor in overcoming obstacles of man and ofnature, and in extending their conquests toward the outposts of thehabitable globe. 

If indomitable enterprise assured permanency of wealth then many ofVanderbilt's competitors would have become and remainedmultimillionaires. Vanderbilt, by no means possessed a monopoly ofacquisitive enterprise; on every hand, and in every line, were menfully as active and unprincipled as he. Nearly all of these men, andscores of competitors in his own sphere--dominant capitalists intheir day--have become well-nigh lost in the records of time; theirdescendants are in the slough of poverty, genteel or otherwise. Thosetimes were marked by the intensest commercial competition; businesswas a labyrinth of sharp tricks and low cunning; the man who managedto project his head far above the rest not only had to practice themethods of his competitors but to overreach and outdo them. It was inthis regard that Vanderbilt showed superior ability. 

In the exploitation of the workers--forcing them to work for lowwages 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 conventionalwriters, it is true, set forth that it was the accepted process ofthe day, implying that it was a condition acquiesced in by theemployer and worker. This is one of the lies disseminated for thepurpose of proving that the great fortunes were made by legitimatemethods. Far from being accepted by the workers it was denounced andwas openly fought by them at every auspicious opportunity. 

Vanderbilt became one of the largest ship and steamboat builders inthe United States and one of the most formidable employers of labor. At one time he had a hundred vessels afloat. Thousands ofshipwrights, mechanics and other workers toiled for him fourteen andsixteen hours a day at $1. 50 a day for many years. The actualpurchasing power of this wage kept declining as the cost of rent andother necessaries of life advanced. This was notably so after thegreat gold discoveries in California, when prices of all commoditiesrose abnormally, and the workers in every trade were forced to strikefor higher wages in order to live. Most of these strikes weresuccessful, but their results as far as wages went were barren; theadvance wrung from employers was by no means equal to the increasedcost of living. 

REGARDED AS A COMMERCIAL BUCCANEER. 

The exploitation of labor, however, does not account for his successas a money maker. Many other men did the same, and yet in thevicissitudes of business went bankrupt; the realm of business wasfull of wrecks. Vanderbilt's success arose from his destructivetactics toward his competitors. He was regarded universally as thebuccaneer of the shipping world. He leisurely allowed other men tobuild up profitable lines of steamboats, and he then proceeded tocarry out methods which inevitably had one of two terminations:either his competitor had to buy him off at an exorbitant price, orhe was left in undisputed possession. His principal biographer, Croffut, whose effusion is one long chant of praise, treats thesemethods as evidences of great shrewdness, and goes on: "His foiblewas 'opposition;' wherever his keen eye detected a line that wasmaking a very large profit on its investment, he swooped down on itand drove it to the wall by offering a better service and lowerrates. " [Footnote: "The Vanderbilts and the Story of Their Fortune, "by W. A. Croffut, 1886: 45-46. ] This statement is only partiallytrue; its omissions are more significant than its admissions. 

Far from being the "constructive genius" that he is represented inevery extant biographical work and note, Vanderbilt was the foremostmercantile pirate and commercial blackmailer of his day. 

Harsh as these terms may seem, they are more than justified by thefacts. His eulogists, in line with those of other rich men, weave abeautiful picture for the edification of posterity, of a broad, noble-minded man whose honesty was his sterling virtue, and whosesplendid ability in opening up and extending the country's resourceswas rewarded with a great fortune and the thanks of his generation. This is utterly false. He who has the slightest knowledge of the lowpractices and degraded morals of the trading class and of thequalities which insured success, might at once suspect thespuriousness of this extravagant presentation, even if the vitalfacts were unavailable. 

But there is no such difficulty. Obviously, for every one fraudulentcommercial 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 theparticular 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 ordeliberate misstatement have all, without exception, borrowed theirnarratives of Vanderbilt's career from the fiction of his literary, newspaper and oratorical incense burners. And so it is thateverywhere the conviction prevails that whatever fraudulent methodsVanderbilt employed in his later career, he was essentially anhonest, straightforward man who was compelled by the promptings ofsheer self-preservation to fight back at unscrupulous competitors orantagonists, and who innately was opposed to underhand work or fraudin any form. Vanderbilt is in every case portrayed as an eminentlyhigh-minded man who never stooped to dissimulation, deceit ortreachery, and whose first millions, at any rate, were made in thelegitimate ways of trade as they were then understood. 

EXTORTION AND THEFT COMMON. 

The truth is that the bulk of Vanderbilt's original millions were theproceeds of extortion, blackmail and theft. 

In the established code of business the words extortion and theft hadan unmistakable significance. Business men did not consider it at alldishonorable to oppress their workers; to manufacture and sell goodsunder false pretenses; to adulterate prepared foods and drugs; todemand the very highest prices for products upon which the very lifeof the people depended, and at a time when consumers needed themmost; to bribe public officials and to hold up the Government inplundering schemes. These and many other practices were looked uponas commonplaces of ordinary trade. 

But even as burglars will have their fine points of honor amongthemselves, so the business world set certain tacit limitations ofaction beyond which none could go without being regarded as violatingthe code. It was all very well as long as members of their own classplundered some other class, or fought one another, no matter howrapaciously, in accordance with understood procedure. But when anybusiness man ventured to overstep these limitations, as Vanderbiltdid, and levy a species of commercial blackmail to the extent ofmillions of dollars, then he was sternly denounced as an arch thief. If Vanderbilt had confined himself to the routine formulas ofbusiness, he might have gone down in failure. Many of the bankruptswere composed of business men who, while sharp themselves, wereoutgeneraled by abler sharpers. Vanderbilt was a master hand indespoiling the despoilers. 

[Illustration: COMMODORE CORNELIUS VANDERBILT, The Founder of theVanderbilt Fortune. ]

How did Vanderbilt manage to extort millions of dollars? The methodwas one of great simplicity; many of its features were brought out inthe United States Senate in the debate of June 9, 1858, over the MailSteamship bill. The Government had begun, more than a decade back, the policy of paying heavy subsidies to steamship companies for thetransportation of mail. This subsidy, however, was not the onlypayment received by the steamship owners. In addition they wereallowed what were called "postages"--the full returns from the amountof postage on the letters carried. Ocean postage at that time wasenormous and burdensome, and was especially onerous upon a class ofpersons least able to bear it. About three-quarters of the letterstransported by ships were written by emigrants. They were taxed theusual rate of twenty-four or twenty-nine cents for a single letter. In 1851 the amount received for trans-Atlantic postages was not lessthan a million dollars; three-fourths of this sum came directly fromthe working class. 

THE CORRUPTION OF OFFICIALS. 

To get these subsidies, in conjunction with the "postages, " thesteamship owners by one means or another corrupted postal officialsand members of Congress. "I have noticed, " said Senator Toombs, in aspeech in the United States Senate on June 9, 1858, that there hasnever been a head of a Department strong enough to resist steamshipcontracts. I have noticed them here with your Whig party and yourDemocratic party for the last thirteen years, and I have never seenany head of a Department strong enough to resist these influences. . . . Thirteen years' experience has taught me that wherever you allowthe Postoffice or Navy Department to do anything which is for thebenefit of contractors you may consider the thing as done. I couldpoint to more than a dozen of these contracts. . . . A million dollarsa year is a power that will be felt. For ten years it amounts to tenmillion dollars, and I know it is felt. I know it pervertslegislation. I have seen its influence; I have seen the publictreasury 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 receivedmany millions of dollars of Government funds. This was all virtuallyplunder; the returns from the "postages" far more than paid them forthe transportation of mails. And what became of these millions inloot? Part went in profits to the owners, and another part was usedas private capital by them to build more and newer ships constantly. Practically none of Vanderbilt's ships cost him a cent; theGovernment funds paid for their building. In fact, a careful tracingof the history of all of the subsidized steamship companies provesthat this plunder from the Government was very considerably more thanenough 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 thepostal officials and Congress so effectively that in 1847 he obtainedan appropriation of $387, 000 a year, and subsequently an additionalappropriation of $475, 000 for five years. Together with the"postages, " these amounts made a total mail subsidy for that one linealone during the latter years of the contract of about a milliondollars a year. The act of Congress did not, however, specify thatthe contract was to run for ten years. The postal officials, by whatSenator Toombs termed "a fraudulent construction, " declared that itdid run for ten years from 1850, and made payments accordingly. Thebill before Congress in the closing days of the session of 1858, wasthe 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 howthe Government was being steadily plundered, and why it was that thepostal system was already burdened with a deficit of $5, 000, 000. While the appropriation bill was being solemnly discussed withpatriotic exclamations, lobbyists of the various steamship companiesbusied themselves with influencing or purchasing votes within thevery halls of Congress. 

Almost the entire Senate was occupied for days with advocating thisor that side as if they were paid attorneys pleading for theinterests of either Collins or Vanderbilt. Apparently a bitterconflict was raging between these two millionaires. Vanderbilt'ssubsidized European lines ran to Southampton, Havre and Bremen;Collins' to Liverpool. There were indications that for years a secretunderstanding had been in force between Collins and Vanderbilt bywhich they divided the mail subsidy funds. Ostensibly, however, inorder to give no sign of collusion, they went through the publicappearance of warring upon each other. By this stratagem they wereable to ward off criticism of monopoly, and each get a largerappropriation than if it were known that they were in league. But itwas 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 eitherCollins or Vanderbilt. The Collins supporters gave out the most suavearguments why the Collins line should be heavily subsidized, and whyCollins should be permitted to change his European port toSouthampton. Vanderbilt's retainers fought this move, which theydeclared would wipe out of existence the enterprise of a great andpatriotic capitalist. 

It was at this point that Senator Toombs, who represented neitherside, cut in with a series of charges which dismayed the whole lobbyfor the time being. He denounced both Collins and Vanderbilt asplunderers, and then, in so many words, specifically accusedVanderbilt 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 colludednow. I have not the least doubt that all these people understand oneanother. I am struggling against collusion. If they have colluded, why should Vanderbilt run to Southampton for the postage whenCollins can get three hundred and eighty-seven thousand dollars forrunning 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 hundredand thirty thousand dollars and pocket one hundred and fifty-seventhousand dollars a year. ' That is the plain, naked case. The Senatorfrom Vermont says the Postmaster General will protect us. It is myduty, in the first place, to prevent collusion, and prevent thecountry from being plundered; to protect it by law as well as I can. '

Regarding the California mails, Senator Toombs reminded the Senate ofthe granting eleven years before of enormous mail subsidies to thetwo steamship lines running to California--the Pacific Mail SteamshipCompany and the United States Mail Steamship Company, otherwisecalled the Harris and the Sloo lines. He declared that Vanderbilt, threatening them with both competition and a public agitation such aswould uncover the fraud, had forced them to pay him gigantic sums inreturn 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 halfthe money we pay now. Why, then, should we continue to waste thepublic money?" Senator Toombs went on:

You give nine hundred thousand dollars a year to carry the mails toCalifornia; and Vanderbilt compels the contractors to give him$56, 000 a month to keep quiet. This is the effect of yoursubventions. Under your Sloo and Harris contracts you pay about$900, 000 a year (since 1847); and Vanderbilt, by his superior skilland energy, compelled them for a long time, to disgorge $40, 000 amonth, and now $56, 000 a month. . . . They pay lobbymen, they payagencies, they go to law, because everybody is to have something; andI know this Sloo contract has been in chancery in New York for years. [Footnote: The case referred to by Senator Toombs was doubtless thatof 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 StatesCircuit Court, at New York City, on May 16, 1856, many interestingand characteristic facts came out both in the argument and in theCourt decision. 

From the decision (which went into the intricacies of the case atgreat length) it appeared that although Albert G. Sloo had formed theUnited States Mail Steamship Company, the incorporators were GeorgeLaw, Marshall O. Roberts, Prosper M. Wetmore and Edwin Crosswell. Sloo assigned his contract to them. Law was the first president, andwas succeeded by Roberts. A trust fund was formed. Law fraudulently(so the decision read) took out $700, 000 of stock, and alsofraudulently appropriated large sums of money belonging to the trustfund. This was the same Law who, in 1851 (probably with a part ofthis plunder) bribed the New York Board of Aldermen, with money, togive him franchises for the Second and Ninth Avenue surface railwaylines. Roberts appropriated $600, 000 of the United States MailSteamship Company's stock. The huge swindles upon the Governmentcarried on by Roberts during the Civil War are described in laterchapters in this work. Wetmore was a notorious lobbyist. By fraud, Law and Roberts thus managed to own the bulk of the capital stock ofthe United States Mail Steamship Company. The mail contract that ithad with the Government was to yield $2, 900, 000 in ten years. 

Vanderbilt stepped in to plunder these plunderers. During the timethat Vanderbilt competed with that company, the price of a singlesteerage passage from California to New York was $35. After he hadsold the company the steamship "North Star" for $400, 000, and hadblackmailed 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 thedivision of the plunder. One of the trustees refused to permitanother access to the books. Judge Ingersoll issued an injunctionrestraining the defendant trustees from withholding such books andpapers. ] The result of this system is that here comes a man--as oldVanderbilt seems to be--I never saw him, but his operations haveexcited my admiration--and he runs right at them and says disgorgethis plunder. He is the kingfish that is robbing these smallplunderers that come about the Capitol. He does not come here forthat purpose; but he says, 'Fork over $56, 000 a month of this moneyto 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 oceanlines were authorized by Congress, specified that the steamers wereto be fit for ships of war in case of necessity, and that thesesteamers were to be accepted by the Navy Department before they coulddraw subsidies. This part of the debate in the United States Senateshows 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 theSloo contract and the Harris contract. They were to build ships fitfor war purposes. I know when the Collins vessels were built; I was amember of the Committee on Ways and Means of the other House, and Iremember that the men at the head of our bureau of yards and dockssaid that they were not worth a sixpence for war purposes; that asingle broadside would blow them to pieces; that they could not standthe fire of their own guns; but newspapers in the cities that weresubsidized commenced firing on the Secretary of the Navy, and hesuccumbed and took the ships. That was the way they got here. 

Senator Collamer, referring to the subsidy legislation, said: "Aslong as the Congress of the United States makes contracts, declarewho they shall be with, and how much they shall pay for them, theycan never escape the generally prevailing public suspicion that thereis fraud and deceit and corruption in those contracts. "]

Thus, it is seen, Vanderbilt derived millions of dollars by thisprocess of commercial blackmail. Without his having to risk a cent, or run the chance of losing a single ship, there was turned over tohim a sum so large every year that many of the most opulent merchantscould not claim the equal of it after a lifetime of feverish trade. It was purely as a means of blackmailing coercion that he started asteamship line to California to compete with the Harris and the Sloointerests. For his consent to quit running his ships and to give thema complete and unassailed monopoly he first extorted $480, 000 a yearof 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 andinquired 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 UnitedStates Mail Steamship Company, carrying the mail between New York andAspinwall, an additional sum of $10, 000 per month, making $40, 000 permonth to Vanderbilt since May, 1856, which they continued to do. This$480, 000 are paid to Vanderbilt per annum simply to give these twocompanies the entire monopoly of their lines--which sum, and muchmore, is charged over to passengers and freight. 

Representative Davis repeatedly pressed for a definite reply as tothe truth of the statement. The advocates of the bill answered withevasions and equivocations. [Footnote: The Congressional Globe, partiii, 1857-58:3029. The Washington correspondent of the New York"Times" telegraphed (issue of June 2, 1858) that the mail subsidybill was passed by the House "Without twenty members knowing itsdetails. "]

BLACKMAIL CHARGES TRUE. 

The mail steamer appropriation bill, as finally passed by Congress, allowed large subsidies to all of the steamship interests. Thepretended warfare among them had served its purpose; all got whatthey sought in subsidy funds. While the bill allowed the Postmaster-General to change Collins' European terminus to Southampton, thatofficial, so it was proved subsequently, was Vanderbilt's plastictool. 

But what became of the charges against Vanderbilt? Were they true orcalumniatory? For two years Congress made no effort to ascertainthis. In 1860, however, charges of corruption in the postal systemand other Government departments were so numerously made, that theHouse of Representatives on March 5, 1860, decided, as a matter ofpolicy, to appoint an investigatng committee. This committee, calledthe "Covode Committee, " after the name of its chairman, probed intothe allegations of Vanderbilt's blackmailing transactions. Thecharges made in 1858 by Senator Toombs and Representative Davies werefully substatiated. 

Ellwood Fisher, a trustee of the United States Mail SteamshipCompany, testified on May 2 that during the greater part of the timehe was trustee, Vanderbilt was paid $10, 000 a month by the UnitedStates Mail Steamship company, and that the Pacific Mail SteamshipCompany paid him $30, 000 a month at the same time and for the samepurpose. The agreement was that if competition appeared payment wasto cease. In all, $480, 000 a year was paid during this time. On June5, 1860, Fisher again testified: "During the period of about fouryears and a half that I was one of the trustees, the earnings of theline were very large, but the greater part of the money waswrongfully appropriated to Vanderbilt for blackmail, and to others onvarious 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 terrorof his name and capital would be effectual upon others who might bedisposed to establish steamship lines" (p. 786). ] William H. Davidge, president of the Pacific Mail Steamship Company, admitted that thecompany had long paid blackmail money to Vanderbilt. "Thearrangement, " 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 thesteamship lines covers many pages of the investigating committee'sreport. 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 theUnited States Mail Steamship Company, likewise admitted thetransaction. [Footnote: Ibid. , 824. 

But Roberts and his associate trustees succeeded in making theGovernment recoup them, to a considerable extent, for the amount outof 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 MailSteamship Company for services in carrying mail in addition to thosecalled for under the Sloo contract. In 1859 they began lobbying inCongress to have this claim recognized. The scheme was considered sobrazen that Congress refused. Year after year, for eleven years, theytried to get Congress to pass an act for their benefit. Finally, onJuly 14, 1870, at a time when bribery was rampant in Congress, theysucceeded. An act was passed directing the Court of Claims toinvestigate and determine the merits of the claim. ] It is quiteuseless [Footnote: The Court of Claims threw the case out of court. Judge Drake, in delivering the opinion of the court, said that theact was to be so construed "as to prevent the entrapping of theGovernment by fixing upon it liability where the intention of thelegislature [Congress] was only to authorize an investigation of thequestion of liability" (Marshall O. Roberts et al. , Trustees, vs. TheUnited States, Court of Claims Reports, vi: 84-90). On appeal, however, the Supreme Court of the United States held that the act ofCongress 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 whetherVanderbilt was criminally prosecuted or civilly sued by theGovernment. Not only was he unmolested, but two years later, as weshall see, he carried on another huge swindle upon the Governmentunder peculiarly heinous conditions. 

This continuous robbery of the public treasury explains howVanderbilt was able to get hold of millions of dollars at a time whenmillionaires were scarce. Vanderbilt is said to have boasted in 1853that he had eleven million dollars invested at twenty-five per cent. A very large portion of this came directly from his bold system ofcommercial blackmail. [Footnote: Undoubtedly so, but the preciseproportion it is impossible to ascertain. ] The mail subsidies werethe real foundation of his fortune. Many newspaper editorials andarticles of the time mention this fact. Only a few of the importantunderlying facts of the character of his methods when he was in thesteamboat and steamship business can be gleaned from the records. Butthese few give a clear enough insight. With a part of the proceeds ofhis plan of piracy, he carried on a subtle system of corruption bywhich he and the other steamer owners were able time after time notonly to continue their control of Congress and the postalauthorities, but to defeat postal reform measures. For fifteen yearsVanderbilt and his associates succeeded in stifling every billintroduced in Congress for the reduction of the postage on mail. 

HE QUITS STEAMSHIPS. 

The Civil War with its commerce-preying privateers was anunpropitious time for American mercantile vessels. Vanderbilt nowbegan his career as a railroad owner. 

He was at this time sixty-nine years old, a tall, robust, vigorousman with a stern face of remarkable vulgar strength. The illiteracyof his youth survived; he could not write the simplest wordscorrectly, and his speech was a brusque medley of slang, jargon, dialect and profanity. It was said of him that he could swear moreforcibly, variously and frequently than any other man of hisgeneration. Like the Astors, he was cynical, distrustful, secretiveand parsimonious. He kept his plans entirely to himself. In hisbusiness dealings he was never known to have shown the slightestmercy; he demanded the last cent due. His close-fistedness was such apassion that for many years he refused to substitute new carpets forthe scandalous ones covering the floors of his house No. 10Washington place. He never read anything except the newspapers, whichhe skimmed at breakfast. To his children he was unsympathetic andinflexibly harsh; Croffut admits that they feared him. The onlyrelaxations he allowed himself were fast driving and playing whist. 

This, in short is a picture of the man who in the next few years usedhis stolen millions to sweep into his ownership great railroadsystems. Croffut asserts that in 1861 he was worth $20, 000, 000; otherwriters say that his wealth did not exceed $10, 000, 000. He knewnothing of railroads, not even the first technical or supervisingrudiments. Upon one thing he depended and that alone: the brute forceof 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 byprivateers, American ship owners found themselves with an assortmentof superfluous vessels on their hands. Forced to withdraw from marinecommerce, they looked about for two openings. One was how to disposeof their vessels, the other the seeking of a new and safe method ofmaking millions. 

Most of their vessels were of such scandalous construction thatforeign capitalists would not buy them at any price. Hastily built inthe brief period of ninety days, wholly with a view to immediateprofit and with but a perfunctory regard for efficiency, many ofthese steamers were in a dangerous condition. That they survivedvoyages was perhaps due more to luck than anything else; year afteryear, vessel after vessel similarly built and owned had gone down tothe bottom of the ocean. Collins had lost many of his ships; so hadother steamship companies. The chronicles of sea travel were a long, grewsome succession of tragedies; every little while accounts wouldcome in of ships sunk or mysteriously missing. Thousands ofimmigrants, inhumanly crowded in the enclosures of the steerage, wereswept to death without even a fighting chance for life. Cabinpassengers fared better; they were given the opportunity of taking tothe life-boats in cases where there was sufficient warning, time androom. At best, sea travel is a hazard; the finest of ships are liableto meet with disaster. But over much of this sacrifice of life hunggrim, ugly charges of mismanagement and corruption, of insufficientcrews and incompetent officers; of defective machinery and rottingtimber; 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 oceanroutes why not palm off their vessels upon the Government? A highlyfavorable time it was; the Government, under the imperative necessityof at once raising and transporting a huge army, needed vesselsbadly. As for the other question momentarily agitating thecapitalists as to what new line of activity they could substitute fortheir own extinguished business, Vanderbilt soon showed how railroadscould be made to yield a far greater fortune than commerce. 

The titanic conflict opening between the North and the South foundthe Federal Government wholly unprepared. True, in granting the mailsubsidies which established the ocean steamship companies, and whichactually furnished the capital for many of them, Congress hadinserted some fine provisions that these subsidized ships should beso built as to be "war steamers of the first class, " available intime of war. But these provisions were mere vapor. Just as the Harrisand the Sloo lines had obtained annual mail subsidy payments of$900, 000 and had caused Government officials to accept their inferiorvessels, so the Collins line had done the same. The report of a boardof naval experts submitted to the Committee of Ways and Means of theHouse of Representatives had showed that the Collins steamers had notbeen built according to contract; that they would crumble to piecesunder the fire of their own batteries, and that a single hostile gunwould blow them to splinters. Yet they had been accepted by the NavyDepartment. 

In times of peace the commercial interests had practiced the grossestfrauds in corruptly imposing upon the Government every form of shoddysupplies. These were the same interests so vociferously proclaimingtheir intense patriotism. The Civil War put their pretensions ofpatriotism to the test. If ever a war took place in which Governmentand people had to strain every nerve and resource to carry on a greatconflict it was the Civil War. The result of that war was only toexchange chattel slavery for the more extensive system of economicslavery. But the people of that time did not see this clearly. TheNorthern soldiers thought they were fighting for the noblest of allcauses, and the mass of the people behind them were ready to makeevery sacrifice to win a momentous struggle, the direct issue ofwhich was the overthrow or retention of black slavery. 

How did the capitalist class act toward the Government, or rather, letus say, toward the army and the navy so heroically pouring out theirblood in battles, and hazarding life in camps, hospitals, stockadesand military prisons?

INDISCRIMINATE PLUNDERING DURING THE CIVIL WAR. 

The capitalists abundantly proved their devout patriotism by makingtremendous fortunes from the necessities of that great crisis. Theyunloaded upon the Government at ten times the cost of manufacturequantities of munitions of war--munitions so frequently worthlessthat they often had to be thrown away after their purchase. [Footnote: In a speech on February 28, 1863, on the urgency ofestablishing additional government armories and founderies, Representative J. W. Wallace pointed out in the House ofRepresentatives: "The arms, ordnance and munitions of war bought bythe Government from private contractors and foreign armories sincethe commencement of the rebellion have doubtless cost, over and abovethe positive expense of their manufacture, ten times as much as wouldestablish and put into operation the armory and founderiesrecommended in the resolution of the committee. I understand that theGovernment, from the necessity of procuring a sufficient quantity ofarms, has been paying, on the average, about twenty-two dollars permusket, when they could have been and could be manufactured in ournational workshops for one-half that money. "--Appendix to TheCongressional Globe, Thirty-seventh Congress, Third Session, 1862-63. Part ii: 136. Fuller details are given in subsequent chapters. ] Theysupplied shoddy uniforms and blankets and wretched shoes; food of sodeleterious a quality that it was a fertile cause of epidemics offevers and of numberless deaths; they impressed, by force ofcorruption, worn-out, disintegrating hulks into service as army andnaval transports. Not a single possibility of profit was there inwhich the most glaring frauds were not committed. By a series ofdisingenuous measures the banks plundered the Treasury and people andcaused their banknotes to be exempt from taxation. The merchantsdefrauded the Government out of millions of dollars by bribing CustomHouse 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 ofmerchandise are daily presented at the Custom Houses is wellknown. . . . "] The Custom House frauds were so notorious that, goaded onby public opinion, the House of Representatives was forced to appointan investigating committee. The chairman of this committee, Representative C. H. Van Wyck, of New York, after summarizing thetestimony in a speech in the House on February 23, 1863, passionatelyexclaimed: "The starving, penniless man who steals a loaf of bread tosave life you incarcerate in a dungeon; but the army of magnificenthighwaymen who steal by tens of thousands from the people, gounwhipped of justice and are suffered to enjoy the fruits of theircrimes. It has been so with former administrations: unfortunately itis 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 desperatelycontested war, but they were at the same time the helpless targetsfor the profit-mongers of their own section who insidiously slewgreat numbers of them--not, it is true, out of deliberate lust formurder, but because the craze for profits crushed every instinct ofhonor and humanity, and rendered them callous to the appallingconsequences. The battlefields were not more deadly than the suppliesfurnished by capitalist contractors. [Footnote: This is one of manyexamples: Philip S. Justice, a gun manufacturer of Philadelphia, obtained a contract in 1861, to supply 4, 000 rifles. He charged $20apiece. The rifles were found to be so absolutely dangerous to thesoldiers using them, that the Government declined to pay his demandedprice for a part of them. Justice then brought suit. (See Court ofClaims Reports, viii: 37-54. ) In the court records, these statementsare included:

William H. Harris, Second Lieutenant of Ordnance, under ordersvisited Camp Hamilton, Va. , and inspected the arms of the Fifty-Eighth Regiment, Pennsylvania Volunteers, stationed there. Hereported: "This regiment is armed with rifle muskets, marked on thebarrel, 'P. S. Justice, Philadelphia, ' and vary in calibre from . 65to . 70. I find many of them unserviceable and irreparable, from thefact that the principal parts are defective. Many of them are made upof parts of muskets to which the stamp of condemnation has beenaffixed by an inspecting officer. None of the stocks have ever beenapproved by an officer, nor do they bear the initials of anyinspector. They are made up of soft, unseasoned wood, and aredefective in construction. . . . The sights are merely soldered on tothe 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 themost worthless kind, and have every appearance of having beenmanufactured from old condemned muskets. Many of them burst; hammersbreak off; sights fall off when discharged; the barrels are verylight, not one-twentieth of an inch thick, and the stocks are made ofgreen wood which have shrunk so as to leave the bands and trimmingsloose. The bayonets are of such frail texture that they bend likelead, and many of them break off when going through the bayonetexercise. 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: "Manyhad burst; many cones were blown out; many locks were defective; manybarrels were rough inside from imperfect boring; and many haddifferent diameters of bore in the same barrel. . . . _At targetpractice so many burst that the men became afraid to fire them_"(p. 45). 

The Court of Claims, on strict technical grounds, decided in favor ofJustice, but the Supreme Court of the United States reversed thatdecision and dismissed the case. The Supreme Court found true theGovernment's contention that "the arms were unserviceable and unsafefor troops to handle. "

Many other such specific examples are given in subsequent chapters ofthis work. ] These capitalists passed, and were hailed, as eminentmerchants, manufacturers and bankers; they were mighty in the martsand 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 ofthe capitalist taught in press, college and pulpit. Nothing is soeffective, as was remarked of old, to divert attention fromscoundrelism as to make a brilliant show of patriotism. In the veryact of looting Government and people and devastating the army andnavy, the capitalists did the most ghastly business under the mask ofthe purest patriotism. Incredible as it may seem, this pretension wasinvoked and has been successfully maintained to this very day. Youcan scarcely pick up a volume on the Civil War, or a biography of thestatesmen or rich men of the era, without wading in fulsome accountsof the untiring patriotism of the capitalists. 

PATRIOTISM AT A SAFE DISTANCE. 

But, while lustily indulging in patriotic palaver, the propertiedclasses took excellent care that their own bodies should not beimperilled. Inspired by enthusiasm or principle, a great array of theworking class, including the farming and the professional elements, volunteered for military service. It was not long before theyexperienced the disappointment and demoralization of camp life. Theletters written by many of these soldiers show that they did notfalter at active campaigning. The prospect, however, of remaining incamp with insufficient rations, and (to use a modern expressive word)graft on every hand, completely disheartened and disgusted many ofthem. Many having influence with members of Congress, contrived toget discharges; others lacking this influence deserted. To fill theconstantly diminishing ranks caused by deaths, resignations anddesertions, it became necessary to pass a conscription act. 

With few exceptions, the propertied classes of the North lovedcomfort and power too well to look tranquilly upon any move to forcethem to enlist. Once more, the Government revealed that it was but aregister of the interests of the ruling classes. The Draft Act was soamended that it allowed men of property to escape being conscriptedinto the army by permitting them to buy substitutes. The poor man whocould not raise the necessary amount had to submit to theconsequences of the draft. With a few of the many dollars wrung, filched or plundered in some way or other, the capitalists couldpurchase immunity from military service. 

As one of the foremost capitalists of the time, Cornelius Vanderbilthas been constantly exhibited as a great and shining patriot. Precisely in the same way as Croffut makes no mention of Vanderbilt'sshare in the mail subsidy frauds, but, on the contrary, ascribes toVanderbilt the most splendid patriotism in his mail carryingoperations, so do Croffut and other writers unctuously dilate uponthe old magnate's patriotic services during the Civil War. Such isthe sort of romancing that has long gone unquestioned, although thegenuine facts have been within reach. These facts show thatVanderbilt was continuing during the Civil War the prodigious fraudshe had long been carrying on. 

When Lincoln's administration decided in 1862 to send a largemilitary and naval force to New Orleans under General Banks, one ofthe first considerations was to get in haste the required number ofships to be used as transports. To whom did the Government turn inthis exigency? To the very merchant class which, since the foundationof the United States, had continuously defrauded the public treasury. The owners of the ships had been eagerly awaiting a chance to sell orlease them to the Government at exorbitant prices. And to whom wasthe business of buying, equipping and supervising them intrusted? Tonone other than Cornelius Vanderbilt. 

Every public man had opportunities for knowing that Vanderbilt hadpocketed millions of dollars in his fraudulent hold-up arrangementwith various mail subsidy lines. He was known to be mercenary andunscrupulous. Yet he was selected by Secretary of War Stanton to actas the agent for the Government. At this time Vanderbilt was posingas a glorious patriot. With much ostentation he had loaned to theGovernment for naval purposes one of his ships--a ship that he couldnot put to use himself and which, in fact, had been built with stolenpublic funds. By this gift he had cheaply attained the reputation ofbeing a fervent patriot. Subsequently, it may be added, Congressturned a trick on him by assuming that he gave this ship to theGovernment, and, to his great astonishment, kept the ship andsolemnly thanked him for the present. 

VANDERBILT'S METHODS IN WAR. 

The outfitting of the Banks expedition was of such a rank characterthat it provoked a grave public scandal. If the matter had beensimply one of swindling the United States Treasury out of millions ofdollars, it might have been passed over by Congress. On all sidesgigantic frauds were being committed by the capitalists. But in thisparticular case the protests of the thousands of soldiers on boardthe transports were too numerous and effective to be silenced orignored. These soldiers were not regulars without influence orconnections; they were volunteers who everywhere had relatives andfriends to demand an inquiry. Their complaints of overcrowding and ofinsecure, 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 buyingthe vessels Vanderbilt had employed one T. J. Southard to act as hishandy man. Vanderbilt, it was testified by numerous ship owners, refused to charter any vessels unless the business were transactedthrough Southard, who demanded a share of the purchase money beforehe would consent to do business. Any ship owner who wanted to get ridof a superannuated steamer or sailing vessel found no difficulty ifhe acceded to Southard's terms. 

The vessels accepted by Vanderbilt, and contracted to be paid for athigh prices, were in shockingly bad condition. Vanderbilt was one ofthe few men in the secret of the destination of Banks' expedition; heknew 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 scoreof years before for trade on Lake Ontario. "In perfectly smoothweather, " reported Senator Grimes, of Iowa, "with a calm sea, theplanks were ripped out of her, and exhibited to the gaze of theindignant soldiers on board, showing that her timbers were rotten. The committee have in their committee room a large sample of one ofthe beams of this vessel to show that it has not the slightestcapacity to hold a nail. " [Footnote: The Congressional Globe, Thirty-seventh Congress, Third Session, 1862-63, Part 1: 610. ] SenatorGrimes continued:

If Senators will refer to page 18 of this report, they will see thatfor the steamer Eastern Queen he (Vanderbilt) paid $900 a day for thefirst thirty days, and $800 for the residue of the days; while she(the Eastern Queen) had been chartered by the Government, for theBurnside expedition at $500 a day, making a difference of three orfour 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 aday. For the Shetucket he paid $250 a day, while she had formerlybeen 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 dayfor 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 charteredto the Government for $300. He paid $250 a day for the Albany, whileshe had been chartered to the Government for $150. He paid $250 a dayfor the Jersey Blue, while she had been chartered to the Governmentfor $150. [Footnote: The Congressional Globe, etc. , 1862-63, Parti:610. ]

There were a few of the many vessels chartered by Vanderbilt throughSouthard for the Government. For vessels bought outright, extravagantsums were paid. Ambrose Snow, a well-known shipping merchant, testified that "when we got to Commodore Vanderbilt we were referredto Mr. Southard; when we went to Mr. Southard, we were told that weshould have to pay him a commission of five per cent. " [Footnote:Ibid. See also Senate Report No. 84, 1863, embracing the fulltestimony. ]

Other shipping merchants corroborated this testimony. The methods andextent of these great frauds were clear. If the ship owners agreed topay Southard five--and very often he exacted ten per cent. [Footnote:Senator Hale asserted that he had heard of the exacting of abrokerage equal to ten per cent, in Boston and elsewhere. ]--Vanderbilt would agree to pay them enormous sums. In giving histestimony Vanderbilt sought to show that he was actuated by the mostpatriotic motives. But it was obvious that he was in collusion withSouthard, and received the greater part of the plunder. 

HORRORS DONE FOR PROFIT. 

On some of the vessels chartered by Vanderbilt, vessels that underthe immigration act would not have been allowed to carry more thanthree hundred passengers, not less than nine hundred and fiftysoldiers were packed. Most of the vessels were antiquated andinadequate; not a few were badly decayed. With a little superficialpatching up they were imposed upon the Government. Despite hisknowing that only vessels adapted for ocean service were needed, Vanderbilt chartered craft that had hitherto been almost entirelyused in navigating inland waters. Not a single precaution was takenby him or his associates to safeguard the lives of the soldiers. 

It was a rule amoung commercial men that at least two men capable ofnavigating should be aboard, especially at sea. Yet, with the livesof thousands of soldiers at stake, and with old and bad vessels inuse at that, Vanderbilt, in more than one instance, as the testimonyshowed, neglected to hire more than one navigator, and failed toprovide instruments and charts. In stating these facts Senator Grimessaid: "When the question was asked of Commodore Vanderbilt and ofother gentlemen in connection with the expedition, why this was, andwhy they did not take navigators and instruments and charts on board, the answer was that the insurance companies and owners of the vesseltook that risk, as though"--Senator Grimes bitingly continued--"theGovernment had no risk in the lives of its valiant men whom it hasenlisted under its banner and set out in an expedition of this kind. "[Footnote: The Congressional Globe, Thirty-seventh Congress, ThirdSession, 1862-63, Part i: 586. ] If the expedition had encountered asevere storm at Cape Hatteras, for instance, it is probable that mostof the vessels would have been wrecked. Luckily the voyage was fair. 

FRAUDS REMAIN UNPUNISHED. 

Did the Government make any move to arrest, indict and imprisonVanderbilt and his tools? None. The farcical ending of theserevelations was the introduction in the United States Senate of amere resolution censuring them as "guilty of negligence. "

Vanderbilt immediately got busy pulling wires; and when theresolution came up for vote, a number of Senators, led by SenatorHale, sprang up to withdraw Vanderbilt's name. Senator Grimesthereupon caustically denounced Vanderbilt. "The whole transaction, "said he, "shows a chapter of fraud from beginning to end. " He wenton: "Men making the most open professions of loyalty and ofpatriotism and of perfect disinterestedness, coming before thecommittee and swearing that they acted from such motives solely, werecompelled to admit--at least one or two were--that in some instancesthey received as high as six and a quarter per cent . . . And I believethat since then the committee are satisfied in their own mind thatthe per cent. Was greater than was in testimony before them. " SenatorGrimes added that he did not believe that Vanderbilt's name should bestricken from the resolution. 

In vain, however, did Senator Grimes plead. Vanderbilt's name wasexpunged, and Southard was made the chief scapegoat. AlthoughVanderbilt had been tenderly dealt with in the investigation, hiscriminality was conclusively established. The affair deeply shockedthe nation. After all, it was only another of many tragic eventsdemonstrating both the utter inefficiency of capitalist management, and the consistent capitalist program of subordinating everyconsideration of human life to the mania for profits. Vanderbilt wasonly a type of his class; although he was found out he deservedcondemnation no more than thousands of other capitalists, great andsmall, whose methods at bottom did not vary from his. [Footnote: Oneof the grossest and most prevalent forms of fraud was that of sellingdoctored-up horses to the Union army. Important cavalry movementswere often delayed and jeoparded by this kind of fraud. In passingupon the suit of one of these horse contractors against theGovernment (Daniel Wormser vs. United States) for payment for horsessupplied, in 1864, for cavalry use, the Supreme Court of the UnitedStates confirmed the charge made by the Government horse inspectorsthat 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 ofhorses, and there was great need for strictness in this regard, forfrauds were constantly perpetrated. . . . It is well known thathorses may be prepared and fixed up to appear bright and smart for afew hours. "--Court of Claims Reports, vii: 257-262. ]

Yet such was the network of shams and falsities with which thesupreme class of the time enmeshed society, that press, pulpit, university and the so-called statesmen insisted that the wealth ofthe rich man had its foundation in ability, and that this ability wasindispensable in providing for the material wants of mankind. 

Whatever obscurity may cloud many of Vanderbilt's methods in thesteamship business, his methods in possessing himself of railroadsare easily ascertained from official archives. 

Late in 1862, at about the time when he had added to the millionsthat he had virtually stolen in the mail subsidy frauds, the hugeprofits from his manipulation of the Banks expedition, he set aboutbuying 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 fromthe New York Common Council in 1832 a franchise for the exclusive useof Fourth avenue, north of Twenty-third street--a franchise which, itwas openly charged, was obtained by distributing bribes in the formof stock among the aldermen. [Footnote: "The History of TammanyHall": 117. ]

The franchise was not construed by the city to be perpetual; certainreservations were embodied giving the city powers of revocation. Butas we shall see, Vanderbilt not only corrupted the Legislature in1872 to pass an act saddling one-half of the expense of depressingthe tracks upon the city, but caused the act to be so adroitly wordedas to make the franchise perpetual. Along with the franchise to useFourth avenue, the railroad company secured in 1832 a franchise, freeof taxation, to run street cars for the convenience of its passengersfrom the railroad station (then in the outskirts of New York City)south to Prince street. Subsequently this franchise was extended toWalker street, and in 1851 to Park Row. These were the initial stagesof the Fourth Avenue surface line, which has been extended, and hasgrown into a vested value of tens of millions of dollars. In 1858 theNew York and Harlem Railroad Company was forced by action of theCommon Council, arising from the protests of the rich residents ofMurray Hill, to discontinue steam service below Forty-second street. It, therefore, now had a street car line running from thatthoroughfare to the Astor House. 

This explanation of antecedent circumstances allows a clearercomprehension of what took place after Vanderbilt had begun buyingthe stock of the New York and Harlem Railroad. The stock was thenselling at $9 a share. This railroad, as was the case with all otherrailroads, without exception, was run by the owners with only themost languid regard for the public interests and safety. Just as thecorporation in the theory of the law was supposed to be a body towhom Government delegated powers to do certain things in theinterests of the people, so was the railroad considered theoreticallya public highway operated for the convenience of the people. It wasupon this ostensible ground that railroad corporations securedcharters, franchises, property and such privileges as the right ofcondemnation of necessary land. The State of New York alone hadcontributed $8, 000, 000 in public funds, and various counties, townsand municipalities in New York State nearly $31, 000, 000 by investmentin stocks and bonds. [Footnote: Report of the Special Committe onRailroads of the New York Assembly, 1879, i:7. ] The theory was indeedattractive, but it remained nothing more than a fiction. 

No sooner did the railroad owners get what they wanted, than theyproceeded to exploit the very community from which their possessionswere obtained, and which they were supposed to serve. The variousrailroads 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 andcars--were deliberately allowed to deteriorate in order that themanipulators might be able to lower the value and efficiency of theroad, and thus depress the value of the stock. Thus, for instance, Vanderbilt aiming to get control of a railroad at a low price, mightvery well have confederates among some of the directors or officialsof that railroad who would resist or slyly thwart every attempt atimprovement, and so scheme that the profits would constantly go down. As the profits decreased, so did the price of the stock in the stockmarket. The changing combinations of railroad capitalists were tooabsorbed in the process of gambling in the stock market to have anydirect concern for management. It was nothing to them that thisneglect caused frequent and heartrending disasters; they were notheld criminally responsible for the loss of life. In fact, railroadwrecks often served their purpose in beating down the price ofstocks. Incredible as this statement may seem, it is abundantlyproved by the facts. 

VANDERBILT GETS A RAILROAD. 

After Vanderbilt, by divers machinations of too intricate characterto be described here, had succeeded in knocking down the price of NewYork and Harlem Railroad shares and had bought a controlling part, the price began bounding up. In the middle of April, 1863, it stoodat $50 a share. A very decided increase it was, from $9 to $50;evidently enough, to occasion this rise, he had put through sometransaction 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 tothe New York and Harlem Railroad a perpetual franchise for a streetrailway on Broadway from the Battery to Union Square. He had donewhat Solomon Kipp and others had done, in 1852, when they had spent$50, 000 in bribing the aldermen to give them a franchise for surfacelines on Sixth avenue and Eighth avenue; [Footnote: See presentmentof 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 inbribing aldermen with a fund of $28, 000 to give them the franchisefor a surface line on Third avenue; [Footnote: Ibid. , 1333-1335. ]what George Law and other capitalists had done, in 1852, in bribingthe aldermen to give them the franchises for street car lines onSecond avenue and Ninth avenue. Only three years before--in 1860--Vanderbilt had seen Jacob Sharp and others bribe the New YorkLegislature (which in that same year had passed an act depriving theNew York Common Council of the power of franchise granting) to givethem franchises for street car lines on Seventh avenue, on Tenthavenue, on Forty-second street, on Avenue D and a franchise for the"Belt" line. It was generally believed that the passage of these fivebills cost the projectors $250, 000 in money and stock distributedamong the purchasable members of the Legislature. [Footnote: See "TheHistory of Public Franchises in New York City": 120-125. ]

Of all the New York City street railway franchises, eitherappropriated or unappropriated, the Broadway line was considered themost profitable. So valuable were its present and potential prospectsestimated that in 1852 Thomas E. Davies and his associates hadoffered, in return for the franchise, to carry passengers for athree-cent fare and to pay the city a million-dollar bonus. Othereager capitalists had hastened to offer the city a continuous paymentof $100, 000 a year. Similar futile attempts had been made year afteryear to get the franchise. The rich residents of Broadway opposed astreet car line, believing it would subject them to noise anddiscomfort; likewise the stage owners, intent upon keeping up theirmonopoly, fought against it. In 1863 the bare rights of the Broadwayfranchise were considered to be worth fully $10, 000, 000. Vanderbiltand George Law were now frantically competing for this franchise. While Vanderbilt was corrupting the Common Council, Law wascorrupting the legislature. [Footnote: The business rivalry betweenVanderbilt and Law was intensified by the deepest personal enmity onLaw's part. As one of the chief owners of the United States MailSteamship Company, Law was extremely bitter on the score ofVanderbilt's having been able to blackmail him and Roberts so heavilyand successfully. ] Such competition on the part of capitalists incorrupting public bodies was very frequent. 

THE ALDERMEN OUTWITTED BY VANDERBILT. 

But the aldermen were by no means unschooled in the current sharppractices of commercialism. A strong cabal of them hatched up ascheme by which they would take Vanderbilt's bribe money, and thenambush him for still greater spoils. They knew that even if they gavehim the franchise, its validity would not stand the test of thecourts. The Legislature claimed the exclusive power of grantingfranchises; astute lawyers assured them that this claim would beupheld. Their plan was to grant a franchise for the Broadway line tothe New York and Harlem Railroad. This would at once send up theprice of the stock. The Legislature, it was certain, would give afranchise for the same surface line to Law. When the courts decidedagainst the Common Council that body, in a spirit of showy deference, would promptly pass an ordinance repealing the franchise. In themeantime, the aldermen and their political and Wall Streetconfederates would contract to "sell short" large quantities of NewYork and Harlem stock. 

The method was simple. When that railroad stock was selling at $100 ashare upon the strength of getting the Broadway franchise, thealdermen would find many persons willing to contract for its deliveryin a month at a price, say, of $90 a share. By either the repealingof the franchise ordinance or affected by adverse court decisions, the stock inevitably would sink to a much lower price. At this lowprice the aldermen and their confederates would buy the stock andthen deliver it, compelling the contracting parties to pay the agreedprice of $90 a share. The difference between the stipulated price ofdelivery and the value to which the stock had fallen--$30, $40 or $50a share--would represent the winnings. 

Part of this plan worked out admirably. The Legislature passed an actgiving Law the franchise. Vanderbilt countered by getting Tweed, theall-powerful political ruler of New York City and New York State, toorder his tool, Governor Seymour, to veto the measure. As wasanticipated by the aldermen, the courts pronounced that the CommonCouncil had no power to grant franchises. Vanderbilt's franchise was, therefore, annulled. So far, there was no hitch in the plot to pluckVanderbilt. 

But an unlooked for obstacle was encountered. Vanderbilt had somehowgot wind of the affair, and with instant energy bought up secretlyall of the New York and Harlem Railroad stock he could. He had massesof ready money to do it with; the millions from the mail subsidyfrauds and from his other lootings of the public treasury proved anunfailing source of supply. Presently, he had enough of the stock tocorner his antagonists badly. He then put his own price upon it, eventually pushing it up to $170 a share. To get the stock that theycontracted to deliver, the combination of politicians and Wall Streetbankers and brokers had to buy it from him at his own price; therewas no outstanding stock elsewhere. The old man was pitiless; hemulcted them $179 a share. In his version, Croffut says ofVanderbilt: "He and his partners in the bull movement took a milliondollars from the Common Council that week and other millions fromothers. " [Footnote: "The Vanderbilts, " etc: 75. ]

The New York and Harlem Railroad was now his, as absolutely almost asthe very clothes he wore. Little it mattered that he did not hold allof the stock; he owned a preponderance enough to rule the railroad asdespotically as he pleased. Not a foot it had he surveyed orconstructed; this task had been done by the mental and manual laborof thousands of wage workers not one of whom now owned the vestige ofan interest in it. For their toil these wage workers had nothing toshow but poverty. But Vanderbilt had swept in a railroad system bymerely using in cunning and unscrupulous ways a few of the millionshe had defrauded from the national treasury. 

HE ANNEXES A SECOND RAILROAD. 

Having found it so easy to get one railroad, he promptly went aheadto annex other railroads. By 1864 he loomed up as the owner of acontrolling mass of stock in the New York and Hudson River Railroad. This line paralleled the Hudson River, and had a terminal in thedowntown section of New York City. In a way it was a competitor ofthe New York and Harlem Railroad. 

The old magnate now conceived a brilliant idea. Why not consolidatethe two roads? True, to bring about this consolidation an authorizingact of the New York Legislature was necessary. But there was littledoubt of the Legislature balking. Vanderbilt well knew the means toinsure its passage. In those years, when the people were taught tolook upon competition as indispensable, there was deep popularopposition to the consolidating of competing interests. This, it wasfeared, would inflict monopoly. 

The cost of buying legislators to pass an act so provocative ofpopular indignation would be considerable, but, at the same time, itwould not be more than a trifle compared with the immense profits hewould gain. The consolidation would allow him to increase, or, as thephrase went, water, the stock of the combined roads. Althoughsubstantially owner of the two railroads, he was legally two separateentities--or, rather, the corporations were. As owner of one line hecould bargain with himself as owner of the other, and could determinewhat the exchange purchase price should be. So, by a juggle, he couldissue enormous quantities of bonds and stocks to himself. These manymillions of bonds and stocks would not cost him personally a cent. The sole expense--the bribe funds and the cost of engraving--he wouldcharge against his corporations. Immediately, these stocks and bondswould be vested with a high value, inasmuch as they would representmortgages upon the productivity of tens of millions of people of thatgeneration, and of still greater numbers of future generations. Byputting up traffic rates and lowering wages, dividends would be paidupon the entire outpouring of stock, thus beyond a doubt insuring itspermanent value. [Footnote: Even Croffut, Vanderbilt's foremosteulogist, cynically grows merry over Vanderbilt's methods which hethus summarizes: "(1) Buy your railroad; (2) stop the stealing thatwent on under the other man; (3) improve the road in everypracticable way within a reasonable expenditure; (4) consolidate itwith any other road that can be run with it economically; (5) waterits stock; (6) make it pay a large dividend. "]

CUNNING AGAINST CUNNING. 

A majority of the New York Legislature was bought. It looked as ifthe consolidation act would go through without difficulty. Surreptitiously, however, certain leading men in the Legislatureplotted with the Wall Street opponents of Vanderbilt to repeat thetrick attempted by the New York aldermen in 1863. The bill would beintroduced and reported favorably; every open indication would bemanifested of keeping faith with Vanderbilt. Upon the certainty ofits passage the market value of the stock would rise. With theirprearranged plan of defeating the bill at the last moment upon someplausible pretext, the clique in the meantime would be busy sellingshort. 

Information of this treachery came to Vanderbilt in time. Heretaliated as he had upon the New York aldermen; put the price of NewYork and Harlem stock up to $285 a share and held it there untilafter he was settled with. With his chief partner, John Tobin, he wascredited with pocketing many millions of dollars. To make theircorner certain, the Vanderbilt pool had bought 27, 000 more sharesthan the entire existing stock of the road. "We busted the wholeLegislature, " was Vanderbilt's jubilant comment, "and scores of thehonorable members had to go home without paying their board bills. "

The numerous millions taken in by Vanderbilt in these transactionscame from a host of other men who would have plundered him as quicklyas he plundered them. They came from members of the Legislature whohad grown rich on bribes for granting a continuous succession ofspecial privileges, or to put it in a more comprehensible form, licenses to individuals and corporations to prey in a thousand andone forms upon the people. They came from bankers, railroad, land andfactory owners, all of whom had assiduously bribed Congress, legislatures, common councils and administrative officials to givethem special laws and rights by which they could all the more easilyand securely grasp the produce of the many, and hold it intactwithout even a semblance of taxation. 

The very nature of that system of gambling called stock-market orcotton 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 theexchanges was legitimate and legalized, and the men who thus gambledwith the resources of the nation were esteemed as highly respectableand responsible leaders of the community. For a penniless man to sellanything he did not own, or which was not in existence, was held aheinous crime and was severely punished by a long prison term. Butthe members of the all-powerful propertied class could contract todeliver stocks which they did not own or which were non-existent, orthey could gamble in produce often not yet out of the ground, and thelaw saw no criminal act in their performances. 

Far from being under the inhibition of law, their methods were dulylegalized. The explanation was not hard to find. These samepropertied classes had made the code of laws as it stood; and if anydoubter denies that laws at all times have exactly corresponded withthe interest and aims of the ruling class, all that is necessary isto compare the laws of the different periods with the profitablemethods of that class, and he will find that these methods, howeverdespicable, vile and cruel, were not only indulgently omitted fromthe recognized category of crimes but were elevated by prevalentteaching to be commercial virtues and ability of a high order. 

With two railroads in his possession Vanderbilt cast about to drag ina third. This was the New York Central Railroad, one of the richestin the country. 

Vanderbilt's eulogists, in depicting him as a masterfulconstructionist, assert that it was he who first saw the waste andfutility of competition, and that he organized the New York Centralfrom the disjointed, disconnected lines of a number of previouslyseparate little railroads. This is a gross error. 

The consolidation was formed in 1853 at the time when Vanderbilt wasplundering from the United States treasury the millions with which hebegan to buy in railroads nine years later. The New York Centralarose from the union of ten little railroads, some running in theterritory between Albany and Buffalo, and others merely projected, but which had nevertheless been capitalized as though they wereactually 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 actof 1853 the capitalization was run up to about $35, 000, 000. Thisfictitious capital was partly based on roads which were never built, and existing on paper only. Then followed a series of legislativeacts giving the company a further list of valuable franchises andallowing it to charge extortionate rates, inflate its stock, andvirtually escape taxation. How these laws were procured may be judgedfrom the testimony of the treasurer of the New York Central railroadbefore a committee of the New York State Constitutional Convention. This official stated that from about 1853 to 1867 the New YorkCentral had spent hundreds of thousands of dollars for "legislativepurposes, "--in other words, buying laws at Albany. 

ACQUISITION BY WRECKING. 

Vanderbilt considered it unnecessary to buy New York Central stock toget control. He had a much better and subtler plan. The Hudson RiverRailroad was at that time the only through road running from New Yorkto Albany. To get its passengers and freight to New York City the NewYork Central had to make a transfer at Albany. Vanderbilt nowdeliberately began to wreck the New York Central. He sent out anorder in 1865 to all Hudson River Railroad employees to refuse toconnect with the New York Central and to take no more freight. Thismove could not do otherwise than seriously cripple the facilities andlower the profits of the New York Central. Consequently, the value ofits stock was bound to go precipitately down. 

The people of the United States were treated to an ironic sight. Herewas a man who only eight years before had been shown up in Congressas an arch plunderer; a man who had bought his railroads largely withhis looted millions; a man who, if the laws had been drafted andexecuted justly, would have been condoning his frauds in prison;--this man was contemptuously and openly defying the very people whoseinterests the railroads were supposed to serve. In this conflictbetween warring sets of capitalists, as in all similar conflicts, public convenience was made sport of. Hudson River trains going northno longer crossed the Hudson River to enter Albany; they stopped halfa mile east of the bridge leading into that city. This made itimpossible to transfer freight. There in the country the trains werearbitrarily stopped for the night; locomotive fires were banked andthe passengers were left to shift into Albany the best they could, whether they walked or contrived to hire vehicles. All were turnedout of the train--men, women and children--no exceptions were madefor sex or infirmity. 

The Legislature went through a pretense of investigating what publicopinion regarded as a particularly atrocious outrage. Vanderbiltcovered this committee with undisguised scorn; it provoked his wrathto be quizzed by a committee of a body many of whose members hadaccepted his bribes. When he was asked why he had so high-handedlyrefused to run his trains across the river, the old fox smiledgrimly, and to their utter surprise, showed them an old law (whichhad hitherto remained a dead letter) prohibiting the New York HudsonRailroad from running trains over the Hudson River. This law had beenenacted in response to the demand of the New York Central, whichwanted no competitor west of Albany. When the committee recovered itsbreath, its chairman timidly inquired of Vanderbilt why he did notrun 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 interferewith 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 wentdown abruptly; at its lowest point he bought in large quantities. Hisopponents, Edward Cunard, John Jacob Astor, John Steward and otherowners of the New York Central thus saw the directorship pass fromtheir hands. The dispossession they had worked to the Pruyns, theMartins, the Pages and others was now being visited upon them. Theyfound in this old man of seventy-three too cunning and crafty a manto defeat. Rather than lose all, they preferred to choose him astheir captain; his was the sort of ability which they could notovercome and to which they must attach themselves. On November 12, 1867, they surrendered wholly and unreservedly. Vanderbilt nowinstalled his own subservient board of directors, and proceeded toput through a fresh program of plunder beside which all his previousschemes were comparatively insignificant. 

CHAPTER V

THE VANDERBILT FORTUNE INCREASES MANIFOLD

Vanderbilt's ambition was to become the richest man in America. Withthree railroads in his possession he now aggressively set out tograsp a fourth--the Erie Railroad. This was another of the railroadsbuilt largely with public money. The State of New York hadcontributed $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 YorkState Assembly Document No. 50, 1842. ] The tradesmen, landowners andbankers who composed the company bribed the Legislature to relinquishthe State's claim, and then looted the railroad with such consummatethoroughness that in order to avert its bankruptcy they were obligedto borrow funds from Daniel Drew. This man was an imposing financialpersonage in his day. Illiterate, unscrupulous, picturesque in hisvery iniquities, he had once been a drover, and had gone into thesteamboat business with Vanderbilt. He had scraped in wealth partlyfrom that line of traffic, and in part from a succession ofbuccaneering operations. His loan remaining unpaid, Drew indemnifiedhimself by taking over, in 1857, by foreclosure, the control of theErie Railroad. 

For the next nine years Drew manipulated the stock at will, sendingthe price up or down as suited his gambling schemes. The railroaddegenerated until travel upon it became a menace; one disasterfollowed another. Drew imperturbably continued his manipulation ofthe stock market, careless of the condition of the road. At no timewas he put to the inconvenience of even being questioned by thepublic authorities. On the contrary, the more millions he made thegreater grew his prestige and power, the higher his standing in thecommunity. Ruling society, influenced solely by money standards, saluted him as a successful man who had his millions, and made nofastidious inquiries as to how he got them. He was a potent man; hisvillainies passed as great astuteness, his devious cunning asmarvelous 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 carryout his designs. He threw Drew and his directors out, butsubsequently realizing Drew's usefulness, reinstated him uponcondition that he be fully pliable to the Vanderbilt interests. Thereupon Drew brought in as fellow directors two young men, thenobscure but of whom the world was to hear much--James Fisk, Jr. , andJay Gould. The narrative of how these three men formed a coalitionagainst Vanderbilt; how they betrayed and then outgeneraled him atevery turn; proved themselves of a superior cunning; sold him largequantities of spurious stock; excelled him in corruption; defraudedmore than $50, 000, 000, and succeeded--Gould, at any rate--in keepingmost of the plunder--this will be found in detail where it moreproperly belongs--in the chapter of the Gould fortune describing thatpart of Gould's career connected with the Erie Railroad. 

Baffled in his frantic contest to keep hold of that railroad--a holdthat he would have turned into many millions of dollars of immediateloot by fraudulently watering the stock, and then bribing theLegislature to legalize it as Gould did--Vanderbilt at once set inmotion a fraudulent plan of his own by which he extorted about$44, 000, 000 in plunder, the greater portion of which went to swellhis fortune. 

The year 1868 proved a particularly busy one for Vanderbilt. He wasengaged in a desperately devious struggle with Gould. In vain did hisagents and lobbyists pour out stacks of money to buy legislativevotes enough to defeat the bill legalizing Gould's fraudulent issueof stock. Members of the Legislature impassively took money from bothparties. Gould personally appeared at Albany with a satchelcontaining $500, 000 in greenbacks which were rapidly distributed. OneSenator, as was disclosed by an investigating committee, accepted$75, 000 from Vanderbilt and then $100, 000 from Gould, kept bothsums, --and voted with the dominant Gould forces. It was only by meansof the numerous civil and criminal writs issued by Vanderbilt judgesthat the old man contrived to force Gould and his accomplices intopaying for the stock fraudulently unloaded upon him. The best termsthat he could get was an unsatisfactory settlement which still lefthim to bear a loss of about two millions. The veteran trickster hadnever before been overreached; all his life, except on one occasion, [Footnote: In 1837 when he had advanced funds to a contractorcarrying the mails between Washington and Richmond, and had takensecurity which proved to be worthless. ] he had been the successfulsharper; but he was no match for the more agile and equally sly, corrupt and resourceful Gould. It took some time for Vanderbilt torealize this; and it was only after several costly experiences withGould, that he could bring himself to admit that he could not hope tooutdo Gould. 

A NEW CONSOLIDATION PLANNED

However, Vanderbilt quickly and multitudinously recouped himself forthe losses encountered in his Erie assault. Why not, he argued, combine the New York Central and the Hudson River companies into onecorporation, and on the strength of it issue a vast amount ofadditional stock?

The time was ripe for a new mortgage on the labor of that generationand of the generations to follow. Population was wondrouslyincreasing, and with it trade. For years the New York Central hadbeen paying a dividend of eight per cent. But this was only part ofthe profits. A law had been passed in 1850 authorizing theLegislature to step in whenever the dividends rose above ten percent, on the railroad's actual cost, and to declare what should bedone with the surplus. This law was nothing more or less than a blindto conciliate the people of the State, and let them believe that theywould get some returns for the large outlay of public funds advancedto the New York Central. No returns ever came. Vanderbilt, and thedifferent groups before him, in control of the road had easily evadedit, just as in every direction the whole capitalist class pushedaside law whenever law conflicted with its aims and interests. It wasthe 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 havegone to the State. Every year they prepared a false account of theirrevenues and expenditures which they submitted to the Stateofficials; they pretended that they annually spent millions ofdollars in construction work on the road--work, in reality, neverdone. [Footnote: See Report of New York Special Assembly Committee onRailroads, 1879, iv: 3, 894. ] The money was pocketed by them underthis device--a device that has since become a favorite of manyrailroad and public utility corporations. 

Unenforced as it was, this law was nevertheless an obstacle in theway of Vanderbilt's plans. Likewise was another, a statuteprohibiting both the New York Central Railroad and the Hudson RiverRailroad from increasing their stock. To understand why this latterlaw was passed it is necessary to remember that the middle class--thefactory owners, jobbers, retail tradesmen and employing farmers--wereeverywhere seeking by the power of law to prevent the too greatdevelopment of corporations. These, they apprehended, and withreason, would ultimately engulf them and their fortunes andimportance. They knew that each new output of watered stock meanteither that the prevailing high freight rates would remain unchangedor would be increased; and while all the charges had to be bornefinally by the working class, the middle class sought to have anunrestricted market on its own terms. 

ALARM OF THE TRADING CLASS

It was the opposition of the various groups of this class thatVanderbilt expected and provided against. He was fully aware that themoment he revealed his plan of consolidation boards of tradeeverywhere would rise in their wrath, denounce him, call togethermass meetings, insist upon railroad competition and send pretentious, firebreathing delegates to the State Capitol. Let them thunder, saidVanderbilt placidly. While they were exploding in eruptions of talkhe would concentrate at Albany a mass of silent arguments in the formof money and get the necessary legislative votes, which was all hecared about. 

Then ensued one of the many comedies familiar to observers oflegislative proceedings. It was amusing to the sophisticated to seedelegations indignantly betake themselves to Albany, submitvoluminous briefs which legislators never read, and with immensegravity argue away for hours to committees which had already beenbought. The era was that of the Tweed regime, when the public fundsof New York City and State were being looted on a huge scale by thepoliticians in power, and far more so by the less vulgar but morecrafty business classes who spurred Tweed and his confederates on tofresh schemes of spoliation. 

Laws were sold at Albany to the highest bidder. "It was impossible, "Tweed testified after his downfall, "to do anything there withoutpaying for it; money had to be raised for the passing of bills. "[Footnote: Statement of William M. Tweed before Special InvestigatingCommittee of the New York Board of Aldermen. Documents of the Boardof Aldermen, 1877, Part II. Document No. 8:15-16. ] Decades beforethis, legislators had been so thoroughly taught by the landowners andbankers how to exchange their votes for cash that now, not only atAlbany and Washington, but everywhere in the United States, bothlegislative and administrative officials haggled in real astutebusiness style for the highest price that they could get. 

One noted lobbyist stated in 1868 that for a favorable report on acertain bill before the New York Senate, $5, 000 apiece was paid tofour members of the committee having it in charge. On the passage ofthe bill, a further $5, 000 apiece with contingent expenses was added. In another instance, where but a solitary vote was needed to put abill through, three Republicans put their figures up to $25, 000 each;one of them was bought. About thirty Republicans and Democrats in theNew York Legislature organized themselves into a clique (long styledthe "Black Horse Cavalry"), under the leadership of an energeticlobbyist, 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 privilegesit asked"--to quote from "The History of Tammany Hall"--"and howevermuch oppression it sought to impose upon the people in the line ofunjust grants, extortionate rates or monopoly, could convince theLegislature of the righteousness of its request upon 'producing' theproper sum. "

A LEGALIZED THEFT OF $44, 000, 000

One act after another was slipped through the Legislature byVanderbilt in 1868 and 1869. On May 20, 1869, Vanderbilt secured, byone bill alone, the right to consolidate railroads, a free grant offranchises, 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 wasthus doubled. Pretending that the railroads embraced in theconsolidation had a great surplus on hand, Vanderbilt, instead ofdistributing this alleged surplus, apportioned the watered stockamong the stockholders as a premium. The story of the surplus was, ofcourse, only a pretense. Each holder of a $100 share received acertificate for $180--that is to say, $80 in plunder for every $100share that he held. [Footnote: Report of Assembly Committee onRailroads, testimony of Alexander Robertson, an expert accountant, 1879, i:994-999. ] "Thus, " reported the "Hepburn Committee" (thepopular name for the New York State Assembly investigating committeeof 1879), "as calculated by this expert, $53, 507, 060 were wrongfullyadded to the capital stock of these roads. " Of this sum $44, 000, 000was issued in 1869; the remainder in previous years. "The only answermade by the roads was that the legislature authorized it, " thecommittee went on. "It is proper to remark that the people are quiteas much indebted to the venality of the men elected to represent themin the Legislature as to the rapacity of the railroad managers forthis state of affairs. " [Footnote: Ibid. , i:21. ]

Despite the fact that the report of the committee recorded that thetransaction was piracy, the euphemistic wording of the committee'sstatement was characteristic of the reverence shown to the rich andinfluential, and the sparing of their feelings by the avoidance ofharsh language. "Wrongfully added" would have been quickly changedinto such inconsiderate terms as theft and robbery had the case beeneven a trivial one of some ordinary citizen lacking wealth and power. The facts would have immediately been presented to the properofficials for criminal prosecution. 

But not a suggestion was forthcoming of haling Vanderbilt to thecriminal bar; had it been made, nothing except a farce would haveresulted, for the reason that the criminal machinery, whileextraordinarily active in hurrying petty lawbreakers to prison, was apart of the political mechanism financed by the big criminals andsubservient to them. 

"The $44, 000, 000, " says Simon Sterne, a noted lawyer who, as counselfor various commercial organizations, unravelled the whole matterbefore the "Hepburn Committee, " in 1879, "represented no more laborthan it took to print the script. " It was notorious, he adds, "thatthe cost of the consolidated railroads was less than $44, 000, 000, "[Footnote: "Life of Simon Sterne, " by John Foord, 1903:179-181. ] Inincreasing the stock to $86, 000, 000 Vanderbilt and his confederatestherefore stole the difference between the cost and the maximum ofthe stock issue. So great were the profits, both open and concealed, of the consolidated railroads that notwithstanding, as CharlesFrancis Adams computed, "$50, 000 of absolute water had been pouredout for each mile of road between New York and Buffalo, " the marketprice of the stock at once shot up in 1869 from $75 a share to $120and then to $200. 

And what was Vanderbilt's share of the $44, 000, 000? His inveteratepanegyrist, Croffut, in smoothly defending the transaction gives thisilluminating 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 hisshare of the profits, and he had $20, 000, 000 more in new stock. "[Footnote: "The Vanderbilts": 103. Croffut in a footnote tells thisanecdote: "When the Commodore's portrait first appeared on the bondsof 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. Itgives everybody confidence. ' The Commodore smiled grimly, the onlyrecognition he ever made of a compliment. ''Cause, ' explained thevisitor, 'when we see that fine, noble brow, it reminds us thatyou'll never let anybody else steal anything. '"]

By this coup Vanderbilt about doubled his previous wealth. Scarcelyhad the mercantile interests recovered from their utter bewildermentat being routed than Vanderbilt, flushed with triumph, swept morerailroads into his inventory of possessions. 

His process of acquisition was now working with almost automaticease. 

First, as we have narrated, he extorted millions of dollars inblackmail. With these millions he bought, or rather manipulated intohis control, one railroad after another, amid an onslaught of briberyand glaring violations of the laws. Each new million that he seizedwas an additional resource by which he could bribe and manipulate;progressively his power advanced; and it became ridiculously easierto get possession of more and more property. His very name became aterror to those of lesser capital, and the mere threat of pitting hisenormous wealth against competitors whom he sought to destroy wasgenerally a sufficient warrant for their surrender. After hisconsummation of the $44, 000, 000 theft in 1869 there was littlewithstanding 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, wasenough of itself, independent of Vanderbilt's other wealth, to forcethrough 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 barelydried, before he used part of the proceeds to buy a controllinginterest in the Lake Shore Railroad, a competing line. Then rapidly, by the same methods, he took hold of the Canada Southern and MichiganCentral. 

The commercial interests looked on dumfounded. Under their very eyesa process of centralization was going on, of which they but dimly, stupidly, grasped the purport. That competition which they had solong shouted for as the only sensible, true and moral system, andwhich they had sought to buttress by enacting law after law, wasbeing 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 theclass from which they had sprung. The different grades of thepropertied class, from the merchant with his fortune of $250, 000 tothe retail tradesman, felt very comfortable in being able to lookdown with a conscious superiority upon the working class from whomtheir money was wrung. Scoffing at equality, they delighted insetting themselves up as a class infinitely above the toilers of theshop and factory; let him who disputes this consult the phrases thatwent the rounds--phrases, some of which are still current--as, forinstance, the preaching that the moderately well-to-do class is thesolid, substantial element of any country. 

Now when this mercantile class saw itself being far overtopped andoutclassed in the only measurement to which it attached any value--that of property--by men with vast riches and power, it began to feelits relegation. Although its ideal was money, and although it set upthe acquisition of wealth as the all-stimulating incentive and goalof human effort, it viewed sullenly and enviously the development ofan established magnate class which could look haughtily anddictatorially down upon it even as it constantly looked down upon theworking class. The factory owner and the shopkeeper had for decadescommanded the passage of summary legislation by which they wereenabled to fleece the worker and render him incapable of resistance. To keep the worker in subjection and in their power they considered ajustifiable proceeding. But when they saw the railroad magnatesapplying those same methods to themselves, by first wiping outcompetition, and then by enforcing edicts regardless of theirinterests, they burst out in furious rage. 

VANDERBILT AND HIS CRITICS. 

They denounced Vanderbilt as a bandit whose methods were a menace tothe community. To the onlooker this campaign of virulent assault wasextremely suggestive. If there was any one line of business in whichfraud was not rampant, the many official reports and courtproceedings of the time do not show it. 

This widespread fraud was not occasional; it was persistent. In oneof the earlier chapters, the prevalence, more than a century ago, ofthe practise of fraudulent substitution of drugs and foods wasadverted to. In the middle of the nineteenth century it was far moreextensive. In submitting, on June 2, 1848, a mass of expert evidenceon the adulteration of drugs, to the House of Representatives, theHouse Select Committee on the Importation of Drugs pointed out:

For a long series of years this base traffic has been constantlyincreasing, until it has become frightfully enormous. It would bepresumed, from the immense quantities, and the great variety ofinferior drugs that pass our custom houses, and particularly thecustom-house at New York, in the course of a single year, that thiscountry had become the great mart and receptacle of all of the refusemerchandise of that description, not only from the Europeanwarehouses, but from the whole Eastern market. [Footnote: Reports ofCommittees, First Session, Thirtieth Congress, 1847-48, Vol. Iii, Report No. 664:3--The committee reported that opium was adulteratedwith licorice paste and bitter vegetable extract; calomel, with chalkand sulphate of barytes; quinine, with silicine, chalk and sulphateof barytes; castor, with dried blood, gum and ammonia; gumassafoetida with inferior gums, chalk and clay, etc. , etc. (pp. 10and 11). ]

In presenting a formidable array of expert testimony, and in giving alist of cases of persons having died from eating foods and drugsadulterated with poisonous substances, the House Committee onEpidemic Diseases, of the Forty-Sixth Congress, reported on February4 1881:

That they have investigated, as far as they could . . . The injuriousand poisonous compounds used in the preparation of food substances, and in the manufacture of wearing apparel and other articles, andfind from the evidence submitted to them that the adulteration ofarticles used in the every day diet of vast numbers of people hasgrown, and is now practised, to such an extent as to seriouslyendanger the public health, and to call loudly for some sort oflegislative correction. Drugs, liquors, articles of clothing, wallpaper and many other things are subjected to the same dangerousprocess. [Footnote: House Reports, Third Session, Forty-sixthCongress, 1880-81, Vol. I, Report No. 199: 1. The committee drafted abill for the prevention of these frauds; the capitalists concernedsmothered it. ]

The House Committee on Commerce, reporting the next year, on March 4, stated that "the evidence regarding the adulterations of foodindicates that they are largely of the nature of frauds upon theconsumer . . . 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, showthat the commercial frauds were continuous, and began long beforeCommodore Vanderbilt's time, and have prevailed up to the present. 

Everywhere was fraud; even the little storekeepers, with their smugpretensions to homely honesty, were profiting by some of the vilest, basest forms of fraud, such as robbing the poor by the light-weightand short-weight trick, [Footnote: These forms of cheating exist atpresent to a greater extent than ever before. It is estimated thatmanufacturers and shopkeepers cheat the people of the United Statesout of $200, 000, 000 a year by the light-weight and short-weightfrauds. In 1907 the New York State Sealer of Weights and Measuresasserted that, in that State alone, $20, 000, 000 was robbed from theconsumers annually by these methods. Recent investigations by theBureau of Standards of the United States Department of Commerce andLabor have shown that immense numbers of "crooked" scales are in use. It has been conclusively established by the investigations ofFederal, State and municipal inspectors of weights and measures thatthere is hardly an article put up in bottled or canned form that isnot short of the weight for which it is sold, nor is there scarcely aretail dealer who does not swindle his customers by the light-weightfraud. There are manufacturers who make a specific business ofturning out fraudulent scales, and who freely advertise the cheatingmerits of these scales. ] or (far worse) by selling skim milk, orpoisonous drugs or adulterated food or shoddy material. Thesepractises were so prevalent, that the exceptions were raritiesindeed. 

If any administration had dared seriously to stop these forms oftheft the trading classes would have resisted and struck back inpolitical action. Yet these were the men--these traders--whovociferously come forth with their homiletic trades againstVanderbilt's criminal transactions, demanding that the power of himand his kind be curbed. 

It was not at all singular that they put their protests on moralgrounds. In a form of society where each man is compelled to fightevery 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 comprehensibleprocess, into moralities. That which is profitable is perverted intoa moral code; the laws passed, the customs introduced and persistedin, and the weight of the dominant classes all conspire to put thestamp of morality on practices arising from the lowest and mostsordid aims. Thus did the trading class make a moral profession ofits methods of exploitation; it congratulated and sanctified itselfon its purity of life and its saving stability. 

From this class--a class interpenetrated in every direction withcommercial frauds--was largely empanelled the men who sat on thosegrand juries and petit juries solemnly passing verdict on the poorwretches of criminals whom environment or poverty had driven intocrime. They were the arbiters of justice, but it was a justice thatwas never allowed to act against themselves. Examine all the penalcodes of the period; note the laws proscribing long sentences inprison for thefts of property; the larceny of even a suit of clotheswas severely punishable, and begging for alms was a misdemeanor. Thencontrast these asperities of law with the entire absence of adequateprotection for the buyer of merchandise. Following the old dictum ofRoman jurisprudence, "Let the buyer beware, " the factory owner couldat will oppress his workers, and compel them, for the scantiestwages, to make for his profit goods unfit for consumption. Thesearticles the retailer sold without scruple over his counter; when thebuyer was cheated or overcharged, as happened with great frequency, he had practically no redress in law. If the merchant were robbed ofeven ever so little he could retaliate by sending the guilty one toprison. But the merchant himself could invidiously and continuouslyrob the customer without fear of any law. All of this was convertedinto a code of moralities; and any bold spirit who exposed its cantand sham was denounced as an agitator and as an enemy of law andorder. [Footnote: A few progressive jurists in the InternationalPrison Congress are attempting to secure the recognition in law ofthe principle that society, as a supreme necessity, is obligated toprotect its members from being made the victims of the cunning andunscrupulous. They have received no encouragement, and will receivenone, from a trading class profiting from the very methods which itis 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 qualitydiscarded petty larceny and ascended into a sphere of superlativegrand larceny. They knew with a cynical perception that society, withall its pompous pretensions to morality, had evolved a rule whichworked with almost mathematical certainty. This rule was theparadoxical, but nevertheless true, one that the greater the theftthe less corresponding danger there was of punishment. 

THE WISDOM OF GRAND LARCENY. 

Now it was that one could see with greater clearness than everbefore, how the mercenary ideal of the ruling class was working outto its inevitable conclusion. Society had made money its god andproperty its yardstick; even in its administration of justice, theoretically supposed to be equal, it had made "justice" anexpensive luxury available, in actual practice, to the rich only. Thedefrauder of large sums could, if prosecuted, use a part of thatplunder, easily engage a corps of shrewd, experienced lawyers, getevidence manufactured, fight out the case on technicalities, drag italong for years, call in political and social influence, and almostinvariably escape in the end. 

But beyond this power of money to make a mockery of justice was astill greater, though more subtle, factor, which was ever aninvaluable aid to the great thief. Every section of the trading classwas permeated with a profound admiration, often tangibly expressed, for the craft that got away with an impressive pile of loot. Thecontempt felt for the pickpocket was the antithesis of the generalmercantile admiring view of the man who stole in grand style, especially when he was one of their own class. In speaking of thepiratical operations of this or that magnate, it was common to hearmany business men interject, even while denouncing him, "Well, I wishI were as smart as he. " These same men, when serving on juries, wereharsh in their verdicts on poor criminals, and unctuously flatteredthemselves with being, and were represented as, the upholders andconservers of law and moral conduct. 

 Departing from the main facts as this philosophical digression mayseem, it is essential for a number of reasons. One of these is thecontinual necessity for keeping in mind a clear, balancedperspective. Another lies in the need of presenting aright theconditions in which Vanderbilt and magnates of his type wereproduced. Their methods at basis were not a growth independent ofthose of the business world and isolated from them. They were simplya development, and not merely one of standards as applied to morals, but of the mechanism of the social and industrial organizationitself. Finally it is advisable to give flashlight glimpses into themodes and views of the time, inasmuch as it was in Vanderbilt's daythat the great struggle between the old principle of competition, asupheld by the small capitalists, and the superseding one ofconsolidation, as incarnated in him and others, took on vigorousheadway. 

HE CONTINUES THE BUYING OF LAWS

Protest as it did against Vanderbilt's merging of railroads, themiddle class found itself quite helpless. In rapid succession he putthrough one combination after another, and caused theft after theftto be legalized, utterly disdainful of criticism or opposition. InState after State he bought the repeal of old laws, or the passage ofnew laws, until he was vested with authority to connect variousrailroads that he had secured between Buffalo and Chicago, into oneline with nearly 1, 300 miles of road. The commercial classes werescared at the sight of such a great stretch of railroad--thenconsidered an immense line--in the hands of one man, audacious, all-conquering, with power to enforce tribute at will. Again, Vanderbiltpatronized the printing presses, and many more millions of stock, allfictitious capital, were added to the already flooded capital of theLake Shore and Michigan Southern Railroad Company. Of the total of$62, 000, 000 of capital stock in 1871, fully one-half was based uponnothing but the certainty of making it valuable as a dividend payerby the exaction of high freight and passenger rates. A little later, the amount was run up to $73, 000, 000, and this was increasedsubsequently. 

Vanderbilt now had a complete railroad system from New York toChicago, with extensive offshoots. It is at this point that we haveto deal with a singular commendation of his methods thrust forwardglibly from that day to this. True, his eulogists admitted then, asthey admit now, Vanderbilt was not overscrupulous in getting propertythat he wanted. But consider, they urge, the improvements he broughtabout on the railroads that came into his possession; the renovationof the roadbed, the institution of new locomotives and cars, thetearing down of the old, worn-out stations. This has been the praiseshowered upon him and his methods. 

Inquiry, however, reveals that this appealing picture, like allothers of its sort, has been ingeniously distorted. The fact was, inthe first place, that these improvements were not made out of regardto public convenience, but for two radically different reasons. Thefirst consideration was that if the dividends were to be paid on thehuge amount of fabricated stock, the road, of necessity, had to beput into a condition of fair efficiency to meet or surpass thecompeting facilities of other railroads running to Chicago. Second, the number of damage claims for accident or loss of life arisinglargely from improper appliances and insufficient safeguards, was sogreat that it was held cheaper in the long run to spend millions forimprovements. 

PUBLIC FUNDS FOR PRIVATE USE

Instead of paying for these improvements with even a few millions ofthe proceeds of the watered stock, Vanderbilt (and all other railroadmagnates in like cases did the same) forced the public treasury todefray a large part of the cost. A good illustration of his methodswas his improvement of his passenger terminus in New York City. Theentrance of the New York Central and the Harlem Railroads is by wayof Park (formerly Fourth) avenue. This franchise, as we have seen, was obtained by bribery in 1832. But it was a qualified franchise. Itreserved certain nominal restrictions in behalf of the people byinserting the right of the city to order the removal of the tracks atany time that they became an obstruction. These terms wereobjectionable to Vanderbilt; a perpetual franchise could becapitalized for far more than a limited or qualified one. A perpetualfranchise was what he wanted. 

The opportunity came in 1872. From the building of the railroad, thetracks had been on the surface of Fourth avenue. Dozens of dangerouscrossings had resulted in much injury to life and many deaths. Thepublic demand that the tracks be depressed below the level of thestreet had been resisted. 

Instead of longer ignoring this demand, Vanderbilt now planned tomake use of it; he saw how he could utilize it not only to foist agreat part of the expense upon the city, but to get a perpetualfranchise. Thus, upon the strength of the popular cry for reform, hewould extort advantages calculated to save him millions and at thesame time extend his privileges. It was but another illustration ofthe 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 forwhich the people have contended, the ruling classes have ever deftlyturned about when they could no longer withstand the popular demands, and have made those very reforms the basis for more spoliation andfor a further intrenchment of their power. [Footnote: CommodoreVanderbilt's descendants, the present Vanderbilts, have been usingthe public outcry for a reform of conditions on the West Side of NewYork City, precisely as the original Vanderbilt utilized that for theimprovement of Fourth avenue. The Hudson River division of the NewYork Central and Hudson River Railroad has hitherto extended downtownon the surface of Tenth and Eleventh Avenues and other thoroughfares. Large numbers of people have been killed and injured. For decadesthere has been a public demand that these dangerous conditions beremedied or removed. The Vanderbilts have as long resisted thedemand; the immense numbers of casualties had no effect upon them. When the public demand became too strong to be ignored longer, theyset about to exploit it in order to get a comprehensive franchisewith 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 Vanderbiltto make the desired improvements, and committing the city to bearone-half the expense and giving him a perpetual franchise. This wasin Tweed's time when the Common Council was composed largely of themost corrupt ward heelers, and when Tweed's puppet, Hall, was Mayor. Public opposition to this grab was so great as to frighten thepoliticians; at any rate, whatever his reasons, Mayor Hall vetoed theordinance. 

Thereupon, in 1872, Vanderbilt went to the Legislature--thatLegislature whose members he had so often bought like so many cattle. This particular Legislature, however, was elected in 1871, followingthe revelations of the Tweed "ring" frauds. It was regarded as a"model reform body. " As has already been remarked in this work, thepseudo "reform" officials or bodies elected by the American people inthe vain hope of overthrowing corruption, will often go to greaterlengths in the disposition of the people's rights and interests thanthe most hardened politicians, because they are not suspected ofbeing corrupt, and their measures have the appearance of beingenacted for the public good. The Tweed clique had been broken up, butthe capitalists who had assiduously bribed its members and profitedso hugely from its political acts, were untouched and in greaterpower than ever before. The source of all this corruption had notbeen struck at in the slightest. Tweed, the politician, wassacrificed and went to prison and died there; the capitalists who hadcorrupted representative bodies everywhere in the United States, before and during his time, were safe and respected, and in aposition to continue their work of corruption. Tweed made theclassic, unforgivable blunder of going into politics as a business, instead of into commercialism. The very capitalists who had profitedso greatly by his corruption, were the first to express horror at hisacts. 

From the "reform" Legislature of 1982 Vanderbilt secured all that hesought. The act was so dexterously worded that while not nominallygiving a perpetual franchise, it practically revoked the qualifiedparts of the charter of 1832. It also compassionately relieved him ofthe necessity of having to pay out about $4, 000, 000, in replacing thedangerous roadway, by imposing that cost upon New York City. Oncethese improvements were made, Vanderbilt bonded them as though theyhad been made with private money. 

"REFORM" AS IT WORKS OUT. 

But these were not his only gifts from the "reform" Legislature. TheHarlem Railroad owned, as we have seen, the Fourth avenue surfaceline of horse cars. Although until this time it extended to Seventy-ninth street only, this line was then the second most profitable inNew York City. In 1864, for instance, it carried nearly six millionpassengers, and its gross earnings were $735, 000. It did not pay, norwas required to pay, a single cent in taxation. By 1872 the city'spopulation had grown to 950, 000. Vanderbilt concluded that the timewas fruitful to gather in a few more miles of the public streets. 

The Legislature was acquiescent. Chapter 325 of the Laws of 1872allowed him to extend the line from Seventy-ninth street to as farnorth as Madison avenue should thereafter be opened. "But see, " saidthe Legislature in effect, "how mindful of the public interests wehave been. We have imposed a tax of five per cent, on all grossreceipts above Seventy-ninth street. " When, however, the time came tocollect, Vanderbilt innocently pretended that he had no means ofknowing whether the fares were taken in on that section of the line, free of taxation, below Seventy-ninth street, or on the taxed portionabove it. Behind that fraudulent subterfuge the city officials havenever been inclined to go, nor have they made any effort. As aconsequence the only revenue that the city has since received fromthat line has been a meager few thousand dollars a year. 

At the very time that he was watering stock, sliding throughlegislatures corrupt grants of perpetual franchises, and swindlingcities and States out of huge sums in taxes, [Footnote: Not alone he. In a tabulated report made public on February 1, 1872, the New YorkCouncil of Political Reform charged that in the single item ofsurface railways, New York City for a long period had been swindledannually out of at least a million dollars. This was anunderestimate. All other sections of the capitalist class swindledlikewise in taxes. ] Vanderbilt was forcing the drivers and conductorson the Fourth avenue surface line to work an average of fifteen hoursout 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 ofthe economizing process was thrown upon the already overloadedworkers. This subtraction of twenty-five cents a day entailed uponthe drivers and conductors and their families many severedeprivations; working for such low wages every cent obviously countedin the management of household affairs. But the methods of thecapitalist class in deliberately pyramiding its profits upon thesufferings of the working class were evidenced in this case (as theyhad been, and since have been, in countless other instances) by theannouncement in the Wall Street reports that this reduction in wageswas followed by an instant rise in the price of the stock of theFourth avenue surface line. The lower the wages, the greater thedividends. 

The further history of the Fourth avenue surface line cannot here bepursued in detail. Suffice to say that the Vanderbilts, in 1894, leased this line for 999 years to the Metropolitan Street RailwayCompany, controlled by those eminent financiers, William C. Whitneyand others, whose monumental briberies, thefts and piracies havefrequently been uncovered in official investigations. For almost athousand years, unless a radical change of conditions comes, theVanderbilts will draw a princely revenue from the ownership of thisfranchise alone. 

It is not necessary to enter into a narrative of all the laws thatVanderbilt bribed Legislature after Legislature, and Common Councilafter Common Council, into passing--laws giving him for nothingimmensely valuable grants of land, shore rights and rights to landunder water, more authorizations to make further consolidations andto issue more watered stock. Nor is it necessary to deal with thenumerous bills he considered adverse to his interests, that he causedto be smothered in legislative committees by bribery. 

VANDERBILT'S CHIEF OF STAFF

His chief instrument during all those years was a general utilitylawyer, Chauncey M. Depew, whose specialty was to hoodwink the publicby grandiloquent exhibitions of mellifluent spread-eagle oratory, while bringing the "proper arguments" to bear upon legislators andother public officials. [Footnote: Roscoe Conkling, a notedRepublican politician, said of him: "Chauncey Depew? Oh, you mean theman that Vanderbilt sends to Albany every winter to say 'haw' and'gee' to his cattle up there. "] Every one who could in any way beused, or whose influence required subsidizing, was, in the phrase ofthe day, "taken care of. " Great sums of money were distributedoutright in bribes in the legislatures by lobbyists in Vanderbilt'spay. Supplementing this, an even more insidious system of bribery wascarried on. Free passes for railroad travel were lavishlydistributed; no politician was ever refused; newspaper and magazineeditors, writers and reporters were always supplied with freetransportation for the asking, thus insuring to a great measure theirgood will, and putting them under obligations not to criticise orexpose plundering schemes or individuals. All railroad companies usedthis form, as well as other forms, of bribery. 

It was mainly by means of the free pass system that Depew, acting forthe Vanderbilts, secured not only a general immunity from newspapercriticism, but continued to have himself and them portrayed inluridly favorable lights. Depending upon the newspapers for itssources of information, the public was constantly deceived andblinded, either by the suppression of certain news, or by its beingtampered with and grossly colored. This Depew continued as thewriggling tool of the Vanderbilt family for nearly half a century. Astonishing as it may seem, he managed to pass among the uninformedas a notable man; he was continuously eulogized; at one time he wasboomed for the nomination for President of the United States, and in1905 when the Vanderbilt family decided to have a directrepresentative in the United States Senate, they ordered the New YorkState Legislature, which they practically owned, to elect him to thatbody. It was while he was a United States Senator that theinvestigations, in 1905, of a committee of the New York Legislatureinto the affairs of certain life insurance companies revealed thatDepew had long since been an advisory party to the gigantic swindlesand briberies carried on by Hyde, the founder and head of theEquitable Life Assurance Society. 

The career of Depew is of no interest to posterity, excepting in sofar as it shows anew how the magnates were able to use intermediariesto do their underground work for them, and to put thoseintermediaries into the highest official positions in the country. This fact alone was responsible for their elevation to such bodies asthe United States Senate, the President's Cabinet and the courts. Their long service as lobbyists or as retainers was the surestpassport to high political or judicial position; their express dutywas 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 hadput their cunning or brains at the complete disposal of the magnates, filled Congress and the courts. These were, to a large extent, theofficials by whose votes or decisions all measures of value to theworking class were defeated; and reversely, by whose actions all ornearly all bills demanded by the money interests, were passed andsustained. 

Here we are again forced to notice the truism thrusting itselfforward so often and conspicuously; that law was essentially made bythe great criminals of society, and that, thus far it has been afrightful instrument, based upon force, for legalizing theft on alarge scale. By law the great criminals absolve themselves and at thesame time declare drastic punishment for the petty criminals. Theproperty obtained by theft is converted into a sacred vestedinstitution; the men who commit the theft or their hirelings sit inhigh places, and pass laws surrounding the proceeds of that theftwith impregnable fortifications of statutes; should any poor devil, goaded on by the exasperations of poverty, venture to help himself toeven the tiniest part of that property, the severest penalty, enactedby those same plunderers, is mercilessly visited upon him. 

After having bribed legislatures to legalize his enormous issue ofwatered stock, what was Vanderbilt's next move? The usual fraudulentone of securing exemption from taxation. He and other railroad ownerssneaked through law after law by which many of their issues of stockwere made non-taxable. 

So now old shaggy Vanderbilt loomed up the richest magnate in theUnited States. His ambition was consummated; what mattered it to himthat his fortune was begot in blackmail and extortion, bribery andtheft? Now that he had his hundred millions he had the means todemand adulation and the semblance of respect, if not respect itself. The commercial world admired, even while it opposed, him; in hismethods it saw at bottom the abler application and extension of itsown, and while it felt aggrieved at its own declining importance andpower, it rendered homage in the awed, reverential manner in which itviewed his huge fortune. 

Over and over again, even to the point of wearisome repetition, mustit be shown, both for the sake of true historical understanding andin justice to the founders of the great fortunes, that all mercantilesociety was permeated with fraud and subsisted by fraud. But theprevalence of this fraud did not argue its practitioners to beinherently evil. They were victims of a system inexorably certain toarouse despicable qualities. The memorable difference between the twoclasses was that the workers, as the sufferers, were keenly alive tothe abominations of the system, while the capitalists not onlyinsisted upon the right to benefit from its continuance, but harshlysought to repress every attempt of the workers to agitate for itsmodification or overthrow. 

REPRESSION BY STARVATION. 

These repressive tactics took on a variety of forms, some of whichare not ordinarily included in the definitions of repression. 

The usual method was that of subsidizing press and pulpit in certainsubtle ways. By these means facts were concealed or distorted, aprejudicial state of public opinion created, and plausible groundsgiven for hostile interference by the State. But a far more powerfulengine of repression was the coercion exercised by employers inforcing their workers to remain submissive on instant peril of losingtheir jobs. While, at that time, manufacturers, jobbers andshopkeepers throughout the country were rising in angry protestagainst the accumulation of plundering power in the hands of such menas Vanderbilt, Gould and Huntington, they were themselves exploitingand bribing on a widespread scale. Their great pose was that of athorough commercial respectability; it was in this garb that theypiously went to legislatures and demanded investigations into therascally methods of the railroad magnates. The facts, said they, should be made public, so as to base on them appropriate legislationwhich would curtail the power of such autocrats. Contrasted with thebaseness and hypocrisy of the trading class, Vanderbilt's qualitiesof brutal candor and selfishness shine out as brilliant virtues. [Footnote: No observation could be truer. As a class, themanufacturers were flourishing on stolen inventions. There might beexceptions, but they were very rare. Year after year, decade afterdecade, the reports of the various Commissioners of Patents pointedout the indiscriminate theft of inventions by the capitalists. Inprevious chapters we have referred to the plundering of Whitney andGoodyear. But they were only two of a vast number of inventorssimilarly defrauded. 

In speaking of the helplessness of inventors, J. Holt, Commissionerof Patents, wrote in his Annual Report for 1857: "The insolence andunscrupulousness of capital, subsidizing and leading on its minionsin the work of pirating some valuable invention held by powerlesshands, can scarcely by conceived by those not familiar with therecords of such cases as I have referred to. Inventors, howevergifted in other respects, are known to be confiding and thriftless;and being generally without wealth, and always without knowledge ofthe chicaneries of law, they too often prove but children in thoserude conflicts which they are called on to endure with the stalwartfraud and cunning of the world. " (U. S. Senate Documents, FirstSession, Thirty-fifth Congress, 1857-58, viii: 9-10). In his AnnualReport for 1858, Commissioner Holt described how inventors were atthe mercy of professional perjurers whom the capitalists hired togive evidence. 

The bribing of Patent office officials was a common occurrence. "Theattention of Congress, " reported Commissioner of Patents CharlesMason in 1854, "is invited to the importance of providing someadequate means of preventing attempts to obtain patents by impropermeans. " Several cases of "attempted bribery" had occurred within theyear, stated Commissioner Mason. (Executive Documents, First Session, Thirty-third Congress, 1853-54, Vol. Vii, Part I: 19-20. ) Everysuccessive Commissioner of Patents called upon Congress to pass lawsfor the prevention of fraud, and for the better protection of theinventor, but Congress, influenced by the manufacturers, was deaf tothese appeals. ]

These same manufacturers objected in the most indignant manner, asthey similarly do now, to any legislative investigations of their ownmethods. Eager to have the practices of Vanderbilt and Gould probedinto, they were acrimoniously opposed to even criticism of theirfactory system. For this extreme sensitiveness there was the amplestreason. The cruelties of the factory system transcended belief. In, for instance, the State of Massachusetts, vaunting itself for itsprogressiveness, enlightenment and culture, the textile factorieswere a horror beyond description. The Convention of the Boston EightHour League, in 1872, did not overstate when it declared of thefactory system that "it employs tens of thousands of women andchildren eleven and twelve hours a day; owns or controls in its ownselfish interest the pulpit and the press; prevents the operativeclasses from making themselves felt in behalf of less hours, throughremorseless exercise of the power of discharge; and is rearing apopulation of children and youth of sickly appearance and scanty orutterly neglected schooling. ". . . 

As the factory system was in Massachusetts, so it was elsewhere. Anyemployee venturing to agitate for better conditions was instantlydischarged; spies were at all times busy among the workers; and if alabor union were formed, the factory owners would obtain sneakemissaries into it, with orders to report on every move and disruptthe union if possible. The factory capitalists in Massachusetts, NewYork, Illinois and every other manufacturing State were determined tokeep up their system unchanged, because it was profitable to workchildren eleven and a half hours a day in a temperature that insummer often reached 108 degrees and in an atmosphere certain tobreed immorality; [Footnote: "Certain to breed immorality. " Seereport of Carrol D. Wright, Massachusetts Bureau of Statistics ofLabor, 1881. A cotton mill operative testified: "Young girls fromfourteen and upward learn more wickedness in one year than they wouldin five out of a mill. " See also the numerous recent reports of theNational Child Labor Committee. ] it was profitable to compel adultmen and women having families to work for an average of ninety centsa day; it was profitable to avoid spending money in equipping theirfactories with life-saving apparatus. Hence these factory owners, forming the aristocracy of trade, savagely fought every move or lawthat might expose or alter those conditions; the annals oflegislative proceedings are full of evidences of bribery. 

Having no illusions, and being a severely practical man, Vanderbiltwell knew the pretensions of this trading class; with many a cynicalremark, aptly epitomizing the point, he often made sport of theirassumptions. He knew (and none knew better) that they had dived deepin bribery and fraud; they were the fine gentlemen, he well recalled, who had generally obtained patents by fraud; who had so often bribedmembers of Congress to vote for a high tariff; the same, too, who hadbribed legislatures for charters, water rights, exemptions fromtaxation, the right to work employees as long as, and under whateverconditions, they wanted to. This manufacturing aristocracy professedto look down upon Vanderbilt socially as a coarse sharper; and in NewYork a certain ruling social element, the native aristocracy, composed of old families whose wealth, originating in fraud, hadbecome respectable by age, took no pains to conceal their opinion ofhim as a parvenu, and drew about their sacred persons an amusingcircle of exclusiveness into the rare precincts of which he might notenter. 

Vanderbilt now proceeded to buy social and religious grace as he hadbought laws. The purchase of absolution has ever been a convenientand cheap method of obtaining society's condonation of theft. Inmedieval centuries it took a religious form; it has become transposedto a social traffic in these superior days. Let a man steal incolossal ways and then surrender a small part of it in charitable, religious and educational donations; he at once ceases being a thiefand straightway becomes a noble benefactor. Vanderbilt now shed hislife-long irreverence, and gave to Deems, a minister of thePresbyterian Church, as a gift, the Church of the Strangers on Mercerstreet, and he donated $1, 000, 000 for the founding of the VanderbiltUniversity at Nashville, Tenn. The press, the church and theeducational world thereupon upon hailed him as a marvel of saintlycharity and liberality. 

THE SERMONIZING OF THE "BEST CLASSES. "

One section of the social organization declined to accept the viewsof the class above it. This was the working class. Superimposed uponthe working class, draining the life blood of the workers to providethem with wealth, luxuries and power, were those upper strata ofsociety known as the "best classes. " These "best classes, " with amonstrous presumption, airily proclaimed their superiority andincessantly harped upon the need of elevating and regenerating themasses. 

And who, it may be curiously asked, were the classes self destined orself selected to do this regenerating? The commercial and financialelement, with its peculiar morals so adjusted to its interests, thatit saw nothing wrong in the conditions by which it reaped its wealth--conditions that made slaves of the workers, threw them intodegradation and poverty, drove multitudes of girls and women intoprostitution, and made the industrial field an immense concourse oftears, agony and carnage. Hanging on to this supreme class of wealth, fawning to it, licking its very feet, were the parasites andadvocates of the press, law, politics, the pulpit, and, with a fewexceptions, of the professional occupations. These were theinstructors who were to teach the working class what morals were;these were the eminences under whose guidance the working class wasto be uplifted!

 Let us turn from this sickening picture of sordid arrogance andignorance so historically true of all aristocracies based upon money, from the remotest time to this present day, and contemplate how theorganized part of the working class regarded the morals of its"superiors. "

While the commercial class, on the one hand, was determined onbeating down the working class at every point, it was, on the other, unceasingly warring among itself. In business dealings there was nosuch recognized thing as friendship. To get the better of the otherwas held the quintessence of mercantile shrewdness. A flint-hard, brute spirit enveloped all business transactions. The business manwho lost his fortune was generally looked upon without emotion orpity, and condemned as an incapable. For self interest, business menbegan to combine in corporations, but these were based purely uponmercenary aims. Not a microscopic trace was visible of that spirit offellow kindness, sympathy, collective concern and brotherhood alreadyfar developed among the organized part of the working class. 

As the supereminent magnate of his day, Vanderbilt was invested withextraordinary publicity; he was extensively interviewed and quoted;his wars upon rival capitalists were matters of engrossing publicconcern; his slightest illness was breathlessly followed bycommercialdom dom and its outcome awaited. Hosts of men, women andchildren perished every year of disease contracted in factories, mines and slums; but Vanderbilt's least ailment was given atranscending importance, while the scourging sweep of death among thelowly and helpless was utterly ignored. 

 Precisely as mercantile society bestowed no attention upon thecrushed and slain, except to advance roughshod over their strickenbodies while throwing out a pittance in charity here and there, soVanderbilt embodied in himself the qualities that capitalist societyin 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 alazy or drunken person, trying to live by plundering the sober andindustrious. " This malign distrust of fellow beings, this acridcynicism of motives, this extraordinary imputation of evil designs onthe part of the penniless, was characteristic of the capitalist classas a whole. Itself practicing the lowest and most ignoble methods, governed by the basest motives, plundering in every direction, itviewed 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 masseswhich its own system had created, whether in America or elsewhere. 

The apologist may hasten forward with the explanation that thecommercial class was not to be judged by Vanderbilt's methods andqualities. In truth, however, Vanderbilt was not more inhuman thanmany 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 fromcotton factories. At the time Vanderbilt was blackmailing, thefounder of this fortune, Colonel Borden, was running cotton mills inFall River. His factory operatives worked from five o'clock in themorning to seven in the evening, with but two half hours ofintermission, one for breakfast, the other for dinner. The workday ofthese men, women and children was thus thirteen hours; their wageswere wretchedly low, their life was one of actual slavery. Insufficient nourishment, overwork, and the unsanitary and disgustingconditions in the mills, prematurely aged and debilitated them, andwere a constant source of disease, killing off considerable numbers, especially the children. 

In 1850, the operatives asked Borden for better wages and shorterhours. This was his reply: "I saw that mill built stone by stone; Isaw the pickers, the carding engines, the spinning mules and thelooms put into it, one after the other, and I would see every machineand stone crumble and fall to the floor again before I would accedeto your wishes. " Borden would not have been amiss had he added thatevery stone in that mill was cemented with human blood. Hisoperatives went on a strike, stayed out ten months, sufferedfrightful hardships, and then were forced back to their tasks byhunger. Borden was inflexible, and so were all the other cotton millowners. [Footnote: The heroism of the cotton operatives wasextraordinary. Slaves themselves, they battled to exterminate negroslavery. "The spinner's union, " says McNeill, "was almost dead duringthe [Civil] war, as most of its members had gone to shoulder themusket and to fight. . . To strike the shackles from the negro. A largenumber were slain in battle. "-"The Labor Movement": 216-217. ] It wasnot until 1874, after many further bitterly-contested strikes, thatthe Masachusetts Legislature was prevailed upon to pass a ten-hourlaw, twenty-four years after the British Parliament had passed suchan enactment. 

The commercial class, high and low, was impregnated with deceit anddissimulation, cynicism, selfishness and cruelty. What were theaspirations of the working class which it was to uplift? The contraststood out with stark distinctness. While business men werefrantically sapping the labor and life out of their workers, and thentricking and cheating one another to seize the proceeds of thatexploitation, the labor unions were teaching the nobility ofbrotherly cooperation. "Cultivate friendship among the greatbrotherhood of toil, " was the advice of Uriah Stevens, master workmanof the Knights of Labor, at the annual meeting of that organizationon 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 hehas too little time, and his faculties become too much blunted byunremitting labor to analyze his condition or devise and perfectfinancial schemes or reformatory measures. The hours of labor are toolong, and should be shortened. I recommend a universal movement tocease work at five o'clock Saturday afternoon, as a beginning. Thereshould be a greater participation in the profits of labor by theindustrious and intelligent laborer. In the present arrangements oflabor and capital, the condition of the employee is simply that ofwage slavery--capital dictating, labor submitting; capital superior, labor inferior. 

This is an artificial and man-created condition, not God'sarrangement and order; for it degrades man and ennobles mere pelf. Itdemeans those who live by useful labor, and, in proportion, exaltsall those who eschew labor and live (no matter by what pretence orrespectable cheat--for cheat it is) without productive work. 

LABOR'S PRINCIPLES IGNORED. 

Such principles as these evoked so little attention that it isimpossible to find them recorded in most of the newspapers of thetime; and if mentioned it was merely as the object of venomousattacks. In varying degrees, now in outright abuse and again insneering and ridicule, the working class was held up as an ignorant, discontented, violent aggregation, led by dangerous agitators, andarrogantly seeking to upset all business by seeking to dictate toemployers what wages and hours of labor should be. 

And, after all, little it mattered to the capitalists what theworkers thought or said, so long as the machinery of government wasnot in their hands. At about the very time Master Workman Stevens wasvoicing the unrest of the laboring masses, and at the identical timewhen the panic of 1873 saw several millions of men workless, thrownupon soup kitchens and other forms of charity, and battered wantonlyby policemen's clubs when they attempted to hold mass meetings ofprotest, an Iowa writer, D. C. Cloud, was issuing a work which showedconcretely how thoroughly Government was owned by the commercial andfinancial classes. This work, obscurely published and now scarcelyknown except to the patient delver, is nevertheless one of the fewserious books on prevailing conditions written at that time, and isin marked contrast to the reams of printed nonsense then circulated. Although Cloud was tinged greatly with the middle class point ofview, and did not see that all successful business was based upondeceit and fraud, yet so far as his lights carried him, he wrotetrenchantly and fearlessly, embodying series after series of factsexposing the existing system. He observed:

. . . A measure without any merit save to advance the interest of apatentee, or contractor, or railroad company, will become a law, while measures of interest to the whole people are suffered toslumber, and die at the close of the session from sheer neglect. Itis known to Congressmen that these lobbyists are paid to influencelegislation by the parties interested, and that dishonest and corruptmeans are resorted to for the accomplishment of the object they haveundertaken . . . Not one interest in the country nor all otherinterests combined are as powerful as the railroad interest . . . Witha network of roads throughout the country; with a large capital atcommand; with an organization perfect in all its parts, controlled bya few leading spirits like Scott, Vanderbilt, Jay Gould, Tracy and adozen others, the whole strength and wealth of this corporate powercan be put into operation at any moment, and Congressmen are boughtand 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 tohis old habits of intense parsimony. Occasionally he mightostentatiously give a large sum here or there for some religious orphilanthropic purpose, but his general undeviating course was aconsistent meanness. In him was united the petty bargaining traits ofthe trading element and the lavish capacities for plundering of themagnate class. While defrauding on a great scale, pocketing tens ofmillions of dollars at a single raid, he would never for a momentoverlook the leakage of a few cents or dollars. His comprehensiveplans for self-aggrandizement were carried out in true piraticalstyle; his aims and demands were for no paltry prize, but for thelargest and richest booty. Yet so ingrained by long development washis faculty of acquisition, that it far passed the line of a passionand became a monomania. 

VANDERBILT'S CHARACTERISTICS. 

To such an extent did it corrode him that even when he could boasthis $100, 000, 000 he still persisted in haggling and huckstering overevery dollar, and in tricking his friends in the smallest and mostunderhand ways. Friends in the true sense of the word he had none;those who regarded themselves as such were of that thrifty, congealeddisposition swayed largely by calculation. But if they expected togain overmuch by their intimacy, they were generally vastly mistaken;nearly always, on the contrary, they found themselves caught in someunexpected snare, and riper in experience, but poorer in pocket, theywere glad to retire prudently to a safe distance from the old man'scontact. "Friends or foes, " wrote an admirer immediately after hisdeath, "were pretty much on the same level in his estimation, and ifa friend undertook to get in his way he was obliged to look out forhimself. "

On one occasion, it is related, when a candidate for a politicaloffice solicited a contribution, Vanderbilt gave $100 for himself, and an equal sum for a friend associated with him in the managementof the New York Central Railroad. A few days later Vanderbiltinformed this friend of the transaction, and made a demand for thehundred dollars. The money was paid over. Not long after this, thefriend in question was likewise approached for a politicalcontribution, whereupon he handed out $100 for himself and the sameamount for Vanderbilt. On being told of his debt, Vanderbilt declinedto pay it, closing the matter abruptly with this laconicpronunciamento, "When I give anything, I give it myself. " At anothertime Vanderbilt assured a friend that he would "carry" one thousandshares of New York Central stock for him. The market price rose to$115 a share and then dropped to $90. A little later, before settingout to bribe an important bill through the Legislature--a bill thatVanderbilt knew would greatly increase the value of the stock--theold magnate went to the friend and represented that since the priceof the stock had fallen it would not be right to subject the friendto 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 uptremendously, to the utter dismay of the confiding friend who saw aprofit of $80, 000 thus slip out of his hands into Vanderbilt's. [Footnote: These and similar anecdotes are to be found incidentallymentioned in a two-page biography, very laudatory on the whole, inthe New York "Times, " issue of January 5, 1877. ]

In his personal expenses Vanderbilt usually begrudged what he lookedupon as superfluous expense. The plainest of black clothes he wore, and he never countenanced jewelry. He scanned the table bill with ahypercritical eye. Even the sheer necessities of his physicalcondition could not induce him to pay out money for costlyprescriptions. A few days before his death his physician recommendedchampagne for some internal trouble. "Champagne!" exclaimedVanderbilt with a reproachful look, "I can't afford champagne. Abottle every morning! Oh, I guess sody water'll do!"

From all accounts it would seem that he diffused about him the sameforbidding environment in his own house. He is described as stern, obstinate, masterful and miserly, domineering his household like atyrant, roaring with fiery anger whenever he was opposed, and flyinginto fits of fury if his moods, designs and will were contested. Hiswife bore him thirteen children, twelve of whom she had brought up tomaturity. 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 thesway of his dominant will, and in the presence of his trying moods. "He goes on: "The fact that she lived harmoniously with such anobstinate man bears strong testimony to her character. " [Footnote:"The Vanderbilts": 113. ]

If we are to place credibility in current reports, she was forcedtime and time again to undergo the most violent scenes in intercedingfor one of their sons, Cornelius Jeremiah. For the nervousdisposition and general bad health of this son the father had notmuch sympathy; but the inexcusable crime to him was that Corneliusshowed neither inclination nor capacity to engage in a businesscareer. If Cornelius had gambled on the stock exchange his fatherwould have set him down as an exceedingly enterprising, respectableand promising man. But he preferred to gamble at cards. Thisrebellious lack of interest in business, joined with dissipation, soenraged the old man that he drove Cornelius from the house and onlyallowed him access during nearly a score of years at such rare timesas the mother succeeded in her tears and pleadings. Worn out with herlong life of drudgery, Vanderbilt's wife died in 1868; about a yearlater the old magnate eloped with a young cousin, Frank A. Crawford, and returning from Canada, announced his marriage, to the unboundedsurprise and utter disfavor of his children. 

THE OLD MAGNATE'S DEATH. 

An end, however, was soon coming to his prolonged life. A few moreyears of money heaping, and then, on May 10, 1876, he was takenmortally ill. For eight months he lay in bed, his powerful vitalitymaking a vigorous battle for life; two physicians died while in thecourse of attendance on him; it was not until the morning of January4, 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 YePity, Lord. " He died with a conventional religious end of which theworld made much; all of the property sanctities and ceremonials wereduly observed; nothing was lacking in the piety of that affectingdeathbed scene. It furnished the text for many a sermon, but whileministerial and journalistic attention was thus eulogisticallyconcentrated upon the loss of America's greatest capitalist, not areference was made in church or newspaper to the deaths every year ofa host of the lowly, slain in the industrial vortex by injury anddisease, and too often by suicide and starvation. Except among thelowly themselves this slaughter passed unprotested and unnoticed. 

Even as Vanderbilt lay moribund, speculation was busy as to thedisposition of his fortune. Who would inherit his aggregation ofwealth? The probating of his will soon disclosed that he hadvirtually entailed it. About $90, 000, 000 was left to his eldest son, William H. , and one-half of the remaining $15, 000, 000 was bequeathedto the chief heir's four sons. [Footnote: To Cornelius J. Vanderbilt, the Commodore's "wayward" son, only the income derived from $200, 000was bequeathed, upon the condition that he should forfeit even thislegacy if he contested the will. Nevertheless, he brought a contestsuit. William H. Vanderbilt compromised the suit by giving to hisbrother the income on $1, 000, 000. On April 2, 1882, Cornelius J. Vanderbilt shot and killed himself. Croffut gives this highlyenlightening 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 thelegatee, and one of them not having been for years on speaking termswith him; but now, in addition to the bequests made to his sisters, William H. Voluntarily [sic] added $500, 000 to each from his ownportion. 

"He drove around one evening, and distributed this splendid largessfrom his carriage, he himself carrying the bonds into each house inhis arms and delivering them to each sister in turn. The donation wasaccompanied by two interesting incidents. In one case the husbandsaid, 'William, I've made a quick calculation here, and I find thesebonds don't amount to quite $500, 000. They're $150 short, at theprice quoted today. ' The donor smiled, and sat down and made out hischeck 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 donorjumped 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 amongthe founder's other surviving children, and some comparatively smallsums bequeathed to charitable and educational institutions. TheVanderbilt dynasty had begun. 

 * * * * * * *

PERSONALITY OF THE CHIEF HEIR. 

At this time William H. Vanderbilt was fifty-six years old. Until1864 he had been occupied at farming on Staten Island; he lived atfirst in "a small, square, plain two-story house facing the sea, witha lean-to on one end for a kitchen. " The explanation of why the sonof a millionaire betook himself to truck farming lay in these facts:The old man despised leisure and luxury, and had a correspondinglystrong 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 couldmake an independent living. He is described as a phlegmatic man ofdull and slow mental processes, domestic tastes and of kindlydisposition to his children. His father (so the chronicles tell) didnot think that he "would ever amount to anything, " but by infiniteplodding, exacting the severest labor from his farm laborers, drivingclose bargains and turning devious tricks in his dealings, hegradually won the confidence and respect of the old man, who wasalways pleased with proofs of guile. Croffut gives a number ofinstances of William's craft and continues: "From his boyhood he hadgiven instant and willing submission to the despotic will of hisfather, and had made boundless sacrifices to please him. Most menwould have burst defiantly away from the repressive control andimperious requirements; but he doubtless thought that for the chanceof becoming heir to $100, 000, 000 he could afford to remain long inthe passive attitude of a distrusted prince. " (sic. )

[Illustration: WILLIAM H. VANDERBILT, He Inherited the Bulk of HisFather's Fortune and Doubled It]

The old autocrat finally modified his contemptuous opinion, and puthim in an executive position in the management of the New York andHarlem Railroad. Later, he elevated him to be a sort of coadjutor byinstalling him as vice president of the New York Central Railroad, and as an associate in the directing of other railroads. It was saidto be painful to note the exhausting persistence with which WilliamH. Vanderbilt daily struggled to get some perceptions of the detailsof railroad management. He did succeed in absorbing considerableknowledge. But his training at the hands of his father was not somuch in the direction of learning the system of management. Men ofability could always be hired to manage the roads. What his fatherprincipally taught him was the more essential astuteness required ofa railroad magnate; the manipulation of stocks and of common councilsand legislatures; how to fight and overthrow competitors and extendthe sphere of ownership and control; and how best to resist, and ifpossible to destroy, the labor unions. In brief, his education was aduplication of his father's scope of action: the methods of the sirewere infused into the son. 

From the situation in which he found himself, and viewing theparticular traits required in the development of capitalisticinstitutions, it was the most appropriate training that he could havereceived. Book erudition and the cultivation of fine qualities wouldhave been sadly out of place; his father's teachings were preciselywhat were needed to sustain and augment his possessions. On everyhand he was confronted either by competitors who, if they could getthe chance, would have stripped him without scruple, or by other menof his own class who would have joyfully defrauded him. Butovershadowing these accustomed business practices, new and startlingconditions that had to be met and fought were now appearing. 

Instead of a multitude of small, detached railroads, owned andoperated by independent companies, the period was now being reachedof colossal railroad systems. In the East the small railroad ownershad been well-nigh crushed out, and their properties joined in hugelines under the ownership of a few controlling men, while in theWest, extensive systems, thousands of miles long, had recently beenbuilt. Having stamped out most of the small owners, the railroadbarons now proceeded to wrangle and fight among themselves. It was acharacteristic period when the railroad magnates were constantlyembroiled in the bitterest quarrels, the sole object of which was tooutdo, bankrupt and wreck one another and seize, if possible, theothers' property. 

THE RISE OF THE FIRST TRUST. 

It was these conflicts that developed the auspicious time andopportunity for a change of the most world--wide importance, and onewhich had a stupendous ultimate purport not then realized. The warsbetween the railroad magnates assumed many forms, not the least ofwhich was the cutting of freight rates. Each railroad desperatelysought to wrench away traffic from the others by offering betterinducements. In this cutthroat competition, a coterie of hawk-eyedyoung men in the oil business, led by John D. Rockefeller, saw theirfertile chance. 

The drilling and the refining of oil, although in their comparativeinfancy, had already reached great proportions. Each railroad waseager to get the largest share of the traffic of transporting oil. Rockefeller, ruminating in his small refinery at Cleveland, Ohio, hadconceived the revolutionary idea of getting a monopoly of theproduction and distribution of oil, obliterating the middleman, andsystematizing and centralizing the whole business. 

Then and there was the modern trust born; and from the very inceptionof the Standard Oil Company Rockefeller and his associatestenaciously pursued their design with a combined ability andunscrupulousness such as had never before been known since the riseof capitalism. One railroad after another was persuaded or forcedinto granting them secret rates and rebates against which it wasimpossible to compete. The railroad magnates--William H. Vanderbilt, for instance--were taken in the fold of the Standard Oil Company bybeing made stockholders. With these secret rates the Standard OilCompany was enabled to crush out absolutely a myriad of competitorsand middlemen, and control the petroleum trade not only of the UnitedStates but of almost the entire world. Such fabulous profitsaccumulated that in the course of forty years, after one unendingcareer of industrial construction on the one hand, and crime on theother, the Standard Oil Company was easily able to become owners ofprodigious railroad and other systems, and completely supplant thescions of the magnates whom three or four decades before they hadwheedled or brow-beaten into favoring them with discriminations. 

CORPORATE WEALTH AND LABOR UNIONS. 

The effects of this great industrial transition were clearly visibleby 1877, so much so that two years later, Vanderbilt, moreprophetically than he realized, told the Hepburn Committee that "ifthis thing keeps up the oil people will own the roads. " But othernoted industrial changes were concurrently going on. With the up-springing and growth of gigantic combinations or concentrations ofcapital, and the gradual disappearance of the small factors inrailroad and other lines of business, workers were compelled by thenewer conditions to organize on large and compact national lines. 

At first each craft was purely local and disassociated from othertrades unions. But comprehending the inadequacy and futility ofexisting separately, and of acting independently of one another, theunions had some years back begun to weld themselves into one powerfulbody, covering much of the United States. Each craft union stillretained its organization and autonomy, but it now became part of anational organization embracing every form of trades, and centrallyofficered and led. It was in this way that the workers, step by step, met the organization of capital; the two forces, each representing aconflicting principle, were thus preparing for a series of greatindustrial battles. 

Capital had the wealth, resources and tools of the country; theworkers their labor power only. As it stood, it was an unevencontest, with every advantage in favor of capital. The workers coulddecline to work, but capital could starve them into subjection. These, however, were but the apparent differences. The real andimmense difference between them was that capital was in absolutecontrol of the political governing power of the nation, and thispower, strange to say, it secured by the votes of the very workingclass constantly fighting it in the industrial arena. Many years wereto elapse before the workers were to realize that they must organizeand vote with the same political solidarity that they long had beendeveloping in industrial matters. With political power in their handsthe capitalists could, and did, use its whole weight with terrificeffect to beat down the working class, and nullify most of the fewconcessions and laws obtained by the workers after the severest andmost self-sacrificing struggles. 

One of the first memorable battles between the two hostile forcescame about in 1877. In their rate wars the railroad magnates had cutincisively into one another's profits. The permanent gainers weresuch incipient, or fairly well developed, trusts or combinations asthe Standard Oil Company. Now the magnates set about asserting theold capitalist principle of recouping themselves by forcing theworkers to make up their losses. 

But these deficits were merely relative. Practically every railroadhad issued vast amounts of bonds and watered stock, on which fixedcharges and dividends had to be paid. Judged by the extent of thisinflated stock, the profits of the railroads had certainly decreased. Despite, however, the prevailing cutthroat competition, and the slumpin general business following the panic of 1873, the railroads weremaking large sums on their actual investment, so-called. Most of thisinvestment, it will be recalled, was not private money but was publicfunds, which were later stolen by corrupt legislation. It was shownbefore the Hepburn Committee in 1879, as we have noted, that from1869 the New York Central Railroad had been making sixteen, andperhaps more than twenty per cent. , on the actual cost of the road. 

Moreover, apart from the profits from ordinary traffic, the railroadswere annually fattening on immense sums of public money gathered inby various fraudulent methods. One of these--and is well worthadverting to, for it exists to a greater degree than ever before--wasthe robbery of the people in the transportation of mails. By afraudulent official construction, in 1873, of the postal laws, therailroads without cessation have cheated huge sums in falsifying theweight of mail carried, and since that time have charged ten times asmuch for mail carrying as have the express companies (the profits ofwhich are very great) for equal haulage. But these are simply twophases of the postal plunder. In addition to the regular mailpayments, the Government has long paid to the railroad companies anextra allowance of $6, 250 a year for the rent of each postal carused, although official investigation has proved that the whole costof constructing such a car averages but from $2, 500 to $5, 000. Inrent alone, five millions a year have been paid for cars worth, alltold, about four millions. From official estimates it would clearlyseem 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 billiondollars since 1873. The Vanderbilt family have been among the chiefbeneficiaries of this continuous looting. [Footnote: PostmasterGeneral Vilas, Annual Report for 1887:56. In a debate in the UnitedStates Senate on February 11, 1905, Senator Pettigrew quotedPostmaster General Wanamaker as saying that "the railroad companiessee to it that the representatives in Congress in both branches takecare of the interests of the railway people, and that it ispractically impossible to procure legislation in the way of reducingexpenses. "] Occasionally the postal officials have made pretences atstopping 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 fictitiouslosses upon the workers by cutting down wages. They had alreadyreduced wages to the point of the merest subsistence; and now theydecreed that wages must again be curtailed ten cents on every dollar. The Baltimore and Ohio Railroad, then in the hands of the Garrettfamily, with a career behind it of consecutive political corruptionand fraud, in some ways surpassing that of the Vanderbilts, led inreducing the wages of its workers. The Pennsylvania Railroadfollowed, and then the Vanderbilts gave the order for anotherreduction. 

At once the Baltimore and Ohio Railroad employees retaliated bydeclaring a strike; the example was followed by the Pennsylvania men. In order to alienate the sympathy of the general public and to have apretext for suppressing the strike with armed force, the railroads, it is quite certain, instigated riots at Martinsburg, W. Va. , and atPittsburg. Troops were called out and the so-called mobs were firedon, resulting in a number of strikers being killed and many wounded. 

That the railroads deliberately destroyed their own property and thencharged the culpability to the strikers, was common report. Soconservative an authority as Carroll D. Wright, for a long timeUnited States Commissioner of Labor, tells of the railroad agentssetting a large number of old, decayed, worthless freight cars atPittsburg on fire, and accusing the strikers of the act. He furthertells of the Pennsylvania Railroad subsequently extorting millions ofdollars from the public treasury on the ground that the destructionof these cars resulted from riot. Wright says that from all that hehas been able to gather, he believes the reports of the railroadsmanufacturing riots to have been true. [Footnote: "The Battles ofLabor": 122. In all, the railroad companies secured approximately$22, 000, 000 from the public treasury in Pennsylvania as indemnity forproperty destroyed during these "riots. " In a subsequent chapter, thecorruption of the operation is described. ] Vanderbilt acted withgreater wisdom than his fellow magnates. Adopting a conciliatorystand, he averted a strike on his lines by restoring the old rate ofwages and by other mollifying measures. 

He was now assailed from a different direction. The long gatheringanger and enmity of the various sections of the middle class againstthe corporate wealth which had possessed itself of so dictatorial apower, culminated in a manner as instructive as it was ineffective. 

In New York State, the Legislature was prevailed upon, in 1879, toappoint an investigating committee. Vanderbilt and other railroadowners, and a multitude of complaining traders were haled up to givetestimony; the stock-jobbing transactions of Vanderbilt and Gouldwere fully and tediously gone into, as also were the methods of therailroads in favoring certain corporations and mercantileestablishments with secret preferential freight rates. 

Not in the slightest did this long-drawn investigation have anyresult calculated to break the power of the railroad owners, or theirpredominant grip upon governmental functions. 

The magnate class preferred to have no official inquiries; there wasalways the annoying possibility that in some State or otherinconvenient laws might be passed, or harrassing legal actions begun;and while revocation or amendment of these laws could be put throughsubsequently when the popular excitement had died away, and the suitscould be in some way defeated, the exposures had an inflaming effectupon a population as yet ill-used to great one-man power of wealth. But if the middle class insisted upon action against the railroadmagnates, there was no policy more suitable to these magnates thanthat of being investigated by legislative committees. They were notaverse to their opponents amusing themselves, and finding a vent fortheir wrath, in volumes of talk which began nowhere and endednowhere. In reply to charges, the magnates could put in theirskillful defense, and inject such a maze of argument, pettifoggeryand technicalities into the proceedings, that before long the public, tired of the puzzle, was bound to throw up its hands in sheerbewilderment, unable to get any concrete idea of what it was allabout. 

FRAUD BECOMES RESPECTABLE WEALTH

So the great investigation of 1879 passed by without the leastdeterrent effect upon the constantly-spreading power and wealth ofsuch men as Vanderbilt and Gould. Every new development revealed thatthe hard-dying middle class was being gradually, yet surely, groundout. But the investigation of 1879 had one significant unanticipatedresult. 

What William H. Vanderbilt now did is well worth noting. As the ownerof four hundred thousand shares of New York Central stock he had beenrabidly denounced by the middle class as a plutocrat dangerous to theinterests of the people. He decided that it would be wise to sell alarge part of this stock; by this stroke he could advantageouslyexchange the forms of some of his wealth, and be able to put forwardthe plausible claim that the New York Central Railroad, far frombeing a one-man institution, was owned by a large number ofinvestors. In November, 1879, he sold through J. Pierpont Morgan morethan two hundred thousand shares to a syndicate, chiefly, however, toBritish aristocrats. 

This sale in no way diminished his actual control of the New YorkCentral Railroad; not only did he retain a sufficient number ofshares, but he owned an immense block of the railroad's bonds. Thesale of the stock brought him $35, 000, 000. What did he do with thissum? 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. Thissurely was a very sagacious move. Stocks do not have the solid, honest air that Government bonds do; nothing is more finely andfirmly respectable than a Government bondholder. 

From the blackmailer, corruptionist and defrauder of one generationto the stolid Government bondholder of the next, was not a long step, but it was a sufficient one. The process of investing in Governmentbonds 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 onthe Stock Exchange, but he later bought $10, 000, 000 more. Also heowned $4, 000, 000 in Government three and one-half per cent. Bonds, many millions of State and city bonds, several millions of dollars inmanufacturing stocks and mortgages, and $22, 000, 000 of railroadbonds. The same Government of which his father had defrauded millionsof dollars now stood as a direct guarantee behind at least$70, 000, 000 of his bonded wealth, and the whole population of theUnited States was being taxed to pay interest on bonds, the purchaseof which was an outgrowth of the theft of public money committed byCornelius Vanderbilt. 

In the years following his father's death, William H. Vanderbiltfound no difficulty in adding more extended railroad lines to hisproperties, and in increasing his wealth by tens of millions ofdollars at a leap. 

MORE RAILROADS ACQUIRED. 

The impact of his vast fortune was well-nigh resistless. Commandingboth financial and political power, his money and resources were usedwith destructive effect against almost every competitor standing inhis way. If he could not coerce the owners of a railroad, thepossession of which he sought, to sell to him at his own price, he atonce brought into action the wrecking tactics his father had sosuccessfully used. 

The West Shore Railroad, a competing line running along the west bankof the Hudson River, was bankrupted by him, and finally, in 1883, bought in under foreclosure proceedings. By lowering his freightrates he took away most of its business; through a series of years hemethodically caused it to be harrassed and burdened by the exerciseof his great political power; he thwarted its plans and secretlyhindered it in its application for money loans or other relief. Othermeans, open and covert, were employed to insure its ruination. Whenat last he had driven its owners into a corner, he calmly stepped inand bought up its control cheaply, and then turned out many millionsof dollars of watered stock. 

He attempted to break in upon the territory traversed by thePennsylvania Railroad by building a competing line, the SouthPennsylvania Railroad. In the construction of this road he had anagreement with the Philadelphia and Reading Railroad, an intensecompetitor of the Pennsylvania; and, as a precedent to building hisline, he obtained a large interest in the Reading Railroad. Out ofthis arrangement grew a highly important sequence which few thenforesaw--the gradual assumption by the Vanderbilt family of a largeshare of the ownership and control of the anthracite coal mines ofPennsylvania. 

Vanderbilt, aiming at sharing in the profits from the rich coal, oiland manufacturing traffic of Pennsylvania, went ahead with hisbuilding of the South Pennsylvania line. But there was an easy way ofgetting millions of dollars before the road was even opened. This wasthe fraudulent one, so widely practiced, of organizing a bogusconstruction company, and charging three and four times more than thebuilding of the railroad actually cost. Vanderbilt got together adummy construction company composed of some of his clerks andbrokers, 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, andthe same amount in stock. Of this $40, 000, 000 in securities, morethan $30, 000, 000 was loot. [Footnote: Van Oss' "American Railroads AsInvestments": 126. Professor Frank Parsons, in his "Railways, theTrusts and the People, " incorrectly ascribes this juggling toCommodore Vanderbilt. ]

If, however, Vanderbilt anticipated that the Pennsylvania Railroadwould remain docile or passive while his competitive line was beingbuilt, he soon learned how sorely mistaken he was. This time he wasopposing no weak, timorous or unsophisticated competitors, but agroup of the most powerful and astute organizers and corruptionists. Their methods in Pennsylvania and other States were exactly the sameas Vanderbilt's in New York State; their political power was as greatin their chosen province as his in New York. His incursion into theterritory they had apportioned to themselves for exploitation was notonly resented but was fiercely resisted. Presently, overwhelmed bythe crushing financial and political weapons with which they foughthim, Vanderbilt found himself compelled to compromise by disposing ofthe line to them. 

THE SEQUEL TO A "GENTLEMEN'S AGREEMENT. "

Vanderbilt's methods and his duplicity in the disposition of thisproject were strikingly revealed in the court proceedings institutedby the State of Pennsylvania. It appeared from the testimony that hehad made a "gentlemen's agreement" with the Reading Railroad, thebitterest competitor of the Pennsylvania Railroad, for a closealliance of interests. Vanderbilt owned eighty-two thousand shares ofReading stock, much of which he had obtained on this agreement. Strangely confiding in his word, the Reading management proceeded toexpend large sums of money in building terminals at Harrisburg andelsewhere to make connections with his proposed South PennsylvaniaRailroad. 

The Pennsylvania Railroad, however, set about retaliating in variouseffective ways. At this point, J. Pierpont Morgan--whose career weshall duly describe--stepped boldly in. Morgan was Vanderbilt'sfinancial agent; and it was he, according to his own testimony onOctober 13, 1885, before the court examiner, who now suggested andmade the arrangements between Vanderbilt and the PennsylvaniaRailroad magnates, by which the South Pennsylvania Railroad was tobecome the property of the Pennsylvania system, and the ReadingRailroad magnates were to be as thoroughly thrown over by as deft astroke of treachery as had ever been put through in the businessworld. 

To their great astonishment, the Reading owners woke up one morningto find that Vanderbilt and his associates had completely betrayedthem by disposing of a majority of the stock of the partly builtSouth Pennsylvania line to the Pennsylvania Railroad system for$5, 600, 000 in three per cent. Railroad debenture bonds. It isinteresting to inquire who Vanderbilt's associates were in thistransaction. They were John D. Rockefeller, William Rockefeller, D. O. Mills, Stephen B. Elkins, William C. Whitney and other founders oflarge fortunes. For once in his career, Vanderbilt met in thePennsylvania Railroad a competitor powerful enough to force him tocompromise. 

Elsewhere, Vanderbilt was much more successful. Out through thefertile 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 fundsand land grants. Its history was a succession of corrupt acts inlegislatures and in Congress, and comprised the usual process ofstock watering and exploitation. 

[Illustration: THE ORIGINAL VANDERBILT HOMESTEAD, Near New Dorp, Staten Island, N. Y. ]

[Illustration: PALACES BUILT BY WILLIAM H. VANDERBILT, And Resided inby Him and His Descendants. ]

By a series of manipulations ending in 1880, Vanderbilt secured acontrolling interest in this railroad, so that he had a complete linefrom New York to Chicago, and thence far into the Northwest. Duringthese 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 tendencymanifested by most other millionaires, discarded his long-followedsombre method of life, and invested himself with a gaudymagnificence. On Fifth avenue, at Fifty-first and Fifty-secondstreets, he built a spacious brown-stone mansion. In reality it was aunion of two mansions; the southern part he planned for himself, thenorthern part for his two daughters. For a year and a half more thansix hundred artisans were employed on the interior; sixtystoneworkers were imported from Europe. The capaciousness, theglitter and the cluttering of splendor in the interior were regardedas 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 thatVanderbilt was fully entitled to it by the laws of a society whichdecreed that its rulers should be those who could best use and abuseit. And rulers must ever live imperiously and impressively; it is notfitting that those who command the resources, labor and Government ofa nation should issue their mandates from pinched and meagersurroundings. Mere pseudo political rulers, such as governors andpresidents, are expected to be satisfied with the plain, unornamentalofficial residences provided by the people; thereby they keep up theappearance of that much-bespoken republican simplicity which is partof the mask of political formulas. Luckily for themselves, thefinancial and industrial rulers are bound by no circumscribingtradition; hence they have no set of buckramed rules to stick closeto for fear of an indignant electorate. 

The same populace that glowers and mutters whenever its politicalofficials show an inclination to pomp, regards it as perfectlynatural that its financial and industrial rulers should body forthall of the most obtrusive evidences of grandeur. Those Vanderbilttwin palaces, still occupied by the Vanderbilt family, wereappropriately built and fitted, and are more truly and specificallyhistoric as the abode of Government than official mansions; for it isthe magnates who have in these modern times been the real rulers ofnations; it is they who have usually been able to decide who thepolitical rulers should be; political parties have been simply theiradjuncts; the halls of legislation and the courts their mouthpiecesand registering bureaus. Theirs has been the power, under coverthough it has lurked, of elevating or destroying public officials, and of approving or cancelling legislation. Why, indeed, should theynot have their gilded palaces?

A SUDDEN TRANSFORMATION. 

The President of the United States lived in the subdued simplicity ofthe White House. But William H. Vanderbilt ate in a great, loftydining room, twenty-six by thirty-seven feet, wrought in ItalianRenaissance, with a wainscot of golden-hued, delicately-carvedEnglish oak around all four sides, and a ceiling with richly-paintedhunting-scene panels. When he entertained it was in a vast drawing-room, palatially equipped, its walls hung with flowing masses of palered velvet, embroidered with foliage flowers and butterflies, and setwith crystals and precious stones. 

It was his art gallery, however, which flattered him most. He knewnothing of art, and underneath his pretentions cared less, for he wasa complete utilitarian; but it had become fashionable to have anelaborate art gallery, and he forthwith disbursed money right andleft to assemble an aggregation of paintings. 

He gave orders to agents for their purchase with the same equanimitythat he would contracts for railroad supplies. And, as a rule, themore generous in size the canvasses, the more satisfied he was thathe was getting his money's worth; art to him meant buying by thesquare foot. Not a few of the paintings unloaded upon him were, despite their high-sounding reputations, essentially commonplacesubjects, and flashy and hackneyed in execution; but he gloried inthe celebrity that came from the high prices he was decoyed intopaying for them. For one of Meissionier's paintings, "The Arrival atthe Chateau, " he paid $40, 000, and on one of his visits to Paris heenriched Meissionier to the extent of $188, 000 for seven paintings. Not until his corps of art advisers were satisfied that a painterbecame fashionably talked about, could Vanderbilt be prevailed uponto buy examples of his work. There was something intensely magical inthe ease and cheapness with which he acquired the reputation of beinga "connoisseur of art. " Neither knowledge nor appreciation wererequired; with the expenditure of a few hundred thousand dollars heinstantaneously transformed himself from a heavy-witted, unculturedmoney hoarder into the character of a surpassing "judge and patron ofart. " 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 mighthave passed tolerably well as an extremely public-spirited andphilanthropic man. After every great fraud that he put through hewould usually throw out to the public some ostentatious gift ordonation. This would furnish a new ground to the sycophantic chorusfor extolling his fine qualities. But he happened to inherit hisfather's irascibility and extreme contempt for the public whom heexploited. Unfortunately for him, he let out on one memorableoccasion his real sentiments. Asked by a reporter why he did notconsider public convenience in the running of his trains, he blurtedout, "The public be damned!"

It was assuredly a superfluous question and answer; but expressed sosententiously, and published, as it was, throughout the length andbreadth of the land, it excited deep popular resentment. He was madethe target for general denunciation and execration, althoughunreasonably so, for he had but given candid and succinct utteranceto the actuating principle of the whole capitalist class. The moralof this incident impressed itself sharply upon the minds of themasterly rich, and to this day has greatly contributed to the politicmanner of their exterior conduct. They learned that however inprivate they might safely sneer at the mass of the people as createdfor their manipulation and enrichment, they must not declare sopublicly. Far wiser is it, they have come to understand, to confinespoliation to action, while in outward speech affirming the mostmellifluous and touching professions of solicitude for publicinterests. 

ADDS $100, 000, 000 IN SEVEN YEARS. 

But William H. Vanderbilt was little affected by this outburst ofpublic rage. He could well afford to smile cynically at it, so longas no definite move was taken to interfere with his privileges, powerand possessions. Since his father's death he had added fully$100, 000, 000 to his wealth, all within a short period. It had takenCommodore Vanderbilt more than thirty years to establish the fortuneof $105, 000, 000 he left. With a greater population and greaterresources to prey upon, William H. Vanderbilt almost doubled theamount in seven years. In January, 1883, he confided to a friend thathe was worth $194, 000, 000. "I am the richest man in the world, " hewent 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 paytwo per cent. " [Footnote: Related in the New York "Times, " issue ofDecember 9, 1885. ] In the same breath that he boasted of his wealthhe would bewail the ill-health condemning him to be a victim ofinsomnia and indigestion. 

Having a clear income of $10, 350, 000 a year, he kept his ordinaryexpenses down to $200, 000 a year. Whatever an air of indifference hewould assume in his grandee role of "art collector, " yet in mostother matters he was inveterately closefisted. He had a delusion that"everybody in the world was ready to take advantage of him, " and heregarded "men and women, as a rule, as a pretty bad lot. " [Footnote:"The Vanderbilts": 127. ] This incident--one of many similar incidentsnarrated by Croffut--reveals his microscopic vigilance in detectingimpositions: When in active control of affairs at the office hefollowed the unwholesome habit of eating the midday lunch at hisdesk, the waiter bringing it in from a neighboring restaurant. 

He paid his bill for this weekly, and he always scrutinized the itemswith proper care. "Was I here last Thursday?" he asked of a clerk atan adjoining desk. 

"No, Mr. Vanderbilt; you stayed at home that day. "

"So I thought, " he said, and struck that day from the bill. Anothertime he would exclaim, sotto voce, "I didn't order coffee lastTuesday, " and that item would vanish. 

Up to the very last second of his life his mind was filled with awhirl of business schemes; it was while discussing railroad planswith Robert Garrett in his mansion, on December 8, 1885, that hesuddenly shot forward from his chair and fell apoplectically to thefloor, and in a twinkling was dead. Servants ran to and froexcitedly; messengers were dispatched to summon his sons; telegramsflashed the intelligence far and wide. 

The passing away of the greatest of men could not have received atithe of the excitement and attention caused by William H. Vanderbilt's death. The newspaper offices hotly issued page afterpage of description, not without sufficient reason. For he, althoughuntitled and vested with no official power, was in actuality anautocrat; dictatorship by money bags was an established fact; andwhile the man died, his corporate wealth, the real director andcenter, to a large extent, of government functions, survivedunimpaired. 

He had abundantly proved his autocracy. Law after law had heviolated; like his father he had corrupted and intimidated, hadbought laws, ignored such as were unsuited to his interests, and haddecreed his own rules and codes. Progressively bolder had the moneykings become in coming out into the open in the directing ofGovernment. Long had they prudently skulked behind forms, devices andshams; they had operated secretly through tools in office, whilevirtuously disclaiming any insidious connection with politics. But noobserver took this pretence seriously. James Bryce, fresh fromEngland, delving into the complexities and incongruities of Americanpolitics at about this time, wrote that "these railway kings areamong the greatest men, perhaps I may say, the greatest men inAmerica, " which term, "greatest, " was a ludicrously reverent way ofdescribing their qualities. "They have power, " he goes on in the samework, "more power--that is, more opportunity to make their willprevail, than perhaps any one in political life except the Presidentor the Speaker, who, after all, hold theirs only for four years andtwo years, while the railroad monarch holds his for life. " [Footnote:"The American Commonwealth. " First Ed. : 515. ] Bryce was not wellenough acquainted with the windings and depths of American politicalworkings to know that the money kings had more power than Presidentor Speaker, not nominally, but essentially. He further relates howwhen a railroad magnate traveled, his journey was like a royalprogress; Governors of States and Territories bowed before him;Legislatures received him in solemn session; cities and towns soughtto propitiate him, for had he not the means of making or marring acity's fortunes? "You cannot turn in any direction in Americanpolitics, " wrote Richard T. Ely a little later, "without discoveringthe railway power. It is the power behind the throne. It is a correctpopular instinct which designates the leading men in the railways, railroad magnates or kings. . . . Its power ramifies in everydirection, 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: "TheIndependent, " 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. Thevocabulary was ransacked to find adjectives glowing enough todescribe his enterprise, foresight, sagacity and integrity. Muchelaborated upon was the fiction that he had increased his fortune byhonest, legitimate means--a fiction still disseminated by thoseshallow or mercenary writers whose trade is to spread orthodox beliefin existing conditions. The underlying facts of his career andmethods were purposely suppressed, and a nauseating sort of panegyricsubstituted. Who did not know that he had bribed Legislature afterLegislature, and had constantly resorted to conspiracy and fraud? Notone of his eulogists was innocent of this knowledge; the record of itwas too public and palpable to justify doubts of its truth. Theextent of his possessions and the size of his fortune arousedwonderment, but no effort was made to contrast the immense wealthbequeathed by one man with the dire poverty on every hand, nor toconnect 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 theUnited States Labor Report for 1886, "that this total (in roundnumbers 1, 000, 000) as representing the unemployed at any one time inthe United States, is fairly representative. "] while the millions atwork received the scantiest wages. Nearly three millions of peoplehad been completely pauperized, and, in one way or another, had to besupported at public expense. Once in a rare while, some perceptiveand unshackled public official might pierce the sophistries of theday and reveal the cause of this widespread poverty, as Ira Stewarddid in the fourth annual report of the Massachusetts Bureau ofStatistics of Labor for 1873. 

"It is the enormous profits, " he pointedly wrote, "made directly uponthe labor of the wage classes, and indirectly through the results oftheir labor, that, first, keeps them poor, and, second, furnishes thecapital that is finally loaned back to them again" at high rates ofinterest. Unquestionably sound and true was this explanation, yet ofwhat avail was it if the causes of their poverty were withheld fromthe active knowledge of the mass of the wage workers? It was thespecial business of the newspapers, the magazines, the pulpit and thepoliticians to ignore, suppress or twist every particle ofinformation that might enlighten or arouse the mass of people; ifthese agencies were so obtuse or recalcitrant as not to know theirexpected place and duty at critical times, they were quickly remindedof them by the propertied classes. To any newspaper owner, clergymanor politician showing a tendency to radicalism, the punishment camequickly. The newspaper owner was deprived of advertisements andaccommodations, the clergyman was insidiously hounded out of hispulpit by his own church associations, the funds of which came frommen of wealth, and the politician was ridiculed and was summarilyretired to private life by corrupt means. As for genuinely honestadministrative officials (as distinguished from the _apparently_honest) who exposed prevalent conditions and sought to remedy them intheir particular departments, they were eventually got rid of by asimilar campaign of calumny and corrupt influences. 

HIS FRAUDS IN EVADING TAXES. 

As in the larger sense all criticism of conditions was systematicallysmothered, so were details of the methods of the rich carefullyobscured or altogether passed by in silence. At Vanderbilt's deaththe newspapers laved in gorgeous descriptions of his mansion. Yetapart from the proceeds of his great frauds, the amounts out of whichhe had cheated the city and State in taxation were alone much morethan enough to have paid for his splendor of living. Like the Astors, the Goelets, Marshall Field and every other millionaire withoutexception, he continuously defrauded in taxes. 

We have seen how the Vanderbilts seized hold of tens of millions ofdollars of bonds by fraud. Certain of their railroad stocks wereexempted from individual taxation, but railroad bonds ranked astaxable personal property. Year after year William H. Vanderbilt hadperjured himself in swearing that his personal property did notexceed $500, 000. On more than this amount he would not pay. When athis death his will revealed to the public the proportions of hisestate, the New York City Commissioners of Assessments and Taxes madean apparent effort to collect some of the millions of dollars out ofwhich he had cheated the city. It was now that the obsequious andtime-serving Depew, grown gray and wrinkled in the retainership ofthe Vanderbilt generations, came forward with this threat: "Heinformed us, " testified Michael Coleman, president of the commission, "that if we attempted to press too hard he would take proceedings bywhich most of the securities would be placed beyond our reach so thatwe could not tax them. The Vanderbilt family could convert everythingthey had into non-taxable securities, such as New York Central, Government and city bonds, Delaware and Lackawanna, and Delaware andWestern Railroad stocks, and pay not a dollar provided they wished todo so. " [Footnote: The New York Senate Committee on Cities, 1890, iii: 2355-2356. ]

The Vanderbilt estate compromised by paying the city a mere part ofthe sum owed. It succeeded in keeping the greatest part of itspossessions immune from taxation, in doing which it but did what thewhole of the large propertied class was doing, as was disclosed infurther detailed testimony before the New York Senate Committee onCities in 1890. 

HIS WILL TRANSMITS $200, 000, 000. 

Unlike his father, William H. Vanderbilt did not bequeath the majorportion of his fortune to one son. He left $50, 000, 000 equally toeach of his two sons, Cornelius and William K. Vanderbilt. Supplementing the fortunes they already had, these legacies swelledtheir individual fortunes to approximately $100, 000, 000 each--aboutthe 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 atrust fund, the income of which was to be apportioned equally amongeach of his eight children. This provided them each with an annualincome of $500, 000. In turn, the principal was to descend to theirchildren, as they should direct by will. Another $40, 000, 000 wasshared outright among his eight children. The remaining $20, 000, 000was variously divided: the greater part to his widow; $2, 000, 000 asan additional gift to Cornelius; $1, 000, 000 to a favorite grandson;sundry items to other relatives and friends, and about $1, 000, 000 tocharitable and public institutions. 

He was buried in a mausoleum costing $300, 000, which he himself hadordered to be built at New Dorp, Staten Island; and there to-day hisashes lie, splendidly interred, while millions of the livingplundered and disinherited are suffered to live in the deadlycongestion of miserable habitations. 

CHAPTER VII

THE VANDERBILT FORTUNE IN THE PRESENT GENERATION

With the demise of William H. Vanderbilt the Vanderbilt fortuneceased being a one-man factor. Although apportioned among the eightchildren, the two who inherited by far the greater part of it--Cornelius and William K. Vanderbilt--were its rulers paramount. Tothem descended the sway of the extensive railroad systemsappropriated by their grandfather and father, with all of the alliedand collateral properties. Both of these heirs had been put through apunctilious course of training in the management of railroad affairs;all of the subtle arts and intricacies of finance, and the grandtactical and strategic strokes of railroad manipulation, had beendrilled into them with extraordinary care. 

Their first move upon coming into their inheritance was to surroundthemselves with the magnificence of imposing residences, as befittedtheir state and estate. A signatory stroke of the pen was the onlyexertion required of them; thereupon architects and a host ofartisans yielded service and built palaces for them, for the one atFifth avenue and Fifty-second street, for the other at Fifth avenueand Fifty-seventh street. 

Millions were spent with prodigal lavishness. On his Fifth avenuemansion alone, Cornelius expended $5, 000, 000. To get the space forthree beds of blossoms and a few square yards of turf, a brownstonehouse adjoining his mansion was torn down, and the garden created atan expense of $400, 000. George, a brother of Cornelius and of WilliamK. Vanderbilt, and a man of retiring disposition, spent $6, 000, 000 inbuilding a palatial home in the heart of the North Carolinamountains. For three years three hundred stonemasons were kept busy;and he gradually added land to his surrounding estate until itembraced one hundred and eighty square miles. His game preserves wereenlarged until they covered 20, 000 acres. So, within thirty yearsfrom the time their grandfather, Commodore Vanderbilt, was extortinghis original millions by blackmailing, did they live like princes, and in greater luxury and power than perhaps any of the titularprinces of ancient or modern days. But the splendor of these abodeswas intended merely for partial use. At their command spacious, majestic palaces arose at Newport, whither in the torrid season someof the Vanderbilts transferred their august seat of power andpleasure. 

Hardly had they settled themselves down in the vested security oftheir great fortunes when an ominous situation presented itself toshake the entire propertied class into a violent state of uneasiness. Hitherto the main antagonistic movement perturbing the magnates wasthat of the obstreperous and still powerful middle class. Dazed andenraged at the certain prospect of their complete subjugation andeventual annihilation, these small capitalists had clamored for lawsrestricting the power of the great capitalists. Some of their demandswere constantly being enacted into law, without, however, theexpected results. 

THE GREAT LABOR MOVEMENT OF 1886

Now, to the intense alarm of all sections of the capitalist class, avery different quality of movement reared itself upward from thedeeps of the social formation. [Footnote: It may be asked why anextended description of this movement is interposed here. Because, inasmuch as it is a part of the plan of this work to present aconstant succession of contrasts, this is, perhaps, as appropriate aplace as any to give an account of the highly important labormovement of 1886. Of course, it will be understood that this movementwas not the result of any one capitalist fortune or process, but wasa general revolt to compel all forms of capitalist control to concedebetter conditions to the workers. ]

This time it was the laboring masses preparing for the most vigorousand comprehensive attack that they had ever made upon capitalism'sintrenchments. Long exploited, oppressed and betrayed, starved orclubbed into intervals of apathy or submission, they were again inmotion, moving forward with a set deliberation and determinationwhich disconcerted the capitalist class. No mere local conflict ofclass interests was it on this occasion, but a general cohesiverevolt of the workers against some of the conditions and laws underwhich they had to labor. 

In 1884 the Federation of Trades and Labor Unions of the UnitedStates and Canada had issued a manifesto calling upon all trades tounite in the demand for an eight-hour workday. The date for a generalstrike was finally fixed for May 1, 1886. The year 1886, therefore, was one of general agitation throughout the United States. Withrapidity and enthusiasm the movement spread. Presently it took on aradical character. Realizing it to be at basis the first nationalawakening of the proletariat, progressive men and women of everyshade of opinion hastened forward to support it and direct it intoone of opposition, not merely to a few of the evils of wage slavery, but to what they considered the fundamental cause itself--thecapitalist system. 

The propertied classes were not deceived. They knew that while thislabor movement nominally confined itself to one for a shorterworkday, yet its impetus was such that it contained the fullestpotentialities for developing into a mighty uprising against the verysystem by which they were enabled to enrich themselves and enslavethe masses. 

The moment this fact was discerned, both great and small capitalistsinstinctively suspended hostilities. They tacitly agreed to holdtheir bitter warfare for supremacy in abeyance, and unite in the faceof their common danger. The triangular conflict between the large andsmall capitalists and the trades unions now resolved into a duelbetween 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 employingfarmers in the South and West, was counted upon as aligned with thepropertied classes. On the part of the capitalists there was no unityof organization in the sense of selected leaders or committees. Itwas not necessary. A stronger bond than that of formal organizationdrove them into acting in conscious unison--namely, the immediateperil involved to their property interests. Apprehension soon gaveway to grim decision. This formidable labor movement had to be brokenand dispersed at any cost. 

But how was the work of destruction to be done? This was thepredicament. Vested wealth could succeed in bribing a labor leaderhere and there; but the movement had bounded far beyond the elementalstage, and had become a glowing agitation which no traitor or set oftraitors could have stopped. 

One effective way of discrediting and suppressing it there was; theancient one of virtually outlawing it, and throwing against it thewhole brute force of Government. The task of putting it down waspreëminently one for the police, army and judiciary. They had beenused to stifle many another protest of the workers; why not this? Asthe great labor movement rolled on, enlisting the ardent attachmentof the masses, denouncing the injustices, corruption and robberies ofthe existing industrial system, the propertied classes more acutelyunderstood 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 bythem, stood ready to use force. But there had to be some kind ofpretext. The hosts of labor were acting peacefully and withremarkable self control and discipline. 

 * * * * * * *

THE PROPERTIED CLASSES STRIKE BACK. 

The propitious occasion soon came. It was in Chicago that the blowwas struck which succeeded in discrediting the cause of the workers, stayed the progress of their movement, and covered it with aprejudice and an odium lasting for years. There, in that maddeningbedlam, called a city, the acknowledged inferno of industrialism, theagitation was tensest. With its brutalities, cruelties, corruptionsand industrial carnage, its hideous contrasts of dissolute riches andwoe-begone poverty, its arrogant wealth lashing the workingpopulation 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 theUnited States for an eight-hour day. At McCormick's reaper works inChicago [Footnote: The McCormick fortune was the outgrowth, to alarge extent, of a variety of frauds and corruptions. Later on inthis work, the facts are given as to how Cyrus H. McCormick, thefounder of the fortune, bribed Congress, in 1854, to give him a timeextension of his patent rights. ] a prolonged strike of many monthsbegan in February. Determined not only to refuse shorter hours, butto 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 theunion workers those despised irresponsibles called "scabs"--signifying laborers willing to help defeat the battles of organizedlabor, and, if the unions won, share in the benefits withoutincurring any of the responsibilities, risks or struggles. On May 1, 1886, forty thousand men and women in Chicago went on strike for aneight-hour day. Thus far, the aim of inciting violence on the part ofthe 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 theexercise of force. On May 2, a great demonstration of the McCormickworkers was held near that company's factories to protest against theemployment of armed Pinkertons. The Pinkerton detective bureau was aprivate establishment, founded during the Civil War; in the ensuingcontests between labor and capital it was alleged to have made aprofitable business of supplying spies and armed men to capitalistsunder the pretense of safeguarding property. These armed bands reallyconstituted private armies; recruited often from the most debased andworthless part of the population, as well as from the needy andshifty, they were, it was charged, composed largely of men who wouldperjure themselves, fabricate evidence, provoke trouble, andslaughter without scruple for pay. Some, as was well established, were ex-convicts, others thugs, and still others were driven to theignoble employment by necessity. [Footnote: The prevailing view ofthe working class toward the Pinkerton detectives was thus expressedat the time in a chapter on the mine workers by John McBride, one ofthe trade union leaders: "They have awakened, " he wrote, "the hatredand detestation of the workingmen of the United States; and thishatred is due, not only to the fact that they protect the men who arestealing the bread from the mouths of the families of strikers, butto the fact that as a class they seem rather to invite trouble thanto allay it. . . . They are employed to terrorize the workingmen, and tocreate in the minds of the public the idea that the miners are adangerous class of citizens that have to be kept down by armed force. These men had an interest in keeping up and creating troubles whichgave employers opportunity to demand protection from the Statemilitia at the expense of the State, and which the State has tooreadily granted. "--"The Labor Movement": 264-265. ] During the courseof the meeting in the afternoon the factory bell rung, and the"scabs" were seen leaving. Some boys in the audience began throwingstones and there was hooting. Fully aware of the combustible accountswanted by their offices, the reporters immediately telephonedexaggerated, inflammatory stories of a riot being under way; thepolice on the spot likewise notified headquarters. [Footnote: In astatement published in the Chicago "Daily News, " issue of May 10, 1889, Captain Ebersold, chief of police in 1886, charged that CaptainSchaack, who had been the police official most active in proceedingagainst the labor leaders and causing them to be executed andimprisoned, had deliberately set about concocting "anarchist"conspiracies in order to get the credit for discovering and breakingthem up. ] Police in large numbers soon arrived; the boys keptthrowing stones; and suddenly, without warning, the police drew theirrevolvers 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 asanarchists, but in reality men of advanced ideas who, while differingfrom one another in economic views, agreed in denouncing the existingsystem as the prolific cause of bitter wrongs and rooted injustices. Sincere, self-sacrificing, intellectual, outspoken, absolutelydevoted to their convictions, burning with compassion and nobleideals for suffering humanity, they had stepped forward and hadgreatly assisted in arousing the militant spirit in the working classin Chicago. At all of the meetings they had spoken with an ardor andability that put them in the front ranks of the proletarian leaders;and in two newspapers published by them, the "Alarm, " in English, andthe "Arbeiter Zeitung, " in German, they unceasingly advocated theinterests of the working class. These men were Albert R. Parsons, aprinter, editor of the "Alarm;" August Spies, an upholsterer bytrade, and editor of the "Arbeiter Zeitung;" Adolph Fischer, aprinter; Louis Lingg, a carpenter; Samuel Fielden, the son of aBritish factory owner; George Engel, a painter; Oscar Neebe, a well-to-do business man, and Michael Schwab, a bookbinder. All of themwere more or less deep students of economics and sociology; they hadbecome convinced that the fundamental cause of the prevalentinequalities of opportunity and of the widespread misery was thecapitalist system itself. Hence they opposed it uncompromisingly. [Footnote: The utterances of these leaders revealed the reasons whythey were so greatly feared by the capitalist class. Fischer, forinstance, said: "I perceive that the diligent, never-resting humanworking bees, who create all wealth and fill the magazines withprovisions, fuel and clothing, enjoy only a minor part of thisproduct, while the drones, the idlers, keep the warehouses locked up, and revel in luxury and voluptuousness. " Engel said: "The history ofall times teaches us that the oppressing always maintain theirtyrannies 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 bringpeace and happiness to mankind. "]

The newspapers, voicing the interests and demands of the intrenchedclasses, denounced these radicals with a sinister emphasis asdestructionists. But it was not ignorance which led them to do this;it was intended as a deliberate poisoning and inflaming of publicopinion. Themselves bribing, corrupting, intimidating, violating lawsand slaying for profit everywhere, the propertied classes everassumed, as has so often been pointed out, the pose of being thestaunch conservers of law and order. To fasten upon the advancedleaders of the labor movement the stigma of being sowers of disorder, and then judicially get rid of them, and crush the spirit andmovement of the aroused proletariat--this was the plan determinedupon. Labor leaders who confined their programme to the industrialarena were not feared so much; but Parsons, Spies and their comradeswere not only pointing out to the masses truths extremely unpalatableto the capitalists, but were urging, although in a crude way, adefinite political movement to overthrow capitalism. With the finestperception, fully alert to their danger, the propertied classes wereintent upon exterminating this portentous movement by striking downits 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 thenight of May 4, at the Haymarket, to protest against the policeassaults. Spies opened the meeting, and was followed by Fielden. Observers agreed that the meeting was proceeding in perfect quiet, soquietly that the Mayor of Chicago, who was present to suppress it ifnecessary, went home--when suddenly one hundred and eighty policemen, with arms in readiness, appeared and peremptorily ordered the meetingto disperse. It seems that without pausing for a reply theyimmediately charged, and began clubbing and mauling the few hundredpersons 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 ofcorporate wealth. At Pittsburg, in 1877, as we have seen, thePennsylvania railroad hirelings deliberately destroyed property andincited riot in order to charge the strikers with crime. In the coalmining regions of Pennsylvania, subsidized detectives had provokedtrouble during the strikes, and by means of bogus evidence and packedjuries had hung some labor leaders and imprisoned others. 

The hurling of the bomb, whether done by a secret emissary, or by asympathizer with labor, proved the lever which the propertied classeshad been feverishly awaiting. Spies, Fielding and their comrades wereat once cast into jail; the newspapers invented wild yarns ofconspiracies and midnight plots, and raucously demanded the hangingof the leaders. The trifling formality of waiting until their guilthad been proved was not considered. The most significant event, however, was the secret meeting of about three hundred leadingAmerican capitalists to plan the suppression of "anarchy. " Veryhorrified they professed themselves to be at violent outrages anddestruction of property and life. Their views were given widecirculation and commendation; they were the finest types ofcommercial success and prestige. They were the owners of railroadsthat slaughtered thousands of human beings every year, because of thedemands of profit; of factories which sucked the very life out oftheir toilers, and which filled the hospitals, slums, brothels andgraveyards with an ever-increasing assemblage; every man in thatconclave, as a beneficiary of the existing system, had drained hisfortune from the sweat, sorrow, miseries and death agonies of amultitude of workers. [Footnote: This seems a very sweeping andextraordinary 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 wasto improve conditions for the workers on the railroads and in minesand factories. Time after time they succeeded in defeating orignoring this legislation. Although the number of workers killed orinjured in accidents every year was enormous, and although the numberslain by diseases contracted in workshops or dwellings was evengreater, the capitalists insisted that the law had no right tointerfere with the conduct of their "private business. "] These werethe men who came forth to form the "Citizens' Association, " andwithin 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 itselfis now everywhere recognized as having been a tragic farce. The jury, it is clear, was purposely drawn from the employing class, or theirdependents; of a thousand talesmen summoned, only five or sixbelonged to the working class. The malignant class nature of thetrial was revealed by the questions asked of the talesmen; nearly alldeclared that they had a prejudice against Socialists, Anarchists andCommunists. Soon the blindest could see that the conviction of thegroup was determined upon in advance, and that it was but the visibleevidence of a huge conspiracy to terrorize the whole working class. 

The theory upon which the group was prosecuted was that they wereactively engaged in a conspiracy against the existing authorities, and that they advocated violence and bloodshed. No jurist would nowpresume to contend that the slightest evidence was adduced to provethis. But all were rushed to conviction: Spies, Parsons, Fischer, andEngel were hanged on November 11, 1887, after fruitless appeals tothe higher courts; Lingg committed suicide in prison, and Fielden, Neebe and Schwab were sentenced to long terms in prison. The fourexecuted leaders met their death with the heroic calmness ofmartyrdom. "Let the voice of the people be heard!" were Parsons' lastwords. Fielden, Neebe and Schwab might have rotted away in prison, were it not that one of the noblest-minded and most maligned men ofhis time, in the person of John P. Altgeld, was Governor of Illinoisin 1893. Governor Altgeld pardoned them on these grounds, which heundoubtedly proved in an exhaustive review: (1) The jury was a packedone selected to convict; (2) the jurors were prejudiced; (3) no guiltwas proved; (4) the State's attorney had admitted no case againstNeebe, yet he had been imprisoned; (5)the trial judge (Gary) waseither so prejudiced or subservient to class influence that he didnot or could not give a fair trial. Even many of those who denouncedAltgeld 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 thehanging and imprisonment of the Chicago group, the labor movement inNew York City had assumed so strong a political form that the rulingclass was seized with consternation. The Knights of Labor, then atthe summit of organization and solidarity, were ripe for independentpolitical action; the effects of the years of active propagandacarried on in their ranks by the Socialists and Single-Tax advocatesnow began to show fruit. At the critical time, when the labor unionswere wavering in the decision as to whether they ought to strike outpolitically or not, the ruling class supplied the necessary vitalimpulsion. While in Chicago the courts were being used to condemn thelabor leaders to death or prison, in the East they were used toparalyze the weapons of offense and defence by which the unions wereable to carry on their industrial warfare. 

The conviction, in New York City, of certain members of a union fordeclaring a boycott, proved the one compelling force needed to massall of the unions and radical societies and individuals into a mightymovement resulting in an independent labor party. To meet thisexigency an effort was made by the politicians to buy off HenryGeorge, the distinguished Single-Tax advocate, who was recognized asthe leader of the labor party. But this flanking attempt at bribingan incorruptible man failed; the labor unions proceeded to nominateGeorge for Mayor, and a campaign was begun of an ardor, vigor andenthusiasm such as had not been known since the Workingmen's partymovement in 1829. 

The election was for local officers of the foremost city in theUnited States--a point of vantage worth contending for, since themoral effect of such a victory of the working class would beincalculable, even if short-lived. To the ruling classes the triumphof the labor unions, while restricted to one city, would unmistakablydenote the glimmerings of the beginning of the end of their regime. Such rebellious movements are highly contagious; from the confines ofone municipality they sweep on to other sections, stimulating actionand inspiring emulation. The New York labor campaign of 1886 was anintrinsic part and result of the general labor movement throughoutthe United States. And it was the most significant manifestation ofthe onward march of the workers; elsewhere the labor unions had notgone beyond the stage of agitation and industrial warfare; but in NewYork, with the most acute perception of the real road it musttraverse, the labor movement had plunged boldly into politicalaction. 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 uponretaining and intensifying those powers. Government was an essentialrequisite to its plans and development. The small capitalistsbitterly fought the great; but both agreed that Government with itslegislators, laws, precedents, and the habits of thought it created, must be capitalistic. Both saw in the uprising of labor a prospectiveoverturning of conditions. 

From this identity of interest a singular concrete alliance resulted. The great capitalists, whom the middle-class had denounced aspirates, now became the decorous and orthodox "saviors of society, "with the small capitalists trailing behind their leadership, andshouting their praises as the upholders of law and the conservatorsof order. In Chicago the same men who had bribed legislators andcommon councils to give them public franchises, and who had hugelyswindled and stolen under guise of law, had been the principals incalling for the execution and imprisonment of the group of laborleaders, and this they had decreed in the name of law. In New YorkCity a pretext for dealing similarly with the labor leaders wasentirely lacking, but another method was found effective in thesubjugation and dispersion of the movement. 

CAPITALIST TRIUMPH BY FRAUD. 

This was the familiar one of corruption and fraud. It was a method inthe exercise of which the capitalists as a class had provedthemselves adepts; they now summoned to their aid all of the ignobleand subterranean devices of criminal politics. 

In the New York City election of 1886 three parties contested, theLabor party, Tammany Hall and the Republican party. Steeped indecades of the most loathsome corruption, Tammany Hall was chosen asthe medium by which the Labor party was to be defrauded and effaced. Pretending to be the "champion of the people's rights, " and boastingthat it stood for democracy against aristocracy, Tammany Hall hadlong deceived the mass of the people to plunder them. It was apowerful, splendidly-organized body of mercenaries and selfseekerswhich, by trading on the principles of democracy, had been able tocount on the partisan votes of a predominating element of the wage-working class. In reality, however, it was absolutely directed by aleader or "boss, " who, with his confederates, made a regular trafficof 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 extortedfrom the wretched women of the street and brothels. This was theorganization that the ruling class, with its fine assumptions ofrespectability, now depended upon to do its work of breaking up thepolitical labor revolt. 

The candidate of Tammany Hall was the ultra-respectable Abram S. Hewitt, a millionaire capitalist. The Republican party nominated averbose, pushful, self-glorifying young man, who, by a combination offortuitous circumstances, later attained the position of President ofthe United States. This was Theodore Roosevelt, the scion of amoderately rich New York family, and a remarkable character whosepugnacious disposition, indifference to political conventionalities, capacity for exhortation, and bold political shrewdness were mistakenfor greatness of personality. The phenomenal success to which hesubsequently rose was characteristic of the prevailing turgidity andconfusion of the popular mind. Both Hewitt and Roosevelt were, ofcourse, acceptable to the capitalist class. As, however, New York wasnormally a city of Democratic politics, and as Hewitt stood thegreater chance of winning, the support of those opposed to the labormovement was concentrated upon him. 

Intrenched respectability, for the most part, came forth to joinsanctimony with Tammany scoundrelism. It was an edifying union, yetdid not comprise all of the forces linked in that historic coalition. The Church, as an institution, cast into it the whole weight of itsinfluence and power. Soaked with the materialist spirit whiledogmatically preaching the spiritual, dominated and pervaded bycapitalist influences, the Church, of all creeds and denominations, lost no time in subtly aligning itself in its expected place. And woeto 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 espousingthe cause of the labor movement. 

Despite every legitimate argument coupled with venomous ridicule andcoercive and corrupt influence that wealth, press and church couldbring to bear, the labor unions stood solidly together. On electionday 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 classthat declaimed with such superior indignation against rule by the"mob" had poured in funds which were distributed by the politiciansfor these frauds. But the vote of the labor forces was sooverwhelming, that even piles of fraudulent votes could not sufficeto overcome it. One final resource was left. This was to count outHenry George by grossly tampering with the election returns andmisrepresenting them. And this is precisely what was done, if thetestimony of numerous eye-witnesses is to be believed. The Laborparty, it is quite clear, was deliberately cheated out of an electionwon in the teeth of the severest and most corrupt opposition. Thisresult it had to accept; the entire elaborate machinery of electionswas in the full control of the Labor party's opponents; and had itinstituted a contest in the courts, the Labor party would have foundits 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 movementhad shrunk to insignificant proportions, and soon thereaftercollapsed. The capitalist interests had followed up their onslaughtin hanging and imprisoning some of the foremost leaders, and incorruption and fraud at the polls, by the repetition of other tacticsthat they had long so successfully used. 

Acting through the old political parties they further insured thedisintegration of the Labor party by bribing a sufficient number ofits influential men. This bribery took the form of giving themsinecurist offices under either Democratic or Republican local, Stateor National administrations. Many of the most conspicuous organizersof the labor movement were thus won over, by the proffer of well-paying political posts, to betray the cause in the furtherance ofwhich they had shown such energy. Deprived of some of its leaders, deserted by others, the labor political movement sank into a state ofdisorganization, and finally reverted to its old servile position ofdividing its vote between the two capitalist parties. 

From now one, for many years, the labor movement existed purely as anindustrial one, disclaiming all connection with politics. Voting intopower either of the old political parties, it then humbly begged afew crumbs of legislation from them, only to have a few sops thrownto it, or to receive contemptuous kicks and humiliations, and, if itgrew too importunate or aggressive, insults backed with the strongmight of judicial, police and military power. 

When it was jubilantly seen by the coalesced propertied classes thatthe much-dreaded labor movement had been thrust aside and shorn, theyresumed their interrupted conflict. 

The small capitalist evinced a fierce energy in seeking to hinder inevery possible way the development of the great. It was in theseyears that a multitude of middle-class laws were enacted both byCongress and by the State legislatures; the representatives of thatclass from the North and East joined with those of the Farmers'Alliance from the West and South. Laws were passed declaringcombinations conspiracies in restraint of trade and prohibiting thegranting of secret discriminative rates by the railroads. In 1889 nofewer than eighteen States passed anti-trust laws; five more followedthe next year. Every one of these laws was apparently of the mostexplicit character, and carried with it drastic penal provisions. "Now, " exulted the small capitalists in high spirits of elation, "wehave the upper hand. We have laws enough to throttle the monopolistsand preserve our righteous system of competition. They don't dareviolate them, with the prospects of long terms in prison staring themin the face. "

THE SMALL CAPITALISTS' LOSING FIGHT. 

The great capitalists both dared and did. If specific statutes wereagainst them, the impelling forces of economic development and thepower of might were wholly on their side. The competitive system wasalready doomed; the middle class was too blind to realize that whatseemed to be victory was the rattle of the slow death struggle. Atfirst, the great capitalists made no attempt to have these lawsaltered or repealed. They adopted a slyer and more circuitous mode ofwarfare. They simply evaded them. As fast as one trust was dissolvedby court decision, it nominally complied, as did, for instance, theStandard Oil Trust and the Sugar Trust, and then furtively causeditself to be reborn into a new combination so cunningly shelteredwithin the technicalities of the law that it was fairly safe fromjudicial overthrow. 

But the great capitalists were too wise to stake their existence uponthe thin refuge of technicalities. With their huge funds they nowsystematically struck out to control the machinery of the two mainpolitical parties; they used the ponderous weight of their influenceto secure the appointment of men favorable to them as AttorneysGeneral of the United States, and of the States, and they carried ona definite plan of bringing about the appointment or election ofjudges upon whose decisions they could depend. The laws passed by themiddle class remained ornamental encumbrances on the statute books;the great capitalists, although harassed continually by futileattacks, triumphantly swept forward, gradually in their consecutiveprogress strangling the middle class beyond resurrection. 

Such was the integral impotence of the warfare of the small againstthe great capitalists that, during this convulsive period, theexisting magnates increased their wealth and power on every hand, andtheir ranks were increased by the accession of new members. From thechaos of middle-class industrial institutions, one trust afteranother sprang full-armed, until presently there was a whole array ofthem. The trust system had proved itself immensely superior in everyrespect to the competitive, and by its own superiority it was boundto supplant the other. 

Where William H. Vanderbilt had thought himself compelled totemporize with the middle class agitation by making a show ofdividing the stock ownership of the New York Central Railroad, hissons Cornelius and William ignored or defied it. Utterly disdainfulof the bitter feeling, especially in the West, against theconsolidation of railroads in the hands of the powerful few, theytranquilly went ahead to gather more railroads in their ownership. The Cleveland, Cincinnati, Chicago and St. Louis Railroad (popularlydubbed the "Big Four") acquired by them in 1890 was one of these. Itwould be tiresome, however, to enter into a narrative of the complex, tortuous methods by which they possessed themselves of theserailroads. By the beginning of the year 1893 the Vanderbilt systemembraced at least 12, 000 miles of railways, with a capitalized valueof several hundred million dollars, and a total gross earning powerof more than $60, 000, 000 a year. "All of the best railroadterritory, " says John Moody in his sketch entitled "The Romance ofthe Railways, " "outside of New England, Pennsylvania and New Jerseywas penetrated by the Vanderbilt lines, and no other railroad systemin the country, with the single notable exception of the PennsylvaniaRailroad, covered anything like the same amount of rich and settledterritory, or reached so many towns and cities of importance. NewYork, Buffalo, Chicago, Cleveland, St. Louis, Cincinnati, Detroit, Indianapolis, Omaha--these were a few of the great marts which wereembraced in the Vanderbilt preserves. " So impregnably rich andpowerful were the Vanderbilts, so profitable their railroads, andtheir command of resources, financial institutions and legislation sogreat, that the panic of 1893 instead of impairing their fortunesgave them extraordinary opportunities for getting hold of theproperties of weaker railroads. 

It was now, acting jointly with other puissant interests, that theysaw their chance to get control of a large part of the fabulouslyrich coal mines of Pennsylvania. These coal mines had originally beenowned by separate companies or operators, each independent of theother. But by about the year 1867 the railroads penetrating the coalregions had conceived the plan of owning the mines themselves. Whycontinue to act as middlemen in transporting the coal? Why not vestin themselves the ownership of these vast areas of coal lands, andsecure all the profits instead of those from merely handling thecoal?

The plan ingratiated itself as a capital one; it could be easilycarried out with little expenditure. All that was necessary for therailroad to do was to burden down the operators with exorbitantcharges, and hamper and beleaguer them in a variety of compressingways. [Footnote: See testimony before the committee to investigatethe Philadelphia and Reading Railroad Company, and the Philadelphiaand Reading Coal and Iron Company, Pennsylvania Legislative Docs. 1876, Vol. V, Doc. No. 2. This investigation fully revealed how therailroads detained the cars of the "independent" operators, andotherwise used oppressive methods. ] As was proved in subsequentlawsuits, the railroads frequently declined to carry coal for this orthat mine, on the pretext that they had no cars available. Everymeans was used to crush the independent operators and depreciate theselling value of their property. It was a campaign of ruination; inlaw it stood as criminal conspiracy; but the railroads persisted init without any further molestation than prolix civil suits, and theyfinally forced a number of the well-nigh bankrupted independentoperators to sell out to them for comparatively trifling sums. [Footnote: Spahr quotes an independent operator in 1900 as sayingthat the railroads charged the independents three times as much forhandling hard coal as they charged for handling soft coal from theWest--"America's Working People": 122-223. ]

By these methods such railroads as the Philadelphia and Reading, theDelaware, Lackawana and Western, the Central Railroad of New Jersey, the Lehigh Valley and others gradually succeeded, in the course ofyears, in extending an ownership over the coal mines. The morepowerful independent operators struck back early at them by getting aconstitutional provision passed in Pennsylvania, in 1873, prohibitingrailroads from owning and operating coal mines. The railroads evadedthis law with facility by an illegal system of leasing, and byorganizing nominally separate and independent companies the stock ofwhich, in reality, was owned by them. 

To the men who did the actual labor of working in the mines--the coalminers--this change of ownership was not regarded with alarm. Indeed, they at first cherished the pathetic hope that it might benefit theircondition, which had been desperate and intolerable enough under theold company system. The small coal-owning capitalists, who hademitted such wailings at their own oppression by the railroads, hadlong relentlessly exploited their tens of thousands of workers. Oneabuse had been piled upon another. The miners were paid by the ton;the companies had fraudulently increased the size of the ton, so thatthe miners had to perform much more labor while wages remainedstationary or were reduced. 

But one of the most serious grievances was that against what werecalled "company or truck stores. " Ingenious contrivances for gettingback the miserable wages paid out, these were company-ownedmerchandise stores in which the miners were compelled to buy theirsupplies. In many collieries the mine worker was not paid in moneybut was given an order on the company store, where he was forced topurchase inferior goods at exorbitant prices. 

To blast in the mines powder was necessary; the miner had to buy itat his own expense, and was charged $2. 75 a keg, although its sellingvalue was not more than $1. 10 or 90 cents. In every direction themine worker was defrauded and plundered. "Often, " says John Mitchell, long the leader of the miners, and a compromiser whose career provesthat he cannot be charged with any deep-seated antagonism tocapitalist interests, "a man together with his children would workfor months without receiving a dollar of money, and not infrequentlyhe would find at the end of the month nothing in his envelope but astatement that his indebtedness to the company had increased so manydollars. " [Footnote: "Organized Labor": 359. Mitchell's comments werefully supported by the vast mass of testimony taken by the UnitedStates Anthracite Coal Commission in 1902. Mitchell is, at thiswriting (1909), in the employ of the Civic Federation, anorganization financed by capitalists. Its alleged purpose is to bringabout "harmony" between capital and labor. ] Mitchell adds that theLegislature of Pennsylvania passed anti-truck store laws, "but theoperators who have always cried out loudest against illegal action byminers openly and unhesitatingly violated the act and subsequentlyevaded it by various devices. " [Footnote: Ibid. ] The wretched housesthe miners occupied "also, " says Mitchell, "served as a means ofextortion, and, in other instances, as a weapon to be used againstthe miners. " In case they complained or struck, the miners wereevicted under the most cruel circumstances. Many other media ofextortion were common. In the entire year the miners averaged onlyone hundred and ninety working days of ten hours each, and, ofcourse, were paid for working time only. According to Spahr 350, 000miners drudged for an average wage of $350 a year. [Footnote: "ThePresent 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 railroadsousted many of the small operators, and largely by pressure of powertook possession of the mines. In vain did the miners' unions implorethe railroad magnates for redress of some kind. The magnates abruptlyrefused, and went on extending and intrenching their authority. TheVanderbilts manipulated themselves into being important factors inthe Delaware and Hudson Railroad, and in the Delaware, Lackawana andWestern Railroad, which had deviously obtained title to some of therichest coal deposits in Wyoming County, and they also becameprominent in the directing of the Lehigh Valley Railroad. 

The most important coal-owning railroad, however, which they andother magnates coveted was the Philadelphia and Reading Railroad. Atleast one-half of the anthracite coal supply of Pennsylvania wasowned or controlled by this railroad. The ownership of the ReadingRailroad, with its subordinate lines, was the pivotal requisitetowards 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 groupof Philadelphia capitalists of the second rank with their threehundred thousand shares. 

Unfortunately for this group, the Philadelphia and Reading Railroadwas afflicted with a president, one Arthur A. McLeod, who was notonly too recklessly ambitious, but who was temerarious enough tocross the path of the really powerful magnates. With immenseconfidence in his plans and in his ability to carry them out, he setout to monopolize the anthracite coal supply and to make the ReadingRailroad a great trunk line. To perfect this monopoly he leased somecoal-carrying railroads and made "a gentlemen's agreement" withothers; and in line with his policy of raising the importance of theroad, he borrowed large sums of money for the construction of newterminals and approaches and for equipment. 

Now, all of these plans interfered seriously with the aims andambition of magnates far greater than he. These magnates quickly sawthe stupendous possibilities of a monopoly of the coal supply--thehundreds of millions of dollars of profits it held out--and decidedthat it was precisely what they themselves should control and nobodyelse. Second, in his aim to have his own railroad connections withthe rich manufacturing and heavily-populated New England districts, McLeod had arranged with various small railroads a complete line fromthe coal fields of Pennsylvania into the heart of New England. Indoing this he overreached his mark. He was soon taught the folly ofpresuming 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 theNew England States were the Vanderbilts and J. Pierpont Morgan. Theone owned the New York Central, the other dominated the New York, NewHaven and Hartford Railroad. The Pennsylvania Railroad likewise hadno intention of allowing such a powerful competitor in its ownprovince. These magnates viewed with intense amazement the effronteryof what they regarded as an upstart interloper. Although they hadbeen constantly fighting one another for supremacy, these threeinterests now made common cause. 

They adroitly prepared to crush McLeod and bankrupt the railroad ofwhich he was the head. By this process they would accomplish threehighly important objects; one the wresting of the Philadelphia andReading Railroad into their own divisible ownership; second, thesecuring of their personal hold on the connecting railroads thatMcLeod had leased; and, finally, the obtaining of undisputedsovereignty over a great part of the anthracite coal mines. Thewarfare now began without those fanciful ceremonials, heralds orproclamations considered so necessary by Governments as a prelude toslaughter. These formalities are dispensed with by businesscombatants. 

First, the Morgan-Vanderbilt interest caused the publication ofterrifying reports that grave legislation hostile to the coalcombination was imminent. The price of Reading stock on the StockExchange immediately declined. Then, following up their advantage, this dual alliance inspired even more ruinous reports. The credit ofthe Philadelphia and Reading Railroad was represented as being in avery bad state. As the railroad had borrowed immense sums of moneyboth to finance its coal combination and to build extensive terminalsand other equipment, large payments to creditors were due from timeto time. To pay these creditors the railroad had to borrow more; butwhen the credit of the railroad was assailed, it found that itssources of borrowing were suddenly shut off. The group ofPhiladelphia capitalists had already borrowed large sums of money, giving Reading shares as collateral. When the market price of thestock kept going down they were called upon to pay back their loans. Declining or unable to do so, their fifty thousand shares of pledgedstock were sold. This sale still more depressed the price of Readingstock. 

In this group of Philadelphia capitalist were men who were reckonedas very astute business lights--George M. Pullman, Thomas Dolan, oneof the street railway syndicate whose briberies of legislatures andcommon councils, and whose manipulation of street railways inPhiladelphia and other cities were so notorious a scandal; JohnWanamaker, combining piety and sharp business;--these were three ofthem. But they were no match for the much more powerful and wilyVanderbilt-Morgan forces. They were compelled under resistlesspressure to throw over their Reading stock at a great loss tothemselves. Most of it was promptly bought up by J. P. Morgan andCompany and the Vanderbilts, who then leisurely arranged a divisionof the spoils between themselves. 

This transaction (strict interpreters of the law would have styled ita conspiracy) opened a facile way for a number of extremely importantchanges. The Vanderbilts and the Morgan interests apportioned betweenthem much of the ownership of the Philadelphia and Reading Railroadwith its vast ownership of coal deposits and its coal carryingtraffic. [Footnote: An investigation, in 1905, showed that the"Baltimore and Ohio Railroad and the New York Central and HudsonRiver Railroad owned about 43. 3 per cent. Of the entire capital stockof the Philadelphia and Reading Railroad Company. " "Report onDiscriminations and Monopolies in Coal and Oil, Interstate CommerceCommission, January 25, 1907": 46. ] The New York, New Haven andHartford Railroad grasped the New York and New England Railroad fromthe Reading's broken hold, and there were further far-reachingchanges militating to increase the railroad, and other, possessionsof both parties. [Footnote: A good account of this expropriatingtransaction is that of Wolcott Drew, "The Reading Crash in 1903" in"Moody's Magazine" (a leading financial periodical), issue ofJanuary, 1907. ] It was but another of the many instances of thesupreme capitalists driving out the smaller fry and seizing theproperty which they had previously seized by fraud. [Footnote: One ofthe particularly indisputable examples of the glaring fraud by whichimmense areas of coal fields were originally obtained was that of thedisposition of the estate of John Nicholson. 

Dying in December, 1800, Nicholson left an estate embracing land, theextent of which was variously estimated at from three to five millionacres. Some of the Pennsylvania legislative documents place the areaat from three to four million acres, while others, notably a reportin 1842, by the judiciary committee of the Pennsylvania House ofRepresentatives, state that it was 5, 000, 000 acres. Nicholson was aleading figure in the Pennsylvania Land Company which had obtainedmost of its vast land possessions by fraud. Some of Nicholson'slanded estate lay in Virginia, Kentucky, North Carolina, SouthCarolina, Georgia and other States, but the bulk of it was inPennsylvania, and included extensive regions containing the veryrichest coal deposits. 

The State of Pennsylvania held a lien upon Nicholson's estate forunpaid taxes amounting to $300, 000. Notwithstanding this lien, different individuals and corporations contrived to get hold ofpractically the whole of the estate in dispute. How they did it istold in many legislative documents; the fraud and theft connectedwith it were a great scandal in Pennsylvania for forty-five years. Wewill quote only one of these documents. Writing on January 24, 1842, to William Elwell, chairman of the Judiciary Committee of thePennsylvania House of Representatives, Judge J. B. Anthony, of theNicholson Court (a court especially established to pass uponquestions arising from the disposition of the estate), said:

"On the 11th of April, 1825, an act passed the Governor to appointagents to discover and sell the Nicholson lands at auction, for whichthey were allowed _twenty-five per cent_. A Special Board ofProperty was also formed to compromise and settle with claimants. From what has come to my knowledge in relation to this Act, I amsatisfied that the commonwealth was seriously injured by the mannerin which it was carried out by some of the agents. It was made use ofprincipally for the benefit of land speculators; and the very smallsums received by the State treasurer for large and valuable tractssold and compromised, show that the cunning and astute land jobberscould easily overreach the Board of Property at Harrisburg. . . . Manyinstances of gross fraud might be enumerated, but it would serve nouseful purpose. " Judge Anthony further said that "very many of themost influential, astute and intelligent inhabitants" and "gentlemenof high standing" were participants in the frauds. --PennsylvaniaHouse Journal, 1842, Vol. Ii, Doc. No. 127: 700-704. ]

The Vanderbilts' ownership of a large part of the shares ofrailroads, which, in turn, own and control the coal mines, may besummed up as follows: Through the Lake Shore Railroad, which theyhave owned almost absolutely, they own, or until recently did own, $30, 000, 000 of shares in the Philadelphia and Reading Railroad withits stupendous anthracite coal deposits, and they owned, for a longtime, large amounts of stock in the Lehigh Valley Railroad with itsunmined coal deposits of 400, 000, 000 tons. In 1908 they disposed oftheir Lehigh Valley Railroad ownings, receiving an equivalent ineither money or some other form of property. The ownership of theDelaware, Lackawana and Western Railroad with its equally largeunmined coal deposits is divided between the Vanderbilt family andthe Standard Oil interests. The Vanderbilts, according to the latestofficial reports, also own heavy interests in the Delaware and HudsonRailroad, the New York, Ontario and Western Railroad, $12, 500, 000 ofstock in the Chesapeake and Ohio Railroad, and large amounts of stockin other coal mining and coal carrying railroads. [Footnote: SeeSpecial Report No. 1 of the Interstate Commerce Commission onIntercorporate Relationship of Railroads: 39. Also Carl Snyder's"American Railways as Investments": 473. ]

Here, then is another important step in the acquisition of a largepart of the country's resources by the Vanderbilts. A recapitulationwill not be out of place. His first millions obtained byblackmailing, Commodore Vanderbilt then uses those millions to buy arailroad. By further fraudulent methods, based upon bribery oflawmaking bodies, he obtains more railroads and more wealth. His son, following his methods, adds other railroads to the inventory, andconverts tens of millions of fraudulently-acquired millions intointerest-bearing Government, State, city and other bonds. The thirdgeneration (in point of order from the founder) continues the methodsof the father and grandfather, gets hold of still more railroads, andemerges as one of the powers owning the great coal deposits ofPennsylvania. 

THE DICTATION OF THE COAL FIELDS. 

The Vanderbilt and Morgan interest at once increased the price ofanthracite coal, adding to it $1. 25 to $1. 35 a ton. In 1900 theyappeared in the open with a new and gigantic plan of consolidation bywhich they were able to control almost absolutely the production andprices. That the Vanderbilt family and the Morgan interests were themain 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 onthe 40, 000, 000 tons of anthracite then produced, and the price wassuccessively raised until consumers were taxed seven times the costof production and transportation. 

The population was completely at the mercy of a few magnates; eachyear, as the winter drew on, the Coal Trust increased its price. Inthe needs and suffering of millions of people it found a ready meansof laying on fresher and heavier tribute. By the mandate of the CoalTrust, housekeepers were taxed $70, 000, 000 in extra impositions ayear, in addition to the $40, 000, 000 annually extorted by theexorbitant prices of previous years. At a stroke the magnates wereable to confiscate by successive grabs the labor of the people of theUnited States at will. Neither was there any redress; for those samemagnates controlled all of the ramifications of Government. 

What, however, of the workers in the mines? While the combination washigh-handedly forcing the consumer to pay enormous prices, how was itacting toward them? The question is almost superfluous. The railroadsmade little concealment of their hostility to the trades unions, andrefused to grant reforms or concessions. Consequently a strike wasdeclared in 1900 by which the mine workers obtained a ten per centincrease in wages and the promise of semi-monthly wages in cash. Butthey had not resumed work before they discovered the hollowness ofthese concessions. Two years of futile application for betterconditions passed, and then, in 1902, 150, 000 men and boys went onstrike. This strike lasted one hundred and sixty-three days. Themagnates were generally regarded as arrogant and defiant; theycontended that they had nothing to arbitrate; [Footnote: It was onthis occasion that George F. Baer, president of the Philadelphia andReading Railroad, in scoring the public sympathy for the strikers, justified the attitude of the railroads in his celebrated utterancein which he spoke "of the Christian men and women to whom God in Hisinfinite wisdom has intrusted the property interests of the country, "which alleged divine sanction he was never able to prove. ] and onlyyielded to an arbitration board when President Roosevelt threatenedthem 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) andseveral minor concessions. Yet at best, their lot is excessivelyhard. Writing a few years later, Dr. Peter Roberts, who, if anything, is not partial to the working class, stated that the wages of thecontract miners were (in 1907) about $600 a year, while adults inother classes of mine workers, who formed more than sixty per cent, of the labor forces, did not receive an annual wage of $450. YetRoberts quotes the Massachusetts Bureau of Statistics as saying that"a family of five persons requires $754 a year to live on. " Theaverage number in the family of a mine worker is five or six. "Thissmall income, " Roberts observes, "drives many of our people to livein cheap and rickety houses, where the sense of shame and decency isblunted in early youth, and where men cannot find such home comfortsas will counteract the attractions of the saloon. " Hundreds ofcompany houses, according to Roberts, are unfit for habitation, and"in the houses of mine employees, of all nationalities, is anappalling infant mortality. " [Footnote: "The Anthracite CoalCommunities": 346-347. ]

THE BITUMINOUS COAL MINES ALSO. 

The sway of the Vanderbilts, however, extends not only over theanthracite, but over a great extent of the bituminous coal fields inPennsylvania, Maryland, West Virginia, Ohio and other States. Bytheir control of the New York Central Railroad, they own variousostensibly independent bituminous coal mining companies. TheClearfield Corporation, the Pennsylvania Coal and Coke Co. , and theWest Branch Coal Company are some of these. By their great holdingsin other railroads traversing the soft coal regions, the Vanderbiltscontrol 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 inthat year about forty-five per cent. Of the stock of the Chesapeakeand Ohio Railroad, and the New York Central owned large amounts ofstock in other railroads. "The Commission, therefore, reaches theconclusion, " the report reads on after going into the question ofownership in detail, "that, as a matter of fact, the Baltimore andOhio Railroad Company, the Norfolk and Western Railroad Company, andthe Philadelphia and Reading Railway Company were practicallycontrolled by the Pennsylvania Railroad Company and the New YorkCentral and Hudson River Railroad Company, and that the result was topractically abolish substantial competition between the carriers ofcoal in the territories under consideration. " Although the StandardOil oligarchy now owns considerable stock in the Vanderbiltrailroads, it is an undoubted fact that the Vanderbilts share to agreat extent the mastery of both hard and soft coal fields. 

It is not possible here to present even in condensed form theoutline, 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, andin guaranteeing themselves a monopoly. A great array of facts are tobe found in the reports of the exhaustive investigations made by theUnited States Industrial Commission in 1901-1902, and by theInterstate Commerce Commission in 1907. 

Thousands of times was the law glaringly violated yet the magnateswere at all times safe from prosecution. Periodically the Governmentwould make a pretense of subjecting them to an inquiry, but in noserious sense were they interfered with. These investigations allhave shown that the railroads first crushed out the small operatorsby a conspiracy of rates, blockades and reprisals, and then by ajuggling process of stocks and bonds, bought in the mines with theexpenditure of scarcely any actual money. Having done this theyformed a monopoly and raised prices which, in law, was a criminalconspiracy. The same weapons destructively used against the smallcoal operators years ago are still being employed against the fewindependent companies remaining in the coal fields, as was disclosed, in 1908, in the suit of the Government to dissolve the workings ofthe 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 inPhiladelphia. The Government's petition charged the defendants withentering into a conspiracy contrary to the letter and the spirit ofthe Sherman act. ]

THE HUGE PROFITS FROM THE COAL MINES. 

No one knows or can ascertain the exact profits of the Vanderbiltsand of other railroad owners from their control of both theanthracite, and largely the bituminous, coal mines. As has beennoted, the railroad magnates cloud their trail by operating throughsubsidiary companies. That their extortions reach hundreds ofmillions of dollars every year is a patent enough fact. Some of theaccompaniments of this process of extortion have been referred to;--the confiscation, on the one hand, of the labor of the wholeconsuming population by taxing from them more and more of theproducts of their labor by repeated increases in the price of coal, and, on the other, the confiscation of the labor of the severalhundred thousand miners who are compelled to work for the mostprecarious wages, and in conditions worse, in some respects, thanchattel slavery. 

But not alone is labor confiscated. Life is also immolated. Theyearly sacrifice of life in the coal mines of the United States issteadily growing. The report for 1908 of the United States GeologicalSurvey showed that 3, 125 coal miners were killed by accidents in thecurrent year, and that 5, 316 were injured. The number of fatalitieswas 1, 033 more than in 1906. "These figures, " the report explains, "do not represent the full extent of the disasters, as reports werenot received from certain States having no mine inspectors. " Side byside with these appalling figures must be again brought out the factadverted to already: that the owners of the coal mines have at alltimes violently opposed the passage of laws drafted to afford greatersafeguard for life in the working of the mines. Being the owners, atthe same time, of the railroads, their opposition in that field tolife-saving improvements has been as consistent. 

Improvements are expensive; human life is contemptibly cheap; so longas there is a surplus of labor it is held to be commercial folly togo to the unnecessary expense of protecting an article of merchandisewhich can be had so cheaply. Human tragedies do not enter into themaking of profit and loss accounts; outlays for mechanical appliancesdo. Assuredly this is a business age wherein profits must takeprecedence over every other consideration, which principle has beenmost elaborately enunciated and established by a long list of exaltedcourt decisions. Yea, and the very magnates whose power rests onforce and fraud are precisely those who insidiously dictate what menshall be appointed to these omniscient courts, before whose edictsall men are expected to bow in speechless reverence. [Footnote: Thisis far from being a rhetorical figure of speech. Witness thedictating of the appointment and nominations of judges by theStandard Oil Company (which now owns immense railroad systems andindustrial plants) as revealed by certain authentic correspondence ofthat 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 wereby no means the only accomplishments of the Vanderbilt family in theyears under consideration. Colorless as was the third generation, undistinguished by any marked characteristic, extremely commonplacein its conventions, it yet proved itself a worthy successor ofCommodore Vanderbilt. The lessons he had taught of how to appropriatewealth were duly followed by his descendants, and all of theancestral methods were closely adhered to by the third generation. Whatever might be its pretensions to a certain integrity and to aprofound respectability, there was really no difference between itsmethods and those of the Commodore. Times had changed; that was all. What had once been regarded as outright theft and piracy were nowcloaked under high-sounding phrases as "corporate extension" and"high finance" and other catchwords calculated to lull publicsuspicion and resentment. A refinement of phraseology had set in; andit served its purpose. 

Concomitantly, while executing the transactions already described, the Vanderbilts of the third generation put through many others, bothlarge and small, which were converted into further heaps of wealth. An enumeration of all of these diverse frauds would necessitate atiresome presentation. A few examples will suffice. 

The small frauds were but lesser in relation to the larger. At thisperiod of the economic development of the country, when immensethefts were being consummated, a fraud had to rise to the dignity ofat least fifty million dollars to be regarded a large one. The law, it is true, proscribed any theft involving more than $25 as grandlarceny, but it was law applying to the poor only, and operative onthem exclusively. The inordinately rich were beyond all law, seeingthat they could either manufacture it, or its interpretation, atwill. Among the conspicuous, audacious capitalists the fraud of a fewpaltry millions shrank to the modesty of a small, cursory, off-handoperation. Yet, in the aggregate, these petty frauds constitutedgreat results, and for that reason were valued accordingly. 

AN $8, 000, 000 AREA CONFISCATED. 

Such a slight fraud was, for instance, the Vanderbilts' confiscationof an entire section of New York City. In 1887 they decided that theyhad urgent and particular need for railroad yard purposes of a sweepof streets from Sixtieth street to Seventy-second street along theHudson River Railroad division. What if this property had beenbought, laid out and graded by the city at considerable expense? TheVanderbilts resolved to have it and get it for nothing. Under specialforms of law dictated by them they thereupon took it. The method wasabsurdly easy. 

Ever compliant to their interests, and composed as usual of menretained by them or responsive to their influences, the Legislatureof 1887 passed an act compelling the city authorities to close up therequired area of streets. Then the city officials, fully asaccommodating, turned the property over to the exclusive, andpractically perpetual, use of the New York Central and Hudson RiverRailroad. With the profusest expressions of regard for the publicinterests, the railroad officials did not in the slightest demur atsigning an agreement with the municipal authorities. In this paperthey pledged themselves to cooperate with the city in conferring uponthe Board of Street Openings the right to reopen any of the streetsat any time. This agreement was but a decoy for immediate populareffect. No such reopening ordinance was ever passed; the streetsremained closed to the public which, theoretically at least, was leftwith the title. In fact, the memorandum of the agreement strangelydisappeared from the Corporation Counsel's office, and did not turnup until twenty years later, when it was accidentally and mostmysteriously discovered in the Lenox Library. Whence came it to thiscurious repository? The query remains unanswered. 

For seventeen and a half acres of this confiscated land, comprisingabout three hundred and fifty city lots, now valued at a round$8, 000, 000, the New York Central and Hudson River Railroad has notpaid a cent in rental or taxes since the act of 1887 was passed. Onthe island of Manhattan alone 70, 000 poor families are every yearevicted for inability to pay rent--a continuous and horribly tragicevent well worth comparing with the preposterous facility with whichthe great possessing classes everywhere either buy or defy law, andconfiscate when it suits them. So cunningly drafted was the act of1887 that while New York City was obliged to give the exclusive useof this large stretch of property to the company, yet the title tothe property--the empty name--remained vested in the city. This beingso, a corporation counsel complaisantly decided that the railroadcompany could not be taxed so long as the city owned the title. [Footnote: Minutes of the New York City Board of Estimate andApportionment--Financial and Franchise Matters, 1907:1071-1085. "Itwill thus be seen, " reported Harry P. Nichols, Engineer-in-Charge ofthe Franchise Bureau, "that the railroad is at present, and has beenfor twenty years, occupying more than three hundred city lots, orsomething less than twenty acres, without compensation to the city. "]

Another of what may be called--for purposes of distinction--thenumerous small frauds at this time, was that foisting upon New YorkCity the cost of replacing the New York Central's masonry viaductapproaches with a fine steel elevated system. This fraud cost thepublic treasury about $1, 200, 000, quite a sizable sum, it will beadmitted, but one nevertheless of pitiful proportions in comparisonwith previous and later transactions of the Vanderbilt family. 

We have seen how, in 1872, Commodore Vanderbilt put through theLegislature an act forcing New York City to pay $4, 000, 000 forimproving the railroad's roadway on Park avenue. His grandsons nowrepeated his method. In 1892 the United States Government was engagedin dredging a ship canal through the Harlem River. The Secretary ofWar, having jurisdiction of all navigable waters, issued a mandate tothe New York Central to raise its bridge to a given height, so as topermit the passing under of large vessels. 

To comply with this order it was necessary to raise the trackstructure both north and south of the Harlem River. Had an ordinarycitizen, upon receiving an order from the authorities to makeimprovements or alterations in his property, attempted to compel thecity to pay all or any part of the cost, he would have been laughedat or summarily dealt with. The Vanderbilts were not ordinaryproperty holders. Having the power to order legislatures to do theirbidding, they now proceeded to imitate their grandfather, and compelthe city to pay the greater portion of the cost of supplying themwith a splendid steel elevated structure. 

PUBLIC TAXATION TO SUPPLY PRIVATE CAPITAL. 

The Legislature of 1892 was thoroughly responsive. This was aLegislature which was not merely corrupt, but brazenly and franklyso, as was proved by the scandalous openness with which variousspoliative measures were rushed through. 

An act was passed compelling New York City to pay one-half of thecost of the projected elevated approaches up to the sum of$1, 600, 000. New York City was thus forced to pay $800, 000 forconstructing that portion south of the Harlem River. If, so the lawread on, the cost exceeded the estimate of $800, 000, then the NewYork Central was to pay the difference. Additional provision was madefor the compelling of New York City to pay for the building of thesection north of the Harlem River. But who did the work ofcontracting and building, and who determined what the cost was? Therailroad company itself. It charged what it pleased for material andwork, and had complete control of the disbursing of theappropriations. The city's supervising commissions had, perforce, toaccept its arbitrary demands, and lacked all power to question, oreven scrutinize, its reports of expenditures. Apart from the New YorkCentral's officials, no one to-day knows what the actual cost hasbeen, except as stated by the company. 

South of the Harlem River this report cost has been $800, 000, northof the Harlem River $400, 000. At practically no expense tothemselves, the Vanderbilts obtained a massive four-track elevatedstructure, running for miles over the city streets. The people of thecity of New York were forced to bear a compulsory taxation of$1, 200, 000 without getting the slightest equivalent for it. TheVanderbilts own these elevated approaches absolutely; not a cent'sworth 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 pluckedfrom the public treasury under form of law to make improvements inwhich the people who have footed the bill have not a moiety ofownership. [Footnote: The facts as to the expenses incurred under theact of 1892 were stated to the author by Ernest Harvier, a member ofthe Change of Grade Commission representing New York City insupervising the work. ] The Vanderbilts have capitalized theseterminal approaches as though they had been built with private money. [Footnote: The New York Central has long compelled the New York, NewHaven and Hartford Railroad to pay seven cents toll for everypassenger transported south of Woodlawn, and also one-third of themaintenance cost, including interest, of the terminal. In reportingan effort of the New York, New Haven and Hartford Railroad to havethese terms modified, the New York "Times" stated in its financialcolumns, issue of December 25, 1908: "As matters now stand the NewHaven, without its consent, is forced to bear one-third of the chargearising from _the increased capital invested in the Central'sterminal"_]

[Illustration: CORNELIUS VANDERBILT Grandson of CommodoreVanderbilt. ]

At this point a significant note may be made in passing. While theseand other huge frauds were going on, Cornelius Vanderbilt wasconspicuously presenting himself as a most ardent "reformer" inpolitics. He was, for instance, a distinguished member of theCommittee of Seventy, organized in 1894, to combat and overthrowTammany corruption! Such, as we have repeatedly observed, is thequality of the men who compose the bourgeois reform movements. Forthe most part great rogues, they win applause and respectability byvirtuously denouncing petty, vulgar political corruption which theythemselves often instigate, and thus they divert attention from theirown extensive rascality. 

A MULTITUDE OF ACQUISITIONS

Why tempt exhaustion by lingering upon a multitude of other fraudswhich went to increase the wealth and possessions of the Vanderbiltfamily? One after another--often several simultaneously--they wereput through, sometimes surreptitiously, again with overt effrontery. Legislative measures in New York and many other States were draftedwith such skill that sly provisions allowing the greatest frauds wereconcealed in the enactments; and the first knowledge that theplundered public frequently had of them was after they had alreadybeen accomplished. These frauds comprised corrupt laws that gave, incircumstances of notorious scandal, tracts of land in the AdirondackMountains to railroad companies now included in the Vanderbiltsystem. They embraced laws, and still more laws, exempting this orthat stock or property from taxation, and laws making presents ofvaluable franchises and allowing further consolidations. Laws wereenacted in New York State the effects of which were to destroy theErie 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 andmany other measures will be skimmed over by a simple reference, andattention focussed on a particularly large and notable transaction bywhich William K. Vanderbilt in 1898 added about $59, 000, 000 to hisfortune at one superb swoop. 

The Vanderbilt ownership of various railroad systems has been of anintricate, roundabout nature. A group of railroads, the majority ofthe stock of which was actually owned by the Vanderbilt family, werenominally put under the ownership of different, and apparentlydistinct, railroad companies. This devious arrangement was intendedto conceal the real ownership, and to have a plausible claim incounteracting the charge that many railroads were concentrated in oneownership, and were combined in monopoly in restraint of trade. Theplan ran thus: The Vanderbilts owned the New York Central and HudsonRiver Railroad. In turn this railroad, as a corporation, owned thegreater part of the $50, 000, 000 stock of the Lake Shore Railroad. TheLake Shore, in turn, owned the control, or a chief share of thecontrol, of other railroads, and thus on. 

In 1897, William K. Vanderbilt began clandestinely campaigning tocombine the New York Central and the Lake Shore under one definite, centralized management. This plan was one in strict harmony with thetrend of the times, and it had the undoubted advantage of promisingto save large sums in managing expenses. But this anticipatedretrenchment was not the main incentive. A dazzling opportunity waspresented of checking in an immense amount in loot. The grandsonagain followed his eminent grandfather's teachings; his plan wasnothing more than a repetition of what the old Commodore had done inhis consolidations. 

During the summer and fall of 1897 the market gymnastics of LakeShore stock were cleverly manipulated. By the declaration of a sevenper cent. Dividend the market price of the stock was run up from 115to about 200. The object of this manipulation was to have ajustification for issuing $100, 000, 000 in three and one-half percent. New York Central bonds to buy $50, 000, 000 of Lake Shore sevenper cent. Capital stock. By his personal manipulation, William K. Vanderbilt at the same time ballooned the price of New York Centralstock. 

The purpose was kept a secret until shortly before the plan wasconsummated on February 4, 1898. On that day William K. Vanderbiltand his subservient directors of the New York Central gathered theircorpulent and corporate persons about one table and voted to buy theLake Shore stock. With due formalities they then adjourned, andmoving over to another table, declared themselves in meeting asdirectors of the Lake Shore Railroad, and solemnly voted to acceptthe offer. 

Presently, however, an awkward and slightly annoying defect wasdiscovered. It turned out that the Stock Corporation law of New YorkState specifically prohibited the bonded indebtedness of anycorporation being more than the value of the capital stock. Thisdiscovery was not disconcerting; the obstacle could be easilyovercome with some well-distributed generosity. A bill was quicklydrawn up to remedy the situation, and hurried to the Legislature thenin session at Albany. The Assembly balked and ostentatiously refusedto pass it. But after the lapse of a short time the Assembly saw agreat new light, and rushed it through on March 3, on which same dayit passed the Senate. It was at this precise time that a certainnoted lobbyist at Albany somehow showed up, it was alleged, with afund of $500, 000, and members of the Assembly and Senate suddenlyrevealed evidences of being unusually flush with money. [Footnote:The author is so informed by an official who represented New YorkCity's legal interests at this session and successive Legislativesessions, and who was thoroughly conversant with every move. SeeChapter 80, Laws of 1898, Laws of New York, 1898, ii: 142. Theamendment declared that Section 24 of the Stock Corporation Law didnot apply to a railroad corporation. ]

A very illuminating transaction, surely, and well deserving ofphilosophic comment. This, however, will be eschewed, and attentionnext turned to the manner in which the Vanderbilts, in 1899, obtainedcontrol of the Boston and Albany Railroad. 

THE BOSTON AND ALBANY RAILROAD BECOMES THEIRS. 

To a great extent, this railroad had been built with public fundsraised by enforced taxation, the city of Albany contributing$1, 000, 000, and the State of Massachusetts $4, 300, 000 of publicfunds. Originally it looked as if the public interests were fullyconserved. But gradually, little by little, predatory corporateinterests got in their delicate work, and induced successivelegislatures and State officials to betray the public interests. Thepublic holdings of stock were entirely subordinated, so that in timea private corporation secured the practical ownership. 

Finally, in 1899, the Legislature of Massachusetts effaced the lastvestige of State ownership by giving the Vanderbilts a perpetuallease of this richly profitable railroad for a scant two milliondollars' payment a year. During the debate over this actRepresentative Dean charged in the Legislature that "it is commonrumor in the State House that members are receiving $300 apiece fortheir votes. " The acquisition of this railroad enabled the New YorkCentral to make direct connection with Boston, and with much of theNew England coast, and added about four hundred miles to theVanderbilt system. Most of the remainder of the New England territoryis subservient to the Boston and Maine Railroad system in which theAmerican Express Company, controlled by the Vanderbilts, owns 30, 000shares. 

To pay interest and dividends on the hundreds of millions of dollarsof inflated bonds and stock which three generations of theVanderbilts had issued, and to maintain and enhance their value, itwas necessary to keep on increasingly extorting revenues. The sourcesof the profits were palpable. Time after time freight rates wereraised, as was more than sufficiently proved in various officialinvestigations, despite denials. Conjunctively with this process, another method of extortion was the ceaseless one of beating down thewages of the workers to the very lowest point at which they could behired. While the Vanderbilts and other magnates were manufacturinglaw at will, and boldly appropriating, under color of law, colossalpossessions in real and personal property, how was the law, asembodied in legislatures, officials and courts acting toward theworking class?

THE GOVERNMENT AN ENGINE OF TYRANNY. 

The grievances and protests of the workers aroused no response savethe ever-active one of contumely, coercion and violent reprisals. Thetreasury of Nation, States and cities, raised by a compulsorytaxation falling heavily upon the workers, was at all times at thecomplete disposal of the propertied interests, who emptied it as fastas it was filled. The propertiless and jobless were left to starve;to them no helping arm was outstretched, and if they complained, noquarter given. The State as an institution, while supported by thetoil of the producers, was wholly a capitalist State with thecapitalists in complete supremacy to fashion and use it as theychose. They used the State political machinery to plunder the masses, and then, at the slightest tendency on the part of the workers toresist these crushing injustices and burdens, called upon the Stateto hurry out its armed forces to repress this dangerous discontent. 

In Buffalo, in 1890-1891, thirty-one in every hundred destitutes wereimpoverished 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 publicfunds were given outright to the capitalists, but not a centappropriated to provide work for the unemployed. In the panic of1893, when millions of men, women and children were out of work, themachinery of government, National, State and municipal, proffered notthe least aid, but, on the contrary, sought to suppress agitation andprohibit meetings by flinging the leaders into jail. Basing hisconclusions upon the (Aldrich) United States Senate Report of 1893--areport highly favorable to capitalist interests, and not unexpectedlyso, since Senator Aldrich was the recognized Senatorial mouthpiece ofthe great vested interests--Spahr found that the highest daily wagefor all earners, taken in a mass, was $2. O4 [Footnote: "The PresentDistribution of Wealth in The United States. "]

More than three-quarters of all the railroad employees in the UnitedStates received less than two dollars a day. Large numbers ofrailroad employees were forced to work from twelve to fourteen hoursa day, and their efficiency and stamina thus lowered. Periodicallymany were laid off in enforced idleness; and appalling numbers weremaimed or killed in the course of duty. [Footnote: The report of theWisconsin Railway Commissioners for 1894, Vol. Xiii. , says: "In arecent year more railway employees were killed in this country thanthree times the number of Union men slain at the battle of LookoutMountain, Missionary Ridge and Orchard Knob combined. . . . In thebloody Crimean War, the British lost 21, 000 in killed and wounded--not as many as are slain, maimed and mangled among the railroad meninjured [Footnote: of the country in a single year. " Various reportsof the Interstate Commerce Commission state the same facts. ] or slainlargely because the railroad corporations refused to expend money inthe introduction of improved automatic coupling devices, theseworkers or their heirs were next confronted by what? The unjust andoppressive provisions of worthless employers' liability laws draftedby corporation attorneys in such a form that the worker or his familygenerally had almost no claim. The very judges deciding these suitswere, as a rule, put on the bench by the railroad corporations. 

MACHINE GUNS FOR THE OVERWORKED. 

These deadly conditions prevailed on the Vanderbilt railroads evenmore than on any others; it was notorious that the Vanderbilt systemwas not only managed in semi-antiquated ways so far as the operationwas concerned, but also that its trainmen were terribly underpaid andoverworked. [Footnote: "Semi-antiquated ways. " Only recently the"Railway Age Gazette, " issue of January, 1909, styled the New YorkCentral's directors as mostly "concentrated absurdities, physicallyincompetent, mentally unfit, or largely unresident and inattentive. "]In reply to a continued agitation for better hours on the part of theVanderbilt employees, the New York Legislature passed an act, in1892, which apparently limited the working hours of railroademployees to ten a day. There was a gleam of sunshine, but lo! whenthe act was critically examined after it had become a law, it wasfound that a "little joker" had been sneaked into its mass oflawyers' terminology. The surreptitious clause ran to this effect:That railroad companies were permitted to exact from their employeesovertime work for extra compensation. This practically made the wholelaw a negation. 

So it turned out; for in August, 1892, the switchmen employed byvarious railroad lines converging at Buffalo struck for shorter hoursand more pay. The strike spread, and was meeting with tacticalsuccess; the strikers easily persuaded men who had been hired to filltheir jobs to quit. What did the Vanderbilts and their allies now do?They fell back upon the old ruse of invoking armed force to suppresswhat they proclaimed to be violence. They who had bought law and hadviolated the law incessantly now represented that their propertyinterests were endangered by "mob violence, " and prated of the needof 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 entireState militia, a force of 8, 000, and dispatched it to Buffalo. Thestrikers were now confronted with bayonets and machine guns. Thesoldiery summarily stopped the strikers from picketing, that is tosay, from attempting to persuade strikebreakers to refrain fromtaking their places. Against such odds the strike was lost. 

If, however, the Vanderbilts could not afford to pay their workers afew cents more in wages a day, they could afford to pay millions ofdollars for matrimonial alliances with foreign titles. Theseexcursions into the realm of high-caste European nobility have thusfar cost the Vanderbilt family about $15, 000, 000 or $20, 000, 000. Whenimpecunious counts, lords, dukes and princes, having wasted theinheritance originally obtained by robbery, and perpetuated byrobbery, are on the anxious lookout for marriages with greatfortunes, and the American money magnates, satiated with vulgarwealth, aspire to titled connections, the arrangement becomes easy. [Footnote: More than 500 American women have married titledforeigners. The sum of about $220, 000, 000, it is estimated (1909), has followed them to Europe. ] Romance can be dispensed with, and thelawyers 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 theDuke of Marlborough. The wedding ceremony was one of showy splendor;millions of dollars in gifts were lavished upon the couple. Othermillions in cash, wrenched also from the labor of the Americanworking population, went to rehabilitate and maintain Blenheim House, with its prodigal cost of reconstruction, its retinue of two hundredservants, and its annual expense roll of $100, 000. Millions moreflowed out from the Vanderbilt exchequer in defraying the cost ofyachts and of innumerable appurtenances and luxuries. Not less than$2, 500, 000 was spent in building Sutherland House in London. Great aswas this expense, it was not so serious as to perturb the duchess'father; his $50, 000, 000 feat of financial legerdemain, in 1898, alonefar more than made up for these extravagant outlays. The Marlboroughtitle was an expensive one; it turned out to be a better thing toretain than the man who bore it; after a thirteen years' compact, thecouple decided to separate for "good and sufficient reasons, " intowhich it is not our business to inquire. All told, the Marlboroughdukedom had cost William K. Vanderbilt, it was said, fully$10, 000, 000. 

Undeterred by Cousin Consuelo's experience, Gladys Vanderbilt, adaughter of Cornelius, likewise allied herself with a title bymarrying, in 1908, Count Laslo Szechenyi, a sprig of the Hungarianfeudal nobility. "The wedding, " naively reported a scribe, "wascharacterized by elegant simplicity, and was witnessed by only threehundred relatives and intimate friends of the bride and bridegroom. "The "elegant simplicity" consisted of gifts, the value of which wasestimated at fully a million dollars, and a costly ceremony. If thebride had beauty, and the bridegroom wit, no mention of them wasmade; the one fact conspicuously emphasized was the all-important oneof 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 oneknew except the parties to the transaction. Her father had died, in1899, leaving a fortune nominally reaching about $100, 000, 000. Itsactual proportions were much greater. It had long been customary onthe part of the very rich, as the New York State Board of TaxCommissioners pointed out, in 1903, to evade the inheritance tax inadvance by various fraudulent devices. One of these was to inclosestocks 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 hiswill he had cut off his eldest son, Cornelius, with but a punymillion dollars. And the reason for this parental sternness? He haddisapproved of Cornelius' choice in marriage. To his son, Alfred, theunrelenting multimillionaire left the most of his fortune, with ashowering of many millions upon his widow, upon Reginald, anotherson, and upon his two daughters. Cornelius objected to the injusticeand hardship of being left a beggar with but a scanty million, andthreatened a legal contest, whereupon Alfred, pitying the direstraits to which Brother Cornelius had been reduced, presented himwith six or seven millions with which to ease the biting pangs ofwant. 

Marriages with titled foreigners have proved a drain upon theVanderbilt fortune, although, thanks to their large share in thecontrol of laws and industrial institutions, the Vanderbilts possessat all times the power of recouping themselves at volition. TheAmerican 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 theStandard Oil Company, and in part from an industrious career ofcorruption and theft. The elder Whitney, according to facts revealedin many official investigations and lawsuits, debauched legislaturesand common councils into giving him and his associates publicfranchises for street railways and for other public utilities, and hestole outright tens of millions of dollars in the manipulation of thestreet railways in various cities. His crimes, and those of hisassociates, were of such boldness and magnitude that even the cynicalbusiness classes were moved to astonishment. [Footnote: For adetailed account see that part of this work, "Great Fortunes fromPublic Franchises. "] Cornelius Vanderbilt, jr. , married a daughter ofR. T. Wilson, a multimillionaire, whose fortune came to a greatextent from the public franchises of Detroit. The initial andcontinued history of the securing and exploitation of the streetrailway and other franchises of that city has constituted a solidchapter of the most flagrant fraud. William K. Vanderbilt, jr. , married a daughter of the multimillionaire Senator Fair, ofCalifornia, whose fortune, dug from mines, bought him a seat in theUnited States Senate. Thus, various multi-millionaire fortunes havebeen interconnected by these American marriages. 

[Illustration: CORNELIUS VANDERBILT, Great-Grandson of CommodoreVanderbilt. ]

DIVERSITY OF THE VANDERBILT POSSESSIONS. 

The fortune of the Vanderbilt family, at the present writing, isrepresented by the most extensive and different forms of property. Railroads, street railways, electric lighting systems, mines, industrial plants, express companies, land, and Government, State andmunicipal bonds--these are some of the forms. From one industrialplant alone--the Pullman Company--the Vanderbilts draw millions inrevenue yearly. Formerly they owned their own palace car company, theWagner, but it was merged with the Pullman. The frauds and extortionsof the Pullman Company have been sufficiently dealt with in theparticular chapter on Marshall Field. In the far-away PhilippineIslands the Vanderbilts are engaged, with other magnates, in theexploitation of both the United States Government and the nativepopulation. The Visayan Railroad numbers one of the Vanderbilts amongits directors. This railroad has already received a Governmentsubsidy of $500, 000, in addition to the free gift of a perpetualfranchise, on the ground that "the railroad was necessary to thedevelopment of the archipelago. "

But the Vanderbilts' principal property consists of the New YorkCentral Railroad system. The Union Pacific Railroad, controlled bythe Harriman-Standard Oil interests, now owns $14, 000, 000 of stock inthe New York Central system, and has directors on the governingboard. The probabilities are that the voting power of the New YorkCentral, the Lake Shore and other Vanderbilt lines is passing intothe hands of the Standard Oil interests, of which Harriman was both apart and an ally. This signifies that it is only a question of ashort time when all or most of the railroads of the United Stateswill be directed by one all-powerful and all-embracing trust. 

But this does not by any means denote that the Vanderbilts have beenstripped of their wealth. However much they may part with theirstock, which gives the voting power, it will be found that, likeWilliam H. Vanderbilt, they hold a stupendous amount in railroad, andother kinds of, bonds. As the Astors and other rich families wereperfectly willing, in 1867, to allow Commodore Vanderbilt to assumethe management of the New York Central on the ground that under hisbold direction their profits and loot would be greater, so thelackadaisical Vanderbilts of the present generation perhaps likewiselooked upon Harriman, who proved his ability to accomplish vastfraudulent stock-watering operations and consolidations, and to oustlesser magnates. The New York Central, at this writing, still remainsa Vanderbilt property, not so distinctively so as it was twenty yearsago, yet strongly enough under the Vanderbilt domination. Accordingto Moody, this railroad's net annual income in 1907 was $34, 000, 000. [Footnote: "Moody's Magazine, " issue of August, 1908] In alluringlydescribing its present and prospective advantages and value Moodywent on:

"To begin with, it has entry into the heart of New York City, withextensive passenger and freight terminals, all of which are bound tobe of steadily increasing worth as the years go by, as New Yorkcontinues to grow in population and wealth. It has, in addition, apractically 'water grade' line all the way from New York to Chicago, and, therefore, for all time must necessarily have a great advantageover lines like the Erie, the Lackawanna and others with heavygrades, many curves, etc. It has a myriad of small feeders andbranches in growing and populous parts of the State of New York, aswell as in the sections further to the west. It touches the GreatLakes at various points, operates water transportation for freight toall parts of the lakes; enters Chicago over its own tracks andcompetes aggressively with the Pennsylvania for all traffic to andfrom all parts of the Mississippi Valley and the West and Southwest. It is in no danger from disastrous competition in its own chosenterritory, therefore, and constantly receives income of vastimportance through a network of feeders which penetrate the territoryof some of the largest of its rivals. "

THE SORT OF ABILITY DISPLAYED. 

The particular kind of ability by which one man, followed by hisdescendants, obtained the controlling ownership of this greatrailroad system, and of other properties, has been herein adequatelyset forth. Long has it been the custom to attribute to CommodoreVanderbilt and successive generations of Vanderbilts an almostsupernatural "constructive genius, " and to explain by that glibphrase their success in getting hold of their colossal wealth. Thisexplanation is clumsy fiction that at once falls to pieces underhistorical scrutiny. The moment a genuine investigation is begun intothe facts, the glamour of superior ability and respectabilityevaporates, and the Vanderbilt fortune stands out, like all otherfortunes, as the product of a continuous chain of frauds. 

Just as fifty years ago Commodore Vanderbilt was blackmailing hisoriginal millions without molestation by law, so today theVanderbilts are pursuing methods outside the pale of law. Not all ofthe facts have been given, by any means; only the most important havebeen included in these chapters. For one thing, no mention has beenmade of their repeated violations of a law prohibiting the grantingof rebates--a law which was stripped of its imprisonment clause bythe railroad magnates, and made punishable by fine only. Time andtime again in recent years has the New York Central been provedguilty in the courts of violating even this emasculated law. From thevery inception of the Vanderbilt fortune the chronicle is the same, and ever the same--legalized theft by purchase of law, andlawlessness by evasion or defiance of law. With fraud it began, byfraud it has been increased and extended and perpetuated, and byfraud 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 atapproximately the same time. One of the most powerful fortunes in theUnited States, it now controls, or has exercised a dominant share ofthe control, over more than 18, 000 miles of railway, the totalownership of which is represented by considerably more than a billiondollars in stocks and bonds. The Gould fortune is also either openlyor 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 fairlyobvious, although what is its exact figure is a matter not to beeasily ascertained. In the flux of present economic conditions, which, so far as the control of the resources of the United States isconcerned, have simmered down to desperate combats between individualmagnates, or contesting sets of magnates, the proportions of greatfortunes, especially those based upon railroads and industries, constantly tend to vary. 

In the years 1908 and 1909 the Gould fortune, if report be true, wassomewhat diminished by the onslaughts of that catapultic railroadbaron, E. H. Harriman, who unceremoniously seized a share of thevoting control of some of the railroad systems long controlled by theGoulds. Despite this reported loss, the Gould fortune is an active, aggressive and immense one, vested with the most extensive power, andembracing hundreds of millions of dollars in cash, land, palaces, orprofit-producing property in the form of bonds and stocks. Itsinfluence and ramifications, like those of the Vanderbilt and ofother huge fortunes, penetrate directly or indirectly into everyinhabited part of the United States, and into Mexico and otherforeign countries. 

JAY GOULD'S BOYHOOD

The founder of this fortune was Jay Gould, father of the presentholding 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 variouschores on his father's farm. In driving the cows he had to gobarefoot, perforce, by reason of poverty, and often thistles bruisedhis feet--a trial which seems to have left such a poignant andindelible impression upon his mind that when testifying before aUnited States Senate investigating committee forty years later hepathetically spoke of it with a reminiscent quivering. His fatherwas, indeed, so poor that he could not afford to let him go to thepublic school. The lad, however, made an arrangement with ablacksmith by which he received board in return for certain clericalservices. These did not interfere with his attending school. Whenfifteen, he became a clerk in a country store, a task which, herelated, kept him at work from six o'clock in the morning until teno'clock at night. It is further related that by getting up at threeo'clock in the morning and studying mathematics for three years, helearned the rudiments of surveying. 

According to Gould's own story, an engineer who was making a map ofUlster County hired him as an assistant at "twenty dollars a monthand found. " This engagement somehow (we are not informed how) turnedout unsatisfactorily. Gould was forced to support himself by making"noon marks" for the farmers. To two other young men who had workedwith him upon the map of Ulster County, Gould (as narrated byhimself) sold his interest for $500, and with this sum as capital heproceeded 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 Pennsylvaniawith Zadoc Pratt, a New York merchant, politician and Congressman ofa certain degree of note at the time. [Footnote: Pratt was regardedas one of the leading agricultural experts of his day. His farm ofthree hundred and sixty-five acres, at Prattsville, New York, wasreputed to be a model. A paper of his, descriptive of his farm, andcontaining woodcut engravings, may be found in U. S. SenateDocuments, Second Session, Thirty-seventh Congress, 1861-62, v:411-415. ] Pratt, it seems, was impressed by young Gould's energy, skilland smooth talk, and supplied the necessary capital of $120, 000. Gould, as the phrase goes, was an excellent bluff; and so dexterouslydid he manipulate and hoodwink the old man that it was quite sometime before Pratt realized what was being done. Finally, becomingsuspicious of where the profits from the Gouldsboro tannery (namedafter Gould) were going, Pratt determined upon some overhauling andinvestigating. 

Gould was alert in forestalling this move. During his visits to NewYork City, he had become acquainted with Charles M. Leupp, a richleather merchant. Gould prevailed upon Leupp to buy out Pratt'sinterest. When Gould returned to the tannery, he found that Pratt hadbeen analyzing the ledger. A scene followed, and Pratt demanded thatGould buy or sell the plant. Gould was ready, and offered him$60, 000, which was accepted. Immediately Gould drew upon Leupp forthe money. Leupp likewise became suspicious after a time, and fromthe ascertained facts, had the best of grounds for becoming so. Thesequel was a tragic one. One night, in the panic of 1857, Leupp shotand killed himself in his fine mansion at Madison avenue and Twenty-fifth street. His suicide caused a considerable stir in New YorkCity. [Footnote: Although later in Gould's career it was freelycharged that he had been the cause of Leupp's suicide, no facts wereofficially brought out to prove the charge. The coroner's jury foundthat Leupp had been suffering from melancholia, superinduced, doubtless, by business reverses. 

Even Houghton, however, in his flamboyantly laudatory work describesGould's cheating of Pratt and Leupp, and Leupp's suicide. Accordingto Houghton, Leupp's friends ascribed the cause of the act to Gould'streachery. 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 NewYork City; the New York directory for that year contains this entry:"Jay Gould, leather merchant, 39 Spruce street; house Newark. " Forseveral years after this his name did not appear in the directory. 

He had been, however, edging his way into the railroad business withthe sums that he had stolen from Pratt and Leupp. At the very timethat Leupp committed suicide, Gould was buying the first mortgagebonds of the Rutland and Washington Railroad--a small line, sixty-twomiles long, running from Troy, New York, to Rutland, Vermont. Thesebonds, which he purchased for ten cents on the dollar, gave himcontrol of this bankrupt railroad. He hired men of managerialability, had them improve the railroad, and he then consolidated itwith other small railroads, the stock of which he had bought in. 

With the passing of the panic of 1857, and with the incoming of thestupendous corruption of the Civil War period, Gould was able tomanipulate his bonds and stock until they reached a high figure. Witha part of his profits from his speculation in the bonds of theRutland and Washington Railroad, he bought enough stock of theCleveland and Pittsburg Railroad to give him control of that line. This he manipulated until its price greatly rose, when he sold theline to the Pennsylvania Railroad Company. In these transactionsthere were tortuous substrata of methods, of which little to-day canbe learned, except for the most part what Gould himself testified toin 1883, which testimony he took pains to make as favorable to hispast as possible. 

His career from 1867 onward stood out in the fullest prominence; amultitude of official reports and investigations and court recordscontribute a translucent record. He became invested with a sinisterdistinction as the most cold-blooded corruptionist, spoliator, andfinancial pirate of his time; and so thoroughly did he earn thisreputation that to the end of his days it confronted him at everystep, and survived to become the standing reproach and terror of hisdescendants. For nearly a half century the very name of Jay Gould hasbeen a persisting jeer and by-word, an object of popular contumelyand hatred, the signification of every foul and base crime by whichgreed triumphs. 

WHY THIS BIASED VIEW OF GOULD'S CAREER?

Yet, it may well be asked now, even if for the first time, why hasJay Gould been plucked out as a special object of opprobrium? Whatcurious, erratic, unstable judgment is this that selects this one manas the scapegoat of commercial society, while deferentially allowinghis business contemporaries the fullest measure of integrity andrespectability?

Monotonous echoes of one another, devoid of understanding, writer hasfollowed writer in harping undiscriminatingly upon Jay Gould'scrimes. His career has been presented in the most forbidding colors;and in order to show that he was an abnormal exception, and not afamiliar type, his methods have been darkly contrasted with those ofsuch illustrious capitalists as the Astors, the Vanderbilts, andothers. 

Thus, has the misinformed thing called public opinion been shaped bythese scribbling purveyors of fables; and this public opinion hasbeen taught to look upon Jay Gould's career as an exotic, "horribleexample, " having nothing in common with the careers of other foundersof large fortunes. The same generation habitually addicted to cursingthe memory of Jay Gould, and taunting his children and grandchildrenwith the reminders of his thefts, speaks with traditional respect ofthe wealth of such families as the Astors and the Vanderbilts. Yetthe cold truth is, as has been copiously proved, John Jacob Astor wasproportionately as notorious a swindler in his day as Gould was inhis; and as for Commodore Vanderbilt, he had already madeblackmailing on a large scale a safe art before Gould was out of histeens. 

Gould has been impeached as one of the most audacious and successfulbuccaneers of modern times. Without doubt he was so; a freebooterwho, if he could not appropriate millions, would filch thousands; apitiless human carnivore, glutting on the blood of his numberlessvictims; a gambler destitute of the usual gambler's code of fairnessin abiding by the rules; an incarnate fiend of a Machiavelli in hiscalculations, his schemes and ambushes, his plots and counterplots. 

But it was only in degree, and not at all in kind, that he differedfrom the general run of successful wealth builders. The Vanderbiltscommitted thefts of as great an enormity as he, but they graduallymanaged to weave around themselves an exterior of protectiverespectability. All sections of the capitalist class, in so fiercelyreviling Gould, reminded one of the thief, who, to divert attentionfrom himself, joins with the pursuing crowd in loudly shouting, "Stopthief!" We shall presently see whether this comparison is anexaggerated one or not. 

THE TEACHINGS OF HIS ENVIRONMENT. 

To understand the incentives and methods of Gould's career, it isnecessary to know the endemic environment in which he grew up andflourished, and its standards and spirit. He, like others of hisstamp, were, in a great measure, but products of the times; and it isnot the man so much as the times that are of paramount interest, forit is they which supply the explanatory key. In preceding chaptersrepeated insights have been given into the methods not merely of onephase, but of all phases, of capitalist formulas and processes. Atthe outset, however, in order to approach impartially this narrativeof the Gould fortune, and to get a clear perception of the dominantforces 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 norcompassion for the very poverty its grotesque system created. Prateits higher classes might of the blessings of poverty; and they mightspread broadcast their prolix homilies on the virtues of a usefullife, "rounded by an honorable poverty. " But all of these teachingswere, in one sense, chatter and nonsense; the very classes which sounctuously preached them were those who most strained themselves toacquire all of the wealth that they possibly could. In another sense, these teachings proved an effective agency in the infusing into theminds of the masses of established habits of thought calculated torender them easy and unresisting victims to the rapacity of theirdespoilers. 

From these "upper classes" proceeded the dictation of laws; and thelaws showed (as they do now) what the real, unvarnished attitude ofthese fine, exhorting moralists was towards the poor. Poverty wasvirtually prescribed as a crime. The impoverished were regarded inlaw as paupers, and so repugnant a term of odium was that of pauper, so humiliating its significance and treatment, that great numbers ofthe destitute preferred to suffer and die in want and silence ratherthan avail themselves of the scanty and mortifying public aidobtainable only by acknowledging themselves paupers. 

Sickness, disability, old age, and even normal life, in poverty werea terrifying prospect. The one sure way of escaping it was to get andhold wealth. The only guarantee of security was wealth, provided itspossessor could keep it intact against the maraudings of his ownclass. Every influence conspired to drive men into making desperateattempts to break away from the stigma and thraldom of poverty, andgain economic independence and social prestige by the ownership ofwealth. 

But how was this wealth to be obtained? Here another set ofinfluences combined with the first set to suppress or shatterwhatever doubts, reluctance or scruples the aspirant might have. Theacquisitive young man soon saw that toiling for the profit of othersbrought nothing but poverty himself; perhaps at the most, some smallsavings that were constantly endangered. To get wealth he must notonly exploit his fellow men, he found, but he must not be squeamishin his methods. This lesson was powerfully and energetically taughton every hand by the whole capitalist class. 

Conventional writers have descanted with a show of great indignationupon Gould's bribing of legislative bodies and upon his cheatings andswindlings. Without adverting again to the corruption, reaching farback into the centuries, existing before his time, we shall simplydescribe some of the conditions that as a young man he witnessed orwhich were prevalent synchronously with his youth. 

Whatever sphere of business was investigated, there it was at oncediscovered that wealth was being amassed, not only by fraudulentmethods, but by methods often a positive peril to human life itself. Whether large or small trader, these methods were the same, varyingonly in degree. 

 * * * * * * *

ALL BUSINESS REEKED WITH FRAUD. 

A Congressional committee, probing, in 1847-1848, into frauds in thesale of drugs found that there was scarcely a wholesale or retaildruggist who was not consciously selling spurious drugs which were amenace to human life. Dr. M. J. Bailey, United States Examiner ofDrugs at the New York Custom House, was one of the many expertwitnesses who testified. "More than one-half of many of the mostimportant chemical and medicinal preparations, " Dr. Bailey stated, "together with large quantities of crude drugs, come to us so muchadulterated as to render them not only worthless as a medicine, butoften dangerous. " These drugs were sold throughout the United Statesat high prices. [Footnote: Report of Select Committee on theImportation of Drugs. House Reports, Thirtieth Congress, FirstSession, 1847-48, Report No. 664:9. In a previous chapter, otherextracts from this report have been given showing in detail what manyof these fraudulent practices were. ] There is not a single record ofany criminal action pressed against those who profited from sellingthis poisonous stuff. 

The manufacture and sale of patent medicines were attended with thegrossest frauds. At that time, to a much greater extent than now, thenewspapers profited more (comparatively) from the publication ofpatent medicine advertisements; and even after a Congressionalcommittee had fully investigated and exposed the nature of thesenostrums, the newspapers continued publishing the alluring andfraudulent advertisements. 

After showing at great length the deceptive and dangerous ingredientsused in a large number of patent medicines, the Committee on theJudiciary of the House of Representatives went on in its report ofFebruary 6, 1849: "The public prints, without exception, publishedthese promises and commendations. The annual [advertising] fee forpublishing Brandeth's pills has amounted to $100, 000. Morrison paidmore than twice as much for the advertisement of his never-dyinghygiene. " The committee described how Morrison's nostrums oftencontained powerful poisons, and then continued: "Morrison isforgotten, and Brandeth is on the high road to the same distinction. T. W. Conway, from the lowest obscurity, became worth millions fromthe sale of his nostrums, and rode in triumph through the streets ofBoston in his coach and six. A stable boy in New York was enrolledamong the wealthiest in Philadelphia by the sale of a panacea whichcontains both mercury and arsenic. Innumerable similar cases can beadduced. " [Footnote: Report No. 52. Reports of Committees, ThirtiethCongress, Second Sess. , i: 31. ] Not a few multimillionaire familiesof to-day derive their wealth from the enormous profits made by theirfathers and grandfathers from the manufacture and sale of thesepoisonous medicines. 

 * * * * * * *

SUCCESS AS GOULD LEARNED IT. 

The frauds among merchants and manufacturers reached far morecomprehensive and permeating proportions. In periods of peace thesefraudulent methods were nauseating enough, but in times of war theywere inexpressibly repellant and ghastly. During the Mexican War theNorthern shoe manufacturers dumped upon the army shoes which were ofso 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 ison record that the American army in Mexico threw them away upon thesands in disgust. But it was during the Civil War that Northerncapitalists of every kind coined fortunes from the nationaldisasters, and from the blood of the very armies fighting for theirinterests shown how Commodore Vanderbilt and other shippingmerchants fraudulently sold or leased to the Government forexorbitant sums, ships for the transportation of soldiers--ships sodecayed or otherwise unseaworthy, that they had to be condemned. Inthose chapters such facts were given as applied mainly to Vanderbilt;in truth, however, they constituted but a mere part of the gorynarrative. While Vanderbilt, as the Government agent, was leasing orbuying rotten ships, and making millions of dollars in loot bycollusion, the most conspicuous and respectable shipping merchants ofthe time were unloading their old hulks upon the Government atextortionate prices. 

One of the most ultra-respectable merchants of the time, ranked ofhigh commercial standing and austere social prestige, was, forinstance, Marshall O. Roberts. This was the identical Roberts sodeeply involved in the great mail-subsidy frauds. This was also thesame sanctimonious Roberts, who, as has been brought out in thechapters on the Astor fortune, joined with John Jacob Astor andothers in signing a testimonial certifying to the honesty of theTweed Regime. A select Congressional committee, inquiring intoGovernment contracts in 1862-63, brought forth volumes of facts thatamazed and sickened a committee accustomed to ordinary politicalcorruption. Here is a sample of the testimony: Samuel Churchman, aGovernment vessel expert engaged by Welles, Secretary of the Navy, told in detail how Roberts and other merchants and capitalists hadcontrived to palm off rotten ships on the Government; and, in hisfurther 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 theGovernment. 

Q. For how much?

A. One hundred thousand dollars each, and one was totally lost andthe 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, Churchmantestified that the Government had been cheated out of at least$25, 000, 000 in the chartering and purchase of vessels, and that hebased his judgment upon "the chartered and purchased vessels I amacquainted with, and the enormous sums wasted there to my certainknowledge. " [Footnote: Ibid, 95-97. ] This $25, 000, 000 swindled fromthe Government in that one item of ships alone formed the basis ofmany a present plutocratic fortune. 

 * * * * * * *

FRAUD UNDERLIES RESPECTABILITY. 

But this was not by any means the only schooling Gould received fromthe respectable business element. It can be said advisedly that therewas not a single avenue of business in which the most shamelessfrauds were not committed upon both Government and people. Theimporters and manufacturers of arms scoured Europe to buy upworthless arms, and then cheated the Government out of millions ofdollars in supplying those guns and other ordnance, all notoriouslyunfit for use. "A large proportion of our troops, " reported aCongressional Commission in 1862, "are armed with guns of veryinferior quality, and tens of thousands of the refuse arms of Europeare at this moment in our arsenals, and thousands more are still toarrive, 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 intothe connection between Government employees on the one hand, andbanks and contractors on the other, established the factconclusively, that the contractors regularly bribed Governmentinspectors in order to have their spurious wares accepted. [Footnote:House Reports of Committees, Thirty-seventh Congress, 1862-63, ReportNo. 64. The Chairman of this committee, Representative C. H. VanWyck, of New York, in reporting to the House of Representatives onFebruary 23, 1863, made these opening remarks:

"In the early history of the war, it was claimed that frauds andpeculations were unavoidable; that the cupidity of the avariciouswould take advantage of the necessities of the nation, and for a timemust revel and grow rich amidst the groans and griefs of the people;that pressing wants must yield to the extortion of the base; thatwhen the capital was threatened, railroad communication cut off, themost exorbitant prices could safely be demanded for steam and sailingvessels; that when our arsenals had been robbed of arms, gold couldnot be weighed against cannon and muskets; that the Government mustbe excused if it suffered itself to be overreached. Yet, after thelapse of two years, we find the same system of extortion prevailing, and robbery has grown more unblushing in its exactions as it feelssecure in its immunity from punishment, and that species of fraudwhich 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 arefinement upon the extortion and immense profits which preceded it. The freedom from punishment by which the first greedy and rapacioushorde were suffered to run at large with ill-gotten gains seems tohave demoralized too many of those who deal with the Government. "--Appendix to The Congressional Globe, Third Session, Thirty-seventhCongress, 1862-63, Part ii: 117. ]

In fact, the ramifications of the prevalent frauds were so extensivethat a number of Congressional committees had to be appointed at thesame time to carry on an adequate investigation; and even after longinquiries, it was admitted that but the surface had been scratched. 

During the Civil War, prominent merchants, with eloquent outbursts ofpatriotism, formed union defense committees in various Northerncities, and solicited contributions of money and commodities to carryon the war. It was disclosed before the Congressional investigatingcommittees that not only did the leading members of these uniondefense committees turn their patriotism to thrifty account ingetting contracts, but that they engaged in great swindles upon theGovernment in the process. Thus, Marcellus Hartley, a conspicuousdealer in military goods, and the founder of a multimillionairefortune, [Footnote: When Marcellus Hartley died in 1902, his personalproperty alone was appraised at $11, 000, 000. His entire fortune wassaid to approximate $50, 000, 000. His chief heir, Marcellus HartleyDodge, a grandson, married, in 1907, Edith Geraldine Rockefeller, oneof the richest heiresses in the world. Hartley was the principalowner of large cartridge, gun and other factories. ] admitted that hehad sold a large consignment of Hall's carbines to a member of theNew York Union Defense Committee. In a sudden burst of contrition hewent on, "I think the worst thing this Government has been swindledupon has been these confounded Hall's carbines; they have beenelevated in price to $22. 50, I think. " [Footnote: House Report No. 2, etc. , 1861-62, vol. Ii: 200-204] He could have accurately added thatthese carbines were absolutely dangerous; it was found that theirmechanism was so faulty that they would shoot off the thumbs of thevery soldiers using them. Hartley was one of the importers whobrought over the refuse arms of Europe, and sold them to theGovernment at extortionate prices. He owned up to having contractswith various of the States (as distinguished from the NationalGovernment) for $600, 000 worth of these worthless arms. [Footnote:Ibid. ] That corruscating patriot and philanthropic multimillionaireof these present times, J. Pierpont Morgan, was, as we shall see, profiting during the Civil War from the sale of Hall's carbines tothe Government. 

One of the Congressional committees, investigating contracts forother army material and provisions, found the fullest evidences ofgigantic frauds. Exorbitant prices were extorted for tents "whichwere valueless"; these tents, it appeared, were made from cheap orold "farmers'" drill, regarded by the trade as "truck. " Soldierstestified that they "could better keep dry out of them than under. "[Footnote: House Report No. 64, etc. , 1862-63: 6. ] Great frauds wereperpetrated in passing goods into the arsenals. One manufacturer inparticular, Charles C. Roberts, was awarded a contract for 50, 000haversacks and 50, 000 knapsacks. "Every one of these, " an experttestified, "was a fraud upon the Government, for they were not linen;they were shoddy. " [Footnote: Ibid. ] A Congressional committee foundthat the provisions supplied by contractors were either deleteriousor useless. Captain Beckwith, a commissary of subsistence, testifiedthat the coffee was "absolutely good for nothing and is worthless. Itis 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 avariety of other substances, with just coffee enough to give it ataste and aroma of coffee. [Footnote: House Report No. 2, etc. 1861-62, ii: 1459. ]

This committee extracted much further evidence showing how all othervarieties of provisions were of the very worst quality, and how"rotten and condemned blankets" in enormous quantities were passedinto the army by bribing the inspectors. It disclosed, at greatlength, how the railroads in their schedule of freight rates wereextorting from the Government fifty per cent. More than from privateparties. [Footnote: House Report No. 2, etc. , 1861-62, xxix. ] DonCameron, leader of the corrupt Pennsylvania political machine, and arailroad manipulator, [Footnote: He had been involved in at least onescandal investigated by a Pennsylvania Legislative Committee, andalso in several dubious railroad transactions in Maryland. ] was atthat time Secretary of War. Whom did he appoint as the supremeofficial in charge of railroad transportation? None other than ThomasA. Scott, the vice-president of the Pennsylvania Railroad. Scott, itmay be said, was another capitalist whose work has so often beenfulsomely described as being that of "a remarkable constructiveability. " The ability he displayed during the Civil War wasunmistakable. With his collusion the railroads extorted right andleft. The committee described how the profits of the railroads afterhis appointment rose fully fifty per cent in one year, and howquartermasters and others were bribed to obtain the transportation ofregiments. "This, " stated the committee, "illustrates the immense andunnecessary profits which was spirited from the Government andsecured to the railroads by the schedule fixed by the vice-presidentof the Pennsylvania Central under the auspices of Mr. Cameron. "[Footnote: House Report No. 2, etc. , 1861-62, xix. The PennsylvaniaRailroad, for example, made in 1862 the sum of $1, 350, 237. 79 more inprofits than it did in the preceding year. ]

These many millions of dollars extorted in frauds "came, " reportedthe committee, "out of the impoverished and depleted Treasury of theUnited States, at a time when her every energy and resources weretaxed to the utmost to maintain the war. " [Footnote: Ibid. , 4. ]

These are but a few facts of the glaring fraud and corruptionprevailing in every line of mercantile and financial business. Greatand audacious as Gould's thefts were later, they could not be put onthe same indescribably low plane as those committed during the CivilWar by men most of whom succeeded in becoming noted for their finerespectability and "solid fortunes. " So many momentous events weretaking place during the Civil War, that amid all the preparations, the battles and excitement, those frauds did not arouse that generalgravity of public attention which, at any other time, would haveinevitably resulted. Consequently, the men who perpetrated themcontrived to hide under cover of the more absorbing great events ofthose years. Gould committed his thefts at a period when the publichad little else to preoccupy its attention; hence they loomed up inthe 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, Gouldhad the opportunity of securing valuable and gratuitous instructionin the ways by which railroad projects and land grants were beingbribed through Congress. He was then only twenty-one years old, readyto learn, but, of course, without experience in dealing withlegislative 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 theydo it; their greatest ally was concealment; but one crowd of them hadtoo baldly bribed Congress to vote for an act giving an enormous landgrant in Iowa, Minnesota and other states, to the Des MoinesNavigation and Railroad Company. The facts unearthed must have been alasting lesson to Gould as to how things were done in the exaltedhalls of Congress. The charges made an ugly stir throughout theUnited States, and the House of Representatives, in self defense, hadto appoint a special committee to investigate itself. 

This committee made a remarkable and unusual report. Ordinarily incharges of corruption, investigating committees were accustomed toreporting innocently that while it might have been true thatcorruption was used, yet they could find no evidence that members hadreceived bribes; almost invariably such committees put the blame, andthe full measure of their futile excoriations, on "the iniquitouslobbyists. " But this particular committee, surprisingly enough, handed in no such flaccid, whitewashing report. It found conclusivelythat corrupt combinations of members of Congress did exist; and inrecommended the expulsion of four members whom it declared guilty toreceiving either money or land in exchange for their votes. One ofthese four expelled member, Orasmus B. Matteson, it appeared, was aleader of a corrupt combination; the committee branded him as havingarranged 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-fourthCongress, Third Session, 1856/57. Report No. 243, Vol. Iii. Insubsequent chapters many further details are given of the corruptionduring this period. ]

 But it was essentially during the Civil War that Gould received hiscompletest tuition in the great art of seizing property andprivileges by bribing legislative bodies. While many sections of thecapitalist class were, as we have seen, swindling manifold hundredsof millions of dollars from a hard-pressed country, and reapingfortunes by exploiting the lives of the very defenders of theirinterests, other sections, equally mouthy with patriotism, weresneaking through Congress and the Legislatures act after act, furtherlegalizing stupendous thefts. 

PATRIOTISM AT FIFTY PER CENT. 

Some of these acts, demanded by the banking interests, made thepeople of the United States pay an almost unbelievable usuriousinterest for loans. These banking statutes were so worded thatnominally the interest did not appear high; in reality, however, byvarious devices, the bankers, both national and international, wereoften able to extort from twenty to fifty, and often one hundred percent. , in interest, and this on money which had at some time orsomehow been squeezed out of exploited peoples in the United Statesor elsewhere. 

By these laws the bankers were allowed to get annual payment from theGovernment of six per cent. Interest in gold on the Government bondsthat they bought. They could then deposit those same bonds with theGovernment, and issue their own bank notes against ninety per cent. Of the bonds deposited. They drew interest from the Government on thedeposited bonds, and at the time charged borrowers an exorbitant rateof 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 sweepinto their coffers hundreds upon hundreds of millions of dollars, nota dollar of which did they earn, and all of which were sweated out ofthe adversities of the people of the United States. From 1863 to 1878alone the Government paid out to national banks as interest on bondsthe 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 answerto a resolution of the House of Representatives. ] On the other hand, the banks were entirely relieved from paying taxes; they secured thepassage of a law exempting Government bonds from taxation. Armieswere being slaughtered and legions of homes desolated, but it was arich and safe time for the bankers; a very common occurrence was itfor banks to declare dividends of twenty, forty, and sometimes onehundred, per cent. 

It was also during the stress of this Civil War period, when theworking and professional population of the nation was fighting on thebattlefield, or being taxed heavily to support their brothers inarms, that the capitalists who later turned up as owners of variousPacific railroad lines were bribing through Congress acts giving themthe most comprehensive perpetual privileges and great grants of moneyand of land. 

Gould saw how all of the others of the wealth seekers were gettingtheir fortunes; and the methods that he now plunged into use were butin keeping with theirs, a little bolder and more brutally frank, perhaps, but nevertheless nothing more than a repetition of what hadlong 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 ofdollars to his ownership was by his looting and wrecking of the ErieRailroad. If physical appearance were to be accepted as a gauge ofcapacity none would suspect that Gould contained the elements of oneof the boldest and ablest financial marauders that the system inforce had as yet produced. About five feet six inches in height andof slender figure, he gave the random impression of being a mild, meek man, characterized by excessive timidity. His complexion wasswarthy and partly hidden by closely-trimmed black whiskers; his eyeswere dark, vulpine and acutely piercing; his forehead was high. Hisvoice was very low, soft and insinuating. 

PRIVATE CONFISCATION OF THE ERIE RAILROAD. 

The Erie Railroad, running from New York City to Buffalo and thencewestward to Chicago, was started in 1832. In New York State alone, irrespective of gifts in other States, it received what was virtuallya gift of $3, 000, 000 of State funds, and $3, 217, 000 interest, making$6, 217, 000 in all. Counties, municipalities and towns through whichit passed were prevailed upon to contribute freely donations ofmoney, lands and rights. From private proprietors in New York Stateit obtained presents of land then valued at from $400, 000 to$500, 000, [Footnote: Report on the New York and Erie RailroadCompany, 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, anextraordinary series of special privileges and franchises was givento it. This process was manifolded in every State through which therailroad passed. The cost of construction and equipment came almostwholly from the grants of public funds. [Footnote: "The Erie railwaywas built by the citizens of this State with money furnished by itspeople. 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. " . . . "Ananalysis of the Erie Reorganization bill, etc. , submitted to theLegislature by John Livingston, Esq. , counsel for the Erie RailwayShareholders, 1876. "]

Confiding in the fair promises of its projectors, the peoplecredulously supposed that their interests would be safeguarded. Butfrom time to time, Legislature after Legislature was corrupted orinduced to enact stealthy acts by which the railroad was permitted topass without restriction into the possession of a small clique ofexploiters and speculators. Not only were the people cheated out offunds raised by public taxation and advanced to build the road--acommon occurrence in the case of most railroads--but this very moneywas claimed by the capitalist owners as private capital, largeamounts of bonds and stocks were issued against it, and the producerswere assessed in the form of high freight and passenger rates to paythe necessary interest and dividends on those spurious issues. 

THE SPECULATOR, DREW, GETS CONTROL. 

Not satisfied with the thefts of public funds, the successive cliquesin control of the Erie Railroad continually plundered its treasury, and defrauded its stockholders. So little attention was given toefficient management that shocking catastrophies resulted at frequentintervals. A time came, however, when the old locomotives, cars andrails were in such a state of decay, that the replacing of them couldno longer be postponed. To do this money was needed, and the treasuryof the company had been continuously emptied by looting. 

The directors finally found a money loaner in Daniel Drew, an uncouthusurer. He had graduated from being a drover and tavern keeper tobeing owner of a line of steamboats plying between New York andAlbany. He then, finally, had become a Wall street banker and broker. For his loans Drew exacted the usual required security. By 1855 hehad advanced nearly two million dollars--five hundred thousand inmoney, the remainder in endorsements. The Erie directors could notpay up, and the control of the railroad passed into his hands. Asignorant of railroad management as he was of books, he took no painsto learn; during the next decade he used the Erie railroad simply asa gambling means to manipulate the price of its stocks on the StockExchange. In this way he fleeced a large number of dupes decoyed intospeculation out of an aggregate of millions of dollars. 

Old Cornelius Vanderbilt looked on with impatience. He foresaw theimmense profits which would accrue to him if he could get control ofthe Erie Railroad; how he could give the road a much greater value bybettering its equipment and service, and how he could put through thesame stock-watering operations that he did in his other transactions. Tens of millions of dollars would be his, if he could only securecontrol. Moreover, the Erie was likely at any time to become adangerous competitor of his railroads. Vanderbilt secretly beganbuying stock; by 1866 he had obtained enough to get control. Drew andhis dummy directors were ejected, Vanderbilt superseding them withhis 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, andthis he now used with histrionic effect. In tears he went toVanderbilt and begged him not to turn out and ruin an old, self-mademan like himself. The appeal struck home. Had the implorer beenanyone else, Vanderbilt would have scoffed. But, at heart, he had afondness for the old illiterate drover whose career in so manyrespects resembled his own. Tears and pleadings prevailed; in amoment of sentimental weakness--a weakness which turned out to becostly--Vanderbilt relented. A bargain was agreed upon by which Drewwas to resume directorship and represent Vanderbilt's interests andpurposes. 

Reinstated in the Erie board, Drew successfully pretended for a timethat he was fully subservient. Ostensibly to carry out Vanderbilt'splans he persuaded that magnate to allow him to bring in as directorstwo men whose pliancy, he said, could be depended upon. These wereJay Gould, demure and ingratiating, and James Fisk, Jr. , a portly, tawdry, pompous voluptuary. In early life Fisk had been a peddler inVermont, and afterwards had managed an itinerant circus. Then he hadbecome a Wall street broker. Keen and suspicious as old Vanderbiltwas, and innately distrustful of both of them, he nevertheless, forsome inexplicable reason, allowed Drew to install Gould and Fisk asdirectors. He knew Gould's record, and probably supposed him, as wellas Fisk, handy tools (as was charged) to do his "dirty work" withoutquestion. 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 toVanderbilt's directions. Believing it to his interest to buy as muchErie stock as he could, both as a surer guarantee of control, and toput his own price upon it, Vanderbilt continued purchasing. The trio, however, had quietly banded to mature a plot by which they wouldwrest away Vanderbilt's control. 

This was to be done by flooding the market with an extra issue ofbonds which could be converted into stock, and then by running downthe price, and buying in the control themselves. It was a trick thatDrew had successfully worked several years before. At a certainjuncture he was apparently "caught short" in the Stock Exchange, andseemed ruined. But at the critical moment he had appeared in Wallstreet with fifty-eight thousand shares of stock, the existence ofwhich no one had suspected. These shares had been converted frombonds containing an obscure clause allowing the conversion. Theprojection of this large number of shares into the stock marketcaused 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 onVanderbilt. Apparently to provide funds for improving the railroad, they voted to issue a mass of bonds. Large quantities of these theyturned over to themselves as security for pretended advances ofmoneys. These bonds were secretly converted into shares of stock, andthen distributed among brokerage houses of which the three weremembers. Vanderbilt, intent upon getting in as much as he could, bought the stock in unsuspectingly. Then came revelations of thetreachery of the three men, and reports of their intentions to issuemore stock. 

Vanderbilt did not hesitate a moment. He hurried to invoke thejudicial assistance of Judge George C. Barnard, of the New York StateSupreme Court. He knew that he could count on Barnard, whom at thistime he corruptly controlled. This judge was an unconcealed tool ofcorporate interests and of the plundering Tweed political "ring"; forhis many crimes on the bench he was subsequently impeached. [Footnote: At his death $1, 000, 000 in bonds and cash were found amonghis effects. ] Barnard promptly issued a writ enjoining the Eriedirectors from issuing further stock, and ordered them to return tothe Erie treasury one-fourth of that already issued. Furthermore, heprohibited any more conversion of bonds into stock on the ground thatit was fraudulent. 

So pronounced a victory was this considered for Vanderbilt, that themarket price of Erie stock went up thirty points. But the plottershad a cunning trick in reserve. Pretending to obey Barnard's order, they had Fisk wrench away the books of stock from a messenger boysummoned ostensibly to carry them to a deposit place on Pine street. They innocently disclaimed any knowledge of who the thief was; as forthe messenger boy, he "did not know. " These one hundred thousandshares of stock Drew, Gould and Fisk instantly threw upon the stockmarket. No one else had the slightest suspicion that the court orderwas being disobeyed. Consequently, Vanderbilt's brokers were busilybuying in this load of stock in million-dollar bunches; other personswere likewise purchasing. As fast as the checks came in, Drew and hispartners converted them into cash. 

GOULD AND HIS PARTNERS FLEE WITH MILLIONS. 

It was not until the day's activity was over that Vanderbilt, amazedand furious, realized that he had been gouged out of $7, 000, 000. Other buyers were also cheated out of millions. The old man had beencaught napping; it was this fact which stung him most. However, afterthe first paroxysm of frenzied swearing, he hit upon a plan ofaction. The very next morning warrants were sworn out for the arrestof Drew, Fisk and Gould. A hint quickly reached them; they thereuponfled to Jersey City out of Barnard's jurisdiction, taking their cargoof loot with them. According to Charles Francis Adams, in his"Chapters of Erie, " one of them bore away in a hackney coach balescontaining $6, 000, 000 in greenbacks. [Footnote: "Chapters of Erie":30. ] The other two fugitives were loaded down with valises crammedwith bonds and stocks. 

Here in more than one sense was an instructive and significantsituation. Vanderbilt, the foremost blackmailer of his time, theplunderer of the National Treasury during the Civil War, the archbriber and corruptionist, virtuously invoking the aid of the law onthe ground that he had been swindled! Drew, Gould and Fisksardonically jested over it. But joke as they well might over theirhaving outwitted a man whose own specialty was fraud, they knew thattheir position was perilous. Barnard's order had declared their salesof stock to be fraudulent, and hence outlawed; and, moreover, if theydared venture back to New York, they were certain, as matters stood, of instant arrest with the threatened alternative of eitherdisgorging or of a criminal trial and possibly prison. To themselvesthey extenuated their thefts with the comforting and self-sufficientexplanation that they had done to Vanderbilt precisely what he haddone to others, and would have done to them. But it was not withthemselves that the squaring had to be done, but with the machineryof law; Vanderbilt was exerting every effort to have them imprisoned. 

How was this alarming exigency to be met? They speedily found a wayout. While Vanderbilt was thundering in rage, shouting out streaks ofprofanity, they calmly went ahead to put into practice a lesson thathe himself had thoroughly taught. He controlled a sufficient numberof judges; why should not they buy up the Legislature, as he hadoften done? The strategic plan was suggested of getting the New YorkLegislature to pass an act legalizing their fraudulent stock issues. Had not Vanderbilt and other capitalists often bought up Congress andLegislatures and common councils? Why not now do the same? They wellknew the approved method of procedure in such matters; an onslaughtof bribing legislators, they reckoned, would bring the desiredresult. 

GOULD BRIBES THE LEGISLATURE WITH $500, 000. 

Stuffing $500, 000 in his satchel, Gould surreptitiously hurried toAlbany. Detected there and arrested, he was released under heavy bailwhich a confederate supplied. He appeared in court in New York City afew days later, but obtained a postponement of the action. No timewas lost by him. "He assiduously cultivated, " says Adams, "a thoroughunderstanding between himself and the Legislature. " In the face ofsinister charges of corruption, the bill legalizing the fraudulentstock issues was passed. Ineffectually did Vanderbilt bribe thelegislators to defeat it; as fast as they took and kept his money, Gould debauched them with greater sums. One Senator in particular, aswe have seen, accepted $75, 000 from Vanderbilt, and $100, 000 fromGould, and pocketed both amounts. 

A brisk scandal naturally ensued. The usual effervescent expedient ofappointing an investigating committee was adopted by the New YorkState Senate on April 10, 1868. This committee did not have toinvestigate to learn the basic facts; it already knew them. But itwas a customary part of the farce of these investigating bodies toproceed with a childlike assumption of entire innocence. 

Many witnesses were summoned, and much evidence was taken. Thecommittee reported that, according to Drew's testimony, $500, 000 hadbeen drawn out of the Erie railroad's treasury, ostensibly forpurposes of litigation, and that it was clear "that large sums ofmoney did come from the treasury of the Erie Railroad Company, whichwere expended for some purpose in Albany, for which no vouchers seemto have been filed in the offices of the company. " The committeefurther found that "large sums of money were expended for corruptpurposes by parties interested in legislation concerning railwaysduring the session of 1868. "

But who specifically did the bribing? And who were the legistatorsbribed? These facts the committee declared that it did not know. Thisinvestigating sham resulted, as almost always happened in the case ofsimilar inquisitions, in the culpability being thrown upon certainlobbyists "who were enriched. " These lobbyists were men whose tradeit was to act as go-betweens in corrupting legistators. Gould andThompson--the latter an accomplice--testified that they had paid"Lon" Payn, a lobbyist who subsequently became a powerful Republicanpolitician, $10, 000 "for a few days' services in Albany in advocatingthe Erie bill"; and it was further brought out that $100, 000 had beengiven to the lobbyists Luther Caldwell and Russell F. Hicks, toinfluence legislation and also to shape public opinion through thepress. Caldwell, it appeared, received liberal sums from bothVanderbilt and Gould. [Footnote: Report of the Select Committee ofthe New York Senate, appointed April 10, 1868, in Relation to MembersReceiving Money from Railway Companies. Senate Document No. 52, 1869:3-12, and 137, 140-146. ] A subsequent investigation committeeappointed, in 1873, to inquire into other charges, reported that inone 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 yearto year to spend large sums to control elections and to influencelegislation. " [Footnote: Report of the Select Committee of theAssembly, Assembly Documents, 1873, Doc. No. 98: xix. ] [Footnote:"What the Erie has done, " the Committee reported, "other greatcorporations are doubtless doing from year to year. Combined as theyare, the power of the great moneyed corporations of this country is astanding menace to the liberties of the people. 

"The railroad lobby flaunts its ill-gotten gains in the faces of ourlegislatures, and in all our politics the debasing effect of itsinfluence is felt" (p. 18). ]

Vanderbilt later succeeded in compelling the Erie Railroad toreimburse him for the sums that he thus corruptly spent in fightingDrew, Gould and Fisk. [Footnote: Railroad Investigation of the Stateof New York, 1879, ii: 1654. ]

Their huge thefts having been legalized, Drew, Gould and Fiskreturned to Jersey City. But their path was not yet clear. Vanderbilthad various civil suits in New York against them; moreover they wereadjudged in contempt of court. Parleying now began. With the severestthreats of what the courts would do if they refused, Vanderbiltdemanded that they buy back the shares of stock that they hadunloaded upon him. 

Drew was the first to compromise; Gould and Fisk shortly afterwardfollowed. They collectively paid Vanderbilt $2, 500, 000 in cash, $1, 250, 000 in securities for fifty thousand Erie shares, and anothermillion dollars for the privilege of calling upon him for theremaining fifty thousand shares at any time within four months. Although this settlement left Vanderbilt out of pocket to the extentof almost two million dollars, he consented to abandon his suits. Thethree now left their lair in Jersey City and transferred the Erieoffices to the Grand Opera House, at Eighth avenue and Twenty-thirdstreet, New York City. In this collision with Vanderbilt, Gouldlearned a sharp lesson he thereafter never overlooked; namely, thatit was not sufficient to bribe common councils and legislatures; he, too, must own his judges. Events showed that he at once begannegotiations. 

GOULD AND FISK THROW OVER DREW. 

The next development was characteristic. Having no longer any needfor their old accomplice, Gould and Fisk, by tactics of duplicity, gradually sheared Drew and turned him out of the management todegenerate into a financial derelict. It was Drew's odd habit, whenever his plans were crossed, or he was depressed, to rush off tohis bed, hide himself under the coverlets and seek solace in sighsand self-compassion, or in prayer--for with all his unscrupulousnesshe had an orthodox religious streak. When Drew realized that he hadbeen plundered and betrayed, as he had so often acted to others, hesought 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 andtreasurer of the Erie Railroad, and Fisk vice-president andcontroller. 

When Gould and Fisk began to turn out more watered stock variousdefrauded malcontent stockholders resolved to take an interveninghand. This was a new obstacle, but it was coolly met. Gould and Fiskbrought in gangs of armed thugs to prevent these stockholders fromgetting physical possession of the books of the company. Then the NewYork Legislature was again corrupted. 

A bill called the Classification Act, drafted to insure Gould andFisk's legal control, was enacted. This bill provided that only one-fifth of the board of directors should be retired in any year. Bythis means, although the majority of stockholders might be opposed tothe Gould-Fisk management, it would be impossible for them to getpossession of the road for at least three years, and full possessionfor not less than five years. 

But to prevent the defrauded large stockholders from gettingpossession of the railroad through the courts, another act waspassed. This provided that no judgement to oust the board ofdirectors could be rendered by any court unless the suit was broughtby the Attorney-General of the State. It was thus only necessary forGould and Fisk to own the Attorney-General entirely (which they tookpains, of course, to do) in order to close the courts to thedefrauded stockholders. On a trumped-up suit, and by an order of oneof the Tweed judges, a receiver was appointed for the stock owned byforeign stockholders; and when any of it was presented for record inthe transfer book of the Erie railroad, the receiver seized it. Inthis way Gould and Fisk secured practical possesssion of $6, 000, 000of the $50, 000, 000 of stock held abroad. 

ALLIANCE WITH CORRUPT POLITICS AND JUDICIARY. 

From 1868 to 1872 Gould, abetted by subservient directors, issued twohundred 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 madeuncommonly easy by having Tweed machine as an auxiliary; in turn, Tweed, up to 1871, controlled the New York City and State dominantpolitical machine, including the Legislature and many of the judges. To insure Tweed's connivance, they made him a director of the ErieRailroad, besides heavily bribing him. [Footnote: "Did you everreceive any money from either Fisk or Gould to be used in bribing theLegislature?" Tweed was asked by an aldermanic committee in 1877, after his downfall. 

A. "I did sir! They were of frequent occurrence. Not only did Ireceive money but I find by an examination of the papers thateverybody else who received money from the Erie railroad charged itto me. "--Documents of the Board of Aldermen, 1877, Part II, No. 8:49. ] With Tweed as an associate they were able to command thejudges who owed their elevation to him. Barnard, one of Tweed'sservile tools, was sold over to Gould and Fisk, and so throughly didthis judge prostitute his office at their behest that once, late atnight, at Fisk's order, he sportively held court in the apartment ofJosie Mansfield, Fisk's mistress. [Footnote: The occasion grew out ofan attempt of Gould and Fisk in 1869 to get control of the Albany andSesquehanna Railroad. Two parties contested--The Gould and the"Ramsey, " headed by J. Pierpont Morgan. Each claimed the election ofits officers and board of directors. One night, at half-past teno'clock, Fisk summoned Barnard from Poughkeepsie to open chambers inJosie Mansfield's rooms. Barnard hurried there, and issued an orderousting Ramsey from the presidency. Judge Smith at Rochestersubsequently found that Ramsey was legally elected, and severelydenounced Gould and Fisk--"Letters of General Francis C. Barlow, Albany": 1871. 

The records of this suit (as set forth in Lansing's Reports, New YorkSupreme Court. I:308, etc. ) show that each of the contesting partiesaccused the other of gross fraud, and that the final decision wasfavorable to the "Ramsey" party. See the chapters on J. PierpontMorgan in Vol. III of this work. ] When the English stockholders sentover a large number of shares to be voted in for a new management, itwas Barnard who allowed this stock to be voted by Gould and Fisk. Atanother time Gould and Fisk called at Barnard's house and obtained aninjunction 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 to1872. 

Gould was, indeed, the unquestioned master mind in thesetransactions; Fisk and the others merely executed his directions. Thevarious fraudulent devices were of Gould's origination. A biographerof Fisk casually wrote at the time: "Jay Gould and Fisk took WilliamM. Tweed into their board, and the State Legislature, Tammany Halland the Erie 'ring' were fused together and have contrived to serveeach other faithfully. " [Footnote: "A Life of James Fisk, Jr. , " NewYork, 1871. ] Gould admitted before a New York State Assemblyinvestigating committee in 1873 that, in the three years prior to1873, he had paid large sums to Tweed and to others, and that he hadalso disbursed large sums "which might have been used to influencelegislation or elections. " These sums were facetiously charged on theErie books to "India Rubber Account"--whatever that meant. 

Gould cynically gave more information. He could distinctly recall, hesaid, "that he had been in the habit of sending money into variousdistricts throughout the State, " either to control nominations orelections for Senators or members of the Assembly. He considered"that, as a rule, such investments paid better than to wait until themen got to Albany. " Significantly he added that it would be asimpossible to specify the numerous instances "as it would be torecall the number of freight cars sent over the Erie Railroad fromday to day. " His corrupt operations, he indifferently testified, extended into four different States. "In a Republican district I wasa Republican; in a Democratic district, a Democrat; in a doubtfuldistrict 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 thusused in widespread corruption came obviously from the proceeds of hisgreat thefts; and he might have added, with equal truth, that withthis stolen money he was able to employ some of the most eminentlawyers of the day, and purchase judges. 

GOULD'S TRADING CLASS SUPPORT

Those writers who are content with surface facts, or who lackunderstanding of popular currents, either state, or leave theinference, that it was solely by bribing and trickery that Gould wasable to consummate his frauds. Such assertions are altogetherincorrect. To do what he did required the support, or at leasttolerance, of a considerable section of public opinion. This heobtained. And how? By posing as a zealous anti-monopolist. 

The cry of anti-monopoly was the great fetich of the entire middleclass; this class viewed with fear the growing concentration ofwealth; and as its interests were reflected by a large number oforgans of public opinion, it succeeded in shaping the thoughts of nosmall a section of the working class. 

While secretly bribing, Gould constantly gave out for publicconsumption a plausible string of arguments, in which act, by theway, he was always fertile. He represented himself as the champion ofthe middle and working classes in seeking to prevent Vanderbilt fromgetting a monopoly of many railroads. He played adroitly upon thefears, the envy and the powerful mainsprings of the self interest ofthe middle class by pointing out how greatly it would be at the mercyof Vanderbilt should Vanderbilt succeed in adding the Erie Railroadand other railroads to his already formidable list. 

It was a time of all times when such arguments were bound to have animmense effect; and that they did was shown by the readiness withwhich the trading class excused his corruption and frauds on theground that he seemed to be the only man who proved that he couldprevent Vanderbilt from gobbling up all of the railroads leading fromNew York City. With a great fatuousness the middle class supposedthat he was fighting for its cause. 

The bitterness of large numbers of the manufacturing, jobbing andagricultural classes against Commodore Vanderbilt was deep-seated. Byan illegal system of preferential freight rates to certainmanufacturers, Vanderbilt put these favorites easily in a positionwhere they could undersell competitors. Thus, A. T. Stewart, one ofthe noted millionaire manufacturers and merchants of the day, insteadof owing his success to his great ability, as has been set forth, really derived it, to a great extent, from the secret preferentialfreight rates that he had on the Vanderbilt railroads. A variety ofother coercive methods were used by Vanderbilt. Special freighttrains were purposely delayed and run at snail's pace in order toforce shippers to pay the extraordinary rates demanded for shippingover the Merchant's Dispatch, a fast freight line owned by theVanderbilt family. 

These were but a few of the many schemes for their private graft thatthe Vanderbilts put in force. The agricultural class was taxedheavily on every commodity shipped; for the transportation of milk, for example, the farmer was taxed one-half of what he himselfreceived for milk. These taxes, of course, eventually fell upon theconsumer, but the manufacturer and the farmer realized that if theextortions were less, their sales and profits would be greater. Theywere in a rebellious mood and gladly welcomed a man such as Gould whothwarted Vanderbilt at every turn. Gould well knew of this bitterfeeling against Vanderbilt; he used it, and thrust himself forwardconstantly in the guise of the great deliverer. 

As for the small stockholders of the Erie railroad, Gould easilypacified them by holding out the bait of a larger dividend than theyhad been getting under the former regime. This he managed by thecommon and fraudulent expedient of issuing bonds, and payingdividends out of proceeds. So long as the profits of these smallstockholders 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 pronouncedcharacteristics of the capitalistic investors, both large and small. Numberless instances have shown that they raise no objections toplundering management provided that under it their money returns areincreased. 

The end of Gould's looting of the Erie railroad was now in sight. However the small stockholders might assent, the large Englishstockholders, some of whom had invidious schemes of their own in theway 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, 000was sent over by them to their American agents with which to bribe anumber of Gould's directors to resign. As Gould had used thesedirectors as catspaws, they were aggrieved because he had kept all ofthe loot himself. If he had even partly divided, their sentimentswould have been quite different. The $300, 000 bribery fund wasdistributed among them, and they carried out their part of thebargain by resigning. [Footnote: Assembly Document No. 98, 1873: xiiand xiii. The English stockholders took no chances on this occasion. The committee reported that not until the directors had resigned didthey "receive their price. " ] The Assembly Investigating Committee of1873 referred carelessly to the English stockholders as being"impatient at the law's delay" and therefore taking matters intotheir own hands. If a poor man or a trade union had become "impatientat the law's delay" and sought an illegal remedy, the judiciary wouldhave quickly pronounced condign punishment and voided the wholeproceeding. The boasted "majesty of law" was a majesty to which theunderdogs only were expected to look up to in fear and trepidation. 

When the English stockholders elected their own board Gould obtainedan injunction from the courts. This writ was absolutely disregarded, and the anti-Gould faction on March 11, 1872, seized possession ofthe offices and books of the company by physical force. Did thecourts punish these men for criminal contempt? No effort was made to. Many a worker or labor union leader had been sent to jail (and hasbeen since), for "contempt of court, " but the courts evidently havebeen willing enough to stomach all of the contempt profusely shownfor them by the puissant rich. The propertyless owned nothing, not tospeak of a judge, but the capitalists owned whole strings of judges, and those whom they did not own or corrupt were generally influencedto their side by association or environment. "All of this, " reportedthe Assembly Investigating Committee of 1873, speaking of the meansemployed to overthrow Gould, "has been done without authority oflaw. " But no law was invoked by the officials to make theparticipants account for their illegal acts. 

THE LEGISLATURE BRIBED AGAIN. 

It seems that the entire amount, including the large fees paid toagents and lawyers, corruptly expended by the English capitalists inousting Gould, was $750, 000. Did they foot this bill out of their ownpockets? By no means. They arranged the reimbursements by voting thissum to themselves out of the Erie Railroad treasury; [Footnote:Assembly Document No. 98, 1873: xii and xvi. ] that is to say, theycompelled the public to shoulder it by adding to the bonded burdenson which the people were taxed to pay interest. 

To complete their control they bribed the New York Legislature torepeal the Classification Act. As has been shown, the Legislature of1872 was considered a "reform" body, and it also has been brought outhow Vanderbilt bribed it to give him invaluable public franchises andlarge grants of public money. In fact, other railroad magnates aswell as he systematically bribed; and it is clear that theycontributed jointly a pool of money both to buy laws and to preventthe passage of objectionable acts. "It appears conclusive, " reportedthe Assembly Investigating Committee of 1873, "that a large amount--reported by one witness at $100, 000--was appropriated for legislativepurposes by the railroad interest in 1872, and that this [$30, 000]was Erie's proportion. " [Footnote: Ibid. , xvii. ] One of thelobbyists, James D. Barber, "a ruling spirit in the Republicanparty, " admitted receiving $50, 000 from the Vanderbilts. [Footnote:Ibid. , 633. ] While uniting to suppress bills feared by them all, eachof 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 ofhis Erie frauds, seem to have reached more than twelve milliondollars, all, or nearly all, of which he personally kept. 

That sum, considering the falling prices of commodities after thepanic of 1873, and comparable with current standards of cost andliving, was equivalent to perhaps double the amount at present. Various approximations of his thefts were made. After a minuteexamination of the Erie railroad's books, Augustus Stein, an expertaccountant, testified before the "Hepburn Committee" (the New YorkAssembly Investigating Committee of 1879) that Gould had himselfpocketed twelve or thirteen million dollars. [Footnote: Q. --Do youthink you could remember the aggregate amount of wrong-doing on thepart of Mr. Gould that you have discovered?

A. --I could give an estimate throwing off a couple of millions hereand there; I could say that it amounted to--that is, what wediscovered--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 andhis accomplices had issued $64, 000, 000 of watered stock. Gould, sothe Erie books revealed, had charged $12, 000, 000 as representing theoutlay for construction and equipment, yet not a new rail had beenlaid, nor a new engine put in use, nor a new station built. Thesetwelve millions or more were what he and his immediate accompliceshad stolen outright from the Erie Railroad treasury. Considerablesums were, of course, paid corruptly to politicians, but Gould gotthem all back, as well as the plunder of his associates, bypersonally manipulating Erie stock so as to compel them to sell at agreat loss to themselves, and a great profit to himself. Furthermore, in these manipulations of stock, he scooped in more millions fromother sources. 

Had it not been for his intense greed and his constitutionalinability to remain true to his confederates, Gould might have beenallowed to retain the proceeds of his thefts. His treachery to one ofthem, Henry N. Smith, who had been his partner in the brokerage firmof Smith, Gould and Martin, resulted in trouble. Gould cornered thestock of the Chicago and Northwestern Railroad; to put it moreplainly, he bought up the outstanding available supply of shares, andthen ran the price up from 75 to 250. Smith was one of a number ofWall Street men badly mulcted in this operation, as Gould intended. Seeking revenge, Smith gave over the firm's books, which were in hispossession, to General Barlow, counsel for the Erie Railroad'sprotesting stockholders. [Footnote: Railroad Investigation, etc. , v:531] Evidence of great thefts was quickly discovered, and an actionwas started to compel Gould to disgorge about $12, 000, 000. A criminalproceeding was also brought, and Gould was arrested and placed underheavy bonds. 

AN EXTRAORDINARY "RESTITUTION. "

Apparently Gould was trapped. But a wonderful and unexpecteddevelopment happened which filled the Wall Street legion withadmiration for his craft and audacity. He planned to make his veryrestitution the basis for taking in many more millions byspeculation; he knew that when it was announced that he had concludedto disgorge, the market value of the stock would instantly go up andnumerous buyers would appear. 

Secretly he bought up as much Erie stock as he could. Then heostentatiously and with the widest publicity declared his intensionto make restitution. Such a cackling sensation it made! The price ofErie stock at once bounded up, and his brokers sold quantities of itto his great accruing profit. The pursuing stockholders assented tohis offer to surrender his control of the Erie Railroad, and toaccept real estate and stocks seemingly worth $6, 000, 000. But afterthe stockholders had withdrawn their suits, they found that they hadbeen tricked again. The property that Gould had turned over to themdid not have a market value of more than $200, 000. [Footnote:Railroad Investigation, etc. 1879, iii: 2503. One of the very rareinstances in which any of Gould's victims was able to compel him todisgorge, was that described in the following anecdote, which wentthe rounds of the press: "An old friend had gone to Gould telling himthat he had managed to save up some $20, 000, and asking his advice asto 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 acertain stock, and assured him that the investment would beabsolutely safe as to income, and, besides, its market value wouldshortly be greatly enhanced. 

"The man did as advised by Gould, and the stock promptly started togo down. Lower and lower it went, and seeing the steady depreciationin the price of the stock, and hearing stories to the effect that thedividends were to be passed, the man wrote to Gould asking if theinvestment was still good. Gould replied to his friend's letter, assuring him that the stories had no foundation in fact and werebeing circulated purely for market effect. 

"But still the stock declined. Each day the price went to new lowerfigures on the Stock Exchange, and finally the rumors became fact, and the Directors passed the dividend. The man had seen the savingsof years vanish in a few months and realized that he was a ruinedman. 

"Goaded to an almost insane frenzy, he rushed into Gould's office theafternoon the Directors announced the passing of the dividend, andtold Gould that he had been deliberately and grossly deceived andthat he was ruined. He wound up by announcing his intention ofshooting Gould then and there. 

"Gould heard his quondam friend through. There could be no mistakingthe man's intent. He was evidently half crazed and possessed of aninsane desire to carry out his threat. Gould turned to him and said:'My dear Mr. ---' calling him by name, 'you are laboring under a mostserious misapprehension. Your money is not lost. If you will go downto my bank tomorrow morning, you will find there a balance of $25, 000to your credit. I sold out your stock some time ago, but hadneglected 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 toplace $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 wasthe first man in line, and was nearly overcome when the cashierhanded him the sum that Gould had named the previous afternoon. 

"Gould had evidently decided in his own mind that the man wasdetermined to kill him, and that the only way to save his life andhis name was to pay the man the sum he had lost plus a profit, in themanner he did. But as a sidelight on the absolutely cold-bloodedself-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 hislooting transactions during those busy years. At the same time, hewas using these stolen millions to corner the gold supply. In this"Black Friday" conspiracy (for so it was styled) he fradulentlyreaped another eleven million dollars to the accompaniment of afinancial panic, with a long train of failures, suicides and muchdisturbance and distress. 

CHAPTER XI

THE GOULD FORTUNE BOUNDS FORWARD

The "gold conspiracy" as plotted and consummated by Gould was in itsday denounced as one of the most disgraceful events in Americanhistory. To adjudge it so was a typical exaggeration and perversionof a society caring only about what was passing in its upper spheres. The spectacular nature of this episode, and the ruin it wrought inthe ranks of the money dealers and of the traders, caused itsimportance to be grossly misrepresented and overdrawn. 

THE ABUSE OF GOULD OVERDONE

It was not nearly as discreditable as the gigantic and repulsiveswindles that traders and bankers had carried on during the darkyears of the Civil War. The very traders and financiers who beslimedGould for his "gold conspiracy" were those who had built theirfortunes on blood-soaked army contracts. Nor could the worst aspectsof Gould's conspiracy, bad as they were, begin to vie in disastrousresults with the open and insidious abominations of the factory andlandlord system. To repeat, it was a system in which incrediblenumbers of working men, women and children were killed off by theperils of their trades, by disease superinduced and aggravated by thewretchedness of their work, and by the misery of their lot andhabitations. Millions more died prematurely because of causesdirectly traceable to the withering influences of poverty. 

But this unending havoc, taking place silently in the routinedepartments of industry, and in obscure alleyways, called forthlittle or no notice. What if they did suffer and perish? Societycovered their wrongs and injustices and mortal throes with aninhibitive silence, for it was expected that they, being lowly, should not complain, obtrude grievances, or in any way makeunpleasant demonstrations. Yet, if the prominent of society weredisgruntled, or if a few capitalists were caught in the snare of ruinwhich they had laid for others, they at once bestirred themselves andmade 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 stridentvoices, and in all the influential avenues for directing publicopinion ready advocates sprang forth to champion their plaints, andconcentrate 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, andcommanded a high premium. The supply of this metal, this yellowdross, which to a considerable degree regulated the world's relativevalues of wages and commodities, was monopolized by the powerfulbanking interests. In 1869 but fifteen million dollars of gold was inactual circulation in the United States. 

Notwithstanding the increase of industrial productive power, thecontinuous displacement of obsolete methods by the introduction oflabor-saving machinery, and the consecutive discovery of new meansfor the production of wealth, the task of the worker was notlightened. He had, for the most part, after great struggles, secureda shorter workday, but if the hours were shorter the work was moretense and racking than in the days before steam-driven machinerysupplanted the hand tool. The mass of the workers were in a state ofdependence and poverty. The land, industrial and financial system, operating in the three-fold form of rent, interest and profit, toreaway from the producer nearly the whole of what he produced. Eventhose factory-owning capitalists exercising a personal and directsupervision over their plants, were often at the mercy of the cliqueof bankers who controlled the money marts. 

Had the supply of money been proportionate to the growth ofpopulation and of business, this process of expropriation would havebeen less rapid. As it was, the associated monopolies, theinternational and national banking interests, and the income classesin general, constricted the volume of money into as narrow a compressas 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, exactedmore 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, andlandowners with tenants, shunted the load on to the worker. Theproducing population had to foot the additional bill by acceptingwages which had a falling buying power, and by having to pay morerent and greater prices for necessities. Such conditions were certainto accelerate the growth of poverty and the centralization of wealth. 

Gould's plan was to get control of the outstanding fifteen millionsof dollars of gold and fix his own price upon them. Not only fromwhat was regarded as legitimate commerce would he exact tribute, buthe would squeeze to the bone the whole tribe of gold speculators--forat that time gold was extensively speculated in to an intensivedegree. 

With the funds stolen from the Erie Railroad treasury, he began tobuy in gold. To accommodate the crowd of speculators in this metal, the Stock Exchange had set apart a "Gold Room, " devoted entirely tothe speculative purchase and sale of gold. Gould was confident thathis plan would not miscarry if the Government would not put incirculation any part of the ninety-five million dollars in goldhoarded as a reserve in the National Treasury. The urgent and all-important point was to ascertain whether the Government intended tokeep this sum entirely shut out from circulation. 

HE BRIBES GOVERNMENT OFFICIALS. 

To get this inside information he succeeded in corruptly winning overto his interests A. R. Corbin, a brother-in-law of President Grant. The consideration was Gould's buying of two million dollars' worth ofgold bonds, without requiring margin or security for Corbin's account[Footnote: Gold Panic Investigation, House Report: No 32, Forty-firstCongress, Second Session, 1870:157. Corbin's venality in lobbying forcorrupt bills was notorious; he admitted his complicity before aCongressional Investigating Committee in 1857. ] Thus Gould thought hehad surely secured an intimate spy within the authoritativeprecincts of the White House. As the premium on gold constantlyrose, these bonds yielded Corbin as much sometimes as $25, 000 a weekin profits. To insure the further success of his plan, Gouldsubsidized General Butterfield, whose appointment as sub-treasurer atNew York Corbin claimed to have brought about. Gould testified in1870 that he had made a private loan to Butterfield, and that he hadcarried speculatively $1, 500, 000 for Butterfield's benefit. Thesestatements Butterfield denied. [Footnote: Gold Panic Investigation, etc. , 160. ]

Through Corbin, Gould attempted to pry out Grant's policies, and withFisk as an interlocutor, Gould personally attempted to draw out thePresident. To their consternation they found that Grant was notdisposed to favor their arguments. The prospect looked very black forthem. Gould met the situation with matchless audacity. By spreadingsubtle rumors, and by inspiring press reports through venal writers, he deceived not only the whole of Wall Street, but even his ownassociates, into believing that high Government officials were incollusion with him. The report was assiduously disseminated that theGovernment did not intend to release any of its hoard of gold forcirculation. The premium, accordingly, shot up to 146. Soon afterthis, certain financial quarters suspected that Gould was bluffing. The impression spreading that he could not depend upon theGovernment's support, the rate of the premium declined, and Gould'sown array of brokers turned against him and sold gold. 

GOULD BETRAYS HIS PARTNERS. 

Entrapped, Gould realized that something had to be done, and donequickly, if he were to escape complete ruin, holding as he did thelarge amount of gold that he had bought at steep prices. By plausiblefabrications he convinced Fisk that Grant was really an ally. Gouldhad bought a controlling interested in the Tenth National Bank. Thisinstitution Gould and Fisk now used as a fraudulent manufactory ofcertified checks. These they turned out to the amount of tens ofmillions of dollars. With the spurious checks they bought from thirtyto forty millions in gold. [Footnote: Gold Panic Investigation: 13. ]Such an amount of gold did not, of course, exist in circulation. Butthe law permitted gambling in it as though it really existed. Ordinary card gamblers, playing for actual money, were under the banof law; but the speculative gamblers of the Stock Exchange who boughtand sold goods which frequently did not exist, carried on their hugefraudulent operations with the full sanction of the law. Gould's planwas not intricate. Extensive purchases of gold naturally--as the lawsof trade went--were bound to increase constantly its price. 

By September, 1869, Gould and his partners not only held all of theavailable gold in circulation, but they held contracts by which theycould call upon bankers, manufacturers, merchants, brokers andspeculators for about seventy millions of dollars more of the metal. To the banking, manufacturing and importing interests gold, as thestandard, was urgently required for various kinds of interfluentbusiness transactions: to pay international debts, interest on bonds, customs dues or to move the crops. They were forced to borrow it atGould'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. Hehad a list, for example, of two hundred New York merchants who owedhim gold; he proposed to print their names in the newspapers, demanding settlement at once, and would have done so, had not hislawyers advised him that the move might be adjudged criminalconspiracy. [Footnote: Gold Panic Investigation, etc. , 13. ]

The tension, general excitement and pressure in business circles weresuch that President Grant decided to release some of the Government'sgold, even though the reserve be diminished. In some mysterious way ahint of this reached Gould. The day before "Black Friday" he resolvedto betray his partners, and secretly sell gold before the priceabruptly dropped. To do this with success it was necessary to keep onbuying, so that the price would be run up still higher. 

Such methods were prohibited by the code of the Stock Exchange whichprescribed certain rules of the game, for while the members of theExchange allowed themselves the fullest latitude and the mostunchecked deception in the fleecing of outside elements, yet amongthemselves they decreed a set of rules forbidding any sort of double-dealing in trading with one another. To draw an analogy, it was likea group of professional card sharps deterring themselves by noscruples in the cheating of the unwary, but who insisted that amongtheir own kind fairness should be scrupulously observed. Yet, rulesor no rules, no one could gainsay the fact that many of the foremostfinanciers had often and successfully used the very enfilladingmethods that Gould now used. 

While Gould was secretly disposing of his gold holdings, he wasgoading on his confederates and his crowd of fifty or more brokers tobuy still more. [Footnote: "Gould, the guiltier plotter of all thesecriminal proceedings, " reported the Congressional InvestigatingCommittee of 1870, "determined to betray his own associates, andsilent, and imperturbable, by nods and whispers directed all. "-GoldPanic Investigation: 14. ] By this time, it seems, Fisk and hispartner in the brokerage business, Belden, had some stray inklings ofGould's real plan; yet all that they knew were the fragments Gouldchose to tell them, with perhaps some surmises of their own. Gouldthrew out just enough of an outline to spur on their appetite for anorgy of spoils. Undoubtedly, Gould made a secret agreement with themby which he could repudiate the purchases of gold made in theirnames. Away from the Stock Exchange Fisk made a ludicrous anddissolute enough figure, with his love of tinsel, his show andbraggadacio, his mock military prowess, his pompous, windy airs andhis covey of harlots. But in Wall Street he was a man of affairs andpower; the very assurance that in social life made him ridiculous toa degree, was transmuted into a pillar of strength among the throngof speculators who themselves were mainly arrant bluffs. A dare-devilaudacity there was about Fisk that impressed, misled and intimidated;a fine screen he served for Gould plotting and sapping in thebackground. 

THE MEMORABLE "BLACK FRIDAY"

The next day, "Black Friday, " September 24, 1869, was one oftremendous excitement and gloomy apprehension among the moneychangers. Even the exchanges of foreign countries reflected theperturbation. 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 marketprices of railroad stocks shrank rapidly; failure after failure ofWall Street firms was announced, and fortunes were swept away. Fearing that the price of gold might mount to 200, manufacturers andother business concerns throughout the country frantically directedtheir agents to buy gold at any price. All this time Gould, throughcertain 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 mostperfunctory occasions the scenes enacted there might have well filledthe exotic observer with unmeasured amazement. But never had itpresented so thoroughly a riotous, even bedlamic aspect as on thisday, 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, andagain bellowing forth this order or that curse with savage energy andwildest gesture. The puny speculators had long since uttered theirdoleful squeak and plunged down into the limbo of ruin, completelyengulfed; only the big speculators, or their commission men, remainedin the arena, and many of these like trapped rats scurried about frompillar to post. The little fountain in the "Gold Room" serenelyspouted and bubbled as usual, its cadence lost in the awful uproar;over to it rushed man after man splashing its cooling water on histhrobbing head. Over all rose a sickening exhalation, the dripping, malodorous sweat of an assemblage worked up to the very limit ofmental endurance. 

What, may we ask, were these men snarling, cursing and fighting over?Why, quite palpably over the division of wealth that masses ofworking men, women and children were laboriously producing, too oftenamid sorrow and death. While elsewhere pinioned labor was humblydoing the world's real work, here in this "Gold Room, " greedcontested furiously with greed, cunning with cunning over their shareof the spoils. Without their structure of law, and Government toenforce it, these men would have been nothing; as it was, they wereamong the very crests of society; the makers of law, the wielders ofpower, the pretenders to refinement and culture. 

Baffled greed and cunning outmatched and duplicity doubled againstitself could be seen in the men who rushed from the "Gold Room"hatless and frenzied--some literally crazed--when the price of goldadvanced to 162. In the surrounding streets were howling andimpassable crowds, some drawn thither by curiosity and excitement, others by a fancied interest; surely, fancied, for it was but a warof eminent knaves and knavish gamblers. Now this was not a"disorderly mob" of workers such as capitalists and politicianscreated out of orderly workers' gatherings so as to have a pretextfor clubbing and imprisoning; nay it all took place in the"conservative" precincts of sacrosanct Wall Street, the abiding placeof "law and order. " The participants were composed of the "bestclasses;" therefore, by all logic it was a scene supereminently sane, respectable and legitimate; the police, worthy defenders of thepeace, treated it all with an awed respect. 

Suddenly, early in the afternoon, came reports that the United StatesTreasury was selling gold; they proved to be true. Within fifteenminutes the whole fabric of the gold manipulation had gone to pieces. It is narrated that a mob, bent on lynching, searched for Gould, butthat he and Fisk had sneaked away through a back door and had goneuptown. 

The general belief was that Gould was irretrievably ruined. That hewas secretly selling gold at an exorbitant price was not known; evenhis own intimates, except perhaps Fisk and Belden, were ignorant ofit. All that was known was that he had made contracts for thepurchase of enormous quantities of fictitious gold at excessivepremiums. As a matter of fact, his underhand sales had brought himeleven or twelve million dollars profit. But if his contracts forpurchase 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 fromthis difficulty. He fell back upon the corrupt judiciary. Uponvarious flimsy pretexts, he and Fisk, in a single day, procuredtwelve sweeping injunctions and court orders. [Footnote: Gold PanicInvestigation, etc. 18. ] These prohibited the Stock Exchange and theGold Board from enforcing any rules of settlement against them, andenjoined Gould and Fisk's brokers from settling any contracts. Theresult, in brief, was that judicial collusion allowed Gould to pockethis entire "profits, " amounting, as the Congressional Committee of1870 reported, to about eleven million dollars, while relieving himfrom any necessity of paying up his far greater losses. Fisk's shareof the eleven millions was almost nothing; Gould retained practicallythe entire sum. Gould's confederates and agents were ruined, financially and morally; scores of failures, dozens of suicides, thedespoilment of a whole people, were the results of Gould's handiwork. 

[Illustration: JAY GOULD, Who, in a Brief Period, Possessed Himselfof a Vast Fortune. ]

 * * * * * * *

From his Erie railroad thefts, the gold conspiracy and othermaraudings, Gould now had about twenty-five or thirty milliondollars. Perhaps the sum was much more. Having sacked the Erieprevious to his being ousted in 1873, he looked out for furtherinstruments of plunder. 

Money was power; the greater the thief the greater the power; andGould, in spite of abortive lawsuits and denunciations, had thecardinal faculty of holding on to the full proceeds of his piracies. In 1873 there was no man more rancorously denounced by the mercantileclasses than Gould. If one were to be swayed by their utterances, hewould be led to believe that these classes, comprising the wholesaleand retail merchants, the importers and the small factory men, had anextraordinarily high and sensitive standard of honesty. But thisassumption was sheer pretense, at complete variance with the facts. It was a grim sham constantly shattered by investigation. Ever, whilevaunting its own probity and scoring those who defrauded it, thewhole mercantile element was itself defrauding at every opportunity. 

 * * * * * * *

SOME COMPARISONS WITH GOULD. 

One of the numberless noteworthy and conclusive examples of theabsolute truth of this generalization was that of the great fraudsperpetrated by the firm of Phelps, Dodge and Company, millionaireimporters of tin, copper, lead and other metals. 

So far as public reputation went, the members of the house were theextreme opposites of Gould. In the wide realm of commercialism a morestable and illustrious firm could not be found. Its wealth wasconventionally "solid and substantial;" its members were lauded as"high-toned" business men "of the old-fashioned school, " and asconsistent church communicants and expansive philanthropists. Indeed, one of them was regarded as so glorious and uplifting a model foradolescent youth, that he was chosen president of the Young Men'sChristian Association; and his statue, erected by his family, to-dayirradiates the tawdry surroundings of Herald Square, New York City. In the Blue Book of the elect, socially and commercially, no namescould be found more indicative of select, strong-ribbed, triple-dyedrespectability and elegant social poise and position. 

In the dying months of 1872, a prying iconoclast, unawed by theglamor 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 StatesTreasury agent. He seems to have been either a duty-loving servant ofthe people, stubbornly bent upon ferreting out fraud wherever hefound it, irrespective of whether the criminals were powerful or not, or he was prompted by the prospect of a large reward. The more hesearched into this case, the more of a mountainous mass of perjuryand fraud revealed itself. On January, 3, 1873, Jayne set the fullfacts before his superior, George S. Boutwell, Secretary of theTreasury. 

". . . Acording to ordinary modes of reckoning, " he wrote, "a houseof the wealth and standing of Phelps, Dodge and Company would beabove the influences that induce the ordinary brood of importers tocommit fraud. That same wealth and standing became an almostimpenetrable armor against suspicion of wrong-doing and diverted theattention of the officers of the Government, preventing that scrutinywhich they give to acts of other and less favored importers. " Jaynewent on to tell how he had proceeded with great caution in"establishing beyond question gross under-valuations, " and how UnitedStates 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 thered tape was thrilled into action, and the Government began a suit inthe United States District Court at New York for $1, 000, 000 forpenalties for fraudulent custom-house under-valuations. It suedWilliam E. Dodge, William E. Dodge, Jr. , D. Willis James, AnsonPhelps Stokes, James Stokes and Thomas Stokes as the participatingmembers of the firm. 

The suit was a purely civil one; influential defrauders were notinconvenienced by Government with criminal actions and the prospectof prison lodging and fare; this punishment was reserved exclusivelyfor petty offenders outside of the charmed circle. The sum of$1, 000, 000 sued for by the Government referred to penalties due since1871 only; the firm's duplicates of invoices covering the periodbefore that could not be found; "they had probably been destroyed;"hence, it was impossible to ascertain how much Phelps, Dodge andCompany had defrauded in the previous years. 

The firm's total importations were about $6, 000, 000 a year; it wasevident, according to the Government officials, that the frauds werenot only enormous, but that they had been going on for a long time. These frauds were not so construed "by any technical construction, orfar-fetched interpretation, " but were committed "by the firm'sdeliberately and systematically stating the cost of their goods belowthe purchase price for no conceivable reason but to lessen the dutiesto be paid to the United States. "

These long-continuing frauds could not have been possible without thecustom-house officials having been bribed to connive. The practice ofbribing customs officers was an old and common one. In his report tothe House of Representatives on February 23, 1863, Representative VanWyck, chairman of an investigating committee, fully described thissystem of bribery. In summarizing the evidence brought out in theexamination of fifty witnesses he dealt at length with the customhouse officials who for large bribes were in collusion with brokersand merchants. "No wonder, " he exclaimed, "the concern [the customhouse] is full of fraud, reeking with corruption. " [Footnote: TheCongrssional Globe, Appendix, Thirty-seventh Congress, Third Session, 1862-3, Part ii: 118. 

"During the last session the Secretary had the honor of transmittingthe draft of a bill for the detection and prevention of fraudulententries at the custom-houses, and he adheres to the opinion that theprovisions therein embodied are necessary for the protection of therevenue. . . . For the past year the collector, naval officer, andsurveyor of New York have entertained suspicions that fraudulentcollusions with some of the customs officers existed. Measures weretaken by them to ascertain whether these suspicions were wellfounded. By persistent vigilance facts were developed which have ledto the arrest of several parties and the discovery that a system offraud has been successfully carried on for a series of years. Theseinvestigations are now being prosecuted under the immediate directionof the Solicitor of the Treasury, for the purpose of ascertaining theextent of those frauds and bringing the guilty parties to punishment. It is believed that the enactment at the last session of the billreferred to would have arrested, and that its enactment now willprevent 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, andthe importers kept on bribing. ]

Great was the indignation shown at the charges by the flusteredmembers of the firm; most stoutly these "eminently proper" menasserted their innocence. [Footnote: If the degree of the scandalthat the unearthing of the frauds created is to be judged by theextent of space given to it by the newspapers, it must have beenlarge and sensational. See issues of the New York "Times" and othernewspapers of January 11, 1873, January 29, 1873, March 20, 1873, andApril 20, 1873. A full history of the case, with the officialcorrespondence from the files of the Treasury Department, is to befound in the New York "Times, " issue of April 28, 1873. ] In point offact (as has been shown in the chapters on the Astor fortune) severalof them had long been slyly defrauding in other fields, particularlyby the corrupt procuring of valuable city land before and during theTweed regime. They had also been enriching themselves by the corruptobtaining of railroad grants. There was a scurrying about by Phelps, Dodge and Company to explain that some mistake had been made; but theGovernment steadfastly pressed its action; and Secretary Boutwellcurtly informed them that if they were innocent of guilt, they hadthe opportunity of proving so in court. After this ultimatum theirtone changed; they exerted every influence to prevent the case fromcoming 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 Treasurythe sum of $271, 017. 23 for the discontinuance of the million-dollarsuit for custom-house frauds. [Footnote: See Houses ExecutiveDocuments, Forty-third Congress, First Session, 1874, Doc. No. 124:78. Of the entire sum of $271, 017. 23 paid by Phelps, Dodge andCompany to compromise the suit, Chester A. Arthur, then Collector of, the Port, later President of the United States, received $21, 906. 01as official fees; the Naval Officer and the Surveyor of the Port eachwere 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. Underthe tariff act there was a heavy duty on imported zinc and lead, while works of art were admitted free of duty. Phelps, Dodge andCompany had zinc and lead made into Europe into crude Dianas, Venusesand Mercurys and imported them in that form, claiming exemption fromthe 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 greatcollective and individual wealth of the members of this firm, and oftheir successors. It was also by reason of these frauds that Phelps, Dodge and Company were easily able to outdo competitors. Onlyrecently, let it be added, they formed themselves into a corporationwith a capital of $50, 000, 000. With the palpably great revenues fromtheir continuous frauds, they were in an advantageous position to buyup many forms of property. Beginning in 1880 the mining of copper, they obtained hold of many very rich mining properties; their coppermines yield at present (1909) about 100, 000, 000 pounds a year. Phelps, Dodge and Company also own extensive coal mines and lines ofrailroads in the southwest Territories of the United States. Tenthousand employees are directly engaged in their copper and coalmines and smaller works, and on the 1, 000 miles of railroad directlyowned and operated by them. 

So greatly were the members of the firm enriched by their frauds thatwhen D. Willis James, one of the partners sued by the Government forfraudulent undervaluations, died on September 13, 1907, he left anestate of not less than $26, 967, 448. John F. Farrel, the appraiser, so reported in his report filed on March 28, 1908, in the transfertax department of the Surrogate's department, New York City. But asthe transfer tax has been, and is, continuously evaded by ingeniousanticipatory devices, the estate, it is probable, reached much more. 

James owned (accepting the appraiser's specific report at a time whenpanic prices prevailed) tens of millions of dollars worth of stock inrailroad, mining, manufacturing and other industries. He owned, forinstance, $2, 750, 000 worth of shares in the Phelps-Dodge Copper QueenMining Company; $1, 419, 510 in the Old Dominion Company, and millionsmore in other mining companies. His holdings in the Great NorthernRailway, the history of which is one endless chain of fraud, amountedto millions of dollars--$3, 840, 000 of preferred stock; $3, 924, 000 ofcommon stock; $1, 715, 000 of stock in the Great Northern iron oreproperties; $1, 405, 000 of Great Northern Railway shares in the formof subscription receipts, and so on. He was a large holder of stockin the Northern Pacific Railway, the development of which, as weshall 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 withthat firm at $475, 000. [Footnote: At his death he was eulogisticallydescribed as "the merchant philanthropist. " On the day after theappraiser's report was filed, the New York "Times, " issue of March29, 1908, said: "Mr. James was a senior member of the firm of Phelps, Dodge & Co. , of 99 John Street. His interest in educational andphilanthropic work was very deep, and by his will he left bequestsamounting to $1, 195, 000 to various charitable and religiousinstitutions. The residue of the estate, amounting to $24, 482, 653, isleft in equal shares to his widow and their son. " On the same daythat the appraiser's report was filed a large gathering of unemployedattempted to hold a meeting in Union Square to plead for the startingof public work, but were brutally clubbed, ridden down and dispersedby the police. ]

In the defrauding of the United States Government however, Phelps, Dodge and Company were doing no uncommon thing. The whole importingtrade was incessantly and cohesively thriving upon this form offraud. In his annual report for 1874, Henry C. Johnson, United StatesCommissioner of Customs, estimated that tourists returning fromEurope yearly smuggled in as personal effects 257, 810 trunks filledwith dutiable goods valued at the enormous sum of $128, 905, 000. "Itis well known, " he added, "that much of this baggage is in realityintended to be put upon the market as merchandise, and that stillother portions are brought over for third parties who have remainedat home. Most of those engaged in this form of importation are peopleof wealth". . . [Footnote: Executive Documents, Forty-third Congress, Second Session, 1874, No. 2: 225. ] Similar and additional facts werebrought out in great abundance by a United States Senate committeeappointed, in 1886, to investigate customs frauds in New York. Afterholding many sessions this committee declared that it had found"conclusive evidence that the undervaluation of certain kinds ofimported merchandise is persistently practiced to an alarming extentat 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 outof the internal revenue tax were so enormous as to call forth severalCongressional investigations; [Footnote: Reports of Committees, Fortieth Congress, Third Session, 1869-70. Report No. 3, etc. ] themillions of dollars thus defrauded were used as private capital inextending the distilleries; virtually all of the fortunes in thepresent Whiskey Trust are derived in great part from these frauds. The banks likewise cheated the Government out of large sums in theirevasion of the stamp tax. "This stamp tax, " reported the Comptrollerof Currency in 1874, "is to a considerable extent evaded by banks andmore frequently by depositors, by drawing post notes, or bills ofexchange at one day's sight, instead of on demand, and bysubstituting receipts for checks. " [Footnote: Executive Document, No. 2, 1874:140. ]

It was from these various divisions of the capitalist class that themost caustic and virtuous tirades against Gould came. The boards oftrade and chambers of commerce were largely made up of men who, whileassuming the most vaniloquent pretensions, were themselves malodorouswith fraud. To read the resolutions passed by them, and to observeretrospectively the supreme airs of respectability and integrity theyindividually took on, one would conclude that they were all men ofwhitest, most irreproachable character. But the official reportscontradict their pretensions at every turn; and they are all seen intheir nakedness as perjurers, cheats and frauds, far more sinister intheir mask than Gould in his carelessly open career of theft andcorruption. Many of the descendants of that sordid aggregation liveto-day in the luxury of inherited cumulative wealth, and boast of acertain "pride of ancestry" and "refinement of social position;" itis they from whom the sneers at the "lower classes" come; and they itis who take unto themselves the ordaining of laws and of customs anddefinitions of morality. [Footnote: It is worthy of note that severalof the descendants of the Phelps-Dodge-Stokes families are men andwomen of the highest character and most radical principles. J. G. Phelps Stokes, for instance, joined the Socialist party to work forthe overthrow of the very system on which the wealth of his family isfounded. A man more devoted to his principles, more keenly alive tothe injustices and oppressions of the prevailing system, moreconscientious in adhering to his views, and more upright in bothpublic and private dealings, it would be harder to find than J. G. Phelps Stokes. He is one of the very few distinguished exceptionsamong his class. ]

From the very foundation of the United States Government, not tomention what happened before that time, the custom-house frauds havebeen continuous up to the very present, without any intermission. Therecent suits brought by the Government against the Sugar Trust forgigantic frauds in cheating in the importation of sugar, were only anindication of the increasing frauds. The Sugar Trust was compelled todisgorge about $2, 000, 000, but this sum, it was admitted, was only apart of the enormous total out of which it had defrauded theGovernment. The further great custom-house scandals and courtproceedings in 1908 and 1909 showed that the bribery of custom-houseweighers and inspectors had long been in operation, and that thewhole importing class, as a class, was profiting heavily by thisbribery and fraud. While the trials of importers were going on in theUnited States Circuit Court at New York, despatches from Washingtonannounced, on October 22, 1909, that the Treasury Departmentestimated that the same kind of frauds as had been uncovered at NewYork, had flourished for decades, although in a somewhat lesserdegree, at Boston, Philadelphia, Norfolk, New Orleans, San Franciscoand at other ports. 

"It is probable, " stated these subdued despatches, "that thesesystematic filchings from the Government's receipts cover a period ofmore than fifty years, and that in this, the minor officials of theNew York Custom House have been the greatest offenders, althoughtheir nefarious profits have been small in comparison with theillegitimate gains of their employers, the great importers. These arethe views of responsible officials of the Treasury Department. " Thesedespatches stated the truth very mildly. The frauds have been goingon for more than a century, and the Government has been cheated outof a total of hundreds upon hundreds of millions of dollars, perhapsbillions. 

And the thieving importers of these times comprise the respectableand highly virtuous chambers of commerce and boards of trade, as wasthe case in Gould's day. They are ever foremost in pompouslydenouncing the very political corruption which they themselves causeand want and profit from; they are the fine fellows who come togetherin their solemn conclaves and resolve this and resolve that against"law-defying labor unions, " or in favor of "a reform in our bodypolitic, " etc. , etc. A glorious crew they are of excellent, mostdevout church members and charity dispensers; sleek, self-sufficientmen who sit on Grand Juries and Trial Juries, and condemn the pettythieves to conviction carrying long terms of imprisonment. Viewingcommercial society, one is tempted to conclude that the worthiestmembers 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 theconvict may be considered a real badge of ancestral honor. 

But the comparison of Gould and the trading classes is by no meanscomplete without adding anew a contrast between how the propertiedplunderers as a class were immune from criminal prosecution, and thepersecution to which the working class was subjected. 

Although all sections of the commercial and financial class werecheating, swindling and defrauding with almost negligible molestationfrom Government, the workers could not even plead for the right towork without drawing down upon themselves the full punitive animosityof governing powers whose every move was one of deference to theinterests of property. Apart from the salient fact that the prisonsthroughout the United States were crowded with poor criminals, whilethe machinery of the criminal courts was never seriously invokedagainst the commercial and financial classes, the police and otherpublic functionaries would not even allow the workers to meetpeacefully for the petitioning of redress. Organized expressions ofdiscontent are ever objectionable to the ruling class, not so muchfor what is said, as for the movements and reconstructions they maylead 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 ofstarvation, suffering for food, for the need of proper clothing, andfor medical attendance. Meetings of the unemployed were held in manyplaces, and public attention called to the needs of the poor. The menasked for work and found it not, and children cried for bread. . . . Theunemployed and suffering poor of New York City determined to hold ameeting and appeal to the public by bringing to their attention thespectacle of their poverty. They gained permission from the Board ofPolice to parade the streets and hold a meeting in Tompkins Square onJanuary 13, 1874, but on January 12 the Board of Police and Board ofParks revoked the order and prohibited the meeting. It was impossibleto notify the scattered army of this order, and at the time of themeeting 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 allsides. 

One of the daily papers of the city confessed that the scene couldnot be described. People rushed from the gates and through thestreets, followed by the mounted officers at full speed, chargingupon them without provocation. Screams of women and children rent theair, and the blood of many stained the streets, and to the furthershame of this outrage it is to be added that when the GeneralAssembly of New York State was called to this matter they tooktestimony, but made no sign. [Footnote: "The Labor Movement":147-148. In describing to the committee on grievances the horrors of thisoutrage, John Swinton, a writer of great ability, and a man whosewhole heart was with the helpless, suffering and exploited, closedhis 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 wassaved for well-fed respectability, and starving humanity was forcedback into its despairing haunts, there to reflect upon the club-taught lesson that empty stomachs should remain inarticulate. For theflash of a second, a nameless fright seized hold of the gildedquarters, but when they saw how well the police did their dispersingwork, and choked up with their clubs the protests of aggregatedsuffering, self-confidence came back, revelry was resumed, and thesaturnalia of theft went on unbrokenly. 

And a lucky day was that for the police. The methods of the rulingclass were reflected in the police force; while perfumed society wasbribing, defrauding and expropriating, the police were enrichingthemselves by a perfected system of blackmail and extortion of theirown. Police Commissioners, chiefs, inspectors, captains and sergeantsbecame millionaires, or at least, very rich from the proceeds of thistraffic. Not only did they extort regular payments from saloons, brothels and other establishments on whom the penalties of law couldbe visited, but they had a standing arrangement with thieves of allkinds, rich thieves as well as what were classed as ordinarycriminals, by which immunity was sold at specified rates. [Footnote:The very police captain, one Williams, who commanded the police atthe Tompkins Square gathering was quizzed by the "Lexow Committee" in1893 as to where he got his great wealth. He it was who invented theterm "Tenderloin, " signifying a district from which large collectionsin blackmail and extortion could be made. By 1892, the annual incomederived by the police from blackmailing and other sources ofextortion was estimated at $7, 000, 000. (See "Investigation of thePolice Department of New York City, " 1894, v:5734. ) With theestablishment of Greater New York the amount about doubled, or, perhaps, trebled. ] The police force did not want this systeminterfered with; hence at all times toadied to the rich andinfluential classes as the makers of law and the creators of publicopinion. To be on the good side of the rich, and to be praised as thedefenders of law and order, furnished a screen of incalculableutility behind which they could carry on undisturbedly their ownpeculiar 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 muchmore than sufficient capital to compete with many of the richestmagnates; and what he might lack in extent of capital when combatedby a combination of magnates, he fully made up for by his pulverizingmethods. His acute eye had previously lit upon the Union PacificRailroad as offering a surpassingly prolific field for a new seriesof thefts. Nor was he mistaken. The looting of this railroad andallied railroads which he, Russell Sage and other members of theclique proceeded to accomplish, added to their wealth, it wasestimated perhaps $60, 000, 000 or more, the major share of which Gouldappropriated. 

It was commonly supposed in 1873 that the Union Pacific Railroad hadbeen so completely despoiled that scarcely a vestige was left to preyupon. But Gould had an extraordinary faculty for devising new andfresh schemes of spoliation. He would discern great opportunities forpillage in places that others dismissed as barren; projects thatother adventurers had bled until convinced nothing more was to beextracted, would be taken up by Gould and become plethora of plunderunder his dexterous touch. Again and again Gould was charged withbeing a wrecker of property; a financial beachcomber who destroyedthat he might profit. These accusations, in the particular exclusivesense in which they were meant, were distortions. In almost everyinstance the railroads gathered in by Gould were wrecked before hesecured control; all that he did was to revive, continue andelaborate the process of wrecking. It had been proved so in the caseof the Erie Railroad; he now demonstrated it with the Union PacificRailroad. 

THE MISLEADING ACCOUNTS HANDED DOWN. 

This railroad had been chartered by Congress in 1862 to run from aline on the one hundredth meridian in Nebraska to the westernboundary of Nevada. The actual story of its inception andconstruction is very different from the stereotyped accounts shed bymost writers. These romancers, distinguished for their sycophancy andlack of knowledge, would have us believe that these enterprisesoriginated as splendid and memorable exhibitions of patriotism, daring and ability. According to their version Congress was sosolicitous that these railroads should be built that it almostimplored the projectors to accept the great gifts of franchises, landand money that it proffered as assistance. A radiantly glowingdescription is forged of the men who succeeded in laying theserailroads; how there stretched immense reaches of wilderness whichwould long have remained desolate had it not been for theseindomitable pioneers; and how by their audacious skill andpersistence they at last prevailed, despite sneers and ridicule, andgave to the United States a chain of railroads such as a few yearsbefore it had been considered folly to attempt. 

Very limpidly these narratives flow; two generations have drunk sodeeply of them that they have become inebriated with thecontemplation of these wonderful men. When romance, however, ishauled to the archives, and confronted with the frigid facts, the olddame 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 waspointed out by a generalization (to be frequently itemized byspecifications later on) that the accounts customarily written of theorigin of these railroads have been ridiculously incorrect. To provethem so it is only necessary to study the debates and the reports ofCongress before, and after, the granting of the charters. 

SECTIONAL INTERESTS IN CONFLICT. 

Far greater forces than individual capitalists, or isolated groups ofcapitalists, were at work to promote or prevent the construction ofthis or that Pacific road. In the struggle before the Civil Warbetween the capitalist system of the North and the slave oligarchy ofthe South, the chattel slavery forces exerted every effort to use thepowers of Government to build railroads in sections where their powerwould be extended and further intrenched. Their representatives inCongress feverishly strained themselves to the utmost to bring aboutthe construction of a trans-continental railroad passing through theSouthwest. The Northern constituents stubbornly fought the project. In reprisal, the Southern legislators in Congress frustrated everymove for trans-continental railroads which, traversing hostile or toodoubtful territory, would add to the wealth, power, population andinterests of the North. The Government was allowed to survey routes, but no comprehensive trans-continental Pacific railroad bills werepassed. 

The debates in Congress during the session of 1859 over Pacificrailroads were intensely aciduous. Speaking of the Southern slaveholders, Senator Wilson, of Massachusetts, denounced them as"restless, ambitious gentlemen who are organizing Southern leagues toopen the African slave trade, and to conquer Mexico and CentralAmerica. " He added with great acerbity: "They want a railroad to thePacific Ocean; they want to carry slavery to the Pacific and have abase line from which they can operate for the conquest of thecontinent south. " [Footnote: The Congressional Globe. Thirty-fifthCongress, Second Session, 1858-59, Part II, Appendix: 291. ] In fieryverbiage the Southern Senators slashed back, taunting the Northernerswith seeking to wipe out the system of chattel slavery, only toextend and enforce all the more effectually their own system of whiteslavery. The honorable Senators unleashed themselves; Senatorialdignity fell askew, and there was snarling and growling, retorts andbacktalk and bad blood enough. 

The disclosures that day were extremely delectable. In the exchangeof recriminations, many truths inadvertently came out. Thecapitalists of neither section, it appeared, were faithful to theinterests of their constituencies. This was, indeed, no discovery;long had Northern representatives been bribed to vote for land andmoney grants to railroads in the South, and vice versa. But thecharges further brought out by Senator Wilson angered and exasperatedhis Southern colleagues. "We all remember, " said he, "that Texas madea grant of six thousand dollars and ten thousand acres of land a mileto a Pacific railway company. " Yes, in truth, they all remembered;the South had supported that railroad project as one that would aidin the extension of her power and institutions. "I remember, " Wilsonwent on, "that when that company was organized the men who got it upcould not, by any possibility, have raised one hundred thousanddollars if they paid their honest debts. Many of them were politicalbankrupts as well as pecuniary bankrupts--men who had not had adollar; and some of them were men who not only never paid a debt, butnever recognized an obligation. "

At this thrust a commotion was visible in the exalted chamber; theblow had been struck, and not far from where Wilson stood. 

"Years have passed away, " continued the Senator, "and what has Texasgot?" Twenty-two or twenty-three miles of railway, with two cars uponit, with no depot, the company owning everything within hailingdistance of the road; and they have imported an old worn-out enginefrom Vermont. And this is part of your grand Southern PacificRailroad. These gentlemen are out in pamphlets, proving each othergreat rascals, or attempting to do so; and I think they havegenerally succeeded. . . . The whole thing from the beginning has beena gigantic swindle. [Footnote: The Congressional Globe, etc. , 1858-9, Part II, Appendix, 291. ]

What Senator Wilson neglected to say was that the capitalists of hisown State and other Northern States had effected even greaterrailroad swindles; the owners of the great mills in Massachusettswere, 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 constructionpioneers, risking their every cent, and racking their health andbrains, in the construction of railways. It was in the very heyday ofthe bribing and swindling, as numerous investigating committeesshowed; there could be no glamour or illusion then. 

The money lavishly poured out for the building of railroads wasalmost wholly public money drawn from compulsory taxation of thewhole people. At this identical time practically every railroadcorporation in the country stood indebted for immense sums of publicmoney, little of which was ever paid back. In New York State morethan $40, 000, 000 of public funds had gone into the railroads; inVermont $8, 000, 000 and large sums in every other State and Territory. The whole Legislature and State Government of Wisconsin had beenbribed with a total of $800, 000, in 1856, to give a large land grantto one company alone, details of which transaction will be foundelsewhere. [Footnote: See the chapters on the Russell Sagefortune. ]The State of Missouri had already disbursed $25, 000, 000 ofpublic funds; not content with these loans and donations two of itsrailroads demanded, in 1859, that the State pay interest on theirbonds. 

In both North and South the plundering was equally conspicuous. Someof the Northern Senators were fond of pointing out the incompetencyand rascality of the Southern oligarchy, while ignoring the acts ofthe capitalists in their own section. Senator Wilson, for instance, enlarged upon the condition of the railroads in North and SouthCarolina, describing how, after having been fed with enormoussubsidies, they were almost worthless. And if anything was calculatedto infuriate the Southerners it was the boast that the capitalists ofMassachusetts had $100, 000, 000 invested in railroads, for they knew, and often charged, that most of this sum had been cheated bylegislation out of the National, State or other public treasury, andthat what had not been so obtained had been extracted largely fromthe underpaid and overworked laborers of the mills. Often they hadcompared the two systems of labor, that of the North and that of theSouth, and had pointedly asked which was really the worse. 

Not until after the Civil War was under way, and the North was incomplete control of Congress, was it that most of the Pacificrailroad legislation was secured. The time was exceedinglypropitious. The promoters and advocates of these railroads could nowadvance the all-important argument that military necessity as well aspopular need called for their immediate construction. 

No longer was there any conflict at Washington over legislationproposed by warring sectional representatives. But another kind offight in Congress was fiercely set in motion. Competitive groups ofNorthern capitalists energetically sought to outdo one another ingetting the charters and appropriations for Pacific railroads. Aftera bitter warfare, in which bribery was a common weapon, a compromisewas reached by which the Union Pacific Railroad Company was to havethe territory west of a point in Nebraska, while to other groups ofcapitalists, headed by John I. Blair and others, charters and grantswere given for a number of railroads to start at different places onthe Missouri River, and converge at the point from which the UnionPacific ran westward. 

In the course of the debate on the Pacific Railroads bill, SenatorPomeroy introduced an amendment providing for the importation oflarge numbers of cheap European laborers, and compelling them tostick to their work in the building of the railroads under theseverest penalties for non-compliance. It was, in fact, a proposal tohave the United States Government legalize the peonage system ofwhite slavery. Pomeroy's amendment specifically provided that thetroops should be called upon to enforce these civil contracts. "Itstrikes one as the most monstrous proposition I ever heard of, "interjected Senator Rice. "It is a measure to enslave white men, andto enforce that slavery at the point of the bayonet. I begin tobelieve what I have heard heretofore in the South, that the object ofsome of these gentlemen was merely to transfer slavery from the Southto the North; and I think this is the first step toward it. "[Footnote: The Congressional Globe, Thirty-seventh Congress, ThirdSession, 1862-63. Part ii: 1241-1243. ]

The amendment was defeated. The act which Congress passed authorizedthe 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 publicdomain, of arbitrary rights of condemnation, and the right to takefrom the public lands whatever building material was needed, Congressgave as a gift to the company alternate sections of land twenty mileswide along the entire line. Still further, the company was empoweredto 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. Thereis not the slightest doubt that the supplementary act of 1864 was. The directors and stockholders of the company were not satisfied withthe comprehensive privileges that they had already obtained. It wasvery easy, they saw, to get still more. Among these stockholders weremany of the most effulgent merchants and bankers in the country; wefind William E. Dodge, for instance, on the list of stockholders in1863. The pretext that they offered as a public bait was that"capital needed more inducements to encourage it to invest itsmoney. " But this assuredly was not the argument prevailing inCongress. According to the report of a Senate committee of 1873--the"Wilson Committee"--nearly $436, 000 was spent in getting the act ofJuly, 1864, passed. [Footnote: Reports of Committees, Credit MobilierReports, Forty-second Congress, Third session, 1873; Doc. No. 78: xviii. The committee reported that the evidence proved that thissum had been disbursed in connection with the passage of theamendatory act of July 2, 1864. ]

For this $436, 000 distributed in fees and bribes, the Union PacificRailroad Company secured the passage of a law giving it even morefavorable government subsidies, amounting to from $16, 000 to $48, 000a mile, according to the topography of the country. The land grantwas enlarged from twenty to forty miles wide until it included about12, 000, 000 acres, and the provisions of the original act were soaltered and twisted that the Government stood little or no chance ofgetting back its outlays. 

The capitalists behind the project now had franchises, gifts andloans actually or potentially worth many hundreds of millions ofdollars. But to get the money appropriated from the NationalTreasury, it was necessary by the act that they should first haveconstructed certain miles of their railroads. The Eastern capitalistshad at home so many rich avenues of plunder in which to invest theirfunds--money wrung out of army contracts, usury and other sources--that many of them were indisposed to put any of it in the unpopulatedstretches of the far West. The banks, as we have seen, were gluttingon twenty, and often fifty, and sometimes a hundred per cent. ; theysaw 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 privatelyraise by 1865 was the insufficient sum of $500, 000. Some greaterincentive was plainly needed to induce capitalists to rush in. OakesAmes, head of the company, and a member of Congress, finally hit uponthe auspicious scheme. It was the same scheme that the Vanderbilts, Gould, Sage, Blair, Huntington, Stanford, Crocker and other railroadmagnates employed to defraud stupendous sums of money. 

Ames produced the alluring plan of a construction company. Thiscorporation was to be a compact affair composed of himself and hischarter associates; and, so far as legal technicalities went, was tobe a corporation apparently distinct and separate from the UnionPacific Railroad Company. Its designed function was to build therailroad, and the plan was to charge the Union Pacific exorbitant andfraudulent sums for the work of construction. What was needed was acompany chartered with comprehensive powers to do the constructingwork. This desideratum was found in the Credit Mobilier Company ofAmerica, a Pennsylvania corporation, conveniently endowed with themost extensive powers. The stock of this company was bought in for afew thousand dollars, and the way was clear for the colossal fraudsplanned. 

The prospects for profit and loot were so unprecedentedly great thatcapitalists now blithely and eagerly darted forward. One has only toexamine the list of stockholders of the Credit Mobilier Company in1867 to verify this fact. Conspicuous bankers such as Morton, Blissand Company and William H. Macy; owners of large industrial plantsand founders of multimillionaire fortunes such as Cyrus H. McCormickand George M. Pullman; merchants and factory owners and landlords andpoliticians--a very edifying and inspiring array of respectablecapitalists was it that now hastened to buy or get gifts of CreditMobilier stock. [Footnote: The full lists of these stockholders canbe found in Docs. No. 77 and No. 78, Reports of U. S. SenateCommittees, 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 moneyinterests. ]

The contract for construction was turned over to the Credit MobilierCompany. This, in turn, engaged subcontractors. The work was reallydone by these subcontractors with their force of low-paid labor. Oakes Ames and his associates did nothing except to look onexecutively from a comfortable distance, and pocket the plunder. Asfast as certain portions of the railroad were built the Union PacificRailroad Company received bonds from the United States Treasury. Inall, these bonds amounted to $27, 213, 000, out of much of which sumthe Government was later practically swindled. 

GREAT CORRUPTION AND VAST THEFTS. 

Charges of enormous thefts committed by Credit Mobilier Company, andof corruption of Congress, were specifically made by variousindividuals and in the public press. A sensational hullabalooresulted; Congress was stormed with denunciations; it discreetlyconcluded that some action had to be taken. The time-honored, mildewed dodge of appointing an investigating committee was decidedupon. 

Virtuously indignant was Congress; zealously inquisitive thecommittee appointed by the United States Senate professed to be. Verysoon its honorable members were in a state of utter dismay. For thetestimony began to show that some of the most powerful men inCongress were implicated in Credit Mobilier corruption; men such asJames G. Blaine, one of the foremost Republican politicians of theperiod, and James A. Garfield, who later was elevated into the WhiteHouse. Every effort was bent upon whitewashing these men; thecommittee found that as far as their participation was concerned"nothing was proved, " but, protest their innocence as they vehementlydid, the tar stuck, nevertheless. 

As to the thefts of the Credit Mobilier Company, the committee freelystated its conclusions. Ames and his band, the evidence showed, hadstolen nearly $44, 000, 000 outright, more than half of which was incash. The committee, to be sure, was not so brutal as to style ittheft; with a true parliamentarian regard for sweetness andsacredness of expression, the committee's report described it as"profit. "

After holding many sessions, and collating volumes of testimony, thecommittee found, as it stated in its report, that the total cost ofbuilding the Union Pacific Railroad was about $50, 000, 000. And whathad the Credit Mobilier Company charged? Nearly $94, 000, 000 or, to beexact, $93, 546, 287. 28. [Footnote: Doc. No. 78, Credit MobilierInvestigation: xiv. ] The committee admitted that "the road had beenbuilt chiefly with the resources of the Government. " [Footnote:Ibid. , xx. ] A decided mistake; it had been entirely built so. Thecommittee itself showed how the entire cost of building the road hadbeen "wholly reimbursed from the proceeds of the Government bonds andfirst mortgage bonds, " and that "from the stock, income bonds, andland grant bonds, the builders received in cash value $23, 366, 000 asprofit--about forty-eight per cent. On the entire cost. " [Footnote:Ibid. , xvii. ]

The total "profits" represented the difference between the cost ofbuilding the railroad and the amount charged--about $44, 000, 000 inall, of which $23, 000, 000 or more was in immediate cash. It was morethan proved that the amount was even greater; the accounts had beenfalsified to show that the cost of construction was $50, 000, 000. Large sums of money, borrowed ostensibly to build the road, had atonce been seized as plunder, and divided in the form of dividendsupon 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 toshare in this carnival of plunder were not gifted with unerringjudgment? From afar they sighted their quarry. Nearly all of themwere 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 alsoglorified as courageous, enterprising men of prescience, who hazardedtheir money in building the Pacific railroads at a time when most ofthe far West was an untenanted desert. And this string of arrantfalsities has passed as "history!"

If they had that foresight for which they were so inveteratelylauded, it was a foresight based upon the certainty that it wouldyield them forty-eight per cent. Profit and more from a project onwhich not one of them did the turn of a hand's work, for even thebribing of Congress was done by paid agents. Nor did they have torisk the millions that they had obtained largely by fraud in tradeand other channels; all that they had to do was to advance that moneyfor a short time until they got it back from the Governmentresources, with forty-eight per cent profit besides. 

The Senate Committee's report came out at a time of panic when manymillions of men, women and children were out of work, and othermillions in destitution. It was in that very year when the workers inNew York City were clubbed by the police for venturing to hold ameeting to plead for the right to work. But the bribing of Congressin 1864, and the thefts in the construction of the railroad, wereonly parts of the gigantic frauds brought out--frauds which a peoplewho believed themselves under a democracy had to bear and put upwith, or else be silenced by force. 

THE BRIBERY PERSISTENTLY CONTINUES. 

When the act of 1864 was passed, Congress plausibly pointed out thewise, precautionary measures it was taking to insure the honestdisbursements of the Government's appropriations. "Behold, " said ineffect this Congress, "the safeguards with which we are surroundingthe bill. We are providing for the appointment of Governmentdirectors to supervise the work, and see to it that the Government'sinterests do not suffer. " Very appropriate legislation, indeed, froma Congress in which $436, 000 of bribe money had been apportioned toinsure its betrayal of the popular interests. 

Buts Ames and his brother capitalists bribed at least one of theGovernment directors with $25, 000 to connive at the frauds:[Footnote: Document No. 78, Credit Mobilier Investigation: xvii] hewas a cheaply bought tool, that director. And immediately after therailroad was built and in operation, its owners scented more millionsof plunder if they could get a law enacted by Congress allowing themexorbitant rates for the transportation of troops and Governmentsupplies and mails. They corruptly paid out, it seems, $126, 000 toget this measure of March 3, 1871, passed. [Footnote: Doc. No. 78, etc. , xvii. ]

What was the result of all this investigation? Mere noise. Theoratorial tom-toms in Congress resounded vociferously for the gullingof home constituencies, and of palaver and denunciations there was aplenitude. The committee confined itself to recommending theexpulsion of Oakes Ames and James Brooks from Congress. TheGovernment bravely brought a civil action, upon many specifiedcharges, against the Union Pacific Railroad Company formisappropriation of funds. This action the company successfullyfought; the United States Supreme Court, in 1878, dismissed the suiton the ground that the Government could not sue until the company'sdebt had matured in 1895. [Footnote: 98 U. S. 569. ]

Thus these great thieves escaped both criminal and civil process, asthey were confident that they would, and as could have beenaccurately foretold. The immense plunder and the stolen railroadproperty the perpretrators of these huge frauds were allowed to keep. Congress could have forfeited upon good legal grounds the charter ofthe Union Pacific Railroad Company then and there. So long as thiswas note done, and so long as they were unmolested in the possessionof their loot, the participating capitalists could well afford to becuriously tolerant of verbal chastisement which soon passed away, andwhich had no other result than to add several more ponderous volumesto the already appallingly encumbered archives of Governmentinvestigations of the stock of the Union Pacific Railroad was at avery low point. The excessive amount of plunder appropriated by Amesand his confederates had loaded it down with debt. With fixed chargeson enormous quantities of bonds to pay, few capitalists saw how thestock could be made to yield any returns--for some time, at any rate. Now was seen the full hollowness of the pretensions of thecapitalists that they were inspired by a public-spirited interest inthe development of the Far West. This pretext had been jockeyed outfor every possible kind of service. As soon as they were convincedthat the Credit Mobilier clique had sacked the railroad of allimmediate plunder, the participating capitalists showed a sturdyalacrity in shunning the project and disclaiming any furtherconnection with it. Their stock, for the most part, was offered forsale. 

JAY GOULD COMES FORWARD

It was now that Jay Gould eagerly stepped in. Where others sawcessation of plunder, he spied the richest possibilities for a newonslaught. For years he had been a covetous spectator of theoperations of the Credit Mobilier; and, of course, had not been ableto contain himself from attempting to get a hand in its stealings. Heand Fisk had repeatedly tried to storm their way in, and had carriedtrumped-up cases into the courts, only to be eventually thwarted. Nowhis chance came. 

What if $50, 000, 000 had been stolen? Gould knew that it had otherresources of very great value; for, in addition to the $27, 000, 000Government bonds that the Union Pacific Railroad had received, italso had as asset about 12, 000, 000 acres of land presented byCongress. Some of this land had been sold by the railroad company atan average of about $4. 50 an acre, but the greater part stillremained in its ownership. And millions of acres more could befraudulently seized, as the sequel proved. 

Gould also was aware--for he kept himself informed--that, twentyyears previously, Government geologists had reported that extensivecoal deposits lay in Wyoming and other parts of the West. Thesedeposits would become of incalculable value; and while they were notincluded in the railroad grants, some had already been stolen, and itwould be easy to get hold of many more by fraud. And that he was notin error in this calculation was shown by the fact that the UnionPacific Railroad and other allied railroads under his control, andunder that of his successors, later seized hold of many of these coaldeposits by violence and fraud. [Footnote: The Interstate CommerceCommission reported to the United States Senate in 1908 that theacquisition of these coal lands had "been attended with fraud, perjury, violence and disregard of the rights of individuals, " andshowed specifically how. Various other Government investigationsfully supported the charges. ] Gould also knew that every yearimmigration 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 becapitalized in advance. Moreover, he had in mind other plans by whichtens of millions could be stolen under form of law. 

Fisk had been murdered, but Gould now leagued himself with much ablerconfederates, the principal of whom was Russell Sage. It is wellworth while pausing here to give some glimpses of Sage's career, forhe left an immense fortune, estimated at considerably more than$100, 000, 000, and his widow, who inherited it, has attained thereputation of being a "philanthropist" by disbursing a few of thosemillions in what she considers charitable enterprises. One of herendowed "philanthropies" is a bureau to investigate the causes ofpoverty and to improve living conditions; another for the propagationof justice. Deeply interested as the benign Mrs. Sage professes to bein the causes producing poverty and injustice, a work such as thismay peradventure tend to enlighten her. This highly desirableknowledge she can thus herein procure direct and gratuitously. Furthermore, it is necessary, before describing the joint activitiesof Gould and Sage, to give a prefatory account of Sage's career; whatmanner of man he was, and how he obtained the millions enabling himto help carry forward those operations.