THE HISTORY OF THE GREAT AMERICAN FORTUNES RUSSELL SAGE. HISTORY OF THE GREAT AMERICAN FORTUNES BY GUSTAVUS MYERS AUTHOR OK "THli HISTORY OK TAMMANY HALL,' 1 " HISTORY OK PUBLIC FRANCHISES IN NEW YORK CITY,'' ETC. VOL. III. GREAT FORTUNES FROM RAILROADS ( CONTINUED) CHICAGO CHARLES H. KKRR &- COMPANY 1911 Copyright 1909-1910 BY GUSTAVUS MYERS Kntrrrd ;it Stationers' Hail. London, Eny:., 1910 II v ( ius-lavus M vri's JOHN F. HIGGINS PRINTER AND BINDER 376-382 MONROE STREET CHICAGO, ILLINOIS CONTENTS CHAPTER PAGE I. Ax INSERT ON THE SAGE FORTUNE i i II. MOKE DETAILS OF THE SAGE FORTUNE 44 III. THE GOULD FORTUXE RESUMED (13 IV r . THE PRESENT STATUS OF THE GOULD FORTUNE . . 80 V. THE BLAIR AND THE GARRETT FORTUNES .... ioj \"I. THE PACIFIC QUARTET i_'4 \'\l. ]. PIERPOXT MORGAN'S GENESIS 146 \'I1I. THE FLO\VERING OF THE MORCAX FORTUXE . . .177 IX. MORGAX AS A BANKING AND RAILROAD GRANDEE . . Jpent just enough to al- low himself a comfortable domicile on Fifth avenue, one of the thoroughfares of the rich in Xe\v York city; aside from this moderate expenditure, he was notoriously parsimonious; his very clothes were the jest of the coun- try. Had he yielded to the prevalent custom of buying the reputation of philanthropist and " benefactor of man- kind " by impressive donations or endowments (to be recouped by further pillage) he would infallibly have been otherwise judged. Fie made no attempt, however, to propitiate harsh public opinion; be it said to his credit that he was unshakenly faithful to his sordid ideals ; at no time did he curry praise or essay to conciliate by rlinging out as a social bribe morsels to charity or phi- lanthropy. \Yhere his compeers (whatever their mo- tives) confused or deceived the public estimate of them and their ways by distributing largess every now and then, he made no advances or pretensions ; in the respect that he candidly idolized money, moralizing and -ham almsgiving, cant and humbuggery were absent in his composition. IIIS CARF.F.K AT T1IF. START. Sage was born of farmer folk in 1816 in Oneida Count}-, Xew York, in an environment of poverty and cramping horizon. There is a paucity of information about his youthful days. \Ye learn that as a boy his dominant yearning was for money, and that he devel- oped a remarkable capacity for sharp trading. He clerked in his brother's grocerv store at Troy, doubtless, we may reasonably surmise, learning all of the profita- ble little trick< of dealing with customers which an ef- 14 HISTORY OF TIII-: GRKAT AMKRICAN FOKTCNKS licient clerk \vas taught, expected and paid to do; de- ceit \vas then, as it is now, the lever of all successful business. Xo doubt he carefullv. ever so carefully, saved money, and so likewise did tens of thousands of other clerks thrift}-, ambitious striplings \vho put it away as they were beneficently advised. But the rule of thrift worked wrong-side in irost of their cases; very few of them became rich, despite their sticking punc- tiliously to all of the regularly prescribed axioms. Plain it ever has been that thrift, temperance and hard work are not the recipe for getting rich, else many millions of people who have to work hard, and who are thrifty and temperate, would forthwith become so. The ortho- dox formulas did not produce riches, as Sage's fellow clerks found out. What, then, brought wealth to him ? " Long before down appeared on his chin he had gained a local reputation of being unu.-ually keen at 'swapping. 5 ' So wrote a eulogist whose description, slight though it be, gives a clue to Sage's methods in boyhood days. We are told that he amassed enough money to open a grocer}- .-tore of his own, and that in 1830, he became a partner in a wholesale grocery estab- Hshment. SWINDLE. On September 12. iS;i. Sage and two other Troy men formed a copartnership, under the name of Wheeler, Sage and Slocum. to carry on a general produce busi- ness at Troy, with a Western headquarters at Mil- waukee, under the name of Wheeler and Company. This copartnership was signalized by a memorable Dwin- dle, which called forth one of the severest decisions and TTIK SACK niKTrXK 15 denunciations ever handed down by the Supreme Court of the United States.'"' The firm deliberated concocted a plan to cheat the creditors of one of its bankrupt creditors in Milwaukee, and while it was engaged in this operation. Sage hoodwinked and cheated his own partners out of the proceeds of the swindle. The facts as given in the statement of the case and the decision of the Supreme Court of the United States were as follows : The firm became the owner of a large debt against one Alanson Sweet of Milwaukee, a debt secured by a mortgage on valuable real estate. This real estate in- cluded a large warehouse, which Wheeler and Com- pany had rented. Proceedings to foreclose the mort- gage against the bankrupt Sweet were begun in Octo- ber, 1854, and a decree was passed by the Wisconsin courts in November, 1855. The Supreme Court's state- ment of the case went on to say that Wheeler, Sage and Slocum were desirous of getting a perfect title to the mortgaged premises, the value of which was $50,000 when the mortgage was given. But other creditors had judgments against Sweet, and Sweet claimed the sum of $12,000 due him from \Yheeler and Company for three years' rent of the warehouse. If Sweet put in this defence successfully, a perfect title could not be secured. Tt was necessary, also, to de- ceive and bluff the other creditors. In order to grasp the whole of the real estate, the court said. Wheeler. Sage and Slocum thought it necessary to purchase cer- tain judgments, and make other arrangements by col- lusion. Sage informed Wheeler and Slocum that this - See Wheeler v. S;ie. \Vall.uv'- Report*. Supreme C':':rt of the Tnited State*, 1:518 r ( :ll. [Q HISTORY OF Till-. iIREAT AMERICAN 1-ORTt'NES could be done 1>v buving off Alexander Mitchell, who controlled Sweet's defence, for $10.000. The court's -latement continues : Sage was authorized to perfect the agreement, and to charge Wheeler and Slocuin their proportionate amount on the books of the firm. This agreement or a similar one, was made by Sage with Mitchell, and judgments purchased under it. ll'ith- i"i:t tiie knoii'ledge of Wheeler, Sage, hoii'crer, abandoned this agreement, and made one li'ith Mitchell for his oicvz benefit. The mortgaged property was sold, and Mitchell became the pur- chaser, letting Sage have one-third interest on certain condi- tions; this being done, as alleged, in violation of the rights, and without the knowledge of Wheeler and Slocum. The mort- gaged debt \vas fixed at $24.000, two-thirds of which amount was paid over by Sage to Wheeler a/id Slocum, being, as he [Sage] said, the best that could be done, and which was ac- cepted by Wheeler and Slocum on that hypothesis. 3 SAGE SWIXDLES HIS PARTNERS. Yet, the court went on to relate, enough of the mort- gaged property, as Wheeler found out and charged, had been sold to produce $105.000, in addition to unsold prop- erty, valued at $27,000, still in Mitchell's hands. 4 On the usual legal ground that when a party obtains an advantage by fraud, he is to be regarded as trustee of the party defrauded and compelled to account, Wheeler brought suit against Sage. He sued to have Sage declared trustee for himself (Wheeler) for one- third of the mortgaged property still held and unsold by Mitchell, and for one-third of the proceeds of the prop- erty that had been sold. The Supreme Court of the United States declared the whole Iran-action fraudulent; that while Wheeler, Sage -Wallace's Reports, Supreme Court of the United States, i : 519. 4 Ibid. THE SACK FORTUNE 17 and Slocum had successfully conspired to cheat Sweet's numerous other creditors. Sage had tricked and cheated his own partners. They had set out to get by fraud real estate worth $50,000 for $30,000, and had authorized Sage to arrange the collusion. Sage had afterward re- linquished the agreement with Mitchell, and had secured clandestinely an advantage to himself, "to the injury of the other parties." In further stating the court's decision. Justice Davis continued : The evidence in this case. consisting mainly of letters inter- changed between Wheeler and Sage, shows clearly enough that a scheme was initiated to get title to the property, and that Sage was the active agent to perfect it, but for some unex- plained reason it failed. . . . All parties rested in the belief that negotiations with Mitchell would be successful ; but . . . Sage abandoned the idea of buying the property on joint ac- count, and bargained with Mitchell in his own behalf. . . . The " Warehouse Case," as it is somewhere called in the record, is anything but creditable to the parlies concerned, and it is surprising that they should have been willing to give it pub- licity through a legal proceeding. . . . The scheme was to get the real estate by depreciating its value through a process of entering judgment for a large nominal amount, and by de- ceiving and " bluffing off " other creditors. The court fin Wis- consin which passed the foreclosure decree] was imposed upon, and a combination formed, the object and direct tendency of which was to secure title to the valuable real estate of an insolvent debtor at the expense and sacrifice of his other cred- itors. The court declined to pass judgment, one way or the other, on the ground that a party who had been engaged in an illegal transaction, could not expect redress, after being cheated, in any court of equity. " A proceed- ing like this is against good conscience and good morals, and cannot receive the sanction of a court of equity. 1 8 HISTORY 01- Till It is again>t the jxilicy of the- law to help either party in such controversies."' 5 The effect of this de- cision \vas to leave Sage in possession of the proceeds of his swindling operation. For seven years Sage held the offices of Alderman of Troy and of Treasurer of Rensselaer County. Xow it is that we get the first clea" penetration into the methods by which he gathered in his first notable amount of money. Xot by trafficking in weights and measures was it, nor by petty swindling, but by a transaction in which as a public official he betrayed the city of Troy into selling to himself for a small sum a railroad line, which railroad he later, according to a prearranged plan. sold to the Xew York Central consolidation at a very large profit. HOW SAGE OBTAINED HIS EIRST SWEEP OF WEALTH. There is nothing vague or conjectural regarding this illuminating transaction: the facts are inscribed authen- tically in the public records. In the years 1840-43. the city of Troy, at public ex- pense, began to build a railroad running twenty-one miles from that city to Schenectady. The city of Troy, in 1837 an( ^ 1 $47- borrowed a total of $650.000, and in 1840 the State of Xew York loaned Troy Sioo.ooo, making 8750.000 in all for the construction and equipment of the Trov and Schenectady Railroad. It was a time when capitalists passively looked on, allowing many munic- ipalities and some of the States to build publicly-owned railroads and operate them for a time, and then, after many millions of public money had been expended, capi- Unitcil Stales, TIFI-: SACK roRTrxi: 19 talists would contrive to take over the ownership unto themselves. This they did by depreciating and crip- pling railroads owned by the community, and bv cor- I O - tf ' ml rupting public officials to sell or lease them for compara- tively insignificant sums. It was a favorite practice of the period, and was worked with great success. The task of providing themselves with modern means of transportation frequently devolved upon communities, since no capitalist would take the initiative in any un- dertaking in which he did not see considerable immedi- ate profits. The aim of the community was service ; that of the capitalist, profit. Communities would never stop to consider whether a railroad would yield profit ; the sole question guiding them was that of public need. The principle which made the people acquiescent in the loaning or donating of large sums of money to private railroad corporations was that railroads were a public necessity, whether publicly or privately built. In New York State alone, not to mention other States, the rail- roads originally received from cities, towns, villages and from the State, the sum of $40,039,496.82 by donation or investment ; e a very considerable amount it made at a time when a dollar had a much greater purchasing power than now. Of this sum, only about one-fourth part was paitl back ; at various times laws were cor- ruptly passed releasing the railroad companies from lia- bility for these debts. Every mile of those railroads is to-day absolutely owned, or practically so, by private in- terests. As the greater number of railroads were owned by pri- vate corporations, it was not difficult for them to bank- rupt publicly-owned railroads when they set out to do 2O III. in:;' freight rind passenger traffic or l>y corrupting public officials to mismanage llicin. This conflict ol public and private intere.--t ab.vavs resulted in the triumph of private interest ; necessarily so because public welfare and pri- vate profits were an incongruous mixture, the one the antithesis of the other, and also because the governing officials were either of the propertied classes or respon- sive or subservient to them. By these methods the campaign against the public ownership of the Troy and Schenectady Railroad was begun. Small detached railroads were anomalies at best ; economic development demanded one of two solutions; either that they became merged in a great public, or in a great private, system. Disconnected, they were waste- ful, inconvenient and unsystematic. This essential fact is fully borne in mind in stating the facts. Among the railroad capitalists the movement for com- bination and cohesion commenced at about 1850. In Xew York State a combination of various bankers, land- owners and politicians concluded along in 1851 that it would be an excellent scheme to unite many of Xew York's separate little railroads into one centralized sys- tem. They were not prompted, it is true, by solicitude for the community; very far from it; the community to them signified a domain for spoils. Xor did they have any appreciation of the economic forces behind their project. Their one propelling idea was to buy up the small railroads for trifling sums and then organize a corporation and sell those railroads to the corporation at a tremendous profit. Xevertheless, in carrying forward the centralizing movement they did a necessary service to the community, however heavilv the people have ha i to pav for it. The Troy and Schenectady Railroad was 21 agreed u])on as one of the roads to be included in o imbination. A CITY r.KTKAYKI) AND I'LL'NDKRKD. llo\v was the city of Troy to be induced to sell its railroad to the clique of projectors? This was the problem. It did not perturb them long. Russell Sage undertook to carry through this portion of the bargain. 1 ie was at this time a leading member of the Troy Com- mon Council, and was serving as one of Troy's directors in the managing of the Troy and Schenectady Railroad. His first move, it would appear, was to cause a steady mismanagement of the railroad's affairs so as to create dissatisfaction, if not disgust, with the continuance of public ownership and operation. Very deftly \vas his undermining and sapping work done so deftly and by such surreptitious methods that no suspicion of his com- plicity was aroused. A public sentiment unfavorable to Troy's retention of the railroad was *hen adroitly worked up; public petitions praying for the sale of the unprofita- ble and unsatisfactory road began to flow in to the Com- mon Council. What did the Common Council now do? It appointed a committee to consider the question of selling; of this committee Sage was the most active member. So very active was he that the committee reported favoring the selling of the railroad. The proposition was, in fad. carried by one vote: it was Sage's vote which decided. Then, on January 24. 1853, another committee of the Common Council was appointed; its assigned function was to sell the stock, franchise and propertv of the rail- road for not less than 200.000. Who was it thai al.-o singularly happened to be the foremost member of thi- 22 HISTORY OE THE GREAT AMERICAN FORTUNES second committee? The phenomenally industrious Al- derman Sage. And when the railroad was finally sold, who was it that bought it? A company headed by Sage, and Sage it was who became its president. 7 Extra* n-- dinarily considerate were the terms of sale; $50,000 \va- to be paid down, the remainder in fourteen years. A LITTLE DISTRIBUTION OF S8.OOO.OOO. Quite a legitimate transaction, the apologist might say ; according to the law, however, it constituted malfeasance in office : many an officeholder in various cities had been removed for less flagrant acts. It was recognized gen- erally as a gross piece of corruption, but nothing was done to interfere with its success nor with the greater corruption that followed. Having, under form of law, grabbed the Troy and Schenectady Railroad, Sage sold it for $900,000 or so to the group of capitalists forming the Xew York Central Railroad combination. Although but $50,000 had been paid for it in cash. Sage and his associates disposed of it not only for the full value of its $650,000 capital stock, but they also received in exchange a premium of twenty-five per cent, on that amount in Xew York Central bonds. In this formation of the Xew York Central. S8.ooo.ooo in bonds all watered were distributed a^ a bonus among the owners of the various railroads embraced in the consolidation : s no insignificant portion of the eight millions was Sage's share of the s] (oils. 7 See Investigation of the Railroads of the State of Xew '"} Committee" K-ei-iative invc-tisation of 1,^70 it! i ' tor} of tlii> Muck watering operation. An ar i, it "i the I'ruy transacti-m liy F. \Y. Pn\vdl. cnti;led ''Two ; ;- i;i PuMir Uwnership of Strain Railr<->a-u.e nf Xo mi-; S.U;K I-'OKTL'NI; 23 \\'hatcver might be the later outcries of Troy's popu- lation over the merciless extortions of the Xe\v York Central Railroad, Sage was now heralded more of a "prominent citizen" than ever beiore, a citizen oi ex- ceeding worth, stability and standing. The glorious and patriotic occupation of politico-business man. with its radius of opportunities, had proved very lucrative. \et the national capital. Sage concluded, held out much greater inducements. Accordingly, the corrupt Troy po- litical ring, of which he was a leader, caused him to be elected to Congress ; there he took his seat in December, 1853, and in 1854 was reflected. That was the era when act after act was passed granting money and land, either openly or by indirection, to railroad companies, and giving corrupt powers and privileges of all miscellaneous kinds to other corporations and to individual capitalists. In the one year of 1850, exclusive of other years. Congress passed at least thirty railroad land-grant acts for the benefit of as many sep- arate railroad corporations acts under which these railroad companies obtained the ownership of tens of millions of acres of public land. The corrupt means used to get these acts through proved one of the great scandals of the times, and led to the appointment of numerous Congressional and State legislative investigat- ing committees. Few members of Congress and legisla- tures there were, as was abundantly shown, who did not take bribes either in money or in stocks and bonds. ! f Sage was barely noticeable in Congress, and a tol- erably complete blank in public life, he nevertheless all the more effectively and intimately cohered himself with many ol these enate. the bill had given the donation of land to the I erritory of Minnesota, not to the company; a- it hnalh becoming a law. the bill contained the ifu TIIF. SACK roKTrXK 2 5 been made in the debate over the bill whereby the op-- position of certain of its opponents was bought off, a statement which the incriminated denied." The ma- jority of another committee, appointed on July 10, 1X54. to investigate charges of bribery reported: ' The under- signed believe that it is clearly established by the testi- mony that money has been liberally used to secure the passage of bills, and they verily believe that much more evidence could be procured if time had been allowed the committee to make a more thorough investigation of the facts." 1L ' Till-; ENTERPRISING FACTORY OWNERS. This committee found that Samuel Colt, the founder of a fortune based upon the manufacture of firearms, paid out at least $15,000 to Dickerson. his attorney and one of his lobbyists, to buy oft the opposition in Con- gress to a bill extending Colt's patent rights, the time limit of which had expired. The testimony indicated 11 Rep. Xo. 352. (854:^5. This act was later repealed. See Chapter ii. Lowlier was, for a time, acting-president of this com- pany. He was a notoriously corrupt New York city politician, and at that very time, wa^ making considerable sums of money, liy fraudulently Celling land at exorbitant prices, to New York- city. (See "The History of Tammany Hall." p. 216.) Lowlier, or, one of these occasions, corruptly sold land to the city of New York for $106,000, \vhich the Controller refused to pay on the ground that this sum was live or six times more than the lard wa-> worth. Lowlier recovered judgment in the couns against the city, and when the Controller declined to satisfy i was on the point of causing Xew York's City Hall. ir. iS'-.S. lie sold at auction, when Mayor Tieinann halted the proceed- ings, and raided the necessary -ami. As it was, the paintings and statuary in the City Hall were sold, and were hid in by Mayor 'I ieinann's secretary. ( Mher officers of the Minnesota and Northwestern Railroad Company were equally notorious Xfu Yo'-k lobbyists and cor- rtiptionislij. : - Reports of Committees, T'nim third Congress, l-'ir>i Se> -ioi.. Vol. lii, Report Xo. 352:35. 26 that about $00,000 in all was spent in getting the bill pa>sed. Another lobbyist. Jere Clemens, who also did the disbursing of Colt's bribe money, was, at the same time, as he admitted under oath, lobbying for various railroad corporations seeking land grants, and for a bill similar to Colt's which extended the patent rights of Cyrus H. McCormick, 1 " a manufacturer of reaping ma- chines, and the founder of a multimillionaire fortune. And how other factory owners were bribing Congress to pass tariff acts was disclosed bv the investigation of a select committee of the House, the majority of which committee reported that one firm in particular. Laurence. Stone and Company, of Boston and Xew York, owners of the large Middlesex Mills, and the equally large Bay State Mills, in Massachusetts, had expended 887.000 in bribes to have the duties on raw woolen materials and dye stuffs reduced. 14 Failing to get from Congress, politically pledged to a low tariff, a high protective tariff on woolen goods, they set out to accomplish the same result bv securing a reduction of customs duties on raw material. One of the lobbyists for this firm was A. R. Corbin. brother-in-law of Clysses S. Grant, the same Corbin whom Gould later bought up in his gold manip- ulation. Corbin received ST.OOO in bribes from Laurence. Stone and Company, and he made no concealment of the fact that he had been regularly acting for the Tllinoi-. ( 'entral Railroad and other railroad corporations. (his was the time, it will br recalled, when Commn rlore Corneliu- Yanderbilt. K. K. Collins, and other steamship capitalist- were debauching Congress to get Till-: SACK FORT (.'NIC 2"J mail subsidies, and when \ underbill was blackmailing two Pacific steamship lines out of $612,000 a year of the (Government subsidy funds. It was also during the>e years that a House committee, after investigation, found that the enacting charter and the land grant of the DCS .Moines Navigation and Railroad Company were passed by bribery. 1 -"' Obviously, judging from the reports of these various investigating committees, and from the much more significant circumstances calling for the ap- pointment of those committees, Congress reeked with fraud and bribery, of which only slight oozings came to the surface; and we incidentally get, in passing along, a lucid insight into some of the methods of the founders of great fortunes based upon manufacturing industries. Bribery, indeed, was so undeniably rife that as a sop to public feeling, one investigating committee after an- other was appointed to inquire into charges. While on this subject, digression will be made to deal with two scandals in particular which came up at this period. It is well worth while referring to these, first, because they additionally reveal the utter corruption carried on con- tinuously at Washington by every section of the capital- i.-t cla>s, and second, because they disclose some of the method^ by which one of the most lauded multimillion- aire financiers and " philanthropists " in the United States built up his fortune. This was William W. Corcoran, a Washington banker, who, after the Civil War, became reputed as one of the most substantial and respected financiers in the Uniteo States. During the decades when Gould and Sage were being" hotly denounced for their frauds Corcoran loomed up as a >taid, conservative banker and, a man of accred- ited mo^t honorable pu-t. lie wa^ the chief partner of work. the banking firm of Corcoran and Riggs. and bequeathed 82.000,000 for a splendid art gallery to the city of Wash- ington, and he also established a home for decrepit old women. A SIDKWISK (iLANCK AT A NOTED PHILANTHROPIST. Corcoran was another of the many capitalists who contrived to assume a coating of protective respectabil- ity. His methods, however, were of the same fraudu- lent nature as those of all the other successful money getters. Evidences of what these methods intrinsically were came out in 1854; they made such a rumpus that the House of Representatives was compelled to undertake some investigation. According to the written and re- peatedly made charges of I'enjamin E. Green, a political figure of the period, Corcoran had extensively bribed public officials in order to make large sums of money out of the handling of United States funds and of specula- tion in them. Under the treaty of Guaclulupe Hidalgo, the United States had agreed to pay Mexico a large indemnity for territory ceded after the Mexican War. ['art of this sum was paid by 1850, but a considerable sum -till remained to be settled. Mexico needed money badly, and proposed that the United States pay it di- rect! v to the .Mexican Government without the inter- mediary of banking houses. Green charged that Cor- coran bribed Thomas II. IJayly, chairman of the House Committee on Ways and Mean-, so to mi-repre-ent Mex- ico's proposition rind manipulate matters that the firm of Corcoran and I'-iggs -mould be made the middlemni in iho transaction, " 1'avly." charged Green, "held a con- trol over all <>f the appropriation bills in most of which 20) Corcoran was directly or indirectly interested.'" 18 Cor- coran thus obtained the handling of the indemnity funds, and made a profit of about $500,000 from the transac- tion. 17 A select committee of the House of Representa- tives made a show of investigating the charges against Bayly, and reported on August 3. 1854, a case of " not proved." THE GARDIXRR-MEARS SWIXDLF.. At the very same time Corcoran was involved in an- other investigation by the House Committee on Judi- ciarya committee many of the members of which were themselves corrupt politicians. The transaction which it was investigating under a resolution passed by the House on March 6, 1854, was the great swindle per- petrated by George II. Gardiner and John 11. Mears upon the United States Government. By perjury, forged affidavits and bribery these two men obtained 8581,000 from the United States Government upon the representation that property of theirs had been de- stroyed in Mexico during the Mexican War. After the money had been appropriated, the facts as to the " as- tounding fraud" (as a House Committee termed it) came out publicly. Both the Senate and the Hou>e in- vestigated the transaction ; a Senate committee reported that the claims " were false and fictitious and the award- obtained upon forged and fabricated papers." 115 Reports of Committees. Thirty-third Congress, First Session, Vol. ni, Uep. Xt i. ,^4 : 4. 17 Ibid. 18 C. S. Senate Report Xo. i8_>. 1854. Tt \\ as at this peni>d that vast stretches of valuable land in the Southwest and the Pacific States were bein,n" obtained by forced documents and by the testimony of perjuring Mexicans. See Chapter li. Vol. ii. and the chapter on the Klkins fortune in Vol. iii. 30 HISTORY OP THE GREAT AMERICAN FORTUNES The people of the United States \vere wrought up over the. disclosures of this bold swindle, and Congress was smitten with another of its spasms of virtuous curiosity. A resolution was passed calling for the recovery of the money paid out to Gardiner and Mears. But were these men the real beneficiaries? Who actually got the money? "Who were the principals behind the fraud? These were points that had to be inquired into. As the investigation unfolded it appeared that a group of bankers and politicians were the parties backing the fraud. Possibly they instigated it, although this general belief was not determined. The testimony showed, how- ever, that when the forged affidavits were being prepared, money was urgently needed to carry the projected swin- dle to a successful conclusion. At this point Corcoran came forward. He loaned 818.750 as funds for the promotion of the swindle, although he claimed, when the committee was investigating, that he did not know that this money was used to buy up testimony and otherwise complete the chain of fraud. But he admitted loaning this 818.750 to Robert G. Corwin and Thomas Corwin. powerful politicians of the day: in return he received an assignment of the Gardiner claim as collateral se- curity." Thomas G. Corwin later was appointed United States Secretary of the Treasury, and it was by his order, under an act passed by Congress, that the money was paid out. Of the 8581.875 appropriated, the sum of 8321.562.50 was nominally in the name of Gar- diner himself, and 8107.187.50 was awarded to Cor- coran a- the assignee of Gardiner. Both of these sums. however, were paid out to Corcoran and entered on the books of Corcoran and Riggs. and (so the report 3 1 has it) "credited to the parties interested."-" Gardiner. while being prosecuted for perjury, committed suicide. The bankers and politicians, however, whose tools Gardiner and Mears were, did not, it is hardly neces- sary to say, have to face criminal trial or any other kind of trial, except a friendly and evasive investiga- tion. So far as Corcoran's complicity was concerned, the committee exoneratingly whitewashed him, and re- lieved him from any legal responsibility. It is probable that Sage learned many valuable lessons from his experience at Washington ; Corcoran's particu- lar kind of banking methods must have opened his eyes to possibilities. At any rate, already a millionaire, or nearly one. from the combination of business and pi 'li- lies. Sage now went into the banking business at Troy, and became a money lender and usurer on a large scale. It was at this juncture that he turned up as one of the largest bondholders of the La Crosse and Milwaukee Railroad. He had become associated with this project at about the time he was in Congress, but the fact was not known until several years afterward, when he foreclosed. The eulogistic biographer in " America's Successful Men," treats Sage's connection with the La Crosse and Milwaukee Railroad in this light fashion: 1 The panic of 1857 found Mr. Sage a large creditor of -" Rep. Xo. 369. etc. Tt is pertinent to note here that Riggs, of the firm of Corcoran and Rigg>. \vas accused, in 1808, of handling a corruption fund employed by the Russian Minister to the United States to secure the passage of a bill appropriating $7,200,000 for the purchase of Alaska by the United States. The House Committee on Public Expenditures investigated. Riu'gs denied the charges. But inasmuch as the members of the Rn^-ia;i Legation, although requested to appear ar.d explain, refused to do so, the Committee reported its investigation, "barren of affirmative or >atisfactory negative re>uhs." See Reports of Committees. Third Session, Fortieth Congress, i8(>8-( 11. id. -'- Ihid. -""The Fifth Animal Reu.rt .,{ tie la Cr R K. Co.. 1857," k ,,5 and HX>. 3*> HISTORY oF Till: C.KKAT AMJ-IKJCAX entv specified Assemblymen an average bribe of 85.- ooo : that 850,000 in bonds were given as a bribe to Coles Hash ford, (dovernor of \\'isconsin. and 816.000 to other State official-, and that 8246.000 bad been variously ])aid out to certain specified editors and to other persons of influence.- 7 The committee reported that the bribers used a secret written code in order to conceal the evidence of bribery. This code, however, was revealed. The committee com- mented : ' The bribery or ' buying up ' a great majority of the Legislature of 1856, is discovered in the back- ground as a tame fact, while the ingenuity displayed in the attempt to veil the transaction beyond the possibility of detection, is so supremely unique as to extort atten- tion. The actors seem not to have been mindful of the fact, that no lid was ever large enough to completely cover up itself." ~* -"Report of the John Select Committee Appointed to Inves- tigate Into Alleged Frauds and Corruption in the Disposition of the Land Grant by the Legislature 01" 1850 and for Other Purposes: Appendices to [Wisconsin] Senate and Assembly Journals. 1858. - s Ibid.. 47. In Wisconsin, not less than in other States, large numbers of farmers were flagrantly robbed. The robbery of Nation, States, counties, municipalities and individuals proceeded at the same time. Of the corruption and fraud in the case of the Milwaukee and Superior Railroad Company, an investigating committee reported that many of the farmer- in Milwaukee County and other parts of \Vi-con.-in had mortgaged their farms in order to rai.-e money for the purchase of railroad stocks. These fanners "were anxiou- to aid in the conduction of a r<>ad which they sup- TiO-ed would benefit themselves and the public generally." Many were German-, "confiding, unsophisticated men.'' The commit- tee continued: "A swarm of the-e vultures known as 'stock agents' were .-ent out amongst the people, and a- the result shows, from the evidence herewith, many poor and worthy men have been robbed of their all. and unless some relief i- extended to them in some way, will soon be deprived of their h.ou-e.-. if >aid mortgage.- are of any legal effect." . . Re- port of Select Committee Appointed I'nder Resolution Xo. 128, A-.-emblv, to Investigate the Affair- of the Milwaukee and Su- TIIK S.U;F, FokirxK 37 " The evidence taken." the committee concluded, " es- tablishes the fact thai the La Crosse and Milwaukee Railroad Company have been guilty of numerous and unparalleled acts of mismanagement, gross violations of duty, fraud and plunder. In fact, corruption and whole- sale plundering are common features." -" The}- were not merely common features of the rail- road corporations in "Wisconsin, but everywhere else in the United States ; year after year they went on un- hindered by legislative or Congressional investigations. The stolen rights and property, far from being forfeited, became strongly riveted vested rights ; neither the bribers nor the bribed were troubled with criminal prosecution except very rarely, and then it was only the subordinate tools who were sent to prison. Every bribery scandal would be shortly followed by some new scandal ; the old would die away or become forgotten, and the new would absorb public attention for a time,- only to go through the same process. Yet. under a noted decision of the Supreme Court of the United States, the principal, in every transaction coming within the law, w r as fully liable to punishment. In January, 1829. in a suit brought by the Government against Astor's American Fur Company, growing out of a seizure by General Tipton of liquors intended for debauching the Indians, that court had laid down this principle of law ( I'eter's Reports. II, 304) : That what- ever was done by an agent, in reference to the business in which he was at the time cmloved. and within the 30 HISTORY OF Till-: GREAT AMERICAN FOK'fl'XES civil case, in all respects as though the principal were the actor or speaker. This interpretation, however, was no more used against other capitalists than it was against Astor. The great land grants received by the La Crosse and Milwaukee Railroad Company were not the only gifts in the legislative acts of 1856. As a corporation the company was forever exempted from taxes, and the lands granted were exempted from taxation for ten years a sufficient time in which to strip them of their timber or sell them. Despite all of the legislative gifts, and additional very valuable donations by towns, coun- ties and cities, the railroad had been so consummately pillaged of its money and resources, and so difficult was it to raise money in the panic of 1857. that it was forced into bankruptcy. 30 Xow it was. as his biographic limners express it, that Sage projected himself into the foreground to " pro- tect his interests." How he did it they do not tell, but the court records of the time describe his methods with considerable plainness of speech if not clearness of explanation. It appeared that Sage had been all along ;; " In the testimony before the \Yi.-consin Joint SeK-ct Com- mittee of 1858, Safe's name was not in any way brought out. It is certain, however, that in 1857 Sage wa- a controlling owner of the La Crosse and Milwaukee Railroad. The investi- gating committee reported this testimony of Premiss Dow, a sii ckholdcr: " In August and September, 1857. rumors became very cur- 'ni in Xcw York that va.-t frauds had been committed in the management of the affairs of the company; thai the funds raised by the -ale of subscriptions of land grant bonds had been applied to other purposes than building the road: . . . thai the ' statement ' of the cnmpany was unreliable, as to the true condition of the company. Many of the holders of land :.: : bonds 1 ecame alarmed and sales oi them were made as low a- twi-my cents on the dollar." (Appendix to Assembly [ounial. \Vi-consin. 1858. p. 105.) Perhaps Sage bought more of tin bonds al this lim' Tin-: SAC,]-: KoirrrxK 39 using dummy directors and agents : tliat is to say. he had put forward certain men \vlio nominally were the own- ers and active spirits, while he. under cover, was actu- ally the controlling owner and moving figure. This fact came out in numerous suits which were carried to the Supreme Court of the United States, and it is from the records of this august court that certain details are obtained. FRAUH'LKXT I'.O.VDS .\.\I> FKA ClU 'LFXT SALK. Sage was virtually the owner of a two million-dollar third mortgage issued to cover the eastern division of the La Crosse and Milwaukee Railroad, extending from Mil- waukee to Portage City, or about half the breadth of Wisconsin. The Supreme Court of the United States set forth in its statement of the case in 1807 that for these $2.000.000 in bonds, not more than $280,000 had been paid in monev. " Indeed," said the Court, "the actual amount is but a little over $150,000.""'' f>y what the Court called " a fraudulent arrangement," intended to cheat the stockholders and the creditors of the road, thi< third mortgage was given precedence and the prop- ertv was foreclosed. The Supreme Court records do not show how Sage got hold <>f his bond-, but they do spread out that the fraudulent Knid issue was followed bv a fraudulent foreclosure sale. $200,000 in money was paid. The remainder of the two millions was in the 1 hands of either directors or under their control by a fraudulent arrangement." The Court denounced the foreclosure a< a sale made bv a fraudulent .JO HISTORY ()!' Till! GRKAT AMERICAN" F< iRTf XKS notice iii which the interested parties onlv knew what was about to happen. r; - This foreclt - 1 eastern division of the La Cros>e and Milwaukee Railroad was reorganized as the Milwaukee and Minnesota Railroad Company, with Russell Sage as its president. The foreclosure had been applied for on August 17, 1857. It would seem, therefore, that Sage had become a heavy bondholder during, or im- mediately after, the very time when the acts were being bribed through Congress, and that he was one of the largest bond creditors at the identical time, or soon after, the La Crosse and Milwaukee Railroad Company had corrupted the entire State of Wisconsin with $800.000 in bonds as bribes. But the precise date of his becom- ing connected with the railroad is not altogether clear in the records. After the foreclosure sale, some of the stockholders and many of the creditors, comprising firms which had supplied material for the construction of the railroad, objected to being cheated. A number of legal actions ensued : these were also carried to the Supreme Court of the I nitcd States, and from them additional facts can be gleaned. One of these cases considered by this court in 1863 was that of several banking firms representing Sage, in an action against the La Crosse and Milwaukee Railroad Company, the purpose of which >nit clearly was to swindle the stockholders and judgment creditors. On the face of the action, it was necessary that Sage's Mil- waukee .anil Minnesota Railroad ( 'ompany. as the suc- cessor in part of the original company, should mnke a "-Wallace's Reports. Supremo Court of tin- I'nited State.-, vi : 4' defence, but very curiously it made none. There was something very singular about this omission ; what it was came out in the intervening application of defrauded stockholders. The records of the case of I'ronson et al vs. The La Crosse and Milwaukee Railroad Company read : After the lime had expired within which the Milwaukee and Minnesota Railroad Company ought to have answered. Inn lie- fore an order had been entered taking the bill against them pro ci'iijcsso, one J. S. Rockwell, a stockholder of the said com- pany, presented to the court his petition, charging collusion between the complainants or their agents, and one Russell Sage, president of the said Milwaukee and Minnesota Railroad Com- pany, to secure a foreclosure and sale in their cause ; for the purpose of extinguishing the rights of the said Milwaukee and Minnesota Railroad Company, which was alleged to be the owner of the equity or redemption of the mortgaged premises; and that the president [Sage] of the last named company, al- though requested by its stockholders, had declined to make any defense in its cause/'" Obviously, for the scheme afoot was to so tangle up the affairs of the company in legal hocus poctts as to have a valid ground for absolutely cheating (or as the term went, "freezing out") the stockholder- and judgment creditor.-, Four years later, as we have just noted, the Supreme Court of the I nited State- found it so in decid- ing another case. Rockwell was not the only stockholder charging col- lusion. .Another stockholder, Fleming, presented a peti tion making a number of charges of which collusion was mcrrlv one. lie also charged that the mortgage issued hv ihr La Crosse and Milwaukee Railroad Companv rcp- resented whai was popularlv known as "Corruption 42 Bonds " and was gotten up " for the corrupt and fraudu- lent purpose of disposing of said bonds, or a large part thereof, in payment of pretended debts to the officers and agents of said company, or their friends, without any consideration to be paid therefor." Also, " that a large part of said bonds were so disposed of and given away in fraud of its creditors.'' [ ' A The attorney for the com- plaining stockholders said in summing up the case : " Men placed to manage corporations for the interest of the stockholders manage them only for their own. They become contractors, half ruin the corporation, pay them- selves with its assets at enormous discounts, then resus- citate things and are rich in the result." "~ J The Supreme Court of the United States subsequently set aside the foreclosure sale on the ground that it was fraudulent, but Sage, by other means, succeeded in keeping his hold. These are the authentic, exact legislative and court records. Entirely different are the facts they reveal from the phrase going the rounds of the press at Sage's death couched in this or similar language. " Perhaps the most noteworthy fact in the accumulation of Mr. Sage's fortune is the absence of graft." And likewise very dif- ferent are they from the statements given in the lu- dicrous " histories " prepared by the railroad corporations t hem-elves. \Yhile Sage was foreclosing the eastern division of La Crossc and Milwaukee Railroad, he was, at the .me time, foreclosing, by reason of his holdings, an- >.',her division which likewise became a part of the C'hi- ; - ! Wallace's Reports, etc., ii : -'^7. This is one instance uf manv more -itch instances clearly revealing the real nature <>t - 1 "- "ability" italists in "developing the resource? of thr country.'' "Ability" it wa- <>f its kind, and one wholly used for plunder ,-Mid per-mal enrichment. ''< Ibid.. J05. Till': SAG!-: FukTuxi-: 43 cago, Milwaukee and St. Paul Railroad system. Thi> other division was the Milwaukee and lloricon Railroad, which was part and parcel of the continuous corrupt transactions. The "historian" of the Chicago, Mil- waukee and St. Paul system writes of the episode in this uninforming way: "The Milwaukee and Horicon Rail- road, incorporated in 1852, was foreclosed hy Washing- ton Hunt and Russell Sage in 1863 and by them trans- ferred to the Chicago, Milwaukee and St. Paul in June, 1863." :;e The enormous frauds in Wisconsin were only a part of Sage's activities at this period. At the same time, he and his fellow capitalists were contiguously carrying through similar fraudulent operations in Minnesota. Were it not that occasionally the}- fell to quarreling over the spoils, and let out secrets in the civil courts, we should be at a loss to know the precise nature of their transactions. As it is. certain records of lawsuits sur- vive to give a fairly clear index of their methods, and what these were will now be related in an expository out- line. """Outline History of the Chicago. Milwaukee and St. Paul Railroad Company. Compiled hy the General Passenger De- partment. iSSS:" 2. The chief attorney for the various rail- roads merged in tln^ sy-tem was Samuel J. Tilden. who later posed a< so ^reat a " reformer " in politics, and who was the Democratic nominee for President of the United States in 1870 It will I". 1 continuously observed that the men nominated hy both political panic-; for hiuh office, executive, legislative and judicial, wi-re invariahlv tho-r who had proved their u--rfulre a- tools, retainers or beneficiaries of the corporate interests. Witness (iartield and I'laine. implicated in the Credit Mobili -r >windle, Morton and manv others. CHAPTER II MORE DETAILS OF THE SAGE FORTUNE In the preceding chapter \ve have seen how, by corrup- tion and fraud. Congress, in 1854. passed an act the wording of which was so surreptitiously altered as to give nearly nine hundred thousand acres of public land in Minnesota direct to the Minnesota and Xorthwe>tern Railroad company. Composed of a combination of Eastern and Western capitalists, lobbyists and politicians, this company proceeded to regale the country with sonor- ous prospectuses of the great things that it intended to do in developing the wilderness of the Northwest. Could the nation doubt the veracity and noble intentions of its charterers, all solid men of capital ? Was the good faith of its projectors, headed by that eminent capitalist. Erastus Corning, of Albany. Xew York, to be ques- tioned? For once the sweet song failed to charm the public, which rose in angry protest against the corrup- tion used, and Congress hastily backslid and repealed thv act. 1 MOKK 1)LTA[LS ()!' Till-: SACK KURT I ' X L 45 It \va> not often that Congress repealed such corrupt acts ; when it did so. astonishment \vas general. GIFTS OF KOTRTELX MILLION' ACRKS. But the good behavior of Congress was of the briefest duration; a mere ebullition serving" duty as something with which to blind the nation. The milling of land- grant bills went on busily; the repealing of that one particular act produced an effect which distracted public attention and which allowed the tmscrutinized passage of many other acts. Among these were measures giving six millions of acres of public lands eventually to ex- pand into fourteen millions in all -to the Territory of Minnesota ('soon to become a State) for the benefit of railroad corporations. The proprieties of the usual form of procedure were now scrupulously observed ; the lands were donated to the individual States, to be granted by them to railroad companies. Congress had learned its lesson of the necessity of sticking to outward forms; henceforth in the case of State grants the briberv had to be dually done, part at Washington and part at the various State capitals. During the session of 1857 a modest little bill went gurgling through, tranquilly making the round- of the committees and becoming a law. At that precise time main' another act was being dragged out to daylight as having been passed by bribery, but this especial bill wended its way unobtrusively, entirely shielded from the searching blaze of publicity. It was an act incorporating the Minnesota and Pacific Railway Company to build a line from St. Paul to St. Anthony's Palls (now the city of Minneapolis) and authorizing various extension^ in different direction-. 4<> .HISTORY OP THK GRKAT AMKRICAX FORTUNES The second part of the program was as successfully accomplished as the first. The Minnesota Legislature was applied to for the wherewithal to carry this enter- prising project into execution, and most generously did it respond. Sundry legislative acts gave to the railroad company a grant of ten sections to the mile, six hun- dred and forty acres to the section, the title to succes- sive grants to vest in the company as fast as every twenty miles were completed. But these were not the only benefactions. In dulcet appeals the company informed the citizens of the State that it needed cash also. Many of these aforesaid citizens, hardy pioneers with a rough way of looking at aft airs, were not overcome with emo- tion at reading these tender appeals. They thought that the land grant was quite enough of an encouragement. I kit the Minnesota Legislature " during the corrupt ad- ministration of Governor Sibley," as contemporary writers in Minnesota put it was of an extremely sus- ceptible nature, incapable of refusing a request.- An act was passed authorizing a 85,000,000 issue of bonds called the "Minnesota State Railroad Bonds " to be handed over to the railroad companies in that State. Xot all of this amount was issued ; the total sum turned over to the railroad companies under this special act was about $2,750.000. Large additional sums of money were then contributed by counties and municipalities, and a " smart business " was done in persuading farmers and merchants to invest their money in the railroad. Whose master mind \vas behind all of thi^ Russell '-'Legislative corruption was almost continuous "The nu- merous charters," complained (lovcrnor YV. A. (inrnian to the Minnesota Legislature, in 185(1. "already granud in Minnesota for ferries, lumbering, manufacturing, mining, etc., i^ enough to arouse your vigilance on ibis subject." Many of tho-e char UTS," he pointed out, "r:n-t become sources of immense revenue to the corporators." Minnesota Council Journal, 1856:91. MURK DETAILS OK Till' SAC]-: I-OUTI XI _|~ Sage's. Rarely did lit 1 appear loo prominently in the foreground, but he was the soft-treading mail who, as was later revealed, chiefly profited from the transaction of the .Minnesota and Pacific Railroad Company. After getting the charter, franchises, rights, land grants, fund- and exemptions what did he and his partners next do? Valiantly and seductively had they argued for induce- ments enough to make it possible- for them to open up the primitive Xorthwest. T>ut the moment that the pri- mary object was obtained of securing these diverse " in- ducements." talk ceased and the work of filling their capacious pockets began with a grim and silent earnest - ness. First, in the order of the day, came the customary freebooting organization of a construction company, com- posed of the identical men in the railroad corporation. They made contracts with themselves calling' for ex- orbitant payments; and then, in addition to these great cribbings, the}' fraudulently awarded themselves bonds in return for pretended services. Along with, these em- bezzlements they placidly set about to cheat the small bondholders and stockholders, and to fleece the creditors who furnished them with necessarv supplies and equip- ment. The thefts were carried on with such rapid assiduity that in about a year after the compam had been char- tered, its treasury had become a vacancv, and the rail- road was plunged into insolvency and. in 1^5^. lore- closed. Who bought it in: The srltsame men who had looted it; as the chiefs of the construction com- pany thev had taken care to fortify themselves with enough bonds to put them in the legal* position oi ma- jority creditors. Some of them, such as Sage, did their work generally through dummies; others appeared in [lie open. They might complain, as they did, that the cause of the company's failure was the difficulty in rais- ing money during the panic of 1857; but this was a flimsy, although plausible, excuse. Presently a unique development turned up. They caused the railroad corporation to be dubbed with two new names; by an act slipped through the Minnesota Legislature, the Minnesota and Pacific Railroad Com- pany was reorganized into two divisions, one called the St. Paul and Pacific, the other the First Division of the St. Paul and Pacific Railroad Company. Why these separate titles for a single railroad proj- ect? Why this confusing arrangement? The reason became obvious a little later. It was an adroit artifice to entrench them in a strong legal vantage to loot and bankrupt the road still further; the same coterie, in reality, directed both companies, and as constructors of a railroad which they themselves directed, they could hand over to themselves bonds making them unassail- able creditors of the whole line. An astute piece of in- genuity ; who.-c was the deft brain that conceived the device? It was that of the "great reformer." that evangel of ''pure and uncorrupted Democracy " Sam- uel |. Tilden. lie wove his legal tangles so well, so very, very well, that the small bondholders and the manu- facturer- who had furni-hed materials, found themselves before long entirely cheated out of their claim-, and with no chance of ! c^l rerlref 5. One of these bondholders. Edward C. TTopkin-. with a wonderful trr ' in the equity of law. bestirred himself to -ee vvheth; . t'ld not collect on -ome coupons of bond- that Iv o\vred <'. the old Mirme-otn and Pacific Railroad. \\ as not (lie St. I'aul and 1'acilic, he claimed, the successor of the original company, and. therein bound to respect, and pay, its debts? Was it not a case ot an old corporation acting under a new name? Th case came up for trial at St. Paul in the I nited Stai. - Circuit Court. The eminent and erudite judge was ]ivh:i F. Dillon the very Dillon, fittingly enough, who sub- sequently left the bench to become pleader for corpora- tions in which. ( lould and Sage were the principal direct- ing spirits. Judge Dillon handed down some choice bolts of law which served sufficient notice on other small fry of cred- itors as to what they could expect. The scope of his decision was superbly direct; he held that when the Leg- islature of Minnesota changed the name of the company in 1862 it created an entirely new corporation which could not be held responsible for the debts of the old. Hopkins' suit was ejected from the court, and both lie and the other creditors were left to ponder in unbroken leisure upon the mysterious beauties of the law." But if the company had a new name or, rather, two new names it retained all of the franchises, privileges and immunities of the old corporation so ran the de- cision. From its debts it was relieved; in all its assets and possessions it was secured. There was the great and important point: name- were but a serviceable mask un- der cover of which the "insiders" could defraud the lesser capitalists. To note the plaintive squeaks of these outraged victims was a lesson of itself they who \\ere only too eager to share in the fruits of the bribing of public bodies, the wrestling of public resources and the general despoliation of a whole people. Their fine moral instincts were quickened only when the}- were defrauded, and then their virtuous indignation was un- bounded. HUGE SriiSIDlKS STOLEN*. \\ hile the projectors were cheating out this crowd of dupes what were they doing with the huge subsidies that they had received in one form or another with which to build the railroad ? The money had certainly van- ished. \Yhere? Little of railroad construction was there to show for the alleged expenditure except some hundred miles of graded prairie. Even the short stretch of ten miles of main line from St. Paul to Minneapolis had not been put into operation by 1862 as required by law. \Yhy not? The rapidity with which such fortunes as Sage's were being amassed was the answer. The money was stolen. When the professional corrupters who had looted this railroad had originally applied to Congress and to Min- nesota for gifts of land and money, they had represented themselves as capitalist- having " ample resources " with which to carry on the project. All that they needed, was their plea, was State encouragement in some form, be- cause " the undertaking was so expensive." After they had robbed the railroad into bankruptcy, a special com- mittee of the Minnesota Senate began to investigate their antecedents and methods. " The sequel." it reported, " demonstrated that the companies had no ca^h capital at command, and scarcely credit sufficient to insure prompt location of their line- of road." 4 The committee went 4 Report of Special Committee on Railroads and Railroad dram-. February .3, 1860. Minnesota Senate Journal 1850-60: MORI-: DKTAI I,S OK T 1 1 K SACK K( WIV N !: 5! So far as your committee can discover, the companies, >incc the passage of the loan amendment, have not furnished one dollar of capital to aid in carrying on their gigantic enterprise. They have sold and hypothecated large portions of the-e bonds at a ruinous discount. They have paid extravagant salaries \.> incompetent or inefficient officers. With the exception of ab air fifty miles of well-built superstructure incomplete, fragme 1 .- tary and disjointed portions of grading, costing on the average less than three thousand dollars per mile are all that these companies can show in return for the munificent issue of bonds made to them by the State. 5 A vivid picture this gives of the original " construct- ive ability" of the capitalists an ability conspicuously displayed in perpetrating the most enormous frauds. But where in the United Stales was it not likewise so? The successive events now following' in the history of this company are dryly incorporated in the records of the case of John S. Kennedy and Company vs. the St. Paul and Pacific Railroad Company, including the First Division, the Northern Pacific Railroad Company, Rus- sell Sage, Samuel J . Tilden, et al. 6 Although the full de- tails are not by any means spread out in these records, some authentic particulars can. at any rate, be gleaned. By 187 r Sage and his associates had completed certain of the railroad extensions, and had mortgaged them for a total of $13,380,000. Nearly all of this money had been advanced by banking houses in Holland. But sixty miles of main line were still in an uncompleted state, and the people of the State were getting dangerously curious to know why. Millions of dollars had disappeared; all of the gifts in land and money made to the company had been sunk thus far in building only some discon- nected and semi-worthless sections of the projected rail- road. J hr directors had 10 make a move; tliey did so In evolving a new scheme for bleeding the too eager and credulous Holland capitalist.-. And this is what they did : A group of men com- prising the First Division of the St. Paul and Pacific, corporatively met and issued bonds for 815.000.000. The same men, or their tools, then met as directors of the St. Paul and Pacific tit is hard to keep these fine dis- tinctions in mind ) and mortgaged the right-, franchises, and property, including the land grant-, to the First Division for ninety-nine years. Then the First Division corporation, a- construction company, bound itself to i ; !ele the railroad extensions before .March I. 1873, on which date, by a recent legislative enactment, the land grant was to be forfeited in case the extensions were not built. 'i he terms of the mortgage were explicit and entic- ing. The whole of the 815,000.000 was to be applied to building the extensions. On the strength of this agree- ment about SS.ooo.ooc) more was rai-ed in Holland in 1871. Put there was one bit of information the Sage e carefullv kept from the Holland capitalists. They did not tell the Hollanders that a large part of the money raised was to be applied to the main line, in violation of the express term.- of the mortgage. 7 What was done with the S8.ooo.ooo rai-ed in Holland? Th.i- . ' ieh the borrowers swore on -olemn oath to .MOKI: i>i:i. \ii.s oi-' r:n. SACK IO^TCNK -i die 1 !' 'llauders, was to be used entirely for constructing the extension lines, was immediately distributed in vari- ous plundering \vavs. About 83.000,000 of it was frau !- nlently diverted t<.) the completion of the main line; large Minis wore grabbed to pay interest on the main line mortgage bonds, and other millions were used for what : For the purchase of iron material and the payment of contractors for work on the extension line. And who sold the iron? The First Division Company. The op- eration was simple; Sage, etc., sold to themselves the rails, and charged the account against the money ad- vance,! by the Dutch capitalists. 8 Those were, indeed, halcyon times of bold graft; the robbery was so large and openhanded that naturally enot:;. ! 'h the First Division, the treasury of which was sacked as fast as it was tilled, went into insolvency in 1872. In less than a year more than 8.000,000 had been ''scattered''; we -hould say, concentrated, for the great bulk of it went into the pockets of a few, and remained there. Xor was this all. "When the First Division sus- pended work in October, 1872, it owed its contractors subordinate firm- who reallv did the constructing work 1 reduced this debt Tricked and stripped, the Dutch capitalist- now full) (] their predicament; the monev that tlu-v had kir.ned from native peoples at home, had been plucked from them. Mow could ths recover it ? Thev took the only blep that they could possibly take, which was to apply for a receiver. Hence the suit brought by John S. Kennedy and Company, acting for them and for oilier bondholders. In cold legal phraseology they set forth their plaint; they had been lied to and defrauded. 'They I the bondholders] also claim," reads the formal court statement, " that by reason of the insolvency of said First Division Company, and of various fraudulent and improper acts of its managing officers which are not here recited because the court does not deem it material to the real merits of the application that a receiver should be appointed," etc., etc. Judge Dillon concurred that a receiver should be ap- pointed. L'rgent reasons, he said, compelled it. The com- pany had a great land grant valued at S6 an acre; and this was the only adequate security for the $15,000,000 mortgage. I'ut it happened that these land-, or a large part of them, were to be forfeited if certain extensions were not completed bv a certain time. It was imperative. Dillon said, to save that land grant, and as the directors of the road admitted that there was no money in the treasury, it was to the best interests of the bondholders to have a receiver appointed. The receiver would have authority to complete the extensions. Dillon, thereupon, on September i, 1875, appointed one Jesse P. Farley a< receiver. The next developments were revealed in the -econd -"it of John S. Kenned\- and Company against the St. Paul and Pacific Railroad. 10 ! 'lJilly 'viiich IK- i KIT;- i-dy ) profited i/normously. Kennedy my of tlu- millions, the dunation nf ,-,r.mc of Farley, it seems, made a great ado about the construct- ing work he was doing, but as a matter of fact, he spent only about ,$100,000 in the work of constructing and re- pair. 11 However, he kept up the pretense enough lo save for a time that part of ihe land tyrant threatened with forfeiture. lUit by 1878 the people of Minnesota were again ablaze. Twenty-one years had passed since the company had been chartered; it had received v;ist subsidies in mouev and land not only from the Xational ( Government, the State, cities and counties, but from in- dividuals. All along its route, both completed and pro- jected, farmers and merchants had subscribed for its stock, only, they found, to hold worthless bits of paper which produced neither railroad nor returns. The com- pany had looted itself twice into insolvency ; it had, by repeated sleight-of-hand process, defrauded not only na- tive capitalists, farmers and merchants, but it had done away with the many millions poured in by the Dutch capitalists. TIIK LKC.ISLATURK WAKES fl>. Xow it was still deep in bankruptcy. The Legislature could not hold out against this overwhelming expression of popular indignation. On March tory." Famous or in famous whichever way you prefer to view it. A val- uable working pair the twain made ; Sage, crafty, som- ber and reclusive ; Gould supplying the public audacity : both equal in inscrutable wiles and stratagems. The one overcautious, the other overreckless, each counterbal- ancing the other. A prodigious respect Gould learned to entertain for Sage ; the one associate was Sage whom Gould could not overreach or fleece. Subsequently and appropriately enough, Sage hied himself to Xew York city early in the course of the Civil War. There, in Wall street, was the headquarters of many of the railroad corporations which had been, and were, bribing and plundering. The office of the LaCrosse and Milwaukee Railroad Company, for in- stance, was there ; whoever might be the actual physical builders of the railroads, the owners were either \\ all street men or kindred capitalists - men who by some species of fraud or theft had pushed themselves into con- trol. And there also in Xew York was the scene of the greatest activity in the current widespread despoliation ; from there radiated the plans and plots which later re- solved themselves into colossal swindles. Had the cen- ter of this deviltry been elsewhere, there Sage and all the others of the brood indubitably would have flown. A money lender on a great scale Sage became; he in- vented a special svstem of tiMirv -the "put" and "call" system, the intricacies *.>\ which we shall not at- tempt to describe. N'uw cmsld be >een what he \vu^ cluing with the million.-, that he was stealing in Wiscon- sin and Minnesota. 1 " Ordinarily he would loan money at high enough rates, but in times of panic and Wall street "squeezes" he demanded -and received as much as two per cent, a day or sixty per cent, a month. Friends or enemies, it did not matter ; all alike had to pay the enormous interest that he exacted if they de- sired a supply of ready money (which he always kept on hand ) and thus save themselves from defaulting on contracts, and so going into bankruptcy. lie was one of that eminent constellation of patriots who hoarded gold when it was most needed to carry on the Civil War, and refused to loan it except at the most incredibly extor- tionate rates. At this time little attention was given in the East to railroad operations in the West; the newspapers were almost wholly filled with reports of events of the great Civil War. Few knew of the gigantic thefts and frauds that Sage was carrying on out in the Xorthwest ; and when he suddenly became known as a multimillionaire, glowing accounts were published of him as a wonderful financier. This praise was always modified, of course. in And also in Io\va. in the railroads in which State he was extensively concerned. The capitalist.-, owning the Sioux City and St. Paul Railroad had caused it to be built in such a zig- zag fashion that they could fraudulently grab even larger land trants than the accommodating acts of Congress intended. By i dging this railroad in O.-ceoia, Dickin-on and O'Brien Countie-, >\va, this company made claim to iSo. iS4.54 extra acre- of public ;and in those countie-, and prevailed upon the State officials railroad company called the McGregor \Ye~teni, and had con- structed his. line through thi> very territory. He demanded a -hare of those iSrj.ooo acres, and, upon refusal, sued the St. I'.'iul and Pacific Railroad Company. The case finally came up in the United Stat<-~ Circuit Com-! in lo\va, on January 20, iXXj, when Judge Love amiably decided, with tine judicial impartial- : y, tl . f the two - . ' was entitled to an undivided . 'and in depute. Fc'K-ral Reporter, x : 435 : 450. MORI'; UKTA1LS Ol-' "I' LIP: SAdK |-'<)KTl'M-; 5!~ the " old-fa-hioned firms" of "strict integrity." To f>o HISTORY o be sure, ii officially knew nothing of the subsidy bribing incessantly going on ; owners of enterprises must culti- vate ignorance of such embarrassing detail--. And could it be, as William Swinton, a noted writer, charged in a pamphlet, that the "eminently respectable" Alexander llrown and his associates were (in our modern phrase- ology i grafting on the very company in which they were stockholders ? Swinton charged that they held a con- trolling lien which amounted to ownership on boiler, iron and other factories which supplied the equipment of the Pacific Mail Steamship Company's line. A faction in December. iXf~, was seeking hard to dislodge them, and they were successfully fighting back. A pretty mess it made in the courts. Finding that Congix-ss was as ever in the bargaining mood, the owners of this line opened fresh negotiations, and. with such brilliant success, that another act was passed in 1872 granting an additional mail subsidy of S5OO.OOO a year for ten years. 'I lie subsidy plunder was now so much larger than before that the contest for its possession, or rather its handling, precipitated a still more violent ro\\- among its owners. With some ulterior end in view. Le (irand Lockwood, one of its stockholders, publicly charged that bribery had been u-ed to get the act through Congress; Lockwood was certainly not prompted bv moral motives; he had been a large bene- ficiary oi the Credit Mobilier swindle. The House of Representatives took on a look of pained and injured surprise, bristled up with indignation, and on February jo, 1^73. ordered the Wav-, and Mean- Commitiee I vestigate. Congress did not, nf course, cxpec! that ihr iu\v-ti ;: ti'>n would realh one of the directors (luring tin's period. '"' Ihid., xviii. "' " A proved perjurer." l ; or years Sage swore that his tax ahle per-onal property did not exceed $2.000.000, and even lhi< amount he sought to have reduced or wiped oft' the tax books. After his death the Xe\v York City Tax Ik-part mem prepared to assess taxes on at least ?.-o,ooo.fK.o personal property inherited hy his widow, hut the amount of r>- segment was greatly re- duced when the executor of hi- will -uhmitted an affidavit claim- ing that $\o.cx}i.).c.(;c> of th.e Sage cash was invested in non-taxahk' Lockwood to make the charges, in order to raise a pub- lic slew, and discredit and overthrow the clique in power. At all events, whatever the ins and outs, there was the Pacific Mail Steamship Company with its large sub- sidies obtained by bribery, and Sage the head of it all in 1873. So far as the identity of bribers and bribed was concerned, the committee professed to know nothing. One lobbyist. Richard 1'.. [nvin, testified that he had paid out .^750,000 to "ciluT persons," 17 but who those persons were the committee said that it did not know; it had '' exhausted every resource " in trying to find out, but in vain. As usual, it was the "' unregulated lobby " which was to be blamed and which should be purged. So much for Sage's career up to the time when he and Gould conjoined in the Union Pacific manipulation and other transactions. What they and other capitalists associated with them did in these operations will now be related. 17 I louse Report, No. 269, etc., 1874-75, ii : I2 3- CHAPTER III THE GOULD FORTUNE RESUMED When haled in 1887 before that inquisitorial govern- mental body, the Pacific Railway Commission, Jay Gould vouchsafed little information; such as was elicited from him was of the most meager character. He said that he had become the owner of a controlling interest in the Union Pacific Railroad Company in 1873 by the pur- chase of fine hundred thousand shares, and that these holdings were subsequently increased to two hundred thousand shares. 1 Sage testified that he himself had begun buying Union Pacific stock in 1868 or i<8n~<).'-' As soon as the grasp of these men and their associates was assured, their industriousness began. Without any in- termediate ceremony two hundred thousand shares of stock were forthwith issued, all certificates of nothing else than their self-arrogated power of present and fu- ture exploitation. This manufacture, without any interference from law, of additional titles of ownership, was only one of their numerous and conterminous activities. Their most plas- tic and successful plan, by which thev were enabled to compound loot on a most magnificent scale, was that of buying in. as individuals, various railroads, and then -elling them at exorbitant price- to the Union Pacific Railroad Company, which corporatively they controlled. 64 HI: With its extraordinary opportunities for self-enrich mcnt on a great scale, this plan \vas one commonly prac- ticed by the puissant capitalists of the times. It had not In any means originated with Gould and Sage : other railroad capitalists had richly profited bv it; so thor- oughly has it commended itself as one of the simplest and most effective mean.- of transferring wealth, that a long -uccession of magnates have consecutively availed of it to this very dav. Three generations of Yander- bilt- have repeatedly demonstrated its value; those illus- trious generalissimos of the ranks of wealth. J. Pierpont Morgan and I 7 .. II. llarriman. have been two more of the radiant cluster who have proved it- enduring worth. I5y this fraudulent process, incalculable sum- of money, mounting into the hundreds of millions, have been seized with facility. So pregnant with spoils has it been that even the I nited States Industrial Commission of 1901, distinguished for its easy-going conventions and acquies- cent attitude, could not forbear saying in its mild, defer- ential way of transactions in which buyer and seller were the same parties : " The possibilities of fraudulent profit- are something enormous under such condition?. Kormerlv transactions of this kind were often enected bv individuals who represented another person, or by families who were dominant influences in the directorate. \\iih the enormous increase both in number and magnitude of such Iran-actions, the capital required now exceeds the actual investment capacity of any except a few great fortunes." :; Reduced to simple language tin's is authoritative con- firmation of the truism that none but the mighty rich have the means to engage in a great campaign of theft. Yet to focus attention upon the frauds of these particular capitalists, without inquiring into the good work which at bottom they were doing, would be grievously one- sided and misleading. Notwithstanding their prodigious frauds, Vanderbilt and Gould and all the other masterful capitalists were, without being conscious of it, perform- ing a great evolutionary service of the highest impor- tance. It was they who were among the leaders in con- solidating and centralizing transportation and industrial utilities ; in effacing the old wasteful competition and the warfare of the little capitalists ; and in establishing an era of systematic, concentrated private control. It was done despite statutory law- and judicial decisions, in spite of every obstacle, for it had to be done ; it was an inevitable stage of progress preceding further stages. In doing it, however, the great barons were prompted by selfish greed only ; they fixed their own price, a colossal price, taxing the producer to pay whatever toll they de- manded. * THE PLUNDERING OF RAILROAD SYSTEMS. 66 sold to themselves as directors of the Union Pacific, was the Kansas Pacific. This line, about three hundred and ninety- four miles in length, was another of the many railroads the history of which was replete with unbroken corruption. Its chief assets were an issue of Govern- ment bonds, and a land grant of three million acres in Kansas and Colorado. From the very granting of the charter the corruption was so well established that none but the densely obtuse could be ignorant of it. But what mattered the means used ? The greater the corruption, the more certainty was there that the ensuing privileges, powers and profits would be all the richer. And the more attractive the prospects, the more eager in their cupidity were the luminaries of the financial world to thrust in a hand. Eminent bankers sharply competed to participate in the financing of the project ; the floating of the Kansas Pa- cific loan was finally awarded to two banking firm-. One of these was Dabney. Morgan and Co., of which J. Pierpont Morgan was a member, and the other the house of Morris K. Jesup and Co.. the head of which sub- sequently managed to become enrolled among the gal- axy of glorified philanthropists. r> In their advertisements in ]86(> the-e bankers glowingly descanted upon the splendid land grant of the Kansas Pacific a grant, which thev assured all intending investors, -would be more than sufficient ->ecuritv for loans. P>ut the usual culmination came. The Kansas and 'acific project was no exception to ihe invariable ex- TI1K liOL'LU KOU i ( X I. Kl pericnce in railroad affair-. It was assiduously plun- dered by the men on top of the heap, and the following of petty investors were neatly cheated out. Obviously. stripped as it was, the market value of its stock sunk to an insignificant point. Gould had been waiting for pre- cisely this opportunity, but he did not avail himself of it before he had put through a sort of blackmailing scheme bv which he could all the more effectually force the Kansas Pacific into his ownership. With a loquacity that ought to have aroused keen suspicion, he proclaimed his purpose to break down the monopoly held by the Kansas Pacific; once more he posed as a middle-class benefactor. Thereupon he be- gan, or, rather, ordered, the building of a railroad in Colorado which trenched competitively upon part of the very territory the Kansas Pacific owners regarded as their own assured domain. Gould's scheme worked to perfection; Kansas Pacific stock was forced lower still, and its affrighted owners were speedily compelled to come to terms. Xo sooner had Gould obtained posses- sion of the Kansas Pacific, and consolidated it with the Union Pacific, than he at once abandoned the. Colorado Railroad. 8 Just how much of Kansas Pacific "Railroad stock Gould, Sage and Dillon respectively secured is not clear, but the amount of booty that they collective! v took in by the fraudulent process of selling this railroad and oilier railroads to themselves as masters of the Union Pacific, i- quite clear. Xo mean operation was it -- something mas- sive was there about it such as might evoke a wonder- ing admiration on the part of a society wherein great thefts were placed in an exalted category. In tlie Higgling exchange of stacks ami bonds and the C>8 HISTORY OF Till-: GRKAT AMIiRU'AX FORTUNES fraudulent diversion of funds, they stole (the Govern- ment termed it "misappropriated") more than $20,000,- ooo in the Kansas Pacific, the Denver, South Park and Pacific, and other consolidations alone. From the vol- umes of the Pacific Railway Commission's report and investigation, certain definite facts are ascertainahle. Both the majority report, that of Commissioners Littler and Anderson, and the minority report of Commissioner Pattison, set forth that the frauds of the Union Pacific Railroad Company, under the direction of Gould, Sage and Dillon, were truly gigantic. Millions of acres of puhlic land were stolen outright. Not less than seven million acres were sold without any patent from the Government. 7 Coal lands of inestima- ble value were fraudulently seized. 8 Millions of dollars were fraudulently shuf.\'d from one corporation to an- other. The stock of the Union Pacific was inflated from 838,000,000 to $50,000.000, the bonded indebtedness from $88,000,000 to $[26,000.000, and sundry other in- debtedness from about $4,000.000 to nearly $10.000.000. The majority report referred '' to the lavish and reckless distribution of the assets of the company in dividends " and expressed sharp curiosity as to why the Union Pa- cific Railroad Company, although doing a large and profitable business, " found itself early in 1884 on the verge of bankruptcy." While these huge stealings were going on. and after a ( lovernment action for " misappropriation of assets " had been begun, Gould and his accomplices took steps to grant themselves immunity from legal consequences. ' It appears," says the majority report. '' that, while this litigation was pending, certain proceedings were taken THI-: r.ori.D FOKTI XK KKSI .MI:D b'-j by the directors whereby by their own acts and votes they undertook to release themselves from any obliga- tions or liabilities to the company." FORTY MILLION DOLLARS GOL'LI)'s SHARK. The minority report was even severer and more searching". It set forth that the Union Pacific and the Kansas Pacific had received about 835,000,000 in ad- vances from the Government, little of which had been paid back, and that up to 1887 the sum of $136.314.- 010.73 ''had been dissipated" by the directors of tlK.-e two railroads/' Fully $84.000.000 of watered stock had been issued. " The Union Pacific Company." the mi- nority report went on. " has received $176.294.793.53 in surplus earnings and land sales during eighteen years, and if its stock had been fully paid, as Congress required that it should be. and as its officers certified under oath that it was, nearly all of that money would be applicable to-day to the payment of the Government debt. The company has paid out $28.650.770 in dividends, and $82.- 742,850 in interest on bonds, nearly all of which wa- distributed to shareholders without consideration. !' ha> sunk over 810,000,000 in Denver. South Park an - : Pacific; it paid out 810.000,000 to Jay Gould and his associates for branch lines and other investments which were worthless." . . . Commissioner Pattison esti- mated that lav Gould's personal profit from hi> manipu- lation of the I'nion Pacific amounted to probably 840.- (K)O.OOO. 10 A large part of the sum that Pattison included in his estimate of the total theft from the origin of the Union 7O HISTORY OL' TliK GREAT AMERICAN' FORTUNES J 'acific Railroad was, as \ve have seen, stolen by Gould's predecessors in the Credit Mobilier swindle. Inasmuch as technical financial terms often present mystifying difficulties to the unaccustomed, a definition of stocks and bonds may not here be out of place; the more appropriately so since it will explain how the manipulators of railroad and other property constituted themselves both shareholders and creditors. If they desired a railroad to be on a paying basis, they, as stockholders, took its dividends ; if it suited their ulterior purposes to bankrupt it, they, as bondholders, could foreclose and buy it back at a bargain price. In the phrase of the street, they could '' play both ends against the middle." Bonds and stocks, although both classed as capital, differ in certain salient respects. [kinds are certificates of indebtedness theoretically issued to those who have made loans to a corporation, and can be effaced upon payment of the principal. Stocks, on the other hand, are certificates of ownership theoretical!} issued to investors : by their nature they are in law per- petual. In brief, then, the stockholders are the owner- of a corporation ; the bondholders its creditors. The query can here naturallv be expected : \Yliy was Gould not prosecuted for his male-factions? How wa> it possible for him to have carried through his immense thefts without some visitation of criminal proceedings? So long as he robbed the people, the great plodding, pow- erles- multitude, without any real representation in po- litical office, it could be understood that his license would plundered his own class as well ; outraged, betrayed and pillaged his own associates ; they were men of power ; why did not they invoke the terrors of criminal law J . \Vell, some of them did. 15ut it profited them no more' than it did his opponents in his famous Erie steal-. Threatened with jail several times, Could easily con- trived to keep out of it. as did his similars in every great capitalist fraud. An indictment found against him on May 13, 1879. by the (irand ]ury of Monmouth County. Xe\v Jersey, for alleged fraudulent transactions, did not trouble him in the least. The charge in this case was made by the Lehigh Car Manufacturing Company that it had supplied cars to him on false representations; that it had agreed to accept as payment first-mortgage bonds of the Xew Jersey Central Railroad, only to discover, when too late, that these bonds were spurious " consolida- tion bonds " representing a consolidation that was never made. Out of this indictment Could somehow wriggled, and nine years later lie was as successful in snuffing out an- other case of criminal proceedings. This was in 1888; powerful adversaries sought hard to put him in prison; and it was the knowledge of their power and persistence that thoroughly alarmed Could. Certain of these opponents were disgruntled bond- holders of tin- I )enver 1'acilic Railroad, and thev were assisted bv the owner of an important Xew York news- paper whose interests Could had crossed and thwarted in the telegraph and submarine cable field. The charge revolved around a tricky piece of periurv by which Could, Sage and Dillon, in their railroad consolidations, had embexxled several million dollars in the juggling of thirty thousand share- of Denver Pacific stock. These bondholders had begun an action a:':rin-4 Could and Sage in Xe\v York, in 1885. for restitution; the news- paper owner dr.ily emitted savage maledictory broadsides ;;gcun>t Gould, a:~.d demanded his punishment. And to cap it all, the foreman of the Grand Jury sitting was a fellow capitalist, whom Gould had cheated fifteen years before in one of his railroad transactions. it was a formidable combination arrayed against him. Gould knew it. He realized at once that he had better settle with the complaining bondholders and light out and with dispatch ; he thereupon came to terms with them, and then fled on his yacht and remained in for- eign parts until the statute of limitations could be pleaded with success in his behalf, so far as criminal pro- ceedings were concerned. A WIDI-; TRAIL OF CORK f I'TION 7 . Still another question, although an idle one, may arise: liow was Gould able to get ihe laws necessary for his numerous frauds, and immunity from legislative and. other official action? The 'Pacific Railway Commission- ers' report docs not answer this question elucidatively. 'I he minority report, however, sheds a few more rays upon lii.- methods. " Hundred.- of thousands of dollars,'' it says, " have been disbur.-ed at the State and Xational capitals for the purpose of influencing legislation." n Frequent references are made to " pavments for im- proper purposes." I lowever, even if the commission had not explained in its meager, grudging wav the corrup- tion following Gould everywhere, it could be taken for granted; hi- trail of bribery and fraud had been a public stench for full . !\ year-, i:i which respect lie differed much from '< ; contemporary wealth-seekers, for Til!-; C.OU.IJ L-'OKTUMi RESUMED 73 whereas lie acquired both name and game they, too, had the game, yet so cunningly was it bagged that they were able to slip into the cover of good repute. Also, let this fact not be overlooked; that the widespread bribery was but a form of procuring license to prey at pleasure. To get laws sanctioning theft, and official connivance at th retention of the proceeds, it was necessary to divide among the politicians (including some of those on the bench) a certain portion of the spoils. By about the year 1883 Gould discarded the Union Pacific after having, as he believed, looted the marrow out of it. Doubtless his conclusion was aright, seeing that no further immediate booty was in sight in that particular line and at that day. But in the fullness of time, namel}'. fifteen years later, when the country's population and resources h?d greatly expanded, a worthy successor, in the person of Harriman, came irresistibly along to imitate and elaborate Gould's methods. Xot to the purpose is it here to anticipate the narrative of Har- riman's career; this will be faithfully found in its proper place; but one more addendum is needed to give a kind of finishing touch to the tale of the Kansas Pacific Rail- road, if only to show that others knew how to begin where Gould left off. The $40,000,000 or thereabouts in loot which Gould appropriated came in considerable part from the Kan- sas Pacific transaction. The final swindling of the ( lov- ernment out of much of the advances that it had given for this road, occurred in iS<;S at the precise time when I larriman was bursting brilliantly into wealth and power. riie Government held a remaining claim against the Kansa< Pacific for $13.000,000. A fraudulent plan had been concocted to have the Government sell its lien at 74 lii.STURY OF THE GREAT AMERICAN FORTUNES one-half of the amount due; a most deftly preconceived plan it was, and only on the eve of its consummation was there an\- noise raised. Turpie offered a motion in the l.'nited Slates Senate that the sale he not confirmed; sup- porting that motion, Senator Allen rose on February 16. 1898, and remarked that "we might as well enact a statute taking $6,700,000 out of the Treasury and make an abso- lute donation of it. It would be no more criminal, no more in violation of the statutory rights of the people." u> Senator Morgan, of Alabama, denounced the sale as rob- bery, Harris called it a swindle, and its promoters thieves. Robust language, but it did not interfere with the hasty sale for $6,000,000 of the Government's lien on that very same day. VAST AREAS OF COAL FIELDS STOLEN'. To form any adequate conception of Gould'- thefts in his manipulation and management of the I'nion Pa- cific consolidation, a mere money computation falls flat. The resources expropriated by Gould and by his de- scendants cannot be expressed in money terms. For ex- ample, the enormous coal deposits expropriated from the people -who can say what their exact money value is? The Interstate Commerce Commission announce.- that \\ vstem, principally by the Denver and Rio Grande ilroad, which was one of a number of Western rail- id li;ies that Gould held onto and bequeathed to hi- My- fifth Congress, Second 75 obtained? Here we do not have to encounter any in- tricacies of stock and bond finance ; they were simply seized with just enough formalities to give some color of complying with the law. Behind these thin formali- ties lay a long' path of " fraud, perjury and violence," says the Interstate Commerce Commission's report of 1908. In commonplace official diction the story of the seizure of these deposits is there told ; how for forty years or more the -Gould and other railroad corpora- tions have employed dummy " occupiers "- mainly women -to file fictitious entries on public coal lands, and then have had the claims transferred. An inexpen- sive method it has been, ridiculously easy to get much for little ; the dummy " occupiers " were paid $50 or $100 each to do their fraudulent work. And if a coal or an oil deposit could not be obtained by fraud, then if the numerous testimony taken by the Interstate Com- merce Commission is correct force was used to oust such individual occupants as had lawfully acquired the land. 13 13 One of the capitalists connected with Gould and Sage was David H. Moffutt, Jr. Mofi'atl was an official of the Denver Pacific Railway and Telegraph Company, and \\a> associated with Gould and Sage in the Union Pacific Railroad. He lie- came one of the foremost millionaires in Colorado. Some of his methods were revealed in a ca>e he lore the Supreme Court of the United Stales. The Government had hrouuht suit to cause tin- cancellation of two patents of land in Colorado, granted ahout ten years hefore, in i- y 73. This land was partly a val- nahle mineral tract, containing large deposits of coal and iron. The Government von its case in the lower courts, and Mofi'af appeah d. In it- decision the Supreme Court held that Govern- ment land officials had conspired to defraud the Government ; that patents of land were made ont in fictitious names of al- leged settlers; that the affidavits were forged, and that Moffan was the real her.eficiary and "knew oi the false and fraudulem character of alleged preemptions." (United States Reports. Vol. cxii : _'.}-3_>. ) In this particular case, Moffait was defeat. -d. Inn .1 is \ery likely thai lie was succes>tul m Mimlar instances of ac- quiring mineral lands. 76 HISTORY Ol ? THE GREAT AMERICAN FORTUNES Continuously, since 1866, these thefts of coal and oil lands have gone on with but occasional stoppages due to official investigations. These in nowise served to pre- vent a fiercer resumption. The Interstate Commerce Commission recently reported that the Gould and Har- riman lines in a large region beyond the Mississippi " ab- solutely dominate the mining, transportation and selling of coal along their lines." Uncounted paragraphs and strings of affidavits, all embodied in the official volumes, sustain the charges of fraud, perjury and violence. Yet the beneficiaries of those colossal frauds have good rea- son to smile amusedly at all such futile investigations ; the ownership of most of the stolen property, however pro- cured, is theirs ; some the Government succeeded in get- ting back, but proportionately little. On the whole, the beneficiaries are well satisfied. Let it not be supposed that Gould's mind was so pre- occupied with his Union Pacific piracies that he was oblivious to opportunities elsewhere. Far from it. This undersized man, with his mild voice and inconspicuous, almost effeminate, personality, was, indeed, an irrepressi- ble conquerer, seizing and pillaging not merely wherever he went, but in many places and in different fields simul- taneously. In his own chosen method of warfare, his mind was an extraordinarily versatile one. wonderfully gifted at computation, with the virile ability to keep track of a vast variety of involved transactions at the same time. \Yith the law end of them he did not have to concern himself; at call he could always hire a corps of the most dexterous attorneys, none of whom scrupled to take as payment a fraction of his thefts. Lawyers, some of whom became judges in the highest courts in the Country, and other lawyers who had been iudgcs and had THI-: GOULD FOKTUXi: UKSU M Kl> 77 resigned to draw large retainers from the very corpora tions in whose favor they had handed down decision. . pleaded and plotted for Gould. An excellent client he was : the litigations in which he was involved were ex- tensive. GOULD'S TEXAS PACIFIC UNDERTAKING. Wherever he appeared, the lesser frauds were over- whelmed and flung out and he, the great fraud, substi- tuted himself in their places. This he again demon- strated in his appropriation and looting of the Texas Pacific Railroad. This line had received the usual Gov- ernment subsidies and land-grant gratuities. The cor- ruption used in the procuring of these was fully revealed in the celebrated " Huntington letters," which came to light later in a suit arising between two railroad fac- tions. The writer of these letters was a man who knew ; a preeminent corrupter himself; he was none other than Collis P. Huntington, one of the dictating railroad mag- nates of the period. In 1876, 1877 anc ^ ^78, the years covered by his letters, a furious competition in corruption was in progress at Washington, and Huntington wrote unreservedly of it. 14 After Congress passed the Texas Pacific Railroad Act, Gould turned up with a scheme closely resembling the Credit Mobilier swindle. Forming a construction com- pany he entered into a contract with the Texas Pacific ''In a letter dated December 17, 1877, Huntington wrote: "Jay Gould \vem lo Washington about two week's since, ami I know saw Mitchell, Senator from Oregon. Smce which time money has been used very freely in Washington. . . . Gould b.as large amounts ir, cash and he pays it without stint to earn- In^ points." In a letter dated May 3, 1878. Huntington wrote that the Texas and Pacific " i<-lk> offered one member of Con- gress $i,ell. So 8 1 seriously was. the business of the Western Union Tele- graph Company cut in npon, that, in self-protection, it was finally forced to buy Gould's competing line for about, it \vas understood, $10,000,000. Having pock- eted this large sum wrenched from Vanderbilt and his associates, Gould tlien ])lungecl in and took away their entire telegraph, system. I'.y every trick and art of Stock Exchange speculative methods, Gould forced down the price of V\"estern Union stock, and gradually bought in quantities. To Vanderbilt's complete surprise and extreme mortification, Gould turned up in iSSi not only with a control of the We: tern Union, but also of the American Union Telegraph Company which he had sold to Yanderbilt but a short time previously. Upon obtaining control of the Western Union Tele- graph Company, Gould immediately increased its stock and kept on increasing it. Triumphant, gorged with spoils and power. Gould did not have to court the sup- port of all that was considered solid and respectable among the money aristocracy. '! hey knew him to be a great thief, and he knew their caliber, despite the ex- terior that they had woven about themselves. The in- stinct of kind for kind is unerring; which instinct in a money world is reinforced by that invariable principle of action whereby wealth-seekers rally around him who proves, his supreme abilitv to get away with the plunder. The vanquished are expeditiously deserted; the success- ful (locked about. Such fellow kings of wealth as John Jacob Astor, J. I'ierp-.nt Morgan. Collis 1\ Iluntington and others were among the noble array to be found in Gould's board of directors; a notable lot manv. or all. 82 ui whom had pur-ued career.- more or less paralleling Gould's ; a sophisticated confraternity they comprised, fully and finely capable of understanding one another. All were wary old stagers ; Gould could not easily overreach them ; while all of them were not quite as astute as Sage, most were widely schooled in every devious tactic and ruse of financial and industrial war- fare. Their safety lay in their lack of trust : the very reverse of the virtues they preached was developed by the necessities of their conflict. But when a credulou- man, such as Cyrus \V. Held, the originator of the sub- marine cable, stepped along with his confiding' faith in Gould's friendship, spoliation and ruin were easv ac- complishments. Field was simple enough to believe in Gould ; only after Gould had mercilessly squeezed his wealth out of him, and had turned him adrift a bank- rupt, did Field, too late, begin to realize that friendship had no place in the competitive whirligig. Field had little reason to whine over his misfortunes: the wealth that Gould tore from him \va- the product of a series of fraud- in the results of which lie was very willing to share. GOULD SWFFT'S [\ FLFVATF.n RAILROADS. This fleecing of Field happened in Gould's thimble- rigging of elevated railroad stocks in Xew York city. Xo part whatever had Gould in the building of this ele- vated system: the franchises by which the roads were constructed and operated had been obtained bv bribery. Afu-r other capitali-t- had done the bribing and had started, $650,000 had been spent. Questioned- as to whether it had been expended at New York or at Albany (the seat of the Legislature) he replied that he did not know. It was quite clear from the inter- rogatories and answers that this $650,000 had been used as a corruption fund. 10 Probably a similar sum had been used to get the franchise of the other elevated railroad, the Xew York. The old device, so familiar in railroad building, of organizing a construction company, was employed in the building of the elevated railroad:- 1 . A company called the Xew York Loan and Improvement Company was brought forth to carry on the work of construc- tion. The same men were directors of both construction company and elevated railroad companies, and made fraudulent contracts with themselves. 17 Such capi- talists and "philanthropists" as George M. Pullman, John P. Kennedy !s and others profited heavily from "' Railroad Investigation of the State of Xew York, 1870. v: 4.-,. These franchises uri.uinated during the period of UK- Tweed regime. I he Xew York Legislature was then hem.u freqnently corrupted. When the franchise for the ISleecker Street and l-'ulton Ferry surface line, Xew York City, was obtained. 8434,- i* i<> of its honds were dFtribnted siratuifou-dy. (See "The His- tory of Public I'ranchiM^ in Xew York City, p. ui.) '^ Ibid.. 12. '""Of Pullman some facts have been broMLiT,: out in Vol. i of this work. Another example (0 his m<;h(>ds and standard;- at about tin's time may be instructive. After Jacob Sharp h;.d bribed the Xew York City Board of Aldermen with ;\"adwav, the owner-; of the f ranch! -c i-'sued SCKJ.OOO ir these fraudulent transactions ; thev were, at the saur.,- lime, reaping wealth el ewhcre bv many other methods of the same character. After the first two elevated railroads were built, a new scheme of plunder was conceived and earried out. A company called the Manhattan was chartered Vv'ith a capital of 82,000,000, ostensibly to build elevated rail- ways, liut it did not build a single foot; the same clique in control of the New York Loan and Improvement Company turned up in control of the .Manhattan, and they leased the two existing roads to the Manhattan. Little actual cash did this lease cost them; they illegally increased the Manhattan's capital stock from $2,000,000 to $13,000, OCX), which amount they divided as loot. 10 Ky stockjobbing methods Could and Sage then crushed out most of the small stockholders, and secured control. They proceeded to water the stock still more, consoli- date the whole system, and crowd out the more pow- erful stockholders. FIKI.I) Til KOWX OTT. Certain of the heavy stockholders, such as Field, stood in with Gould and Sage, but other- bitterly fought the various fraudulent moves and expedients that Gould and Sage brought into play. The outcome of the en- -liing legal contest could be forecasted. Gould seldom -tork ;:nd ,S'2.5Of>.rx>o in bond- for tin- construction of a railway three miles in length, and the- real coM of \vliirh \va^ only - lO.nou Tbc-c bonds were nnlruv fully and dishonestly issued. i'nllnian knew that fact, and also of the' bribery. In exchan"-' for cars --npplird by liim. he rec'.^-cd SI.-O.OTJO of thc-c hopd- nt fifty run- on tin- dollar. Sec rcpDrl of. and testimony b tore, the Xew N'nrk Senate fnvesiii.'atiny ('onunilter. " ;- fVimmittee Broadway K'ailrnafl. iKs'.'i": 1X1. !!l Railrrtad Fnve libation nf the Slat' 1 of \\-\v N'nrk, 187';, v : o rind 7. 85 \vcnt into court without owning his judge. The judicial tool this time was Westbrook of the New York Supreme Court; when Gould had started out in his career of theft, \Yesibn><>k had been his first lawyer. Now as judge, Westbrook issued orders and injunctions backing up Gould and Sage's fraudulent acts. Mis subservience \\ as so notorious that he once held court in Gould's pri- vate office in the Western Union Telegraph Company's office and issued an injunction.- After becoming absolute masters of the elevated rail- way sy.-tcms in Xew York city Gould and Sage no longer had any use for Field. At the first opportunity the stock- market was rigged to divest Field, and he was thrown out to linger and die a ruined man. -'" Tin- Xe\v York State Assembly later impeached Judge \Vcst- brook for malfeasance in office; hut from the Senate, as trial body, he managed to get a verdict of acquittal. CHAPTER IV THE PRESENT STATUS OF THE GOULD FORTUNE What was the concrete result, the grand culmination of Gould's fifteen years of plundering? He, himself, gave a demonstration when on March 13, 1882, he called in Sage and other associate? and exhibited to them a box crammed with securities. Disparaging reports had been scattered in Wall street thaKhe had been hard hit by recent declines in the stock market : and it was to belie these statements that he summoned in witnesses to attest by impressive proofs that his wealth and power were unaffected. He spread out $23.000,000 of West- ern Union stock; $12,000,000 of Missouri Pacific stock, and $19,000,000 of other stock-. ' There is not another man in America except Yanderbilt," observed Sage, " who could make such a display of stock as that." But the securities thus revealed were only a part of Gould's wealth; they did not include many other varieties. Two years later he ostentatiously made another and still larger display. Tho^e heaps of stocks and bonds were the legal tokens of this one man's far-reaching power. By their owncr- -lilp lie was vested not only with the mastery of the great inflowing revenues from numerous corporations, but the autocratic control over a vast army of wage workers. Every dollar of hi? fortune had been ex- horted by deceit, bribery, fraud and theft, yet here he -.;;-. one of the dominating magnates of the country, the 86 owner of a ramification of properties, the dictator of the fate oi tens of thousands of workingmcn. P>ehind him. as an impregnable fortification, stood the Law. guaran- teeing him the possession of that which he had seized by theft. Hut a tew years back and ( lould was buying law to escape law; and now here he was unbranded with the prison stigma, thanks to his money, and lording it over the nation, lint ever there clung to him that >ame crass, indiscriminate brutality of method in dealing both with the powerful and the weak; just as he struck hard at competing capitalists, without timiditv or mercy, so d.id he openly and candidly browbeat and terrorize his legions of workingmen. Of him it could not be said that he shrank from assailing the strong, while overawing the feeble. Me warred on both capitalist and on labor. organized and unorganized, and did so with equal fe- rocitv whether by involution or frontal onslaught. ( amid was not the politic sort of magnate who cut the pay of his workingmen, and then, as a solace, presented them v, itl'i a tov philanthropy; he did not polish greed with hvpocrisv. When he reduced the pav of the work- er-- on his line 1 -, he did it with a bold aggressiveness, dar- ing them to challenge hi-- power. l : ew magnates, while in the very process of putting through some colo>sal fraud, had the hardihood to incite oi tln-ir emploves and oi the people-. to wail until lh>' agitation over their in- had hern tempered hv a eertain lapse oi ai ;- pnlic\ m 11 ncca^tun jtindered tlu- verv nme> \vl:en he was del raiuliiii' 88 HI: and bribing, he belligerently attacked his workers and compelled them to accept lower wages. What if a public outcry should go up? lie had been menaced with many outbursts of fierce, withal futile, public indigna- tion : they had not interfered with his accumulations ; he viewed them with a cynical scorn. In 1881 he and his 'clique were loaded down with spoils ; the people had grown exceedingly restless, stung by their poverty, on the one hand, and contemplating the gigantic wealth of the capitalists on the other. Gould went ahead as if public protest were as nothing. He added, as we have seen, 813.000.000 of watered stock to the capital of the elevated railroads in Xew York city, and at the same time forced the agents and gate- men on those roads to submit to new terms. They had been complaining that they had to work from twelve to fifteen hours a day for the wretched pittance of 82 and 81.75 a day. Gould listened to their grievances, and conciliated them with an order reducing their day's work to twelve hours. But their visions of scanty tri- umph vanished when they learned that he had also cut 'heir pay. At the very time that he was looting the railroads in the West, he reduced the wages of the men on the Mis- sotiri Pacific and defied the labor unions, causing great -trike- in 1885 and 1886, by which, however, his rail- road workers gained virtually nothing. Most typical of the servility of many newspapers and politicians were the alm-e and obloquy with which the labor leaders who con- ducted those -trikes were overwhelmed, Let a man champion tlu j cause of the oppressed, and no matter how loity hi- ideals or noble his nature, he was at once sub- jected tn an endless stream of ridicule and traducing. 'L he servitors of the public press and the retainers of 1'RKSKXT STA'JTS OF 'I' I IK GOULD FORTl'NK 80, politics joined in a vicious persecution ; Martin Irons, who managed the Missouri 1'aciiic strike, was defamed, hounded and blacklisted. It was pitiful to see this man, one of the purest, best and self-sacrificing, precariously compelled in after years to sell peanuts for a living; and he now lies in an obscure grave, quite forgotten, while the remains of Gould, one of the master thieves of the period, repose in a spacious mausoleum, and the children of Gould are among the oligarchy of families ruling the United State-. TIIKFT RKWAROF.l) WITH POWER AND SPl.KXDOR. At forty-rive years of age Gould possessed more than a hundred million dollars. He was prematurely old ; his beard was streaked with gray, his hair thin, and his swarthy, bilious, glowering face was rigid with hard, deep lines. His form had shrunk so that he looked more insignificant than ever before. Tint when he traveled, no one could mistake the evidences of sovereign power. From one end of the country to the other he rode in a palatial private car, handsomely appointed, containing every comfort and luxury then devised an observation room, a parlor, a dining hall, sleeping rooms, a kitchen and porter's quarters. His yacht, Atalanta, was sump- tuous, indeed. His manner of life befitted that of a full-blown magnate. At Irvington-on-the-Hudson !v sequestered himself in a great and costly man-ion, rounded by live hundred acres. Attached to it was < v of the finest conservatories in the world. His city resi- dence i?i Xew York city was a massive, somber brown- stone house at the northeast corner oi Filth avenue and rty-seventl] street, i:i the very hran of the aristocratic : in go MI < I le. however, had other mighty powers not evidenced in outward display. For some years he owned a new-- paper, the Xew York " World " : a curious sight it was to see one of the great pirate-, who manv a time had narrowly escaped prison, intruding the public as to it- duty, moral, political and otherwise. But the known lact that Gould owned this newspaper helped to dis- count its utterances and reduce its circulation. 1 A much more successful and insidious method of in- fluencing public opinion was bv his control of the West- ern l/nion Telegraph Company, and. through that corpo- ration, of the Assi elated Press, the foremost news dis- tributing agency in the United States. Distorted, mis- leading or false news dispatches were manufactured or artfullv colored and -upplied to the public press. These not only gave Gould superior underhand facilities for influencing the course of the stock market, but they were also used in favor of capitalists and against labor and radical movements at every opportunity. The pub- lic \vas fed on grossly perverted news accounts of strikes and labor and political movements; upon this fabricated new.- the newspaper owner-, themselves capitalists or largely servile to capital, l^ed hostile if not malevolent editorial-; and the combination of the whole was used to prejudice the ma-- of the public against anv move- ment or agitation threatening the complete sway of capital. the block fronting his Xe\v York citv mansion he would nervously pace for hours during the long, shadowy vigils of the night a little, shrunken, cankered man vainly endeavoring to tire his mind and frame into an exhaus- tion compelling sleep. He died on the morning of De- cember 2. 1892, and his body was interred in a classic mausoleum, costing Si 10,000, in \Yoodlawn Cemetery. Many multimillionaires, whose ways and station were akin to (iould's, and some of whose careers were inter- woven with his, showed up at the funeral services. Rus- sell Sage was there, and J. Pierpont Morgan and Collis 1'. Huntington and a group of others an impressive procession of money lords with appropriate visages and attired in the immaculate garb of mourning, although not a soul really mourned Gould save his own family. His will disclosed an estate of nominally 877.000,000, but this was merely the exoteric side of the testamentary document; the e-tate amounted to far more. All was nates. Gould did not transmit the bulk of his wealth to hi- eldest s< in. Xow, when fav Gould died, many newspaper-owning scavengers, who during his lifetime had bootlicked him or kept fearfully silent, belched forth vituperation and rehearsed his odious deed-. Their misrepresentations consisted not in exaggerating hi> evil that were not possible but in singling him out as an exceptional defrauder, and in detaching him from 'he system whirl: produced him and which alone could be held responsible. Guiild parsed a\va\ ihe mo>1 haled man in the United Sue:;; 1 amM'i ns hr.d never Concerned him. Inil hi- chil Iren devel< ' ed the vearning U r recognition. At every step, at first, there came an outrush of the old taunt that their father's fortune had come from ] ullage and wrecking. Yet all of the founders of fortunes were, without a single exception, of a stripe ; all had tricked, : ; cd. deceived, bribed, defrauded and stolen. With hundreds of millions of dollars, however, at their command the (loulds were able to overcome all so- cial obstacles. When one has money enough an elect social position does not have to be accorded ; it can be taken by assault. One of the easiest routes is by buying an entree into the caste of European titled nobility, which in the.-e bu.-iness days does a lively trade huckstering names for cash. Accordingly, in 1895 Anna Gould, one of Jay's daughters, was transformed into the Countess de Castellane. and the Count received the opportunity of requisitioning manv of the Gould millions. During the next eleven year- lie right jovially availed himself of it. and squandered millions with a fine prodigality, and went through fantastic antics until a divorce cruelly put a .-top to them. But Aline. Gould a-cended still higher in the pages of the Almanach de Gotha. The Count'- successor is the Prince de Sagan. a perceptive scion who i- doing his valuable part in demonstrating how the feudal nobk-.-. often deprived of their -tolen c.-tates at hume bv revolution and dis.-ipation, can lei- -urery recoup by allying themselve- with estates stolen in newer countries Tn lav to- 1 much .-tre-s upon the social a.-piratinn- and doing- of the Gould family would obscure the titanic industrial conflict in which thev have been engaged. Af- ter Jay Gould'- death the wealth and possession-; of the family grea'ilv increased and iis conquests were ex- tended.' i'>t;t this process has noi. been allowed to continue un- restricted. The last few years, as \ve have already pointed out, have ushered in a terrific contest for tii.' exclusive mastery of the nation's resources. Looking hack fifty years, \ve see a large number of petty, conse- quential industrial bosses, each running his own little- railroad or factory. A change then takes place ; great, energetic capitalists develop, who make war upon the petty bosses and by fair means or foul crush them, seize their properties and consolidate these into great systems. The petty railroad owners disappear and their places are taken by such overbearing magnates as the Vandcrbilts, the Goulds, Huntington, Morgan, Hill, and the like. Ten years ago all of these men were magnates of colossal power, each heading some great system, and despotically dictating over some particular domain. Xow another stage in the process of industrial evolu- tion is being reached which signifies the decline of overlords of the Gould type, and which foretells the approaching climax of capitalist institution-. Mighty as these magnates have been, they are gradually and inexorably being subordinated by a still mightier power, the most puissant of all. The aim of this all-pervading - Many of the large properties of which they became owners. dr partial owner.--, had a broad foundation of fraud. While neither Jay (iould nor his children committed the-e paiticular fraud-;, yet they benefited by the original frauds. The Co'o-ado ( '( i;d and iron Company is a case in instance. In a mt broiuii; in iS<;7 to vacate the land title of thi-- company, the Govertvneiv charged that the company's ci.al and mineral lands had been < .!> t nined by conspiracy and fraud. The lower court? sustained the Government, but the Supreme ('our' of the I nitcd State- decided thai although undi >uhtrd!y fraud h:.d been used, yet the proof presented was not sulncient for an adverse decision. Supreme Conn Repi irter. viii : 131-141. 94 power is industrial absolutism; and in the pursuance of this inevitable end it is grinding down all opposition even as the GoukK the Yanderbilts and others have squelched lesser magnates heretofore. Xo longer are the Goulds able to extend their power much; the climac- teric period has arrived when they have to fight hard to retain what they have. TII1-: KISIXG AUTOCRACY. This supreme power, clutching at every form of the production and distribution of products, is the Standard Oil Company, headed by the Rockefellers. Thirty-five years ago it obtained a monopoly of oil products by getting secret railroad rates, and by other crushing methods. At first it ingratiatingly approached the railroad magnates as a supplicant seeking favors. Soon, as a matter of policy, it made these magnates shar- ers in its profits. Then it began to buy its way into the ownership of railroads. Its profits have been so fabu- lously vast that it has been under the constant, uncs- capable necessity of reinvesting its vast surplus, ever growing vaster. This surplus it has applied to buying up railroads, bank, mine, public utilitv and industrial stocks and securities of all descriptions. With this fixed, unchanging policy its power grew to such an extern that its members began to push themselves in as director-, oi a great variety of corporations. For a period it then carried on a policy of having "a community of inter- est'' with the large magnates in every field: of working in cooperation with them in determining industrial mat ters. I'ut during all of this time it wa< encroaching! . buving mere- and more stocks of all kinds; so that now it ha-; arrived at tin* point where, operating through such GEORGE GOULD. Eldi-st Son of J. Gould, and Chief Wielder of the Gould Fortune. general-; as Mir laiely lepartcd I larriman, it is gradu- ally forcing the \'aiulcrbilts. the ( ion!.'!-- and oilier first- rank magnates of a decade ag< > to a secondary place, and entrenching itself in autocratic authority. Several of the railroads long ruled over by the Goulds have be- come, to a considerable extent, Standard Oil adjuncts. Industrial battles, such as that between George Gould and the Pennsylvania Railroad in 1902, will, as' occur- rences, soon be extinct. This warfare arose over ( iould's project to extend the AYabash Railroad to the Atlantic seaboard. The Pennsylvania Railroad promptly objected to a competitor in its richly profitable territory. The ensuing struggle was fought out in legislatures, common councils, courts. Congress, and by actual phys- ical force. So completely have the Pennsylvania Rail- road magnates ruled that State for fifty years ihat it did require- considerable temerity on Gould's part to war upon them."' 3 As an instance of the exercise of the Pennsylvania Railroad's great political power, the following account is significant. 1; shows ho\v Cassatt, president of that railroad, and a few other industrial magnates and political bosses, decided that Philander Knox (at present, 1010. United States Secretary of State) should be chosen a raited States Senator. Knox was long- a corporation lawyer. The Governor of Pennsylvania was ordered to ratify the choke of this gr-np of pnliiicnl dictators, and did so. "I his account was published editorially in "Collier's Weekly," i-Mie of June S, 1007. and rcpuhlished in the same peri' 'dical. issue of X<>vei;;l>er 2~. [909,. !t- accuracy was not- disputed, and no denial- were made, or suits for libel brought. The account read : "Mr. Knox's pulitical g'ene.- is had for i 1 ^ -etting the genera! >ithces 01 t!ie I'enn.^ylvania Railroad in Philadelphia. There met, to name a sii e>M>r fur (he recently decea.-ed Ouay, Sena- tor Penrose. Henry ('. I ; rick. ']/.' Durham, tiie Philadelphia boss, who was tlu-n at the height of his power, and the late President Cassatt. ['etween tl;e p li i and the t\\o mei ' business a in.idit.t was arranged. K;ii'X ^knjiild be Seiiator. . . . Then the party adjourned i'' dinner a; President Cas- satt's liou.-e. Tn tlii- was invi'Kl (Jovernor Pennypacker, who hcid the app' >int ing. \\'hi!e the resl tinkered the walnuts, \\-u- '/> M l- ; H'XV Or 'I ill: CKKAT ( >:ic oi i!ic most marked instances .-bowing the ex- tremes lhat the Pennsylvania Railroad magnates went in their rule, was the Riot Indemnity bill which thev at- tempted in 1879 to get the Legislature of that State to pass. It is advisable' to present a sketch of the circum- stances of this bill, inasmuch as it gives a good idea of the methods of A. J. Cas>att, long the president of the Pennsylvania Railroad. It was Cassatt whom George Gould had to fight in 1902; the methods Cassatt used in 1879 were the methods lie invariably used. \Yith all his unscrupulousness Jay Gould never had the face to do anything approaching in enormitv the Riot Indemnity bill of Cassatt. Vet when Cassatt died recently the most lavish eulogies were everywhere published; he passed away in the full attributes of superior respectability. \\ e have seen, in an earlier chapter, how the Penn- sylvania Railroad's officials, during the great strike of 18/7, ordered their agent- to set a number of worthless freight cars at I'ittsburg on fire, in order to charge the strikes with being riotous, and so have a pretext for calling out the military. That very crime of arson these magnates, two years later, made the basis for an attempt at plundering the people out of 84.000,000 at one grab. In the whole in- dustrial historv of the country no avowedlv bolder -cheme had ever been tried before. When, in [87'], a bill \vas introduced in the Pennsylvania Legislature to indemnify the railroad, to the amount of about $4.000,- rri?c invited the Governor into thr liack yard to look at the moon. ' Tt'-^ Knox.' said Pcnrose to tlu- Governor. .And Knox it \va-. . "I < i thi- rarrative some minor intcresl i- lent by tlic faci thai Prc-sidi-nt rassatt \va- a Democrat. '" OOO, for the loss of property, the news was received with general amazement. Oissatt pushed the bill, and it would have become law had not some of the legislators revolted at the brazenness of the plan. A few de- nounced it as a monstrous fraud; one, in particular. Rep- resentative Wolfe, charged that bribery was being used, and demanded an investigation. Whereupon, a commit- tee of investigation was appointed on April 9. 1879. The report of this committee specifically stated that three members of the Legislature had been guilty of bribery. From the evidence it was clear that Cassatt and Quay- -the latter a corrupt politician at the head of the Pennsylvania Republican machine had leagued forces to rush the bill through ; that many members had been bribed either with money or with promises that cer- tain bills of theirs would be passed ; that corrupt com- binations existed among members to pass important leg- islation, and that many editors of influence throughout the State had been bought to advocate the passage of the bill. 4 A WAR OK Ml LTI. \ni.LIOXAIRK.S. Such were the ways of C'assatt, the head of the forces that ( ieorge (lould had to encounter. Of all result-, Gould sought most to get an entrance into Pitt-burg with its stupendous annual traffic of 75.000,000 tons. The government of that city was owned by the Penn- 1 Pel ruff. Kemlile, Suiter. Ruir,'cn?er rind Crnvfnrd, nil lejr!.-- ! ;; ; '.'~:- or lobbyists, were comieted, hi iS^o, oi hril'i.-ry, and each ' : - -enters ! to a year's i:>r>n- " : - : !:i passing sentence j '':. ! V;:r ; r marked ill:;! ' "' i' : . " i ' 'i a common occnr- r pre i 1 : t]v I Vnnsylv.'.nia l.ev.i- li'ti.ro i~;>r years. " ; , ; i';- .;',.: ii the coi'rr.i.iiiin ai^-iu::.:;: the attempted v>a--a^e I 0,8 \lvania Railroad. But what of that? If money could put in and run one set of officials, money could also put in another set. So George Gould deeided. and rightly. The government of Pittsburg now became the .-take : Gould adroitly caused the question of the entry of the Wabash Railroad to be made an issue of the municipal election of 1902. Backed by his millions, so it was said, a '' reform " movement was generated and blown into lusty growth. Gould carried his point : a Common Council favorable to his plans was elected. 3 At the same time Gould had a bill passed by Congress allowing him to bridge the Monongahela River. The statement has been made that it cost him $12,000.000 to get an entrance into Pittsburg, but the documentary proof is wanting. After spending $35.000,000, he carried through his \Yabash plans. Xow the warfare of force began. In retaliation for Gould's victory, the Pennsylvania Railroad magnates or- dered all of his Western Union Telegraph poles along that railroad's right of way to be cut down. If the telegraph operator.-- had gone on a n\ ictiou of o-;e of the principal bribe taker- wa- followed hy hi- cnnfes>i-in. and hy tlic confessions, in Marc! 1 . \<>io. nf many mr.rc memhcr- of (lie Pitt-hnru" Common Council These confessions ili-cln-cd a vast sysu-m nf lirihery hy sterl macrnates, hank- arid other business in'"rest->. \t tlie present \vritiii" ' April, 1010). forty-one councilnien arc under indict- nit-n 1 . and more than a -core of others have confessed. PRESENT STATUS OK THK Got'LD I'OKTUNK 99 present generation of Goulds, in a work, being pub- lished serially at the present writing (1910), and written by Judge I' en B. Lindsey. a public-spirited juri.-t who has the most intimate knowledge of Colorado affairs, Judge Lindsey reveal- in detail some extent of the cor- ruption in that State. lie tells how nearly all of the officials and judges are corporation tools; how vast num- bers of fraudulent votes are counted at elections ; and how the corporations have dictated the election or ap- pointment of main- of the very judges whose decisions have been so oppressive to the working class. In par- ticular, lie tells at length how Governor Peabody was fraudulently declared elected in 1905, and how Peabody had bargained to appoint to Supreme Court judgeships certain men named by the corporations. Lindsey goes on: Does this seem incredible? Read then the Colorado Supreme Court Reports, Vol. 35, page 325 and thereabouts. You will find it charged that the Colorado and Southern Railway Com pany, the Denver and Rio Grande Railway Company, and the public service corporations of Denver had an agreement with Governor Peabody whereby these corporations were to be allowed to -elect the judges to be appointed to the Supreme Bench. You will rind it charged that Luther M. Goddard had been selected a- a proper judge by the public utility corporations, but that the two railroad companies ob- jected to him as "too closely allied with the interims of the Denver City Tramway Company and the Denver I'm'on Water Company." "As a last resort." the statement continues, "the agent and representative of the said Colorado and Southern Railway Company was induced to, and did, after midnight on Sunday, the eighth day of January, and at about one o'clock in the morning on Monday, the ninth day of January, repair to the home of the said Luther M. Goddard, in a carriage, call ing him out of bed. having then and there Mich conversation with the said Goddard that the said railway corporations, through their agents, withdrew their opposition to hi- eonfirma t:-''n, ai (1 they did on .-aid ni"rning at about throe oViock thereof announce to the remainder of the said corporations through ihcir said agents and representatives, that their opposition had been withdrawn, and the withdrawal of the said opposition having been announced, the said senate of the Fifteenth Gen- eral Assembly did. almost immediately upon its convening on the morning of Monday, the ninth day of January, confirm the said nomination of the said Goddard." The brief containing these charges is signed by Henry M. Teller, Ex-Cabinet member and United States Senator, and by Ex-Governor Thomas acting as counsel for Senator T. M. Pat- terson, who had made the charges in his paper, The l{<>cky Mountain Xczcs. These gentlemen offered to prove the charges before the Court, but the Court, in a most amazing decision, re- fused the offer, held that no matter how true such charges might be, it was "contempt of court" to make them, and lined Sena- tor Patterson Si.ooo! . . / And so it seem-, if such charges a? these are true, that the present Goulds are continuing the methods of their lather. It may aLo be well assumed that these public revelations are only indications of extensive under- ground practices and transactions many of which are never publicly discio.-ed. Slowly sliding downward, as it is. to a relinquishing place in the ranks of wealth when compared with such fortunes and power as Rockefeller's, the Gould family is nevertheless prodigiously rich. Forty years ago Jay Gould was doing his best to keep out of prison ; to-day his children and grandchildren live in gorgeous palace?. Georgian Court at Lakewood, X. J., one of the homes < f George Gould, is emblematic of their splendor. Built in the Georgian style of architecture, the main part is two hundred feet long and fifty wide. The great main I'KKSKNT STATUS OF Til 1-1 lluL'LD FORTUNE 1OI hall is thirty feet wide and fifty long; at one end is a massive elliptical staircase of marble and bronze, sup- ported by marble columns, and at the other end a superb marble fireplace. Around three sides of the hall is a mural painting sixteen feet high and eighty feet long a depiction of the " Canterbury Pilgrims " from Chaucer. A hundred and fifty pendants of cut glass radiate prisms from the chandelier. The furniture in this hall is of Louis XIV. style, blazing with powdered gold and covered with dee]) crimson velvet. This palace contains thirtv rooms for the use of George Gould's family and guests. The very bedstead in which George Gould sleeps cost $25.000. And all around this gray and white mansion, gray stucco covering brick walls, are fairy-like Italian sunken gardens filled with statuary and magnificent fountains. Connected with the man- sion is a court, built at a cost of 8250,000, wherein is a great tanbark hippodrome, a gymnasium, bowling alleys and lounging rooms, a shooting gallery, a large swim- ming poo! and Turkish and Russian baths. And this is only one of the many palaces of the mem- bers of the Gould family. Whence all of this wealth and splendor came is now an open book ; no enigma are its sources, but a prolonged tale of fraud and theft, whereof the most vital facts only have been herein brought out. CHAPTER V THE BLAIR AND THE GARRET! FORTUNES Of John I. Blair little is now heard, yet when he died in 1899, at the age of ninety-seven, he left a great per- sonal fortune, estimated variously at from $60,000,000 to $90.000.000 ; his wealth, descending largely to his son, De \Yitt C. Blair, forms one of the notable estates in the United States. Here, according to the purveyors of public opinion, was an honest man ; here incontestably was a capitalist of '' rare business instinct," whose for- tune came from pure, legitimate and upright methods. I ; talent as ;i suc- cessful business man by debauching, swindling and mur- dering Indian tribes, and while Yandcrbilv was black- mailing, and Sage was bribing and embezzling, Blair was demonstrating in his mvn wav that he. too, had all the necessan qualifications ol "a leading business man." I'orn near I'elvidere. X. |., in iSnj. Ins parents were IO4 HISTORY OF THE GREAT AMERICAN FORTUNES farming folk; and his biographers relate with a blissful smack of appreciation that when he was a very young boy he annouiu-jJ to his mother that, " I could go in for education, but I intend to get rich." Like Sage, he started as a clerk in a country store, and he then wid- ened into being the owner of a general merchandise store, at what is now Blairstown, New Jersey. Years passed and he prospered, his panegyrists tell, and he then opened a number of branch stores. But this part of his career is shrouded in mere tradition ; nothing au- thentic is known of his methods at the time. BLAIR AS A RAILROAD BUILDER. Blair next turned up as the owner of an iron foundry at Oxford Furnace, N. J., and it is from this point of his career that definite facts are embodied in official records. '' The necessity for transporting the metal to the seaboard," says one biographer, " led Air. Blair and others to organize the Lackawanna Coal and Iron Com- pany, out of which has grown the great system of the Delaware, Lackawanna and AYestern Railroad." With this all-inclusive sentence the biographer airily dismisses this part of the subject. Hut there are weighty reasons whv we should dwell upon it, with brief, yet sufficient explanation, for it was in this operation that Blair made his first millions; it was here that he gave the first scin- tillating demonstrations of his " rare business instincts." I fad it not been for an acrimonious falling out be- tween him and his associates in this railroad business, the truth would be beyond reach. As it is. these men made the huge error of perpetuating their quarrel in print; an unpardonable blunder if the good opinion of posterity is to he held. This quarrel arose over such a TI1K r.LAIR AND liARRKTT FORTUNES 105 sordid matter as the allotment of graft; it was a bitter, ungentlemanly row, as is all too clearly evidenced in the biting denunciations of one another that were put in the reports by the disputants themselves. From these re- ports it appears that l>lair was, indeed, doing- business in the accustomed style; he was selling, at excessive prices, the products of his mill to a railroad corporation of which he was a director, and individually building branch lines which he foisted at enormous profit upon the corporation. The Delaware, Lackawanna and Western Railroad, now one of the very richest in the land, was organized in 1850 by the grouping of a number of small, separate lines. To secure franchises and special rights and aid, the usual procedure of bribery was resorted to, and with unfailing success. The men at the head of it knew their slippery trade well ; they were the same rich merchants who were involved in many another fraud. Some ot them we have accosted before in these chapters - (ieorge 1). 1 'helps, John J. ! 'helps, William K. Hodge. Moses Taylor and others. With ]ohn I. 1'lair these men formed the board of directors of the Delaware, Lacka- wanna and Western Railroad Companv. One of the separate lines incorporated in this railroad was the Warren line, crossing Xew Jersey into Pennsyl- vania. The building of this road, as nearlv as can be made out Irom the law record-. wa- attended with some very peculiar circumstances. Two set'- of capitalists were competing" for a fnuichi.-c to extend their railroads through the mountains to ihe Delaware Water dap: one wa- the Morris and Kssex Railroad (/ompanv. the ''ther the \\arren Railr. >ad Companv, headed by Hlair and D-.'dge. !>oth. <;i 1851, obtained charters from the Xew [ersev I e'>i-latr.re within ; few da\> of each io6 other's grant. In those years scandal after scandal wa^ developed in successive Xe\v Jersey legislatures; it \va> no secret that the railroad magnates not only debauched the Legislature and the common councils of the citie- with bribes, but regularly, in true business-like style, corrupted the elections of the State. In 1851, for in- stance, the only candidates balloted for by the Legislature for the post of United States Senator were rival rail- road nabobs ; the very same men who, it was notorious had for years been bribing and corrupting. Which of the two sets would succeed in building it- railroad extension first ? The Legislature had accommo- dated both with charters for the same route: in that re- spect they were on an equal footing. Hut Blair and Dodge completely outwitted the Morris and Essex set. and went on to claim prior rights for their lines. '1 he Morris and Hssex Railroad Company charged fraud and went hotfooted into court after an injunction, which temporarily it obtained. The case came up for final adjudication in the New Jersey Court of Chancery in 1854. The Morris and Essex group asserted that thev had bought the right of way through the Van Xess Gap, and charged Blair with taking fraudulent possession of these lands for the purpose of '' fraudulently frustrating the complainants in the extension of their road": tha: the survey made by Blair and Dodge was fraudulent. and that there were other frauds. In his answer Blaiv put in a general denial, although he admitted that tli Morris and Essex Railroad Company had bought the I and received deeds for it. but averred that thi Junk place after the lands had been conveved to the \V;< : ren Railroad ( umpany. Each side charged tlu nth \\itli fraud: undoubtedly the a-sertions of both were cor- Till: iiL.UK' AND GAKUMTT FOU '1 I" N MS 1O7 rect. Judge Green decided in favor of Blair and dis- solved the injunction.- Subsequently the Warren rail- road was unloaded upon the D., L. & \Y. at a great profit. CHARGES OF JOl'.IiERY AND GRAFTING. At first, the relations among Blair, the Phelpses and Dodge must have been of that brotherly unity springing from the satisfactory apportioning of good things. Pre- vious to 1856, the annual reports of the board of mana- gers of the Delaware, Lackawanna and \Yestern Rail- road Company breathed the most splendid harmony, with never a ripple of discord. As president of the company, Phelps had appointed Blair the land agent for the Warren division of the railroad. 3 Very evi- dentlv a joyous, comfortable spirit of satisfaction with the way things were progressing pervaded this stalwart group of worthies. Suddenly the tenor of their private and public com- munications changed. Peppery statements, growing into broadsides, were issued, filled with charges and coun- ter charges, and a caustic quarrel set in over the question of graft, especially in connection with the \Yar- ren railroad. On September <), 1856, Phelps resigned from the pre.-idcncv. and in doing so, practicallv charged others of the directors with carrving on a profuse sys- - Nc\v Jersey Kqir.ty Reports, ix : 635-049. The chief owner of the Morris ai:l F.ssex Railroad wa? Ed- '.vard A. S'cvei.^ \vlio. for many year-, blackmailed a 0"nipeiiii;j lire, the Xe\v J;-i>oy Tran.-portali<>n Company, and \vho, \vhcn that company fnaliy refused to continue to pay Hackniai!, bribed, it \vas charycd, the Xe\v Jersey f.epislatnrc to pass rc- ry inca-n-i - .- See (.'liaj.ur \:i oi present volinne. "Second Anr.r: 1 Report of the Board of Alanat^rs of tlv Delaware. Laekauan:ia ur,d \Vesu-rn Rai'n\';ifl Comj anv, 185^'':^. IO8 HISTORY OF Till-: GRliAT AA1ER1CAX 1'OKTL'MiS tern of grafting in the purchase of land, supplies and branch lines. Did Phelps resign as a protest? More probably, the actual situation was that the internal fight sprang up over difficult}' in adjusting the division of the spoils, and the anti-Phelps faction had proved itself the stronger. Phelps set forth his case in published confi- dential statements accompanying the annual reports. He boasted that after the franchises of the Delaware, Lack- awanna and Western Railroad had been forfeited for non-compliance, that it was he who had got through an act on April 2, 1885, " restoring all franchises and granting other important privileges." He complained of the exorbitant expenditures the directors were mak- ing, and significantly pointed out that when he had wanted to get an auditor, Blair and other directors re- fused to vote for one. Referring to the process of graft Phelps wrote that "one of our managers [BlairJ is a director and large stockholder in the Lackawanna iron and Coal Company; one-eighth owner in the Lehigh and Tobyanna Land Company ; largely interested in real estate along the line of the road and president of the Warren railroad, of which his son is a principal contrac- tor. Another son is director and very large owner in the Lackawanna Iron and Coal Company,'' etc. 4 In another confidential circular, dated January 17, 1857, ! 'helps criticized Blair as "one of the parties more par- ticularly referred to " and as " systematically opposed to my measures." If this much came out in cold type, what must have been the whole story? The frag- mentary visions we get in lhe>e reports are undon k s dly but an index In the elaborate miscellanies of graft carried on by .Blair in every available direction. 5 P.LAIR'S RAILROADS i.\ THE WEST. Blair's loot in tbese transactions appears to have been very large. His operations were so successful that he went into railroad founding as a regular pursuit ; and, as did Sage, he combined professional politics and busi- ness. His greatest opportunities came when the Union Pacific and other railroad charters, subsidies and land grants were bribed through Congress. " In the early days of the settlement of the great West," wrote one of his puffers, " Mr. Blair found am- ple opportunity for the exercise of his rare judgment and untiring energy, and his name was connected, either as a builder or director, with not less than twenty-five different lines." What a symmetrical and appealing de- scription ! All that it lacks to complete it are certain trivial details, which will here be supplied. As one of the original directors of the Union Pacific Railroad, Blair shared in its continuous and stupendous frauds. But it was in Jowa.that he plundered the most of his tens of millions Iowa with its fine pristine agri- cultural lands, among the richest in the United States. ^ Grossly pliable as the law has been, where capitalist inter- ests have been concerned, nevertheless the law has Ions? professed tu recognize the fundamental principle that it was against pub- lic policy to let contracts for the construction of a railroad to a director or officer of the company. "All such contracts," says Elliott, "are regarded with keen suspicion, and, at least in the absence of good taith, are voidable, or, according to some au- thorities, void, upon the clearest principles of public policy." ( See Elliott on Railroads, ii : 830-840 ) This sounds well in theory, but in practice the courts have invariably found grounds to sanction these framK IIO HISTORY OK Till-: OKI-; AT AMKRICAX KORTUXKS \\'hilc Sage was busily engaged in thefts and expropria- tions in "Wisconsin and Minnesota, he was also, as was Blair, pursuing precisely the same methods in Iowa. There was the same bribery of Congress and of Legis- lature ; the same story of immense subsidies and land grants corruptly secured; 6 the same outcome of thiev- ing- construction companies, looted railroads, the cheat- ing of investors, bankruptcies and fraudulent receiver- ships. Not less than $50.000.000 in subsidies in one form or another were obtained by the railway com- panies in Iowa; their land grants reached almost 5,000,- ooo acres. In the projection of the railroads in that State, Blair was the predominating almost, excepting Sage, the exclusive figure ; he seemed to direct every- thing; and he certainly allowed no one else to pocket what he could yet awav with himself. One of a number of his railroads was the Sioux City and Pacific a line with a very ambitious name but of modest length. Its charter, subsidies and land grant were obtained by Blair at the auspicious and precise time fl " The first land grants made by Congress," wrote Governor J. G. Xewbold of Iowa, in his annual message in 1878, "were turned over to the companies absolutely, although the act of Congress contemplated the .-ale of the lands by the State as earned, and the devotion of the proceeds to the construction of the railroads; the companies uere permitted to select the lands regardless of their line of road; and they were allowed, virtu ally, their own time to complete the work, notwithstanding that one main object of the grams was to secure this completion at an THK HI. AIR AXI) GAKKKTT I-'oKTI N KS Til when the I'tiion Pacific measures were passed 1>v hrib- erv. Whether, however, lilair used money in corrupting Congress is not to be determined from the official rec- ords. Hut if he did not, he, at any rate, employed an wen more subtle and effective mode of corruption. The Congressional investigations reveal that it was his system to debauch members of Congress with gifts of stock in his corporations; 7 these honorable members, of course, mightily protested that they had paid for it, but nobody believed their excuses. Poor's Railroad Manual for 1872-73 additionally reveals that among the direc- tors and stockholders of Blair's railroads were some of the identical members of Congress, both of the House and Senate, who had advocated and voted for the char- ters, subsidies and land grants for these railroads. For the Sioux City and Pacific Railroad Blair secured a land grant of one hundred sections, and .$16,000 of Government bonds, for each mile of railroad. What happened next ? Act two was the organization of a 7 See Credit Mobilier Reports. These are full of testimony attesting the buying up of members of Congress by this method. His chief accomplices in this work in Congress were William B. Allison and (Jakes Ames. As Representative, and later I'nited Stales Senator, from fowa, Allison was long a powerful Republican politician. Ames (as \vc have seen) was one of the principal originators and manipulators ot the great Credit Mobilier swindle (see Chapter xii. Vol. ii). The fact that Alli- son and Ames were both officers of the Sioux City and Pacific Railroad Company at the same time that they were members of Congress was well known before the act of 1868 was passed. On December 15, 1X07, Blair certified to Hugh McCulloch, United States Secretary of the Treasury, that the following officers of the company had been elected on August 7, 18(17: John T. Blair, president; William 15. Allison, vice-president; John M. S. William- of Boston, treasurer, etc. The Executive. Committee elected on thai date \vas composed of Blair. AUK-, Charles A. Lambard, D. C. Blair, and William B. Allison. See Kx. Documents. Xos. iSi to 252, Second Session, Fortieth Con- yresS, 18(17-68, Doc. Xo. .03. 112 HISTORY OK TIIK GKKAT AMERICAN FORTUNES construction company modeled on exactly the same lines as the Credit Alobilier. As the head of this company, I '.lair extorted large sums for building the railroad. On the prairies of Iowa, with almost no grading neces- sary, railroad building called for comparatively little ex- penditure. Expert testimony before the Pacific Railroad Commission, in 1887. estimated that the road could have been built at a cost of $2,600,000, with the supple- mentary statement (and what a commentary it formed upon the business standards of the times!) that if hon- estly done the entire cost ought not to have exceeded $1,000,000. A LITTLE ITEM OF A $4,OOO,OOO THEFT. What did Blair's company (which was mainly himself and his sons) charge? It awarded itself $49,865 a mile, or a total of more than $5,000,000. Then having bled the railroad into insolvency, Blair enriched himself fur- ther by selling it to the Chicago and Northwestern Rail- road Company. Jf there be any doubt of the cool delib- eration with which those " eminent capitalists " set out to swindle the Government, it must, perforce, be dissi- pated by consideration of the following fact: "When the negotiations were pending for the transfer of the stock of the Sioux City and Pacific Railroad Company to the Chicago and Northwestern," reads the report of the Pacific Railroad Commission, ''John T. Blair offered a resolution, which appears on the minutes, setting forth that the Chicago and Northwestern must bind itself to protect every obligation of the companv except that to the United States Government." 8 This was ^ refresh- ing! v candid wav of arransjincr swindles in advance. THK m.AlK AM) (1AKRKTT FORTl'NKS L J ^ And, in fact, the final swindling of the Government oi much of the funds that it had advanced was accom- plished in 1900. By an act then lobbied tli rough Con- gress, the company was virtually released from pa vim; back more than one-tenth of the sum it still owed the Government. '' AXOTIIF.R RAILROAD Pr.fNDERF.D. But Blair's frauds in the inception and construction of the Sioux City and Pacific and some of his other roads were surpassed in degree, at least by those he put through in another of his Iowa railroad projects the Dubuque and Sioux City line. The charter and land grants of this railroad, and those of the Iowa Falls and Sioux City Railroad, were given by an act passed by Congress on May 15, 1856. \Ye have seen what indis- criminate corruption was going on in Congress in 1856 and accompanying years ; how the Des Moines River and Navigation Company's land grant was obtained by briber}', and how committees were reporting the ex- istence of corrupt combinations in Congress. There is no definite official evidence that the charter and land grants of the Dubuque and Sioux City Railroad Com- pany and those of the Iowa Falls and Sioux City were secured bv bribery, but judging by the collateral circum- stances attending the passage of other bills at the same time, the probabilities are strong that they were. l>y the act of 1856 these two companies received as a gift about i .200,000 acres of public land in Iowa. 10 Despite "Allison, who, as a prominent member of the House, had been implicated in Illair's briberies nearly forty years before, was now nne of the leaders in the United States Senate. This was the man at whose death the newspapers eulogized as a "great constructive statesman." "'The aet of May r;, iS;o, gave a total of 1.233,4X1.70 aeres this lavish present, the incorporators made little or no attempt to build the entire railroad ; they occupied them- selves almost solely with stockjobbing, and with the business of profitably disposing of the land to settlers. Congress was compelled under pressure of public opin- i"ii to forfeit much of their land grant. CORRUPTING OF CONGRESS. Blair >aw what glorious opportunities had been lost by the act of forfeiture. But the mischief could be undone. If one set of capitalists were obtuse enough not to know how a restoration could be brought about. he knew. So he came forward, took up the companies as his own. and applied to Congress and to the Legisla- ture of Iowa for a re-umption of the rights and grants of which the\- had been shorn. He succeeded; both Congress and the Iowa Legis- lature passed acts in 1868 restoring the rights and land grant. How came it that he encountered no obstacle- in his plan? \\ by were these legislative bodies so tract- abler Of course, they could plead that they simply acted in deference to memorials from the citizens of Iowa ; but memorials were transparent affairs, easily manufactured. And the " \\ ilson Committee " { tin- Credit Mobilier Investigation) of 1872 could make it- whitewashing report that " no evidence could be found " of money having been Used for "improper purposes." to tht- Dubuque and Sioux City Railroad Company and the I own Falls and Sioux City Railroad Company. By the same act the Iowa Central Air Line and the Cedar Rapids and Mi- -ouri River Railroad Company received a total of 783,096.33 acre-, supplement!. d by 347.317.64 acres by act of June 2. 1864. The acts of May 15, 1850, and June j, 1804, al>o gave extensive 'and .a rants to the Chicago. Rock Island and Pacific Railroad Company. Till-: IJLA1K AM) GAKKETT FORT L N MS 115 either in Congress or in the Iowa Legislature. But the testimony before this very committee flatly contra- dicted its conclusions. It was revealed that a whole string of conspicuous members of Congress had suddenly become large stockholders in the Dubuque and Sioux City Railroad. 1011 Upon getting the restoration of the land grant, Blair organized a construction company, called the Sioux City Railroad Contracting Company, and by the usual cumulative system of frauds in construc- tion work, made immense " profits,'' reaching many mil- lions of dollars. Some of the railroads that Blair plun- dered are now parts of the Illinois Central system, of which Harriman became dictator. It must not be thought, however, that outright bribery was always resorted to in order to secure subsidies, 'spe- cial rights and immunities. In the first stages of rail- road history direct bribery was the usual means; but as time wore on. the passing of monty in direct forms became less frequent, and a less crude, finer and more insidious system of bribery was generally substituted. The Western magnates began to follow the advice of that Eastern magnate who declared that it was easier to elect, than to buy. a legislature. The newer system as it was carried on in Iowa and uther states was succinctly described in 1805 by William Larrabee, erstwhile Governor of Towa. " Outright brib- er}-." he wrote, with a long and keen knowledge of the facts. lib - pribably the means lo;. and its treasury was emuiy. Carrel I and [ fopkin>, who hail long been asso- < : lei! with it and who had prohr.bly shared in the loot I2O rett was the son of a rich shipping merchant ; Hopkins had made money in the grocery business. Garrett and Hopkins not only continued the long pre- vailing frauds, but put through many other fraudulent and corrupt acts. Here, for example, is one of the -mailer frauds: The millions of stock subscriptions do- nated by the State of Maryland for the building of the Baltimore and Ohio Railroad had been to a large ex- tent floated in London among British capitalists. The interest had to be paid by Maryland to these financiers in gold. Did the company, on its part, reimburse the State in coin? By no means. It claimed, by force of certain judicial decisions, that it was not required to pay interest to the State otherwise than in currency. Un- der the prevailing money conditions, and estimating the difference in rates of exchange, this form of payment meant a constant loss to the State of Maryland a loss reaching more than a total' of $400,000, of which amount the Baltimore and Ohio cheated the State. Far greater were the amounts of which the State of Maryland was cheated in the fraudulent manipulation of what was called the \Yashmgton Branch of the Bal- timore and Ohio Railroad. In return for franchises and aid. the company agreed to pay the State one-fifth of the pa->enger receipts. After the branch was in suc- cessful operation, its treasury was constantly represented as so -icklv that there was no money in hand with pay the State. Time after time inquiries were honest legislators as to where the great profits , Xo satisfactory answer was ever given: the ~ absolutely rhealed : and, finallv, a corrupt act : prnrticallv abandoning all of iK. -'.' 121 and C )hio Railroad Company caused a scries of measures to be passed exceeding in corruption, in some respects, those put through by Commodore Yanderbilt in New York. Repeatedly the legislatures of Maryland, Vir- ginia, West Virginia, Pennsylvania and other States, and the common councils of many cities, were bought up. and the courts were thoroughly subverted. Franchises of inestimable value were given away ; the public treas- ury was cheated out of the sums advanced, and was drawn upon to pay the expense of improvements; large stock watering issues were authorized, and the company was virtually relieved from taxation. By 1876 fully $88,000,000 of its property went untaxed. The militant object of Garrett and Hopkins was the destruction of the Chesapeake and Ohio Canal as a com- petitor. As Commodore Yanderbilt in Xcw York found the Erie Canal to be a competitor of his lines, so Gar- rett and Hopkins decided that they could not get a monopoly of transportation in Maryland until the Ches- apeake and Ohio Canal had been extinguished as a com- petitor. The obstacles in their way were great, for the State of Maryland had expended many millions of pub- lic money in the construction of the canal, and owned it. and the public was not disposed to see its usefulness impaired. This was especially true of the merchant class, which demanded competition and insisted that monopoly would be ruinous. DKSTROVI'XC; CANAL COMPETITION. Beginning in 1860, Garrett and Hopkins corrupted the Maryland Legislature, until by one act piled upon another, they were gradually able to wrest away its < '\\ner-hip from the Stair. P.ti! they did not merely de- pcnd upon tlie bribing of legislators after they were in office. With money supplied by Garrett and Hopkins. the political bosses of .Maryland engaged in packing of primaries, indiscriminate bribery of voters and stuffing of ballot boxes, thus insuring the election of subservient official-. Once the canal was practically in their hands, (.jarrett and Hopkins made it useless as a competitor. Having a complete monopoly they now exacted extor- tionate charges for transportation, and they likewise increased their profits bv cutting the pay of their em- ployes. In desperation, the railroad workers declared a strike in 1877. False reports of the violence of the strikers were immediately dispatched broadcast. Using these charges as a pretext, the military was called out. At Martinsburg, \V. \"a.. the State militia refused to lire upon the strikers, but a company of militia, recruited from a class hostile to the strikers, opened fire, killing manv of the strikers and wounding others. Roth (jarrett and Hopkins extorted out large sum> from their control and manipulations of the Baltimore and Ohio Railroad. Hopkins' fortune, at his death, amounted to nominally Si 0.000,000. At the time of hi- demise, in 1^73. he was " the wealthiest citizen of Balti- more.'' The most clo-etisted of men. he relaxed in at least one respect during the last year of his life. Fol- lowing the example of so many other multimillionaires of the period, he made certain of the perpetuation of hi- memory a< a "great philanthropist." To this end, in March. 1^73, he gave properly valued at 84.500.000 with which to found a ho-phal in Baltimore : he presented ith a public park, and he donated $3,500,000 Till': ULAiK AND GAKKETT FORTUNES 123 as an initial benefaction for the founding of the Johns Hopkins University. Here it is pertinent to inquire what was the form of property given in these bounties. Very largely, it consisted of Baltimore and Ohio Rail- road stock ; it was property representing the corruption of public life, the abasement of the workers and the gen- eral spoliation of the entire community. And what was Garrett' s share of the proceeds of the joint control? At his death, in 1884, it was said to be $15,000.000, but it was undoubtedly much more. This wealth descended to his son Robert, who went through a series of personal excesses, to wind up in melancholia and softening of the brain. Obviously enough, he was no match for those abler capitalists, the Yanderbilts, Goulds and Scott ; 1:; they pounced upon him and ruth- lessly despoiled him as his father had despoiled others ; his autocratic power and sway gradually vanished. When he died, in 1896, his wealth had shrunk to about $5,000,- ooo. and the Baltimore and Ohio system had passed under the control of the Pennsylvania railroad group of magnates. Ki A current siory, frequently published, was to this effect: That Robert Garrett had secretly consummated negotiations for the purchase of the Philadelphia, Wilmington and Baltimore Railroad, and the night before the final arrangements were to be made invited a friend to celebrate the occasion. When bibulous from champagne, (iarrctt revealed the secret. The friend excused himself, went immediately to Scott, of the Pennsylvania Railroad, and informed that magnate. Scott at once filled a satchel full of bonds, and hurried away to make an offer to the capitalists controlling the Philadelphia. Wilmington and Balti- more Railroad, outbid Garrett, and had secured the ownership of that railroad for the Pennsylvania system almost before Gar- rett had awakened from his drunken stupor. CHAPTER VI THE PACIFIC QUARTET During the range of years when the Yanderbilts, Gould, Sage, Blair and various other railroad magnates were hurling themselves upward into the realms of mas- terful wealth, four other noted capitalists whose careers were interjoined, were doing likewise in the Far \Yest. This group was o imposed of Collis P. Huntington, Leland Stanford, Charles Crocker and Mark Hopkins. It was an unusual brotherhood in that, for a long time, they hung together with a tenacious fidelity not often found among railroad capitalists. In fact, it was so rare a phenomenon that the mention of it deserves a place of supreme precedence. Such magnates as Commodore Yanderbilt and William H. Yanderbilt, Gould and Sage, preferred to go it alone, not merely satisfied with the lion's share, but determined to bag it all. if they could; they were disirustful and intolerant of partners except as expediency demanded, and then they acted with them only to fleece them eventually. The Pacific quartet were also starkly individualistic, each for himself, but they moderated their propensities enough to fuse their interests in a common harmony of aim. Even more: they >agaciously weighed the >pecial fitness of each, as- signed tlie duties according to this mem. and divided the >poil< with fairness. 124 COLLIS P. HUNTINGTON. TI1K PACIFIC ion of overseership, all joined to- gether as a unit in the promotion and consummation of their plans. Circumstances did not compel these four men to be :>f quite the same revolutionary type of capitalists as the Yanderbilts and ( loulds. They did not have to do much pummeling of smaller capitalists, nor expend much effort in beating down the sacred doctrine of " free and unre- stricted competition." Their territory was largely one v. Irich had not been taken up by companies of small cap- italists, building in piecemeal fashion. They had the opportunity of bringing forth great railroad systems out of what had been a void. At a bound they sprang from an obscure position to that of great capitalists; the transformation from petty dealers in merchandise or law to multimillionaires was a quick, sudden one. Within a lew years thev took their place among the industrial dic- tators of flic United States; owners of great railroad and steamship lines and of many other forms of prop- erty, and of an immense domain of land not less than 30,000,000 acres in all. All of these men have passed away, but the wealth that they became possessed of re- mains ; and even if their personal careers are of no lin- gering interest, their fortunes are still active, and the history of their properties is of very pertinent present importance. TIIF.Y BKGIX \VITJI SCAXT CAPITAL. All four had migrated from the Hast to California after the discovery of gold on the Pacific Coast. There Iluntington carried on a hardware and miners' supply store at Sacramento, and Hopkins became his partner; Crocker was likewise a small merchant, and Stanford was a lawyer. The four were not able to scrape together a pool of more than an insignificant sum with which to execute what was then considered one ol the greatest and most difficult railroad projects of modern times. The phrase monger is addicted to rhapsodizing upon the marvelous self-confidence which could initiate a huge railroad line with only a trivial sum as a starter. This may be a romantic \vav of describing their prowess and Till-". I'ACli'IC OUAKTF.T 1 2/ ingenuity. But neither was the project itself of their conception, nor did they have to supply the funds. Years before they took hold of the work as a definite undertaking, the building of Pacific lines had been agi- tated and urged, and the Government had surveyed feasi- ble routes. 1 Not one of the quartet knew anything of railroad construction, nor had the least fundamental knowledge of how to equip and operate a railroad. In what direction, then, lay their ability? Purely and wholly in the line of promoting. The capitalist system was of such a fantastically inverted nature that to grasp the ownership of anything did not imply or require the ability of supervision. Railroads, factories, mines and public utility systems were generally owned by men otten bv absentees who knew nothing of any aspect ol them except the one all-important phase the budget of profit or loss. The ability of the promoter was the most necessary consideration, although not the foremost in insuring the title of ownership. Very frequently, in the case of fac- tories and mines, promoters had to get funds from bank- ing houses, which usually, by skillful law work, suc- ceeded in getting those promoters into a legal snare, forc- ing them out. and expropriating their property. Rail- road promoters, however, did not have to depend so much upon private bankers. They could draw upon Government, State and cities for advances of money. If a man, or a >et of men. could succeed in bribing Con- gress and the legislatures to donate land grants and ad- \ ance the funds, it was a very simple matter to hire highly competent civil engineers to survey and build the routes, and employ good executives to run them they were built. The first and prime necessity was the purchase of legis- lation with its corollaries franchises, gifts and free access to the public treasuries. This done, the remain- der of the program was easy. In this regard it was that Huntington and his partners showed their finesse not an unusual finesse, by any means ; its caliber was neither more nor less than that of many another capi- talist, who also had been adroit in bribing legislation through. L'pon organizing the Central Pacific Railroad Company in i8(')i, the Huntington group could not privately raise more than about $1(^5.000. of which amount they, them- selves, put in about $50.000. This sum. ridiculously inadequate to build a railroad estimated to cost $25.000.- ooo, was, however, enough and more than enough, for certain well-understood primary operations. With it expenses could be defrayed at the centers of legislation: petitions and memorials concocted; advo- cates paid, and newspapers subsidized. If the trick were well turned, a whole succession of franchises, special laws, land grants and money subsidies would follow. Thus we see that the original capital needed in many cap- italist enterprises was not for the actual prosecution of the work, but for the purpose of bribery. In fact, money, as an absolute requirement, could be dispensed with. For their vote-, legislators (being wily, tactful and practical men ) much preferred cash, but when cash could not be fingered, they conveniently took whatever " inducements " \vere offered. We have come across in- -tance after instance in which embryo capitalist- or- ganizcd corporations, rolled off stocks and bonds (which Till. P. \ClKiC y repeating the process they had the entire road constructed, with scarcely the expenditure of 3 " History of the Pacific States." xix:62. Till: PACIFIC (JUAKTET 1J3 a single dollar of their own. The next step was to load it down with a capitalization of $139,000,000 4 which was the beginning of still more stock inflation. A THEFT OF $5O,OOO,OOO. What was the total of their frauds? The report of the Pacific Railroad Commission gives no adequate idea of the immensely valuable rights and possessions of all kinds that they secured by bribery and fraud. Rut it does give a comprehensive account of their money and stock plundering^. " In the accounts of the Central Pa- cific Railroad Company," the report of the Pacific Rail- road Commission of 1887 states, "the division of earn- ings for improper purposes amounted to many millions, through contracts made by Messrs. Stanford, Hunting- ton, Hopkins and Crocker with themselves." According to this report, the cost of building 1.171 miles of road was $27,217.000, but they fraudulently charged three times that sum. Here was a theft of more than fiftv millions in one grand haul. Tn addition to stolen cash, they issued to themselves $33,722,000 in bonds and $49.- 005.000 of stock. T'ut these sums were only part of the total thefts. The Pacific Railroad Commission's report goes on to say : 'Then as directors of the Central Pacific, they took leases of their own lines for the Central Pacific for $3.400,000 per annum ; which was at the rate of nearly thirteen per cent. Fifteen months ago (in i88(>) three of these directors (Stanford, Huntington and Crocker) contracted with them-elve< to build an extension of one hundred and three miles. In payment tliev issued stock to the amount of $8.000,000, and bomP to the- amount 134 HISTORY 01' THE GREAT AMERICAN FORTUNES of $4,500,000, the market value of the stock and bonds being at the time $8,340,000. The actual cost of con- struction was $3,505,000, so that they personally profited by their own votes by that single transaction to the ex- tent of $4,834,000," etc., etc. GROSS CORRUPTION OF CONGRESS. The process of corruption and theft was continued in the building of the Southern Pacific Railroad. In 1871 Congress chartered the Texas and Pacific Rail- road to run from .Marshall, Texas, to San Diego, Cal., and presented the company with approximately 18,000,- ooo acres of public lands on condition that the road was to be completed in ten years; otherwise the land grant was to be declared forfeited. At the same time, Congress chartered the Southern Pacific Railroad Company to build a line from El Paso. Texas, to San Francisco, and gave it a gift of about 5.000,000 acres of public land-. The Texas and Pacific project was owned by a group of capitalists headed by Scott, of the Pennsylvania Rail- road ; the 1 luntington men were at the head of the South- ern Pacific Railroad Company. These two groups of capitalists soon came into col- li-ion : each fiercely sought to oust the other, and gain an undisputed monopoly of transportation in the terri- tory in question. The fight was carried into Congress each side caused the introduction of bills aimed at crip- pling the other. The contest then narrowed to a ques- tion of \\hich group could corrupt Congress the more effectually. "Scot!." wrote 1 Tuntington on January 2(), 1876. "is making a terrible effort to pass his bill, and he has many advantage- with hi- railroad running out from Washing- TI1K I'.U'llTC (H'AUTKT 135 tun in almost every direction, on which he gives l-Yee Passes to everyone \vho can help him ever so little. It has cost money to fix things, so 1 know his bill would not pass. 1 believe with $200,000 we can pass our bill." 5 On March 6, 1876, Huntington wrote that "the Rail- road Committee of the House was set up for Scott, and it has been a very difficult matter to switch a majority of the Committee from him, but 1 think it has been done." On November 11, 1876, Huntington wrote further to one of his associates, " I am glad to learn that you will send to this office $2,000,000 by the first of January." On May 3, 1878, he notified his partners: ' The T. and P. folks are working hard on their bill and say they are sure to pass it, but 1 do not believe it. They offered one member of Congress $ 1,000 cash down, $5,000 when the bill was passed and Si 0,000 of the bonds when they got them if he would vote for the bill." 6 Huntington came out victorious. 'There is no room for doubt," reported the Pacific Railroads Commission 5 We have seen, in the narration of the Gould fortune, how Scott hail been placed in charge of the Government supervision of railroad transportation during the Civil War, and how a Con- gressional committee had exposed the immense extortions in conveying soldiers, equipment and supplies that some of the Northern railroads ,-,uccess fully carried on immediately folli wing Ins appointment. '' Flu re were 1 many 01 these letters; we have already given a glimpse of one of them in Chapter iii. Vol. iii. They came to liyht (as noted in that chapter) in a lawsuit between two fac- tions. They were published in full in "Driven from Sea to Sea." by C." C. Post. "It is impo>Ml)ie. " n ported the 1'aciiie Railroad Commission in 1887. "to read the evidence of C. P. Huntington and Leland Stanford and the Collon letters without reaching ihe coiiclu sion that very large sums of money have been improperly used in connection with 1< ui 'ation." Vol. i: i .: i . llumingion was accustomed to boa>iiii'4' of his method of bribery, "Whenever possible 1 always try to pav in check-', for ihe men who take them are ever afterward mv slaves." of 1887, "that a large portion of $4,818,535 was used for the purpose of influencing legislation, and prcventin;.; the passage o, measures deemed hostile to the interests of the company, and for the purpose of influencing elec- iii >ns. v T The next thing- the Huntington group did was to force the Eastern capitalists out of the Texas and Pacific Rail- read, absorb that line into their own system, and illegally grab the eighteen million-acre land grant of the Texas and Pacific. Even under the law, as it stood, the Texas and Pacific was not entitled to the land grant. The House Committee on Judiciary on August 3, 1882, after an investigation, declared that the Texas and Pacific Rail- road Company had never completed any part of the route for which the land grant in Xew Mexico. Arizona and California was given ; that it " had never earned the grant " ; that it did not purpose to build the road for which it was chartered and endowed, and that it was transferring to the Southern Pacific Railroad Company "all of the rights and titles to the land in question." 8 The Committee on Judiciary prepared a resolution de- claring ihc forfeiture of the land grant, and urged its passage by Congress as a joint resolution. It did not pass. Presenting the general results as nearly as official investigations could ascertain them, this is what ilnnt- ington and hi< associates did: They had received hun- dreds of millions of dollars in the form ot money, bond- and land- from ( lovernment. Slates, counties and mu- ;IIK I'Aciric gi'AKTi-rr 137 nicipalitiex As controllers of the Contract and Finance Company and oilier construction companies, they had turned over to themselves $142,000,000 in all for ostensi- ble construction work. They had expended at least five millions for corrupt political purposes. They had stu- pendously watered the stock of their railroads, and with the cumulative proceeds of their thefts had secured control of nineteen distinct railway systems and of steam- ship lines, also. They had, by fraud, robbed the Gov- ernment of many millions of acres of land ; thev had defrauded the Government of the bulk of the funds that it had advanced ; they refused to pay more than the merest nominal taxation, and they extorted onerous rates for transportation. This is the general summarv of their acts as set forth in the report of the Pacific Railroads Commission. " From the evils of subsidy-giving," says Bancroft, the country suffered for many years. The population wa.- shifting, the available resources of the State [California] feu- : but notwithstanding, there was hardly a county in it that by 1870 had not bunU'iied itself with a debt of from Smo.ooo to ^oo.coo at a high rate of interest, to run in some instance-; Mxiy years. Companies incorporated under a general law be- sieged the Legislature annually to pass acts authorizing the people to vote on incurring this indebtedness; newspapers pa- rad'.-d tile benefits to be rcceuvd from every railroad scheme. often without knowing whether it had any merit. Thus, urged by the Legislature and the press, the people passed under the rod with the greatest equanimity/' inn 138 railroads were " apt to fix the rates on a given article ' all it would bear.' " 10 This description ap- plied not only to California but to every State and Ter- ritory reached directly or indirectly by railroads. The very people whose representatives had given public prop- erty so lavishly to a few, were robbed in every manner that ingenuity could formulate. Not only was the pub- lic plundered ; Huntingdon and his associates ground out their own lesser stockholders by the same fraudulent methods that Gould and Sage used, and also, like Gould and Sage, they cheated out a horde of confiding in- vestors. The disillusioning of the people of the Pacific States was reflected in the messages of the various Governors. Only a few years previously, the Governors of Califor- nia and other States had urged the Legislatures to be extremely generous in donating large bounties to rail- road projectors and other capitalists. They wrote rap- turouslv of the great public benefits certain to come from the construction of railroads, and praised the railroad promoters as men of the loftiest public spirit. Soon a decided change came over the spirit of these message-. Hitter complaints of extortion and robbery succeeded glowing encomiums. In his message to the California Legislature, in 1860,, Governor 11. Tl. Haight had thi- 1' > say : Our land system seems to be mainly formed to ta ciiitate ihc acquisition of lar^e bodies of land by capitalist.- or [ 'rations, either a.- donations, or at nominal prices. . . . rs who pnrcha.-ed from the State lands sold as swamp or overflowed, find their farms claimed under the railroad grants, and themselves involved in expensive contests before Registers of [.and Office-;. 1 ' Tin: PACIFIC QUARTET I3e messages had any vital result. In some instances they were sincere, but, as a rule, they were intended to be nothing more than wordy sops to appease middle-class public opinion. 1 " Some of the very '-Inaugural Address of Go\ . Xewton Booth, etc., 10-11. 13 The merchants, manufacturers and importers who had ap- plauded and banqueted Huutington and his associates only a few years previously, were now caustically denouncing them, not for their direct thefts, but for their extortions. For ex- ample, see "A Petition of the Citizen-; of San Francisco Rela- tive to the Arbitrary Exactions And lniu>tice v ; of Railroad Companies." Nearly all of the signers were business firms. They complained, in this peii'i'>n, of the "arbitrary exactions and injustice of railroad companies," and demanded State regu- lations. Appendix to California Senate and Assembly Journal. Twentieth Session, 1874, Vol. iv. Doc. No. 8. I4O HISTORY OF THE GREAT AMERICAN FORTUNES Governors who wrote them with ^uch a display of ear- nestness were put in power and controlled by the very corporations of which they complained. The legisla- tures were wholly under the domination of the great private corporations, and the judiciary almost wholly so. Year after year, the different Governors denounced cor- porate practices, and demanded corrective legislation, which never came. Two and three decades after Gov- ernor Xewton Booth's denunciation, Governors were still writing similar futile messages. Acclaimed at first as public benefactors, Huntington and his associates were subjected to the fiercest de- nunciation when the people realized the enormous frauds that they had committed. For the frauds, of which an epitome has been here given, were only a portion of the total. It is hardly necessary to plunge into the tortu- ous mass and maze of detail : how they resorted to nim- ble subterfuges to escape their obligations, and de- frauded the Government ; how they corrupted and ruled States and Territories, and seized hold of one possession after another; and how, through their control of political machinery, they sent Representatives and Senators to Washington as though they were so many errand boy-. The Pacific quartet were among the first of the mag- nates to come out into the open and exercise political power directly, instead of intrusting it to retainers. To have one of their own members in the United State^ Senate, there to keep alert for their interests, they caused the California Legislature, in 1887, to elect Stanford to that body. Hopkins died in 1876, Crocker in 1888. Very charac- t eristic ;>kin.-' million- were used. Ili- \vidow inherited hi- wealth and remarried, and part of T11K PACIFIC 01. \KTK1 1 _; i her inheritance went toward the purchase of an old-e- tablished Xew York newspaper. Thus was witnessed, as in the case of Gould, a newspaper being financed by the proceeds of theft, and the inheritors of those pro- ceeds giving' directions as to what should constitute the moral and political pabulum fed out to the public. A splendid country mansion, costing $2,000,000, at Great Barrington, Mass., is a standing explanation of how some more of Hopkins' millions were applied. Crocker left a fortune nominally estimated at $40,000,000. Stanford's wealth was so great that he, like the As- tors, the Yanderbilts, Goulds and other magnates, was forced to the necessity of investing the surplus. Part of the many millions stolen from the Government and expropriated from the people, w r as put into San Fran- cisco street railways, 14 of which system he owned a one- fourth share, and from which he derived ten per cent, a year. Other millions were invested in other forms of property. He became a great landed proprietor. He owned the immense Vina vineyard, comprising 100,000 acres of land ; the Palo Alto ranch, with its extensive breeding establishment and its great vineyards, and he owned much other real estate in San Francisco and else- where. From his stocks and lands he received, it was estimated, an income of Si. 000,000 a year. Up to 1885 he had been merely a financier, so-called, praised by some as a great railroad builder, by others as a colossal thief. Xow lie became a full-fledged philan- thropist by giving property worth many millions for the establishment of the Leland Stanford, Jr., University. 14 Recent developments in San Francisco showing how brib- ery was used in getting street railway franchises are but an indi- cation of the corrupt methods long prevailing. 142 HISTORY OF THE GREAT. AMERICAN FORTV-NI>- Thus \vas another " scat of learning ;< established jo be subjected to the censorship of money. STANFORD IN THE UNITED STATES SENATE. As a United States Senator. Stanford's salary was $5,000 a year; he spent 875,000 every session; it was a pastime of this man to throw twenty-dollar gold pieces to the newsboys. His chief business in Washington was to prevent the Government from taking' genuine action compelling him and his band to disgorge ; to stifle all hos- tile proceedings, and to get through laws giving more franchises, land, waterway rights and special privileges, and to secure license for extortions. On the who!'.-. he succeeded. This ponderous magnate, weighing two hundred and thirty-four pounds, was the political wire- puller of the quartet, while Hunting-ton was the crafty financier, full of sharp tricks and devious contrivances. \Yhen Stanford died, in 1893. his estate was appraised a> nominally worth about $18,000.000. but its size wa- considerably greater. lie had given large sums for the Leland Stanford, Jr.. University, and in his will he pro- vided more millions. The remainder of his estate went to his widow, who likewise gave donations to this uni- versity: in all. Air. and Mrs. Stanford pre>ented fully $30.000,000 for the establishment, expansion and per- petuation of the institution named after their son. The fortune plucked by Huntington was greater than that of any of the other- of the quartet. At his death, in igoo. it was estimated at from $50.000.000 to $80,- 000,000. Tt embraced interests in a va-t number of rail- road, -tram-hip and other corporations inU-re-t- which he had bought with his share of the Pacific railroad-' LELAND STANFORD. 143 loot, or engineered into his control by fraud. A favorite boast of bis at one time was that lie could travel from the Atlantic to the Pacific in his own cars and over his own rails, and that he could also, if he chose, sail in his own steamships from Brazil to New York, from thence to Colon, from Panama to San Francisco, and from there to Yokohama and Hongkong. His power was gigantic; he controlled the economic life of millions of workers, and dictated the government of a half dozen States. His plunder was intact. In 1894 he was quoted as saying in answer to a report : "1 never made any exhibition of $44,000,0(30 of bonds, although 1 could have displayed twice as much in amount." THEY IlKCOMi: ARISTOCRATS. No intelligent person was unaware of the long and great series of frauds and thefts that Huntington, Stan- ford, Crocker and Hopkins had plowed through to squeeze their wealth. Yet, while severely denounced, they did not have to meet the same taunts and revilings constantly cast at Jay Could. Essentially they were of the same stripe as Could, but Could was held up to popu- lar maledictions as a railroad wrecker, while criticism of the Huntington group was always tempered with the remark. " Well, if they stole colossal sums, they at least constructed great railways and were big factors in the development of the country." And they had no diffi- culty in getting instant entree into what was represented as the " best society." Xo question was raised as to their eligibility. I>y power of money they at once be- came a part of the financial aristocracy. Also, by this same power of money, 1 luntington's adopted daughter 144 HISTORY OK THE CREAT AMERICAN FORTUNES entered with ease the fine circle: of European titled aris- tocracy ; she married Prince Ilaztfeld, in 1889, and re- ceived a paternal present of several million dollars. Huntington lived like a grandee at least residen- tially. Fie had a mansion in San Francisco ; a superb place in the Adirondacks, for which he paid $250,000; a palatial country home at Throgg's Xeck, X. Y. ; and he built, at an expense of millions, an impressive pile at 1-ifth avenue and Fifty-seventh street, Xew York City. 15 that aristocratic avenue whither so many magnates, after a career of fraud and theft, came to ensconce themselves in befitting grandeur. Eight years were spent in building, at a cost of $250,000, a mausoleum in Wood- lawn Cemetery a classic, capacious tomb of marble. THEIR LINES TAKEN OVER BY HARRIMAN. And there his remains now lie. After his death the inventory of his estate showed that his wealth was ap- parently about $60,000,000 ; unquestionably it totalled a much larger sum. His widow, who still lives, inherited the greater part of it. But what became of the control of the railroad and steamship lines which he dominated? His death occurred at about the very time the Standard Oil oligarch}', acting through Harriman and its banking houses, was prepared, in its gradual reaching out for railroad ownership, to buy in the ownership of the Pa- cific railroad and steamship lines. The great surplus of the Standard Oil treasury easily furnished the many millions needed to buy over the shares held by Mrs. Huntington ; and the control of the Southern Pacific and other extensive line?, both railroad and steamship, '"Hut after ii wns cnnn>!eft d lie could never be persuaded to live in it. His reason was n belief in the superstition that men build houses only to die in them. TT1F. I'.U'I !!(' nUARTKT T.| ' built and sustained by fraud and theft, was taken over l:y the all-powerful Standard Oil magnates, thus markir, v, one more aggressive step in the assumption of a central- ized ownership of the productive and distributing re- sources of the United States. CHAPTER VII J. PIERPONT MORGAN'S GENESIS Did ever a man of-wealth lave more in panegyrics than that conquering money hero of these present times. J. Pierpont Morgan? Long since, his fame was trumpeted to the four quarters of the earth. His copious praises have been chanted with an extravagance that in the case of anyone else would have been rejected as turgid. Most mighty patriot and unexcelled public-spirited citi- zen, great financier and noble philanthropist, marvelou.- " captain of industry " and conservator of the social structure, friend of kings, and king among men - these are but a .-elected few of the apotheoses too often seri- ously accepted by the people at large. One writer in particular, raptly reaching up for a large expression of homage, has touched almost the climax of adoration in emblazoning him. " Morgan the Magnificent.'' 1 Many a hired or acquiescent scribe, plying well his trade, has reeled out his effusions; and the total of these lias produced a certain -ettled. aggregate public opinion which look- up to Morgan with unabated awe and ad- miration. In the firmament of wealth no man shines out more dazzlingby than he. 1 f ever there thrived a money potentate whose for- ,46 J. I'IKRPOXT MOKOAXS ( IK X KSJS 147 tune had been preeminently eulogized as having been ac([uired by pnrilv of method, that man is J. I'ierpont Morgan. Xot once has he been subjected to strictures of " tainted wealth," nor at any time has he had to fight an inimical public opinion such as Jay ( iould had to in his day, and as Rockefeller has encountered throughout his career. For the last thirty years Morgan has been overwhelmed with laudations of every character. Spo- radically, perhaps, some unshackled spirit in Congress or on the public platform might rise to break abruptly in upon this outpouring of ilatterv bv venturing criti- cisms or revelations. Hut these irruptions passed idly by, hardly noticed in the general, continuous deluge of encomiums. The praises, abundant enough, bestowed upon other magnates, have paled beside those heaped upon Morgan. Without question, he has been held aloft as the most ex- traordinary financier of all. His feats in this regard have been recounted as though they bordered upon tin- miraculous. As a railroad and industrial magnate he has been interminably glorified. But fully as much so has he been held up to the world's admiration as a philan- thropist and a man of versatile parts and benevolence-- : an cncourager and patron of Art, a lover of Literature, a Cntsus with a mind capable of at once grasping the most intricate detail- of finance and reveling" in the beau- ties and understanding of the Fine Arts. fn all of the mass of reiterated, embellished ac- counts turned out about Morgan's career, there is no particle of truth save one undisputed fact. I ndeniably he is one of the towering, aggressive money monarch-- of the I "nited States. What does he not own or con- trol? Scan the conglomeration of properties owned exclusivelv bv him. or jointlv with others. What a 148 bewildering list! The mind is taxed at inventorying them, and forbears enumeration. Banking institutions and railroads, industrial plants and mines, land, public utility systems and shares, steamships, publishing houses and newspapers all his, or partially so. Morgan is supereminently one of the '' Christian men to whom God in His infinite wisdom has confided the property interests of the country." Let us scrutinize the career of this man whom God is alleged to have chosen as a trustee for the steward- ship of the nation's property, and for the guidance of its Government. Foulest of all foul blasphemies would it be to in- terrogate the divine choice of lieutenants or derogate from them. Yet inasmuch as those who make such emphatic claims of heavenly appointment have not as yet been able to produce their credentials (although earnestly beseeched to do so), we fallible mortals shall have to fall back upon mere human standards of judg- ment. What (by way of analogy), if the people of the United States should forthwith conclude to confis- cate all private property, and declare collective owner- ship upon the ground that the good Lord God had au- thorized it so what would the present legal owner.- say? Would they not resist, and demand written docu- ments, attesting the fact of divine sanction, signed and sealed by celestial notaries? And even if, let us fancy, such documents were forthcoming, would not our mag- nates have the Supreme Court of the United State- denounce them a< stupid forgeries, issue a mandate for the arrest of their contumacious Author, and again -i/'rnlv declare, for the twentieth thousand time, that iv power was superior to that of the Supreme Court of the V-;t,-d States? J. riKKl'ONT MORGAN S GKNJiSIS l^J All other criteria failing, we shall have to consider Morgan by the light of terrestrial evidence perhaps a poor method, but the only one within our horizon. NOT OTITK A " SELl'-MADK MAX." Morgan is not one of those magnates coming wholly under the classification of being a " self-made man." This phrase, used with so unctuous an effect in contemporaneous descriptions of rich men's careers, has never been applied to Morgan. For once, there is a break-off in the almost unvarying run of similitudes. Of the early careers of nearly all other multimillion- aires the same story has been mechanically written by glorifying writers ; how these men started out as poor boys, opened a little store somewhere, saved money and gradually worked up to wealth. In the nineteenth century the term " ^elf-made man*' was invested with an inordinate importance as signifying great personal energy and ability ; so much credit was supposed to at- tach to it that it was always mentioned with praise and received with pride. The object of its application was pointed out as a man who, possessing no original ad- vantages, overcame all obstacles by sheer force of skill and determination, and achieved wealth. Thi>. however, could not be said of J. Pierpont Mor- gan. His father, Junius S. Morgan, was q millionaire. Ascending by successive .-tcps from the positions of farmer bov. dry goods clerk, bank clerk and commer- i-ial man, Junius S. Morgan bec;une a partner of George IVabodv in the bankinir business. When the Civil War 15O HISTORY OF THE GREAT AMERICAN FORTUNES ment tlieir wealth suddenly began to pile up ; where hitherto they had amassed riches by stages not remark- ably rapid, they now added many millions within a very few years. ins FATHER'S CAREER. How did they contrive to do it? Biographical nar- ratives aver that it was done by legitimate banking meth- ods, although what those methods were is not explained. But if we are to believe the comments and criticisms appearing in the American newspapers of the time, their methods were not only very far from being legitimate, but were within the pale of the most active treason. The Constitution of the United States defines treason as consisting in citizens levying war upon the nation, or in giving aid and comfort to the enemy. According to writers of the day. the methods of George Peabody and Company were of such a character as to be not only treasonable, but double treason, in that, while in the very act of giving insidious aid to the enemy, George Peabody and Company were the financial plenipoten- tiaries of the United States Government, and were being well paid to advance its interests. An article for example, published in the Springfield Republican- in October, 1866, asserted: "For all who know anything of the subject know very well that he [Peabody] and his partners in London gave us no faith and no help in our struggle for national existence. They participated to the full in the common English distrust of our cause and our success, and talked and : i d f r i!jc South r.'ithrr lli'in tor the nation." Evidently, it was the sight of the large benefactions which I'eabody was then giving that prompted the re- marks upon the origin of his fortune. MILLION'S FKO.H ALLEGED TUKASOX. The writer of this article went on to say ihat George Peabody and Company swelled the feeling of doubt abroad, and speculated upon it. " Xo individuals," he continued, " contributed so much to Hooding our money markets with the evidences of our debt in Kurope, and breaking down their prices and weakening financial con- fidence in our nationality than George I'eabody and Company, and none made more money by the operation. All the money, and more, we presume, that Mr. I'eabody is giving away so' lavishly among our institutions of learning was gained by the speculations of his house in our misfortunes." 3 A writer in the New York Evening Post, issue of October 26, 1866, also made the same state- ments, accusing Peabody and Junius S. Morgan of using their positions as United States financial representatives to undermine the very cause that they were paid to rep- resent, and profiting heavily from their teacher}-. These are a few of the newspaper comments then current. \Yhether they were all true, or partially true, or not true at all, we do not know: no confirmation of them can be found in official records. The statements 'This article \vas al>o published in the Xe\v York '"Times." is.-ue of October 31. 1866. " \Ye ha\e in ibis country," wrote Cloud in his ''Monopolies and the People," published in 1873, "a moneyed aristocracy, e>>m- posed mainly of men who speculated in t!ie;r country's in i-- for- tunes during the late Civil YYar. ami \vho under pretense of aiding the (iovenimem. made their i \veniy. fifty and one hundred PIT cent, and ama-sed larije for ,:;, - l,y takim: a d vantage of ihe ride of u-ar a-' it submerged a nation'- hopes" p. j2~. 152 HISTORY OF Till-: GREAT AMERICAN FORTUNES are given here for what they may be worth. 4 But ii should he remembered that not the one-thousandth part of what was going on in the world of capitalism ever found its way into official documents. Reasoning from conditions prevailing at the time, it is more than likely that the accusations were by no means ill-founded. YOL'NG MORGAN'S ENVIRONMENT. In the chapters on the Yanderbilt and the Gould for- tunes an abundance of facts from the Government rec- ords have been presented, depicting how every part of ihe capitalist class was engaged in the most gigantic frauds and swindles upon the Government during the Civil War. To add to this collocation would be super- fluous were it not necessary to bring out clearly in each case the prevailing methods, influences and conditions, and to show that particular acts were not those of in- dividuals so much as of a class. Peabody and the elder Morgan were but following the standards of their class, the capitalist order of society, and the lessons which 4 Regarding another of Peabody's transactions, however, cer- tain definite facts are embodied in official documents. From these documents it would conclusively appear that Peabody had been long carrying on methods somewhat similar to those thai he was accused of profiting by during the Civil War. In 1839 the Chesapeake and Ohio Canal Company found oc- casion to complain bitterly of Peabody's methods as its finan- cial representative in London. The stock of this company was secured by bonds issued by the State of Maryland as pledge for its debt. Peabody sold these bonds in Kurpe at ruinous dis- counts, and with large sums of money belonging" to the com- pany in his possession, refused to honor its bills. By this pmce>s he made large profits. His excuse was the critical con- dition of tlu- European money markets. The directors of the company formally approved his action, probably to let him out eracrfully. but were glad to accept his resignation. U. S. Sen- a'c Documents, First Session. Twenty-sixth Congress, 1839-40, Vol. viii. Doc. Xo. oio. This document contains the full cor- !"<.-'! 'H.'u'nce between the company arc! Peabody. j. 1'iiiki'uXT MORGANS ciiXKSis 153 young J. i'ierpont Morgan imbibed were those taught in exemplary fasliion by the whole of the class. To de- scribe his transactions with a precipitate abruptness of treatment, while omitting a perspective upon his times, would afford no understanding of the molding forces in operation, and would be prejudicial and without aim. In every department of business the most persistent and gigantic frauds had long been committed by capital- ists, and grew to enormous proportions during the Civil War. Xot only were those rich bribers and defrauders secure from punishment, but they had little difficulty in keeping all, or nearly all, of the wealth thus fraudulently acquired, and investing much of it in other channels. It is advisable to advert here again to the practices of that large body of importers who had already acquired con- sequential fortunes, and who, when Morgan was just starting out, occupied a superior position as respectable, conspicuous and patriotic " leading citizens." In- the one prolific field of defrauding the Government of customs dues, large private fortunes had already been amassed by the year 1860. In preceding volumes we have given instance after instance, particularly the enor- mous frauds of Phelps, Dodge and Company. But those instances were only a few of an immense total. A Congressional report in 1850 (Ex. Documents, Sec- ond Session, Thirt\-fir upon the inability of the revenue officers to detect such false description or undervaluation, and sometimes upon his own power by corruption, to induce them to pas? the poods, with a full knowledge of the fraud. Experience has proven that in neither ca-e is his expectation disappointed by the result. As to the ,'u-ce^ibility i ninny of those employed in the J. I'lEKl'O.Vl MORGANS GENESIS 155 custom house to corrupt intluenees, the evidence is, I regret to say, conclusive and startling. The facts developed in connection with the particular frauds before referred to show that money, in large sums, was received by officials as the undisguised reward of fraudulent acts or connivance. But, in addition to this, the statements herewith M'.bmitted seem to justify the belief that nearly the entire body of subordinate officers in and about the custom house are, in one way or another, in the habitual receipt of emoluments from importers or their agents. Jordan reported (page 6 of the report) that one lawyer declared that he had paid to a single cnstom-house record clerk the stun of $1800 in a period of fifteen months. " Entries from the hooks of an importing house, doing Imt a moderate husiness, are discovered, showing that about a thousand dollars had been paid by it to an ex- aminer within a period of a year. It is shown that a bond clerk, with a salary of $1000 per annum, enters upon a term of eight years with nothing, and leaves it with a fortune of thirty thousand dollars." Jordan re- ported that he thought the amount and extent of bribes were much larger than the custom-house orncials were willing to admit. \Yhat wa^ set forth in official reports as " the notoriou> Williams case." was characteristic of the methods by which fortunes had been thus acquired. In these official reports, the firm of J. D. and M. Williams, wine im- porters of Boston, was described as one of the " olde.-t established " in that cits' ; its members had grown verv rich, and occupied a preeminent station of superior ele- gance and prestige. They professed to be deeply shocked and wronged when, in 1865, Collector Goodrich of the i 'on of Boston specifically charged them with long-con- tinned defrauding of the (lovernment in the importation of sherry and champagne. The Government examiners and officials presented calculations showing that, by undervaluations, the firm had cheated the Government out of at least $150,000 in duties ; that the interest would make the amount nearly $200,000; and that the value of the wines, since 1846, liable to forfeiture, would reach about $2,000,000. (See Reports of Committees, Second Session, Thirty-ninth Congress, 1866-67, Report Xo. 150 Collector Goodrich demanded of the firm that it pay $500,000 restitution to the Government a sum equiva- lent to double the duties and interest. Confronted with the most positive evidences of its guilt, the firm dropped its arrogant and injured attitude. It offered the Gov- ernment $350,000 in lull satisfaction of all duties, fines and forfeitures. This offer was declined. Suddenly, a singular change came over the custom-house officials ; thev consented to revise their calculations and recom- mend the settlement of the Government's claim for the payment of $100.000, and that sum was accepted. The result was a loud public scandal ; impatient curi- osity was popularly expressed as to why, after declining an offer of $350,000. the Government had accepted $100.- ooo. The House Committee on I'ublic Expenditures in- vestigated. Thi- committee, on February 11, 186". li.'iiuled in t\vo reports. Both reports, agreed upon thi- fact : That during the firm's negotiations with the ( iov- i-rnment, Samuel A. \Yav, a prominent Boston banker, i Stained $31.200 from the Williams firm, whom he rep- resented in the case. What did he do with that sum? ['he three majority members of the committee reported that there were strong indications that he had bribed custom-house officials to agree to the settlement so fa- vorable to the William- firm. Rut as for the complicity J. PIKRl'OXT MORGAN S C.KXKSl.S 157 of the \\ 'i11ianu-e>. ill-:- majonh could not entertain the suspicion, it reported, that a firm of such " long-unblcni- ished reputation and wealth" (sic) could be a party to i raud and bribery. The minority report of two members ridiculed that of the majority. " According to Messrs. \Yilliams' o-.vn testimony," it reported, Way, their agent, represented to them that he must have money with which to brihe Government officials into a more favorable compromise. . . . And how did these honorable and persecuted wine importers receive the proposition? Were they shocked at it? . . . Nothing of the kind. . . . They did precisely what might be expected of men, who, for a long series of years, had systematically defrauded the Government by putting false invoices through the custom house by as long a continued a series of perjuries. They handed to their agent, Mr. Way, at his request during the negotiation, the nice little t official who stands be- tween them and the Treasury." The practice on the part of capitali>ts in causing the removal of honest officials who sought to thwart their frauds had been long-prevail- ing, as we have seen in the cases ot John Jacob Astor and others. \o criminal action wa- brought ajiainst the William- 158 HISTORY OF TIIK GKKAT AMERICAN" FORTUNES linn ; the scandal was >oon forgotten ; and they, like many another importing house profiting by such methods, re- tained their rank and wealth. Of the $100,000,000 or thereabouts invested in railroads by Massachusetts capi- talists at that time, a considerable part of the investment was doubtless made by men who had obtained their wealth by defrauding the Government in customs dues. l.i recurring charges are any indication of corruption, the officials of the I'niled States courts were constantly corruptly influenced or bribed to bring no criminal ac- tions against men of wealth, or to cause cases finally to be dismissed, if actions were brought. Even slave trad- ers, the abominations and horrors of whose traffic shocked the whole civilized world, seem to have bought immunity, and this, too. after the Civil War had begun. Accord- ing to the Duke de Rochefoucault Liancourt, who trav- eled in the L nited States in 1/95. " nearly twenty vessels from the harbors of the United States are employed in the importation of negroes to Georgia and the West India Isles." In his " Travels " (Vol. II. p. 292, English trans- lation) the Duke further told how the merchants of Rhode Island were the conductors of what he described as the "accursed traffic." I nited States law prohibited die importation of slaves after the year 1808, and out- lawed the traffic as piracy. I'm the slave traffic contin- ued, and large sums of Northern capital, particularly of Xew York, Spanish and Cuban capital, were invested in it. Slaves snatched from Africa were sold in the Span- ish colonies in America. " Spain," wrote Secretary of State Seward to Minister to Spain Koerner. in 1864, " is believed to ],c the only Christian country in whose do- minions African negroes are now introduced as >laves." Spain, added Seward, bad a treat v with Great llritain i m the subiect. but disregarded it. J. I'iMKI'OXT .M< )I dead, re- mains a slave for life." ( U. S. Senate Fx. Docs., First Session, Thirty-eighth Congress, 1 863-4 14. Part II, Doc. No. 48.) On June 19, 1861. the bark .-liu/nsta was seized bv I nited Stales Marshal Robert Murray at Greenpoint. Long Island, on the charge of being Titled out as a -laver to go in Africa, and was condemned. A party of capitalists, headed by Appleton ( >ake> Smith and hi- brother, scions of a well-known family, were financing the expedition. To Murray':- amazement, the U. S. Di-- trict Attorney's office at New York then allowed the ves- i6o -el to be bonded for an in-igniiicant ,-um, and licen.-ed her to clear the port. Hastening after her. Murray again seized the .hiyusta at Fire Island. lie then for- mally and circumstantially charged collusion between the slave trade interests and certain officers of the Federal judiciary at Xe\v York. The Secretary of the Interior subsequently decided that collusion had not been proved. i ['. S. Senate Docs., Second Session, 1861-62, Vol. V, Doc. Xo. 40. I Horace Greeley's editorials of the day ex- press the greatest indignation at this attempted cheating of justice ; the case \vas only one of numerous such cases ; main' a time slave traders had succeeded in having actions against them dropped or dismissed. \Ye have now seen how the most successful capitalists, the founders of great fortunes, piled up their wealth by unrestrained careers of fraud and theft. \Ye have noted how Commodore Vanderbilt pocketed millions by blackmailing competitors, and by lea.-ing or selling worth- less vessel*- to the Government during the Civil War for exorbitant sums. The facts have been set forth how a host of other capitali.-ts swindled the l.'nited State- Treasury out nf hundred- of millions of dollar-, and hazarded the lives of the very armies righting for their cause by bribing Government officials to accept army and navy supplies of shoddy clothing, worthless tents and blanket-, good-for-nothing .shoe.-., adulterated, deleterious food, and gun- which were frequently more dangerou- to the men u-ing them than to the enemy. I-' ven if the supplies and equipment contracted for were of payable quality, the Government was mulcted out of extortionate -urns. In previous chapters we have had repeated occasion - to refer to the huge Dwindles which Mar-hall ( ). Robert-, one of the foremo-t and highly prized capitalists of j. I'IKKPOXT MoR;:\:\'s r.KNKSJS l6l those years, successfully worked upon the Government. Some of the vessels that he sold for transport service were so bad that one of them foundered a day or two after leaving port. The erew of this ship the i'nion was alone saved, and barely so, at that ; the ship and all her armv stores were a total loss. Another ship sold by Roberts was so badly damaged on her first voy- age as to be hardly able to reach port, although not without much loss of freight. ]'>ut to give a succinct idea of the greater sums squeezed out of the Govern- ment for vessels for which some fair degree of effi- ciency could be claimed, the case of the steamship Illinois need only be cited. For a few years' lease of this vessel Roberts succeeded in getting a total rental of $3/0.700, yet it was appraised by a naval board as worth, all told, cost of construction and equipment included, $257,187. After the Civil War it was returned to him in a much better condition than when he had leased it. The transaction was one of man}- such scandals that Congress deemed it wise to investigate/"' Xeed it be* said, however, that Vanderbilt and Roberts were far from being exceptions? One of the greatest frauds of all in the extortion of large sums from the Government was Thomas Clyde, the founder of the C'lvde Steamship Line and commonly described in bio- graphical account^ as a capitalist of the greatest probity. According to the court records, Clyde, bv fraudulent representations, succeeded in obtaining exorbitant rates for the lea-ing of vessels for transport service. The Government discovered his fraud- in time, and despite his urgent remonstrances, declined to pay the full amount that he claimed. hi the >uit tliat followed in the case of the steamer 7 allaca, the Government claimed that Clyde was guilty of a fraud ; that in dealing with Quartermaster Fergu- son he had fraudulently suppressed certain facts which, had they been known, would have prevented Ferguson from contracting to pay $115 a day for the vessel. In this case the Court of Claims decided in favor of Clyde. 6 Cut in the case of the steamer Rebecca Clyde, also be- fore the Court of Claims in December. 1869, the court severely denounced Clyde's claim as fraudulent, referred to the " unconscionable and exorbitant rates of trans- portation." and to the " injustice and extortion " of Clyde's claim, and dismissed his petition. 7 In the ap- peals in both cases the Supreme Court of the United State- reversed both decisions. Such of the successful capitalists as were not defraud- ing in many directions were concentrating schemes of fraud in some one -pecial direction. The Stevens family, of Hoboken. X. J.. was one of the notable examples. Thev were millionaires lie fore j. Pierpont Morgan had outgrown boyhood; they ranked high among the leading capitalists of the country; and by donations of a part of their fortunes they became celebrated as philanthropists. The}' were the principal owners of the Camden and Amboy railroad, then called in Xew jersey the " Railroad Monopoly." In the fifteen years before ]$(io they were the mo>t notorious corrupters of the Xcw fersey Legislature; lime after time they bribed bills through, corrupted the election- and the courts, ignored or evaded the laws. 41 Gum -if rinim>. v : 1.^4-140. T Tliirl.. 140-155. J. I'IKUI'O.V! MORGAN'S GKNKSLS l6^ and bled the public by an illegal system of transportation charges. That they and Blair and other railroad mag- nates were continually debauching the Xew Jersey Leg- islature was common understanding, but it was not to be expected that the Legislature would seriously investigate itself. In 1855 a specific bribery scandal inadvertently happened to become public ; the Legislature hurriedly appointed a catechizing committee which made a pre- tense of investigation, and then turned in a report which harmed no one. 8 The Stevenses not only had their direct, but also their indirect, sources of tribute. One of them, Edward A. Stevens, a philanthropist par excellence, was carrying on, it seems, a species of blackmailing akin to that Van- derbilt employed. As the owner of the Hoboken Land and Improvement Company, Stevens had secured a fran- chise for a branch railroad line from Hoboken to Xew- ark. For many years, up to 1860, he compelled the Xew Jersey Transportation Company, a competitor in that one section of the State, to pay him an annual subsidy of $18,000. in order to buy him off from building the branch line. The Xew Jersey Transportation Company decided, in 1860, that it would no longer pay this blackmail money. In retaliation. Stevens bribed the Xew Jersey Legislature to give him a franchise to connect his line with the Morris and Lssex Railroad in which he held a large proprietorship. A turbulent scene en>ued when the bill was pas>ed on March i, iSbo. Assemblyman Slaight, of Hudson County, charged that an offer of briberv had been made to him to vote for Stevens' bill. Hi-! HISTORY OF Till-: CiKL-:.\'J AMERICAN L'ORTVNES \\'hercupon Peckbam, of the same county, rose and an- nounced he had hcen offered by Stevens' opponent? as high as $3,000 to oppose the bill. These are but a very few of the many examples of succcs>ful capitalists whom the young- men were taught to look up to and, if possible, emulate. And what were the business methods of the most conspicuous factory owners " J . To get an even more correct focu> upon the youthful career of J. Pierpont Morgan, it is de- sirable to consider some of the ways in which the large industrial concerns were rushing into great wealth. Asa \\ "hitney was one of the important all-round capi- talists of the United States ; he was a railroad projector, and his firm, Asa Whitney and Sons, owned the largest carwheel factorv in the land, lie was a verv enthusi- astic patriot ; so were they all. those commercial men. brave in patriotic talk. The quality of their patriotism was particularly evidenced after John Brown's raid at Harper's Ferry. War between Xortli and South was generally regarded as unavoidable. The South was busily preparing. What were the Xorthern factory owners doing? Work- ing their plants day and night to supply the South with equipment. In the first months of [860 the Whitney works were run to their fullest capacity to provide wheeK largely for Southern railroads. In the same months the Baldwin Locomotive Works of Philadelphia turned rut fifty-eight locomotives, all but four of which were for Southern railroads. Bcment and Dougherty and the firm of William Setters and Company, machine tool builders in Philadelphia, were filling heavy orders for Southern railway and machine shops. These capitalists, and all who were doing as they were, knew that every indication threatened that this equip- J. I' IKK I'D XT MOKUAX'S GEXESIS 165 ment would soon be used in war against the very sec- tion to which they belonged, and for the interests and principles of which they professed to be such staunch adherents. In fact, some of them made declamatory patriotic speeches at the very time when they were profiting from equipping what they knew would shortly develop into an openly hostile people, intent upon sus- taining their purposes by armed force. Till-: DKFR.U'DIXG OF IXVENTORS. The Northern gun manufacturers did the same; not one of them scrupled to fill Southern orders. They also refused, for the most part, to adopt any improvements or utilize any of the numerous new inventions. In plead- ing for the establishment of more Government armories, and foundries, Representative Wallace of Pennsylvania, in a speech in Congress, on February 28, 1863, said: . . . When we look at the manner in which our army and Government have been defrauded by peculators, we must shrink from the idea of trusting to private contractors to furnish the necessary means for our national defence. Dependence upon private contractors for arms and munitions of war is too pre- cariou.- and uncertain in all respects, as well as too costly, upon \\liicli to re>t such an important and vital interest of the na- tion The improvements made of late yea'-- in the power and destruetivene.ss of all arm> have rendered comparatively u-e!e-< weapons that were deenu-d the \ cry hot, perhaps not more than a quarter of a century ago. . . . | lu 1 interest of the p-iv^tc contractor i> to discoura.ee all change in the character of arms which his machinery is prepared to make, a- machinery i^ co-tly, and every matt-rial change nece>>itates a corresponding change in hi--, machinery . . .'' 1 66 HISTORY OF THE GREAT AMERICAN FORTUNES patriotism was not involved; that it was simply " a case of business." Doubtless it was this acute business instinct which led them to steal outright the patents for breech-loading gun.-. According to the conclusions of a Congressional committee on patents, the inventor of mechanical devices for breech-loading small arms and machine guns was George YY. Morse, who took out patents in 1856. The gun manufacturers appropriated his inventions. As in the cases of Goodyear and many another inventor, Morse was cheated out. Thrown into the deepest poverty, he applied, in r8~8. to the Government for payment on the score of his invention. In favoring his petition, the Committee on Patents reported, " He is ignored and poor in his declining years, and those who have adopted his inventions without remunerating him are rolling in wealth:' ] " In the case of another inventor, C. D. Schubarth, a foreigner residing at Providence, K. 1., a Government Commission reported these facts: that he had invented a new type of gun: that in order to raise the funds he had to take in several capitalists as partners ; that he was informed that to get a contract from the War De- partment, it was necessary to bribe one of the United States Senators from Rhode Island; that he was then given a letter of introduction to United States Senator j. F. Simmons by the Providence firm of A. D. and [. Y. Smith " a business house of great wealth and re- ability ": and that he arranged to give Simmons five per cent, of the amount of the contract. Schubarth thus obtained a contract for 50,000 Springfield rifles; according to tho evidence before the Government - j. PiKKPovr MORGAN'S GENESIS 167 Commission, Simmons' graft amounted to $5O,oou.'" a Kverywhcre in the struggle for commercial success obtruded fraud, theft and murder; one or more or a combination of these methods constituted the means by which wealth was largely piled up. Overwork and criminal accidents joined with disease and want and worry and unsanitary housing killed off myriads of workers by sudden or lingering death. Yet not alone in the factories and mines, on the sea and in the tene- ments did this scourge of death go on as an accompani- ment of the rapid growth of private wealth. Out on the primitive plains and in the mountain fastnesses whole tribes of Indians were ruthlessly despoiled, driven off, and then, on some pretext or other, slaughtered so that their lands and the resources on them could be gratui- tously seized." 1 "<' 1 Report of Commissioners Joseph Holt and Robert Dak- Owen to Secretary of War Stanton, June 21. 1862. U. S. Senate Documents, Second Session, Thirty-seventh Congress, 1861-62, Vol. i. Doc. Xo. 64. 11 These are a few extracts from the annual report of the United States Commissioner of Indian Affairs, 1851): " \Ye have substantially taken possession of the country Ithc Western Territories] and deprived them (the Indian-] of their accustomed means of support. " Xumbers of them are compelled to sustain life by using for food reptiles, insects, grass, seeds and roots. "They have at time- been compelled to either steal or -tarve. "Many of the numerous depredation- have doubtless been committed by them in consequence of their destitute and des- perate condition." Report after report of ihe I'niied Stale- Commissioner of Indian Affairs showed that many Indian tribe- were in a state of absolute destitution, and Congress was called upon to pa-- appropriations for their -upport. 'Ihe 1'awnees and other tribes that Astor had debauched and swindled for so long a period, were in a starving condition. Document Xo. .7. United State- on! Session. 1875. reveals that UritiMi had long since introduced among the IT Indian tribes in Alaska, the me'hod- v A.-tor of getting the Indians drunk l68 HISTORY UF Tiili GREAT AMERICAN FORTUNES The outbreak of the Civil War gave the mercantile class unsurpassed opportunities for profiting from what amounted to crganized murder. However severe thi- statement seems, it is in reality quite mild in describing the prevailing practices of capitalists. PROFITING FROM ORGANIZED MURDER. It would be quite puerile and a poor extenuation to say that they were not fully conscious of the disastrous consequences to the nation flowing from their acts. They knew the baleful results to the soldiery of impos- ing fraudulent army and navy supplies upon the Govern- ment. Yet, spurred by the certainty of extortionate profits, they went eagerly ahead, and when their frauds were discovered, sought to block every attempt at investi- gation. In the one item of shoes alone, the shoe man- ufacturers sold to the Government from 1861 to 1862 five million pairs of shoes for the army, as to which transaction a Government commission reported that at least $3,000,000 had been defrauded ; that supplies of shoes which were so bad that thev could not be sold privately had been palmed off upon the Government. 12 But the one equipment which the army most urgently needed wa> rifles. \Ve have already, in a previous chap- ter, related how Marcellus Hartley and other prominent capitalists swindled the Government, and imperiled the- I'nion Army, bv importing the refuse of Fuin>pean ann,- and unloading them upon the I'nited States Government. Also, we have adverted to the fact that it was greatly becau-e of the great profits made in these transactions that flartk-v was able to build enormous factorie- at j. I'lEuroxT MORGAN s GENESIS iy Bridgeport. Conn. factories that his descendants now own. J. Fierpont Morgan \vas profiting from the same meth- ods at the same time, lie was, in 1861, a robust young man. just turned twenty-four years old. " He inherited from his parents." says one of his biographers, " their purity of character and exceptional abilities." 1:; Those attributed lofty virtues were not in evidence. At a crit- ical juncture when the Union Government was most in need of soldiers. Morgan chose not onlv to stay at home, but to profit from the sale of worthless rifles for the arm- ing of the men who responded to the call to arms. Abraham Lincoln was sending out his proclamations calling for volunteers. The contest was a momentous struggle not merely between sections, but between two kinds of conflicting capitalist institutions. The so-called common people the factory and shop workers, the slum dwellers, the professionals and the farmers he- roically poured in for enlistment. Hundreds of thou- sands went forth to the camp< and battlefields, never to return. Although well qualified physically and mentally for military .-ervice, Morgan avoided any kind of duty inter- fering with monev making and comfort. He differed in nowise from almost all the men of position and prop- erty. They restricted their exuberant patriotism ti> talk and the waving of bunting, but took great care to keep away from the /one- of personal danger. The rich. 1i>r who>e interests the Northern armies were at basis fight- ing, not onlv a- a clas< evaded enlistment, but proceeded tn demoralize, spread disahihtv and sow death among their own armies. While dning this, and at the same HIT'- the (!<>vi.ri .:.'. State- and cities out of I7O iilSTOKV OF Till-: GREAT AMERICAN FORTUNES vast sums in army contracts, they caused the Draft Act to be so amended that it gave men of property the easy opportunity of escaping conscription by permitting them to hire substitutes. MORGAN' S FIRST STROKE OF BUSINESS. J. Pierpont Morgan's first ascertainable business trans- action was in one of these army contracts ; and while it was not on so large a scale as those of older capitalists, it was (judged by prevailing capitalist standards) a very able stroke for a young man of twenty-four. Its success gave promise of much greater things to come, in which respect Morgan's admirer- were not disappointed. In 1857 the army inspecting officers condemned a large number of Hall's carbines as thoroughly unservice- able, and as of obsolete and dangerous pattern. The Government thereupon auctioned off quantities of them from time to time at prices ranging from between Si ami 82 each. Five thousand of them, however, still remained in the army arsenal in Xew York City and were there when the Civil War broke out. On May 28, 1861, one Arthur M. Eastman, of Man- chester, Xew Hampshire, made an offer to the Govern- ment to buy these riiles at $3 each. Knowing the great frauds going on in the furnishing of army supplies, the Government officials might well have been .suspicious of ihis offer, but apparently did not question its good faith. The riiles were sold to Eastman at $3.50 each. Rut either Eastman lacked the money for payment, or had been thrust forward to act as a dummy for a principal in the background. One Simon Stevens 11 then -topped j. I'lEKi'o.vr .MORGAN'S GENESIS 171 on the scene, agreeing to back Eastman to the extent of $20,000, which sum \vas to be applied for payment for the rifles ; as collateral security Stevens took a lien upon the ritles. But from whom did Stevens get the funds? The official and legal records show that it was from J. 1'ierpont Morgan. A GREAT SCANDAL OF THK TIME. i'he next step in this transaction was in Stevens' tele- graphing, on August 5, 1861, a notification to General Fremont, commanding at St. Louis, that he had five thou- sand new carbines, in perfect condition, and inquiring whether Fremont would take them. From Fremont's headquarters came word to ship them to the army head- quarters at St. Louis at once. During all of this time the carbines had remained at the arsenal in New York City. Upon receiving Fremont's order, Morgan paid the Government the sum of $17,486 at the rate of $3.50 a carbine. The ritles were shipped direct from the arsenal to St. Louis. And what was the sum charged upon the Government for them? The bill made out to tract- in iSoj reported to Congress that Simon Steven-- was one of a clique involved in custom-house fraud-. Hefore 1850. the New York Collector of the Port had employed the laborers and eartmen in the appraiser's -tore to haul good- to the Govern- ment honded warehouses. In Augu-t. 1850. Collector Schell (a corrupt Tammany politician) made a contract by which the haul- ing was turned over to some of hi- political a.-sociates. They were paid. !?i -'.3,000 a year. " I'pon this contract." reported Chairman Van \\yck. "the parties made from fifty to seventy- five thousand dollars yearly." "I'he committee showed how the contract had been corruptly ordained, and stated that Stevens had a one-eighth -hare of the profit-. Stevens also caused any of the custom-house clerk- who -aid anything against the con tract to he remo\ ed from office.- The Congressional Globe, Third Session. Thirty-seventh Congress, iS6_'-o^. Part II, Appen- dix : U.S. 172 HISTORY OF THE CHEAT AMERICAN FORTIM.S Fremont called for the payment of $22 apiece for the consignment. 15 This was one of the many army contracts popularly and officially regarded as scandalous in the highest de- gree ; one of the select Congressional Committees of 1862 lost no time in the investigating of it. After making a full inquiry this committee reported : Thus the proposal actually was to sell to the Government at $22 each 5. OCK> of its own arms, the intention being, if the offer \vas accepted, to obtain these arms from the Government at $3.50 each. It i< verv evident that the verv innds with which 15 Reports of Committees, Second Session, Thirty-seventh Congress. 1861-62. Vol. ii : Ixiv-lxxli. The frauds at Fremont's headquarters, at St. Louis, were particularly enormous. Major McKinstry, quartermaster of the L T . S. army at that place, was tried by a conrtmartial on sixty- one specifications of corrupt practices, and was found guilty on twenty-six. The testimony showed the gros.-e.-t frauds, by col- lusion, in all kinds of army supplies. The Morgan rifle trans- action, however, was not brought out in the specifications. Mc- Kinstry was discharged from the army. House Reports. Com- mittees and Court of Claims, Third Session, Thirty-seventh Con- gress, 1862-63, Report No. 49: 1-24. That the bribery of certain Union officers was a fact wa- re vealed by this communication sent by Major-General Frederick Steele, on July 26, 1864, from Little Rock. Ark., to Major- General F. R. S. Canby, commanding the Military Division of West Mississippi: "General: Your communication in regard to bribery among the officers of my command is just received. If bribe.- had been taken it must have been by agents. I am satisfied that the of- ficers know nothing about it. General Marcy. Inspector-General, i- at Fort Smith investigating the matter. Carr is chief-quar- termaster of my corps and a lieutenant-colonel. Krig.-Gen. J W. Davidson has slandered Carr on all occasions. . . . lie could have had affidavits in regard to the corruption of his own di-hui>ing officers if he had wished them. I have seen such affidavit-.' House Miscellaneous Documents. Second Session, Fifty-.-econd Congress, iS<;j <>i (Rebellion Record Series 1, Vol. xli>" p. 4 i- Lo The committee further reported that the rifles were so bad that it was found that they would shoot off the thumbs of the very soldiers using them. But not only did the Government condemn the transaction as a bare- faced swindle; .Marccllus Hartley, himself a dealer in arms and a self-confessed swindler," had declared before the committee, " 1 think the worst thing this Govern- ment has been swindled upon has been these confounded Mail's carbines." lt; The Government refused to pay Morgan the $22 demanded for each of the five thousand carbines, whereupon Morgan pressed his claim. Thus it was that the case of J. Pierpont Morgan vs. The United States Government came into the public records. It figured as case Xo. (;/.'" To adjudicate this claim, as well as man}' other similar claims, the Secretary of War appointed a Commission composed of J. Holt and Rob- ert Dale Owen, son of the famous Robert Owen. Reporting on July i, i86j, this commission stated that one hundred and four cases, involving demands upon the National Treasury to the extent of 850.000,000 had been referred to it, and that it had cut out $17,000.000 of claims as extravagant and fraudulent. 1V In passing upon Morgan's claim it declared that General Fremont had no authority to contract for the rifles, but that it. the committee, recognized a legal obligation on the part oi the Government arising from the fact that the arms passed into the service of the armv. As the best wav out of a bad bargain it decided to pay Morgan at the T/4 HISTORY OK THIC, r.KKAT AMF.KH'.NX KOKi I'Xl.S rate of $13.31 a carbine, and it pointed out that even at this price Morgan and Stevens stood to make $49,000 above the price at which the rifles had been sold to them by the United States. iy Under this ruling a total of $55,550 was paid to Morgan by the Government, which sum was accepted on account only. This settlement, however, was not satisfactory to the claimants; the full pound of blood was demanded. Suit was brought in the Court of Claims at Washington for $58,000 more. This time the case was entitled Simon Stevens vs. The United States Government. 20 In the statement of the case before the court the fact wa.-^ emphasized that, according to the Government, the car- bines had been inspected and pronounce:! unserviceable by the Government ordnance officer. In delivering his decision Judge Peck said: " By an arrangement between Stevens and one J. Pierpont Morgan the voucher for the first two thousand and five hundred carbines delivered was to be made out in the name of Morgan, which was done ; the said voucher was signed by 1 ; . I.). Cadwallader, Captain of Ordnance, United States Army, and was for the sum of $55,550. By further arrangement this voucher went into the hands of Messrs. Ketclmm, Son and Company." This voucher was paid on or about September ro, 1861. The other twenty-five hundred rifles, the court said, had also been received by Fre- mont." 1 ''' Ibid., ]xxv. The Commission Mated ilial there \vas a le.ual obligation on the part of the Government to pay, but that this obligation arose not from Fremont's contract, hui because the arms did pa'-s into army service. 20 Court of Claims Reports ii : 08, etc. - 1 Ibid., no. In ur.iniiny for the Government the \\ S. Assi-t- ant Solicitor -aid to the court : "The arnir- \vere pnrrbri- '1 !>v Arthur M. F.aMman, from the United States, at //.u/'-'nili tlnllars cucli. because they had been inspected aid pronounced unserviceable by the ord- 175 1 hese arc the lacts as set forth in unimpassioned court records. COTRTS MAKE THE GOVERNMENT PAY. Did Morgan and his associates get their full demands from the Government ? They did. Judge Peck held that when Fremont had agreed to buy the rifles lie had en- tered into a contract which hound the Government, and that a contract was a contract. The court took no cognizance of the fact that the worthless, condemned rifles had been represented as new, nor did it consider the fact that the money with which they had been bought from the Government was virtually Government money. It gave Stevens a judgment against the Govern- ment for $58,1.75. Jt was this particular decision which assured the open sesame for the holders of what were then cynically called " deadhorse claims " to collect the full amount of their swindling operations. The Government could now plead itself defenseless against the horde of contractors who had bribed officials to accept decayed ships and de- fective armor, worthless arms and shoddy clothing, flimsy tents, blankets and shoes, and haversacks which came to pieces, adulterated lood and similar equipment and supplies. As for criminal action, not a single one of these defrauders went to prison, or stood any danger of it; the courts throughout the land were perennially busy rushing off petty defrauders to imprisonment and em- nance officer. They \verc sold by Ka-tnian to the claimant for twelve anil cine-half d<>llar> each, and the clni:n:mt at once sold to (ieneral Fremont at t:ci'itty-i:\.'<> dollars each. The ("lovcrn- nient price for ncic arms <>t~ this pattern, of i;ood <]na'i'y and fit for service, was seventeen and one-half dollars." [bid.. <>S. i/o HISTORY OK Tiir: (,R;-:.\T AMERICAN* FORTUNES ploying the full punitive power of their machinery against poor, unintluential offenders. 22 This was the real beginning of J. Pierpont Morgan's business career; the facts are there immovable and un- a-sailable in the public records. This was the brand of "patriot" he and his fellow capitalists were; yet ever since, and especially so to-day, clergy and politicians and -hallow, obsequious writers saturate the public with myths all designed to prove Morgan's measureless benevolence and lofty patriotism. 23 -- In reporting to Congress, on March 3, 1863, the House Se- lect Committee on Government Contracts, after submitting its great amount of testimony regarding the frauds on every hand, concluded : " Many frauds have been exposed, the Government relieved from many unconscionable contracts, and millions of dollars saved to the treasury. Yet it is a matter of regret that punish- ment has not been meted out to the basest class of transgressors. They to whom this duty belonged seemed sadly to have neglected it. ll'orse tl:an traitors in arms are the men pretending loyalty to the flan, iclio feast and fatten on the misfortune of the na- tion, li'Jiile /\/.'nV'/ blood is crimsoning the plains of the South, and bodies of their countrymen are mouldering in the dust. The leniency of the Government toward- these men is a marvel which the present cannot appreciate, and history never explain." House Reports, Committees and Courts of Claims. Third Ses- sion, Thirty-seventh Congress, 1862-63. Report No. 50:47. But history can explain. It was not to be expected that the very class controlling Government the capitalist class was to be proceeded against by it- creature. - :: For example, an article entitled "Cleveland's Opinion of in " McClure's Magazine," i-sue of April. 1900. The of this article quotes Cleveland, for several terms Presi- thc United State-, as saying of Morgan's conduct when issue was under way in 1894: iw. to... that v. ith him it was not merely a matter of an 'it clear sighted, far-seeing patriotism. He was ^ 1" bankc r. c mo avert a peril crisis." f. PIERPCNT MORGAN. CHAPTER VIII THE FLOWERLM; OF THE MORGAN FORTUNE " Great is Mr. Morgan's power, greater in some re- spects even than that of President or kings," wrote a sea- soned British observer some years ago 1 which fact, patent to even the casual onlooker, easily passes uncon- tradicted. Who, indeed, can gainsay its truth? Above all forms of law and functionaries of office, above the highest representative bodies and tribunals, above enact- ments and Constitutions, supreme above eighty-five mil- lions of American people, this one man towers with a hold and grasp of power as tremendous as it is por- tentous. And what has awarded him this mighty- power? Has it come by vote or wish of the people or by some incongruous provision of Governmental ma- chinery ? Xay, none of these things are responsible for it; despite them all it has come about, and it persists in mockery of them all. Then, wherein lies the explana- tion: Xeed it be told anew? The cause and substance of it all are Morgan's wealth and his dictatorship, >hared with a few others, of the resources of the nation, which ownership carries with it the real ruling power, for whoso own the mean- by which the people must live owns the people. 1 \. Maurice Ln\v in " I hr Independent,'' issue of October 30. UK*- 1 . T 77 And A [organ to-day controls billions of dollars of the country's resources. MORGAN THEN AND NOW. Can this Morgan be the same \vho started out by .successfully palming off upon the Government during the Civil War five thousand of its own condemned rifles, and at extortionate prices? Is it possible that the man who profited from arming the nation's soldiers with self- slaughtering guns can be the same Morgan whose power to-day " is greater than that of President or kings"? Is the great, sublime patriot of these days, J. Pierpont Morgan, the same Morgan who came into col- lision with investigating committees during the Civil War, and who was practically denounced in the severest language? Verily, he is the same man. the identical same, ik'hold him in the budding of his career, and observe how he began it: and behold him now. glutted with wealth and power, covered with honors, august dis- penser of benevolence, the incarnate source of all wis- dom, financial and otherwise, the mightv man of com- merce and of the arts, the idol of capitalist ideals. Hetwecn that Civil War transaction and his present sway, necessarily there lies a long category of deeds. I ndi~putably he began his career with proofs of excep- tional brilliance 1 . Had his first business achievement that of the condemned rifles been judged by the -tandards of the "lower classes," lie would have been thrown into prison, or had the soldiers who had to use the gun- come within his proximitv. the 1 life, perad- vcntnrc, might have been shot out of him then and there. l>ut his o\vn Hass. far from having a remote thought of abhorrence or o-tracism. admired his busi- FLOWKRIXG OF Till': .MORGAN" FORTL'A' K I/O, tics.- skill, mettle and audacity, and regarded him a^ an extraordinarily promising young man. (ireat things were predicted for so astute an novitiate ; yet novitiate was not the word : the most experienced business man could hardly have done better than did Morgan in that famous ride sale. Moreover, Morgan had other advantages which as- sured a notable future. He had a millionaire father, which was a relationship to be trebly prized at a time when millionaire progenitors were not so very numer- ous. The paternal advice and guidance, based upon a protracted career in the serpentine channels of wealth getting, could unfailingly be drawn upon. Additionally, J. Pierpont Morgan had the backing of the old man's millions and prestige, and what was more important would some day inherit those millions. All of these factors were infallibly the prelude to a glorious career. HE ATTAINS " CXIVKRSAL RKSPKCT." The respect of the mercantile and financial classes for Morgan's proved ability grew proportionately with each new display of his capacity. Presently we find a contemporary biographer saying of him: "Mr. Mor- gan made himself universally respected as an able finan- cier in iSi'V), when he came out victorious in a memora- ble struggle for the control of the Albany and Susque- hanna Railroad, which had fallen into the clutches of Messrs. Fisk and Gould. The contest was waged not < inly by litigation, but also bv force 1 of arms, and Gov- ernor Hoffman called out the militia. Fi-k was eventu- al! v dislodged." It had not taken long for Morgan to arrive at the point where he was " universally respected." By "uni- i8o vcrsally " the writer of tlwt eulogy meant among Mor- gan s class, the opinion (A which was held to be all- inclusive; that of the workers was considered of little or no account, and could always he ignored or ridi- culed. But what was the real nature of this railroad business which made Morgan so " universally re- spected''? What great public service, if any, did he render? What was the special merit involved in his overthrowing of Gould and Fisk, and his getting control of the railroad in question? 5 Eulogistic writers fail to give enlightenment on this point. But what they omit, public records supply to some extent. Had either (iould and Fisk, on the one hand, or Mor- gan, on the other, built the Albany and Susquehanna Railroad or provided the funds for its construction? Not a mother's son of them. This line, now a part of the Delaware and 1 ludson Railroad, had been built with public funds drawn from the treasuries of Xew York State and of various counties and municipalities in that State. At least Si .01:0.000 of the $45.000.000 drained from the public treasury in Xew York State for the building of railroads, had gone into the construction of the Albany and Susquehanna Railroad. 2 The usual pilfering processes marked its building: large sums were stolen in various forms of graft ; and, as in the case of the Eric Railroad and other railroads. the State was cheated out of much of its loans. Then ihe group of capitalists in control watered the Albany c\i id Susquehanna's stuck aiul manipulated it for specula- tive purpose- until tlic\ were ousted by other capitalists who repealed their manipulating methods on a larger scale. This railroad's chief value, lay in the fact that it had direct connections with the coal minin reions of aiul Ki.-k. the other bv f. Pierponi Morgan. The older capitalists were amaxed at the sight of these young men audaciously struggling for the possession of a val- uable railroad system, in the construction of which neither set had had any part whatever. Old Commodore Yanderbilt looked on with a blended admiration and envy. ( jonld was but thirty-three years old. and Mor- gan thirty-one. Kadi side bought all of the stock that it could; (iould \\ith the proceeds of his thefts, and Mor- gan possibly with the proceeds of such transactions as the rillc sale, for instance. Stockholders' elections were held amid scenes of the greatest disorder, and each parly churned the election of its own board of directors, and accused the other of the grossest frauds. (.June appropriately the contest went into the courts, twenty-one separate suits were brought by (iould and Kisk. and a sheaf of injunctions obtained. The Morgan partv fought back vigorously. Hut so lonj. contest was confined to the Xew V>rk i iould and Ki-k had the surely of victory, was that such Supreme Court (. 'ard< '/( chatlels Verv soon an edi lying Una liercely determined was each -ide that ihe railroad was thrown int. 182 disorganization and could not be operated. After spending a million dollar.- of public money on its con- strnction, the people were forced to look on while the two parties, neither of whom had invested a dollar in its building, claimed to be its owners, and estopped the other with judicial orders and injunctions. \\hich of the two would come out ahead? The out- come was doubtful. Hut it did not continue so very long. Gould and Fisk were cleverly entrapped into mak- ing an agreement which led to their utter eventual de- feat. The agreement was to this purport : That inas- much as the conflicting parties could not agree, they had arrived at a mutual understanding by which they would write to Governor 1 'oilman setting forth that it had be- come impracticable to run the railroad, and therefore requesting the appointment of a Stale official to operate it pending a new election of directors. This communi- cation was sent to Governor Hoffman on August II, 1869, and its provisions were accepted. HOTII SIDES CIIAKGF.D WITH FRAUD. In less than a month after this, separate elections were held ; each side again claimed that its directors were elected. More suits followed. Gould and Fisk charged that Ramsey, president of the road, had illegally issued three thousand shares of stock to the Morgan party, and demanded that this issue be declared invalid. Morgan, Samuel Sloan and others of the opposition retaliated charges diat Gould and Fisk had used force and "rnud. The Stale of N'cw York now stepped in, and hi nigh ihe \tlornev General, brought an action against ' parties. The State charged that both stockholder-' '- \vere illegal, irregular and void; that spurious votes !i;nl been counted in, and that otherwise they were full of fraud/' 1 The State a>kcd for an injunction re- straining both boards from taking possession. 1 he ca>e came up again in November. i8(Hj, be fore- judge Danvin Smith in the Supreme Court at R<>che>- ter, X. Y. Gould and Fisk found themselves ;:; a great disadvantage. .In Xc\v York City, with their bought judges on hand, thev could arrange for decisions in ad- vance, but in Rochester they were in a territory where the power of competitive magnates was strongly in- trenched. Judge Smith's decision was wholly favorable to the group of capitalists led by J. Pierpont Morgan, and the Albany and Susquehanna Railroad passed into their control.' 1 This seems to have been J. Pierpont Morgan's first entry into the railroad business in which later he was to become so powerful a factor. Thenceforth, for nearly thirty years, until the period of organizing industrial trusts began, his chief undertakings were his banking business and what was called " the reorganization of rail- road^." The two things worked well together. By means of financial laws, corruptly passed, the bankers, both in- ternatii.nal and national, compelled the people of the I nited States, through their Government, to present them with the fund- with which t<> buy up railroads and iither forms of property." \\ e have already described '' [.;m -IMJ'- Reports, X"e\v York Supreme Court, i : j;oS. eie. T! . . :' ti ca.-e i;i ilu- tleei~i"',i frn;uentl.v refers to " i !: ]>;irt v iu-.'iiK-il i-v I. ! "ierp< 'in MI iri.:;i : " Sre. i !: iV . '< '' ill. -t:iU- of >, \\ '. .r! \>. The Al])any 1 8 4 the financial system prevailing in the L niied Staler dur- ing and immediately following the Civil War ; henv the people were taxed from Si 8.000.000 to 820,000,000 a year to pay interest annually to the bankers and other bondholders. \Ye have also showed how the banker? had laws passed by which they could deposit their Gov- ernment bonds in the United States Treasury and receive back the full amount in currency, less ten per cent. Thus the banks received a double interest ; often as much as six per cent, in gold in annual interest from the Government, and a far greater amount in interest for the public use of the currency which they were gratuitously allowed to issue on the strength of the deposited bonds. 6 At the same time, they were relieved from paying taxes on Government bonds. Their profits, obviously, were enormou>. averaging twenty, fifty, and often one hun- dred per cent, in the course of a year. The law.- also were so devised as to insure them a virtual monopoly of the currencv supply an incalculable power in manip- ulating industry and the markets, and in controlling spec- ulation in stocks. In its resolutions passed at Militarv Hall. Xew York City, on October 19. 1829. the YYorkingmen's Party had denounced the banker- as " the greatest knaves, im- postors and paupers of the age." A violent tirade this seemed on its face. but. in point of fact, there wa-- hardly a banker in the country who was not c^n-tantlv p pres.e.ntatives. In 1873 it \va> estimated that $375.000.000 of American railroad -counties were held abroad, chiefly by for- hankers. The Final Report of the Indu-tria! Commission in ;' f'jovi-nimer.t from iSd.} to 1878 had paid out to national banks M.I L'i of S25J, 8.5.7, 550. 77 as interest on bonds. House incnt. No ~-\. 1870. KLOWKUING OF Till: MORGAN FORTL'NIi 185 ami criminally violating the law by committing- some -pecies of fraud or other. Year after year the courts were full of lawsuits in which this or that banker \vas charged with fraudulent transactions. There is little scientific use in describing Morgan's career without ad- verting to an illuminative mention of what other con- spicuous bankers were doing, both before, and during, his time, liver and ever anew it will be seen that Mor- gan was doing nothing more than emulating the tradi- tional practices of his class. Perhaps the foremost banker in the United States in the first lour decades of the nineteenth century was Nicholas Riddle, that proud aristocrat and founder of a familv of aristocrats. I le was long president of the once all-powerful Hank of the United States, and was held up to the whole country as an illustrious example of die position to which any able and well-regulated youth could attain. Vet he was accused of being a thief, an embezzler, a malefactor in law. After his retirement from the presi- dency of the Hank of the United States, that institution brought a civil action against him and the cashier. John Andrews, fur the restitution of $400.000 winch they were charged with stealing from the bank in iS^i. 1 !i - theft, it was further specifically charged, was o .<>...'. 1 bv fraudulent entries, burning of vouchers and by oilier methods. 1'v the time the suit came up in court in iS.i ;. Middle had died, but the action was pressed against An- drews, lii- answer was a genera! denial, but fudge Par- sons decided that he was convinced that the claim for recovery wa- one \\hich con! '. he enforced, and he over- :.vr AMKKICAX i-~oilance of many instances of the methods of powerful bankers during Morgan's early career, let us consider the case of Bischoftsheim and Goldschmidt. Thev it \vas who loaned Jay Gould the money to pay fraudulent in- terest on fraudulent bonds in his Erie Railroad thefts ; they supplied the money to pay fictitious dividends, and when they saw more profit in betraying him, they quickly changed front and poured out the 8750.000 with which Gould's directors of the Erie Railroad were bribed to resign. * By such methods they heaped up great for- tunes ; when Goldschmidt died a quarter of a century ago he left an estate of $30.000.000. LAWS DRAFTED FOR PLl'XDEK. But the extraordinary financial laws passed during the Givil War were only the forerunners of other laws which the bankers and the creditor class in general caused to be passed in following years, and by which they instantly and vastly increased their wealth and power, and were enabled far more effectually than ever before to put the screws upon the producing class. The most noted of these laws was that passed by Con- gresj "H Eebruary 12. 1^73. practically accomplish- ing the demonitization of silver as a coin. This was the same Gongre-.- which, a- we have seen in one of the chapters on the Sage fortune, was bribed with a million 7 Parson's Stlcct Fruity Cases nf the First Judicial District of IVnn-ylvanin. 1^.44. ii : 31-63. Also, Pennsylvania llou-e Journal. 1^42, Vol. ii. Appendix : 182. Middle's theft has hee;i incidentally refcmd to in a previous chapter, but it stands a I' ire extended notice here. - !:::': ,"i Investigation of the State of Xe\v York. 1870. S- :'-.. >'".'. Y '. S'a ; ' Assembly nr.rr.nifnt-:. 1X7?. ' : , M^c \"o. 08. KLOWEKINc; OK T II K .MORGAN KOKTl.'Mi 1 o/ dollars to pass an act granting an additional subsidy of 85,000,000 to the Pacific Mail Steamship Company. The demonitization act went through by evasion ; not a word was directly mentioned in it of the demonitization of silver; few knew of its purport; even the advocates of bimetallism voted for it. It was one of the most adroit bills ever put through Congress, and it was only after it had become a law that its concealed provisions began to be understood. Then a terrific cry of rage went up from the middle class from one end of the country to the other; the ex- citement was intense. In this excitement atid indigna- tion the working class was persuaded into joining, al- though at basis, the workers were not affected by this law ; their exploitation and despoilment had gone on under bimetallism, and would continue without cessation under monometallism. It was the middle class which was struck at hard ; the supply of money was at once contracted, the purchas- ing power of gold was enhanced, and the power of the large creditor capitalists and banking institutions over the small property owning class was greatly augmented. This law was passed at about the same time that the first trust, the Standard Oil Company, was rising to give the death blow to the doctrine of free competition in trade, and to crush out the middleman in business. The day was a sorry one for the long-dominant middle class. The middle class representatives in Congress and else- where now began an agitation which lasted many years.' 1 ' They charged that the demonitization of silver had been brought about by the conspiracy of John Sherman and a 1 88 few other prominent men in Congress, with the financiers of Wall street and Europe. In fact, the successive vol- umes of the " Congressional Record " of those years are full of speeches in which this charge is brought out over and over again. But the law stood : and what was more galling to the middle class. John Sherman, denounced so bitterly as a traitor, and as a mercenary of the bankers, was appointed, a few years later, to be Secretary of the United States Treasury. From that time on, the bank- ers, national and international, came out more and more in the open in direct dictatorship of the financial law> and policy of the United States. Circumlocution became less necessary. The great Government bond issue of 1877, by which the bankers made colossal profits, followed Sherman's appointment. Before, however, referring to this memor- able sell-out, it will be well to give a passing glimpse of Morgan's varied activities and the nature of them. Morgan's first partnership was as a member of the firm of Dabney, Morgan and Company, which firm, it will be re- called, was one of the banking houses participating in that noted Kansas Pacific Railway loan of 1869. This loan was asked for from investors largely on the >trength of a three-million-acre land grant in Kansa> and Colorado, which had been corruptly secured "by the Kansas Pacific Railway Company from Congress, and which was the beginning of not one series, but man}' -erics, of fraud and plunder. 11 '' Morgan could claim, and with justice so far as current standards went, that the floating of this loan was a " legitimate banking transac- tion " ; but the fact that no banker declined to profit from the financing of enterprises which he knew began and I-'LOUKKIXG OF Til 1C MOKGAX FoRTCXK l8<) continued in corruption anl Dwindling, gives a very clear idea of tlie (|tialitv of the assumed morals and ethics of the capitalist class. THI-: GRF\T r.oxo issrr. OF 1877. Morgan's next partnership was as a member of the firm of Drcxel, Morgan and Company. lie began to be conspicuous in very large transactions. One of these was the floating of the $260,000,000 L. S. Government bond issue of 1877. Avoiding plunging into detail, which would be intricate at be>t, suffice it to say that this bond issue was generally regarded, and not without full reason, as one of the verv worst cases that had ever been known of the people being betrayed over to a few bankers. The selling of the bonds was apportioned among these banking houses : August Belmont. the Rothschilds, J. and \Y. Seligman Brothers, and Drexel. Morgan and Company, the last named acting for them- selves and for the firm of J. S. Morgan and Company in London. This syndicate at once sold the bonds at an advance of from one to four per cent, above the price which they had paid to the Government. The profits of the syndicate reached into the tens of millions of dol- lar.-. Drexel, Morgan and Company alone were credited with "making" a clear profit of $5,0x30.000. Their function consisted in nothing more or less than acting as licensed speculative middlemen for a Government which could have disposed of the bonds without inter- mediaries. Moreover, the participating bankers were able to get the bonds for them>el\vs at " bargain prices." and then through associated national banks, carry on the familiar practice of exacting double interest one in- F 90 tcrest from the Government, and another for the u>e ot currency issued on the basis of those same bond-. 11 These transactions comprised obviously but a few of Morgan's varied activities in the decades following the Civil War ; it can be well understood that he was, at the .-ame time, engaged in a mass of purely private btisine-- dealing?, of which, no details ever became public. Even of his public trail:"- actions the fact- as set forth in the public records are more indications, than actual and complete account.-, of the underlying circumstances. The financiers and business men had everv motive for en- shrouding their affairs in the greatest secrecy, particu- larly when tho-e affair- in any way related to the divert- ing of Government functions for their ends, or had to do with the suspicious passage of partial laws or the violation of laws. The motto of the whole commercial class was to keep the public in the dark as much as possible: and even when the usual legislative investigat- ing committees, fortified by summary power- of la\v. mildly -ought to ascertain the surface facts onlv, with- out probing too dee]), they were, as a rule, obstructed at every turn. Such facts as did become public came out adventi- tiously despite every effort of the magnates concerned to hu.-h them up. Sometimes embittered competitor- would supply revelations to investigating committee- : m other occasions the magnates would seek to cheat M Thf scandalous circumstances of this bond i.ue made a lively stir throughout the country and aroused warm dehatr> in Oingre??. On January 24. 1870. the l.nitvd Stat>\- Sena'e pa-sed a resolution calling upon Sherman. Secretary of the Treasury, for information as to tin- alleged payment? of double interest in regard to moneys rcceiv d by bank- and sy:v i: :!' - for bond- lr, i\ved to remain < :\ depo-it uith national bank- pending the call f < >r 'lie bond-. Ste Senate E\ccutivt* iment. \"o. <., i ^'t. 10.1 one another in the division of the spoils or overreach at the other's expense, and then the quarrel would be thrown into the courts and some salient facts, at least, revealed. The point cannot be too strongly emphasized that for every one charge of crookedness and corrup- tion that investigating committees and public officials made against capitalists, a hundred such charges were specifically brought by capitalists themselves against their own kind ; a fact overabundant!}- attested in the vol- uminous court records from the very beginning of the United States Government down to the present. Had it not been for a row between various magnate- in a transaction in which William H. Yanderbilt. j. Pier- pont Morgan and other capitalists were engaged, and the consequent wrangling in the courts, certain facts per- taining to another of Morgan's feats could not be now ascertained. In one of the chapters on the Yanderbilt fortune 1 - it has been brought out how. in 1870,, Morg;.n formed a svndicate to buy two hundred and fifty thou- sand shares of Xew York Central stock from William 11. Yanderbilt. and how further, this stock, bought at 120. was, after a magical process of manipulation in the Xew York and London stock markets, sold at I ^o. thereby yielding the syndicate an immense profit. "Thi<," wrote a biographer, "gained for Mr. Morgan the confidence of Mr. Yanderbilt. who intrusted him in 1X85 with the task of adjusting the difficulties be- tween the Central and West Shore roads." Morgan, however, did not need to solicit anybody's " confidence " ; he was a truculent, aggressive financier. 10,2 HISTORY OF THE r.UEAT AMERICAN FORTl'XES with a dominating, even fierce, personality, and wit', great power in his own field, that of banking. His min<; was of that resolute, masterful order declining to be balked by any man or set of circumstances, and his methods were not distinguished by delicacy. "His method of treatment is drastic," wrote this same bi- ographer of his railroad organizations, " and the holders of junior securities have made many a wry face, but the method has seemed to be efficacious. From Si. 000,000 to 83.000.000 is generally put down as the commission for reorganization going to the. house of ]. P. Morgan and l'ompany, i:; for knowing how to do it and doing it." Between these lines can be legibly read the nature of Morgan's "efficacious " methods; they will be still more illuminated, by force of his own words and acts, further on in this narrative. Contrary to the description so widely and continu- ously disseminated, many capitalists are not men of personal courage, in the sense of standing up. man to man, and verbally " having it out." as the vulgar phrase goes. The cunning, cupidity, turpitude and treachery so impregnated in business, and. in fact, the foundation of successful business, breed both a physical and moral cowardice. Well able, as they are. to fight their combats through lawyers, most capitalists, by reason of a certain degeneracy, lack the faculty of exercising a strong, di- rect, personal, virile influence over men, such as a fight- ing pirate captain of the old days held over his band. Morgan has been one of the few exceptions, t nited v, ith his wealth there has been in him a powerful belli- cose personality, a tremendous vitality both of mind and phv-ique : a man who could impose his will by sheer brute strength a> well as by reasoning: who could con- vince by argument, and if necessary, bulldoze and ter- rorize. Such a combination allied with wealth and education (for he was college bred) and a complete knowledge of all the tricks of the trade, was bound to prove invincible, or almost so. His very appearance, arising from an un- fortunate facial disfigurement, added to his forceful ap- pearance, and to the terror which he inspired. Xot inap- propriately did he name his yacht The Corsair: he was a modern embodiment, in a present-day guise, of some antique corsair, the qualities simply being trans- posed for adaption to new conditions. r.RKAT MAC.X. \TF.S VIF.I.D TO HIM. Instead of having to squirm himself into Yanderbilt's confidence, he compelled that haughty magnate to come to terms. This fact Morgan himself testified to in the suit arising from Yanderbilt's South Pennsylvania railroad project a transaction which has been de- scribed heretofore. This litigation, it will be recalled, sprang from Vanderbilt's building a parallel line to com- pete with the I'enn-ylvania Railroad. Morgan, it was true, had acted as \ anderbilt's financial agent, but he also had heavy interests in the Pennsylvania Railroad. and his banking hou-e represented large foreign holding interests in that line. Above all. he was on the sharp lookout for tlie interests of |. Pierpont Morgan. How did he force Yandcrhilt to .-ell hi- South Penn- sylvania !nu- to the Pennsvlvama Railroad.' In an ex- amination, on ! Vcembcr 13. iSS;. before Kxaminer John II. Weiss in the federal Court at Philadelphia, he re- lated that when he returned from Kurope in |nne. iSS;, 194 HISTORY 01-' THF, CRKAT AMF.KU'AX FORTl'XF.S lie " became satisfied that something should be done to bring more harmony among the trunk lines." and he added that he believed that " sufficient pressure could be brought on Mr. Vanderbilt to induce him to sell out." Of the specific nature of this "pressure," no explana- tion was given, but those familiar with the immense co- ercive power of the Pennsylvania Railroad, and the power of Morgan's bank, and that of his correlated banks, were not in doubt as to its significance. The treaty of peace between the warring magnates was finally made aboard Morgan's yacht. \Yhat was Mor- gan's part? To use his own language, he " bought from the South Pennsylvania and sold to the Pennsylvania." What his rewards as arbiter were was a fact not made public: we can conjecture that his bill was no slight one. This treaty, like all such agreements, was made only to be broken ; the Reading Railroad which, under the pact, was to be indemnified for certain property, claimed that it was cheated ; hence the suit. Up to this time, that is to say. 1886, Morgan had figured little as a railroad magnate; his conspicuousness was more that of a powerful banker who made a spe- cialty of reorganizing railroads. Let it. not be supposed that the term "reorganizing" comprehended the under- taking of expensive improvements in the physical layout and operation of railroads ; the introduction ol safer ap- pliances and equipment, and the minimi/ing of danger id pas>engers and 1o railroad workmen. Reorganization included none' of these things; there \vas not a railroad corporation in the country which did not violently contest the passage of laws requiring safety apparatus, and which did not violate such laws as were finally parsed ; progressively, the yearly death rate of FLO\\ i.Ki \<; OF -I'm-: M OKI, AN FOKTI NIC n^ passengers and railroad employes increased." Tlic profits, in the form of dividends, came not only from a series of extortions, but from the slaughter of a greater number of men, women and children than were killed in the worst wars that the civilized (or rather, uncivil- ized,) world has known. The " reorganizations," so called, were not intended to change these condition- ; their sole purpose was to put the railroads in a position where profits would be assured, no matter at what pub- lic expense or at what cost of life. After a railroad had been grabbed and thrown into bankruptcy by succes- sive crews of capitalists, a reorganize!", such as Mor- gan, would step in, compel the creditors to settle at his own terms, force the small stockholders to consent t<> some new arrangement of stock, and issue new securities to be sold in Furope or America. In brief, a "reor- ganization " consisted in scaling down the debts, or sum- marily expunging them, and in devising new plans bv which the profit < would be greater. For doing this. Morgan was hailed a< a man of won- derful constructive acumen a financier <>i tir>t-rate or- der. Frequently, however, as we >hall see, the small stockholders did not share this opinion; and occasion- ally they forgot their expected gratitude so far as to 1 ' The mimher of railroad employes killed nr injured in- creased from jj.noo out of a t7_M>74 employed in 11)07 an in croa.se from 3,u per cent, in iS8<) to 5.51 per c. t. in 1-107. From iS8S to KKJ7 not less than 5^.040 euijiloyi. > were ki-'ed while at work, and mure than Sc.o.i'o.i employes were either maimed or crippled. These figures have been compiled from the annual reports of the Interstate Commerce Commission. I (JO charge him in court with fraud.'-"' This was Morgan's great role for many years : as a reorgani/xT. not as a proprietary railroad magnate. The great railroad po- tentates of the period np to i88<) were the Yanderbilts, < ionlds, Sage, Blair and Iluntington. They were the men recognized in Congress as the lords of the railroad systems, which fact is patent from a scrutiny of the Congressional Record." in which, with great abun- dance, recur word}' denunciations of them for gross cor- ruption and for consecutive violation of laws. Mor- gan's name was not mentioned in the-e accusations. Cut it was not long before Morgan came to the front as one of the foremost railroad magnates in the I nited States. His aggressiveness of character and action, his truculent boldness in smashing down obstacles, his con- tempt for artificial restraints of law. his disregard of public opinion, and hi- knowledge of how to applv power where it would produce the best results all of the. in its fury at being on the verge of overthrow, was most active in having all sorts of anti-trust legislation passed ir ' For example: In the case of the Toledo Railway and I'en inal Company, the Ohio Savings Bank and Trust Com- pany :':lrd a petition in the i-Yderal Court at Toledo. Ohio, on August 5, 1007. averting that fraud had been used in connection with the -ale of that road, and charging collusion between Morgan and other railroad magnates. By this collusion, it \va- alleged, an agreement had been reached by which the property \va- sold at a low figure through (he smothering of competitive bidding, and that this had been done to defraud unsecured cred- itors. The petition was overruled. This cla;-s was obdurately determined to keep things as they were. On the other hand, the. great magnates, in line with the momentum of modern economic forces, were being forced into effacing the middleman in every direction, and in centralizing ownership. The middle class had the number and traditions ; the magnates had the money and the power; as for the working class, despite its strikes, it was merely, in the long run, a pawn in the combat. The Standard Oil Company had built tip its power largely by reason of the secret railroad rebates and discriminations. If a drastic law could 1:^ passed against the railroads, the middle class argued, the rising trusts would receive a fatal quietus a futile kind of reasoning, but one .sincerely believed in at the time and for a long time afterward. The great aim of the middle class, therefore, was to get through Con- gress a strict interstate commerce law, such as would, under heavy penalties, forbid rebate giving and railroad pooling. The Congressional sessions of 1884. 1885 and 1886 were, to a great extent, occupied with long debates over this proposed law. The middle class was quite sure that it was the victor. Senator followed Senator, Represent- ative followed Representative, in arraigning the railroad magnates. ]f speeches signified anvthing these mag- nates were alreadv on the highroad to defeat and to prison. Senator Van \Vyck, of Xebraska. thundered for days at a stretch. " [-"or years/' said he, "capital has been organi/ed. b< >ld. im>crupulous, rapacious, law- defving, moving as did Could, according to Ins sworn testimony, in Xew N t ork, and deuce of hi- own written ' ~ lai ure -. upon the conn s. up' ) i l Slates, unblu-dnnglv purchasin ly8 HISTORY OF Till-: GREAT AMERICA X FORTl'XES . . . In a republic they despise the people and control its representatives." 1\\ KK1 Mi OF TI1F. MOiUiAN FOUTl'Nli I 1 /; tended, and for which contingency thev had expressed and equivocally drafted it. Due clause after another was, on this or that ground, declared inoperative by the courts; the interstate Commerce Commission, which the law established, had not even the power, it was de- cided, to compel the attendance of witnesses, and the courts refused to grant writs of subpiena in aid of its proceedings. Further mo re, railroad official- ( who were the only persons whose testimony could secure a con- viction) were excused from testifying on the ground that by so doing they might incriminate themselves. In a word, the Interstate Commerce Commission, on the establishment of which as a peremptory tribunal the middle class had built such high hopes, was found to be nothing more than an inane body which was. allowed to devote itself to the harmless pastime of collecting statistics, but was empowered to do nothing more serious. Again the bewildered middle class found itself woe- fully routed. While it had been holding meeting- and talking and petitioning, tin- magnates had sent a stream of " silent arguments ' coursing through the exalted wall of Congre-s. And, in fact, some <>f the verv mem- bers of Congress who were so vigorously inveighing against the "high-handed" corruption oi the railroad magnate^, and demanding punitive law-, were, at tlns verv time, themselves implicated in a great -caudal. This wa- what was called the " 1 'an- Klectric Scan- dal ": and if anv reader de-ire- in acquaint him-elf with the vast ramifications of corruption in Cnngre-s. in the courts and in the legi-lature- at the time let him (if 2OO lie dare) read the 1,284 pages of testimony liken by a Congressional Investigating Committee. 1 . 1 " The Pan- hlectric Company was a competitor of the Bell Tele- phone Company: at least, it energetically attempted to be. 'j he Bell Company had already established the validity of its patents in the courts, although not with- out having to face and fight down charge after charge on the part of other inventors that it had appropriated the fruits of their inventions. The testimony before this particular Congressional Committee was full of charges, sometimes mere insinuations, at other times open accusations, that in order to attain its victory, and to secure favorable decisions, laws and franchises, the Bell Telephone Company had bribed Congress, the va- rious legislatures and judges either by mon'cv or by gifts of stock. Against the Bell Company the Pan-Klectric Company seemed powerless; but as a last resort, its promoters began a campaign of corruption to get the I "nited States Covernment to move in the courts lor the vacating of the Bell patents. Large blocks of Mock were distributed among vanou- influential Senators and Representatives, some of whom offered no objections to being made direct- ors oi the Pan-Klectric Company. I "nited State- Attor- nev-Ccneral ( iarland upon whot of the courts. Yet the lawyers in Congress who drew these* bills were ranked as the foremost "Constitutional expert-" in the land a situation not at all contradictory to those who understood the double-faced nature of the performances at Washington. Man\' State- were passing drastic anti-trust laws. These laws did not essentiailv arre-t the growth of trusts but thcv did have the effect of spreading a certain timid- of wealth, it was true, cunirolled the machinery of Gov- ernment, and criminal proceedings were little to be feared. Still, with the public temper in the inflamed ,-tate in which it was. there was never any tellinf what might break forth. 1 he great railroad magnates, in particular, were tired of a competition resulting in the cutting of rates, in- creased expenses, and diminished profits. They were eager to form a combination effective enough to pre- vent competition in the respect of undermining one an- other's freight and passenger rate>. With such an agreement in force, profits would be immensely increased, and upon the strength of those increased profits, more watered stock could be issued. Hut who \va.- audacious enough to undertake the in- itiative in forming this combination? In a way. it was a perilous tiling to do. ]f unbought or unintimidated public officials should take a notion to prosecute crim- inally, its promoters and beneficiaries were liable, upon conviction, to a long sojourn in prison. Van- derbilt, Gould and Huntington and other magnates, while caring nothing for law. did not choo-c to take the lead: moreover, as thev were ]ealou> and di-trustful of one ;; ther, it would not have been iudiciou> for anyone of them to have done -o. The ideal leader in this exigency was J. Pierpont Mor- gan; and how he stepped forward and molded the nebu- lous plan into a definite, concrete combination, will now be rdaled. CHAPTER IX MORGAN AS A BANKING AND RAILROAD GRANDER On January 2, 1889, a circular marked '" Private and Confidential," was issued by the three banking houses of Drcxel. Morgan and Company, Brown Brothers and Company, and Kidder, Peabody and Company. The most painstaking- care was exercised that this document should not find its way into the press, or otherwise be- come public. Indeed, extraordinary measures were taken to surround its contents with every precaution of secrecy. Why this fear? Because the circular was an invita- tion, tacitly understood as a command, to the great rail- road magnates to as.-emble at Morgan's house. Xo. 210 Madison avenue, and there form, in the phrase of the day, an iron-clad combination. The plan was to make a strict compact which would eft ace competition among certain railroad-, and unite those intere-t- in an agree- ment by which the people ol tin- I nited Stale- could be bled even mure effectively than before. For the sake of appearance, in ca-e the nature of the undertaking should leak into public print, the promoter- garnished over their real purpose-- with a string ot diverting phrases. Their sole aim, so ihcy pleasantly indited it. was an association "to maintain public, reasonable, uni- form and -table rate-." and they added that another ob- iect would be the gathering of -lati-tic- regarding rail ways. 203 Such subterfuges deceived nobody but the credulous or uninformed. A HISTORIC MEETING IX MORGAN'S HOUSE. That circular is a historic document, well worth more than passing notice ; and he who is familiar with the forces then at work will rightly consider it of far greater importance than Presidents' messages, ordainments of Congress or Courts' decrees. At a time when the whole gravamen of law and ju- ridical precedent was being used to insist upon indus- trial forces remaining stationary and stagnant, this cir- cular came as a proclamation of defiance. Common and statute law sternly declared that the thing called com- petition in trade must be kept alive, and that if it could not sustain itself by its own merits, the law should demand its maintenance. The causes producing and justifying competition were passing away, but none of the law-making bodies recognized the newer conditions, nor made any provisions for them. But the magnates realized that the old indiscriminate system of competi- tion was rapidly becoming archaic, and that the time was ripe for a more systematic organization of indus- try. And so, while Congress and the legislatures were busily enacting law after law, supposedly edicts of " the sovereign people of the I'nited State-," a few magnates issued a brief circular which intrinsically was of far, far more binding weight than entire volumes of statutes im- potent, in the long run. in the face of onrushing eo> n< >i;nr i< >rces. llie ideas <>\ the people at large and the self- poses down, as the magnate.- did. and however harmlcs- they might represent their aims, the plan of this group ol. hankers and railroad grandees was certain to arouse the sharpest suspicions. A restless, sullen state of mind pervaded the mass of people. Distrustful of any asser- tions made hy the magnates, they were ever ready to see sinister projects beneath bland announcements. Fur- thermore, the magnates' definition of " reasonable " was diametrically different from that of the people at large. .\fatters and charges that the magnates honeyed over as " reasonable adjustments," impressed the popular under- standing as extremely unreasonable; as gross extortions of which the law should take condign notice. \\'RKCKixd TIII-: Minni.K CLASS C.UADL'ALLV. At the behest of the middle class, laws directed, super- ficially at least, against the magnates' arbitrary power and concentration of resources were everywhere being passed. Since the putting down and dissolution of the great labor movement of 1886, serious inroads from that quarter were no longer feared. Putt the work of ex- tinguishing the middle class had to be proceeded with slowly and discreetly. Workers' uprisings, political or other, could be crushed by force and court decrees and by bribery and fraud at the polls. In any emergency the whole middle class would stand with the great propertied interests in sub- duing the working class. Yet when the fight for su- premacy was one confined to the middle class and the plutocracy, the magnates had good reason not to attack the middle class too openly. The country swarmed with organizations of manufacturers, jobbers and small trade-- men, and in the XYest and South the Farmers' Alliance, 2O6 HISTORY 01' TIIF. GRKAT AMKRJCAX FOKTUNK.S an ally, was at its strongest. This middle class arrogated tn itself the distinction of being " the public." The work- ing class, whom it used and exploited, had only a few obscure trade journals to disseminate its views and voice its demands, and, although comprising the immense bulk of the voters, had not a single real representative in political office. But the interests of the middle class were represented by thousands of newspapers and journals; by a host of political spokesmen and lawyers and college professors, and by the force of prevalent law and com- mercial institutions. In warring upon the magnates the most persistent argu- ment that the middle class used in its appeal for sympathy and support, was that the extortions of the magnates were immoral. Precisely as, when the \vorkingmen in previous decades had struck' for a shortening of their hours of daily labor, the manufacturers had declared the movement insurrectionary and immoral, so now they used the same plea against the exactions of the magnates. When the workers complained that their bosses oppressed them, the bosses retaliated with the charge that the workingmen were unruly, and that their demands for redress were not based on morality. Hut when the mag- nates squeezed the manufacturers, jobbers and retailers then these diyisions of the middle class made vehement lamentations that they were the victims of an immoral conspiracy. Nothing could exceed the baseness and hypocrisy of the middle class, as a class. It demanded the widest latitude m law in placing no restrictions upon it either in exploit- ing its employes, or in robbing back from them in variou- swindling ways the meager wages it paid. It insistently fought the workers' struggle for a shorter workday and more wages; it opposed the passage of even slight laws for the pr< 'lection of the uorkciV labor; ii combated inovcincnts for factor}' and tenement reionns. At tin- same time it insisted upon its right to make and sell shoddy goods and adulterated products, and impose them upon the workers at extortionate prices. The manv laws which, after strong agitation on the part of labor organizations and various other bodies, the different legislatures were passing at this time, indicate the widespread practice of manufacturing and selling- adulterated and often poisonous foods and drug--. The passage of these laws had long been contested by the capitalist class, as a whole; and even after they were enacted, they were not generally enforced, and were so ineffective that, many years later, during Roosevelt's ad- ministration, a Xational Pure Food Act was passed by Congress after the severest and most persistent opposi- tion on the part of the beneficiaries of the frauds. Tin- law, also, has been largely ineffective. In i8/(j, Wisconsin enacted a penal law, providing penalties for the adulteration of foods and drugs. Ohio, in 1887, 1800. and r8<)8 passed law< for the pun ishment of variou^ kind.-- of adulteration. Xew York, in i8<)3 and [8 and 18(^7. passed \:\\\ < against the adulteration of cer- tain foods. Iowa enacted laws for the punishment of those selling adulterated milk, cheese, butter and linseed oil. Illinois, in 1881. passed a law again-t the fraudu- lent manulacture or srde of imitation butter, and re- enacted it in 18117. Xe\\ Jersey, in the same year. pa<>ed an act to prevent the adulteration of food^ and 2O8 HISTORY Ol- Till-'. GRMAT AMERICAN I'ORTL'XKS drugs, and enacted another law in 1897. Pennsylvania prohibited the sale of adulterated drugs, and provided 1 enaltics for the adulteration of milk and cream. Michi- gan, in 1895, passed an act to prohibit and prevent adulteration, fraud and deception in the manufacture and sales of articles of food and drink. Nebraska and Kentucky passed similar laws. South Dakota, in 1885, enacted penal laws relating to the adulteration of food and drink, and. in 1897, passed another act increasing the penalties. These are some examples of the various State laws. Nearly, all of the States also passed laws against the sale, by fraudulent weights and measures, of coal, wheat and various other foods and commodities. CHARACTERISTICS OF THE MAGNATES CRITICS. Not a move, on the other hand, could the magnates make without the middle class raising the cry of fraud a not untrue accusation, it is hardly necessary to say, but one singularly ill-chosen from a class itself gan- grened with fraud. The Farmers' Alliance and kindred organizations virtuously fulminated against the extor- tions and frauds of the magnate class: the cattle dealers of the Southwest especially were not merely bitter, but rancorous!}- so, against the railroad kings. Yet all of the large cattle ranches had been obtained by fraud in more or less degree. 1 The cattlemen not only practiced cx- tortions, but in their economic wars with adjacent cattle- men, forced their cowboys to fight and kill the cowboys 'See House Report?. Forty-eighth Congress, Second Sessinp. 1884-5. Executive Document No. 267 : xxviv. This document deals with the Texas ranches. In prcvi-ms chapters of this work many fact- have been Lnven from official documents showing the illegal, ar.'i 'ten violent, seizure of cattle rancho through out the \Yest. of their neighbor-, and risk being killed them cive : nearly all of those cowboy affrays so romantically de- scribed in fiction, arose from nothing more or less than economic disputes between competing rival master caitlv men. To say that the entire manufacturing cla-s was de- frauding and swindling in ever}- conceivable form is but: to state a truism elaborated upon specifically in many a public document. Leaving- a-ide the current stupendous frauds in profit- ing from misleading semi-worthless merchandise, or adulterated products sold under fal-e pretense-; a traf- fic shared in by wholesaler, jobixr and retailer; aside from this phase and a multitude of other phases, we shall simply give one typical graphic example of what the man- ufacturers were doing in one of the largest manufactur- ing States in the Union. While protesting against the evasion of taxation by the railroad corporation-, the manufacturers were defrauding in the one item of tax- ation alone of a sum gigantic in the aggregate. "It is a notorious fact," reported Comptroller Morgan, oi Xew York State, in ujoo. "that hundred.- of manufacturing companies, whose plants are located in thi- State, who-e business is chiellv trail-acted here, and which tor all prac- tical purposes are Xew York enterprises, escape all in- direct taxation in this Stale, and much local taxation, by being incorporated in other State-." They paid -ub- -tantialh- nothing for tire and police protection, Comp- troller Morgan aided.'-' Yet in case their employe- struck. the>e manufacturers were ever ready to requisi- tion the pretext of violence and demand police and mili- tia to club or shoc.it into submission the ver working 210 class from who.-e labor the entire burden of taxation came. This had been a long-continuing condition of af- fairs in every State. MORGAN" DIRECTS MATTERS. These facts will give a fairly clear idea of the compo- sition and pretensions of that middle class which the news of the meeting in Morgan's house was bound to excite into convulsions. A momentous gathering it cer- tainly was that assembled in Morgan's mansion on Jan- uary 8, 1889. Who are they we note there? Apparently private citizen-; in reality monarchs of the land: Jay Gould with his son George, held by the leading strings ; Stickney. of the Northwest territory; Roberts, of the Pennsylvania Railroad ; sleek Depew. echoing the Yan- derbilts ; Sloan, of the Delaware, Lackawanna and West- ern Railroad, and a half dozen more magnates or their accredited mouthpieces. The honorable legislatures could gravel}- discuss the advisability of this or that leg- islation : the noisy "Congress of the United States" could solemnly meet and after wearing out months in rodomontade, profess to make law.-; the high and mighty Court- could blink austerely and pompously hand down their decision-, Hut in that room in Morgan's house sat many of the actual rulers of the United States ; the men who had the power in the final say of ordering what -h- >uld be done. Morgan \va- chairman of the meeting, and with wonted tie directness went -traight to the point. Thank- to a stenographic report would be strictlv en- forced against him. So confident of its ground was the meeting, that the subject of possible prosecution wa< not given a thought. The -acred doctrine, the "inalienable. undeprivable right" of competition was. without any ambiguity or ceremonv, given a deadly blow. For that, if for no other reason, the meeting was memorable. The magnates were sure of immunity. To them laws were instruments not obstacles: the same code of laws which they lightlv stamped under foot they could always suc- cc>-fully use against workingmen on strike, as they did. for example, five years later, in the great railroad strike of i8;4, when Federal troops were ordered out at their command to overawe, and, if necessary, mow down the strikers. Another pha>e of that meeting (a "conference." as it \va- called) deserves mention. I Tow much of a vacuitv mm were considered, magnate 1 - though they were, air! how all important propertv was held, was shown bv t! . method of voting. \- each proposition was advanced it was put to a vote. The names of the magnates were not mentioned in the roll-call ; it was the corporate rail- roads which were expected to vote and which did vote. Thus, instead of Gould's name, the name of his railroad- was called; the Missouri Pacific and the \Yahash voted, not Gould. \Yhat could have been more beautifully sim- ple and direct, so free from cant, so faithful to the spirit of the human money bags present? If this method were only adopted in Congress much good in point of popular understanding would result, for while the old forms there still persi>t. most of our ''statesmen" would not be libelled were the roll-call made by corporations instead of by putative representatives of the people. If a mere threat of the powerful bankers, led by Mor- gan, was enough to convince or overawe a group of the railroad dictators of the I'nited States, what could not the banking power accomplish when it actively concen- trated its might of monev upon a given object? Xcither capitalist foe nor any government could withstand it. The extreme-- lo which it could go in successfullv execut- ing its plans and in dissipating all obstacles by its ter- rorism, was tvpically shown in a noted bond deal, in 1895. whereby the I'nited States Government was held up by a syndicate of bankers headed by Morgan, and forced to give over a virtual gift of many million- of dollars for the privilcuv of having a nominal and transient claim on a supply of g>ld which those same bankers had drained from the I'nited States Treasury only a short time pre- viouslv. 214 HISTORY OF THE GREAT AMERICAN FORTUNES reer. His father died in 1890, bequeathing to him a fortune superficially estimated at $10,000,000. But it is needless to say that J. Pierpont Morgan was already a -eignorial multimillionaire. That he was intensely hated by a large portion of the element in the financial district was undeniable, but it was a hatred caused not by objec- tion to his methods, but because he eminently surpassed in either the brutality or finesse of those methods. All of his decriers of his own rank had at basis some per- sonal grievance resolving itself into a rankling enmity at being outwitted or outdone by Morgan. Had he given them the slightest opening they would have enmeshed and swindled him and gloated over the deed. But with, the exception of one distinguished antagonist, to whom we will refer later, he anticipated and overcame them all, and left many of them with the embittered memory of their collision with him. but with nothing more substantial. Xo doubt Morgan's personality had much to do with this current hatred on the part of those who came into contact with him ; he was at no time to be suspected of being of the unctuous order of men, full of blandishments and sweetened guile. Rather, he was a sort of plug-ugly in the financial purlieus, belligerent and ruthless, with a rough, dictatorial manner, unsparing of the feelings or interests of those who in any way crossed his will or plans. Those personal details, however, were not known to the great ma-s of the people the country over. The popular conception of men in public notice was derived almost wholly from what the newspapers >aid. and these orMai t'y, with rare departure-, portrayed Morgan a- IMVM financier and benevolent gentleman. In MOT- icial transactions immense number- oi" the mid- . as well a- people higher in the -eale of the well-to-do, lost, in the aggregate, great sums of money torn from them in the stockjobbing operations in Wall street. P.ut they did not blame Morgan per-onalh ; their bitterness \vas cast at the generic monster called Wall street. And yet noi a -ingle one of those thus stripped had not deliberately set out to enrich himself at someone else's expense; even those who pu' their fii.r.ds in stocks for the purpose of " legitimate investment," did so with the full knowledge that the lower the wages paid on the railroads and in the factories, and the longer the daily labor of the workers, the brighter were the chance- for a larger dividend. At the same time, while hated in the financial dis- trict, Morgan was deeply feared for his far-reaching power, and what were considered his relentless methods both in accomplishing his ends and in settling scores. ( )bservers usuallv described him, in the slang of Wall street, as a man who was in business " for all there is in it." As though anyone else were in Wall street for a different purpose! His policy was regarded as th;it of finding a weak spot in a corporation and then " squeez- ing it for all it was worth"- a very much biased accu- sation, inasmuch as every other successful financier in- controvertiblv pursued the same methods, although not always in the same way. His favorite expression. when questioned about his transactions was, " 1 am not in Wall -tree' for my health." His enemies whi-pered about that he was a " freehootrr in finance ": hi- admir- ersthose who profited by his bounty -loudly pro- claimed his "'reatne--. Railroad from McLeod, in 1893, we have already given a description. 4 In that account it was shown how, when .MeLeod pressingly needed funds both to finance his rail- road's coal combination and to pay for improvements, he found that the leading banking institutions had im- paired, and then cut off, his credit. Morgan and Yan- derbilt were then able to assault and beat down the price of Reading stock, buy large quantities of it at a very low figure, and gain control of the system. As a railroad, the Reading line was not extensive: its great value lay in its ownership of anthracite coal mines, of vast unmined deposits, and in its coal-carrying traffic. To his other manifold powers Morgan now added that of coal magnate. The Constitution of Pennsylva- nia, as we have seen, expressly forbade railroad cor- porations from owning and operating coal mines. But that law did not exist which the very rich were not able to evade. Dummy holding companies were organized ; and. although everybody knew that these companies were mere subterfuges, the public authorities took no action, and when, after many years of inactivity, they, with in- different energy brought suit, the case was appealed by the magnates to the Supreme Court of the United States, from which, in 1909. the railroads emerged victorious with a decision of so equivocal a nature as to be tanta- mount to one in their favor. Two immediate re>ults signalized Morgan's entry as a monarch of the coal fields. To both we have adverted in a previous chapter, but they will here bear repetition. Kvery housekeeper using hard coal was taxed to add more millions to Morgan's fortune: the price of stove coal was raided from 81.25 t<> Sr.^5 more a ton (ban had bt-rn chared lie fore. The second result \vas the more rapid process of crushing < nt the independent coal operators. Ilv a concatenation of ruthless methods ' these independents were ruined and driven out, not with- out much wailing against oppression, and shrill charges of fraud. Yet the very mines which the}- were virtually coerced into giving up had been secured by fraud, either by them or by their predecessors. The law records of the State of Pennsylvania reveal case after case, before and after the Civil \\ ar, of fraudulent tax sales of lands contain- ing coal; and the bribery of the Pennsylvania Legisla- ture by individuals and corporations for coal mining and other kinds of charters and special rights had been so admittedly brazen that, in 1847. the Legislature, with self-righteous display, was constrained to pass an " Act to Define and Tunish the Offense of 1'ribery." making the crime of giving or receiving a bribe a felony, pun- ishable with a hue not exceeding S;.ooo or a sentence of five years in prison." This law was treated with lev- ity ; it had no other effect than to refine and obscure the methods of bribery. Another act was parsed on March 3, 1860, and a third on April 20, 1874. which laws were likewise facetiously regarded by the seekers of vested privileges, and the bribery went on per^istentlv. 7 Time :iy connmiiHis scandals qrou-ir.ir <>'' < : ennsylvania Legislature \va- that of th" pas ^-(i in the interest of the lunibermin. Ms ;- after time the Legi-lature ' f i 'enn-ylvania was forced to appoint investigating committees to report on this or that charge that bribes had been used ; one of the few time.- when any of the bribed ever went to prison was in the Riot Indemnity Hill trial- in 18/9-80. Some excuse was needed to give the appearance of a necessity for the great increase in the price of coal. The coal magnates supplied it beforehand. They inquired how thev could avoid charging more. Had not the pro- duction of coal fallen? And were not the freight rates extremely high' Pun the Government knew that these claims were fabrications. The House Committee on Interstate Commerce had unanimously reported that the coal magnates had deliberately reduced the output of coal: that although the capacity of the collieries was 5O.ooo.ocjo tons a year, yet only about 40,000,000 tons were being mined, so as to make a show of scarcity. And as regard- freight rates for coal the committee re- ported, " Although coal in freight can be handled cheaper than almost any cla-s of freight, yet it pays nearly dou- ble the rate of wheat and cotton."' Without quibble, this combination was a conspiracy, criminally ami civilly liable. Hut neither National or State law was enforced again-t it. The House Commit- tee reported that the Interstate Commerce Act was too ineffective a law to proceed under, and that ended talk ;" criminal prosecution. The Government machinery of e I nitcd State- practically became (as it did in so many other in-tance- ) an accessory of the coal combina- tion in allowing it to -queeze more huge extortion- from the Buffering- of the mass of the people. The boa-ted Government "of, for and by the people/' vva- a Government run wholly by the great propertied .: ; >j interests as a necessary appendage, based upon force, for compelling. tlie people to submit without redrew or quar- ter. Such operations as this explain how Morgan'> for- tune leaped by millions at a time; every dollar extorted in that increase of price came very largely from familie- wlio, already burdened by a thousand and one extor- tions, were forced to suffer still more keenly ; each new compression from above drove them deeper into abject poverty, with all its demoralizing and horrible evils. The whole edifice of capitalism was built on a vast, ghastly charnal house, overcrowded with the bones of numberless victims. Yet the industrial grandees who thus slaughtered with impunitv in the insidious ways of trade paraded themselves as very devout men: Morgan was a vestryman of St. George's Church, Xew York City, and ostentatiously passed the contribution plate in the name of Christ. To this coal transaction of Morgan's there is a sequel, showing how, and by what methods, he expanded as a coal dictator, but the recounting of this will be de- ferred to its proper chronological place, and that famous bond deal of his in 1895 will be considered. TRAXSPKRRIXT, ("IKCAT RAILROAD SYSTEMS. The two Drexcl partners of his, Frank and Anthony Drexel, passed away, each leaving an estate of $25.000.- ooo. The}", too, had acquired the glorious name of philanthropists ; before dying they had together given away the sum of $8,000,000 to found sundry charitable institutions in or near Philadelphia. Since their part- ner>hip with Morgan they bad, of course, shared in all of hN transaction?. Some of these \ve -hall have to pa>.- over with only a reference, inasmuch as the fact- are exceedingly involved. But this one point sticks out: Great railroad systems, in the building of which neither Morgan nor his associates had in the slightest partici- pated, which had been constructed largely with public f.mcls and gifts of public land, and which they had never seen until long after they were in operation : these railroads suddenly passed into the ownership of the .Morgan combine, which largely meant Morgan. How did this transformation come about? Shall \ve have to retell the old story ; the original looting, the bankruptcies, reorganizations, and tricks of finance, squeezing out of creditors and small stockholders? However glib financial writers may attempt to explain it, or with whatever fine phrases apologists might gloss it over, the matter reduces itself to this trenchant fact : That Morgan became possessed of great railroad sys- tems in the South, with the initiation and operation of which he had had no more to do than a babe. The Industrial Commission reported these railroads as being in the " Morgan group " by 1901 : The Southern Rail- way, with its 6.807 miles of track; the Mobile and Ohio Railroad, the Queen and Crescent, the Central of Geor- gia (later taken over by Harriman), the Georgia South- ern and Florida, the Macon and Birmingham, the Philadelphia and Reading, the Lehigh Valley, the Erie ( subsequentlv acquired by Harriman). the Central of Xew Jersey, and the Atlantic Coast line/' The total ex- tent of these railroads was j 9.073 miles. Compared to the tortuous and difficult details of Mor- gan's " reorganizations,'' the tale of his I nited State- bond transaction of 1805 is simple enough lo he ea-il\ n imprehended. As gold \vas the international trade standard of value. 9 Final Report of iht 1 Industrial Commission, 7902, xix : ,308. 221 the I. ir.tC'l States ( lovernnu nl followed tlie ])olicv of holding a certain amount as a treasury reserve. When, by reason of some cause or other, this reserve was de- pleted the Government was compelled to issue bonds to replenish it. The powerful junta of leading national and inter- national bankers definitely and deliberately forced the United States Government to put out these bond issues. This the\ - did by draining the treasury of its gold, and by then going through the empty form of selling back- that gold in return for bonds. The treasury notes and greenbacks, comprising much of the currency of the Un'ted States Government, were redeemable in coin. This provision was construed as calling for payment in gold. The bankers would take over to the sub-treasury in Xew York Citv great stacks of treasury notes and greenbacks and exchange them for gold. This gold they would then hoard in their vaults. The Government au- thorities were fully aware 1 of this proceeding, and knew quite well that the ulterior purpose was to force a bond issue. After the banking clique had obtained the bonds, it could do two things sell large amounts of them, at enhanced premiums, to smaller banks, savings banks, insurance companies, estates and investors in general, and it could use such portion of the issue that is kept as a basis for issuing new currencv. The large private bankers, such as Morgan, had their chain of auxiliary national banks, bv means of which bond issues could be converted into currencv, and the time-honored ex- tortion of getting a double interest could be managed. bankers. Their profits, it is estimated, reached tens of millions. With the advent of the year 1895 the United States Treasury \vas again emptied of gold. Where had the gold, which the Government had purchased only a short time previously at usurious rates, gone? The re- ports of the large banks gave the answer. \\y the end of January, twenty-six banks in Xe\v York City had in their vaults a 1: >ard of $^5.000,000 in gold. Presently the amount totaled 8129,000,000, all told. The Govern- ment shrieked in helplessness; J 'resident Cleveland was reported as saying privately that " the banks have got the country by the throat." At the appropriate moment a syndicate of bankers ap- peared in the open and magnanimously offered to supply gold to the Government in exchange for bonds. This syndicate was composed of J. P. Morgan and Company, August Belmont and Company, representing the Roths- childs : James Speycr, the National City Rank and four other extremely powerful national banks. In the negotiations with President Cleveland for the bond issue. Morgan's emissary and clever man of law was Francis Lynde Stetson, who had been regular coun- sel for Morgan since 1887. Stetson had been Jacob Sharp's attorney at the very time when, in 1884, Sharp had bribed the Xew York Hoard of Aldermen with $500,000 to give him a franchise for a surface railroad on I'.roadway. His activities in Sharp's transactions caused him to be subjected to some severe questioning in iS8n by the Xew York State Senate Committee on the i '.roadway Railroad. .After Sharp had successfully bribed the Xew York Aldermen. F.lkins and \\idener. who \vcre likewise 1 bribing the Philadelphia Common Council and the Pennsylvania Legislature, and who be- came multimillionaire -tnet railway magnates, tried (although for the time unsuccessfully), t<> lease the Broadwa\ Railroad lor a term of 999 years, and as an earnest of good faith, deposited 10,000 shares of Broad- wav stock, which they had secured, with Drexel, Mor- gan and Company. 10 Morgan knew that every one of these shares was the product of bribery, and that the whole Broadway franchise had been so obtained. Per- haps Stetson's excellent and adroit work for Sharp highly commended him to Morgan. After Cleveland had been defeated in his candidacy in 1888 for a second term as President of the I'nited States, he resumed the practice of law, and formed a partnership with Stetson. Cleveland was reflected President in 1892; thereafter Stetson was a frequent and confidential caller at the White House. These various circumstances were much commented upon, and with particular animadversion, when Cleveland was virtually charged in 1895 ^'ith openly selling out the people of the United States to the Morgan syndicate, repre- sented bv Stetson. KICHTF.KN MILLIONS AS A GIFT. then compelled a bond is-nie. and declared that it alone could supplv the required gold. This was a transparent falsehood. Main- members of Congress urged Cleve- land and John (I. Carlisle. Secretary of the Treasury, to make the bond issue a "popular" one. By "popular" was not meant the mass of the people, who had neitlu-v ; i; nor other knid oi money, but trom tiie smaHe;' cap ila'i '. interests. Cleveland and Carlisle. ho\ve\ er. tuiT.-.C over t 1 ne 862,000,000 of iour ])cr cent, bonds to il: . Mi rgan syndicate at the ])rice of 104. The syndicate immediately resold the bonds to investors in America and. in Kurope at 118, 119 and 120, clearing, it was estimated, in direct profits, about Si8.ooo.ooo. 11 This sum repre- sented the sum that would have gone to the Government had the sale of bonds been accomplished without this intermediary operation. The contract with the Govern- ment entirely dictated by the bankers, headed by Mor- gan, gave the syndicate, furthermore, an option on all bond issues tip to October i, following, and allowed it to choose its own time to deliver one-half of the total amount in gold. From every public quarter came the severest denun- ciations of Cleveland, on the one hand, and Morgan, on the other. Kvcn partisan newspapers and periodical supporter.- of Cleveland condemned the bargain as scan- dalous, and declared that the Government had been shamelessly " buncoed." if. indeed, no worse charge could be brought against its chief executive. 1 - His own polit- : The bond contract made with the Government, on February X, 1805, v.-as kept secret for some days. After the issuance of ihe bonds, Morgan personally superintended the receipt of the bids at his office. 'Ihe rush to buy bonds from him was so great that twenty-two minutes after the bidding began, he an- nounced that no more bids would be received; that the whole -uppiy of bonds bad been .-old. '-Hardly had the gold reserve obtained by this $62,000.000 i.-sue been obtained, than it was again quickly drained by the banker-. In the latter part of 1X0.5. sinister rumors spread a new bond issue was under way. These rumor- were con- hy the is-uance of a private circular by J. Pierpont Mor- gan and Company, announcing their purpose to form a -yndi ver an expected additional issue of $200.000.00.) Government bonds. Morgan ai.d hi- associates anticipated a profit of $20.000.000. Kvidently. Morgan knew the precise aniuiuit the Government intended to borrow; when the Govern- 22' ical party repudiated Cleveland. Iktt a significant in- sight into the indifference with which the great magnates viewed storms of criticism was furnished by the fact that Morgan ignored the denunciation of his acts, yet deeply and openly resented a published description of himself as a " ruby-visaged magnate." He was very sensitive as to his facial deformities. So far as strictures on his acts went, they soon passed away, and the very journals which had been foremost in verbally flaying him. reverted to their old sycophantic policy of extolling him as an illustrious financier and philanthropist. Of all the magnates, none had a more biting contempt for the newspapers than Morgan. None knew better than he that whatever outbreak they might occasionally make, their course on the whole could be easily controlled by the great propertied interests. NOTHING FOR Tin-: UNEMPLOYED. To realize, however, the full import of the action of the Government it] this particular bond sale, by which a meiH issued its call. it> terms corresponded with those of the Morgan circular i>-ned one week earlier. Such a public uproar resulted, that Cleveland and his Cabinet were compelled to throw over the Morgan syndicate, and the ne\v loan wa^ "pop- ularly floated," at a ravine to the national treasury of SJO.OOQ.- ooo. It need scarcely he remarked, as a typical and memorable fact, thai in hi> ofticial correspondence and public statements, Morgan wa< representing liimselt as actuated by "patriotic con- siderations" and a de.-ire to serve "the best interests of the (iovernment and the people!'' One Wall Street broker, in a public statement, cynically described it as " fascinating and lucra- tive patriotism." When Morgan wa< planning to get hold of ihe new $jut a new surprise was in store for that class. Instead of showing any trepidation or preparing tor their dissolu- tion, such trusts as were then in existence received the decision with most irritating equanimity, and serenely proceeded to perpetuate their corporate selves by don- ning a new legal garb. They not only continued to wax great and powerful, but the Sugar Trust, in particular, with the llavemeyers at its head, carried on continuously a colossal system of frauds upon the ( lovernment in the The North River _;_'o iilSTuUY OF TIIK GUH.Vi AMERICAN FORTUNES fraudulent weighing' of imported sugar. These frauds rxlended over a long series of years, and it was estimated. \vhen the facts became public in 1909, that the amount of which the Government had been thus defrauded readied fully tens of millions of dollars.- In addition to these monumental swindles, the Sugar Trust continued so absolutely secure in its monopoly that it was easily able to crush all competitors, dictate tariff schedules, and extort, in the course of trade, an annual profit placed by some authorities at 855,000.000 a year, or a total of $660.000,000 in profits in the period from its organiza- tion to 1909. Speaking- in a large political sense, a last stand was made by the middle class in the Presidential campaign of 1896. That was its great, although not really final, attempt to defeat the plutocracy, and conquer the powers of government for ii- own policies. I nder the leader- ship of Bryan the Democratic I 'arty declared itself radi- cal and tremendously and sincerely earnest, but its so- called radicalism was in essence a reactionary futile ef- fort to extinguish the trusts and reestablish the old con- fusing competitive conditions in the production and dis- tribution of goods. It was a bitterly-contested campaign in which immense sums of money were corruptly dis- -. \fter the Government had proved beyond dispute the com- mission of these great frauds, the American Sugar Refining Company, as heretofore noted, paid more than $2,000.000 to the government in April, 1909, as restitution for its swindles. I'.ut this $ _v.ooo covered only a mere part of the long-continuing frauds. .None of the beneficiaries of these thefts were punished; punishment of a few obscure customs weigher.- and some < '" the trust's employe? was the only action taken. The di- ' 1 irs of the Sugar Trust were also indicted in 1009, it is true. The indictment, however, wa-- not for the customs frauds, but for violating the Federal ami-tru-t act a meaningless indict- ment, cuiiviction upon which carries, in practice, a nominal tine only. " PEERLESS CAPTAIN OF INDUSTRY " tributcd by the money interests of the Republican Party to defeat Bryan and the middle class. TIIK PLUTOCRACY IN T FULL POWER. McKinley's election as President of the United States, with a Congress the majority of which was of his views, was a distinct notification that the plutocracy was in full power a power won in a pitched combat, and there- fore interpreted as a popular approval of the rule by great magnates and trusts. Henceforth, it \vas well understood, the trusts need fear no governmental antagonism, even of a sham order; for while mock legal actions at no time impaired the basic sway of the trusts, yet they caused constant annoyances and expense. When McKinley took office magnates of every descrip- tion knew that the trust movement had full license, con- firmed by private bargain, to go on unhindered and un- molested, except, perhaps, with an occasional inroad for spectacular popular effect. Consequently the business of organizing trusts flourished in the open ; one trust after another was formed embracing about every known prod- uct. The work was carried on with phenomenal celerity and success. The middle class looked on impotently while factories, railroads, gas and electric plants, street railway lines, telephone systems and mine.- were con- verted from a state of individual or mere corporate owner- ship into the trust form, owned by great single corpora- tions with stupendous amounts of capital, and with dictatorship over vast masses of workingmen. In this revolutionary work, that of organizing trusts. ]. Pierpnnt Morgan was one oi" the foremost gcncralissi- mns. Indispensable ;:- : it is in this \vork to describe the 230 HISTORY OF THE GREAT AMERICAN FORTUNES methods by which he requisitioned his wealth, it is no less necessary to point out the services that he and his kind were doing for progress. In the exclusive considera- tion of progressive movements, it is immaterial what the motive was ; the thing done is all that counts historically. Xone can deny that these revolutionary capitalists were actuated wholly by ambitiously personal ends : greed, pelf and the lust of power. But after all they were revolu- tionists without knowing it, and precisely the sort of capitalist revolutionists needed at that particular time. Strong, ruthless men, bold in cunning and cunning in their boldness, were required for the work of crushing out the old cut-throat, haphazard, individualistic com- petitive system. That sluggish, money-grabbing, petty- minded body, the middle class, preoccupied with the com- fort of its bellv and with its narrow conventions, had set its self-interest against the demands of progress. It de- clined to budge ; it hedged itself behind walls of special laws ; it -ought to make matter- travel backward. Under these conditions Morgan and his colleagues were the men for the task: forceful, dominating, arbitrary men, not scrupling at any means to attain their ends, contemptuous enough of law when it stood in their way. and powerful enough to defy it. Very expert destructionists were they. Hut they were also constructionists. They tore down to build up. A decayed, archaic industrial system ihev replaced with one of a far more systematic order, the forerunner of finer systems to come. Progress often works through queer instruments. In the year- closelv following 1898 Morgan was iall} prominent in many of these trust creation-. \n ubiquitous magnate he was. pushing his industrial commest- and overlordship in many variegated direc- tion-. F.arli arrnniulntinij -ncce-s added millions of dol- PEERLESS CAPTAIN OF INDUSTRY 23! lars to his fortune. With a choice list to select from. what brilliant display of his financial acumen shall we take up first? Consecutively, the most pertinent is that noted Pennsylvania Coal Company transaction of his. THE UNFAILING RECIPE FOR MAKING MONEY. The plan which he had begun some years before of gathering in coal mining properties and coal carrying rail- roads, and of merging them into a combination, he per- sistently continued. The most important of all of the remaining independent companies in the Pennsylvania anthracite region was the Pennsylvania Coal Company. It controlled some of the most valuable mines in the center of the richest deposits. While paying wretched wages to its workers, it had for years been reaping sixteen per cent, dividends on a capital of $5,000,000. Stowed away in its treasury it had. in the form of a surplus, a fund of Sio.ooo.ooo. Here was a noble opportunity. Could any alert financier with-tand the temptation? As soon as Morgan acquainted himself with the attractive facts, a plan of campaign speedily developed. lie sent agents to scour the northeastern region of Pennsylvania, with orders to pav anv price demanded for -hares O f flu- Pennsylvania Coal Company. I'nobtrnsively these discreet emissaries went about their mis-ion. l ; or month- they traversed Pennsylvania, finally getting enough stuck to insure Mor gan's control, for which stock an average price of $;^j a share was paid. \Yhat did Morgan next do? lie sold the property to the Krie l\ailroad Company for $32.000,000. This pay- ment was in the form of four per cent, collateral tru-t bonds -(.-cured bv mortgages on the Pennsylvania Coal 23- IlisTOUY OF THE GREAT AMERICAN FORTUNES Company's property and by the Xe\v York, Susquehanna and Western Railroad, a line acquired a short time previously by ti/.- Erie. Xor was this all; an issue of $5,000,000 of preferred stock was thrown in. But who controlled the Erie Railroad? The eminent J. Pierpont Morgan. As an individual he bought the coal property, and then, as dictator of the Erie Railroad, decided what he should be paid for it. " Criticism," observed the Industrial Commission, with the dainty restraint characteristic of all such euphemistic, official reports. '' has been directed against this operation on the ground that the price paid by the Erie Railroad to J. P. Morgan and Company was excessive. Testi- mony before the Industrial Commission indicates th\< was in fact the highest price paid for such properties in the history of the business.' 3 What this Commission feebly and so gently dismissed as " criticism '' was, in reality, a general growl of indignation at Morgan's ease and audacUy in calmly transferring to himself millions of dollars in so-called " profits." It was of this kind of transaction and similar varieties that the Industrial Com- mission elsewhere relieved itself of this declaration: " The possibilities of fraudulent profit are something enormous under such conditions."' For once, in mak- ing this clear statement, the Industrial Commission almost overcame its habitual timidity of phraseology, and called thing:-; by their true names. Vet what availed it to say that fraud was fraud when the beneficiaries were not even questioned bv law? The amount pocketed by Morgan in this performance cannot be learm-d. 'To what extent profit rose," the Industrial Commission >at- " PEERLESS CAPTAIN OF INDUSTRY '' 233 testimony before the Commission." 5 We may well judge that the profit could be estimated in millions. THWARTED BY A GREATER MAGNATE. While in control of the Eric Railroad, so rich with memories of Jay Gould's frauds and thefts, Morgan un- expectedly, and to his deep mortification, ran plump into his first great defeat. It came about in his attempt to put through a railroad juggling operation. Had it been successful he would have been able to appropriate the bulk of at lea.st $10,000,000 in '' profits." The plan was the typically fraudulent one common among the magnates of buying in a railroad and then unloading it (to use the financial slang of the day) upon a trunk railroad system controlled by both buyer and seller. Morgan had .--ecnred a controlling interest in the Cin- cinnati, Hamilton and Dayton Railroad. This line was composed of a number of former separate railroads and of various leased railroads. On September 20, 1905. the Erie Railroad bought this interest from a syndicate headed by J. P. Morgan and Companr. The Erie direc- tors, all registers of Morgan's orders, authorized the issuing of $12,000.000 of four per cent, bonds, convert- ible into Erie common stock at f>o, to pay Morgan for the Cincinnati. Hamilton and Dayton Railroad. Thus far the program had slipped on smoothly. Suddenlv came evidences of the most powerful opposi- tion from quarters commanding obedience. Xntice was -erved that the Erie director- must revoke their action. If they refused, costly reprisals would follow n<>t only in litigation but by the application nf a pressure that they resist. l ; rom \vh . /; '. ;hi- mighty edict come ? '' ' ; ' f ;1 '. : 4(10. -'34 Who \vas the awe-inspiring magnate that could frighten .Morgan into retreat? His identity never came out publicly, but the sur- misc was rooted in Wall street, that he was none other than E. II. Harriman. The belief prevailed that llar- riman, representing the Standard Oil oligarch}', was seek- ing to get control of the Erie Railroad himself, and that it was to his interest at that particular juncture to thwart .Morgan. The sequel has borne out that conviction : the Eric- Railroarl later passed under Harriman's control. 6 Whatever was the nature of the secret means used to compel Morgan to face about, and whoever it was that used them, they were entirely effective. The Erie di- rector- meekly rescinded their action, and the prospec- tive $10,000,000 in " profits " vanished like a dream. What became of Morgan'- Cincinnati, Hamilton and Dayton Railroad after he was forced to take it back? 7 This system, which he had been on the very point of -elling to his Erie Railroad at a price so extravagant as to cause astonishment even among the veteran manipu- r ' In a li-t matyled. the new stock issued will be tight-handedly bound up for seven years in a voting trust of which Morgan will have dictatorial control to do as he minds with the Cincinnati. Hamilton and Dayton Railroad. Moreover, absurd as it mav seem, his com- mission for " reorganizing " the railroad in such a man- ner as to force out the small stockholders and concen- trate ownership largely in himself, will probably be sev- eral million dollars. He stands, therefore, partially, if not virtually, recouped for the evaporation of that $10,000,000 in 1905. In ciillo(|uia! parlance, this " freezing out '' of small capitalist stockholders ha< been one of the most conspic- uous and inevitable accomplishments of the triumphant progress oJ our magnates. \\ e have remarked how the Vanderbilts, Jay Could. Sage, lluntington and other if the 236 HISTORY 01" THE GREAT AMERICAN EORTUXES small parasites nonentities when compared with the great grandees would emit a dolorous wail, burst out into lamentations and accusations of fraud, and appeal for sympathy and succor. So long as they could defraud others, and reap wealth out of the sufferings and deg- radations of the working class, all was properly blissful. When they profited from fraud it was " good business." but when fraud was used against them it was denounced as criminally pernicious. In disposing of them no magnate was more proficient than Morgan. In 1903 the stock of the Chicago North- western Railroad was selling at the market price of 295x8. and a large number of persons of means mer- chants, professional people, legatees and others held shares of that stock as an investment. The railroad was then put through the usual astring- ent process of " reorganization.'' In all of these re- organization devices, reasons are found for levying a heavy assessment upon the stockholders. These levies are for the ascribed purposes of paying the expenses of the " reorganization," legal expenses, advertising, and millions in commission to the reorganizers. The assessments are frequently so onerous that the minor stockholders cannot afford to pay them : consequently. In- explicit provision, their stock becomes forfeited. From 29.^8 tne ^tock went down to Si (July. 1909) : and what with declines of price and assessments thousands of in- dividuals have been forced to part with their stock. Who got hold of that ,-tock? The question is really superfluous. The stock was put into a " voting trust." with autocratic power for five years, and in command < iver all -tamls Morgan. Thi- Damping out of crowds of relatively small stockholders went on so constantly that it iinallv becanu \vhcn it \vas blended with v;h;it \vevo considered dramatic cirru mstanc.es. did it call forth uncommon notice. But \vhile each of :hj magnates was busily flinging out these hindrances and expropriating their property, he had to be on ceaseless guard against the incursion of some other magnate or of a combination of magnates. Incessant vigilance was imperative. The warfare was necessarily a complex one, with its paradoxical aspects. The. magnates fought the working class, and the working class fought back, sometimes ag- gressively, at other times on the defensive. Toward the middle class, however, the magnates were forced to use a double objective set of tactics. They had to crush the middle class and take its property away, either by direct spoliation on the one hand, or on the other, by inveigling its elements into investing their funds in great stockjob- bing enterprises which subsequently turned out to be adroit swindles. In surveying this war of the classes the most remarkable phase has been the ease with which the great moneyed interests have traded on the shortsighted cupidity of the middle class. With the naive expecta- tion that the magnates would fraternally and benevo- lent!}- create riches for it. the middle class has poured its collective wealth into their schemes, only again and again to find that very wealth wrenched from it, and used to bring about its extinction as a class. Surmounting these forms of the conflict in society was the titanic warfare among the magnates to hold back one another or to seize from the other spoils each had seized from the multitude below. When the interests of these lords of finance and industry clashed, then the thunderbolts rlew. 2 3 8 Such a battle notably occurred in 1901. From what- ever point of view it is considered, sociologically, philo- sophically or historically, it was an event full of curious instruction. It symbolized a new order of things; be- tween it and the" times when feudal dukes and barons and kings rushed to arms to settle their quarrels of self- interest, lay a long and broadening gap. These modern battles also carry their wake of ruination and death, but it is so indirect as not to be outwardly observable. The weapons are money, reinforced by cunning and fraud; very powerful weapons which none in these days have been able to withstand. Under the old system the feudal lord lost caste if he did not light in person ; success might often mean his own death. But no bodily risk is entailed to confronting money monarchs of these present happy days; they can make wealth fight for them in the stock markets; and if, perchance, it becomes necessary for them to determine their quarrels with capitalists of other countries by force, they can impress, through their gov- ernments, the working class, led by men trained by those governments in the art of slaughter, to do their fighting. Happen what will, their hides are safe. A MATTLK OK MACNATF.S. The daily routine budget of news in May, K)Oi. was suddenly enlivened by the reports that an array of great magnates had rushed headlong into a fractious conten- tion. There was unwonted commotion in high places. Morgan. James J. Hill, the Rockefellers and Harriman, the Vanderbilts and other superlative eminences were entangled in warfare. Here was rousing news, indeed. \\hat was the meaning of this furor among the exalted? How did il begin and where would it end? The cause was I fill'- aifcmpt to undermine the in- terest> of the other magnates concerned. ( Obviously tin- was an act properly calling for retaliatory measures. h> his antocracv over the < ireat Xorlhern Railroad, a line extending through the Xortlnvest and Canada. Mill had recently added a leading interest in the Xorlhern Pacific Railroad, which traversed parallel territory. The incep- tion and construction of the Xorthern 1'aciiic Railroad were rq)lete with the usual corruption and jobbing, and with thefts of vast areas of agricultural, timber and mineral land-. This corruption will lie hereafter dealt with. I 'hindered by various financiers, the Xorthern Pacific had been forced into bankruptcy. Hill had then obtained control. His vista now widened. Why should he not have a direct share of the immense traffic converging at Chi- cago? To get this, he set out to manipulate himself into control of the Chicago. Burlington and Ouincy Railroad. This move alarmed competitive magnates ; they at once saw how the interests of their railroads in the North- west and West would certainly be jeopardized. How could they ward it oft. or at least neutralize its results? The most feasible plan presenting itself was to attack him on his own ground. With good strategy they be- gan buying Xorthern Pacific stock. This would give them a voice in one of his own railroads. While Har- riman. supported bv the Standard Oil oligarchv, wa- doing th\<. Hill was straining him-elf to buv in more and more Xorthern Pacific stock, and Morgan was deep in the stockjobbing fray to safeguard his own extensive interests. limes a.- much as twenty-three points a day, reaching 300 a share, and for a part of one clay, Si.ooo a share. A " corner " surpassing in magnitude an}- previously known in railroad stock resulted. " The sacrifices neces- sary to secure funds for covering contract.--,'' says the Inch;.-! rial Commission, " precipitated a panic of wide- spread proportions." s Thousands upon thousands of lesser stockholders of other railroad securities were caught in the whirligig and ruined ; as fast as the quo- tations of Northern Pacific stock went on increasing, those of other railroad stocks precipitately declined. The upshot of this warfare might have been expected. The Standard Oil clique came out of it with augmented dominancy. and with added power in a region where previously it had not been so strong. While the country resounded with the mournful outcries of a scattered host of petty stock speculators, clawed out of their insignifi- cant fortunes, the contending magnates amicably decided to arrange a new understanding. The disputed territory should be nicely partitioned among them, and affairs would be made tranquilly satisfactory. A '' gentlemen's agreement," otherwise phrased " a community of inter- est," would cement their brotherly relations. Such a covenant would choke out competition, and simplify and enlarge the pleasant work of squeezing more tribute from the people. Who was lo be chosen as arbiter? Whose was the fust mind to be entrusted with the selection of the new director- of the Northern Pacific Railroad? Morgan was the man chosen for the adjustment. No vague " gentlemen'- agreement " fur him however, when some- s Final Report of Imlu-irial Co:r,mi:-sion. xix:3!7. " L'liKKI.KSS CAPTAIN OF INDUSTRY 24'< thing better could be substituted. He conceived the ide -\ of a huge holding company, an incorporated body to hold title to both the Great Northern and the Northern Pa- cific railroads. The Northern Securities Company was thereupon organized with a capital of $400,000,000. Upon the announcement of this, the people of the Northwest bestirred themselves in vehement protest. Were they not oppressed enough already? So crushing a monopoly must not be permitted, they declared ; it would hold them in absolute thralldom ; suit must be brought to void it. The United States Government did bring such a suit and pressed it. The motive for the great energy and ability shown in its prosecution has never been made clear. \Yas it to the secret interests of certain powerful magnates to break up the Northern Securities Company? The Supreme Court of the United States decided that it was an illegal corporation, But and these buts always supervene although the company formally and decorously disolved, the principle upon which it was formed practically remained in force by virtue of another '' gentlemen's agreement." The court mandate was one thing; its enforcement against the fundamentals, quite another. Rut the form of dis- solution had been gone through and the law thereby was considered satisfied. Thus, this decision, hailed by the middle class as a critical defeat for the trusts, was after all nothing but empty phraseology. Even while these opponents of the trusts were gleefully praising the Supreme Court of the United States as " the bulwark of freedom of trade," the trusts caused Congress to enact a law which knocked over the main prop upon which the middle class had beer, depending in its war upon the great centralized corpora- tion^. 242 HISTORY 01- Till': OKKAT A M KK1CAX KlKTTNKS For more than a decade trust organizers had been confronted with a national law decreeing fine or im- prisonment or both upon conviction for engaging in any act in restraint of trade. Xone had gone to prison, nor controlling the entire functions of government, as they did, was there any prospect of the visitation of such a punishment. But the imprisonment clause was a con- stant irritant : why have it on the statute books when it could easily be obliterated ? And why not also have a specific declaration of immunity ': A solitary provision calling for fine in case of conviction, the magnates did not mind at all. Lt would give an appearance of defer- ring to public sentiment and. at the same time, could be well regarded jocularly by those at whom it was directed. When trust magnates were gathering in immense sums from illicit acts, what did a fine of a few thousand dol- lars matter? It was too trivial to bother over. V'esides. even if the fine, by some extraordinary possibility were made heavv. it could be assessed, in turn, upon the con- sumer. act passed bv ( 'ongres< in K.K\V Concurrently, ihe same net reasserted and amplified the principle of granting immunity to trust officers. \o matter how much or how often thev violated tin- anti-tru-t laws, they were now absolutely secure from anv po-sibililv of prison sentence. 'I IH ( iovernment might examine them with the great- er pretended inquisitivencss. and in the proce draw out the mo-t self-incriminating admissions, but this evi- dence a- testimony could not. by the act of 1003. be used PEERLESS CAPTAIN OK IXDISTKY against them in the trial of any criminal proceeding. Not only was the individual exempted; the corporation itself \vas distinctly relieved from prosecution for any penalty or forfeiture. The triumph of the trusts was now intrinsically com- plete. CHAPTER XI MORGAN AT HIS ZENITH By the end of the year 1902 J. Pierpont Morgan, reck- oning by appearances, seemed to outrank every other American magnate; scarcely a day passed that the news- papers did not report some new achievement of his, or obsequiously render tribute to his ever-expanding power. In the public appraisement he bulked as a supervitally preponderant man, a figure standing out with an im- mense and peculiar distinction, eclipsing the most obtru- sive political and industrial functionaries. Contra>ted with him, ostensible political rulers were innocuous ephemeral personages. For a time they might vociferously command attention, but their encumb- ency was dependent upon the will of the magnates, and they were pushed up or pulled down as suited the policy and purposes of the great propertied interests. A long- array of "eminent statesmen" had shufiled into solemn view, and for a while had been the cynosure oi the r.-'tion, and then, like exploded rockets, had disappeared into obscurity, or into a stale akin to it. Yet, in an- oilier aspect, brief and borrowed as was their power, llieirs wa- not the portion of oblivion; conventional his- tory, which accepts the apparent as the real, document^ nml often perpetuates their names, ignorant of the f:ici ihal they were only the server^ or servitors of particular impelling forces and nitere-t--. 244 \.\ AT iMS ZKNITll 245 Behind the nominal political masters stood the real masters the great magnates. HISTORICAL OMISSIONS AND MISJUDGEMENTS. Seeing that this is so, what vitally boots it whether this or that individual happened to fill the so-called great elective or appointive offices? In stereotyped historical textbooks and narratives the names of J. 1'ierpont Mor- gan and his like do not enter; not even a cursory glimpse is given of their deeds. Yet, in large part, these are the significant things that fundamentally have made actual history. Rulers have been allowed to make formal dec- laration of wars, but capitalists have commanded them. When it pleases the interests of capital to have peace, titular rulers are ordered to arrange it. Should rulers be so obtuse or stubborn as to stand in the way of capi- talist interests, revolution follows. If, in a parliamen- tary countrv laws are somehow enacted contrary to the interests of the dominant capitalist class, those laws are effectively voided. All of which proves that, although presidents, kings and emperors may mightily pose as the "creators of policies," yet after all the}- are only the sounding-board creatures of money forces unnoticed bv i irthodox histories. An overbearingly potent and heroic "great man" iv-Hj-evelt appeared; many a descriptive work has been written of him: and doubtlos, in the curious nature of ihings, we are likewise fated to see many a statue of bird. For what ? If history tells the tale aright it will tell how be begged campaign fnnd< from the very trust magnates \vhom lie pretended to tlout : how, in a critical moment in ihe national election of 1904, 'u 1 so despaired of success 246 .HISTORY OF THE GREAT AMERICAN FORTUNES that he was forced to appeal to Morgan, Harriman and their fellow magnates for a fresh and immediate infusion of funds. The world does not revere a loser, unless he be a great one, and for a great cause. In considerable degree, Roosevelt fought the fight of a rapidly-decaying cau>c, that of the middle-class, a cause doomed to fall ignobly, and rightly so. On the surface he seemed the " big man " of the day : in point of fact, he was van- quished by such magnates as Morgan, Harriman and Rockefeller. They, to all appearances mere private in- dividuals, defeated every move of him who was supposed to be invested with even greater powers than many po- tentates. The irresistible progress of the trust movement and the all-comprehending power of the magnates, can be better estimated when it is recalled that it was during Roosevelt's administration that the most antagonistic campaign thus far essayed against the trusts was carried on. 1 At least it seemed so if invective and suits at law counted. But, at basis, Roosevelt, despite his pretenses, was an instrument of the trust magnates, which fact was connoted anew bv the circumstance that he was the Presi- dent who signed the act striking out the imprisonment clause from the anti-rebating act assuring magnates and corporations full immunity from criminal prosecu- tion.'' 1 'That is against the "had" trusts. How even the outward act^ of officialdom were being made to conform to the interests of tin- ruling class was shown by the growing tendency to ac- cept sonic trusts as " good," and so arraign others as "bad,'' al- thi'Ugh all trusts subsisted in violation of statute law. ( mirage, hnesty and the saving grace of common sense, ac- ' Mr. Roosevelt, are the ilm-e thing> that will make nun real." . . . wrote A. Maurice Low in "The Independent," ;u uf October 30, igo.2. While thus humbly imploring the ates for funds with which to finance his campaign, and relieving them by law from imprisonment, Roosevelt took spe- MORGAN AT HIS ZENITH 247 It was proved again during the great coal strike of 1902 when Roosevelt was forced to beseech J. Pierpont Morgan to consent to some kind of arbitration settlement. True, indeed. Roosevelt, or those inspired by him. could darkly intimate that it were well for the coal magnates to come to terms; othenvise ihey might sutler criminal prosecution for violation of the act forbidding railroads from owning coal mines. Hut the magnate-;, well realiz- ing how often they had luard this chip-trap M>rt of talk, and how empty and futile it all was, could pass it over with amused contempt. Then came the sight of the President of the I nited States, theoretically representing 85,00x5,000 of people, being compelled to parley and treat with a few magnates on their own terms. ' The one man who controlled the operators," wrote A. Maurice Low (who, unquestionably, was one of the best informed newspaper correspondents at Washington), "was Mr. J. Pierpont Morgan. Everything else having failed his services had to be enlisted." Morgan instantly showed that he had the power of doing what the President of the United States acknowledged that the highest executive in the country in his own person could not do a fact moving Low to exclaim reverentially (as quoted hereto- fore) : " (Ireat is Mr. Morgan's power, greater in some respects even than that of Presidents or Kings." Roose- velt could publicly boast of his having settled that strike. cial occasion in. 1907 to prejudice public opinion against Mover. Haywood and Fcttibone, officers of the Western Federation of Miners, \vhen they were in prison awaiting trial. Thev were later acquitted of ilie trumped-up charge of murder brought by pouertul capitalist interests in order to discredit and break up the pro.ure^ive labor organization of which they were the heads. (.\nainly, Roosevelt was extremely courag'eotis in attacking the weak, and tho>e from whom he could expect no support or funds. A more overestimated mar,, nor one who more -uccess fully befooled the people by sheer talk, has not lived in recent iimes. iiiSTOUV Ol- THE GXCAT AMiiKiCAN FUR'iV N KS yet, in point of actual fact, Morgan shrewdly used Roosevelt to bring about a settlement at the time when the magnates decided it was politic, and with a result the most favorable that they could hope for in the particular alarming exigency. 3 Morgan's lofty, surmounting status at this time did not arise from any misconception that he was the richest man in the United States. That prepotency John D. Rocke- feller could easily claim and hold. But Morgan was so unceasingly before the public in some activity or other, and was so preeminently conspicuous in the organization of railroad combinations and industrial trusts, that, con- sidering all aspects, he was looked upon as perhaps the most important of the magnates. This was a popular deception, and was caused by the difference in tactics between Morgan and the Standard Oil oligarch}-. The Rockefellers and their associates systematically discouraged publicity as to their business transactions ; in all of their operations they cultivated the profoundest secrecy and took exceeding pains not to acquaint the people with the real extent of their posses- sions, nor with the methods by which they were gradually drawing into their owner-hip the resources of not only one nation, but of many nations. AYorking through aux- ilarie- or intermediaries the}- were converting much of the United States with its assets, including human labor. peace or war hung in the balance : To permit the i meant pos-ihilities that no man wanted even to h ink'ht mean the opening of Pandora'- box. It and riol and bloodshed in the coal reeion. en \vor-< i>; Xew Y.,rk city. .Already the po ir >r ; ng for nul. and winter had not even lightly la'd the ritv. It might nu-an such a state of affair- that MORGAN AT IliS XMXiTlI 249 into their private property, but ^o surreptitiously was this done that they allowed no mention of their conquests to be either formally or informally given out. The Stand- ard Oil headquarters was an inaccessible citadel of si- lence. On the other hand, Morgan seemed to glory in the ostentation of publicity. Even if he did not. it was an indispensable requisite. In his threefold capacity of banker, railroad magnate and industrial trust organizer Morgan needed a certain amount of inspired publicity for the specific purposes of his undertakings. As a banker he had to advertise his financing of projects in order to dispose of the stock ; the more power he was credited with, and the more extraordinary a financier he \vas extolled, the easier it was to induce a multitude of investors to put their money in enterprises sponsored by him. Uetween Morgan, the precocious young money zealot of 1861. successfully imposing spurious rifies upon the I nion army, rind Morgan the incommensurable magnate of K)O2. lay a long span of some forty years. For four decades he had- incessantly campaigned for great wealth ; thousands of Wall street aspirants, ambitious to reach the same goal, had out-trained themselves during that time only to go down in abject failure. Everywhere Morgan could see. as he advanced, the immediate wro:! upon whose misfortune? much of hi< fortune was built. And what were the cumulative results of hi< life of money-seeking? Of the pn>perlie- he owned otherwise, there is no definite authentic record, but the extent of hi- railroad possessions can be a-certaincd. Moodv wrote that in 1902 he was " identified ".;! " ;~,,co ) mi! 250 HISTORY Oi ; Till: GREAT AMKKJCAX I/UKTL'NKS of railroad. 4 " These," Mood}- explained, '' control rights of way, coal lands, terminals, competing lines, steamship connections and the like.'' Further attention need not he given to his methods of acquiring railroads. His railroad transactions, large as the}' were, hecame somewhat obscured by his still greater trust-forming operations. " Mr. Morgan," Moody fur- ther wrote, " is essentially the inspirer, the creator and the dominator of current American industrial forces." A sonorous sentence, but quite exaggerated. Long be- fore that time. John D. Rockefeller had demonstrated the principle of the centralization of industry; Morgan neither exclusively inspired, created nor dominated; he was but one of the leading practicalists in transforming industrial conditions from the competitive to the tru-t form. " lie is unquestionably," went on Mood}', " the boldest, the ablest and most far-seeing of any of the modern ' generals of finance ' who stand at the head of the modern movement for the consolidation idea in the production and distribution of wealth. This is easily proven by the fact that the enterprises in which his in- fluence is paramount to-day are the strongest and most ably planned of anv of the great combinations or ' tru.-t-.' '" "' Such eulogies as this have a mechanical ring: ihev nave !>een manufactured almost automatically. That they :; nd unchallenged ; .~ sufficient comment uon the MORGAN AT HIS ZENITH 25! why he should be brevetted a " general of finance." The assumption evidently has been fixed that these high- sounding, all-inclusive, prejudicative assertions would be swallowed as truth ordained ; and, remarkable as it does seem, this has been the brand of truck ladled out for consumption by the American people. Fortunately there prevails in some quarters a rebellious spirit of free in- quiry, which same spirit presses us to know more of what a magnate had to do in order to be ranked as a " general of finance.'' MORGAN S ORGANIZATION OF THE STEEL TRUST \Yhat was the exceptionally strong and ably-planned trust to which Moody thus so airily refers? It was the great Steel Trust. Xeed it be remarked that this was by no means Morgan's only such progeny? In the organi- zation of so many trusts did he participate that the term " Morganization of Industry '' ran rampant like an ob- session. \Yith these other trusts, however, it is hardly necessary to deal ; as a crystalline example of Morgan's methods, the Steel Trust will doubtless suffice. This trust, let it be proclaimed at the outset, was no paltry affair of a few hundred million dollars. It was an enterprise worthy of the application of a " great general of finance." The pen may stumble in writing it. but somehow we will contrive to get the fact into print that this trust came into being with more than a billion dollars capital. .And we feel irresistibly constrained to linger upon that billion dollars. flic ordinary human mind !- capable of much : it can let it> exuberant imagina- tion create heavens and helN, enchantments and exor cUnis, and it can ^trctch illusion to realms without limit: but to conceive of a billion dollars, or rather to visualize 252 HISTORY 01-' THE C.RLAT AMERICAN FORTUNES it, is a task to be forsworn. Quite idle is it for the \vorkers to attempt the visualization ; their sole part is to produce the billions, not to see them, much less have the use of them. Contemplating that billion dollars further, we are driven to note the immense progressions occurring in the case of a " great general of finance. As a downy young man, Morgan was probably content with his profits of thousands in financing the selling of that batch of condemned rifles to the army ; but then he was only a mere ambitious fledgling. Yet now. namely, in the year 1901. when he organized the Steel Tru.-t, he had become a full-fledged " general." and, as all men know, no " general of finance " in these days i- worthy of the name unless he splashes in projects of the major hundreds of millions, or billions of dollars. In this Steel Trust (or Lnitcd States Steel Corpora- tion, as it chose to call itself) a very large number of important plants were gradually merged : plants in main parts of the l/nited States, iron plants and steel mills and factories of tin products every kind and quality of wares made [rum iron and steel were embraced in the production of the plants gathered in under this gi- gantic corporation. It was pleased to style itself not an owning corporation so much as a "holding company." All of the existing plants in the United State- it did nut succeed in taking within its fold, but of thor-e re maining outside, many were large mills allied with it, doubtless to give a judicious appearance of competition. ' ithcrs there were of an "independent" order, mills tic to the trust and actively bent upon o :. ; i iig with it. !"( >r rea-on- to be stated laUr In t'ii- ehapter the Steel Trust had no fea 1 ' of most of {}< . There w; - another black prospect for the midrilc-cia--. Verilv, the once infallible doctrine that "competition i.- the life of track'," was side unto death, and college pro fessors were utterly at a loss to know how to inter the corpse decent! v, when decease finally came. i'erhaps curiosity may he expressed regarding the prior history of these individual steel and iron and tin plants; how they became huge, and their owners multi- millionaires, before the Steel Trust was organized. Were their owners honest men who thriftily saved their pen- nies, amassed capital, toiled hard, invented their own devices, and were respectable men and legitimate traders? Not quite. They were accounted respectable enough, but their methods were not a scintilla different from those of the capitalists in all other fields, which is to say that their respectability was as well founded as that of any other capitalist group. Yet this is not the appro- priate place to give a detailed account of their careers how they and their predecessors thrived on inventions many of which they got by chicanery or theft ; how they again and again and again bribed Congress for a high protective tariff; how they corrupted elections and ruled cities and partially State and National Governments : how they defrauded the Government before, during and after the Civil War; how the armor mill owners charged their own Government extortionate prices for warship armor plate which, on at least one specific occasion, was found to be worthlessly defective' 1 '; and oppressed their Thi> was in 1804. According to official reports the Carnegie Steel Company \vus making armor plate at a co>t of le>s thai) SJCKI a ton, which plate i- M>M t" the Russian go\ eminent a 1 bL'4v,i a ton while charging the 'Cr.ited States Government from $5 jo to $700 a ton for precisely the same armor plate. Afur an elaborate investigation, a Congressional Committee reported (see House Report Xo. 14^18, Fifty-third Congress, Second Ses- sion 1 : "The company was hired to make the best possible armor plate, and \va< paid an enormous price. Resting under the.-e 2^4 HISTORY OF Till'. GREAT AMERICAN FORTUNES masses of workers and when those workers struck for better conditions caused them to be shot down, as hap- pened in the Carnegie works at Homestead, Pennsyl- vania, in 1892. All of these factors and conditions will be fully described in a subsequent part of this work. 7 ROCKEFELLER AND CARNEGIE FALL OUT. Not with a rythmic placidity did the Steel Trust come into being. An embittered contest, tinged with much personal animus, among certain of the great magnates preceded, and in some degree precipitated, its forma- tion. Controlling a large part of the iron ore deposits in the Mesaba region in the Northwest, Rockefeller had been aiming to buy out the Carnegie plants for the pur- pose of organizing a trttst. To compel Carnegie to yield, he had recourse to the methods he had so often and successfully used in the oil fields. But he found Carnegie a hornet of an individual. It did Rockefeller no good to mass his interests in the ore fields, in Lake Superior transportation atid in railroads against Car- obligations the company or its servants perpetrated manifold frauds, the natural tendency of which was to palm off upon the (iovcrnmcnt an inferior armor whose inferiority might per- chance appear only in the shock of battle and with incalculable damage to the country. " The efforts of the company, and of its superintendents, ("line, Corey and Schwab, have been to satisfy your committee ilia! the armor is tip to the requirements of the contract, not- withstanding the false reports to inspectors, doctoring of speci- men:-, plugging of plates, fraudulent retreating of test plate-; ;'ud 'jockeying' of the testing-machine The unblushing char- acter i if the fraud-; to which these men have been parties and the disregard for truth and honesty which they have shown in testi lying before your committee rentier them unworthy of cre- dence." 7 " The (ireat Fortunes From Industries." M Olion had to be awaited. The delay was costly to Rockefeller. The option held by Frick expired by time limit. And that precious mil- lion dollars advanced by Rockefeller what became of that? Carnegie declared it forfeited, and held on to it. Frick was enraged, and Rockefeller resentful. Hence- forth, the animosity between Frick and Carnegie deepened, while Rockefeller contained him-elf till the dav when he would even matters with Carnegie. 256 I-YickV and Rockefeller's carefully nursed ambitions. Hi is factor was J. I'ierpont Morgan. The bridge and the tube trusts, owned largely by Morgan, 8 had been planning to manufacture their own billets. As the Carnegie works were flourishing in the billet trade, the news was of momentous importance to Carnegie. Tie at once prepared to retaliate. But how could he effectively do >o ? \Yhat form of reprisal would be quickest and most telling? Carnegie had grown seared with experience Sa in the machinations of trade; he was not the magnate to be taught how to strike at a competitor's most vital point. The word flew forth that he intended to go into the bridge and tube business. Here was an announcement for Morgan to ponder and scowl over. I.'ut another edict (it is no exaggeration to speak of the orders issued by magnates as edicts) fol- lowed in rapid order. Carnegie knew, of course, that Morgan was an extensive owner of the Pennsylvania Railroad and its properties. If a railroad were built to 8 Indications of the methods of the companies in the bridge trust came out in 1910, and cau-cd a considerable public scandal. State Senator Confer, and other witnesses testified before the Xe\v York State Senate, sitting as a trial Committee of the Whole, that a corruption fund of $6.000 had been distributed, in looi, among three influential members of the Assembly, to bring about the defeat of a bill considered disadvantageous to the interests of the bridge trust. J. P. Allds. President pro tern <>f the Senate, at the time the charges were made, was one of the licensed. 'I 'ne Senate found him guilty. The revelations before this committee in February and March, 1910, were of such a character that it was the general opinion that they only faintly indicated the vast and continuous corrupting of legi.-lature> by rations of all kinds. This belief was borne out by the fact that resolutions introduced in both houses of the Legislature for a comprehensive self-investigation were at iir>t voted down. "'- " Seared with experience.'' IraMiirch a? a description of hi< career i- not strictly relevant to this part of the work, we can- rot halt here to recount the details, of transactions, in which, many a time, lie had got the better of panner-. friend-, invent- or^ and competitors. MORGAN AT HJs Xl-N'lTll 2$/' compete with the .Pennsylvania system, Morgan's in- terests and fortune would be doubly assaulted. Car- negie allowed the information to get out that he pur- posed to construct his own railroads from Pittsburg to the Great Lakes, on the west, and, on the east, to the Atlantic Ocean. He went on with the plan as though he were in dead earnest : he rushed surveying parties to map out the route. THE RESULTS OF CARNEGIE S RETALIATION. The effect upon Morgan was galvanic. Perhaps Carnegie was bluffing in return for bluffs. But the situ- ation was too serious for trilling. Carnegie might carry out his threats; there was the danger. Had Morgan been dealing with the United States Government he would have felt no great concern at threats that he knew he could safely ignore; but in contesting with Carnegie, he was opposed by a magnate of whose power lie had reason to be grimly apprehensive. How could Carnegie be placated, or dissuaded, or prevented from carrying out hi> ominous plan-? ( >ne heroic way there was to bnv him out. and organize a trust. Thereupon, it i- related, Morgan betook himself po-t ha^te to Carnegie, X<> time was lost in unesscntials. The magnates went straight to tin- point. Morgan in- miired of Carnegie for what sum he would sell hi- plants. \Vith a clever expression <>f indifference. Carnegie sen- tenliously replied, " Three hundred million-;." A silence ensued: the magnate- looked craftilv at each other. Whether Morgan was aware that <>n!v a short time pre- viotisly Carnegie had agreed to sell out to Friek for $100.000,000 i- not known. Hn his part, Carnegie be- lieved that he had Morgan in a corner, which convic- 258 HISTORY OK THK ORKAT AMERICAN KORTUXKS t:on was clearly worth a raise of $200,000,000. Perhaps Carnegie, in the style of the excellent business man, asked an exorbitant price so as to compromise on a sum larger than he really expected. Morgan's next words must have surprised him. There was no drawn-out haggling, no comment of any character. " Take it in mortgage?" asked Morgan brusquely. "Provided it covers the whole proposed combination." Carnegie re- plied. The trade was then and there arranged ; the re- mainder was simply a matter of formalities and ratifica- tions. Carnegie was pleased with himself. Two great ob- jects he had accomplished: he had obtained an immense purchase price, far beyond his expectations, and he was now able to carry out a yearning that he had long in- dulged of divesting himself of active business cares, and of playing the exclusive role of the retired and philanthropic captain of industry. Doubtless, lie felt quite positive that he had outwitted even the great J. Pierpont Morgan. But, as time passed, he found good grounds to have doubts of his astuteness. Subsequently, after .Morgan had demonstrated how vast sums could be taken in with facility in jobbery in the stock issues of the Steel Trust, Carnegie began to look back and perceive that he, not Morgan, was the outdone one not a pleasant feeling for a man who had been self-satisfied that he was as sharp as any of the other magnate--, \\liile Carnegie was ostentatiously dispensing millions for public libraries, and preaching the doctrine that it wa> a disgrace to die rich, he wa> ^ecretly fuming over the fact that he had not held up Morgan for a hundred million dollars more. This story was current in Wall street: MORGAN AT 1 1 IS XKNITH 250 Many months later Carnegie and Morgan were on the same Atlantic liner bound for recreation in foreign fields. Coming down late to their morning coffee, there was a few minutes for reminiscence between them. " Do you know, Air. Morgan," said Carnegie, " I have been thinking it over, and I find I made a mistake. I should ha\v asked you another hundred million for those Carnegie proper- ties." " If you had, I should have paid it/' responded Morgan in his frank, unfeeling truthfulness. And Carnegie, so the story goes, was so soured in his soul that he could take no more toast and marmalade. '' As in the case of the railroads, and of other indus- trial concerns, the characteristics so typical of altered economic conditions were seen in the passing of the steel industry into the control of Morgan, Rockefeller, the (joulds and their fellow magnates. Carnegie had grown up in the steel business ; he knew its details and technique with consummate thoroughness. fn addition, he had adopted the plan of making partners, in a measure, of subordinates who had proved their ca- pacity in both the knowledge of the manufacture of steel and in methods calculated to increase profits. Neither Morgan nor Rockefeller nor ( iould had any technical knowledge of how to run a steel plant : left to them- selves they could not have managed a factory for a single minute. But, as the capitalist system went, thev were not required to have the slightest training in run- ning railroads, factories, steamships or mines. They could annex, or engage, men of experience to do this for them. How were the great steel plants to be directed, now that the industry had gone out of the hands of owners who personally had known how to do that directing? 1 9 '' The Wall Street Journal." issue of August 2, IQOQ. 260 HISTORY OF THK GREAT AMERICAN FORTUNES The problem was very simple, or rather, it was no problem at all. Morgan followed Carnegie's plan of put- ling skilled men at the directing head, and of allowing them to share somewhat in the division of stock and profits. Highly significant of the methods of capitalists was their selection of directing managers. \Ye have seen how, when Schwab and Core}- were superintendents of the Carnegie plants, a Congressional committee, in 1894. had denounced them individually, in a tame enough report, as being specifically responsible for the armor-plate frauds. Did Carnegie discontinue their services? At that very time Carnegie was thrusting himself forward publicly as a pious benefactor and a loftv citizen. Did he .-how anv indignation at * o Schwab's and Corey's method-: How could he? Had they not thereby shown what valuable profit producers the}' were? lie prized their services so much that he not only bestowed continuous marks of favor upon them, but he later elevated them to be directors and minor partners. They were identically the men whom Morgan also wanted: from a capitalist point of view they were highly efficient. \Yhen Morgan organized the Steel Trust, to whom did he turn a^ hi- -election for executives? To Schwab and Corey : they successively occupied the po- -ition of president of the I nited States Steel Corpora- tion. Indeed. Schwab expanded to IDC somewhat of a magnate him-elf. and incontrovertiblv proved that he had learned proficiency in genuine magnate methods. 1 'rganizing the I nited States Shipbuilding Company, on !; : - own hook, he and his associates issued false pros- pectuses, decoyed investor-, fraudulently made a gift to themselves of $55,000.000 in securities, and otherwise committed r-uch fraud upon fraud, that after the com- MORGAN AT HIS ZENITH 26l puny had gone into bankruptcy the receiver denounced the whole transaction as " an artistic swindle." 10 A TRUST PERFECT IX AEE PARTS. Apart from the recital of these frauds, there can be no gainsaying of the fact that the Steel Trust was the very acme of efficient organization for capitalist pur- poses. Other trusts might be well organized in the field of production, and partially that of distribution, and yet lack control of the supply of raw material. The Steel Trust controlled all three of these factors. It had its own plants. With Morgan, the Standard Oil magnates and the Goulds either dominating, or asso- ciated with, it, the railroad and steamship lines of the United States were at its disposal. It owned vast de- posits of iron ore and coal, some of which had been turned over to it by Carnegie, and others of which John I). Rockefeller held. The Steel Trust, in fact, was the fir-t trust to establi-h a scientific control over tlie-e 10 See report of ex-United States Senator James M. Smith, receiver of the company, to the United State- Di-trict Court Newark. X. J. I he report \\ a- submitted to the court on Xo- vember 2, loo.?. The appended paragraph is only a slight portion o f the entire report : "\\lio participated in tin- wholesale plunder? The te-tinionv now being taken . . . will doubtless di-clo-e the names oi all the participant.-: but as -ucli testimony \\-ili be submitted to this court for action, your receiver doe- not deem it proper to comment upon it here. Certain it is that much of this va- ; amount of .-lock and bond- wa- taken by persons and cor poration- who parted witli little or no considerations in exchange therefor. Block- of the stock \veni to the vendors of the con- stituent plant- and to the purchasers of bonds, as bonus, ahso lutelv without benefit to the company; $JO,ooo,OOO of it admit ledly went to Mr. Charle- M . Scliv.ah in addition to the agreed price for Bethlehem. Some oi ;t went to the promoter- of tin- 2O2 illblOKY UI ; THE GREAT AMERICAN lOK'il.XLS three factors. so indispensable to the perfect operation of a tru.-t. By its ownership of great iron deposits, and its practical dictatorship over transportation systems, it at once reduced nearly all of such competitors as it had to nonenities. Only one competitor, the Tennessee Coal and Iron Company, owned its own raw supply; and this competitor was later put out of the way under circum- stances which will be described further on. And here, again, enters the familiar factor of the small frauds being- ousted by the great ; of the property originally wrested by fraud being taken over by great magnates whose specialty (and it was a very service- able specialty ) was the extermination of lesser frauds. The original seizure of the mineral lands, particularly the iron ore mines in the Northwest, had been accom- plished by force anil by grossest frauds. 11 It \vas because it controlled all of the sources of pro- duction and distribution that the Steel Trust was able to capitalize itself for more than a billion dollars. What became of this billion dollars of stock? A huge amount in common stock" no one knows just ho\v much Morgan awarded to himself as a reward for promoting the tru>t. and other quantities of the stock were issued to his associates. At the same time, Morgan bought large quantities of preferred ,-tock. A careful appraisement by expert- established the fact that only about 8300.- OOO the exact price paid to Carnegie repre- sented the actual assets of the trust; the remainder of the stock" was " watered.'' Some of this very stock was shrewdly sold to a portion of the workers in the steel is, thus tending to de-troy their resistance to the MORGAN AT HIS ZKN1T1I 263 FORTY MILLIONS STOCK PRO FITS \VITUIX A YEAR. The profits made by Morgan were instantaneous and gigantic. The stock obtained by him he was able to sell at the market price of about 50. By October, 1902, Morgan and his immediate partners in the syndicate had already distributed 840.000,000 in profits. 1 - From whom did the>e stockjobbing profits come? From a host of middle class investors throughout the world. Lured on by the glowing prospectuses of the Steel Trust, and certain that the money that they put in would pro- duce large dividends, and the stock would rise in value, they literally scrambled to pay over their money for the stock. After the process had been exhaustively worked by the manipulators, the price of common stock was gradually beat down, until, in 1004. it sank to 8-^4. Hordes of middle ela.-s investors were ruined; tin 1 mag- nates had transferred their money to their own pockets. This kind of operation has been repeated several times with great success. When the little fellows parted with their stocks at low prices, the magnate 1 .- would buy it hack, and then by forcing declaration of dividends, and making roseate reports of the -tee! business, would force up the market quotations, and -ell the stock back again, with resulting immense profits. l',v -uch methods Mor- gan and hi- associated clique have taken in hundred:- of million^ of dollars. Tf it be asked from whom the-e hundred- of milliou- in stockjobbing profit- directly came, the answer is sim- ple. Prom the v !' to-do, not merely in the I nited 264 Stales, but the world over. The involuntary donors comprised the f;.:reign aristocracy as well as the American tradesmen, the .-::::dl manufacturers and the professional moneyed divisions, revealed themselves fully as eager as the native investors to relieve Morgan of his vast en- cumbrance of paper supply, otherwise called stock. They poured in their money, and he distributed his pa- per : he was swamped with orders. Was ever such naive and trusting confidence shown as was displayed by these hosts of investors? Their simple faith in the excellencies of the magnates could not be shaken. Repeatedly had they, or other multi- tudes of individuals in their own classes, been inveigled into Wall street, and dexterously cheated. But these frequent experiences, instead of implanting a wisdom tempered by enduring suspicion, passed over them with- out leaving a trace. The merchants and petty manu- facturers, in particular, who prided themselves on being so adroit in defrauding the working class, responded every time to the insinuating song of the magnates. And every time they did so they found themselves rav- ished of their money. Xo word must be uttered against their methods of swindling the workers from whom came the wealth seized from them; such protests were dangerous agitation. Let them, however, be defrauded by the Wall street magnates, and curses were not se- vere enough. I>ut back the shorn would flock to Wall street, like a dog returning to the master who scourges it. Another phenomenon mu-t be significantly noticed. Kven if considerable sections of this middle class warilv kepi away from -lock markei adventuring, their money was nevertheless used by the magnates, as though ii MOKGAX AT 1I1S ZENITH 2O5 were the assured properly of those magnates. Astonish- ingly paradoxical as this seems, it was and is, a bitter joke on the purblind middle class. The profits made by the small manufacturers and the retailers in swindling the workers by selling adulterated, inferior and short- weight products, were deposited in the banks. These deposits were utilized by the trust organizers to oblit- erate the very class owning them a class hating the trusts with a deadly enmity. Such was the incongru- ous situation to which the middle class was oblivious. The great magnates controlled vastly powerful New York banks; 13 these institutions, in turn, held control over hundreds, if not thousands, of smaller banks throughout the country. The stock issues of the Steel Trust, as well as those of many other trusts, were sold to these banks. The trust magnates lifted out the money of the middle class, and the banks, in exchange, received the watered stock and bonds. T1IK GKKAT [XSTRAXCF, FRAfDS. Hundreds of millions of dollars more were held bv the great insurance companies as deposits and surplus from premiums paid in yearly by immense numbers of policyholclers, comprising the ultra-rich, the middle class and the working class. In insurance companies, such 13 The three great New York banks which, it is understood, Morgan then lon^ controlled, were the First National, the Na- tional Hank of Commerce and the Hanover National. Their immense resources may be realized from the life, and received aeeiit>' commissions en hi-; own insurance. Report of the [Xev. York] Legislative Insurance Committee, lox/i. x : 85. '" Tlu- Equitable, for instance, owned $;n'j.^64.034 of railroad and traction company bond-, the Mutual about the same amount in railroad and mi-cellaneou-- bonds, and the Xe\v York a umilarlv lame am Hint. 268 HISTORY OF THE GREAT AMERICAN FORTUNES Equitable Life Assurance Society. Magnate arrayed himself against magnate, and group opposed group. The clearer it became that the fight for control of the stupendous revenues could not be compromised, the more malignant the magnates became. The stage was soon reached when ugly charges of fraud, graft and corrup- tion were allowed to get into the public press. Here was a spectacle for the gods. Xot from any " labor agitator/" nor from any '' irresponsible newspaper " did these charges come ; nay. they came from some of the lordliest magnates in the land, from men of the most " unimpeachable respectability." Xow, here they were vulgarly accusing one another of being liars, frauds and all-round knaves. That the matter made a loud sensation can well be understood ; newspaper writers diligently applied them- selves to reporting the great event. Quarrels among magnates were not uncommon, but when a whole array of the nation's oligarchy of wealth pushed their row into the open,, and began bedamning one another, it was a rare opportunity for truths to come out. Xone but the magnate,- themselves could open the door- of their holy of holies and reveal the mysteries within. I 'raises be to the glorious occasion, they were now doing this verv thing. I hit when the holy of holies was subjected to scrutiny, it was found to be a cesspool from which long pent-up noxious exhalation- burst forth, almost threatening to -uffocate a nation that had been taught to reverence the aforesaid holv places. The quarrel became so fierce lhal a swelling popular demand sprang up for a leg- i-bitivr committee to do some exhaustive and salubrious probing. Tin- demand, at least, had every appearance of being a -pontane ui- popular one; but it can }>' rea- MORGAN AT HIS ZENITH sonably surmised that after trying every other means of ousting the group of magnates in power, the opposi- tion party cleverly investigated the popular indignation in order to compel an investigation, and discredit the clique in control. Subsequent developments proved that Ilarriman had long been attempting to gain exclusive control of the massed funds of the Equitable Life As- surance Society. In addition, his own testimony attested the fact that Governor Odell of Xew York was his crea- ture, and that the very Legislature which ordered the investigation was obedient to his orders. From the first sessions of that investigating commit- tee to the last, the story unrolled was one of such appal- ling fraud and corruption that the very enormity of it finally deprived it of effect. One after another, the magnates were haled forth to the light ; and when they retired they, the " great captains of industry," the su- premely respectable products of society, the fine mor- alists of the nation, the supporters and endowers of charities and churches, the rulers of politics, were re- vealed as perjurers, bribers and thieves. If magnates desire to keep up the myth of " sterling honesty," be- nevolence and patriotism, they must learn not to quarrel among themselves. Otherwise, they will tell on one an- other, which is not politic. Kven more seriously. they will undermine the stanchions and " pillars of so- ciety," one of which, in the United States, is the popular belief that the people vote their rulers in and out of office, and shape the course of legislation. 27O HISTORY OF THE GREAT AMERICAN FORTUNES to the magnates to have the secret come out? Over and over again was that secret disclosed in past investi- gations, but without instructive results. Yet. behold ! the people once more have the opportunity of getting an insight into what goes on behind the scenes when the Legislative Investigating Committee reports in 1906: The testimony taken by the committee makes it clear that the large insurance companies systematically attempted (sic) to control legislation in this [Xe\v York] and other States, which could affect their interests directly or indirectly. The three companies divided the country, outside of New York and a few other States, so as to avoid a waste of effort, each look- ing after its chosen district and bearing its appropriate part of the total expenses. 10 Excellent ! even bribery, like industry, becomes sys- tematized and modernized. In the process, delicate ex- ternals are preserved. To ledger bribery funds as cor- ruption money is a gross -hock to fastidious taste, and is inexcusably unbusinesslike. Hence, so the commit- tee reported, bribery expenditures were classified as " legal expenses." The committee described them as ex- traordinarily large. The Mutual, in 1904. disbursed $364.254.95: the Equitable. Si 72.698. 42, and the Xew York, with Morgan's partner, Perkins, practically in command, $204.01 9. 25. 1T This, according to the simple rules of arithmetic, made a total of more than three- quarters of a million dollars spent in one year in the corrupting of legislature.-, administrative officials and certain newspaper writers. 18 These " legal expenses," the committee redundantly wrote, were " far in excess 16 Report of the [Xew York] Legislative Insurance Commit- tee, i oof), x : 23 17 Ibid., [6. ' 8 The ti>ti:r.ony showed lhat many newspaper writers had received large sums for the -upprcssion of articles revealing the methods of tlie.-e companies. MORGAN AT HIS ZKXITIF 2/1 of the amounts required for legitimate purposes." For what were these corruption funds employed ? To get laws under which great frauds could be carried on. and to prevent the passage of laws interfering with the graft. And who were the immediate distributers of the funds? Trained, circumspect lobbyists, thor- oughly experienced in the business of knowing who, when and where to bribe. They were never stinted for money. Andrew C. Fields, long engaged by the Mutual Life Insurance Company to manipulate legislation at .Albany, held forth in a sumptuously furnished house there. This headquarters was jocosely styled the '' House of Mirth! " The rent and other expenses were charged to " legal expenses." The Mutual thus ex- pended more than $2,000,000 in " legal expenses " from 1898 to 1904.- And what were those of the Xew York Life Insurance Company? From 1895 to 1904. the total payments to Andrew Hamilton, its principal lobby- ist, amounted to $1.312,197.16, all of which sum was soberly entered as "legal expenses."- 1 J. P. Morgan and Company made advances of money to Hamil- ton.- 2 Rut the corruption neither began nor ended with the buying of legislative votes or of administrative conni- vance. Over and above the politicians in office were the busses in control of the machinery of both the Repub- lican and the Democratic parties. Those party machines could command the votes; and the orders of the men at 19 Report of the I Now York] Legislative Insurance Commit- tee, 1906, x : 16. - Ibid.. 16 21 Ibid.. 50. -- Ibid., 49. For instance, J. I'. .Morgan and Company, in Oc tober. 1<)O2. advanced $50.310.70 to Hamilton. Tbis sum was deducted from the profits of the Xew York Life Insurance Com- pany. Hamilton was not required tu make any accounting. 2J2 HISTORY OF Till: GREAT AMERICAN FORTUNES the head called for submission by the underling politi- cian-. Refusal brought discipline and retirement. By controlling the . secret workings of the party organiza- tions, the magnates virtually controlled the platforms of those parties, their nominees, and the general course of the men elected to office. For one more proof of this, another dip into the re- port of that celebrated insurance investigating committee of 1905 will suffice. " The insurance companies," it re- ported. " regularly contributed large sums to the cam- paign funds of both the Republican and the Demo- cratic parties." This was no exceptional act, however: it was the conventional order of the day ; all of the great corporations did likewise. Had not Jay Gould, thirty- odd years before, explained the method? And had not other capitalists long antecedent to Jay Gould shown how efficacious it was? .-V present of nearly 850,000 was contributed in 1894 ^. v tnc Xew York Life In- surance Company to the campaign fund of the Repub- lican National Committee,-" and similar amount- in 1896 and in 1900 for the same purpose. 24 All of the large insurance companies gave contributions, not only for na- tional political campaign?, but also for those in the States.-'"' It was found impossible to trace all of the direction- of this continuous corruption. " Enormous sum-." the committee stated, '' have been expended in a surreptitious manner." The immen.-e sums thus spent in political corruption were .-tolen from the proceeds of the policyholders. - :; Report of the [Xe\v York] Legislative Insurance Committee, 1006. \ : 62. -* [hid. lave $;o,ooo in MORGAN AT 1118 ZENITH 2J $ With this stolen money, mounting into millions of dol lars, the magnates bought their way into every State legislature in the Union ; they purchased a way for them- selves or for their allies into the United States Senate : and they carried their demands in both the Republican and the Democratic parties. An arraignment more destructive to the existing arrangement of society could not be found than was contained in the facts (and they were by no means, all of the facts ) reported by that committee. The substantial conclusion was. although not set forth in so many plain words, that the adminis- trative officials, the legislatures. Congress, the courts and the old political parties were controlled and dominated by groups of unparalleled frauds and pirates. For the sums diverted to insure this political control were only a tithe of the aggregate stupendous thefts. Following close upon the investigation came suits against the " high financiers" for the restitution of more than $10.000,- ooo. and these suits were but indications of still vaster sums fraudulently taken. The suits were compromised. DARK DAYS FOR RESPECTABILITY. It was a period of travail for respectability ; much explaining had to be done, which (in such a case) is always a confession. The directors or swayers of those insurance companies comprised some of the most super- eminent magnates and exalted philanthropists in the I'nited States. Elegant society suffered no shock at the revelations, for it was built and sustained, every part and woof of it. by theft, fraud, bribery and exploita- tion. But the apologists and retainers, whose vocation it was to strew praise in tlu path of the money monarch^, 274 HISTORY 01' THI-: GREAT AMKRICAX FORTUNES were egregiously put out of face. What could they say when such of their heroes as George J. Gould, Alfred G. Vanderbilt. John Jacob Astor, August Belmont, Jacob H. Schiff. 2 ' 5 Henry C. Frick, D. O. Mills, and many others were being shown up either as participants or as responsible heads? More galling still was the be- smearing of their great idols, E. H. Harriman, and above all, the devout and philanthropic J. Pierpont Morgan. 27 All of these money conquerors had been interminably glorified : nothing had been too extravagant to say of them ; and now they could be seen twisting and squirm- ing in the uncomfortable act "of being caught." Good repute may be. as the poets and philosophers say. a priceless possession. P>ut these magnates did not mind the temporary hurt. For temporary it surely was ; a little time would pass, and then the newspapers, mag- azines, college presidents and clergy, largely owned or subsidized by the magnates, would resume their inter- rupted chorus of prai.-e. and all would be well again. A bit of the plunder thrown out to universities and churches would add to the magical effect. Hence, it was not any loss of reputation that the mag- nates and their satraps feared. The one and only dis- 26 The Equitable Life Assurance Society "loaned immense sums " to Kuhn, Loeb and Company, of which SchifT was a lead- ing member. (Ibid., 118.) These fund-, in large part, were turned over to Harriman for use in hi- railroad gathering and centralizing projects. SchitT pa-sed in public a> one of the benevolent philanthropists of the time. -~ The extent of Morgan's utilization of insurance money wa- -ho\vn by the legislative investigating committee. " The evidence is," it reported, "that while Mr. Perkins has been a member of J. P. Morgan and Company, the Xew York Life has purchased from it securities of the par value of $39,286,075 for the price of $38.804.981.51. (Report of the [Xew York) Legislative Insur- ance Committee, 1906:811. Superficially, the report suggest ^ that the Xew York Life Insurance Company thus obtained "a bargain " in the purchase of these securities. In reality, much of the securities comprised " watered '' stocks. MORGAN AT HIS XKXITH 2/5 quieting prospect was that of being shunted away to pris- ons. Throughout the United States the insurance dis- closures the outcropping facts as to the vast, long- continuing corruptions and frauds had called forth a frenzied demand at first that the guilty be rushed to trial and imprisoned. But that demand, if carried out, would have entailed a unique and unprecedented situation. Should all of the guilty be jailed, or even a number of them, the nation would have been deprived of many of its foremost mag- nates, its greatest philanthropists, its most exemplary patriots. llo\v could society have survived such a loss? According to orthodox teachings, these men were im- perative to the proper administration, and the well-be- ing, of the whole social and industrial system. Incar- cerate the great magnates, philanthropists and patriots, even though they were also the greatest plunderers? The thought was impossible. Xo fear of prison, however, need have been entertained by the implicated. Had not many an investigation been held before, decade after decade, almost year after year, sometimes several investigations in a single year? J lad any of the rich dcfrauders disclosed in those investiga- tions ever gone to prison? What ground was there for supposing that tin's investigation would result any differ- ently? In a society ruled by money, what are court- for but to be used as a minatory instrument for enforc- ing the law, made by the rich, against the propcrtyless? What are judge- for except to con-true that law as the magnates who put them on the bench demand that it be construed ? -^ -* It is quite needless to reiterate here facts (already brought out) regarding the methods by which appointments and elections to the bench were made by the tfmit property interests. Later 276 HISTORY OF THE GREAT AMERICAN FOKTL'N i:.:> Xot the law so much a- the interpretation is what es- sentially counts. THE MAGNATES ESCAPE THE LAW. I low the law was interpreted was soon seen. Under the pressure of public opinion, the District Attorney of Xew York County, one \Yilliam Travers Jerome (long renowned as a " reformer ") finally caused the Grand Jury to take action in proceeding against a few of the satraps and the figureheads. But, in the case of Per- kins, for instance, it was decided that if he had com- mitted grand larceny, it had been done without criminal intent. The thousands of poor offenders hurried off to prison were obviously afflicted with an overabundance of this same criminal intent. Yet for a rich and powerful man to commit any fraud with criminal intent was a principal unknown to practical jurisprudence. The farce dragged out a while: not one of the participants of great wealth was even incommoded by the formality of a trial. 29 And what was the outcome of that extraordinary in- vestigation ? Again was >een the operation of that prin- ciple so often brought out in these chapters ; that every " reform wave '' of a capitalist order of society is used by the great capitalists to aggrandize their wealth and power. Taking advantage of the popular discredit of the large insurance companies, and making fine asser- tions of the reforms that he intended to bring about. on, a full elucidation of this subject will be Riven, as also a de- scription of the criminal law as applied to the pour. '' i IK- tacts thus generalized are >o notorious that it is hardly necessary to specify at length. Although he was much de- nounced, Jerome did not deviate from the uniform practice (a- >o often throughout thi- work) of enforcing the laws vigorously against the poor, while allowing the rich frauds and t'niever- to go scot free. At one time, a "popular hero," Jtronu went out of office thoroughly discredited in public opinion. MORGAN AT 11 IS ZENITH 2/7 Thomas F. Ryan secured control of the Equitable Lile Assurance Society, completely frustrating Harriman's efforts to the same end. Ryan's career, and the facts as to how he obtained his immense wealth, were so generally known, that his appearance in the role of a " reformer " was the signal for an instantaneous outburst of public sarcasm which Ryan did not at all mind, seeing that he had carried his assault. 30 Enough, however, of the methods by which these vast insurance funds were manipulated for politico-financial ends. The sensation caused by the revelations was as profound as the reaction that followed. For a brief period the mass were privileged to have a look behind the scenes, get wrought up at what they saw, and then the curtains were drawn again and the old comedy was resumed. The intense popular excitement flattened out into the sheerest lassitude. \Yhat noteworthy changes resulted from all that pro- tracted boring, ten solid volumes of it? Xone. Some lawyer folk grasped political advancement out of it, others enriched themselves from a trail of litigation, a 30 In his speech in the United States Senate on March 17. 1907, Senator La Follette thus referred to Ryan: " The Metropolitan Interhoroutih Traction Company cleaned up. at the lowe-t estimate, $100.000.000 by methods which should have committed many of the participants to the penitentiary. The public and the stockholders were robbed alike. That divi- dends were paid with borrowed money purely to stock ioh ihe public is now known to a certainty. Stock was thus balloonvd to $j< i'\ per share, which .coes bctrgin.e now at $35. The insider- robbed the company on construction of upwards of ?4O.oooooo. Investigation lias disclosed that St.otio.otx) was spent as a ycilow- do.tr fund ' for corrupting public officials. In 1886 Thomas F. Ryan was ;i poor man. In K)O5 Henry 1). McDonou^h, his offi- cial representative, estimated Ryan's fortune at fifty millions. 'I lu- foundation of ail hi.- weahh and poucf wa- the Metropolitan Street Railway." "Centralization and Community Control of Industry," etc. (Government Doc.), 24. Ryan's career will be fully described in thai part of tlii- work comprising "Great Fortune- Fmm Public Franchises." HISTORY OF 'I HL GREAT AMERICAN FORTUNES few minor laws were passed, and one set of capitalists was deposed to make place for another. And that was the finis of this great investigation which was to have brought such " beneficial reforms." One of the most remarkable, and at the same time most comical, features of American political life in the nineteenth and twentieth centuries was the frequency of these official investigations. Survey the archives and you will be bewildered by their number and continuity, extant in the form of printed testimony and reports. These were not investigations made by a hostile officialdom, but by governing authorities, either repre- senting the very capitalistic interests investigated, or favorable to them. The numerous investigations may, therefore, be accepted as those of capitalist society dis- closing itself. Everyone of them reveals ihe same story of fraud, corruption and theft, from which not a single line of business was exempt. The stupendous extent of the incessant and deliberate lying carried on by capital- ist expositors may at once be seen by comparing their fulsome accounts of capitalists and of the capitalistic system with the facts perpetuated in the reports of the capitalists' own Government. Xot one of those investi- gations carried with it any real salutary benefits for the people; after every such inquisition the mass were plun- dered and despoiled as effectively as before almost in- variably more so. Apparently the only inherent virtue of those investigations seems to have been that of sup- ; lying thi- pre-ent author with facts a not inconsider- :rii;e, it may be appreciatively added." 1 fore, y.ilii this knowledge, wonder can be expressed '.. "insurance iniquities " (as they were styled) were not rri r.atdy viewed. In aanality, j/reat a- they were, they 1 ' ihe merest fragment- of a collossal network of fraud, ion and graft, covering: every department, branch and !-:i':d of iiu-ine?? and old-party politics. MORGAN AT HIS ZKMTH But what of those virtuous middle-class investors who, when tricked and defrauded by the magnates, plaintively put themselves on exhibition as outraged and helpless victims of a crew of unscrupulous financiers? 1 low, for example, did the many investors in Steel Trust stock regard the great Morgan after their disillusioning and spoliation? They broke out in passionate imprecations. Throughout the country you met them even-where be- wailing their lo.-ses ; some of their thousands, others of their tens of thousands, and still others of their hundreds of thousands of dollars. In many another \\all street onslaught, the losers could not specifically blame Mor- gan ; but in the Steel Trust stock-rigging he was so palpably the principal moving spirit, that necessarily this bitterness was directed at him. To the point of nausea the charge was repeated that fraud had brought about the stripping or ruin of those innocent, confiding investors ; :! - fraud did it all, fraud explained the whole process. Delicious innocence ! Not an individual was there among those self-commiserating investors who would not have been elated to have profited in the stock market at the expense of other investor.-. Had such been the out- come. the transaction would have been highly legitimate and just. The crime consoled in the magnates exclu- -ively pock-ding the booty. This at once Iran-formed the operation into one of betrayal, injustice, fraud and >ppression term.- springing spontaneously from the niddlc clasr- whenever its pocket i- drained. Then came "'-'.Many 'if these investors were nut, of course, despoiled of thi'ir entire Fortune 1 . Thus, a >mail manufacturer mitdit invest >-'j . <<<> df his fortune in Steel Tru-t stock, ami ln-,e a irreat part of the investment in -dlin^ on! at a very much lower price ;; ;ha( at which he hnd hou.jlu i . As the market price kept ending he \\-om 1 d conclude to -eil out licfort hi- losses would be qreater, The "margin" investor.- -uttered much worse. 280 HISTORY or THE GREAT AMERICAN FORTUNES that old familiarly dolorous plaint of its grievance.- . And would the terror of law never descend upon the supersubtle corporate greed that was swindling and de- vouring the virtuous middle class, " the backbone of the country " ? THE SOURCE OF PROFITS. Agitated over their own misfortunes and expropria- tion, these investors excoriated Morgan and the other magnates. And their actuating reason was what? That of not being allowed to have a hand in the profits. 'Who has not heard pigs squeal when a hog usurps the trough ! And what, further, were the basic conditions from which these investors eagerly . strained for profits, either in -lock gambling or in dividends? The value of the stock depended at bottom upon the trade profits of the business. Those profits came from the labor in the mills and the exploitation of the manu- factured product, the price of which exploitation was indirectly taxed upon the working class wherever steel was sold or used. Were the petty investors, so clamor- ous for their own security and comfort, uneasy at the condition.- under which masses of men and boys worked in the iron and coal mines and in the steel manufacturing plant.-? Did they experience any qualms at the long hour- and low pay. and the squalid, often revolting, life to which those workers were forced? Did the bestial degradation and frightful destitution so often encount- ered in -u-rl-mill quarters disturb their thoughts? Or were they impressed by the gha-tly casualties in the mills. MI- the diseases rife in the workingmen's quarters, causing an undiminished slaughter of men. women and : Did the investor-, whose understanding of in MORGAN AT lilS ZliNlTH 251 justice was so sensitively acute when they were robbed or in distress, see any injustice in such conditions? In this exploitation they saw nothing by a " right- eous " system of industry from which they eagerly sought profit. They were not ignorant of the existence of these conditions; it was with a knowledge, not always full, but some realization, nevertheless, of them, that they sophisticatedly bought Steel Trust stock to share in the profits. When an exposure was made, in 1908, of some of these conditions, not more than a handful of stock- holders protested against the horrors ; exceptions among their class to which we gladly draw attention. In its long duel with the magnates, the middle class ever and always insisted that its grievances be heard and respect- full}- treated. Yet, let the workers make the slightest move for redress, and that class, with stony rigidity, would demand their repression as " disturbers of busi- ness," if for no other reason. To describe those conditions at length would be an inappropriate anticipation of another part of this work- to which the description is more germane. Some glimp- ses, however, will be to the point. Xor will the facts be drawn from working-class spokesmen and writers. Do not the conventions of the day condemn these as un- worthv of credence and citation? Observe with what immense respect legislatures. Congress, the courts, edi- tors and literarv reviewers treat the trashiest utterance- of capitalists, and swear by their value and authenticitv. But working-class memorials, protests and statement- are obviously the productions of "rabid agitators" ; thev " chronically exaggerate " and are " partial and par- tisan." Since capitalists (and their retinue of scribes i alone possess the high virtue of complete veracity, cita- lions from such source- will perhaps carry weight. 282 J11STUKV OF THE C.REAT AMERICAN FORTUNES What i> this extraordinary document we hold in our hand? It is a report entitled "The Pittsburg Survey," the same being an exhaustive investigation of the con- ditions of the working class of Pittsburg. Scrutinizing further, we find that this investigation was carried on by means of funds contributed by " The Russell Sage Endowment." s " That fact enhances its prestige for ci- tation purposes. What is this further fact we note on the bottom of the cover? That the report has been published in a magazine conducted by the Charity Or- ganization Society of Xew York City, under which title appears what? The name of J. Pierpont Morgan, as treasurer of that society. Xo\v we are invulnerably on safe footing. To a report issued under >uch exalted aus- pices, who would be so reckless as to impute inaccuracy or impartiality? More especially so, inasmuch as this report has been generally commended for its accuracy an accuracy, it may be added, toned with an extremely conservative treatment. On. then, with the quoting. ' The United States Steel Corporation." the report said.. owns properly on the South Side of Pittsburg just beyond the Point Bridge. Here is located the old Painter's Mill, which I- one of the plants of the Carnegie Steel Company, which in :;,rn is one of the constituent companies of the United States Sted Corporation; and here. also, stands what remains of ''The Russell Sage F.ndo\vinent " a fund amounting to ninny millions of dollars, given by Sage's widow for (among other purposes) the pnrpo.-e of investigating the conditions pro- poverty. Part of the money robbed by Sage in previous is ihr,.; tt-ed to find out why so many millions of ' itirui are in destitution. What a grotesque MORGAN AT 111S ZliNITH 283 Painter's Row, where the company has housed certain of its employes, mostly immigrants. When the Carnegie Steel Com- pany took over Painter's Mill, it renovated the plant so as to turn out the sort and quantity of output which the Carnegie name stands for. When it took over Painter's Row, it did nothing. When, a little over a year ago, and several years after the purchase of the property, I made a detailed investigation of the place, I found half a thousand people living there under conditions that were unbelievable back-to-back houses with no through ventilation ; cellar kitchens ; dark, unsanitary, ill-venti- lated, over-crowded sleeping rooms, no drinking water supply on the premises ; and a dearth of sanitary accommodations that was shameful. 34 The writer hastens to add : The story of Painter's Row should be considered in its bear- ings. The United States Steel Corporation is building a re- markable new town at Gary, Indiana; its subsidiary companies have- promoted house building along original lines, notably at Vandergraft, Ambridge and Lorain, and the Carnegie Steel Company has fair, low-rental houses at Munhall and elsewhere. On the other hand, other Pittsburg corporations own company houses which have been equally as bad as Painter's Row; and a similar story could be written of a shack at one time owned by one of the foremost Protestant churches of Pittsburg, and razed to the ground only because the headworker of Kingsley House had the courage to publish its picture and the name of the owner. PainterV Row has been improved, it is reported, since the publication of the report : the Steel Trust officials were driven to it by the resulting publicity. But Paint- er's Row is only a typical incident in a vast accumula- tion of poverty and misery, to be met with everywhere in the steel mill towns. That qualifying note regarding the erection of fine new houses for the workers in (larv 284 HISTORY OF THE GREAT AMERICAN FORTUNES and other Steel Trust towns has an altruistic touch ; very melodiously and enthusiastically it rolls along. Yet we have seen, in the case of the town of Pullman, how these " model towns " work out : how the workers are reduced to a state of serfdom, exploited at every turn in the mills rind out; and such efficiency as comes from fairly decent living quarters simply redounds, as a " good investment," to the profit of the mill owners. Of the conditions noted further in Pittsburg, one more extract from the volumin- ous report (which might well be termed a Chamber of Horrors) will give an additional insight: . . . Tt is a common opinion in the district that some em- ployers of labor give the Slavs and Italians preference because of their docility, their habit of silent submission, their amen- ability to discipline, and their willingness to work long hours and overtime without a murmur. Foreigners as a rule earn the lowest wages and work the full stint of hours. I found them in the machine shops working sixty hours a week ; at the blast furnaces working twelve hours a day for seven days in the week. The common laborer in and around the mills works sev- enty-two hours a week. The unit of wages is an hour rate for day labor and a Slav is willing to take the longer hours (twelve hours a day for men who work fourteen and sixteen in the fatherland) with extra work on Sundays, especially in connec- tion with clearing the yards and repairing. Possibly sixty to seventy per cent, of the laborers in the mills come out Sunday." and the mechanics and other laborers on occasions work thirty- six hours in order that the plant may start on time. In one mill I found Russians (Greek Orthodox) in favor for the rea- son that they gladly worked on Sundays. Many work in intense heat, the din of machinery and the noise of escaping steam. The congested condition of most of the plants in Pittsburg adds to the physical discomforts for an out-of-doors people; while their ignorance of the language and of modern machinery increases the risk. How many of the Slavs. Lithuanians and Italians arc injured in Pittsburg in one year is not known. No reliable statistics are compiled. In their MORGAN AT ins XKXITH 285 absence people guess, and the mischief wrought by contradictory and biased statements is met on all hands. When I mentioned a plant that had a bad reputation to a priest, he said, " Oh, that is the slaughter-house ; they kill them there every day." I quote him not for his accuracy, but to show how the rumors circu- late and are real to the people themselves. It is undoubtedly true, that, exaggerated though the reports may be, the \\aste in life and limb is great, and if it all fell upon the native born a cry would long since have gone up which would have stayed the slaughter. 35 These are but the most cursory views of a few of the prevailing conditions. All of the bond and stock hold- ers, large and small," 6 great magnates and little parasites, not merely have acquiesced in these conditions, but have insisted upon their continuance, upon the principle (so often referred to in the course of this work) that the lower the wages and longer the hours of work, the se- ductively greater the dividend prospects. Splendid man- sions, as capacious and ornamental as palaces, arise upon the tense labor, the suffering and the mortality of those masses of workers. Carnegie, pompously spreading his philanthropy, draws his income from the very life blood of those workers and their families and children,'' 17 and A I organ, piously dispensing charity, officiating at relig- ious meetings, and posing as the incarnation of princely benevolence, allows no such impractical considerations as ""'''The Pittsburg Survey,'' i : 537 and 539. The Carnegie Steel Company began several decades ago the systematic hiring of immigrant workers. The average pay of these workers i- $[.6o a day. "'But the lew exceptions noted previously, 37 " One-third of all who die in Pittsburg. die without having anything to say about it. That is. they die under five year- of age. One- fourth of all who die. die without having any thing to say about anything. That is, ihey die under one year of age. MOM of these deaths are preventable, being the out come of conditions which, humanly -peaking, have no right to exist." This slaughter is greatly caused by impure milk and bad housing condition-. "The Pittshurg Survey," ii : 943. ^86 HISTORY OF THK GRKAT AMERICAN FORTUNES pity or sentiment to make life even a moiety more toler- able in the roaring hells from which are derived an aver- age of $145,000,000 net profits a year." 8 38 The American Federation of Labor, at its annual meeting at Toronto, in November, 1909, declared that the Steel Trust was actively bent upon destroying labor unions, and that it \vas the foremost aggressor in this move. The object i- to reduce the workers to a still greater condition of servitude. The stock lists of the I'nited Steel Corporation which were opem-d lor inspection at the animal meeting of the stockholders, in Hoboken. X. ].. on April 18, 1910, showed that the name of ]. P. Morgan and Company, for the firm and as holders for others, appeared on the lists for large amounts of stock. Mor- gan's London house, formerly known as ]. S. Morgan and Com- pany, but at present Morgan, Grenfell and Company, also held, it was revealed, large amounts of stock. The holdings in the name of Luke II . Cutler, amounting to 17-395 shares, were gen- erally considered to be stock owned by John D. Rockefeller. Of the foreign stockholders, the " Dutch Syndicate " was shown to be the largest, its holdings reaching 216.870 shares of common stock. The Rothchilds were' also disclosed as large stockholders. A considerable number of conspicuous American individual cap- italists and banking firms were entered on the books as stock- holders in varying degrees of ownership, large and small. CHAPTER XII MORGAN AS "THE SAVIOR OF THE NATION" All previous panegyrics lavished upon Morgan became stale and inadequate compared to the apotheosis of him during the panic of 1907. What climax of earthly splen- dor does Morgan reach? He becomes the "Savior of the Nation." Around their genesis, methods and characters, the magnates weave romantic yarns. They supply the in- spiration ; a host of writers and orators, trained to trans- fer that romancing into catchwords and phrases, carry it to the people and popularize it until it becomes an al- most adamantine tradition. Always it is the same species of romance ; the toil, the thrift, the integrity, the wonderful ability by which the magnates reaped their fortunes ; their heroism in time of war, their saving philanthropy in all great crises. The audacity of these " literary " puffers is as great as the imposture of the magnates whom they cover with adulation. In the very commission of vast frauds and thefts, the magnates will pose as public-spirited, patriotic men. Their puffer> hasten to paint them likewise. There is no judicious waiting until time has receded, and the actual facts are more or less forgotten. The very enormities of the magnates are at once transformed into acts of the greatest purity, and the people are called upon t<> applaud. In every conceivable manner the press, or at 287 288 HISTORY OF 'I' III-: GttKAT AMF.R1CAX FORTUNES lea-t a considerable section of it, is manipulated to coun- teract the effect of disclosures. A CIIARACTFRISTIC EL' LOGY OF MORGAN. Shortly after the panic of 1907 had set in, an article (and it was one of many such productions) entitled " Morgan the Magnificent" was published in a "popu- lar magazine." Its bombastic style, if nothing else, must provoke a wondering interest, yet it was strictly in accord with the quality of most of the matter pub- lished in books ant] magazines. This trash was called " popular " not because the people wanted it, but because to a great extent many publishers considered it " safe." It did not antagonize the vested interests of wealth. The article began with this lurid introduction : There were scenes in the saving of Wall street by John Pierpont Morgan that never can be written ; things said and done that cannot and should not even be remembered, even in those days, of excitement, horror and confusion: heroism, crimes, blunders, treacheries and martyrdoms that spanned the whole capacity of man for glory or shame; for. until the continent came, half-crying, half-cursing out of the trembling madness that threatened to bring down the banking system of the coun- try into ruins, smash the credit of the nation and smirch its name, men were in a nameless bewilderment of fear beyond words to express, as in the presence of some impending and irresistible convulsion of nature the boldest and keenest become craven and stupid. Plain Mr. Morgan, fresh from the dronings of a great Epis- copal church convention at Richmond, was suddenly aroused by tin- peril of the financial situation to a demonstration of c<>ur- age. -tn-n.uth and personal masterfulness that brought order and confidence nut of chaos and de-pair. \nd there is a little history to compare to the sight of this -tout, Decretive American banker nf seventy years withdrawing MORGAN* AS " THE XATIOX's SAVIOR " 28*) from the passionless company of bishops and ministers intent on religious ideals, to take command of the fierce, clashing money forces of Wall street, gone craxy out of sheer fright to become the protagonist and hero of the most cynical, sus- picious, treacherous, cruel, arrogant and cowardly human ele- ments in the world. It might well be imagined that Morgan, the " connois- seur of art," the " lover of literature," the great arbiter clegantarium, would have sent for the author of this perpetration and caused him to be the bastinadoed on the spot. Evidently in the absence of proof to the con- trary Morgan was pleased with the confection. It would not be worth notice here were it not for the fact that the point of it that Morgan was the " Savior of the Nation " was gravely and repeatedly pressed for- ward by many other writers and publications. In scrutinizing Morgan's career, one prodigious vir- tue is encountered. It is that of consistency. The qual- ity of his patriotism and heroism never changed from the time of his introduction into business. That rille sale at the outbreak of the Civil War was the first exhibition of his intense patriotism. In 1894 his patriotic nature was again displayed consistently when he and his clique squeezed a profit of $18,000,000 or more from the ( lov- ernment in a time of need. In the panic of i<;o/ his never-failing patriotism was even more prominently shown. While the effusions of the " popular writers " were wending the rounds of the country, a recalcitrant L'nited States Senator was boring the august Senate of the { nited States with a long, tiresome speech. The bulk of the august Senate did not care to hear what this Sen- ator, one La Toilette, of Wisconsin, had to say, but were compelled to by the rule-. The Senate of the United 290 ms'iORY or THK <;RK.\T AMKKICAX KORTL'XH.-, Slates was most sen-itively jealous of its prestige and dignity. Most of its members were multimillionaires. La Follelte lacked that highly important qualification. Still more, he was painfully deficient in ca.ste in another respect. He had not bought his way into the Senate of the United States, thereby outraging one of its most sacred canons. Hence he could give no real test of standing or any guarantee of wise, conservative states- manship. But the majority of his colleagues had good reason to be impatient of La Follette's speech. Ilis was a voice from the past. They represented the newer order, that of centralized industry, and a Government run directly by the magnates themselves. He was a relic of the old creed, that of the age of competition in industry. For four long days, on March 17. 19, 24 and 29, 1908, he delivered his lugubrious wail. " In their strife for more money, more power more power, more money," he explained in describing the great magnates, " there is no time for thought, for reflection. Government, society and the individual are swallowed up in the strug- gle for greater control.'' Thus he stumbled through mazes of facts the purport and interpretation of which he did not understand. X'either did he comprehend the fundamental fact that commercial upheaval- are not the work of individual-, but of the whole capitalist system ; that certain powerful individual.-, or interests could ac- celerate or retard them, but could not be held responsible tor their causation. According to him, a crowd of con- -pirators, headed bv the Standard Oil Company and Morgan had deliberately brought on the panic: he ful- minated against them and denounced them as arch crim- inals. Amid his accusations, lamentations and platitudes. MORGAN AS " TIII-: NATION s SAVIOR 29 ; Senator La Folk-tie embodied certain facts of real his- toric value facts confirmed by the records of what actually took place, and familiar to all close observers of events during the panic. The panic of 1907, like previous panics, supplied the propitious opportunity to the great magnates to crush out lesser magnates and seize the control of their prop- erty. The requirements of industrial centralization de- manded the effacement of certain minor magnate groups which, from the point of view of the great magnates, had possessed themselves of a rather dangerous degree of industrial and financial power. These ambitious little magnates had imitated the methods of the great ; they had combined fraudulent financial manipulation with the op- pressive exercise of political power, and thereby had tricked or forced out the owners of various properties, and had then vested the ownership of those properties in themselves. The form was the usual one of organiz- ing large corporations, with immense amounts of wa- tered stock. These corporations were built upon the ruin, extinguishment or buying owt of numbers of former independent business men. One of these minor capitalist cliques was what \va- called the " F leinze-AIorse-Thoma- Group." IT.- control comprised twelve banks and two trust companies ; a coastwise steamship company, consolidated by the inclu- sion of a number of steamship companies; large copper mine-, a trust in ice, and various other properties. Tin- control of some of the>e propcrtic- \va- largely secured by means of the enormous profit- robbed from the poor : STORY or THK GREAT AMERICAN FORTUNES ana this robbery was of a corrupt alliance between Moi>e and tin: Tammany administration in Xe\v York City. Before organizing the Ice Trust, Morse had been an inconspicuous banker. In the course of this business, he had dealings in discounting the notes of various in- dividuals and firms engaged in the selling of ice. Con- ceiving the idea of forming a trust in that necessity, he set about to crush out the small dealers. One of hi> first steps was to assure himself of the collusion of powerful politicians ruling the government of Xew York City. In its investigation of the administration of Xew York City, the " Mazet Committee ''- an investigating body appointed by the Legi^aturc in i8f ice. practically cutting off the supply of the very poor.- - Sec- " Tin.- Hi.-tory of Tammany Hall." YVuii .is assured monopoly, the Ice Trust declined to L,.pper mines in Montana, and who.-e manipulation of the politic- and politicians of that State \vas somewhat similar to that Morse used in Xew York City. Also, he made a coalition with Thomas, who controlled some Xew York bank-. ( 'ii the -urface this seemed a very powerful combina- tion : not an opportunity was lost by Mor-e and his as^o- MORGAN AS '' THE NATION'S SAVIOR " 2Q5 ciates to spread abroad the impression that they were too formidable to be overthrown. THE GREAT MAGNATES LIE IN AMP.USH. These men made much noise in the financial world, and dashed around with prodigious belief in their in- vincibility. The}- were vaunted as great financiers ; doubtless inflated bv their own success, they esteemed themselves so. and judged themselves fully able to cope with the great magnates. In the meantime, the Morgan and Rockefeller group was carefully observing their op- erations, and awaiting the ripe time when they could be crushed out at one blow. The Standard Oil Company wanted those copper mines, and the steamship company organized by Morse was considered a competitive menace to railroad lines controlled by the Morgan and Rocke- feller interests. Senator La toilette's account of events that followed was accurate as to the facts. In his speech in the I nited States Senate he gave this narrative : Suddenly, in the rir-t day> of October, somebody (to use a Wall street phrase) began ID "smash I'nited Copper on the curb." The stock broke badly. Standard Oil \vas getting under way. Doubtless, never -u>pectmg the source, lleiuxe, thr >ugh his brother, a member ot the Stock Exchange, and through brokers, bought and bought until Unittd Copper went ou< of >iglu. carrying d'i\vn ileinxeV brother, * >ne firm of his broker-, and involving the MorsoHein/.e banks in the crash. Up to this point the panic had been well in hand, but with the revelations following hard upon clearing house investiga- tion:-, it Clipped u- bridle, and the situation assumed a si.-t- ai.ee. Though gold and bank notes were ostentatiously piled on the counters to impress depositors, ;,:id young Vanderhilt offered as an exhibit of resources and placid at the teller'- window, the excited depositors persisted in demanding their money. :; !n a dav, as it vrcro, the Morse-Heinze- 1 homa mashed into nothingness, and its p'ropertie f Control in Industry. Phe Panic of October. Speech of lion. Robert M. La Follettc MOKC.AX AS "THE NATION'S SAVIOR" 297 had ended there, they would have had cause to rejoice over their good fortune. But their rout had to be made complete. The Federal authorities began to take a sud- den interest in their operations. Where previously the (Government's prosecuting officials had been wholly un- aware that Morse, Heinze and Thomas had been commit- ting fraud in their financial methods, they now spied out the 'fullest evidences. From certain quarters proofs were offered of violations of the law by the fallen trio. The I nited States District Attorney's office in New York- City became alive with energy. It caused grand jurors to investigate, and showed striking official zeal in the prosecution. 1 leinze was indicted, and Morse brought to trial, convicted, and sentenced to fifteen years in prison a verdict from which he appealed. The United States Circuit Court of Appeals affirmed the verdict,' 4 and A Torse is now serving his term in the Federal prison at Atlanta. Morse and Heinze learned two valuable lessons which all aspiring little magnates might well take to heart : First, that it is extremely unwise to cross the interest of the really big magnates; and, second, that those mag- nates can use the criminal machinery of the courts against opponents of their own class, not less than against labor leaders, labor unions and the propertiless in general. Hut the grasping of the properties of the ousted com- bination were not the only seizures during those harvest 4 During hi? commitment in the Xe\v York oily prison the United State- judges allowed him to fro out every day in order " that he mi.^ht attend to necessary business." Of the va-t num- ber ot persons convicted of crime, pot a siiudc in-tapce has ever been known ot a poor prisoner being a!' >wcd to leave prison during the day so that he miyln work for hi- family. The conn - ; ' d !;;!<"' that Mor^c could >: free under hail ['ending the d cision of his appeal. X<> poor pri-oner \vas allnued this priv- 2 9 8 day- of the panic of 1907. The electric apparatus fac- tories of the Westinghouse Company had long been in the way of the Standard Oil Company, which owned tiie (Jeneral Electric Company. The Standard Oil Com- pany exercised a financial pressure during the panic that soon drove the Westinghouse Company into an extrica- tion, from which it escaped only by becoming a Standard Oil property. And, in the conferences held by the Wall street financiers during the early days of the panic. Mor- gan learned that the control of the Tennessee Coal and Iron Company, in the form of stock, had been placed with the Tru-t Company of America by John W. < iates and hi- associates to secure loans. This was informa- tion of the highest and most momentous value. TIIK STF.EL TKl'S/f AJiSOKHS A DAXGEROl'S COMPETITOR. The Tennessee Coal and Iron Company was the mo-t dangerous competitor of the Steel Trust. It was the one great competitor having it- own sources of iron ore and coal supply. In the fall of 1907 it owned, it was estimated, from 500.000,000 to 700,000,000 tons of iron ore, 2.000.000.000 tons of coal, and " very large quanti- ties of flux and fluxing material." All of these coal dc- posits were within a radius of thirty miles of its plant in Birmingham, Ala/' The owners of this companv were planning improvements which would have made it an - ven more serious competitor of the Steel Tru-t, and thev had plans under way of merging the Republic Steel Company with their corporation. Moreover, the Ten- nessee Coal and Iron Company was foremost in the developmenl of the open hearth -ystcm of making steel cs Senate ("ommittee - \ved by the Government, the Trust Company of America would go down in failure, cau-ing a train oJ other bankruptcies, and the panic would be manifold intensified. Whatever were the reason^ for Roosevelt's submission, he gave his consent. At that very time the courts were enforcing the anti-trusl law with a construction that no one had 3OO HISTORY OF THE GREAT AMERICAN FORTUNES dreamed of when the law was passed. The eminent judges discovered that labor unions were trusts, and issued writs against them on the ground that they were conspiracies in defiance of that law ! Roosevelt was bit- terly denounced ; 6 his action, however, mattered little so far as the merging of the two corporations was con- cerned ; had not the Steel Trust obtained control at that particular time it would have inevitably done so at some other time, and by another process. 7 According to dis- closures before the Senate Committee on Judiciary, the Steel Trust made a profit of $670.000,000 by forcing the Seven United States Senators signed a document severely arraigning him for sanctioning a violation of the anti-trust law and for practically commanding the United States Department of Justice to take no steps for an enforcement of the law. Under the caption of " Morgan, Dictator,'' the Berlin Tagc- blatt, on December 3, 1907. publi-hed a leading article on it- financial page, urging the prosecution of Morgan for blackmail in threatening a more disa>trous calamity in case Roo-evelt did not accede. Under the German laws, said the Tageblatt, Mor- gan would have been immediately arrested for blackmail. An amusing comment, considering that Morgan and his kind are the Government in the United States. ~ The futihy of the anti-trust law. so far as it is applied to capitalist corporations was mockingly shown by Congressman Littlefield. one of the Republican dictators of Congress and a trust advocate of great skill. In an address to the Illinois Bar Association on June 27, 1008, he pointed out: " In 1907 the Government had in its service one hundred and seventy-one District and Assistant District Attorneys. This lit- tle army of lawyers cost the Government in salaries and ex- penses $735.612.06, in addition to the salaries of the Department of Ju.-tice, amounting to $270.965.58. By the exercise of du-- diligence they obtained 9.741 convictions for violation of the law. The average number of convictions for violation of the Sherman Anti-Trust law during the la^t six and one-half year- is a little more than one a year, only ^even since September 14. [<4. " In order to get the full signiiicap.ee of this record it should lie borne in mind that during this period the Government ha- had available for it- us*, for tin- enforcement of tin- special stat- i : :- ' (. and $;>50.ooo m K;oN. Siixe SepKmber i .'. , ' . iih i i'i' ; ! injunctions. ;:; id -i. ven c nviction-;. S3Sn.24J.^ : '.- I ior this spe 'i;.i purpose, i\-u'iii L; ;:i fines of o; , >' ,' .<" 10." Trust Company of America to sell the control of the enormously valuable plants and mines of the Tennessee Coal and iron Company at a preposterously low price. Where did Morgan and his associates get the money with which to carry on the process of terrorizing the country and gathering in immense industrial and other properties? Again, the people had another of those frequently occurring vivid opportunities of seeing how thoroughly the United States Government was an instru- ment of the capitalists. In the banks there were more than two hundred million dollars of money wrung funda- mentally from the sweat of the working class in taxa- tion. The few oligarchs controlling the great banks were allowed to use this money as though it were their private property. They declined to loan any money to anyone until their plans were ready, and when they did loan, it was at extortionate rates of interest. Even this complete transference of Government funds did not sat- isfy them ; they demanded more. The Government at once responded. Cortelyou, Secretary of the Treasury, instantly permitted the national banks to issue thirty million dollars more in paper currency, and made the mints work night and day to turn out fresh coin. Posing as the savior of the country. .Morgan came for- ward at the auspicious time, on the afternoon, of Oc- tober 24. 1907. and magnanimously announced his de- >ire to " relieve the tension." The entire capitalist class, excepting the very few magnates thus engineering the whole situation, was clamoring for loans of money. The loans were finally given on that afternoon. The " savior of the country " demanded from twenty per cent, up- wards for loan-, and exacted securities as collateral at neavy sacrifices to the borrowers. The money that he thus loaned was Government money, squeezed in taxa- 302 HISTORY OF THE GREAT AMERICAN FORTUNES tion from the producers. It was a classic example of Government of, for and by the great capitalists. XO AID FOR THE UNEMPLOYED. While the Government was placing the treasury of the United States at the disposal of Morgan, what was it doing for the millions of workers thrown into enforced idleness and destitution ? By June, 1908, it was conserva- tively estimated that perhaps five million workers in the L'nited States were out of work, and could get none. Reports from the charity organizations in every city showed that the cities were overcrowded with, the home- less and unemployed. Destitution was rife, and cases of starvation of men. women and children, were more frequent than the official reports dared reveal. The jails throughout the country were crowded with men who, thrown out of work, were adjudged vagrants and sentenced. Many of the homeless voluntarily committed some breach of the law in order to be sent to jail. There, at least, shelter and food could be obtained. Many towns adopted the plan of deliberately driving out the unemployed. Everywhere crime increased ; driven to absolute necessity, many workers stole, and, of course, were dispatched to prison. The Social Eth- ical League, of Xew York City, reported that crime had increased fifty per cent, within >ix months. With destitution and starvation everywhere, what did the Government, whether National, State, or city, do for the unemployed? Nothing except to club and ter- rorize them when they presumed to hold street meetings to plead for the right to work. In the whole -phere of government there was not a single real representative of the worker- to -peak or act MORGAN AS "THE NATIONS SAVIOR 303 for the workers. The Government was a Government elected by the votes of millions of workingmen, yet the working class did not have a single mouthpiece in that Government. A Senator such as Davis of Arkansas might rise, as he did, in the United States Senate on December 12, 10,07, and fiercely denounce "the stock gamblers and thieves of Wall street," but. lie, and all like him, did not speak for the working class, about which they cared nothing save to keep it in submission ; they spoke for the middle class and for that alone. 8 A CAREER STILL IN EVIDENCE. This is the true history, in outline, of the career of the great " savior of the country." I'nt it is not all. Unquestionably Morgan has been engaged in a large number of other transactions of which no details have ever become public. Some very recent happenings, how- ever, are tolerably well known. He and other Ameri- can bankers were dissatisfied with the placing of a $27,- 500,000 loan with European bankers, and insisted upon the United States ( iovernment their Government demanding that they should have a share. Nor is it so long ago that another transaction of Morgan's became public. lie " consented " to take a $30.000,000 six per cent, issue of Xew York City's bonds in order "to save Xew York's credit." Did he pay for the-e bonds in cash? Xay. He signed a check for $15.000.000 on the First Xational Hank of Xew York, and another for $15.000.000 drawn on the X~ational City Bank of Xew York. Whose monev, virtuallv. was it in these bank- 304 HISTORY OF Til!.-: GREAT AMERICAN FORTUNES against which Morgan's checks were drawn? Money deposited by the United States Treasury. In addition, 1'e obtained tens of millions more of Xew York City bonds at a high rate of interest. The heroic qualities of the " savior of the country " are further illumined by Comptroller Metz's statement that be, Metz, in order to get -Morgan to accept Xew York City's bonds, had to betake himself to Albany, and get a special act passed by the Legislature increasing the interest on the bonds. Another such illustration of Morgan's methods, or those of corporations controlled by him, will be given. At an expense of more than $22,000,000 9 (reckoned to November, 1909) Xew York City has constructed a series of extensive, modern piers on the Hudson River, from Little We.-t Twelfth street to Twenty-Second street. These piers are called the Chelsea Pier Improvements. The entire cost has been defrayed by Xew York City, and the money was obtained from selling issues of city bonds. The interest rate has varied from three, to nearly five, per cent. Part of the bonds are payable in thirty years, a very small portion in forty years, and most of the total issue " matures " in fifty years. These piers have been leased to three steamship com- panies, fine of which is the International Mercantile Marine Company, organized by Morgan, another is the Cunard Line, a third the Compagnie Generalc Transat- lantic inc. These companies secured from the Tammany administration, in 1904, a lease of such a scandalous character that the city docs not get enough revenue to pay even the interest on the bonds issued for the piers. On December 16, 1903, the International Mercantile Marine Company offered, in writing, to take a lease of five full piers and one half pier at an annual rental of 9 Statement of Xc\v York City Dock Department. MORC.AX AS THE X. \TIOX S SAVIOR -?(}-, *J - $450,000.' The question of awarding this lea:-/,? was still pending \vhen Tammany came back into power. The International .Mercantile Company then secured the return of its first offer, 11 and a thirty-year lease \v made later by which the three companies secured ni.; piers at an annual rental of $565, ooo. 1 - Inasmuch as the International Mercantile Marine Company alone had originally been willing to offer $3,392,351.46 for the nine piers for a thirty-year period, this chr.'ige in the terms entailed a loss to the city of nearly three million dollars. The result can be stated as follows : The Chelsea improvements have cost the city $22,- 000,000. The annual interest charges that the city is required to meet are $844,800. The amortization charges are $220,000. The calculated annual depreciation is $345,553.50. The total annual charges are, therefore, $1,410,- 353-50- The annual rent received from steamship companies for these piers is $565.000. Hence, the net loss per annum to the city is $845,- 353-50. The loss to the city per day is $2.316.04. Thus Xew York City's officials were prevailed upon to lease the largest and fme-t piers in Xew York, if not in the United States, at a lower rental than the city had been receiving for older and far inferior piers, so that. Xew York City loses $845.353.50 every year. And while Morgan's International Mercantile Marine Company was profiting by this transaction. Morgan was giving $20,- T.O6 HISTORY OF Till-: GKKAT AMERICAN FORTUNES ooo a year to the Bureau of Municipal Research to in- vestigate, and expose, petty graft! Comment is need- less. These transactions, however, are small compared to Morgan's still more recent activities. On December 2, 1909. Morgan personally bought the majority stock of the Equitable Life .Assurance Society, which Thomas P. Ryan, in 1905. had purchased from the Hyde fam- ily. By this purchase Morgan acquired the ownership of the stock around which revolved such a bitter contest for possession four years previously - a contest which (as already described > caused the great insurance scan- dals and revelations of 1905. By the purchase of this stock, Morgan obtained control of assets rated at $4/0- ooo.ooo : he paid, it was reported, approximately $2,- 500,000 for Ryan's stock. Thirteen days after this pur- chase, he bought a number of telephone lines, competi- tors of the Hell Telephone Company, probably to unite them with the Bell system. A legislative committee in Ohio has been investigating charges that bribery was used to pass a bill allowing this merger. Morgan's next step revealed how rapidly he was ex- tending his alreadv gigantic power. By purchase, com- bination or " community of interest " he acquired the Guarantee Trust Company of Xew York, a ninety-mil- lion dollar concern ; the Mercantile Trust Company, with resources of 868.475.000; the Equitable Trust Company, with assets of $63.800,000: the Morton Trust Company -formerly controlled by Ryan ; the Eifth Avenue Trust Company, and other very powerful banking insti- tutions. Morgan's power now embraces banking and trust, insurance, industrial and transportation companies, and controls or influences capital estimated, at the very MORGAN' AS "THE NATION'S SAVIOR" 3O/ least, at more than ten billions of dollars. 1 " How much of this stupendous sum Morgan personally owns or con- trols, or what alliance he has with the Rockefellers or other great money interests, are factors not definitely known. After consummating this Money Trust, he was hailed as the " Money Emperor," and his immense pos- sessions were denounced as an impressive and ruthless example of one-man power, although the step was, in reality, another inevitable hound in the centralization and overlordship of the country's resources. Only those blind to this development were astonished by it. Finally, to end the narrative of Morgan's career, there remains the huge expropriation of resources, estimated at a value of from $900,000,000 to $2,000,000,000, in Alaska, and of vast stretches of water-power sites in that Territory, and in various of the Yx'estcrn States sites intrinsically and potentially valued at hundreds of millions, if not billions, of dollars. The successful ef- forts under way on the part of great capitalist interest- to obtain immense stretches of coal, copper and other mineral land, timber lands and water-power sites, were resisted by Clifford I'inchot, I nitcd States Chief For- ester. A critical controversy ensued, in 1909 and 1910. between Pinchot and Ballinger, Secretarv of the In- terior. Charges were made that Ballinger had, before his prior appointment as Land Commissioner, acted as attorney for certain of the claimants, especially the ( 'unninghnms, who had obtained great tract- of land of the most valuable resources. A Congressional in- vestigation resulted. This investigation is still (at this writing) going on. 308 HISTORY OF THI: GRF.AT AMERICAN FORTUNES .Many facts, however, popularly regarded as startling, have already been brought out : in no sense, however, were they other, at basis, than a continued story of the fraudulent appropriation of public lands which has been going on in this country lor three centuries. Pinchot and L. R. Glavis, Chief of the Field Division of the General Land Office at Seattle. Washington, were, upon various pretexts, dismissed from office after they had exposed, and vainly sought to stop, the gigantic land frauds in progress. 14 This, as we have so copiously seen throughout this work, has been the fate of so many hon- est public officials obstructing capitalist fraud. On January 28, 1910, Glavis testified before the Joint Com- mittee of Congress that he had been requested by Bal- linger to hold up his investigations of fraud until after the election (of 1908). and that Ballinger supplied secret information of the I". S. Land Office to the Cunningham claimants, who, the testimony showed, were dummies acting for the Guggenheims. 15 Some of the charges 14 Of Glavis, Yir. Heney. retained by the Government, under Roosevelt, to prosecute pnY.-erful land thieves wrote to the editor of "Collier's Weekly": "This will introduce Air. L. R. Glavis, who is Chief of Field Division of the General Land Office at Seattle, Washington. I am in a position to know from experience with him that Mr Glavis possesses sterling integrity, as well as a high degree of practical intelligence. " He possesses information in regard to a gigantic coal-land swindle in Alaska by Guggenheim and others, and I want you to know the facts, so that you will be in a position to act when thp proper time comes. Mr. Glavis is actuated solely by a de- -ire to prevent this fraud from being accomplished. He i> ready ; "I willing to lose his position, if necessary." "Collier's \Ve> k'y," i-sue of February 19, 1010. '"'The assertion was made, by at least one member of Con- gress, that Rallinger's appointment as Secretary of the Interior Irid been brought about by the Gu:j;''--heims in return for a brgi. campaign contribution that they had made. This assertion s far has not been proved. It should al.-o be noted here that the election of one of the Guggenheims a? L'nited State-; Senn'or MORGAN AS ' THE NATION S SAVIOR 3ni those report- that during the la>l eight year- coal lands within the L'nited States have been ob- tained by frand to the extent of over 50.000 acres. These are n-ua!!y the very best ni the coal lands, and are to-day \vorth easily oio.ooo.ooo. If mined on a royalty Miflidently IMW to en nblo independent operators to compete with exiting eoal com 'inations the returns to the ( } 'vernmcnt would reach over >[OO.ooo.coo. . . ." Statement of ihe General Land Office, January, zb. 1910. 31O HISTORY 01- THE GREAT AMERICAN FORTUNES ued at hundreds of millions, if not billions, of dollars, thus showing that the seizing of land, begun in settlement times, has continued through more than three centuries up to the very present without any serious interruption. Commencing his career with the sale of those con- demned rifles to the Union Army during the Civil \Yar, Morgan has prospered until he now towers as a financial colossus and as one of the actual rulers of the land, lie lives in a splendid mansion on Madison avenue. New York City, and for his private gratification built, ad- joining it, a fine, spacious marble art gallery, filled with the costliest works of art. He professes a passion for literature, and his library is extensive. He is even a dictator of the morals of other people, as witness his stopping of the opera " Salome " when it was first pro- duced at the Metropolitan Opera House, of which he is a patron and director. Money, grandeur, prestige, power, all are his. And all the while the prisons are crowded with petty thieves. STEPHEN B. ELKINS. CHAPTER XI11 THK ELKINS FORTUNE With a fortune conservatively estimated at 850,000,- ooo, but undoubtedly reaching much more, Stephen B. Klkins is one of the notable multimillionaires ol the United States. Compared to the wealth of such mag- nates as the Vanderbilts, the Goulds. Morgan and Mill. Elkins' possessions are not remarkable ; he can not be placed in their special class. But his wealth has ele- vated him to be one of the most powerful politicians in the country ; he is one of the active ruling leaders of the United States Senate; the State of \Yest Virginia is virtually his province, not only politically, but to a great extent, as his personal property, lie owns or controls many of its mountains and its coal mines, and much of its other natural resources ; some of its rail- roads are his, and also its traction companies. The West Virginia Central Railroad, sold a few years ago to the Goulds for Sl8.mo,ooo. was controlled by him; this \vas but one of his railroad-. In the >ame State he owns bank-- and security companies, construction corporations, coke plants, water works and oilier diversified proper- ties. | [ it- candidate for Vice President of the United States. T!K forms of " popular government," so-called, still prevail in West Virginia, but only to carry out the designs and will of such magnates as Elkins and Davis, as in other States they are used to execute the plans of magnates who rule in them. The Elkins-Davis family ordered the legislature to elect Elkins to the United States Senate, and the honorable Legislature did it. State and county officials, judges and other functionaries owe their incum- bency and allegiance to this family. Elkins. at present, is the grand factotum of West Virginia politics. Yet twenty years ago he was considered an interloper. The same wealth that has enabled him to center in him- self political and industrial control of an entire State, i-. it is reported, to bring him a new distinction. His daughter, it is rumored, is to marry the Duke of the . \bruzzi. a member of the royal reigning family of Italy. These royal families, as is well known, are extraordi- narilv solicitous of the preservation of caste; "noble blood,'"' hallowed by ancient ancestry, is of all things, ndrd as a passport of admittance into the sacred And for intimate admission nothing less than " loyal blood " usually suffices. If royalty ex- ancestry with such scrupulous care, why should critically examine the origin of the wealth to THE ELK1NS FORTUNE 313 which it attaches itself? Would royalty think of marry- ing without having a genealogy duly made out and veri- fied? If it is true that the Elkins fortune is to enrich the royal family of Italy, surely its history likewise ought to he known and treasured in the royal archives. Senator Elkins inherited no wealth ; he is wholly " the architect of his own fortune." What were the species and style of his architecture? According to the routine biographies, ordinarily paid for at advertising rates, his was the memorable career of a poor boy rising to great wealth by hard work, application and superior ability. 1 jilt official documents have a very different tale to tell : and while they do not explain how Elkins obtained all of his millions, they give enough vivid details of the meth- ods by which lie first became a millionaire. As a young man, Elkins was repeatedly accused of being one of OuantrcH's band of marauders during the Civil \Yar. as to which charge no actual proof can be found in the records. After the Civil War he went to Xew Mexico. There he studied Spanish and became a member of the Territorial Legislature. His enemies. both partisan and personal, brought the accusation against him that he was the originator and ringleader of the immense land frauds current in Xew Mexico. Thi- particular charge was both unjust and false. Long be- fore Elkins drifted into the Southwest the land frauds were notorious; what lie and others did after the Civil War was nothing more than a continuation of what had been going on for many vears. It i- characteristic of the \vay in which American hi- lory lias been written that not a line can be found of the' gigantic fraud- by which tens of million- of acre- of land were stolen in the Southwest and in the Pacific Stales after the Mexican War. nlthr T^\] court record. 314 HISTORY OL' THE GREAT AMERICAN" FORTUNES and other official documents relate enough details to make an extended work by themselves. In Chapter II, Vol. ii. of this work a brief summary of these colossal frauds was presented, with the explanation that further facts would be more fully set forth in this chapter. I nder the Mexican colonization laws no individual was entitled to, or could claim, more than forty-eight thousand acres. The Mexican authority in California was overthrown by the American forces on July /, 1846. and elsewhere at about the same time. \Yhen it was evident that the Mexican power was about to pass away. Pio Pico, the Mexican Acting Governor of California, at once began to issue fraudulent grants of land, which, the court records indicate, were given for bribes. Most of these grants were presented in Ma}'. 184(1. Xumer- ous other land grants, alleged to have been given by him at the same time, were forgeries. The Supreme Court of the I nited States found some of them so when the Government later contested their validity. The Mex- ican governors corruptly gave some land grants, while many other grants were forged, with the signatures <>! the Mexican governors. When the Mexican war wa- over. American capitalist - bought from the Mexican h< Kkr- large' numbers of the land grants covering manv millions of acre.- of the very best and richest agricultural, grazing, mining or tim- brr hind m California, New Mexico, Colorado, Arizona ither sections. In fact, - >me of ihese alleged gram- I large portions of the populous cilie^ and towns. rican caj iiialist- rule applicati< n t> > the ales Government to have tin- "rants confirmed. THE ELK INS FORTUNE 3! 5 hi nearly every case the Government denounced the grants as forged and otherwise fraudulent, and refused. The claims were then taken to the courts. One individual, Henry Cambnston, claimed eleven square leagues of pasture land on the Sacramento River, as having been granted by Acting Governor Pico on 'May 23, 1846. The California courts decided in his favor. These local courts throughout California and other portions of the \Yest seem to have been in collu- sion with the land grabbers, and were often composed of judges who were themselves interested in land-grab- bing operations. The Government carried the Cambus- ton case to the Supreme Court of the United States, as- serting that the purported grant was fraudulent and forged. The Supreme Court of the United States, in December, 1857, handed down a decision expressing doubts of the genuineness of the grant, and reversing the decree of the California courts. 1 Another claimant, l-'uentes, had the assurance to carry his claim to eleven leagues of California territory to the Supreme Court of the United States. In his argument before this court in December, 1859, United States At- torney General Black denounced the claim as " fraudu- lent and >purious. a base and impudent forgery/' : "It is not at all difficult to see," Attorney General Black continued. " how and when this grant was fabricated. It is in the handwriting of Manuel Castro, a part of whose bu>iness consisted in forging land grants." This particular grant. Black -tated. was dated Monterey. June 12. 1843. ' )U ^ 't had been forged in Mexico City in i8;o. "There are several other grants in ManiK'l Castro'- 316 HISTORY Oi ; Till-: GR1-:.\T AMERICAN' FOKTfMiS handwriting," Black added." The .Supreme Court of the United States found the grant at issue to be fraudulent, and voided it. 4 James R. Bolton turned up with a claim to ten thou- and acres of land in the vicinity of San Francisco a claim worth, at a low estimate, in 1851, more than two million dollars. 5 The grant was one purporting to have been made to Santillan, a priest, by Pio Pico, on Febru- ary 10, 1846. Bolton had his claim confirmed by the courts in California on the ground that it was valid, and that he had bought it from Santillan in April. 1850, for 8200.000. The Supreme Court of the United States could not be convinced of the validity of the grant and dismissed the claim.' 5 Another particularly flagrant case was that of the claim of Juan M. Luco and Jose Leandro Luco to 270.000 acres in California. They claimed that this alleged grant was made on December 4, 1845, ^ v Acting Governor Pio Pico to one Jose de la Rosa, from whom they swore they purchased it. The Supreme Court of the United State.-;, in December, 1859, found that the documents were forged. " Its confirmation," said this court's deci-ion of the grant, " was vigorously opposed by the counsel for the Government. They [the Government's counsel] allege that the documents pro- duced to support the claim were forgeries, supported by perjuries of persons who had conspired to defraud the Government of an immense body of valuable land. . . . The whole of the testimony is beyond doubt a mere fabrication. ... In conclusion we must say, that after a careful examination of the testimony, we THE ELKINS FORTUNE entertain no doubt that the title produced by the claim- ants is false and forged/' 7 A claimant, one White, claimed a large tract of land in California under a grant alleged to have been made to Antonio Ortega. The Supreme Court of the United States, in December, 1863, found that the grant \vas fraudulent and forged, and that the evidence was per- jury. 8 In the case of Andres Pico against the United States for the possession of eleven square leagues of land in California, the Supreme Court of the United States decided that the grant alleged to have been made by Acting Governor Pio Pico on June 6, 1846, was fraud- ulent and that the documents were forged. 9 LARGE ESTATES SECURED BY FORGERY AND PERJURY. These were a few of the thirty-six private land claims rejected by the Supreme Court of the United States up to 1869. They were crude forgeries and the cases were not skilfully prepared. But thirty-three other claims were confirmed. Most of these were fully as fraudulent as those rejected, but the work of forgery was so cleverly done, and bought witnesses, well trained in the art of giving testimony, gave such corroborative evidence, that the majority of the Supreme Court of the United States declared that it found itself in a posi- tion where it could find no grounds upon which to dis- Xumbers of these grant- embraced 7 Howard's Reports, Supreme Court of the United States, xxiii: 5I5-543- s Wallace's Reports, Supreme Court of the United States i : 660-682. ;) Wallace's Reports, Supreme Court of the United States :i : 270-282. 318 HISTORY or Tin-; <;RI-;.\T AMERICAN" HIRTUXES gold and silver mine- and valuable timber lands, as well as agricultural tracts. An example of this successful imposture was the case of Hornsby vs. the United States. Ilornsby claimed that Acting Governor Pico on May 6, 1846, had granted 40.000 acres of land in California to Jose Roland, from whom Hornsby te.-tified that he bought the claim. The majority of the Supreme Court of the United States, in December. i8r/j. confirmed the grant on the ground that the title was possessed at the time California was ad- mitted to the Union. Hut Justices Davis, Clifford and Swayne in a dissenting opinion said: . . . The Mexican authority was overthrown in California on July /, 1846, but the history of the times made it clear to every intelligent man for a considerable period before this date that the country would pass to the jurisdiction of the United States. During this period grants of land were made very freely by Pio Pico, the Acting Governor, and the records of this court show that many of the grant- were invalid and fraudulent. Doubtless, grants were made by him within that time which were valid, but all mu-t agree that every urant which bear.- his signature should be examined with the most careful scrutiny. By the record in this ca-e. it apptars that the petition for this grant is dated May 5. 1846. and the grant, if any was made, was on the following clay, and did not comply with the require- ment- i'if the law conferring power on the Governor of California to grant lands. . . . Xo possession of any kind is proved in this ca-e, and the au- thenticity of this grant, covering an area of over forty thoti- -and acre-- <>f land, depend- upon the testimony of a -ingle wit ness, unsupported by any proof, except the imperfect or mutilated expidiente, found among a mass of loo-e paper- on "he :'r>nr of Mile of the rooms of the custom hou-e at Monterey after the Mexican otiicml- had tied on the approach of our forces. 10 10 Wallace'- Report-. Supreme C'lin ->f the United States- x : 224-245. THE ELKLXS FOKTl' XK 319 The Congressional committee reports of the period are likewise full of evidences of the prevailing frauds. AN' ORGANIZED SYSTEM OF FRAUD. In his report to Congress in 1860, United States At- torney General Black described how he had ordered the Mexican archives to he collected, and he gave the results of that investigation. " The archives thus collected," he wrote. furnished irresistible proof that there had been an organized system of fabricating land titles carried on for a long time in California by Mexican officials; that forgery and perjury had been reduced to a regular occupation: that the making of false grants, with the subornation of false witnesses to prove them, had become a trade and a business. . . . There was al-o compiled from the records here a faithful chart of all of the professional witnesses or persons supposed to have hired them- selves out to do the busine-s of false ^-wearing of claims. To- day full biographies of nearly all of the men who ha\e been engaged in these schemes of imposture, from governors down to the lowest suborned witnesses, can now be furnished when- ever necessary. Attorney General Black set forth further : It must be remembered that the grants in most of these fraudulent cases were very skilfully got up. and were supported by the positive oaths, not merely of obscure men whose charac- ters were presumed to be fair, but also by the testimony of distinguished men, who had occupied high social and political places under the former governors. Their honesty in many cases was never suspected until after the records were brought to Washington. They [the frauduh-nt land claims] passed through two lower tribunals, some of them without being ques- tioned, and nearly all of them without successful opposition, Tin- value of the land< claimed under grants a^cer- 320 taincd to be forged is 8150,000,000. . . . Il is vain to lock tor public morality under a government \vhich fails to distin- guish het\veen honest titles and fraudulent claims. 11 Reporting on February 24, 1869, on the claim of \Yil- liam McGarrahan to a large land grant in California in- cluding vast rich mines, alleged to have been granted by -Voting Governor Pico to Vincent P. Gomez and sold to McGarrahan, the House Committee on Claims wrote: . . . Gomez, Abrego and Moreno [the secretary of Acting Governor Pico] are suitable associate?. They are equally no- torious for the forgeries and perjuries in which they have been concerned. Gome; and Abrego were the chief instruments in the false swearing in the great Limantour swindle that at- tracted so much public attention some years ago. Ex-Secretary Stamon visited California in 1858 in behalf of the United States in connection with land cases, and then found that Abrego had been a witness to support thirty-two, and Gomez, twelve, claims, most of which ascertained to be frauds or forgeries. 1 - The committee went on to say that " many of the towns and cities of California are covered by these re- jected claims, and if Congress is to readjudicate and re- verse one case on ex parte evidence, then the other thirty- five will be resurrected, and an army of land -harks, lobby agents and lying witnes-es will invade the Capitol and defile the halls of legislation with their schemes of forgery and perjury." The committee referred to " a bagful of the affidavits of drunken and venal Mexicans who can be hired for five dollars apiece to swear to anything." K: It said that dependent upon the passage ;: Ex-Doc. Xo. 84, Thirty-sixth Congress. Also, Hou=e Re- ports. Third Session, Fortieth Congress, Report Xo. 261 : 544. 12 Report Xo. 261, etc., 1809:5.35. In "lie case especially, Gomez had been convicted by the Supreme Court of the United State:- of ^wearing to a fal.-e date. See Wallace's Reports, Su- preme Court of the United States, vi : =;8o. !:; Ibid.. 543. THE KLKIXS FOKTUXK 321 of the McGarrahan bill, was a prize of more than $500,- ooo, and that '' politicians, lawyers, and editors have taken large shares in the lottery ; the professional lobby, both male and female, have been marshaled behind and around AIcGarrahan. The crowd is impatient of delay, and hungry for the spoils of victory.'' 14 CORRUPTION' OF COXGRKSS AXI) THK COURTS. The national Capitol was not only filled with lobbyists for these landgrabbers, but members of Congress were financially interested in the success of the fraudulent claims, or themselves held claims in the names of dum- mies. It was also strongly suspected, although never proved, that at least one Justice of the Supreme Court of the United States, appointed during the Civil War, and the very one whose vote often decided the fate of the claims was interested, either financially, politically or by friendly connection with certain of the land claim- ants. As we have seen in other chapters, it was no un- usual matter for the highest judiciary, as well as the lowest, to hold stock or other evidences of property in corporations or enterprises, cases affecting which were decided by those very judges or their associates. These decisions would then take rank as precedents, to be cited in future cases. Rut the courts were not the sole reliance of the land grabbers and oilier plunderers. It was Congress tli: \ the}- usually depended upon for the confirmation of their schemes. A confirming act passed by Congress was con- sidered as law strictly binding upon the courts, and it was to be generally expected that the courts would con- 322 HISTORY OF T1IK C.RKAT AMERICAN FORTUNES .-true the aets of Congress with the closest technicality. Thus it was, to mention only one instance of many in- stances, that Marshall O. Roberts and his partners suc- ceeded in robbing the United States Treasury ! out of millions of dollars by lobbying an act through Congress so adroitly worded that, after the Court of Claims had dismissed the claim, the Supreme Court of the United States decided, upon technical grounds, that the act of Congress amounted to a ratification of their claim." 5 Beginning by about the year i8r>o. Congress was " in- duced " to confirm one private land claim after another. The reports of a number of the Congressional Com- mittees on Private Land Claims strongly suggest bribery, but no positive, specific proof appears. Very often these measures were passed in the burr}- and confusion of the last days of a session, with few members knowing what they were. After the passage of these acts by Congress, the next step was to have a fraudulent survey of the alleged grants made by land office officials. In order to make these fraudulent surveys under form of law. the land- grabbers lobbied two acts through Congress. One act. passed in 1860. authorized surveys to be made at the expense of " settlers." This meant that capitalists were virtually allowed to hire Government surveyers, and ar- range with them to increase fraudulently the boundaries of the alleged grants. This is precisely what happened, as is shown in the numerous official reports cited in Chapter 11. vol. U. Another act. passed by Congress in !ccause. as the sequel showed, the foremost I'nited States Territorial officials in Xew Mexico were in collusion with them. I )espite the order of the De- partment of the interior, which wa- law. the Territorial 3^<> UlslOKY OF THE GREAT AMERICAN FORTUNES officials continued to assess the alleged grant as private property for taxes. The taxes, by prearrangement, went unpaid, and a fraudulent tax sale was held at public auc- tion in January, 18/7, and the grant was sold for an al- leged tax debt. The nominal purchaser was M. W. Mills, a member of the New Mexico Legislature. Mills transferred the alleged tax title to T. B. Catron, United States District Attorney for Xew Mexico. Shortly af- terward it was revealed that Stephen B. Elkins was the real party behind the whole transaction, and that he was the chief owner of the alleged title. 21 Elkins had long been a powerful Republican politician in Xew Mexico. During President Grant's administra- tion he had been United States District Attorney in that territory. At that time the peonage system of slavery was widespread in Xew Mexico, as it is still in Mexico. The laborer who fell in debt to his employer could not quit employment until the indebtedness was first discharged. This resulted in the worker's practical slavery. Under the United States laws the Government paid a fee of $25 for each conviction of persons charged with violating the peonage statutes of the United States. Klkins. it was said, procured the indictment of thousands of Mexican violators of this law, convicted them, or compromised the cases, and. thus was enabled to pocket the fee of 825 in each case. He became reasonably rich bv tliL process. I le was then elected a delegate to Congress from Xew Mexico, and it was during this time that he got hold of the Maxwell land grant and pushed it in Congress. [-(cord-, of tin- General Land Oitice, of January J\VIHT of the grant time l:~.ikin> !>rt -That the grant I. cxxi ; ^-'7. 330 HISTORY OF THE GREAT AMERICAN FORTUNES A. Bentley, special counsel for the Government, submit- ting a long brief arguing that frauds were practised upon the Government in the enlargement of the bound- aries of the grant, and he also argued that the decision uf Secretary of the Interior Cox. in 1869, was final. TIII-: SUPREME COURT'S DECISION. Piles upon piles of proofs that the grossest frauds had been committed could not convince the Supreme Court of the United States. In its decision of April 18, 1887, it held that the act of June 21, 1860, was virtually a new grant, and that it confirmed the grant to the full extent of the 1.714.764.94 acres claimed a decision received with the utmost amazement by the whole country. With this decision in hand the Maxwell grant holders proceeded to evict settler,- right and left. This raided a great storm. The settlers on the grant organized and appointed (.). I*. McMains their agent to present their petition for redress to Congress. In an affidavit dated May <;. 1892. McMains, on behalf of the settlers, charged the different United States authorities, such as Secretarv of the Interior Xoble, Land Commissioner Carter (at pre-ent, 1909. a United States Senator from Montana ) and other officials with refusing to throw 'pen the grant as public lands. This refusal, the afii- pointed out, \va- in violation of the explicit act of Congress of June 21, 1860. The affidavit read on: the deponent further dcpo-cs and say- that S. B. Elkins iva> : president of the Maxwell La; d firant and l\a:l- .'.;. Company, which was bankrupt at the lime of hi- re.-ig- in [875: that after 1875 ilie -aid S. l'>. Eikins had no ' : tin- -aid Company a- nfticer or coun.-el. and t'>k 33* no part in the company's affairs ; that he was, nevertheless, interested as an outsider and speculator in having the land re- quired by law to be treated as public land, again treated and surveyed as the alleged Beaubien and Miranda or Maxwell grant, and made a trip to Europe in the latter part of 1875-76 with a scheme in view for the reorganization of the Maxwell Land (I rant Company. That T. B. Catron of Xew Mexico, who was interested with Klkins in having the land required by law to be treated as public land, again treated and surveyed as the alleged Maxwell grant, became, on July 19, 1877, by an unlawful and fraudulent tax title deed, an alleged owner of nearly 2,000,000 acres of pub- lic land as the so-called Beaubien and Miranda or Maxwell grant: that in order to profit by the unlawful tax title deed 10 public land as the alleged Maxwell grant, it became necessary to defeat the enforcement of the final and valid order of the Department of the Interior of January 28, 1874, requiring the lands claimed by the Maxwell grant claimants to be treated as public land, by prosecuting anew the adjudicated Maxwell grant claim against the United States to survey and patent; That the panic.- con-piring to pro.-ecute said adjudicated claim against the L'nited State-, in violation of Section 5498 of the Revised Statutes, were lion. S. B. Klkins, then delegate to Congress from Xew Mexico; lion. T. B. Catron. then L'nited States Attorney ir Xew Mexico, and Hon. J. A. Williamson, then Conmiis>ioner of the (ieneral Land Office; that the ob- ject of said conspiracy was accomplished, the enforcement of the valid order i January 28, 1874, a n( l the :u 'L ot ~ Congress of June 21, 1800. wa> defeated, homestead and preemption settlers were deprived ut their private and vested rights without due process of law and the L'nited States deprived of its surveyed public lands. 1 -' 7 The affidavit went on to -ay that "the refusal of the officials to enforce the act of Congress is in the interest of the afore-aid conspiracy; that by Mich wrongful re- nisal said secretary and commissioner are aiding and 332 HISTORY OF THE GREAT AMERICAN FORTUNES abetting, by trick and fraud, the said conspiracy." 28 The House Committee on Private Land Claims, to whom the petition of the settlers was referred, found that the statements regarding the Xew Mexican portion of the grant were true. As to the four hundred thou- sand acres in Colorado, the committee reported : " Xo application by the Maxwell Land Grant Railway Company has been made to the Commissioner of the General Land Office for the survey of public land in Colorado in 1877 as a portion of the alleged Maxwell grant ; but a party who is in nowise connected with the company or acting in any capacity in behalf of the com- pany Hon. S. B. Elkins did ask for a survey to be approved " that would include public lands in Colorado as belonging to the Maxwell grant. It was after this survey that the whole of the 1.714.764.94 acres were mortgaged to Dutch capitalists for 700,000. This land in Colorado, the committee stated, was unlawfully ap- propriated. The committee concluded : " And it is the opinion of your committee that the lands included within the Colorado portion of the alleged Maxwell grant were required, by act of June 21, 1860, to be treated as pub- lic land . . . and was not a portion of the original Beaubien and Miranda grant."- 9 SURVEYOR GENERAL JULIAN STATES THE CASE. Congress took no action on the report of the House Committee on Private Land Claims, and the result of this complete inactivity, coupled with the decision of the Supreme Court of the I niled States, was that the up THK ELK1XS FORTUNE 333 propriators, or their assignees, of the 1,714,764.94 acre-, were allowed to retain a possession which thereafter was undisputed. George \Y. Julian, United States Sur- veyor General of Xew Mexico, during President Cleve- land's first administration, found a state of affairs in that territory, which, in recounting Elkins' career, he described in a speech, on September 14, 1892, before the llendricks Club at Indianapolis. After relating some of Elkins' early transactions in Xew Mexico. Julian said : This experience amply prepared him for the brilliant ventures in real estate through which he became rich. His dealings were mainly in Spanish grants, which he bought for a very small price from their Mexican claimants or their grantees. The boundaries of these grants were vague and uncertain, and their definite settlement had to be determined by the Surveyor Gen- eral of the Territory, subject to the final action of Congress. Elkins became a member of the land ring of the territory, and largely through his influence the survey of these grants was made to contain hundreds of thousands of acres that did not belong to them. He thus became a great landholder, for through the manipulation of committees in Congress grants thus illegally surveyed were confirmed with their fictitious boundaries. He made himself particularly conspicuous a> the hero of the famous Maxwell grant, which, as Secretary Cox decided in iiSfio.. contained only twenty-two square league-, or about 96,000 acres, but which, under the manipulation of Klkins, was sur- veyed and patented for 1,7 14. 7(14.0.4 acres, or nearly 2.680 square miles. Congress, through the action of its committees, was beguiled into the confirmation of the grant, with the exterior boundaries vaguely indicated in it so stretched as to cover the whole nf this immense area, and which continuation by Con- gress compelled the Supreme Court to recognize thi> astound- ing robbery as valid. By such methods as these more than 10,000,000 acres of the public domain in Xew Mexico have be- come the spoil of land-grabbers, and the ringleader in this game of spoiliation was Stephen H. Elkins. the confederate of Stephen \Y. Dorsey and the master spirit in the movement. lie was thoroughly qualified for his work. He was irrepres- 334 HISTORY OF THI-: GRKAT AMERICAN FORTUNES sible and full of resources. He was a genius in business, ar.d in the pursuit of his ends was singularly unshackled by a con- science. He used the Surveyor General of the Territory, the Land Department in Washington, and the committees of Con- gress as his instruments in fleecing poor settlers and robbing the Government of its lands. To cheat a man out of his home is justly regarded as a crime second only to murder, and to rob the nation of its public domain and thus abridge the oppor- tunity of landless men to acquire homes is not only a crime against society, but a cruel mockery of the poor. If any such considerations ever di-turbed the dreams of Mr. Elkins. they were summarily silenced by hi.- overmastering zeal in the work of " practical politics." According to Dor.-ey, Hlkins knew more than any other person about the star route cases, which be- came famous a dozen year- ago, and tie will also be remem- bered as engaged in the prosecution of a claim of $50,000,0 o against Brazil while Blaine was Secretary of State under Gar- field, which claim was afterward indignantly rejected by Secre- tary Bayard. . . . In referring to these matter- I do not speak at random, but from official documents, and a-certained facts with which I be- came familiar during my public service of four years in that territory under the last administration. The " star route '' fruu to which Julian referred became a great public scandal thirty years ago. f'y means of them the L'nited State.- Treasury was robbed (if large sums. The term "-tar route" was used to designate interior po-tal route-, on which the mails were carried other than on railroad- or by steamboats. These route- were officially de-ignated on the hooks of the I 'ostoffice Department by a-terisk- or >tars, thus ; ' : , hence the term. The inve-tigation- made by the Pustoffice Department and bv committee- of L'ongre-s did not re- yeal Klkin- a- a contractor. J fi- signature, however, was found attached to the bond- of certain leading pu.-ta) route contractors in the Southwest, and he was very en- ergetic in -ecuring the e-tabli-hment of overland routes TIII-: KLKIXS FOKrrxK 335 in Xcw Mexico and elsewhere. U was conclusively established that he was interested in what was called the " Kerens combination," the ostensible head of which was Richard C. Kerens, a powerful Republican politician of St. Louis. I hit so astutely and covertlv did Elkins work that he did not appear at all in the great " star route " trials in 1882 and in 1883. ;!0 KLKIXS CF.TS TIII-: STAMP OF OFFICIAL KKSPKCTA RILIT V. .By this time he was a noted Republican politician of national importance. In 1884 he was chairman of the Republican National Committee and in December, 1891, President Harrison appointed him Secretary of War. Harrison was not ignorant of the details of Elkins' career in Xew Mexico, for while a United States Sena- tor, Harrison was a member of the Committee on Terri- tories, and gave particular attention to the affairs in Xew Mexico. I larri-on was likewise acquainted with the facts of the Brazilian claim. This was an alleged claim growing out of a conce>sion to one D. (]. M. Fewell by the Brazil- ian Government to develop certain nitrate deposit.- on an inland off the Brazilian coast. Jewell claimed that he had fitted out a ves-el and had expended 27.000 when the Brazilian Government annulled the concession. ]"!- kins became attorney for Jewel! and filed an elaborate "" The charge war- iong openly made that the rea-nn why Klkins was not hrouglu to trial wa- :hai lie had secretly turned state's evidence, ami had furnii-hed the Postmaster General vvii'i much valuahle information aeain.-i his former as-ociau-s.. S" far a< the puhlic records are cor.cerned, no documentary or-oi" of thi> charge can he found. Kerens, i' may he i nted, ci i 'in; 1 d In- career a-- a con- >yicuoiis Reptni'.ican politician ai:d wa- appointed Amh;:s-ador to . \it.-iria hv President Taft. in H)Otributed throughout the entire State to insure the election of members favorable to his plans. In the United State- Senate Elkins has been one of the most adroit and useful law-drafters for the plutocracy. One 'nil'. F.LKIXS FORTUNE 337 of his notable acts was an amendment to the interstate commerce act expunging the clause providing imprison- ment for violation of the anti-rebating law, and giving complete immunity to magnates who testify in such pro- ceedings brought against them. As one of the wealth rulers and law makers of the United States, Elkins is obviously a very powerful and distinguished magnate. Moralizcrs may well contem- plate his career, and consider its climax. Were the sug- gestion even facetiously made that our legislators should be elected wholly from prison constituencies, it would be received with either amazed .shock or droll levity, according to temperament. And yet, it should cause neither of these receptions, for have we not seen herein by a convincing mass of facts, that Business Society, after all, consists so largely of those who have not been found out and punished, and those who have? Such a conclusion, as we see, is no exaggeration. And have we not also seen by the facts that the great despoilcrs become the dictators of the very communities whom they despoil ; how would it do to reverse the process and elect the pettv despoilers, convicts though they be, as rulers? 'Twould be no worse, and perhaps better. Hut neither of these classes can be condemned for the passions and crimes which the system, and the forces of that svstem, generate and too often compel ; the system, not the units, stand- the need of change. By the light of this fact, and this alone, Elkins' career, and that of all like him, big and little, should be considered. CHAPTER XIV THE HILL FORTUNE Unsparingly criticised, and frequently assailed with ex- treme bitterness in his early career, few magnates have been the subject of more lavish eulogy in his latter years than James J. Hill. As his wealth and power rapidly grew, and he became a multimillionaire, and dic- tator of the political and industrial affairs of large sec- tions of the United States and Canada, the usual trans- formation resulted. He ceased being the familiar "Jim " Hill derisively -lurred as the "Jay Gould of the Northwest." and was metamorphosed into the great Mr, Hill, the imposing genius of stupendous achievement. A crowd of writers, well -chooled in the extravagant lan- guage of sycophancy, came forth to proclaim his heroic proportions as a master mind in the constructive devel- opment of the country's resources. For full thirty vears these eulogies, all suspiciously alike as though inspired from a central source, have con- tinuously appeared. In all of them one special dithyranv bic note has been pressed. With infinite rhetorical vari- ation-, such transcendent terms as " genius of transpor- tation " and " intellectual giant " have been freely applied to Hill. Ingeniously put forward under manv dictional disguises and artful tricks of -tyle, the burden of these lays; had been the same a- that so much remarked in the endless panegyrics of the Astors, the Vanderbilts, J. 1'ier- pont Morgan. lilair. Sage, and nearly all other magnate-. 338 THE HILL FORTUNE 339 Always there is the emphasis, strongly denoting an argu- ment for a client, upon Hill's extraordinary capaeity and integrity ; how he obtained every dollar of his vast fortune honestly, and how (it is specified) corruption and graft have been conspicuously absent in the methods by which he amassed his wealth. One steady monoto- nous song it had been, varied, in long-separated intervals, by a tirade from the pen of some unyoked brother a tirade with substance of truth, but lacking estimate and understanding. HILL'S ENORMOUS FORTUNE. The extent of Hill's fortune is enormous, but at this writing neither the exact nor approximate number of his hundreds of millions of dollars can be stated with any degree of accuracv. hi one notable respect his purlers do not misstate: Hill started with no money whatever. Now that he has a colossal fortune, that fact of itself should be provocative enough to cause deep investigation ; for money does not fall like rain ; it must be garnered somehow ; and while millions of hard workers have a difficult enough time getting a sufficiency for their simplest wants, the ease with which one man has pos- sessed himself of vast storehouses of wealth is a grave and grim fact, well calculated at the outset to cause di-belief, on genera! principles, in the airy, sweeping statements of Hill's euli-gi-t-. Hut the verv fact which should at once arouse questionings and originate investi- gation is converted by his panegvrists into a sublime ivihute into a conclusive proof of hi< remarkable power of demonstrating him-elf to be a "self-made man." \Ye know too well what thi- commercial jargon of the dav means; not a man with intelligence, ideals or 340 HISTORY or Tin-: <;KK.\T AMKKICAX J-ORTI/M-S culture, but merely one of wealth; the customary bour- geois mind can, generally speaking, conceive of no other kind of successful man. If, however, wealth can be used interchangeably with greatness, then Hill is a truly great nabob. He owns or controls extensive railroad systems in the Northwest and West; he is the owner of vast areas of land, and of mineral deposits the fabulous value of which defies cal- culation. He is the possessor of steamship lines and of many other kinds of property ; he lives in a virtual palace, and politicians, editors, clergy and judges are. his puppets. Seeing that he "began"- as his eulogists, express it without money, how did he contrive to get all this wealth? His homage rs do not explain this vital question ; they unctuously reel out dates and figures and glibly relate when he obtained this or that property, but /zott' he really accomplished the process they tell not.. Till-: CHARACTKR OF TIIK XORT II \\ K.ST\S SKTTLEM KXT. Hill was born at ( iuelph. Canada, in 1838, and mi- grated to St. Paul, Minnesota, in 1856. The environ- ment into which he came, as a youth of eighteen, can easily be comprehended after a reading of the previous chapters. The Northwest was in its first real period of settlement; and not as conventional histories have it. was this settlement wholly made by " stalwart pioneers." As a matter of fact, it was made also by land-grabber-, timber thieves, gamblers, trading sharps, cutthroats and rogue> in general. The ru>h to get land grants, mineral depoMts, railroad franchises and every other available re- source, was at its height. " [looms" of all kinds were projected; a horde of venal individuals swarmed in to preempt whatever they could, and fleece anybody that TIU; HILL t-oKTixh 34 1 they could. There was a raging mania for the rapid acquisition of wealth, regardless of the means used. True, a stream of agriculturists, whose sole aim was to obtain cheap land and honestly till it, poured in. But this element did not give the tone to the general charactcr of the activities. The real aggressive tone was imparted by adventurers, capitalistic and otherwise. Practically all of these capitalists were Easterners, and many of them, as the records show, had been engaged in swindles in the East. Different sets of them were busily bribing Congress, Government officials and the Legislatures for land grants, railroad charters, franchises, mineral de- posits and special laws. Sharp merchants, trading schemers and real estate hawks overran the newly-settled towns and cities. The stamp of money was upon every thought and plan ; the pervading ideal was wealth, no matter how acquired; all classes were infected by it. Greed was in the very air. and if the many law-suit records in the Minnesota Courts can be taken as an indi- cation, jobbery, swindling and cheating were a very routine performance in all business transactions. Hill came into this atmosphere of venality, avarice and corruption ; a state of society judging every man by the significant question. "How much is he worth?" Long before his entry, this corruption had gained full headway. Throughout the whole West, Northwest and Southwest, the fraudulent seixure of agricultural, timber and mining lands, and the corruption of Congress and of the Legi^- laiure- for gratuitous awards of public money, had ( a- we have abundantly ^een in previous chapters") long been notoiious. The Common Councils of the cities and pub- He office- of all kinds were generally filled with men wlic converted their positions into a means of securing illicit revenue. Firihed or otherwise influenced to give special 342 HISTORY OF THE GREAT AMERICAN FORTUNES franchises and privileges or connive at frauds many of these men left offices, paying modest salaries, with a for- tune. THE DEBAUCHING AND SWINDLING OF INDIANS. The character of trade in the West and Northwest had been determined early in the nineteenth century by the operations of John Jacob Astor's American Fur Company and his other fur companies. Of the nature of the methods by which Astor laid the foundations of the fortune of 820.000.000 which he left at his death in 1848, and which fortune has since grown to be one of the largest in the world, many details have been set forth in Volumes 1 and II. We have seen, from the official record-, how he systematically debauched numer- ous Indian tribes with whiskey, charged them incredibly extortionate prices for cheap merchandise which he ex- changed for furs, and pauperized, and spread demorali- zation and death among, the Indians. We have also seen how many of the Indian uprisings, resulting in the murder and massacres of white settlers, and in the murder and punitive shooting by the traders and by the vengeful Indians in return, were originally caused by these continued practices of debauching and swindling. In Volume 1 it was explained that many additional facts had been intentionally left out; some of those there omitted will be described here in order to contribute to a clearer understanding of the long-prevailing trading hods in the West and Xorthwest. I: i- clear from the reports of the United States army 1 . and those of the Government Indian Agent- that rican I'ur Company dominated the whole of the .'vest and Xorthwest fur regions. The Government THE HILL FORT i: ML 343 had established its own trading posts, called factories or agencies, the purpose of which was to supply the Indians with merchandise in exchange either for furs or land or to relieve their de-dilute condition when neces- sary. These Government muling posts were strictly prohibited from dealing in or supplying liquor. The American Fur Company succeeded in undermining the trade of these agencies, and finally in causing their abo- lition. The illegal use of liquor by the American Fur Company was one of its powerful means in seducing the Indians fruin the Government trading posts ; another successful method was by prejudicing the Indians against them by the claim that the Government mer- chandise was inferior. In representing to the Govern- ment at Washington that the Government trading posts did little business, .Matthew Irwin, I". S. Indian Agent, at Green Bay. Wisconsin, wrote that two of the reasons for this state of affairs were because of the secret prac- tice on the part of private traders in vending whiskey, and because of ihe prejudice excited among the Indians against the Government agencies. ( Doc. Xo. 60, First Session. Seventeenth Congress, p. 60.) In a communi- cation, dated February 22. uS22, to Senator Johnson, chairman of the V. S. Senate Committee on Indian Affairs, Thomas L. McKenney, V. S. Superintendent of Indian Trade, wrote that the agent- of the American Fur Company " had a great deal at slake in overturning these establishments (the Government trading posts) and has much more at -lake in the overthrow of the entire system." Superintendent McKenncy wrote point- edly in ihe "haste ol the American Fur Company to gra.-p the trade with our Indian-." i Doc. Xo. (>o. p. 42. i \\ritmg from Camp Missouri. Missouri River, to 344 insTokY OF mi-: CKKAT AMERICAN L'ORTCNKS Colonel li. Atkinson, on October 29, 1819, Major Thomas Biddle gave this description of the private traders : These traders are continually endeavoring to lessen each other in the eyes of the Indians, not only by abusive words, but by all sorts of low tricks and maneuvers. If a trader trusts an Indian, his opponent uses all his endeavors to purchase the furs he may take, or prevent in any way his being paid ; each trader supports his favorite chief, which produces not only intestine commotions and dissensions in the tribe, but destroys the influence of the principal chief, who should always be under the control of the Government. The introduction of ardent spirits [whiskey, etc.] is one of the unhappy conse- quences of this opposition among traders; so violent is the attachment of the Indians for it, that he who gives most is sure to obtain furs ; while, should any attempt to trade without it. he is sure of losing ground with his antagonist. Xo bargain is ever concluded without it. and the law on the subject i? evaded, by their saying they give, not sell it. Parenthetically, a reply made by Major John Biddle to one of the interrogations addressed to him by Sena- tor Johnson may be properly interposed here : Question /J 1 . Are the Indian.- judges of the quality of good- in which they trade, of the reasonableness of prices, and of the value of their own furs and peltries? Answer. The Indians are very observant, and reputed to li- very good judges of the articles which they are accustomed to buy. Their capacity for the petty traffic which they carry or. i- believed tn be much greater than i? generally apprehendi'i ! he principal fraud practiced upon them is believed to be n the article of spurious liqu'>r>: tn ichich the seller attaclies the penalty lie ici'itld incur from deteeti.": i Doc. Xo. do. p. - i i<> resume Major Thomas Middle's communication tn ( i'loncl Atkinson: lie wrote further that when tlv. 1 trader- ln.ncrht furs after an Indian hunt "a keg of THE IIII.L FOKTfXK 345 whiskey was considered an indispensable equipment oi Mich an undertaking." He closed his communication with the following remarks : 1 had found on my arrival [at the Maha nation of Indians] most of the principal men drunk. The Big Elk. who is so much our friend, and who formerly possessed unlimited power in his nation, was so drunk for two days, that I could not deliver your letter to him ; when I gave it, I requested an interpreter to inform him that I had been two days waiting to deliver a letter from you, but that very much to my surprise, I had found him too drunk to transact business. He appeared affected at what I said, acknowledged how unworthy it was in him to be in that situation, and admitted he had lost much power by it. He blamed the whites for bringing liquor into the coun- try, said when he knew it was not to be had he felt no incli- nation for it, but that when it was near and attainable hi> attachment for it is irresistible. . . . Thus is the influence of this valuable and sensible Indian IOM to his tribe and the Government, and thus is a man who pos- sesses some traits that do honor to human nature, debased and made a beast of. (Doc. Xo. 60, pp. 46, 47.) Document Xo. 60, First Session. Seventeenth Con- gress, includes this extract from a letter from the U. S. Indian Agent at (ireen Ray, Wisconsin, to Mr. McKen- ney, U. S. Superintendent of Indian Trade: The fact can be e-tabli-lu'd that in almost every case the persons engaged [as traders] by Mr. Astor's principal agent. Mr. Crooks (who is a British subject), were known Briti-!; subjects; many of them having held commissions under i!; British Government and headed Indians during ih<- hue u [that of 1812-15]. For example, at this place Mr. Astor sent goods to the following persons, la-t fall, to be traded along-iiK the factory [Government agemy]: JOHN LOWE, British subjects and holding com the Briti>h Govern Indian Department T war. FllSTORY OF THE GREAT AMERICAN FORTUNES And the following persons were sent by Air. Astor in the neighborhood of Mr. Rouse, whom 1 sent to do business with the Indians at the Ouisconsin [Wisconsin]. PETER GRIGNON, [ British subjects belonging to this place, MR. JACOBS, and holding commissions, during the MR. CHAPEREAX. and 1 late war, from the British Govern- J. B. GRIG.XON, ment, in the Indian Department. And Mr. Lusienaux (a British subject) was sent by Mr. Astor to trade with the Indians at Winnebago lake. At Menominee river, where I sent Mr. Thomas P. James to trade, he was opposed by a Canadian sent by Mr. Astor; and in an underhand manner by Peter Powell, a British subject who held a commission in the Indian Department during the late war. A description followed of the secret traffic in whiskey carried on bv A>tor's agents, with the explanatory state- ment that " it i'.' as deemed illegal to accept Indian testi- mony." In other words, Indians could he indiscrimi- nately debauched, swindled, plundered and murdered, as we have seen in Vol. 1, and yet their testimony in civil or criminal suit- -^'as not considered legal. The communication further described how Astor caused hone>t official- who expo-ud his method? and sought to prevent them to he dismissed from office (see note on page 84, Vol. II, of this work) and continued: It appears that the commanding officer at Prairie du Chien undertook at the instigation of the Indian agent, to stop and -end to St. Louis some of Mr. Astor's British trading subjects. : or this act it is said the agent will be dismissed from the public service; and we now have the novel spectacle before us of a British -ub.iect ('Mr. Crooks) traveling to the Prairie, with a passport from Governor Cass. said to be given by authority of i .-. War Departn:'.-ni. to inquire ir.to the conduct of the Indian nd ci imtnanding < >fncer. 1'he I a?s referred to was the same Lewi- Cas>. who. Tllli HILL FORTt'XL 347 as has been noted in Vol. 1, received $35,000 from Astor, for services not stated. On January 14, 1822, Senator Johnson laid before the United States Senate a long communication (Doc. Xo. 10) regarding Astor 's American Fur Company from Superintendent of Indian Trade AlcKenney, who wrote of " the keen and adventurous trader, skilled in the arts of deception and speculation, who is bent on making gains," and how " the consequences to the In- dians are notorious ; and these involve bereavement, and suffering and death!" McKenney referred feelingly to " the sight of that intellectual and moral degradation to which such a traffic necessarilv dooms this unfortunate race of men." and described the trade as " essentially degrading in its character, and disastrous in its conse- quences, for it is the principal business of such traders to oppose everything like improvement. Such is the likeness which is stamped deep upon our Indians, and which may be traced out in all of the poverty and misery which invests so large a portion of their popu- lation. History details the causes ; and these are to be found in the superior intelligence and keen avarice of the one party, and their disregard to political and moral order : and the unenlightened and dependent condition <>f the other." McKenney went on: . . It cannot be admitted as a just view of the Indian character and manners to pronounce upon his treachery and cruelty a? the characteristics of his moral constitution. These wily acts are rather the results of his best conceptions of de- fence, and of preserving himself from the treachery which is practiced upon him; and the displays of his vengeance are but the ebullitions of a provoking temper. \Ve see the Indian i;oadoi into desperation by iniu-tice and fraud. . . . 34^ HISTORY OF Till-; GKKAT AMERICAN FOKTUNKS G. C. Sibley, L". S. Indian Agent at Fort Osage, wrote, on April 16, 1819, to Superintendent McKenney, de- nouncing the attempts, chiefly on the part of the Ameri- can Fur Company, to bring about the abolition of the ( Government trading posts. With bitterness he wrote that " The clamorous cupidity of the traders will no longer be restrained; the Indian trade must be given up to ' individual enterprise ' ; to merciless men ... to unprincipled pioneers of commerce of every -hade and hue." If that should be done, he pointed out, an address along these lines might as well be made to the settlers : " Your property will be sacrificed ; your families mur- dered, and your farms desolated; but these men insist upon their right.-, and the fur trade must be left open to them. . . . What is the bleeding scalp of an infant, compared with the rich fur of a beaver skin?" (Doc. Xo. 60, pp. 57-59.) All of these protests were of no avail : by a cam- paign of persistent misrepresentation, wire-pulling and presumably bribery, A.-tor finally succeeded in having the Government trading posts abolished, and thereafter could debauch and swindle the Indian tribe- without any competition in trade from the Government. But while denouncing A-tor, and justly so, for his extraor- dinarily revolting practices, the United State- Indian Agents might well have denounced themselves for vir- tuallv defrauding the Indians in the purchase for the Government of vast areas of lands owned by the In- dian-. Superintendent McKenney stated that these land.- had cost the Government an average of only tie a cents an acre! I'-^'o cents an acre, so it is written . the Indian-; were often paid this sum in merchandise. Much of the poverty, and nearly all of the debauchery, -windling. murder- and massacres could be right- THI-: Hll. I. lORTL'NK 349 fully charged to Astor, but the (iovcrnment itself was responsible for some of the destitution in thus taking advantage of the unsophisticated Indians and wheedling away their valuable agricultural, timber and mineral lands for virtually nothing. And, as we have seen, capi- talists then promptly stepped in and fraudulently secured great stretches of these timber and mineral lands, while .sections of the working class were vainly petitioning Congress to give the workers cheap access to the soil, or to hold the land as national property, for the benefit of the whole people. The bribery of Government agents, in all departments, by capitalists determined upon defrauding the Govern- ment, the Indians, inventors and the producers in general, was persistent. In Chapter J, Vol. II, facts have been given of the corrupt collusion of land office registers and receivers by which capitalists obtained immense tracts of land. Many of the Government agents among the Indian tribes were likewise corrupted, either by money r> r other means. Numerous Congressional investigations conclusively established this fact. An investigation, in 1842, of the frauds practiced during the previous dec- ade or more upon the Cherokees, for instance, revealed such an elaborate system of fraud on the part of private contractors in the contracts for supplies, that a powerful attempt was made to suppress the report. The I louse Committee on Indian Affairs declined to yield to the influences demanding suppression, and published the re- port in full. (Report Xo. 271. February 25. 1843. Twenty-seventh Congress. Third Session.) The report of the investigation consisted of two sections, the first of which gave a description of the Cherokees. In it own report, the Rouse Committee on Indian Affairs thus reported in part : 35O HISTORY Ol- Till-: GKK AT AMERICAN FORTUNES 'I'hc second report relates to frauds alleged to have been > oinmitted upon the Government and the Indians, by certain sub- < nlinate agents in the public employment, and persons who had contracted with the Government to furnish subsistence to a number of tribes. This report presents a great amount of facts on the subject, showing that the most exorbitant prices were paid to the contractors who furnished the rations. The man- lier in which the contracts were made is pointed out, as well cts the manner :;, which they were performed; and, unless the statements are false, i- i: ; ,-vide;.t that the Government was de- frauded in the nr-.; instance, and the Indians in the second; and that in bm!; the :-. .'- '. vernment participated. The facts contained in ti:o report are very valuable. They expose the whole machinery of fraud, by which the Govern- ment and Indians have been so often and so greatly wronged. The inquiry by Lieutenant Colonel Hitchcock appears to have been conducted \\ith great intelligence and fairness. . . . Xorth and south, east and west, this defrauding of Government and Indians continuously went on. The thefts of mineral lands in \Yisconsin, Illinois, Iowa, Michigan and other States were so scandalous a condition by the year 1840, that successive Congressional Committees were moved to report extensively upon them. The House Committee of Public Laud- reported, on December 18, 1840, that large tract- of land, well known to be rich in mineral deposit-, in the Xorthwest and el-e- where. had been fraudulently seized under nominal forms of law. and that deception, perjury and fraud were common. 1 Two vears later, on April I. 1842, the Ilou-e Com- mittee on Public lands submitted a similar elaborate report, containing a petition from citi/cn- of variou- THK HII.I. l-'OKTl'NK 351 Western and Northwestern States complaining that the oldest and most valuable mines had been fraudulently seized " and that, too at the very time when the regular miners were occupying the same, and were deriving their livelihood from them." The committee described main- cases of perjury or fraud in the seizure of lead and copper mines, and many facts were brought out showing that the bribery of Land Office officials and army officers was a regular part of the fraudulent operations. " Redress through the courts of ordinary jurisdiction," the report read " is slow and expensive. The persons aggrieved are generally men poor in purse, living by their labor, and they have not the means to contend in court with the wrongdoers." - A report, dated January 27, 1846, of the Senate Com- mittee on Public Lands, in answer to a resolution of in- quiry of the United States Senate as to the character and disposition of the Lake Superior mineral regions, pointed out that that region " lias within the two or three pa-t years risen into great importance in the public e-tirna- tion." The committee declared itself fully persuaded that its copper mines were very valuable, and that under proper management the mines might become a prolific source of income to the Treasury of the I'nited State--. The committee described the great fraud- by winch largp areas of these mineral deposits, located on public domain. were pas-ing into private hand-." Krequent Congressional reports told of the fraudulent methods by which immensely valuable mineral deposits in the \orth\ve-t were robbed from the Indian-, and the ( ioverntnent Dwindled. The House Committee on Indian 352 HISTORY OF THI GREAT A.MKKICAX FORTUNES Affairs reported, for example, on April 11. 1874. that a treat}-, signed in 1854, between the United States and a branch of the Chippewa Indians gave that tribe a reser- vation in Michigan. " In 1869," the report continued,, "some speculators in public lands discovered valuable minerals in the township, fifty-one [part of the Chippewa reservation.] They immediately went to work, while the secret remained theirs, to have it restored to market. The}' finally succeeded so far as to induce the Govern- ment to restore to market so much of the township, by far the larger and more valuable portion, as lies east of Huron Bay." The report declared that the Indians had been unjustly dealt by and wronged, and the mineral lands fraudulently acquired. This was but one of many Mich reports dealing with the theft of mineral lands from that tribe and other Indian tribes. The huge fraudulent operations in the theft of timber from the public domain in Minnesota and other States and Territories, and the bribery of public officials to con- nive at those thefts, were another example of the wide- spread and permeating fraud. Congress had passed an explicit act prohibiting depre- dation- on the public timber lands, and providing a penaltv for each violation of the law of a fine of not less than triple the value of the timber cut, destroyed or re- moved, and a term of imprisonment not to exceed twelve months. This law was effectively ignored or evaded by individual lumber capitalists or lumber corporations. In a long report, under orders, to I nited States Secretary of THE HILL FORTL'XK 353 the Interior Robert AlcQelland, on February 12, 1854, James B. Estes, U. S. Timber Agent for Iowa, Minnesota and the Western district of Wisconsin, stated that in one Minnesota section alone the Clack River district more than two hundred million feet of pine had been cut and carried away. " On the Black River," wrote Estes. are sixteen lumbering mills, ail of \vhich, until the last year have been .supported by logs taken from the public lands." L'pon the Chippe\va and Red Cedar or Mcnominec rivers, the s-..iie state of waste exists and has been carried on for a number of years. There are also upon these streams, and their branches, eight saw mills which doubtless cut, as an average, more than two millions of feet a year. The amount of lumber cut at all 01 these mills is small compared with the actual waste upon the pub- lic lands, as there is now, and has been for years, a most exten- sive business of '"logging" carried on to supply the lower mar kets of the Mississippi." .Along certain rivers besides those named, Estes added, there were " nineteen saw mills, of steam and water power, which are engaged in cutting, and doubtless con- sume, fortv or fiftv millions feet of lumber yearly. In addition to this, there has been a large traffic in rafting logs down the Mississippi to the St. Louis and other markets below." " This immense amount of lumber was almost all stolen. Usually the ( iovernment timber agents were bribed to wink at thi- colossal system of fraud, and at other time- th'.'v were likewise bribed to o far as to counsel resistence by force. Meeting- were held in the lumber region-, attended by lumber merchants from Chicago in some instances, at which violent harangues were made, and resolutions adopted, the lemper of which was well calculated to excite a feeling leading to -he mo-t dangerous consequences. 1 ' In fact, the timber capitalists emploved armed gangs to prevent the seixure of the stolen lumber, and fleets of lake ships were requisitioned to carrv off the lumber hv -'ealth he- fore the Government agents could arrive to confiscate it. What eventually happened to those thieves? Invaria- bly thev 'Taduallv succeeded in forcing the honest Gov- eminent timber and land officials out of office. They /might the Government by force and strategy, and con- tested it in the courts. The plea was set up by them that timber was not a part of the land, and for years, the courts solemnly considered the question whether a tree went with the real estate. Finally, the Supreme Court of the L'nited States gravel}- decided that it did ; that " the timber while standing is a part of the realty, and it can only be sold as the land could be. and unless lawfully cut. will remain the property of the United States." n A few of the underlings of the lumber capitalists were detained in jail ; as for the capitalists themselves, they were allowed by the Government "to compromise" the cases against them, by payment of trivial sums. Xo poor man violating the law had ever been permitted to com- promise with the (ioverninent: lie had to face a court mandate and go to jail and stay there until his sentence expired. 1'ut the timber capitalists, like all other sections of the capitalist class, were allowed to keep the fruit oi their thefts, and buy immunity from the penalties of the law by paying back a very small part of the pro- ceeds. With these proceeds the timber thieves often then bribed legislatures for privileges and franchises, bought stocks and bonds, and real estate in the cities, built fine mansions and became the founders of some of the con- siderable fortunes in the United States. And continu- ously, decade after decade, the gigantic thefts of timber from the public lands went on unceasingly. 12 11 I*. S. vs. Cook, Wallace's Reports. Supreme Court of the ! r.iiul States, xix : 591. - Tiie voluminous reports on the subject issued by the Gen- eral [.and Oftice in 1877, s-hu-vv that the most extensive timber depredations \vere still going on in Minnesota, Michigan, \Yis roi>in, I.oniM.-ma, Alabama, Florida and other States, and that Government timber agents \\xre being bribed, or otherwise in- Tin; HILL FORTUNE 357 These are a very few instances of the methods in the seizure of mineral deposits and timber throughout the Northwest long before, or at about the time, Hill ap- peared on the scene. In fact, it might be said that when he arrived in St. Paul, fraud as the foremost means to success, had already become traditional. The remarkable frauds by which many millions of dollars were stolen bv Russell Sage and others in the projection and manipu- lation of the St. Paul and Pacific railroad were carried on under Hill's eyes. Very probably lie learned his first great lesson from observing Sage's methods, and it was this very railroad that he and his partners obtained, after Sage had plundered, and practically abandoned, it. THI.C HISTORY OF A RAILROAD HILL SHCU RKU. The history of this railroad was one of continuous cor- ruption from its inception. The facts have been given in one of the chapters on the Sage fortune, but a re- capitulation will be here summarized. The attempted corrupt seizure of public lands in Minnesota began in 1^54. when an act was corruptly lobbied through Congress indirectlv giving nine hundred thousand acre- of public domain to the Minnesota and Northwestern Railroad Company. The ensuing pubhe scandal compelled the repeal of that act. I'.ut other act- were passed by Congress in [^57. by the same proved methods of briber}-, indirectly, yet absolutely, giving a present of six million acres of public land in Minnesota to various railroad corporations. One of these mea-ures of Congress, approved on March 3. 1^7. made a large land grant to the Territory 35& HISTORY OK Till: GREAT AMERICAN FORTi NES ol Minnesota for the benefit of the Minnesota and Pacific Railroad Company. The further history of this railroad has heretofore been specifically described ; how its projectors were composed of notorious lobbyists and swindlers; how they corrupted the Minnesota Legislature to award them " as aid " several millions of dollars of State bonds ; how they fraudulently sold and hypothe- cated large amounts of those bonds and stole the pro- ceeds ; and how. although they had received millions of acres of public lands, and millions of dollars of public money, yet, by 1859, they had not built more than a few miles of worthless track. More millions of dollars had been stolen by palming off >t ( >ck on farmers, mer- chant- anil other investing dupe>. The robbery of these huge sum- threw the railroad company into insolvency. Then in order to prevent de- frauded creditors from recovering, Sage and his asso- ciate- corrupted the Minnesota Legislature to pass an act reorganizing the cmpanv into two divisions, one di- vision called the St. Paul and Pacific, and the other, the First Division of the St. Paul and Pacific Railroad Com- pany. This legislative act. the courts held, entirely re- lieved the two new corporations from the debt- of the old corporation, although it in nowise atiected their land grant and franchise right,-. 1 laving thu- made it impossible for creditors to re- cover, Sage and companv, on the plea that "further public encouragement wa- nece--ary to complete the rail- road." lobbied an act through Congre-s in 18^5, by which the land grant wa- increa-ee right- and land grant ' Farley vs. St. Paul. Minnrapoli- and Manitoba Railroad 1 oinpnny. Federal Reporur. xiv: 114-118; United Stales Re- ports, Vol. cxx : 303-31^: Farley vs. Mill. Federal Reporter. :i^--j_!. Farley vs. \~onnan \V. Kut-on et a!.. Minnesota ts, \\vii . ioj- 107. 1 ;:1 Rep' 'Her. xx\i\ : 5 i'i 1 r! 5 v 1 -'. N'ornian \\ Kiu.-nn el al.. Minnesota keport-. \ \vii : i<>?. TilL 11 ILL FORTUNE 361 with forfeiture. But who would supply the funds for this construction ? Kittson brought in two fellow-Cana- dian friends -George Stephen, manager of the Bank of Montreal, and Alexander Donald Smith, long associated with the Hudson Bay Trading Company. Where Stephen and Smith obtained the millions of dollars which they now advanced, has never been clearly shown, li was long persistently charged, by at least one responsible member of the Canadian Parliament, among others, that Stephen, Smith and one Angus withdrew $6,000,000 from the Bank of Montreal with which to finance the enterprise, without the knowledge of their co-directors. So far as documentary proof of this allegation is con- cerned, none has been found; it may exist, but we have been unable to discover it. II ILL AND J1IS C'LIOt'L (,KT T 1 1 K RAILROAD. The campaign to get control of the railroad was now Jairly complete. The various properties embraced in the railroad company's title were mortgaged in several mortgages amounting, in the aggregate, to $28,000,000 of bond<. Hill and hi- a--ociates bought in these $28.- 000,000 of bonds at an absurdly lo\v price, in some cases of large issues, at only three per cent, of their value. The range of prices was from thirteen and a quarter, to seventy-five per cent., of their par value. 17 I'm Hill and his partner- were not required to pay in immediate cash. The bond- were chiefly bought on the understanding that they were not to be paid for until the railroad was reorganised. Such actual monev n- was expended was -pent in a hr.sv effort to construct thr extensions, and thus fore- 302 HISTORY 01- THE GREAT AMERICAN EuKTL'NES .-tall the forfeiture law. " Under these circumstances," i he court record states, " the receiver, at the instance of .Mr. George Stephen and other large bondholders (James J. Hill, Donald A. Smith and Xorman W. Kitt- son) hurried to court, and got an order on April 18, 1878, to get authority to issue debentures to complete the extensions." 1S Under the authority of the court, Farley, out of the funds advanced by the Hill-Stephen combination, built one hundred and twenty-five miles of railroad at an aggregate cost of $1,016,300. This ex- tension gave an unbroken railway connection between St. Paul and the Canadian system of railway in Mani- toba. (July one thing more was necessary to get the whole railroad line out of the jurisdiction of the Court into absolutely private possession. This was a decree of foreclosure. On April ti, 1879, a final order of fore- closure was decreed, and on June 14, 1879, the road was sold to the St. Paul. Minneapolis and Manitoba Railroad Company. This company Hill and his asso- ciates had organized a month before the sale, for the express purpose of buying the railroad under foreclosure. The entire cost of the main lines and extensions of the St. Paul and Pacific, both divi-ions, was $6,780,000. I'.ut the Hill coterie were not called upon to pay this -urn in money. They were allowed to turn in receiver's debentures and bonds a- payment for the purcha-e price. Tllii HILL riJKTL'Xli 363 thereby confessing his criminal complicity in being a party (as he swore) to a clandestine agreement by which such a sale had been fraudulently arranged for in ad- vance. In the suit, in 1880, of Wetmore vs. the St. Paul and Pacific Railroad Company, to set aside the sale, Judge Miller estimated the five hundred and sixty-five miles of railroad and the 2,586,606 acres of land to be worth $20,000,000 or more. 19 In fact, from a part of the land grant alone, aside from the railroad property itself, Hill and company obtained more than twice the sum that they had paid for the entire property. Im- mediately after the foreclosure sale, they sold the greater part of the land grant for $13,068,887. A few years previously Mill was a poor man ; perhaps he had a few thousand dollars. The operation described at once made him a millionaire. Me and his associates not only held the railroad's bonds, but they apportioned the stock among themselves. Mill and Kittson each re- ceived 57,646 shares of stock, and the other members of the combination their share. In addition, they other- wise made large profits.-" As soon as the railroad was secure in their possession, thev began the accustomed process of hugelv watering its stock. THAf III-: \\ A Farlev was bittcrlv disappointed at receiving none of the spoils. So determined was he to get what he claimed was his allotment, that he did not mind the publicity of his betrayal of his trust as receiver. Me brought a suit against Kittson, Mill, etc.. in the Minnesota Supreme ('onrt. alleirinir thai bv airreunent he was to receive one- 364 HISTORY Oi' Till-; GREAT AMERICAN FORIL'NKS fifth of the capital stock of the railroad, and one-fifth of all other securities and property acquired by Kittson, Hill and the others of the combination, as a result of his collusion. It was a very audacious ground upon which to base a complaint. Farley could produce no written agreement, and Judge Gilfillan, in October, 1880, decided that he had not proved his case. 21 At the same time, Farley sued the St. Paul, Minne- apolis and Manitoba Railroad Company in the United States Circuit Court. The attorneys for the defense, it is interesting to note, based their main plea for non- suiting the case on the ground that a court official who had betrayed his trust had no standing in court. In this particular plea Judges Treat and Xelson concurred. Their decision, rendered in 1882, said in part: Courts will not and ought not be made the agencies whereby frauds are in any respect recognized or aided. They will not unravel a tangled web of fraud for the benefit of anyone en- meshed therein through whose agency the web was woven. Es- pecially must that be a rule where a trusted officer of a court, whose position is both advisory and fiduciary, seeks its assistance to compel alleged confederates to share with him the spoils ac- quired through his concealments and deceit-, which he admits were deemed by his confederates and himself necessary to their success through his betrayal of his trust.--' Till-: COURT VIRTUALLY CONI-IRMS HIS ( ' H AK< ,MS. Then followed parts of the court's decision prac- tically confirming Farley's statements that he had entered into a conspiracy of colln-ion with Hill. Kittson. Stephen, Smith, etc., on the one hand, and Kenned}' on the oilier. "The plaintifY." continued the decision. TI1K HILL FOIUTXK 365 " conceived a scheme to wreck the vast railroad interests which it was his duty to protect. Through a betrayal of his trust under such circumstances, according to his version of the facts, these vast railroad properties have been secured, and a profit realized of $15,000,000 or more.'* - y The court went on to say that for his betrayals, Farley was to get a portion of the spoils, and the ground oi' his suit was that his associates had repudiated the fraud- ulent contract. As they refused to divide the spoils, Farley had sought the aid of the courts to compel them a very strange demand, the decision said, to bring into any court. As for Kennedy's part in the transaction, the decision set forth. " It is charged, how- ever, and for the purposes of the case may be admitted, that Mr. Kennedy, agent of the Amsterdam Committee, was advised by the plaintiff [Farley] during the progress of the scheme that he, the plaint iff. was secretly betray- ing his trust." 24 The decision concluded by saying that Farley's cause of action was based on " inherent turpi- tude," and that the court? would not recognize any such action as valid.- 5 FAKLKY INSISTS UPON GRTTIXC HIS SHARK OF T 11 F. SPOILS. Farley carried the case to the Supreme Court of the United States. That court, in October. 1886. held that the plea put forth in the lower court was unsatisfactory, in that it had not established any question of fact. The case was remanded with instructions for a new trial. 2 " The suit, therefore, came up again in the United 366 HISTORY OF THE GREAT AMERICAN FORTUNES States Circuit Court at St. Paul, this time in September, 1889. This court's statement of the case reads: In 1876, complainant, Farley, was, by appointment of this court, receiver of the property of the St. Paul and Pacific Rail- way, and also general manager of the lines of the First Division of the St. Paul and Pacific Railway Company. . . . Several series of mortgage bonds were outstanding, largely owned and held in Holland. Complainant alleges that he and the defend- ants, Kittson and Hill, entered into an agreement for the pur- chase of these bonds, or a majority thereof, and the use of the same in the purchase of the road in foreclosure of the mortgages. The defendants were to furnish the funds necessary therefor, and the complainant to furnish facts, information and assistance. Certain it is that the bonds were purchased by the defendants, Hill and Kittson, with two associates, foreclosures consummated, and the railway properties acquired.- 7 The question was, the court declared, whether such a contract had been made, and if so, whether it was against public policy. Farlev testified that an oral contract had. been made, and he was corroborated by his clerk, Fisher. 1 lill denied it, and as for Kittson, he had died before his testimony could be taken. Various letters of Farley's correspondence, with the banking firm of John S. Kennedy and Company were produced in court and were incorporated in the court record. One of these, written on May 23, 18/9. by Farley to John S. P>arncs, a mem- ber of the Kennedy firm, read : Since the election of I'.igelow and C-alush, as Directors in the Xew Company, Men of no .Money, railroad experience or Influ- ences. And myself left "in in the cold, I am forced to the con- clusion that My time and claims mi the Si. I'au! and Pacific is Short, I did expect betlcr tilings of Hill and Kiitson. I had a talk with Jim Mill la-t Knight, lie disclaims any intention on his part to ignore my claims, but he is Mich a I.yer can't be- TH1<: 1I1LL FOKTUXT, 367 beve him. It is a matter of astonishment to every person in St. Paul to see the way Jim Hill handles Mr. Stephens, lie is notoriously known to be the biggest liar in the state. Mr. Kilt- son told me time and time again that Jim Hill is the worst man he ever saw. L'pham, P. H. Kelly, Thompson and in fact every citizen in St. Paul if they would Speak their Sentiments would all tell the same story. You Must Not blame Me if I should try to get even with Jim Hill before 1 leave here.- 8 In deciding the case, Justice Brewer said that he did not believe such a contract had been made, and he based his belief on this singular and highly amusing ground of reasoning: " Is it probable," he wrote of Farley, "that a man so situated, with his years of experience in rail- road foreclosures, and owing such a duty to the bond- holders, would enter into a secret arrangement with third parties for the purchase of the bonds -an ar- rangement which made it to his interest to reduce the market price of bonds? Is it probable thai such a man would deliberately cloud the record of his life?'' etc., etc.- 1 ' Of course not. Again Farley carried the case to the Supreme Cottrt of the (United States. This court, in October, 1893. up- held the decision of the Circuit Court, declaring that. Farley had not proved his claim. 1 " After thirteen years - s Federal Reporter, xxxix: 521. One of Hill's eulogists in a "biography," very effusive on the whole, publi-hed in the Xew York "Tribune." issue of April 7. )<;o7. \\\u< wrote of Hill: "Mr. Hill has a reputation in the Northwest as a very hard man in business. . . . He has never had patience with any one who could not practice unllaguing industry _aud self-de- nial. Out of this same trail ha- grown the conviction among railroad men that 'Jim' Hill i< the hardest man in the business to work for. For him-elf there has never been a quitting time. I-.ven now he is busy nights and Sundays when there is work to do. Tt has always been a short r-hrift for those in his em - there were -uch things as office ploy who could not forget ir -"-'Federal Reporter, xxxi 368 HISTORY OF Till-: GREAT AMERICAN FORTl'XES of legal contest, Farley was unable to collect a single dollar. LULL AND HIS PARTNERS BECOME GREAT DIGNITARIES. Of the men whom Farley alleged conspired with him, or who were alleged to have profited by his betrayal of his duty. Hill became the great multimillionaire auto- crat of the Northwest, and Stephen and Smith obtained peerages from the British Crown Stephen as Lord Mount Stephen, Knight of the Grand Cross of the Royal Victorian Order, etc., and Smith as Lord Strathcona, Knight of the Order of St. Michael and St. George, etc. :u Kennedy rose to be a multimillionaire ; when he died on October 31, 10,09, he left a fortune estimated at from $30,000,000 to S6o.ooo.ooo which included $7,000.000 worth of stock in the Great Northern Railway, mostly obtained at the very time he betrayed his clients, the Dutch capitalists. lie also held S 10,000,000 of North- ern Pacific Railway stock, secured at about the time when the Northern .Pacific Railroad Company, as we shall see. was bribing land grants through Congress and stealing vast mineral deposits from the public domain. In the latter years of his life, Kennedy gave a few mil- lions for " philanthropic purposes,'' and was exalted as "a great philar.thropi.-4." His will revealed that he be- queathed tens of millions to philanthropic and educa- tional in.->tituiions. Th:.- bv wav of passing explanation. To continue the story of the Hill fortune, however: Hill and his asso- ciates secure;! more franchises and special laws, built extensions, and formed the Great Northern Railroad otit of the railroads that they had obtained and the exten- ;: Stv " I'.urkt/- Ikurriiit.-." sions which they constructed. The Legislatures of llie Xortlnvest were deluged with bribe money, although it was never specifically proved that Hill was the dis- tributor. The whole newspaper press was subsidi^tj-1. and towns, cities and counties were prevailed upon to grant endowments and exemptions of all kinds. So riie was this corruption, that, in 1883, some protesting mem- bers of the Minnesota Senate introduced this resolution which was adopted : WHEREAS, The acquisition and holding of large interests in land-grant railroads, public contracts and other schemes receiv- ing aid from the General Government, by high l\('-jral officials, places such officials in positions where they cannot be true to the public interests, without a sacrifice of self interest : and WHKKEAS, Money thus acquired by public men is ordinarily used to corrupt the springs of political intluencc, and prevent the expression of the real sentiments of the people, and, WHKKEAS, It is alleged that in the preceding Senatorial election, certain members of this Legislature have been improperly and corruptly intluencvd by promises of money, public office or other valuable considerations, for a certain candidate for United States Senator, therefore, The resolution called for a Special Investigating Com- mittee of Seven.'- Ihe report of this committee, while of a whitewashing and partisan nature, indicated an ap- palling state of corruption. The significance of this self-admitted corruption of the successive Minnesota legislatures, will be better understood by a consideration of one among a lar^v number of characteristic episodes. On March i, 1877. when the popular indignation against the robberies and usurpations committed by Rus- sell Sage and his band was at its height, the Minnesota Legislature had enacted that the St. Paul and Pacific 37O HISTORY OF Till-: HRKAT AMKKICAX FORTl'XKS Railroad Company should have no right " directly or in- directly " to any land upon which settlers had settled in good faith. Inasmuch as a certain part of the railroad wa<- not completed until November, 1878, the terms of ihe act of Congress of June 22, 1874, were violated. This act had extended the time of completion to March 3, 1876; otherwise the land grant was to be forfeited. :!;; l.iut the Supreme Court of the United States conven- iently decided that a mere breach of the conditions of the act of Congress did not of itself work a forfeiture of the grant; either Congress or the Minnesota Legisla- ture had to take some specific action declaring the for- feiture. 1 '' 4 The es-ential object, therefore, on the part of Hill and his associates was to prevent Congress and the Minnesota Legislature from passing such a forfeiture act ; and thev were successful. After Mill had secured control of the St. Paul and Pacific Railroad, under the name of the St. Paul, Min- neapolis and Manitoba Railroad, and had changed the title to that of the ( ireat Northern Railroad, he claimed in 1884, sixtv-five thousand acres of land in Dakota. Ik-fore 1884 no claim had ever been set up bv the com- pany to that land. The claim was based upon the old land-grant act of 1857, passed when Dakota was a part of Minnesota. For vears the country along the Red River in Dakota had remained a wilderness until farmers settled there, and converted it into <.me of the richest agricul- tural regions in the West. The General Land Office THE HILL FORTUNE 3/1 took it for granted that this land did not belong to the railroad company, and had given full titles to the settlers. In November and December, 1891, intense excitement prevailed among the farmers in the Red River Valley. An order had been issued by the Great Northern Rail- road Company compelling farmers, by December [5, to vacate lands belonging to the company. This order was based upon a decision of the Supreme Court of the United States declaring that the company's land grant extended to the Territory of Dakota now the States of North Dakota and South Dakota." 5 This decision gave the company some of the most fertile and valuable areas in Dakota. Unquestionably, under the acts of Con- gress, these lands, even if the original grant had extended west of the Red River, had long since been forfeited. The Supreme Court of the United Statc>. however, by its successive decisions, negatived the explicit acts of Congress. The Great Northern Railroad thereupon began the eviction of farmers in the odd numbered sec- tions within the twenty-mile indemnity limit of its land grant. This order of the company was like a thunder- clap to the settlers. Many had resided on the land for twentv years. The settlers appealed to Congress. That body passed an act to allow the railroad company to select an equal area of lands in lieu of those settled upon. This act, although apparently passed for the benefit of the settlers, was precisely what the Great Northern Railroad Com- pany was waiting for. The land- relinquidied by the company were non-mineral; the act of Congress there- fore, provided that the lands in exchange that it should select elsewhere should be non-mineral. Hut when the exchange was made it was discovered that the company "" L'nitcd States Reports, Vol. cxxxvii : 528. 37 2 HISTORY OF Til!': OKKAT AMERICAN' l-'ORTl'NES had selected the must valuable timber lands in Idaho, Montana and Washington lands worth far more than the Dakota lands and that on some of these lands rich mineral deposits underlay the timber. The Commis- sioner of the General Land Office at that time was, as \vc have noted in a previous chapter, T. II. Carter. His record was so very satisfactory to Hill, the ruler of the politics of the Northwest, that, a few years ago, the Mon- tana Legislature was allowed to send Carter to the United States Senate, of which he is now a distinguished member. HILL S IRON ORE DEPOSITS. Hill personally owns immense iron-ore deposits in Minnesota. These deposits are currently estimated to be worth at least a billion dollars. In 1906 he leased what was really a small part of these deposits to the Steel Trnsi for a period of twenty-five years on a royalty basis, the payments amounting, in the aggregate, to tens of millions of dollars. 1 low he obtained these deposits is not told clearly in official documents. We have seen in previous chapters, that the original land grants made by Congress, corrupt as were the circumstances of the passage of the various acts, were never intended to cover coal, iron or other mineral deposits. But by fraudulent constructions of the laws, made by Land Commissioners and the Courts, coal and iron lands were determined nut to be included within the meaning of the word min- eral. According to Senator I'ettigrew's version, Ilill secured large iron deposits in Minnesota by private purchase, i-'nr this he had ample capital, reaching hundreds ol millions of dullar-;. This moncv was derived from ihe TJIL-: HILL [ St. Paul and Pacific Railroad transactions, successive illegal stock waterings, and the extortionate profits from his railroad system profits terrifically oppressive to the people of the Northwest. Senator Pettigrew writes of the purchase by Hill of these iron deposits: " The iron underlay forests of pine, and the lumber company had built a lumber road to get out the pine, and having cut the pine off, sold the road and the land to Mr. Hill at what they considered a very exorbitant price, but it turned out that underlying the land were vast deposits of iron ore. I think Mr. Hill estimates the mines at five hundred million tons." ;iG If this account is correct, it may saiely be assumed that Hill knew the character of the land before he bought it; judged by business stand- ards it was a very astute transaction. This assumption is borne out by the facts revealed in a suit brought at St. Paul, in January 29. [901. by H. \Y. Pearson, a geologist of Duluth, against Hill and the (Ireat Northern Railroad Companv. The sum in- vi lived in the proceeding was stated to be not less than Si |, 000,000 which was alleged to be the value of :;ii Related in a personal letter to the author. In Chapter ii, Vol. ii, of this work ("'['he Seizure of the I'ublic Domain'"). \ve have seen ho\v large areas of land, granted to canal cor- porations as nominally swamp lands, were so fraudulently sur- veyed as to include some of the very richest copper deposits in the Xoriiuvest. The same was true of iron ore deposits in some of tlie grants to railroad corporations. It cannot he said that the beneficiaries of the^e frauds were unaware ot ihe fari that copper and iron ore i(> were on ihe land- tin:- fraud- ulently acquired hy them. A number of reports by Government geoli gi-al experts h::d de.-erihcd the extent and location ot these mineral deposits. One voluminous repot-'., in particular, was that i>y [. \Y. ["osier and J. 1). Whitney. United State.- Govern- ment geologists. 1; wa> i--ued in 1851, and gave full de-crip- lions of tlie character of the mineral land-. It especially de- scribed the iron ore deposits of the Lake Superior region a^ being of an almost unprecedented state of purity. L". S. Sen- ate Documents. Special Session, Thirty-second Congress, 1851, Vol. iii, Dor. Xo. 4. 3/4 HISTORY 01' THE GKKAT AMERICAN FORTUNES property held by Hill and his railroad, and taken by them after its discovery by Pearson. In his complaint Pear- son averred that these mineral deposits were located by him under a contract with Hill by which he, Pearson, was to have a share in the profits. Pearson further .'.dlegvd that he had been employed by Hill, in 1896, to locate coal and iron deposits in the States of Washington and Montana; that he found the deposits; that under his direction the Hill interests secured thousands of acres of valuable land, and that when he presented his claim for a share, he was cast aside. Of the final dis- position of this suit no record appears in the available court documents. If. however, the methods used by the Great Northern Railroad in appropriating mineral lands have been the same as those employed by the Northern Pacific Rail- road, then their nature is clear. This latter railroad was not originally owned by Hill, but he and those allied with him, now hold its ownership. ' The net outcome," says .Mood}-, "of the Northern Pacific corner, and of the Northern Securities incident "' has been that the Hill interests remain in undisputed control of the three vast railroad system- which now go under the name of the Hill properties, viz: The Northern Pacific, the Great Northern, and the Chicago, Burlington and Ouincy. constituting in the aggregate, over 18.000 miles of rail- r> -ad line-.""' T1LI-: NORTHERN PACIFIC RAILROAD. Tin-: iiiu. FOUTI.XI-: 375 the right of way through the public domain, the right to take from the public lands material for construction, and an immense area of public lands in Montana. Idaho and other sections of the Northwest. The.-j enormous privileges and grams were given to it at the identical time \vheii the Union Pacific Railroad and other land- grant and subsidi/ed railroad companies \\ire bribing Congress. As \ve have seen, the I nion Pacific Railroad disbursed nearlv 8430.000 in securing the passage ol the act of July 2. 1804, increasing the Government money subsidy granted to it and doubling its land grant. 111 ' Doubtless the passage of the Northern Pacific Railroad act was effected by the same means. In all. the North- ern Pacific Railroad obtained about 57.000.000 acres of public domain. By the definite terms of this act however, all mineral lands were expressly excluded from this grant, although (lie term mineral (to repeat an explanation already given) wa> later fraudulently construed, in the ease of all land grants, not to include iron or coal. The Northern Pacific Railroad was, therefore, endowed with a land grant forty miles wide running across the conti- nent, west of the Missouri River. This land grant in- luded vast stretches of the very richest timber lands. The ensuing history of the Northern Pacific Railroad was the -ame as that of all other railroads. It \vas plundered by successive gronp< of capitalists One of the capitalist- powerfully controlling the Northern Pa- cific Railroad for some years was Henry \ illard. a man of remarkable character and enterprise. Different fac- tion- of capitalists fiercely fought him. and sought to 3/0 II [STORY OF II11-. GKKAT A MI-IK 1C AN FORTUNKS ou-t him from the control of the Northern Pacific Rail- road and other railroads in the Northwest. In hi-- " Memoirs," Yillard tells of a formidable combination arrayed against him in 1889, composed of Hill and large financial corporations. Four years later Yillard was ac- cused by his opponents of having profited enormously from buying, in his individual capacity, " semi-worth- less " railroads in Manitoba and elsewhere, and then '' unloading " them, at exorbitant prices, upon the North- ern Pacific Railroad, which, corporatively, he controlled. So far as the court records indicate the facts, these allegations seem to have been part of a plan to discredit Yillard, and cause his overthrow ; when the charges were passed upon by the courts, Yillard was personally vindi- cated, liut that the railroad's treasury had been looted by previous group.- of capitalists is absolutely clear; con- testing factions were continually charging the other with the responsibility for promotions, extensions and enter- prises largely devised for the special purpose of appro- priating large amounts in loot. 40 So contradictory and involved were these charges and recriminations that it is not ea.-y to determine' the relative, much less the ab- solute, truth. Certain of Yillard's capitalist opponents were especially notorious for their evil records: so much so that charges coming from them were received with distrust and cynical skepticism, in general, and with dis- mi-.-al, (.'ii the merits, from the courts in particular. '"Such charges were characteristic, a> we have so frequently -tated, of capitalist method- of warfare upon one another. IHAVCT were violently as-ailed so as to di-crulit : "<: di-lodtK- them. TIi!. 1 spectacle *.va- frequently presented of ihe ''leading" and nio-t "respectable'' financier- ferociously nc another as liars and thieve-. These virtuou- ihur :-. it i- needless to say, arose from no moral indigna ulterior purpo-e \va? to crush the other, if possible, and -:<- property and power. THE HILL FORTUNE 377 ontesl wa> iicrcely carried on. I -'or years the contest to dislodge Yillard from control GREAT THEFTS OF AiiXERAL LANDS During the time that various capitalists controlled the Northern Pacific Railroad the thefts of mineral lands were so extensive that both Congress and the State of Montana were constrained to investigate. The people of [Montana were greatly agitated over the railroad's claim to lands containing the very richest gold, silver, lead and copper mines, particularly the great copper deposits for which Montana was famous. In fact, the people of the entire West were deeply aroused, for if the courts should finally sustain the action of the North- ern Pacific Railroad, then all of the other Pacific rail- roads could likewise claim all of the mines and mineral deposits within their land grants, consisting of odd num- bered sections. Already, in i8<;o, the Supreme Court of the Inited States had provisionally handed down a decision sustaining the Northern Pacific Railroad's claim that oiil\ suet! mineral lands as \eere icno\cn to be mineral at the date of the land (/rant were to he excepted from the land grant. The trans-Mississippi Congress, meeting at Denver, in May and October. 1891. adopted resolutions declaring: WHEREAS, Thi> dictum of tlu- Supreme Court, if it -i, / ,', come law, would invest the Pacific railway companies hi !di grants of land from the (iovenmient with a vast number or the besl mines discovered within the limits ot -aid crrar.ts b} - pro- jectors and miners, who have located therein in ,uood faith and de\eloped and sold therein in the h ir.esl 1'clief that said ,u.rant- wcre limited to agricultural laud- only, as declared in the act- of Congress making them: and 370 HISTORY or Tin-: GRKAT AMERICAN FOKTL~NI:S WHEREAS. The citizens of the L'nited States have invested mil- lions of dollars in the development of mines on said lands which have been discovered subsequent to the date of said grants: ami WHEREAS, The consequences of this newly made construction of said grants must be the confiscation of private property and the spoilation of individuals in behalf of -aid railway companies on a scale so vast that history affords few parallels thereto, and to the bringing of actions to recover the value of ores heretofore mined from said land.-, which, if successful, must reduce a large number of our citizens to want and beggary; and WHEREAS. If said construction of it becomes the law of the land, it will take vast regions of mineral land out of the market, either for future explorations or purchase, to the manifest injury of the people. Wherefore, be it Rcsolrcd. That the Congrer-s protests against any construc- tion of the -tatute- of the United States which will result in such a system of wholesale confiscation, and the consequent enrich- ment of great combinations already enjoying the bounty of the government, and calls upon the representatives of the people in Congress assembled to take such prompt and immediate action as may be within their immediate constitutional prerogative to de-troy this threatened danger At the same time Martin Maginnis, Mineral Land (Commissioner of Montana, reported to ( lovernor Toole that the va-t land grant of the Northern Pacific Railway Company .-iretche> from the eastern to the we-tern boundary of the State iii Montana in . i- nearly one hundred and twenty miles wide and over -even hundred mile- long. The Congre-s which created this corpora rave to it one-half of the lands within these limits, carefully < \cluding all mineral land-, and emphasizing their reservation from the grant by giving to the company indemnity for such lands as might turn out to be mineral. Little prospecting had then been clone; very liilie was known of the character of these land--. ' discoveries of mineral lard had yet to be made, the mines them to be developed and these to be finally -egregated "otn the land grant of the company, and the company recom with other land:- not mineral in their character THE HILL FORTUNE Xothing would scan to be plainer than the fact that the reser- vation \vcnt with and was part of the grant; and that future ex- ploration, survey and classification would be necessary to define the non-mineral lands which would become the property of the company and the mineral lands which were reserved to be for- ever open to the prospector and the miner, under the mining laws of the United States. If the road could have been definitely located and built as rap- idly across the continent as the charter was pushed through the Congress, it would have been left to the future to prove the character of the lands, and if the company at that time by virtue of a finished road claimed all the lands, surveyed and unsurveyed, unexplored and not prospected, that company would simply have taken them all ; for the mineral discoveries have all been made since then. It was not until later that the audacious claim was set up that lands not then known to be mineral, or not known to be mineral at a certain date, were therefore not mineral, and by consequence passed to the corporation. 41 Mineral Land Commissioner Maginnis then dealt ex- tensively with the long delay of the projectors of the Northern Pacific Railroad in building the railroad a delay, he wrote. by which it failed in one of the primal purposes of it.- crea- tion, and in fairly earning that part of its endowment which was intruded to secure its completion at least fifteen years before it came to us. who. while wearily waiting its advent, had occupied, -ubducd and partially developed the country without its assist- ance. It was never dreamed that the railroad company would set up at any time in its existence a claim to the mineral lands, which \\ere excluded from the grant, in the granting act it set t. by >pe citic reservations intended to run with and be a- perpetual a- the grant itself. Congress had created no tribunal to demit which were mineral or which non-mineral bearing land-. It let") that to the executive department, which has the control of the sale and survey and classification of -ill the public land- \ large portion of the land .V X HISTORY 01- THE GREAT AMERICAN FORTUNES mside lines of the grant has never heen surveyed or in any way examined, prospected or classified by the government. The labor and toil of the voluntary prospector and the miner has alone made known which are mineral districts and which are not. Suddenly the astounding claim was set up that all the portions of the country which had not heen voluntarily examined by the individual prospector, acting under no agency of the Government hut at his own expense, and therefore proven to be mineral at a certain date, were to be considered non-mineral and to become the property of the Northern Pacific Railway Company in spite of the fact that the charter itself said that such lands never should be, and that the company should take other lands in lieu thereof in order to make up the quota that it claimed. It would seem that neither in law nor equity could there be any warrant for such a claim, that the company cmild not obtain by indirection those lands that were directly reserved from the grant and held open to the prospector and the miner under the well-defined policies of the United States as laid down in its laws governing the disposition of mineral lands. But under certain constructions of certain cases in some of the courts, the company did set up its claims not only to the mineral lands but to the min erals which had been mined. It contested the applications for patents to mines upon odd sections and sued for the recovery of (ires taken from the same. The people of the State became universally alarmed at a course which threatened such calamity to its interests and recognizing the fact that poor pro>pt-ci"rp and miners, or rich ones either for that matter, could not successfully contest with such a power fill corporation, the State determined to make the cau>e of it- people its own cause, and with that object in view, the Legisla ture passed th" following law : 4 - Ilcre followed the provisions of that law. the object of which was to safeguard the interests of the individual miners. Notwithstanding the passage of this act. the lower courts, manv of the judges of which had been railroad attorneys, or who had been elevated to the bench bv railroad influence, gave decision after decision in THii HIM. KokTrxK 381 favor of the Northern Pacific Railroad. The chief op- ponents of this railroad were large copper corporations. such as the corporation controlling the great Anaconda copper mine, then valued at $25,000.000. These corporations had themselves obtained their mines largely by fraud. But individual miners and prospector.-,, in nowise connected with any fraudulent operation, were deeply stirred, and in turn the mass of resident people. The House Committee on Public Lands of Congress took up the matter. Yillard, as president of the finance committee of the Northern Pacific Railroad was busily in evidence with his attorneys. " Mr. Henry Yillard," stated the report of Mineral Commissioner Maginnis, next engaged the attention of the committee. He also claimed that the company was now completely vested with the title of the disputed mineral lands. lie considered that question as no longer open. The Supreme Court could only affirm the numer- ous decisions already rendered in favor of the railway company. The property rights of the corporation were heyond the reach of legislation; but he was anxious to have tin';- controversy set tied. It was injuring the road and the mining industry and he was ready to offer a compromise on the part of his company. He was authorised to submit a proposition to the committee- That the company would agree to this bill, to the survey and classification, and would deed back to the United State- all lands so excepted as mineral: Provided, That the company should be recompensed therefor with other land>, either by the extent >n of present indemnity limits or by selection fron the even a> well as the odd sections within the grant. 4 -" The House Committee on Public Lands reported that the Xorthern Pacific Railroad had included in its land grant the richest and most extensively developed mine- in Montana and Idaho. " Within this grant are also in- cluded millions of acres of land not vet entirelv or at all 382 HISTORY OF Till; GREAT AMERICAN FORTUNES explored for minerals but which . . . probably eon- lain mineral deposits as valuable as any yet discovered." The railroad company, the committee set forth, claimed that the legal construction of the act of 1864 gave the company all lands within the grant, not kno-;\.'n to be mineral at the date of that act, or at least at the date when the company filed the map of its route. This," the report went on, " seems to the committee a most extraordinary claim. . . . Many of the most valuable mines in Montana, and most all of those in Idaho, have been discovered since 1882. The company, not satisfied with its immense land grant and other special privileges given by the Government, now seeks, upon what is at best but a technicality, to take from those who have discovered and developed them, the very mineral lands expressly excepted from the grant." 44 Meanwhile, however, the Northern Pacific Railroad had gained its point. While time was being consumed in talk and appeals from court decisions, this is what was done, according to Senator Pettigrew: "The whole force at Washington in the Land Department at Wash- ington was engaged exclusively in rushing through these patents for the Northern Pacific, and 1 think, if you will look- up the court records, you will find that the iudge objected to an item of about 83.000 brought in by the receivers, which was paid to a very special friend of the Land Commissioner as an attorney fee to hasten the issue of these patents, and thus, the Northern Pacific acquired title to vast areas of exceedingly valuable mineral land> in the States of Montana. Idaho and Wash- ington. The Land Commissioner was no doubt corrupt in thi- connection, and there is no doubt that the North- Secoml Session, TIIF. I1JIJ. KOKTrXF. ern Pacific officials really purchased his activity in getting those patents. " Afterwards," ex-Senator Pettigrew continues, '' Con- gress passed a law, some time, I think, in 1898, provid- ing for inspectors to inspect the lands along land-grant roads, and determine which were mineral, and which were not, so that mineral lands should not be patented after that date ; but the mischief had nearly all been done." 45 Pettigrew's statements, however, are disputed by friends of Villard claiming to have a knowledge of the matter. They deny that the Northern Pacific thus ob- tained patents. Xo patents, they assert, were obtained by the railroad or were granted to it during the prevail- ing agitation. They add that the Commission provided for by Congress was authorized to issue patents for non- mineral lands only. If corruption was used to get min- eral lands under the pretext of being non-mineral, it is unlikely that Yillard personally sanctioned it. At approximately during this time the \orthern Pa- cific Railroad, on August 15, 1893, went into bankruptcy. 1: ' Related in a personal letter to the author. The fact that powerful members of Congress were, at the same time, paid at- torneys for land-grant railroad-, and acted in that capacity in Congress, caused the introduction of a bill in the United States Senate, on June i, i8S6, by Senator Beck of Kentucky, mak- ing it unlawful for any member of Congress to act a- the at- torney or agent for any railroad which had received a land grant from Congress. In the debate on his measure on June 22, 1886, Senator Beck urged: "Will any gentleman insist that any man who is the attorney of any railroad, any man who i- retained in any way by any of these roads, when the-e great questions imolving perhaps fifty or a hundred millions to the tax-burdened peoples of this country come up tor consideration, -hall advocate the interests of the road whose money in the ,-bape 01 retainers or fees he ha- in his pocket, keeping the fact concealed, professing all of the time that he is acting and arguing in the interests of the I'nited States?" The bill failed. of course. 10 become a law. 3.<,/ to influence Wall Street opera: 1 .'!; 1 -: in fact, he did not dictate a single line of it< editorials. (In the other hand, the editors at time-; frankly criticised \u< policy in railroad affair 1 -. It may he added that (to the author'? personal knowledge) the Xew \ ork r.i'i'ning Post ha- consistently refused to he influenced in its editorial expn -sions by either the offer or withdrawal of department-store, financial and other advertising. it has maintained this course, despite very heavy losses result- ing from the withdrawal of ~uch advertising. 386 HISTORY OF THE GREAT AMERICAN FORTUNES iiill gradually began to figure as the dominant owner. It is pertinent to note here that it was alleged that Maginnis was secretly in the employ of Hill's Great Northern Railroad at the very time he was warring upon the Northern Pacific. The great contest between Mill and Harriman in 1901, for the control of the Northern Pacific Railroad has already been described in one of the chapters on J. Pier- pont Morgan; the result thus far has been (a? hitherto related) that the Mill interests remain in control of the Northern Pacific Railroad, as well as the Great North- ern Railroad and the Chicago. Burlington and Ouincy. According to Charles Edward Russell, who made a very careful study of the successive stock waterings of the Great Northern Railroad, Mill, Kennedy, Lord Mount Stephen, Lord Strathcona and other magnates have drawn a total of $407,000.000 profit from the ma- nipulation of stock of the Great Northern. Russell says that this sum is entirely exclusive of all dividends inter- est and other emoluments. These, of themselves, have reached enormous sums. 41 * A committee appointed by the Minnesota State Senate, in 1907, to investigate the cap- italization of railroads in Minnesota, reported that these railroads were capitalized at about 8400,000,000, or about $50,000 a mile, whereas the actual capitalization, on an average cost of $27.000 a mile. >hould be $215,- 000,000. The Great Xorthern Railroad, owning 2.040 miles of road in Minnesota, was heavilv overcapitalized, the committee reported. The committee declared that the Great Northern had been making an annual profit of -ixteen and a half per cent, estimated on a valuation of cost of construction and maintainarice of $33.000 per THE HILL FORT TNI-: 3cSj mile. 411 The Northern Pacific likewise largely overcap- italized, had been deriving, it reported, an annual profit of twelve and a half per cent, on an estimated valuation of $35,000 per mile. 00 One of Hill's recent stockjobbing transactions resulted in a suit in which he was acctised of gross fraud. On July 22, 1907, complaint was filed in the county court at St. Paul by Clarence A. Yenner, a stockholder, 'alleging that on November i, 1900, Hill, as president of the (ireat Northern Railroad and others of the officers and di- rectors, had entered into a scheme to obtain, in con- junction with the Northern Pacific Railroad, a controlling interest in the Chicago, Burlington and Ouincy Railroad. The complaint averred that on April 23, 1901. Hill was authorized by the Hoard Of Directors to make the pur- chase of the Burlington at $200 a share, which he did before January i, 1902, in conjunction with the North- ern Pacific, for the purpose of which joint collateral trust fund- were issued by the two railroad.-. The complaint further alleged that Hill, knowing of the plan to purchase the lUirlmgton bv the stockholders of the two road-, in violation of his dutv as an officer and director of the (ireat Northern. " hone-tly. diligently and laithfully and carefully to administer the atiair- ot the said (ireat Northern, for it- best interots, conceived and entered into certain illegal, wrongful and fraudulent plans and dc-ign- to make a large profit for himself per- sonally, and at the expense and to the loss and damage of the (ireat Northern, bv per-onally purchasing and ub cage. Burlington ami Ouincy Railway Company, which was acquired at prices far in advance of those paid by him for the stock by the (ireat Northern and Northern Pacific Railway companies." Yenner al>o alleged in his complaint that Hill ac- quired a personal profit out of the transaction of an amount exceeding Sio.ooo.ooo for which he asked an ac- counting. AYe are unable to ascertain Hill's answer or the result of this suit/' 1 Let it not be supposed, however, that the record of Hill's cumulative acts, as revealed in -uccessive law and other records, has interfered in the slightest with his exalted reputation. Far and wide his sycophants of the press do still loudly -pread their fanciful, rap- turous descriptions of him, always carefully leaving un- said the true means bv which he obtained his great wealth. Much has been made of his piety: his giving, for instance. $500.000 for the endowment of a Roman Catholic Cathedral, at St. 1'aul; much is incessantly written of his exceeding probity, his " financial acumen and '' business virtues." When he speaks he is hailed as a veritable oracle, and truly so. for the gods of present society are the Money Gods; Society, which at huge ex- pense has built jails and prisons for the petty criminal. 51 With err eat frequency, charges have been made that rail- road attorneys throughout the United State? often write the decision: nf judges in case? affecting railroads. Many such spe- ::--d::l?. have lately come to liuht. Only recently the (Irani! Jury, of Spokane, Washington, brought indictments for ein- 1 :x!ement apainst Judtre M. J- Gordon, former western counsel < f ' . Great Xortht-rn Railroad. The. Grand Jury, at the same time, denounced Hill and other Great Northern Railroad of : ' in attempting to hamper its work, and prevent the in- t of Gordon, and it further censured J ud ire Milo A. !: ' for permitting G"rd his own. THE IIILL FURTL.NE 389 creels palaces for the great criminals, and insists upon pouring wealth increasingly into their coffers and hails them dictators. And who can blame the magnates for thus mocking and scourging the peoples who thus rever- ence them and the system which produces and per- petuates them? For, not they, but the system, should be held responsible. Comprehensive Conclusions would IK- premature here; there still remains to be told the narrative of how Ivl- ward II. Harriman, and above all. the Standard ' >il Company, for whom it is believed he so largely acted, possessed themselves of vast railroad systems. The Standard ( )il oligarchy is, indeed, the mightiest railroad owner of all; man\' of those railroads the inception and development of which have been here told, are owned or controlled by it ; to it has accrued the final benefits of much of that series of original frauds and thefts some picture of which has been given in this work. I'm the scope of this volume does not here permit of the extended nar- rative of Ilarriman's career, with its accompaniments of enormous frauds and salutarv constructive work; nor. more so, does it allow the prolonged description of how the Standard Oil Companv, starting with a few oil re- fineries, contrived to secure possession oi so large a share of the resources of the I. nited State-, railroad- and otherwise. This narrative will have to IK- deferred to later volumes, as also the story of the great fortune- ba-ed upon public franchises, mines and industries. Meanwhile, some few observations mav be properly pertinent and. instructive. The inevitable burden : lii wi-rk. as is t<>o pan: full obvious, has been the frauds and thefts by what HISTORY OF THE, GREAT AMERICAN FORTUNES tunes built up. This is not so because the author, in the perverseness of his heart has formulated it so, but because these are the inescapable facts. But why, query certain querelous critics, schooled in sychophantic stand- ards, "enlarge upon the dark side of the picture? Had not all of these men their good points, their kindly streaks, their capacity for some doing of service for their fellow men ? " Such misguided critics, with your obtrusive narrow conceptions and warped mentality, it is ye who so blindly refuse to perceive, and do justice. What, may it be inquired, would your comment been had this work, in- stead of laying bare the frauds, shams and robberies by which immense fortunes have been amassed, been an artful or (for the matter of that) an ////artful eulogy of those men, and an apotheosis of the system creating them? What, indeed, would you have said? Indubi- tablv this work would have been highly " rational and un- biassed "; no accusations of "prejudicial treatment" would have occurred. Conventional publishers would have eagerlv grasped for it ; "'- and to the author en- couragement and monev returns would have been as- sured. As it is (what is really of no interest to anvone but himself) he has had to undertake it in the face of the greatest obstacles a fact perhaps tending to dem- onstrate that he who proclaims stern truth in stern garb must do it for its own sake, and with an titter defiance of all supine or mercenarv powers that would seek to change hi- plan or hold him back". Then there are those piping critics, overwhelmed by the proofs, who, as a last resort exclaim: "Is it pos- THE HILL KOKTlXi: 30,1 siblc that vour facts are correct? 1 )u vou not exau"er- * - oo ate.'" To all such not remonstration nor censure but pity should be extended : deep pity for their hemmed-in mental horizon. And. after all, they are only reflection-, or rather products, of a certain prevalent standard of the day which priina facie condemns the man with the poor appearance as guilty of all the offenses charged, but resolutely declines to impute serious crime to him of wealth and corresponding superior station, regardle--, of how much the proofs multiply. Much could be writ- ten upon the efficacy of a high silk hat as a protection of person and reputation. When the author's " History of Tammany Hall" ap- peared, its accuracy was not questioned, because, per- force, the facts -i^cre accurate, and the story there told was that of a vulgar political organization. How singu- lar it is. remarks one perceptive commentator, that -ome oi tho-e who -o highly acclaimed that work lor its com- prehensiveness and accuracv, should be the very critics who now insinuate their doubts as to the accuracv ot fact- when applied to the founders of great fortune- and their verv respectable descendants. Xo, sage reviewer, it i- hv no mean- singular: that attitude i- transparent: the truer in this case the fact- are and the more volumi- nous and indisputable the citation- from official records, the more the apologists and retainer- of wealth are driven back to their only po--ible defence. Thev can do nothing but suggest meaningless doubt- doubts >o abundantly refuted by the formidable mas- 01 citations throughout tin- work. And be it known that the frauds and robberie- herein de-cribed. great and continuous as thev have been, are far from bring the Complete -lory: further volume- remain to be written; and tor every one fraudulent transaction accidenialiv coming to public 39-2 daylight. This, it is unnecessary to say, is palpably no history of personal traits, dispositions or temperaments; it is a narrative of the means whereby properties have been acquired, and great fortunes possessed. .Hut the acade- mician, strong in the audacity of his soporific mediocrity, may say, " This is no history ; it lacks dispassionate style." If " dispassionate style " consists of a dull string of dates, names and phrases, with no glimpses of the roots of matters, nor a clear interpretation of causes and events, then this work does certainly want " dispassionate style," and well it is that this defect is there. Who, indeed, does not know that there is no more effective medium for inventing, telling and perpetuating false- hoods than this same so-called "dispassionate style"? A heightening and an emphasis of certain tissues of fact, a .-lighting concealment of other facts, and behold! the trick is done. While on this point, it will be pardonable on the part of the author (considering his many earnest years of original research ) to express his unbounded ama/ement that so m.'-iiv pretentious volumes, theoretical and other- wise, have- been turned out by college professors on this subject, without their having taken the slightest trouble to ascertain th-j facts. Hue-spun dogmatic theory, mo-t of it is. or di-torted high-sounding assumptions; word-, words, nrj end of turgid words; no really original work or thought, no in-ight, no interpretation except a pseudo. illegitimate one arrived at \\ithoul a knowledge of the fact-, and so ruriou-lv iu accord with the dictate- of the ruling \\ealih of the lime. Thi- particular hi-tory. lie it -aid, i- written from a di-liuct point of view, narrating THK HILL FORTUNE 393 facts never hitherto brought out, and the accuracy of which cannot be challenged ; the point of view, as the author believes, is the correct one, verified by every accumulating proof. Finally, there are those who rush forward to press this question : " Have not the founders and perpetuator-. of the great fortunes had their good qualities?" The question is arrant superfluity; so they have had and have. But do the good people who are so solicitous on thi- score ever think of making the same interrogatory as to the hundreds of thousands of slum dwellers, or of the 50,000 (or so) convicts in the United States? Is any consideration or extenuation demanded for them.' For the poor, the wretched, the degraded everywhere? And yet the crimes for which petty malefactors are punished are not a thousandfold as criminal as those committed by the founders and holders of wealth ; even solitary murder lapses far into insignificance compared to the never-ending catalogue of the mass of indirect murder- brought about bv the greed for profit and wealth. All. all. capitalist and slum dweller, convict and multi- millionaire are creatures of the system thus causing greed and vice, poverty and crime -horrid factor- produced by no intrinsic fault in human nature, but by the im- petus, provocations and results of that system. All, all have infinite capacitv for good, were it but given favor- able environment to develop: the wonder can be ex- pressed that under such a blighting system so much good does exist. And those magnates who, in their pomp and vainglory, think that they rule force? creature-!) oulv the instruments of lorces. of this tumult, this rushirg and tramplim working Purpose, moving forward with a 3-\ 18, 124-125. 148, 202; prosecution of. Vol. 111:37-38, 342-340. American Railway L'nion Vol. 1 : 282. American L'nion Telegraph Company Vol. Il!:Si Ames. (Jakes Vol. [1:360-361, 304. 366; Vol. I II: in. Anthony. Judge J. B.. cited Vol. II: 251 -252. Apprentice labor law Vol. 1:77. Arizona, ^reut land frauds in Vol. fl : 84-8*; ; Vol. 111:323. Arkansas, land fraud- in Vol. 11:41. Armor frauds Vol. (11:253-254. Armour, J. Ogden Vol. 1 : 290. Army supplies scandals Vol. 1 : 261 : Vol. 11:293-297. Arthur. President Chester A. Vol. 11:342. Astor. John Jacob (founder of the fortune') -Vol. 1:40. 65. (8; has the free use of five million- of Government fund-. Vol. I : 80 ; ul-o ()-. ico; inception of fortune. Vol. liioij- [12: debauching and swindling of Indian tribe-. Vol. I: 112-123: hi- enormous profits, Vol. I: 124: hi- corruption of officials. Vol. I: t-5 : Hfr in Xew York. Vol. 1: 126: im- nnmitv from puni-hment. Vol 1:127-128; use of Goveri 396 INDEX becomes America's richest man. Vol. 1:194-197; death, Vol. 1:198-199; also Vol. 1:242-243, 245, 258; how he caused Government officials to be dismissed from office, Vol 1 1 : 84 ; also Vol. 11:286; Vol. 111:37-38, 103, 167; further details of his debauching and swindling of Indians. Vol. 111:342- 349- Astor, John Jacob II Vol. 1:224, 233, 234. Astor, John Jacob, Jr., (son of William B.) Vol. 1 : 209, 212; Vol. II: 151; Vol. III:8i. Astor, John Jacob, (son of William) Vol. I : 234, 240, 251 ; Vol. 111:274- Astor, \\ illiam Vol. I : 224, 225, 229, 233-234. Astor, Mrs. William Vol. 1:239. Astor, William Waldorf Vol. I: 220-221, 234, 240-241. Atkinson, Henry M. Vol. 11:88. Bacon's Rebellion Vol. 1 : 27. Baer, George F. Vol. 11:254. Bailey, Dr. M. J., cited Vol. II : 290. Baltimore and Ohio Railroad Vol. 11:203-204: Vol. III:ii8- 123. Ballinger, Richard S. Vol. II : 47. Bank of America Vol. I: 162, 165. Bank frauds and corruption Vol. 1:89, 161-163; Vol. 11:29. 300; Vol. Ill: 183-189. Bank of New York Vol. I: 160, 254. Bank of the United States- Vol. 1:86; extensive bribery by, Vol. 1:88-89, 160, 193, 194, 243, 244; Vol. 11:29. Barber, James D. Vol. II: 321. Barbour, James Vol. I: 115. Baring Brothers Vol. 1:86. Barlow. General Francis C. Vol. 11:315. Barnard. Judge George C. Vol. 11:307-309. 315. Barrett, Walter, cited Vol. 1:66, 78, 80, 109/246. Bayard. Nicholas, obtain.-; arreat estate by bribery Vol I 33 Bayly, Thomas H. Vol. 111:28-29. Beach, Moses Yale Vol. I : 195. Beaubin and Miranda land grant Vol. II: 84-^5. ! ellamy. Captain, sea pirate Vol. I : 150. eilnmont. Farl of Vol. 1:28; attempted bribery of. Vol. I: 20-30: expo-es corrupt grants. Vol. I: ^2-34, 36; also, Vol. I : =52, 14. ! Hmont, August Vol. Ill: 189, 222. 274. niton. Thomas Vol. I: 12", i ;o. iddle, Nicholas --Vol. 1:244: Vol. TIT: 18^-186. Big Four" Railroad Vol. !I : 243. in'jhatn, [ohn Vol. I : 14.}. 147. fMieim and Gold.-cliniid! - Vol III 186 - Bbi-k Friday " Vol. M : ^25. U3 ^36 i iaine. Fan - G. Vnl II : '_>: Vol.' Ill : 43. Vol, 111 : 102, i i I. INDEX 397 Blair, Jolin I. Vol. 11:357, }6o ; Vol. Ill: 102-119. Blair. John T. Vol. Ill: Hi. Blake. Luther, cited Vol. I : 133. Bonded laborers Vol. J : 50-5 J, 77. Booth, Governor Newton, cited Vol. ill : 139. Boston and Albany Railroad Vol. 11:269-270. Bout well, George S. Vol. 11:338-341. Bowne. Robert Vol. 1 : 109. Broadway surface railroad franchise Vol. 11:142-144. Brevoort, Henry Vol. 1 : 196. Brooks, James 'Vol. 11:365. Brooks, Peter Charndon Vol. 1 : 61-62. Brown Brothers and Company Vol. Ill: 50-60. Brown, K. 1). Vol. 1:214. Brown. Nicholas Vol. I : 63. Bryce. James, cited- Vol. 11:217. Buchanan, Thomas Vol. 1:243. Buford, John, cited- Vol. 11: 130. Burgess. Captain Samuel, sea pirate Vol. 1:38, 47, 139, 141. Burr, Aaron Vol. 1: 161, 166-167. Butler, Cy r u s Vo 1 . I : 60-6 r . Butler. Samuel Vol. 1 : 60-61. Cabot. George Vol. I: "-58, 59. Caldwell. Luther Vol. II: 311. California, great land frauds in Vol 11:78, 80, 82-84- Vol Canal land grants fraudulently manipulated Vol. 11:24-27. Calumet and Hecla Mining Company, copper lands obtained by fraud Vol. II : 27. Cameron, Don Vol. 11:297. Canada Southern Railroad Vol. II: 162. Cardelli. Peter Vol. 1 : 137. Carey, Matthew, cited Vol. 1:93. Carnegie. Andrew Vol. 111:253-264. Carter, Robert Vol. 1:40-41. " Ca-h Sales " Act Vol. II : 41-42. Cass. Lewis Vol. I : i 14. 118; evident corruption of, Vol I- 125, 130: Vol. Ill 1346-347. Cassatt, A. J. Vol. 111:95-97. Castellane, Count de Vol. 111:92. Cairo,,. T. R Vol. 11:85. Cedar Rapid- and Mi-'-ouri River Railroad Vol. Ill -114 Ci tral Pacific Railroad Vol. 11:43: Vol. Ill : 128-145. Central Railroad of New Jer-ey Vof 11:245. Chartered Companies in Settlement Times Vol. I: 11. Chase. Salmon P., cited Vol II: 128. 341. Chaves, Ignacio Vol. II : 87. Chesapeake and Ohio ("ana! Company Vol. 11:24. 26; Vo 1 III : 121 -I 22. !-2. 398 INDEX Chemical Bank, frauds of Vol. I: 163, 243, 244, 246. Chicago, Milwaukee and St. Paul Railroad Vol. 111:32, 43. Chicago and Northwestern Railroad Vol. II: 210-211, 323; Vol. Ill : 112, 236. Chicago, Rock Island and Pacific Railroad Vol. Ill 1114. Churchman, Samuel Vol. 11:293-294. Chicago, Burlington and Quincy Railroad Vol. 111:239. Cincinnati, Hamilton and Dayton Railroad Vol. 111:233-235. Civic Federation Vol. 11:246. Civil War corruption Vol. I : 261 ; Vol. 11:127-138, 285, 291- 298, 358-359; Vol. Ill: 135. 150-152, 160-162, 164-1/6. Clapp, Asa Vol. 1:59. Clark, General William Vol. 1 : 120. Clark, William A., U. S. Senator Vol. II : 71. Cleveland, President Grover Vol. 1:283; Vol. 111:1/6, 223- 225, 336. Cleveland and Pittsburg Railroad Vol. 11:285. Clews, Henry Vol. Ill : 61. Clinton, Governor George Vol. 1:152. Clyde. Thomas- Vol. Ill: 161-162. Cloud. D. C, cited Vol. 11:189; Vol. Ill : 151. Coal lands, fraudulent seizure of Vol. 11:32, 42, 46, 47, 83, 251-252, 367: Vol. 111:68. 74-75- 93. 217. Coal Trust Vol. 11:253-254; Vol. 111:216-219. Colder), Cadwallader Vol. 1:26. Collins, E. K. Vol. II: 114-118, 122: Vol. 111:26. Colorado, great land frauds in Vol. II : 80-8 1. 83-89, 367: Vol. Iff : 75, 93. 314. 324-334; Colorado and Southern Railway Company Vol. 111:99. Colt, Samuel Vol. Ill : 25-26. Confiscation, attempts at in Settlement times Vol. 1:37-38. Congress, corruption of Vol. 11:32-47. 298-299, 357-366; Vol. 111:24-33; 45~4 r >, 5 f X>2, 7-2-73- 77. 1 13-115. [ 3'- T 32. 134-136. 320-321, 357. 383. Conkling, Roscoe Vol. 11:176. Connolly, Richard 11. Vol. 1 : 212. 213, 214-216. Consumers' League Vol. 1:271. Cooper. Peter Vol. I : 195. Cope, Thomas Pym Vol. 1:63. Copper deposits, fraudulent seizure of Vol. 1:134: Vol. II: 26-27: Vol. Ill : 307, 324-325, 350-352. 373, 377-383. Copper Oueen Minintr Company Vol. II: ^43. Corbin, A. R. Vol. 11:329-330"; Vol. 111:26. * Corcoran and Ricix r - V"l. 111:27-31, Corcoran, William \\'. Vol. 111:27-31. Corruption at the polS -Vol. I: 191-194; Vo Corning, Rrastus Vol. 1 1 I : 44. Corwin, Robert G.--Voi. 1 H : 30. Corwin, Thoma.- G. Vol. 1 1 1 : 30. 153. INDF.X Cosby, Governor Vol. I : 253. Court of Claims decisions Vol. II : 121-122, 129-130. 137-138; Vol. Ill: 174-17=;. Credit Mobilier Vol. 11:359-366; Vol. 111:77, 114. 115. Crocker, George- \ r ol. 11:360: Vol. Ill: 124-141. Croffut, W. A., cited Vol. II: no, 123, 132, 144. 146, 161, 185, 195. 197. -'i 6. Crooks and Stewart (Astor's agents among Indians) Vol. II: 84: Vol. HI: 345-346. Crosby William B. Vol. I: 195. Crosswell, Kdwin Vol. II: 117. Cunard, Edward Vol. I: 210; Vol. II: 151. Custom-house frauds Vol. 1:134-13;; Vol. IT : 338-330, 342: Vol. Ill: 153-158. Dabney, Morgan and Company Vol. 111:66. Dana. "Charles A. Vol. II : 68" Davidge, William II. Vol. II: 121. Davit's, Thomas E. Vol. IF: 142. Davis. Henry G. Vol. Ill: 312. Davis. Xoah Vol. 11:339. De Beaumont, cited Vol. I : 1/7-170. Debs, Eugene V. Vol. I: 282-283. Debt, imprisonment for Vol. 1:71-73, 81. Delaware and Hudson Railroad Vol. 11:247. 252; Vol 111: 180. Delaware, Lackawanna and Western Railroad Vol. [1:221, 247, 252: Vol. Ill : 104-108. Delaware and Western Railroad- Vol. II: 221. Delins, Godfrey, obtains land grant by fraud Vol. 1:33. .37- Denver Pacific Railroad Vol. 111:71-72. Denver and Rio Grande Railroad Vol. 111:74, o<>-ioo. 328 Denver. Souih Park and Pacific Railroad Vol. Ill: 08-69. Depew, Channcey .M. \"ol. II: 71. 176-178, 220: Vol. Ill: 210. Deposit Act Vol. II : 81, Desert Land Paw Vol. 11:35-37. 30. 46. De- Moine- Xavigation and Railroad Company, bribery by Vol. 1 1 : 209; Vol. Ill : 27. i 13. De Tocqueville, cited Vol. I: 177-170. Dillon. Mm F. Vnl. Ill: 40. 54. Dillon. Sidney- - Vol. Ill : 65. 07-^0. 71. Dixon, Frank 11.. cited Vol. Ill: 117. Dodue. \\'illiam E.-- Vol. I: 211: extensive custom hou-'. 1 frauds -- Vol. II : ^^44. \4< . ?8; also Vol. Hi : Dodge. William E. Jr. Vo] !:nS- customs frauds. Vol. 11: 339 344, 340. Dolan. Thomas Vnl. II : 250. Donuan. Governor \'ol. I: ;_]. loday. ! ieneral Thj ma- D . cited Vol. II : 130. Dougherty. Thomas J. - \"ol. I : 124 4OO JXDF.X Dow, Premiss Vol. 111:38. Draft Act during Civil War Vol. II: 131-132, I) red Scott decision Vol. I : 188. Drew, Daniel Vol. 11:153-154. 303-313. Drew, Wolcott. cited Vol. 11:251. Drexel. Anthony Vol. Ill : 2ig. Drexel, Frank Vol. Ill : 219. Drexel. Morgan and Company Vol. Ill : 189. Dubuque and Sioux City Railroad Vol. Ill: 113-115. Dutch East India Company Vol. I : 15. Dutch \Yest India Company Vol. 1:14-15, 18-19. Eastman, Arthur M. Vol. Ill: 170. Edmonds, John M., cited Vol. 1 : 180. Elections, corrupt ('see corruption at the polls). Elkin?. Stephen B Vol. II : 71, 84-86, 88, 210; Vol. Ill: 29, the narrative of his career, 311-337. Ely. Profe.-sor Richard T., cited Vol. 11:217-218. Equal Rights Party -Vol. I: 174. Equitable Eifc Assurance Society Vol. II: 178: corruption and frauds, Vol. 111:266-2/7, purchase by J. Pierpont Morgan. 306'. Erie Canal Vol. 11:24, 255, 266. Erie Railroad Vol. II: 153, 162, 302-325. 329, 337, 352: Vol. Ill : 121. 231-234. Estancia land grant Vol. 11:87. Evans. Captain R. X., secures land grant by bribery Vol. I : 32-33- Everett, Edward, cited Vol. 1:92. "Exchange of Land Law" Vol. 11:43-46. Farley, Jesse P. Vol. 111:54, 55, 359-368. Farnham and Davenport ( Astor's agents among Indian tribes) Vol. I : 121. Farmers' Alliance Vol. 11:226. 241. Federation of Trades and Labor Lnions Vol. 11:225. Feudal estate Vol. I: 18-21; passing of, 42; continuing con- dition^ of, 45-46: disintegration of. 97-100. Ftudal grants Vol. I: 14-22. 1-Yudal tenuiv- a'loli-hed Vol. 1 : 99-100. Field. Cyrus \Y. Vol. Ill : 82-85. Fit-Id. Henry r c-randso-i of Marshall) Vol. 1:293-29;. Field. Marshall III Vol. 1:293. 29;. Fielden. Samuel Vol. II : 230-234. Fir-t Division. St. Paul and Pacific Railroad Vol. 111:48-56. Fisheries of \~e\v Enirland Vol. 1:52-54. Fi-k. fames Jr.- Vol. 1 1 : ^o:-?^. 366-367; Vol. 111:170-183. Fithian, Philip Vickcrs. Cited Vol. 1:41. Flatrg. Controller Vol. I : 147. JXDIiX 40; Fletcher, British governor, corrupt land grants by Vol. 1:25, 32-34, 38-39. 52, 141, 143, 146. Florida, land frauds in Vol. 11:41-42. Foord, John, cited Vol. 11: 161. Forest Reservation Bill Vol. 11:45. Forsyth, Thomas, cited Vol. I: 120-122. Franklin. Benjamin Vol. 1:43. Frauds in import duties (see custom house frauds). Fraudulent substitution in trade Vol. 1 : 66-67 : Vol. II : 164- 166, 289-291; Vol. 1 1 1 : 207-208. Frick. I lenry C. \"ol. 111:95, 255, 274. Gardiner. George 11. Vol. Ill: 20-31. (iaresche. V. .M., cited --Vol. I: 132. Garfield, President James A. Vol. 11:362; Vol. 111:43- Garfiekl. James R. (son of precedine. and Secretary of the Interior ) Vol. 1 I : 47. Garrett, John \Y.. an outline of his career Vol III: 118-122. Garrett, Robert, son of preceding Vol. II: 203-216; Vol. Ill: 123. Garrison, William Lloyd Vol. 1:225. George. Henry Vol. 11:235. 230. Georgia, land frauds in Vol. 1:133-134; Vol. 11: 17. Georgia Mississippi Land Company Vol. II : 17. Girard, Jean Vol. 1:8;, Girard. Stephen Vol. 1:66. 68. 82-02, 257. Goddard. Luther M. Vol. 1 1 1 : 99-100. Goelet estate Vol. 1 : 107, 148, 105, 224. (ioelet. Jacobus Vol. 1:242. Goelet. Ogden Vol. 1:247-248. Goelet, Peter Vol. I: 212, 242. 243-244. 246. Goelet, Peter P. V<>!. I : 07. 100. 14;,. 164, 245. 244. 246. (ioelet, Robert Vol. 1: 104, 247. 248. Goelet, Robert R. Vol. 1:24^-244. 24'). Goelet, Robert Walton Vol. I : 251. Gold Conspiracy "- - Vol. 11 : 326-^327. Gon/ales, Salvador Vol. 11:86-87. Goodchild, Rev. F. M.. cited - - Vol. 1:272. ( loodyear, Charles - V i. 274. Gould. Jay (founder of the fortune) Vol. 11:69, 154-150. iSo. 180. 205: t lu- narrati' n of In- career, j^i-.rS; hi< career further described in \~ ' . [11:5657, 62 04, . 100, 1^8. 1.13: hi- content \vith I Pierpotu Morgan. Vol. Ill: 170-18;. Gram. Pre-ident LMyWs S. Vol. II: 3^)-.^: Vol. Ill .-26. Grav. \\';'' : M - Vof. i : oj. 4O2 IXDKX Grazing lands, fraudulent seizure of Vol. 11:36-37, 78-91. Great Northern Railroad Vol. II: 71, 343; Vol. Ill : 239, 368. 370, .#6-388. Grceley, Horace Vol. I : 181 ; \'ol. Ill: 160. Green, Andrew F. Vol. 1:213. Crimes, L'. S. Senator, cited Vol. 11: 134-137. Guilbert, Charles 11. Vol. 11:257. Gnggenheims, The Vol. II: 71: Vol. 111:308-309. TTaight, Governor H. !!., cited Vol. Ill: 138. Hale. I'nited States Senator, cited Vol. if: 135. Hamilton, Alexander Vol. I : 168. Hamilton, Andrew, lobbyist Vol. Ill: : 271. Hammond's "Political History of the State of New York." cited Vol. I : 162-163. Hancock, John Vol. I : =57. Harriman. Edward H. Vol. [ : 251 ; Vol. 11:277-278, 281; Vol. Ill :f>4, 73, 76. 95. IT.> 144- 234, 238-243, 246, 269. Hartley, Marcellus Vol. II : 295 ; Vol. 111:168-169. Harvier. Krnest. cited Vol. 11:26;. Hatzfeld. Prince Vol. Ill : 144. Havemeyers, The Vol. II: 95: Vol. 111:227-228. Hearst. George Vol. If: 71. Howes. Joseph V<>1. [ : ^7. Hewitt. Abram S. Vol. Tl : 258. Hicks, Russell P. Vol. II : 311. Hill, James J. Vol. 1 1 1 : =;6, 93. 238-243; his career in full, 338-388. Hoffman'- "Stale and Ri^ht^ of the Corporation of New York," cited Vol. I : 167. Holmes, J. A., cited Vol. I : 294. Holt, Joseph, cited Vol. II : 181 ; Vol. Ill: 167. 173. Hopkins Edward C Vol. 111:48-49. Hopkin>, [ohti Vol. Ill : 118-123. Hopkins, Mark Vol. HI : 124-141. Houghton. Walter R., cited Vol. 1:84-8;. 87, 132-133. 2^. 256, 284: Vol. Ill : 26. Howard, J. H., cited Vol. I : 133. Hud-on River Railroad Vol. II : I.s6-r6i ilu^he.-. Andrew, cited Vol. I: 118-110. I I mn, Washington -Vol. HI : 4^. Ihmtington, Coll is P. Vol. H:i8o. 360; Vol. TIT 7, St. 91. 93: the narrative of hi- career. Vol. HI: 124-144. IXDliX 403 Indians, debauching and drefrauding of Vol. 1 : 48-49, 5-!- [32-134; Vol. [1:84; Y o! - HI: 167. 342-350. Industrial " Accidents " Vol. 1:294; Vol. 11:23^, 2/1-2/2; Vol. Ill : i y;, 284-285. InduMrial Commission (U. S.), cited -Vol. 1 : 271 ; Vol. Ill: 64-65. 232-233. 1 nsurance frauds Vol. Ill : 266-280. International Prison Association Vol. II: 167. Interstate Commerce Commission Vol. II: 250, 252, 256, 271- 272: Vol. Ill : 74-76. Inventors, defrauding of Vol. I: 132, i^ ; Vol. II: 180-181: Vol. Ill: 165-166. lo\va (Yntral Air Line Vol. 111:114-115. Iowa Constitutional Convention of 1857 Vol. II .'31. Iowa, great land frauds in -Vol. 11:299; Vol. 111:27, 58, 109-1 15. Iowa, legislative bribery Vol. II: 31; Vol. ill: 110-117. Iron deposits, fraudulent securing of Vol. 11:^2-^, 41-42; Vol. Ill: 75, 202, 377-38.3. Irons, Martin Vol. 111:89. Irwin, Richard R Vol. 111:62. Irwin. Matthew, cited Vol. 1:112-113. 119; Vol. 111:343. Ivins. \ViIIiam X. Vol. 1:231. . - Jrfferson. Thomas Vol. 1:42, 193. lYrome, William "I'ravers \'ol. 111:276. 204. Jesun, Morris K. Vol. Ill: no. [onnson, Henry, I'. S. Senator -- Vol. I: no; Vol. Ill- ^4 \ Johnson, Henry C Vol. 11 : 344. Jordan. IvKvin \'ol. Ill: 154-155. Judiciary, corrupt ion of Vol. I: iS8-iS'j. 283; \'<'\ 11:307-30). 153; Vol. [11:76 77, S.j-S;. 05, <>> -no. ^ Julian,' George \V.. cited - Vol. II :X8; Vol 111 : 332 .^33. justice, 1'bilip S. Vol. 11: 129-130. Ki-rcns. Richard C.- Vol. Ill : ^35, Kidd. Captain U'illiam. sea-piratV Vnl [ r. =2 Kinkbead, Govi-nu.r John I!., cited - Vol. [11: '130 Kipp. Solomon, bribr- New \"ork City C'ommon Council \' II: 140. 404 IXDF.X Labor I 'arty- Vol. 11:237-240. Labor .Movement of 1886 Vol. 11:224-241. Lac La Belle Ship Canal Company Vol. 11:25. LaCrosse and Milwaukee Railroad Vol. 111:31-43, 57. LaFollette, Robert M., U. S. Senator, cited Vol. 111:277, 289, 295-296. Lake Shore Railroad Vol. II: 162, 170, 266-268. Land, corrupt obtaining of in Settlement times Vol. 1:25, 28-39. Land frauds Vol. I: 120, 132-133; Vol. 11:17-49, 78-91, 251- 252, 298-299, 301, 354-368; Vol. 111:24-25, 32-38, 66, 75. 77, 167, 314-334. 3.50-357. 377-383.. Land grants, corrupt securing of Vol. 1:25, 28-39, 132-133; Vol. II: 17-18, 19-22. 26-27, 32-49. 63-64, 77-91, 356, 358- 359, 361-362; Vol. 111:24-25. 32-38, 66, 77, 109-116, 131-138, I: 23-41. -Vol. Ill: 115-116. 117, 141-144- 57- I : 49- Lehigh Car Manufacturing Company Vol. III:-:. Leiter, Levi Z. Vol. 1:259-261. l.-ui^lative corruption Vol. 1:89, 141, 181, 209-211, 245; Vol. I I : 2(>, 30-32. 132. 142. 146-147, 149. 155-160, 202, 204, 264, 269. 310-317, 321-322, 350; Vol. II I: 19. 32-42, 46-51. 72-73. 82-83, 05- 9-6-1)7, 99-100. 106-108, 120-122, 128-131. 162-164. 217-218. 256, 2/0-273. 3i;.j. Lehigh Valley Railroad Vol. 11:245, 252. Lenox, Robert Vol. 1 : 148. Leupp, Charles M. Vol. 11:284. Lewis, Francis Vol. I : 57. " Lexow Committee'' Vol. II : 350. l.imantour. Jose (great land grant) Vol. 11:78; Vol. Ill: 320. Lincoln. Abraham Vol. II : 132. Lincoln, Robert T. Vol. 1:279. Lindsay, Judge Men B., cited Vol. ITT: 99-100. Lewis _ V<>1. 11 : 230-234. num. Mcnianiin F., cited Vol. 1:132: Vol. IT : 21. -pcnard. Anthony Vol. I : 168. estate Vol. I : ar [of ! lealth. cited Vol. '. : 218-220. 1 1 d ' - ' ' I ' : a 1 i ' : ' . \ "nl . 11 : 2 : . 406 IXDKX Milton, Colonel John, cited Vol. 1: 133. Milwaukee and Horicon Railroad Vol. 111:43. Milwaukee and Superior Railroad Company Vol. Ill : 36-37. Mineral lands, fraudulent seizure of Vol. 1:134; Vol. 11:26- 27, 32-33, 41-48, 80-83: Vol. Ill: 31 1-337, 350-352. 377-383. Minnesota, land frauds in Vol. 11:83; Vol. 111:24-25, 44-56, 352-356. and Northwestern Railroad Company Vol. Ill: 357-372. Vol. Ill: 79-80, 88. 1 1 : 246. 111:75. 1:279; Vol. 11:243, 278-279; Vol. Ill : loo. 234, 249-250, 374. Montana, land frauds in Vol. 11:83; Vol. 111:377-383. 313; Vol. 111:64, 66, 81, 91, 93, 146-149, his career. 169- 310. Morgan, junius S. Vol. Ill: 149-151. death of, 214. Morris and Essex Railroad Vol. Ill: 105-107. Morris, Kdwanl Vol. I : 290. Morris, Mary Vol. 1: 139. Morris, Robert Vol. I : 57. Morris, Roger Vol. I: 139. Mortier, Abraham Vol. 1:167-168. Morse, Charles W. Vol. 111:292-297. Morse, George W. Vol. Ill : 166. Morton, liliss and Company Vol. 11:360-361. Morton, Levi P. Vol. 11:361. Mutual Life Insurance Company corruption and frauds Vol. Ill: 266-276. National Greenback Labor Party Vol.. II: 91. Xavarro, Jose K Vol. Ill : 83. Xavy ScandaN (bad supplies and equipment) Vol. II: 114: 118-119. 126-127, 134-137, 292-294. Xeebe, Oscar Vol. I I : 2 30-2 U- Xewbold. Governor J. G., cited Vol. Ill: no. Xew Hngland Company, The Vol. I : 24. \"ew Hampshire, claimed by Samuel Allen Vol. 1:29-30. Xew Jersey Central Railroad Vol. Ill: 71. Xew (crsey Transportation Company Vol. Ill: 107. Xew Mexico, great land frauds in Vol. IT: 83-89; Vol. Ill: , ; " ! 335- ',-,: York and 1 [arlain Railroad Vol. I:2IO; Vol. II : 138 I 1"; 174- (<>7- .:,: Yurk Central Railroad \'ol. 1:209-211, 251: Vol. H: [48 152, 192, 206. 243, 248. 256, 261-270, 277-278; Vol. ITT: 407 N T c\v York City municipal land, corrupt obtaining of Vol. I: 143-150. 211-213, 252: Vol. II : 26 1 -263. Xew York Constitutional Convention of 1846, cited Vol. I: IOO. Xew York and Xew England Railroad Vol. 11:250-251. Xew York City elevated railroads franchises obtained by evi- dent corruption Vol. 1 i [ : ^3-84. New York Life Insurance Company, corruption frav Is Vol. Ill: 2( .6-276. New York, Xew Haven and Hartford Railroad Vol. H: 248-250. Xeu York, Ontario and Western Railroad Vol. IF: 252. Xew York. Susnuehanna and Western Railroad Vol. 111:232. Nichols, Harry P.. cited Vol. 11:263. Xicholson. John Vol. II : 251. Nolan, Gervacio. 'and grant Vol. 11:86, 89. Norfolk and Western Railroad Vol. 11:256. Northern Pacific Railroad Vol. 11:43. 46, 343; Vol. 111:51, 230-241. 3747^88. Northern Securities Company Vol. Ill: 241. Ohio, extensive land frauds in Vol. 11: in. Ohio Constitutional Convention of 1850-51 Vol. ! I : 30. Ohio Land Company ----- Vol. II: in. Old Dominion Mining Company Vol. 11:343. Oregon, great land frauds in Vol. 11 : 82. (TRourke, Matthew [. Vol. 1:213. Owen. Robert Dale Vol. 1:225: Vol. II 1:167. Pacific Mail Steamship Company (blackmailed by Commodore Yanderliih, and mail subsidies secured by bribery") Vol. 1! : ri7 121 : Vnl. HI: 50-62. 187. Paint.', Thomas Vol. 1:42. Palmer. Potter Vol. I : 201. Pan-Electric Scandal Vol. Ill: 11/0-201. Parsons, \lberi R. Vol. [I:.'3O, 234. 1'arsons Frank, cited --Vol. 1:250. 283-284; Vol. 11:44, 208- 200. r 'arlianient. Uritish. enact* laws auain-4 American colonies Vol. I : 55-56. Parti ni, lame-;, cited- -vol. I : tou. 108.. Patents, "theft of- - \"ul. 1 : 132, 14=; Vol. It:t8o-l8i; Y 165 -]()(>. !'. roons, the \"o!. [-.14, 16-22: powers of. Vol. i : decline of their estates. Vol. I : 07-100. ,;i. !"-< pii Mcdill. riled - Vol. I : ._>o 205. I 1 UT-OII T M.. ; ' < Senator - - Vnl [II : ino! 1 ' !y. - k'org. V..1. I : 50. '.. (ieoi'L! ...... Juniu Mornan) Vol. ill: 140- 408 IXUEX Pennsylvania Coal Company Vol. 111:231-233. Pennsylvania, land frauds in Vol. 11:251-252. Pennsylvania Railroad Vol. II: 208-210, 243, 256; Vol. Ill: 95-98. 123. 256-257. Perkins. George W. Vol. 111:266-26;. 270. 274. Perkins, Thomas Handasyd Vol. 1:02. Pettigrcu-. U. S. Senator, cited Vol. II: 4=1-46 : Vol. Ill: 572- 373- 382-383. Phelps, Dodge and Company Vol. 11:337-344: Vol. Ill: 50, 1 53- Phelps, George D. Vol. 111:105-109. Phelps, John J Vol. Ill: 105. Phillips. Adolphus (son of Frederick) Vol. 1:38, 139. 141. Phillips. Frederick, (backer and employer of the pirate Bur- gess. I Vol. I : 38. 141. 142. Phillips. William A., cited Vol. 11:34. 93- Pierce, President Franklin \"ol. 111:44. Pinchot, Gifford Vol. H : 47 : Vol. 111:307. Pinkerton detectives Vol. 11:228-229. Piracy of literary work Vol. 1:135-136. " Pittsburu Survey" The. cited -Vol. 111:282-28=;. Platt, Thomas C Vol. II: 71. Plymouth Colony Vol. 1:24-51. Po'e. Edgar Allan Vol. 1:225." Pomeroy. I". S. senator, cited Vol. 11:357. Poor's "Railroad Manual." cited Vol. lll:iii. 180. Portage Lake and Lake Superior Ship Canal Company Vol. II: 25. Postal Department, looting of by railroads Vol. II : 202-203. Powell, F. W., cited Vol. 111:22. Pratt. Zadoc Vol. 11:283-284. Prison Association of New York Vol. I: 181. Prison and penitentiary system Vol. 1:177-181. Privateering, fortunes from Vol. 1 : 57-5^. Property qualifications for voters Vol. 1:69-70, 190-101. Pro>titmi< >n Vol. I : 269-272. Pulitzer, fo-eph Vol. Ill : 90. Pullman Company, The Vol. 1:278-28;. 295; Vol. 11:277. Pullman. George AL Vol. 1:279; Vol. II ^250. 500-361: Vol [11:83-84. Purely. Fliiah. Vol. II: 141. Railroad <-orruption \'ol. 1:250-251. 276: Vol. 11:30-47. 141- M2. T 4'--i-i, T~4-i6r, 173-174, (76-179, 197, 201-26=;. 267- 26-1. " ' 300. 302-323. 3.^-- 367; V.'.l. 111:24-31. 32-38! 45-46. '... '.: 73, 7". 97 I no, 105 !(X; : ''' 122. 128-132, 134 I -' . 1 fiolx ri - - VoL '\\ ':(>--. ' . r:-,: 1 :):td Vol. II : 6;: Vo'. Ill : 220 INDKX Roam. Xorman B. Vol. 1 : 279. Rensselaer. txiliaen Van Vol. 1 : 18. Rensselacr, Stephen Van (one of the last patroons) VoL 1:44, 9-8. Rhinelandcr estate Vol. I: 106. 14.?, 224. Rhinelander, Frederick \"ol. 1 . : 145, 242, 252. Rliinelandcr, \\'illiam Vol. 1:145-146, 242. 252-253. Rhinelandcr. William C. Vol. 1 : 212, 213, 253. Rice, L T . S. Senator, cited Vol. 11:358. Ridyeway, Jacob Vol. 1 : 196. Roberts, Charles C Vol 11:296. Roberts, Marshall O. Vol. 1:214-215; Vol. II: 117-118, 121- 122, 292-293: Vol. Ill : 160-161, 322. Roberts, Dr. Peter, cited Vol. 11:255. Rochefoucault Liancourt, Duke de. cited Vol. Ill: 158. Rockefeller. John I). Vol. II : 96, 199. 210; Vol. 111:94-95, -246. 2^0. 2^4-2^6. Rockefeller. William Vol. TT:2io: Vol. Ill : 94-95. 246. Romaine, Benjamin Vol. I : 143, 144, 243 Roosevelt, Jamt-; Vol. I: 148. Roosevelt, 'President Theodore Vol. 1 : 216. 258: Vol. 11:46, 7^. 2^8: Vol. 111:246-248. 20/>-}oo. Root. Elihu Vol. I :_>] 5: Vol. 111:248. Rosser, I. Travis Vol. "ill: 24. Russell, Charles Edward, cited Vol. Ill: 386. Russell. Thomas Vol. 1 : 60. Rothschilds, the Vol. Ill : 189. Rutgers Anthony Vol. 1:253. Rutgers, _!"hn Vol. 1:253. Rutland and Wa^hin.trton Railroad Vol. 11:285. Ryan, Thoma< F. Vol. 111:277. 306. . Sajjan. Prince de Vol. 111:92. Sage, Russell Vol. IT: 360, 367, 368: Vol. Ill: 11-70. 7.5-86 oi, 103. 138. Sand ford, (ieiitral J. \\'. A., cited Vol. 1 : 133. Sanurede. Christo, (land urant > Vol. 11:87, 80. Schell, Edward Vol. \: 214-313. Schermerhorn, Peter Vol. 1:254. Schermerhorn. William C. \"ol. I : 202. Schermerhorn?, the Vol. 1: 143, 148. 224, 2V\ 242, 2-4 Schiff. Jacob IT. Vn!. ill: 274. Sclml arth, C. ! '.-- Vol. Ill : if>6. : ; ] uyler, (Jeoroe \\ .. cited Vol. [ : 34. Sciin\ier, Pe'.er, secure.- estate by bribery \ r <>\. f : 33, ^7. - ' ' b, Charles M. V->1. Ill ^253 -'54.' . o 2- : b. O-car- V..I. 1 1 : 230 234' : . Thoma< K.~ \"ol 'T 180-2^,7 : \'--'. ':!;'. ?-. 41 I.NUKX Seli^man Brothers, J. and \\". \"ol. Ill: 189. Sharp. Jacob Vol. II : 141 : Vol. 111:83, 222. Shearman, Thomas G., cited Vol. I : 107 : Vol. 11:98 Sherman, John Vol. II : 301 : Vol. III:i88. Shippers, free use of Government money Vol. 1:79. 81. 129. Sioux City and St. Paul Railroad Vol. 111:58. 110-113. Sioux City Railroad Contracting Company Vol. Ill: 115. Sistare, George K. Vol. 1:214. Slavery, black, introduction of Vol. I : 12. 13; conditions of. Vol. 1:179-180: extension of, Vol. II: 3^4; slave traffic, Vol. Ill: 158-160. Sloan. Samuel Vol. Ill: 182, 210. Sloo, Albert G. Vol. II: 1 17-121. Shmis Vol. 1:218-220. 240, 268-269: Vol. 11:56-57. Smith, Alexander Donald Vol. 111:361-368. Smith, Henry M. Vol. II : 323. Smith, Matthew L.. cited Vol. I : 168. 203. Smith, Colonel William Vol. 1:33- 38. 39-40. Smith. Thomas H. Vol. I : 80. Smith, A. D. and J. Y. Vol. Ill: 160. Snelling, Colonel J.. cited Vol. 1:115-116. Snow, Ambrose Vol. II: 135. Snyder, Carl, cited Vol. 11:252. Society for the Prevention of Pauperi.-m Vol. I : 73, 76. Southard. T. J. Vol. II: 133, 135. 137. Southern Pacific Railroad Vol. 11:43. 355: Vol. Ill: 134, 144- 145. South Pennsylvania Railroad Vol. II: 208-210. Spahr, Charles B., cited Vol. I : 290 ; Vol. 11:245. -?7'- Spark-, William A. J., U. S. Land Commissioner, cited Vol. 11:26, 33. 37. 42. 49, 80-83. 89; Vol. 111:326. Speycr. Jam-. Vol. 111:222. Spies, Augu-t Vol. II : 252. Standard Oil Company Vol. 11:27. 53- 74. 08. 100. 199-201, 242, 259. 276. 277-278; Vol. 111:94-95, 125. M4-I45. 197. 240, 248. 261, 290, 295. 298. Stanford, Leland Vol. II : 71, 360: hi- career de-cribed. \'> ' HI: 124-143. Statiton, V. S. Secretary of \\ ar Vol. II: 132. Stead. William T., cited Vol. 1:271. Steel Trust Vol. Ill : 25^-265, 279-286. Strenwyck, Conieliu- Vol. 1 : 47. Stein, Augustus, cited Vol. II : 322. Sterne, Simon, cited Vol. II: iu>-i6i. m. Frmoi- Lynde Vol. 111:222-223. ven. George Vol. Ill: v.i ! rl C-ard V Vol. ' - von". Simon Vol. Ill : ..-:!-, i 'Hah. cited Vo] ,\ard. Ira. cited Vol. II : 219. ; r ,l. r,jhn_Vol. 1 : 210: Vol. 11 : i-i. IXUIiX 411 Stewart, A. T. Vol. I: 195, 318. Stokes, Anson Phclps Vol. 11:339. Stokes, James Vol. 11:336. Stokes, J. G. Phelps Vol. 11:346. Stokes, Thomas Vol. II : 339. Stone and Timber Act Vol. 11:30-40, 46. Strikes Vol. 1:282-284; Vol. 11:55, 56, 59, 61, 64-65, 203-204, 227-230, 272-273; Vol. 111:88-39. 122. 247-248, 254, 384-385. Suffrage, struggle for manhood -Vol. 1:190-191. Sugar Trust Vol. 11:74, 242, colossal import frauds, 34(1- 347 ; Vol. Ill : 227, 228. Supreme Court of the United States decisions Vol. 1 : 188 ; Vol. II : 1 8, 32-33, 37, 122, 138, 365; Vol. I II: 15-18, 39-42, 75. 93. 241, 315-318. 330, 356, 370'. 377- Swartwout, Samuel, his enormous defalcation \ ol. 1:75- Swinton, John Vol. 11:349. Tammany Hall Vol. 1:144, 211-21(1, 252; Vol. 11:237-240, Tammany Hall. "History of," cited Vol. I: 141, 216; Vol. II: n, 159; Vol. Ill :25. Taney, Roger B. Vol. 1 : 188. Taylor, Jacob Vol. 1:149. Taylor, Moses Vol. 1:195, 214. Taxation, evasion of Vol. 1:184-187, 231-232, 288-289: Vol. ll:22O-22i, 27^: Vol. Ill: 61, no, 209-210. Teller, Henry M.. cited Vol. 11:35; Vol. HI: too. Tenement houses in New York City Vol. I : 218-222, 240. Tennes>ee Coal and Iron Company Vol. 111:262, 298-301. Tenth National P>ank Vol. (1:331. Texas. land frauds in Vol. 11:90-91. 354-355; Vol. Ill: 208. Texas Pacific Railroad Vol. 111:77-78, 134-136. Thorndike, Israel Vol. 1:58. Tierra Amarilla land grant Vol. 11:87. Tilden. Samuel J. Vol. 111:43, 48. Timber lands, fraudulent securing of Vol. 1:28-38. 132-134; Vol. II:i7-22. 32-33, 42. 30-49, 78-91. 358-359: Vol. HI: 314-334, 35^-357- Tipton, General, seizure of liquor from A>tor's American Fur Company Vol. I : 1 17. Tobacco Trust 'Vol. II : 74. Toombs, I". S, Senator, cited Vol. 11: 113, 110-118. Tracy. Nathaniel Vol. 1:58. Trading class, -pringing up of Vol. I Trinity Church or Corporation Vol. 2; }. Troy';' ' S -henectady Railroad Vol. I'wt d "Ring" \"ni 1 : i ;S. 211-216; voi, n:<;, i ?^ r s- ! 7- -\M-3T r >. Tweed, \Villiam M. \ ol. (1 : 144. 158. 173, 314-316. 4*-2 INDEX Union Pacific Railroad Vol. II: 33-34, 41, 43, 351-368; Vol III : 63-76. _ 79, 80. 109. L'nion Bank of Maryland Vol. I: 188. United States Mail Steamship Company Vol. II: 117-121. United States Bank (see Bank of the United States). U.-her, John Vol. I: 31. United States Shipbuilding Company Vol. Ill: 260-261. Van r.urcn, Martin Vol. 11:66. Vanderbilt, Alfred G. Vol. 11:275-276; Vol. 111:274. \\nderbilt, Consuelo Vol. 11:274. Vanderbilt, Cornelius (founder of fortune) Vol. 1:9", H&- 195, 210-211, 251; Vol. II:io5-ii2; his large blackmailing transactions. Vol. II: : 113-122, 123; his methods during the Civil War, Vol. 11:132-137: goes into railroads. Vol. II: 141-152; acquirement of railroads and corruption of legis- latures. Vol. 11:153-163. 164-194; his death. Vol. II : 194- 195. also Vol. 11:203, 278. 280, 286-287. 292. 304-312, 317- 319: Vol. 111:26-27. 103. 121. 124. 1 60, 181. Vanderbilt, Cornelius (grandson of the founder) Vol. II: 98. 223-224. 243-280. Vanderbilt, Cornelius Jeremiah (son of the founder) Vol. II: i 94- {95- Vanderbilt, Cornelius (great grandson of the founder) Vol. 1 : 251 ; Vol. II : 95-98, 275, 276. Vanderbilt. Frederick W. Vol. 11:98. Vanderbilt. Gladys Vol. 11:274-275. Vanderbilt. William II. (son and chief heir of founder) Vol. IT:i95-222. 247, 278; Vol. III:8o-8i, 86, 123, 124, 191, 193-194. 215-216. Vanderbilt, William K. (grandson of founder) Vol. 11:98. 99, 223-224. 243. 280. 238-243. Vanderbilt, William K.. Jr. Vol. 11:277. Vanderbilt, Reginald Vol. 11:27;. Van Oss, cited Vol. II : 208. Van \Yyck, C. H.. U. S. Senator, ciled Vol. II : 128, 294, 340. Vilas, U. S. Po.-tma-ier-General. cited Vol. 1 1 : 202. Villard. Henry Vol. 111:375-376, 381. Visayan Railroad Vol. 11:277. Waha.-h and Erie Canal Company Vol. II : 2;. \Vahash Railroad Vol. 111:78-79. 9;. 98. Wallace, J. W. cited Vol. II: 128. \Vanamaker. John- Vol. II: 202. 250. Warren Railroad Vol. Ill: 105-108. Washington. George, landed estate ' f -Vol. 1:43. \Va-hiriL'!on. State of. ereat land frauds in Vol. I Vol'. [IF : 374-383. Weaver. Gen. ml, cited Vol. II: 91 Webb. W. I -I - Vol. I: 148 I.XDKX 413 Western Union Telegraph Company Vol. F:2Si; Vol. Ill : 80- 82, 90, 98. Westminster, Duke of Vol. 1:240. \Yest Shore Railroad \"ol. 1 1 : 207-208. Wetmore, Prosper Vol. I : 181 ; Vol. IF: 117-118. "Wilson Committee " Vol. 11:358; Vol. 111:114-115. Wilson, U. S. Senator Vol. I!:35V3T> Whitney, Asa Vol. Ill: 164. Whitney, Eli Vol. 1:62. 132. Whitney, Harry Payne Vol. 11:276. Whitney, William C. Vol. II: 176, 210, 276. Williams, Alexander S. Vol. 11: ^o. Williams, J. I), and M. Vol. HI: 155-158. Wisconsin, land frauds in Vol. 1:134; Vol. 111:32-38. Wisconsin, bribery in Vol. Ill: ^2-38. Wilson, R. T. Vol. 11:2/6. Working-men's Party, The Vol. 1:171-174; Vol. 11:68. 236: Vol. Ill: 184. Wright. Carroll D.. cited Vol. 1:282: Vol. IT: 182, 204. 218: Vol. 111:226. Wyoming, land frauds in Vol. 11:83, 367. UNIVERSITY OF CALIFORNIA LIBRARY Los Angeles This book is DUE on the last date stamped below. o ID a 315 L 005 829 721 9 A 001 446010 9