Part 10:History of The Great American Fortunes...The Vanderbilt Fortune Increases Manifold....The Entailing of the Vanderbilt Fortune

HISTORY OF THE GREAT 

AMERICAN FORTUNES
BY GUSTAVUS MYERS

CHAPTER V

THE VANDERBILT FORTUNE 

INCREASES MANIFOLD

Vanderbilt’s ambition was to become the richest man in America.  With three railroads in his possession he now aggressively set out to grasp a fourth — the Erie Railroad.  This was another of the railroads built largely with public money.  The State of New York had contributed $3,000,000, and other valuable donations had been given.

At the very inception of the railroad corruption began.¹  The tradesmen, landowners and bankers who composed the company bribed the Legislature to relinquish the State’s claim, and then looted the railroad with such consummate thoroughness that in order to avert its bankruptcy they were obliged to borrow funds from Daniel Drew.  This man was an imposing financial personage in his day.  Illiterate, unscrupulous, picturesque in his very iniquities, he had once been a drover, and had gone into the steamboat business with Vanderbilt.  He had scraped in wealth partly from that line of traffic, and in part from a succession of buccaneering operations.  His loan remaining unpaid, Drew indemnified himself by taking over, in 1857, by foreclosure, the control of the Erie Railroad.

For the next nine years Drew manipulated the stock at will, sending the price up or down as suited his gambling schemes.  The railroad degenerated until travel upon it became a menace ;  one disaster followed another.  Drew imperturbably continued his manipulation of the stock market, careless of the condition of the road.  At no time was he put to the inconvenience of even being questioned by the public authorities.  On the contrary, the more millions he made the greater grew his prestige and power, the higher his standing in the community.  Ruling society, influenced solely by money standards, saluted him as a successful man who had his millions, and made no fastidious inquiries as to how he got them.  He was a potent man ;  his villainies passed as great astuteness, his devious cunning as marvelous sagacity.

GOULD OVERREACHES VANDERBILT.

Vanderbilt resolved to wrest the Erie Railroad out of Drew’s hands.  By secretly buying its stock he was in a position in 1866 to carry out his designs.  He threw Drew and his directors out, but subsequently realizing Drew’s usefulness, reinstated him upon condition that he be fully pliable to the Vanderbilt interests.  Thereupon Drew brought in as fellow directors two young men, then obscure but of whom the world was to hear much — James Fisk, Jr., and Jay Gould.  The narrative of how these three men formed a coalition against Vanderbilt ;  how they betrayed and then out generaled him at every turn ;  proved themselves of a superior cunning ;  sold him large quantities of spurious stock ;  excelled him in corruption ;  defrauded more than $50,000,000, and succeeded — Gould, at any rate — in keeping most of the plunder — this will be found in detail where it more properly belongs — in the chapter of the Gould fortune describing that part of Gould’s career connected with the Erie Railroad.

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

The year 1868 proved a particularly busy one for Vanderbilt.  He was engaged in a desperately devious struggle with Gould.  In vain did his agents and lobbyists pour out stacks of money to buy legislative votes enough to defeat the bill legalizing Gould’s fraudulent issue of stock.  Members of the Legislature impassively took money from both parties.  Gould personally appeared at Albany with a satchel containing $500,000 in greenbacks which were rapidly distributed.  One Senator, as was disclosed by an investigating committee, accepted $75,000 from Vanderbilt and then $100,000 from Gould, kept both sums,— and voted with the dominant Gould forces.  It was only by means of the numerous civil and criminal writs issued by Vanderbilt judges that the old man contrived to force Gould and his accomplices into paying for the stock fraudulently unloaded upon him.  The best terms that he could get was an unsatisfactory settlement which still left him to bear a loss of about two millions.  The veteran trickster had never before been overreached ;  all his life, except on one occasion,² he had been the successful sharper ;  but he was no match for the more agile and equally sly, corrupt and resourceful Gould.  It took some time for Vanderbilt to realize this ;  and it was only after several costly experiences with Gould, that he could bring himself to admit that he could not hope to outdo Gould.

A NEW CONSOLIDATION PLANNED.

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

The time was ripe for a new mortgage on the labor of that generation and of the generations to follow.  Population was wondrously increasing, and with it trade.  For years the New York Central had been paying a dividend of eight per cent.  But this was only part of the profits.  A law had been passed in 1850 authorizing the Legislature to step in whenever the dividends rose above ten per cent. on the railroad’s actual cost, and to declare what should be done with the surplus.  This law was nothing more or less than a blind to conciliate the people of the State, and let them believe that they would get some returns for the large outlay of public funds advanced to the New York Central.  No returns ever came.  Vanderbilt, and the different groups before him, in control of the road had easily evaded it, just as in every direction the whole capitalist class pushed aside law whenever law conflicted with its aims and interests.  It was the property less only for whom the execution of law was intended.  Profits from the New York Central were far more than eight per cent.;  by perjury and frauds the directors retained sums that should have gone to the State.  Every year they prepared a false account of their revenues and expenditures which they submitted to the State officials ;  they pretended that they annually spent millions of dollars in construction work on the road — work, in reality, never done.³  The money was pocketed by them under this device — a device that has since become a favorite of many railroad and public utility corporations.

Unenforced as it was, this law was nevertheless an obstacle in the way of Vanderbilt’s plans.  Likewise was another, a statute prohibiting both the New York Central Railroad and the Hudson River Railroad from increasing their stock.  To understand why this latter law was passed it is necessary to remember that the middle class — the factory owners, jobbers, retail tradesmen and employing farmers — were everywhere seeking by the power of law to prevent the too great development of corporations.  These, they apprehended, and with reason, would ultimately engulf them and their fortunes and importance.  They knew that each new output of watered stock meant either that the prevailing high freight rates would remain unchanged or would be increased ;  and while all the charges had to be borne finally by the working class, the middle class sought to have an unrestricted market on its own terms.

ALARM OF THE TRADING CLASSES.

It was the opposition of the various groups of this class that Vanderbilt expected and provided against.  He was fully aware that the moment he revealed his plan of consolidation, boards of trade everywhere would rise in their wrath, denounce him, call together mass meetings, insist upon railroad competition and send pretentious, fire breathing delegates to the State Capitol.  Let them thunder, said Vanderbilt placidly.  While they were exploding in eruptions of talk he would concentrate at Albany a mass of silent arguments in the form of money and get the necessary legislative votes, which was all he cared about.

Then ensued one of the many comedies familiar to observers of legislative proceedings.  It was amusing to the sophisticated to see delegations indignantly betake themselves to Albany, submit voluminous briefs which legislators never read, and with immense gravity argue away for hours to committees which had already been bought.  The era was that of the Tweed regime, when the public funds of New York City and State were being looted on a huge scale by the politicians in power, and far more so by the less vulgar but more crafty business classes who spurred Tweed and his confederates on to fresh schemes of spoliation.

Laws were sold at Albany to the highest bidder.  “ It was impossible,” Tweed testified after his downfall, “ to do anything there without paying for it ;  money had to be raised for the passing of bills.”⁴  Decades before this, legislators had been so thoroughly taught by the landowners and bankers how to exchange their votes for cash that now, not only at Albany and Washington, but everywhere in the United States, both legislative and administrative officials haggled in real astute business style for the highest price that they could get.

One noted lobbyist stated in 1868 that for a favorable report on a certain bill before the New York Senate, $5,000 apiece was paid to four members of the committee having it in charge.  On the passage of the bill, a further $5,000 apiece with contingent expenses was added.  In another instance, where but a solitary vote was needed to put a bill through, three Republicans put their figures up to $25,000 each ;  one of them was bought.  About thirty Republicans and Democrats in the New York Legislature organized themselves into a clique (long styled the “ Black Horse Cavalry ”), under the leadership of an energetic lobbyist, with a mutual pledge to vote as directed.⁵  “ Any corporation, however extensive and comprehensive the privileges it asked ”— to quote from “ The History of Tammany Hall “—” and however much oppression it sought to impose upon the people in the line of unjust grants, extortionate rates or monopoly, could convince the Legislature of the righteousness of its request upon ` producing’ the proper sum.”

A LEGALIZED THEFT OF $44,000,000.

One act after another was slipped through the Legislature by Vanderbilt in 1868 and 1869.  On May 20, 1869, Vanderbilt secured, by one bill alone, the right to consolidate railroads, a free grant of franchises, and other rights worth hundreds of millions of dollars, and the right to water stock and bonds to an enormous extent.

 

The printing presses were worked overtime in issuing more than $44,000,000 of watered stock.  The capital stock of the two roads was thus doubled.  Pretending that the railroads embraced in the consolidation had a great surplus on hand, Vanderbilt, instead of distributing this alleged surplus, apportioned the watered stock among the stockholders as a premium.  The story of the surplus was, of course, only a pretense.  Each holder of a $180 share received a certificate for $180 — that is to say, $80 in plunder for every $100 share that he held.⁶  “ Thus,” reported the “ Hepburn Committee ” (the popular name for the New York State Assembly investigating committee of 1879), “as calculated by this expert, $53,507,060 were wrongfully added to the capital stock of these roads.”  Of this sum $44,000,000 was issued in 1869 ;  the remainder in previous years.  “ The only answer made by the roads was that the legislature authorized it,” the committee went on.  “It is proper to remark that the people are quite as much indebted to the venality of the men elected to represent them in the Legislature as to the rapacity of the railroad managers for this state of affairs.”⁷

Despite the fact that the report of the committee recorded that the transaction was piracy, the euphemistic wording of the committee’s statement was characteristic of the reverence shown to the rich and influential, and the sparing of their feelings by the avoidance of harsh language.  “ Wrongfully added ” would have been quickly changed into such inconsiderate terms as theft and robbery had the case been even a trivial one of some ordinary citizen lacking wealth and power.  The facts would have immediately been presented to the proper officials for criminal prosecution.

But not a suggestion was forthcoming of haling Vanderbilt to the criminal bar ;  had it been made, nothing except a farce would have resulted, for the reason that the criminal machinery, while extraordinarily active in hurrying petty lawbreakers to prison, was a part of the political mechanism financed by the big criminals and subservient to them.

“ The $44,000,000,” says Simon Sterne, a noted lawyer who, as counsel for various commercial organizations, unraveled the whole matter before the “Hepburn Committee,” in 1879, “ represented no more labor than it took to print the script.”  It was notorious, he adds, “ that the cost of the consolidated railroads was less than $44,000,000,”⁸  In increasing the stock to $86,000,000 Vanderbilt and his confederates therefore stole the difference between the cost and the maximum of the stock issue.  So great were the profits, both open and concealed, of the consolidated railroads that notwithstanding, as Charles Francis Adams computed, “ $50,000 of absolute water had been poured out for each mile of road between New York and Buffalo,” the market price of the stock at once shot up in 1869 from $75 a share to $120 and then to $200.

And what was Vanderbilt’s share of the $44,000,000 ?  His inveterate panegyric, Croffut, in smoothly defending the transaction gives this illuminating depiction of the joyous event :  “ One night, at midnight, he (Cornelius Vanderbilt) carried away from the office of Horace F. Clark, his son-in-law, $6,000,000 in greenbacks as a part of his share of the profits, and he had $20,000,000 more in new stock.”⁹

By this coup Vanderbilt about doubled his previous wealth.  Scarcely had the mercantile interests recovered from their utter bewilderment at being routed than Vanderbilt, flushed with triumph, swept more railroads into his inventory of possessions.

His process of acquisition was now working with almost automatic ease. First, as we have narrated, he extorted millions of dollars in blackmail.  With these millions he bought, or rather manipulated into his control, one railroad after another, amid an onslaught of bribery and glaring violations of the laws.  Each new million that he seized was an additional resource by which he could bribe and manipulate ;  progressively his power advanced ;  and it became ridiculously easier to get possession of more and more property.  His very name became a terror to those of lesser capital, and the mere threat of pitting his enormous wealth against competitors whom he sought to destroy was generally a sufficient warrant for their surrender.  After his consummation of the $44,000,000 theft in 1869 there was little withstanding of him.  By the most favorable account — that of Croffut — his own allotment of the plunder amounted to $26,000,000.  This sum, immense, and in fact of almost inconceivable power in that day, was enough of itself, independent of Vanderbilt’s other wealth, to force through almost any plan involving a seizing of competing property.

HE SCOOPS UP MORE RAILROADS.

Vanderbilt did not wait long.  The ink on the $44,000,000 had barely dried, before he used part of the proceeds to buy a controlling interest in the Lake Shore Railroad, a competing line.  Then rapidly, by the same methods, he took hold of the Canada Southern and Michigan Central.

The commercial interests looked on dumbfounded.  Under their very eyes a process of centralization was going on, of which they but dimly, stupidly, grasped the purport.  That competition which they had so long shouted for as the only sensible, true and moral system, and which they had sought to buttress by enacting law after law, was being irreverently ground to pieces.

Out of their own ranks were rising men, trained in their own methods, who were amplifying and intensifying those methods to shatter the class from which they had sprung.  The different grades of the propertied class, from the merchant with his fortune of $250,000 to the retail tradesman, felt very comfortable in being able to look down with a conscious superiority upon the working class from whom their money was wrung.  Scoffing at equality, they delighted in setting themselves up as a class infinitely above the toilers of the shop and factory ;  let him who disputes this consult the phrases that went the rounds — phrases, some of which are still current — as, for instance, the preaching that the moderately well-to-do class is the solid, substantial element of any country.

Now when this mercantile class saw itself being far over topped and outclassed in the only measurement to which it attached any value — that of property — by men with vast riches and power, it began to feel its relegation.  Although its ideal was money, and although it set up the acquisition of wealth as the all-stimulating incentive and goal of human effort, it viewed sullenly and enviously the development of an established magnate class which could look haughtily and dictatorially down upon it even as it constantly looked down upon the working class.  The factory owner and the shopkeeper had for decades commanded the passage of summary legislation by which they were enabled to fleece the worker and render him incapable of resistance.  To keep the worker in subjection and in their power they considered a justifiable proceeding.  But when they saw the railroad magnates applying those same methods to themselves, by first wiping out competition, and then by enforcing edicts regardless of their interests, they burst out in furious rage.

VANDERBILT AND HIS CRITICS.

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

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

For a long series of years this base traffic has been constantly increasing, until it has become frightfully enormous.  It would be presumed, from the immense quantities, and the great variety of inferior drugs that pass our custom houses, and particularly the custom-house at New York, in the course of a single year, that this country had become the great mart and receptacle of all of the refuse merchandise of that description, not only from the European warehouses, but from the whole Eastern market.^9a

In presenting a formidable array of expert testimony, and in giving a list of cases of persons having died from eating foods and drugs adulterated with poisonous substances, the House Committee on Epidemic Diseases, of the Forty-Sixth Congress, reported on February 4 1881 :

That they have investigated, as far as they could . . . the injurious and poisonous compounds used in the preparation of food substances, and in the manufacture of wearing apparel and other articles, and find from the evidence submitted to them that the adulteration of articles used in the every day diet of vast numbers of people has grown, and is now practiced, to such an extent as to seriously endanger the public health, and to call loudly for some sort of legislative correction.  Drugs, liquors, articles of clothing, wall paper and many other things are subjected to the same dangerous process.¹⁰

The House Committee on Commerce, reporting the next year, on March 4, stated that “the evidence regarding the adulteration's of food indicates that they are largely of the nature of frauds upon the consumer and injure both the health and morals of the people.” The committee declared that the practice of fraudulent substitutions “had become universal.”¹¹

These few significant extracts, from a mass of official reports, show that the commercial frauds were continuous, and began long before Commodore Vanderbilt’s time, and have prevailed up to the present.

Everywhere was fraud ;  even the little storekeepers, with their smug pretensions to homely honesty, were profiting by some of the vilest, basest forms of fraud, such as robbing the poor by the light-weight and short-weight trick,¹² or (far worse) by selling skim milk, or poisonous drugs or adulterated food or shoddy material.  These practices were so prevalent, that the exceptions were rarities indeed.

If any administration had dared seriously to stop these forms of theft the trading classes would have resisted and struck back in political action.  Yet these were the men — these traders — who vociferously come forth with their homiletic trades against Vanderbilt’s criminal transactions, demanding that the power of him and his kind be curbed.

It was not at all singular that they put their protests on moral grounds.  In a form of society where each man is compelled to fight every other man in a wild, demoralizing struggle for self-preservation, self-interest naturally usurps the supreme functions, and this self-interest becomes transposed, by a comprehensible process, into moralities.  That which is profitable is perverted into a moral code ;  the laws passed, the customs introduced and persisted in, and the weight of the dominant classes all conspire to put the stamp of morality on practices arising from the lowest and most sordid aims.  Thus did the trading class make a moral profession of its methods of exploitation ;  it congratulated and sanctified itself on its purity of life and its saving stability.

From this class — a class interpenetrated in every direction with commercial frauds — was largely empaneled the men who sat on those grand juries and petite juries solemnly passing verdict on the poor wretches of criminals whom environment or poverty had driven into crime.  They were the arbiters of justice, but it was a justice that was never allowed to act against themselves.  Examine all the penal codes of the period ;  note the laws proscribing long sentences in prison for thefts of property ;  the larceny of even a suit of clothes was severely punishable, and begging for alms was a misdemeanor.  Then contrast these asperities of law with the entire absence of adequate protection for the buyer of merchandise.  Following the old dictum of Roman jurisprudence, “ Let the buyer beware,” the factory owner could at will oppress his workers, and compel them, for the scantiest wages, to make for his profit goods unfit for consumption.  These articles the retailer sold without scruple over his counter ;  when the buyer was cheated or overcharged, as happened with great frequency, he had practically no redress in law.  If the merchant were robbed of even ever so little he could retaliate by sending the guilty one to prison.  But the merchant himself could invidiously and continuously rob the customer without fear of any law.  All of this was converted into a code of moralities ;  and any bold spirit who exposed its cant and sham was denounced as an agitator and as an enemy of law and order.¹³

Vanderbilt did better than expose it ;  he improved upon, and enlarged, it and made it a thing of magnitude ;  he and others of his quality discarded petty larceny and ascended into a sphere of superlative grand larceny.  They knew with a cynical perception that society, with all its pompous pretensions to morality, had evolved a rule which worked with almost mathematical certainty.  This rule was the paradoxical, but nevertheless true, one that the greater the theft the less corresponding danger there was of punishment.

THE WISDOM OF GRAND LARCENY.

Now it was that one could see with greater clearness than ever before, how the mercenary ideal of the ruling class was working out to its inevitable conclusion.  Society had made money its god and property its yardstick ;  even in its administration of justice, theoretically supposed to be equal, it had made “ justice” an expensive luxury available, in actual practice, to the rich only.  The defrauder of large sums could, if prosecuted, use a part of that plunder, easily engage a corps of shrewd, experienced lawyers, get evidence manufactured, fight out the case on technicalities, drag it along for years, call in political and social influence, and almost invariably escape in the end.

But beyond this power of money to make a mockery of justice was a still greater, though more subtle, factor, which was ever an invaluable aid to the great thief.  Every section of the trading class was permeated with a profound admiration, often tangibly expressed, for the craft that got away with an impressive pile of loot.  The contempt felt for the pickpocket was the antithesis of the general mercantile admiring view of the man who stole in grand style, especially when he was one of their own class.  In speaking of the piratical operations of this or that magnate, it was common to hear many business men interject, even while denouncing him, “ Well, I wish I were as smart as he.”  These same men, when serving on juries, were harsh in their verdicts on poor criminals, and unctuously flattered themselves with being, and were represented as, the upholders and conserver's of law and moral conduct.

Departing from the main facts as this philosophical digression may seem, it is essential for a number of reasons.  One of these is the continual necessity for keeping in mind a clear, balanced perspective.  Another lies in the need of presenting aright the conditions in which Vanderbilt and magnates of his type were produced.  Their methods at basis were not a growth independent of those of the business world and isolated from them.  They were simply a development, and not merely one of standards as applied to morals, but of the mechanism of the social and industrial organization itself.  Finally it is advisable to give flashlight glimpses into the modes and views of the time, inasmuch as it was in Vanderbilt’s day that the great struggle between the old principle of competition, as upheld by the small capitalists, and the superseding one of consolidation, as incarnated in him and others, took on vigorous headway.

HE CONTINUES THE BUYING OF LAWS.

Protest as it did against Vanderbilt’s merging of railroads, the middle class found itself quite helpless.  In rapid succession he put through one combination after another, and caused theft after theft to be legalized, utterly disdainful of criticism or opposition.  In State after State he bought the repeal of old laws, or the passage of new laws, until he was vested with authority to connect various railroads that he had secured between Buffalo and Chicago, into one line with nearly 1,300 miles of road.  The commercial classes were scared at the sight of such a great stretch of railroad — then considered an immense line — in the hands of one man, audacious, all conquering, with power to enforce tribute at will.  Again, Vanderbilt patronized the printing presses, and many more millions of stock, all fictitious capital, were added to the already flooded capital of the Lake Shore and Michigan Southern Railroad Company.  Of the total of $62,000,000 of capital stock in 1871, fully one-half was based upon nothing but the certainty of making it valuable as a dividend payer by the exaction of high freight and passenger rates.  A little later, the amount was run up to $73,000,000, and this was increased subsequently.

Vanderbilt now had a complete railroad system from New York to Chicago, with extensive offshoots.  It is at this point that we have to deal with a singular commendation of his methods thrust forward glibly from that day to this.  True, his eulogists admitted then, as they admit now, Vanderbilt was not over scrupulous in getting property that he wanted.  But consider, they urge, the improvements he brought about on the railroads that came into his possession ;  the renovation of the roadbed, the institution of new locomotives and cars, the tearing down of the old, worn-out stations.  This has been the praise showered upon him and his methods.

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

PUBLIC FUNDS FOR PRIVATE USE.

Instead of paying for these improvements with even a few millions of the proceeds of the watered stock, Vanderbilt (and all other railroad magnates in like cases did the same) forced the public treasury to defray a large part of the cost.  A good illustration of his methods was his improvement of his passenger terminus in New York City.  The entrance of the New York Central and the Harlem Railroads is by way of Park (formerly Fourth) avenue.  This franchise, as we have seen, was obtained by bribery in 1832.  But it was a qualified franchise.  It reserved certain nominal restrictions in behalf of the people by inserting the right of the city to order the removal of the tracks at any time that they became an obstruction.  These terms were objectionable to Vanderbilt ;  a perpetual franchise could be capitalized for far more than a limited or qualified one.  A perpetual franchise was what he wanted.

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

Instead of longer ignoring this demand, Vanderbilt now planned to make use of it ;  he saw how he could utilize it not only to foist a great part of the expense upon the city, but to get a perpetual franchise.  Thus, upon the strength of the popular cry for reform, he would extort advantages calculated to save him millions and at the same time extend his privileges.  It was but another illustration of the principle in capitalist society to which we have referred before (and which there will be copious occasion to mention again and again) that after energetically contesting even those petty reforms for which the people have contended, the ruling classes have ever deftly turned about when they could no longer withstand the popular demands, and have made those very reforms the basis for more spoliation and for a further entrenchment of their power.¹⁴

The first step was to get the New York City Common Council to pass, with an assumption of indignation, an ordinance requiring Vanderbilt to make the desired improvements, and committing the city to bear one-half the expense and giving him a perpetual franchise.  This was in Tweed’s time when the Common Council was composed largely of the most corrupt ward heelers, and when Tweed’s puppet, Hall, was Mayor.  Public opposition to this grab was so great as to frighten the politicians ;  at any rate, whatever his reasons, Mayor Hall vetoed the ordinance.

Thereupon, in 1872, Vanderbilt went to the Legislature — that Legislature whose members he had so often bought like so many cattle.  This particular Legislature, however, was elected in 1871, following the revelations of the Tweed “ring” frauds.  It was regarded as a “ model reform body.”  As has already been remarked in this work, the pseudo “ reform ” officials or bodies elected by the American people in the vain hope of overthrowing corruption, will often go to greater lengths in the disposition of the people’s rights and interests than the most hardened politicians, because they are not suspected of being corrupt, and their measures have the appearance of being enacted for the public good.  The Tweed clique had been broken up, but the capitalists who had assiduously bribed its members and profited so hugely from its political acts, were untouched and in greater power than ever before.  The source of all this corruption had not been struck at in the slightest.  Tweed, the politician, was sacrificed and went to prison and died there ;  the capitalists who had corrupted representative bodies everywhere in the United States, before and during his time, were safe and respected, and in a position to continue their work of corruption.  Tweed made the classic, unforgivable blunder of going into politics as a business, instead of into commercialism.  The very capitalists who had profited so greatly by his corruption, were the first to express horror at his acts.

From the “reform” Legislature of 1872 Vanderbilt secured all that he sought.  The act was so dexterously worded that while not nominally giving a perpetual franchise, it practically revoked the qualified parts of the charter of 1832.  It also compassionately relieved him of the necessity of having to pay out about $4,000,000, in replacing the dangerous roadway, by imposing that cost upon New York City.  Once these improvements were made, Vanderbilt bonded them as though they had been made with private money.

“ REFORM ” AS IT WORKS OUT.

But these were not his only gifts from the “reform ” Legislature.  The Harlem Railroad owned, as we have seen, the Fourth avenue surface line of horse cars.  Although until this time it extended to Seventy-ninth street only, this line was then the second most profitable in New York City.  In 1864, for instance, it carried nearly six million passengers, and its gross earnings were $735,000.  It did not pay, nor was required to pay, a single cent in taxation.  By 1872 the city’s population had grown to 950,000.  Vanderbilt concluded that the time was fruitful to gather in a few more miles of the public streets.

The Legislature was acquiescent.  Chapter 325 of the Laws of 1872 allowed him to extend the line from Seventy-ninth street to as far north as Madison avenue should thereafter be opened.  “ But see,” said the Legislature in effect, “ how mindful of the public interests we have been.  We have imposed a tax of five per cent. on all gross receipts above Seventy-ninth street.”  When, however, the time came to collect, Vanderbilt innocently pretended that he had no means of knowing whether the fares were taken in on that section of the line, free of taxation, below Seventy-ninth street, or on the taxed portion above it.  Behind that fraudulent subterfuge the city officials have never been inclined to go, nor have they made any effort.  As a consequence the only revenue that the city has since received from that line has been a meager few thousand dollars a year.

At the very time that he was watering stock, sliding through legislatures corrupt grants of perpetual franchises, and swindling cities and States out of huge sums in taxes,¹⁵ Vanderbilt was forcing the drivers and conductors on the Fourth avenue surface line to work an average of fifteen hours out of twenty-four, and reducing their daily wages from $2.25 to $2.

Vanderbilt made the pretense that it was necessary to economize ;  and, as was the invariable rule of the capitalists, the entire burden of the economizing process was thrown upon the already overloaded workers.  This subtraction of twenty-five cents a day entailed upon the drivers and conductors and their families many severe deprivations ;  working for such low wages every cent obviously counted in the management of household affairs.  But the methods of the capitalist class in deliberately pyramiding its profits upon the sufferings of the working class were evidenced in this case (as they had been, and since have been, in countless other instances) by the announcement in the Wall Street reports that this reduction in wages was followed by an instant rise in the price of the stock of the Fourth avenue surface line.  The lower the wages, the greater the dividends.

The further history of the Fourth avenue surface line cannot here be pursued in detail.  Suffice to say that the Vanderbilt's, in 1894, leased this line for 999 years to the Metropolitan Street Railway Company, controlled by those eminent financiers, William C. Whitney and others, whose monumental bribes, thefts and piracies have frequently been uncovered in official investigations.  For almost a thousand years, unless a radical change of conditions comes, the Vanderbilt's will draw a princely revenue from the ownership of this franchise alone.

It is not necessary to enter into a narrative of all the laws that Vanderbilt bribed Legislature after Legislature, and Common Council after Common Council, into passing — laws giving him for nothing immensely valuable grants of land, shore rights and rights to land under water, more authorizations to make further consolidations and to issue more watered stock.  Nor is it necessary to deal with the numerous bills he considered adverse to his interests, that he caused to be smothered in legislative committees by bribery.

VANDERBILT’S CHIEF OF STAFF.

 

His chief instrument during all those years was a general utility lawyer, Chauncey M. Depew, whose specialty was to hoodwink the public by grandiloquent exhibitions of mellifluous spread-eagle oratory, while bringing the “ proper arguments ” to bear upon legislators and other public officials.¹⁶  Every one who could in any way be used, or whose influence required subsidizing, was, in the phrase of the day, “taken care of.”  Great sums of money were distributed outright in bribes in the legislatures by lobbyists in Vanderbilt’s pay.  Supplementing this, an even more insidious system of bribery was carried on.  Free passes for railroad travel were lavishly distributed ;  no politician was ever refused ;  newspaper and magazine editors, writers and reporters were always supplied with free transportation for the asking, thus insuring to a great measure their good will, and putting them under obligations not to criticize or expose plundering schemes or individuals.  All railroad companies used this form, as well as other forms, of bribery.

It was mainly by means of the free pass system that Depew, acting for the Vanderbilt's, secured not only a general immunity from newspaper criticism, but continued to have himself and them portrayed in luridly favorable lights.  Depending upon the newspapers for its sources of information, the public was constantly deceived and blinded, either by the suppression of certain news, or by its being tampered with and grossly colored.  This Depew continued as the wriggling tool of the Vanderbilt family for nearly half a century.  Astonishing as it may seem, he managed to pass among the uninformed as a notable man ;  he was continuously eulogized ;  at one time he was boomed for the nomination for President of the United States, and in 1905 when the Vanderbilt family decided to have a direct representative in the United States Senate, they ordered the New York State Legislature, which they practically owned, to elect him to that body.  It was while he was a United States Senator that the investigations, in 1905, of a committee of the New York Legislature into the affairs of certain life insurance companies revealed that Depew had long since been an advisory party to the gigantic swindles and bribes carried on by Hyde, the founder and head of the Equitable Life Assurance Society.

The career of Depew is of no interest to posterity, excepting in so far as it shows anew how the magnates were able to use intermediaries to do their underground work for them, and to put those intermediaries into the highest official positions in the country.  This fact alone was responsible for their elevation to such bodies as the United States Senate, the President’s Cabinet and the courts.  Their long service as lobbyists or as retainers was the surest passport to high political or judicial position ;  their express duty was to vote or decide as their masters’ interest bid them.  So it was (as it is now) that men who had bribed right and left, and who had put their cunning or brains at the complete disposal of the magnates, filled Congress and the courts.  These were, to a large extent, the officials by whose votes or decisions all measures of value to the working class were defeated ;  and reversely, by whose actions all or nearly all bills demanded by the money interests, were passed and sustained.

Here we are again forced to notice the truism thrusting itself forward so often and conspicuously ;  that law was essentially made by the great criminals of society, and that, thus far it has been a frightful instrument, based upon force, for legalizing theft on a large scale.  By law the great criminals absolve themselves and at the same time declare drastic punishment for the petty criminals.  The property obtained by theft is converted into a sacred vested institution ;  the men who commit the theft or their hirelings sit in high places, and pass laws surrounding the proceeds of that theft with impregnable fortifications of statutes ;  should any poor devil, goaded on by the exasperation's of poverty, venture to help himself to even the tiniest part of that property, the severest penalty, enacted by those same plunderers, is mercilessly visited upon him.

After having bribed legislatures to legalize his enormous issue of watered stock, what was Vanderbilt’s next move ?  The usual fraudulent one of securing exemption from taxation.  He and other railroad owners sneaked through law after law by which many of their issues of stock were made non-taxable.

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

Over and over again, even to the point of wearisome repetition, must it be shown, both for the sake of true historical understanding and in justice to the founders of the great fortunes, that all mercantile society was permeated with fraud and subsisted by fraud.  But the prevalence of this fraud did not argue its practitioners to be inherently evil.  They were victims of a system inexorably certain to arouse despicable qualities.  The memorable difference between the two classes was that the workers, as the sufferers, were keenly alive to the abominations of the system, while the capitalists not only insisted upon the right to benefit from its continuance, but harshly sought to repress every attempt of the workers to agitate for its modification or overthrow.

REPRESSION BY STARVATION.

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

The usual method was that of subsidizing press and pulpit in certain subtle ways.  By these means facts were concealed or distorted, a prejudicial state of public opinion created, and plausible grounds given for hostile interference by the State.  But a far more powerful engine of repression was the coercion exercised by employers in forcing their workers to remain submissive on instant peril of losing their jobs.  While, at that time, manufacturers, jobbers and shopkeepers throughout the country were rising in angry protest against the accumulation of plundering power in the hands of such men as Vanderbilt, Gould and Huntington, they were themselves exploiting and bribing on a widespread scale.  Their great pose was that of a thorough commercial respectability ;  it was in this garb that they piously went to legislatures and demanded investigations into the rascally methods of the  railroad magnates.  The facts, said they, should be made public, so as to base on them appropriate legislation which would curtail the power of such autocrats.  Contrasted with the baseness and hypocrisy of the trading class, Vanderbilt’s qualities of brutal candor and selfishness shine out as brilliant virtues.¹⁷

These same manufacturers objected in the most indignant manner, as they similarly do now, to any legislative investigations of their own methods.  Eager to have the practices of Vanderbilt and Gould probed into, they were acrimoniously opposed to even criticism of their factory system.  For this extreme sensitiveness there was the amplest reason.  The cruelties of the factory system transcended belief.  In, for instance, the State of Massachusetts, vaunting itself for its progressiveness, enlightenment and culture, the textile factories were a horror beyond description.  The Convention of the Boston Eight Hour League, in 1872, did not overstate when it declared of the factory system that “ it employs tens of thousands of women and children eleven and twelve hours a day ;  owns or controls in its own selfish interest the pulpit and the press ;  prevents the operative classes from making themselves felt in behalf of less hours, through remorseless exercise of the power of discharge ;  and is rearing a population of children and youth of sickly appearance and scanty or utterly neglected schooling.“...

As the factory system was in Massachusetts, so it was elsewhere.  Any employee venturing to agitate for better conditions was instantly discharged ;  spies were at all times busy among the workers ;  and if a labor union were formed, the factory owners would obtain sneak emissaries into it, with orders to report on every move and disrupt the union if possible.  The factory capitalists in Massachusetts, New York, Illinois and every other manufacturing State were determined to keep up their system unchanged, because it was profitable to work children eleven and a half hours a day in a temperature that in summer often reached 108 degrees and in an atmosphere certain to breed immorality ;  ¹⁸ it was profitable to compel adult men and women having families to work for an average of ninety cents a day ;  it was profitable to avoid spending money in equipping their factories with life-saving apparatus.  Hence these factory owners, forming the aristocracy of trade, savagely fought every move or law that might expose or alter those conditions ;  the annals of legislative proceedings are full of evidences of bribery.

Having no illusions, and being a severely practical man, Vanderbilt well knew the pretensions of this trading class ;  with many a cynical remark, aptly epitomizing the point, he often made sport of their assumptions.  He knew (and none knew better) that they had dived deep in bribery and fraud ;  they were the fine gentlemen, he well recalled, who had generally obtained patents by fraud ;  who had so often bribed members of Congress to vote for a high tariff ;  the same, too, who had bribed legislatures for charters, water rights, exemptions from taxation, the right to work employees as long as, and under whatever conditions, they wanted to.  This manufacturing aristocracy professed to look down upon Vanderbilt socially as a coarse sharper ;  and in New York a certain ruling social element, the native aristocracy, composed of old families whose wealth, originating in fraud, had become respectable by age, took no pains to conceal their opinion of him as a parvenu, and drew about their sacred persons an amusing circle of exclusiveness into the rare precincts of which he might not enter.

Vanderbilt now proceeded to buy social and religious grace as he had bought laws.  The purchase of absolution has ever been a convenient and cheap method of obtaining society’s condonation of theft.  In medieval centuries it took a religious form ;  it has become transposed to a social traffic in these superior days.  Let a man steal in colossal ways and then surrender a small part of it in charitable, religious and educational donations ;  he at once ceases being a thief and straightway becomes a noble benefactor.  Vanderbilt now shed his life-long irreverence, and gave to Deems, a minister of the Presbyterian Church, as a gift, the Church of the Strangers on Mercer street, and he donated $1,000,000 for the founding of the Vanderbilt University at Nashville, Tenn.  The press, the church and the educational world thereupon hailed him as a marvel of saintly charity and liberality.

THE SERMONIZING OF THE “BEST CLASSES.”

One section of the social organization declined to accept the views of the class above it.  This was the working class.  Superimposed upon the working class, draining the life blood of the workers to provide them with wealth, luxuries and power, were those upper strata of society known as the “ best classes.”  These “ best classes,” with a monstrous presumption, airily proclaimed their superiority and incessantly harped upon the need of elevating and regenerating the masses.

And who, it may be curiously asked, were the classes self destined or self selected to do this regenerating ?  The commercial and financial element, with its peculiar morals so adjusted to its interests, that it saw nothing wrong in the conditions by which it reaped its wealth — conditions that made slaves of the workers, threw them into degradation and poverty, drove multitudes of girls and women into prostitution, and made the industrial field an immense concourse of tears, agony and carnage.  Hanging on to this supreme class of wealth, fawning to it, licking its very feet, were the parasites and advocates of the press, law, politics, the pulpit, and, with a few exceptions, of the professional occupations.  These were the instructors who were to teach the working class what morals were ;  these were the eminences under whose guidance the working class was to be uplifted !

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

While the commercial class, on the one hand, was determined on beating down the working class at every point, it was, on the other, unceasingly warring among itself.  In business dealings there was no such recognized thing as friendship.  To get the better of the other was held the quintessence of mercantile shrewdness.  A flinthard, brute spirit enveloped all business transactions.  The business man who lost his fortune was generally looked upon without emotion or pity, and condemned as an incapable.  For self interest, business men began to combine in corporations, but these were based purely upon mercenary aims.  Not a microscopic trace was visible of that spirit of fellow kindness, sympathy, collective concern and brotherhood already far developed among the organized part of the working class.

As the super eminent magnate of his day, Vanderbilt was invested with extraordinary publicity ;  he was extensively interviewed and quoted ;  his wars upon rival capitalists were matters of engrossing public concern ;  his slightest illness was breathlessly followed by commercialdom and its outcome awaited.  Hosts of men, women and children perished every year of disease contracted in factories, mines and slums ;  but Vanderbilt’s least ailment was given a transcending importance, while the scourging sweep of death among the lowly and helpless was utterly ignored.

Precisely as mercantile society bestowed no attention upon the crushed and slain, except to advance roughshod over their stricken bodies while throwing out a pittance in charity here and there, so Vanderbilt embodied in himself the qualities that capitalist society in mass practiced and glorified.  “ It was strong men,” says Croffut, “ whom he liked and sympathized with, not weak ones ;  the self-reliant, not the helpless.  He felt that the solicitor of charity was always a lazy or drunken person, trying to live by plundering the sober and industrious.”  This malign distrust of fellow beings, this acrid cynicism of motives, this extraordinary imputation of evil designs on the part of the penniless, was characteristic of the capitalist class as a whole.  Itself practicing the lowest and most ignoble methods, governed by the basest motives, plundering in every direction, it viewed every member of its own class with suspicion and rapacity.  Then it turned about, and with immense airs of superiority, attributed all of its own vices and crimes to the impoverished masses which its own system had created, whether in America or elsewhere.

The apologist may hasten forward with the explanation that the commercial class was not to be judged by Vanderbilt’s methods and qualities.  In truth, however, Vanderbilt was not more inhuman than many of the contemporary shining lights of the business world.

“ HONESTY AND INDUSTRY” ANALYZED.

If there is any one fortune commonly praised as having been acquired “ by honesty and industry,” it is the Borden millions, made from cotton factories.  At the time Vanderbilt was blackmailing, the founder of this fortune, Colonel Borden, was running cotton mills in Fall River.  His factory operatives worked from five o’clock in the morning to seven in the evening, with but two half hours of intermission, one for breakfast, the other for dinner.  The workday of these men, women and children was thus thirteen hours ; their wages were wretchedly low, their life was one of actual slavery.  Insufficient nourishment, overwork, and the unsanitary and disgusting conditions in the mills, prematurely aged and debilitated them, and were a constant source of disease, killing off considerable numbers, especially the children.

In 1850, the operatives asked Borden for better wages and shorter hours.  This was his reply :  “ I saw that mill built stone by stone ;  I saw the pickers, the carding engines, the spinning mules and the looms put into it, one after the other, and I would see every machine and stone crumble and fall to the floor again before I would accede to your wishes.”  Borden would not have been amiss had he added that every stone in that mill was cemented with human blood.  His operatives went on a strike, stayed out ten months, suffered frightful hardships, and then were forced back to their tasks by hunger.  Borden was inflexible, and so were all the other cotton mill owners.¹⁹  It was not until 1874, after many further bitterly-contested strikes, that the Massachusetts Legislature was prevailed upon to pass a ten-hour law, twenty-four years after the British Parliament had passed such an enactment.

The commercial class, high and low, was impregnated with deceit and dissimulation, cynicism, selfishness and cruelty.  What were the aspirations of the working class which it was to uplift ?  The contrast stood out with stark distinctness.  While business men were frantically sapping the labor and life out of their workers, and then tricking and cheating one another to seize the proceeds of that exploitation, the labor unions were teaching the nobility of brotherly cooperation “Cultivate friendship among the great brotherhood of toil,” was the advice of Uriah Stevens, master workman of the Knights of Labor, at the annual meeting of that organization on January 12, 1871.  And he went on :

And while the toiler is thus engaged in creating the world’s value, how fares his own interest and well-being ?  We answer, “ Badly,” for he has too little time, and his faculties become too much blunted by unremitting labor to analyze his condition or devise and perfect financial schemes or reformatory measures.  The hours of labor are too long, and should be shortened.  I recommend a universal movement to cease work at five o’clock Saturday afternoon, as a beginning.  There should be a greater participation in the profits of labor by the industrious and intelligent laborer.  In the present arrangements of labor and capital, the condition of the employee is simply that of wage slavery — capital dictating, labor submitting ;  capital superior, labor inferior.        

This is an artificial and man-created condition, not God’s arrangement and order ;  for it degrades man and ennobles mere pelf.  It demeans those who live by useful labor, and, in proportion, exalts all those who eschew labor and live (no matter by what pretense or respectable cheat—for cheat it is) without productive work.

LABOR’S PRINCIPLES IGNORED.

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

And, after all, little it mattered to the capitalists what the workers thought or said, so long as the machinery of government was not in their hands.  At about the very time Master Workman Stevens was voicing the unrest of the laboring masses, and at the identical time when the panic of 1873 saw several millions of men work less, thrown upon soup kitchens and other forms of charity, and battered wantonly by policemen clubs when they attempted to hold mass meetings of protest, an Iowa writer, D.C. Cloud, was issuing a work which showed concretely how thoroughly Government was owned by the commercial and financial classes.  This work, obscurely published and now scarcely known except to the patient delver, is nevertheless one of the few serious books on prevailing conditions written at that time, and is in marked contrast to the reams of printed nonsense then circulated.  Although Cloud was tinged greatly with the middle class point of view, and did not see that all successful business was based upon deceit and fraud, yet so far as his lights carried him, he wrote trenchantly and fearlessly, embodying series after series of facts exposing the existing system.  He observed :

. . . A measure without any merit save to advance the interest of a patentee, or contractor, or railroad company, will become a law, while measures of interest to the whole people are suffered to slumber, and die at the close of the session from sheer neglect.  It is known to Congressmen that these lobbyists are paid to influence legislation by the parties interested, and that dishonest and corrupt means are resorted to for the accomplishment of the object they have undertaken. ... Not one interest in the country nor all other interests combined are as powerful as the railroad interest. . . . With a network of roads throughout the country ;  with a large capital at command ;  with an organization perfect in all its parts, controlled by a few leading spirits like Scott, Vanderbilt, Jay Gould, Tracy and a dozen others, the whole strength and wealth of this corporate power can be put into operation at any moment, and Congressmen are bought and sold by it like any article of merchandise.²⁰

CHAPTER VI

THE ENTAILING OF THE 

VANDERBILT FORTUNE

The richer Commodore Vanderbilt grew, the more closely he clung to his old habits of intense parsimony.  Occasionally he might ostentatiously give a large sum here or there for some religious or philanthropic purpose, but his general undeviating course was a consistent meanness.  In him was united the petty bargaining traits of the trading element and the lavish capacities for plundering of the magnate class.  While defrauding on a great scale, pocketing tens of millions of dollars at a single raid, he would never for a moment overlook the leakage of a few cents or dollars.  His comprehensive plans for self-aggrandizement were carried out in true piratical style ;  his aims and demands were for no paltry prize, but for the largest and richest booty.  Yet so ingrained by long development was his faculty of acquisition, that it far passed the line of a passion and became a monomania.

VANDERBILT’S CHARACTERISTICS.

To such an extent did it corrode him that even when he could boast his $100,000,000 he still persisted in haggling and huckstering over every dollar, and in tricking his friends in the smallest and most underhand ways.  Friends in the true sense of the word he had none ;  those who regarded themselves as such were of that thrifty, congealed disposition swayed largely by calculation.  But if they expected to gain overmuch by their intimacy, they were generally vastly mistaken ;  nearly always, on the contrary, they found themselves caught in some unexpected snare, and riper in experience, but poorer in pocket, they were glad to retire prudently to a safe distance from the old man’s contact.  “ Friends or foes,” wrote an admirer immediately after his death, “were pretty much on the same level in his estimation, and if a friend undertook to get in his way he was obliged to look out for himself.”
On one occasion, it is related, when a candidate for a political office solicited a contribution, Vanderbilt gave $100 for himself, and an equal sum for a friend associated with him in the management of the New York Central Railroad.  A few days later Vanderbilt informed this friend of the transaction, and made a demand for the hundred dollars.  The money was paid over.  Not long after this, the friend in question was likewise approached for a political contribution, whereupon he handed out $100 for himself and the same amount for Vanderbilt.  On being told of his debt, Vanderbilt declined to pay it, closing the matter abruptly with this laconic pronunciamento, “ When I give anything, I give it myself.”  At another time Vanderbilt assured a friend that he would “ carry ” one thousand shares of New York Central stock for him.  The market price rose to $115 a share and then dropped to $90.  A little later, before setting out to bribe an important bill through the Legislature — a bill that Vanderbilt knew would greatly increase the value of the stock — the old magnate went to the friend and represented that since the price of the stock had fallen it would not be right to subject the friend to a loss.  Vanderbilt asked for the return of the stock and got it.  Once the bill became a law, the market price of the stock went up tremendously, to the utter dismay of the confiding friend who saw a profit of $80,000 thus slip out of his hands into Vanderbilt’s.¹
In his personal expenses Vanderbilt usually begrudged what he looked upon as superfluous expense.  The plainest of black clothes he wore, and he never countenanced jewelry.  He scanned the table bill with a hypercritical eye.  Even the sheer necessities of his physical condition could not induce him to pay out money for costly prescriptions.  A few days before his death his physician recommended champagne for some internal trouble.  “ Champagne ! ” exclaimed Vanderbilt with a reproachful look, “ I can’t afford champagne.  A bottle every morning !  Oh, I guess sody water’ll do ! ”
From all accounts it would seem that he diffused about him the same forbidding environment in his own house.  He is described as stern, obstinate, masterful and miserly, domineering his household like a tyrant, roaring with fiery anger whenever he was opposed, and flying into fits of fury if his moods, designs and will were contested.  His wife bore him thirteen children, twelve of whom she had brought up to maturity.  A woman of almost rustic simplicity of mind and of habits, she became obediently meek under the iron discipline he administered.  Croffut says of her that she was “ acquiescent and patient under the sway of his dominant will, and in the presence of his trying moods.”  He goes on :  “ The fact that she lived harmoniously with such an obstinate man bears strong testimony to her character.”²
If we are to place credibility in current reports, she was forced time and time again to undergo the most violent scenes in interceding for one of their sons, Cornelius Jeremiah.  For the nervous disposition and general bad health of this son the father had not much sympathy ;  but the inexcusable crime to him was that Cornelius showed neither inclination nor capacity to engage in a business career.  If Cornelius had gambled on the stock exchange his father would have set him down as an exceedingly enterprising, respectable and promising man.  But he preferred to gamble at cards.  This rebellious lack of interest in business, joined with dissipation, so enraged the old man that he drove Cornelius from the house and only allowed him access during nearly a score of years at such rare times as the mother succeeded in her tears and pleadings.  Worn out with her long life of drudgery, Vanderbilt’s wife died in 1868 ;  about a year later the old magnate eloped with a young cousin, Frank A. Crawford, and returning from Canada, announced his marriage, to the unbounded surprise and utter disfavor of his children.

THE OLD MAGNATE’S DEATH.

An end, however, was soon coming to his prolonged life.  A few more years of money heaping, and then, on May 10, 1876, he was taken mortally ill.  For eight months he lay in bed, his powerful vitality making a vigorous battle for life ;  two physicians died while in the course of attendance on him ;  it was not until the morning of January 4, 1877, that the final symptoms of approaching death came over him.  When this was seen the group about his bed emotionally sang :  “ Come, Ye Sinners, Poor and Needy,” “ Nearer, My God, To Thee,” and “ Show Ye Pity, Lord.”  He died with a conventional religious end of which the world made much ;  all of the proper sanctity and ceremonials were duly observed ;  nothing was lacking in the piety of that affecting deathbed scene.  It furnished the text for many a sermon, but while ministerial and journalistic attention was thus eulogistically concentrated upon the loss of America’s greatest capitalist, not a reference was made in church or newspaper to the deaths every year of a host of the lowly, slain in the industrial vortex by injury and disease, and too often by suicide and starvation.  Except among the lowly themselves this slaughter passed un-protested and unnoticed.

Even as Vanderbilt lay moribund, speculation was busy as to the disposition of his fortune.  Who would inherit his aggregation of wealth ? The probating of his will soon disclosed that he had virtually entailed it.  About $90,000,000 was left to his eldest son, William H., and one-half of the remaining $15,000,000 was bequeathed to the chief heir’s four sons.³  A few millions were distributed among the founder’s other surviving children, and some comparatively small sums bequeathed to charitable and educational institutions.  The Vanderbilt dynasty had begun.

PERSONALITY OF THE CHIEF HEIR.

At this time William H. Vanderbilt was fifty-six years old.  Until 1864 he had been occupied at farming on Staten Island ;  he lived at first in “ a small, square, plain two-story house facing the sea, with a lean-to on one end for a kitchen.”  The explanation of why the son of a millionaire betook himself to truck farming lay in these facts :  The old man despised leisure and luxury, and had a correspondingly strong admiration for “ self-made ” men.  Knowing this, William H. Vanderbilt made a studious policy of standing in with his father, truckling to his every caprice and demand, and proving that he could make an independent living.  He is described as a phlegmatic man of dull and slow mental processes, domestic tastes and of kindly disposition to his children.  His father (so the chronicles tell) did not think that he “ would ever amount to anything,” but by infinite plodding, exacting the severest labor from his farm laborers, driving close bargains and turning devious tricks in his dealings, he gradually won the confidence and respect of the old man, who was always pleased with proofs of guile.  Croffut gives a number of instances of William’s craft and continues :  “From his boyhood he had given instant and willing submission to the despotic will of his father, and had made boundless sacrifices to please him.  Most men would have burst defiantly away from the repressive control and imperious requirements ;  but he doubtless thought that for the chance of becoming heir to $100,000,000 he could afford to remain long in the passive attitude of a distrusted prince.” (sic.)
The old autocrat finally modified his contemptuous opinion, and put him in an executive position in the management of the New York and Harlem Railroad.  Later, he elevated him to be a sort of coadjutor by installing him as vice president of the New York Central Railroad, and as an associate in the directing of other railroads.  It was said to be painful to note the exhausting persistence with which William H. Vanderbilt daily struggled to get some perceptions of the details of railroad management.  He did succeed in absorbing considerable knowledge.  But his training at the hands of his father was not so much in the direction of learning the system of management.  Men of ability could always be hired to manage the roads.  What his father principally taught him was the more essential astuteness required of a railroad magnate ;  the manipulation of stocks and of common councils and legislatures ;  how to fight and overthrow competitors and extend the sphere of ownership and control ;  and how best to resist, and if possible to destroy, the labor unions.  In brief, his education was a duplication of his father’s scope of action :  the methods of the sire were infused into the son.

From the situation in which he found himself, and viewing the particular traits required in the development of capitalistic institutions, it was the most appropriate training that he could have received.  Book erudition and the cultivation of fine qualities would have been sadly out of place ;  his father’s teachings were precisely what were needed to sustain and augment his possessions.  On every hand he was confronted either by competitors who, if they could get the chance, would have stripped him without scruple, or by other men of his own class who would have joyfully defrauded him.  But overshadowing these accustomed business practices, new and startling conditions that had to be met and fought were now appearing.
Instead of a multitude of small, detached railroads, owned and operated by independent companies, the period was now being reached of colossal railroad systems.  In the East the small railroad owners had been well-nigh crushed out, and their properties joined in huge lines under the ownership of a few controlling men, while in the West, extensive systems, thousands of miles long, had recently been built.  Having stamped out most of the small owners, the railroad barons now proceeded to wrangle and fight among themselves.  It was a characteristic period when the railroad magnates were constantly embroiled in the bitterest quarrels, the sole object of which was to outdo, bankrupt and wreck one another and seize, if possible, the others’ property.

THE RISE OF THE FIRST TRUST.

It was these conflicts that developed the auspicious time and opportunity for a change of the most worldwide importance, and one which had a stupendous ultimate purport not then realized.  The wars between the railroad magnates assumed many forms, not the least of which was the cutting of freight rates.  Each railroad desperately sought to wrench away traffic from the others by offering better inducements.  In this cutthroat competition, a coterie of hawk-eyed young men in the oil business, led by John D. Rockefeller, saw their fertile chance.
The drilling and the refining of oil, although in their comparative infancy, had already reached great proportions.  Each railroad was eager to get the largest share of the traffic of transporting oil.  Rockefeller, ruminating in his small refinery at Cleveland, Ohio, had conceived the revolutionary idea of getting a monopoly of the production and distribution of oil, obliterating the middleman, and systematizing and centralizing the whole business.
Then and there was the modern trust born ;  and from the very inception of the Standard Oil Company Rockefeller and his associates tenaciously pursued their design with a combined ability and unscrupulousness such as had never before been known since the rise of capitalism.  One railroad after another was persuaded or forced into granting them secret rates and rebates against which it was impossible to compete.  The railroad magnates — William H. Vanderbilt, for instance — were taken in the fold of the Standard Oil Company by being made stockholders.  With these secret rates the Standard Oil Company was enabled to crush out absolutely a myriad of competitors and middlemen, and control the petroleum trade not only of the United States but of almost the entire world.  Such fabulous profits accumulated that in the course of forty years, after one unending career of industrial construction on the one hand, and crime on the other, the Standard Oil Company was easily able to become owners of prodigious railroad and other systems, and completely supplant the scions of the magnates whom three or four decades before they had wheedled or browbeaten into favoring them with discrimination's.

CORPORATE WEALTH 

AND LABOR UNIONS.

The effects of this great industrial transition were clearly visible by 1877, so much so that two years later, Vanderbilt, more prophetically than he realized, told the Hepburn Committee that “ if this thing keeps up the oil people will own the roads.”  But other noted industrial changes were concurrently going on.  With the up-springing and growth of gigantic combinations or concentrations of capital, and the gradual disappearance of the small factors in railroad and other lines of business, workers were compelled by the newer conditions to organize on large and compact national lines.
At first each craft was purely local and disassociated from other trades unions.  But comprehending the inadequacy and futility of existing separately, and of acting independently of one another, the unions had some years back begun to weld themselves into one powerful body, covering much of the United States.  Each craft union still retained its organization and autonomy, but it now became part of a national organization embracing every form of trades, and centrally officer-ed and led.  It was in this way that the workers, step by step, met the organization of capital ;  the two forces, each representing a conflicting principle, were thus preparing for a series of great industrial battles.
Capital had the wealth, resources and tools of the country ;  the workers their labor power only.  As it stood, it was an uneven contest, with every advantage in favor of capital.  The workers could decline to work, but capital could starve them into subjection.  These, however, were but the apparent differences.  The real and immense difference between them was that capital was in absolute control of the political governing power of the nation, and this power, strange to say, it secured by the votes of the very working class constantly fighting it in the industrial arena.  Many years were to elapse before the workers were to realize that they must organize and vote with the same political solidarity that they long had been developing in industrial matters.  With political power in their hands the capitalists could, and did, use its whole weight with terrific effect to beat down the working class, and nullify most of the few concessions and laws obtained by the workers after the severest and most self-sacrificing struggles.
One of the first memorable battles between the two hostile forces came about in 1877.  In their rate wars the railroad magnates had cut incisively into one another’s profits.  The permanent gainers were such incipient, or fairly well developed, trusts or combinations as the Standard Oil Company.  Now the magnates set about asserting the old capitalist principle of recouping themselves by forcing the workers to make up their losses.
But these deficits were merely relative.  Practically every railroad had issued vast amounts of bonds and watered stock, on which fixed charges and dividends had to be paid.  Judged by the extent of this inflated stock, the profits of the railroads had certainly decreased.  Despite, however, the prevailing cutthroat competition, and the slump in general business following the panic of 1873, the railroads were making large sums on their actual investment, so-called.  Most of this investment, it will be recalled, was not private money but was public funds, which were later stolen by corrupt legislation.  It was shown before the Hepburn Committee in 1879, as we have noted, that from 1869 the New York Central Railroad had been making sixteen, and perhaps more than twenty per cent., on the actual cost of the road.
Moreover, apart from the profits from ordinary traffic, the railroads were annually fattening on immense sums of public money gathered in by various fraudulent methods.  One of these — and is well worth adverting to, for it exists to a greater degree than ever before — was the robbery of the people in the transportation of mails.  By a fraudulent official construction, in 1873, of the postal laws, the railroads without cessation have cheated huge sums in falsifying the weight of mail carried, and since that time have charged ten times as much for mail carrying as have the express companies (the profits of which are very great) for equal haulage.  But these are simply two phases of the postal plunder.  In addition to the regular mail payments, the Government has long paid to the railroad companies an extra allowance of $6,250 a year for the rent of each postal car used, although official investigation has proved that the whole cost of constructing such a car averages but from $2,500 to $5,000.  In rent alone, five millions a year have been paid for cars worth, all told, about four millions.  From official estimates it would clearly seem that the railroads have long cheated the people out of at least $20,000,000 a year in excess rates — a total of perhaps half a billion dollars since 1873.  The Vanderbilt family have been among the chief beneficiaries of this continuous looting.⁴  Occasionally the postal officials have made pretenses at stopping the plunder, but with no real effect.

THE GREAT STRIKE OF 1877.

Making a loud and plaintive outcry about their declining revenues, some of the railroad systems prepared to assess their fictitious losses upon the workers by cutting down wages.  They had already reduced wages to the point of the merest subsistence ;  and now they decreed that wages must again be curtailed ten cents on every dollar.  The Baltimore and Ohio Railroad, then in the hands of the Garrett family, with a career behind it of consecutive political corruption and fraud, in some ways surpassing that of the Vanderbilt's, led in reducing the wages of its workers.  The Pennsylvania Railroad followed, and then the Vanderbilt's gave the order for another reduction.
At once the Baltimore and Ohio Railroad employees retaliated by declaring a strike ;  the example was followed by the Pennsylvania men.  In order to alienate the sympathy of the general public and to have a pretext for suppressing the strike with armed force, the railroads, it is quite certain, instigated riots at Martinsburg, W. Va., and at Pittsburgh.  Troops were called out and the so-called mobs were fired on, resulting in a number of strikers being killed and many wounded.
That the railroads deliberately destroyed their own property and then charged the culpability to the strikers, was common report.  So conservative an authority as Carroll D. Wright, for a long tine United States Commissioner of Labor, tells of the railroad agents setting a large number of old, decayed, worthless freight cars at Pittsburgh on fire, and accusing the strikers of the act.  He further tells of the Pennsylvania Railroad subsequently extorting millions of dollars from the public treasury on the ground that the destruction of these cars resulted from riot.  Wright says that from all that he has been able to gather, he believes the reports of the railroads manufacturing riots to have been true.⁵  Vanderbilt acted with greater wisdom than his fellow magnates.  Adopting a conciliatory stand, he averted a strike on his lines by restoring the old rate of wages and by other mollifying measures.
He was now assailed from a different direction.  The long gathering anger and enmity of the various sections of the middle class against the corporate wealth which had possessed itself of so dictatorial a power, culminated in a manner as instructive as it was ineffective.
In New York State, the Legislature was prevailed upon, in 1879, to appoint an investigating committee.  Vanderbilt and other railroad owners, and a multitude of complaining traders were haled up to give testimony ;  the stock-jobbing transactions of Vanderbilt and Gould were fully and tediously gone into, as also were the methods of the railroads in favoring certain corporations and mercantile establishments with secret preferential freight rates.
Not in the slightest did this long-drawn investigation have any result calculated to break the power of the railroad owners, or their predominant grip upon governmental functions.
The magnate class preferred to have no official inquiries ;  there was always the annoying possibility that in some State or other inconvenient laws might be passed, or harassing legal actions begun ;  and while revocation or amendment of these laws could be put through subsequently when the popular excitement had died away, and the suits could be in some way defeated, the exposures had an inflaming effect upon a population as yet ill-used to great one-man power of wealth.  But if the middle class insisted upon action against the railroad magnates, there was no policy more suitable to these magnates than that of being investigated by legislative committees.  They were not averse to their opponents amusing themselves, and finding a vent for their wrath, in volumes of talk which began nowhere and ended nowhere.  In reply to charges, the magnates could put in their skillful defense, and inject such a maze of argument, pettifoggery and technicalities into the proceedings, that before long the public, tired of the puzzle, was bound to throw up its hands in sheer bewilderment, unable to get any concrete idea of what it was all about.

FRAUD BECOMES 

RESPECTABLE WEALTH.

So the great investigation of 1879 passed by without the least deterrent effect upon the constantly-spreading power and wealth of such men as Vanderbilt and Gould.  Every new development revealed that the hard-dying middle class was being gradually, yet surely, ground out.  But the investigation of 1879 had one significant unanticipated result.
What William H. Vanderbilt now did is well worth noting.  As the owner of four hundred thousand shares of New York Central stock he had been rabidly denounced by the middle class as a plutocrat dangerous to the interests of the people.  He decided that it would be wise to sell a large part of this stock ;  by this stroke he could advantageously exchange the forms of some of his wealth, and be able to put forward the plausible claim that the New York Central Railroad, far from being a one-man institution, was owned by a large number of investors.  In November, 1879, he sold through J. Pierpont Morgan more than two hundred thousand shares to a syndicate, chiefly, however, to British aristocrats.
This sale in no way diminished his actual control of the New York Central Railroad ;  not only did he retain a sufficient number of shares, but he owned an immense block of the railroad’s bonds.  The sale of the stock brought him $35,000,000.  What did he do with this sum ?  He at once reinvested it in United States Government bonds.  Thus, the proceeds of a part of the stock obtained by outright fraud, either by his father or himself, were put into Government bonds.  This surely was a very sagacious move.  Stocks do not have the solid, honest air that Government bonds do ;  nothing is more finely and firmly respectable than a Government bondholder.
From the blackmailer, corruption and defrauder of one generation to the stolid Government bondholder of the next, was not a long step, but it was a sufficient one.  The process of investing in Government bonds Vanderbilt continued ;  in a few years he owned not less than $54,000,000 worth of four per cents.  In 1884 he had to sell $10,000,000 of them to make good the losses incurred by his sons on the Stock Exchange, but he later bought $10,000,000 more.  Also he owned $4,000,000 in Government three and one-half per cent. bonds, many millions of State and city bonds, several millions of dollars in manufacturing stocks and mortgages, and $22,000,000 of railroad bonds.  The same Government of which his father had defrauded millions of dollars now stood as a direct guarantee behind at least $70,000,000 of his bonded wealth, and the whole population of the United States was being taxed to pay interest on bonds, the purchase of which was an outgrowth of the theft of public money committed by Cornelius Vanderbilt.
In the years following his father’s death, William H. Vanderbilt found no difficulty in adding more extended railroad lines to his properties, and in increasing his wealth by tens of millions of dollars at a leap.

MORE RAILROADS ACQUIRED.

The impact of his vast fortune was well-nigh resistless.  Commanding both financial and political power, his money and resources were used with destructive effect against almost every competitor standing in his way.  If he could not coerce the owners of a railroad, the possession of which he sought, to sell to him at his own price, he at once brought into action the wrecking tactics his father had so successfully used.
The West Shore Railroad, a competing line running along the west bank of the Hudson River, was bankrupted by him, and finally, in 1883, bought in under foreclosure proceedings.  By lowering his freight rates he took away most of its business ;  through a series of years he methodically caused it to be harassed and burdened by the exercise of his great political power ;  he thwarted its plans and secretly hindered it in its application for money loans or other relief.  Other means, open and covert, were employed to insure its ruination.  When at last he had driven its owners into a corner, he calmly stepped in and bought up its control cheaply, and then turned out many millions of dollars of watered stock.
He attempted to break in upon the territory traversed by the Pennsylvania Railroad by building a competing line, the South Pennsylvania Railroad.  In the construction of this road he had an agreement with the Philadelphia and Reading Railroad, an intense competitor of the Pennsylvania ;  and, as a precedent to building his line, he obtained a large interest in the Reading Railroad.  Out of this arrangement grew a highly important sequence which few then foresaw — the gradual assumption by the Vanderbilt family of a large share of the ownership and control of the anthracite coal mines of Pennsylvania.
Vanderbilt, aiming at sharing in the profits from the rich coal, oil and manufacturing traffic of Pennsylvania, went ahead with his building of the South Pennsylvania line.  But there was an easy way of getting millions of dollars before the road was even opened.  This was the fraudulent one, so widely practiced, of organizing a bogus construction company, and charging three and four times more than the building of the railroad actually cost.  Vanderbilt got together a dummy construction company composed of some of his clerks and brokers, and advanced the sum, about $6,500,000, to build the road.  In return, he ordered this company to issue $20,000,000 in bonds, and the same amount in stock.  Of this $40,000,000 in securities, more than $30,000,000 was loot.⁶
If, however, Vanderbilt anticipated that the Pennsylvania Railroad would remain docile or passive while his competitive line was being built, he soon learned how sorely mistaken he was.  This time he was opposing no weak, timorous or unsophisticated competitors, but a group of the most powerful and astute organizers and corruptionists.  Their methods in Pennsylvania and other States were exactly the same as Vanderbilt’s in New York State ;  their political power was as great in their chosen province as his in New York.  His incursion into the territory they had apportioned to themselves for exploitation was not only resented but was fiercely resisted.  Presently, overwhelmed by the crushing financial and political weapons with which they fought him, Vanderbilt found himself compelled to compromise by disposing of the line to them.

THE SEQUEL TO A 

“GENTLEMEN AGREEMENT.”

Vanderbilt’s methods and his duplicity in the disposition of this project were strikingly revealed in the court proceedings instituted by the State of Pennsylvania.  It appeared from the testimony that he had made a “ gentlemen agreement ” with the Reading Railroad, the bitterest competitor of the Pennsylvania Railroad, for a close alliance of interests.  Vanderbilt owned eighty-two thousand shares of Reading stock, much of which he had obtained on this agreement.  Strangely confiding in his word, the Reading management proceeded to expend large sums of money in building terminals at Harrisburg and elsewhere to make connections with his proposed South Pennsylvania Railroad.
The Pennsylvania Railroad, however, set about retaliating in various effective ways.  At this point, J. Pierpont Morgan — whose career we shall duly describe — stepped boldly in.  Morgan was Vanderbilt’s financial agent ;  and it was he, according to his own testimony on October 13, 1885, before the court examiner, who now suggested and made the arrangements between Vanderbilt and the Pennsylvania Railroad magnates, by which the South Pennsylvania Railroad was to become the property of the Pennsylvania system, and the Reading Railroad magnates were to be as thoroughly thrown over by as deft a stroke of treachery as had ever been put through in the business world.
To their great astonishment, the Reading owners woke up one morning to find that Vanderbilt and his associates had completely betrayed them by disposing of a majority of the stock of the partly built South Pennsylvania line to the Pennsylvania Railroad system for $5,600,000 in three per cent. railroad debenture bonds.  It is interesting to inquire who Vanderbilt’s associates were in this transaction.  They were John D. Rockefeller, William Rockefeller, D.O. Mills, Stephen B. Elkins, William C. Whitney and other founders of large fortunes.  For once in his career, Vanderbilt met in the Pennsylvania Railroad a competitor powerful enough to force him to compromise.
Elsewhere, Vanderbilt was much more successful.  Out through the fertile wheat, corn and cattle sections of Wisconsin, Minnesota, Iowa, Dakota and Nebraska ran the Chicago and Northwestern Railroad, a line 4,000 miles long which had been built mostly by public funds and land grants.  Its history was a succession of corrupt acts in legislatures and in Congress, and comprised the usual process of stock watering and exploitation.  By a series of manipulations ending in 1880, Vanderbilt secured a controlling interest in this railroad, so that he had a complete line from New York to Chicago, and thence far into the Northwest.  During these years he also secured control of other railroad lines.

HE EXPANDS IN SPLENDOR.

 

It was at this time that he, in accord with the chrysalid tendency manifested by most other millionaires, discarded his long-followed sombre method of life, and invested himself with a gaudy magnificence.  On Fifth avenue, at Fifty-first and Fifty-second streets, he built a spacious brown-stone mansion.  In reality it was a union of two mansions ;  the southern part he planned for himself, the northern part for his two daughters.  For a year and a half more than six hundred artisans were employed on the interior ;  sixty stoneworkers were imported from Europe.  The capaciousness, the glitter and the cluttering of splendor in the interior were regarded as of unprecedented lavishness in the United States.

All of the luxury overloading these mansions was, as was well known, the fruit of fraud piled upon fraud ;  it represented the spoliation, misery and degradation of the many ;  but none could deny that Vanderbilt was fully entitled to it by the laws of a society which decreed that its rulers should be those who could best use and abuse it.  And rulers must ever live imperiously and impressively ;  it is not fitting that those who command the resources, labor and Government of a nation should issue their mandates from pinched and meager surroundings.  Mere pseudo political rulers, such as governors and presidents, are expected to be satisfied with the plain, un-ornamental official residences provided by the people ;  thereby they keep up the appearance of that much-bespoken republican simplicity which is part of the mask of political formulas.  Luckily for themselves, the financial and industrial rulers are bound by no circumscribing tradition ;  hence they have no set of buckramed rules to stick close to for fear of an indignant electorate.
The same populace that glowers and mutters whenever its political officials show an inclination to pomp, regards it as perfectly natural that its financial and industrial rulers should body forth all of the most obtrusive evidences of grandeur.  Those Vanderbilt twin palaces, still occupied by the Vanderbilt family, were appropriately built and fitted, and are more truly and specifically historic as the abode of Government than official mansions ;  for it is the magnates who have in these modern times been the real rulers of nations ;  it is they who have usually been able to decide who the political rulers should be ;  political parties have been simply their adjuncts ;  the halls of legislation and the courts their mouthpieces and registering bureaus.  Theirs has been the power, under cover though it has lurked, of elevating or destroying public officials, and of approving or cancelling legislation.  Why, indeed, should they not have their gilded palaces ?

A SUDDEN TRANSFORMATION.

The President of the United States lived in the subdued simplicity of the White House.  But William H. Vanderbilt ate in a great, lofty dining room, twenty-six by thirty-seven feet, wrought in Italian Renaissance, with a wainscot of golden-hued, delicately-carved English oak around all four sides, and a ceiling with richly-painted hunting-scene panels.  When he entertained it was in a vast drawing-room, palatially equipped, its walls hung with flowing masses of pale red velvet, embroidered with foliage flowers and butterflies, and set with crystals and precious stones.
It was his art gallery, however, which flattered him most.  He knew nothing of art, and underneath his pretention's cared less, for he was a complete utilitarian ;  but it had become fashionable to have an elaborate art gallery, and he forthwith disbursed money right and left to assemble an aggregation of paintings.
He gave orders to agents for their purchase with the same equanimity that he would contracts for railroad supplies.  And, as a rule, the more generous in size the canvasses, the more satisfied he was that he was getting his money’s worth ;  art to him meant buying by the square foot.  Not a few of the paintings unloaded upon him were, despite their high-sounding reputations, essentially commonplace subjects, and flashy and hackneyed in execution ;  but he gloried in the celebrity that came from the high prices he was decoyed into paying for them.  For one of Meissionier’s paintings, “ The Arrival at the Chateau,” he paid $40,000, and on one of his visits to Paris he enriched Meissionier to the extent of $188,000 for seven paintings.  Not until his corps of art advisers were satisfied that a painter became fashionably talked about, could Vanderbilt be prevailed upon to buy examples of his work.  There was something intensely magical in the ease and cheapness with which he acquired the reputation of being a “ connoisseur of art.”  Neither knowledge nor appreciation were required ;  with the expenditure of a few hundred thousand dollars he instantaneously transformed himself from a heavy-witted, uncultured money hoarder into the character of a surpassing “ judge and patron of art.” And his pretensions were seriously accepted by the uninformed, absorbing their opinions from the newspapers.

“THE PUBLIC BE DAMNED.”

If he had discreetly comported himself in other respects he might have passed tolerably well as an extremely public-spirited and philanthropic man.  After every great fraud that he put through he would usually throw out to the public some ostentatious gift or donation.  This would furnish a new ground to the sycophantic chorus for extolling his fine qualities.  But he happened to inherit his father’s irascibility and extreme contempt for the public whom he exploited.  Unfortunately for him, he let out on one memorable occasion his real sentiments.  Asked by a reporter why he did not consider public convenience in the running of his trains, he blurted out, “ The public be damned !”
It was assuredly a superfluous question and answer ;  but expressed so sententiously, and published, as it was, throughout the length and breadth of the land, it excited deep popular resentment.  He was made the target for general denunciation and execration, although unreasonably so, for he had but given candid and succinct utterance to the actuating principle of the whole capitalist class.  The moral of this incident impressed itself sharply upon the minds of the masterly rich, and to this day has greatly contributed to the politic manner of their exterior conduct.  They learned that however in private they might safely sneer at the mass of the people as created for their manipulation and enrichment, they must not declare so publicly.  Far wiser is it, they have come to understand, to confine spoliation to action, while in outward speech affirming the most mellifluous and touching professions of solicitude for public interests.

ADDS $100,000,000 

IN SEVEN YEARS.

But William H. Vanderbilt was little affected by this outburst of public rage.  He could well afford to smile cynically at it, so long as no definite move was taken to interfere with his privileges, power and possessions.  Since his father’s death he had added fully $100,000,000 to his wealth, all within a short period.  It had taken Commodore Vanderbilt more than thirty years to establish the fortune of $105,000,000 he left.  With a greater population and greater resources to prey upon, William H. Vanderbilt almost doubled the amount in seven years.  In January, 1883, he confided to a friend that he was worth $194,000,000.  “ I am the richest man in the world,” he went on.  “ In England the Duke of Westminster is said to be worth $200,000,000, but it is mostly in land and houses and does not pay two per cent.”⁷  In the same breath that he boasted of his wealth he would bewail the ill-health condemning him to be a victim of insomnia and indigestion.
Having a clear income of $10,350,000 a year, he kept his ordinary expenses down to $200,000 a year.  Whatever an air of indifference he would assume in his grandee rôle of “art collector,” yet in most other matters he was inveterately closefisted.  He had a delusion that “ everybody in the world was ready to take advantage of him,” and he regarded “ men and women, as a rule, as a pretty bad lot.”⁸    This incident — one of many similar incidents narrated by Croffut — reveals his microscopic vigilance in detecting impositions :

When in active control of affairs at the office he followed the unwholesome habit of eating the midday lunch at his desk, the waiter bringing it in from a neighboring restaurant.

He paid his bill for this weekly, and he always scrutinized the items with proper care.  “Was I here last Thursday ?” he asked of a clerk at an adjoining desk.

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

“So I thought,” he said, and struck that day from the bill.  Another time he would exclaim, sotto voce, “ I didn’t order coffee last Tuesday,” and that item would vanish.

Up to the very last second of his life his mind was filled with a whirl of business schemes ;  it was while discussing railroad plans with Robert Garrett in his mansion, on December 8, 1885, that he suddenly shot forward from his chair and fell apoplectically to the floor, and in a twinkling was dead.  Servants ran to and fro excitedly ;  messengers were dispatched to summon his sons ;  telegrams flashed the intelligence far and wide.
The passing away of the greatest of men could not have received a tithe of the excitement and attention caused by William H. Vanderbilt’s death.  The newspaper offices hotly issued page after page of description, not without sufficient reason.  For he, although untitled and vested with no official power, was in actuality an autocrat ;  dictatorship by money bags was an established fact ;  and while the man died, his corporate wealth, the real director and center, to a large extent, of government functions, survived unimpaired.
He had abundantly proved his autocracy.  Law after law had he violated ;  like his father he had corrupted and intimidated, had bought laws, ignored such as were unsuited to his interests, and had decreed his own rules and codes.  Progressively bolder had the money kings become in coming out into the open in the directing of Government.  Long had they prudently skulked behind forms, devices and shams ;  they had operated secretly through tools in office, while virtuously disclaiming any insidious connection with politics.  But no observer took this pretence seriously.  James Bryce, fresh from England, delving into the complexities and incongruities of American politics at about this time, wrote that “ these railway kings are among the greatest men, perhaps I may say, the greatest men in America,” which term, “ greatest,” was a ludicrously reverent way of describing their qualities.  “ They have power,” he goes on in the same work, “ more power — that is, more opportunity to make their will prevail, than perhaps any one in political life except the President or the Speaker, who, after all, hold theirs only for four years and two years, while the railroad monarch holds his for life.”⁹  Bryce was not well enough acquainted with the windings and depths of American political workings to know that the money kings had more power than President or Speaker, not nominally, but essentially.  He further relates how when a railroad magnate traveled, his journey was like a royal progress ;  Governors of States and Territories bowed before him ;  Legislatures received him in solemn session ;  cities and towns sought to propitiate him, for had he not the means of making or marring a city’s fortunes ?  “ You cannot turn in any direction in American politics,” wrote Richard T. Ely a little later, “ without discovering the railway power.  It is the power behind the throne.  It is a correct popular instinct which designates the leading men in the railways, railroad magnates or kings. ... Its power ramifies in every direction, its roots reaching counting rooms, editorial sanctums, schools and churches which it supports with a part of its revenues, as well as courts and Legislatures.” . . .¹⁰

HIS DEATH A NOTABLE EVENT.

Vanderbilt’s death, as that of one of the real monarchs of the day, was an event of transcendent importance, and was treated so.  The vocabulary was ransacked to find adjectives glowing enough to describe his enterprise, foresight, sagacity and integrity.  Much elaborated upon was the fiction that he had increased his fortune by honest, legitimate means — a fiction still disseminated by those shallow or mercenary writers whose trade is to spread orthodox belief in existing conditions.  The underlying facts of his career and methods were purposely suppressed, and a nauseating sort of panegyric substituted.  Who did not know that he had bribed Legislature after Legislature, and had constantly resorted to conspiracy and fraud ?  Not one of his eulogists was innocent of this knowledge ;  the record of it was too public and palpable to justify doubts of its truth.  The extent of his possessions and the size of his fortune aroused wonderment, but no effort was made to contrast the immense wealth bequeathed by one man with the dire poverty on every hand, nor to connect those two conditions.
At the very time his wealth was being inventoried at $200,000,000, not less than a million wage earners were out of employment,” while the millions at work received the scantiest wages.  Nearly three millions of people had been completely pauperized, and, in one way or another, had to be supported at public expense.  Once in a rare while, some perceptive and unshackled public official might pierce the sophistries of the day and reveal the cause of this widespread poverty, as Ira Steward did in the fourth annual report of the Massachusetts Bureau of Statistics of Labor for 1873.
“ It is the enormous profits,” he pointedly wrote, “made directly upon the labor of the wage classes, and indirectly through the results of their labor, that, first, keeps them poor, and, second, furnishes the capital that is finally loaned back to them again “ at high rates of interest.  Unquestionably sound and true was this explanation, yet of what avail was it if the causes of their poverty were withheld from the active knowledge of the mass of the wage workers ?  It was the special business of the newspapers, the magazines, the pulpit and the politicians to ignore, suppress or twist every particle of information that might enlighten or arouse the mass of people ;  if these agencies were so obtuse or recalcitrant as not to know their expected place and duty at critical times, they were quickly reminded of them by the propertied classes.  To any newspaper owner, clergyman or politician showing a tendency to radicalism, the punishment came quickly.  The newspaper owner was deprived of advertisements and accommodations, the clergyman was insidiously hounded out of his pulpit by his own church associations, the funds of which came from men of wealth, and the politician was ridiculed and was summarily retired to private life by corrupt means.  As for genuinely honest administrative officials (as distinguished from the apparently honest) who exposed prevalent conditions and sought to remedy them in their particular departments, they were eventually got rid of by a similar campaign of calumny and corrupt influences.

HIS FRAUDS IN EVADING TAXES.

As in the larger sense all criticism of conditions was systematically smothered, so were details of the methods of the rich carefully obscured or altogether passed by in silence.  At Vanderbilt’s death the newspapers laved in gorgeous descriptions of his mansion.  Yet apart from the proceeds of his great frauds, the amounts out of which he had cheated the city and State in taxation were alone much more than enough to have paid for his splendor of living.  Like the Astors, the Goelets, Marshall Field and every other millionaire without exception, he continuously defrauded in taxes.

 

We have seen how the Vanderbilt's seized hold of tens of millions of dollars of bonds by fraud.  Certain of their railroad stocks were exempted from individual taxation, but railroad bonds ranked as taxable personal property.  Year after year William H. Vanderbilt had perjured himself in swearing that his personal property did not exceed $500.000.  On more than this amount he would not pay.  When at his death his will revealed to the public the proportions of his estate, the New York City Commissioners of Assessments and Taxes made an apparent effort to collect some of the millions of dollars out of which he had cheated the city.  It was now that the obsequious and time-serving Depew, grown gray and wrinkled in the retainership of the Vanderbilt generations, came forward with this threat :  “ He informed us,” testified Michael Coleman, president of the commission, “ that if we attempted to press too hard he would take proceedings by which most of the securities would be placed beyond our reach so that we could not tax them.  The Vanderbilt family could convert everything they had into non-taxable securities, such as New York Central, Government and city bonds, Delaware and Lackawanna, and Delaware and Western Railroad stocks, and pay not a dollar provided they wished to do so.”¹²
The Vanderbilt estate compromised by paying the city a mere part of the sum owed.  It succeeded in keeping the greatest part of its possessions immune from taxation, in doing which it but did what the whole of the large propertied class was doing, as was disclosed in further detailed testimony before the New York Senate Committee on Cities in 1890.

HIS WILL TRANSMITS $200,000,000.

Unlike his father, William H. Vanderbilt did not bequeath the major portion of his fortune to one son.  He left $50,000,000 equally to each of his two sons, Cornelius and William K. Vanderbilt.  Supplementing the fortunes they already had, these legacies swelled their individual fortunes to approximately $100,000,000 each — about the same amount as their father had himself inherited.  The remaining $100,000,000 was thus disposed of in William H. Vanderbilt’s will :  $40,000,000, in railroad and other securities, was set apart as a trust fund, the income of which was to be apportioned equally among each of his eight children.  This provided them each with an annual income of $500,000.  In turn, the principal was to descend to their children, as they should direct by will.  Another $40,000,000 was shared outright among his eight children.  The remaining $20,000,000 was variously divided :  the greater part to his widow ;  $2,000,000 as an additional gift to Cornelius ;  $1,000,000 to a favorite grandson ;  sundry items to other relatives and friends, and about $1,000,000 to charitable and public institutions.
He was buried in a mausoleum costing $300,000, which he himself had ordered to be built at New Dorp, Staten Island ; and there to-day his ashes lie, splendidly interred, while millions of the living plundered and disinherited are suffered to live in the deadly congestion of miserable habitations.

Chapter 5 Notes

¹ Report of the New York and Erie Railroad Company, New York State Assembly Document No. 50, 1842.

² In 1837 when he had advanced funds to a contractor carrying the mails between Washington and Richmond, and had taken security which proved to be worthless.

³ See Report of New York Special Assembly Committee on Railroads, 1879, iv: 3,894.

⁴ Statement of William M. Tweed before a Special Investigating Committee of the New York Board of Aldermen.  Documents of the Board of Aldermen, 1877, Part II. Document No. 8:15-16.

⁵ Documents of the Board of Aldermen, 1877, Part II, No. 8:212-213.

⁶ Report of Assembly Committee on Railroads, testimony of Alexander Robertson, an expert accountant, 1879, i:994-999.

⁷ Ibid., i:21.

⁸ “ Life of Simon Sterne,” by John Foord, 1903:179-181.

⁹ “The Vanderbilts”:103. Croffut in a footnote tells this anecdote “ When the Commodore’s portrait first appeared on the bonds of the Central, a holder of some called one day and said :  ‘Commodore, glad to see your face on them bonds.  It’s worth ten per cent.  It gives everybody confidence.’  The Commodore smiled grimly, the only recognition he ever made of a compliment.  ‘Cause,’ explained the visitor, `when we see that fine, noble brow, it reminds us that you’ll never let anybody else steal anything.’”

^9a Reports of Committees, First Session, Thirtieth Congress, 1847-48, Vol. iii, Report No. 664:3—The committee reported that opium was adulterated with licorice paste and bitter vegetable extract ;  calomel, with chalk and sulphate of barytes ;  quinine, with silicine, chalk and sulphate of barytes ;  castor, with dried blood, gum and ammonia ;  gum assafœtida with inferior gums, chalk and clay, etc., etc. (pp. 10 and 11).

¹⁰ House Reports, Third Session, Forty-sixth Congress, 1880-81, Vol. i, Report No. 199:I.  The committee drafted a bill for the prevention of these frauds ;  the capitalists concerned smothered it.

¹¹ House Reports, First Session, Forty-seventh Congress, 1881-82, Vol. ii, Report No. 634:1-5.

¹² These forms of cheating exist at present to a greater extent than ever before.  It is estimated that manufacturers and shopkeepers cheat the people of the United States out of $200,000,000 a year by the light-weight and short-weight frauds.  In 1907 the New York State Sealer of Weights and Measures asserted that, in that State alone, $20,000,000 was robbed from the consumers annually by these methods.  Recent investigations by the Bureau of Standards of the United States Department of Commerce and Labor have shown that immense numbers of “crooked” scales are in use.  It has been conclusively established by the investigations of Federal, State and municipal inspectors of weights and measures that there is hardly an article put up in bottled or canned form that is not short of the weight for which it is sold, nor is there scarcely a retail dealer who does not swindle his customers by the light-weight fraud.  There are manufacturers who make a specific business of turning out fraudulent scales, and who freely advertise the cheating merits of these scales.

¹³ A few progressive jurists in the International Prison Congress are attempting to secure the recognition in law of the principle that society, as a supreme necessity, is obligated to protect its members from being made the victims of the cunning and unscrupulous.  They have received no encouragement, and will receive none, from a trading class profiting from the very methods which it is sought to place under the inhibition of criminal law.

¹⁴ Commodore Vanderbilt’s descendants, the present Vanderbilts, have been using the public outcry for a reform of conditions on the West Side of New York City, precisely as the original Vanderbilt utilized that for the improvement of Fourth avenue.  The Hudson River division of the New York Central and Hudson River Railroad has hitherto extended downtown on the surface of Tenth and Eleventh Avenues and other thoroughfares.  Large numbers of people have been killed and injured.  For decades there has been a public demand that these dangerous conditions be remedied or removed.  The Vanderbilts have as long resisted the demand ;  the immense numbers of casualties had no effect upon them.  When the public demand became too strong to be ignored longer, they set about to exploit it in order to get a comprehensive franchise with incalculable new privileges.

¹⁵ Not alone he.  In a tabulated report made public on February 1, 1872, the New York Council of Political Reform charged that in the single item of surface railways, New York City for a long period had been swindled annually out of at least a million dollars.  This was an underestimate.  All other sections of the capitalist class swindled likewise in taxes.

¹⁶ Roscoe Conkling, a noted Republican politician, said of him :  “Chauncey Depew ?  Oh, you mean the man that Vanderbilt sends to Albany every winter to say `haw’ and `gee’ to his cattle up there.”

¹⁷ No observation could be truer. As a class, the manufacturers were flourishing on stolen inventions.  There might be exceptions, but they were very rare.  Year after year, decade after decade, the reports of the various Commissioners of Patents pointed out the indiscriminate theft of inventions by the capitalists.  In previous chapters we have referred to the plundering of Whitney and Goodyear.  But they were only two of a vast number of inventors similarly defrauded.
      In speaking of the helplessness of inventors, J. Holt, Commissioner of Patents, wrote in his Annual Report for 1857 :  “The insolence and unscrupulousness of capital, subsidizing and leading on its minions in the work of pirating some valuable invention held by powerless hands, can scarcely by conceived by those not familiar with the records of such cases as I have referred to.  Inventors, however gifted in other respects, are known to be confiding and thriftless ;  and being generally without wealth, and always without knowledge of the chicaneries of law, they too often prove but children in those rude conflicts which they are called on to endure with the stalwart fraud and cunning of the world.”  (U.S. Senate Documents, First Session, Thirty-fifth Congress, 1857-58, viii : 9-10).  In his Annual Report for 1858, Commissioner Holt described how inventors were at the mercy of professional perjurers whom the capitalists hired to give evidence.
      The bribing of Patent office officials was a common occurrence.  “The attention of Congress,” reported Commissioner of Patents Charles Mason in 1854, “is invited to the importance of providing some adequate means of preventing attempts to obtain patents by improper means.”  Several cases of “attempted bribery” had occurred within the year, stated Commissioner Mason.  (Executive Documents, First Session, Thirty-third Congress, 1853-54, Vol vii, Part I: 19-20.)  Every successive Commissioner of Patents called upon Congress to pass laws for the prevention of fraud, and for the better protection of the inventor, but Congress, influenced by the manufacturers, was deaf to these appeals.

¹⁸ “ Certain to breed immorality.”  See report of Carrol D. Wright, Massachusetts Bureau of Statistics of Labor, 1881.  A cotton mill operative testified :  “Young girls from fourteen and upward learn more wickedness in one year than they would in five out of a mill.”  See also the numerous recent reports of the National Child Labor Committee.

¹⁹ The heroism of the cotton operatives was extraordinary.  Slaves themselves, they battled to exterminate negro slavery.  “ The spinner’s union,” says McNeill, “ was almost dead during the [Civil] war, as most of its members had gone to shoulder the musket and to fight . . . to strike the shackles from the negro.  A large number were slain in battle.”—“The Labor Movement”:216-217.

²⁰ “ Monopolies and the People :” 155-156.

Chapter 6 Notes
___________________________________

1 These and similar anecdotes are to be found incidentally mentioned in a two-rage biography, very laudatory on the whole, in the New York ” “Times,” issue of January 5, 1877.

2 “The Vanderbilts ”: 113.

3 To Cornelius J. Vanderbilt, the Commodore’s “ wayward ” son, only the income derived from $200,000 was bequeathed, upon the condition that he should forfeit even this legacy if he contested the will.  Nevertheless, he brought a contest suit.  William H. Vanderbilt compromised the suit by giving to his brother the income on $1,000,000.  On April 2, 1882, Cornelius J. Vanderbilt shot and killed himself.  Croffut gives this highly enlightening account of the compromising of the suit.
      “ At least two of the sisters had sympathized with ` Cornele’s’ suit, and had given him aid and comfort :  neither of them liking the legatee, and one of them not having been for years on speaking terms with him ;  but now, in addition to the bequests made to his sisters, William H. voluntarily [sic] added $500,000 to each from his own portion.
      “He drove around one evening, and distributed this splendid largess from his carriage, he himself carrying the bonds into each house in his arms and delivering them to each sister in turn.  The donation was accompanied by two interesting incidents.  In one case the husband said, ‘William, I’ve made a quick calculation here, and I find these bonds don’t amount to quite $500,000.  They’re $150 short, at the price quoted today.’  The donor smiled, and sat down and made out his check for the sum to balance.
      “ In another case, a husband, after counting and receipting for the $500,000, followed the generous visitor out of the door, and said, ‘ By the way, if you conclude to give the other sisters any more, you’ll see that we fare as well as any of them, won’t you ?’  The donor jumped into his carriage and drove off without replying, only saying, with a laugh, to his companions, ` Well, what do you think o’ that ?’”—“ The Vanderbilts ”:151-152.

4 Postmaster General Vilas, Annual Report for 1887:56.  In a debate in the United States Senate on February 11, 1905, Senator Pettigrew quoted Postmaster General Wanamaker as saying that “the railroad companies see to it that the representatives in Congress in both branches take care of the interests of the railway people, and that it is practically impossible to procure legislation in the way of reducing expenses.”

5 “ The Battles of Labor ”: 122.  In all, the railroad companies secured approximately $22,000,000 from the public treasury in Pennsylvania as indemnity for property destroyed during these “ riots.”  In a subsequent chapter, the corruption of the operation is described.

6 Van Oss’ “American Railroads As Investments”: 126. Professor Frank Parsons, in his “Railways, the Trusts and the People,” incorrectly ascribes this juggling to Commodore Vanderbilt.

7 Related in the New York “ Times,” issue of December 9, 1885.

8 “ The Vanderbilts ” : 127.

9 “The American Commonwealth,” First Ed.: 515.

10 “ The Independent,” issue of August 28, 1890.

11 “It is probably true,” said Carroll D. Wright in the United States Labor Report for 1886, “that this total (in round numbers 1,000,000) as representing the unemployed at any one time in the United States, is fairly representative.”

12 The New York Senate Committee on Cities, 1890, iii: 2355-2356.