The vessels accepted by Vanderbilt, and contracted to be paid for at high prices, were in shockingly bad condition. Vanderbilt was one of the few men in the secret of the destination of Banks' expedition; he knew that the ships had to make an ocean trip. Yet he bought for $10,000 the Niagara, an old boat that had been built nearly a score of years before for trade on Lake Ontario. "In perfectly smooth weather," reported Senator Grimes, of Iowa, "with a calm sea, the planks were ripped out of her, and exhibited to the gaze of the indignant soldiers on board, showing that her timbers were rotten. The committee have in their committee room a large sample of one of the beams of this vessel to show that it has not the slightest capacity to hold a nail." [Footnote: The Congressional Globe, Thirty- seventh Congress, Third Session, 1862-63, Part 1: 610.] Senator Grimes continued:
If Senators will refer to page 18 of this report, they will see that for the steamer Eastern Queen he (Vanderbilt) paid $900 a day for the first thirty days, and $800 for the residue of the days; while she (the Eastern Queen) had been chartered by the Government, for the Burnside expedition at $500 a day, making a difference of three or four hundred dollars a day. He paid for the Quinebang $250 a day, while she had been chartered to the Government at one time for $130 a day. For the Shetucket he paid $250 a day, while she had formerly been in our employ for $150 a day. He paid for the Charles Osgood $250 a day, while we had chartered her for $150. He paid $250 a day for the James S. Green, while we had once had a charter of her for $200. He paid $450 a day for the Salvor, while she had been chartered to the Government for $300. He paid $250 a day for the Albany, while she had been chartered to the Government for $150. He paid $250 a day for the Jersey Blue, while she had been chartered to the Government for $150. [Footnote: The Congressional Globe, etc., 1862-63, Part i:610.]
There were a few of the many vessels chartered by Vanderbilt through Southard for the Government. For vessels bought outright, extravagant sums were paid. Ambrose Snow, a well-known shipping merchant, testified that "when we got to Commodore Vanderbilt we were referred to Mr. Southard; when we went to Mr. Southard, we were told that we should have to pay him a commission of five per cent." [Footnote: Ibid. See also Senate Report No. 84, 1863, embracing the full testimony.]
Other shipping merchants corroborated this testimony. The methods and extent of these great frauds were clear. If the ship owners agreed to pay Southard five—and very often he exacted ten per cent. [Footnote: Senator Hale asserted that he had heard of the exacting of a brokerage equal to ten per cent, in Boston and elsewhere.]— Vanderbilt would agree to pay them enormous sums. In giving his testimony Vanderbilt sought to show that he was actuated by the most patriotic motives. But it was obvious that he was in collusion with Southard, and received the greater part of the plunder.
On some of the vessels chartered by Vanderbilt, vessels that under the immigration act would not have been allowed to carry more than three hundred passengers, not less than nine hundred and fifty soldiers were packed. Most of the vessels were antiquated and inadequate; not a few were badly decayed. With a little superficial patching up they were imposed upon the Government. Despite his knowing that only vessels adapted for ocean service were needed, Vanderbilt chartered craft that had hitherto been almost entirely used in navigating inland waters. Not a single precaution was taken by him or his associates to safeguard the lives of the soldiers.
It was a rule amoung commercial men that at least two men capable of navigating should be aboard, especially at sea. Yet, with the lives of thousands of soldiers at stake, and with old and bad vessels in use at that, Vanderbilt, in more than one instance, as the testimony showed, neglected to hire more than one navigator, and failed to provide instruments and charts. In stating these facts Senator Grimes said: "When the question was asked of Commodore Vanderbilt and of other gentlemen in connection with the expedition, why this was, and why they did not take navigators and instruments and charts on board, the answer was that the insurance companies and owners of the vessel took that risk, as though"—Senator Grimes bitingly continued—"the Government had no risk in the lives of its valiant men whom it has enlisted under its banner and set out in an expedition of this kind." [Footnote: The Congressional Globe, Thirty-seventh Congress, Third Session, 1862-63, Part i: 586.] If the expedition had encountered a severe storm at Cape Hatteras, for instance, it is probable that most of the vessels would have been wrecked. Luckily the voyage was fair.
Did the Government make any move to arrest, indict and imprison Vanderbilt and his tools? None. The farcical ending of these revelations was the introduction in the United States Senate of a mere resolution censuring them as "guilty of negligence."
Vanderbilt immediately got busy pulling wires; and when the resolution came up for vote, a number of Senators, led by Senator Hale, sprang up to withdraw Vanderbilt's name. Senator Grimes thereupon caustically denounced Vanderbilt. "The whole transaction," said he, "shows a chapter of fraud from beginning to end." He went on: "Men making the most open professions of loyalty and of patriotism and of perfect disinterestedness, coming before the committee and swearing that they acted from such motives solely, were compelled to admit—at least one or two were—that in some instances they received as high as six and a quarter per cent … and I believe that since then the committee are satisfied in their own mind that the per cent. was greater than was in testimony before them." Senator Grimes added that he did not believe that Vanderbilt's name should be stricken from the resolution.
In vain, however, did Senator Grimes plead. Vanderbilt's name was expunged, and Southard was made the chief scapegoat. Although Vanderbilt had been tenderly dealt with in the investigation, his criminality was conclusively established. The affair deeply shocked the nation. After all, it was only another of many tragic events demonstrating both the utter inefficiency of capitalist management, and the consistent capitalist program of subordinating every consideration of human life to the mania for profits. Vanderbilt was only a type of his class; although he was found out he deserved condemnation no more than thousands of other capitalists, great and small, whose methods at bottom did not vary from his. [Footnote: One of the grossest and most prevalent forms of fraud was that of selling doctored-up horses to the Union army. Important cavalry movements were often delayed and jeoparded by this kind of fraud. In passing upon the suit of one of these horse contractors against the Government (Daniel Wormser vs. United States) for payment for horses supplied, in 1864, for cavalry use, the Supreme Court of the United States confirmed the charge made by the Government horse inspectors that the plaintiff had been guilty of fraud, and dismissed the case. "The Government," said Justice Bradley in the court's decision, "clearly had the right to proscribe regulations for the inspection of horses, and there was great need for strictness in this regard, for frauds were constantly perpetrated. . . . It is well known that horses may be prepared and fixed up to appear bright and smart for a few hours."—Court of Claims Reports, vii: 257-262.]
Yet such was the network of shams and falsities with which the supreme class of the time enmeshed society, that press, pulpit, university and the so-called statesmen insisted that the wealth of the rich man had its foundation in ability, and that this ability was indispensable in providing for the material wants of mankind.
Whatever obscurity may cloud many of Vanderbilt's methods in the steamship business, his methods in possessing himself of railroads are easily ascertained from official archives.
Late in 1862, at about the time when he had added to the millions that he had virtually stolen in the mail subsidy frauds, the huge profits from his manipulation of the Banks expedition, he set about buying the stock of the New York and Harlem Railroad.
This railroad, the first to enter New York City, had received from the New York Common Council in 1832 a franchise for the exclusive use of Fourth avenue, north of Twenty-third street—a franchise which, it was openly charged, was obtained by distributing bribes in the form of stock among the aldermen. [Footnote: "The History of Tammany Hall": 117.]
The franchise was not construed by the city to be perpetual; certain reservations were embodied giving the city powers of revocation. But as we shall see, Vanderbilt not only corrupted the Legislature in 1872 to pass an act saddling one-half of the expense of depressing the tracks upon the city, but caused the act to be so adroitly worded as to make the franchise perpetual. Along with the franchise to use Fourth avenue, the railroad company secured in 1832 a franchise, free of taxation, to run street cars for the convenience of its passengers from the railroad station (then in the outskirts of New York City) south to Prince street. Subsequently this franchise was extended to Walker street, and in 1851 to Park Row. These were the initial stages of the Fourth Avenue surface line, which has been extended, and has grown into a vested value of tens of millions of dollars. In 1858 the New York and Harlem Railroad Company was forced by action of the Common Council, arising from the protests of the rich residents of Murray Hill, to discontinue steam service below Forty-second street. It, therefore, now had a street car line running from that thoroughfare to the Astor House.
This explanation of antecedent circumstances allows a clearer comprehension of what took place after Vanderbilt had begun buying the stock of the New York and Harlem Railroad. The stock was then selling at $9 a share. This railroad, as was the case with all other railroads, without exception, was run by the owners with only the most languid regard for the public interests and safety. Just as the corporation in the theory of the law was supposed to be a body to whom Government delegated powers to do certain things in the interests of the people, so was the railroad considered theoretically a public highway operated for the convenience of the people. It was upon this ostensible ground that railroad corporations secured charters, franchises, property and such privileges as the right of condemnation of necessary land. The State of New York alone had contributed $8,000,000 in public funds, and various counties, towns and municipalities in New York State nearly $31,000,000 by investment in stocks and bonds. [Footnote: Report of the Special Committe on Railroads of the New York Assembly, 1879, i:7.] The theory was indeed attractive, but it remained nothing more than a fiction.
No sooner did the railroad owners get what they wanted, than they proceeded to exploit the very community from which their possessions were obtained, and which they were supposed to serve. The various railroads were juggled with by succeeding groups of manipulators. Management was neglected, and no attention paid to proper equipment. Often the physical layout of the railroads—the road-beds, rails and cars—were deliberately allowed to deteriorate in order that the manipulators might be able to lower the value and efficiency of the road, and thus depress the value of the stock. Thus, for instance, Vanderbilt aiming to get control of a railroad at a low price, might very well have confederates among some of the directors or officials of that railroad who would resist or slyly thwart every attempt at improvement, and so scheme that the profits would constantly go down. As the profits decreased, so did the price of the stock in the stock market. The changing combinations of railroad capitalists were too absorbed in the process of gambling in the stock market to have any direct concern for management. It was nothing to them that this neglect caused frequent and heartrending disasters; they were not held criminally responsible for the loss of life. In fact, railroad wrecks often served their purpose in beating down the price of stocks. Incredible as this statement may seem, it is abundantly proved by the facts.
After Vanderbilt, by divers machinations of too intricate character to be described here, had succeeded in knocking down the price of New York and Harlem Railroad shares and had bought a controlling part, the price began bounding up. In the middle of April, 1863, it stood at $50 a share. A very decided increase it was, from $9 to $50; evidently enough, to occasion this rise, he had put through some transaction which had added immensely to the profits of the road. What was it?
Sinister rumors preceded what the evening of April 21, 1863, disclosed. He had bribed the New York City Common Council to give to the New York and Harlem Railroad a perpetual franchise for a street railway on Broadway from the Battery to Union Square. He had done what Solomon Kipp and others had done, in 1852, when they had spent $50,000 in bribing the aldermen to give them a franchise for surface lines on Sixth avenue and Eighth avenue; [Footnote: See presentment of Grand Jury of February 26, 1853, and accompanying testimony, Documents of the (New York) Board of Aldermen, Doc. No. XXI, Part II, No. 55.] what Elijah F. Purdy and others had done in the same year in bribing aldermen with a fund of $28,000 to give them the franchise for a surface line on Third avenue; [Footnote: Ibid., 1333-1335.] what George Law and other capitalists had done, in 1852, in bribing the aldermen to give them the franchises for street car lines on Second avenue and Ninth avenue. Only three years before—in 1860— Vanderbilt had seen Jacob Sharp and others bribe the New York Legislature (which in that same year had passed an act depriving the New York Common Council of the power of franchise granting) to give them franchises for street car lines on Seventh avenue, on Tenth avenue, on Forty-second street, on Avenue D and a franchise for the "Belt" line. It was generally believed that the passage of these five bills cost the projectors $250,000 in money and stock distributed among the purchasable members of the Legislature. [Footnote: See "The History of Public Franchises in New York City": 120-125.]
Of all the New York City street railway franchises, either appropriated or unappropriated, the Broadway line was considered the most profitable. So valuable were its present and potential prospects estimated that in 1852 Thomas E. Davies and his associates had offered, in return for the franchise, to carry passengers for a three-cent fare and to pay the city a million-dollar bonus. Other eager capitalists had hastened to offer the city a continuous payment of $100,000 a year. Similar futile attempts had been made year after year to get the franchise. The rich residents of Broadway opposed a street car line, believing it would subject them to noise and discomfort; likewise the stage owners, intent upon keeping up their monopoly, fought against it. In 1863 the bare rights of the Broadway franchise were considered to be worth fully $10,000,000. Vanderbilt and George Law were now frantically competing for this franchise. While Vanderbilt was corrupting the Common Council, Law was corrupting the legislature. [Footnote: The business rivalry between Vanderbilt and Law was intensified by the deepest personal enmity on Law's part. As one of the chief owners of the United States Mail Steamship Company, Law was extremely bitter on the score of Vanderbilt's having been able to blackmail him and Roberts so heavily and successfully.] Such competition on the part of capitalists in corrupting public bodies was very frequent.
But the aldermen were by no means unschooled in the current sharp practices of commercialism. A strong cabal of them hatched up a scheme by which they would take Vanderbilt's bribe money, and then ambush him for still greater spoils. They knew that even if they gave him the franchise, its validity would not stand the test of the courts. The Legislature claimed the exclusive power of granting franchises; astute lawyers assured them that this claim would be upheld. Their plan was to grant a franchise for the Broadway line to the New York and Harlem Railroad. This would at once send up the price of the stock. The Legislature, it was certain, would give a franchise for the same surface line to Law. When the courts decided against the Common Council that body, in a spirit of showy deference, would promptly pass an ordinance repealing the franchise. In the meantime, the aldermen and their political and Wall Street confederates would contract to "sell short" large quantities of New York and Harlem stock.
The method was simple. When that railroad stock was selling at $100 a share upon the strength of getting the Broadway franchise, the aldermen would find many persons willing to contract for its delivery in a month at a price, say, of $90 a share. By either the repealing of the franchise ordinance or affected by adverse court decisions, the stock inevitably would sink to a much lower price. At this low price the aldermen and their confederates would buy the stock and then deliver it, compelling the contracting parties to pay the agreed price of $90 a share. The difference between the stipulated price of delivery and the value to which the stock had fallen—$30, $40 or $50 a share—would represent the winnings.
But an unlooked for obstacle was encountered. Vanderbilt had somehow got wind of the affair, and with instant energy bought up secretly all of the New York and Harlem Railroad stock he could. He had masses of ready money to do it with; the millions from the mail subsidy frauds and from his other lootings of the public treasury proved an unfailing source of supply. Presently, he had enough of the stock to corner his antagonists badly. He then put his own price upon it, eventually pushing it up to $170 a share. To get the stock that they contracted to deliver, the combination of politicians and Wall Street bankers and brokers had to buy it from him at his own price; there was no outstanding stock elsewhere. The old man was pitiless; he mulcted them $179 a share. In his version, Croffut says of Vanderbilt: "He and his partners in the bull movement took a million dollars from the Common Council that week and other millions from others." [Footnote: "The Vanderbilts," etc: 75.]
The New York and Harlem Railroad was now his, as absolutely almost as the very clothes he wore. Little it mattered that he did not hold all of the stock; he owned a preponderance enough to rule the railroad as despotically as he pleased. Not a foot it had he surveyed or constructed; this task had been done by the mental and manual labor of thousands of wage workers not one of whom now owned the vestige of an interest in it. For their toil these wage workers had nothing to show but poverty. But Vanderbilt had swept in a railroad system by merely using in cunning and unscrupulous ways a few of the millions he had defrauded from the national treasury.
Having found it so easy to get one railroad, he promptly went ahead to annex other railroads. By 1864 he loomed up as the owner of a controlling mass of stock in the New York and Hudson River Railroad. This line paralleled the Hudson River, and had a terminal in the downtown section of New York City. In a way it was a competitor of the New York and Harlem Railroad.
The old magnate now conceived a brilliant idea. Why not consolidate the two roads? True, to bring about this consolidation an authorizing act of the New York Legislature was necessary. But there was little doubt of the Legislature balking. Vanderbilt well knew the means to insure its passage. In those years, when the people were taught to look upon competition as indispensable, there was deep popular opposition to the consolidating of competing interests. This, it was feared, would inflict monopoly.
The cost of buying legislators to pass an act so provocative of popular indignation would be considerable, but, at the same time, it would not be more than a trifle compared with the immense profits he would gain. The consolidation would allow him to increase, or, as the phrase went, water, the stock of the combined roads. Although substantially owner of the two railroads, he was legally two separate entities—or, rather, the corporations were. As owner of one line he could bargain with himself as owner of the other, and could determine what the exchange purchase price should be. So, by a juggle, he could issue enormous quantities of bonds and stocks to himself. These many millions of bonds and stocks would not cost him personally a cent. The sole expense—the bribe funds and the cost of engraving—he would charge against his corporations. Immediately, these stocks and bonds would be vested with a high value, inasmuch as they would represent mortgages upon the productivity of tens of millions of people of that generation, and of still greater numbers of future generations. By putting up traffic rates and lowering wages, dividends would be paid upon the entire outpouring of stock, thus beyond a doubt insuring its permanent value. [Footnote: Even Croffut, Vanderbilt's foremost eulogist, cynically grows merry over Vanderbilt's methods which he thus summarizes: "(1) Buy your railroad; (2) stop the stealing that went on under the other man; (3) improve the road in every practicable way within a reasonable expenditure; (4) consolidate it with any other road that can be run with it economically; (5) water its stock; (6) make it pay a large dividend."]
A majority of the New York Legislature was bought. It looked as if the consolidation act would go through without difficulty. Surreptitiously, however, certain leading men in the Legislature plotted with the Wall Street opponents of Vanderbilt to repeat the trick attempted by the New York aldermen in 1863. The bill would be introduced and reported favorably; every open indication would be manifested of keeping faith with Vanderbilt. Upon the certainty of its passage the market value of the stock would rise. With their prearranged plan of defeating the bill at the last moment upon some plausible pretext, the clique in the meantime would be busy selling short.
Information of this treachery came to Vanderbilt in time. He retaliated as he had upon the New York aldermen; put the price of New York and Harlem stock up to $285 a share and held it there until after he was settled with. With his chief partner, John Tobin, he was credited with pocketing many millions of dollars. To make their corner certain, the Vanderbilt pool had bought 27,000 more shares than the entire existing stock of the road. "We busted the whole Legislature," was Vanderbilt's jubilant comment, "and scores of the honorable members had to go home without paying their board bills."
The numerous millions taken in by Vanderbilt in these transactions came from a host of other men who would have plundered him as quickly as he plundered them. They came from members of the Legislature who had grown rich on bribes for granting a continuous succession of special privileges, or to put it in a more comprehensible form, licenses to individuals and corporations to prey in a thousand and one forms upon the people. They came from bankers, railroad, land and factory owners, all of whom had assiduously bribed Congress, legislatures, common councils and administrative officials to give them special laws and rights by which they could all the more easily and securely grasp the produce of the many, and hold it intact without even a semblance of taxation.
The very nature of that system of gambling called stock-market or cotton or produce exchange speculation showed at once the sharply- defined disparities and discriminations in law.
Common gambling, so-called, was a crime. The gambling of the exchanges was legitimate and legalized, and the men who thus gambled with the resources of the nation were esteemed as highly respectable and responsible leaders of the community. For a penniless man to sell anything he did not own, or which was not in existence, was held a heinous crime and was severely punished by a long prison term. But the members of the all-powerful propertied class could contract to deliver stocks which they did not own or which were non-existent, or they could gamble in produce often not yet out of the ground, and the law saw no criminal act in their performances.
Far from being under the inhibition of law, their methods were duly legalized. The explanation was not hard to find. These same propertied classes had made the code of laws as it stood; and if any doubter denies that laws at all times have exactly corresponded with the interest and aims of the ruling class, all that is necessary is to compare the laws of the different periods with the profitable methods of that class, and he will find that these methods, however despicable, vile and cruel, were not only indulgently omitted from the recognized category of crimes but were elevated by prevalent teaching to be commercial virtues and ability of a high order.
With two railroads in his possession Vanderbilt cast about to drag in a third. This was the New York Central Railroad, one of the richest in the country.
Vanderbilt's eulogists, in depicting him as a masterful constructionist, assert that it was he who first saw the waste and futility of competition, and that he organized the New York Central from the disjointed, disconnected lines of a number of previously separate little railroads. This is a gross error.
The consolidation was formed in 1853 at the time when Vanderbilt was plundering from the United States treasury the millions with which he began to buy in railroads nine years later. The New York Central arose from the union of ten little railroads, some running in the territory between Albany and Buffalo, and others merely projected, but which had nevertheless been capitalized as though they were actually in operation.
The cost of construction of these eleven roads was about $10,000,000, but they were capitalized at $23,000,000. Under the consolidating act of 1853 the capitalization was run up to about $35,000,000. This fictitious capital was partly based on roads which were never built, and existing on paper only. Then followed a series of legislative acts giving the company a further list of valuable franchises and allowing it to charge extortionate rates, inflate its stock, and virtually escape taxation. How these laws were procured may be judged from the testimony of the treasurer of the New York Central railroad before a committee of the New York State Constitutional Convention. This official stated that from about 1853 to 1867 the New York Central had spent hundreds of thousands of dollars for "legislative purposes,"—in other words, buying laws at Albany.
Vanderbilt considered it unnecessary to buy New York Central stock to get control. He had a much better and subtler plan. The Hudson River Railroad was at that time the only through road running from New York to Albany. To get its passengers and freight to New York City the New York Central had to make a transfer at Albany. Vanderbilt now deliberately began to wreck the New York Central. He sent out an order in 1865 to all Hudson River Railroad employees to refuse to connect with the New York Central and to take no more freight. This move could not do otherwise than seriously cripple the facilities and lower the profits of the New York Central. Consequently, the value of its stock was bound to go precipitately down.
The people of the United States were treated to an ironic sight. Here was a man who only eight years before had been shown up in Congress as an arch plunderer; a man who had bought his railroads largely with his looted millions; a man who, if the laws had been drafted and executed justly, would have been condoning his frauds in prison;— this man was contemptuously and openly defying the very people whose interests the railroads were supposed to serve. In this conflict between warring sets of capitalists, as in all similar conflicts, public convenience was made sport of. Hudson River trains going north no longer crossed the Hudson River to enter Albany; they stopped half a mile east of the bridge leading into that city. This made it impossible to transfer freight. There in the country the trains were arbitrarily stopped for the night; locomotive fires were banked and the passengers were left to shift into Albany the best they could, whether they walked or contrived to hire vehicles. All were turned out of the train—men, women and children—no exceptions were made for sex or infirmity.
The Legislature went through a pretense of investigating what public opinion regarded as a particularly atrocious outrage. Vanderbilt covered this committee with undisguised scorn; it provoked his wrath to be quizzed by a committee of a body many of whose members had accepted his bribes. When he was asked why he had so high-handedly refused to run his trains across the river, the old fox smiled grimly, and to their utter surprise, showed them an old law (which had hitherto remained a dead letter) prohibiting the New York Hudson Railroad from running trains over the Hudson River. This law had been enacted in response to the demand of the New York Central, which wanted no competitor west of Albany. When the committee recovered its breath, its chairman timidly inquired of Vanderbilt why he did not run trains to the river.
"I was not there, gentlemen," said Vanderbilt.
"But what did you do when you heard of it?"
"I did not do anything."
"Why not? Where were you?"
"I was at home, gentlemen," replied Vanderbilt with serene impudence, "playing a rubber of whist, and I never allow anything to interfere with me when I am playing that game. It requires, as you know, undivided attention."
As Vanderbilt had foreseen, the stock of the New York Central went down abruptly; at its lowest point he bought in large quantities. His opponents, Edward Cunard, John Jacob Astor, John Steward and other owners of the New York Central thus saw the directorship pass from their hands. The dispossession they had worked to the Pruyns, the Martins, the Pages and others was now being visited upon them. They found in this old man of seventy-three too cunning and crafty a man to defeat. Rather than lose all, they preferred to choose him as their captain; his was the sort of ability which they could not overcome and to which they must attach themselves. On November 12, 1867, they surrendered wholly and unreservedly. Vanderbilt now installed his own subservient board of directors, and proceeded to put through a fresh program of plunder beside which all his previous schemes were comparatively insignificant.
Vanderbilt's ambition was to become the richest man in America. With three railroads in his possession he now aggressively set out to grasp a fourth—the Erie Railroad. This was another of the railroads built largely with public money. The State of New York had contributed $3,000,000, and other valuable donations had been given.
At the very inception of the railroad corruption began [Footnote: Report of the New York State and Erie Railroad Company, New York State Assembly Document No. 50, 1842.] The tradesmen, landowners and bankers who composed the company bribed the Legislature to relinquish the State's claim, and then looted the railroad with such consummate thoroughness that in order to avert its bankruptcy they were obliged to borrow funds from Daniel Drew. This man was an imposing financial personage in his day. Illiterate, unscrupulous, picturesque in his very iniquities, he had once been a drover, and had gone into the steamboat business with Vanderbilt. He had scraped in wealth partly from that line of traffic, and in part from a succession of buccaneering operations. His loan remaining unpaid, Drew indemnified himself by taking over, in 1857, by foreclosure, the control of the Erie Railroad.
For the next nine years Drew manipulated the stock at will, sending the price up or down as suited his gambling schemes. The railroad degenerated until travel upon it became a menace; one disaster followed another. Drew imperturbably continued his manipulation of the stock market, careless of the condition of the road. At no time was he put to the inconvenience of even being questioned by the public authorities. On the contrary, the more millions he made the greater grew his prestige and power, the higher his standing in the community. Ruling society, influenced solely by money standards, saluted him as a successful man who had his millions, and made no fastidious inquiries as to how he got them. He was a potent man; his villainies passed as great astuteness, his devious cunning as marvelous sagacity.
Vanderbilt resolved to wrest the Erie Railroad out of Drew's hands. By secretly buying its stock he was in a position in 1866 to carry out his designs. He threw Drew and his directors out, but subsequently realizing Drew's usefulness, reinstated him upon condition that he be fully pliable to the Vanderbilt interests. Thereupon Drew brought in as fellow directors two young men, then obscure but of whom the world was to hear much—James Fisk, Jr., and Jay Gould. The narrative of how these three men formed a coalition against Vanderbilt; how they betrayed and then outgeneraled him at every turn; proved themselves of a superior cunning; sold him large quantities of spurious stock; excelled him in corruption; defrauded more than $50,000,000, and succeeded—Gould, at any rate—in keeping most of the plunder—this will be found in detail where it more properly belongs—in the chapter of the Gould fortune describing that part of Gould's career connected with the Erie Railroad.
Baffled in his frantic contest to keep hold of that railroad—a hold that he would have turned into many millions of dollars of immediate loot by fraudulently watering the stock, and then bribing the Legislature to legalize it as Gould did—Vanderbilt at once set in motion a fraudulent plan of his own by which he extorted about $44,000,000 in plunder, the greater portion of which went to swell his fortune.
The year 1868 proved a particularly busy one for Vanderbilt. He was engaged in a desperately devious struggle with Gould. In vain did his agents and lobbyists pour out stacks of money to buy legislative votes enough to defeat the bill legalizing Gould's fraudulent issue of stock. Members of the Legislature impassively took money from both parties. Gould personally appeared at Albany with a satchel containing $500,000 in greenbacks which were rapidly distributed. One Senator, as was disclosed by an investigating committee, accepted $75,000 from Vanderbilt and then $100,000 from Gould, kept both sums,—and voted with the dominant Gould forces. It was only by means of the numerous civil and criminal writs issued by Vanderbilt judges that the old man contrived to force Gould and his accomplices into paying for the stock fraudulently unloaded upon him. The best terms that he could get was an unsatisfactory settlement which still left him to bear a loss of about two millions. The veteran trickster had never before been overreached; all his life, except on one occasion, [Footnote: In 1837 when he had advanced funds to a contractor carrying the mails between Washington and Richmond, and had taken security which proved to be worthless.] he had been the successful sharper; but he was no match for the more agile and equally sly, corrupt and resourceful Gould. It took some time for Vanderbilt to realize this; and it was only after several costly experiences with Gould, that he could bring himself to admit that he could not hope to outdo Gould.
However, Vanderbilt quickly and multitudinously recouped himself for the losses encountered in his Erie assault. Why not, he argued, combine the New York Central and the Hudson River companies into one corporation, and on the strength of it issue a vast amount of additional stock?
The time was ripe for a new mortgage on the labor of that generation and of the generations to follow. Population was wondrously increasing, and with it trade. For years the New York Central had been paying a dividend of eight per cent. But this was only part of the profits. A law had been passed in 1850 authorizing the Legislature to step in whenever the dividends rose above ten per cent, on the railroad's actual cost, and to declare what should be done with the surplus. This law was nothing more or less than a blind to conciliate the people of the State, and let them believe that they would get some returns for the large outlay of public funds advanced to the New York Central. No returns ever came. Vanderbilt, and the different groups before him, in control of the road had easily evaded it, just as in every direction the whole capitalist class pushed aside law whenever law conflicted with its aims and interests. It was the propertyless only for whom the execution of law was intended. Profits from the New York Central were far more than eight per cent.; by perjury and frauds the directors retained sums that should have gone to the State. Every year they prepared a false account of their revenues and expenditures which they submitted to the State officials; they pretended that they annually spent millions of dollars in construction work on the road—work, in reality, never done. [Footnote: See Report of New York Special Assembly Committee on Railroads, 1879, iv: 3,894.] The money was pocketed by them under this device—a device that has since become a favorite of many railroad and public utility corporations.
Unenforced as it was, this law was nevertheless an obstacle in the way of Vanderbilt's plans. Likewise was another, a statute prohibiting both the New York Central Railroad and the Hudson River Railroad from increasing their stock. To understand why this latter law was passed it is necessary to remember that the middle class—the factory owners, jobbers, retail tradesmen and employing farmers—were everywhere seeking by the power of law to prevent the too great development of corporations. These, they apprehended, and with reason, would ultimately engulf them and their fortunes and importance. They knew that each new output of watered stock meant either that the prevailing high freight rates would remain unchanged or would be increased; and while all the charges had to be borne finally by the working class, the middle class sought to have an unrestricted market on its own terms.
It was the opposition of the various groups of this class that Vanderbilt expected and provided against. He was fully aware that the moment he revealed his plan of consolidation boards of trade everywhere would rise in their wrath, denounce him, call together mass meetings, insist upon railroad competition and send pretentious, firebreathing delegates to the State Capitol. Let them thunder, said Vanderbilt placidly. While they were exploding in eruptions of talk he would concentrate at Albany a mass of silent arguments in the form of money and get the necessary legislative votes, which was all he cared about.
Then ensued one of the many comedies familiar to observers of legislative proceedings. It was amusing to the sophisticated to see delegations indignantly betake themselves to Albany, submit voluminous briefs which legislators never read, and with immense gravity argue away for hours to committees which had already been bought. The era was that of the Tweed regime, when the public funds of New York City and State were being looted on a huge scale by the politicians in power, and far more so by the less vulgar but more crafty business classes who spurred Tweed and his confederates on to fresh schemes of spoliation.
Laws were sold at Albany to the highest bidder. "It was impossible," Tweed testified after his downfall, "to do anything there without paying for it; money had to be raised for the passing of bills." [Footnote: Statement of William M. Tweed before Special Investigating Committee of the New York Board of Aldermen. Documents of the Board of Aldermen, 1877, Part II. Document No. 8:15-16.] Decades before this, legislators had been so thoroughly taught by the landowners and bankers how to exchange their votes for cash that now, not only at Albany and Washington, but everywhere in the United States, both legislative and administrative officials haggled in real astute business style for the highest price that they could get.
One noted lobbyist stated in 1868 that for a favorable report on a certain bill before the New York Senate, $5,000 apiece was paid to four members of the committee having it in charge. On the passage of the bill, a further $5,000 apiece with contingent expenses was added. In another instance, where but a solitary vote was needed to put a bill through, three Republicans put their figures up to $25,000 each; one of them was bought. About thirty Republicans and Democrats in the New York Legislature organized themselves into a clique (long styled the "Black Horse Cavalry"), under the leadership of an energetic lobbyist, with a mutual pledge to vote as directed. [Footnote: Documents of the Board of Aldermen, 1877, Part II, No. 8; 212-213.] "Any corporation, however extensive and comprehensive the privileges it asked"—to quote from "The History of Tammany Hall"—"and however much oppression it sought to impose upon the people in the line of unjust grants, extortionate rates or monopoly, could convince the Legislature of the righteousness of its request upon 'producing' the proper sum."
One act after another was slipped through the Legislature by Vanderbilt in 1868 and 1869. On May 20, 1869, Vanderbilt secured, by one bill alone, the right to consolidate railroads, a free grant of franchises, and other rights worth hundreds of millions of dollars, and the right to water stock and bonds to an enormous extent.
The printing presses were worked overtime in issuing more than $44,000,000 of watered stock. The capital stock of the two roads was thus doubled. Pretending that the railroads embraced in the consolidation had a great surplus on hand, Vanderbilt, instead of distributing this alleged surplus, apportioned the watered stock among the stockholders as a premium. The story of the surplus was, of course, only a pretense. Each holder of a $100 share received a certificate for $180—that is to say, $80 in plunder for every $100 share that he held. [Footnote: Report of Assembly Committee on Railroads, testimony of Alexander Robertson, an expert accountant, 1879, i:994-999.] "Thus," reported the "Hepburn Committee" (the popular name for the New York State Assembly investigating committee of 1879), "as calculated by this expert, $53,507,060 were wrongfully added to the capital stock of these roads." Of this sum $44,000,000 was issued in 1869; the remainder in previous years. "The only answer made by the roads was that the legislature authorized it," the committee went on. "It is proper to remark that the people are quite as much indebted to the venality of the men elected to represent them in the Legislature as to the rapacity of the railroad managers for this state of affairs." [Footnote: Ibid., i:21.]
Despite the fact that the report of the committee recorded that the transaction was piracy, the euphemistic wording of the committee's statement was characteristic of the reverence shown to the rich and influential, and the sparing of their feelings by the avoidance of harsh language. "Wrongfully added" would have been quickly changed into such inconsiderate terms as theft and robbery had the case been even a trivial one of some ordinary citizen lacking wealth and power. The facts would have immediately been presented to the proper officials for criminal prosecution.
But not a suggestion was forthcoming of haling Vanderbilt to the criminal bar; had it been made, nothing except a farce would have resulted, for the reason that the criminal machinery, while extraordinarily active in hurrying petty lawbreakers to prison, was a part of the political mechanism financed by the big criminals and subservient to them.
"The $44,000,000," says Simon Sterne, a noted lawyer who, as counsel for various commercial organizations, unravelled the whole matter before the "Hepburn Committee," in 1879, "represented no more labor than it took to print the script." It was notorious, he adds, "that the cost of the consolidated railroads was less than $44,000,000," [Footnote: "Life of Simon Sterne," by John Foord, 1903:179-181.] In increasing the stock to $86,000,000 Vanderbilt and his confederates therefore stole the difference between the cost and the maximum of the stock issue. So great were the profits, both open and concealed, of the consolidated railroads that notwithstanding, as Charles Francis Adams computed, "$50,000 of absolute water had been poured out for each mile of road between New York and Buffalo," the market price of the stock at once shot up in 1869 from $75 a share to $120 and then to $200.
And what was Vanderbilt's share of the $44,000,000? His inveterate panegyrist, Croffut, in smoothly defending the transaction gives this illuminating depiction of the joyous event: "One night, at midnight, he (Cornelius Vanderbilt) carried away from the office of Horace F. Clark, his son-in-law, $6,000,000 in greenbacks as a part of his share of the profits, and he had $20,000,000 more in new stock." [Footnote: "The Vanderbilts": 103. Croffut in a footnote tells this anecdote: "When the Commodore's portrait first appeared on the bonds of the Central, a holder of some called one day and said: 'Commodore, glad to see your face on them bonds. It's worth ten per cent. It gives everybody confidence.' The Commodore smiled grimly, the only recognition he ever made of a compliment. ''Cause,' explained the visitor, 'when we see that fine, noble brow, it reminds us that you'll never let anybody else steal anything.'"]
By this coup Vanderbilt about doubled his previous wealth. Scarcely had the mercantile interests recovered from their utter bewilderment at being routed than Vanderbilt, flushed with triumph, swept more railroads into his inventory of possessions.
His process of acquisition was now working with almost automatic ease.
First, as we have narrated, he extorted millions of dollars in blackmail. With these millions he bought, or rather manipulated into his control, one railroad after another, amid an onslaught of bribery and glaring violations of the laws. Each new million that he seized was an additional resource by which he could bribe and manipulate; progressively his power advanced; and it became ridiculously easier to get possession of more and more property. His very name became a terror to those of lesser capital, and the mere threat of pitting his enormous wealth against competitors whom he sought to destroy was generally a sufficient warrant for their surrender. After his consummation of the $44,000,000 theft in 1869 there was little withstanding of him. By the most favorable account—that of Croffut— his own allotment of the plunder amounted to $26,000,000. This sum, immense, and in fact of almost inconceivable power in that day, was enough of itself, independent of Vanderbilt's other wealth, to force through almost any plan involving a seizing of competing property.
* * * * * * *
Vanderbilt did not wait long. The ink on the $44,000,000 had barely dried, before he used part of the proceeds to buy a controlling interest in the Lake Shore Railroad, a competing line. Then rapidly, by the same methods, he took hold of the Canada Southern and Michigan Central.
The commercial interests looked on dumfounded. Under their very eyes a process of centralization was going on, of which they but dimly, stupidly, grasped the purport. That competition which they had so long shouted for as the only sensible, true and moral system, and which they had sought to buttress by enacting law after law, was being irreverently ground to pieces.
Out of their own ranks were rising men, trained in their own methods, who were amplifying and intensifying those methods to shatter the class from which they had sprung. The different grades of the propertied class, from the merchant with his fortune of $250,000 to the retail tradesman, felt very comfortable in being able to look down with a conscious superiority upon the working class from whom their money was wrung. Scoffing at equality, they delighted in setting themselves up as a class infinitely above the toilers of the shop and factory; let him who disputes this consult the phrases that went the rounds—phrases, some of which are still current—as, for instance, the preaching that the moderately well-to-do class is the solid, substantial element of any country.
Now when this mercantile class saw itself being far overtopped and outclassed in the only measurement to which it attached any value— that of property—by men with vast riches and power, it began to feel its relegation. Although its ideal was money, and although it set up the acquisition of wealth as the all-stimulating incentive and goal of human effort, it viewed sullenly and enviously the development of an established magnate class which could look haughtily and dictatorially down upon it even as it constantly looked down upon the working class. The factory owner and the shopkeeper had for decades commanded the passage of summary legislation by which they were enabled to fleece the worker and render him incapable of resistance. To keep the worker in subjection and in their power they considered a justifiable proceeding. But when they saw the railroad magnates applying those same methods to themselves, by first wiping out competition, and then by enforcing edicts regardless of their interests, they burst out in furious rage.
They denounced Vanderbilt as a bandit whose methods were a menace to the community. To the onlooker this campaign of virulent assault was extremely suggestive. If there was any one line of business in which fraud was not rampant, the many official reports and court proceedings of the time do not show it.
This widespread fraud was not occasional; it was persistent. In one of the earlier chapters, the prevalence, more than a century ago, of the practise of fraudulent substitution of drugs and foods was adverted to. In the middle of the nineteenth century it was far more extensive. In submitting, on June 2, 1848, a mass of expert evidence on the adulteration of drugs, to the House of Representatives, the House Select Committee on the Importation of Drugs pointed out:
For a long series of years this base traffic has been constantly increasing, until it has become frightfully enormous. It would be presumed, from the immense quantities, and the great variety of inferior drugs that pass our custom houses, and particularly the custom-house at New York, in the course of a single year, that this country had become the great mart and receptacle of all of the refuse merchandise of that description, not only from the European warehouses, but from the whole Eastern market. [Footnote: Reports of Committees, First Session, Thirtieth Congress, 1847-48, Vol. iii, Report No. 664:3—The committee reported that opium was adulterated with licorice paste and bitter vegetable extract; calomel, with chalk and sulphate of barytes; quinine, with silicine, chalk and sulphate of barytes; castor, with dried blood, gum and ammonia; gum assafoetida with inferior gums, chalk and clay, etc., etc. (pp. 10 and 11).]
In presenting a formidable array of expert testimony, and in giving a list of cases of persons having died from eating foods and drugs adulterated with poisonous substances, the House Committee on Epidemic Diseases, of the Forty-Sixth Congress, reported on February 4 1881:
That they have investigated, as far as they could … the injurious and poisonous compounds used in the preparation of food substances, and in the manufacture of wearing apparel and other articles, and find from the evidence submitted to them that the adulteration of articles used in the every day diet of vast numbers of people has grown, and is now practised, to such an extent as to seriously endanger the public health, and to call loudly for some sort of legislative correction. Drugs, liquors, articles of clothing, wall paper and many other things are subjected to the same dangerous process. [Footnote: House Reports, Third Session, Forty-sixth Congress, 1880-81, Vol. i, Report No. 199: 1. The committee drafted a bill for the prevention of these frauds; the capitalists concerned smothered it.]
The House Committee on Commerce, reporting the next year, on March 4, stated that "the evidence regarding the adulterations of food indicates that they are largely of the nature of frauds upon the consumer … and injure both the health and morals of the people." The committee declared that the practise of fraudulent substitutions "had become universal." [Footnote: House Reports, First Session, Forty-seventh Congress, 1881-82, Vol. ii, Report No. 634: 1-5.]
These few significant extracts, from a mass of official reports, show that the commercial frauds were continuous, and began long before Commodore Vanderbilt's time, and have prevailed up to the present.
Everywhere was fraud; even the little storekeepers, with their smug pretensions to homely honesty, were profiting by some of the vilest, basest forms of fraud, such as robbing the poor by the light-weight and short-weight trick, [Footnote: These forms of cheating exist at present to a greater extent than ever before. It is estimated that manufacturers and shopkeepers cheat the people of the United States out of $200,000,000 a year by the light-weight and short-weight frauds. In 1907 the New York State Sealer of Weights and Measures asserted that, in that State alone, $20,000,000 was robbed from the consumers annually by these methods. Recent investigations by the Bureau of Standards of the United States Department of Commerce and Labor have shown that immense numbers of "crooked" scales are in use. It has been conclusively established by the investigations of Federal, State and municipal inspectors of weights and measures that there is hardly an article put up in bottled or canned form that is not short of the weight for which it is sold, nor is there scarcely a retail dealer who does not swindle his customers by the light-weight fraud. There are manufacturers who make a specific business of turning out fraudulent scales, and who freely advertise the cheating merits of these scales.] or (far worse) by selling skim milk, or poisonous drugs or adulterated food or shoddy material. These practises were so prevalent, that the exceptions were rarities indeed.
If any administration had dared seriously to stop these forms of theft the trading classes would have resisted and struck back in political action. Yet these were the men—these traders—who vociferously come forth with their homiletic trades against Vanderbilt's criminal transactions, demanding that the power of him and his kind be curbed.
It was not at all singular that they put their protests on moral grounds. In a form of society where each man is compelled to fight every other man in a wild, demoralizing struggle for self- preservation, self-interest naturally usurps the supreme functions, and this self-interest becomes transposed, by a comprehensible process, into moralities. That which is profitable is perverted into a moral code; the laws passed, the customs introduced and persisted in, and the weight of the dominant classes all conspire to put the stamp of morality on practices arising from the lowest and most sordid aims. Thus did the trading class make a moral profession of its methods of exploitation; it congratulated and sanctified itself on its purity of life and its saving stability.
From this class—a class interpenetrated in every direction with commercial frauds—was largely empanelled the men who sat on those grand juries and petit juries solemnly passing verdict on the poor wretches of criminals whom environment or poverty had driven into crime. They were the arbiters of justice, but it was a justice that was never allowed to act against themselves. Examine all the penal codes of the period; note the laws proscribing long sentences in prison for thefts of property; the larceny of even a suit of clothes was severely punishable, and begging for alms was a misdemeanor. Then contrast these asperities of law with the entire absence of adequate protection for the buyer of merchandise. Following the old dictum of Roman jurisprudence, "Let the buyer beware," the factory owner could at will oppress his workers, and compel them, for the scantiest wages, to make for his profit goods unfit for consumption. These articles the retailer sold without scruple over his counter; when the buyer was cheated or overcharged, as happened with great frequency, he had practically no redress in law. If the merchant were robbed of even ever so little he could retaliate by sending the guilty one to prison. But the merchant himself could invidiously and continuously rob the customer without fear of any law. All of this was converted into a code of moralities; and any bold spirit who exposed its cant and sham was denounced as an agitator and as an enemy of law and order. [Footnote: A few progressive jurists in the International Prison Congress are attempting to secure the recognition in law of the principle that society, as a supreme necessity, is obligated to protect its members from being made the victims of the cunning and unscrupulous. They have received no encouragement, and will receive none, from a trading class profiting from the very methods which it is sought to place under the inhibition of criminal law.]
Vanderbilt did better than expose it; he improved upon, and enlarged, it and made it a thing of magnitude; he and others of his quality discarded petty larceny and ascended into a sphere of superlative grand larceny. They knew with a cynical perception that society, with all its pompous pretensions to morality, had evolved a rule which worked with almost mathematical certainty. This rule was the paradoxical, but nevertheless true, one that the greater the theft the less corresponding danger there was of punishment.
Now it was that one could see with greater clearness than ever before, how the mercenary ideal of the ruling class was working out to its inevitable conclusion. Society had made money its god and property its yardstick; even in its administration of justice, theoretically supposed to be equal, it had made "justice" an expensive luxury available, in actual practice, to the rich only. The defrauder of large sums could, if prosecuted, use a part of that plunder, easily engage a corps of shrewd, experienced lawyers, get evidence manufactured, fight out the case on technicalities, drag it along for years, call in political and social influence, and almost invariably escape in the end.
But beyond this power of money to make a mockery of justice was a still greater, though more subtle, factor, which was ever an invaluable aid to the great thief. Every section of the trading class was permeated with a profound admiration, often tangibly expressed, for the craft that got away with an impressive pile of loot. The contempt felt for the pickpocket was the antithesis of the general mercantile admiring view of the man who stole in grand style, especially when he was one of their own class. In speaking of the piratical operations of this or that magnate, it was common to hear many business men interject, even while denouncing him, "Well, I wish I were as smart as he." These same men, when serving on juries, were harsh in their verdicts on poor criminals, and unctuously flattered themselves with being, and were represented as, the upholders and conservers of law and moral conduct.
Departing from the main facts as this philosophical digression may seem, it is essential for a number of reasons. One of these is the continual necessity for keeping in mind a clear, balanced perspective. Another lies in the need of presenting aright the conditions in which Vanderbilt and magnates of his type were produced. Their methods at basis were not a growth independent of those of the business world and isolated from them. They were simply a development, and not merely one of standards as applied to morals, but of the mechanism of the social and industrial organization itself. Finally it is advisable to give flashlight glimpses into the modes and views of the time, inasmuch as it was in Vanderbilt's day that the great struggle between the old principle of competition, as upheld by the small capitalists, and the superseding one of consolidation, as incarnated in him and others, took on vigorous headway.
Protest as it did against Vanderbilt's merging of railroads, the middle class found itself quite helpless. In rapid succession he put through one combination after another, and caused theft after theft to be legalized, utterly disdainful of criticism or opposition. In State after State he bought the repeal of old laws, or the passage of new laws, until he was vested with authority to connect various railroads that he had secured between Buffalo and Chicago, into one line with nearly 1,300 miles of road. The commercial classes were scared at the sight of such a great stretch of railroad—then considered an immense line—in the hands of one man, audacious, all- conquering, with power to enforce tribute at will. Again, Vanderbilt patronized the printing presses, and many more millions of stock, all fictitious capital, were added to the already flooded capital of the Lake Shore and Michigan Southern Railroad Company. Of the total of $62,000,000 of capital stock in 1871, fully one-half was based upon nothing but the certainty of making it valuable as a dividend payer by the exaction of high freight and passenger rates. A little later, the amount was run up to $73,000,000, and this was increased subsequently.
Vanderbilt now had a complete railroad system from New York to Chicago, with extensive offshoots. It is at this point that we have to deal with a singular commendation of his methods thrust forward glibly from that day to this. True, his eulogists admitted then, as they admit now, Vanderbilt was not overscrupulous in getting property that he wanted. But consider, they urge, the improvements he brought about on the railroads that came into his possession; the renovation of the roadbed, the institution of new locomotives and cars, the tearing down of the old, worn-out stations. This has been the praise showered upon him and his methods.
Inquiry, however, reveals that this appealing picture, like all others of its sort, has been ingeniously distorted. The fact was, in the first place, that these improvements were not made out of regard to public convenience, but for two radically different reasons. The first consideration was that if the dividends were to be paid on the huge amount of fabricated stock, the road, of necessity, had to be put into a condition of fair efficiency to meet or surpass the competing facilities of other railroads running to Chicago. Second, the number of damage claims for accident or loss of life arising largely from improper appliances and insufficient safeguards, was so great that it was held cheaper in the long run to spend millions for improvements.
Instead of paying for these improvements with even a few millions of the proceeds of the watered stock, Vanderbilt (and all other railroad magnates in like cases did the same) forced the public treasury to defray a large part of the cost. A good illustration of his methods was his improvement of his passenger terminus in New York City. The entrance of the New York Central and the Harlem Railroads is by way of Park (formerly Fourth) avenue. This franchise, as we have seen, was obtained by bribery in 1832. But it was a qualified franchise. It reserved certain nominal restrictions in behalf of the people by inserting the right of the city to order the removal of the tracks at any time that they became an obstruction. These terms were objectionable to Vanderbilt; a perpetual franchise could be capitalized for far more than a limited or qualified one. A perpetual franchise was what he wanted.
The opportunity came in 1872. From the building of the railroad, the tracks had been on the surface of Fourth avenue. Dozens of dangerous crossings had resulted in much injury to life and many deaths. The public demand that the tracks be depressed below the level of the street had been resisted.
Instead of longer ignoring this demand, Vanderbilt now planned to make use of it; he saw how he could utilize it not only to foist a great part of the expense upon the city, but to get a perpetual franchise. Thus, upon the strength of the popular cry for reform, he would extort advantages calculated to save him millions and at the same time extend his privileges. It was but another illustration of the principle in capitalist society to which we have referred before (and which there will be copious occasion to mention again and again) that after energetically contesting even those petty reforms for which the people have contended, the ruling classes have ever deftly turned about when they could no longer withstand the popular demands, and have made those very reforms the basis for more spoliation and for a further intrenchment of their power. [Footnote: Commodore Vanderbilt's descendants, the present Vanderbilts, have been using the public outcry for a reform of conditions on the West Side of New York City, precisely as the original Vanderbilt utilized that for the improvement of Fourth avenue. The Hudson River division of the New York Central and Hudson River Railroad has hitherto extended downtown on the surface of Tenth and Eleventh Avenues and other thoroughfares. Large numbers of people have been killed and injured. For decades there has been a public demand that these dangerous conditions be remedied or removed. The Vanderbilts have as long resisted the demand; the immense numbers of casualties had no effect upon them. When the public demand became too strong to be ignored longer, they set about to exploit it in order to get a comprehensive franchise with incalculable new privileges.]
The first step was to get the New York City Common Council to pass, with an assumption of indignation, an ordinance requiring Vanderbilt to make the desired improvements, and committing the city to bear one-half the expense and giving him a perpetual franchise. This was in Tweed's time when the Common Council was composed largely of the most corrupt ward heelers, and when Tweed's puppet, Hall, was Mayor. Public opposition to this grab was so great as to frighten the politicians; at any rate, whatever his reasons, Mayor Hall vetoed the ordinance.
Thereupon, in 1872, Vanderbilt went to the Legislature—that Legislature whose members he had so often bought like so many cattle. This particular Legislature, however, was elected in 1871, following the revelations of the Tweed "ring" frauds. It was regarded as a "model reform body." As has already been remarked in this work, the pseudo "reform" officials or bodies elected by the American people in the vain hope of overthrowing corruption, will often go to greater lengths in the disposition of the people's rights and interests than the most hardened politicians, because they are not suspected of being corrupt, and their measures have the appearance of being enacted for the public good. The Tweed clique had been broken up, but the capitalists who had assiduously bribed its members and profited so hugely from its political acts, were untouched and in greater power than ever before. The source of all this corruption had not been struck at in the slightest. Tweed, the politician, was sacrificed and went to prison and died there; the capitalists who had corrupted representative bodies everywhere in the United States, before and during his time, were safe and respected, and in a position to continue their work of corruption. Tweed made the classic, unforgivable blunder of going into politics as a business, instead of into commercialism. The very capitalists who had profited so greatly by his corruption, were the first to express horror at his acts.
From the "reform" Legislature of 1982 Vanderbilt secured all that he sought. The act was so dexterously worded that while not nominally giving a perpetual franchise, it practically revoked the qualified parts of the charter of 1832. It also compassionately relieved him of the necessity of having to pay out about $4,000,000, in replacing the dangerous roadway, by imposing that cost upon New York City. Once these improvements were made, Vanderbilt bonded them as though they had been made with private money.
But these were not his only gifts from the "reform" Legislature. The Harlem Railroad owned, as we have seen, the Fourth avenue surface line of horse cars. Although until this time it extended to Seventy- ninth street only, this line was then the second most profitable in New York City. In 1864, for instance, it carried nearly six million passengers, and its gross earnings were $735,000. It did not pay, nor was required to pay, a single cent in taxation. By 1872 the city's population had grown to 950,000. Vanderbilt concluded that the time was fruitful to gather in a few more miles of the public streets.
The Legislature was acquiescent. Chapter 325 of the Laws of 1872 allowed him to extend the line from Seventy-ninth street to as far north as Madison avenue should thereafter be opened. "But see," said the Legislature in effect, "how mindful of the public interests we have been. We have imposed a tax of five per cent, on all gross receipts above Seventy-ninth street." When, however, the time came to collect, Vanderbilt innocently pretended that he had no means of knowing whether the fares were taken in on that section of the line, free of taxation, below Seventy-ninth street, or on the taxed portion above it. Behind that fraudulent subterfuge the city officials have never been inclined to go, nor have they made any effort. As a consequence the only revenue that the city has since received from that line has been a meager few thousand dollars a year.
At the very time that he was watering stock, sliding through legislatures corrupt grants of perpetual franchises, and swindling cities and States out of huge sums in taxes, [Footnote: Not alone he. In a tabulated report made public on February 1, 1872, the New York Council of Political Reform charged that in the single item of surface railways, New York City for a long period had been swindled annually out of at least a million dollars. This was an underestimate. All other sections of the capitalist class swindled likewise in taxes.] Vanderbilt was forcing the drivers and conductors on the Fourth avenue surface line to work an average of fifteen hours out of twenty-four, and reducing their daily wages from $2.25 to $2.
Vanderbilt made the pretense that it was necessary to economize; and, as was the invariable rule of the capitalists, the entire burden of the economizing process was thrown upon the already overloaded workers. This subtraction of twenty-five cents a day entailed upon the drivers and conductors and their families many severe deprivations; working for such low wages every cent obviously counted in the management of household affairs. But the methods of the capitalist class in deliberately pyramiding its profits upon the sufferings of the working class were evidenced in this case (as they had been, and since have been, in countless other instances) by the announcement in the Wall Street reports that this reduction in wages was followed by an instant rise in the price of the stock of the Fourth avenue surface line. The lower the wages, the greater the dividends.
The further history of the Fourth avenue surface line cannot here be pursued in detail. Suffice to say that the Vanderbilts, in 1894, leased this line for 999 years to the Metropolitan Street Railway Company, controlled by those eminent financiers, William C. Whitney and others, whose monumental briberies, thefts and piracies have frequently been uncovered in official investigations. For almost a thousand years, unless a radical change of conditions comes, the Vanderbilts will draw a princely revenue from the ownership of this franchise alone.
It is not necessary to enter into a narrative of all the laws that Vanderbilt bribed Legislature after Legislature, and Common Council after Common Council, into passing—laws giving him for nothing immensely valuable grants of land, shore rights and rights to land under water, more authorizations to make further consolidations and to issue more watered stock. Nor is it necessary to deal with the numerous bills he considered adverse to his interests, that he caused to be smothered in legislative committees by bribery.