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Great Fortunes from Railroads

G >> Gustavus Myers >> Great Fortunes from Railroads




A very illuminating transaction, surely, and well deserving of
philosophic comment. This, however, will be eschewed, and attention
next turned to the manner in which the Vanderbilts, in 1899, obtained
control of the Boston and Albany Railroad.


THE BOSTON AND ALBANY RAILROAD BECOMES THEIRS.

To a great extent, this railroad had been built with public funds
raised by enforced taxation, the city of Albany contributing
$1,000,000, and the State of Massachusetts $4,300,000 of public
funds. Originally it looked as if the public interests were fully
conserved. But gradually, little by little, predatory corporate
interests got in their delicate work, and induced successive
legislatures and State officials to betray the public interests. The
public holdings of stock were entirely subordinated, so that in time
a private corporation secured the practical ownership.

Finally, in 1899, the Legislature of Massachusetts effaced the last
vestige of State ownership by giving the Vanderbilts a perpetual
lease of this richly profitable railroad for a scant two million
dollars' payment a year. During the debate over this act
Representative Dean charged in the Legislature that "it is common
rumor in the State House that members are receiving $300 apiece for
their votes." The acquisition of this railroad enabled the New York
Central to make direct connection with Boston, and with much of the
New England coast, and added about four hundred miles to the
Vanderbilt system. Most of the remainder of the New England territory
is subservient to the Boston and Maine Railroad system in which the
American Express Company, controlled by the Vanderbilts, owns 30,000
shares.

To pay interest and dividends on the hundreds of millions of dollars
of inflated bonds and stock which three generations of the
Vanderbilts had issued, and to maintain and enhance their value, it
was necessary to keep on increasingly extorting revenues. The sources
of the profits were palpable. Time after time freight rates were
raised, as was more than sufficiently proved in various official
investigations, despite denials. Conjunctively with this process,
another method of extortion was the ceaseless one of beating down the
wages of the workers to the very lowest point at which they could be
hired. While the Vanderbilts and other magnates were manufacturing
law at will, and boldly appropriating, under color of law, colossal
possessions in real and personal property, how was the law, as
embodied in legislatures, officials and courts acting toward the
working class?


THE GOVERNMENT AN ENGINE OF TYRANNY.

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

In Buffalo, in 1890-1891, thirty-one in every hundred destitutes were
impoverished because of unemployment, and in New York City twenty-
nine in every hundred. [Footnote: "Encyclopedia of Social Reform,"
Edition of 1897: 1073.] Hundreds of millions of dollars of public
funds were given outright to the capitalists, but not a cent
appropriated to provide work for the unemployed. In the panic of
1893, when millions of men, women and children were out of work, the
machinery of government, National, State and municipal, proffered not
the least aid, but, on the contrary, sought to suppress agitation and
prohibit meetings by flinging the leaders into jail. Basing his
conclusions upon the (Aldrich) United States Senate Report of 1893--a
report highly favorable to capitalist interests, and not unexpectedly
so, since Senator Aldrich was the recognized Senatorial mouthpiece of
the great vested interests--Spahr found that the highest daily wage
for all earners, taken in a mass, was $2.O4 [Footnote: "The Present
Distribution of Wealth in The United States."]

More than three-quarters of all the railroad employees in the United
States received less than two dollars a day. Large numbers of
railroad employees were forced to work from twelve to fourteen hours
a day, and their efficiency and stamina thus lowered. Periodically
many were laid off in enforced idleness; and appalling numbers were
maimed or killed in the course of duty. [Footnote: The report of the
Wisconsin Railway Commissioners for 1894, Vol. xiii., says: "In a
recent year more railway employees were killed in this country than
three times the number of Union men slain at the battle of Lookout
Mountain, Missionary Ridge and Orchard Knob combined. ... In the
bloody Crimean War, the British lost 21,000 in killed and wounded--
not as many as are slain, maimed and mangled among the railroad men
injured [Footnote: of the country in a single year." Various reports
of the Interstate Commerce Commission state the same facts.] or slain
largely because the railroad corporations refused to expend money in
the introduction of improved automatic coupling devices, these
workers or their heirs were next confronted by what? The unjust and
oppressive provisions of worthless employers' liability laws drafted
by corporation attorneys in such a form that the worker or his family
generally had almost no claim. The very judges deciding these suits
were, as a rule, put on the bench by the railroad corporations.


MACHINE GUNS FOR THE OVERWORKED.

These deadly conditions prevailed on the Vanderbilt railroads even
more than on any others; it was notorious that the Vanderbilt system
was not only managed in semi-antiquated ways so far as the operation
was concerned, but also that its trainmen were terribly underpaid and
overworked. [Footnote: "Semi-antiquated ways." Only recently the
"Railway Age Gazette," issue of January, 1909, styled the New York
Central's directors as mostly "concentrated absurdities, physically
incompetent, mentally unfit, or largely unresident and inattentive."]
In reply to a continued agitation for better hours on the part of the
Vanderbilt employees, the New York Legislature passed an act, in
1892, which apparently limited the working hours of railroad
employees to ten a day. There was a gleam of sunshine, but lo! when
the act was critically examined after it had become a law, it was
found that a "little joker" had been sneaked into its mass of
lawyers' terminology. The surreptitious clause ran to this effect:
That railroad companies were permitted to exact from their employees
overtime work for extra compensation. This practically made the whole
law a negation.

So it turned out; for in August, 1892, the switchmen employed by
various railroad lines converging at Buffalo struck for shorter hours
and more pay. The strike spread, and was meeting with tactical
success; the strikers easily persuaded men who had been hired to fill
their jobs to quit. What did the Vanderbilts and their allies now do?
They fell back upon the old ruse of invoking armed force to suppress
what they proclaimed to be violence. They who had bought law and had
violated the law incessantly now represented that their property
interests were endangered by "mob violence," and prated of the need
of soldiers to "restore law and order." It was a serviceable pretext,
and was immediately acted upon.

The Governor of New York State obediently ordered out the entire
State militia, a force of 8,000, and dispatched it to Buffalo. The
strikers were now confronted with bayonets and machine guns. The
soldiery summarily stopped the strikers from picketing, that is to
say, from attempting to persuade strikebreakers to refrain from
taking their places. Against such odds the strike was lost.

If, however, the Vanderbilts could not afford to pay their workers a
few cents more in wages a day, they could afford to pay millions of
dollars for matrimonial alliances with foreign titles. These
excursions into the realm of high-caste European nobility have thus
far cost the Vanderbilt family about $15,000,000 or $20,000,000. When
impecunious counts, lords, dukes and princes, having wasted the
inheritance originally obtained by robbery, and perpetuated by
robbery, are on the anxious lookout for marriages with great
fortunes, and the American money magnates, satiated with vulgar
wealth, aspire to titled connections, the arrangement becomes easy.
[Footnote: More than 500 American women have married titled
foreigners. The sum of about $220,000,000, it is estimated (1909),
has followed them to Europe.] Romance can be dispensed with, and the
lawyers depended upon to settle the preliminaries.


TEN MILLIONS FOR A DUKEDOM.

The announcement was made in 1895 that "a marriage had been arranged"
between Consuelo, a young daughter of William K. Vanderbilt, and the
Duke of Marlborough. The wedding ceremony was one of showy splendor;
millions of dollars in gifts were lavished upon the couple. Other
millions in cash, wrenched also from the labor of the American
working population, went to rehabilitate and maintain Blenheim House,
with its prodigal cost of reconstruction, its retinue of two hundred
servants, and its annual expense roll of $100,000. Millions more
flowed out from the Vanderbilt exchequer in defraying the cost of
yachts and of innumerable appurtenances and luxuries. Not less than
$2,500,000 was spent in building Sutherland House in London. Great as
was this expense, it was not so serious as to perturb the duchess'
father; his $50,000,000 feat of financial legerdemain, in 1898, alone
far more than made up for these extravagant outlays. The Marlborough
title was an expensive one; it turned out to be a better thing to
retain than the man who bore it; after a thirteen years' compact, the
couple decided to separate for "good and sufficient reasons," into
which it is not our business to inquire. All told, the Marlborough
dukedom had cost William K. Vanderbilt, it was said, fully
$10,000,000.

Undeterred by Cousin Consuelo's experience, Gladys Vanderbilt, a
daughter of Cornelius, likewise allied herself with a title by
marrying, in 1908, Count Laslo Szechenyi, a sprig of the Hungarian
feudal nobility. "The wedding," naively reported a scribe, "was
characterized by elegant simplicity, and was witnessed by only three
hundred relatives and intimate friends of the bride and bridegroom."
The "elegant simplicity" consisted of gifts, the value of which was
estimated at fully a million dollars, and a costly ceremony. If the
bride had beauty, and the bridegroom wit, no mention of them was
made; the one fact conspicuously emphasized was the all-important one
of the bride having a fortune "in her own right" of about
$12,000,000.

[Illustration: THE DUCHESS OF MARLBOROUGH, Daughter of William K.
Vanderbilt.]

The precise sum which made the Count eager to share his title, no one
knew except the parties to the transaction. Her father had died, in
1899, leaving a fortune nominally reaching about $100,000,000. Its
actual proportions were much greater. It had long been customary on
the part of the very rich, as the New York State Board of Tax
Commissioners pointed out, in 1903, to evade the inheritance tax in
advance by various fraudulent devices. One of these was to inclose
stocks or money in envelopes and apportion them among the heirs,
either at the death bed, or by subsequent secret delivery. [Footnote:
See Annual Report of the New York State Board of Tax Commissioners,
New York Senate Document, No. 5, 1903: 10.]

Like his father, Cornelius Vanderbilt had died of apoplexy. In his
will he had cut off his eldest son, Cornelius, with but a puny
million dollars. And the reason for this parental sternness? He had
disapproved of Cornelius' choice in marriage. To his son, Alfred, the
unrelenting multimillionaire left the most of his fortune, with a
showering of many millions upon his widow, upon Reginald, another
son, and upon his two daughters. Cornelius objected to the injustice
and hardship of being left a beggar with but a scanty million, and
threatened a legal contest, whereupon Alfred, pitying the dire
straits to which Brother Cornelius had been reduced, presented him
with six or seven millions with which to ease the biting pangs of
want.

Marriages with titled foreigners have proved a drain upon the
Vanderbilt fortune, although, thanks to their large share in the
control of laws and industrial institutions, the Vanderbilts possess
at all times the power of recouping themselves at volition. The
American marriages, on the other hand, contracted by this family,
have interlinked other great fortunes with theirs.

One of the Vanderbilt buds married Harry Payne Whitney, whose father,
William C. Whitney, left a large fortune, partly drawn from the
Standard Oil Company, and in part from an industrious career of
corruption and theft. The elder Whitney, according to facts revealed
in many official investigations and lawsuits, debauched legislatures
and common councils into giving him and his associates public
franchises for street railways and for other public utilities, and he
stole outright tens of millions of dollars in the manipulation of the
street railways in various cities. His crimes, and those of his
associates, were of such boldness and magnitude that even the cynical
business classes were moved to astonishment. [Footnote: For a
detailed account see that part of this work, "Great Fortunes from
Public Franchises."] Cornelius Vanderbilt, jr., married a daughter of
R. T. Wilson, a multimillionaire, whose fortune came to a great
extent from the public franchises of Detroit. The initial and
continued history of the securing and exploitation of the street
railway and other franchises of that city has constituted a solid
chapter of the most flagrant fraud. William K. Vanderbilt, jr.,
married a daughter of the multimillionaire Senator Fair, of
California, whose fortune, dug from mines, bought him a seat in the
United States Senate. Thus, various multi-millionaire fortunes have
been interconnected by these American marriages.

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


DIVERSITY OF THE VANDERBILT POSSESSIONS.

The fortune of the Vanderbilt family, at the present writing, is
represented by the most extensive and different forms of property.
Railroads, street railways, electric lighting systems, mines,
industrial plants, express companies, land, and Government, State and
municipal bonds--these are some of the forms. From one industrial
plant alone--the Pullman Company--the Vanderbilts draw millions in
revenue yearly. Formerly they owned their own palace car company, the
Wagner, but it was merged with the Pullman. The frauds and extortions
of the Pullman Company have been sufficiently dealt with in the
particular chapter on Marshall Field. In the far-away Philippine
Islands the Vanderbilts are engaged, with other magnates, in the
exploitation of both the United States Government and the native
population. The Visayan Railroad numbers one of the Vanderbilts among
its directors. This railroad has already received a Government
subsidy of $500,000, in addition to the free gift of a perpetual
franchise, on the ground that "the railroad was necessary to the
development of the archipelago."

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

But this does not by any means denote that the Vanderbilts have been
stripped of their wealth. However much they may part with their
stock, which gives the voting power, it will be found that, like
William H. Vanderbilt, they hold a stupendous amount in railroad, and
other kinds of, bonds. As the Astors and other rich families were
perfectly willing, in 1867, to allow Commodore Vanderbilt to assume
the management of the New York Central on the ground that under his
bold direction their profits and loot would be greater, so the
lackadaisical Vanderbilts of the present generation perhaps likewise
looked upon Harriman, who proved his ability to accomplish vast
fraudulent stock-watering operations and consolidations, and to oust
lesser magnates. The New York Central, at this writing, still remains
a Vanderbilt property, not so distinctively so as it was twenty years
ago, yet strongly enough under the Vanderbilt domination. According
to Moody, this railroad's net annual income in 1907 was $34,000,000.
[Footnote: "Moody's Magazine," issue of August, 1908] In alluringly
describing its present and prospective advantages and value Moody
went on:

"To begin with, it has entry into the heart of New York City, with
extensive passenger and freight terminals, all of which are bound to
be of steadily increasing worth as the years go by, as New York
continues to grow in population and wealth. It has, in addition, a
practically 'water grade' line all the way from New York to Chicago,
and, therefore, for all time must necessarily have a great advantage
over lines like the Erie, the Lackawanna and others with heavy
grades, many curves, etc. It has a myriad of small feeders and
branches in growing and populous parts of the State of New York, as
well as in the sections further to the west. It touches the Great
Lakes at various points, operates water transportation for freight to
all parts of the lakes; enters Chicago over its own tracks and
competes aggressively with the Pennsylvania for all traffic to and
from all parts of the Mississippi Valley and the West and Southwest.
It is in no danger from disastrous competition in its own chosen
territory, therefore, and constantly receives income of vast
importance through a network of feeders which penetrate the territory
of some of the largest of its rivals."


THE SORT OF ABILITY DISPLAYED.

The particular kind of ability by which one man, followed by his
descendants, obtained the controlling ownership of this great
railroad system, and of other properties, has been herein adequately
set forth. Long has it been the custom to attribute to Commodore
Vanderbilt and successive generations of Vanderbilts an almost
supernatural "constructive genius," and to explain by that glib
phrase their success in getting hold of their colossal wealth. This
explanation is clumsy fiction that at once falls to pieces under
historical scrutiny. The moment a genuine investigation is begun into
the facts, the glamour of superior ability and respectability
evaporates, and the Vanderbilt fortune stands out, like all other
fortunes, as the product of a continuous chain of frauds.

Just as fifty years ago Commodore Vanderbilt was blackmailing his
original millions without molestation by law, so today the
Vanderbilts are pursuing methods outside the pale of law. Not all of
the facts have been given, by any means; only the most important have
been included in these chapters. For one thing, no mention has been
made of their repeated violations of a law prohibiting the granting
of rebates--a law which was stripped of its imprisonment clause by
the railroad magnates, and made punishable by fine only. Time and
time again in recent years has the New York Central been proved
guilty in the courts of violating even this emasculated law. From the
very inception of the Vanderbilt fortune the chronicle is the same,
and ever the same--legalized theft by purchase of law, and
lawlessness by evasion or defiance of law. With fraud it began, by
fraud it has been increased and extended and perpetuated, and by
fraud it is held.




CHAPTER IX

THE RISE OF THE GOULD FORTUNE


The greater part of this commanding fortune was originally heaped up,
as was that of Commodore Vanderbilt, in about fifteen years, and at
approximately the same time. One of the most powerful fortunes in the
United States, it now controls, or has exercised a dominant share of
the control, over more than 18,000 miles of railway, the total
ownership of which is represented by considerably more than a billion
dollars in stocks and bonds. The Gould fortune is also either openly
or covertly paramount in many telegraph, transatlantic cable, mining,
land and industrial corporations.

Its precise proportions no one knows except the Gould family itself.
That it reaches many hundreds of millions of dollars is fairly
obvious, although what is its exact figure is a matter not to be
easily ascertained. In the flux of present economic conditions,
which, so far as the control of the resources of the United States is
concerned, have simmered down to desperate combats between individual
magnates, or contesting sets of magnates, the proportions of great
fortunes, especially those based upon railroads and industries,
constantly tend to vary.

In the years 1908 and 1909 the Gould fortune, if report be true, was
somewhat diminished by the onslaughts of that catapultic railroad
baron, E. H. Harriman, who unceremoniously seized a share of the
voting control of some of the railroad systems long controlled by the
Goulds. Despite this reported loss, the Gould fortune is an active,
aggressive and immense one, vested with the most extensive power, and
embracing hundreds of millions of dollars in cash, land, palaces, or
profit-producing property in the form of bonds and stocks. Its
influence and ramifications, like those of the Vanderbilt and of
other huge fortunes, penetrate directly or indirectly into every
inhabited part of the United States, and into Mexico and other
foreign countries.


JAY GOULD'S BOYHOOD

The founder of this fortune was Jay Gould, father of the present
holding generation. He was the son of a farmer in Delaware County,
New York, and was born in 1836. As a child his lot was to do various
chores on his father's farm. In driving the cows he had to go
barefoot, perforce, by reason of poverty, and often thistles bruised
his feet--a trial which seems to have left such a poignant and
indelible impression upon his mind that when testifying before a
United States Senate investigating committee forty years later he
pathetically spoke of it with a reminiscent quivering. His father
was, indeed, so poor that he could not afford to let him go to the
public school. The lad, however, made an arrangement with a
blacksmith by which he received board in return for certain clerical
services. These did not interfere with his attending school. When
fifteen, he became a clerk in a country store, a task which, he
related, kept him at work from six o'clock in the morning until ten
o'clock at night. It is further related that by getting up at three
o'clock in the morning and studying mathematics for three years, he
learned the rudiments of surveying.

According to Gould's own story, an engineer who was making a map of
Ulster County hired him as an assistant at "twenty dollars a month
and found." This engagement somehow (we are not informed how) turned
out unsatisfactorily. Gould was forced to support himself by making
"noon marks" for the farmers. To two other young men who had worked
with him upon the map of Ulster County, Gould (as narrated by
himself) sold his interest for $500, and with this sum as capital he
proceeded to make maps of Albany and Delaware counties. These maps,
if we may believe his own statement, he sold for $5,000.


HE GOES INTO THE TANNING BUSINESS.

Subsequently Gould went into the tanning business in Pennsylvania
with Zadoc Pratt, a New York merchant, politician and Congressman of
a certain degree of note at the time. [Footnote: Pratt was regarded
as one of the leading agricultural experts of his day. His farm of
three hundred and sixty-five acres, at Prattsville, New York, was
reputed to be a model. A paper of his, descriptive of his farm, and
containing woodcut engravings, may be found in U. S. Senate
Documents, Second Session, Thirty-seventh Congress, 1861-62, v:411-
415.] Pratt, it seems, was impressed by young Gould's energy, skill
and smooth talk, and supplied the necessary capital of $120,000.
Gould, as the phrase goes, was an excellent bluff; and so dexterously
did he manipulate and hoodwink the old man that it was quite some
time before Pratt realized what was being done. Finally, becoming
suspicious of where the profits from the Gouldsboro tannery (named
after Gould) were going, Pratt determined upon some overhauling and
investigating.

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