Great Fortunes from Railroads

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

Each period to itself, however. Cornelius Vanderbilt was the golden
luminary of his time, a magnate of such combined, far-reaching wealth
and power as the United States had never known. Indeed, one overruns
the line of tautology in distinguishing between wealth and power. The
two were then identical not less than now. Wealth was the real power.
None knew or boasted of this more than old Vanderbilt when, with
advancing age, he became more arrogant and choleric and less and less
inclined to smooth down the storms he provoked by his contemptuous
flings at the great pliable public. When threatened by competitors,
or occasionally by public officials, with the invocation of the law,
he habitually sneered at them and vaunted his defiance. In terse
sentences, interspersed with profanity, he proclaimed the fact that
money was law; that it could buy either laws or immunity from the
law.

* * * * * * *

Since wealth meant power, both economic and political, it is not
difficult to estimate Vanderbilt's supreme place in his day.

Far below him, in point of possessions, stretched the 50,000,000
individuals who made up the nation's population. Nearly 10,000,000
were wage laborers, and of the 10,000,000 fully 500,000 were child
laborers. The very best paid of skilled workers received in the
highest market not more than $1,040 a year. The usual weekly pay ran
from $12 to $20 a week; the average pay of unskilled laborers was
$350 a year. More than 7,500,000 persons ploughed and hoed and
harvested the farms of the country; comparatively few of them could
claim a decent living, and a large proportion were in debt. The
incomes of the middle class, including individual employers, business
and professional men, tradesmen and small middlemen, ranged from
$1,000 to $10,000 a year.

How immeasurably puny they all seemed beside Vanderbilt! He beheld a
multitude of many millions struggling fiercely for the dollar that
meant livelihood or fortune; those bits of metal or paper which
commanded the necessities, comforts and luxuries of life; the
antidote of grim poverty and the guarantees of good living; which
dictated the services, honorable or often dishonorable, of men, women
and children; which bought brains not less than souls, and which put
their sordid seal on even the most sacred qualities. Now by these
tokens, he had securely 105,000,000 of these bits of metal or wealth
in some form equivalent to them. Millions of people had none of these
dollars; the hundreds of thousands had a few; the thousands had
hundreds of thousands; the few had millions. He had more than any.

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

A FORTUNE OF $700,000,000

From $105,000,000 bequeathed at his death, the Vanderbilt fortune has
grown until it now reaches fully $700,000,000. This is an approximate
estimate; the actual amount may be more or less. In 1889 Shearman
placed the wealth of Cornelius and William K. Vanderbilt, grandsons
of the first Cornelius, at $100,000,000 each, and that of Frederick
W. Vanderbilt, a brother of those two men, at $20,000,000. [Footnote:
"Who Owns the United States?"--The Forum Magazine, November, 1889.]
Adding the fortunes of the various other members of the Vanderbilt
family, the Vanderbilts then possessed about $300,000,000. Since that
time the population and resources of the United States have vastly
increased; wealth in the hold of a few has become more intensely
centralized; great fortunes have gone far beyond their already
extraordinary boundaries of twenty years ago; the possessions of the
Vanderbilts have expanded and swollen in value everywhere, although
recently the Standard Oil oligarchy has been encroaching upon their
possessions. Very probable it is that the combined Vanderbilt fortune
reaches fully $700,000,000, actually and potentially.

But the incidental mention of such a mass of money conveys no
adequate conception of the power of this family. Nominally it is
composed of private citizens with theoretically the same rights and
limitations of citizenship held by any other citizen and no more. But
this is a fanciful picture. In reality, the Vanderbilt family is one
of the dynasties of inordinately rich families ruling the United
States industrially and politically. Singly it has mastery over many
of the railroad and public utility systems and industrial
corporations of the United States. In combination with other powerful
men or families of wealth, it shares the dictatorship of many more
corporations. Under the Vanderbilts' direct domination are 21,000
miles of railroad lines, the ownership of which is embodied in
$600,000,000 in stocks and $700,000,000 in bonds. One member alone,
William K. Vanderbilt, is a director of seventy-three transportation
and industrial combinations or corporations.

BONDS THAT HOLD PRESENT AND POSTERITY.

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

Kingly power at best is shadowy, indefinite, depending mostly upon
traditional custom and audacious assumption backed by armed force. If
it fall back upon a certain alleged divine right it cannot produce
documents to prove its authority. The industrial monarchs of the
United States are fortified with both power and proofs of possession.
Those bonds and stocks are the tangible titles to tangible property;
whoso holds them is vested with the ownership of the necessities of
tens of millions of subjected people. Great stretches of railroad
traverse the country; here are coal mines to whose products some
ninety million people look for warmth; yonder are factories; there in
the cities are street car lines and electric light and power supply
and gas plants; on every hand are lands and forests and waterways--
all owned, you find, by this or that dominant man or family.

The mind wanders back in amazement to the times when, if a king
conquered territory, he had to erect a fortress or castle and station
a garrison to hold it. They that then disputed the king's title could
challenge, if they chose, at peril of death, the provisions of that
title, which same provisions were swords and spears, arrows and
muskets.

But nowhere throughout the large extent of the Vanderbilt's
possessions or those of other ruling families are found warlike
garrisons as evidence of ownership. Those uncouth barbarian methods
are grossly antiquated; the part once played by armed battalions is
now performed by bits of paper. A wondrously convenient change has it
been; the owners of the resources of nations can disport themselves
thousands of miles away from the scene of their ownership; they need
never bestir themselves to provide measures for the retention of
their property. Government, with its array of officials, prisons,
armies and navies, undertakes all of this protection for them. So
long as they hold these bits of paper in their name, Government
recognizes them as the incontestable owners and safeguards their
property accordingly. The very Government established on the taxation
of the workers is used to enforce the means by which the workers are
held in subjection.

THEY DECREE TAXES AT WILL.

These batches of stocks and bonds betoken as much more again. A
pretty fiction subsists that Government, the creator of the modern
private corporation, is necessarily more powerful than its creature.
This theoretical doctrine, so widely taught by university professors
and at the same time so greatly at variance with the palpable facts,
will survive to bring dismay in the near future to the very classes
who would have the people believe it so. Instead of now being the
superior of the corporation the Government has long since definitely
surrendered to private corporations a tremendous taxing power
amounting virtually to a decree authorizing enslavement. Upon every
form of private corporation--railroad, industrial, mining, public
utility--is conferred a peculiarly sweeping and insidious power of
taxation the indirectness of which often obscures its frightful
nature and effects.

Where, however, the industrial corporation has but one form of
taxation the railroad has many forms. The trust in oil or any other
commodity can tax the whole nation at its pleasure, but inherently
only on the one product it controls. That single taxation is of
itself confiscatory enough, as is seen in the $912,000,000 of profits
gathered in by the Standard Oil Company since its inception. The
trust tax is in the form of its selling price to the public. But the
railroad puts its tax upon every product transported or every person
who travels. Not a useful plant grows or an article is made but that,
if shipped, a heavy tax must be paid on it. This tax comes in the
guise of freight or passenger rates.

The labor of hundreds of millions of people contributes incessantly
to the colossal revenues enriching the railroad owners. For their
producing capacity the workers are paid the meagerest wages, and the
products which they make they are compelled to buy back at exorbitant
prices after they pass through the hands of the various great
capitalist middlemen, such as the trusts and the railroads. How
enormous the revenues of the railroads are may be seen in the fact
that in the ten years from 1898 to 1908 the dividends declared by
thirty-five of the leading railroads in the United States reached the
sum of about $1,800,000,000. This railroad taxation is a grinding,
oppressive one, from which there is no appeal. If the Government
taxes too heavily the people nominally can have a say; but the people
have absolutely no voice in altering the taxation of corporations.
Pseudo attempts have been made to regulate railroad charges, but
their futility was soon evident, for the reason that owning the
instruments of business the railroads and the allied trusts are in
actual possession of the governmental power viewing it as a working
whole.

AND EXERCISE UNRESTRAINED POWER.

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

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

Millions have gone hungry or lived on an attenuated diet while
elsewhere harvests rotted in the ground; between their needs and
nature's fertility lay the railroads. Organized and maintained for
profit and for profit alone, the railroads carry produce and products
at their fixed rates and not a whit less; if these rates are not paid
the transportation is refused. And as in these times transportation
is necessary in the world's intercourse, the men who control it have
the power to stand as an inflexible barrier between individuals,
groups of individuals, nations and international peoples. The very
agencies which should under a rational form of civilization be
devoted to promoting the interests of mankind, are used as their
capricious self-interest incline them by the few who have been
allowed to obtain control of them. What if helpless people are swept
off by starvation or by diseases superinduced by lack of proper food?
What if in the great cities an increasing sacrifice of innocents goes
on because their parents cannot afford the price of good milk--a
price determined to a large extent by railroad tariff? All of this
slaughter and more makes no impress upon the unimpressionable
surfaces of these stocks and bonds, and leaves no record save in the
hospitals and graveyards.

The railroad magnates have other powers. Government itself has no
power to blot a town out of existence. It cannot strew desolation at
will. But the railroad owners can do it and do not hesitate if
sufficient profits be involved. One man sitting in a palace in New
York can give an order declaring a secret discriminative tariff
against the products of a place, whereupon its industries no longer
able to compete with formidable competitors enjoying better rates,
close down and the life of the place flickers and sometimes goes out.

These are but a very few of the immensity of extravagant powers
conferred by the ownership of these railroad bonds and stocks. Bonds
they assuredly are, incomparably more so than the clumsy yokes of
olden days. Society has improved its outwards forms in these passing
centuries. Clanking chains are no longer necessary to keep slaves in
subjection. Far more effective than chains and balls and iron collars
are the ownership of the means whereby men must live. Whoever
controls them in large degree, is a potentate by whatever name he be
called, and those who depend upon the owner of them for their
sustenance are slaves by whatever flattering name they choose to go.

HIGH AND MIGHTY POTENTATES.

The Vanderbilts are potentates. Their power is bounded by no law;
they are among the handful of fellow potentates who say what law
shall be and how it shall be enforced. No stern, masterful men and
women are they as some future moonstruck novelist or historian bent
upon creating legendary lore may portray them. Voluptuaries are most
of them, sunk in a surfeit of gorgeous living and riotous pleasure.
Weak, without distinction of mind or heart, they have the money to
hire brains to plan, plot, scheme, advocate, supervise and work for
them. Suddenly deprived of their stocks and bonds they would find
themselves adrift in the sheerest helplessness. With these stocks and
bonds they are the direct absolute masters of an army of employees.
On the New York Central Railroad alone the Vanderbilt payroll
embraces fifty thousand workers. This is but one of their railroad
systems. As many more, or nearly as many, men work directly for them
on their other railroad lines.

One hundred thousand men signify, let us say, as many families.
Accepting the average of five to a family, here are five hundred
thousand souls whose livelihood is dependent upon largely the will of
the Vanderbilt family. To that will there is no check. To-day it may
be expansively benevolent; to-morrow, after a fit of indigestion or a
night of demoralizing revelry, it may flit to an extreme of
parsimonious retaliation. As the will fluctuates, so must be the fate
of the hundred thousand workers. If the will decides that the pay of
the men must go down, curtailed it is, irrespective of their protests
that the lopping off of their already slender wages means still
keener hardship. Apparently free and independent citizens, this army
of workers belong for all essential purposes to the Vanderbilt
family. Their jobs are the hostages held by the Vanderbilts. The
interests and decisions of one family are supreme.

The germination and establishment of this immense power began with
the activities of the first Cornelius Vanderbilt, the founder of this
pile of wealth. He was born in 1794. His parents lived on Staten
Island; his father conveyed passengers in a boat to and from New
York--an industrious, dull man who did his plodding part and allowed
his wife to manage household expenses. Regularly and obediently he
turned his earnings over to her. She carefully hoarded every
available cent, using an old clock as a depository.

THE FOUNDER'S START.

Vanderbilt was a rugged, headstrong, untamable, illiterate youth. At
twelve years of age he could scarcely write his own name. But he knew
the ways of the water; when still a youth he commenced ferrying
passengers and freight between Staten Island and New York City. For
books he cared nothing; the refinements of life he scorned. His one
passion was money. He was grasping and enterprising, coarse and
domineering. Of the real details of his early life little is known
except what has been written by laudatory writers. We are informed
that as he gradually made and saved money he built his own schooners,
and went in for the coasting trade. The invention and success of the
steamboat, it is further related, convinced him that the day of the
sailing vessel would soon be over. He, therefore, sold his interest
in his schooners, and was engaged as captain of a steamboat plying
between New York and points on the New Jersey coast. His wife at the
same time enlarged the family revenues by running a wayside tavern at
New Brunswick, N. J., whither Vanderbilt had moved.

In 1829, when his resources reached $30,000, he quit as an employee
and began building his own steamboats. Little by little he drove many
of his competitors out of business. This he was able to do by his
harsh, unscrupulous and strategic measures. [Footnote: Some glimpses
of Vanderbilt's activities and methods in his early career are
obtainable from the court records. In 1827 he was fined two penalties
of $50 for refusing to move a steamboat called "The Thistle,"
commanded by him, from a wharf on the North River in order to give
berth to "The Legislature," a competing steamboat. His defence was
that Adams, the harbor master, had no authority to compel him to
move. The lower courts decided against him, and the Supreme Court, on
appeal, affirmed their judgment. (Adams vs. Vanderbilt. Cowen's
Reports. Cases in Supreme Court of the State of New York, vii: 349-
353.)

In 1841 the Eagle Iron Works sued Vanderbilt for the sum of $2,957.15
which it claimed was due under a contract made by Vanderbilt on March
8, 1838. This contract called for the payment by Vanderbilt of
$10,500 in three installments for the building of an engine for the
steamboat "Wave." Vanderbilt paid $7,900, but refused to pay the
remainder, on the ground that braces to the connecting rods were not
supplied. These braces, it was brought out in court, cost only $75 or
$100. The Supreme Court handed down a judgment against Vanderbilt. An
appeal was taken by Vanderbilt, and Judge Nelson, in the Supreme
Court, in October, 1841, affirmed that judgment.--Vanderbilt vs.
Eagle Iron Works, Wendell's Reports, Cases in the Supreme Court of
the State of New York, xxv: 665-668.] He was severe with the men who
worked for him, compelling them to work long hours for little pay. He
showed a singular ability in undermining competitors. They could not
pay low wages but what he could pay lower; as rapidly as they set
about reducing passenger and freight rates he would anticipate them.
His policy at this time was to bankrupt competitors, and then having
obtained a monopoly, to charge exorbitant rates. The public, which
welcomed him as a benefactor in declaring cheaper rates and which
flocked to patronize his line, had to pay dearly for their premature
and short-sighted joy. For the first five years his profits,
according to Croffut, reached $30,000 a year, doubling in successive
years. By the time he was forty years old he ran steamboats to many
cities on the coast, and had amassed a fortune of half a million
dollars.

DRIVING OUT COMPETITORS.

Judging from the records of the times, one of his most effective
means for harassing and driving out competitors was in bribing the
New York Common Council to give him, and refuse them, dock
privileges. As the city owned the docks, the Common Council had the
exclusive right of determining to whom they should be leased. Not a
year passed but what the ship, ferry and steamboat owners, the great
landlords and other capitalists bribed the aldermen to lease or give
them valuable city property. Many scandals resulted, culminating in
the great scandal of 1853, when the Grand Jury, on February 26,
handed up a presentment showing in detail how certain aldermen had
received bribes for disposal of the city's water rights, pier
privileges and other property, and how enormous sums had been
expended in bribes to get railroad grants in the city. [Footnote:
Proceedings of the New York Board of Aldermen, xlviii: 423-431.]
Vanderbilt was not openly implicated in these frauds, no more than
were the Astors, the Rhinelanders, the Goelets and other very rich
men who prudently kept in the background, and who managed to loot the
city by operating through go-betweens.

Vanderbilt's eulogists take great pains to elaborate upon his
tremendous energy, sagacity and constructive enterprise, as though
these were the exclusive qualities by which he got his fortune. Such
a glittering picture, common in all of the usual biographies of rich
men, discredits itself and is overthrown by the actual facts. The
times in which Vanderbilt lived and thrived were not calculated to
inspire the masses of people with respect for the trader's methods,
although none could deny that the outcropping capitalists of the
period showed a fierce vigor in overcoming obstacles of man and of
nature, and in extending their conquests toward the outposts of the
habitable globe.

If indomitable enterprise assured permanency of wealth then many of
Vanderbilt's competitors would have become and remained
multimillionaires. Vanderbilt, by no means possessed a monopoly of
acquisitive enterprise; on every hand, and in every line, were men
fully as active and unprincipled as he. Nearly all of these men, and
scores of competitors in his own sphere--dominant capitalists in
their day--have become well-nigh lost in the records of time; their
descendants are in the slough of poverty, genteel or otherwise. Those
times were marked by the intensest commercial competition; business
was a labyrinth of sharp tricks and low cunning; the man who managed
to project his head far above the rest not only had to practice the
methods of his competitors but to overreach and outdo them. It was in
this regard that Vanderbilt showed superior ability.

In the exploitation of the workers--forcing them to work for low
wages and compelling them to pay high prices for all necessities--
Vanderbilt was no different from all contemporaneous capitalists.
Capitalism subsisted by this process. Almost all conventional
writers, it is true, set forth that it was the accepted process of
the day, implying that it was a condition acquiesced in by the
employer and worker. This is one of the lies disseminated for the
purpose of proving that the great fortunes were made by legitimate
methods. Far from being accepted by the workers it was denounced and
was openly fought by them at every auspicious opportunity.

Vanderbilt became one of the largest ship and steamboat builders in
the United States and one of the most formidable employers of labor.
At one time he had a hundred vessels afloat. Thousands of
shipwrights, mechanics and other workers toiled for him fourteen and
sixteen hours a day at $1.50 a day for many years. The actual
purchasing power of this wage kept declining as the cost of rent and
other necessaries of life advanced. This was notably so after the
great gold discoveries in California, when prices of all commodities
rose abnormally, and the workers in every trade were forced to strike
for higher wages in order to live. Most of these strikes were
successful, but their results as far as wages went were barren; the
advance wrung from employers was by no means equal to the increased
cost of living.

REGARDED AS A COMMERCIAL BUCCANEER.

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

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