Great Fortunes from Railroads

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This, in short is a picture of the man who in the next few years used
his stolen millions to sweep into his ownership great railroad
systems. Croffut asserts that in 1861 he was worth $20,000,000; other
writers say that his wealth did not exceed $10,000,000. He knew
nothing of railroads, not even the first technical or supervising
rudiments. Upon one thing he depended and that alone: the brute force
of money with its auxiliaries, cunning, bribery and fraud.

CHAPTER IV

THE ONRUSH OF THE VANDERBILT FORTUNE

With the outbreak of the Civil War, and the scouring of the seas by
privateers, American ship owners found themselves with an assortment
of superfluous vessels on their hands. Forced to withdraw from marine
commerce, they looked about for two openings. One was how to dispose
of their vessels, the other the seeking of a new and safe method of
making millions.

Most of their vessels were of such scandalous construction that
foreign capitalists would not buy them at any price. Hastily built in
the brief period of ninety days, wholly with a view to immediate
profit and with but a perfunctory regard for efficiency, many of
these steamers were in a dangerous condition. That they survived
voyages was perhaps due more to luck than anything else; year after
year, vessel after vessel similarly built and owned had gone down to
the bottom of the ocean. Collins had lost many of his ships; so had
other steamship companies. The chronicles of sea travel were a long,
grewsome succession of tragedies; every little while accounts would
come in of ships sunk or mysteriously missing. Thousands of
immigrants, inhumanly crowded in the enclosures of the steerage, were
swept to death without even a fighting chance for life. Cabin
passengers fared better; they were given the opportunity of taking to
the life-boats in cases where there was sufficient warning, time and
room. At best, sea travel is a hazard; the finest of ships are liable
to meet with disaster. But over much of this sacrifice of life hung
grim, ugly charges of mismanagement and corruption, of insufficient
crews and incompetent officers; of defective machinery and rotting
timber; of lack of proper inspection and safeguards.

THE ANSWER FOUND.

The steamboat and steamship owners were not long lost in perplexity.
Since they could no longer use their ships or make profit on ocean
routes why not palm off their vessels upon the Government? A highly
favorable time it was; the Government, under the imperative necessity
of at once raising and transporting a huge army, needed vessels
badly. As for the other question momentarily agitating the
capitalists as to what new line of activity they could substitute for
their own extinguished business, Vanderbilt soon showed how railroads
could be made to yield a far greater fortune than commerce.

The titanic conflict opening between the North and the South found
the Federal Government wholly unprepared. True, in granting the mail
subsidies which established the ocean steamship companies, and which
actually furnished the capital for many of them, Congress had
inserted some fine provisions that these subsidized ships should be
so built as to be "war steamers of the first class," available in
time of war. But these provisions were mere vapor. Just as the Harris
and the Sloo lines had obtained annual mail subsidy payments of
$900,000 and had caused Government officials to accept their inferior
vessels, so the Collins line had done the same. The report of a board
of naval experts submitted to the Committee of Ways and Means of the
House of Representatives had showed that the Collins steamers had not
been built according to contract; that they would crumble to pieces
under the fire of their own batteries, and that a single hostile gun
would blow them to splinters. Yet they had been accepted by the Navy
Department.

In times of peace the commercial interests had practiced the grossest
frauds in corruptly imposing upon the Government every form of shoddy
supplies. These were the same interests so vociferously proclaiming
their intense patriotism. The Civil War put their pretensions of
patriotism to the test. If ever a war took place in which Government
and people had to strain every nerve and resource to carry on a great
conflict it was the Civil War. The result of that war was only to
exchange chattel slavery for the more extensive system of economic
slavery. But the people of that time did not see this clearly. The
Northern soldiers thought they were fighting for the noblest of all
causes, and the mass of the people behind them were ready to make
every sacrifice to win a momentous struggle, the direct issue of
which was the overthrow or retention of black slavery.

How did the capitalist class act toward the Government, or rather, let
us say, toward the army and the navy so heroically pouring out their
blood in battles, and hazarding life in camps, hospitals, stockades
and military prisons?

INDISCRIMINATE PLUNDERING DURING THE CIVIL WAR.

The capitalists abundantly proved their devout patriotism by making
tremendous fortunes from the necessities of that great crisis. They
unloaded upon the Government at ten times the cost of manufacture
quantities of munitions of war--munitions so frequently worthless
that they often had to be thrown away after their purchase.
[Footnote: In a speech on February 28, 1863, on the urgency of
establishing additional government armories and founderies,
Representative J. W. Wallace pointed out in the House of
Representatives: "The arms, ordnance and munitions of war bought by
the Government from private contractors and foreign armories since
the commencement of the rebellion have doubtless cost, over and above
the positive expense of their manufacture, ten times as much as would
establish and put into operation the armory and founderies
recommended in the resolution of the committee. I understand that the
Government, from the necessity of procuring a sufficient quantity of
arms, has been paying, on the average, about twenty-two dollars per
musket, when they could have been and could be manufactured in our
national workshops for one-half that money."--Appendix to The
Congressional Globe, Thirty-seventh Congress, Third Session, 1862-63.
Part ii: 136. Fuller details are given in subsequent chapters. ] They
supplied shoddy uniforms and blankets and wretched shoes; food of so
deleterious a quality that it was a fertile cause of epidemics of
fevers and of numberless deaths; they impressed, by force of
corruption, worn-out, disintegrating hulks into service as army and
naval transports. Not a single possibility of profit was there in
which the most glaring frauds were not committed. By a series of
disingenuous measures the banks plundered the Treasury and people and
caused their banknotes to be exempt from taxation. The merchants
defrauded the Government out of millions of dollars by bribing Custom
House officers to connive at undervaluations of imports. [Footnote:
In his report for 1862 Salmon P. Chase, Secretary of the Treasury,
wrote: "That invoices representing fraudulent valuation of
merchandise are daily presented at the Custom Houses is well
known...."] The Custom House frauds were so notorious that, goaded on
by public opinion, the House of Representatives was forced to appoint
an investigating committee. The chairman of this committee,
Representative C. H. Van Wyck, of New York, after summarizing the
testimony in a speech in the House on February 23, 1863, passionately
exclaimed: "The starving, penniless man who steals a loaf of bread to
save life you incarcerate in a dungeon; but the army of magnificent
highwaymen who steal by tens of thousands from the people, go
unwhipped of justice and are suffered to enjoy the fruits of their
crimes. It has been so with former administrations: unfortunately it
is so with this." [Footnote: Appendix to the Congressional Globe,
Thirty-seventh Congress, Third Session, 1862-63. Part ii: 118.]

The Federal armies not only had to fight an open foe in a desperately
contested war, but they were at the same time the helpless targets
for the profit-mongers of their own section who insidiously slew
great numbers of them--not, it is true, out of deliberate lust for
murder, but because the craze for profits crushed every instinct of
honor and humanity, and rendered them callous to the appalling
consequences. The battlefields were not more deadly than the supplies
furnished by capitalist contractors. [Footnote: This is one of many
examples: Philip S. Justice, a gun manufacturer of Philadelphia,
obtained a contract in 1861, to supply 4,000 rifles. He charged $20
apiece. The rifles were found to be so absolutely dangerous to the
soldiers using them, that the Government declined to pay his demanded
price for a part of them. Justice then brought suit. (See Court of
Claims Reports, viii: 37-54.) In the court records, these statements
are included:

William H. Harris, Second Lieutenant of Ordnance, under orders
visited Camp Hamilton, Va., and inspected the arms of the Fifty-
Eighth Regiment, Pennsylvania Volunteers, stationed there. He
reported: "This regiment is armed with rifle muskets, marked on the
barrel, 'P. S. Justice, Philadelphia,' and vary in calibre from .65
to .70. I find many of them unserviceable and irreparable, from the
fact that the principal parts are defective. Many of them are made up
of parts of muskets to which the stamp of condemnation has been
affixed by an inspecting officer. None of the stocks have ever been
approved by an officer, nor do they bear the initials of any
inspector. They are made up of soft, unseasoned wood, and are
defective in construction. ... The sights are merely soldered on to
the barrel, and come off with the gentlest handling. Imitative screw-
heads are cut on their bases. The bayonets are made up of soft iron,
and, of course, when once bent remain 'set,'" etc., etc. (p. 43).

Col. (later General) Thomas D. Doubleday reported of his inspection:
"The arms which were manufactured at Philadelphia, Penn., are of the
most worthless kind, and have every appearance of having been
manufactured from old condemned muskets. Many of them burst; hammers
break off; sights fall off when discharged; the barrels are very
light, not one-twentieth of an inch thick, and the stocks are made of
green wood which have shrunk so as to leave the bands and trimmings
loose. The bayonets are of such frail texture that they bend like
lead, and many of them break off when going through the bayonet
exercise. You could hardly conceive of such a worthless lot of arms,
totally unfit for service, and dangerous to those using them" (p.
44).

Assistant Inspector-General of Ordnance John Buford reported: "Many
had burst; many cones were blown out; many locks were defective; many
barrels were rough inside from imperfect boring; and many had
different diameters of bore in the same barrel. ... _At target
practice so many burst that the men became afraid to fire them_"
(p. 45).

The Court of Claims, on strict technical grounds, decided in favor of
Justice, but the Supreme Court of the United States reversed that
decision and dismissed the case. The Supreme Court found true the
Government's contention that "the arms were unserviceable and unsafe
for troops to handle."

Many other such specific examples are given in subsequent chapters of
this work.] These capitalists passed, and were hailed, as eminent
merchants, manufacturers and bankers; they were mighty in the marts
and in politics; and their praise as "enterprising" and "self-made"
and "patriotic" men was lavishly diffused.

It was the period of periods when there was a kind of adoration of
the capitalist taught in press, college and pulpit. Nothing is so
effective, as was remarked of old, to divert attention from
scoundrelism as to make a brilliant show of patriotism. In the very
act of looting Government and people and devastating the army and
navy, the capitalists did the most ghastly business under the mask of
the purest patriotism. Incredible as it may seem, this pretension was
invoked and has been successfully maintained to this very day. You
can scarcely pick up a volume on the Civil War, or a biography of the
statesmen or rich men of the era, without wading in fulsome accounts
of the untiring patriotism of the capitalists.

PATRIOTISM AT A SAFE DISTANCE.

But, while lustily indulging in patriotic palaver, the propertied
classes took excellent care that their own bodies should not be
imperilled. Inspired by enthusiasm or principle, a great array of the
working class, including the farming and the professional elements,
volunteered for military service. It was not long before they
experienced the disappointment and demoralization of camp life. The
letters written by many of these soldiers show that they did not
falter at active campaigning. The prospect, however, of remaining in
camp with insufficient rations, and (to use a modern expressive word)
graft on every hand, completely disheartened and disgusted many of
them. Many having influence with members of Congress, contrived to
get discharges; others lacking this influence deserted. To fill the
constantly diminishing ranks caused by deaths, resignations and
desertions, it became necessary to pass a conscription act.

With few exceptions, the propertied classes of the North loved
comfort and power too well to look tranquilly upon any move to force
them to enlist. Once more, the Government revealed that it was but a
register of the interests of the ruling classes. The Draft Act was so
amended that it allowed men of property to escape being conscripted
into the army by permitting them to buy substitutes. The poor man who
could not raise the necessary amount had to submit to the
consequences of the draft. With a few of the many dollars wrung,
filched or plundered in some way or other, the capitalists could
purchase immunity from military service.

As one of the foremost capitalists of the time, Cornelius Vanderbilt
has been constantly exhibited as a great and shining patriot.
Precisely in the same way as Croffut makes no mention of Vanderbilt's
share in the mail subsidy frauds, but, on the contrary, ascribes to
Vanderbilt the most splendid patriotism in his mail carrying
operations, so do Croffut and other writers unctuously dilate upon
the old magnate's patriotic services during the Civil War. Such is
the sort of romancing that has long gone unquestioned, although the
genuine facts have been within reach. These facts show that
Vanderbilt was continuing during the Civil War the prodigious frauds
he had long been carrying on.

When Lincoln's administration decided in 1862 to send a large
military and naval force to New Orleans under General Banks, one of
the first considerations was to get in haste the required number of
ships to be used as transports. To whom did the Government turn in
this exigency? To the very merchant class which, since the foundation
of the United States, had continuously defrauded the public treasury.
The owners of the ships had been eagerly awaiting a chance to sell or
lease them to the Government at exorbitant prices. And to whom was
the business of buying, equipping and supervising them intrusted? To
none other than Cornelius Vanderbilt.

Every public man had opportunities for knowing that Vanderbilt had
pocketed millions of dollars in his fraudulent hold-up arrangement
with various mail subsidy lines. He was known to be mercenary and
unscrupulous. Yet he was selected by Secretary of War Stanton to act
as the agent for the Government. At this time Vanderbilt was posing
as a glorious patriot. With much ostentation he had loaned to the
Government for naval purposes one of his ships--a ship that he could
not put to use himself and which, in fact, had been built with stolen
public funds. By this gift he had cheaply attained the reputation of
being a fervent patriot. Subsequently, it may be added, Congress
turned a trick on him by assuming that he gave this ship to the
Government, and, to his great astonishment, kept the ship and
solemnly thanked him for the present.

VANDERBILT'S METHODS IN WAR.

The outfitting of the Banks expedition was of such a rank character
that it provoked a grave public scandal. If the matter had been
simply one of swindling the United States Treasury out of millions of
dollars, it might have been passed over by Congress. On all sides
gigantic frauds were being committed by the capitalists. But in this
particular case the protests of the thousands of soldiers on board
the transports were too numerous and effective to be silenced or
ignored. These soldiers were not regulars without influence or
connections; they were volunteers who everywhere had relatives and
friends to demand an inquiry. Their complaints of overcrowding and of
insecure, broken-down ships poured in, and aroused the whole country.
A great stir resulted. Congress appointed an investigating committee.

The testimony was extremely illuminative. It showed that in buying
the vessels Vanderbilt had employed one T. J. Southard to act as his
handy man. Vanderbilt, it was testified by numerous ship owners,
refused to charter any vessels unless the business were transacted
through Southard, who demanded a share of the purchase money before
he would consent to do business. Any ship owner who wanted to get rid
of a superannuated steamer or sailing vessel found no difficulty if
he acceded to Southard's terms.

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.

HORRORS DONE FOR PROFIT.

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.

FRAUDS REMAIN UNPUNISHED.

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.]

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