Great Fortunes from Railroads Part 17

[Footnote: Spahr quotes an independent operator in 1900 as saying that the railroads charged the independents three times as much for handling hard coal as they charged for handling soft coal from the West--"America's Working People": 122-223.]

By these methods such railroads as the Philadelphia and Reading, the Delaware, Lackawana and Western, the Central Railroad of New Jersey, the Lehigh Valley and others gradually succeeded, in the course of years, in extending an ownership over the coal mines. The more powerful independent operators struck back early at them by getting a const.i.tutional provision pa.s.sed in Pennsylvania, in 1873, prohibiting railroads from owning and operating coal mines. The railroads evaded this law with facility by an illegal system of leasing, and by organizing nominally separate and independent companies the stock of which, in reality, was owned by them.

To the men who did the actual labor of working in the mines--the coal miners--this change of ownership was not regarded with alarm. Indeed, they at first cherished the pathetic hope that it might benefit their condition, which had been desperate and intolerable enough under the old company system. The small coal-owning capitalists, who had emitted such wailings at their own oppression by the railroads, had long relentlessly exploited their tens of thousands of workers. One abuse had been piled upon another. The miners were paid by the ton; the companies had fraudulently increased the size of the ton, so that the miners had to perform much more labor while wages remained stationary or were reduced.

But one of the most serious grievances was that against what were called "company or truck stores." Ingenious contrivances for getting back the miserable wages paid out, these were company-owned merchandise stores in which the miners were compelled to buy their supplies. In many collieries the mine worker was not paid in money but was given an order on the company store, where he was forced to purchase inferior goods at exorbitant prices.

To blast in the mines powder was necessary; the miner had to buy it at his own expense, and was charged $2.75 a keg, although its selling value was not more than $1.10 or 90 cents. In every direction the mine worker was defrauded and plundered. "Often," says John Mitch.e.l.l, long the leader of the miners, and a compromiser whose career proves that he cannot be charged with any deep-seated antagonism to capitalist interests, "a man together with his children would work for months without receiving a dollar of money, and not infrequently he would find at the end of the month nothing in his envelope but a statement that his indebtedness to the company had increased so many dollars." [Footnote: "Organized Labor": 359. Mitch.e.l.l's comments were fully supported by the vast ma.s.s of testimony taken by the United States Anthracite Coal Commission in 1902. Mitch.e.l.l is, at this writing (1909), in the employ of the Civic Federation, an organization financed by capitalists. Its alleged purpose is to bring about "harmony" between capital and labor.] Mitch.e.l.l adds that the Legislature of Pennsylvania pa.s.sed anti-truck store laws, "but the operators who have always cried out loudest against illegal action by miners openly and unhesitatingly violated the act and subsequently evaded it by various devices." [Footnote: Ibid.] The wretched houses the miners occupied "also," says Mitch.e.l.l, "served as a means of extortion, and, in other instances, as a weapon to be used against the miners." In case they complained or struck, the miners were evicted under the most cruel circ.u.mstances. Many other media of extortion were common. In the entire year the miners averaged only one hundred and ninety working days of ten hours each, and, of course, were paid for working time only. According to Spahr 350,000 miners drudged for an average wage of $350 a year. [Footnote: "The Present Distribution of Wealth in the United States": 110-111.]

SEIZING RAILROADS AND COAL MINES.

This system of abject slavery was in full force when the railroads ousted many of the small operators, and largely by pressure of power took possession of the mines. In vain did the miners' unions implore the railroad magnates for redress of some kind. The magnates abruptly refused, and went on extending and intrenching their authority. The Vanderbilts manipulated themselves into being important factors in the Delaware and Hudson Railroad, and in the Delaware, Lackawana and Western Railroad, which had deviously obtained t.i.tle to some of the richest coal deposits in Wyoming County, and they also became prominent in the directing of the Lehigh Valley Railroad.

The most important coal-owning railroad, however, which they and other magnates coveted was the Philadelphia and Reading Railroad. At least one-half of the anthracite coal supply of Pennsylvania was owned or controlled by this railroad. The ownership of the Reading Railroad, with its subordinate lines, was the pivotal requisite towards getting a complete monopoly of the anthracite coal deposits.

William H. Vanderbilt had acquired an interest in it years before, but the actual controlling ownership at this time was held by a group of Philadelphia capitalists of the second rank with their three hundred thousand shares.

Unfortunately for this group, the Philadelphia and Reading Railroad was afflicted with a president, one Arthur A. McLeod, who was not only too recklessly ambitious, but who was temerarious enough to cross the path of the really powerful magnates. With immense confidence in his plans and in his ability to carry them out, he set out to monopolize the anthracite coal supply and to make the Reading Railroad a great trunk line. To perfect this monopoly he leased some coal-carrying railroads and made "a gentlemen's agreement" with others; and in line with his policy of raising the importance of the road, he borrowed large sums of money for the construction of new terminals and approaches and for equipment.

Now, all of these plans interfered seriously with the aims and ambition of magnates far greater than he. These magnates quickly saw the stupendous possibilities of a monopoly of the coal supply--the hundreds of millions of dollars of profits it held out--and decided that it was precisely what they themselves should control and n.o.body else. Second, in his aim to have his own railroad connections with the rich manufacturing and heavily-populated New England districts, McLeod had arranged with various small railroads a complete line from the coal fields of Pennsylvania into the heart of New England. In doing this he overreached his mark. He was soon taught the folly of presuming to run counter to the interests of the big magnates.

AND THE WAY IN WHICH IT WAS DONE.

The two powers controlling the large railroads traversing most of the New England States were the Vanderbilts and J. Pierpont Morgan. The one owned the New York Central, the other dominated the New York, New Haven and Hartford Railroad. The Pennsylvania Railroad likewise had no intention of allowing such a powerful compet.i.tor in its own province. These magnates viewed with intense amazement the effrontery of what they regarded as an upstart interloper. Although they had been constantly fighting one another for supremacy, these three interests now made common cause.

They adroitly prepared to crush McLeod and bankrupt the railroad of which he was the head. By this process they would accomplish three highly important objects; one the wresting of the Philadelphia and Reading Railroad into their own divisible ownership; second, the securing of their personal hold on the connecting railroads that McLeod had leased; and, finally, the obtaining of undisputed sovereignty over a great part of the anthracite coal mines. The warfare now began without those fanciful ceremonials, heralds or proclamations considered so necessary by Governments as a prelude to slaughter. These formalities are dispensed with by business combatants.

First, the Morgan-Vanderbilt interest caused the publication of terrifying reports that grave legislation hostile to the coal combination was imminent. The price of Reading stock on the Stock Exchange immediately declined. Then, following up their advantage, this dual alliance inspired even more ruinous reports. The credit of the Philadelphia and Reading Railroad was represented as being in a very bad state. As the railroad had borrowed immense sums of money both to finance its coal combination and to build extensive terminals and other equipment, large payments to creditors were due from time to time. To pay these creditors the railroad had to borrow more; but when the credit of the railroad was a.s.sailed, it found that its sources of borrowing were suddenly shut off. The group of Philadelphia capitalists had already borrowed large sums of money, giving Reading shares as collateral. When the market price of the stock kept going down they were called upon to pay back their loans.

Declining or unable to do so, their fifty thousand shares of pledged stock were sold. This sale still more depressed the price of Reading stock.

In this group of Philadelphia capitalist were men who were reckoned as very astute business lights--George M. Pullman, Thomas Dolan, one of the street railway syndicate whose briberies of legislatures and common councils, and whose manipulation of street railways in Philadelphia and other cities were so notorious a scandal; John Wanamaker, combining piety and sharp business;--these were three of them. But they were no match for the much more powerful and wily Vanderbilt-Morgan forces. They were compelled under resistless pressure to throw over their Reading stock at a great loss to themselves. Most of it was promptly bought up by J. P. Morgan and Company and the Vanderbilts, who then leisurely arranged a division of the spoils between themselves.

This transaction (strict interpreters of the law would have styled it a conspiracy) opened a facile way for a number of extremely important changes. The Vanderbilts and the Morgan interests apportioned between them much of the ownership of the Philadelphia and Reading Railroad with its vast ownership of coal deposits and its coal carrying traffic. [Footnote: An investigation, in 1905, showed that the "Baltimore and Ohio Railroad and the New York Central and Hudson River Railroad owned about 43.3 per cent. of the entire capital stock of the Philadelphia and Reading Railroad Company." "Report on Discriminations and Monopolies in Coal and Oil, Interstate Commerce Commission, January 25, 1907": 46.] The New York, New Haven and Hartford Railroad grasped the New York and New England Railroad from the Reading's broken hold, and there were further far-reaching changes militating to increase the railroad, and other, possessions of both parties. [Footnote: A good account of this expropriating transaction is that of Wolcott Drew, "The Reading Crash in 1903" in "Moody's Magazine" (a leading financial periodical), issue of January, 1907.] It was but another of the many instances of the supreme capitalists driving out the smaller fry and seizing the property which they had previously seized by fraud. [Footnote: One of the particularly indisputable examples of the glaring fraud by which immense areas of coal fields were originally obtained was that of the disposition of the estate of John Nicholson.

Dying in December, 1800, Nicholson left an estate embracing land, the extent of which was variously estimated at from three to five million acres. Some of the Pennsylvania legislative doc.u.ments place the area at from three to four million acres, while others, notably a report in 1842, by the judiciary committee of the Pennsylvania House of Representatives, state that it was 5,000,000 acres. Nicholson was a leading figure in the Pennsylvania Land Company which had obtained most of its vast land possessions by fraud. Some of Nicholson's landed estate lay in Virginia, Kentucky, North Carolina, South Carolina, Georgia and other States, but the bulk of it was in Pennsylvania, and included extensive regions containing the very richest coal deposits.

The State of Pennsylvania held a lien upon Nicholson's estate for unpaid taxes amounting to $300,000. Notwithstanding this lien, different individuals and corporations contrived to get hold of practically the whole of the estate in dispute. How they did it is told in many legislative doc.u.ments; the fraud and theft connected with it were a great scandal in Pennsylvania for forty-five years. We will quote only one of these doc.u.ments. Writing on January 24, 1842, to William Elwell, chairman of the Judiciary Committee of the Pennsylvania House of Representatives, Judge J. B. Anthony, of the Nicholson Court (a court especially established to pa.s.s upon questions arising from the disposition of the estate), said:

"On the 11th of April, 1825, an act pa.s.sed the Governor to appoint agents to discover and sell the Nicholson lands at auction, for which they were allowed _twenty-five per cent_. A Special Board of Property was also formed to compromise and settle with claimants.

From what has come to my knowledge in relation to this Act, I am satisfied that the commonwealth was seriously injured by the manner in which it was carried out by some of the agents. It was made use of princ.i.p.ally for the benefit of land speculators; and the very small sums received by the State treasurer for large and valuable tracts sold and compromised, show that the cunning and astute land jobbers could easily overreach the Board of Property at Harrisburg. ... Many instances of gross fraud might be enumerated, but it would serve no useful purpose." Judge Anthony further said that "very many of the most influential, astute and intelligent inhabitants" and "gentlemen of high standing" were partic.i.p.ants in the frauds.--Pennsylvania House Journal, 1842, Vol. ii, Doc. No. 127: 700-704.]

The Vanderbilts' ownership of a large part of the shares of railroads, which, in turn, own and control the coal mines, may be summed up as follows: Through the Lake Sh.o.r.e Railroad, which they have owned almost absolutely, they own, or until recently did own, $30,000,000 of shares in the Philadelphia and Reading Railroad with its stupendous anthracite coal deposits, and they owned, for a long time, large amounts of stock in the Lehigh Valley Railroad with its unmined coal deposits of 400,000,000 tons. In 1908 they disposed of their Lehigh Valley Railroad ownings, receiving an equivalent in either money or some other form of property. The ownership of the Delaware, Lackawana and Western Railroad with its equally large unmined coal deposits is divided between the Vanderbilt family and the Standard Oil interests. The Vanderbilts, according to the latest official reports, also own heavy interests in the Delaware and Hudson Railroad, the New York, Ontario and Western Railroad, $12,500,000 of stock in the Chesapeake and Ohio Railroad, and large amounts of stock in other coal mining and coal carrying railroads. [Footnote: See Special Report No. 1 of the Interstate Commerce Commission on Intercorporate Relationship of Railroads: 39. Also Carl Snyder's "American Railways as Investments": 473.]

Here, then is another important step in the acquisition of a large part of the country's resources by the Vanderbilts. A recapitulation will not be out of place. His first millions obtained by blackmailing, Commodore Vanderbilt then uses those millions to buy a railroad. By further fraudulent methods, based upon bribery of lawmaking bodies, he obtains more railroads and more wealth. His son, following his methods, adds other railroads to the inventory, and converts tens of millions of fraudulently-acquired millions into interest-bearing Government, State, city and other bonds. The third generation (in point of order from the founder) continues the methods of the father and grandfather, gets hold of still more railroads, and emerges as one of the powers owning the great coal deposits of Pennsylvania.

THE DICTATION OF THE COAL FIELDS.

The Vanderbilt and Morgan interest at once increased the price of anthracite coal, adding to it $1.25 to $1.35 a ton. In 1900 they appeared in the open with a new and gigantic plan of consolidation by which they were able to control almost absolutely the production and prices. That the Vanderbilt family and the Morgan interests were the main parties to this combination was well established. [Footnote: Final Report of the U. S. Industrial Commission, 1902, xix: 462-463.]

Already high, a still heavier increase of price at once was put on the 40,000,000 tons of anthracite then produced, and the price was successively raised until consumers were taxed seven times the cost of production and transportation.

The population was completely at the mercy of a few magnates; each year, as the winter drew on, the Coal Trust increased its price. In the needs and suffering of millions of people it found a ready means of laying on fresher and heavier tribute. By the mandate of the Coal Trust, housekeepers were taxed $70,000,000 in extra impositions a year, in addition to the $40,000,000 annually extorted by the exorbitant prices of previous years. At a stroke the magnates were able to confiscate by successive grabs the labor of the people of the United States at will. Neither was there any redress; for those same magnates controlled all of the ramifications of Government.

What, however, of the workers in the mines? While the combination was high-handedly forcing the consumer to pay enormous prices, how was it acting toward them? The question is almost superfluous. The railroads made little concealment of their hostility to the trades unions, and refused to grant reforms or concessions. Consequently a strike was declared in 1900 by which the mine workers obtained a ten per cent increase in wages and the promise of semi-monthly wages in cash. But they had not resumed work before they discovered the hollowness of these concessions. Two years of futile application for better conditions pa.s.sed, and then, in 1902, 150,000 men and boys went on strike. This strike lasted one hundred and sixty-three days. The magnates were generally regarded as arrogant and defiant; they contended that they had nothing to arbitrate; [Footnote: It was on this occasion that George F. Baer, president of the Philadelphia and Reading Railroad, in scoring the public sympathy for the strikers, justified the att.i.tude of the railroads in his celebrated utterance in which he spoke "of the Christian men and women to whom G.o.d in His infinite wisdom has intrusted the property interests of the country,"

which alleged divine sanction he was never able to prove.] and only yielded to an arbitration board when President Roosevelt threatened them with the full punitive force of Government action.

By the decision of this board the miners secured an increase of wages (which was a.s.sessed on the consumer in the form of higher prices) and several minor concessions. Yet at best, their lot is excessively hard. Writing a few years later, Dr. Peter Roberts, who, if anything, is not partial to the working cla.s.s, stated that the wages of the contract miners were (in 1907) about $600 a year, while adults in other cla.s.ses of mine workers, who formed more than sixty per cent, of the labor forces, did not receive an annual wage of $450. Yet Roberts quotes the Ma.s.sachusetts Bureau of Statistics as saying that "a family of five persons requires $754 a year to live on." The average number in the family of a mine worker is five or six. "This small income," Roberts observes, "drives many of our people to live in cheap and rickety houses, where the sense of shame and decency is blunted in early youth, and where men cannot find such home comforts as will counteract the attractions of the saloon." Hundreds of company houses, according to Roberts, are unfit for habitation, and "in the houses of mine employees, of all nationalities, is an appalling infant mortality." [Footnote: "The Anthracite Coal Communities": 346-347.]

THE BITUMINOUS COAL MINES ALSO.

The sway of the Vanderbilts, however, extends not only over the anthracite, but over a great extent of the bituminous coal fields in Pennsylvania, Maryland, West Virginia, Ohio and other States. By their control of the New York Central Railroad, they own various ostensibly independent bituminous coal mining companies. The Clearfield Corporation, the Pennsylvania Coal and c.o.ke Co., and the West Branch Coal Company are some of these. By their great holdings in other railroads traversing the soft coal regions, the Vanderbilts control about one-half of the bituminous coal supply in the Eastern, and most of the Middle-Western, States.

According to the Interstate Commerce Commission's report, in 1907, the New York Central Railroad and the Pennsylvania Railroad owned in that year about forty-five per cent. of the stock of the Chesapeake and Ohio Railroad, and the New York Central owned large amounts of stock in other railroads. "The Commission, therefore, reaches the conclusion," the report reads on after going into the question of ownership in detail, "that, as a matter of fact, the Baltimore and Ohio Railroad Company, the Norfolk and Western Railroad Company, and the Philadelphia and Reading Railway Company were practically controlled by the Pennsylvania Railroad Company and the New York Central and Hudson River Railroad Company, and that the result was to practically abolish substantial compet.i.tion between the carriers of coal in the territories under consideration." Although the Standard Oil oligarchy now owns considerable stock in the Vanderbilt railroads, it is an undoubted fact that the Vanderbilts share to a great extent the mastery of both hard and soft coal fields.

It is not possible here to present even in condensed form the outline, much less the full narrative, of the labyrinth of tricks, conspiracies and frauds which the railroad magnates have resorted to, and still practice, in the throttling of the small capitalists, and in guaranteeing themselves a monopoly. A great array of facts are to be found in the reports of the exhaustive investigations made by the United States Industrial Commission in 1901-1902, and by the Interstate Commerce Commission in 1907.

Thousands of times was the law glaringly violated yet the magnates were at all times safe from prosecution. Periodically the Government would make a pretense of subjecting them to an inquiry, but in no serious sense were they interfered with. These investigations all have shown that the railroads first crushed out the small operators by a conspiracy of rates, blockades and reprisals, and then by a juggling process of stocks and bonds, bought in the mines with the expenditure of scarcely any actual money. Having done this they formed a monopoly and raised prices which, in law, was a criminal conspiracy. The same weapons destructively used against the small coal operators years ago are still being employed against the few independent companies remaining in the coal fields, as was disclosed, in 1908, in the suit of the Government to dissolve the workings of the various railroad companies in the anthracite coal combination.

[Footnote: See testimony brought out before Charles H. Guilbert, Examiner appointed by the United States District Court in Philadelphia. The Government's pet.i.tion charged the defendants with entering into a conspiracy contrary to the letter and the spirit of the Sherman act.]

THE HUGE PROFITS FROM THE COAL MINES.

No one knows or can ascertain the exact profits of the Vanderbilts and of other railroad owners from their control of both the anthracite, and largely the bituminous, coal mines. As has been noted, the railroad magnates cloud their trail by operating through subsidiary companies. That their extortions reach hundreds of millions of dollars every year is a patent enough fact. Some of the accompaniments of this process of extortion have been referred to;-- the confiscation, on the one hand, of the labor of the whole consuming population by taxing from them more and more of the products of their labor by repeated increases in the price of coal, and, on the other, the confiscation of the labor of the several hundred thousand miners who are compelled to work for the most precarious wages, and in conditions worse, in some respects, than chattel slavery.

But not alone is labor confiscated. Life is also immolated. The yearly sacrifice of life in the coal mines of the United States is steadily growing. The report for 1908 of the United States Geological Survey showed that 3,125 coal miners were killed by accidents in the current year, and that 5,316 were injured. The number of fatalities was 1,033 more than in 1906. "These figures," the report explains, "do not represent the full extent of the disasters, as reports were not received from certain States having no mine inspectors." Side by side with these appalling figures must be again brought out the fact adverted to already: that the owners of the coal mines have at all times violently opposed the pa.s.sage of laws drafted to afford greater safeguard for life in the working of the mines. Being the owners, at the same time, of the railroads, their opposition in that field to life-saving improvements has been as consistent.

Improvements are expensive; human life is contemptibly cheap; so long as there is a surplus of labor it is held to be commercial folly to go to the unnecessary expense of protecting an article of merchandise which can be had so cheaply. Human tragedies do not enter into the making of profit and loss accounts; outlays for mechanical appliances do. a.s.suredly this is a business age wherein profits must take precedence over every other consideration, which principle has been most elaborately enunciated and established by a long list of exalted court decisions. Yea, and the very magnates whose power rests on force and fraud are precisely those who insidiously dictate what men shall be appointed to these omniscient courts, before whose edicts all men are expected to bow in speechless reverence. [Footnote: This is far from being a rhetorical figure of speech. Witness the dictating of the appointment and nominations of judges by the Standard Oil Company (which now owns immense railroad systems and industrial plants) as revealed by certain authentic correspondence of that trust made public in the Presidential campaign of 1908.]

CHAPTER VIII

FURTHER ASPECTS OF THE VANDERBILT FORTUNE

The juggling of railroads and the virtual seizure of coal mines were by no means the only accomplishments of the Vanderbilt family in the years under consideration. Colorless as was the third generation, undistinguished by any marked characteristic, extremely commonplace in its conventions, it yet proved itself a worthy successor of Commodore Vanderbilt. The lessons he had taught of how to appropriate wealth were duly followed by his descendants, and all of the ancestral methods were closely adhered to by the third generation.

Whatever might be its pretensions to a certain integrity and to a profound respectability, there was really no difference between its methods and those of the Commodore. Times had changed; that was all.

What had once been regarded as outright theft and piracy were now cloaked under high-sounding phrases as "corporate extension" and "high finance" and other catchwords calculated to lull public suspicion and resentment. A refinement of phraseology had set in; and it served its purpose.

Concomitantly, while executing the transactions already described, the Vanderbilts of the third generation put through many others, both large and small, which were converted into further heaps of wealth.

An enumeration of all of these diverse frauds would necessitate a tiresome presentation. A few examples will suffice.

The small frauds were but lesser in relation to the larger. At this period of the economic development of the country, when immense thefts were being consummated, a fraud had to rise to the dignity of at least fifty million dollars to be regarded a large one. The law, it is true, proscribed any theft involving more than $25 as grand larceny, but it was law applying to the poor only, and operative on them exclusively. The inordinately rich were beyond all law, seeing that they could either manufacture it, or its interpretation, at will. Among the conspicuous, audacious capitalists the fraud of a few paltry millions shrank to the modesty of a small, cursory, off-hand operation. Yet, in the aggregate, these petty frauds const.i.tuted great results, and for that reason were valued accordingly.

AN $8,000,000 AREA CONFISCATED.