Great Fortunes from Railroads Part 18

Such a slight fraud was, for instance, the Vanderbilts' confiscation of an entire section of New York City. In 1887 they decided that they had urgent and particular need for railroad yard purposes of a sweep of streets from Sixtieth street to Seventy-second street along the Hudson River Railroad division. What if this property had been bought, laid out and graded by the city at considerable expense? The Vanderbilts resolved to have it and get it for nothing. Under special forms of law dictated by them they thereupon took it. The method was absurdly easy.

Ever compliant to their interests, and composed as usual of men retained by them or responsive to their influences, the Legislature of 1887 pa.s.sed an act compelling the city authorities to close up the required area of streets. Then the city officials, fully as accommodating, turned the property over to the exclusive, and practically perpetual, use of the New York Central and Hudson River Railroad. With the profusest expressions of regard for the public interests, the railroad officials did not in the slightest demur at signing an agreement with the munic.i.p.al authorities. In this paper they pledged themselves to cooperate with the city in conferring upon the Board of Street Openings the right to reopen any of the streets at any time. This agreement was but a decoy for immediate popular effect. No such reopening ordinance was ever pa.s.sed; the streets remained closed to the public which, theoretically at least, was left with the t.i.tle. In fact, the memorandum of the agreement strangely disappeared from the Corporation Counsel's office, and did not turn up until twenty years later, when it was accidentally and most mysteriously discovered in the Lenox Library. Whence came it to this curious repository? The query remains unanswered.

For seventeen and a half acres of this confiscated land, comprising about three hundred and fifty city lots, now valued at a round $8,000,000, the New York Central and Hudson River Railroad has not paid a cent in rental or taxes since the act of 1887 was pa.s.sed. On the island of Manhattan alone 70,000 poor families are every year evicted for inability to pay rent--a continuous and horribly tragic event well worth comparing with the preposterous facility with which the great possessing cla.s.ses everywhere either buy or defy law, and confiscate when it suits them. So cunningly drafted was the act of 1887 that while New York City was obliged to give the exclusive use of this large stretch of property to the company, yet the t.i.tle to the property--the empty name--remained vested in the city. This being so, a corporation counsel complaisantly decided that the railroad company could not be taxed so long as the city owned the t.i.tle.

[Footnote: Minutes of the New York City Board of Estimate and Apportionment--Financial and Franchise Matters, 1907:1071-1085. "It will thus be seen," reported Harry P. Nichols, Engineer-in-Charge of the Franchise Bureau, "that the railroad is at present, and has been for twenty years, occupying more than three hundred city lots, or something less than twenty acres, without compensation to the city."]

Another of what may be called--for purposes of distinction--the numerous small frauds at this time, was that foisting upon New York City the cost of replacing the New York Central's masonry viaduct approaches with a fine steel elevated system. This fraud cost the public treasury about $1,200,000, quite a sizable sum, it will be admitted, but one nevertheless of pitiful proportions in comparison with previous and later transactions of the Vanderbilt family.

We have seen how, in 1872, Commodore Vanderbilt put through the Legislature an act forcing New York City to pay $4,000,000 for improving the railroad's roadway on Park avenue. His grandsons now repeated his method. In 1892 the United States Government was engaged in dredging a ship ca.n.a.l through the Harlem River. The Secretary of War, having jurisdiction of all navigable waters, issued a mandate to the New York Central to raise its bridge to a given height, so as to permit the pa.s.sing under of large vessels.

To comply with this order it was necessary to raise the track structure both north and south of the Harlem River. Had an ordinary citizen, upon receiving an order from the authorities to make improvements or alterations in his property, attempted to compel the city to pay all or any part of the cost, he would have been laughed at or summarily dealt with. The Vanderbilts were not ordinary property holders. Having the power to order legislatures to do their bidding, they now proceeded to imitate their grandfather, and compel the city to pay the greater portion of the cost of supplying them with a splendid steel elevated structure.

PUBLIC TAXATION TO SUPPLY PRIVATE CAPITAL.

The Legislature of 1892 was thoroughly responsive. This was a Legislature which was not merely corrupt, but brazenly and frankly so, as was proved by the scandalous openness with which various spoliative measures were rushed through.

An act was pa.s.sed compelling New York City to pay one-half of the cost of the projected elevated approaches up to the sum of $1,600,000. New York City was thus forced to pay $800,000 for constructing that portion south of the Harlem River. If, so the law read on, the cost exceeded the estimate of $800,000, then the New York Central was to pay the difference. Additional provision was made for the compelling of New York City to pay for the building of the section north of the Harlem River. But who did the work of contracting and building, and who determined what the cost was? The railroad company itself. It charged what it pleased for material and work, and had complete control of the disbursing of the appropriations. The city's supervising commissions had, perforce, to accept its arbitrary demands, and lacked all power to question, or even scrutinize, its reports of expenditures. Apart from the New York Central's officials, no one to-day knows what the actual cost has been, except as stated by the company.

South of the Harlem River this report cost has been $800,000, north of the Harlem River $400,000. At practically no expense to themselves, the Vanderbilts obtained a ma.s.sive four-track elevated structure, running for miles over the city streets. The people of the city of New York were forced to bear a compulsory taxation of $1,200,000 without getting the slightest equivalent for it. The Vanderbilts own these elevated approaches absolutely; not a cent's worth of claim or t.i.tle have the people in them. Together with the $4,000,000 of public money extorted by Commodore Vanderbilt in 1872, this sum of $1,200,000 makes a total amount of $5,200,000 plucked from the public treasury under form of law to make improvements in which the people who have footed the bill have not a moiety of ownership. [Footnote: The facts as to the expenses incurred under the act of 1892 were stated to the author by Ernest Harvier, a member of the Change of Grade Commission representing New York City in supervising the work.] The Vanderbilts have capitalized these terminal approaches as though they had been built with private money.

[Footnote: The New York Central has long compelled the New York, New Haven and Hartford Railroad to pay seven cents toll for every pa.s.senger transported south of Woodlawn, and also one-third of the maintenance cost, including interest, of the terminal. In reporting an effort of the New York, New Haven and Hartford Railroad to have these terms modified, the New York "Times" stated in its financial columns, issue of December 25, 1908: "As matters now stand the New Haven, without its consent, is forced to bear one-third of the charge arising from _the increased capital invested in the Central's terminal"_]

[Ill.u.s.tration: CORNELIUS VANDERBILT Grandson of Commodore Vanderbilt.]

At this point a significant note may be made in pa.s.sing. While these and other huge frauds were going on, Cornelius Vanderbilt was conspicuously presenting himself as a most ardent "reformer" in politics. He was, for instance, a distinguished member of the Committee of Seventy, organized in 1894, to combat and overthrow Tammany corruption! Such, as we have repeatedly observed, is the quality of the men who compose the bourgeois reform movements. For the most part great rogues, they win applause and respectability by virtuously denouncing petty, vulgar political corruption which they themselves often instigate, and thus they divert attention from their own extensive rascality.

A MULt.i.tUDE OF ACQUISITIONS

Why tempt exhaustion by lingering upon a mult.i.tude of other frauds which went to increase the wealth and possessions of the Vanderbilt family? One after another--often several simultaneously--they were put through, sometimes surrept.i.tiously, again with overt effrontery.

Legislative measures in New York and many other States were drafted with such skill that sly provisions allowing the greatest frauds were concealed in the enactments; and the first knowledge that the plundered public frequently had of them was after they had already been accomplished. These frauds comprised corrupt laws that gave, in circ.u.mstances of notorious scandal, tracts of land in the Adirondack Mountains to railroad companies now included in the Vanderbilt system. They embraced laws, and still more laws, exempting this or that stock or property from taxation, and laws making presents of valuable franchises and allowing further consolidations. Laws were enacted in New York State the effects of which were to destroy the Erie Ca.n.a.l (which has cost the people of New York State $100,000,000) as a compet.i.tor of the New York Central Railroad. All of these and many other measures will be skimmed over by a simple reference, and attention focussed on a particularly large and notable transaction by which William K. Vanderbilt in 1898 added about $59,000,000 to his fortune at one superb swoop.

The Vanderbilt ownership of various railroad systems has been of an intricate, roundabout nature. A group of railroads, the majority of the stock of which was actually owned by the Vanderbilt family, were nominally put under the ownership of different, and apparently distinct, railroad companies. This devious arrangement was intended to conceal the real ownership, and to have a plausible claim in counteracting the charge that many railroads were concentrated in one ownership, and were combined in monopoly in restraint of trade. The plan ran thus: The Vanderbilts owned the New York Central and Hudson River Railroad. In turn this railroad, as a corporation, owned the greater part of the $50,000,000 stock of the Lake Sh.o.r.e Railroad. The Lake Sh.o.r.e, in turn, owned the control, or a chief share of the control, of other railroads, and thus on.

In 1897, William K. Vanderbilt began clandestinely campaigning to combine the New York Central and the Lake Sh.o.r.e under one definite, centralized management. This plan was one in strict harmony with the trend of the times, and it had the undoubted advantage of promising to save large sums in managing expenses. But this antic.i.p.ated retrenchment was not the main incentive. A dazzling opportunity was presented of checking in an immense amount in loot. The grandson again followed his eminent grandfather's teachings; his plan was nothing more than a repet.i.tion of what the old Commodore had done in his consolidations.

During the summer and fall of 1897 the market gymnastics of Lake Sh.o.r.e stock were cleverly manipulated. By the declaration of a seven per cent. dividend the market price of the stock was run up from 115 to about 200. The object of this manipulation was to have a justification for issuing $100,000,000 in three and one-half per cent. New York Central bonds to buy $50,000,000 of Lake Sh.o.r.e seven per cent. capital stock. By his personal manipulation, William K.

Vanderbilt at the same time ballooned the price of New York Central stock.

The purpose was kept a secret until shortly before the plan was consummated on February 4, 1898. On that day William K. Vanderbilt and his subservient directors of the New York Central gathered their corpulent and corporate persons about one table and voted to buy the Lake Sh.o.r.e stock. With due formalities they then adjourned, and moving over to another table, declared themselves in meeting as directors of the Lake Sh.o.r.e Railroad, and solemnly voted to accept the offer.

Presently, however, an awkward and slightly annoying defect was discovered. It turned out that the Stock Corporation law of New York State specifically prohibited the bonded indebtedness of any corporation being more than the value of the capital stock. This discovery was not disconcerting; the obstacle could be easily overcome with some well-distributed generosity. A bill was quickly drawn up to remedy the situation, and hurried to the Legislature then in session at Albany. The a.s.sembly balked and ostentatiously refused to pa.s.s it. But after the lapse of a short time the a.s.sembly saw a great new light, and rushed it through on March 3, on which same day it pa.s.sed the Senate. It was at this precise time that a certain noted lobbyist at Albany somehow showed up, it was alleged, with a fund of $500,000, and members of the a.s.sembly and Senate suddenly revealed evidences of being unusually flush with money. [Footnote: The author is so informed by an official who represented New York City's legal interests at this session and successive Legislative sessions, and who was thoroughly conversant with every move. See Chapter 80, Laws of 1898, Laws of New York, 1898, ii: 142. The amendment declared that Section 24 of the Stock Corporation Law did not apply to a railroad corporation.]

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 Ma.s.sachusetts $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 Ma.s.sachusetts 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 cla.s.s?

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 inst.i.tution, 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 ma.s.ses, 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 dest.i.tutes 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 munic.i.p.al, 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 ma.s.s, 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 k.n.o.b combined. ... In the b.l.o.o.d.y 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 pa.s.sed 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 ma.s.s of lawyers' terminology. The surrept.i.tious 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 t.i.tles. These excursions into the realm of high-caste European n.o.bility 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 t.i.tled connections, the arrangement becomes easy.

[Footnote: More than 500 American women have married t.i.tled 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 d.u.c.h.ess'

father; his $50,000,000 feat of financial legerdemain, in 1898, alone far more than made up for these extravagant outlays. The Marlborough t.i.tle 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 t.i.tle by marrying, in 1908, Count Laslo Szechenyi, a sprig of the Hungarian feudal n.o.bility. "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.

[Ill.u.s.tration: THE d.u.c.h.eSS OF MARLBOROUGH, Daughter of William K.

Vanderbilt.]

The precise sum which made the Count eager to share his t.i.tle, 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 Doc.u.ment, 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 t.i.tled foreigners have proved a drain upon the Vanderbilt fortune, although, thanks to their large share in the control of laws and industrial inst.i.tutions, 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 a.s.sociates 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 a.s.sociates, were of such boldness and magnitude that even the cynical business cla.s.ses 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 const.i.tuted 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.