Great Fortunes from Railroads Part 19

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

DIVERSITY OF THE VANDERBILT POSSESSIONS.

The fortune of the Vanderbilt family, at the present writing, is represented by the most extensive and different forms of property.

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

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

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

[Footnote: "Moody's Magazine," issue of August, 1908] In alluringly describing its present and prospective advantages and value Moody went on:

"To begin with, it has entry into the heart of New York City, with extensive pa.s.senger and freight terminals, all of which are bound to be of steadily increasing worth as the years go by, as New York continues to grow in population and wealth. It has, in addition, a practically 'water grade' line all the way from New York to Chicago, and, therefore, for all time must necessarily have a great advantage over lines like the Erie, the Lackawanna and others with heavy grades, many curves, etc. It has a myriad of small feeders and branches in growing and populous parts of the State of New York, as well as in the sections further to the west. It touches the Great Lakes at various points, operates water transportation for freight to all parts of the lakes; enters Chicago over its own tracks and competes aggressively with the Pennsylvania for all traffic to and from all parts of the Mississippi Valley and the West and Southwest.

It is in no danger from disastrous compet.i.tion in its own chosen territory, therefore, and constantly receives income of vast importance through a network of feeders which penetrate the territory of some of the largest of its rivals."

THE SORT OF ABILITY DISPLAYED.

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

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

CHAPTER IX

THE RISE OF THE GOULD FORTUNE

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

Its precise proportions no one knows except the Gould family itself.

That it reaches many hundreds of millions of dollars is fairly obvious, although what is its exact figure is a matter not to be easily ascertained. In the flux of present economic conditions, which, so far as the control of the resources of the United States is concerned, have simmered down to desperate combats between individual magnates, or contesting sets of magnates, the proportions of great fortunes, especially those based upon railroads and industries, constantly tend to vary.

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

JAY GOULD'S BOYHOOD

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

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

HE GOES INTO THE TANNING BUSINESS.

Subsequently Gould went into the tanning business in Pennsylvania with Zadoc Pratt, a New York merchant, politician and Congressman of a certain degree of note at the time. [Footnote: Pratt was regarded as one of the leading agricultural experts of his day. His farm of three hundred and sixty-five acres, at Prattsville, New York, was reputed to be a model. A paper of his, descriptive of his farm, and containing woodcut engravings, may be found in U. S. Senate Doc.u.ments, Second Session, Thirty-seventh Congress, 1861-62, v:411- 415.] Pratt, it seems, was impressed by young Gould's energy, skill and smooth talk, and supplied the necessary capital of $120,000.

Gould, as the phrase goes, was an excellent bluff; and so dexterously did he manipulate and hoodwink the old man that it was quite some time before Pratt realized what was being done. Finally, becoming suspicious of where the profits from the Gouldsboro tannery (named after Gould) were going, Pratt determined upon some overhauling and investigating.

Gould was alert in forestalling this move. During his visits to New York City, he had become acquainted with Charles M. Leupp, a rich leather merchant. Gould prevailed upon Leupp to buy out Pratt's interest. When Gould returned to the tannery, he found that Pratt had been a.n.a.lyzing the ledger. A scene followed, and Pratt demanded that Gould buy or sell the plant. Gould was ready, and offered him $60,000, which was accepted. Immediately Gould drew upon Leupp for the money. Leupp likewise became suspicious after a time, and from the ascertained facts, had the best of grounds for becoming so. The sequel was a tragic one. One night, in the panic of 1857, Leupp shot and killed himself in his fine mansion at Madison avenue and Twenty- fifth street. His suicide caused a considerable stir in New York City. [Footnote: Although later in Gould's career it was freely charged that he had been the cause of Leupp's suicide, no facts were officially brought out to prove the charge. The coroner's jury found that Leupp had been suffering from melancholia, superinduced, doubtless, by business reverses.

Even Houghton, however, in his flamboyantly laudatory work describes Gould's cheating of Pratt and Leupp, and Leupp's suicide. According to Houghton, Leupp's friends ascribed the cause of the act to Gould's treachery. See "Kings of Fortune," 265-266.]

HE BUYS RAILROAD BONDS WITH HIS STEALINGS.

Three years later, in 1860, Gould set up as a leather merchant in New York City; the New York directory for that year contains this entry: "Jay Gould, leather merchant, 39 Spruce street; house Newark." For several years after this his name did not appear in the directory.

He had been, however, edging his way into the railroad business with the sums that he had stolen from Pratt and Leupp. At the very time that Leupp committed suicide, Gould was buying the first mortgage bonds of the Rutland and Washington Railroad--a small line, sixty-two miles long, running from Troy, New York, to Rutland, Vermont. These bonds, which he purchased for ten cents on the dollar, gave him control of this bankrupt railroad. He hired men of managerial ability, had them improve the railroad, and he then consolidated it with other small railroads, the stock of which he had bought in.

With the pa.s.sing of the panic of 1857, and with the incoming of the stupendous corruption of the Civil War period, Gould was able to manipulate his bonds and stock until they reached a high figure. With a part of his profits from his speculation in the bonds of the Rutland and Washington Railroad, he bought enough stock of the Cleveland and Pittsburg Railroad to give him control of that line.

This he manipulated until its price greatly rose, when he sold the line to the Pennsylvania Railroad Company. In these transactions there were tortuous substrata of methods, of which little to-day can be learned, except for the most part what Gould himself testified to in 1883, which testimony he took pains to make as favorable to his past as possible.

His career from 1867 onward stood out in the fullest prominence; a mult.i.tude of official reports and investigations and court records contribute a translucent record. He became invested with a sinister distinction as the most cold-blooded corruptionist, spoliator, and financial pirate of his time; and so thoroughly did he earn this reputation that to the end of his days it confronted him at every step, and survived to become the standing reproach and terror of his descendants. For nearly a half century the very name of Jay Gould has been a persisting jeer and by-word, an object of popular contumely and hatred, the signification of every foul and base crime by which greed triumphs.

WHY THIS BIASED VIEW OF GOULD'S CAREER?

Yet, it may well be asked now, even if for the first time, why has Jay Gould been plucked out as a special object of opprobrium? What curious, erratic, unstable judgment is this that selects this one man as the scapegoat of commercial society, while deferentially allowing his business contemporaries the fullest measure of integrity and respectability?

Monotonous echoes of one another, devoid of understanding, writer has followed writer in harping undiscriminatingly upon Jay Gould's crimes. His career has been presented in the most forbidding colors; and in order to show that he was an abnormal exception, and not a familiar type, his methods have been darkly contrasted with those of such ill.u.s.trious capitalists as the Astors, the Vanderbilts, and others.

Thus, has the misinformed thing called public opinion been shaped by these scribbling purveyors of fables; and this public opinion has been taught to look upon Jay Gould's career as an exotic, "horrible example," having nothing in common with the careers of other founders of large fortunes. The same generation habitually addicted to cursing the memory of Jay Gould, and taunting his children and grandchildren with the reminders of his thefts, speaks with traditional respect of the wealth of such families as the Astors and the Vanderbilts. Yet the cold truth is, as has been copiously proved, John Jacob Astor was proportionately as notorious a swindler in his day as Gould was in his; and as for Commodore Vanderbilt, he had already made blackmailing on a large scale a safe art before Gould was out of his teens.

Gould has been impeached as one of the most audacious and successful buccaneers of modern times. Without doubt he was so; a freebooter who, if he could not appropriate millions, would filch thousands; a pitiless human carnivore, glutting on the blood of his numberless victims; a gambler dest.i.tute of the usual gambler's code of fairness in abiding by the rules; an incarnate fiend of a Machiavelli in his calculations, his schemes and ambushes, his plots and counterplots.

But it was only in degree, and not at all in kind, that he differed from the general run of successful wealth builders. The Vanderbilts committed thefts of as great an enormity as he, but they gradually managed to weave around themselves an exterior of protective respectability. All sections of the capitalist cla.s.s, in so fiercely reviling Gould, reminded one of the thief, who, to divert attention from himself, joins with the pursuing crowd in loudly shouting, "Stop thief!" We shall presently see whether this comparison is an exaggerated one or not.

THE TEACHINGS OF HIS ENVIRONMENT.

To understand the incentives and methods of Gould's career, it is necessary to know the endemic environment in which he grew up and flourished, and its standards and spirit. He, like others of his stamp, were, in a great measure, but products of the times; and it is not the man so much as the times that are of paramount interest, for it is they which supply the explanatory key. In preceding chapters repeated insights have been given into the methods not merely of one phase, but of all phases, of capitalist formulas and processes. At the outset, however, in order to approach impartially this narrative of the Gould fortune, and to get a clear perception of the dominant forces of his generation, a further presentation of the business- cla.s.s methods of that day will be given.

As a young man what did Jay Gould see? He saw, in the first place, that society, as it was organized, had neither patience nor compa.s.sion for the very poverty its grotesque system created. Prate its higher cla.s.ses might of the blessings of poverty; and they might spread broadcast their prolix homilies on the virtues of a useful life, "rounded by an honorable poverty." But all of these teachings were, in one sense, chatter and nonsense; the very cla.s.ses which so unctuously preached them were those who most strained themselves to acquire all of the wealth that they possibly could. In another sense, these teachings proved an effective agency in the infusing into the minds of the ma.s.ses of established habits of thought calculated to render them easy and unresisting victims to the rapacity of their despoilers.

From these "upper cla.s.ses" proceeded the dictation of laws; and the laws showed (as they do now) what the real, unvarnished att.i.tude of these fine, exhorting moralists was towards the poor. Poverty was virtually prescribed as a crime. The impoverished were regarded in law as paupers, and so repugnant a term of odium was that of pauper, so humiliating its significance and treatment, that great numbers of the dest.i.tute preferred to suffer and die in want and silence rather than avail themselves of the scanty and mortifying public aid obtainable only by acknowledging themselves paupers.

Sickness, disability, old age, and even normal life, in poverty were a terrifying prospect. The one sure way of escaping it was to get and hold wealth. The only guarantee of security was wealth, provided its possessor could keep it intact against the maraudings of his own cla.s.s. Every influence conspired to drive men into making desperate attempts to break away from the stigma and thraldom of poverty, and gain economic independence and social prestige by the ownership of wealth.

But how was this wealth to be obtained? Here another set of influences combined with the first set to suppress or shatter whatever doubts, reluctance or scruples the aspirant might have. The acquisitive young man soon saw that toiling for the profit of others brought nothing but poverty himself; perhaps at the most, some small savings that were constantly endangered. To get wealth he must not only exploit his fellow men, he found, but he must not be squeamish in his methods. This lesson was powerfully and energetically taught on every hand by the whole capitalist cla.s.s.

Conventional writers have descanted with a show of great indignation upon Gould's bribing of legislative bodies and upon his cheatings and swindlings. Without adverting again to the corruption, reaching far back into the centuries, existing before his time, we shall simply describe some of the conditions that as a young man he witnessed or which were prevalent synchronously with his youth.

Whatever sphere of business was investigated, there it was at once discovered that wealth was being ama.s.sed, not only by fraudulent methods, but by methods often a positive peril to human life itself.

Whether large or small trader, these methods were the same, varying only in degree.