Great Fortunes from Railroads Part 7

THEY DECREE TAXES AT WILL.

These batches of stocks and bonds betoken as much more again. A pretty fiction subsists that Government, the creator of the modern private corporation, is necessarily more powerful than its creature.

This theoretical doctrine, so widely taught by university professors and at the same time so greatly at variance with the palpable facts, will survive to bring dismay in the near future to the very cla.s.ses who would have the people believe it so. Instead of now being the superior of the corporation the Government has long since definitely surrendered to private corporations a tremendous taxing power amounting virtually to a decree authorizing enslavement. Upon every form of private corporation--railroad, industrial, mining, public utility--is conferred a peculiarly sweeping and insidious power of taxation the indirectness of which often obscures its frightful nature and effects.

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

The labor of hundreds of millions of people contributes incessantly to the colossal revenues enriching the railroad owners. For their producing capacity the workers are paid the meagerest wages, and the products which they make they are compelled to buy back at exorbitant prices after they pa.s.s through the hands of the various great capitalist middlemen, such as the trusts and the railroads. How enormous the revenues of the railroads are may be seen in the fact that in the ten years from 1898 to 1908 the dividends declared by thirty-five of the leading railroads in the United States reached the sum of about $1,800,000,000. This railroad taxation is a grinding, oppressive one, from which there is no appeal. If the Government taxes too heavily the people nominally can have a say; but the people have absolutely no voice in altering the taxation of corporations.

Pseudo attempts have been made to regulate railroad charges, but their futility was soon evident, for the reason that owning the instruments of business the railroads and the allied trusts are in actual possession of the governmental power viewing it as a working whole.

AND EXERCISE UNRESTRAINED POWER.

Visualizing this power one begins to get a vivid perception of the comprehensive sway of the Vanderbilts and of other railroad magnates.

They levy tribute without restraint--a tribute so vast that the exactions of cla.s.sic conquerors become dwarfed beside it. If this levying entailed only the seizing of money, that cold, unbreathing, lifeless substance, then human emotion might not start in horror at the consequences. But beneath it all are the tugging and tearing of human muscles and minds, the toil and sweat of an unnumbered mult.i.tude, the rending of homes, the infliction of sorrow, suffering and death.

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

Millions have gone hungry or lived on an attenuated diet while elsewhere harvests rotted in the ground; between their needs and nature's fertility lay the railroads. Organized and maintained for profit and for profit alone, the railroads carry produce and products at their fixed rates and not a whit less; if these rates are not paid the transportation is refused. And as in these times transportation is necessary in the world's intercourse, the men who control it have the power to stand as an inflexible barrier between individuals, groups of individuals, nations and international peoples. The very agencies which should under a rational form of civilization be devoted to promoting the interests of mankind, are used as their capricious self-interest incline them by the few who have been allowed to obtain control of them. What if helpless people are swept off by starvation or by diseases superinduced by lack of proper food?

What if in the great cities an increasing sacrifice of innocents goes on because their parents cannot afford the price of good milk--a price determined to a large extent by railroad tariff? All of this slaughter and more makes no impress upon the unimpressionable surfaces of these stocks and bonds, and leaves no record save in the hospitals and graveyards.

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

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

HIGH AND MIGHTY POTENTATES.

The Vanderbilts are potentates. Their power is bounded by no law; they are among the handful of fellow potentates who say what law shall be and how it shall be enforced. No stern, masterful men and women are they as some future moonstruck novelist or historian bent upon creating legendary lore may portray them. Voluptuaries are most of them, sunk in a surfeit of gorgeous living and riotous pleasure.

Weak, without distinction of mind or heart, they have the money to hire brains to plan, plot, scheme, advocate, supervise and work for them. Suddenly deprived of their stocks and bonds they would find themselves adrift in the sheerest helplessness. With these stocks and bonds they are the direct absolute masters of an army of employees.

On the New York Central Railroad alone the Vanderbilt payroll embraces fifty thousand workers. This is but one of their railroad systems. As many more, or nearly as many, men work directly for them on their other railroad lines.

One hundred thousand men signify, let us say, as many families.

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

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

THE FOUNDER'S START.

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

In 1829, when his resources reached $30,000, he quit as an employee and began building his own steamboats. Little by little he drove many of his compet.i.tors out of business. This he was able to do by his harsh, unscrupulous and strategic measures. [Footnote: Some glimpses of Vanderbilt's activities and methods in his early career are obtainable from the court records. In 1827 he was fined two penalties of $50 for refusing to move a steamboat called "The Thistle,"

commanded by him, from a wharf on the North River in order to give berth to "The Legislature," a competing steamboat. His defence was that Adams, the harbor master, had no authority to compel him to move. The lower courts decided against him, and the Supreme Court, on appeal, affirmed their judgment. (Adams vs. Vanderbilt. Cowen's Reports. Cases in Supreme Court of the State of New York, vii: 349- 353.)

In 1841 the Eagle Iron Works sued Vanderbilt for the sum of $2,957.15 which it claimed was due under a contract made by Vanderbilt on March 8, 1838. This contract called for the payment by Vanderbilt of $10,500 in three installments for the building of an engine for the steamboat "Wave." Vanderbilt paid $7,900, but refused to pay the remainder, on the ground that braces to the connecting rods were not supplied. These braces, it was brought out in court, cost only $75 or $100. The Supreme Court handed down a judgment against Vanderbilt. An appeal was taken by Vanderbilt, and Judge Nelson, in the Supreme Court, in October, 1841, affirmed that judgment.--Vanderbilt vs.

Eagle Iron Works, Wendell's Reports, Cases in the Supreme Court of the State of New York, xxv: 665-668.] He was severe with the men who worked for him, compelling them to work long hours for little pay. He showed a singular ability in undermining compet.i.tors. They could not pay low wages but what he could pay lower; as rapidly as they set about reducing pa.s.senger and freight rates he would antic.i.p.ate them.

His policy at this time was to bankrupt compet.i.tors, and then having obtained a monopoly, to charge exorbitant rates. The public, which welcomed him as a benefactor in declaring cheaper rates and which flocked to patronize his line, had to pay dearly for their premature and short-sighted joy. For the first five years his profits, according to Croffut, reached $30,000 a year, doubling in successive years. By the time he was forty years old he ran steamboats to many cities on the coast, and had ama.s.sed a fortune of half a million dollars.

DRIVING OUT COMPEt.i.tORS.

Judging from the records of the times, one of his most effective means for hara.s.sing and driving out compet.i.tors was in bribing the New York Common Council to give him, and refuse them, dock privileges. As the city owned the docks, the Common Council had the exclusive right of determining to whom they should be leased. Not a year pa.s.sed but what the ship, ferry and steamboat owners, the great landlords and other capitalists bribed the aldermen to lease or give them valuable city property. Many scandals resulted, culminating in the great scandal of 1853, when the Grand Jury, on February 26, handed up a presentment showing in detail how certain aldermen had received bribes for disposal of the city's water rights, pier privileges and other property, and how enormous sums had been expended in bribes to get railroad grants in the city. [Footnote: Proceedings of the New York Board of Aldermen, xlviii: 423-431.]

Vanderbilt was not openly implicated in these frauds, no more than were the Astors, the Rhinelanders, the Goelets and other very rich men who prudently kept in the background, and who managed to loot the city by operating through go-betweens.

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

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

In the exploitation of the workers--forcing them to work for low wages and compelling them to pay high prices for all necessities-- Vanderbilt was no different from all contemporaneous capitalists.

Capitalism subsisted by this process. Almost all conventional writers, it is true, set forth that it was the accepted process of the day, implying that it was a condition acquiesced in by the employer and worker. This is one of the lies disseminated for the purpose of proving that the great fortunes were made by legitimate methods. Far from being accepted by the workers it was denounced and was openly fought by them at every auspicious opportunity.

Vanderbilt became one of the largest ship and steamboat builders in the United States and one of the most formidable employers of labor.

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

REGARDED AS A COMMERCIAL BUCCANEER.

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

by W. A. Croffut, 1886: 45-46.] This statement is only partially true; its omissions are more significant than its admissions.

Far from being the "constructive genius" that he is represented in every extant biographical work and note, Vanderbilt was the foremost mercantile pirate and commercial blackmailer of his day.

Harsh as these terms may seem, they are more than justified by the facts. His eulogists, in line with those of other rich men, weave a beautiful picture for the edification of posterity, of a broad, n.o.ble-minded man whose honesty was his sterling virtue, and whose splendid ability in opening up and extending the country's resources was rewarded with a great fortune and the thanks of his generation.

This is utterly false. He who has the slightest knowledge of the low practices and degraded morals of the trading cla.s.s and of the qualities which insured success, might at once suspect the spuriousness of this extravagant presentation, even if the vital facts were unavailable.

But there is no such difficulty. Obviously, for every one fraudulent commercial or political transaction that comes to public notice, hundreds and thousands of such transactions are kept in concealment.

Enough facts, however, remain in official records to show the particular methods Vanderbilt used in getting together his millions.

Yet no one hitherto seems to have taken the trouble to disinter them; even serious writers who cannot be accused of wealth worship or deliberate misstatement have all, without exception, borrowed their narratives of Vanderbilt's career from the fiction of his literary, newspaper and oratorical incense burners. And so it is that everywhere the conviction prevails that whatever fraudulent methods Vanderbilt employed in his later career, he was essentially an honest, straightforward man who was compelled by the promptings of sheer self-preservation to fight back at unscrupulous compet.i.tors or antagonists, and who innately was opposed to underhand work or fraud in any form. Vanderbilt is in every case portrayed as an eminently high-minded man who never stooped to dissimulation, deceit or treachery, and whose first millions, at any rate, were made in the legitimate ways of trade as they were then understood.

EXTORTION AND THEFT COMMON.

The truth is that the bulk of Vanderbilt's original millions were the proceeds of extortion, blackmail and theft.

In the established code of business the words extortion and theft had an unmistakable significance. Business men did not consider it at all dishonorable to oppress their workers; to manufacture and sell goods under false pretenses; to adulterate prepared foods and drugs; to demand the very highest prices for products upon which the very life of the people depended, and at a time when consumers needed them most; to bribe public officials and to hold up the Government in plundering schemes. These and many other practices were looked upon as commonplaces of ordinary trade.

But even as burglars will have their fine points of honor among themselves, so the business world set certain tacit limitations of action beyond which none could go without being regarded as violating the code. It was all very well as long as members of their own cla.s.s plundered some other cla.s.s, or fought one another, no matter how rapaciously, in accordance with understood procedure. But when any business man ventured to overstep these limitations, as Vanderbilt did, and levy a species of commercial blackmail to the extent of millions of dollars, then he was sternly denounced as an arch thief.

If Vanderbilt had confined himself to the routine formulas of business, he might have gone down in failure. Many of the bankrupts were composed of business men who, while sharp themselves, were outgeneraled by abler sharpers. Vanderbilt was a master hand in despoiling the despoilers.

[Ill.u.s.tration: COMMODORE CORNELIUS VANDERBILT, The Founder of the Vanderbilt Fortune.]

How did Vanderbilt manage to extort millions of dollars? The method was one of great simplicity; many of its features were brought out in the United States Senate in the debate of June 9, 1858, over the Mail Steamship bill. The Government had begun, more than a decade back, the policy of paying heavy subsidies to steamship companies for the transportation of mail. This subsidy, however, was not the only payment received by the steamship owners. In addition they were allowed what were called "postages"--the full returns from the amount of postage on the letters carried. Ocean postage at that time was enormous and burdensome, and was especially onerous upon a cla.s.s of persons least able to bear it. About three-quarters of the letters transported by ships were written by emigrants. They were taxed the usual rate of twenty-four or twenty-nine cents for a single letter.

In 1851 the amount received for trans-Atlantic postages was not less than a million dollars; three-fourths of this sum came directly from the working cla.s.s.

THE CORRUPTION OF OFFICIALS.

To get these subsidies, in conjunction with the "postages," the steamship owners by one means or another corrupted postal officials and members of Congress. "I have noticed," said Senator Toombs, in a speech in the United States Senate on June 9, 1858, that there has never been a head of a Department strong enough to resist steamship contracts. I have noticed them here with your Whig party and your Democratic party for the last thirteen years, and I have never seen any head of a Department strong enough to resist these influences. ...

Thirteen years' experience has taught me that wherever you allow the Postoffice or Navy Department to do anything which is for the benefit of contractors you may consider the thing as done. I could point to more than a dozen of these contracts. ... A million dollars a year is a power that will be felt. For ten years it amounts to ten million dollars, and I know it is felt. I know it perverts legislation. I have seen its influence; I have seen the public treasury plundered by it. ... [Footnote: The Congressional Globe, First Session, Thirty-fifth Congress, 1857-58, iii: 2839.]