History of the Great American Fortunes Part 11

CORRUPT GRANTS OF CITY LAND.

In this procedure he was but doing what a number of other contemporaries such as Peter Goelet, the Rhinelanders, the Lorillards, the Schermerhorns and other men who then began to found powerful landed families, were doing at the same time. The methods by which these men secured large areas of land, now worth huge sums, were unquestionably fraudulent, although the definite facts are not as wholly available as are, for instance, those which related to Fletcher's granting vast estates for bribes in the seventeenth century, or the bribery which corrupted the various New York legislatures beginning in the year 1805.

Nevertheless, considering the character of the governing politicians, and the scandals that ensued from the granting and sales of New York City land a century or more ago, it is reasonably certain that corrupt means were used. The student of the times cannot escape from this conclusion, particularly as it is borne out by many confirming circ.u.mstances.

New York City, at one time, owned a very large area of land which was fraudulently granted or sold to private individuals. Considerable of this granting or selling was done during the years when the corrupt Benjamin Romaine was City Controller. Romaine was so badly involved in a series of scandals arising from the grants and corrupt sales of city land, that in 1806 the Common Council, controlled by his own party, the Tammany machine, found it necessary to remove him from the office of City Controller for malfeasance.[104] The specific charge was that he had fraudulently obtained valuable city land in the heart of the city without paying for it. Something had to be done to still public criticism, and Romaine was sacrificed. But, in fact, he was far from being the only venal official concerned in the current frauds. These frauds continued no matter which party or what set of officials were in power. Several years after Romaine was removed, John Bingham, a powerful member of the Aldermanic Committee on Finance, which pa.s.sed upon and approved these various land grants, was charged by public investigators with having caused the city to sell to his brother-in-law land which he later influenced the city administration to buy back at an exorbitant price. Spurred by public criticism the Common Council demanded its reconveyance.[105] It is more than evident--it is indisputable--from the records and the public scandals, that the successive city administrations were corruptly conducted. The conservative newspaper comments alone of the period indicate this clearly, if nothing else does.

A PROCESS OF SPOLIATION.

Neither Astor nor Goelet were directly active members of the changing political cliques which controlled the affairs of the city. It is likely that they bore somewhat the same relation to these cliques that the politico-industrial magnates and financiers of to-day do; to all appearances distinctly apart from partic.i.p.ation in politics, and yet by means of money, having a strong or commanding influence in the background. But the Rhinelander brothers, William and Frederick, were integral members of the political machine in power. Thus we find that in 1803, William Rhinelander was elected a.s.sessor for the Fifth Ward (a highly important and sumptuary office at that time), while both he and Frederick were, at the same time, appointed inspectors of elections.[106]

The action of the city officials in disposing of city land to themselves, to political accomplices and to favorites (who, it is probable, although not a matter of proof, paid bribes) took two forms.

One was the granting of land under water, the other the granting of city real estate. At that time the configuration of Manhattan Island was such that it was marked by ponds, streams and marshes, while the marginal lines of the Hudson River and the East River extended much further inland than now. When an individual got what was called a water grant, it meant land under shallow water, where he had the right to build bulkheads and wharves and to fill in and make solid ground. Out of these water grants was created property now worth hundreds upon hundreds of millions of dollars. The value at that time was not great, but the prospective value was immense. This fact was recognized in the official reports of the day, which set forth how rapidly the city's population and commerce were increasing. As for city land as such, the city not only owned large tracts by reason of old grants and confiscations, but it constantly came into possession of more because of non-payment of taxes.

The excuses by which the city officials covered their short-sighted or fraudulent grants of the water rights and the city land were various.

One was that the gifts were for the purpose of a.s.sisting religious inst.i.tutions. This, however, was but an occasional excuse. The princ.i.p.al excuse which was persisted in for forty years was that the city needed revenue. This was a fact. The succeeding city administrations so corruptly and extravagantly squandered the city's money that the city was constantly in debt. Perhaps this debt was created for the very purpose of having a plausible ground for disposing of city land. So it was freely charged at that time.

THE CITY CREATES LANDLORDS.

Let us see how the religious motive worked. On June 10, 1794, the city gave to Trinity Church a water grant covering all that land from Washington street to the North River between Chambers and Reade streets.

The annual rent was one shilling per running foot after the expiration of forty-two years from June 10, 1794. Thus, for forty-two years, no rent was charged. Shortly after the pa.s.sage of this grant, Trinity Church conveyed it to William Rhinelander, and also all that ground between Jay and Harrison streets, from Greenwich street to the North River. By a subsequent arrangement with Trinity Church and the city, all of this land as well as certain other Trinity land became William Rhinelander's property; and then, by agreement of the Common Council on May 29, 1797, and confirmation of Nov. 16, 1807, he was given all rights to the land water between high and low water mark, bounding his property, for an absurdly low rental.[107] These water grants were subsequently filled in and became of enormous value.

Astor was as energetic as Rhinelander in getting grants from the city officials. In 1806 he obtained two of large extent on the East Side--on Mangin street between Stanton and Houston streets, and on South street between Peck Slip and Dover street. On May 30, 1808, upon a favorable report handed in by the Finance Committee, of which the notorious John Bingham was a member, Astor received an extensive grant along the Hudson bounding the old Burr estate which had come into his possession.[108] In 1810 he received three more water grants in the vicinity of Hubert, Laight, Charlton, Hammersly and Clarkson streets, and on April 28, 1828, three at Tenth avenue, Twelfth, Thirteenth, Fourteenth and Fifteenth streets. These were some of the grants that he received. But they do not include the land in the heart of the city that he was constantly buying from private owners or getting by the evident fraudulent connivance of the city officials.

Having obtained the water grants and other land by fraud, what did the grantees next proceed to do? They had them filled in, not at their own expense, but largely at the expense of the munic.i.p.ality. Sunken lots were filled in, sewers placed, and streets opened, regulated and graded at but the merest minimum of expense to these landlords. By fraudulent collusion with the city authorities they foisted much of the expense upon the taxpayers. How much money the city lost by this process in the early decades of the nineteenth century was never known. But in 1855 Controller Flagg submitted to the Common Council an itemized statement for the five years from 1850 in which he referred to "the startling fact that the city's payments, in a range of five years [for filling in sunken lots, regulating and grading streets, etc.], exceed receipts by the sum of more than two millions of dollars."[109]

MANY PARTIc.i.p.aNTS IN THE CURRENT FRAUDS.

In the case of most of these so-called water fronts, there was usually a trivial rental attached. Nearly always, however, this was commuted upon payment of a small designated sum, and a full and clear t.i.tle was then given by the city. In this rush to get water-grants--grants many of which are now solid land filled with business and residential buildings--many of the ancestors of those families which pride themselves upon their exclusive air partic.i.p.ated. The Lorillards, the Goelets, William F. Havemeyer, Cornelius Vanderbilt, W. H. Webb, W. H.

Kissam, Robert Lenox, Schermerhorn, James Roosevelt, William E. Dodge, Jr.--all of these and many others--not omitting Astor's American Fur Company--at various times down to, and including the period of, the monumentally corrupt Tweed "ring," got grants from corrupt city administrations. Some of these water rights, that is to say, such fragmentary parts of them as pertained to wharves and bulkheads, New York City, in recent years, has had to buy back at exorbitant prices.

From the organization of the Dock Department down to 1906 inclusive, New York City had expended $70,000,000 for the purchase of bulkhead and wharf property and for construction.

During all the years from 1800 on, Astor, in conjunction with other landholders, was manipulating the city government not less than the State and Federal Government. Now he gets from the Board of Aldermen t.i.tle to a portion of this or that old country road on Manhattan which the city closes up; again and again he gets rights of land under water.

He constantly solicits the Board of Aldermen for this or that right or privilege and nearly always succeeds. No property or sum is too small for his grasp. In 1832, when Eighth avenue, from Thirteenth to Twenty-third streets is graded down and the earth removed is sold by the city to a contractor for $3,049.44, Astor, Stephen D. Beekman and Jacob Taylor pet.i.tion that each get a part of the money for earth removed from in front of their lots. This is considered such a petty attempt at defrauding, that the Aldermen call it an "unreasonable pet.i.tion" and refuse to accede.[110] In 1834 the Aldermen allow him a part of the old Hurlgate road, and Rhinelander a part of the Southampton road. Not a year pa.s.ses but that he does not get some new right or privilege from the city government. At his request some streets are graded and improved; the improvement of such other streets as is not to his interest to have improved is delayed. Here sewers are placed; then they are refused. Every function of city administration was incessantly used by him. The c.u.mulative effect of this cla.s.s use of government was to give him and others a constant succession of grants and privileges that now have a prodigious value.

But it should be noted that those who thus benefited, singularly enjoyed the advantages of laws and practices. For city land that they bought they were allowed to pay on easy terms; not infrequently the city had to bring action for final payment. But the tenants of these landlords had to pay rent on the day that it fell due, or within a few days of the time; they could not be in arrears more than three days without having to face dispossess proceedings. Nor was this all the difference. On land which they corruptly obtained from the city and which, to a large extent, they fraudulently caused to be filled in, regulated, graded or otherwise improved at the expense of the whole community, the landlords refused to pay taxes promptly, just as they refused to pay them on land that they had bought privately. What was the result? "Some of our wealthiest citizens," reported the Controller in 1831, "are in the habit of postponing the payment of taxes for six months and more, and the Common Council are necessitated to borrow money on interest to meet the ordinary disburs.e.m.e.nts of the city."[111] If a man of very moderate means were backward in payment of taxes, the city promptly closed him out, and if a tenant of any of these delinquent landlords were dispossessed for non-payment of rent, the city it was which undertook the process of eviction. The rich landlord, however, could do as he pleased, since all government represented his interests and those of his cla.s.s. Instead of the punishment for non-payment of taxes being visited upon him, it was imposed upon the whole community in the form of interest-bearing bonds.

PILLAGE, PROFITS AND LAND.

The money that Astor secured by robbing the Indians and exploiting the workers by means of monopolies, he thus put largely into land. In 1810, a story runs, he offers to sell a Wall Street lot for $8,000. The price is so low that a buyer promptly appears. "Yes, you are astonished,"

Astor says. "But see what I intend to do with that eight thousand dollars. That Wall Street lot, it is true, will be worth twelve thousand dollars in a few years. But I shall take that eight thousand dollars and buy eighty lots above Ca.n.a.l street and by the time your one lot is worth twelve thousand dollars, my eighty lots will be worth eighty thousand dollars." So goes one of the fine stories told to ill.u.s.trate his foresight, and to prove that his fortune came exclusively from that faculty and from his industry.

This version bears all the impress of being undoubtedly a fraud. Astor was remarkably secretive and dissembling, and never revealed his plans to anyone. That he bought the lots is true enough, but his attributed loquacity is mythical and is the invention of some gushing eulogist. At that time he was buying for $200 or $300 each many lots on lower Broadway, then, for the most part, an unoccupied waste. What he was counting upon was the certain growth of the city and the vastly increasing values not that he would give his land, but which would accrue from the labor of an enlarged population. These lots are now occupied by crowded business buildings and are valued at from $300,000 to $400,000 each.

Throughout those years in the first decade of the nineteenth century he was constantly buying land on Manhattan Island. Practically all of it was bought, not with the idea of using it, but of holding it and allowing future populations to make it a thousand times more valuable.

An exception was his country estate of thirteen acres at Hurlgate (h.e.l.lgate) in the vicinity of Sixtieth street and the East River. It was curious to look back at the fact that less than a century ago the upper regions of Manhattan Island were filled with country estates--regions now densely occupied by huge tenement houses and some private dwellings.

In those days, not less than in these, a country seat was considered a necessary appendage to the possessions of a rich man. Astor bought that Hurlgate estate as a country seat; but as such it was long since discontinued although the land comprising it has never left the hold of the Astor family.

What were the intrinsic circ.u.mstances of the means by which he bought land, now worth hundreds of millions of dollars? For once, we get a gleam of the truth, but a gleam only, in the "popular writer's" account when he says: "John Jacob Astor's record is constantly crossed by embarra.s.sed families, prodigal sons, mortgages and foreclosure sales.

Many of the victims of his foresight were those highest in church and state. He thus acquired for $75,000 one-half of Governor George Clinton's splendid Greenwich country place [in the old Greenwich village on the west side of Manhattan Island].... After the Governor's death, he kept persistently at the heirs, lent them money and acquired additional slices of the family property.... Nearly two-thirds of the Clinton farm is now held by Astor's descendants, and is covered by scores of business buildings, from which is derived an annual income estimated at $500,000."

THE FATE OF OTHERS HIS GAIN.

In this transaction we see the beginnings of that period of conquest on the part of the very rich using their surplus capital in effacing the less rich--a period which really opened with Astor and which has been vastly intensified in recent times. Clinton was accounted a rich man in his day, but he was a pigmy in that respect compared to Astor. With his incessant inflow of surplus wealth, Astor was in a position where on the instant he could take advantage of the difficulties of less rich men and take over to himself their property. A large amount of Astor's money was invested in mortgages. In times of periodic financial and industrial distress, the mortgagers were driven to extremities and could no longer keep up their payments. These were the times that Astor waited for, and it was in such times that he stepped in and possessed himself, at comparatively small expense, of large additional tracts of land.

It was this way that he became the owner of what was then the Cosine farm, extending on Broadway from Fifty-third to Fifty-seventh streets and westward to the Hudson River. This property, which he got for $23,000 by foreclosing a mortgage, is now in the very heart of the city, filled with many business, and every variety of residential, buildings, and is rated as worth $6,000,000. By much the same means he acquired ownership of the Eden farm in the same vicinity, coursing along Broadway north from Forty-second street and slanting over to the Hudson River.

This farm lay under pledges for debt and attachments for loans. Suddenly Astor turned up with a third interest in an outstanding mortgage, foreclosed, and for a total payment of $25,000 obtained a sweep of property now covered densely with huge hotels, theaters, office buildings, stores and long vistas of residences and tenements--a property worth at the very least $25,000,000. Any one with sufficient security in land who sought to borrow money would find Astor extremely accommodating. But woe betide the hapless borrower, whoever he was, if he failed in his obligations to the extent of even a fraction of the requirements covered by law! Neither personal friendship, religious considerations nor the slightest feelings of sympathy availed.

But where law was insufficient or non-existent, new laws were created either to aggrandize the powers of landlordship, or to seize hold of land or enchance its value, or to get extraordinary special privileges in the form of banking charters. And here it is necessary to digress from the narrative of Astor's land transactions and advert to his banking activities, for it was by reason of these subordinately, as well as by his greater trade revenues, that he was enabled so successfully to pursue his career of wealth-gathering. The circ.u.mstances as to the origin of certain powerful banks in which he and other landholders and traders were large stockholders, the methods and powers of those banks, and their effect upon the great body of the people, are component parts of the a.n.a.lytic account of his operations. Not a single one of Astor's biographers has mentioned his banking connections. Yet it is of the greatest importance to describe them, inasmuch as they were closely intertwined with his trade, on the one hand, and with his land acquisitions, on the other.

FOOTNOTES:

[90] Doc. No. 13, State Papers, Second Session, 18th Congress, Vol. ii.

[91] "Stole on a monstrous scale." The land frauds, by which many of the Southern planters obtained estates in Louisiana, Mississippi and other States were a national scandal. Benjamin F. Linton, United States Attorney for Western Louisiana, reported to President Andrew Jackson on August 27, 1835, that in seizing possession of Government land in that region "the most shameful frauds, impositions and perjuries had been committed in Louisiana." Sent to investigate, V. M. Garesche, an agent of the Government Land Office, complained that he could get no one to testify. "Is it surprising," he wrote to the Secretary of the Treasury, "when you consider that those engaged in this business belong to every cla.s.s of society from the member of the Legislature (if I am informed correctly) down to the quarter quarter-section settler!" Up to that time the Government held t.i.tle to immense tracts of land in the South and had thrown it open to settlers. Few of these were able to get it, however.

Southern plantation men and Northern capitalists and speculators obtained possession by fraud. "A large company," Garesche reported, "was formed in New York for the purpose, and have an agent who is continually scouring the country." The final report was a whitewashing one; hence, none of the frauds was sent to jail.--Doc. No. 168, Twenty-fourth Congress, 2d Session, ii:4-25, also Doc. No. 213, Ibid.

[92] "America," admits Houghton, "never presented a more shameful spectacle than was exhibited when the courts of the cotton-growing regions united with the piratical infringers of Whitney's rights in robbing their greatest benefactor.... In spite of the far-reaching benefits of his invention, he had not realized one dollar above his expenses. He had given millions upon millions of dollars to the cotton-growing states, he had opened the way for the establishment of the vast cotton-spinning interests of his own country and Europe, and yet, after fourteen years of hard labor, he was a poor man, the victim of wealthy, powerful, and, in his case, a dishonest cla.s.s."--"Kings of Fortune":337. All other of Whitney's biographers relate likewise.

[93] See Senate Doc.u.ments, First Session, 24th Congress, 1835, Vol. vi, Doc. No. 425. A few extracts from the great ma.s.s of correspondence will lucidly show the nature of the fraudulent methods. Writing from Columbus, Georgia, on July 15, 1833, Col. John Milton informed the War Department ... "Many of them [the Indians] are almost starved, and suffer immensely for the things necessary to the support of life, and are sinking in moral degradation. They have been much corrupted by white men who live among them, who induce them to sell to as many different individuals as they can, and then cheat them out of the proceeds."...

(p. 81.) Luther Blake wrote to the War Department from Fort Mitch.e.l.l, Alabama, on September 11, 1833 ... "Many, from motives of speculation, have bought Indian reserves fraudulently in this way--take their bonds for trifles, pay them ten or twenty dollars in something they do not want, and take their receipts for five times the amount." (p. 86). On February 1, 1834, J. H. Howard, of Pole-Cat Springs, Creek Nation, sent a communication, by request, to President Jackson in which he said, ...

"From my own observation, I am induced to believe that a number of reservations have been paid for at some nominal price, and the princ.i.p.al consideration has been whisky and homespun" ... (p. 104). Gen. J. W. A.

Sandford, sent by President Jackson to the Creek country to investigate the charges of fraud, wrote, on March 1, 1834, to the War Department, ... "It is but very recently that the Indian has been invested with an individual interest in land, and the great majority of them appear neither to appreciate its possession, nor to economize the money for which it is sold; the consequence is, that the white man rarely suffers an opportunity to pa.s.s by without swindling him out of both".... (p.

110).

The records show that the princ.i.p.al beneficiaries of these swindles were some of the most conspicuous planters, mercantile firms and politicians in the South. Frequently, they employed dummies in their operations.

[94] Reports of House Committees, Second Session, 26th Congress, 1840-41, Report No. 1.

[95] Ibid., 1 and 2.

[96] Executive Doc.u.ments, First Session, 23rd Congress, 1833-34, Doc.

No. 132.

[97] Senate Doc.u.ments, First Session, 22nd Congress, 1831-33, Vol. iii, Doc. No. 139.

[98] "No inventor," reported the United States Commissioner of Patents in 1858, "probably has ever been so hara.s.sed, so trampled upon, so plundered by that sordid and licentious cla.s.s of infringers known in the parlance of the world, with no exaggeration of phrase as 'pirates.' The spoliation of their incessant guerilla upon his defenseless rights have unquestionably amounted to millions."

[99] Doc. No. 134, Twenty-fourth Congress, 2d Session, Vol. ii.

[100] Doc. 129, State Papers, 1819-21, Vol. ii.

[101] See Part I, Chapter II.

[102] "Allowed itself." The various New York legislatures from the end of the eighteenth century on were hotbeds of corruption. Time after time members were bribed to pa.s.s bills granting charters for corporations or other special privileges. (See the numerous specific instances cited in the author's "History of Tammany Hall," and subsequently in this work.) The Legislature of 1827 was notoriously corrupt.