History of the Great American Fortunes Part 12

[103] Journal of the [New York] Senate, 1815:216--Journal of the [New York] a.s.sembly, 1818:261; Journal of the a.s.sembly, 1819. Also "A Statement and Exposition of The t.i.tle of John Jacob Astor to the Lands Purchased by him from the surviving children of Roger Morris and Mary, his Wife"; New York, 1827.

[104] MSS. Minutes of the (New York City) Common Council, xvi:239-40 and 405.

[105] Ibid., xx: 355-356.

[106] MSS. Minutes of the Common Council, xiii: 118 and 185.

[107] MSS. Minutes of the Common Council, xvii: 141-144. See also Annual Report of Controller for 1849, Appendix A.

[108] MSS. Minutes of the Common Council, xviii: 411-414.

[109] Doc. No. 33, Doc.u.ments of the Board of Aldermen, xxii:26.

[110] Proceedings of the Board of Aldermen, 1832-33, iv: 416-418.

[111] Controller's Reports for 1831:7. Also Ibid. for 1841:28.

CHAPTER IV

THE RAMIFICATIONS OF THE ASTOR FORTUNE

Astor flourished at that precise time when the traders and landowners, flushed with revenues, reached out for the creation and control of the highly important business of professionally dealing in money, and of dictating, personally and directly, what the supply of the people's money should be.

This signalized the next step in the aggrandizement of individual fortunes. The few who could center in themselves, by grace of Government, the banking and manipulation of the people's money and the restricting or inflating of money issues, were immediately vested with an extraordinary power. It was a sovereign power at once coercive and proscriptive, and a mighty instrument for transferring the produce of the many to a small and exclusive coterie. Not merely over the labor of the whole working cla.s.s did this gripping process extend, but it was severely felt by that large part of the landowning and trading cla.s.s which was excluded from holding the same privileges. The banker became the master of the master. In that fierce, pervading compet.i.tive strife, the banks were the final exploiters. Spa.r.s.ely organized and wholly unprotected, the worker was in the complete power of the trader, manufacturer and landowner; in turn, such of these divisions of the propertied cla.s.s as were not themselves sharers in the ownership of banks were at the mercy of the banking inst.i.tutions.

At any time upon some pretext or other, the banks could arbitrarily refuse the latter cla.s.s credit or accommodation, or hara.s.s its victims in other ways equally as destructive. As business was largely done in expectations of payment, in other words, credit, as it is now, this was a serious, often a desperate, blow to the lagging or embarra.s.sed brothers in trade. Banks were virtually empowered by law to ruin or enrich any individual or set of individuals. As the banks were then founded and owned by men who were themselves traders or landholders, this power was crushingly used against compet.i.tors. Armed with the strong power of law, the banks overawed the mercantile world, thrived on the industry, misfortune or ruin of others, and swayed politics and elections. The bank men loaned money to themselves at an absurdly low rate of interest. But for loans of money to all others they demanded a high rate of interest which, in periods of commercial distress, overwhelmed the borrowers. Nominally banks were restricted to a certain standard rate of interest; but by various subterfuges they easily evaded these provisions and exacted usurious rates.

BANKS AND THEIR POWER.

These, however, were far from being the worst features. The most innocent of their great privileges was that of playing fast and loose with the money confidingly entrusted to their care by a swarm of depositors who either worked for it, or for the matter of that, often stole it; bankers, like p.a.w.nbrokers, ask no questions. The most remarkable of their vested powers was that of manufacturing money. The industrial manufacturer could not make goods unless he had the plant, the raw material and the labor. But the banker, somewhat like the fabled alchemists, could trans.m.u.te airy nothing into bank-note money, and then, by law, force its acceptance. The lone trader or landholder unsupported by a partnership with law could not fabricate money. But let trader and landholder band in a company, incorporate, then persuade, wheedle or bribe a certain ent.i.ty called a legislature to grant them a certain bit of paper styled a charter, and lo! they were instantly transformed into money manufacturers.

A MANDATE TO PREY.

The simple mandate of law was sufficient authorization for them to prey upon the whole world outside of their charmed circle. With this sc.r.a.p of paper they could go forth on the highways of commerce and over the farms and drag in, by the devious, absorbent processes of the banking system, a great part of the wealth created by the actual producers. As it was with taxation, so was it with the burdens of this system; they fell largely upon the worker, whether in the shop or on the farm. When the business man and the landowner were compelled to pay exorbitant rates of interest they but apparently had to meet the demands. What these cla.s.ses really did was to throw the whole of these extra impositions upon the working cla.s.s in the form of increased prices for necessaries and merchandise and in augmented rents.

But how were these State or Government authorizations, called charters, to be obtained? Did not the Federal Const.i.tution prohibit States from giving the right to banks to issue money? Were not private money factories specifically barred by that clause of the Const.i.tution which declared that no State "shall coin money, emit bills of credit, or make anything but gold or silver a tender in payment of debts?"

Here, again, the power of cla.s.s domination of Government came into compelling effect. The onward sweep of the trading cla.s.s was not to be balked by such a trifling obstacle as a Const.i.tutional provision. At all times when the Const.i.tution has stood in the way of commercial aims it has been abrogated, not by repeal nor violent overthrow, but by the effective expedient of judicial interpretation. The trading cla.s.s demanded State created banks with power of issuing money; and, as the courts have invariably in the long run responded to the interests and decrees of the dominant cla.s.s, a decision was quickly forthcoming in this case to the effect that "bills of credit" were not meant to cover banknotes. This was a new and surprising construction; but judicial decision and precedent made it virtually law, and law a thousandfold more binding than any Const.i.tutional insertion.

COURTS AND CONSt.i.tUTION.

The trading cla.s.s had already learned the importance of the principle that while it was essential to control law-making bodies, it was imperative to have as their auxiliary the bodies that interpreted law.

To a large extent the United States since then has lived not under legislative-made law, but under a purely separate and extraneous form of law which has superseded the legislature product, namely, court law.

Although nowhere in the United States Const.i.tution is there even the suggestion that courts shall make law, yet this past century and more they have been gradually building up a formidable code of interpretations which substantially ranks as the most commanding kind of law. And these interpretations have, on the whole, consistently followed, and kept pace with, the changing interests of the dominant cla.s.s, whether traders, slaveholders, or the present trusts.

This decision of the august courts opened the way for the greatest orgy of corruption and the most stupendous frauds. In New York, Ma.s.sachusetts, New Jersey, Pennsylvania, Maryland, and other States a continuous rush to get bank charters ensued. Most of the legislatures were composed of men who, while perhaps, not innately corrupt, were easily seduced by the corrupt temptations held out by the traders. There was a deep-seated hostility, in many parts of the country, on the part of the middling tradesmen--the shopkeepers and the petty merchants--to any laws calculated to increase the power and the privileges of the superior traders and the landowners. Among the ma.s.ses of workers, most of whom were, however, disfranchised, any attempt to vest the rich with new privileges, was received with the bitterest resentment. But the legislatures were approachable; some members who were put there by the rich families needed only the word as to how they should vote, while others, representing both urban and rural communities, were swayed by bribes. By one means or another the traders and landholders forced the various legislatures into doing what was wanted.

Omitting the records of other States, a few salient facts as to what took place in New York State will suffice to give a clear idea of some of the methods of the trading cla.s.s in pressing forward their conquests, in hurling aside every impediment, whether public opinion or law, and in creating new laws which satisfied their extending plans for a ramification of profit-producing interests. If forethought, an unswerving aim and singleness of execution mean anything, then there was something sternly impressive in the way in which this rising capitalist cla.s.s went forward to s.n.a.t.c.h what it sought, and what it believed to be indispensable to its plans. There was no hesitation, nor were there any scruples as to niceties of methods; the end in view was all that counted; so long as that was attained, the means used were considered paltry side-issues. And, indeed, herein lies the great distinction of action between the world-old propertied cla.s.ses and the contending proletariat; for whereas the one have always campaigned irrespective of law and particularly by bribery, intimidation, repression and force, the working cla.s.s has had to confine its movement strictly to the narrow range of laws which were expressly prepared against it and the slightest violation of which has called forth the summary vengeance of a society ruled actually, if not theoretically, by the very propertied cla.s.ses which set at defiance all law.

THE BANKING FRAUDS BEGIN.

The chartered monopoly held by the traders who controlled the United States Bank was not accepted pa.s.sively by others of the commercial cla.s.s, who themselves wanted financial engines of the same character.

The doctrine of State's rights served the purpose of these excluded capitalists as well as it did that of the slaveholders.

The States began a course of reeling out bank charters. By 1799 New York City had one bank, the Bank of New York; this admixed the terrorism of trade and politics so overtly that presently an opposition application for a charter was made. This solitary bank was run by some of the old landowning families who fully understood the danger involved in the triumph of the democratic ideas represented by Jefferson; a danger far overestimated, however, since win as democratic principles did, the propertied cla.s.s continued its victorious march, for the simple reason that property was able to divert manhood suffrage to its own account, and to aggrandize itself still further on the ruins of every subsequent similar reform expedient. What the agitated ma.s.ses, for the most part, of that period could not comprehend was that they who hold the possession of the economic resources will indubitably sway the politics of a country, until such time as the proletariat, no longer divided but thoroughly conscious, organized, and aggressive, will avail itself of its majority vote to transfer the powers of government to itself. The Bank of New York injected itself virulently into politics and fought the spread of democratic ideas with sordid but effective weapons. If a merchant dared support what it denounced as heretical doctrines, the bank at once black-listed him by rejecting his notes when he needed cash most.

It was now that Aaron Burr, that adroit leader of the opposition party, stepped in. Seconded or instigated by certain traders, he set out to get one of those useful and invaluable bank charters for his backers. The explanation of how he accomplished the act is thus given: Taking advantage of the epidemic of yellow fever then desolating New York City, he, with much preliminary of philanthropic motives, introduced a bill for the apparent beneficent purpose of diminishing the future possibility of the disease by incorporating a company, called the Manhattan Company, to supply pure, wholesome water. Supposing that the charter granted nothing more than this, the explanation goes on, the Legislature pa.s.sed the bill, and was most painfully surprised and shocked when the fact came out that the measure had been so deftly drawn, that it, in fact, granted an unlimited charter, conferring banking powers on the company.[112]

This explanation is probably shallow and deficient. It is much more likely that bribery was resorted to, considering the fact that the granting of every successive bank charter was invariably accompanied by bribery. Six years later the Mercantile Bank received a charter for a thirteen years' period--a charter which, it was openly charged by certain members of the a.s.sembly, was secured by bribery. These charges were substantially proved by the testimony before a legislative investigating committee.[113] In 1811 the Mechanics' Bank was chartered with a time limit under circ.u.mstances indicating bribery.

Indeed, so often was bribing done and so p.r.o.nounced were charges of corruption at frequent sessions of the Legislature, that in 1812, the a.s.sembly, in an heroic spasm of impressive virtue, pa.s.sed a resolution compelling each member to pledge himself that he had neither taken, nor would take, "any reward or profit, direct or indirect, for any vote on any measure."[114] This resolution was palpably intended to blind the public; for, in that identical year, the Bank of America received a charter amid charges of flagrant corruption. One a.s.semblyman declared under oath that he had been offered the sum of $500, "besides, a handsome present for his vote."[115] All of the banks, except the Manhattan, had limited charters; measures for the renewal of these were practically all put through by bribery.[116] Thus, in 1818, the charter of the Merchants' Bank was renewed until 1832, and renewed after that.

The chartering of the Chemical Bank (that staid and most eminently respectable and solid New York inst.i.tution of to-day) was accomplished by bribery. The Chemical Bank was an outgrowth of the Chemical Manufacturing Company, the plant and business of which were bought expressly as an excuse to get a banking auxiliary. The Goelet brothers were among the founders of this bank. In fact, many of the great landed fortunes were inseparably a.s.sociated with the frauds of the banking system; money from land was used to bribe legislatures, and money made from the banks was employed in buying more land. The promoters of the Chemical Bank set aside a considerable sum of money and $50,000 in stock for the bribery fund.[117] No sooner had it received its charter than it began to turn out reams of paper money, based upon no value, which paper was paid as wages to its employees as well as circulated generally. So year after year the bribery went on industriously, without cessation.

BRIBERY A CRIME IN NAME ONLY.

Were the bribers ever punished, their illicitly gotten charters declared forfeited, and themselves placed under the ban of virtuous society?

Far, very far, from it! The men who did the bribing were of the very pinnacle of social power, elegance and position, or quickly leaped to that height by reason of their wealth. They were among the foremost landholders and traders of the day. By these and a wide radius of similar means, they ama.s.sed wealth or greatly increased wealth already acc.u.mulated. The ancestors of some of the most conspicuous multimillionaire families of the present were deeply involved in the perpetration of all of those continuous frauds and crimes--Peter Goelet and his sons, Peter P. and Robert, for instance, and Jacob Lorillard, who, for many years, was president of the Mechanics' Bank. No stigma attached to these wealth-graspers. Their success as possessors of riches at once, by the automatic processes of a society which enthroned wealth, elevated them to be commanding personages in trade, politics, orthodoxy and the highest social spheres. The cropped convict, released from prison, was followed everywhere by the jeers and branding of a society which gloated over his downfall and which forever reminded him of his infamy. But the men who waded on to wealth through the muck of base practices and by means of crimes a millionfold more insidious and dangerous than the offense of the convict, were not only honored as leading citizens, but they became the extolled and unquestioned dictators of that supreme trading society which made modes, customs and laws.

It was a society essentially built upon money; consequently he who was dexterous enough to get possession of the spoils, experienced no difficulty in establishing his place among the elect and anointed. His frauds were forgotten or ignored; only the fact that he was a rich man was remembered. And yet, what is more natural than to seek, and accept, the obeisance lavished upon property, in a scheme of society where property is crowned as the ruling power? In the rude centuries previously mankind exalted physical prowess; he who had the greatest strength and wielded the deftest strokes became victor of the judicial combat and gathered in laurels and property. But now we have arrived at the time when the cunning of mind supplants the cunning of muscle; bribery takes the place of brawn; the contestants fight with statutes instead of swords. And this newer plan, which some have decried as degenerate, is a great advance over the old, for thereby has brute force been legally abandoned in personal quarrels at least, and that cunning of mind which has held sway, is the first evidence of the reign of mind, which from a low order, will universally develop n.o.ble and supereminent qualities charged with the good, and that alone, of the human race.

ASTOR'S BANKING ACTIVITIES.

With this preliminary sketch, we can now proceed to a consideration of how Astor profited from the banking system. We see that constantly the bold spirits of the trading cla.s.s, with a part of the money made or plundered in some direction or other, were bribing representative bodies to give them exceptional rights and privileges which, in turn, were made the fertile basis for further spoliation. Astor was a stockholder in at least four banks, the charters of which had been obtained or renewed by trickery and fraud, or both. He owned 1,000 shares of the capital stock of the Manhattan Company; 1,000 of the Merchant's Bank; 500 of the Bank of America; 1,604 of the Mechanic's Bank. He also owned at one time considerable stock in the National Bank, the charter of which, it was strongly suspected had been obtained by bribery.

There is no evidence that he, himself, did the actual bribing or was in any way concerned in it. In all of the legislative investigations following charges of bribery, the invariable practice was to throw the blame upon the wicked lobbyists, while professing the most nave astonishment that any imputations should be cast upon any of the members of the honorable Legislature. As for the bribers behind the scenes, their names seldom or never were brought out or divulged. In brief, these investigations were all of that rose-water order, generally termed "whitewashing." But whether Astor personally bribed or not, he at any rate consciously profited from the results of bribery; and, moreover, it is not probable that his methods in the East were different, except in form, from the debauching and exploitation that he made a system of in the fur regions. It is not outside the realm of reasonable conjecture to suppose that he either helped to debauch, or connived at the corruption of legislatures, just as in another way he debauched Indian tribes.

Furthermore his relations with Burr in one notorious transaction, are sufficient to justify the conclusion that he held the closest business relations with that political adventurer who lived next door to him at No. 221 Broadway. This transaction was one which was partially the outcome of the organization of the Manhattan Bank and was a source of millions of dollars of profit to Astor and to his descendants.

A century or more ago Trinity Church owned three times the extent of even the vast real estate that it now holds. A considerable part of this was the gift of that royal governor Fletcher, who, as has been set forth, was such a master-hand at taking bribes. There long existed a contention upon the part of New York State, a contention embodied in numerous official records, that the land held for centuries by Trinity Church was usurped; that Trinity's t.i.tle was invalid and that the real t.i.tle vested in the people of the city of New York. In 1854-55 the Land Commissioners of New York State, deeply impressed by the facts as marshalled by Rutger B. Miller,[118] recommended that the State bring suit. But with the filing of Trinity's reply, mysterious influences intervened and the matter was dropped. These influences are frequently referred to in aldermanic doc.u.ments.

To go back, however: In 1767 Trinity Church leased to Abraham Mortier, for ninety-nine years, at a total annual rental of $269 a year, a stretch of land comprising 465 lots in what is now the vicinity bounded by Greenwich, Spring and Hudson streets. Mortier used it as a country place until 1797 when the New York Legislature, upon the initiative of Burr, developed a consuming curiosity as to how Trinity Church was expending its income. This was a very ticklish question with the pious vestrymen of Trinity, as it was generally suspected that they were commingling business and piety in a way that might, if known, cause them some trouble. The law, at that time, restricted the annual income of Trinity Church from its property to $12,000 a year. A committee of investigation was appointed; of this committee Burr was made chairman.

HOW ASTOR SECURED A LEASE.

Burr never really made any investigation. Why? The reason soon came out, when Burr turned up with a transfer of the Mortier lease to himself. He at once obtained from the Manhattan Bank a $38,000 loan, pledging the lease as security. When his duel with Hamilton forced Burr to flee the country, Astor promptly came along and took the lease off his hands.

Astor, it was said, paid him $32,000 for it, subject to the Manhattan Bank's mortgage. At any rate, Astor now held this extraordinarily valuable lease.[119] He immediately released it in lots; and as the city fast grew, covering the whole stretch with population and buildings, the lease was a source of great revenue to him and to his heirs.[120] As a Lutheran, Astor could not be a vestryman of Trinity Church. Anthony Lispenard, however, it may be pa.s.singly noted, was a vestryman, and, as such, mixed piety and business so well, that his heirs became possessed of millions of dollars by the mere fact that in 1779, when a vestryman, he got a lease, for eighty-three years of eighty-one Trinity lots adjacent to the Astor leased land, at a total annual rental of $177.50.[121]