History of the Great American Fortunes Part 13

It was by the aid of the banking system that the trading cla.s.s was greatly enabled to manipulate the existing and potential resources of the country and to extend invaluable favors to themselves. In this system Astor was a chief partic.i.p.ant. For many years the banks, especially in New York State, were empowered by law to issue paper money to the extent of three times the amount of their capital. The actual specie was seized hold of by the shippers, and either h.o.a.rded, or exported in quant.i.ties to Asia or Europe which, of course, would not handle paper money. By 1819 the banks in New York had issued $12,500,000, and the total amount of specie to redeem this fiat stuff amounted to only $2,000,000. These banknotes were nothing more or less than irresponsible promises to pay. What became of them?

WHAT THE WORKER GOT AS WAGES.

What, indeed, became of them? They were imposed upon the working cla.s.s as payment for labor. Although these banknotes were subject to constant depreciation, the worker had to accept them as though they were full value. But when the worker went to buy provisions or pay rent, he was compelled to pay one-third, and often one-half, as much as the value represented by those banknotes. Sometimes, in crises, he could not get them cashed at all; they became pitiful souvenirs in his hands. This fact was faintly recognized by a New York Senate Committee when it reported in 1819 that every artifice in the wit of man had been devised to find ways of putting these notes into circulation; that when the merchant got this depreciated paper, he "saddled it upon the departments of productive labor." "The farmer and the mechanic alike," went on the report, "have been invited to make loans and have fallen victims to the avarice of the banker. The result has been the banishment of metallic currency, the loss of commercial confidence, fict.i.tious capital, increase of civil prosecutions and multiplication of crimes."[122] What the committee did not see was that by this process those in control of the banks had, with no expenditure, possessed themselves of a considerable part of the resources of the country and had made the worker yield up twice and three times as much of the produce of his labor as he had to give before the system was started.

The large amount of paper money, without any basis of value whatever, was put out at a heavy rate of interest. When the merchant paid his interest, he charged it up as extra cost on his wares; and when the worker came to buy these same wares which he or some fellow-worker had made, he was charged a high price which included three things all thrown upon him: rent, interest and profit. The banks indirectly sucked in a large portion of these three factors. And so thoroughly did the banks control legislation that they were not content with the power of issuing spurious paper money; they demanded, and got through, an act exempting bank stock from taxation.

Thus year after year this system went on, beggaring great numbers of people, enriching the owners of the banks and virtually giving them a life and death power over the worker, the farmer and the floundering, struggling small business man alike. The laws were but slightly altered. "The great profits of the banks," reported a New York Senate Committee on banks and insurance in 1834, "arise from their issues. It is this privilege which enables them, in fact, to coin money, to subst.i.tute their evidences of debt for a metallic currency and to loan more than their actual capitals. A bank of $100,000 capital is permitted to loan $250,000; and thus receive an interest on twice and a half the amount actually invested."[123]

THE WORKINGMEN'S PARTY PROTEST.

It cannot be said that all of the workingmen were apathetic, or that some did not see through the fraud of the system. They had good reason for the deepest indignation and exasperation. The terrible injustices piled upon them from every quarter--the low wages that they were forced to accept, often in depreciated or worthless banknotes, the continually increasing exactions of the landlords, the high prices squeezed out of them by monopolies, the arbitrary discriminations of law--these were not without their effect. The Workingmen's Party, formed in 1829 in New York City, was the first and most ominous of these proletarian uprisings. Its resolutions read like a proletarian Declaration of Independence, and would unquestionably have resulted in the most momentous agitation, had it not been that it was smothered by its leaders, and also because the slavery issue long obscured purely economic questions. "Resolved," ran its resolutions adopted at Military Hall, Oct. 19, 1829,

in the opinion of this meeting, that the first appropriation of the soil of the State to private and exclusive possession was eminently and barbarously unjust. That it was substantially feudal in its character, inasmuch as those who received enormous and unequal possessions were _lords_ and those who received little or nothing were _va.s.sals_. That hereditary transmission of wealth on the one hand and poverty on the other, has brought down to the present generation all the evils of the feudal system, and that, in our opinion, is the prime source of all our calamities.

After declaring that the Workingmen's Party would oppose all exclusive privileges, monopolies and exemptions, the resolutions proceeded:

We consider it an exclusive privilege for one portion of the community to have the _means of education in colleges_, while another is restricted to common schools, or, perhaps, by extreme poverty, even deprived of the limited education to be acquired in those establishments. Our voice, therefore, shall be raised in favor of a system of education which shall be equally open to _all_, as in a real republic, it should be.

Finally the resolutions told what the Workingmen's Party thought of the bankers and the banking system. The bankers were denounced as "the greatest knaves, impostors and paupers of the age." The resolutions went on:

As banking is now conducted, the owners of the banks receive annually of the people of the State not less than two millions of dollars in their paper money (and it might as well be pewter money) for which there is and can be nothing provided for its redemption on demand....

The mockery that went up from all that was held influential, respectable and stable when these resolutions were printed, was echoed far and wide.

They were looked upon first as a joke, and then, when the Workingmen's Party began to reveal its earnestness and strength, as an insolent challenge to const.i.tuted authority, to wealth and superiority, and as a menace to society.

RADICALISM VERSUS RESPECTABILITY.

The "Courier and Enquirer," owned by Webb and Noah, in the pay of the United States Bank, burst out into savage invective. It held the Workingmen's Party up to opprobrium as an infidel crowd, hostile to the morals and the inst.i.tutions of society, and to the rights of property.

Nevertheless the Workingmen's Party proceeded with an enthusiastic, almost ecstatic, campaign and polled 6,000 votes, a very considerable number compared to the whole number of voters at the time.

By 1831, however, it had gone out of existence. The reason was that it allowed itself to be betrayed by the supineness, incompetence, and as some said, the treachery, of its leaders, who were content to accept from a Legislature controlled by the propertied interests various mollifying sops which slightly altered certain laws, but which in no great degree redounded to the benefit of the working cla.s.s. For a few bits of counterfeit, this splendid proletarian uprising, glowing with energy, enthusiasm and hope, allowed itself to be snuffed out of existence.

What a tragedy was there! And how futile and tragic must inevitably be the fate of any similar movement which depends not upon itself, not upon its own intrinsic, collective strength and wisdom, but upon the say-so of leaders who come forward to a.s.sume leadership. Representing only their own timidity of thought and cowardice of action, they often end by betraying the cause placed confidingly in their charge. That cla.s.s which for these immemorial generations has done the world's work, and as long has been plundered and oppressed and betrayed, thus had occasion to learn anew the bitter lesson taught by the wreckage of the past, that it is from itself that the emanc.i.p.ation must come; that it is itself which must essentially think, act and strike; that its forces, long torn asunder and dispersed, must be marshalled in invulnerable compactness and iron discipline; and so that its hosts may not again be routed by strategy, no man or set of men should be entrusted with the irrevocable power of executing its decrees, for too often has the courage, boldness and strength of the many been shackled or destroyed by the compromising weakness of the leaders.

THE PANIC OF 1837.

Pa.s.sing over the Equal Rights movement in 1834, which was a diluted revival of the Workingmen's Party, and which, also, was turned into sterility by the treachery of its leaders, we arrive at the panic of 1837, the time when Astor, profiting from misfortune on every side, vastly increased his wealth.

The panic of 1837 was one of those periodic financial and industrial convulsions resulting from the chaos of capitalist administration. No sooner had it commenced, than the banks refused to pay out any money, other than their worthless notes. For thirty-three years they had not only enjoyed immense privileges, but they had used the powers of Government to insure themselves a monopoly of the business of manufacturing money. In 1804 the Legislature of New York State had pa.s.sed an extraordinary law, called the restraining act. This prohibited, under severe penalties, all a.s.sociations and individuals not only from issuing notes, but "from receiving deposits, making discounts or transacting any other business which incorporated banks may or do transact." Thus the law not only legitimatized the manufacture of worthless money, but guaranteed a few banks a monopoly of that manufacture. Another restraining act was pa.s.sed in 1818. The banks were invested with the sovereign privilege of depreciating the currency at their discretion, and were authorized to levy an annual tax upon the country, nearly equivalent to the interest on $200,000,000 of deposits and circulation. On top of these acts, the Legislature pa.s.sed various acts compelling the public authorities in New York City to deposit public money with the Manhattan Company. This company, although, as we have seen, expressly chartered to supply pure water to the city of New York, utterly failed to do so; at one stage the city tried to have its charter revoked on the ground of failure to carry out its chartered function, but the courts decided in the company's favor.[124]

At the outbreak of the panic of 1837, the New York banks held more than $5,500,000 of public money. When called upon to pay only about a million of that sum, or the premium on it, they refused. But far worse was the experience of the general public. When they frantically besieged the banks for their money, the bank officials filled the banks with heavily armed guards and plug-uglies with orders to fire on the crowd in case a rush was attempted.[125]

In every State conditions were the same. In May, 1837, not less than eight hundred banks in the United States suspended payment, refusing a single dollar to the Government whose deposits of $30,000,000 they held, and to the people in general who held $120,000,000 of their notes. No specie whatever was in circulation. The country was deluged with small notes, colloquially termed shinplasters. Of every form and every denomination from the alleged value of five cents to that of five dollars, they were issued by every business individual or corporation for the purpose of paying them off as wages to their employees. The worker was forced to take them for his labor or starve. Moreover, the shinplasters were so badly printed that it was not hard to counterfeit them. The counterfeiting of them quickly became a regular business; immense quant.i.ties of the stuff were issued. The worker never knew whether the bills paid him for his work were genuine or counterfeit, although essentially there was not any great difference in basic value between the two.[126]

THE RESULTING WIDESPREAD DESt.i.tUTION.

Now the storm broke. Everywhere was impoverishment, ruination and beggary. Every bank official in New York City was subject to arrest for the most serious frauds and other crimes, but the authorities took no action. On the contrary, so complete was the dominance of the banks over Government,[127] that they hurriedly got the Legislature to pa.s.s an act practically authorizing a suspension of specie payments. The consequences were appalling. "Thousands of manufacturing, mercantile, and other useful establishments in the United States," reported a New York Senate Committee, "have been broken down or paralyzed by the existing crisis.... In all our great cities numerous individuals, who, by a long course of regular business, had acquired a competency, have suddenly been reduced, with their families to beggary."[128] New York City was filled with the homeless and unemployed. In the early part of 1838 one-third of all the persons in New York City who subsisted by manual labor, were wholly or substantially without employment. Not less than 10,000 persons were in utter poverty, and had no other means of surviving the winter than those afforded by the charity of neighbors.

The almshouses and other public and charitable inst.i.tutions overflowed with inmates, and 10,000 sufferers were still uncared for.

The prevailing system, as was pointed out even by the conventional and futile reports of legislative committees, was one inevitably calculated to fill the country with beggars, vagrants and criminals. This important fact was recognized, although in a remote way, by De Beaumont and De Tocqueville who, however, had no fundamental understanding of the deep causes, nor even of the meaning of the facts which they so accurately gathered. In their elaborate work on the penitentiary system in the United States, published in 1833, they set forth that it was their conclusion that in the four States, New York, Ma.s.sachusetts, Connecticut and Pennsylvania, the prison system of which they had fully investigated, almost all of those convicted for crimes from 1800 to 1830 were convicted for offenses against property. In these four States, collectively, with a population amounting to one-third of that of the Union, not less than 91.29 out of every 100 convictions were for crimes against property, while only 8.66 of every 100 were for crimes against persons, and 4.05 of every 100 were for crimes against morals. In New York State singly, 93.56 of every 100 convictions were for crimes against property and 6.26 for crimes against persons.[129]

PROPERTY AND CRIME.

Thus we see from these figures filled with such tragic eloquence, the economic impulse working at bottom, and the property system corrupting every form of society. But here a vast difference is to be noted. Just as in England the aristocracy for centuries had made the laws and had enforced the doctrine that it was they who should wield the police power of the State, so in the United States, to which the English system of jurisprudence had been transplanted, the propertied interests, const.i.tuting the aristocracy, made and executed the laws. De Beaumont and De Tocqueville pa.s.singly observed that while the magistrates in the United States were plebeian, yet they followed out the old English system; in other words, they enforced laws which were made for, and by, the American aristocracy, the trading cla.s.ses.

The views, aims and interests of these cla.s.ses were so thoroughly intrenched in law that the fact did not escape the keen notice of these foreign investigators. "The Americans, descendants of the English," they wrote, "have provided in every respect for the rich and hardly at all for the poor.... In the same country where the complainant is put in prison, the thief remains at liberty, if he can find bail. Murder is the only crime whose authors are not protected[130].... The ma.s.s of lawyers see in this nothing contrary to their ideas of justice and injustice, nor even to their democratic inst.i.tutions."[131]

THE SYSTEM--HOW IT WORKED.

The system, then, frequently forced the dest.i.tute into theft and mendicancy. What resulted? Laws, inconceivably harsh and brutal, enacted by, and in behalf of, property rights were enforced with a rigor which seems unbelievable were it not that the fact is verified by the records of thousands of cases. Those convicted for robbery usually received a life sentence; they were considered lucky if they got off with five years. The ordinary sentence for burglary was the same, with variations.

Forgery and grand larceny were punishable with long terms, ranging from five to seven years. These were the laws in practically all of the States with slight differences. But they applied to whites only. The negro slave criminal had a superior standing in law, for the simple reason that while the whites were "free" labor, negroes were property, and, of course, it did not pay to send slaves to prison. In Maryland and in most Southern States, where the slaveholders were both makers and executors of law, the slaves need have no fear of prison. "The slaves, as we have seen before, are not subject to the Penal Code of the whites; they are hardly ever sent to prison. Slaves who commit grave crimes are hung; those who commit heinous crimes not punishable with death are sold out of the State. In selling him care is taken that his character and former life are not known, _because it would lessen his price_." Thus wrote De Beaumont and De Tocqueville; and in so writing they handed down a fine insight into the methods of that Southern propertied cla.s.s which a.s.sumed so exalted an opinion of its honor and chivalry.

But the sentencing of the criminal was merely the beginning of a weird life of horror. It was customary at that period to immure prisoners in solitary confinement. There, in their small and reeking cells, filled with damps and pestilential odors, they were confined day after day, year after year, condemned to perpetual inactivity and silence. If they presumed to speak, they were brutally lashed with the whip. They were not allowed to write letters, nor to communicate with any member of their family. But the law condescended to allow a minister to visit them periodically in order to awaken their religious thoughts and preach to them how bad a thing it was to steal! Many were driven stark mad or died of disease; others dashed their brains out; while others, when finally released, went out into the world filled with an overpowering hatred of Society, and all its inst.i.tutions, and a long-cherished thirst for vengeance against it for having thus so cruelly misused them.

Such were the laws made by the propertied cla.s.ses. But they were not all. When a convict was released, the law allowed only three dollars to be given him to start anew with. "To starve or to steal is too often the only alternative," wrote John W. Edmonds, president of the New York board of prison inspectors in 1844.[132] If the released convict did steal he was nearly always sent back to prison for life.

Equally severe in their way were the laws applying to mendicants and vagrants. Six months or a year in the penitentiary or workhouse was the usual sentence. After the panic of 1837, crime, mendicancy, vagrancy and prost.i.tution tremendously increased, as they always do increase after two events: war, which, when over, turns into civil life a large number of men who cannot get work; and panics which chaotically uproot industrial conditions and bring about widespread dest.i.tution. Although undeniably great frauds had been committed by the banking cla.s.s, not a single one of that cla.s.s went to jail. But large numbers of persons convicted of crimes against property, and great batches of vagrants were dispatched there, and also many girls and women who had been hurled by the iron force of circ.u.mstances into the horrible business of prost.i.tution.

These were some of the conditions in those years. Let it not, however, be supposed that the traders, bankers and landowners were impervious to their own brand of sensibilities. They dressed fastidiously, went to church, uttered hallelujahs, gave dainty receptions, formed a.s.sociations to dole out alms and--kept up prices and rents. Notwithstanding the general distress, rents in New York City were greater than were paid in any other city or village upon the globe.[133]

FOOTNOTES:

[112] Hammond's "Political History of the State of New York," 1:129-130.

[113] Journal of the [New York] Senate and a.s.sembly, 1803:351 and 399.

[114] Ibid., 1812:134.

[115] Ibid., 1812:259-260. Frequently, in those days, the giving of presents was a part of corrupt methods.

[116] "The members [of the Legislature] themselves sometimes partic.i.p.ated in the benefits growing out of charters created by their own votes; ... if ten banks were chartered at one session, twenty must be chartered the next, and thirty the next. The cormorants could never be gorged. If at one session you bought off a pack of greedy lobby agents ... they returned with increased numbers and more voracious appet.i.te."--Hammond, ii:447-448.

[117] Journal of the [New York] Senate, 1824:1317-1350. See also Chap.

VIII, Part II of this work.

[118] "Letter and Authentic Doc.u.mentary Evidence in Relation to the Trinity Church Property," etc., Albany, 1855. Hoffman, the best authority on the subject, says in his work published forty-five years ago: "Very extensive searches have proved unavailing to enable me to trace the sources of the t.i.tle to much of this upper portion of Trinity Church property."--"State and Rights of the Corporation of New York,"

ii:189.

[119] In all of the official communications of Trinity Church up to 1867 this lease is referred to as the "Burr or Astor Lease."--"The Communication of the Rector, Church Wardens and Vestrymen of Trinity Church in the city of New York in reply to a resolution of the House, pa.s.sed March 4, 1854"; Doc.u.ment No. 130, a.s.sembly Docs. 1854. Also Doc.u.ment No. 45, Senate Docs. 1856. Upon returning from exile Burr tried to break his lease to Astor, but the lease was so astutely drawn that the courts decided in Astor's favor.

[120] In his descriptive work on New York City of a half century ago, Matthew Hale Smith, in "Sunshine and Shadow in New York" (pp. 121-122), tells this story: "The Morley [Mortier] lease was to run until 1867.