History of the Great American Fortunes Part 19

PROXIMITY OF PALACES AND POVERTY.

From these palaces it is but a step, as it were, to gaunt neighborhoods where great parts of the population are crowded in the most inhuman way into wretched tenement houses. It is an undeniable fact that more than fifty blocks on Manhattan Island--each of which blocks is not much larger than the s.p.a.ce covered by the Astor mansions--have each a teeming population of from 3,000 to 4,000 persons. In each of several blocks 6,000 persons are congested. In 1855, when conditions were thought bad enough, 417,476 inhabitants were crowded into the section south of Fourteenth street; but in 1907 this district contained fully 750,000 population. Forty years ago the lower sections only of Manhattan were overcrowded, but now the density of congestion has spread to all parts of Manhattan, and to parts of the Bronx and Brooklyn. On an area of two hundred acres in certain parts of New York City not less than 200,000 people exist. It is not uncommon to find eighteen men, women, and children, driven to it by necessity, sleeping in three small, suffocating rooms.

[Ill.u.s.tration: THE ASTOR MANSIONS IN NEW YORK CITY.

Occupied by the Late Mrs. William Astor and by John Jacob Astor.]

But the New York City residences of the Astors are only a mere portion of their many palaces. They have impressive mansions, costing great sums, at Newport. At Ferncliffe-on-the-Hudson John Jacob Astor has an estate of two thousand acres. This country palace, built in chaste Italian architecture, is fitted with every convenience and luxury. John Jacob Astor's cousin, William Waldorf, some years since expatriated himself from his native country and became a British subject. He bought the Cliveden estate at Taplow, Bucks, England, the old seat of the Duke of Westminster, the richest landlord in England. Thenceforth William Waldorf scorned his native land, and has never even taken the trouble to look at the property in New York which yields him so vast a revenue.

This absentee landlord, for whom it is estimated not less than 100,000 men, women and children directly toil, in the form of paying him rent, has surrounded himself in England with a lofty feudal exclusiveness.

Sweeping aside the privilege that the general public had long enjoyed of access to the Cliveden grounds, he issued strict orders forbidding trespa.s.sing, and along the roads he built high walls surmounted with broken gla.s.s. His son and heir, Waldorf Astor, has avowed that he also will remain a British subject. William Waldorf Astor, it should be said, is somewhat of a creator of public opinion; he owns a newspaper and a magazine in London.

The origin and successive development of the Astor fortune have been laid bare in these chapters; not wholly so, by any means, for a ma.s.s of additional facts have been left out. Where certain fundamental facts are sufficient to give a clear idea of a presentation, it is not necessary to pile on too much of an acc.u.mulation. And yet, such has been the continued emphasis of property-smitten writers upon the thrift, honesty, ability and sagacity of the men who built up the great fortunes, that the impression generally prevails that the Astor fortune is preeminently one of those ama.s.sed by legitimate means. These chapters should dispel this illusion.

FOOTNOTES:

[158] See Testimony taken before the [New York] Senate Committee on Cities, 1890, iii:2312, etc.

[159] Testimony taken before the [New York] Senate Committee on Cities, 1890, iii: 2314-2315.

[160] As one of many ill.u.s.trations of the ethics of the propertied cla.s.s, the appended newspaper dispatch from Newport, R. I., on Jan. 2, 1903, brings out some significant facts:

"William C. Schermerhorn, whose death is announced in New York, and who was a cousin of Mrs. William Astor, was one of Newport's pioneer summer residents. He was one of New York's millionaires, and his Newport villa is situated on Narragansett avenue near Cliffside, opposite the Pinard cottages.

"Mr. Schermerhorn, with Mrs. Astor and ex-Commodore Gerry, of the New York Yacht Club, in order to avoid the inheritance tax of New York, and to take advantage of Newport's low tax-rate, obtained in January last through their counsel, Colonel Samuel R. Honey, a decree declaring their citizenship in Rhode Island. Since that time Mr. Schermerhorn's residence has been in this state. In last year's tax-list he was a.s.sessed for $150,000.

"Mr. Schermerhorn was a member of both the fashionable clubs on Bellevue avenue, the Newport Casino and the Newport Reading-Room."

[161] For further details on this point see Chapter ix, Part II.

CHAPTER VIII

OTHER LAND FORTUNES CONSIDERED

The founding and aggrandizement of other great private fortunes from land were accompanied by methods closely resembling, or identical with, those that the Astors employed.

Next to the Astors' estate the Goelet landed possessions are perhaps the largest urban estates in the United States in value. The landed property of the Goelet family on Manhattan Island alone is estimated at fully $200,000,000.

THE GOELET FORTUNE.

The founder of the Goelet fortune was Peter Goelet, an ironmonger during and succeeding the Revolution. His grandfather, Jacobus Goelet, was, as a boy and young man, brought up by Frederick Phillips, with whose career as a promoter and backer of pirates and piracies, and as a briber of royal officials under British rule, we have dealt in previous chapters.

Of Peter Goelet's business methods and personality no account is extant.

But as to his methods in obtaining land, there exists little obscurity.

In the course of this work it has already been shown in specific detail how Peter Goelet in conjunction with John Jacob Astor, the Rhinelander brothers, the Schermerhorns, the Lorillards and other founders of multimillionaire dynasties, fraudulently secured great tracts of land, during the early and middle parts of the last century, in either what was then, or what is now, in the heart of New York City. It is entirely needless to iterate the narrative of how the city officials corruptly gave over to these men land and water grants before that time munic.i.p.ally owned--grants now having a present incalculable value.[162]

As was the case with John Jacob Astor, the fortune of the Goelets was derived from a mixture of commerce, banking and ownership of land.

Profits from trade went toward buying more land, and in providing part of corrupt funds with which the Legislature of New York was bribed into granting banking charters, exemptions and other special laws. These various factors were intertwined; the profits from one line of property were used in buying up other forms and thus on, reversely and comminglingly. Peter had two sons; Peter P., and Robert R. Goelet. These two sons, with an eye for the advantageous, married daughters of Thomas Buchanan, a rich Scotch merchant of New York City, and for a time a director of the United States Bank. The result was that when their father died, they not only inherited a large business and a very considerable stretch of real estate, but, by means of their money and marriage, were powerful dignitaries in the directing of some of the richest and most despotic banks. Peter P. Goelet was for several years one of the directors of the Bank of New York, and both brothers benefited by the corrupt control of the United States Bank, and were princ.i.p.als among the founders of the Chemical Bank.

These brothers had set out with an iron determination to build up the largest fortune they could, and they allowed no obstacles to hinder them. When fraud was necessary they, like the bulk of their cla.s.s, unhesitatingly used it. In getting their charter for the notorious Chemical Bank, they bribed members of the Legislature with the same phlegmatic serenity that they would put through an ordinary business transaction. This bank, as we have brought out previously, was chartered after a sufficient number of members of the Legislature had been bribed with $50,000 in stock and a large sum of money. Yet now that this bank is one of the richest and most powerful inst.i.tutions in the United States, and especially as the criminal nature of its origin is unknown except to the historic delver, the Goelets mention the connection of their ancestors with it as a matter of great and just pride. In a voluminous biography giving the genealogies of the rich families of New York--material which was supplied and perhaps written by the families themselves--this boast occurs in the chapter devoted to the Goelets: "They were also numbered among the founders of that famous New York financial inst.i.tution, the Chemical Bank."[163] Thus do the crimes of one generation become transformed into the glories of another! The stock of the Chemical Bank, quoted at a fabulous sum, so to speak, is still held by a small, compact group in which the Goelets are conspicuous.

From the frauds of this bank the Goelets reaped large profits which systematically were invested in New York City real estate. And progressively their rentals from this land increased. Their policy was much the same as that of the Astors--constantly increasing their land possessions. This they could easily do for two reasons. One was that almost consecutively they, along with other landholders, corrupted city governments to give them successive grants, and the other was their enormous surplus revenue which kept piling up.

ONCE A FARM; NOW OF VAST VALUE.

When William B. Astor inherited in 1846 the greater part of his father's fortune, the Goelet brothers had attained what was then the exalted rank of being millionaires, although their fortune was only a fraction of that of Astor. The great impetus to the sudden increase of their fortune came in the period 1850-1870, through a tract of land which they owned in what had formerly been the outskirts of the city. This land was once a farm and extended from about what is now Union Square to Forty-seventh street and Fifth avenue. It embraced a long section of Broadway--a section now covered with huge hotels, business buildings, stores and theaters. It also includes blocks upon blocks filled with residences and aristocratic mansions. At first the fringe of New York City, then part of its suburbs, this tract lay in a region which from 1850 on began to take on great values, and which was in great demand for the homes of the rich. By 1879 it was a central part of the city and brought high rentals. The same combination of economic influences and pressure which so vastly increased the value of the Astors' land, operated to turn this quondam farm into city lots worth enormous sums. As population increased and the downtown sections were converted into business sections, the fashionables shifted their quarters from time to time, always pushing uptown, until the Goelet lands became a long sweep of ostentatious mansions.

In imitation of the Astors the Goelets steadily adhered, as they have since, to the policy of seldom or never selling any of their land. On the other hand, they bought constantly. On one occasion they bought eighty lots in the block from Fifth to Sixth avenues, Forty-second to Forty-third streets. The price they paid was $600 a lot. These lots have a present aggregate value of perhaps $15,000,000 or more, although they are a.s.sessed at much less.

MISERS WITH MILLIONS.

The second generation of the Goelets--counting from the founder of the fortune--were incorrigibly parsimonious. They reduced miserliness to a supreme art. Likewise the third generation. Of Peter Goelet, a grandson of the original Peter, many stories were current ill.u.s.trating his close-fistedness. His pa.s.sion for economy was carried to such an abnormal stage that he refused even to engage a tailor to mend his garments.[164] He was unmarried, and generally attended to his own wants. On several occasions he was found in his office at the Chemical Bank industriously absorbed in sewing his coat. For stationery he used blank backs of letters and envelopes which he carefully and systematically saved and put away. His house at Nineteenth street, corner of Broadway, was a curiosity shop. In the bas.e.m.e.nt he had a forge, and there were tools of all kinds over which he labored, while upstairs he had a law library of 10,000 volumes, for it was a fixed, cynical determination of his never to pay a lawyer for advice that he could himself get for the reading.

Yet this miser, who denied himself many of the ordinary comforts and conveniences of life, and who would argue and haggle for hours over a trivial sum, allowed himself one expensive indulgence--expensive for him, at least. He was a lover of fancy fowls and of animals. Storks, pheasants and peac.o.c.ks could be seen in the grounds about his house, and also numbers of guinea pigs. In his stable he kept a cow to supply him with fresh milk; he often milked it himself.

This eccentric was very melancholy and, apart from his queer collection of pets, cared for nothing except land and houses. Chancing in upon him one could see him intently pouring over a list of his properties. He never tired of doing this, and was petulantly impatient when houses enough were not added to his inventory.

He died in 1879 aged seventy-nine years; and within a few months, his brother Robert, who was as much of an eccentric and miser in his way, pa.s.sed away in his seventieth year.

THE THIRD GENERATION.

The fortunes of the brothers descended to Robert's two sons, Robert, born in 1841, and Ogden, born in 1846. These wielders of a fortune so great that they could not keep track of it, so fast did it grow, abandoned somewhat the rigid parsimony of the previous generations. They allowed themselves a glittering effusion of luxuries which were popularly considered extravagances but which were in nowise so, inasmuch as the cost of them did not represent a t.i.the of merely the interest on the princ.i.p.al. In that day, although but thirty years since, when none but the dazzlingly rich could afford to keep a sumptuous steam yacht in commission the year round, Robert Goelet had a costly yacht, 300 feet long, equipped with all the splendors and comforts which up to that time had been devised for ocean craft. Between them, he and his brother Ogden possessed a fortune of at least $150,000,000. The basic structure of this was New York City land, but a considerable part was in railroad stocks and bonds, and miscellaneous aggregations of other securities to the purchase of which the surplus revenue had gone. Thus, like the Astors and other rich landholders, partly by investments made in trade, and largely by fraud, the Goelets finally became not only great landlords but sharers in the centralized ownership of the country's transportation systems and industries.

When Ogden Goelet died he left a fortune of at least $80,000,000, reckoning all of the complex forms of his property, and his brother, Robert, dying in 1899, left a fortune of about the same amount. Two children survived each of the brothers. Then was witnessed that characteristic so symptomatic of the American money aristocracy. A surfeit of money brings power, but it does not carry with it a recognized position among a t.i.tled aristocracy. The next step is marriage with t.i.tle. The t.i.tled descendants of the predatory barons of the feudal ages having, generation after generation, squandered and mortgaged the estates gotten centuries ago by force and robbery, stand in need of funds. On the other hand, the feminine possessors of American millions, aided and abetted doubtless by the men of the family, who generally crave a "blooded" connection, l.u.s.t for the superior social status insured by a t.i.tle. The arrangement becomes easy. In marrying the Duke of Roxburghe in 1903, May Goelet, the daughter of Ogden, was but following the example set by a large number of other American women of multimillionaire families. It is an indulgence which, however great the superficial consequential money cost may be, is, in reality, inexpensive. As fast as millions are dissipated they are far more than replaced in these private coffers by the collective labor of the American people through the tributary media of rent, interest and profit. In the last ten years the value of the Goelet land holdings has enormously increased, until now it is almost too conservative an estimate to place the collective fortune at $200,000,000.

This large fortune, as is that of the Astors and of other extensive landlords, is not, as has been pointed out, purely one of land possessions. Far from it. The invariable rule, it might be said, has been to utilize the surplus revenues in the form of rents, in buying up controlling power in a great number and variety of corporations. The Astors are directors in a large array of corporations, and likewise virtually all of the other big landlords. The rent-racked people of the City of New York, where rents are higher proportionately than in any other city, have sweated and labored and fiercely struggled, as have the people of other cities, only to deliver up a great share of their earnings to the lords of the soil, merely for a foothold. In turn these rents have incessantly gone toward buying up railroads, factories, utility plants and always more and more land.

WHERE SURPLUS REVENUE HAS GONE.

But the singular continuity does not end here. Land acquired by political or commercial fraud has been made the lever for the commission of other frauds. The railroads now controlled by a few men, among whom the large landowners are conspicuous, were surveyed and built to a great extent by public funds, not private money. As time pa.s.ses a gradual transformation takes place. Little by little, scarcely known to the people, laws are altered; the States and the Government, representing the interests of the vested cla.s.s, surrender the people's rights, often even the empty forms of those rights, and great railroad systems pa.s.s into the hands of a small cabal of multimillionaires.

To give one of many instances: The Illinois Central Railroad, pa.s.sing through an industrial and rich farming country, is one of the most profitable railroads in the United States. This railroad was built in the proportion of twelve parts to one by public funds, raised by taxation of the people of that State, and by prodigal gifts of public land grants. The balance represents the investments of private individuals. The cost of the road as reported by the company in 1873 was $48,331 a mile. Of this amount all that private individuals contributed was $4,930 a mile above their receipts; these latter were sums which the private owners gathered in from selling the land given to them by the State, amounting to $35,211 per mile, and the sums that they pocketed from stock waterings amounting to $8,189 a mile. "The unsold land grant," says Professor Frank Parsons, "amounted to 344,368 acres, worth probably over $5,000,000, so that those to whom the securities of the company were issued, had obtained the road at a bonus of nearly $2,000,000 above all they paid in."[165]

By this manipulation, private individuals not only got this immensely valuable railroad for practically nothing, but they received, or rather the laws (which they caused to be made) awarded them, a present of nearly four millions for their dexterity in plundering the railroad from the people. What set of men do we find now in control of this railroad, doing with it as they please? Although the State of Illinois formally retains a nominal say in its management, yet it is really owned and ruled by eight men, among whom are John Jacob Astor, and Robert Walton Goelet, a.s.sociated with E. H. Harriman, Cornelius Vanderbilt and four others. John Jacob Astor is one of the directors of the Western Union Telegraph monopoly, with its annual receipts of $29,000,000 and its net profits of $8,000,000 yearly; and as for the many other corporations in which he and his family, the Goelets and the other commanding landlords hold stock, they would, if enumerated, make a formidable list.

And while on this phase, we should not overlook another salient fact which thrusts itself out for notice. We have seen how John Jacob Astor of the third generation very eagerly in 1867 invited Cornelius Vanderbilt to take over the management of the New York Central Railroad, after Vanderbilt had proved himself not less an able executive than an indefatigable and effective briber and corrupter. So long as Vanderbilt produced the profits, Astor and his fellow-directors did not care what means he used, however criminal in law and whatever their turpitude in morals. John Jacob Astor of the fourth generation repeats this performance in aligning himself, as does Goelet, with that master-hand Harriman, against whom the most specific charges of colossal looting have been brought.[166] But it would be both idle and prejudicial in the highest degree to single out for condemnation a brace of capitalists for following out a line of action so strikingly characteristic of the entire capitalist cla.s.s--a cla.s.s which, in the pursuit of profits, dismisses nicety of ethics and morals, and which ordains its own laws.

THE RHINELANDERS.