History of the Great American Fortunes Part 20

The wealth of the Rhinelander family is commonly placed at about $100,000,000. But this, there is excellent reason to believe, is an absurdly low approximation. Nearly a century and a half ago William and Frederick Rhinelander kept a bakeshop on William street, New York City, and during the Revolution operated a sugar factory. They also built ships and did a large commission business. It is usually set forth, in the plenitude of eulogistic biographies, that their thrift and ability were the foundation of the family's immense fortune. Little research is necessary to shatter this error. That they conducted their business in the accepted methods of the day and exercised great astuteness and frugality, is true enough, but so did a host of other merchants whose descendants are even now living in poverty. Some other explanation must be found to account for the phenomenal increase of the original small fortune and its unshaken retention.

This explanation is found partly in the fraudulent means by which, decade after decade, they secured land and water grants from venal city administrations, and in the singularly dubious arrangement by which they obtained an extremely large landed property, now having a value of tens upon tens of millions, from Trinity Church. Since the full and itemized details of these transactions have been elaborated upon in previous chapters, it is hardly necessary to repeat them. It will be recalled that, as important personages in Tammany Hall, the dominant political party in New York City, the Rhinelanders used the powers of city government to get grant after grant for virtually nothing. From Trinity Church they got a ninety-nine year lease of a large tract in what is now the very hub of the business section of New York City--which tract they subsequently bought in fee simple. Another large tract of New York City real estate came into their possession through the marriage of William C. Rhinelander, of the third generation, to a daughter of John Rutgers.

This Rutgers was a lineal descendant of Anthony Rutgers, who, in 1731, obtained from the royal Governor Cosby the gift of what was then called the "Fresh Water Pond and Swamp"--a stretch of seventy acres of little value at the time, but which is now covered with busy streets and large commercial and office buildings. What the circ.u.mstances were that attended this grant are not now known. The grant consisted of what are now many blocks along Broadway north of Lispenard street. It is not merely business sections which the Rhinelander family owns, however; they derive stupendous rentals from a vast number of tenement houses.

The Rhinelanders, also, employ their great surplus revenues in constantly buying more land. With true aristocratic aspirations, they have not been satisfied with mere plebeian American mansions, gorgeous palaces though they be; they set out to find a European palace with warranted royal a.s.sociations, and found one in the famous castle of Schonberg, on the Rhine, near Oberwesel, which they bought and where they have ensconced themselves. How great the wealth of this family is may be judged from the fact that one of the Rhinelanders--William--left an estate valued at $50,000,000 at his death in December, 1907.

THE SCHERMERHORNS.

The factors entering into the building up of the Schermerhorn fortune were almost identical with those of the Astor, the Goelet and the Rhinelander fortunes. The founder, Peter Schermerhorn, was a ship chandler during the Revolution. Parts of his land and other possessions he bought with the profits from his business; other portions, as has been brought out, he obtained from corrupt city administrations. His two sons continued the business of ship chandlers; one of them--"Peter the Younger"--was especially active in extending his real estate possessions, both by corrupt favors of the city officials and by purchase. One tract of land, extending from Third avenue to the East River and from Sixty-fourth to Seventy-fifth street, which he secured in the early part of the nineteenth century, became worth a colossal fortune in itself. It is now covered with stores, buildings and densely populated tenement houses. "Peter the Younger" quickly gravitated into the profitable and fashionable business of the day--the banking business, with its succession of frauds, many of which have been described in the preceding chapters. He was a director of the Bank of New York from 1814 until his death in 1852.

It seems quite superfluous to enlarge further upon the origin of the great landed fortunes of New York City; the typical examples given doubtless serve as expositions of how, in various and similar ways, others were acquired. We shall advert to some of the great fortunes in the West based wholly or largely upon city real estate.

While the Astors, the Goelets, the Rhinelanders and others, or rather the entire number of inhabitants, were trans.m.u.ting their land into vast and increasing wealth expressed in terms of hundreds of millions in money, Nicholas Longworth was aggrandizing himself likewise in Cincinnati.

HOW LONGWORTH BEGAN.

Longworth had been born in Newark, N. J., in 1782, and at the age of twenty-one had migrated to Cincinnati, then a mere outpost, with a population of eight hundred sundry adventurers. There he studied law and was admitted to practice. The story of how Longworth became a landowner is given by Houghton as follows: His first client was a man accused of horse stealing. In those frontier days, a horse represented one of the most valuable forms of property; and, as under a system wherein human life was inconsequential compared to the preservation of property, the penalty for stealing a horse was usually death. No term of reproach was more invested with cutting contempt and cruel hatred than that of a horse thief. The case looked black. But Longworth somehow contrived to get the accused off with acquittal. The man--so the story further runs--had no money to pay Longworth's fee and no property except two second-hand copper stills. These also were high in the apprais.e.m.e.nt of property values, for they could be used to make whisky, and whisky could be in turn used to debauch the Indian tribes and swindle them of furs and land. These stills Longworth took and traded them off to Joel Williams, a tavern-keeper who was setting up a distillery. In exchange, Longworth received thirty-three acres of what was then considered unpromising land in the town.[167] From time to time he bought more land with the money made in law; this land lay on what were then the outskirts of the place. Some of the lots cost him but ten dollars each.

As immigration swarmed West and Cincinnati grew, his land consequently took on enhanced value. By 1830 the population was 24,831; twenty years later it had reached 118,761, and in 1860, 171,293 inhabitants. For a Western city this was a very considerable population for the period. The growth of the city kept on increasingly. His land lay in the very center of the expanding city, in the busiest part of the business section and in the best portion of the residential districts. Indeed, so rapidly did its value grow soon after he got it, that it was no longer necessary for him to practice law or in any wise crook to others. In 1819 he gave up law, and thenceforth gave his entire attention to managing his property.

An extensive vineyard, which he laid out in Ohio, added to his wealth.

Here he cultivated the Catawba grape and produced about 150,000 bottles a year.

All available accounts agree in describing him as merciless. He foreclosed mortgages with pitiless prompt.i.tude, and his adroit knowledge of the law, approaching if not reaching, that of an unscrupulous pettifogger, enabled him to get the upper hand in every transaction. His personal habits were considered repulsive by the conventional and fastidious. "He was dry and caustic in his remarks," says Houghton, "and very rarely spared the object of his satire. He was plain and careless in his dress, looking more a beggar than a millionaire."

HIS VAGARIES--SO CALLED.

There were certain other conventional respects in which he was woefully deficient, and he had certain singularities which severely taxed the comprehension of routine minds. None who had the appearance of respectable charity seekers could get anything else from him than contemptuous rebuffs. For respectability in any form he had no use; he scouted and scoffed at it and pulverized it with biting and grinding sarcasm. But once any man or woman pa.s.sed over the line of respectability into the besmeared realm of sheer disrepute, and that person would find Longworth not only accessible but genuinely sympathetic. The drunkard, the thief, the prost.i.tute, the veriest wrecks of humanity could always tell their stories to him and get relief. This was his grim way of striking back at a commercial society whose lies and shams and hypocrisies he hated; he knew them all; he had practiced them himself. There is good reason to believe that alongside of his one personality, that of a rapacious miser, there lived another personality, that of a philosopher.

Certainly he was a very unique type of millionaire, much akin to Stephen Girard. He had a clear notion (for he was endowed with a highly a.n.a.lytical and penetrating mind) that in giving a few coins to the abased and the wretched he was merely returning in infinitesimal proportion what the prevailing system, of which he was so conspicuous an exemplar, took from the whole people for the benefit of a few; and that this system was unceasingly turning out more and more wretches.

Long after Longworth had become a multimillionaire he took a savage, perhaps a malicious, delight in doing things which shocked all current conceptions of how a millionaire should act. To understand the intense scandal caused by what were considered his vagaries, it is only necessary to bear in mind the ultra-lofty position of a multimillionaire at a period when a man worth $250,000 was thought very rich. There were only a few millionaires in the United States, and still fewer multimillionaires. Longworth ranked next to John Jacob Astor. On one occasion a beggar called at Longworth's office and pointed eloquently at his gaping shoes. Longworth kicked off one of his own untied shoes and told the beggar to try it on. It fitted. Its mate followed. Then after the beggar left, Longworth sent a boy to the nearest shoe store, with instructions to get a pair of shoes, but in no circ.u.mstances to pay more than a dollar and a half.

This remarkable man lived to the age of eighty-one; when he died in 1863 in a splendid mansion which he had built in the heart of his vineyard, his estate was valued at $15,000,000. He was the largest landowner in Cincinnati, and one of the largest in the cities of the United States.

The value of the land that he bequeathed has increased continuously; in the hands of his various descendants to-day it is many times more valuable than the huge fortune which he left. Cincinnati, with its population of 325,902,[168] pays incessant tribute in the form of a vast rent roll to the scions of the man whose main occupation was to hold on to the land he had got for almost nothing. Unlike the founder of the fortune the present Longworth generation never strays from the set formulas of respectability; it has intermarried with other rich families: and Nicholas, a namesake and grandson of the original, and a representative in Congress, married in circ.u.mstances of great and lavish pomp a daughter of President Roosevelt, thus linking a large fortune, based upon vested interests, with the ruling executive of the day and strategically combining wealth with direct political power.

The same process of reaping gigantic fortunes from land went on in every large city. In Chicago, with its phenomenally speedy growth of population and its vast array of workers, immense fortunes were ama.s.sed within an astonishingly short period. Here the growth of large private fortunes was marked by much greater celerity than in the East, although these fortunes are not as large as those based upon land in the Eastern cities.

MARSHALL FIELD AND LEITER.

The largest landowners that developed in Chicago were Marshall Field and Levi Z. Leiter. In 1895 the Illinois Labor Bureau, in that year happening to be under the direction of able and conscientious officials, made a painstaking investigation of land values in Chicago. It was estimated that the 266 acres of land, const.i.tuting what was owned by individuals and private corporations in one section alone--the South Side,--were worth $319,000,000. This estimate was made at a time when the country was slowly recovering, as the set phrase goes, from the panic of 1892-94, and when land values were not in a state of inflation or rise. The amount of $319,000,000 was calculated as being solely the value of the land, not counting improvements, which were valued at as much more. The princ.i.p.al landowner in this one section, not to mention other sections of that immense city, was Marshall Field, with $11,000,000 worth of land; the next was Leiter, who owned in that section land valued at $10,500,000.[169] It appeared from this report that eighteen persons owned $65,000,000 of this $319,000,000 worth of land, and that eighty-eight persons owned $136,000,000 worth--or one-half of the entire business center of Chicago. Doubling the sums credited to Field and Leiter (that is to say, adding the value of the improvements to the value of the land), this brought Field's real estate in that one section to a value of $22,000,000, and Leiter's to nearly the same. This estimate was confirmed to a surprising degree by the inventory of Field's executors reported to the court early in 1907. The executors of Field's will placed the value of his real estate in Chicago at $30,000,000. This estimate did not include $8,000,000 worth of land which the executors reported that he owned in New York City, nor the millions of dollars of his land possessions elsewhere.

FIELD'S MANY POSSESSIONS.

Field left a fortune of about $100,000,000 (as estimated by the executors) which he bequeathed princ.i.p.ally to two grandsons, both of which heirs were in boyhood. The factors const.i.tuting this fortune are various. At least $55,000,000 of it was represented at the time that the executors made their inventory, by a mult.i.tude of bonds and stocks in a wide range of diverse industrial, transportation, utility and mining corporations. The variety of Field's possessions and his numerous forms of ownership were such that we shall have pertinent occasion to deal more relevantly with his career in subsequent parts of this work.

[Ill.u.s.tration: MARSHALL FIELD.]

The careers of Field, Leiter and several other Chicago multimillionaires ran in somewhat parallel grooves. Field was the son of a farmer. He was born in Conway, Ma.s.s., in 1835. When twenty-one he went to Chicago and worked in a wholesale dry goods house. In 1860 he was made a partner.

During the Civil War this firm, as did the entire commercial world, proceeded to hold up the nation for exorbitant prices in its contracts at a time of distress. The Government and the public were forced to pay the highest sums for the poorest material. It was established that Government officials were in collusion with the contractors. This extortion formed one of the saddest and most sordid chapters of the Civil War (as it does of all wars,) but conventional history is silent on the subject, and one is compelled to look elsewhere for the facts of how the commercial houses imposed at high prices shoddy material and semi-putrid food upon the very army and navy that fought for their interests.[170] In the words of one of Field's laudatory biographers, "the firm coined money"--a phrase which for the volumes of significant meaning embodied in it, is an epitome of the whole profit system.

Some of the personnel of the firm changed several times: in 1865 Field, Leiter and Potter Palmer (who had also become a multimillionaire) a.s.sociated under the firm name of Field, Leiter & Palmer. The great fire of 1871 destroyed the firm's buildings, but they were replaced.

Subsequently the firm became Field, Leiter & Co., and, finally in 1887, Marshall Field & Co.[171] The firm conducted both a wholesale and retail business on what is called in commercial slang "a cash basis:" that is, it sold goods on immediate payment and not on credit. The volume of its business rose to enormous proportions. In 1884 it reached an aggregate of $30,000,000 a year; in 1901 it was estimated at fully $50,000,000 a year.

FOOTNOTES:

[162] Some of this land and these water grants and piers were obtained by Peter Goelet during the corrupt administration of City Controller Romaine. Goelet, it seems, was allowed to pay in installments. Thus, an entry, on January 26, 1807, in the munic.i.p.al records, reads: "On receiving the report of the Street Commissioner, Ordered that warrants issue to Messrs. Anderson and Allen for the three installments due to them from Mr. Goelet for the Whitehall and Exchange Piers."--MSS.

Minutes of the [New York City] Common Council, 1807, xvi:286.

[163] "Prominent Families of New York":231. Another notable example of this glorifying was Nicholas Biddle, long president of the United States Bank. Yet the court records show that, after a career of bribery, he stole $400,000 of that bank's funds.

[164] At this very time his wealth, judged by the standard of the times, was prodigious. "His wealth is vast--not less than five or six millions," wrote Barrett in 1862--"The Old Merchants of New York City,"

1:349.

[165] "The Railways, the Trusts and the People":104.

[166] See Part III, "Great Fortunes From Railroads."

[167] "Kings of Fortune":172.

[168] Census of 1900.

[169] Eighth Annual Report, Illinois Labor Bureau:104-253.

[170] In those parts of this work relating to great fortunes from railroads and from industries, this phase of commercial life is specifically dealt with. The enormities brazenly committed during the Spanish-American War of 1898 are sufficiently remembered. Napoleon had the same experience with French contractors, and the testimony of all wars is to the same effect.

[171] So valuable was a partnership in this firm that a writer says that Field paid Leiter "an unknown number of millions" when he bought out Leiter's interest.

CHAPTER IX

THE FIELD FORTUNE IN EXTENSO

In close similarity to the start of the Astors and many other founders of great land fortunes, commerce was the original means by which Marshall Field obtained the money which he invested in land.

Consecutively came a ramification of other revenue-producing properties.

Once in motion, the process worked in the same admixed, interconnected way as it did in the ama.s.sing of contemporary large fortunes. It may be literally compared to hundreds of golden streams flowing from as many sources to one central point. From land, business, railroads, street railways, public utility and industrial corporations--from these and many other channels, prodigious profits kept, and still keep, pouring in ceaselessly. In turn, these formed ever newer and widening distributing radii of investments. The process, by its own resistless volition, became one of continuous compound progression.

LAND FOR ALMOST NOTHING.

Long before the business of the firm of Marshall Field & Co. had reached the annual total of $50,000,000, Field, Leiter and their a.s.sociates had begun buying land in Chicago. Little capital was needed for the purpose: The material growth of Chicago explains sufficiently how a few dollars put in land fifty or sixty years ago became in time an automatically-increasing fund of millions. A century or so ago the log cabin of John Kinzie was the only habitation on a site now occupied by a swarming, conglomerate, rushing population of 1,700,000.[172] Where the prairie land once stretched in solitude, a huge, roaring, choking city now stands, black with factories, the habitat of nearly two millions of human beings, living in a whirlpool of excitement and tumult, presenting extremes of wealth and poverty, the many existing in dire straits, the few rolling in sovereign luxury. A saying prevails in Chicago that the city now holds more millionaires than it did voters in 1840.