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Full text of "History of the great American fortunes"

THE HISTORY OF THE GREAT 
AMERICAN FORTUNES 




RUSSELL SAGE. 



HISTORY OF THE GREAT 
AMERICAN FORTUNES 



BY 



GUSTAVUS MYERS 

AUTHOR OF '' THE HISTORY OF TAMMANY HALL," " HISTORY OF 
PUBLIC FRANCHISES IN NEW YORK CITY," ETC. 



VOL. III. 
GREAT FORTUNES FROM RAILROADS 

(CONTINUED) 



CHICAGO 

CHARLES H. KERR & COMPANY 
1910 



103 



Copyright 1909-1910 
BY GUSTAVUS MYERS 



Entered at Stationers' Hall, London, En;., 1910 
By Gustavus Myers 



All Rights Reserved by Gustavus Myers 

Including that of Translation into Foreign 

Languages, including the Scandinavian 




9^9620 




o 

* 



CONTENTS 

CHAPTER PAGE 

I. AN INSERT ON THE SAGE FORTUNE 11 

II. MORE DETAILS OF THE SAGE FORTUNE 44 

III. THE GOULD FORTUNE RESUMED 63 

IV. THE PRESENT STATUS OF THE GOULD FORTUNE . . 86 
V. THE BLAIR AND THE GARRETT FORTUNES . . . .102 

VI. THE PACIFIC QUARTET 124 

VII. J. PIERPONT MORGAN'S GENESIS 146 

VIII. THE FLOWERING OF THE MORGAN FORTUNE . . .177 

IX. MORGAN AS A BANKING AND RAILROAD GRANDEE . . 203 

X. MORGAN THE " PEERLESS CAPTAIN OF INDUSTRY " . . 227 

XI. MORGAN AT His ZENITH 244 

XII. MORGAN AS "THE SAVIOR OF THE NATION" ... 287 

XIII. THE ELKINS FORTUNE 311 

XIV. THE HILL FORTUNE 338 



^ 

C "*^A.J 



,, 



PART III 

THE GREAT FORTUNES FROM RAILROADS 
(Continued) 



HISTORY OF THE GREAT 
AMERICAN FORTUNES 

CHAPTER I 
AN INSERT ON THE SAGE FORTUNE 

Russell Sage was mellow with experience when Gould 
was still in his verdant youth ; years before Gould began 
his predacious career, Sage had the reputation among the 
knowing of being an old hand at political and financial 
corruption. Was this reputation justified? And did 
Sage garner his first millions by illicit methods? Cer- 
tain of his biographers glide nimbly over these ques- 
tions, while others tell their ready-made advocates' tale; 
how by his thrift and enterprise, his marvelous business 
astuteness, and his imposing array of other mercantile 
virtues and faculties he made his great fortune. 1 It 
would denote a lack of fidelity to these accounts were 
the word " sterling " omitted in connection with virtues ; 
in the case of our multimillionaires virtues must neces- 
sarily be " sterling virtues." Were it not that the same 
stock phrases abound in all of these eulogies, they might 
provoke a gush of emotion, so touching are they, and 
often pathetic. But the moment the test of examina- 
tion is applied they turn out to be sheer inventions. 

1 For example: See "America's Successful Men,"VoL i, 
containing a laudatory sketch of Sage. 

II 



12 HISTORY OF THE GREAT AMERICAN FORTUNES 

In fact, all such works betray their own obvious worth- 
lessness. 



SAGE'S GREAT DEFECT. 



One of the expected virtues, however, Sage griev- 
ously lacked, and it was by reason of this omission that 
he was the subject of gibes and harsh criticism through- 
out his life. So far as the methods that he used in get- 
ting together his millions went, he was not attacked; 
on the contrary, in his later years at any rate, he was 
represented as a very shrewd man who made his money 
by legitimate means. It was his niggardliness which 
proved the ground for his unpopularity. The severe 
economy preached as one of the great stepping stones 
to fortune, was condemned after the fortune had been 
acquired. A certain state of public mind or standard 
had been built up almost requiring that the millionaire 
should be a " good spender " ; he should live sumptu- 
ously, blaze forth in glitter, and have some pet philan- 
thropy. 

Sage's recusant quality classified him as quite distinc- 
tive among the very rich men of his time. No self- 
indulgence for him, no extravagance, no expensive hob- 
bies or splurges. He was a man who displeased his class 
and violated its canons; to such it seemed that he made 
wealth odious to the masses by declining to invest it 
with that generosity which, it was supposed, softened the 
popular hostility to the system allowing its accumula- 
tion. 

Hence arose an undue rasping criticism of his per- 
sonality. Nearly all of the millionaires of his day, 
after piling up their heaps, gloried in some costly con- 
ceit or resplendent show. None of this finery or foolery 



THE SAGE FORTUNE 13 

for the crustaceous Sage. He spent just enough to al- 
low himself a comfortable domicile on Fifth avenue, one 
of the thoroughfares of the rich in New York city; 
aside from this moderate expenditure, he was notoriously 
parsimonious; his very clothes were the jest of the coun- 
try. 

Had he yielded to the prevalent custom of buying the 
reputation of philanthropist and " benefactor of man- 
kind " by impressive donations or endowments (to be 
recouped by further pillage) he would infallibly have 
been otherwise judged. He made no attempt, however, 
to propitiate harsh public opinion ; be it said to his credit 
that he was unshakenly faithful to his sordid ideals; 
at no time did he curry praise or essay to conciliate by 
flinging out as a social bribe morsels to charity or phi- 
lanthropy. Where his compeers (whatever their mo- 
tives) confused or deceived the public estimate of them 
and their ways by distributing largess every now and 
then, he made no advances or pretensions ; in the respect 
that he candidly idolized money, moralizing and sham 
almsgiving, cant and humbuggery were absent in his 
composition. 



HIS CAREER AT THE START. 

Sage was born of farmer folk in 1816 in Oneida 
County, New York, in an environment of poverty and 
cramping horizon. There is a paucity of information 
about his youthful days. We learn that as a boy his 
dominant yearning was for money, and that he devel- 
oped a remarkable capacity for sharp trading. He 
clerked in his brother's grocery store at Troy, doubtless, 
we may reasonably surmise, learning all of the profita- 
ble little tricks of dealing with customers which an ef- 



14 HISTORY OF THE GREAT AMERICAN FORTUNES 

ficient clerk was taught, expected and paid to do; de- 
ceit was then, as it is now, the lever of all successful 
business. No doubt he carefully, ever so carefully, 
saved money, and so likewise did tens of thousands of 
other clerks thrifty, ambitious striplings who put it 
away as they were beneficently advised. But the rule of 
thrift worked wrong-side in most of their cases; very 
few of them became rich, despite their sticking punc- 
tiliously to all of the regularly prescribed axioms. Plain 
it ever has been that thrift, temperance and hard work 
are not the recipe for getting rich, else many millions 
of people who have to work hard, and who are thrifty 
and temperate, would forthwith become so. The ortho- 
dox formulas did not produce riches, as Sage's fellow 
clerks found out. What, then, brought wealth to him ? 

" Long before down appeared on his chin he had 
gained a local reputation of being unusually keen at 
' swapping/ " So wrote a eulogist whose description, 
slight though it be, gives a clue to Sage's methods in 
boyhood days. We are told that he amassed enough 
money to open a grocery store of his own, and that in 
1839 he became a partner in a wholesale grocery estab- 
lishment. 



HE AND HIS PARTNERS CONCOCT A SWINDLE. 

On September 12, 1851, Sage and two other Troy 
men formed a copartnership, under the name of Wheeler, 
Sage and Slocum, to carry on a general produce busi- 
ness at Troy, with a Western headquarters at Mil- 
waukee, under the name of Wheeler and Company. 
This copartnership was signalized by a memorable swin- 
dle, which called forth one of the severest decisions and 



THE SAGE FORTUNE 15 

denunciations ever handed down by the Supreme Court 
of the United States. 2 The firm deliberately concocted 
a plan to cheat the creditors of one of its bankrupt cred- 
itors in Milwaukee, and while it was engaged in this 
operation, Sage hoodwinked and cheated his own part- 
ners out of the proceeds of the swindle. 

The facts as given in the statement of the case and 
the decision of the Supreme Court of the United States 
were as follows : 

The firm became the owner of a large debt against 
against the bankrupt Sweet were begun in October, 1854, 
one Alanson Sweet of Milwaukee, a debt secured by a 
mortgage on valuable real estate. This real estate in- 
cluded a large warehouse, which Wheeler and Company 
had rented. Proceedings to foreclose the mortgage 
and a decree was passed by the Wisconsin courts in 
November, 1855. The Supreme Court's statement of the 
case went on to say that Wheeler, Sage and Slocum were 
desirous of getting a perfect title to the mortgaged prem- 
ises, the value of which was $50,000 when the mortgage 
was given. But other creditors had judgments against 
Sweet, and Sweet claimed the sum of $12,000 due him 
from Wheeler and Company for three years' rent of the 
warehouse. 

If Sweet put in this defence successfully, a perfect 
title could not be secured. It was necessary, also, to 
deceive and bluff the other creditors. In order to grasp 
the whole of the real estate, the court said, Wheeler, 
Sage and Slocum thought it necessary to purchase cer- 
tain judgments, and make other arrangements by col- 
lusion. Sage informed Wheeler and Slocum that this 

2 See Wheeler vs. Sage, Wallace's Reports, Supreme Court of 
the United States, i : 518-531. 



16 HISTORY OF THE GREAT AMERICAN FORTUNES 

could be done by buying off Alexander Mitchell, who 
controlled Sweet's defence, for $10,000. The court's 
statement continues: 

Sage was authorized to perfect the agreement, and to charge 
Wheeler and Slocum their proportionate amount on the books 
of the firm. This agreement or a similar one, was made by 
Sage with Mitchell, and judgments purchased under it. With- 
out the knowledge of Wheeler, Sage, however, abandoned this 
agreement, and made one with Mitchell for his own benefit. 
The mortgaged property was sold, and Mitchell became the pur- 
chaser, letting Sage have one-third interest on certain condi- 
tions; this being done, as alleged, in violation of the rights, 
and without the knowledge of Wheeler and Slocum. The mort- 
gaged debt was fixed at $24,000, two-thirds of which amount 
was paid over by Sage to Wheeler and Slocum, being, as he 
[Sage] said, the best that could be done, and which was ac- 
cepted by Wheeler and Slocum on that hypothesis. 8 

SAGE SWINDLES HIS PARTNERS. 

Yet, the court went on to relate, enough of the mort- 
gaged property, as Wheeler found out and charged, had 
been sold to produce $105,000, in addition to unsold prop- 
erty, valued at $27,000, still in Mitchell's hands. 4 

On the usual legal ground that when a party obtains 
an advantage by fraud, he is to be regarded as trustee 
of the party defrauded and compelled to account, 
Wheeler brought suit against Sage. He sued to have 
Sage declared trustee for himself (Wheeler) for one- 
third of the mortgaged property still held and unsold by 
Mitchell, and for one-third of the proceeds of the prop- 
erty that had been sold. 

The Supreme Court of the United States declared the 
whole transaction fraudulent; that while Wheeler, Sage 

3 Wallace's Reports, Supreme Court of the United States, 



THE SAGE FORTUNE 17 

and Slocum had successfully conspired to cheat Sweet's 
numerous other creditors, Sage had tricked and cheated 
his own partners. They had set out to get by fraud 
real estate worth $50,000 for $30,000, and had authorized 
Sage to arrange the collusion. Sage had afterward re- 
linquished the agreement with Mitchell, and had secured 
clandestinely an advantage to himself, " to the injury of 
the other parties." 

In further stating the court's decision, Justice Davis 
continued : 

The evidence in this case, consisting mainly of letters inter- 
changed between Wheeler and Sage, shows clearly enough that 
a scheme was initiated to get title to the property, and that 
Sage was the active agent to perfect it, but for some unex- 
plained reason it failed. . . . All parties rested in the belief 
that negotiations with Mitchell would be successful ; but . . . 
Sage abandoned the idea of buying the property on joint ac- 
count, and bargained with Mitchell in his own behalf. . . . 
The " Warehouse Case," as it is somewhere called in the record, 
is anything but creditable to the parties concerned, and it is 
surprising that they should have been willing to give it pub- 
licity through a legal proceeding. . . . The scheme was to 
get the real estate by depreciating its value through a process 
of entering judgment for a large nominal amount, and by de- 
ceiving and "bluffing off" other creditors. The court [in Wis- 
consin which passed the foreclosure decree] was imposed upon, 
and a combination formed, the object and direct tendency of 
which was to secure title to the valuable real estate of an 
insolvent debtor at the expense and sacrifice of his other cred- 
itors. 

The court declined to pass judgment, one way or the 
other, on the ground that a party who had been engaged 
in an illegal transaction, could not expect redress, after 
being cheated, in any court of equity. " A proceed- 
ing like this is against good conscience and good morals, 
and cannot receive the sanction of a court of equity. 



l8 HISTORY OF THE GREAT AMERICAN FORTUNES 

... It is against the policy of the law to help either 
party in such controversies." 8 The effect of this de- 
cision was to leave Sage in possession of the proceeds 
of his swindling operation. 

For seven years Sage held the offices of Alderman of 
Troy and of Treasurer of Rensselaer County. Now it 
is that we get the first clear penetration into the methods 
by which he gathered in his first notable amount of 
money. Not by trafficking in weights and measures 
was it, nor by petty swindling, but by a transaction in 
which as a public official he betrayed the city of Troy 
into selling to himself for a small sum a railroad line, 
which railroad he later, according to a prearranged plan, 
sold to the New York Central consolidation at a very 
large profit. 

HOW SAGE OBTAINED HIS FIRST SWEEP OF WEALTH. 

There is nothing vague or conjectural regarding this 
illuminating transaction; the facts are inscribed authen- 
tically in the public records. 

In the years 1840-43, the city of Troy, at public ex- 
pense, began to build a railroad running twenty-one miles 
from that city to Schenectady. The city of Troy, in 
1837 and 1847, borrowed a total of $650,000, and in 1840 
the State of New York loaned Troy $100,000, making 
$750,000 in all for the construction and equipment of 
the Troy and Schenectady Railroad. It was a time when 
capitalists passively looked on, allowing many munic- 
ipalities and some of the States to build publicly-owned 
railroads and operate them for a time, and then, after 
many millions of public money had been expended, capi- 

8 Wallace's Reports, Supreme Court of the United States, 



THE SAGE FORTUNE 19 

talists would contrive to take over the ownership unto 
themselves. This they did by depreciating and crip- 
pling railroads owned by the community, and by cor- 
rupting public officials to sell or lease them for compara- 
tively insignificant sums. It was a favorite practice of 
the period, and was worked with great success. 

The task of providing themselves with modern means 
of transportation frequently devolved upon communities, 
since no capitalist would take the initiative in any un- 
dertaking in which he did not see considerable immedi- 
ate profits. The aim of the community was service ; that 
of the capitalist, profit. Communities would never stop 
to consider whether a railroad would yield profit; the 
sole question guiding them was that of public need. 
The principle which made the people acquiescent in the 
loaning or donating of large sums of money to private 
railroad corporations was that railroads were a public 
necessity, whether publicly or privately built. In New 
York State alone, not to mention other States, the rail- 
roads originally received from cities, towns, villages and 
from the State, the sum of $40,039,496.82 by donation or 
investment ; * a very considerable amount it made at a 
time when a dollar had a much greater purchasing 
power than now. Of this sum, only about one-fourth 
part was paid back; at various times laws were cor- 
ruptly passed releasing the railroad companies from lia- 
bility for these debts. Every mile of those railroads is 
to-day absolutely owned, or practically so, by private in- 
terests. 

As the greater number of railroads were owned by pri- 
vate corporations, it was not difficult for them to bank- 
rupt publicly-owned railroads when they set out to do 

8 Railroad Investigation of the State of New York, 1879, 
i : 238-243. 



2O HISTORY OF THE GREAT AMERICAN FORTUNES 

so. This they could easily do by diverting or obstruct- 
ing freight and passenger traffic or by corrupting public 
officials to mismanage them. This conflict of public and 
private interest always resulted in the triumph of private 
interest; necessarily so because public welfare and pri- 
vate profits were an incongruous mixture, the one the 
antithesis of the other, and also because the governing 
officials were either of the propertied classes or respon- 
sive or subservient to them. 

By these methods the campaign against the public 
ownership of the Troy and Schenectady Railroad was 
begun. Small detached railroads were anomalies at best ; 
economic development demanded one of two solutions; 
either that they became merged in a great public, or in a 
great private, system. Disconnected, they were waste- 
ful, inconvenient and unsystematic. This essential fact 
is fully borne in mind in stating the facts. 

Among the railroad capitalists the movement for com- 
bination and cohesion commenced at about 1850. In 
New York State a combination of various bankers, land- 
owners and politicians concluded along in 1851 that it 
would be an excellent scheme to unite many of New 
York's separate little railroads into one centralized sys- 
tem. They were not prompted, it is true, by solicitude 
for the community; very far from it; the community to 
them signified a domain for spoils. Nor did they have 
any appreciation of the economic forces behind their 
project. Their one propelling idea was to buy up the 
small railroads for trifling sums and then organize a 
corporation and sell those railroads to the corporation at 
a tremendous profit. Nevertheless, in carrying forward 
the centralizing movement they did a necessary service 
to the community, however heavily the people have had 
to pay for it. The Troy and Schenectady Railroad was 



THE SAGE FORTUNE 21 

agreed upon as one of the roads to be included in this 
combination. * 



A CITY BETRAYED AND PLUNDERED. 

How was the city of Troy to be induced to sell its 
railroad to the clique of projectors? This was the 
problem. It did not perturb them long. Russell Sage 
undertook to carry through this portion of the bargain. 
He was at this time a leading member of the Troy Com- 
mon Council, and was serving as one of Troy's directors 
in the managing of the Troy and Schenectady Railroad. 
His first move, it would appear, was to cause a steady 
mismanagement of the railroad's affairs so as to create 
dissatisfaction, if not disgust, with the continuance of 
public ownership and operation. Very deftly was his 
undermining and sapping work done so deftly and by 
such surreptitious methods that no suspicion of his com- 
plicity was aroused. A public sentiment unfavorable to 
Troy's retention of the railroad was then adroitly worked 
up ; public petitions praying for the sale of the unprofita- 
ble and unsatisfactory road began to flow in to the Com- 
mon Council. 

What did the Common Council now do? It appointed 
a committee to consider the question of selling; of this 
committee Sage was the most active member. So very 
active was he that the committee reported favoring the 
selling of the railroad. The proposition was, in fact, 
carried by one vote; it was Sage's vote which decided. 
Then, on January 24, 1853, another committee of the 
Common Council was appointed; its assigned function 
was to sell the stock, franchise and property of the rail- 
road for not less than $200,000. Who was it that also 
singularly happened to be the foremost member of this 



22 HISTORY OF THE GREAT AMERICAN FORTUNES 

second committee? The phenomenally industrious Al- 
derman Sage. And when the railroad was finally sold, 
who was it that bought it? A company headed by Sage, 
and Sage it was who became its president. 7 Extraor- 
dinarily considerate were the terms of sale ; $50,000 was 
to be paid down, the remainder in fourteen years. 

A LITTLE DISTRIBUTION OF $8,OOO,OOO. 

Quite a legitimate transaction, the apologist might say ; 
according to the law, however, it constituted malfeasance 
in office ; many an officeholder in various cities had been 
removed for less flagrant acts. It was recognized gen- 
erally as a gross piece of corruption, but nothing was 
done to interfere with its success nor with the greater 
corruption that followed. Having, under form of law, 
grabbed the Troy and Schenectady Railroad, Sage sold 
it for $900,000 or so to the group of capitalists forming 
the New York Central Railroad combination. Although 
but $50,000 had been paid for it in cash, Sage and his 
associates disposed of it not only for the full value of its 
$650,000 capital stock, but they also received in exchange 
a premium of twenty-five per cent, on that amount in 
New York Central bonds. In this formation of the New 
York Central, $8,000,000 in bonds all watered were 
distributed as a bonus among the owners of the various 
railroads embraced in the consolidation ; 8 no insignificant 
portion of the eight millions was Sage's share of the 
spoils. 

7 See Investigation of the Railroads of the State of New 
York, 1879, v : 28-58. 

8 The " Hepburn Committee " legislative investigation of 1879 
went into the history of this stock watering operation. An ac- 
count of the Troy transaction by F. W. Powell, entitled " Two 
Experiments in Public Ownership of Steam Railroads," ap- 
peared in 'the "Quarterly Journal of Economics," issue of No- 
vember, 1908. 



THE SAGE FORTUNE 23 

Whatever might be the later outcries of Troy's popu- 
lation over the merciless extortions of the New York 
Central Railroad, Sage was now heralded more of a 
" prominent citizen " than ever before, a citizen of ex- 
ceeding worth, stability and standing. The glorious and 
patriotic occupation of politico-business man, with its 
radius of opportunities, had proved very lucrative. Yet 
the national capital, Sage concluded, held out much 
greater inducements. Accordingly, the corrupt Troy po- 
litical ring, of which he was a leader, caused him to be 
elected to Congress ; there he took his seat in December, 
1853, and in 1854 was reflected. 

That was the era when act after act was passed 
granting money and land, either openly or by indirection, 
to railroad companies, and giving corrupt powers and 
privileges of all miscellaneous kinds to other corporations 
and to individual capitalists. In the one year of 1856, 
exclusive of other years, Congress passed at least thirty 
railroad land-grant acts for the benefit of as many sep- 
arate railroad corporations acts under which these 
railroad companies obtained the ownership of tens of 
millions of acres of public land. The corrupt means 
used to get these acts through proved one of the great 
scandals of the times, and led to the appointment of 
numerous Congressional and State legislative investigat- 
ing committees. Few members of Congress and legisla- 
tures there were, as was abundantly shown, who did not 
take bribes either in money or in stocks and bonds. 

If Sage was barely noticeable in Congress, and a tol- 
erably complete blank in public life, he nevertheless all 
the more effectively and intimately cohered himself with 
many of these same rich railroad projects. The particu- 
lar means whereby he did so are not ascertainable, but 
certain it is that when he left Congress he was found to 



24 HISTORY OF THE GREAT AMERICAN FORTUNES 

be a conspicuous " insider " of various of these land 
grant railroad corporations. 

UNRESTRAINED FRAUD AND BRIBERY. 

" He was called the father of railroad construction 
companies in Wisconsin and Minnesota," warbles a rhap- 
sodizing writer, apparently confident that the reference 
will redound to Sage's undying credit. What this eulo- 
gist prudently omits is an account of how these com- 
panies secured their charters and land grants. 

The Minnesota and Northwestern Railroad Company 
was one of the railroad companies which obtained its 
charter and land during the very time Sage was in 
Congress ; the act was passed to the accompaniment of 
charges of fraud and bribery. As regards this corpora- 
tion, however, there is no documentary evidence connect- 
ing Sage with it. But it is worth while referring to it. 

A select committee of the House was appointed on 
July 24, 1854, to investigate; and although the commit- 
tee handed in an evasive, whitewashing report, the testi- 
mony given before it undoubtedly proved that somehow 
the wording of the act had been fraudulently changed 
in the House in the process of engrossing. These 
changes, according to J. Travis Rosser, secretary of the 
Territory of Minnesota, " gave millions of dollars " to 
the railroad company in question. As originally passed 
by the Senate, the bill had given the donation of land 
to the Territory of Minnesota, not to the company ; as it 
finally read after becoming a law, the bill contained the 
fraudulent changes inserted in the House. 10 Robert W. 
Lowber, a stockholder, testified that arrangements had 

9 " America's Successful Men," i : 567. 

10 Reports of Committees, Thirty-third Congress, First Session, 
Vol. iii, Rep. No. 352:30. 



THE SAGE FORTUNE 2$ 

been made in the debate over the bill whereby the op- 
position of certain of its opponents was bought off, a 
statement which the incriminated denied. 11 The ma- 
jority of another committee, appointed on July 10, 1854, 
to investigate charges of bribery reported : " The under- 
signed believe that it is clearly established by the testi- 
mony that money has been liberally used to secure the 
passage of bills, and they verily believe that much more 
evidence could be procured if time had been allowed the 
committee to make a more thorough investigation of the 
facts." 

THE ENTERPRISING FACTORY OWNERS. 

This committee found that Samuel Colt, the founder 
of a fortune based upon the manufacture of firearms, 
paid out at least $15,000 to Dickerson, his attorney and 
one of his lobbyists, to buy off the opposition in Con- 
gress to a bill extending Colt's patent rights, the time 
limit of which had expired. The testimony indicated 

11 Rep. No. 352, 1854 : 35. This act was later repealed. Sec 
Chapter ii. Lowber was, for a time, acting-president of this com- 
pany. He was a notoriously corrupt New York city politician, 
and at that very time, was making considerable sums of money, 
by fraudulently selling land at exorbitant prices, to New York 
city. (See "The History of Tammany Hall," p. 216.) Lowber, 
on one of these occasions, corruptly sold land to the city of 
New York for $196,000, which the Controller refused to pay on 
the ground that this sum was five or six times more than the 
land was worth. Lowber recovered judgment in the courts 
against the city, and when the Controller declined to satisfy it, 
was on the point of causing New York's City Hall, in 1858, to 
be sold at auction, when Mayor Tiemann halted the proceed- 
ings, and raised the necessary sum. As it was, the paintings and 
statuary in the City Hall were sold, and were bid in by Mayor 
Tiemann's secretary. 

Other officers of the Minnesota and Northwestern Railroad 
Company were equally notorious New York lobbyists and cor- 
ruptionists. 

"Reports of Committees, Thirty-third Congress, First Ses- 
sion, Vol. iii, Report No. 352 : 35. 



26 HISTORY OF THE GREAT AMERICAN FORTUNES 

that about $60,000 in all was spent in getting the bill 
passed. Another lobbyist, Jere Clemens, who also did 
the disbursing of Colt's bribe money, was, at the same 
time, as he admitted under oath, lobbying for various 
railroad corporations seeking land grants, and for a bill 
similar to Colt's which extended the patent rights of 
Cyrus H. McCormick, 13 a manufacturer of reaping ma- 
chines, and the founder of a multimillionaire fortune. 

And how other factory owners were bribing Congress 
to pass tariff acts was disclosed by the investigation of a 
select committee of the House, the majority of which 
committee reported that one firm in particular, Laurence, 
Stone and Company, of Boston and New York, owners 
of the large Middlesex Mills, and the equally large Bay 
State Mills, in Massachusetts, had expended $87,000 in 
bribes to have the duties on raw woolen materials and 
dye stuffs reduced. 14 Failing to get from Congress, 
politically pledged to a low tariff, a high protective tariff 
on woolen goods, they set out to accomplish the same 
result by securing a reduction of customs duties on raw 
material. One of the lobbyists for this firm was A. R. 
Corbin, brother-in-law of Ulysses S. Grant, the same 
Corbin whom Gould later bought up in his gold manip- 
ulation. Corbin received $1,000 in bribes from Laurence, 
Stone and Company, and he made no concealment of the 
fact that he had been regularly acting for the Illinois 
Central Railroad and other railroad corporations. 

This was the time, it will be recalled, when Commo- 
dore Cornelius Vanderbilt, E. K. Collins, and other 
steamship capitalists were debauching Congress to get 

18 Rep. No. 352, etc., 20. It is deserving of note that Houghton 
includes both Colt and McCormick in his " Kings of Fortune, or 
the Triumphs and Achievements of Noble, Self-made Men," etc. 

"Reports of Committees, First Session, Thirty-fifth Con- 
gress, Vol. iv, Report No. 414. 



THE SAGE FORTUNE 27 

mail subsidies, and when Vanderbilt was blackmailing 
two Pacific steamship lines out of $612,000 a year of the 
Government subsidy funds. It was also during these 
years that a House committee, after investigation, found 
that the enacting charter and the land grant of the Des 
Moines Navigation and Railroad Company were passed 
by bribery. 15 Obviously, judging from the reports of 
these various investigating committees, and from the 
much more significant circumstances calling for the ap- 
pointment of those committees, Congress reeked 'with 
fraud and bribery, of which only slight oozings came to 
the surface; and we incidentally get, in passing along, 
a lucid insight into some of the methods of the founders 
of great fortunes based upon manufacturing industries. 

Bribery, indeed, was so undeniably rife that as a sop 
to public feeling, one investigating committee after an- 
other was appointed to inquire into charges. While on 
this subject, digression will be made to deal with two 
scandals in particular which came up at this period. It 
is well worth while referring to these, first, because they 
additionally reveal the utter corruption carried on con- 
tinuously at Washington by every section of the capital- 
ist class, and second, because they disclose some of the 
methods by which one of the most lauded multimillion- 
aire financiers and " philanthropists " in the United States 
built up his fortune. 

This was William W. Corcoran, a Washington banker, 
who, after the Civil War, became reputed as one of the 
most substantial and respected financiers in the Uniteo 
States. During the decades when Gould and Sage were 
being hotly denounced for their frauds, Corcoran loomed 
up as a staid, conservative banker and a man of accred- 
ited most honorable past. He was the chief partner of 

18 See Chapter ix, Vol, ii of this work. 



28 HISTORY OF THE GREAT AMERICAN FORTUNES 

the banking firm of Corcoran and Riggs, and bequeathed 
$2,000,000 for a splendid art gallery to the city of Wash- 
ington, and he also established a home for decrepit old 
women. 



A SIDEWISE GLANCE AT A NOTED PHILANTHROPIST. 

Corcoran was another of the many capitalists who 
contrived to assume a coating of protective respectabil- 
ity. ~His methods, however, were of the same fraudu- 
lent nature as those of all the other successful money 
getters. 

Evidences of what these methods intrinsically were 
came out in 1854; they made such a rumpus that the 
House of Representatives was compelled to undertake 
some investigation. According to the written and re- 
peatedly made charges of Benjamin E. Green, a political 
figure of the period, Corcoran had extensively bribed 
public officials in order to make large sums of money out 
of the handling of United States funds and of specula- 
tion in them. Under the treaty of Guadulupe Hidalgo, 
the United States had agreed to pay Mexico a large 
indemnity for territory ceded after the Mexican War. 
Part of this sum was paid by 1850, but a considerable 
sum still remained to be settled. Mexico needed money 
badly, and proposed that the United States pay it di- 
rectly to the Mexican Government without the inter- 
mediary of banking houses. Green charged that Cor- 
coran bribed Thomas H. Bayly, chairman of the House 
Committee on Ways and Means, so to misrepresent Mex- 
ico's proposition and manipulate matters that the firm of 
Corcoran and Riggs should be made the middlemen in 
the transaction. " Bayly," charged Green, " held a con- 
trol over all of the appropriation bills in most of which 



THE SAGE FORTUNE 2O, 

Corcoran was directly or indirectly interested." lf Cor- 
coran thus obtained the handling of the indemnity funds, 
and made a profit of about $500,000 from the transac- 
tion. 17 A select committee of the House of Representa- 
tives made a show of investigating the charges against 
Bayly, and reported on August 3, 1854, a case of " not 
proved." 

THE GARDINER-MEARS SWINDLE. 

At the very same time Corcoran was involved in an- 
other investigation by the House Committee on Judi- 
ciary a committee many of the members of which 
were themselves corrupt politicians. The transaction 
which it was investigating under a resolution passed by 
the House on March 6, 1854, was the great swindle per- 
petrated by George H. Gardiner and John H. Mears 
upon the United States Government. By perjury, 
forged affidavits and bribery these two men obtained 
$581,000 from the United States Government upon the 
representation that property of theirs had been de- 
stroyed in Mexico during the Mexican War. After the 
money had been appropriated, the facts as to the " as- 
tounding fraud " (as a House Committee termed it) 
came out publicly. Both the Senate and the House in- 
vestigated the transaction; a Senate committee reported 
that the claims " were false and fictitious and the awards 
obtained upon forged and fabricated papers." 18 

18 Reports of Committees, Thirty-third Congress, First Session, 
Vol. iii, Rep. No. 354:4. 

" Ibid. 

18 U. S. Senate Report No. 182, 1854. 

It was at this period that vast stretches of valuable land in 
the Southwest and the Pacific States were being^ obtained by 
forged documents and by the testimony of perjuring Mexicans. 
See Chapter ii, Vol. ii, and the chapter on the Elkins fortune 
in Vol. iii. 



30 HISTORY OF THE GREAT AMERICAN FORTUNES 

The people of the United States were wrought up over 
the disclosures of this bold swindle, and Congress was 
smitten with another of its spasms of virtuous curiosity. 
A resolution was passed calling for the recovery of the 
money paid out to Gardiner and Hears. But were these 
men the real beneficiaries? Who actually got the 
money? Who were the principals behind the fraud? 
These were points that had to be inquired into. 

As the investigation unfolded it appeared that a group 
of bankers and politicians were the parties backing the 
fraud. Possibly they instigated it, although this general 
belief was not determined. The testimony showed, how- 
ever, that when the forged affidavits were being prepared, 
money was urgently needed to carry the projected swin- 
dle to a successful conclusion. At this point Corcoran 
came forward. He loaned $18,750 as funds for the 
promotion of the swindle, although he claimed, when the 
committee was investigating, that he did not know that 
this money was used to buy up testimony and otherwise 
complete the chain of fraud. But he admitted loaning 
this $18,750 to Robert G. Corwin and Thomas Corwin, 
powerful politicians of the day; in return he received 
an assignment of the Gardiner claim as collateral se- 
curity. 19 Thomas G. Corwin later was appointed 
United States Secretary of the Treasury, and it was by 
his order, under an act passed by Congress, that the 
money was paid out. Of the $581,875 appropriated, the 
sum of $321,562.50 was nominally in the name of Gar- 
diner himself, and $107,187.50 was awarded to Cor- 
coran as the assignee of Gardiner. Both of these sums, 
however, were paid out to Corcoran and entered on 
the books of Corcoran and Riggs, and (so the report 

19 House Reports, Thirty-third Congress, First Session, Vol. 
iii, Report No. 369 : 39. 



THE SAGE FORTUNE 3! 

has it) " credited to the parties interested." 20 Gardiner, 
while being prosecuted for perjury, committed suicide. 
The bankers and politicians, however, whose tools 
Gardiner and Mears were, did not, it is hardly neces- 
sary to say, have to face criminal trial or any other 
kind of trial, except a friendly and evasive investiga- 
tion. So far as Corcoran's complicity was concerned, 
the committee exoneratingly whitewashed him, and re- 
lieved him from any legal responsibility. 

It is probable that Sage learned many valuable lessons 
from his experience at Washington ; Corcoran's particu- 
lar kind of banking methods must have opened his eyes 
to possibilities. At any rate, already a millionaire, or 
nearly one, from the combination of business and poli- 
tics, Sage now went into the banking business at Troy, 
and became a money lender and usurer on a large scale. 

It was at this juncture that he turned up as one of the 
largest bondholders of the La Crosse and Milwaukee 
Railroad. He had become associated with this project 
at about the time he was in Congress, but the fact 
was not known until several years afterward, when he 
foreclosed. The eulogistic biographer in " America's 
Successful Men," treats Sage's connection with the La 
Crosse and Milwaukee Railroad in this light fashion: 
" The panic of 1857 found Mr. Sage a large creditor of 

20 Rep. No. 369, etc. It is pertinent to note here that Riggs, of 
the firm of Corcoran and Riggs, was accused, in 1868, of handling 
a corruption fund employed by the Russian Minister to the United 
States to secure the passage of a bill appropriating $7,200,000 
for the purchase of Alaska by the United States. The House 
Committee on Public Expenditures investigated. Riggs denied 
the charges. But inasmuch as the members of the Russian 
Legation, although requested to appear and explain, refused to 
do so, the Committee reported its investigation, "barren of 
affirmative or satisfactory negative results." See Reports of 
Committees, Third Session, Fortieth Congress, 1868-69, Report 
No. 35- 



32 HISTORY OF THE GREAT AMERICAN FORTUNES 

the La Crosse Railroad. ... To protect the loans 
he had made to the road he found himself compelled to 
advance yet larger sums, and later, through legal pro- 
ceedings instituted to protect his investment, he became 
the owner of the road which afterward became a part of 
the Chicago, Milwaukee and St. Paul, of which Mr. 
Sage was at different times a director and vice presi- 
dent." 



THE BRIBERY OF AN ENTIRE STATE. 

This explanation reads very smoothly, but it omits a 
multitude of details both essential and enlightening. It 
can be said that at a period when bribery and fraud were 
so common as to cloy the popular mind, no transaction 
aroused a greater sensation or made a deeper impression 
upon a people jaded with continuous exposures of brib- 
ery, than the great thefts and briberies committed by 
the owners of the La Crosse and Milwaukee railroad. 

This corporation had been chartered by the Wisconsin 
Legislature in 1852 to build a railroad crossing Wiscon- 
sin from Milwaukee on the eastern boundary, to La 
Crosse on the western. Two additional acts passed in 
the same year allowed it to consolidate with two other 
railroads running in different directions. 

In June, 1856, Congress passed a bill granting to Wis- 
consin approximately 2,388,000 acres of public land in 
that State to be distributed among the railroads in Wis- 
consin. The enactment of this law was one of thirty 
distinct railroad land-grant acts passed in that one year. 
That they were put through by bribery was shown by 
the report of a House investigating committee which rec- 
ommended the expulsion of four prominent Congressmen 
on the ground of their having been at the head of cor- 



THE SAGE FORTUNE 33 

rupt combinations in Congress. 21 The La Crosse and 
Milwaukee Railroad Company thereupon lost no time in 
bribing (and all of the other land-grant railroads did the 
same in other States) the Legislature of Wisconsin to 
award a huge land grant. What followed the corrupt 
acts of Congress would doubtless never have been made 
public had it not been for the fact that another railroad 
company was sharply competing with the La Crosse and 
Milwaukee Company to get the major land grant from 
the Wisconsin Legislature. Beaten in the contest it re- 
vengefully raised charges that bribery had been used. 
The result was the appointment of a joint investigating 
committee by the two houses of the Wisconsin Legis- 
lature, and it is from their report, covering more than 
three hundred pages, and handed in on May 13, 1858, 
that the fullest details are obtainable. 

This committee reported that in the construction of 
the La Crosse and Milwaukee Railroad nearly $1,700,000 
had been stolen by the directors up to 1856. One method 
was by making exorbitant contracts with themselves to 
construct their roads ; another was by false construction 
charges; a third was by their buying property as in- 
dividuals and then selling it to the company at exor- 
bitant prices. These fraudulent methods were common 
among the directors of railroads throughout the United 
States. According to the findings of the committee, the 
La Crosse and Milwaukee Railroad directors, composed 
of Wall street bankers and New York politicians, had 
so plundered the stock, security and property of the 
company that it was reduced to a condition of bank- 
ruptcy. The plan was thus made imperative of getting 
a large land grant in order to rescue the company from 

21 Report of Select Committee appointed to Investigate Cer- 
tain Alleged Corrupt Combinations of Members of Congress, 
Reports of Committees, 1856-57, Vol. iii, Report No. 245. 



34 HISTORY OF THE GREAT AMERICAN FORTUNES 

its condition, and save the directors from criminal prose- 
cution for frauds and robbery. Sage did not figure 
among the directors at this time; his holdings, it ap- 
pears, were in bonds not stocks; he remained in the 
background working through intermediaries. 



$8OO,OOO IN BRIBES TO GET AN ACT PASSED. 

To get this land grant, consisting of about 1,000,000 
acres, the La Crosse and Milwaukee Railroad directors 
debauched not merely a few leading members of the 
Legislature, but virtually the whole Legislature, the Gov- 
ernor and other State officers, and a large number of 
editors of newspapers and politicians. It was this whole- 
sale bribery of an entire State, joined with the general 
plunder, robbery and sundry swindling, that made so 
uncommonly deep an impression upon the public mind; 
the newspapers, which in general ordinarily gave scant 
space to accounts of bribery, opened up on this occasion, 
in evident appreciation of the nature of the scandal, and 
published long summaries, in some cases covering a page 
and a half in fine print, of the committee's report. 

More than $800,000 in bonds and money but chiefly 
in bonds had been paid out in bribes to insure the 
passage of the land-grant act of 1856, the committee re- 
ported. This was an underestimate. According to the 
report of the president of the La Crosse and Milwaukee 
Railroad Company to the stockholders, the passage of 
this act cost $1,000,000 in bonds. 22 In his annual report 
for 1858 the president of the company bewailed the fact 
that the passage of the land-grant act had cost the com- 
pany so much. He itemized the expenses incurred. The 

22 See " The Sixth Annual Report of the La Crosse and Mil- 
waukee R. R. Company. New York, 1858 " : 16. 



THE SAGE FORTUNE 35 

first was this brief but significant entry, " Construction 
bonds of 1862, issued for Charter Expenses, $1,000,000." 
The second item enumerated in the list of expenses for 
getting the land grant was another $1,000,000 spent in 
the purchase and consolation of the St. Croix and Lake 
Superior Railroad, which railroad was awarded 847,000 
acres of public land. 23 A third entry was, " Stock is- 
sued for Charter Expenses at Madison [the capital of 
Wisconsin], $90,000." 24 A fourth item was one of 
$210,000 " for services " in getting a charter for a branch 
railroad called the Milwaukee and Watertown Rail- 
road. 25 

Large as they were, these expenditures were trivial 
compared to the value of the land grants received. The 
annual report of the La Crosse and Milwaukee Railroad 
Company for 1857 contained a statement from the Wis- 
consin Land Commissioner setting forth that the areas 
granted were rich agricultural and timber lands, and 
valuing them at the sum of $i 7,345, 6oo. 28 Seventeen 
million dollars in return for a disbursement of several 
millions in bribes was not a bad business transaction. 



But to revert to the report of the joint legislative 
committee of Wisconsin: It reported that for the pas- 
sage of the land-grant act of 1856, $175,000 in bonds were 
distributed among thirteen specified Senators, the indi- 
vidual bribes of whom ranged from $10,000 to $20,000; 
that $355,000 in bonds had been given in bribes to sev- 

23 " Sixth Annual Rep., La Crosse and Milwaukee R. R.," 16. 
2* Ibid. 
Ibid. 

20 " The Fifth Annual Report of the La Crosse and Milwaukee 
R. R. Co., 1857," 35 and 100. 



36 HISTORY OF THE GREAT AMERICAN FORTUNES 

enty specified Assemblymen an average bribe of $5,- 
ooo ; that $50,000 in bonds were given as a bribe to 
Coles Bashford, Governor of Wisconsin, and $16,000 to 
other State officials, and that $246,000 had been variously 
paid out to certain specified editors and to other persons 
of influence. 27 

The committee reported that the bribers used a secret 
written code in order to conceal the evidence of bribery. 
This code, however, was revealed. The committee com- 
mented : " The bribery or * buying up ' a great majority 
of the Legislature of 1856, is discovered in the back- 
ground as a tame fact, while the ingenuity displayed in 
the attempt to veil the transaction beyond the possibility 
of detection, is so supremely unique as to extort atten- 
tion. The actors seem not to have been mindful of the 
fact, that no lid was ever large enough to completely 
cover up itself." 28 

27 Report of the Joint Select Committee Appointed to Inves- 
tigate Into Alleged Frauds and Corruption in the Disposition 
of the Land Grant by the Legislature of 1856 and for Other 
Purposes; Appendices to [Wisconsin] Senate and Assembly 
Journals, 1858. 

28 Ibid., 47. In Wisconsin, not less than in other States, large 
numbers of farmers were flagrantly robbed. The robbery of 
Nation, States, counties, municipalities and individuals proceeded 
at the same time. 

Of the corruption and fraud in the case of the Milwaukee and 
Superior Railroad Company, an investigating committee reported 
that many of the farmers in Milwaukee County and other parts 
of Wisconsin had mortgaged their farms in order to raise money 
for the purchase of railroad stocks. These farmers " were 
anxious to aid in the construction of a road which they sup- 
posed would benefit themselves and the public generally." Many 
were Germans, "confiding, unsophisticated men." The commit- 
tee continued : " A swarm of these vultures known as ' stock 
agents ' were sent out amongst the people, and as the result 
shows, from the evidence herewith, many poor and worthy 
men have been robbed of their all, and unless some relief is 
extended to them in some way, will soon be deprived of their 
houses, if said mortgages are of any legal effect." . . . Re- 
port of Select Committee Appointed Under Resolution No. 12$ 
Assembly, to Investigate the Affairs of the Milwaukee and Su- 



THE SAGE FORTUNE 37 

" The evidence taken," the committee concluded, " es- 
tablishes the fact that the La Crosse and Milwaukee 
Railroad Company have been guilty of numerous and 
unparalleled acts of mismanagement, gross violations of 
duty, fraud and plunder. In fact, corruption and whole- 
sale plundering are common features." 29 

They were not merely common features of the rail- 
road corporations in Wisconsin, but everywhere else in 
the United States; year after year they went on un- 
hindered by legislative or Congressional investigations. 
The stolen rights and property, far from being forfeited, 
became strongly riveted vested rights ; neither the bribers 
nor the bribed were troubled with criminal prosecution 
except very rarely, and then it was only the subordinate 
tools who were sent to prison. Every bribery scandal 
would be shortly followed by some new scandal ; the 
old would die away or become forgotten, and the new 
would absorb public attention for a time, only to go 
through the same process. 

Yet, under a noted decision of the Supreme Court of 
the United States, the principal, in every transaction 
coming within the law, was fully liable to punishment. 
In January, 1829, in a suit brought by the Government 
against Astor's American Fur Company, growing out 
of a seizure by General Tipton of liquors intended for 
debauching the Indians, that court had laid down this 
principle of law (Peter's Reports, II, 364) : That what- 
ever was done by an agent, in reference to the business 
in which he was at the time employed, and within the 
scope of his authority, was said and done by the prin- 
cipal, and might be proved in a criminal as well as a 

perior Railroad Company, Appendix to Assembly Journal, Wis- 
consin: IO-II. 

29 Report of the Joint Select Committee, etc., Appendices to 
[Wisconsin] Senate and Assembly Journals, 1858:47. 



38 HISTORY OF THE GREAT AMERICAN FORTUNES 

civil case, in all respects as though the principal were 
the actor or speaker. This interpretation, however, was 
no more used against other capitalists than it was against 
Astor. 

The great land grants received by the La Crosse and 
Milwaukee Railroad Company were not the only gifts 
in the legislative acts of 1856. As a corporation the 
company was forever exempted from taxes, and the 
lands granted were exempted from taxation for ten 
years a sufficient time in which to strip them of their 
timber or sell them. Despite all of the legislative gifts, 
and additional very valuable donations by towns, coun- 
ties and cities, the railroad had been so consummately 
pillaged of its money and resources, and so difficult was 
it to raise money in the panic of 1857, that it was forced 
into bankruptcy. 30 

Now it was, as his biographic limners express it, that 
Sage projected himself into the foreground to "pro- 
tect his interests." How he did it they do not tell, 
but the court records of the time describe his methods 
with considerable plainness of speech if not clearness of 
explanation. It appeared that Sage had been all along 

80 In the testimony before the Wisconsin Joint Select Com- 
mittee of 1858, Sage's name was not in any way brought out. 
It is certain, however, that in 1857 Sage was a controlling 
owner of the La Crosse and Milwaukee Railroad. The investi- 
gating committee reported this testimony of Prentiss Dow, a 
stockholder : 

" In August and September, 1857, rumors became very cur- 
rent in New York that vast frauds had been committed in the 
management of the affairs of the company; that the funds 
raised by the sale of subscriptions of land grant bonds had 
been applied to other purposes than building the road; . . . 
that the 'statement ' of the company was unreliable, as to the 
true condition of the company. Many of the holders of land 
grant bonds became alarmed and sales of them were made as 
low as twenty cents on the dollar." (Appendix to Assembly 
Journal, Wisconsin, 1858, p. 165.) Perhaps Sage bought more 
of the bonds at this time. 



THE SAGE FORTUNE 39 

using dummy directors and agents ; that is to say, he had 
put forward certain men who nominally were the own- 
ers and active spirits, while he, under cover, was actu- 
ally the controlling owner and moving figure. This fact 
came out in numerous suits which were carried to the 
Supreme Court of the United States, and it is from 
the records of this august court that certain details are 
obtained. 



FRAUDULENT BONDS AND FRAUDULENT SALE. 

Sage was virtually the owner of a two million-dollar 
third mortgage issued to cover the eastern division of the 
La Crosse and Milwaukee Railroad, extending from Mil- 
waukee to Portage City, or about half the breadth of 
Wisconsin. The Supreme Court of the United States 
set forth in its statement of the case in 1867 that for 
these $2,000,000 in bonds, not more than $280,000 had 
been paid in money. " Indeed/' said the Court, " the 
actual amount is but a little over $150,000." 81 By what 
the Court called " a fraudulent arrangement," intended 
to cheat the stockholders and the creditors of the road, 
this third mortgage was given precedence and the prop- 
erty was foreclosed. The Supreme Court records do 
not show how Sage got hold of his bonds, but they do 
spread out that the fraudulent bond issue was followed 
by a fraudulent foreclosure sale. 

" Of the $2,000,000 in bonds," the Court said, " only 
$200,000 in money was paid. The remainder of the two 
millions was in the hands of either directors or under 
their control by a fraudulent arrangement." The Court 
denounced the foreclosure as a sale made by a fraudulent 

81 James vs. Railroad Company, Wallace's Reports, Supreme 
Court of the United States, vi:755. 



4O HISTORY OF THE GREAT AMERICAN FORTUNES 

notice in which the interested parties only knew what 
was about to happen. 82 

This foreclosed eastern division of the La Crosse and 
Milwaukee Railroad was reorganized as the Milwaukee 
and Minnesota Railroad Company, with Russell Sage 
as its president. The foreclosure had been applied for 
on August 17, 1857. It would seem, therefore, that 
Sage had become a heavy bondholder during, or im- 
mediately after, the very time when the acts were being 
bribed through Congress, and that he was one of the 
largest bond creditors at the identical time, or soon after, 
the La Crosse and Milwaukee Railroad Company had 
corrupted the entire State of Wisconsin with $800,000 
in bonds as bribes. But the precise date of his becom- 
ing connected with the railroad is not altogether clear in 
the records. After the foreclosure sale, some of the 
stockholders and many of the creditors, comprising firms 
which had supplied material for the construction of the 
railroad, objected to being cheated. A number of legal 
actions ensued; these were also carried to the Supreme 
Court of the United States, and from them additional 
facts can be gleaned. 



A GENERAL ALL-ROUND SWINDLING. 

One of these cases considered *by this court in 1863 
was that of several banking firms representing Sage, in 
an action against the La Crosse and Milwaukee Railroad 
Company, the purpose of which suit clearly was to 
swindle the stockholders and judgment creditors. On 
the face of the action, it was necessary that Sage's Mil- 
waukee and Minnesota Railroad Company, as the suc- 
cessor in part of the original company, should make a 

82 Wallace's Reports, Supreme Court of the United States, vi j 
755- 



THE SAGE FORTUNE 4! 

defence, but very curiously it made none. There was 
something very singular about this omission ; what it was 
came out in the intervening application of defrauded 
stockholders. The records of the case of Bronson et al 
vs. The La Crosse and Milwaukee Railroad Company 
read: 

After the time had expired within which the Milwaukee and 
Minnesota Railroad Company ought to have answered, but be- 
fore an order had been entered taking the bill against them pro 
confesso, one J. S. Rockwell, a stockholder of the said com- 
pany, presented to the court his petition, charging collusion 
between the complainants or their agents, and one Russell Sage, 
president of the said Milwaukee and Minnesota Railroad Com- 
pany, to secure a foreclosure and sale in their cause; for the 
purpose of extinguishing the rights of the said Milwaukee and 
Minnesota Railroad Company, which was alleged to be the 
owner of the equity or redemption of the mortgaged premises; 
and that the president [Sage] of the last named company, al- 
though requested by its stockholders, had declined to make any 
defense in its cause. 33 

Obviously, for the scheme afoot was to so tangle up 
the affairs of the company in legal hocus pocus as to have 
a valid ground for absolutely cheating (or as the term 
went, " freezing out ") the stockholders and judgment 
creditors. Four years later, as we have just noted, the 
Supreme Court of the United States found it so in decid- 
ing another case. 

Rockwell was not the only stockholder charging col- 
lusion. Another stockholder, Fleming, presented a peti- 
tion making a number of charges of which collusion was 
merely one. He also charged that the mortgage issued 
by the La Crosse and Milwaukee Railroad Company rep- 
resented what was popularly known as " Corruption 

33 Wallace's Reports, Supreme Court of the United States, 
ii : 285-286. 



42 HISTORY OF THE GREAT AMERICAN FORTUNES 

Bonds " and was gotten up " for the corrupt and fraudu- 
lent purpose of disposing of said bonds, or a large part 
thereof, in payment of pretended debts to the officers and 
agents of said company, or their friends, without any 
consideration to be paid therefor." Also, " that a large 
part of said bonds were so disposed of and given away 
in fraud of its creditors." s * The attorney for the com- 
plaining stockholders said in summing up the case: 
" Men placed to manage corporations for the interest of 
the stockholders manage them only for their own. They 
become contractors, half ruin the corporation, pay them- 
selves with its assets at enormous discounts, then resus- 
citate things and are rich in the result." 35 The Supreme 
Court of the United States subsequently set aside the 
foreclosure sale on the ground that it was fraudulent, 
but Sage, by other means, succeeded in keeping his hold. 

These are the authentic, exact legislative and court 
records. Entirely different are the facts they reveal 
from the phrase going the rounds of the press at Sage's 
death couched in this or similar language, " Perhaps the 
most noteworthy fact in the accumulation of Mr. Sage's 
fortune is the absence of graft." And likewise very dif- 
ferent are they from the statements given in the lu- 
dicrous " histories " prepared by the railroad corporations 
themselves. 

While Sage was foreclosing the eastern division of 
the La Crosse and Milwaukee Railroad, he was, at the 
same time, foreclosing, by reason of his holdings, an- 
other division which likewise became a part of the Chi- 

84 Wallace's Reports, etc., ii : 287. This is one instance of 
many more such instances clearly revealing the real nature of 
the "ability" of the capitalists in "developing the resources of 
the country." " Ability " it was of its kind, and one wholly used 
for plunder and personal enrichment. 

"Ibid., 295- 



THE SAGE FORTUNE 43 

cago, Milwaukee and St. Paul Railroad system. This 
other division was the Milwaukee and Horicon Railroad, 
which was part and parcel of the continuous corrupt 
transactions. The " historian " of the Chicago, Mil- 
waukee and St. Paul system writes of the episode in this 
uninforming way : " The Milwaukee and Horicon Rail- 
road, incorporated in 1852, was foreclosed by Washing- 
ton Hunt and Russell Sage in 1863 and by them trans- 
ferred to the Chicago, Milwaukee and St. Paul in June, 
1863." 36 

The enormous frauds in Wisconsin were only a part of 
Sage's activities at this period. At the same time, he 
and his fellow capitalists were contiguously carrying 
through similar fraudulent operations in Minnesota. 
Were it not that occasionally they fell to quarreling over 
the spoils, and let out secrets in the civil courts, we 
should be at a loss to know the precise nature of their 
transactions. As it is, certain records of lawsuits sur- 
vive to give a fairly clear index of their methods, and 
what these were will now be related in an expository out- 
line. 

se "Outline History of the Chicago, Milwaukee and St. Paul 
Railroad Company. Compiled by the General Passenger De- 
partment, 1888 : " 2. The chief attorney for the various rail- 
roads merged in this system was Samuel J. Tilden, who later 
posed as so great a " reformer " in politics, and who was the 
Democratic nominee for President of the United States in 1876. 
It will be continuously observed that the men nominated by 
both political parties for high office, executive, legislative and 
judicial, were invariably those who had proved their usefulness 
as tools, retainers or beneficiaries of the corporate interests. 
Witness Garfield and Elaine, implicated in the Credit Mobilier 
swindle, Morton and many others. 



CHAPTER II 
MORE DETAILS OF THE SAGE FORTUNE 

In the preceding chapter we have seen how, by corrup- 
tion and fraud, Congress, in 1854, passed an act the 
wording of which was so surreptitiously altered as to 
give nearly nine hundred thousand acres of public land 
in Minnesota direct to the Minnesota and Northwestern 
Railroad company. Composed of a combination of 
Eastern and Western capitalists, lobbyists and politicians, 
this company proceeded to regale the country with sonor- 
ous prospectuses of the great things that it intended to 
do in developing the wilderness of the Northwest. Could 
the nation doubt the veracity and noble intentions of its 
charterers, all solid men of capital? Was the good 
faith of its projectors, headed by that eminent capitalist, 
Erastus Corning, of Albany, New York, to be ques- 
tioned? For once the sweet song failed to charm the 
public, which rose in angry protest against the corrup- 
tion used, and Congress hastily backslid and repealed tho 
act. 1 

1 Notwithstanding its repeal, the Minnesota and Northwestern 
Railroad Company influenced the United States District Attor- 
ney for Minnesota to bring a trumped-up suit in order to get 
a favorable court decision on the validity of its title. That offi- 
cial was summarily dismissed from office by President Pierce 
when the facts became known. House Executive Documents. 
Thirty-third Congress, Second Session, 1854-55, Vol. v, Doc. 
No. 35. 

44 



MORE DETAILS OF THE SAGE FORTUNE '45 

It was not often that Congress repealed such corrupt 
acts; when it did so, astonishment was general. 



GIFTS OF FOURTEEN MILLION ACRES. 

But the good behavior of Congress was of the briefest 
duration; a mere ebullition serving duty as something 
with which to blind the nation. The milling of land- 
grant bills went on busily; the repealing of that one 
particular act produced, an effect which distracted public 
attention and which allowed the unscrutinized passage of 
many other acts. Among these were measures giving 
six millions of acres of public lands eventually to ex- 
pand into fourteen millions in all to the Territory of 
Minnesota (soon to become a State) for the benefit of 
railroad corporations. The proprieties of the usual form 
of procedure were now scrupulously observed ; the lands 
were donated to the individual States, to be granted by 
them to railroad companies. Congress had learned its 
lesson of the necessity of sticking to outward forms; 
henceforth in the case of State grants the bribery had to 
be dually done, part at Washington and part at the 
various State capitals. 

During the session of 1857 a modest little bill went 
gurgling through, tranquilly making the rounds of the 
committees and becoming a law. At that precise time 
many another act was being dragged out to daylight as 
having been passed by bribery, but this especial bill 
wended its way unobtrusively, entirely shielded from the 
searching blaze of publicity. It was an act incorporating 
the Minnesota and Pacific Railway Company to build 
a line from St. Paul to St. Anthony's Falls (now the 
city of Minneapolis) and authorizing various extensions 
in different directions. 



46 HISTORY 01? THE GREAT AMERICAN FORTUNES 

The second part of the program was as successfully 
accomplished as the first. The Minnesota Legislature 
was applied to for the wherewithal to carry this enter- 
prising project into execution, and most generously did 
it respond. Sundry legislative acts gave to the railroad 
company a grant of ten sections to the mile, six hun- 
dred and forty acres to the section, the title to succes- 
sive grants to vest in the company as fast as every twenty 
miles were completed. But these were not the only 
benefactions. In dulcet appeals the company informed 
the citizens of the State that 'it needed cash also. Many 
of these aforesaid citizens, hardy pioneers with a rough 
way of looking at affairs, were not overcome with emo- 
tion at reading these tender appeals. They thought that 
the land grant was quite enough of an encouragement. 
But the Minnesota Legislature " during the corrupt ad- 
ministration of Governor Sibley," as contemporary 
writers in Minnesota put it was of an extremely sus- 
ceptible nature, incapable of refusing a request. 2 An act 
was passed authorizing a $5,000,000 issue of bonds 
called the "Minnesota State Railroad Bonds" to be 
handed over to the railroad companies in that State. 
Not all of this amount was issued ; the total sum turned 
over to the railroad companies under this special act was 
about $2,750,000. Large additional sums of money were 
then contributed by counties and municipalities, and a 
" smart business " was done in persuading farmers and 
merchants to invest their money in the railroad. 

Whose master mind was behind all of this? Russell 

2 Legislative corruption was almost continuous. " The nu- 
merous charters," complained Governor W. A. Gorman to the 
Minnesota Legislature, in 1856, "already granted in Minnesota 
for ferries, lumbering, manufacturing, mining, etc., is enough to 
arouse your vigilance on this subject." Many of those char- 
ters," he pointed out, " must become sources of immense revenue 
to the corporators." Minnesota Council Journal, 1856:91. 



MORE DETAILS OF THE SAGE FORTUNE 47 

Sage's. Rarely did he appear too prominently in the 
foreground, but he was the soft-treading man who, as 
was later revealed, chiefly profited from the transactions 
of the Minnesota and Pacific Railroad Company. After 
getting the charter, franchises, rights, land grants, funds 
and exemptions what did he and his partners next do? 
Valiantly and seductively had they argued for induce- 
ments enough to make it possible for them to open up 
the primitive Northwest. But the moment that the pri- 
mary object was obtained of securing these diverse " in- 
ducements," talk ceased and the work of filling their 
capacious pockets began with a grim and silent earnest- 
ness. 

First, in the order of the day, came the customary 
f reebooting organization of a construction company, com- 
posed of the identical men in the railroad corporation. 
They made contracts with themselves calling for ex- 
orbitant payments ; and then, in addition to these great 
cribbings, they fraudulently awarded themselves bonds in 
return for pretended services. Along with these em- 
bezzlements they placidly set about to cheat the small 
bondholders and stockholders, and to fleece the creditors 
who furnished them with necessary supplies and equip- 
ment. 

ROBBED INTO INSOLVENCY. 

The thefts were carried on with such rapid assiduity 
that in about a year after the company^had been char- 
tered, its treasury had become a vacancy, and the rail- 
road was plunged into insolvency and, in 1858, fore- 
closed. Who bought it in? The selfsame men who 
had looted it; as the chiefs of the construction com- 
pany they had taken care to fortify themselves with 
enough bonds to put them in the legal position of ma- 



48 HISTORY Otf THE GREAT AMERICAN FORTUNES 

jority creditors. Some of them, such as Sage, did their 
work generally through dummies; others appeared in 
the open. They might complain, as they did, that the 
cause of the company's failure was the difficulty in rais- 
ing money during the panic of 1857; ^ ut tms was a 
flimsy, although plausible, excuse. 

Presently a unique development turned up. They 
caused the railroad corporation to be dubbed with two 
new names; by an act slipped through the Minnesota 
Legislature, the Minnesota and Pacific Railroad Com- 
pany was reorganized into two divisions, one called the 
St. Paul and Pacific, the other the First Division of the 
St. Paul and Pacific Railroad Company. 

Why these separate titles for a single railroad proj- 
ect? Why this confusing arrangement? The reason 
became obvious a little later. It was an adroit artifice 
to entrench them in a strong legal vantage to loot and 
bankrupt the road still further; the same coterie, in 
reality, directed both companies, and as constructors 
of a railroad which they themselves directed, they could 
hand over to themselves bonds making them unassail- 
able creditors of the whole line. An astute piece of in- 
genuity; whose was the deft brain that conceived the 
device ? It was that of the " great reformer," that 
evangel of " pure and uncorrupted Democracy " Sam- 
uel J. Tilden. He wove his legal tangles so well, so very, 
very well, that the small bondholders and the manu- 
facturers who had furnished materials, found themselves 
before long entirely cheated out of their claims, and with 
no chance of legal redress. 

One of these bondholders, Edward C. Hopkins, with a 
wonderful trust in the equity of law, bestirred himself 
to see whether he could not collect on some coupons of 
bonds that he owned of the old Minnesota and Pacific 



MORE DETAILS OF THE SAGE FORTUNE 49 

Railroad. Was not the St. Paul and Pacific, he claimed, 
the successor of the original company, and thereby 
bound to respect, and pay, its debts? Was it not a case 
of an old corporation acting under a new name? The 
case came up for trial at St. Paul in the United States 
Circuit Court. The eminent and erudite judge was John 
F. Dillon the very Dillon, fittingly enough, who sub- 
sequently left the bench to become pleader for corpora- 
tions in which Gould and Sage were the principal direct- 
ing spirits. 

Judge Dillon handed down some choice bolts of law 
which served sufficient notice on other small fry of cred- 
itors as to what they could expect. The scope of his 
decision was superbly direct ; he held that when the Leg- 
islature of Minnesota changed the name of the company 
in 1862 it created an entirely new corporation which 
could not be held responsible for the debts of the old. 
Hopkins' suit was ejected from the court, and both he 
and the other creditors were left to ponder in unbroken 
leisure upon the mysterious beauties of the law. 8 

But if the company had a new name or, rather, two 
new names it retained all of the franchises, privileges 
and immunities of the old corporation so ran the de- 
cision. From its debts it was relieved; in all its assets 
and possessions it was secured. There was the great and 
important point ; names were but a serviceable -mask un- 
der cover of which the " insiders " could defraud the 
lesser capitalists. To note the plaintive squeaks of 
these outraged victims was a lesson of itself they who 
were only too eager to share in the fruits of the bribing 
of public bodies, the wrestling of public resources and 
the general despoilation of a whole people. Their fine 

8 Edward C. Hopkins vs. St. Paul and Pacific Railroad Com- 
pany, Dillon's Circuit Court Reports, 1871-73, ii : 396-398. 



50 HISTORY OF THE GREAT AMERICAN FORTUNES 

moral instincts were quickened only when they were 
defrauded, and then their virtuous indignation was un- 
bounded. 

HUGE SUBSIDIES STOLEN. 

While the projectors were cheating out this crowd of 
dupes what were they doing with the huge subsidies 
that they had received in one form or another with which 
to build the railroad? The money had certainly van- 
ished. Where? Little of railroad construction was 
there to show for the alleged expenditure except some 
hundred miles of graded prairie. Even the short stretch 
of ten miles of main line from St. Paul to Minneapolis 
had not been put into operation by 1862 as required by 
law. Why not ? The rapidity with which such fortunes 
as Sage's were being amassed was the answer. The 
money was stolen. 

When the professional corrupters who had looted this 
railroad had originally applied to Congress and to Min- 
nesota for gifts of land and money, they had represented 
themselves as capitalists having " ample resources " with 
which to carry on the project. All that they needed, was 
their plea, was State encouragement in some form, be- 
cause " the undertaking was so expensive." After they 
had robbed the railroad into bankruptcy, a special com- 
mittee of the Minnesota Senate began to investigate their 
antecedents and methods. " The sequel," it reported, 
" demonstrated that the companies had no cash capital at 
command, and scarcely credit sufficient to insure prompt 
location of their lines of road." 4 The committee went 
on: 

4 Report of Special Committee on Railroads and Railroad 
Grants. February 3, 1860, Minnesota Senate Journal, 1859-60: 
343- 



MORE DETAILS OF THE SAGE FORTUNE 5! 

So far as your committee can discover, the companies, since 
the passage of the loan amendment, have not furnished one 
dollar of capital to aid in carrying on their gigantic enterprise. 
They have sold and hypothecated large portions of these bonds 
at a ruinous discount. They have paid extravagant salaries to 
incompetent or inefficient officers. With the exception of about 
fifty miles of well-built superstructure incomplete, fragmen- 
tary and disjointed portions of grading, costing on the average 
less than three thousand dollars per mile are all that these 
companies can show in return for the munificent issue of bonds 
made to them by the State. 5 

A vivid picture this gives of the original " construct- 
ive ability " of the capitalists an ability conspicuously 
displayed in perpetrating the most enormous frauds. 
But where in the United States was it not likewise so? 

The successive events now following in the history of 
this company are dryly incorporated in the records of 
the case of John S. Kennedy and Company vs. the St. 
Paul and Pacific Railroad Company, including the First 
Division, the Northern Pacific Railroad Company, Rus- 
sell Sage, Samuel J. Tilden, et al. 6 Although the full de- 
tails are not by any means spread out in these records, 
some authentic particulars can, at any rate, be gleaned. 

By 1871 Sage and his associates had completed certain 
of the railroad extensions, and had mortgaged them for 
a total of $13,380,000. Nearly all of this money had 
been advanced by banking houses in Holland. But sixty 
miles of main line were still in an uncompleted state, and 
the people of the State were getting dangerously curious 
to know why. Millions of dollars had disappeared; all 
of the gifts in land and money made to the company 
had been sunk thus far in building only some discon- 
nected and semi-worthless sections of the projected rail- 

5 Minnesota Senate Journal, 1859-60 : 344. 

8 Dillon's Circuit Court Reports, 1871-73, ii : 448-527. 



52 HISTORY OF THE GREAT AMERICAN FORTUNES 

road. The directors had to make a move ; they did so by 
evolving a new scheme for bleeding the too eager and 
credulous Holland capitalists. 



DUTCH CAPITALISTS SWINDLED. 

And this is what they did: A group of men com- 
prising the First Division of the St. Paul and Pacific, 
corporatively met and issued bonds for $15,000,000. 
The same men, or their tools, then met as directors of the 
St. Paul and Pacific (it is hard to keep these fine dis- 
tinctions in mind) and mortgaged the rights, franchises, 
and property, including the land grants, to the First 
Division for ninety-nine years. Then the First Division 
corporation, as construction company, bound itself to 
complete the railroad extensions before March I, 1873, 
on which date, by a recent legislative enactment, the land 
grant was to be forfeited in case the extensions were 
not built. 

The terms of the mortgage were explicit and entic- 
ing. The whole of the $15,000,000 was to be applied to 
building the extensions. On the strength of this agree- 
ment about $8,000,000 more was raised in Holland in 
1871. But there was one bit of information the Sage 
clique carefully kept from the Holland capitalists. They 
did not tell the Hollanders that a large part of the money 
raised was to be applied to the main line, in violation of 
the express terms of the mortgage. 7 

What was done with the $8,000,000 raised in Holland ? 
This sum, which the borrowers swore on solemn oath to 

7 In its dry terminology the Court expressed the fact thus : 
" But this part of the scheme as contemplated a diversion of 
a portion of said proceeds to the main line not being made 
public or announced to the persons who subsequently purchased 
said bonds." Dillon, v : 459. 



MORE DETAILS OF THE SAGE FORTUNE 53 

the Hollanders, was to be used entirely for constructing 
the extension lines, was immediately distributed in vari- 
ous plundering ways. About $3,000,000 of it was fraud- 
ulently diverted to the completion of the main line ; large 
sums were grabbed to pay interest on the main line 
mortgage bonds, and other millions were used for what? 
For the purchase of iron material and the payment of 
contractors for work on the extension line. And who 
sold the iron? The First Division Company. The op- 
eration was simple; Sage, etc., sold to themselves the 
rails, and charged the account against the money ad- 
vanced by the Dutch capitalists. 8 

Those were, indeed, halcyon times of bold graft; the 
robbery was so large and openhanded that naturally 
enough the First Division, the treasury of which was 
sacked as fast as it was filled, went into insolvency in 
1872. In less than a year more than $8,000,000 had been 
" scattered " ; we should say, concentrated, for the great 
bulk of it went into the pockets of a few, and remained 
there. Nor was this all. When the First Division sus- 
pended work in October, 1872, it owed its contractors 
subordinate firms who really did the constructing work 
about $700,000, although it later reduced this debt 
to $500,000 by paying part in supplies of iron. It also 
heaved under large floating debts, and its interest cou- 
pons were under protest. 

THEY APPEAL TO COURT. 

Tricked and stripped, the Dutch capitalists now fully 
realized their predicament; the money that they had 
skinned from native peoples at home, had been plucked 
from them. How could they recover it ? They took the 

8 Dillon's Circuit Court Reports, 1879-80, v 1451-459. 



54 HISTORY OF THE GREAT AMERICAN FORTUNES 

only step that they could possibly take, which was to 
apply for a receiver. Hence the suit brought by John 
S. Kennedy and Company, acting for them and for 
other bondholders. In cold legal phraseology they set 
forth their plaint; they had been lied to and defrauded. 
" They [the bondholders] also claim," reads the formal 
court statement, " that by reason of the insolvency of said 
First Division Company, and of various fraudulent and 
improper acts of its managing officers which are not 
here recited because the court does not deem it material 
to the real merits of the application that a receiver 
should be appointed," etc., etc. 9 

Judge Dillon concurred that a receiver should be ap- 
pointed. Urgent reasons, he said, compelled it. The com- 
pany had a great land grant valued at $6 an acre; and 
this was the only adequate security for the $15,000,000 
mortgage. But it happened that these lands, or a large 
part of them, were to be forfeited if certain extensions 
were not completed by a certain time. It was imperative, 
Dillon said, to save that land grant, and as the directors 
of the road admitted that there was no money in the 
treasury, it was to the best interests of the bondholders 
to have a receiver appointed. The receiver would have 
authority to complete the extensions. Dillon, thereupon, 
on September i, 1875, appointed one Jesse P. Farley as 
receiver. 

The next developments were revealed in the second 
suit of John S. Kennedy and Company against the St. 
Paul and Pacific Railroad. 10 

Dillon's Circuit Court Reports, 1879-80, v: 451-459. 

10 Dillon's Circuit Court Reports, 1879-^80, v 1519-536. Ken- 
nedy, however, betrayed the interests of the Dutch stockhold- 
ers, colluded with the receiver, and made a fraudulent arrange- 
ment by which he (Kennedy) profited enormously. Kennedy 
thus obtained many of the millions, the donation of some of 



MORE DETAILS OF THE SAGE FORTUNE 5$ 

Farley, it seems, made a great ado about the construct- 
ing work he was doing, but as a matter of fact, he spent 
only about $100,000 in the work of constructing and re- 
pair. 11 However, he kept up the pretense enough to 
save for a time that part of the land grant threatened 
with forfeiture. But by 1878 the people of Minnesota 
were again ablaze. Twenty-one years had passed since 
the company had been chartered; it had received vast 
subsidies in money and land not only from the National 
Government, the State, cities and counties, but from in- 
dividuals. All along its route, both completed and pro- 
jected, farmers and merchants had subscribed for its 
stock, only, they found, to hold worthless bits of paper 
which produced neither railroad nor returns. The com- 
pany had looted itself twice into insolvency; it had, by 
repeated sleight-of-hand process, defrauded not only na- 
tive capitalists, farmers and merchants, but it had done 
away with the many millions poured in by the Dutch 
capitalists. 



THE LEGISLATURE WAKES UP. 

Now it was still deep in bankruptcy. The Legislature 
could not hold out against this overwhelming expression 
of popular indignation. On March 9, 1878, it passed 
an act declaring that unless a specified number of miles 
should be built by certain dates, then the uncompleted 
portions, together with the land grants, rights, franchises, 
immunities and appertaining property " shall at once be 
and become absolutely forfeited to the State of Minne- 
sota, without any act or ceremony whatsoever. 12 

which later enabled him to blossom out as a "great philanthro- 
pist" See the chapter on the Hill fortune. 

Dillon's Circuit Court Reports, 1879-80, v: 519-536. 
12 Minnesota Special Laws, 1878:344. 



56 HISTORY OF THE GREAT AMERICAN FORTUNES 

It was a drastic law, and some action had to be taken 
at once, if the State was to be thwarted. Who would 
furnish the money necessary to build the uncompleted 
sections, and thus prevent the forfeiture of franchises 
and land grants? Sage and others, after getting out of 
the road all the plunder that they could see in sight, 
had retired to use the proceeds of that piracy in repeat- 
ing their transactions in other directions. The railroad 
itself was in a deplorably bad shape, thoroughly disor- 
ganized, and very dangerous to travel on. It had little 
equipment and few stations or depots worth considering. 
This was the " splendid railroad system " that Sage and 
his clique were to build; this was the result of their 
" vast constructive ability ! " How much Sage took out 
of the project in spoils we are unable to say ; there is no 
record stating the sum either absolutely or approxi- 
mately ; it amounted, most certainly, to many millions of 
dollars. 

With forfeiture of much of the possessions and many 
of the rights of the railroad in imminent danger, four 
men, who became noteworthy among the great capital- 
ists of our time, stepped forward to get control of the 
St. Paul and Pacific system. These were James J. Hill, 
yclept the " Jay Gould of the Northwest," and three other 
Canadians, two of whom attained elevation to the British 
peerage. How they secured control, and what they did 
thereafter, forms a story not connected with the Sage 
fortune; it will be found in full in the chapter on the 
Hill fortune. 

Meanwhile Sage had met Gould in Troy, and had re- 
moved to New York city. " The two men," says the ef- 
fusive biographer heretofore quoted, " made an impres- 
sion upon each other, which afterward deepened into a 




JAMES J. HILL, 
The Railroad Magnate of Minnesota. 



MORE DETAILS OF THE SAGE FORTUNE 57 

friendship famous in financial history." Famous or in- 
famous whichever way you prefer to view it. A val- 
uable working pair the twain made; Sage, crafty, som- 
ber and reclusive; Gould supplying the public audacity; 
both equal in inscrutable wiles and stratagems. The one 
overcautious, the other overreckless, each counterbal- 
ancing the other. A prodigious respect Gould learned to 
entertain for Sage; the one associate was Sage whom 
Gould could not overreach or fleece. 

Subsequently and appropriately enough, Sage hied 
himself to New York city early in the course of the Civil 
War. There, in Wall street, was the headquarters of 
many of the railroad corporations which had been, and 
were, bribing and plundering. The office of the 
LaCrosse and Milwaukee Railroad Company, for in- 
stance, was there ; whoever might be the actual physical 
builders of the railroads, the owners were either Wall 
street men or kindred capitalists men who by some 
species of fraud or theft had pushed themselves into con- 
trol. 

And there also in New York was the scene of the 
greatest activity in the current widespread despoilation ; 
from there radiated the plans and plots which later re- 
solved themselves into colossal swindles. Had the cen- 
ter of this deviltry been elsewhere, there Sage and all 
the others of the brood indubitably would have flown. 

STOLEN MILLIONS LOANED IN USURY. 

A money lender on a great scale Sage became ; tie in- 
vented a special system of usury the "put" and 
" call " system, the intricacies of which we shall not at- 
tempt to describe. Now could be seen what he was 



58 HISTORY OF THE GREAT AMERICAN FORTUNES 

doing with the millions that he was stealing in Wiscon- 
sin and Minnesota. 13 Ordinarily he would loan money 
at high enough rates, but in times of panic and Wall 
street " squeezes " he demanded and received as 
much as two per cent, a day or sixty per cent, a month. 
Friends or enemies, it did not matter; all alike had to 
pay the enormous interest that he exacted if they de- 
sired a supply of ready money (which he always kept 
on hand) and thus save themselves from defaulting on 
contracts, and so going into bankruptcy. He was* one of 
that eminent constellation of patriots who hoarded gold 
when it was most needed to carry on the Civil War, and 
refused to loan it except at the most incredibly extor- 
tionate rates. 

At this time little attention was given in the East to 
railroad operations in the West; the newspapers were 
almost wholly filled with reports of events of the great 
Civil War. Few knew of the gigantic thefts and frauds 
that Sage was carrying on out in the Northwest; and 
when he suddenly became known as a multimillionaire, 
glowing accounts were published of him as a wonderful 
financier. This praise was always modified, of course, 

18 And also in Iowa, in the railroads in which State he was 
extensively concerned. The capitalists owning the Sioux City 
and St. Paul Railroad had caused it to be built in such a zig- 
zag fashion that they could fraudulently grab even larger land 
grants than the accommodating acts of Congress intended. By 
edging this railroad in Osceola, Dickinson and O'Brien Counties, 
Iowa, this company made claim to 189,184.54 extra acres of public 
land in those counties, and prevailed upon the State officials 
to grant a patent. Sage, however, had become president of a 
railroad company called the McGregor Western, and had con- 
structed his line through this very territory. He demanded a 
share of those 189,000 acres, and, upon refusal, sued the St. 
Paul and Pacific Railroad Company. The case finally came up 
in the United States Circuit Court in Iowa, on January 20, 1882, 
when Judge Love amiably decided, with fine judicial impartial- 
ity, that each of the two companies was entitled to an undivided 
half of the land in dispute. Federal Reporter, x 1435: 450. 



MORE DETAILS OF THE SAGE FORTUNE 59 

by derision of his extraordinary stinginess, and detesta- 
tion of his hard qualities. But there were those who 
had been associated with him who smiled at the stories 
of his " wizard-like " performances in heaping up mil- 
lions; they knew what his attributed necromancy really 
was; of the series of briberies, frauds and thefts. The 
particulars of at least one more transaction in which he 
was engaged at this time are accessible, however much 
many of his other dealings are beyond historical reach. 

THE PACIFIC MAIL SUBSIDY. 

One of the many corporations in which Sage became a 
large stockholder was the Pacific Mail Steamship Com- 
pany. This corporation, as we have noted in the Van- 
derbilt chapters, long corrupted Congress to get preda- 
tory mail subsidies from the Government. By an addi- 
tional act passed by Congress on February 17, 1865, it 
received another heavy Government subsidy for carrying 
the mails between San Francisco and Asia via Hono- 
lulu. 

The booty was so rich that different factions of capi- 
talists continually fought one another to get control of 
the company's treasury. We find from law suit records 
that in 1867 that fine, old, massively respectable banking 
firm of Brown Brothers and Company was one of the 
heaviest stockholders. In its own name, and acting for 
authorizing parties, it held 77,839 shares of a total of 
the Pacific Mail Steamship Company's 200,000 shares of 
capital stock. 

Like the firm of Phelps, Dodge and Company, the 
banking firm of Brown Brothers and Company was pre- 
eminently reputed (as it has been since) to be one 
of the " old-fashioned firms " of " strict integrity." To 



6o HISTORY OF THE GREAT AMERICAN FORTUNES 

be sure, it officially knew nothing of the subsidy bribing 
incessantly going on ; owners of enterprises must culti- 
vate ignorance of such embarrassing details. And could 
it be, as William Swinton, a noted writer, charged in a 
pamphlet, that the " eminently respectable " Alexander 
Brown and his associates were (in our modern phrase- 
ology) grafting on the very company in which they were 
stockholders? Swinton charged that they held a con- 
trolling lien which amounted to ownership on boiler, iron 
and other factories which supplied the equipment of the 
Pacific Mail Steamship Company's line. A faction in 
December, 1867, was seeking hard to dislodge them, and 
they were successfully fighting back. A pretty mess it 
made in the courts. 

Finding that Congress was as ever in the bargaining 
mood, the owners of this line opened fresh negotiations, 
and, with such brilliant success, that another act was 
passed in 1872 granting an additional mail subsidy of 
$500,000 a year for ten years. The subsidy plunder was 
now so much larger than before that the contest for its 
possession, or rather its handling, precipitated a still 
more violent row among its owners. With some ulterior 
end in view, Le Grand Lockwood, one of its stockholders, 
publicly charged that bribery had been used to get the 
act through Congress; Lockwood was certainly not 
prompted by moral motives; he had been a large bene- 
ficiary of the Credit Mobilier swindle. The House of 
Representatives took on a look of pained and injured 
surprise, bristled up with indignation, and on February 
20, 1873, ordered the Ways and Means Committee to in- 
vestigate. 

Congress did not, of course, expect that the investiga- 
tion would really disclose any damaging facts ; it was 
sanguinely anticipated that the inquiry could easily be 



MORE DETAILS OF THE SAGE FORTUNE 6l 

diverted to harmless channels. But the testimony given 
shattered these blithe expectations. 



A MILLION DOLLARS IN BRIBES. 

The committee was not elated at the testimony; it 
found itself compelled to report that " a sum of nearly 
one million dollars appears to have been disbursed in 
some sort of connection with the passage of the act," 14 
and " that the results of the evidence are that $565,000 
was paid out to lobbyists ; the disposition of the remain- 
ing $335,000 remains in doubt upon the evidence pre- 
sented." 15 Russell Sage was president of the Pacific 
Mail Steamship Company at this time; he was haled 
up to testify, which he did with a very aggrieved air. 
He denied having been connected with the company^at 
the time that the subsidy was granted, and avowed that 
he knew nothing of the alleged bribery. If we are to 
accept his word that he was not concerned in the brib- 
ery a doubtful acceptation, since in other matters 
he was a proved perjurer lf then what he probably had 
done was to wait until after the $5,000,000 subsidy had 
been granted, and then had manipulated matters to get 
in control himself. No doubt he knew full well of the 
bribery, and it is a possible supposition that he had urged 

14 House Report No. 269, Forty-third Congress, Second Ses- 
sion, 1874-75, n ' : xvii. Henry Clews, that exalted banker and 
moralizer, was one of the directors during this period. 

15 Ibid., xviii. 

16 "A proved perjurer." For years Sage swore that his tax- 
able personal property did not exceed $2,000,000, and even this 
amount he sought to have reduced or wiped off the tax books. 
After his death the New York City Tax Department prepared 
to assess taxes on at least $50,000,000 personal property inherited 
by his widow, but the amount of assessment was greatly re- 
duced when the executor of his will submitted an affidavit claim- 
ing that $10,000,000 of the Sage cash was invested in non-taxable 
securities. 



62 HISTORY OF THE GREAT AMERICAN FORTUNES 

Lockwood to make the charges, in order to raise a pub- 
lic stew, and discredit and overthrow the clique in 
power. 

At all events, whatever the ins and outs, there was 
the Pacific Mail Steamship Company with its large sub- 
sidies obtained by bribery, and Sage the head of it all in 
1873. So far as the identity of bribers and bribed was 
concerned, the committee professed to know nothing. 
One lobbyist, Richard B. Irwin, testified that he had 
paid out $750,000 to " other persons," 1T but who those 
persons were the committee said that it did not know; 
it had " exhausted every resource " in trying to find out, 
but in vain. As usual, it was the " unregulated lobby " 
which was to be blamed and which should be purged. 

So much for Sage's career up to the time when he 
and Gould conjoined in the Union Pacific manipulation 
and other transactions. What they and other capitalists 
associated with them did in these operations will now be 
related. 

17 House Report, No. 269, etc., 1874-75, : 123. 



CHAPTER III 
THE GOULD FORTUNE RESUMED 

When haled in 1887 before that inquisitorial govern- 
mental body, the Pacific Railway Commission, Jay Gould 
vouchsafed little information ; such as was elicited from 
him was of the most meager character. He said that he 
had become the owner of a controlling interest in the 
Union Pacific Railroad Company in 1873 by the pur- 
chase of one hundred thousand shares, and that these 
holdings were subsequently increased to two hundred 
thousand shares. 1 Sage testified that he himself had 
begun buying Union Pacific stock in 1868 or i86o,. 2 As 
soon as the grasp of these men and their associates was 
assured, their industriousness began. Without any in- 
termediate ceremony two hundred thousand shares of 
stock were forthwith issued, all certificates of nothing 
else than their self-arrogated power of present and fu- 
ture exploitation. 

This manufacture, without any interference from law, 
of additional titles of ownership, was only one of their 
numerous and conterminous activities. Their most plas- 
tic and successful plan, by which they were enabled to 
compound loot on a most magnificent scale, was that of 
buying in, as individuals, various railroads, and then 
selling them at exorbitant prices to the Union Pacific 
Railroad Company, which corporatively they controlled. 

1 Pacific Railway Commission, U. S. Senate Executive Docu- 
ments, First Session, Fiftieth Congress, i : 53 and 447. 

2 Ibid., 340. 

63 



64 HISTORY OF THE GREAT AMERICAN FORTUNES 

It was a plan which, although theoretically regarded in 
law as fraudulent, was nevertheless audaciously carried 
on with complete immunity. 



A GREAT OPPORTUNITY FOR FRAUD. 

With its extraordinary opportunities for self-enrich- 
ment on a great scale, this plan was one commonly prac- 
ticed by the puissant capitalists of the times. It had not 
by any means originated with Gould and Sage; other 
railroad capitalists had richly profited by it; so thor- 
oughly has it commended itself as one of the simplest 
and most effective means of transferring wealth, that a 
long succession of magnates have consecutively availed 
of it to this very day. Three generations of Vander- 
bilts have repeatedly demonstrated its value; those illus- 
trious generalissimos of the ranks of wealth, J. Pierpont 
Morgan and E. H. Harriman, have been two more of the 
radiant cluster who have proved its enduring worth. 

By this fraudulent process, incalculable sums of money, 
mounting into the hundreds of millions, have been seized 
with facility. So pregnant with spoils has it been that 
even the United States Industrial Commission of 1901, 
distinguished for its easy-going conventions and acquies- 
cent attitude, could not forbear saying in its mild, defer- 
ential way of transactions in which buyer and seller were 
the same parties : " The possibilities of fraudulent 
profits are something enormous under such conditions. 
Formerly transactions of this kind were often effected 
by individuals who represented another person, or by 
families who were dominant influences in the directorate. 
. . . With the enormous increase both in number 
and magnitude of such transactions, the capital required 



THE GOULD FORTUNE RESUMED 65 

now exceeds the actual investment capacity of any except 
a few great fortunes." 8 

Reduced to simple language this is authoritative con- 
firmation of the truism that none but the mighty rich 
have the means to engage in a great campaign of theft. 
Yet to focus attention upon the frauds of these particular 
capitalists, without inquiring into the good work which 
at bottom they were doing, would be grievously one- 
sided and misleading. Notwithstanding their prodigious 
frauds, Vanderbilt and Gould and all the other masterful 
capitalists were, without being conscious of it, perform- 
ing a great evolutionary service of the highest impor- 
tance. It was they who were among the leaders in con- 
solidating and centralizing transportation and industrial 
utilities ; in effacing the old wasteful competition and the 
warfare of the little capitalists; and in establishing an 
era of systematic, concentrated private control. It was 
done despite statutory law and judicial decisions, in spite 
of every obstacle, for it had to be done; it was an 
inevitable stage of progress preceding further stages. In 
doing it, however, the great barons were prompted by 
selfish greed only; they fixed their own price, a colossal 
price, taxing the producer to pay whatever toll they de- 
manded. 



THE PLUNDERING OF RAILROAD SYSTEMS. 

One of the railroads that Gould, Sage, Sidney Dillon * 
and their accessories bought as individuals, and then 

8 Final Report of the Industrial Commission, 1902, xixrjao- 
327. 

4 Dillon was the founder of an extensive fortune ; his de- 
scendants are among the prominent railroad owners of the 
United States. 



66 HISTORY OF THE GREAT AMERICAN FORTUNES 

sold to themselves as directors of the Union Pacific, 
was the Kansas Pacific. This line, about three hundred 
and ninety-four miles in length, was another of the many 
railroads the history of which was replete with unbroken 
corruption. Its chief assets were an issue of Govern- 
ment bonds, and a land grant of three million acres in 
Kansas and Colorado. 

From the very granting of the charter the corruption 
was so well established that none but the densely obtuse 
could be ignorant of it. But what mattered the means 
used? The greater the corruption, the more certainty 
was there that the ensuing privileges, powers and profits 
would be all the richer. And the more attractive the 
prospects, the more eager in their cupidity were the 
luminaries of the financial world to thrust in a hand. 
Eminent bankers sharply competed to participate in the 
financing of the project ; the floating of the Kansas Pa- 
cific loan was finally awarded to two banking firms. 
One of these was Dabney, Morgan and Co., of which 
J. Pierpont Morgan was a member, and the other the 
house of Morris K. Jesup and Co., the head of which sub- 
sequently managed to become enrolled among the gal- 
axy of glorified philanthropists.* In their advertisements 
in 1869 these bankers glowingly descanted upon the 
splendid land grant of the Kansas Pacific a grant, 
which they assured all intending investors, would be more 
than sufficient security for loans. 

BLACKMAILING AND PILLAGE. 

But the usual culmination came. The Kansas and 
Pacific project was no exception to the invariable ex- 

8 His estate, after his death on January 22, 1908, was esti- 
mated at $12,814,894 in net personal and real estate. A large 
portion of the estate was in railroad securities. 



THE GOULD FORTUNE RESUMED 67 

perience in railroad affairs. It was assiduously plun- 
dered by the men on top of the heap, and the following 
of petty investors were neatly cheated out. Obviously, 
stripped as it was, the market value of its stock sunk to 
an insignificant point. Gould had been waiting for pre- 
cisely this opportunity, but he did not avail himself 
of it before he had put through a sort of blackmailing 
scheme by which he could all the more effectually force 
the Kansas Pacific into his ownership. 

With a loquacity that ought to have aroused keen 
suspicion, he proclaimed his purpose to break down the 
monopoly held by the Kansas Pacific; once more he 
posed as a middle-class benefactor. Thereupon he be- 
gan, or, rather, ordered, the building of a railroad in 
Colorado which trenched competitively upon part of the 
very territory the Kansas Pacific owners regarded as 
their own assured domain. Gould's scheme worked to 
perfection; Kansas Pacific stock was forced lower still, 
and its affrighted owners were speedily compelled to 
come to terms. No sooner had Gould obtained posses- 
sion of the Kansas Pacific, and consolidated it with the 
Union Pacific, than he at once abandoned the Colorado 
Railroad.' 

Just how much of Kansas Pacific Railroad stock 
Gould, Sage and Dillon respectively secured is not clear, 
but the amount of booty that they collectively took in by 
the fraudulent process of selling this railroad and other 
railroads to themselves as masters of the Union Pacific, is 
quite clear. No mean operation was it something mas- 
sive was there about it such as might evoke a wonder- 
ing admiration on the part of a society wherein great 
thefts were placed in an exalted category. 

In the juggling exchange of stocks and bonds and the 

* Pacific Railway Commission, i : 175. 



68 HISTORY OX THE GREAT AMERICAN FORTUNES , 

fraudulent diversion of funds, they stole (the Govern- 
ment termed it "misappropriated") more than $20,000,- 
ooo in the Kansas Pacific, the Denver, South Park and 
Pacific, and other consolidations alone. From the vol- 
umes of the Pacific Railway Commission's report and 
investigation, certain definite facts are ascertainable. 
Both the majority report, that of Commissioners Littler 
and Anderson, and the minority report of Commissioner 
Pattison, set forth that the frauds of the Union Pacific 
Railroad Company, under the direction of Gould, Sage 
and Dillon, were truly gigantic. 

Millions of acres of public land were stolen outright. 
Not less than seven million acres were sold without any 
patent from the Government. 7 Coal lands of inestima- 
ble value were fraudulently seized. 8 Millions of dollars 
were fraudulently shuffled from one corporation to an- 
other. The stock of the Union Pacific was inflated from 
$38,000,000 to $50,000,000, the bonded indebtedness from 
$88,000,000 to $126,000,000, and sundry other in- 
debtedness from about $4,000,000 to nearly $10,000,000. 
The majority report referred " to the lavish and reckless 
distribution of the assets of the company in dividends " 
and expressed sharp curiosity as to why the Union Pa- 
cific Railroad Company, although doing a large and 
profitable business, " found itself early in 1884 on the 
verge of bankruptcy." 

While these huge stealings were going on, and after 
a Government action for " misappropriation of assets " 
had been begun, Gould and his accomplices took steps to 
grant themselves immunity from legal consequences. 
" It appears," says the majority report, " that, while this 
litigation was pending, certain proceedings were taken 

7 Pacific Railway Commission, i : 102. 
Ibid. 



THE GOULD FORTUNE RESUMED 69 

by the directors whereby by their own acts and votes 
they undertook to release themselves from any obliga- 
tions or liabilities to the company." 

FORTY MILLION DOLLARS GOULD'S SHARE. 

The minority report was even severer and more 
searching. It set forth that the Union Pacific and the 
Kansas Pacific had received about $35,000,000 in ad- 
vances from the Government, little of which had been 
paid back, and that up to 1887 the sum of $136,314,- 
010.73 " had been dissipated " by the directors of these 
two railroads. 9 Fully $84,000,000 of watered stock had 
been issued. "The Union Pacific Company," the mi- 
nority report went on, "has received $176,294,793.53 
in surplus earnings and land sales during eighteen years, 
and if its stock had been fully paid, as Congress required 
that it should be, and as its officers certified under oath 
that it was, nearly all of that money would be applicable 
to-day to the payment of the Government debt. The 
company has paid out $28,650,770 in dividends, and $82,- 
742,850 in interest on bonds, nearly all of which was 
distributed to shareholders without consideration. It 
has sunk over $10,000,000 in Denver, South Park and 
Pacific; it paid out $10,000,000 to Jay Gould and his 
associates for branch lines and other investments which 
were worthless." . . . Commissioner Pattison esti- 
mated that Jay Gould's personal profit from his manipu- 
lation of the Union Pacific amounted to probably $40,- 
ooo,ooo. 10 

A large part of the sum that Pattison included in his 
estimate of the total theft from the origin of the Union 

9 Pacific Railway Commission, i : 147. The Government subse- 
quently compelled the Union Pacific to make a sort of settlement.- 

10 Ibid., i : 150. 



70 HISTORY OF THE GREAT AMERICAN FORTUNES 

Pacific Railroad was, as we have seen, stolen by Gould's 
predecessors in the Credit Mobilier swindle. 

Inasmuch as technical financial terms often present 
mystifying difficulties to the unaccustomed, a definition 
of stocks and bonds may not here be out of place; the 
more appropriately so since it will explain how the 
manipulators of railroad and other property constituted 
themselves both shareholders and creditors. 

If they desired a railroad to be on a paying basis, they, 
as stockholders, took its dividends; if it suited their 
ulterior purposes to bankrupt it, they, as bondholders, 
could foreclose and buy it back at a bargain price. In 
the phrase of the street, they could " play both ends 
against the middle." Bonds and stocks, although both 
classed as capital, differ in certain salient respects. 
Bonds are certificates of indebtedness theoretically issued 
to those who have made loans to a corporation, and can 
be effaced upon payment of the principal. Stocks, on 
the other hand, are certificates of ownership theoretically 
issued to investors ; by their nature they are in law per- 
petual. In brief, then, the stockholders are the owners 
of a corporation ; the bondholders its creditors. 

THE FARCE OF THE COURTS. 

The query can here naturally be expected : Why was 
Gould not prosecuted for his malefactions ? How was 
it possible for him to have carried through his immense 
thefts without some visitation of criminal proceedings? 
So long as he robbed the people, the great plodding, pow- 
erless multitude, without any real representation in po- 
litical office, it could be understood that his license would 
in nowise be interfered with, seeing that all law was 
at the command of the rich freebooters. But Gould 



THE GOULD FORTUNE RESUMED Jl 

plundered his own class as well ; outraged, betrayed and 
pillaged his own associates; they were men of power; 
why did not they invoke the terrors of criminal law? 

Well, some of them did. But it profited them no more 
than it did his opponents in his famous Erie steals. 
Threatened with jail several times, Gould easily con- 
trived to keep out of it, as did his similars in every great 
capitalist fraud. An indictment found against him on 
May 13, 1879, by the Grand Jury of Monmouth County, 
New Jersey, for alleged fraudulent transactions, did not 
trouble him in the least. The charge in this case was 
made by the Lehigh Car Manufacturing Company that it 
had supplied cars to him on false representations ; that 
it had agreed to accept as payment first-mortgage bonds 
of the New Jersey Central Railroad, only to discover, 
when too late, that these bonds were spurious " consolida- 
tion bonds " representing a consolidation that was never 
made. 

Out of this indictment Gould somehow wriggled, and 
nine years later he was as successful in snuffing out an- 
other case of criminal proceedings. 

This was in 1888; powerful adversaries sought hard 
to put him in prison ; and it was the knowledge of their 
power and persistence that thoroughly alarmed Gould. 

Certain of these opponents were disgruntled bond- 
holders of the Denver Pacific Railroad, and they were 
assisted by the owner of an important New York news- 
paper whose interests Gould had crossed and thwarted 
in the telegraph and submarine cable field. The charge 
revolved around a tricky piece of perjury by which 
Gould, Sage and Dillon, in their railroad consolidations, 
had embezzled several million dollars in the juggling of 
thirty thousand shares of Denver Pacific stock. These 
bondholders had begun an action against Gould and 



72 HISTORY OF THE GREAT AMERICAN FORTUNES 

Sage in New York, in 1885, for restitution; the news- 
paper owner daily emitted savage maledictory broadsides 
against Gould, and demanded his punishment. And to 
cap it all, the foreman of the Grand Jury sitting was a 
fellow capitalist, whom Gould had cheated fifteen years 
before in one of his railroad transactions. 

It was a formidable combination arrayed against him. 
Gould knew it. He realized at once that he had better 
settle with the complaining bondholders and light out 
and with dispatch; he thereupon came to terms with 
them, and then fled on his yacht and remained in for- 
eign parts until the statute of limitations could be 
pleaded with success in his behalf, so far as criminal pro- 
ceedings were concerned. 



A WIDE TRAIL OF CORRUPTION. 

Still another question, although an idle one, may arise : 
How was Gould able to get the laws necessary for his 
numerous frauds, and immunity from legislative and 
other official action? The Pacific Railway Commission- 
ers' report does not answer this question elucidatively. 
The minority report, however, sheds a few more rays 
upon his methods. " Hundreds of thousands of dollars," 
it says, " have been disbursed at the State and National 
capitals for the purpose of influencing legislation." n 
Frequent references are made to " payments for im- 
proper purposes." However, even if the commission had 
not explained in its meager, grudging way the corrup- 
tion following Gould everywhere, it could be taken for 
granted ; his trail of bribery and fraud had been a public 
stench for full twenty years, in which respect he differed 
much from most contemporary wealth-seekers, for 

11 Pacific Railway Commission, i : 192, 



THE GOULD FORTUNE RESUMED 73 

whereas he acquired both name and game they, too, had 
the game, yet so cunningly was it bagged that they were 
able to slip into the cover of good repute. Also, let this 
fact not be overlooked; that the widespread bribery was 
but a form of procuring license to prey at pleasure. To 
get laws sanctioning theft, and official connivance at the 
retention of the proceeds, it was necessary to divide 
among the politicians (including some of those on the 
bench) a certain portion of the spoils. 

By about the year 1883 Gould discarded the Union 
Pacific after having, as he believed, looted the marrow 
out of it. Doubtless his conclusion was aright, seeing 
that no further immediate booty was in sight in that 
particular line and at that day. But in the fullness of 
time, namely, fifteen years later, when the country's 
population and resources had greatly expanded, a worthy 
successor, in the person of Harriman, came irresistibly 
along to imitate and elaborate Gould's methods. Not to 
the purpose is it here to anticipate the narrative of Har- 
riman's career ; this will be faithfully found in its proper 
place ; but one more addendum is needed to give a kind 
of finishing touch to the tale of the Kansas Pacific Rail- 
road, if only to show that others knew how to begin 
where Gould left off. 

The $40,000,000 or thereabouts in loot which Gould 
appropriated came in considerable part from the Kan- 
sas Pacific transaction. The final swindling of the Gov- 
ernment out of much of the advances that it had given 
for this road, occurred in 1898 at the precise time 
when Harriman was bursting brilliantly into wealth and 
power. 

The Government held a remaining claim against the 
Kansas Pacific for $13,000,00x5. A fraudulent plan had 
been concocted to have the Government sell its lien at 



74 HISTORY OF THE GREAT AMERICAN FORTUNES 

one-half of the amount due; a most deftly preconceived 
plan it was, and only on the eve of its consummation was 
there any noise raised. Turpie offered a motion in the 
United States Senate that the sale be not confirmed ; sup- 
porting that motion, Senator Allen rose on February 16, 
1898, and remarked that "we might as well enact a statute 
taking $6,700,000 out of the Treasury and make an abso- 
lute donation of it. It would be no more criminal, no 
more in violation of the statutory rights of the people." 12 
Senator Morgan, of Alabama, denounced the sale as rob- 
bery, Harris called it a swindle, and its promoters thieves. 
Robust language, but it did not interfere with the hasty 
sale for $6,000,000 of the Government's lien on that very 
same day. 

VAST AREAS OF COAL FIELDS STOLEN. 

To form any adequate conception of Gould's thefts 
in his manipulation and management of the Union Pa- 
cific consolidation, a mere money computation falls flat. 
The resources expropriated by Gould and by his de- 
scendants cannot be expressed in money terms. For ex- 
ample, the enormous coal deposits expropriated from the 
people who can say what their exact money value is? 
The Interstate Commerce Commission announces that 
practically the entire coal supply of Oklahoma, Utah and 
Wyoming is owned and monopolized by the Gould rail- 
way system, principally by the Denver and Rio Grande 
Railroad, which was one of a number of Western rail- 
road lines that Gould held onto and bequeathed to his 
children. 

How was the ownership of these extensive coal fields 

12 The Congressional Record, Fifty-fifth Congress, Second 
Session, Vol. iii, Part II: 1761. 



THE GOULD FORTUNE RESUMED 75 

obtained? Here we do not have to encounter any in- 
tricacies of stock and bond finance; they were simply 
seized with just enough formalities to give some color 
of complying with the law. Behind these thin formali- 
ties lay a long path of " fraud, perjury and violence," 
says the Interstate Commerce Commission's report of 
1908. In commonplace official diction the story of the 
seizure of these deposits is there told; how for forty 
years or more the Gould and other railroad corpora- 
tions have employed dummy " occupiers " mainly 
women to file fictitious entries on public coal lands, 
and then have had the claims transferred. An inexpen- 
sive method it has been, ridiculously easy to get much 
for little ; the dummy " occupiers " were paid $50 or 
$100 each to do their fraudulent work. And if a coal or 
an oil deposit could not be obtained by fraud, then if 
the numerous testimony taken by the Interstate Com- 
merce Commission is correct force was used to oust 
such individual occupants as had lawfully acquired the 
land. 13 * 

13 One of the capitalists connected with Gould and Sage was 
David H. Moffatt, Jr. Moffatt was an official of the Denver 
Pacific Railway and Telegraph Company, and was associated 
with Gould and Sage in the Union Pacific Railroad. He be- 
came one of the foremost millionaires in Colorado. Some of his 
methods were revealed in a case before the Supreme Court of 
the United States. The Government had brought suit to cause 
the cancellation of two patents of land in Colorado, granted 
about ten years before, in 1873. This land was partly a val- 
uable mineral tract, containing large deposits of coal and iron. 
The Government won its case in the lower courts, and Moffatt 
appealed. In its decision the Supreme Court held that Govern- 
ment land officials had conspired to defraud the Government; 
that patents of land were made out in fictitious names of al- 
leged settlers: that the affidavits were forged, and that Moffatt 
was the real beneficiary and " knew of the false and fraudulent 
character of alleged preemptions." (United States Reports, Vol. 
cxii: 24-32.) In this particular case, Moffatt was defeated, but 
it is very likely that he was successful in similar instances of ac- 
quiring mineral lands. 



76 HISTORY OF THE GREAT AMERICAN FORTUNES 

Continuously, since 1866, these thefts of coal and oil 
lands have gone on with but occasional stoppages due 
to official investigations. These in nowise served to pre- 
vent a fiercer resumption. The Interstate Commerce 
Commission recently reported that the Gould and Har- 
riman lines in a large region beyond the Mississippi " ab- 
solutely dominate the mining, transportation and selling 
of coal along their lines." Uncounted paragraphs and 
strings of affidavits, all embodied in the official volumes, 
sustain the charges of fraud, perjury and violence. Yet 
the beneficiaries of those colossal frauds have good rea- 
son to smile amusedly at all such futile investigations ; the 
ownership of most of the stolen property, however pro- 
cured, is theirs ; some the Government succeeded in get- 
ting back, but proportionately little. On the whole, the 
beneficiaries are well satisfied. 

Let it not be supposed that Gould's mind was so pre- 
occupied with his Union Pacific piracies that he was 
oblivious to opportunities elsewhere. Far from*it. This 
undersized man, with his mild voice and inconspicuous, 
almost effeminate, personality, was, indeed, an irrepressi- 
ble conquerer, seizing and pillaging not merely wherever 
he went, but in many places and in different fields simul- 
taneously. In his own chosen method of warfare, his 
mind was an extraordinarily versatile one, wonderfully 
gifted at computation, with the virile ability to keep track 
of a vast variety of involved transactions at the same 
time. With the law end of them he did not have to 
concern himself ; at call he could always hire a corps of 
the most dexterous attorneys, none of whom scrupled to 
take as payment a fraction of his thefts. Lawyers, some 
of whom became judges in the highest courts in the 
country, and other lawyers who had been judges and had 



THE GOULD FORTUNE RESUMED 77 

resigned to draw large retainers from the very corpora- 
tions in whose favor they had handed down decisions, 
pleaded and plotted for Gould. An excellent client he 
was; the litigations in which he was involved were ex- 
tensive. 

GOULD'S TEXAS PACIFIC UNDERTAKING. 

Wherever he appeared, the lesser frauds were over- 
whelmed and flung out and he, the great fraud, substi- 
tuted himself in their places. This he again demon- 
strated in his appropriation and looting of the Texas 
Pacific Railroad. This line had received the usual Gov- 
ernment subsidies and land-grant gratuities. The cor- 
ruption used in the procuring of these was fully revealed 
in the celebrated " Huntington letters," which came to 
light later in a suit arising between two railroad fac- 
tions. The writer of these letters was a man who knew ; 
a preeminent corrupter himself ; he was none other than 
Collis P. Huntington, one of the dictating railroad mag- 
nates of the period. In 1876, 1877 and 1878, the years 
covered by his letters, a furious competition in corruption 
was in progress at Washington, and Huntington wrote 
unreservedly of it. 14 

After Congress passed the Texas Pacific Railroad Act, 
Gould turned up with a scheme closely resembling the 
Credit Mobilier swindle. Forming a construction com- 
pany he entered into a contract with the Texas Pacific 

14 In a letter dated December 17, 1877, Huntington wrote: 
" Jay Gould went to Washington about two weeks since, and 
I know saw Mitchell, Senator from Oregon. Since which time 
money has been used very freely in Washington. . . . Gould 
has large amounts in cash and he pays it without stint to carry 
his points." In a letter dated May 3, 1878, Huntington wrote 
that the Texas and Pacific " folks offered one member of Con- 
gress $1,000 cash down, $5,000 when the bill passed and $10,000 
of the bonds " if he would vote for the bill, etc., etc. 



78 HISTORY OF THE GREAT AMERICAN FORTUNES 

Railroad Company to build the westward extension, em- 
bracing about six hundred miles. For this work $12,- 
000,000 in bonds was to be paid, and a stock bonus of 
another $12,000,000. A very remarkable contract it was, 
tantamount to giving Gould a present of the system ; its 
execution could be explained only upon the premise that 
Gould had bought up a sufficient number of the railroad 
directors, with an assurance that they would get a gen- 
erous dip into the plunder. For by the terms of the 
contract, the stockholders of the Texas Pacific owned a 
one-sixth interest only in the construction company; 
this left the Gould syndicate with $10,000,000 in stock, 
which easily sufficed to give it the mastery of the road. 
It placed him in a position where he could elect its di- 
rectors, make further contracts with himself on any basis 
he chose, manipulate its affairs, and, in general, make 
them dovetail with his many other schemes. 



MORE RAILROAD SYSTEMS GATHERED IN. 

The Texas Pacific was one of the four main lines that 
Gould and Sage obtained control of by their well-known 
methods. These it is scarcely necessary to recapitulate. 
Another of their lines was the Wabash, composed of 
sixty-eight originally separate little railroads in Ohio, 
Michigan, Indiana, Illinois, Missouri and Iowa. Within 
five years of the time they gained hold of the Wabash, 
Gould and Sage had obtained a great series of privileges 
from various States, looted the railroad of millions of 
dollars, and then had thrown it into bankruptcy. 15 So 
nauseatingly fraudulent were their methods, that Judge 
Gresham, of the United States Circuit Court one of 

16 A detailed account of this wrecking transaction appeared in 
the " Xorth American Review," issue of February, 1888. 



THE GOULD FORTUNE RESUMED 79 

the few judges of independent character removed re- 
ceivers whom Gould and Sage had caused to be ap- 
pointed, and accompanied this act with a caustic de- 
nunciation ; all of which had no effect upon Gould's own- 
ership; he retained its control and it descended to his 
family. 

Each new haul gave Gould and Sage a still greater 
supply of resources with which to manipulate other rail- 
roads and other public utility systems into their control. 
The Missouri Pacific, with its chain of railroads for the 
building of which the State of Missouri had advanced 
$25,000,000, was next added to the list. It suited the 
plan of Gould and Sage not to drive this railroad into 
bankruptcy as they had the others. In this instance 
they had a special design. By fraudulently diverting 
freight traffic at the expense of their other railroads, they 
so increased its " earnings " that its stock commanded 
a high value ; the selling of the stock at the apex price 
yielded them large sums. Then they would depreciate 
the value of the stock and buy it back. The Missouri 
Pacific is to-day one of the most prized possessions of 
the Gould family ; its control is so compactly a matter of 
callow family inheritance that only recently, in 1909, 
Kingdon Gould, a grandson of Jay Gould, was installed 
as a director. 

All of these various systems were annexed by Gould 
in approximately the same years that he was plundering 
the Union Pacific. Shall we enter into a recital of the 
network of details by which the final result was ac- 
complished? The maneuvering, the coercion here, the 
bribery there, the undermining of this faction of capital- 
ists, and the overthrow of that, the legal devices and 
long-drawn law suits all these form a complex nar- 
rative which, if copiously described, would be confusing 



80 HISTORY OF THE GREAT AMERICAN FORTUNES 

and wearisome. But the battering methods Gould used 
in getting hold of other properties are worth an outline, 
showing as they do, the manner in which the railroad 
and industrial kings fought out their wars. 



VANDERBILT BLACKMAILED AND OUTGENERALED. 

In looking about for new properties to add to their 
possessions, Gould and Sage, when sacking the Union 
Pacific Railroad, decided that the Western Union Tele- 
graph system should be theirs. Any other set of capital- 
ists would have hesitated long before venturing such a 
plan, for that company, the strongest of all the telegraph 
companies, was controlled by William H. Vanderbilt, the 
richest capitalist in the United States. Gould and Sage 
were not at all deterred by the prospect ; they had a plan 
by which they could force out Vanderbilt; it was none 
other than the species of blackmailing scheme which 
they had used to coerce the Kansas Pacific directors, a 
scheme which Vanderbilt himself had employed, and 
which competing capitalists had used against him. 

This oft-used scheme of the day was the very simple 
one of building a competitive telegraph line. Again 
Gould came forward with the posture of being an " an- 
tagonist of monopolies " ; sweetly did he discourse on 
the necessity of complete competition. It was at this 
time that Senator Vest minted his trenchant comment 
upon the professions of the money seekers, " When they 
speak they lie; when they are silent they are stealing," 
an epigram deserving of perpetuation. 

Along the line of the Union Pacific Railroad and 
of their other railroads, Gould and Sage ordered the 
construction of a telegraph line, with the fixed purpose 
of compelling Vanderbilt either to buy or to sell. So 



THE GOULD FORTUNE RESUMED 8l 

seriously was the business of the Western Union Tele- 
graph Company cut in upon, that, in self-protection, it 
was finally forced to buy Gould's competing line for 
about, it was understood, $10,000,000. Having pock- 
eted this large sum wrenched from Vanderbilt and his 
associates, Gould then plunged in and took away their 
entire telegraph system. By every trick and art of 
Stock Exchange speculative methods, Gould forced 
down the price of Western Union stock, and gradually 
bought in quantities. To Vanderbilt's complete surprise 
and extreme mortification, Gould turned up in 1881 not 
only with a control of the Western Union, but also of 
the American Union Telegraph Company which he had 
sold to Vanderbilt but a short time previously. 



THE MONEY ARISTOCRACY AND GOULD. 

Upon obtaining control of the Western Union Tele- 
graph Company, Gould immediately increased its stock 
and kept on increasing it. Triumphant, gorged with 
spoils and power, Gould did not have to court the sup- 
port of all that was considered solid and respectable 
among the money aristocracy. They knew him to be a 
great thief, and he knew their caliber, despite the ex- 
terior that they had woven about themselves. The in- 
stinct of kind for kind is unerring; which instinct in a 
money world is reinforced by that invariable principle 
of action whereby wealth-seekers rally around him who 
proves his supreme ability to get away with the plunder. 
The vanquished are expeditiously deserted; the success- 
ful flocked about. Such fellow kings of wealth as John 
Jacob Astor, J. Pierpont Morgan, Collis P. Huntington 
and others were among the noble array to be found in 
Gould's board of directors; a notable lot many, or all, 



82 HISTORY OF THE GREAT AMERICAN FORTUNES 

of whom had pursued careers more or less paralleling 
Gould's; a sophisticated confraternity they comprised, 
fully and finely capable of understanding one another. 

All were wary old stagers; Gould could not easily 
overreach them; while all of them were not quite as 
astute as Sage, most were widely schooled in every 
devious tactic and ruse of financial and industrial war- 
fare. Their safety lay in their lack of trust; the very 
reverse of the virtues they preached was developed by 
the necessities of their conflict. But when a credulous 
man, such as Cyrus W. Field, the originator of the sub- 
marine cable, stepped along with his confiding faith in 
Gould's friendship, spoliation and ruin were easy ac- 
complishments. Field was simple enough to believe in 
Gould; only after Gould had mercilessly squeezed his 
wealth out of him, and had turned him adrift a bank- 
rupt, did Field, too late, begin to realize that friendship 
had no place in the competitive whirligig. Field had 
little reason to whine over his misfortunes; the wealth 
that Gould tore from him was the product of a series of 
frauds in the results of which he was very willing to 
share. 



GOULD SWEEPS IN ELEVATED RAILROADS. 

This fleecing of Field happened in Gould's thimble- 
rigging of elevated railroad stocks in New York city. 
No part whatever had Gould in the building of this ele- 
vated system; the franchises by which the roads were 
constructed and operated had been obtained by bribery. 
After other capitalists had done the bribing and had 
shown how profitable these elevated railroads were, 
Gould and Sage reached out for their ownership. 

It was fairly well established before the Hepburn 



THE GOULD FORTUNE RESUMED 83 

Legislative committee, in 1879, that about $650,000 had 
been expended in bribes to get the charter of one of 
these elevated railroad companies, the Gilbert, later 
called the Metropolitan. Under examination, Jose F. 
Navarro, one of the officials of the company, testified 
that up to the time the building of this railroad was 
started, $650,000 had been spent. Questioned as to 
whether it had been expended at New York or at 
Albany (the seat of the Legislature) he replied that 
he did not know. It was quite clear from the inter- 
rogatories and answers that this $650,000 had been used 
as a corruption fund. 18 Probably a similar sum had 
been used to get the franchise of the other elevated 
railroad, the New York. 

The old device, so familiar in railroad building, of 
organizing a construction company, was employed in 
the building of the elevated railroads. A company 
called the New York Loan and Improvement Company 
was brought forth to carry on the work of construc- 
tion. The same men were directors of both construction 
company and elevated railroad companies, and made 
fraudulent contracts with themselves. 17 Such capi- 
talists and " philanthropists " as George M. Pullman, 
John P. Kennedy 18 and others profited heavily from 

16 Railroad Investigation of the State of New York, 1879, v : 43. 
These franchises originated during the period of the Tweed 
regime. The New York Legislature was then being frequently 
corrupted. When the franchise for the Bleecker Street and 
Fulton Ferry surface line, New York City, was obtained, $434,- 
ooo of its bonds were distributed gratuitously. (See "The His- 
tory of Public Franchises in New York City, p. 121.) 

" Ibid., 12. 

18 Of Pullman some facts have been brought out in Vol. i of 
this work. Another example of his methods and standards 
at about this time may be instructive. After Jacob Sharp had 
bribed the New York City Board of Aldermen with $500,000 in 
cash, in 1884, to give Sharp a franchise for a surface railway 
on Broadway, the owners of the franchise issued $952,000 in 



84 HISTORY OF THE GREAT AMERICAN FORTUNES 

these fraudulent transactions; they were, at the same 
time, reaping wealth elsewhere by many other methods 
of the same character. 

After the first two elevated railroads were built, a 
new scheme of plunder was conceived and carried out. 
A company called the Manhattan was chartered with a 
capital of $2,000,000, ostensibly to build elevated rail- 
ways. But it did not build a single foot ; the same clique 
in control of the New York Loan and Improvement 
Company turned up in control of the Manhattan, and 
they leased the two existing roads to the Manhattan. 
Little actual cash did this lease cost them ; they illegally 
increased the Manhattan's capital stock from $2,000,000 
to $13,000,000, which amount they divided as loot. 19 By 
stockjobbing methods Gould and Sage then crushed out 
most of the small stockholders, and secured control. 
They proceeded to water the stock still more, consoli- 
date the whole system, and crowd out the more pow- 
erful stockholders. 



FIELD THROWN OUT. 

Certain of the heavy stockholders, such as Field, 
stood in with Gould and Sage, but others bitterly fought 
the various fraudulent moves and expedients that Gould 
and Sage brought into play. The outcome of the en- 
suing legal contest could be forecasted. Gould seldom 

stock and $2,500,000 in bonds for the construction of a railway 
only three miles in length, and the real cost of which was only 
$160,000. These bonds were unlawfully and dishonestly issued. 
Pullman knew that fact, and also of the bribery. In exchange 
for cars supplied by him, he received $150,000 of these bonds 
at fifty cents on the dollar. See report of, and testimony be- 
fore, the New York Senate Investigating Committee, " Senate 
Committee Broadway Railroad, 1886 ":i8i. 

19 Railroad Investigation of the State of New York, 1879, 
v : 6 and 7. 



THE GOULD FORTUNE RESUMED 85 

went into court without owning his judge. The judicial 
tool this time was Westbrook of the New York Supreme 
Court; when Gould had started out in his career of 
theft, Westbrook had been his first lawyer. Now as 
judge, Westbrook issued orders and injunctions backing 
up Gould and Sage's fraudulent acts. His subservience 
was so notorious that he once held court in Gould's pri- 
vate office in the Western Union Telegraph Company's 
office and issued an injunction. 2 * 

After becoming absolute masters of the elevated rail- 
way systems in New York city Gould and Sage no longer 
had any use for Field. At the first opportunity the stock 
market was rigged to divest Field, and he was thrown 
out to linger and die a ruined man. 

20 The New York State Assembly later impeached Judge West- 
brook for malfeasance in office; but from the Senate, as trial 
body, he managed to get a verdict of acquittal. 



CHAPTER IV 
THE PRESENT STATUS OF THE GOULD FORTUNE 

What was the concrete result, the grand culmination 
of Gould's fifteen years of plundering? He, himself, 
gave a demonstration when on March 13, 1882, he called 
in Sage and other associates and exhibited to them a 
box crammed with securities. Disparaging reports had 
been scattered in Wall street that he had been hard 
hit by recent declines in the stock market; and it was 
to belie these statements that he summoned in witnesses 
to attest by impressive proofs that his wealth and power 
were unaffected. He spread out $23,000,000 of West- 
ern Union stock; $12,000,000 of Missouri Pacific stock, 
and $19,000,000 of other stocks. " There is not another 
man in America except Vanderbilt," observed Sage, 
" who could make such a display of stock as that." But 
the securities thus revealed were only a part of Gould's 
wealth ; they did not include many other varieties. Two 
years later he ostentatiously made another and still 
larger display. 

Those heaps of stocks and bonds were the legal tokens 
of this one man's far-reaching power. By their owner- 
ship he was vested not only with the mastery of the 
great inflowing revenues from numerous corporations, 
but the autocratic control over a vast army of wage 
workers. Every dollar of his fortune had been ex- 
tracted by deceit, bribery, fraud and theft, yet here he 
was, one of the dominating magnates of the country, the 

86 



PRESENT STATUS OF THE GOULD FORTUNE 87 

owner of a ramification of properties, the dictator of the 
fate of tens of thousands of workingmen. Behind him, 
as an impregnable fortification, stood the Law, guaran- 
teeing him the possession of that which he had seized 
by theft. 



WARRED ON CAPITALIST AND WORKER ALIKE. 

But a few years back and Gould was buying law to 
escape law ; and now here he was unbranded with the 
prison stigma, thanks to his money, and lording it over 
the nation. But ever there clung to him that same 
crass, indiscriminate brutality of method in dealing both 
with the powerful and the weak; just as he struck hard 
at competing capitalists, without timidity or mercy, so 
did he openly and candidly browbeat and terrorize his 
legions of workingmen. Of him it could not be said that 
he shrank from assailing the strong, while overawing 
the feeble. He warred on both capitalist and on labor, 
organized and unorganized, and did so with equal fe- 
rocity whether by involution or frontal onslaught. 
Gould was not the politic sort of magnate who cut the 
pay of his workingmen, and then, as a solace, presented 
them with a toy philanthropy; he did not polish greed 
with hypocrisy. When he reduced the pay of the work- 
ers on his lines, he did it with a bold aggressiveness, dar- 
ing them to challenge his power. 

Few magnates, while in the very process of putting 
through some colossal fraud, had the hardihood to incite 
the resentment of their employes and of the people. 
They preferred to wait until the agitation over their in- 
dividual frauds had been tempered by a certain lapse of 
time. Such a cautious policy on no occasion hindered 
Gould. During the very times when he was defrauding 



88 HISTORY OF THE GREAT AMERICAN FORTUNES 

and bribing, he belligerently attacked his workers and 
compelled them to accept lower wages. What if a 
public outcry should go up ? He had been menaced with 
many outbursts of fierce, withal futile, public indigna- 
tion; they had not interfered with his accumulations; he 
viewed them with a cynical scorn. 

In 1881 he and his clique were loaded down with 
spoils; the people had grown exceedingly restless, stung 
by their poverty, on the one hand, and contemplating 
the gigantic wealth of the capitalists on the other. 
Gould went ahead as if public protest were as nothing. 
He added, as we have seen, $13,000,000 of watered stock 
to the capital of the elevated railroads in New York 
city, and at the same time forced the agents and gate- 
men on those roads to submit to new terms. They had 
been complaining that they had to work from twelve 
to fifteen hours a day for the wretched pittance of $2 
and $1.75 a day. Gould listened to their grievances, 
and conciliated them with an order reducing their day's 
work to twelve hours. But their visions of scanty tri- 
umph vanished when they learned that he had also cut 
their pay. 

At the very time that he was looting the railroads in 
the West, he reduced the wages of the men on the Mis- 
souri Pacific and defied the labor unions, causing great 
strikes in 1885 and 1886, by which, however, his rail- 
road workers gained virtually nothing. Most typical of 
the servility of many newspapers and politicians were the 
abuse and obloquy with which the labor leaders who con- 
ducted those strikes were overwhelmed. Let a man 
champion the cause of the oppressed, and no matter how 
lofty his ideals or noble his nature, he was at once sub- 
jected to an endless stream of ridicule and traducing. 
The servitors of the public press and the retainers of 



PRESENT STATUS OF THE GOULD FORTUNE 89 

politics joined in a vicious persecution; Martin Irons, 
who managed the Missouri Pacific strike, was defamed, 
hounded and blacklisted. It was pitiful to see this man, 
one of the purest, best and self-sacrificing, precariously 
compelled in after years to sell peanuts for a living; and 
he now lies in an obscure grave, quite forgotten, while 
the remains of Gould, one of the master thieves of the 
period, repose in a spacious mausoleum, and the children 
of Gould are among the oligarchy of families ruling the 
United States. 



THEFT REWARDED WITH POWER AND SPLENDOR. 

At forty-five years of age Gould possessed more than 
a hundred million dollars. He was prematurely old; 
his beard was streaked with gray, his hair thin, and his 
swarthy, bilious, glowering face was rigid with hard, 
deep lines. His form had shrunk so that he looked more 
insignificant than ever before. But when he traveled, 
no one could mistake the evidences of sovereign power. 
From one end of the country to the other he rode in a 
palatial private car, handsomely appointed, containing 
every comfort and luxury then devised an observation 
room, a parlor, a dining hall, sleeping rooms, a kitchen 
and porter's quarters. His yacht, Atalanta, was sump- 
tuous, indeed. His manner of life befitted that of a 
full-blown magnate. At Irvington-on-the-Hudson he 
sequestered himself in a great and costly mansion, sur- 
rounded by five hundred acres. Attached to it was one 
of the finest conservatories in the world. His city resi- 
dence in New York city was a massive, somber brown- 
stone house at the northeast corner of Fifth avenue and 
Forty-seventh street, in the very heart of the aristocratic 
section. 



9O HISTORY OF THE GREAT AMERICAN FORTUNES 

He, however, had other mighty powers not evidenced 
in outward display. For some years he owned a news- 
paper, the New York " World " ; a curious sight it was 
to see one of the great pirates, who many a time had 
narrowly escaped prison, instructing the public as to its 
duty, moral, political and otherwise. But the known 
fact that Gould owned this newspaper helped to dis- 
count its utterances and reduce its circulation. 1 

A much more successful and insidious method of in- 
fluencing public opinion was by his control of the West- 
ern Union Telegraph Company, and, through that corpo- 
ration, of the Associated Press, the foremost news dis- 
tributing agency in the United States. Distorted, mis- 
leading or false news dispatches were manufactured or 
artfully colored and supplied to the public press. These 
not only gave Gould superior underhand facilities for 
influencing the course of the stock market, but they 
were also used in favor of capitalists and against labor 
and radical movements at every opportunity. The pub- 
lic was fed on grossly perverted news accounts of strikes 
and labor and political movements; upon this fabricated 
news the newspaper owners, themselves capitalists or 
largely servile to capital, based hostile if not malevolent 
editorials; and the combination of the whole was used 
to prejudice the mass of the public against any move- 
ment or agitation threatening the complete sway of 
capital. 

JAY GOULD'S DEATH. 

Jay Gould's last years were divided between the tor- 
tures of severe indigestion and insomnia. Up and down 

1 But when Gould sold the " World " to Joseph Pulitzer, that 
newspaper became one of the bitterest denouncers of Gould, prob- 
ably with a view to disassociating itself as much as possible in the 
public mind from the fact of Gould's former ownership. 



PRESENT STATUS OF THE GOULD FORTUNE QI 

the block fronting his New York city mansion he would 
nervously pace for hours during the long, shadowy vigils 
of the night a little, shrunken, cankered man vainly 
endeavoring to tire his mind and frame into an exhaus- 
tion compelling sleep. He died on the morning of De- 
cember 2, 1892, and his body was interred in a classic 
mausoleum, costing $110,000, -in Woodlawn Cemetery. 
Many multimillionaires, whose ways and station were 
akin to Gould's, and some of whose careers were inter- 
woven with his, showed up at the funeral services. Rus- 
sell Sage was there, and J. Pierpont Morgan and Collis 
P. Huntington and a group of others an impressive 
procession of money lords with appropriate visages and 
attired in the immaculate garb of mourning, although 
not a soul really mourned Gould save his own family. 
His will disclosed an estate of nominally $77,000,000, 
but this was merely the exoteric side of the testamentary 
document; the estate amounted to far more. All was 
bequeathed in trust for his six children four sons and 
two daughters. Unlike the Astors and some other mag- 
nates, Gould did not transmit the bulk of his wealth to 
his eldest son. 

Now, when Jay Gould died, many newspaper-owning 
scavengers, who during his lifetime had bootlicked him 
or kept fearfully silent, belched forth vituperation and 
rehearsed his odious deeds. 

Their misrepresentations consisted not in exaggerating 
his evil that were not possible but in singling him 
out as an exceptional defrauder, and in detaching him 
from the system which produced him and which alone 
could be held responsible. 

Gould passed away the most hated man in the United 
States. Social ambitions had never concerned him, but 
his children developed the yearning for recognition. At 



92 HISTORY OF THE GREAT AMERICAN FORTUNES 

every step, at first, there came an outrush of the old 
taunt that their father's fortune had come from pillage 
and wrecking. Yet all of the founders of fortunes were, 
without a single exception, of a stripe; all had tricked, 
lied, deceived, bribed, defrauded and stolen. 

With hundreds of millions of dollars, however, at 
their command the Goulds were able to overcome all so- 
cial obstacles. When one has money enough an elect 
social position does not have to be accorded; it can be 
taken by assault. One of the easiest routes is by buying 
an entree into the caste of European titled nobility, which 
in these business days does a lively trade huckstering 
names for cash. Accordingly, in 1895 Anna Gould, one 
of Jay's daughters, was transformed into the Countess 
de Castellane, and the Count received the opportunity 
of requisitioning many of the Gould millions. During 
the next eleven years he right jovially availed himself 
of it, and squandered millions with a fine prodigality, 
and went through fantastic antics until a divorce cruelly 
put a stop to them. But Mme. Gould ascended still 
higher in the pages of the Almanach de Gotha. The 
Count's successor is the Prince de Sagan, a perceptive 
scion who is doing his valuable part in demonstrating 
how the feudal nobles, often deprived of their stolen 
estates at home by revolution and dissipation, can lei- 
surely recoup by allying themselves with estates stolen in 
newer countries. 



THE STRUGGLE FOR SURVIVAL. 

To lay too much stress upon the social aspirations and 
doings of the Gould family would obscure the titanic 
industrial conflict in which they have been engaged. Af- 
ter Jay Gould's death the wealth and possessions of the 



PRESENT STATUS OF THE GOULD FORTUNE 93 

family greatly increased and its conquests were ex- 
tended. 2 

But this process has not been allowed to continue un- 
restricted. The last few years, as we have already 
pointed out, have ushered in a terrific contest for the 
exclusive mastery of the nation's resources. Looking 
back fifty years, we see a large number of petty, conse- 
quential industrial bosses, each running his own little 
railroad or factory. A change then takes place; great, 
energetic capitalists develop, who make war upon the 
petty bosses and by fair means or foul crush them, seize 
their properties and consolidate these into great systems. 
The petty railroad owners disappear and their places are 
taken by such overbearing magnates as the Vanderbilts, 
the Goulds, Huntington, Morgan, Hill, and the like. Ten 
years ago all of these men were magnates of colossal 
power, each heading some great system, and despotically 
dictating over some particular domain. 

Now another stage in the process of industrial evolu- 
tion is being reached which signifies the decline of 
overlords of the Gould type, and which foretells the 
approaching climax of capitalist institutions. Mighty 
as these magnates have been, they are gradually and 
inexorably being subordinated by a still mightier power, 
the most puissant of all. The aim of this all-pervading 

2 Many of the large properties of which they became owners, 
or partial owners, had a broad foundation of fraud. While 
neither Jay Gould nor his children committed these particular 
frauds, yet they benefited by the original frauds. The Colorado 
Coal and Iron Company is a case in instance. In a suit brought 
in 1897 to vacate the land title of this company, the Government 
charged that the company's coal and mineral lands had been ob- 
tained by conspiracy and fraud. The lower courts sustained the 
Government, but the Supreme Court of the United States decided 
that although undoubtedly fraud had been used, yet the proof 
presented was not sufficient for an adverse decision. Supreme 
Court Reporter, viii: 131-141. 



94 HISTORY OF THE GREAT AMERICAN FORTUNES 

power is industrial absolutism; and in the pursuance of 
this inevitable end it is grinding down all opposition 
even as the Goulds, the Vanderbilts and others have 
squelched lesser magnates heretofore. No longer are 
the Goulds able to extend their power much ; the climac- 
teric period has arrived when they have to fight hard to 
retain what they have. 



THE RISING AUTOCRACY. 

This supreme power, clutching at every form of the 
production and distribution of products, is the Standard 
Oil Company, headed by the Rockefellers. 

Thirty-five years ago it obtained a monopoly of oil 
products by getting secret railroad rates, and by other 
crushing methods. At first it ingratiatingly approached 
the railroad magnates as a supplicant seeking favors. 
Soon, as a matter of policy, it made these magnates shar- 
ers in its profits. Then it began to buy its way into the 
ownership of railroads. Its profits have been so fabu- 
lously vast that it has been under the constant, unes- 
capable necessity of reinvesting its vast surplus, ever 
growing vaster. This surplus it has applied to buying 
up railroads, bank, mine, public utility and industrial 
stocks and securities of all descriptions. With this fixed, 
unchanging policy its power grew to such an extent that 
its members began to push themselves in as directors of 
a great variety of corporations. For a period it then 
carried on a policy of having " a community of inter- 
est " with the large magnates in every field ; of working 
in cooperation with them in determining industrial mat- 
ters. But during all of this time it was encroachingly 
buying more and more stocks of all kinds ; so that now 
it has arrived at the point where, operating through such 




GEORGE GOULD. 
Eldest Son of Jay Gould, and Chief Wielder of the Gould Fortune. 



PRESENT STATUS OF THE GOULD FORTUNE Q$ 

generals as the lately-departed Harriman, it is gradu- 
ally forcing the Vanderbilts, the Goulds and other first- 
rank magnates of a decade ago to a secondary place, 
and entrenching itself in autocratic authority. Several 
of the railroads long ruled over by the Goulds have be- 
come, to a considerable extent, Standard Oil adjuncts. 

Industrial battles, such as that between George Gould 
and the Pennsylvania* Railroad in 1902, will, as occur- 
rences, soon be extinct. This warfare arose over 
Gould's project to extend the Wabash Railroad to the 
Atlantic seaboard. The Pennsylvania Railroad promptly 
objected to a competitor in its richly profitable territory. 
The ensuing struggle was fought out in legislatures, 
common councils, courts, Congress, and by actual phys- 
ical force. So completely have the Pennsylvania Rail- 
road magnates ruled that State for fifty years that it did 
require considerable temerity on Gould's part to war 
upon them. 8 

8 As an instance of the exercise of the Pennsylvania Railroad's 
great political power, the following account is significant. It 
shows how Cassatt, president of that railroad, and a few other 
industrial magnates and political bosses, decided that Philander 
Knox (at present, 1910, United States Secretary of State) 
should be chosen a United States Senator. Knox was long a 
corporation lawyer. The Governor of Pennsylvania was ordered 
to ratify the choice of this group of political dictators, and did 
so. This account was published editorially in " Collier's 
Weekly," issue of June 8> 1907, and republished in the same 
periodical, issue of November 27, 1909,. Its accuracy was not 
disputed, and no denials were made, or suits for libel brought. 
The account read: 

" Mr. Knox's political genesis had for its setting the general 
offices of the Pennsylvania Railroad in Philadelphia. There 
met, to name a successor for the recently deceased Quay, Sena- 
tor Penrose, Henry C. Frick, ' Iz ' Durham, the Philadelphia 
boss, who was then at the height of his power, and the late 
President Cassatt. Between the politicians and the two men of 
business a modus was arranged. Knox should be Senator. 
. . . Then the party adjourned to dinner at President Cas- 
satt's house. To this was invited Governor Pennypacker, who 
had the appointing. While the rest fingered the walnuts, Pen- 



96 HISTORY OF THE GREAT AMERICAN FORTUNES 

One of the most marked instances showing the ex- 
tremes that the Pennsylvania Railroad magnates went in 
their rule, was the Riot Indemnity bill which they at- 
tempted in 1879 to et tne Legislature of that State to 
pass. It is advisable to present a sketch of the circum- 
stances of this bill, inasmuch as it gives a good idea of 
the methods of A. J. Cassatt, long the president of the 
Pennsylvania Railroad. It was Cassatt whom George 
Gould had to fight in 1902; the methods Cassatt used 
in 1879 were the methods he invariably used. With 
all his unscrupulousness Jay Gould never had the face to 
do anything approaching in enormity the Riot Indemnity 
bill of Cassatt. Yet when Cassatt died recently the most 
lavish eulogies were everywhere published; he passed 
away in the full attributes of superior respectability. 

SELF-INFLICTED ARSON AND A $4,OOO,OOO GRAB. 

We have seen, in an earlier chapter, how the Penn- 
sylvania Railroad's officials, during the great strike of 
1877, ordered their agents to set a number of worthless 
freight cars at Pittsburg on fire, in order to charge the 
strikes with being riotous, and so have a pretext for 
calling out the military. 

That very crime of arson these magnates, two years 
later, made the basis for an attempt at plundering the 
people out of $4,000,000 at one grab. In the whole in- 
dustrial history of the country no avowedly bolder 
scheme had ever been tried before. When, in 1879, a 
bill was introduced in the Pennsylvania Legislature to 
indemnify the railroad, to the amount of about $4,000,- 

rose invited the Governor into the back yard to look at the 
moon. ' It's Knox,' said Pcnrose to the Governor. And Knox ' 
it was. ... To this narrative some minor interest is lent by 
the fact that President Cassatt was a Democrat." 



PRESENT STATUS OF THE GOULD FORTUNE 97 

ooo, for the loss of property, the news was received with 
general amazement. Cassatt pushed the bill, and it 
would have become law had not some of the legislators 
revolted at the brazenness of the plan. A few de- 
nounced it as a monstrous fraud ; one, in particular, Rep- 
resentative Wolfe, charged that bribery was being used, 
and demanded an investigation. Whereupon, a commit- 
tee of investigation was appointed on April 9, 1879. 

The report of this committee specifically stated that 
three members of the Legislature had been guilty of 
bribery. From the evidence it was clear that Cassatt 
and Quay the latter a corrupt politician at the head 
of the Pennsylvania Republican machine had leagued 
forces to rush the bill through ; that many members had 
been bribed either with money or with promises that cer- 
tain bills of theirs would be passed ; that corrupt com- 
binations existed among members to pass important leg- 
islation, and that many editors of influence throughout 
the State had been bought to advocate the passage of the 
bill.* 

A WAR OF MULTIMILLIONAIRES. 

Such were the ways of Cassatt, the head of the forces 
that George Gould had to encounter. Of all results, 
Gould sought most to get an entrance into Pittsburg 
with its stupendous annual traffic of 75,000,000 tons. 
The government of that city was owned by the Penn- 

* Petroff, Kemble, Salter, Rumberger and Crawford, all legis- 
lators or lobbyists, were convicted, in 1880, of bribery, and each 
was sentenced to a year's imprisonment. In passing sentence 
Judge Pearson remarked that bribery had been a common occur- 
rence in the Pennsylvania Legislature for years. 

But although the corruption attending the attempted passage 
of this bill was exposed, the Pennsylvania Railroad finally se- 
cured, as has already been noted, approximately $22,000,000 in 
"damages " from the public treasury. 



98 HISTORY OF THE <JUAT AMERICAN FORTUNES 

sylvania Railroad. But what of that? If money could 
put in and run one set of officials, money could also 
put in another set. So George Gould decided, and 
rightly. The government of Pittsburg now became the 
stake; Gould adroitly caused the question of the entry 
of the Wabash Railroad to be made an issue of the 
municipal election of 1902. 

Backed by his millions, so it was said, a " reform " 
movement was generated and blown into lusty growth. 
Gould carried his point; a Common Council favorable 
to his plans was elected. 5 At the same time Gould had 
a bill passed by Congress allowing him to bridge the 
Monongahela River. The statement has been made that 
it cost him $12,000,000 to get an entrance into Pittsburg, 
but the documentary proof is wanting. After spending 
$35,000,000, he carried through his Wabash plans. 

Now the warfare of force began. In retaliation for 
Gould's victory, the Pennsylvania Railroad magnates or- 
dered all of his Western Union Telegraph poles along 
that railroad's right of way to be cut down. If the 
telegraph operators had gone on a strike, the cry would 
have been raised that they were dangerously interrupting 
an essential public business, but violence when com- 
mitted by magnates was held a sacred right of property, 
and no protests of Government officials were heard. 

This transaction has been only one of many of those 
of corporations controlled largely or partially by the 

5 This " reform " movement was heralded as one which would 
regenerate Pittsburg. The increasing corruption, caused by the 
business interests in bribing public bodies, was evidenced re- 
cently. The conviction of one of the principal bribe takers was 
followed by his confession, and by the confessions, in March, 
1910, of many more members of the Pittsburg Common Council. 
These confessions disclosed a vast system of bribery by steel 
magnates, banks and other business interests. At the present 
writing (April, 1910), forty-one councilmen are under indict- 
ment, and more than a score of others have confessed. 



PRESENT STATUS OF THE GOULD FORTUNE 99 

present generation of Goulds. In a work, being pub- 
lished serially at the present writing (1910), and written 
by Judge Ben B. Lindsey, a public-spirited jurist who 
has the most intimate knowledge of Colorado affairs, 
Judge Lindsey reveals in detail some extent of the cor- 
ruption in that State. He tells how nearly all of the 
officials and judges are corporation tools ; how vast num- 
bers of fraudulent votes are counted at elections; and 
how the corporations have dictated the election or ap- 
pointment of many of the very judges whose decisions 
have been so oppressive to the working class. In par- 
ticular, he tells at length how Governor Peabody was 
fraudulently declared elected in 1905, and how Peabody 
had bargained to appoint to Supreme Court judgeships 
certain men named by the corporations. Lindsey goes 
on: 

Does this seem incredible? Read then the Colorado Supreme 
Court Reports, Vol. 35, page 325 and thereabouts. You will find 
it charged that the Colorado and Southern Railway Com- 
pany, the Denver and Rio Grande Railway Company, and 
the public service corporations of Denver had an agreement 
with Governor Peabody whereby these corporations were to 
be allowed to select the judges to be appointed to the 
Supreme Bench. You will find it charged that Luther M. 
Goddard had been selected as a proper judge by the public 
utility corporations, but that the two railroad companies ob- 
jected to him as "too closely allied with the interests of the 
Denver City Tramway Company and the Denver Union Water 
Company." "As a last resort," the statement continues, "the 
agent and representative of the said Colorado and Southern 
Railway Company was induced to, and did, after midnight on 
Sunday, the eighth day of January, and at about one o'clock 
in the morning on Monday, the ninth day of January, repair 
to the home of the said Luther M. Goddard, in a carriage, call- 
ing him out of bed, having then and there such conversation 
with the said Goddard that the said railway corporations, 
through their agents, withdrew their opposition to his confirma- 



tOO HISTORY 01? THE GREAT AMERICAN FORTUNES 

tion, and they did on said morning at about three o'clock thereof 
announce to the remainder of the said corporations through 
their said agents and representatives, that their opposition had 
been withdrawn, and the withdrawal of the said opposition 
having been announced, the said senate of the Fifteenth Gen- 
eral Assembly did, almost immediately upon its convening on 
the morning of Monday, the ninth day of January, confirm the 
said nomination of the said Goddard." 

The brief containing these charges is signed by Henry M. 
Teller, Ex-Cabinet member and United States Senator, and by 
Ex-Governor Thomas acting as counsel for Senator T. M. Pat- 
terson, who had made the charges in his paper, The Rocky 
Mountain News. These gentlemen offered to prove the charges 
before the Court, but the Court, in a most amazing decision, re- 
fused the offer, held that no matter how true such charges might 
be, it was "contempt of court" to make them, and fined Sena- 
tor Patterson $1,000! . . . 6 

And so it seems, if such charges as these are true, 
that the present Goulds are continuing the methods of 
their father. It may also be well assumed that these 
public revelations are only indications of extensive under- 
ground practices and transactions many of which are 
never publicly disclosed. 

Slowly sliding downward, as it is, to a relinquishing 
place in the ranks of wealth when compared with such 
fortunes and power as Rockefeller's, the Gould family 
is nevertheless prodigiously rich. Forty years ago Jay 
Gould was doing his best to keep out of prison ; to-day 
his children and grandchildren live in gorgeous palaces. 

Georgian Court at Lakewood, N. J., one of the homes 
of George Gould, is emblematic of their splendor. Built 
in the Georgian style of architecture, the main part is 
two hundred feet long and fifty wide. The great main 

6 " The Beast and the Jungle," Everybody's Magazine, issue of 
February, 1910:241-242. Moody's "Truth About The Trusts," 
issued in 1904, describes the Denver and Rio Grande Railroad 
as a distinctively Gould system, (p. 435). 



PRESENT STATUS OF THE GOULD FORTUNE IOI 

hall is thirty feet wide and fifty long; at one end is a 
massive elliptical staircase of marble and bronze, sup- 
ported by marble columns, and at the other end a superb 
marble fireplace. Around three sides of the hall is a 
mural painting sixteen feet high and eighty feet long 
a depiction of the " Canterbury Pilgrims " from 
Chaucer. A hundred and fifty pendants of cut glass 
radiate prisms from the chandelier. The furniture in 
this hall is of Louis XIV. style, blazing with powdered 
gold and covered with deep crimson velvet. This palace 
contains thirty rooms for the use of George Gould's 
family and guests. The very bedstead in which George 
Gould sleeps cost $25,000. And all around this gray 
and white mansion, gray stucco covering brick walls, 
are fairy-like Italian sunken gardens filled with statuary 
and magnificent fountains. Connected with the man- 
sion is a court, built at a cost of $250,000, wherein is a 
great tanbark hippodrome, a gymnasium, bowling alleys 
and lounging rooms, a shooting gallery, a large swim- 
ming pool and Turkish and Russian baths. 

And this is only one of the many palaces of the mem- 
bers of the Gould family. Whence all of this wealth 
and splendor came is now an open book ; no enigma are 
its sources, but a prolonged tale of fraud and theft, 
whereof the most vital facts only have been herein 
brought out. 



- 



CHAPTER V 
THE BLAIR AND THE GARRETT FORTUNES 

Of John I. Blair little is now heard, yet when he died 
in 1899, at the age of ninety-seven, he left a great per- 
sonal fortune, estimated variously at from $60,000,000 
to $90,000,000; his wealth, descending largely to his 
son, De Witt C. Blair, forms one of the notable estates 
in the United States. Here, according to the purveyors 
of public opinion, was an honest man ; here incontestably 
was a capitalist of " rare business instinct," whose for- 
tune came from pure, legitimate and upright methods. 
" For more than half a century," said one newspaper 
editorial * at his death, " he has been one of the leading 
business men in the country, and for more than a quar- 
ter of a century one of the richest men in the world, 
his fortune being estimated at from $50,000,000 to $100,- 
000,000, every farthing of which came to him through 
legitimate channels, creating other wealth on its way to 
him, as well as after it had reached his hands." This 
was not an isolated eulogy; round and round the col- 
umns of the press went these paeans with never a dis- 
sent or demurring. 

AN INQUIRY INTO BLAIR* S CAREER. 

Through all of these weary pages have we searched 
afar with infinitesimal scrutiny for a fortune acquired 
by honest means. Nor have the methods been measured 

1 New York " Tribune," August 27, 1899. 

I O2 




JOHN I. BLAIR. 



THE BLAIR A7JD GARRF.TT FORTUNES IO3 

by the test of a code of advanced ethics, but solely by 
the laws as they stood in the respective times. At no 
time has the discovery of an " honest fortune " rewarded 
our determined quest. Often we thought that we had 
come across a specimen, only to find distressing disap- 
pointment; through all fortunes, large and small, runs 
the same heavy streak of fraud and theft, the little 
trader, with his misrepresentation and swindling, differ- 
ing from the great frauds in degree only. Have we, at 
last, in Blair's, stumbled upon one fortune unblemished 
by any taint whatsoever? Can we now exclaim, 
Eureka ! So it would seem if current comment is to be 
swallowed as the fact. But inasmuch as we have dog- 
gedly developed an exploring, if not a perversely skep- 
tical turn of mind, let us gratify it to the full by investi- 
gating the career of this paragon of commercial virtue. 

Now it does so happen that whatever the reserved, 
sequestered life Blair led in his dotage, basking in the 
titular glory of wonderful business man and philanthro- 
pist, he left a large, resounding impress upon industrial 
events of fifty and sixty years ago. The surviving rec- 
ords, buried in obscurity, emerge from their forgotten 
shelves to confound the fairy tales of present-day eulo- 
gists. He was contemporaneous with Commodore Van- 
tierbilt, the first John Jacob Astor, and Russell Sage ; and 
he was as excellent a business man as any of them, 
which is to say, his methods were relatively the same 
&s theirs. While Astor was proving his talent as a suc- 
cessful business man by debauching, swindling and mur- 
dering Indian tribes, and while Vanderbilt was black- 
mailing, and Sage was bribing and embezzling, Blair 
was demonstrating in his own way that he, too, had all 
the necessary qualifications of " a leading business man." 

Born near Belvidere, N. J., in 1802, his parents were 



IO4 HISTORY OF THE GREAT AMERICAN FORTUNES 

farming folk; and his biographers relate with a blissful 
smack of appreciation that when he was a very young 
boy he announced to his mother that, " I could go in 
for education, but I intend to get rich." Like Sage, he 
started as a clerk in a country store, and he then wid- 
ened into being the owner of a general merchandise 
store, at what is now Blairstown, New Jersey. Years 
passed and he prospered, his panegyrists tell, and he then 
opened a number of branch stores. But this part of 
his career is shrouded in mere tradition ; nothing au- 
thentic is known of his methods at the time. 



BLAIR AS A RAILROAD BUILDER. 

Blair next turned up as the owner of an iron foundry 
at Oxford Furnace, N. J., and it is from this point of 
his career that definite facts are embodied in official 
records. " The necessity for transporting the metal to 
the seaboard," says one biographer, " led Mr. Blair and 
others to organize the Lackawanna Coal and Iron Com- 
pany, out of which has grown the great system of the 
Delaware, Lackawanna and Western Railroad." With 
this all-inclusive sentence the biographer airily dismisses 
this part of the subject. But there are weighty reasons 
why we should dwell upon it, with brief, yet sufficient 
explanation, for it was in this operation that Blair made 
his first millions ; it was here that he gave the first scin- 
tillating demonstrations of his " rare business instincts." 

Had it not been for an acrimonious falling out be- 
tween him and his associates in this railroad business, 
the truth would be beyond reach. As it is, these men 
made the huge error of perpetuating their quarrel in 
print ; an unpardonable blunder if the good opinion of 
posterity is to be held. This quarrel arose over such a 



THE BLAIR AND GARRETT FORTUNES IO5 

sordid matter as the allotment of graft; it was a bitter, 
ungentlemanly row, as is all too clearly evidenced in the 
biting denunciations of one another that were put in the 
reports by the disputants themselves. From these re- 
ports it appears that Blair was, indeed, doing business 
in the accustomed style; he was selling, at excessive 
prices, the products of his mill to a railroad corporation 
of which he was a director, and individually building 
branch lines which he foisted at enormous profit upon 
the corporation. 

The Delaware, Lackawanna and Western Railroad, 
now one of the very richest in the land, was organized 
in 1850 by the grouping of a number of small, separate 
lines. To secure franchises and special rights and aid, 
the usual procedure of bribery was resorted to, and with 
unfailing success. The men at the head of it knew their 
slippery trade well; they were the same rich merchants 
who were involved in many another fraud. Some of 
them we have accosted before in these chapters 
George D. Phelps, John J. Phelps, William E. Dodge, 
Moses Taylor and others. With John I. Blair these men 
formed the board of directors of the Delaware, Lacka- 
wanna and Western Railroad Company. 

One of the separate lines incorporated in this railroad 
was the Warren line, crossing New Jersey into Pennsyl- 
vania. The building of this road, as nearly as can be 
made out from the law records, was attended with some 
very peculiar circumstances. Two sets of capitalists 
were competing for a franchise to extend their railroads 
through the mountains to the Delaware Water Gap; 
one was the Morris and Essex Railroad Company, the 
other the Warren Railroad Company, headed by Blair 
and Dodge. Both, in 1851, obtained charters from the 
New Jersey Legislature within a few days of each 



106 HISTORY OF THE GREAT AMERICAN FORTUNES 

other's grant. In those years scandal after scandal was 
developed in successive New Jersey legislatures; it was 
no secret that the railroad magnates not only debauched 
the Legislature and the common councils of the cities 
with bribes, but regularly, in true business-like style, 
corrupted the elections of the State. In 1851, for in- 
stance, the only candidates balloted for by the Legislature 
for the post of United States Senator were rival rail- 
road nabobs; the very same men who, it was notorious, 
had for years been bribing and corrupting. 

Which of the two sets would succeed in building its 
railroad extension first? The Legislature had accommo- 
dated both with charters for the same route; in that re- 
spect they were on an equal footing. But Blair and 
Dodge completely outwitted the Morris and Essex set, 
and went on to claim prior rights for their lines. The 
Morris and Essex Railroad Company charged fraud and 
went hotfooted into court after an injunction, which 
temporarily it obtained. The case came up for final 
adjudication in the New Jersey Court of Chancery in 
1854. The Morris and Essex group asserted that they 
had bought the right of way through the Van Ness Gap, 
and charged Blair with taking fraudulent possession of 
these lands for the purpose of " fraudulently frustrating 
the complainants in the extension of their road " ; that 
the survey made by Blair and Dodge was fraudulent, 
and that there were other frauds. In his answer Blair 
put in a general denial, although he admitted that the 
Morris and Essex Railroad Company had bought the 
land and received deeds for it, but averred that this 
took place after the lands had been conveyed to the War- 
ren Railroad Company. Each side charged the other 
with fraud ; undoubtedly the assertions of both were cor- 



THE BLAIR AND GARRETT FORTUNES IO7 

rect. Judge Green decided in favor of Blair and dis- 
solved the injunction. 2 Subsequently the Warren rail- 
road was unloaded upon the D., L. & W. at a great 
profit. 

CHARGES OF JOBBERY AND GRAFTING. 

At first, the relations among Blair, the Phelpses and 
Dodge must have been of that brotherly unity springing 
from the satisfactory apportioning of good things. Pre- 
vious to 1856, the annual reports of the board of mana- 
gers of the Delaware, Lackawanna and Western Rail- 
road Company breathed the most splendid harmony, 
with never a ripple of discord. As president of the 
company, Phelps had appointed Blair the land agent 
for the Warren division of the railroad. 8 Very evi- 
dently a joyous, comfortable spirit of satisfaction with 
the way things were progressing pervaded this stalwart 
group of worthies. 

Suddenly the tenor of their private and public com- 
munications changed. Peppery statements, growing into 
broadsides, were issued, filled with charges and coun- 
ter charges, and a caustic quarrel set in over the 
question of graft, especially in connection with the War- 
ren railroad. On September 9, 1856, Phelps resigned 
from the presidency, and in doing so, practically charged 
others of the directors with carrying on a profuse sys- 

2 New Jersey Equity Reports, ix : 635-649. 

The chief owner of the Morris and Essex Railroad was Ed- 
ward A. Stevens who, for many years, blackmailed a competing 
line, the New Jersey Transportation Company, and who. when 
that company finally refused to continue to pay blackmail, 
bribed, it was charged, the New Jersey Legislature to pass re- 
taliatory measures. See Chapter vii of present volume. 

3 " Second Annual Report of the Board of Managers of the 
Delaware, Lacka\vanna and Western Railroad Company, 1855 " : 8. 



IO8 HISTORY OF THE GREAT AMERICAN FORTUNES 

tern of grafting in the purchase of land, supplies and 
branch lines. 

Did Phelps resign as a protest? More probably, the 
actual situation was that the internal fight sprang up 
over difficulty in adjusting the division of the spoils, 
and the anti-Phelps faction had proved itself the 
stronger. Phelps set forth his case in published confi- 
dential statements accompanying the annual reports. He 
boasted that after the franchises of the Delaware, Lack- 
awanna and Western Railroad had been forfeited for 
non-compliance, that it was he who had got through 
an act on April 2, 1885, " restoring all franchises and 
granting other important privileges." He complained 
of the exorbitant expenditures the directors were mak- 
ing, and significantly pointed out that when he had 
wanted to get an auditor, Blair and other directors re- 
fused to vote for one. Referring to the process of 
graft Phelps wrote that " one of our managers [Blair] 
is a director and large stockholder in the Lackawanna 
Iron and Coal Company ; one-eighth owner in the Lehigh 
and Tobyanna Land Company; largely interested in real 
estate along the line of the road and president of the 
Warren railroad, of which his son is a principal contrac- 
tor. Another son is director and very large owner in 
the Lackawanna Iron and Coal Company," etc.* In 
another confidential circular, dated January 17, 1857, 
Phelps criticized Blair as " one of the parties more par- 
ticularly referred to " and as " systematically opposed 
to my measures." If this much came out in cold type, 
what must have been the whole story? The frag- 
mentary visions we get in these reports are undoubtedly 

4 " Confidential Statement to the Stockholders of the Delaware, 
Lackawanna and Western Railroad Company, 1856": 6, 



THE BLAIR AND GARRETT FORTUNES IOO, 



but an index to the elaborate miscellanies of graft carried 
on by Blair in every available direction. 5 



Blair's loot in these transactions appears to have been 
very large. His operations were so successful that he 
went into railroad founding as a regular pursuit; and, 
as did Sage, he combined professional politics and busi- 
ness. His greatest opportunities came when the Union 
Pacific and other railroad charters, subsidies and land 
grants were bribed through Congress. 

" In the early days of the settlement of the great 
West," wrote one of his puffers, " Mr. Blair found am- 
ple opportunity for the exercise of his rare judgment 
and untiring energy, and his name was connected, either 
as a builder or director, with not less than twenty-five 
different lines." What a symmetrical and appealing de- 
scription! All that it lacks to complete it are certain 
trivial details, which will here be supplied. 

As one of the original directors of the Union Pacific 
Railroad, Blair shared in its continuous and stupendous 
frauds. But it was in Iowa that he plundered the most 
of his tens of millions Iowa with its fine pristine agri- 
cultural lands, among the richest in the United States. 

6 Grossly pliable as the law has been, where capitalist inter- 
ests have been concerned, nevertheless the law has long professed 
to recognize the fundamental principle that it was against pub- 
lic policy to let contracts for the construction of a railroad to 
a director or officer of the company. " All such contracts," says 
Elliott, "are regarded with keen suspicion, and, at least in the 
absence of good faith, are voidable, or, according to some au- 
thorities, void, upon the clearest principles of public policy." 
(See Elliott on Railroads, {1:830-840.) This sounds well in 
theory, but in practice the courts have invariably found grounds 
to sanction these frauds. 



110 HISTORY OP THE GREAT AMERICAN FORTUNES 

While Sage was busily engaged in thefts and expropria- 
tions in Wisconsin and Minnesota, he was also, as was 
Blair, pursuing precisely the same methods in Iowa. 
There was the same bribery of Congress and of Legis- 
lature ; the same story of immense subsidies and land 
grants corruptly secured ; 6 the same outcome of thiev- 
ing construction companies, looted railroads, the cheat- 
ing of investors, bankruptcies and fraudulent receiver- 
ships. Not less than $50,000,000 in subsidies in one 
form or another were obtained by the railway com- 
panies in Iowa; their land grants reached almost 5,000,- 
ooo acres. In the projection of the railroads in that 
State, Blair was the predominating almost, excepting 
Sage, the exclusive figure ; he seemed to direct every- 
thing; and he certainly allowed no one else to pocket 
what he could get away with himself. 



THE SIOUX CITY AND PACIFIC FRAUDS. 

One of a number of his railroads was the Sioux City 
and Pacific a line with a very ambitious name but of 
modest length. Its charter, subsidies and land grant 
were obtained by Blair at the auspicious and precise time 

8 " The first land grants made by Congress," wrote Governor 
J. G. Newbold of Iowa, in his annual message in 1878, " were 
turned over to the companies absolutely, although the act of 
Congress contemplated the sale of the lands by the State as 
earned, and the devotion of the proceeds to the construction of 
the railroads; the companies were permitted to select the lands 
regardless of their line of road; and they were allowed, virtu- 
ally, their own time to complete the work, notwithstanding that 
one main object of the grants was to secure this completion at an 
early day. 

"Townships, towns and cities have been permitted to tax 
property within their limits to help build the roads, and the 
revenue thus derived was turned over absolutely to the com- 
panies constructing them, while much of the property of these 
companies practically escapes municipal taxation." Iowa Docu- 
ments, 1878, Reports of State Officers : 27. 



THE BLAIR AND GARRETT FORTUNES III 

when the Union Pacific measures were passed by brib- 
ery. 

Whether, however, Blair used money in corrupting 
Congress is not to be determined from the official rec- 
ords. But if he did not, he, at any rate, employed an 
even more subtle and effective mode of corruption. The 
Congressional investigations reveal that it was his system 
to debauch members of Congress with gifts of stock 
in his corporations ; 7 these honorable members, of 
course, mightily protested that they had paid for it, but 
nobody believed their excuses. Poor's Railroad Manual 
for 1872-73 additionally reveals that among the direc- 
tors and stockholders of Blair's railroads were some of 
the identical members of Congress, both of the House 
and Senate, who had advocated and voted for the char- 
ters, subsidies and land grants for these railroads. 

For the Sioux City and Pacific Railroad Blair secured 
a land grant of one hundred sections, and $16,000 of 
Government bonds, for each mile of railroad. What 
happened next? Act two was the organization of a 

7 See Credit Mobilier Reports. These are full of testimony 
attesting the buying up of members of Congress by this method. 

His chief accomplices in this work in Congress were William 
B. Allison and Oakes Ames. As Representative, and later 
United States Senator, from Iowa, Allison was long a powerful 
Republican politician. Ames (as we have seen) was one of the 
principal originators and manipulators of the great Credit 
Mobilier swindle (see Chapter xii, Vol. ii). The fact that Alli- 
son and Ames were both officers of the Sioux City and Pacific 
Railroad Company at the same time that they were members 
of Congress was well known before the act of 1868 was passed. 
On December 15, 1867, Blair certified to Hugh McCulloch, 
United States Secretary of the Treasury, that the following 
officers of the company had been elected on August 7, 1867: 
John T. Blair, president; William B. Allison, vice-president; 
John M. S. Williams of Boston, treasurer, etc. The Executive 
Committee elected on that date was composed of Blair, Ames, 
Charles A. Lambard, D. C. Blair, and William B. Allison. See 
Ex. Documents, Nos. 181 to 252, Second Session, Fortieth Con- 
gress, 1867-68, Doc. No. 203. 



112 HISTORY OF THE GREAT AMERICAN FORTUNES 

construction company modeled on exactly the same lines 
as the Credit Mobilier. As the head of this company, 
Blair extorted large sums for building the railroad. 
On the prairies of Iowa, with almost no grading neces- 
sary, railroad building called for comparatively little ex- 
penditure. Expert testimony before the Pacific Railroad 
Commission, in 1887, estimated that the road could have 
been built at a cost of $2,600,000, with the supple- 
mentary statement (and what a commentary it formed 
upon the business standards of the times!) that if hon- 
estly done the entire cost ought not to have exceeded 
$1,000,000. 

A LITTLE ITEM OF A $4,OOO,OOO THEFT. 

What did Blair's company (which was mainly himself 
and his sons) charge? It awarded itself $49,865 a mile, 
or a total of more than $5,000,000. Then having bled 
the railroad into insolvency, Blair enriched himself fur- 
ther by selling it to the Chicago and Northwestern Rail- 
road Company. If there be any doubt of the cool delib- 
eration with which those " eminent capitalists " set out 
to swindle the Government, it must, perforce, be dissi- 
pated by consideration of the following fact : " When 
the negotiations were pending for the transfer of the 
stock of the Sioux City and Pacific Railroad Company 
to the Chicago and Northwestern," reads the report of 
the Pacific Railroad Commission, " John I. Blair offered 
a resolution, which appears on the minutes, setting forth 
that the Chicago and Northwestern must bind itself to 
protect every obligation of the company except that to 
the United States Government." 8 This was a refresh- 
ingly candid way of arranging swindles in advance. 

8 Pacific Railroad Commission, i : 193. 



THE BLAIR AND GARRETT FORTUNES 113 

And, in fact, the final swindling of the Government of 
much of the funds that it had advanced was accom- 
plished in 1900. By an act then lobbied through Con- 
gress, the company was virtually released from paying 
back more than one-tenth of the sum it still owed the 
Government. 9 

ANOTHER RAILROAD PLUNDERED. 

But Blair's frauds in the inception and construction 
of the Sioux City and Pacific and some of his other 
roads were surpassed in degree, at least by those he 
put through in another of his Iowa railroad projects 
the Dubuque and Sioux City line. The charter and land 
grants of this railroad, and those of the Iowa Falls and 
Sioux City Railroad, were given by an act passed by 
Congress on May 15, 1856. We have seen what indis- 
criminate corruption was going on in Congress in 1856 
and accompanying years; how the Des Moines River 
and Navigation Company's land grant was obtained by 
bribery, and how committees were reporting the ex- 
istence of corrupt combinations in Congress. There is 
no definite official evidence that the charter and land 
grants of the Dubuque and Sioux City Railroad Com- 
pany and those of the Iowa Falls and Sioux City were 
secured by bribery, but judging by the collateral circum- 
stances attending the passage of other bills at the same 
time, the probabilities are strong that they were. By 
the act of 1856 these two companies received as a gift 
about 1,200,000 acres of public land in Iowa. 10 Despite 

9 Allison, who, as a prominent member of the House, had 
been implicated in Blair's briberies nearly forty years before, 
was now one of the leaders in the United States Senate. This 
was the man at whose death the newspapers eulogized as a 
" great constructive statesman." 

10 The act of May 15, 1856, gave a total of 1,233,48170 acres 



114 HISTORY OF THE GREAT 'AMERICAN FORTUNES 

this lavish present, the incorporators made little or no 
attempt to build the entire railroad ; they occupied them- 
selves almost solely with stockjobbing, and with the 
business of profitably disposing of the land to settlers. 
Congress was compelled under pressure of public opin- 
ion to forfeit much of their land grant. 

CORRUPTING OF CONGRESS. 

Blair saw what glorious opportunities had been lost 
by the act of forfeiture. But the mischief could be 
undone. If one set of capitalists were obtuse enough 
not to know how a restoration could be brought about, 
he knew. So he came forward, took up the companies 
as his own, and applied to Congress and to the Legisla- 
ture of Iowa for a resumption of the rights and grants 
of which they had been shorn. 

He succeeded; both Congress and the Iowa Legis- 
lature passed acts in 1868 restoring the rights and land 
grant. How came it that he encountered no obstacles 
in his plan? Why were these legislative bodies so tract- 
able? Of course, they could plead that they simply 
acted in deference to memorials from the citizens of 
Iowa; but memorials were transparent affairs, easily 
manufactured. And the "Wilson Committee " (the 
Credit Mobilier Investigation) of 1872 could make its 
whitewashing report that " no evidence could be found " 
of money having been used for " improper purposes," 

to the Dubuque and Sioux City Railroad Company and the 
Iowa Falls and Sioux City Railroad Company. By the same 
act the Iowa Central Air Line and the Cedar Rapids and Mis- 
souri River Railroad Company received a total of 783,096.53 
acres, supplemented by 347,317.64 acres by act of June 2, 1864. 
The acts of May 15, 1856, and June 2, 1864, also gave extensive 
land grants to the Chicago, Rock Island and Pacific Railroad 
Company. 



THE BLAIR AND GARRETT FORTUNES 

either in Congress or in the Iowa Legislature. But the 
testimony before this very committee flatly contra- 
dicted its conclusions. It was revealed that a whole 
string of conspicuous members of Congress had suddenly 
become large stockholders in the Dubuque and Sioux 
City Railroad. 10 * Upon getting the restoration of the 
land grant, Blair organized a construction company, 
called the Sioux City Railroad Contracting Company, and 
by the usual cumulative system of frauds in construc- 
tion work, made immense " profits," reaching many mil- 
lions of dollars. Some of the railroads that Blair plun- 
dered are now parts of the Illinois Central system, of 
which Harriman became dictator. 

It must not be thought, however, that outright bribery 
was always resorted to in order to secure subsidies, spe- 
cial rights and immunities. In the first stages of rail- 
road history direct bribery was the usual means ; but as 
time wore on, the passing of money in direct forms 
became less frequent, and a less crude, finer and more 
insidious system of bribery was generally substituted. 
The Western magnates began to follow the advice of 
that Eastern magnate who declared that it was easier to 
elect, than to buy, a legislature. 

BRIBERY BY MONEY AND OTHERWISE. 

The newer system as it was carried on in Iowa and 
other states was succinctly described in 1895 by William 
Larrabee, erstwhile Governor of Iowa. " Outright brib- 
ery," he wrote, with a long and keen knowledge of the 
facts, 

10a See the section of the Credit Mobilier Reports entitled 
" Credit Mobilier and Dubuque and Sioux City," in which the 
details are set forth. 



Il6 HISTORY OF THE GREAT AMERICAN FORTUNES 

is probably the means least often employed by corporations to 
carry their measures. ... It is the policy of the political 
corruption committees of corporations to ascertain the weak- 
ness and wants of every man whose services they are likely to 
need, and to attack him, if his surrender should be essential 
to their victory, at its weakest point. Men with political am- 
bition are encouraged to aspire to preferment, and are assured 
of corporate support to bring it about. Briefless lawyers are 
promised corporate business or salaried attorneyships. Those 
in financial straits are accommodated with loans. Vain men 
are flattered and given newspaper notoriety. Others are given 
passes for their families and their friends. Shippers are given 
advantages in rates over their competitors. The idea is that 
every legislator shall receive for his vote and influence some 
compensation which combines the maximum of desirability to 
him with the minimum of violence to his self-respect. . . . 
The lobby which represents the railroad companies at legisla- 
tive sessions is usually the largest, the most sagacious and 
the most unscrupulous of all. In extreme cases influential 
constituents of doubtful members are sent for at the last mo- 
ment to labor with their representatives, and to assure them 
that the sentiment of their districts is in favor of the measure 
advocated by the railroads. Telegrams pour in upon the unsus- 
pecting members. Petitions in favor of the proposed measure 
are also hastily circulated among the more unsophisticated con- 
stituents of members sensitive to public opinion, and are then 
presented to them as an unmistakable indication of the popu- 
lar will. . . . Another powerful reinforcement of the rail- 
road lobby is not infrequently a subsidized press and its cor- 
respondents. 

But the robbery by means of construction companies 
in his numerous railroad projects formed only a part of 
the wealth grasped by Blair. One-eighth of the entire 
domain of the richly fertile State of Iowa was granted 
to railroads, most of which Blair owned. This reached 
an area almost as large as the State of Massachusetts. 
Settlers were compelled to pay an exorbitant price for 
farm lands, and very often were under mortgage to the 
railroad companies. A detailed description of Blair's 



THE BLAIR AND GARRETT FORTUNES 117 

methods would be simply a repetition of those described 
in previous chapters in the case of other magnates. 

PHILANTHROPY COMPARED WITH FACT. 

Although incurably stingy in personal expenditures 
the meanest of men Blair donated just enough money 
to procure the award of being an extremely pious phi- 
lanthropist. He founded one hundred churches in the 
West; he established a Presbyterian Academy at a cost 
of $150,000, and gave several hundred thousand more 
dollars to the Presbyterian Church. But what were the 
effects of his frauds and oppressions and those of his 
successors upon the very people to whom he so de- 
voutly contributed pulpits and gospels? Writing of the 
Iowa railroads, Dr. Frank H. Dixon, a conservative 
writer, says: 

The roads had it in their power to make and unmake cities, 
to destroy the businesses of individuals, or to force their re- 
moval to favored points. The people were quickly up in arms 
against this policy. The flame of opposition was fanned by 
the bitter feelings aroused through absentee ownership, so 
prevalent in the Western States at this time. A well-settled 
conviction possessed the people that the owners of capital, di- 
recting their operations in absentia and through intermediaries, 
limited their interest in Western affairs to the amount of divi- 
dends which they could squeeze from the shippers. 11 

And, of course, the large amounts of watered stock, 
upon which these dividends had to be paid, were issued 
to cover the gigantic frauds of the railroad constructors 
and of succeeding groups of manipulators. 

This, in outline, was the course of Blair, so eminent 
and exalted a capitalist ; here is an elucidation of the 

""State Railroad Control, With a History of Its Develop- 
ment in Iowa "124. 



Il8 HISTORY Otf THE GREAT AMERICAN FORTUNES 

fine textures of his " rare business instincts " ; and 
knowing it, the mystery of where his sixty or ninety 
millions came from is quite apparent, if not entirely 
clear. 

What Blair and others were doing in the North and 
West before, during, and after the Civil War, John W. 
Garrett and Johns Hopkins were doing in Maryland. 
Scarcely referred to now, Garrett was extolled in his day 
as a " famous railroad king " ; and in this case it is 
not the man so much nor the Garrett fortune which 
commands interest as is the story of the railway line 
that he and Hopkins largely owned ; this property forms 
to-day one of the great transportation systems of the 
country. 

THE BALTIMORE AND OHIO BUILT BY PUBLIC MONEY. 

As were other railroads, the Baltimore and Ohio Rail- 
road was built almost wholly with funds granted by 
State, counties and municipalities. In 1827 the State 
of Maryland granted a subscription of $500,000 as first 
aid, and the city of Baltimore the same sum. At the 
outset the projectors loftily disclaimed any intention of 
asking any further grants of public aid ; private capital, 
said they, would construct the road. But seven years 
later they made another inroad upon the public treasury ; 
the State of Maryland was induced to subscribe $3,000,- 
ooo more in 1835, and the city of Baltimore $3,000,000 
in 1836. In 1838 they obtained $1,000,000 from the city 
of Wheeling. 12 For a while they were discreet enough 
to refrain from again attacking the public treasury ; but 

12 Laws, Ordinances and Documents Relating to the Balti- 
more and Ohio Railroad Company; 1840:67, 108, 133, 134, etc. 



THE BLAIR AND GARRETT FORTUNES IIQ 

when, in 1850, they applied to the Common Council of 
Baltimore for $5,000,000 more, and obtained the amount, 
there was some questioning as to what had become of 
the many millions contributed from the public ex- 
chequer. A considerable part, it was evident, had been 
used in constructing the railroad, but opinions were 
freely expressed that the directors had been enriching 
themselves by the customary grafting devices of the day 
such as, for instance, those used by Blair in New 
Jersey, Pennsylvania and New York. 

Whenever, however, opposition to additional appro- 
priations sprang up and embarrassing questions were 
asked, the directors would have their glittering arguments 
ready. " See what a great work we have been carrying 
on. Is this not an enterprise of the greatest importance 
to the whole community, to the farmer, the mechanic 
and the business man? Now, when we are on the high 
road to completion, shall we have to suspend because of 
lack of funds? Would not this be a great public ca- 
lamity ? " Such arguments told with the public ; and the 
legislatures and common councils, corruptly influenced, 
could always base their explanations upon them. 



GARRETT AND HOPKINS GET CONTROL. 

Plundered by the original clique, the Baltimore and 
Ohio Railroad went into financial ruin. Notwithstand- 
ing the great bounties that it had received, it was in a 
demoralized condition in 1856, and its treasury was 
empty. Garrett and Hopkins, who had long been asso- 
ciated with it and who had probably shared in the loot 
(although there is no specific proof on this point), 
bought up more quantities of its stock, then selling cheap, 
and snatched control. Born in Baltimore in 1820, Gar- 



I2O HISTORY OF THE GREAT 'AMERICAN FORTUNES 

rett was the son of a rich shipping merchant ; Hopkins 
had made money in the grocery business. 

Garrett and Hopkins not only continued the long pre- 
vailing frauds, but put through many other fraudulent 
and corrupt acts. Here, for example, is one of the 
smaller frauds : The millions of stock subscriptions do- 
nated by the State of Maryland for the building of the 
Baltimore and Ohio Railroad had been to a large ex- 
tent floated in London among British capitalists. The 
interest had to be paid by Maryland to these financiers 
in gold. Did the company, on its part, reimburse the 
State in coin? By no means. It claimed, by force of 
certain judicial decisions, that it was not required to pay 
interest to the State otherwise than in currency. Un- 
der the prevailing money conditions, and estimating the 
difference in rates of exchange, this form of payment 
meant a constant loss to the State of Maryland a loss 
reaching more than a total of $400,000, of which amount 
the Baltimore and Ohio cheated the State. 

Far greater were the amounts of which the State of 
Maryland was cheated in the fraudulent manipulation 
of what was called the Washington Branch of the Bal- 
timore and Ohio Railroad. In return for franchises 
and aid, the company agreed to pay the State one-fifth 
of the passenger receipts. After the branch was in suc- 
cessful operation, its treasury was constantly represented 
as so sickly that there was no money in hand with 
which to pay the State. Time after time inquiries were 
made by honest legislators as to where the great profits 
had gone. No satisfactory answer was ever given; the 
State was absolutely cheated; and, finally, a corrupt act 
was passed practically abandoning all of the State's 
claims. 

Under Garrett and Hopkins' control, the Baltimore 



THE BLAIR AND GARRETT FORTUNES 121 

and Ohio Railroad Company caused a series of measures 
to be passed exceeding in corruption, in some respects, 
those put through by Commodore Vanderbilt in New 
York. Repeatedly the legislatures of Maryland, Vir- 
ginia, West Virginia, Pennsylvania and other States, and 
the common councils of many cities, were bought up, 
and the courts were thoroughly subverted. Franchises 
of inestimable value were given away; the public treas- 
ury was cheated out of the sums advanced, and was 
drawn upon to pay the expense of improvements ; large 
stock watering issues were authorized, and the company 
was virtually relieved from taxation. By 1876 fully 
$88,000,000 of its property went untaxed. 

The militant object of Garrett and Hopkins was the 
destruction of the Chesapeake and Ohio Canal as a com- 
petitor. As Commodore Vanderbilt in New York found 
the Erie Canal to be a competitor of his lines, so Gar- 
rett and Hopkins decided that they could not get a 
monopoly of transportation in Maryland until the Ches- 
apeake and Ohio Canal had been extinguished as a com- 
petitor. The obstacles in their way were great, for the 
State of Maryland had expended many millions of pub- 
lic money in the construction of the canal, and owned 
it, and the public was not disposed to see its usefulness 
impaired. This was especially true of the merchant 
class, which demanded competition and insisted that 
monopoly would be ruinous. 

DESTROYING CANAL COMPETITION. 

Beginning in 1860, Garrett and Hopkins corrupted 
the Maryland Legislature, until by one act piled upon 
another, they were gradually able to wrest away its 
ownership from the State. But they did not merely de- 



122 HISTORY OF THE GREAT AMERICAN FORTUNES 

pend upon the bribing of legislators after they were in 
office. With money supplied by Garrett and Hopkins, 
the political bosses of Maryland engaged in packing 
of primaries, indiscriminate bribery of voters and stuffing 
of ballot boxes, thus insuring the election of subservient 
officials. Once the canal was practically in their hands, 
Garrett and Hopkins made it useless as a competitor. 

Having a complete monopoly they now exacted extor- 
tionate charges for transportation, and they likewise 
increased their profits by cutting the pay of their em- 
ployes. In desperation, the railroad workers declared a 
strike in 1877. False reports of the violence of the 
strikers were immediately dispatched broadcast. Using 
these charges as a pretext, the military was called out. 
At Martinsburg, W. Va., the State militia refused to fire 
upon the strikers, but a company of militia, recruited 
from a class hostile to the strikers, opened fire, killing 
many of the strikers and wounding others. 



HOPKINS BECOMES A PHILANTHROPIST. 

Both Garrett and Hopkins extorted out large sums 
from their control and manipulations of the Baltimore 
and Ohio Railroad. Hopkins' fortune, at his death, 
amounted to nominally $10,000,000. At the time of his 
demise, in 1873, he was " the wealthiest citizen of Balti- 
more." The most closefisted of men, he relaxed in at 
least one respect during the last year of his life. Fol- 
lowing the example of so many other multimillionaires 
of the period, he made certain of the perpetuation of his 
memory as a " great philanthropist." To this end, in 
March, 1873, he gave property valued at $4,500,000 with 
which to found a hospital in Baltimore; he presented 
Baltimore with a public park, and he donated $3,500,000 



THE BLAIR AND GARRETT FORTUNES 123 

as an initial benefaction for the founding of the Johns 
Hopkins University. Here it is pertinent to inquire 
what was the form of property given in these bounties. 
Very largely, it consisted of Baltimore and Ohio Rail- 
road stock; it was property representing the corruption 
of public life, the abasement of the workers and the gen- 
eral spoliation of the entire community. 

And what was Garrett's share of the proceeds of the 
joint control? At his death, in 1884, it was said to be 
$15,000,000, but it was undoubtedly much more. This 
wealth descended to his son Robert, who went through 
a series of personal excesses, to wind up in melancholia 
and softening of the brain. Obviously enough, he was 
no match for those abler capitalists, the Vanderbilts, 
Goulds and Scott ; 13 they pounced upon him and ruth- 
lessly despoiled him as his father had despoiled others; 
his autocratic power and sway gradually vanished. When 
he died, in 1896, his wealth had shrunk to about $5,000,- 
ooo, and the Baltimore and Ohio system had passed 
under the control of the Pennsylvania railroad group of 
magnates. 

13 A current story, frequently published, was to this effect: 
That Robert Garrett had secretly consummated negotiations for 
the purchase of the Philadelphia, Wilmington and Baltimore 
Railroad, and the night before the final arrangements were to 
be made invited a friend to celebrate the occasion. When 
bibulous from champagne, Garrett revealed the secret. The friend 
excused himself, went immediately to Scott, of the Pennsylvania 
Railroad, and informed that magnate. Scott at once filled a 
satchel full of bonds, and hurried away to make an offer to the 
capitalists controlling the Philadelphia, Wilmington and Balti- 
more Railroad, outbid Garrett, and had secured the ownership 
of that railroad for the Pennsylvania system almost before Gar- 
rett had awakened from his drunken stupor. 



CHAPTER VI 
THE PACIFIC QUARTET 

During the range of years when the Vanderbilts, 
Gould, Sage, Blair and various other railroad magnates 
were hurling themselves upward into the realms of mas- 
terful wealth, four other noted capitalists whose careers 
were interjoined, were doing likewise in the Far West. 

This group was composed of Collis P. Huntington, 
Leland Stanford, Charles Crocker and Mark Hopkins. 
It was an unusual brotherhood in that, for a long time, 
they hung together with a tenacious fidelity not often 
found among railroad capitalists. In fact, it was so rare 
a phenomenon that the mention of it deserves a place of 
supreme precedence. Such magnates as Commodore 
Vanderbilt and William H. Vanderbilt, Gould and Sage, 
preferred to go it alone, not merely satisfied with the 
lion's share, but determined to bag it all, if they could; 
they were distrustful and intolerant of partners except 
as expediency demanded, and then they acted with them 
only to fleece them eventually. The Pacific quartet were 
also starkly individualistic, each for himself, but they 
moderated their propensities enough to fuse their 
interests in a common harmony of aim. Even more: 
they sagaciously weighed the special fitness of each, as- 
signed the duties according to this individual appraise- 
ment, and divided the spoils with a certain flavor of 
fairness. 

124 




COLLIS P. HUNTINGTON. 



THE PACIFIC QUARTET 

So far as railroad magnates were concerned, this was 
a remarkable feature of their time. 



FOUR MEN WHO COULD ACT TOGETHER. 

In fine, this group was distinguished by a method of 
intelligent cooperation. To this fact was due, in a 
measure, their rapid success in obtaining great wealth 
without the necessity of dragging through intermediate 
stages. They were among the first of the magnates to 
prove the superiority of the principle of systematic 
organization a lesson which the Standard Oil group 
took up a little later, amplified, improved, and developed 
into a superfine system. Here was not a case of where 
one man dominatingly insisted that he alone was en- 
dowed with all of the functions required in successful 
business. The Pacific quartet recognized the value of 
specialization. In a general way, Huntington was in- 
trusted with the supervision of the financial affairs; 
Stanford of the plans for the manipulation of law and 
politics; Crocker was placed in charge of the construc- 
tion work, and Hopkins was the commandant of office 
details. The particular useful qualifications of each of 
the four were mutually appreciated and availed of. In 
addition to this division of overseership, all joined to- 
gether as a unit in the promotion and consummation of 
their plans. 

Circumstances did not compel these four men to be 
of quite the same revolutionary type of capitalists as the 
Vanderbilts and Goulds. They did not have to do much 
pummeling of smaller capitalists, nor expend much effort 
in beating down the sacred doctrine of " free and unre- 
stricted competition." Their territory was largely one 



126 HISTORY OF THE GREAT AMERICAN FORTUNES 

which had not been taken up by companies of small cap- 
italists, building in piecemeal fashion. They had the 
opportunity of bringing forth great railroad systems out 
of what had been a void. At a bound they sprang from 
an obscure position to that of great capitalists; the 
transformation from petty dealers in merchandise or law 
to multimillionaires was a quick, sudden one. Within a 
few years they took their place among the industrial dic- 
tators of the United States; owners of great railroad 
and steamship lines and of many other forms of prop- 
erty, and of an immense domain of land not less than 
30,000,000 acres in all. All of these men have passed 
away, but the wealth that they became possessed of re- 
mains; and even if their personal careers are of no lin- 
gering interest, their fortunes are still active, and the 
history of their properties is of very pertinent present 
importance. 



THEY BEGIN WITH SCANT CAPITAL. 

All four had migrated from the East to California 
after the discovery of gold on the Pacific Coast. There 
Huntington carried on a hardware and miners' 
supply store at Sacramento, and Hopkins became his 
partner; Crocker was likewise a small merchant, and 
Stanford was a lawyer. The four were not able to 
scrape together a pool of more than an insignificant sum 
with which to execute what was then considered one of 
the greatest and most difficult railroad projects of modern 
times. 

The phrase monger is addicted to rhapsodizing upon 
the marvelous self-confidence which could initiate a huge 
railroad line with only a trivial sum as a starter. This 
may be a romantic way of describing their prowess and 



THE PACIFIC QUARTET 127 

ingenuity. But neither was the project itself of their 
conception, nor did they have to supply the funds. 
Years before they took hold of the work as a definite 
undertaking, the building of Pacific lines had been agi- 
tated and urged, and the Government had surveyed feasi- 
ble routes. 1 Not one of the quartet knew anything of 
railroad construction, nor had the least fundamental 
knowledge of how to equip and operate a railroad. 

In what direction, then, lay their ability? Purely and 
wholly in the line of promoting. The capitalist system 
was of such a fantastically inverted nature that to grasp 
the ownership of anything did not imply or require the 
ability of supervision. Railroads, factories, mines and 
public utility systems were generally owned by men 
often by absentees who knew nothing of any aspect of 
them except the one all-important phase the budget of 
profit or loss. 

The ability of the promoter was the most necessary 
consideration, although not the foremost in insuring the 
title of ownership. Very frequently, in the case of fac- 
tories and mines, promoters had to get funds from bank- 
ing houses, which usually, by skillful law work, suc- 
ceeded in getting those promoters into a legal snare, forc- 
ing them out, and expropriating their property. Rail- 
road promoters, however, did not have to depend so 
much upon private bankers. They could draw upon 
Government, State and cities for advances of money. 
If a man, or a set of men, could succeed in bribing Con- 
gress and the legislatures to donate land grants and ad- 
vance the funds, it was a very simple matter to hire 
highly competent civil engineers to survey and build the 

1 By an act of March 3, 1853, Congress appropriated funds 
for the surveying, by the Army Corps of Engineers, of railroad 
routes from the Mississippi River to the Pacific. The results 
were published in 1855. 



128 HISTORY OF THE GREAT 'AMERICAN FORTUNES 

routes, and employ good executives to run them after 
they were built. 

The first and prime necessity was the purchase of legis- 
lation with its corollaries franchises, gifts and free 
access to the public treasuries. This done, the remain- 
der of the program was easy. In this regard it was 
that Huntington and his partners showed their finesse 
not an unusual finesse, by any means; its caliber was 
neither more nor less than that of many another capi- 
talist, who also had been adroit in bribing legislation 
through. 

Upon organizing the Central Pacific Railroad Company 
in 1861, the Huntington group could not privately raise 
more than about $195,000, of which amount they, them- 
selves, put in about $50,000. This sum, ridiculously 
inadequate to build a railroad estimated to cost $25,000,- 
ooo, was, however, enough and more than enough, for 
certain well-understood primary operations. 

With it expenses could be defrayed at the centers of 
legislation; petitions and memorials concocted; advo- 
cates paid, and newspapers subsidized. If the trick were 
well turned, a whole succession of franchises, special 
laws, land grants and money subsidies would follow. 
Thus we see that the original capital needed in many cap- 
italist enterprises was not for the actual prosecution of 
the work, but for the purpose of bribery. In fact, 
money, as an absolute requirement, could be dispensed 
with. For their votes, legislators (being wily, tactful 
and practical men) much preferred cash, but when cash 
could not be fingered, they conveniently took whatever 
" inducements " were offered. We have come across in- 
stance after instance in which embryo capitalists or- 
ganized corporations, rolled off stocks and bonds (which 



THE PACIFIC QUARTET I2Q 

cost the expense of engraving only) and used them, in 
lieu of cash, as payment for legislative votes. 

If the average railroad corporation, argued the Pa- 
cific quartet, could so easily, by the simple media of 
bought laws, annex itself to public treasuries, what could 
not they do? A far more telling and impressive public 
argument the Huntington group had than most of their 
fellow railroad promoters. Already " in the fifties " 
there was an insistent, genuinely enthusiastic popular 
demand, reaching almost the proportions of a clamor, 
for railroad connections between coast and coast. Upon 
the strength of this eagerness, much bounty and booty 
could be extracted. At the outbreak of the Civil War 
the demand became irresistibly intensified by the lack of 
speedy intercoastal communications, both railroad and 
telegraph. Moreover, the popular imagination was cap- 
tivated and dazzled by the immensity of the undertaking. 
With prevailing opinion in so favorably an assenting 
state, matters could be pliably molded. 



THEY GET THEIR LAWS. 

Yet while the people, as a whole, were desirous of Pa- 
cific railroads, considerable sections of them were by no 
means reconciled to the corrupt legislative methods of 
presenting large areas of land and large advances of 
money for private enrichment. 

The farmer, burdened by the price that he had to pay 
for his small farm, and often blanketed by a mortgage, 
did not quite approve of the squandering of the public 
domain for the benefit of a law-created handful of 
grandees. The small traders, resenting the very idea of 
any class above them, bitterly objected, as a class, to 
great capitalists being created by virtual edict of law. 



I3O HISTORY OF THE GREAT AMERICAN FORTUNES 

The alert and organized sections of the working class 
saw in this constant manipulation of legislative bodies 
another perversion of governmental power for the ag- 
grandizement of a small and hostile class, and the rapid 
impetus to an overshadowing plutocracy. Aware of this 
general feeling, legislative assemblies had to be " in- 
duced " ; they might themselves use fine-sounding and 
seemingly solid arguments in explaining to constituencies ; 
but a very different incentive appealed to them; settle- 
ments had to be made in cash or its equivalent. 2 
A more temptingly opportune time for spoliative meas- 

2 The California Legislature was frequently charged with cor- 
ruption, but its farcical investigations of itself always resulted 
in whitewashing reports. 

One of these scandals was that of April, 1861, when John F. 
McCauley charged that legislators had sought bribes from him 
to pass a claim that he held against the State of California. 
The Legislature appointed an investigating committee on April 
18, 1861. (See Appendix to Journal of California Assembly, 
Twelfth Session, 1861, Doc. No. 15). McCauley testified that 
one Wittgenstein, a go-between for Chairman Walden of the 
Assembly Committee on Claims, approached him and told him 
that for a favorable report Walden wanted $400 or $500 
(pp. 2-4). In his testimony Wittgenstein admitted telling Mc- 
Cauley that Walden had made $7,000 or $8,000 in that way; he 
also admitted saying that Walden had made a large amount of 
money during the session. Wittgenstein substantially admitted 
the truth of McCauley's charges (pp. 5-11). The report, how- 
ever, was a whitewashing one. 

Another scandal was when the editor of the newspaper, the 
"American Flag," specifically charged, in 1866, that a fund of 
$108,090 had been expended in the Legislature by local bankers, 
commission merchants and importers to prevent the repeal of a 
law called the Specific Contract Act. He accused seven Sen- 
ators of having sold their votes for $12,000 each. An investi- 
gating committee of the California Senate was appointed. One 
of the witnesses examined was Darius O. Mills, then a San 
Francisco banker, and later a prominent New York multi- 
millionaire. He and other witnesses denied knowing anything 
of a corruption fund. The committee's report exonerated the 
accused. " Report of Senate Committee of Investigation on 
Certain Charges Made by the Editor of the ' American Flag/ " 
Appendix to Journal of Senate and Assembly of the Legislature 
of California, 1866, Vol. ii. 



THE PACIFIC QUARTET 13! 

ures than the period of the Civil War could hardly have 
been found. Engrossed in the tumultuous upheavals of 
those convulsive years, the people had neither the pa- 
tience nor disposition to keep close track of routine en- 
actments in Congress or in the legislatures. At the very 
beginning of that war the Huntington group organized 
the Central Pacific Railroad Company, with a capital 
stock of $8,500,000, nearly the whole of which capital was 
fictitious so far as actual investment of money was con- 
cerned. At once they directed their energies right to 
the core of things. Huntington betook himself to Wash- 
ington to lobby in Congress, while Stanford, elected Gov- 
ernor of California, busied himself with similar ends at 
home. No visionaries were they, but practical men who 
knew how to proceed straightway. 

Stanford's work quickly bore fruit in California; the 
city of Sacramento was authorized to donate $400,000; 
Placer County to loan $550,000, and the State of Califor- 
nia to hand over $2,100,000. At the same time, Hunt- 
ington was doing surpassing missionary duty in Con- 
gress. An act was passed in 1862 by which about $25,- 
000,000 in Government six-per-cent. bonds and about 
4,500,000 acres of public lands were placed at the dis- 
posal of the quartet. The few protests against these 
great gifts were immediately silenced. " Is not the Gov- 
ernment fully protected ? " the promoters innocently in- 
quired. " Are not its loans covered by a first mortgage? 
If the company defaults, cannot the Government step in 
and recover ? " This sounded plausible. Two years 
later, however, at the very time when (as we have seen) 
the Union Pacific coterie were corrupting Congress to get 
greater land grants and altered laws, Huntington again 
debauched Congress. An act was passed doubling the 
Central Pacific's land grant and relegating the Govern- 



132 HISTORY OF THE GREAT AMERICAN FORTUNES 

merit's claim on the Central Pacific to the under position 
of a second mortgage. And, as it turned out later, the 
contract with the Government was so deftly drawn that, 
according to a decision of the Supreme Court of the 
United States subsequently, the Government's lien cov- 
ered the main lines only, and not the branch lines. 
Whether this contract, as drawn, was a result of collu- 
sion with Government officials was never determined. 

" Whence came the means," asks Bancroft, " by which 
four men with only moderate fortunes were enabled to 
build, buy, own and operate all the roads belonging to 
the Central and Southern Pacific systems? In 1869, be- 
fore the last spike had been driven at Promontory, the 
railroad quartet, besides owning the road, had received 
as a loan $24,000,000 of Government bonds forming 
a second mortgage on the road, together with $400,000 
of San Francisco bonds as an unconditional gift, $550,- 
ooo of county bonds, and $2,100,000 paid, or to be paid, 
by the State of California in return for services to be 
rendered by the company." s 

The operations of the quartet were simple enough. 
Once they had obtained the requisite loans and gifts, 
they threw aside all pretenses, and openly and vigor- 
ously set out to defraud all within reach, not only the 
Federal Government, but also States, counties, cities and 
investors. First, they organized a construction com- 
pany, called the Credit and Finance Company. Then 
they made a contract with themselves to build the Cen- 
tral Pacific. With the aid of the loans given by Sacra- 
mento and Placer County, they built enough road to 
draw $848,000 from the Government as the subsidy of 
the first section. By repeating the process they had the 
entire road constructed, with scarcely the expenditure of 

8 "History of the Pacific States," xix:62. 



THE PACIFIC QUARTET 133 

a single dollar of their own. The next step was to load 
it down with a capitalization of $139,000,000 4 which was 
the beginning of still more stock inflation. 

A THEFT OF $5O,OOO,OOO. 

What was the total of their frauds? The report of 
the Pacific Railroad Commission gives no adequate idea 
of the immensely valuable rights and possessions of all 
kinds that they secured by bribery and fraud. But it 
does give a comprehensive account of their money and 
stock plunderings. " In the accounts of the Central Pa- 
cific Railroad Company," the report of the Pacific Rail- 
road Commission of 1887 states, " the division of earn- 
ings for improper purposes amounted to many millions, 
through contracts made by Messrs. Stanford, Hunting- 
ton, Hopkins and Crocker with themselves." According 
to this report, the cost of building 1,171 miles of road 
was $27,217,000, but they fraudulently charged three 
times that sum. Here was a theft of more than fifty 
millions in one grand haul. In addition to stolen cash, 
they issued to themselves $33,722,000 in bonds and $49,- 
005,000 of stock. But these sums were only part of the 
total thefts. The Pacific Railroad Commission's report 
goes on to say : 

" Then as directors of the Central Pacific, they took 
leases of their own lines for the Central Pacific for 
$3,400,000 per annum ; which was at the rate of nearly 
thirteen per cent. Fifteen months ago (in 1886) three 
of these directors (Stanford, Huntington and Crocker) 
contracted with themselves to build an extension of one 
hundred and three miles. In payment they issued stock 
to the amount of $8,000,000, and bonds to the amount 

* Hudson's " Railways and the Republic " : 265. 



134 HISTORY Otf THE GREAT AMERICAN FORTUNES 

of $4,500,000, the market value of the stock and bonds 
being at the time $8,340,000. The actual cost of con- 
struction was $3,505,000, so that they personally profited 
by their own votes by that single transaction to the ex- 
tent of $4,834,000," etc., etc. 



GROSS CORRUPTION OF CONGRESS. 

The process of corruption and theft was continued in 
the building of the Southern Pacific Railroad. 

In 1871 Congress chartered the Texas and Pacific Rail- 
road to run from Marshall, Texas, to San Diego, Cal., 
and presented the company with approximately 18,000,- 
ooo acres of public lands on condition that the road was 
to be completed in ten years; otherwise the land grant 
was to be declared forfeited. At the same time, Congress 
chartered the Southern Pacific Railroad Company to 
build a line from El Paso, Texas, to San Francisco, and 
gave it a gift of about 5,000,000 acres of public lands. 
The Texas and Pacific project was owned by a group 
of capitalists headed by Scott, of the Pennsylvania Rail- 
road ; the Huntington men were at the head of the South- 
ern Pacific Railroad Company. 

These two groups of capitalists soon came into col- 
lision; each fiercely sought to oust the other, and gain 
an undisputed monopoly of transportation in the terri- 
tory in question. The fight was carried into Congress; 
each side caused the introduction of bills aimed at crip- 
pling the other. The contest then narrowed to a ques- 
tion of which group could corrupt Congress the more 
effectually. 

" Scott," wrote Huntington on January 29, 1876, " is 
making a terrible effort to pass his bill, and he has many 
advantages with his railroad running out from Washing- 



THE PACIFIC QUARTET 135 

ton in almost every direction, on which he gives Free 
Passes to everyone who can help him ever so little. 
... It has cost money to fix things, so I know his 
bill would not pass. I believe with $200,000 we can pass 
our bill." 5 

On March 6, 1876, Huntington wrote that " the Rail- 
road Committee of the House was set up for Scott, and it 
has been a very difficult matter to switch a majority of 
the Committee from him, but I think it has been done." 
On November n, 1876, Huntington wrote further to one 
of his associates, " I am glad to learn that you will send 
to this office $2,000,000 by the first of January." On 
May 3, 1878, he notified his partners: " The T. and P. 
folks are working hard on their bill and say they are 
sure to pass it, but I do not believe it. They offered one 
member of Congress $1,000 cash down, $5,000 when the 
bill .was passed and $10,000 of the bonds when they got 
them if he would vote for the bill." 6 

Huntington came out victorious. " There is no room 
for doubt," reported the Pacific Railroads Commission 

8 We have seen, in the narration of the Gould fortune, how 
Scott had been placed in charge of the Government supervision 
of railroad transportation during the Civil War, and how a Con- 
gressional committee had exposed the immense extortions in 
conveying soldiers, equipment and supplies that some of the 
Northern railroads successfully carried on immediately following 
his appointment. 

6 There were many of these letters ; we have already given a 
glimpse of one of them in Chapter iii, Vol. iii. They came to 
light (as noted in that chapter) in a lawsuit between two fac- 
tions. They were published in full in " Driven from Sea to 
Sea," by C. C Post. 

" It is impossible," reported the Pacific Railroad Commission 
in 1887, " to read the evidence of C. P. Huntington and Leland 
Stanford and the Colton letters without reaching the conclu- 
sion that very large sums of money have been improperly used 
in connection with legislation." Vol. 1:121. Huntington was 
accustomed to boasting of his method of bribery, " Whenever 
possible I always try to pay in checks, for the men who take 
them are ever afterward my slaves." 



136 HISTORY OF THE GREAT AMERICAN V FORTUNES 

of 1887, " that a large portion of $4,818,535 was used 
for the purpose of influencing legislation, and preventing 
the passage of measures deemed hostile to the interests 
of the company, and for the purpose of influencing elec- 
tions." T 

The next thing the Huntington group did was to force 
the Eastern capitalists out of the Texas and Pacific Rail- 
road, absorb that line into their own system, and illegally 
grab the eighteen million-acre land grant of the Texas 
and Pacific. Even under the law, as it stood, the Texas 
and Pacific was not entitled to the land grant. The 
House Committee on Judiciary on August 3, 1882, after 
an investigation, declared that the Texas and Pacific Rail- 
road Company had never completed any part of the 
route for which the land grant in New Mexico, Arizona 
and California was given ; that it " had never earned the 
grant " ; that it did not purpose to build the road for 
which it was chartered and endowed, and that it was 
transferring to the Southern Pacific Railroad Company 
" all of the rights and titles to the land in question." 8 
The Committee on Judiciary prepared a resolution de- 
claring the forfeiture of the land grant, and urged its 
passage by Congress as a joint resolution. It did not 
pass. 

A SUMMARY OF THEIR PLUNDERINGS. 

Presenting the general results as nearly as official 
investigations could ascertain them, this is what Hunt- 
ington and his associates did: They had received hun- 
dreds of millions of dollars in the form of money, bonds 
and lands from Government, States, counties and mu- 

7 Report of U. S. Pacific Railway Commission, i : 84. 

8 House Report NO, 1803, Forty-seventh Congress, Second 
Session. 



THE PACIFIC QUARTET 137 

nicipalities. As controllers of the Contract and Finance 
Company and other construction companies, they had 
turned over to themselves $142,000,000 in all for ostensi- 
ble construction work. They had expended at least five 
millions for corrupt political purposes. They had stu- 
pendously watered the stock of their railroads, and with 
the cumulative proceeds of their thefts had secured 
control of nineteen distinct railway systems and of steam- 
ship lines, also. They had, by fraud, robbed the Gov- 
ernment of many millions of acres of land; they had 
defrauded the Government of the bulk of the funds that 
it had advanced; they refused to pay more than the 
merest nominal taxation, and they extorted onerous rates 
for transportation. 

This is the general summary of their acts as set forth 
in the report of the Pacific Railroads Commission. 
" From the evils of subsidy-giving," says Bancroft, 

the country suffered for many years. The population was 
shifting, the available resources of the State [California] few; 
but notwithstanding, there was hardly a county in it that by 
1870 had not burdened itself with a debt of from $100,000 to 
$300,000 at a high rate of interest, to run in some instances 
sixty years. Companies incorporated under a general law be- 
sieged the Legislature annually to pass acts authorizing the 
people to vote on incurring this indebtedness; newspapers pa- 
raded the benefits to be received from every railroad scheme, 
often without knowing whether it had any merit. Thus, urged 
by the Legislature and the press, the people passed under the 
rod with the greatest equanimity. 9 

Bancroft relates further : " It is a fact in California 
commercial history that hardly could the reader of a city 
daily or a country weekly open his newspaper without 
finding therein some complaint against railroad manage- 
ment, especially applying to freight charges." The 

9 Bancroft's "History of the Pacific States," xix:564. 



138 HISTORY OF THE GREAT AMERICAN FORTUNES 

railroads were " apt to fix the rates on a given 
article ' all it would bear/ " 10 This description ap- 
plied not only to California but to every State and Ter- 
ritory reached directly or indirectly by railroads. The 
very people whose representatives had given public prop- 
erty so lavishly to a few, were robbed in every manner 
that ingenuity could formulate. Not only was the pub- 
lic plundered ; Huntingdon and his associates ground out 
their own lesser stockholders by the same fraudulent 
methods that Gould and Sage used, and also, like Gould 
and Sage, they cheated out a horde of confiding in- 
vestors. 

The disillusioning of the people of the Pacific States 
was reflected in the messages of the various Governors. 
Only a few years previously, the Governors of Califor- 
nia and other States had urged the Legislatures to be 
extremely generous in donating large bounties to rail- 
road projectors and other capitalists. They wrote rap- 
turously of the great public benefits certain to come from 
the construction of railroads, and praised the railroad 
promoters as men of the loftiest public spirit. Soon a 
decided change came over the spirit of these messages. 
Bitter complaints of extortion and robbery succeeded 
glowing encomiums. In his message to the California 
Legislature, in 1869, Governor H. H. Haight had this 
to say : 

. . . Our land system seems to be mainly formed to fa- 
cilitate the acquisition of large bodies of land by capitalists or 
corporations, either as donations, or at nominal prices. . . . 
Numbers who purchased from the State lands sold as swamp 
or overflowed, find their farms claimed under the railroad 
grants, and themselves involved in expensive contests before 
Registers of Land Offices. 11 

10 "History of the Pacific States," xix:628. 
11 First Biennial Message, etc., 6. 



THE PACIFIC QUARTET 139 

In his inaugural address, delivered on December 8, 
1871, Governor Newton Booth of California expressed 
himself : 

The undue political influence and financial control that many 
corporations have assumed, is not the only evil presented by 
them. In their internal administration, between majorities and 
minorities, directors and stockholders, cases of the grossest in- 
justice are constantly arising. It is not uncommon to find one 
class of stockholders enriching themselves from a company 
which impoverishes another. . . . The organization of cor- 
porations within corporations is a refinement of subtlety and 
fraud which should be positively prevented by law. 12 

After describing the Central Pacific Railroad's system 
of discrimination in fares and freights, " a grievous bur- 
den, so long and patiently endured by our people," Gov- 
ernor John H. Kinkhead of Nevada wrote to the Leg- 
islature of that State in 1879 : 

Grave, and I believe well-grounded, complaint is made con- 
cerning the valuation of railroad property for taxation. The 
owners of this species of property are granted exceptional priv- 
ileges, and should be made to bear their equal part of all of 
the expenses of Government. 

Not one of these messages had any vital result. In 
some instances they were sincere, but, as a rule, they 
were intended to be nothing more than wordy sops to 
appease middle-class public opinion. 13 Some of the very 

12 Inaugural Address of Gov. Newton Booth, etc., lo-zi. 

18 The merchants, manufacturers and importers who had ap- 

? lauded and banqueted Huntington and his associates only a 
ew years previously, were now caustically denouncing them, 
not for their direct thefts, but for their extortions. For ex- 
ample, see "A Petition of the Citizens of San Francisco Rela- 
tive to the Arbitrary Exactions And Injustices of Railroad 
Companies." Nearly all of the signers were business firms. 
They complained, in this petition, of the "arbitrary exactions 
and injustice of railroad companies," and demanded State regu- 
lations. Appendix to California Senate and Assembly Journal, 
Twentieth Session, 1874, Vol. iv, Doc. No. 8. 



140 HISTORY OF THE GREAT AMERICAN FORTUNES 

Governors who wrote them with such a display of ear- 
nestness were put in power and controlled by the very 
corporations of which they complained. The legisla- 
tures were wholly under the domination of the great 
private corporations, and the judiciary almost wholly so. 
Year after year, the different Governors denounced cor- 
porate practices, and demanded corrective legislation, 
which never came. Two and three decades after Gov- 
ernor Newton Booth's denunciation, Governors were still 
writing similar futile messages. 

Acclaimed at first as public benefactors, Huntington 
and his associates were subjected to the fiercest de- 
nunciation when the people realized the enormous frauds 
that they had committed. For the frauds, of which an 
epitome has been here given, were only a portion of the 
total. It is hardly necessary to plunge into the tortu- 
ous mass and maze of detail; how they resorted to nim- 
ble subterfuges to escape their obligations, and de- 
frauded the Government; how they corrupted and ruled 
States and Territories, and seized hold of one possession 
after another ; and how, through their control of political 
machinery, they sent Representatives and Senators to 
Washington as though they were so many errand boys. 
The Pacific quartet were among the first of the mag- 
nates to come out into the open and exercise political 
power directly, instead of intrusting it to retainers. To 
have one of their own members in the United States 
Senate, there to keep alert for their interests, they caused 
the California Legislature, in 1887, to elect Stanford to 
that body. 

Hopkins died in 1876, Crocker in 1888. Very charac- 
teristic of the peculiarities of prevailing society was one 
of the ways in which Hopkins* millions were used. His 
widow inherited his wealth and remarried, and part of 



THE PACIFIC QUARTET 14! 

her inheritance went toward the purchase of an old-es- 
tablished New York newspaper. Thus was witnessed, 
as in the case of Gould, a newspaper being financed 
by the proceeds of theft, and the inheritors of those pro- 
ceeds giving directions as to what should constitute the 
moral and political pabulum fed out to the public. A 
splendid country mansion, costing $2,ooo,coo, at Great 
Barrington, Mass., is a standing explanation of how 
some more of Hopkins' millions were applied. Crocker 
left a fortune nominally estimated at $40,000,000. 

Stanford's wealth was so great that he, like the As- 
tors, the Vanderbilts, Goulds and other magnates, was 
forced to the necessity of investing the surplus. Part 
of the many millions stolen from the Government and 
expropriated from the people, was put into San Fran- 
cisco street railways, 14 of which system he owned a one- 
fourth share, and from which he derived ten per cent, a 
year. Other millions were invested in other forms of 
property. He became a great landed proprietor. He 
owned the immense Vina vineyard, comprising 100,000 
acres of land; the Palo Alto ranch, with its extensive 
breeding establishment and its great vineyards, and he 
owned much other real estate in San Francisco and else- 
where. From his stocks and lands he received, it was 
estimated, an income of $1,000,000 a year. 

Up to 1885 he had been merely a financier, so-called, 
praised by some as a great railroad builder, by others as 
a colossal thief. Now he became a full-fledged philan- 
thropist by giving property worth many millions for the 
establishment of the Leland Stanford, Jr., University. 

14 Recent developments in San Francisco showing how brib- 
ery was used in getting street railway franchises are but an indi- 
cation of the corrupt methods long prevailing. 



142 HISTORY OF THE GREAT AMERICAN FORTUNES 

Thus was another " seat of learning " established to 
be subjected to the censorship of money. 



STANFORD IN THE UNITED STATES SENATE. 

As a United States Senator, Stanford's salary was 
$5,000 a year; he spent $75,000 every session; it was a 
pastime of this man to throw twenty-dollar gold pieces to 
the newsboys. His chief business in Washington was 
to prevent the Government from taking genuine action 
compelling him and his band to disgorge ; to stifle all hos- 
tile proceedings, and to get through laws giving more 
franchises, land, waterway rights and special privileges, 
and no interference with extortions. On the whole, 
he succeeded. This ponderous magnate, weighing two 
hundred and thirty-four pounds, was the political wire- 
puller of the quartet, while Huntington was the crafty 
financier, full of sharp tricks and devious contrivances. 
When Stanford died, in 1893, his estate was appraised 
as nominally worth about $18,000,000, but its size was 
considerably greater. He had given large sums for the 
Leland Stanford, Jr., University, and in his will he pro- 
vided more millions. The remainder of his estate went 
to his widow, who likewise gave donations to this uni- 
versity; in all, Mr. and Mrs. Stanford presented fully 
$30,000,000 for the establishment, expansion and per- 
petuation of the institution named after their son. 

The fortune plucked by Huntington was greater than 
that of any of the others of the quartet. At his death, 
in 1900, it was estimated at from $50,000,000 to $80,- 
000,000. It embraced interests in a vast number of rail- 
road, steamship and other corporations interests which 
he had bought with his share of the Pacific railroads' 




LELAND STANFORD. 



THE PACIFIC QUARTET 143 

loot, or engineered into his control by fraud. A favorite 
boast of his at one time was that he could travel from 
the Atlantic to the Pacific in his own cars and over his 
own rails, and that he could also, if he chose, sail in his 
own steamships from Brazil to New York, from thence 
to Colon, from Panama to San Francisco, and from 
there to Yokohama and Hongkong. His power was 
gigantic; he controlled the economic life of millions of 
workers, and dictated the government of a half dozen 
States. His plunder was intact. In 1894 he was quoted 
as saying in answer to a report : " I never made any 
exhibition of $44,000,000 of bonds, although I could 
have displayed twice as much in amount." 

THEY BECOME ARISTOCRATS. 

No intelligent person was unaware of the long and 
great series of frauds and thefts that Huntington, Stan- 
ford, Crocker and Hopkins had plowed through to 
squeeze their wealth. Yet, while severely denounced, 
they did not have to meet the same taunts and revilings 
constantly cast at Jay Gould. Essentially they were of 
the same stripe as Gould, but Gould was held up to popu- 
lar maledictions as a railroad wrecker, while criticism of 
the Huntington group was always tempered with the 
remark, " Well, if they stole colossal sums, they at least 
constructed great railways and were big factors in the 
development of the country." And they had no diffi- 
culty in getting instant entree into what was represented 
as the " best society." No question was raised as to 
their eligibility. By power of money they at once be- 
came a part of the financial aristocracy. Also, by this 
same power of money, Huntington's adopted daughter 



144 HISTORY OF THE GREAT 'AMERICAN FORTUNES 

entered with ease the fine circle of European titled aris- 
tocracy; she married Prince Haztfeld, in 1889, an d re- 
ceived a paternal present of several million dollars. 

Huntington lived like a grandee at least residen- 
tially. He had a mansion in San Francisco; a superb 
place in the Adirondacks, for which he paid $250,000 ; a 
palatial country home at Throgg's Neck, N. Y. ; and he 
built, at an expense of millions, an impressive pile at 
Fifth avenue and Fifty-seventh street, New York City. 15 
that aristocratic avenue whither so many magnates, 
after a career of fraud and theft, came to ensconce 
themselves in befitting grandeur. Eight years were spent 
in building, at a cost of $250,000, a mausoleum in Wood- 
lawn Cemetery a classic, capacious tomb of marble. 

THEIR LINES TAKEN OVER BY HARRIMAN. 

And there his remains now lie. After his death the 
inventory of his estate showed that his wealth was ap- 
parently about $60,000,000; unquestionably it totalled a 
much larger sum. His widow, who still lives, inherited 
the greater part of it. But what became of the control 
of the railroad and steamship lines which he dominated? 
His death occurred at about the very time the Standard 
Oil oligarchy, acting through Harriman and its banking 
houses, was prepared, in its gradual reaching out for 
railroad ownership, to buy in the ownership of the Pa- 
cific railroad and steamship lines. The great surplus of 
the Standard Oil treasury easily furnished the many 
millions needed to buy over the shares held by Mrs. 
Huntington; and the control of the Southern Pacific 
and other extensive lines, both railroad and steamship, 

15 But after it was completed he could never be persuaded to 
live in it. His reason was a belief in the superstition that men 
build houses only to die in them. 



THE PACIFIC QUARTET 145 

built and sustained by fraud and theft, was taken over by 
the all-powerful Standard Oil magnates, thus marking 
one more aggressive step in the assumption of a central- 
ized ownership of the productive and distributing re- 
sources of the United States. 



CHAPTER VII 
J. PIERPONT MORGAN'S GENESIS 

Did ever a man of wealth lave more in panegyrics than 
that conquering money hero of these present times, J. 
Pierpont Morgan ? Long since, his fame was trumpeted 
to the four quarters of the earth. His copious praises 
have been chanted with an extravagance that in the case 
of anyone else would have been rejected as turgid. 
Most mighty patriot and unexcelled public-spirited citi- 
zen, great financier and noble philanthropist, marvelous 
" captain of industry " and conservator of the social 
structure, friend of kings, and king among men these 
are but a selected few of the apotheoses too often seri- 
ously accepted by the people at large. One writer in 
particular, raptly reaching up for a large expression of 
homage, has touched almost the climax of adoration in 
emblazoning him, " Morgan the Magnificent." * 

MORGAN'S EXQUISITE REPUTATION. 

Many a hired or acquiescent scribe, plying well his 
trade, has reeled out his effusions ; and the total of these 
has produced a certain settled, aggregate, public opinion 
which looks up to Morgan with unabated awe and ad- 
miration. In the firmament of wealth no man shines out 
more dazzlingly than he. 

If ever there thrived a money potentate whose for- 

1 Under this title, an article by a " popular writer " appeared 
in " Pearson's Magazine," issue of February, 1908. 

146 



j. PIERPONT MORGAN'S GENESIS 147 

tune had been preeminently eulogized as having been 
acquired by purity of method, that man is J. Pierpont 
Morgan. Not once has he been subjected to strictures 
of " tainted wealth," nor at any time has he had to 
fight an inimical public opinion such as Jay Gould had to 
in his day, and as Rockefeller has encountered throughout 
his career. For the last thirty years Morgan has been 
overwhelmed with laudations of every character. Spo- 
radically, perhaps, some unshackled spirit in Congress 
or on the public platform might rise to break abruptly 
in upon this outpouring of flattery by venturing criti- 
cisms or revelations. But these irruptions passed idly 
by, hardly noticed in the general, continuous deluge of 
encomiums. 

The praises, abundant enough, bestowed upon other 
magnates, have paled beside those heaped upon Morgan. 
Witrtbut question, he has been held aloft as the most ex- 
traordinary financier of all. His feats in this regard 
have been recounted as though they bordered upon the 
miraculous. As a railroad and industrial magnate he 
has been interminably glorified. But fully as much so 
has he been held up to the world's admiration as a philan- 
thropist and a man of versatile parts and benevolences; 
an encourager and patron of Art, a lover of Literature, 
a Croesus with a mind capable of at once grasping the 
most intricate details of finance and reveling in the beau- 
ties and understanding of the Fine Arts. 

In all of the mass of reiterated, embellished ac- 
counts turned out about Morgan's career, there is no 
particle of truth save one undisputed fact. Undeniably 
he is one of the towering, aggressive money monarchs 
of the United States. What does he not own or con- 
trol? Scan the conglomeration of properties owned 
exclusively by him, or jointly with others. What a 



148 HISTORY OF THE GREAT AMERICAN FORTUNES 

bewildering list! The mind is taxed at inventorying 
them, and forbears enumeration. Banking institutions 
and railroads, industrial plants and mines, land, public 
utility systems and shares, steamships, publishing houses 
and newspapers all his, or partially so. Morgan is 
supereminently one of the " Christian men to whom 
God in His infinite wisdom has confided the property 
interests of the country." 

Let us scrutinize the career of this man whom God is 
alleged to have chosen as a trustee for the steward- 
ship of the nation's property, and for the guidance of 
its Government. 

Foulest of all foul blasphemies would it be to in- 
terrogate the divine choice of lieutenants or derogate 
from them. Yet inasmuch as those who make such 
emphatic claims of heavenly appointment have not as 
yet been able to produce their credentials (although 
earnestly beseeched to do so), we fallible mortals shall 
have to fall back upon mere human standards of judg- 
ment. What (by way of analogy), if the people of 
the United States should forthwith conclude to confis- 
cate all private property, and declare collective owner- 
ship upon the ground that the good Lord God had au- 
thorized it so what would the present legal owners 
say? Would they not resist, and demand written docu- 
ments, attesting the fact of divine sanction, signed and 
sealed by celestial notaries? And even if, let us fancy, 
such documents were forthcoming, would not our mag- 
nates have the Supreme Court of the United States 
denounce them as stupid forgeries, issue a mandate for 
the arrest of their contumacious Author, and again 
sternly declare, for the twentieth thousand time, that no 
power was superior to that of the Supreme Court of the 
United States? 



J. PIERPONT MORGAN S GENESIS 149 

All other criteria failing, we shall have to consider 
Morgan by the light of terrestrial evidence perhaps a 
poor method, but the only one within our horizon. 



NOT QUITE A " SELF-MADE MAN." 

Morgan is not one of those magnates coming wholly 
under the classification of being a " self-made man/' 

This phrase, used with so unctuous an effect in 
contemporaneous descriptions of rich men's careers, has 
never been applied to Morgan. For once, there is a 
break-off in the almost unvarying run of similitudes. 
Of the early careers of nearly all other multimillion- 
aires the same story has been mechanically written by 
glorifying writers; how these men started out as poor 
boys, opened a little store somewhere, saved money 
and gradually worked up to wealth. In the nineteenth 
century the term " self-made man " was invested with 
an inordinate importance as signifying great personal 
energy and ability; so much credit was supposed to at- 
tach to it that it was always mentioned with praise and 
received with pride. The object of its application was 
pointed out as a man who, possessing no original ad- 
vantages, overcame all obstacles by sheer force of skill 
and determination, and achieved wealth. 

This, however, could not be said of J. Pierpont Mor- 
gan. His father, Junius S. Morgan, was a millionaire. 
Ascending by successive steps from the positions of 
farmer boy, dry goods clerk, bank clerk and commer- 
cial man, Junius S. Morgan became a partner of George 
Peabody in the banking business. When the Civil War 
came on, George Peabody and Company were appointed 
the financial representatives in England of the United 
States Government. Synchronously with this appoint- 



150 HISTORY OF THE GREAT AMERICAN FORTUNES 

ment their wealth suddenly began to pile up; where 
hitherto they had amassed riches by stages not remark- 
ably rapid, they now added many millions within a 
very few years. 

HIS FATHER'S CAREER. 

How did they contrive to do it? Biographical nar- 
ratives aver that it was done by legitimate banking meth- 
ods, although what those methods were is not explained. 
But if we are to believe the comments and criticisms 
appearing in the American newspapers of the time, their 
methods were not only very far from being legitimate, 
but were within the pale of the most active treason. 
The Constitution of the United States defines treason 
as consisting in citizens levying war upon the nation, 
or in giving aid and comfort to the enemy. According 
to writers of the day, the methods of George Peabody 
and Company were of such a character as to be not 
only treasonable, but double treason, in that, while in 
the very act of giving insidious aid to the enemy, George 
Peabody and Company were the financial plenipoten- 
tiaries of the United States Government, and were being 
well paid to advance its interests. 

An article for example, published in the Springfield 
Republican 2 in October, 1866, asserted: " For all 
who know anything of the subject know very well that 
he [Peabody] and his partners in London gave us no 
faith and no help in our struggle for national existence. 
They participated to the full in the common English 
distrust of our cause and our success, and talked and 
acted for the South rather than for the nation." 

2 This newspaper has always enjoyed the reputation of being 
of an extremely careful and accurate character; it has remained 
one of the very best newspapers in the United States. 



j. PIERPONT MORGAN'S GENESIS 151 

Evidently, it was the sight of the large benefactions 
which Peabody was then giving that prompted the re- 
marks upon the origin of his fortune. 



MILLIONS FROM ALLEGED TREASON. 

The writer of this article went on to say that George 
Peabody and Company swelled the feeling of doubt 
abroad, and speculated upon it. " No individuals," he 
continued, " contributed so much to flooding our money 
markets with the evidences of our debt in Europe, and 
breaking down their prices and weakening financial con- 
fidence in our nationality than George Peabody and 
Company, and none made more money by the operation. 
All the money, and more, we presume, that Mr. Peabody 
is giving away so lavishly among our institutions of 
learning was gained by the speculations of his house in 
our misfortunes." 8 A writer in the New York Evening 
Post, issue of October 26, 1866, also made the same state- 
ments, accusing Peabody and Junius S. Morgan of using 
their positions as United States financial representatives 
to undermine the very cause that they were paid to rep- 
resent, and profiting heavily from their teachery. 

These are a few of the newspaper comments then 
current. Whether they were all true, or partially true, 
or not true at all, we do not know; no confirmation of 
them can be found in official records. The statements 

8 This article was also published in the New York "Times," 
issue of October 31, 1866. 

" We have in this country," wrote Cloud in his " Monopolies 
and the People," published in 1873, " a moneyed aristocracy, com- 
posed mainly of men who speculated in their country's misfor- 
tunes during the late Civil War, and who under pretense of 
aiding the Government, made their twenty, fifty and one hundred 
per cent, and amassed large fortunes by taking advantage of the 
tide of war as it submerged a nation's hopes." p. 227. 



152 HISTORY OF THE GREAT AMERICAN FORTUNES 

are given here for what they may be worth. 4 But it 
should be remembered that not the one-thousandth part 
of what was going on in the world of capitalism ever 
found its way into official documents. Reasoning from 
conditions prevailing at the time, it is more than likely 
that the accusations were by no means ill-founded. 

YOUNG MORGAN'S ENVIRONMENT. 

In the chapters on the Vanderbilt and the Gould for- 
tunes an abundance of facts from the Government rec- 
ords have been presented, depicting how every part of 
the capitalist class was engaged in the most gigantic 
frauds and swindles upon the Government during the 
Civil War. To add to this collocation would be super- 
fluous were it not necessary to bring out clearly in each 
case the prevailing methods, influences and conditions, 
and to show that particular acts were not those of in- 
dividuals so much as of a class. Peabody and the elder 
Morgan were but following the standards of their class, 
the capitalist order of society, and the lessons which 

4 Regarding another of Peabody's transactions, however, cer- 
tain definite facts are embodied in official documents. From 
these documents it would conclusively appear that Peabody had 
been long carrying on methods somewhat similar to those that 
he was accused of profiting by during the Civil War. 

In 1839 the Chesapeake and Ohio Canal Company found oc- 
casion to complain bitterly of Peabody's methods as its finan- 
cial representative in London. The stock of this company was 
secured by bonds issued by the State of Maryland as pledge for 
its debt. Peabody sold these bonds in Europe at ruinous dis- 
counts, and with large sums of money belonging to the com- 
pany in his possession, refused to honor its bills. By this 
process he made large profits. His excuse was the critical con- 
dition of the European money markets. The directors of the 
company formally approved his action, probably to let him out 
gracefully, but were glad to accept his resignation. U. S. Sen- 
ate Documents, First Session, Twenty-sixth Congress, 1839-40, 
Vol. viii, Doc. No. 610. This document contains the full cor- 
respondence between the company and Peabody. 



j. PIERPONT MORGAN'S GENESIS 153 

young J. Pierpont Morgan imbibed were those taught in 
exemplary fashion by the whole of the class. To de- 
scribe his transactions with a precipitate abruptness of 
treatment, while omitting a perspective upon his times, 
would afford no understanding of the molding forces in 
operation, and would be prejudicial and without aim. 

In every department of business the most persistent 
and gigantic frauds had long been committed by capital- 
ists, and grew to enormous proportions during the Civil 
War. Not only were those rich bribers and defrauders 
secure from punishment, but they had little difficulty in 
keeping all, or nearly all, of the wealth thus fraudulently 
acquired, and investing much of it in other channels. It 
is advisable to advert here again to the practices of that 
large body of importers who had already acquired con- 
sequential fortunes, and who, when Morgan was just 
starting out, occupied a superior position as respectable, 
conspicuous and patriotic " leading citizens." 

In the one prolific field of defrauding the Government 
of customs dues, large private fortunes had already been 
amassed by the year 1860. In preceding volumes we 
have given instance after instance, particularly the enor- 
mous frauds of Phelps, Dodge and Company. But those 
instances were only a few of an immense total. 

A Congressional report in 1850 (Ex. Documents, Sec- 
ond Session, Thirty-first Congress, 1850-51, Vol. V, Ex. 
Doc. No. 44) specified 2,062 different cases of fraudu- 
lent undervaluations on the part of nearly as many im- 
porters at Boston, Philadelphia, New York and New Or- 
leans. Replying to a resolution of the United States 
Senate calling for a statement of measures adopted to 
prevent frauds upon the revenue, U. S. Secretary of the 
Treasury Corwin reported (U. S. Senate Documents, 
First Session, Thirty-first Congress, 1849-50, Vol. XIV, 



154 HISTORY OF THE GREAT AMERICAN FORTUNES 

Doc. No. 79) that the honest trader had no opportunity 
in business. " All the frauds," he wrote, " which can 
be perpetrated by double invoices and false valuations 
continue without abatement. Honest merchants and fair 
traders have been driven from the business of importing 
foreign merchandise, being unable to compete with the 
dishonest practices that prevail and which our present 
system favors. . . . The means at the disposal of 
this department are entirely inadequate to such an exam- 
ination of imports as will effectually suppress the sys- 
tematic frauds known to be extensively perpetrated." 

Thirteen years later Edwin Jordan, Solicitor for the 
United States Treasury Department, reported the same 
state of affairs. Describing the custom house frauds at 
New York, he reported, on January 25, 1863, to Chase, 
Secretary of the Treasury (House Miscellaneous Doc- 
uments, Third Session, Thirty-seventh Congress, 1862- 
63, Vol. I, Doc. No. 18), " that frauds in the importation 
of foreign merchandise are extensively, constantly and 
systematically carried on. They are effected in various 
ways." One method, Jordan wrote, was that of consid- 
erable direct smuggling of jewelry, laces, rich silks and 
other costly goods carried on the person, often with the 
connivance of the revenue officers. Jordan continued : 

But probably, the usual mode in which frauds are committed 
is by the use of invoices, in which the goods to which they 
relate are falsely described, or undervalued. Sometimes the 
importer relies upon the inability of the revenue officers to 
detect such false description or undervaluation, and sometimes 
upon his own power by corruption, to induce them to pass the 
goods, with a full knowledge of the fraud. Experience has 
proven that in neither case is his expectation disappointed by 
the result. . . . 

As to the accessibility of many of those employed in the 



J. PIERPONT MORGAN S GENESIS 155 

custom house to corrupt influences, the evidence is, I regret 
to say, conclusive and startling. 

The facts developed in connection with the particular frauds 
before referred to show that money, in large sums, was received 
by officials as the undisguised reward of fraudulent acts or 
connivance. But, in addition to this, the statements herewith 
submitted seem to justify the belief that nearly the entire body 
of subordinate officers in and about the custom house are, in 
one way or another, in the habitual receipt of emoluments from 
importers or their agents. 

Jordan reported (page 6 of the report) that one lawyer 
declared that he had paid to a single custom-house record 
clerk the sum of $1800 in a period of fifteen months. 
" Entries from the books of an importing house, doing 
but a moderate business, are discovered, showing that 
about a thousand dollars had been paid by it to an ex- 
aminer within a period of a year. It is shown that a 
bond clerk, with a salary of $1000 per annum, enters 
upon a term of eight years with nothing, and leaves it 
with a fortune of thirty thousand dollars." Jordan re- 
ported that he thought the amount and extent of bribes 
were much larger than the custom-house omcials were 
willing to admit. 

What was set forth in official reports as " the notorious 
Williams case," was characteristic of the methods by 
which fortunes had been thus acquired. In these official 
reports, the firm of J. D. and M. Williams, wine im- 
porters of Boston, was described as one of the " oldest 
established " in that city ; its members had grown very 
rich, and occupied a preeminent station of superior ele- 
gance and prestige. They professed to be deeply shocked 
and wronged when, in 1865, Collector Goodrich of the 
Port of Boston specifically charged them with long-con- 
tinued defrauding of the Government in the importation 



156 HISTORY OF THE GREAT AMERICAN FORTUNES 

of sherry and champagne. The Government examiners 
and officials presented calculations showing that, by 
undervaluations, the firm had cheated the Government 
out of at least $150,000 in duties; that the interest would 
make the amount nearly $200,000 ; and that the value of 
the wines, since 1846, liable to forfeiture, would reach 
about $2,000,000. (See Reports of Committees, Second 
Session, Thirty-ninth Congress, 1866-67, Report No. 

ISO 

Collector Goodrich demanded of the firm that it pay 
$500,000 restitution to the Government a sum equiva- 
lent to double the duties and interest. Confronted with 
the most positive evidences of its guilt, the firm dropped 
its arrogant and injured attitude. It offered the Gov- 
ernment $350,000 in full satisfaction of all duties, fines 
and forfeitures. This offer was declined. Suddenly, a 
singular change came over the custom-house officials; 
they consented to revise their calculations and recom- 
mend the settlement of the Government's claim for the 
payment of $100,000, and that sum was accepted. 

The result was a loud public scandal; impatient curi- 
osity was popularly expressed as to why, after declining 
an offer of $350,000, the Government had accepted $100,- 
ooo. The House Committee on Public Expenditures in- 
vestigated. This committee, on February n, 1867, 
handed in two reports. Both reports agreed upon this 
fact : That during the firm's negotiations with the Gov- 
ernment, Samuel A. Way, a prominent Boston banker, 
obtained $31,200 from the Williams firm, whom he rep- 
resented in the case. What did he do with that sum? 
The three majority members of the committee reported 
that there were strong indications that he had bribed 
custom-house officials to agree to the settlement so fa- 
vorable to the Williams firm. But as for the complicity 



j. PIERPONT MORGAN'S GENESIS 157 

of the Williamses, the majority could not entertain the 
suspicion, it reported that a firm of such " long-unblem- 
ished reputation and wealth" (sic) could be a party to 
fraud and bribery. 

The minority report of two members ridiculed that 
of the majority. " According to Messrs. Williams' own 
testimony," it reported, 

Way, their agent, represented to them that he must have 
money with which to bribe Government officials into a more 
favorable compromise. . . . And how did these honorable 
and persecuted wine importers receive the proposition? Were 
they shocked at it? . . . Nothing of the kind. . . . They 
did precisely what might be expected of men, who, for a long 
series of years, had systematically defrauded the Government 
by putting false invoices through the custom house by as fong 
a continued a series of perjuries. They handed to their agent, 
Mr. Way, at his request during the negotiation, the nice little 
sum of $31,200 ... to have it used in the bribery and 
corruption of United States officers (page 28 of the report). 

The minority, however, thought that Way had " pock- 
eted the money himself." In reading these reports one 
is inclined to conclude that the majority sought to white- 
wash the firm, and the minority to clear the custom-house 
officials. The firm had, it was clear, testified to its guilt, 
and considerable testimony showed that the custom-house 
officials were generally corrupt. The minority report 
ended by severely denouncing the firm, and spoke of 
" the immense ' Merest which the foreign importers have 
in breaking down every honest official who stands be- 
tween them and the Treasury." The practice on the part 
of capitalists in causing the removal of honest officials 
who sought to thwart their frauds had been long-prevail- 
ing, as we have seen in the cases of John Jacob Astor 
and others. 

No criminal action was brought against the Williams 



158 HISTORY OF THE GREAT AMERICAN FORTUNES 

firm ; the scandal was soon forgotten ; and they, like many 
another importing house profiting by such methods, re- 
tained their rank and wealth. Of the $100,000,000 or 
thereabouts invested in railroads by Massachusetts capi- 
talists at that time, a considerable part of the investment 
was doubtless made by men who had obtained their 
wealth by defrauding the Government in customs dues. 
If recurring charges are any indication of corruption, 
the officials of the United States courts were constantly 
corruptly influenced or bribed to bring no criminal ac- 
tions against men of wealth, or to cause cases finally to 
be dismissed, if actions were brought. Even slave trad- 
ers, the abominations and horrors of whose traffic shocked 
the whole civilized world, seem to have bought immunity, 
and this, too, after the Civil War had begun. Accord- 
ing to the Duke de Roche foucault Liancourt, who trav- 
eled in the United States in 1795, " nearly twenty vessels 
from the harbors of the United States are employed in 
the importation of negroes to Georgia and the West India 
Isles." In his " Travels " (Vol. II, p. 292, English trans- 
lation) the Duke further told how the merchants of 
Rhode Island were the conductors of what he described 
as the " accursed traffic." United States law prohibited 
the importation of slaves after the year 1808, and out- 
lawed the traffic as piracy. But the slave traffic contin- 
ued, and large sums of Northern capital, particularly of 
New York, Spanish and Cuban capital, were invested in 
it. Slaves snatched from Africa were sold in the Span- 
ish colonies in America. " Spain," wrote Secretary of 
State Seward to Minister to Spain Koerner, in 1864, " is 
believed to be the only Christian country in whose do- 
minions African negroes are now introduced as slaves." 
Spain, added Seward, had a treaty with Great Britain 
on the subject, but disregarded it. 



j. PIERPONT MORGAN'S GENESIS 159 

From May i, 1852, to May i, 1862, twenty-six Amer- 
ican schooners and brigs were libelled by the Govern- 
ment at the Port of New York, charged with being en- 
gaged in the slave traffic. Some were seized at New 
York, and others on the coast of Africa. Many of these 
vessels were condemned. (Senate Doc. No. 53, Vol. V, 
U. S. Senate Documents, Second Session, 1861-62.) On 
November 28, 1863, Seward wrote officially to Lord 
Lyons that a steamship had recently landed more than 
one thousand African negroes near Cardenas or Sagua, 
Cuba ; that " very prominent and wealthy persons are said 
to be implicated in the business " ; and that it was be- 
lieved the steamer went to Nassau after landing the ne- 
groes. Under Spanish law, it was provided that all Af- 
rican negroes captured by the Spanish Government should 
be declared emancipadoes, and distributed among the 
planters and others for a monthly compensation, part of 
which accrued to the Government. But Thomas Savage, 
U. S. Vice Consul-General at Havana, in describing the 
system, wrote to Seward: "... A little gold ju- 
diciously distributed among the euro,, captains of the 
district, etc., will establish the fact [of the negro's alleged 
decease] and the emancipado, so reported as dead, re- 
mains a slave for life." (U. S. Senate Ex. Docs., First 
Session, Thirty-eighth Congress, 1863-64, Part II, Doc. 
No. 48.) 

On June 19, 1861, the bark Augusta was seized by 
United States Marshal Robert Murray at Greenpoint, 
Long Island, on the charge of being fitted out as a 
slaver to go to Africa, and was condemned. A party of 
capitalists, headed by Appleton Oakes Smith and his 
brother, scions of a well-known family, were financing 
the expedition. To Murray's amazement, the U. S. Dis- 
trict Attorney's office at New York then allowed the ves- 



l6o HISTORY OF THE GREAT AMERICAN FORTUNES 

sel to be bonded for an insignificant sum, and licensed 
her to clear the port. Hastening after her, Murray 
again seized the Augusta at Fire Island. He then for- 
mally and circumstantially charged collusion between the 
slave trade interests and certain officers of the Federal 
judiciary at New York. The Secretary of the Interior 
subsequently decided that collusion had not been proved. 
(U. S. Senate Docs., Second Session, 1861-62, Vol. V, 
Doc. No. 40.) Horace Greeley's editorials of the day ex- 
press the greatest indignation at this attempted cheating 
of justice ; the case was only one of numerous such cases ; 
many a time slave traders had succeeded in having actions 
against them dropped or dismissed. 

We have now seen how the most successful capitalists, 
the founders of great fortunes, piled up their wealth 
by unrestrained careers of fraud and theft. We have 
noted how Commodore Vanderbilt pocketed millions by 
blackmailing competitors, and by leasing or selling worth- 
less vessels to the Government during the Civil War for 
exorbitant sums. The facts have been set forth how 
a host of other capitalists swindled the United States 
Treasury out of hundreds of millions of dollars, and 
hazarded the lives of the very armies fighting for their 
cause by bribing Government officials to accept army 
and navy supplies of shoddy clothing, worthless tents and 
blankets, good-for-nothing shoes, adulterated, deleterious 
food, and guns which were frequently more dangerous 
to the men using them than to the enemy. 

Even if the supplies and equipment contracted for 
were of passable quality, the Government was mulcted 
out of extortionate sums. 

In previous chapters we have had repeated occasions 
to refer to the huge swindles which Marshall O. Roberts, 
one of the foremost and highly prized capitalists of 



j. PIERPONT MORGAN'S GENESIS 161 

those y^ars, successfully worked upon the Government. 
Some of the vessels that he sold for transport service 
were so bad that one of them foundered a day or two 
after leaving port. The crew of this ship the Union 
was alone saved, and barely so, at that; the ship 
and all her army stores were a total loss. Another ship 
sold by Roberts was so badly damaged on her first voy- 
age as to be hardly able to reach port, although not 
without much loss of freight. But to give a succinct 
idea of the greater sums squeezed out of the Govern- 
ment for vessels for which some fair degree of effi- 
ciency could be claimed, the case of the steamship 
Illinois need only be cited. For a few years' lease of 
this vessel Roberts succeeded in getting a total rental of 
$370,700, yet it was appraised by a naval board as worth, 
all told, cost of construction and equipment included, 
$257,187. After the Civil War it was returned to him 
in a much better condition than when he had leased it. 
The transaction was one of many such scandals that 
Congress deemed it wise to investigate. 5 

Need it be said, however, that Vanderbilt and Roberts 
were far from being exceptions? One of the greatest 
frauds of all in the extortion of large sums from the 
Government was Thomas Clyde, the founder of the 
Clyde Steamship Line and commonly described in bio- 
graphical accounts as a capitalist of the greatest probity. 
According to the court records, Clyde, by fraudulent 
representations, succeeded in obtaining exorbitant rates 
for the leasing of vessels for transport service. The 
Government discovered his frauds in time, and despite 
his urgent remonstrances, declined to pay the full amount 
that he claimed. 

8 See Executive Documents, Second Session, Thirty-ninth Con- 
gress, 1866-67, Vol. x, Document No. 65. 



l62 HISTORY OF THE GREAT AMERICAN FORTUNES 

In the suit that followed in the case of the steamer 
Tallaca, the Government claimed that Clyde was guilty 
of a fraud; that in dealing with Quartermaster Fergu- 
son he had fraudulently suppressed certain facts which, 
had they been known, would have prevented Ferguson 
from contracting to pay $115 a day for the vessel. In 
this case the Court of Claims decided in favor of Clyde.' 
But in the case of the steamer Rebecca Clyde, also be- 
fore the Court of Claims in December, 1869, the court 
severely denounced Clyde's claim as fraudulent, referred 
to the " unconscionable and exorbitant rates of trans- 
portation," and to the " injustice and extortion " of 
Clyde's claim, and dismissed his petition. 7 In the ap- 
peals in both cases the Supreme Court of the United 
States reversed both decisions. 

CONTEMPORANEOUS PHILANTHROPISTS. 

Such o-f the successful capitalists as were not defraud- 
ing in many directions were concentrating schemes of 
fraud in some one special direction. 

The Stevens family, of Hoboken, N. J., was one of 
the notable examples. They were millionaires before J. 
Pierpont Morgan had outgrown boyhood; they ranked 
high among the leading capitalists of the country; and 
by donations of a part of their fortunes they became 
celebrated as philanthropists. They were the principal 
owners of the Camden and Amboy railroad, then called 
in New Jersey the " Railroad Monopoly." 

In the fifteen years before 1860 they were the most 
notorious corrupters of the New Jersey Legislature; 
time after time they bribed bills through, corrupted the 
elections and the courts, ignored or evaded the laws, 

Court of Claims, v : 134-140. 7 Ibid., 140-155. 



j. PIERPONT MORGAN'S GENESIS 163 

and bled the public by an illegal system of transportation 
charges. That they and Blair and other railroad mag- 
nates were continually debauching the New Jersey Leg- 
islature was common understanding, but it was not to be 
expected that the Legislature would seriously investigate 
itself. In 1855 a specific bribery scandal inadvertently 
happened to become public; the Legislature hurriedly 
appointed a catechizing committee which made a pre- 
tense of investigation, and then turned in a report which 
harmed no one. 8 

The Stevenses not only had their direct, but also their 
indirect, sources of tribute. One of them, Edward A. 
Stevens, a philanthropist par excellence, was carrying 
on, it seems, a species of blackmailing akin to that Van- 
derbilt employed. As the owner of the Hoboken Land 
and Improvement Company, Stevens had secured a fran- 
chise for a branch railroad line from Hoboken to New- 
ark. For many years, up to 1860, he compelled the New 
Jersey Transportation Company, a competitor in that one 
section of the State, to pay him an annual subsidy of 
$18,000, in order to buy him off from building the branch 
line. 

The New Jersey Transportation Company decided, 
in 1860, that it would no longer pay this blackmail 
money. In retaliation, Stevens bribed the New Jersey 
Legislature to give him a franchise to connect his line 
with the Morris and Essex Railroad in which he held 
a large proprietorship. A turbulent scene ensued when 
the bill was passed on March i, 1860. Assemblyman 
Slaight, of Hudson County, charged that an offer of 
bribery had been made to him to vote for Stevens' bill. 

8 Report of the Special Committee in Reference to Alleged 
Attempts at Bribery. New Jersey Senate Journal, 1855 : 707 to 
715, &ii to 862, etc. The bill was one authorizing the building 
of bridges over the Passaic River and Newark Bay. 



164 HISTORY OF THE GREAT AMERICAN FORTUNES 

Whereupon Peckham, of the same county, rose and an- 
nounced he had been offered by Stevens' opponents as 
high as $3,000 to oppose the bill. 

These are but a very few of the many examples 
of successful capitalists whom the young men were 
taught to look up to and, if possible, emulate. And 
what were the business methods of the most conspicuous 
factory owners? To get an even more correct focus 
upon the youthful career of J. Pierpont Morgan, it is de- 
sirable to consider some of the ways in which the large 
industrial concerns were rushing into great wealth. 

Asa Whitney was one of the important all-round capi- 
talists of the United States ; he was a railroad projector, 
and his firm, Asa Whitney and Sons, owned the largest 
carwheel factory in the land. He was a very enthusi- 
astic patriot ; so were they all, those commercial men, 
brave in patriotic talk. The quality of their patriotism 
was particularly evidenced after John Brown's raid at 
Harper's Ferry. 

War between North and South was generally regarded 
as unavoidable. The South was busily preparing. 
What were the Northern factory owners doing? Work- 
ing their plants day and night to supply the South with 
equipment. In the first months of 1860 the Whitney 
works were run to their fullest capacity to provide wheels 
largely for Southern railroads. In the same months 
the Baldwin Locomotive Works of Philadelphia turned 
out fifty-eight locomotives, all but four of which were 
for Southern railroads. Bement and Dougherty and the 
firm of William Setters and Company, machine tool 
builders in Philadelphia, were filling heavy orders for 
Southern railway and machine shops. 

These capitalists, and all who were doing as they were, 
knew that every indication threatened that this equip- 



j. PIERPONT MORGAN'S GENESIS 165 

ment would soon be used in war against the very sec- 
tion to which they belonged, and for the interests and 
principles of which they professed to be such staunch 
adherents. In fact, some of them made declamatory 
patriotic speeches at the very time when they were 
profiting from equipping what they knew would shortly 
develop into an openly hostile people, intent upon sus- 
taining their purposes by armed force. 

THE DEFRAUDING OF INVENTORS. 

The Northern gun manufacturers did the same; not 
one of them scrupled to fill Southern orders. They also 
refused, for the most part, to adopt any improvements 
or utilize any of the numerous new inventions. In plead- 
ing for the establishment of more Government armories, 
and foundries, Representative Wallace of Pennsylvania, 
in a speech in Congress, on February 28, 1863, said: 

. . . When we look at the manner in which our army and 
Government have been defrauded by peculators, we must shrink 
from the idea of trusting to private contractors to furnish the 
necessary means for our national defense. Dependence upon 
private contractors for arms and munitions of war is too pre- 
carious and uncertain in all respects, as well as too costly, upon 
which to rest such an important and vital interest of the na- 
tion. The improvements made of late years in the power and 
destructiveness of all arms have rendered comparatively useless 
weapons that were deemed the very best, perhaps not more than 
a quarter of a century ago. . . . The interest of the private 
contractor is to discourage all change in the character of arms 
which his machinery is prepared to make, as machinery is costly, 
and every material change necessitates a corresponding change in 
his machinery. . . . 9 

The explanation of the gun manufacturers was that 

9 The Congressional Globe, Thirty-seventh Congress, Second 
Session, 1862-63, Part II, Appendix : 136. 



l66 HISTORY OF THE GREAT AMERICAN FORTUNES 

patriotism was not involved ; that it was simply " a case 
of business." 

Doubtless it was this acute business instinct which led 
them to steal outright the patents for breech-loading 
guns. According to the conclusions of a Congressional 
committee on patents, the inventor of mechanical devices 
for breech-loading small arms and machine guns was 
George W. Morse, who took out patents in 1856. The 
gun manufacturers appropriated his inventions. As in 
the cases of Goodyear and many another inventor, Morse 
was cheated out. Thrown into the deepest poverty, he 
applied, in 1878, to the Government for payment on the 
score of his invention. In favoring his petition, the 
Committee on Patents reported, " He is ignored and 
poor in his declining years, and those who have adopted 
his inventions without remunerating him are rolling in 
wealth." 10 

In the case of another inventor, C. D. Schubarth, a 
foreigner residing at Providence, R. L, a Government 
Commission reported these facts; that he had invented 
a new type of gun; that in order to raise the funds he 
had to take in several capitalists as partners; that he 
was informed that to get a contract from the War De- 
partment, it was necessary to bribe one of the United 
States Senators from Rhode Island; that he was then 
given a letter of introduction to United States Senator 
J. F. Simmons by the Providence firm of A. D. and 
J. Y. Smith " a business house of great wealth and re- 
spectability " ; and that he arranged to give Simmons 
five per cent, of the amount of the contract. Schubarth 
thus obtained a contract for 50,000 Springfield rifles; 
according to the evidence before the Government 

10 House Reports, First Session, Forty-fifth Congress, 187^-79, 
Vol. i, Report No. 1 : 3. 



j. PIERPONT MORGAN'S GENESIS 167 

Commission, Simmons' Graft amounted to $5o,ooo. loa 
Everywhere in the struggle for commercial success 
obtruded fraud, theft and murder; one or more or a 
combination of these methods constituted the means by 
which wealth was largely piled up. Overwork and 
criminal accidents joined with disease and want and 
worry and unsanitary housing killed off myriads of 
workers by sudden or lingering death. Yet not alone 
in the factories and mines, on the sea and in the tene- 
ments did this scourge of death go on as an accompani- 
ment of the rapid growth of private wealth. Out on 
the primitive plains and in the mountain fastnesses whole 
tribes of Indians were ruthlessly despoiled, driven off, 
and then, on some pretext or other, slaughtered so that 
their lands and the resources on them could be gratui- 
tously seized. 11 

10 * Report of Commissioners Joseph Holt and Robert Dale 
Owen to Secretary of War Stanton, June 21, 1862, U. S. Senate 
Documents, Second Session, Thirty-seventh Congress, 1861-62, 
Vol. i, Doc. No. 64. 

11 These are a few extracts from the annual report of the 
United States Commissioner of Indian Affairs, 1859: 

" We have substantially taken possession of the country [the 
Western Territories] and deprived them [the Indians] of their 
accustomed means of support. 

" Numbers of them are compelled to sustain life by using for 
food reptiles, insects, grass, seeds and roots. 

"They have at times been compelled to either steal or starve. 

" Many of the numerous depredations have doubtless been 
committed by them in consequence of their destitute and des- 
perate condition." 

Report after report of the United States Commissioner of 
Indian Affairs showed that many Indian tribes were in a state 
of absolute destitution, and Congress was called upon to pass 
appropriations for their support. The Pawnees and other tribes 
that Astor had debauched and swindled for so long a period, 
were in a starving condition. Document No. 27, United States 
Senate Documents, Second Session, 1875, reveals that British 
and American traders had long since introduced among the 
Chilcats, Sitkas and other Indian tribes in Alaska, the methods 
so successfully exploited by Astor of getting the Indians drunk 
and swindling them of furs. 



168 HISTORY OF THE GREAT AMERICAN FORTUNES 

The outbreak of the Civil War gave the mercantile 
class unsurpassed opportunities for profiting from what 
amounted to organized murder. However severe this 
statement seems, it is in reality quite mild in describing 
the prevailing practices of capitalists. 



PROFITING FROM ORGANIZED MURDER. 

It would be quite puerile and a poor extenuation to 
say that they were not fully conscious of the disastrous 
consequences to the nation flowing from their acts. 
They knew the baleful results to the soldiery of impos- 
ing fraudulent army and navy supplies upon the Govern- 
ment. Yet, spurred by the certainty of extortionate 
profits, they went eagerly ahead, and when their frauds 
were discovered, sought to block every attempt at investi- 
gation. In the one item of shoes alone, the shoe man- 
ufacturers sold to the Government from 1861 to 1862 
five million pairs of shoes for the army, as to which 
transaction a Government commission reported that at 
least $3,000,000 had been defrauded; that supplies of 
shoes which were so bad that they could not be sold 
privately had been palmed off upon the Government. 12 

But the one equipment which the army most urgently 
needed was rifles. We have already, in a previous chap- 
ter, related how Marcellus Hartley and other prominent 
capitalists swindled the Government, and imperiled the 
Union Army, by importing the refuse of European arms 
and unloading them upon the United States Government. 
Also, we have adverted to the fact that it was greatly 
because of the great profits made in these transactions 
that Hartley was able to build enormous factories at 

12 Reports of Committees, Thirty-seventh Congress, Second 
Session, 1861-62, Vol. 2 : Ix 



j. PIERPONT MORGAN'S GENESIS 169 

Bridgeport, Conn. factories that his descendants now 
own. 

J. Pierpont Morgan was profiting from the same meth- 
ods at the same time. He was, in 1861, a robust young 
man, just turned twenty-four years old. " He inherited 
from his parents," says one of his biographers, " their 
purity of character and exceptional abilities." 13 Those 
attributed lofty virtues were not in evidence. At a crit- 
ical juncture when the Union Government was most in 
need of soldiers, Morgan chose not only to stay at home, 
but to profit from the sale of worthless rifles for the arm- 
ing of the men who responded to the call to arms. 

Abraham Lincoln was sending out his proclamations 
calling for volunteers. The contest was a momentous 
struggle not merely between sections, but between two 
kinds of conflicting capitalist institutions. The so-called 
common people the factory and shop workers, the 
slum dwellers, the professionals and the farmers he- 
roically poured in for enlistment. Hundreds of thou- 
sands went forth to the camps and battlefields, never to 
return. 

Although well qualified physically and mentally for 
military service, Morgan avoided any kind of duty inter- 
fering with money making and comfort. He differed in 
nowise from almost all the men of position and prop- 
erty. They restricted their exuberant patriotism to talk 
and the waving of bunting, but took great care to keep 
away from the zone of personal danger. The rich, for 
whose interests the Northern armies were at basis fight- 
ing, not only as a class evaded enlistment, but proceeded 
to demoralize, spread disability and sow death among 
their own armies. While doing this, and at the same 
time swindling the Government, States and cities out of 

18 " America's Successful Men," i : 452. 



I7O HISTORY OF THE GREAT AMERICAN FORTUNES 

vast sums in army contracts, they caused the Draft Act 
to be so amended that it gave men of property the easy 
opportunity of escaping conscription by permitting them 
to hire substitutes. 



MORGAN S FIRST STROKE OF BUSINESS. 

J. Pierpont Morgan's first ascertainable business trans- 
action was in one of these army contracts ; and while it 
was not on so large a scale as those of older capitalists, 
it was (judged by prevailing capitalist standards) a very 
able stroke for a young man of twenty-four. Its success 
gave promise of much greater things to come, in which 
respect Morgan's admirers were not disappointed. 

In 1857 the army inspecting officers condemned a 
large number of Hall's carbines as thoroughly unservice- 
able, and as of obsolete and dangerous pattern. The 
Government thereupon auctioned off quantities of them 
from time to time at prices ranging from between $i and 
$2 each. Five thousand of them, however, still remained 
in the army arsenal in New York City and were there 
when the Civil War broke out. 

On May 28, 1861, one Arthur M. Eastman, of Man- 
chester, New Hampshire, made an offer to the Govern- 
ment to buy these rifles at $3 each. Knowing the great 
frauds going on in the furnishing of army supplies, the 
Government officials might well have been suspicious of 
this offer, but apparently did not question its good faith. 
The rifles were sold to Eastman at $3.50 each. But 
either Eastman lacked the money for payment, or had 
been thrust forward to act as a dummy for a principal 
in the background. One Simon Stevens 14 then stepped 

14 The House Investigating Committee on Government Con- 



j. PIERPONT MORGAN'S GENESIS 171 

on the scene, agreeing to back Eastman to the extent of 
$20,000, which sum was to be applied for payment for the 
rifles ; as collateral security Stevens took a lien upon the 
rifles. But from whom did Stevens get the funds? 
The official and legal records show that it was from J. 
Pierpont Morgan. 



A GREAT SCANDAL OF THE TIME. 

The next step in this transaction was in Stevens' tele- 
graphing, on August 5, 1861, a notification to General 
Fremont, commanding at St. Louis, that he had five thou- 
sand new carbines, in perfect condition, and inquiring- 
whether Fremont would take them. From Fremont's 
headquarters came word to ship them to the army head- 
quarters at St. Louis at once. During all of this time 
the carbines had remained at the arsenal in New York 
City. Upon receiving Fremont's order, Morgan paid the 
Government the sum of $17,486 at the rate of $3.50 
a carbine. The rifles were shipped direct from the 
arsenal to St. Louis. And what was the sum charged 
upon the Government for them? The bill made out to 

tracts in 1862 reported to Congress that Simon Stevens was one 
of a clique involved in custom-house frauds. Before 1859, the 
New York Collector of the Port had employed the laborers and 
cartmen in the appraiser's store to haul goods to the Govern- 
ment bonded warehouses. In August, 1859, Collector Schell (a 
corrupt Tammany politician) made a contract by which the haul- 
ing was turned over to some of his political associates. They 
were paid $123,000 a year. " Upon this contract," reported 
Chairman Van Wyck, " the parties made from fifty to seventy- 
five thousand dollars yearly." The committee showed how the 
contract had been corruptly obtained, and stated that Stevens 
had a one-eighth share of the profits. Stevens also caused any 
of the custom-house clerks who said anything against the con- 
tract to be removed from office. The Congressional Globe, 
Third Session, Thirty-seventh Congress, 1862-63, Part II, Appen- 
dix: 118. 



1J2 HISTORY OF THE GREAT AMtffrirK 1 * fcORTU.NES 

Fremont called for the payment of $2* apiece for the 
consignment. 15 

This was one of the many army contracts popularly 
and officially regarded as scandalous in the highest de- 
gree; one of the select Congressional Committees of 1862 
lost no time in the investigating of it. After making a 
full inquiry this committee reported: 

Thus the proposal actually was to sell to the Government at 
$22 each 5,000 of its own arms, the intention being, if the offer 
was accepted, to obtain these arms from the Government at $3.50 
each. . . . It is very evident that the very funds with which 
this purchase was effected were borrowed on the faith of the 
previous agreement to sell. The Government not only sold one 
day for $17,486 arms which it had agreed the day before to 

15 Reports of Committees, Second Session, Thirty-seventh 
Congress, 1861-62, Vol. ii : Ixiv-lxxli. 

The frauds at Fremont's headquarters, at St. Louis, were 
particularly enormous. Major McKinstry, quartermaster of the 
U. S. army at that place, was tried by a courtmartial on sixty- 
one specifications of corrupt practices, and was found guilty on 
twenty-six. The testimony showed the grossest frauds, by col- 
lusion, in all kinds of army supplies. The Morgan rifle trans- 
action, however, was not brought out in the specifications. Mc- 
Kinstry was discharged from the army. House Reports, Com- 
mittees and Court of Claims, Third Session, Thirty-seventh Con- 
gress, 1862-63, Report No. 49: 1-24. 

That the bribery of certain Union officers was a fact was re- 
vealed by this communication sent by Major-General Frederick 
Steele, on July 26, 1864, from Little Rock, Ark., to Major- 
General E. R. S. Canby, commanding the Military Division of 
West Mississippi: 

" General : Your communication in regard to bribery among 
the officers of my command is just received. If bribes had been 
taken it must have been by agents. I am satisfied that the of- 
ficers know nothing about it. General Marcy, Inspector-General, 
is at Fort Smith investigating the matter. Carr is chief-quar- 
termaster of my corps and a lieutenant-colonel. Brig.-Gen. J. 
W. Davidson has slandered Carr on all occasions. . . . He 
could have had affidavits in regard to the corruption of his own 
disbursing officers if he had wished them. I have seen such 
affidavits. House Miscellaneous Documents, Second Session, 
Fifty-second Congress, 1892-93 (Rebellion Record Series I, Vol. 
xli), p. 401. 



j. PIERPONT MORGAN'S GENESIS 173 

repui chiioc for $109,912 making a loss to the United States 
of $92.426 but virtually furnished the money to pay itself the 
which it received. 



The committee further reported that the rifles were 
o bad that it was found that they would shoot off the 
tiiumbs of the very soldiers using them. But not only 
did the Government condemn the transaction as a bare- 
faced swindle; Marcellus Hartley, himself a dealer in 
arms and a self-confessed swindler, had declared before 
the committee, " I think the worst thing this Govern- 
ment has been swindled upon has been these confounded 
Hall's carbines." ie The Government refused to pay 
Morgan the $22 demanded for each of the five thousand 
carbines, whereupon Morgan pressed his claim. Thus 
it was that the case of J. Pierpont Morgan vs. The United 
States Government came into the public records. It 
figured as case No. 97. 1T To adjudicate this claim, as 
tvell as many other similar claims, the Secretary of War 
appointed a Commission composed of J. Holt and Rob- 
ert Dale Owen, son of the famous Robert Owen. 

Reporting on July I, 1862, this commission stated that 
one hundred and four cases, involving demands upon 
the National Treasury to the extent of $50,000,000 had 
been referred to it, and that it had cut out $17,000,000 
of claims as extravagant and fraudulent. 18 In passing 
upon Morgan's claim it declared that General Fremont 
had no authority to contract for the rifles, but that it, 
the committee, recognized a legal obligation on the part 
of the Government arising from the fact that the arms 
passed into the service of the army. As the best way 
out of a bad bargain it decided to pay Morgan at the 

19 Reports of Committees, Second Session, Thirty-seventh 
Congress, 1861-62, Vol. ii : 200-204. 
17 Ibid., 64-72. 
1& Ibid., Ixxvii. 



174 HISTORY OF THE GREAT AMERICAN FORTUNES 

rate of $13.31 a carbine, and it pointed out that even at 
this price Morgan and Stevens stood to make $49,000 
above the price at ^hich the rifles had been sold to them 
by the United States. 18 Under this ruling a total of 
$55,550 was paid to Morgan by the Government, which 
sum was accepted on account only. 

This settlement, however, was not satisfactory to the 
claimants ; the full pound of blood was demanded. Suit 
was brought in the Court of Claims at Washington for 
$58,000 more. This time the case was entitled Simon 
Stevens vs. The United States Government. 20 In the 
settlement of the case before the court the fact was 
emphasized that, according to the Government, the car- 
bines had been inspected and pronounced unserviceable 
by the Government ordnance officer. In delivering his 
decision Judge Peck said : " By an arrangement between 
Stevens and one J. Pierpont Morgan the voucher for the 
first two thousand and five hundred carbines delivered 
was to be made out in the name of Morgan, which was 
done ; the said voucher was signed by F. D. Cadwallader, 
Captain of Ordnance, United States Army, and was for 
the sum of $55,550. By further arrangement this 
voucher went into the hands of Messrs. Ketchum, Son 
and Company." This voucher was paid on or about 
September 10, 1861. The other twenty-five hundred 
rifles, the court said, had also been received by Fre- 
mont. 21 

19 Ibid., Ixxv. The Commission stated that there was a legal 
obligation on the part of the Government to pay, but that this 
obligation arose not from Fremont's contract, but because the 
arms did pass into army service. 

20 Court of Claims Reports, ii : 98, etc. 

21 Ibid., 99. In arguing for the Government the U. S. Assist- 
ant Solicitor said to the court: 

" The arms were purchased by Arthur M. Eastman, from the 
United States, at three and one-half dollars each, because they 
had been inspected and pronounced unserviceable by the ord- 



J. PIERPONT MORGAN S GENESIS 175 

These are the facts as set forth in unimpassioned court 
records. 



COURTS MAKE THE GOVERNMENT PAY. 

Did Morgan and his associates get their full demands 
from the Government ? They did. Judge Peck held that 
when Fremont had agreed to buy the rifles he had en- 
tered into a contract which bound the Government, and 
that a contract was a contract. The court took no 
cognizance of the fact that the worthless, condemned 
rifles had been represented as new, nor did it consider 
the fact that the money with which they had been 
bought from the Government was virtually Government 
money. It gave Stevens a judgment against the Govern- 
ment for $58,175. 

It was this particular decision which assured the open 
sesame for the holders of what were then cynically called 
" deadhorse claims " to collect the full amount of their 
swindling operations. The Government could now 
plead itself defenseless against the horde of contractors 
who had bribed officials to accept decayed ships and de- 
fective armor, worthless arms and shoddy clothing, flimsy 
tents, blankets and shoes, and haversacks which came 
to pieces, adulterated food and similar equipment and 
supplies. As for criminal action, not a single one of 
these defrauders went to prison, or stood any danger of 
it ; the courts throughout the land were perennially busy 
rushing off petty defrauders to imprisonment and em- 
nance officer. They were sold by Eastman to the claimant for 
twelve and one-half dollars each, and the claimant at once sold 
to General Fremont at twenty-two dollars each. The Govern- 
ment price for new arms of this pattern, of good quality and 
fit for service, was seventeen and one-half dollars." Ibid., 98. 



176 HISTORY OF THE GREAT AMERICAN FORTUNES 

ploying the full punitive power of their machinery 
against poor, uninfluential offenders. 22 

This was the real beginning of J. Pierpont Morgan's 
business career; the facts are there immovable and un- 
assailable in the public records. This was the brand of 
" patriot " he and his fellow capitalists were ; yet ever 
since, and especially so to-day, clergy and politicians and 
shallow, obsequious writers saturate the public with myths 
all designed to prove Morgan's measureless benevolence 
and lofty patriotism. 23 

22 In reporting to Congress, on March 3, 1863, the House Se- 
lect Committee on Government Contracts, after submitting its 
great amount of testimony regarding the frauds on every hand, 
concluded : 

" Many frauds have been exposed, the Government relieved 
from many unconscionable contracts, and millions of dollars 
saved to the treasury. Yet it is a matter of regret that punish- 
ment has not been meted out to the basest class of transgressors. 
They to whom this duty belonged seemed sadly to have neglected 
it. Worse than traitors in arms are the men pretending loyalty 
to the Hag, who feast and fatten on the misfortune of the na- 
tion, while patriot blood is crimsoning the plains of the South, 
and bodies of their countrymen are mouldering in the dust. 
The leniency of the Government towards these men is a marvel 
which the present cannot appreciate, and history ^never explain." 
House Reports, Committees and Courts of Claims, Third Ses- 
sion, Thirty-seventh Congress, 1862-63, Report No. 50 : 47. But 
history can explain. It was not to be expected that the very 
class controlling Government the capitalist class was to be 
proceeded against by its creature. 

23 For example, an article entitled " Cleveland's Opinion of 
Men," in " McClure's Magazine," issue of April, 1909. The 
writer of this article quotes Cleveland, for several terms Presi- 
dent of the United States, as saying of Morgan's con3uct when 
a bond issue was under way in 1894: 

" I saw, too, that with him it was not merely a matter of 
business, but of clear sighted, far-seeing patriotism. He was 
not looking for a personal bargain, but sat there, a great patriotic 
banker, concerting with me and my advisers as to measures to 
avert a peril, determined to do his best in a severe and trying 




J. PIERPONT MORGAN. 



CHAPTER VIII 
THE FLOWERING OF THE MORGAN FORTUNE 

" Great is Mr. Morgan's power, greater in some re- 
spects even than that of President or kings," wrote a sea- 
soned British observer some years ago * which fact, 
patent to even the casual onlooker, easily passes uncon- 
tradicted. Who, indeed, can gainsay its truth? Above 
all forms of law and functionaries of office, above the 
highest representative bodies and tribunals, above enact- 
ments and Constitutions, supreme above eighty-five mil- 
lions of American people, this one man towers with a 
hold and grasp of power as tremendous as it is por- 
tentous. And what has awarded him this mighty 
power? Has it come by vote or wish of the people or 
by some incongruous provision of Governmental ma- 
chinery? 

Nay, none of these things are responsible for it; 
despite them all it has come about, and it persists in 
mockery of them all. Then, wherein lies the explana- 
tion? Need it be told anew? The cause and substance 
of it all are Morgan's wealth and his dictatorship, 
shared with a few others, of the resources of the nation, 
which ownership carries with it the real ruling power, 
for whoso own the means by which the people must live 
owns the people. 

1 A. Maurice Low in " The Independent," issue of October 
30, 1902. 

177 



178 HISTORY OF THE GREAT AMERICAN FORTUNES 

And Morgan to-day controls billions of dollars of the 
country's resources. 



MORGAN THEN AND NOW. 

Can this Morgan be the same who started out by 
successfully palming off upon the Government during 
the Civil War five thousand of its own condemned rifles, 
and at extortionate prices? Is it possible that the man 
who profited from arming the nation's soldiers with self- 
slaughtering guns can be the same Morgan whose 
power to-day " is greater than that of President or 
kings " ? Is the great, sublime patriot of these days, J. 
Pierpont Morgan, the same Morgan who came into col- 
lision with investigating committees during the Civil 
War, and who was practically denounced in the severest 
language? Verily, he is the same man, the identical 
same. Behold him in the budding of his career, and 
observe how he began it; and behold him now, glutted 
with wealth and power, covered with honors, august dis- 
penser of benevolence, the incarnate source of all wis- 
dom, financial and otherwise, the mighty man of com- 
merce and of the arts, the idol of capitalist ideals. 

Between that Civil War transaction and his present 
sway, necessarily there lies a long category of deeds. 
Undisputably he began his career with proofs of excep- 
tional brilliance. Had his first business achievement 
that of the condemned rifles been judged by the 
standards of the " lower classes," he would have been 
thrown into prison, or had the soldiers who had to use 
the guns come within his proximity, the life, perad- 
venture, might have been shot out of him then and 
there. But his own class, far from having a remote 
thought of abhorrence or ostracism, admired his busi- 



FLOWERING OF THE MORGAN FORTUNE 179 

ness skill, mettle and audacity, and regarded him as an 
extraordinarily promising young man. Great things 
were predicted for so astute an novitiate; yet novitiate 
was not the word: the most experienced business man 
could hardly have done better than did Morgan in that 
famous rifle sale. 

Moreover, Morgan had other advantages which as- 
sured a notable future. He had a millionaire father, 
which was a relationship to be trebly prized at a time 
when millionaire progenitors were not so very numer- 
ous. The paternal advice and guidance, based upon a 
protracted career in the serpentine channels of wealth 
getting, could unfailingly be drawn upon. Additionally, 
J. Pierpont Morgan had the backing of the old man's 
millions and prestige, and what was more important 
would some day inherit those millions. All of these 
factors were infallibly the prelude to a glorious career. 



HE ATTAINS " UNIVERSAL RESPECT." 

The respect of the mercantile and financial classes 
for Morgan's proved ability grew proportionately with 
each new display of his capacity. Presently we find a 
contemporary biographer saying of him : " Mr. Mor- 
gan made himself universally respected as an able finan- 
cier in 1869, when he came out victorious in a memora- 
ble struggle for the control of the Albany and Susque- 
hanna Railroad, which had fallen into the clutches of 
Messrs. Fisk and Gould. The contest was waged not 
only by litigation, but also by force of arms, and Gov- 
ernor Hoffman called out the militia. Fisk was eventu- 
ally dislodged." 

It had not taken long for Morgan to arrive at the 
point where he was " universally respected." By "uni- 



ISO HISTORY OF THE GREAT AMERICAN FORTUNES 

versally " the writer of that eulogy meant among Mor- 
gan's class, the opinion of which was held to be all- 
inclusive; that of the workers was considered of little 
or no account, and could always be ignored or ridi- 
culed. But what was the real nature of this railroad 
business which made Morgan so " universally re- 
spected"? What great public service, if any, did he 
render? What was the special merit involved in his 
overthrowing of Gould and Fisk, and his getting control 
of the railroad in question? 

Eulogistic writers fail to give enlightenment on this 
point. But what they omit, public records supply to 
some extent. 

Had either Gould and Fisk, on the one hand, or Mor- 
gan, on the other, built the Albany and Susquehanna 
Railroad or provided the funds for its construction? 
Not a mother's son of them. This line, now a part of 
the Delaware and Hudson Railroad, had been built with 
public funds drawn from the treasuries of New York 
State and of various counties and municipalities in that 
State. At least $1,000,000 of the $45,000,000 drained 
from the public treasury in New York State for the 
building of railroads, had gone into the construction of 
the Albany and Susquehanna Railroad. 2 

The usual pilfering processes marked its building; 
large sums were stolen in various forms of graft; and, 
as in the case of the Erie Railroad and other railroads, 
the State was cheated out of much of its loans. Then 
the group of capitalists in control watered the Albany 

2 See Railroad Investigation of the State of New York, 1879. 
Poor's Railroad Manual of the United States for 1860-70 re- 
ported : " The construction of this road has been largely aided 
by money appropriated by the State, the sums ($1,000,000 in all) 
representing which do not appear in the capital accounts." 
p. 69. 



FLOWERING OF THE MORGAN FORTUNE l8l 

and Susquehanna's stock and manipulated it for specula- 
tive purposes until they were ousted by other capitalists 
who repeated their manipulating methods on a larger 
scale. This railroad's chief value lay in the fact that it 
had direct connections with the coal mining regions of 
Pennsylvania. 

Two contesting sets of capitalists now rushed forward 
to seize control of it. One crowd was led by Gould 
and Fisk, the other by J. Pierpont Morgan. The older 
capitalists were amazed at the sight of these young 
men audaciously struggling for the possession of a val- 
uable railroad system, in the construction of which 
neither set had had any part whatever. Old Commodore 
Vanderbilt looked on with a blended admiration and 
envy. Gould was but thirty-three years old, and Mor- 
gan thirty-one. Each side bought all of the stock that 
it could ; Gould with the proceeds of his thefts, and Mor- 
gan possibly with the proceeds of such transactions as 
the rifle sale, for instance. Stockholders' elections were 
held amid scenes of the greatest disorder, and each 
party claimed the election of its own board of directors, 
and accused the other of the grossest frauds. 

Quite appropriately the contest went into the courts. 
Twenty-one separate suits were brought by Gould and 
Fisk, and a sheaf of injunctions obtained. The Morgan 
party fought back vigorously. But so long as the legal 
contest was confined to the New York City courts, 
Gould and Fisk had the surety of victory. The reason 
was that such Supreme Court judges as Barnard and 
Cardozo, formerly Vanderbilt's tools, were now Gould's 
chattels and did whatever he ordered. 

Very soon an edifying situation turned up. So 
fiercely determined was each side to kick out the other 
that the railroad was thrown into a state of absolute 



l82 HISTORY OF THE GREAT AMERICAN FORTUNES 

disorganization and could not be operated. After 
spending a million dollars of public money on its con- 
struction, the people were forced to look on while the 
two parties, neither of whom had invested a dollar in its 
building, claimed to be its owners, and estopped the other 
with judicial orders and injunctions. 

Which of the two would come out ahead? The out- 
come was doubtful. But it did not continue so very 
long. Gould and Fisk were cleverly entrapped into mak- 
ing an agreement which led to their utter eventual de- 
feat. The agreement was to this purport: That inas- 
much as the conflicting parties could not agree, they had 
arrived at a mutual understanding by which they would 
write to Governor Hoffman setting forth that it had be- 
come impracticable to run the railroad, and therefore 
requesting the appointment of a State official to operate 
it pending a new election of directors. This communi- 
cation was sent to Governor Hoffman on August n, 
1869, and its provisions were accepted. 



BOTH SIDES CHARGED WITH FRAUD. 

In less than a month after this, separate elections were 
held; each side again claimed that its directors were 
elected. More suits followed. Gould and Fisk charged 
that Ramsey, president of the road, had illegally issued 
three thousand shares of stock to the Morgan party, and 
demanded that this issue be declared invalid. Morgan, 
Samuel Sloan and others of the opposition retaliated 
with charges that Gould and Fisk had used force and 
fraud. The State of New York now stepped in, and 
through the Attorney General, brought an action against 
both parties. The State charged that both stockholders' 
elections were illegal, irregular and void; that spurious 



FLOWERING OF THE MORGAN FORTUNE 183 

votes had been counted in, and that otherwise they were 
full of fraud. 3 The State asked for an injunction re- 
straining both boards from taking possession. 

The case came up again in November, 1869, before 
Judge Darwin Smith in the Supreme Court at Roches- 
ter, N. Y. Gould and Fisk found themselves at a great 
disadvantage. In New York City, with their bought 
judges on hand, they could arrange for decisions in ad- 
vance, but in Rochester they were in a territory where 
the power of competitive magnates was strongly in- 
trenched. Judge Smith's decision was wholly favorable 
to the group of capitalists led by J. Pierpont Morgan, 
and the Albany and Susquehanna Railroad passed into 
their control.* 

This seems to have been J. Pierpont Morgan's first 
entry into the railroad business in which later he was to 
become so powerful a factor. Thenceforth, for nearly 
thirty years, until the period of organizing industrial 
trusts began, his chief undertakings were his banking 
business and what was called " the reorganization of rail- 
roads." 

The two things worked well together. By means of 
financial laws, corruptly passed, the bankers, both in- 
ternational and national, compelled the people of the 
United States, through their Government, to present 
them with the funds with which to buy up railroads and 
other forms of property. 5 We have already described 

8 Lansing's Reports, New York Supreme Court, i : 308, etc. 
The statement of the case in the decision frequently refers to 
"the party headed by J. Pierpont Morgan." 

4 See, The People of the State of New York vs. The Albany 
and Susquehanna Railroad Company, Lansing's Reports, N. Y. 
Supreme Court, 1 : 308-345. 

6 Under the surface, the Rothschilds have long had a power- 
ful influence in dictating American financial laws. The law rec- 
ords show that they were powers in the old Bank of the United 
States. August Belmont and Company were their American 



184 HISTORY OF THE GREAT AMERICAN FORTUNES 

the financial system prevailing in the United States dur- 
ing and immediately following the Civil War; how the 
people were taxed from $18,000,000 to $20,000,000 a 
year to pay interest annually to the bankers and other 
bondholders. We have also showed how the bankers 
had laws passed by which they could deposit their Gov- 
ernment bonds in the United States Treasury and receive 
back the full amount in currency, less ten per cent. 

Thus the banks received a double interest; often as 
much as six per cent, in gold in annual interest from the 
Government, and a far greater amount in interest for the 
public use of the currency which they were gratuitously 
allowed to issue on the strength of the deposited bonds. 9 
At the same time, they were relieved from paying taxes 
on Government bonds. Their profits, obviously, were 
enormous, averaging twenty, fifty, and often one hun- 
dred per cent, in the course of a year. The laws also 
were so devised as to insure them a virtual monopoly 
of the currency supply an incalculable power in manip- 
ulating industry and the markets, and in controlling spec- 
ulation in stocks. 

In its resolutions passed at Military Hall, New York 
City, on October 19, 1829, the Workingmen's Party 
had denounced the bankers as " the greatest knaves, im- 
postors and paupers of the age." A violent tirade this 
seemed on its face, but, in point of fact, there was 
hardly a banker in the country who was not constantly 

representatives. In 1873 it was estimated that $375,000,000 
of American railroad securities were held abroad, chiefly by for- 
eign bankers. The Final Report of the Industrial Commission 
in 1902 estimated (see page 404 of that report) the amount of 
these securities held by foreign banking houses and others abroad 
at about $3,100,000,000. 

6 The fact has been brought out in a previous chapter how the 
Government from 1863 to 1878 had paid out to national banks 
the great sum of $252,837,556.77 as interest on bonds. House 
Executive Document, No. 34, 1879. 



FLOWERING OF THE MORGAN FORTUNE 185 

and criminally violating the law by committing some 
species of fraud or other. Year after year the courts 
were full of lawsuits in which this or that banker was 
charged with fraudulent transactions. There is little 
scientific use in describing Morgan's career without ad- 
verting to an illuminative mention of what other con- 
spicuous bankers were doing, both before, and during, 
his time. Ever and ever anew it will be seen that Mor- 
gan was doing nothing more than emulating the tradi- 
tional practices of his class. 



A VISION OF SOME 

Perhaps the foremost banker in the United States in 
the first four decades of the nineteenth century was 
Nicholas Biddle, that proud aristocrat and founder of 
a family of aristocrats. He was long president of the 
once all-powerful Bank of the United States, and was 
held up to the whole country as an illustrious example of 
the position to which any able and well-regulated youth 
could attain. 

Yet he was accused of being a thief, an embezzler, a 
malefactor in law. After his retirement from the presi- 
dency of the Bank of the United States, that institution 
brought a civil action against him and the cashier, John 
Andrews, for the restitution of $400,000 which they 
were charged with stealing from the bank in 1836. This 
theft, it was further specifically charged, was concealed 
by fraudulent entries, burning of vouchers and by other 
methods. By the time the suit came up in court in 1844, 
Biddle had died, but the action was pressed against An- 
drews. His answer was a general denial, but Judge Par- 
sons decided that he was convinced that the claim for 
recovery was one which could be enforced, and he over- 



l86 HISTORY OF THE GREAT AMERICAN FORTUNES 

ruled Andrews' demurrer. 7 And to give merely one in- 
stance of many instances of the methods of powerful 
bankers during Morgan's early career, let us consider 
the case of Bischoffsheim and Goldschmidt. They it was 
who loaned Jay Gould the money to pay fraudulent in- 
terest on fraudulent bonds in his Erie Railroad thefts; 
they supplied the money to pay fictitious dividends, and 
when they saw more profit in betraying him, they quickly 
changed front and poured out the $750,000 with which 
Gould's directors of the Erie Railroad were bribed to 
resign. 8 By such methods they heaped up great for- 
tunes; when Goldschmidt died a quarter of a century 
ago he left an estate of $30,000,000. 

LAWS DRAFTED FOR PLUNDER. 

But the extraordinary financial laws passed during the 
Civil War were only the forerunners of other laws 
which the bankers and the creditor class in general 
caused to be passed in following years, and by which 
they instantly and vastly increased their wealth and 
power, and were enabled far more effectually than ever 
before, to put the screws upon the producing class. 

The most noted of these laws was that passed by Con- 
gress on February 12, 1873, practically accomplish- 
ing the demonitization of silver as a coin. This was 
the same Congress which, as we have seen in one of the 
chapters on the Sage fortune, was bribed with a million 

7 Parson's Select Equity Cases of the First Judicial District 
of Pennsylvania, 1844, ii 13 1-63. Also, Pennsylvania House 
Journal, 1842, Vol. ii, Appendix : 182. Riddle's theft has been 
incidentally referred to in a previous chapter, but it stands a 
more extended notice here. 

8 Railroad Investigation of the State of New York, 1879, 
ii : 1496. See also New York State Assembly Documents, 1873, 
Vol. vi, Doc. No. 98. 



FLOWERING OF THE MORGAN FORTUNE 187 

dollars to pass an act granting an additional subsidy of 
$5,000,000 to the Pacific Mail Steamship Company. 
The demonitization act went through by evasion; not a 
word was directly mentioned in it of the demonitization 
of silver ; few knew of its purport ; even the advocates of 
bimetallism voted for it. It was one of the most adroit 
bills ever put through Congress, and it was only after it 
had become a law that its concealed provisions began 
to be understood. 

Then a terrific cry of rage went up from the middle 
class from one end of the country to the other; the ex- 
citement was intense. In this excitement and indigna- 
tion the working class was persuaded into joining, al- 
though at basis, the workers were not affected by this 
law; their exploitation and despoilment had gone on 
under bimetallism, and would continue without cessation 
under monometallism. 

It was the middle class which was struck at hard ; the 
supply of money was at once contracted, the purchas- 
ing power of gold was enhanced, and the power of the 
large creditor capitalists and banking institutions over 
the small property owning class was greatly augmented. 
This law was passed at about the same time that the 
first trust, the Standard Oil Company, was rising to give 
the death blow to the doctrine of free competition in 
trade, and to crush out the middleman in business. The 
day was a sorry one for the long-dominant middle class. 

The middle class representatives in Congress and else- 
where now began an agitation which lasted many years. 9 
They charged that the demonitization of silver had been 
brought about by the conspiracy of John Sherman and a 

9 The millionaire silver mine owners of the West, although 
not to be classed with the middle class, were the leaders in this 
agitation. Self-interest actuated them. 



1 88 HISTORY OF THE GREAT AMERICAN FORTUNES 

few other prominent men in Congress, with the financiers 
of Wall street and Europe. In fact, the successive vol- 
umes of the " Congressional Record " of those years are 
full of speeches in which this charge is brought out over 
and over again. But the law stood ; and what was more 
galling to the middle class, John Sherman, denounced so 
bitterly as a traitor, and as a mercenary of the bankers, 
was appointed, a few years later, to be Secretary of the 
United States Treasury. From that time on, the bank- 
ers, national and international, came out more and more 
in the open in direct dictatorship of the financial laws 
and policy of the United States. Circumlocution became 
less necessary. 

The great Government bond issue of 1877, by which 
the bankers made colossal profits, followed Sherman's 
appointment. Before, however, referring to this memor- 
able sell-out, it will be well to give a passing glimpse of 
Morgan's varied activities and the nature of them. 
Morgan's first partnership was as a member of the firm of 
Dabney, Morgan and Company, which firm, it will be re- 
called, was one of the banking houses participating in 
that noted Kansas Pacific Railway loan of 1869. This 
loan was asked for from investors largely on the 
strength of a three-million-acre land grant in Kansas 
and Colorado, which had been corruptly secured by the 
Kansas Pacific Railway Company from Congress, and 
which was the beginning of not one series, but many 
series, of fraud and plunder. 10 Morgan could claim, and 
with justice so far as current standards went, that the 
floating of this loan was a " legitimate banking transac- 
tion " ; but the fact that no banker declined to profit from 
the financing of enterprises which he knew began and 

10 See Chapter iii, Vol. iii. 



FLOWERING OF THE MORGAN FORTUNE 189 

continued in corruption and swindling, gives a very clear 
idea of the quality of the assumed morals and ethics of 
the capitalist class. 



THE GREAT BOND ISSUE OF 1877. 

Morgan's next partnership was as a member of the 
firm of Drexel, Morgan and Company. He began to be 
conspicuous in very large transactions. One of these 
was the floating of the $260,000,000 U. S. Government 
bond issue of 1877. Avoiding plunging into detail, 
which would be intricate at best, suffice it to say that this 
bond issue was generally regarded, and not without full 
reason, as one of the very worst cases that had ever 
been known of the people being betrayed over to a few 
bankers. The selling of the bonds was apportioned 
among these banking houses: August Belmont, the 
Rothschilds, J. and W. Seligman Brothers, and Drexel, 
Morgan and Company, the last named acting for them- 
selves and for the firm of J. S. Morgan and Company 
in London. This syndicate at once sold the bonds at an 
advance of from one to four per cent, above the price 
which they had paid to the Government. The profits 
of the syndicate reached into the tens of millions of dol- 
lars. Drexel, Morgan and Company alone were credited 
with " making " a clear profit of $5,000,000. Their 
function consisted in nothing more or less than acting 
as licensed speculative middlemen for a Government 
which could have disposed of the bonds without inter- 
mediaries. Moreover, the participating bankers were 
able to get the bonds for themselves at " bargain prices," 
and then through associated national banks, carry on the 
familiar practice of exacting double interest one in- 



IQO HISTORY OF THE GREAT AMERICAN FORTUNES 

terest from the Government, and another for the use of 
currency issued on the basis of those same bonds. 11 

These transactions comprised obviously but a few of 
Morgan's varied activities in the decades following the 
Civil War ; it can be well understood that he was, at the 
same time, engaged in a mass of purely private business 
dealings, of which no details ever became public. Even 
of his public transactions the facts as set forth in the 
public records are more indications, than actual and 
complete accounts, of the underlying circumstances. 
The financiers and business men had every motive for en- 
shrouding their affairs in the greatest secrecy, particu- 
larly when those affairs in any way related to the divert- 
ing of Government functions for their ends, or had 
to do with the suspicious passage of partial laws or the 
violation of laws. The motto of the whole commercial 
class was to keep the public in the dark as much as 
possible; and even when the usual legislative investigat- 
ing committees, fortified by summary powers of law, 
mildly sought to ascertain the surface of acts only, with- 
out probing too deep, they were, as a rule, obstructed 
at every turn. 

Such facts as did become public came out adventi- 
tiously despite every effort of the magnates concerned 
to hush them up. Sometimes embittered competitors 
would supply revelations to investigating committees; 
on other occasions the magnates would seek to cheat 

11 The scandalous circumstances of this bond issue made a 
lively stir throughout the country and aroused warm debates 
in Congress. On January 24, 1879, the United States Senate 
passed a resolution calling upon Sherman, Secretary of the 
Treasury, for information as to the alleged payments of double 
interest in regard to moneys received by banks and syndicates 
for bonds being allowed to remain on deposit with national 
banks pending the call for the bonds. See Senate Executive 
Document, No. 9, 1879. 



FLOWERING OF THE MORGAN FORTUNE IQI 

one another in the division of the spoils or overreach at 
the other's expense, and then the quarrel would be 
thrown into the courts and some salient facts, at least, 
revealed. The point cannot be too strongly emphasized 
that for every one charge of crookedness and corrup- 
tion that investigating committees and public officials 
made against capitalists, a hundred such charges were 
specifically brought by capitalists themselves against their 
own kind; a fact overabundantly attested in the vol- 
uminous court records from the very beginning of the 
United States Government down to the present. 

MORGAN AND WILLIAM H. VANDERBILT. 

Had it not been for a row between various magnates 
in a transaction in which William H. Vanderbilt, J. Pier- 
pont Morgan and other capitalists were engaged, and 
the consequent wrangling in the courts, certain facts per- 
taining to another of Morgan's feats could not be now 
ascertained. In one of the chapters on the Vanderbilt 
fortune 12 it has been brought out how, in 1879, Morgan 
formed a syndicate to buy two hundred and fifty thou- 
sand shares of New York Central stock from William 
H. Vanderbilt, and how further, this stock, bought at 
1 20, was, after a magical process of manipulation in the 
New York and London stock markets, sold at 130, 
thereby yielding the syndicate an immense profit. 
" This," wrote a biographer, " gained for Mr. Morgan 
the confidence of Mr. Vanderbilt, who intrusted him 
in 1885 with the task of adjusting the difficulties be- 
tween the Central and West Shore roads." 

Morgan, however, did not need to solicit anybody's 
" confidence " ; he was a truculent, aggressive financier, 

12 Chap, vii, Vol. ii. 



192 HISTORY OF THE GREAT AMERICAN FORTUNES 

with a dominating, even fierce, personality, and with 
great power in his own field, that of banking. His mind 
was of that resolute, masterful order declining to be 
balked by any man or set of circumstances, and his 
methods were not distinguished by delicacy. " His 
method of treatment is drastic," wrote this same bi- 
ographer of his railroad organizations, " and the holders 
of junior securities have made many a wry face, but the 
method has seemed to be efficacious. From $1,000,000 
to $3,000,000 is generally put down as the commission 
for reorganization going to the house of J. P. Morgan 
and Company, 8 for knowing how to do it and doing it." 
Between these lines can be legibly read the nature of 
Morgan's " efficacious " methods ; they will be still more 
illuminated, by force of his own words and acts, further 
on in this narrative. 

Contrary to the description so widely and continu- 
ously disseminated, many capitalists are not men of 
personal courage, in the sense of standing up, man to 
man, and verbally " having it out," as the vulgar phrase 
goes. The cunning, cupidity, turpitude and treachery 
so impregnated in business, and, in fact, the foundation 
of successful business, breed both a physical and moral 
cowardice. Well able, as they are, to fight their combats 
through lawyers, most capitalists, by reason of a certain 
degeneracy, lack the faculty of exercising a strong, di- 
rect, personal, virile influence over men, such as a fight- 
ing pirate captain of the old days held over his band. 
Morgan has been one of the few exceptions. United 
with his wealth there has been in him a powerful belli- 
cose personality, a tremendous vitality both of mind and 
physique; a man who could impose his will by sheer 

18 The firm of Drexcl, Morgan and Company was succeeded 
by that of J. P. Morgan and Company. 



FLOWERING OF THE MORGAN FORTUNE 193 

brute strength as well as by reasoning; who could con- 
vince by argument, and if necessary, bulldoze and ter- 
rorize. 

Such a combination allied with wealth and education 
(for he was college bred) and a complete knowledge of 
all the tricks of the trade, was bound to prove invincible, 
or almost so. His very appearance, arising from an un- 
fortunate facial disfigurement, added to his forceful ap- 
pearance, and to the terror which he inspired. Not inap- 
propriately did he name his yacht The Corsair; he 
was a modern embodiment, in a present-day guise, of 
some antique corsair, the qualities simply being trans- 
posed for adaption to new conditions. 

GREAT MAGNATES YIELD TO HIM. 

Instead of having to squirm himself into Vanderbilt's 
confidence, he compelled that haughty magnate to come 
to terms. This fact Morgan himself testified to in 
the suit arising from Vanderbilt's South Pennsylvania 
railroad project a transaction which has been de- 
scribed heretofore. This litigation, it will be recalled, 
sprang from Vanderbilt's building a parallel line to com- 
pete with the Pennsylvania Railroad. Morgan, it was 
true, had acted as Vanderbilt's financial agent, but he 
also had heavy interests in the Pennsylvania Railroad, 
and his banking house represented large foreign holding 
interests in that line. Above all, he was on the sharp 
lookout for the interests of J. Pierpont Morgan. 

How did he force Vanderbilt to sell his South Penn- 
sylvania line to the Pennsylvania Railroad? In an ex- 
amination, on December 13, 1885, before Examiner John 
H. Weiss in the Federal Court at Philadelphia, he re- 
lated that when he returned from Europe in June, 1885, 



194 HISTORY OF THE GREAT AMERICAN FORTUNES 

he " became satisfied that something should be done to 
bring more harmony among the trunk lines," and he 
added that '. e believed that " sufficient pressure could be 
brought on Mr. Vanderbilt to induce him to sell out." 
Of the specific nature of this " pressure," no explana- 
tion was given, but those familiar with the immense co- 
ercive power of the Pennsylvania Railroad, and the 
power of Morgan's bank, and that of his correlated 
banks, were not in doubt as to its significance. The 
treaty of peace between the warring magnates was 
finally made aboard Morgan's yacht. What was Mor- 
gan's part ? To use his own language, he " bought from 
the South Pennsylvania and sold to the Pennsylvania." 
What his rewards as arbiter were was a fact not made 
public; we can conjecture that his bill was no slight 
one. This treaty, like all such agreements, was made 
only to be broken; the Reading Railroad which, under 
the pact, was to be indemnified for certain property, 
claimed that it was cheated; hence the suit. 

Up to this time, that is to say, 1886, Morgan had 
figured little as a railroad magnate; his conspicuousness 
was more that of a powerful banker who made a spe- 
cialty of reorganizing railroads. Let it not be supposed 
that the term " reorganizing " comprehended the under- 
taking of expensive improvements in the physical layout 
and operation of railroads ; the introduction of safer ap- 
pliances and equipment, and the minimizing of danger 
to passengers and to railroad workmen. 

Reorganization included none of these things; there 
was not a railroad corporation in the country which did 
not violently contest the passage of laws requiring safety 
apparatus, and which did not violate such laws as were 
finally passed; progressively, the yearly death rate of 



FLOWERING OF THE MORGAN FORTUNE IQ5 

passengers and railroad employes increased. 14 The 
profits, in the form of dividends, came not only from a 
series of extortions, but from the slaughter of a greater 
number of men, women and children than were killed 
in the worst wars that the civilized (or rather, uncivil- 
ized,) world has known. The " reorganizations," so 
called, were not intended to change these conditions; 
their sole purpose was to put the railroads in a position 
where profits would be assured, no matter at what pub- 
lic expense or at what cost of life. After a railroad 
had been grabbed and thrown into bankruptcy by succes- 
sive crews of capitalists, a reorganizer, such as Mor- 
gan, would step in, compel the creditors to settle at his 
own terms, force the small stockholders to consent to 
some new arrangement of stock, and issue new securities 
to be sold in Europe or America. In brief, a " reor- 
ganization " consisted in scaling down the debts, or sum- 
marily expunging them, and in devising new plans by 
which the profits would be greater. 

RECURRING CHARGES OF FRAUD. 

For doing this, Morgan was hailed as a man of won- 
derful constructive acumen a financier of first-rate or- 
der. Frequently, however, as we shall see, the small 
stockholders did not share this opinion; and occasion- 
ally they forgot their expected gratitude so far as to 

14 The number of railroad employes killed or injured in- 
creased from 22,000 out of a total of 704,743 in service in 1889, 
to 92,178 of a total of 1,672,074 employed in 1907 an in- 
crease from 3.12 per cent, in 1889 to 5.51 per cent, in 1907. From 
1888 to 1907 not less than 53,046 employes were killed while at 
work, and more than 800,000 employes were either maimed or 
crippled. These figures have been compiled from the annual 
reports of the Interstate Commerce Commission. 



196 HISTORY OF THE GREAT AMERICAN FORTUNES 

charge him in court with fraud. 15 This was Morgan's 
great role for many years; as a reorganizer, not as a 
proprietary railroad magnate. The great railroad po- 
tentates of the period up to 1889 were the Vanderbilts, 
Goulds, Sage, Blair and Huntington. They were the 
men recognized in Congress as the lords of the railroad 
systems, which fact is patent from a scrutiny of the 
" Congressional Record," in which, with great abun- 
dance, recur wordy denunciations of them for gross cor- 
ruption and for consecutive violation of laws. Mor- 
gan's name was not mentioned in these accusations. 

But it was not long before Morgan came to the front 
as one of the foremost railroad magnates in the United 
States. His aggressiveness of character and action, his 
truculent boldness in smashing down obstacles, his con- 
tempt for artificial restraints of law, his disregard of 
public opinion, and his knowledge of how to apply power 
where it would produce the best results all of these 
qualities and capacities were the very ones needed at 
that precise time. 

THE CAMPAIGN AGAINST THE MAGNATES. 

A troublous time the railroad and industrial magnates 
were having. It was the period when the middle class, 
in its fury at being on the verge of overthrow, was most 
active in having all sorts of anti-trust legislation passed. 

16 For example : In the case of the Toledo Railway and 
Terminal Company, the Ohio Savings Bank and Trust Com- 
pany filed a petition in the Federal Court at Toledo, Ohio, on 
August 5, 1907, asserting that fraud had been used in connection 
with the sale of that road, and charging collusion between 
Morgan and other railroad magnates. By this collusion, it was 
alleged, an agreement had been reached by which the property 
was sold at a low figure through the smothering of competitive 
bidding, and that this had been done to defraud unsecured cred- 
itors. The petition was overruled. 



FLOWERING OF THE MORGAN FORTUNE 1 97 

This class was obdurately determined to keep things as 
they were. On the other hand, the great magnates, in 
line with the momentum of modern economic forces, 
were being forced into effacing the middleman in every 
direction, and in centralizing ownership. The middle 
class had the number and traditions; the magnates had 
the money and the power; as for the working class, 
despite its strikes, it was merely, in the long run, a 
pawn in the combat. The Standard Oil Company had 
built up its power largely by reason of the secret railroad 
rebates and discriminations. If a drastic law could be 
passed against the railroads, the middle class argued, 
the rising trusts would receive a fatal quietus a futile 
kind of reasoning, but one sincerely believed in at the 
time and for a long time afterward. The great aim 
of the middle class, therefore, was to get through Con- 
gress a strict interstate commerce law, such as would, 
under heavy penalties, forbid rebate giving and railroad 
pooling. 

The Congressional sessions of 1884, 1885 and 1886 
were, to a great extent, occupied with long debates over 
this proposed law. The middle class was quite sure that 
it was the victor. Senator followed Senator, Represent- 
ative followed Representative, in arraigning the railroad 
magnates. If speeches signified anything these mag- 
nates were already on the highroad to defeat and to 
prison. Senator Van Wyck, of Nebraska, thundered 
for days at a stretch. " For years," said he, " capital 
has been organized, bold, unscrupulous, rapacious, law- 
defying, moving as did Gould, according to his sworn 
testimony, in New York, and Huntington, by the evi- 
dence of his own written testimony, upon State legis- 
latures, upon the courts, upon the Congress of the United 
States, unblushingly purchasing judges and legislatures. 



198 HISTORY OF THE GREAT AMERICAN FORTUNES 

. . . In a republic they despise the people and control 
its representatives." 18 " The time has come," put in 
Senator Conger, " when generalities, glittering and other- 
wise, will not satisfy the demands of the people. They 
demand a positive, incisive, direct and plain law." 17 
Senator Call, of Florida, had his say, and it was a long 
one, none of which is worth quoting except his assertion 
that the railroads had issued $3,000,000,000 of bogus 
bonds, and that they were assessing the people of the 
United States to pay an actual taxation of $300,000,000 
yearly. 18 More than one Senator and Representative 
dwelt indignantly upon that $300,000,000 of annual en- 
forced taxation extorted by the railroads. And so the 
debate went wearily on, tiring out everyone but the 
talkers themselves, whose stock-in-trade was talk. 
Would the flow of words never end? 



THE MIDDLE CLASS TRICKED 'AND BEATEN. 

At last an interstate commerce law was passed. Great 
was the rejoicing among the middle class. Its compo- 
nents exulted in their victory, and in visions foresaw 
their dominance soon restored and the trusts ruined and 
extinguished. 

But after a comparatively brief interval their jubila- 
tion became blank dismay. This law, this great, long- 
agitated for law, which was to intrench them so effec- 
tively, turned out to be an utter sham. On its surface 
its provisions read fair and smooth; but when it went 
to the courts the perforating began, as its authors in- 

16 " Interstate Commerce Debates in Forty-second Congress," 
1886-87:62. 
17 Ibid., i: 
".Ibid., 



FLOWERING OF THE MORGAN FORTUNE 

tended, and for which contingency they had expressed 
and equivocally drafted it. One clause after another 
was, on this or that ground, declared inoperative by the 
courts; the Interstate Commerce Commission, which 
the law established, had not even the power, it was de- 
cided, to compel the attendance of witnesses, and the 
courts refused to grant writs of subpoena in aid of its 
proceedings. Furthermore, railroad officials (who were 
the only persons whose testimony could secure a con- 
viction) were excused from testifying on the ground 
that by so doing they might incriminate themselves. In 
a word, the Interstate Commerce Commission, on the 
establishment of which as a peremptory tribunal the 
middle class had built such high hopes, was found to be 
nothing more than an inane body which was allowed 
to devote itself to the harmless pastime of collecting 
statistics, but was empowered to do nothing more 
serious. 

Again the bewildered middle class found itself woe- 
fully routed. While it had been holding meetings and 
talking and petitioning, the magnates had sent a stream 
of " silent arguments " coursing through the exalted 
wall of Congress. And, in fact, some of the very mem- 
bers of Congress who were so vigorously inveighing 
against the "high-handed" corruption of the railroad 
magnates, and demanding punitive laws, were, at this 
very time, themselves implicated in a great scandal. 

THE PAN-ELECTRIC SCANDAL. 

This was what was called the " Pan-Electric Scan- 
dal " ; and if any reader desires to acquaint himself with 
the vast ramifications of corruption in Congress, in the 
courts and in the legislatures at the time let him (if 



2OO HISTORY OF THE GREAT AMERICAN FORTUNES 

he dare) read the 1,284 P a S e of testimony taken by 
a Congressional Investigating Committee. 19 The Pan- 
Electric Company was a competitor of the Bell Tele- 
phone Company: at least, it energetically attempted to 
be. The Bell Company had already established the 
validity of its patents in the courts, although not with- 
out having to face and fight down charge after charge 
on the part of other inventors that it had appropriated 
the fruits of their inventions. The testimony before 
this particular Congressional Committee was full of 
charges, sometimes mere insinuations, at other times 
open accusations, that in order to attain its victory, and 
to secure favorable decisions, laws and franchises, the 
Bell Telephone Company had bribed Congress, the va- 
rious legislatures and judges either by money or by gifts 
of stock. 

Against the Bell Company the Pan-Electric Company 
seemed powerless; but as a last resort, its promoters 
began a campaign of corruption to get the United States 
Government to move in the courts for the vacating of the 
Bell patents. Large blocks of stock were distributed 
among various influential Senators and Representatives, 
some of whom offered no objections to being made direct- 
ors of the Pan-Electric Company. United States Attor- 
ney-General Garland upon whose say-so depended 
whether the suit for vacating the Bell patents should 
be brought or not, held, it was charged, not less than 
$10,000,000 of stock in the Pan-Electric Company, for 
which stock he had not paid a dollar. When the Pan- 
Electric promoters were interrogated as to these methods 
they cynically pointed out that the Bell Telephone Com- 
pany had begun its career by using precisely the same 

10 Sec House Miscellaneous Documents, Forty-ninth Congress, 
1885-86, Vol. xix. " Testimony taken by the Committee Relat- 
ing to the Pan-Electric Telephone Company." 



FLOWERING OF THE MORGAN FORTUNE 2OI 

methods. In this fight, the Bell Telephone Company 
succeeded in completely vanquishing its threatening 
competitor, the Pan-Electric Company, which soon 
passed into nothingness. 20 

Such was the majority composition of a Congress 
from whom the middle class expected such great and 
public-spirited reforms ; this was the Congress which was 
to pass laws that would forever check " the greedy, in- 
satiable inroads of the monopolies ! " " Monopoly " was 
the particular bugbear of those years ; the generic thing 
that politicians could always conveniently convert into 
personal political capital in their constituencies by flag- 
ellating it with roars of denunciation, which was an 
exceedingly popular pose. The word " trust," be it 
noted, as signifying a complete monopoly, had not then 
come into popular usage. Those virtuous outbursts in 
Congress against the monopolies, served the purpose 
well, but one overshadowing fact neither the middle class 
nor the working class seemed to note, namely, that what- 
ever might be said in Congress, nearly every bill 
apparently drawn to curtail the power of monopolies 
and wealth was so ingeniously drafted that its so-called 
vital provisions failed to stand the test of the courts. 
Yet the lawyers in Congress who drew these bills were 
ranked as the foremost " Constitutional experts " in the 
land a situation not at all contradictory to those who 
understood the double-faced nature of the performances 
at Washington. 

Many States were passing drastic anti-trust laws. 
These laws did not essentially arrest the growth of trusts, 
but they did have the effect of spreading a certain timid- 
ity among magnates or would-be magnates. The power 

20 The present Telephone trust originated in the Bell Tele* 
phone Company. J. Pierpont Morgan is a large stockholder. 



202 HISTORY OF THE GREAT AMERICAN FORTUNES 

of wealth, it was true, controlled the machinery of Gov- 
ernment, and criminal proceedings were little to be 
feared. Still, with the public temper in the inflamed 
state in which it was, there was never any telling what 
might break forth. 

The great railroad magnates, in particular, were tired 
of a competition resulting in the cutting of rates, in- 
creased expenses, and diminished profits. They were 
eager to form a combination effective enough to pre- 
vent competition in the respect of undermining one an- 
other's freight and passenger rates. With such an 
agreement in force, profits would be immensely increased, 
and upon the strength of those increased profits, more 
watered stock could be issued. 

MORGAN AN EMERGENCY LEADER. 

But who was audacious enough to undertake the in- 
itiative in forming this combination? In a way, it was 
a perilous thing to do. If unbought or unintimidated 
public officials should take a notion to prosecute crim- 
inally, its promoters and beneficiaries were liable, 
upon conviction, to a long sojourn in prison. Van- 
derbilt, Gould and Huntington and other magnates, while 
caring nothing for law, did not choose to take the lead ; 
moreover, as they were jealous and distrustful of one 
another, it would not have been judicious for anyone of 
them to have done so. 

The ideal leader in this exigency was J. Pierpont Mor- 
gan ; and how he stepped forward and molded the nebu- 
lous plan into a definite, concrete combination, will now 
be related. 



CHAPTER IX 
MORGAN AS A BANKING AND RAILROAD GRANDEE 

On January 2, 1889, a circular marked " Private and 
Confidential/' was issued by the three banking houses 
of Drexel, Morgan and Company, Brown Brothers and 
Company, and Kidder, Peabody and Company. The 
most painstaking care was exercised that this document 
should not find its way into the press, or otherwise be- 
come public. Indeed, extraordinary measures were 
taken to surround its contents with every precaution of 
secrecy. 

Why this fear? Because the circular was an invita- 
tion, tacitly understood as a command, to the great rail- 
road magnates to assemble at Morgan's house, No. 219 
Madison avenue, and there form, in the phrase of the 
day, an iron-clad combination. The plan was to make 
a strict compact which would efface competition among 
certain railroads, and unite those interests in an agree- 
ment by which the people of the United States could be 
bled even more effectively than before. For the sake 
of appearance, in case the nature of the undertaking 
should leak into public print, the promoters garnished 
over their real purposes with a string of diverting 
phrases. Their sole aim, so they pleasantly indited it, 
was an association " to maintain public, reasonable, uni- 
form and stable rates," and they added that another ob- 
ject would be the gathering of statistics regarding rail- 
ways. 

203 



2O4 HISTORY OF THE GREAT AMERICAN FORTUNES 

Such subterfuges deceived nobody but the credulous or 
uninformed. 



A HISTORIC MEETING IN MORGAN'S HOUSE. 

That circular is a historic document, well worth more 
than passing notice; and he who is familiar with the 
forces then at work will rightly consider it of far greater 
importance than Presidents' messages, ordainments of 
Congress or Courts' decrees. 

At a time when the whole gravamen of law and ju- 
ridical precedent was being used to insist upon indus- 
trial forces remaining stationary and stagnant, this cir- 
cular came as a proclamation of defiance. Common and 
statute law sternly declared that the thing called com- 
petition in trade must be kept alive, and that if it could 
not sustain itself by its own merits, the law should 
demand its maintenance. The causes producing and 
justifying competition were passing away, but none of 
the law-making bodies recognized the newer conditions, 
nor made any provisions for them. But the magnates 
realized that the old indiscriminate system of competi- 
tion was rapidly becoming archaic, and that the time 
was ripe for a more systematic organization of indus- 
try. And so, while Congress and the legislatures were 
busily enacting law after law, supposedly edicts of " the 
sovereign people of the United States," a few magnates 
issued a brief circular which intrinsically was of far, far 
more binding weight than entire volumes of statutes im- 
potent, in the long run, in the face of onrushing eco- 
nomic forces. 

But the ideas of the people at large and the self- 
interest of the middle class were against any overthrow 
of the competitive system, Tone their statement of pur- 



A BANKING AND RAILROAD GRANDEE 2O5 

poses down, as the magnates did, and however harmless 
they might represent their aims, the plan of this group 
of bankers and railroad grandees was certain to arouse 
the sharpest suspicions. A restless, sullen state of mind 
pervaded the mass of people. Distrustful of any asser- 
tions made by the magnates, they were ever ready to see 
sinister projects beneath bland announcements. Fur- 
thermore, the magnates' definition of " reasonable " was 
diametrically different from that of the people at large. 
Matters and charges that the magnates honeyed over as 
" reasonable adjustments," impressed the popular under- 
standing as extremely unreasonable ; as gross extortions 
of which the law should take condign notice. 

WRECKING THE MIDDLE CLASS GRADUALLY. 

At the behest of the middle class laws directed, super- 
ficially at least, against the magnates' arbitrary power 
and concentration of resources were everywhere being 
passed. Since the putting down and dissolution of the 
great labor movement of 1886, serious inroads from that 
quarter were no longer feared. But the work of ex- 
tinguishing the middle class had to be proceeded with 
slowly and discreetly. 

Workers' uprisings, political or other, could be crushed 
by force and court decrees and by bribery and fraud at 
the polls. In any emergency the whole middle class 
would stand with the great propertied interests in sub- 
duing the working class. Yet when the fight for su- 
premacy was one confined to the middle class and the 
plutocracy, the magnates had good reason not to attack 
the middle class too openly. The country swarmed with 
organizations of manufacturers, jobbers and small trades- 
men, and in the West and South the Farmers' Alliance, 



2O6 HISTORY OF THE GREAT AMERICAN FORTUNES 

an ally, was at its strongest. This middle class arrogated 
to itself the distinction of being " the public." The work- 
ing class, whom it used and exploited, had only a few 
obscure trade journals to disseminate its views and voice 
its demands, and, although comprising the immense bulk 
of the voters, had not a single real representative in 
political office. But the interests of the middle class were 
represented by thousands of newspapers and journals; 
by a host of political spokesmen and lawyers and college 
professors, and by the force of prevalent law and com- 
mercial institutions. 

In warring upon the magnates the most persistent argu- 
ment that the middle class used in its appeal for sympathy 
and support, was that the extortions of the magnates 
were immoral. Precisely as, when the workingmen in 
previous decades had struck for a shortening of their 
hours of daily labor, the manufacturers had declared the 
movement insurrectionary and immoral, so now they 
used the same plea against the exactions of the magnates. 
When the workers complained that their bosses oppressed 
them, the bosses retaliated with the charge that the 
workingmen were unruly, and that their demands for 
redress were not based on morality. But when the mag- 
nates squeezed the manufacturers, jobbers and retailers 
then these divisions of the middle class made vehement 
lamentations that they were the victims of an immoral 
conspiracy. 

Nothing could exceed the baseness and hypocrisy of the 
middle class, as a class. It demanded the widest latitude 
in law in placing no restrictions upon it either in exploit- 
ing its employes, or in robbing back from them in various 
swindling ways the meager wages it paid. It insistently 
fought the workers' struggle for a shorter workday and 
more wages; it opposed the passage of even slight laws 



A BANKING AND RAILROAD GRANDEE 2O7 

for the protection of the workers' labor; it combated 
movements for factory and tenement reforms. At the 
same time it insisted upon its right to make and sell 
shoddy goods and adulterated products, and impose them 
upon the workers at extortionate prices. 

The many laws which, after strong agitation on the 
part of labor organizations and various other bodies, the 
different legislatures were passing at this time, indicate 
the widespread practice of manufacturing and selling 
adulterated and often poisonous foods and drugs. The 
passage of these laws had long been contested by the 
capitalist class, as a whole; and even after they were 
enacted, they were not generally enforced, and were so 
ineffective that, many years later, during Roosevelt's ad- 
ministration, a National Pure Food Act was passed by 
Congress after the severest and most persistent opposi- 
tion on the part of the beneficiaries of the frauds. This 
law, also, has been largely ineffective. 

In 1879, Wisconsin enacted a penal law, providing 
penalties for the adulteration of foods and drugs. 
Ohio, in 1887, 1896, and 1898 passed laws for the pun- 
ishment of various kinds of adulteration. New York, 
in 1893 and 1898, passed laws forbidding the fraudulent 
sale of certain imitation foods and certain fraudulent 
stamped goods. After years of agitation, Massachusetts, 
in 1897, passed a law (Chap. 344) prohibiting the man- 
ufacture or sale of adulterated food. Missouri, in 1889 
and 1897, passed laws against the adulteration of cer- 
tain foods. Iowa enacted laws for the punishment of 
those selling adulterated milk, cheese, butter and linseed 
oil. Illinois, in 1881, passed a law against the fraudu- 
lent manufacture or sale of imitation butter, and re- 
enacted it in 1897. New Jersey, in the same year, 
passed an act to prevent the adulteration of foods and 



20)8 HISTORY OF THE GREAT AMERICAN FORTUNES 

drugs, and enacted another law in 1897. Pennsylvania 
prohibited the sale of adulterated drugs, and provided 
penalties for the adulteration of milk and cream. Michi- 
gan, in 1895, passed an act to prohibit and prevent 
adulteration, fraud and deception in the manufacture 
and sales of articles of food and drink. Nebraska and 
Kentucky passed similar laws. South Dakota, in 1885, 
enacted penal laws relating to the adulteration of food 
and drink, and, in 1897, passed another act increasing 
the penalties. These are some examples of the various 
State laws. Nearly all of the States also passed laws 
against the sale, by fraudulent weights and measures, of 
coal, wheat and various other foods and commodities. 

CHARACTERISTICS OF THE MAGNATES* CRITICS. 

Not a move, on the other hand, could the magnates 
make without the middle class raising the cry of fraud 
a not untrue accusation, it is hardly necessary to say, 
but one singularly ill-chosen from a class itself gan- 
grened with fraud. The Farmers' Alliance and kindred 
organizations virtuously fulminated against the extor- 
tions and frauds of the magnate class ; the cattle dealers 
of the Southwest especially were not merely bitter, but 
rancorously so, against the railroad kings. Yet all of the 
large cattle ranches had been obtained by fraud in more 
or less degree. 1 The cattlemen not only practiced ex- 
tortions, but in their economic wars with adjacent cattle- 
men, forced their cowboys to fight and kill the cowboys 

1 See House Reports, Forty-eighth Congress, Second Session, 
1884-5. Executive Document No. 267 : xxviv. This document 
deals with the Texas ranches. In previous chapters of this work 
many facts have been given from official documents showing 
the illegal, and often violent, seizure of cattle ranches through- 
out the West. 



A BANKING AND RAILROAD GRANDEE 2OO, 

of their neighbors, and risk being killed themselves; 
nearly all of those cowboy affrays so romantically de- 
scribed in fiction, arose from nothing more or less than 
economic disputes between competing rival master cattle- 
men. 

To say that the entire manufacturing class was de- 
frauding and swindling in every conceivable form is but 
to state a truism elaborated upon specifically in many a 
public document. 

Leaving aside the current stupendous frauds in profit- 
ing from misleading semi-worthless merchandise, or 
adulterated products sold under false pretenses a traf- 
fic shared in by wholesaler, jobber and retailer; aside 
from this phase and a multitude of other phases, we shall 
simply give one typical graphic example of what the man- 
ufacturers were doing in one of the largest manufactur- 
ing States in the Union. While protesting against the 
evasion of taxation by the railroad corporations, the 
manufacturers were defrauding in the one item of tax- 
ation alone of a sum gigantic in the aggregate. " It is 
a notorious fact," reported Comptroller Morgan, of New 
York State, in 1900, " that hundreds of manufacturing 
companies, whose plants are located in this State, whose 
business is chiefly transacted here, and which for all prac- 
tical purposes are New York enterprises, escape all in- 
direct taxation in this State, and much local taxation, 
by being incorporated in other States." They paid sub- 
stantially nothing for fire and police protection, Comp- 
troller Morgan added. 2 Yet in case their employes 
struck, these manufacturers were ever ready to requisi- 
tion the pretext of violence and demand police and mili- 
tia to club or shoot into submission the very working 

2 Annual Report of the Comptroller of New York State, 1900: 
xxiii. 



2IO HISTORY 01' THE GREAT AMERICAN FORTUNES 

class from whose labor the entire burden of taxation 
came. This had been a long-continuing condition of af- 
fairs in every State. 

MORGAN DIRECTS MATTERS. 

These facts will give a fairly clear idea of the compo- 
sition and pretensions of that middle class which the 
news of the meeting in Morgan's house was bound to 
excite into convulsions. A momentous gathering it cer- 
tainly was that assembled in Morgan's mansion on Jan- 
uary 8, 1889. Who are they we note there? Apparently 
private citizens; in reality monarchs of the land: Jay 
Gould with his son George, held by the leading strings ; 
Stickney, of the Northwest territory; Roberts, of the 
Pennsylvania Railroad; sleek Depew, echoing the Van- 
derbilts ; Sloan, of the Delaware, Lackawanna and West- 
ern Railroad, and a half dozen more magnates or their 
accredited mouthpieces. The honorable legislatures 
could gravely discuss the advisability of this or that leg- 
islation ; the noisy " Congress of the United States " 
could solemnly meet and after wearing out months in 
rodomontade, profess to make laws ; the high and mighty 
Courts could blink austerely and pompously hand down 
their decisions. But in that room in Morgan's house sat 
many of the actual rulers of the United States; the men 
who had the power in the final say of ordering what 
should be done. 

Morgan was chairman of the meeting, and with wonted 
brusque directness went straight to the point. Thanks 
to a stenographic report of the proceedings which fortu- 
nately we have been able to get hold of, the work of 
that meeting is clear. The name of the organization 
was to be the " Interstate Commerce Railway Commis- 



A BANKING AND RAILROAD GRANDEE 211 

sion " ; its essential purpose the cessation of competition 
among its members. But how was any magnate to be 
prevented from competing with another, or stopped from 
encroaching upon another's domain? What penalties 
should there be, and how could they be enforced ? Cer- 
tainly no law could be invoked to compel the carrying out 
of such an agreement, for the law explicitly prohibited 
combinations, and any legislation would not only be out- 
lawed, but would reveal the extent of the whole criminal 
compact. 

HE DELIVERS A MANDATE. 

There was, however, a far greater power than that of 
law, namely, the power of massed money. If any mag- 
nate present were inclined to balk at the prepared 
program he was brought to an instant realization of the 
punishment when Morgan announced : 

I am authorized to say, I think, on behalf of the [banking] 
houses represented here that if an organization can be formed 
practically upon the basis submitted by the committee, and with 
an executive committee able to enforce its provisions, upon 
which the bankers shall be represented, they are prepared to say 
that they will not negotiate, and will do everything in their 
power to prevent the negotiation of, any securities for the con- 
struction of parallel lines, or the extension of lines not ap- 
proved by that executive committee. I wish that distinctly un- 
derstood. 3 

i 

The threat, or promise, as it could be differently inter- 
preted, was assuredly understood. Vast as was the 
wealth of the magnates present or represented, neither 
any one or a combination of them, dared (had they been 

8 " Proceedings of Conference Between Presidents of Railroad 
Lines West of Chicago and St. Louis, and Representatives of 
Banking Houses, held at No. 219 Madison Avenue, New York, 
January 8 and 10, 1889 " : 36. 



212 HISTORY OF THE GREAT AMERICAN FORTUNES 

so disposed) to defy such an ultimatum. To do so meant 
inviting the vindictive, crushing wrath of a clique of na- 
tional and international bankers whose money and power 
could be used with the most destructive results. Nor 
was there any possible way of appealing to a higher 
power. 

What if many of the State legislatures had penalized 
combinations in restraint of trade? What if the irate 
middle class was frantically clamoring for the enforce- 
ment of these laws? What if in both common and stat- 
ute law this coercive decree of the bankers was criminal 
conspiracy? Every man in that assemblage knew that, 
judged by prevailing laws, he was participating in a con- 
spiracy, yet no apprehension was acutely felt that the 
numerous national and State laws would be strictly en- 
forced against him. So confident of its ground was the 
meeting, that the subject of possible prosecution was not 
given a thought. The sacred doctrine, the " inalienable, 
undeprivable right " of competition was, without any 
ambiguity or ceremony, given a deadly blow. For that, 
if for no other reason, the meeting was memorable. The 
magnates were sure of immunity. To them laws were 
instruments not obstacles; the same code of laws which 
they lightly stamped under foot they could always suc- 
cessfully use against workingmen on strike, as they did, 
for example, five years later, in the great railroad strike 
of 1894, when Federal troops were ordered out at their 
command to overawe, and, if necessary, mow down the 
strikers. 

Another phase of that meeting (a " conference," as it 
was called) deserves mention. How much of a vacuity 
men were considered, magnates though they were, and 
how all important property was held, was shown by the 
method of voting. As each proposition was advanced, 



A BANKING AND RAILROAD GRANDEE 213 

it was put to a vote. The names of the magnates were 
not mentioned in the roll-call ; it was the corporate rail- 
roads which were expected to vote and which did vote. 
Thus, instead of Gould's name, the name of his railroads 
was called; the Missouri Pacific and the Wabash voted, 
not Gould. What could have been more beautifully sim- 
ple and direct, so free from cant, so faithful to the spirit 
of the human money bags present? If this method were 
only adopted in Congress much good in point of popular 
understanding would result, for while the old forms there 
still persist, most of our " statesmen " would not be 
libelled were the roll-call made by corporations instead of 
by putative representatives of the people. 

If a mere threat of the powerful bankers, led by Mor- 
gan, was enough to convince or overawe a group of the 
railroad dictators of the United States, what could not 
the banking power accomplish when it actively concen- 
trated its might of money upon a given object? Neither 
capitalist foe nor any government could withstand it. 
The extremes to which it could go in successfully execut- 
ing its plans and in dissipating all obstacles by its ter- 
rorism, was typically shown in a noted bond deal, in 1895, 
whereby the United States Government was held up by 
a syndicate of bankers headed by Morgan, and forced to 
give over a virtual gift of many millions of dollars for 
the privilege of having a nominal and transient claim on 
a supply of gold which those same bankers had drained 
from the United States Treasury only a short time pre- 
viously. 



THE WALL STREET VIEW OF MORGAN. 

Before describing this transaction a digression will be 
made to chronicle some intervening facts in Morgan's ca- 



214 HISTORY OF THE GREAT AMERICAN FORTUNES 

reer. His father died in 1890, bequeathing to him a 
fortune superficially estimated at $10,000,000. But it is 
needless to say that J. Pierpont Morgan was already a 
seignorial multimillionaire. That he was intensely hated 
by a large portion of the element in the financial district 
was undeniable, but it was a hatred caused not by objec- 
tion to his methods, but because he eminently surpassed 
in either the brutality or finesse of those methods. All 
of his decriers of his own rank had at basis some per- 
sonal grievance resolving itself into a rankling enmity at 
being outwitted or outdone by Morgan. Had he given 
them the slightest opening they would have enmeshed 
and swindled him and gloated over the deed. 

But with the exception of one distinguished antagonist, 
to whom we will refer later, he anticipated and overcame 
them all, and left many of them with the embittered 
memory of their collision with him, but with nothing 
more substantial. No doubt Morgan's personality had 
much to do with this current hatred on the part of those 
who came into contact with him; he was at no time to 
be suspected of being of the unctuous order of men, full 
of blandishments and sweetened guile. Rather, he was 
a sort of plug-ugly in the financial purlieus, belligerent 
and ruthless, with a rough, dictatorial manner, unsparing 
of the feelings or interests of those who in any way 
crossed his will or plans. 

Those personal details, however, were not known to 
the great mass of the people the country over. The 
popular conception of men in public notice was derived 
almost wholly from what the newspapers said, and these 
constantly, with rare departures, portrayed Morgan as 
a great financier and benevolent gentleman. In Mor- 
gan's financial transactions immense numbers of the mid- 
dle class, as well as people higher in the scale of the 



A BANKING AND RAILROAD GRANDEE 21 5 

well-to-do, lost, in the aggregate, great sums of money 
torn from them in the stockjobbing operations in Wall 
street. But they did not blame Morgan personally ; their 
bitterness was cast at the generic monster called Wall 
street. And yet not a single one of those thus stripped 
had not deliberately set out to enrich himself at 
someone else's expense; even those who put their funds 
in stocks for the purpose of " legitimate investment," did 
so with the full knowledge that the lower the wages paid 
on the railroads and in the factories, and the longer the 
daily labor of the workers, the brighter were the chances 
for a larger dividend. 

At the same time, while hated in the financial dis- 
trict, Morgan was deeply feared for his far-reaching 
power, and what were considered his relentless methods 
both in accomplishing his ends and in settling scores. 
Observers usually described him, in the slang of Wall 
street, as a man who was in business " for all there is 
in it." As though anyone else were in Wall street for 
a different purpose! His policy was regarded as that 
of finding a weak spot in a corporation and then " squeez- 
ing it for all it was worth " a very much biased accu- 
sation, inasmuch as every other successful financier in- 
controvertibly pursued the same methods, although not 
always in the same way. His favorite expression, 
when questioned about his transactions was, " I am not 
in Wall street for my health." His enemies whispered 
about that he was a " freebooter in finance " ; his admir- 
ers those who profited by his bounty loudly pro- 
claimed his greatness. 

HE COMES TO THE FRONT AS A COAL MAGNATE. 

Of Morgan's methods in seizing, in conjunction with 
William H. Vanderbilt, the Philadelphia and Reading 



2l6 HISTORY OF THE GREAT AMERICAN FORTUNES 

Railroad from McLeod, in 1893, we have already given 
a description. 4 In that account it was shown how, when 
McLeod pressingly needed funds both to finance his rail- 
road's coal combination and to pay for improvements, 
he found that the leading banking institutions had im- 
paired, and then cut off, his credit. Morgan and Van- 
derbilt were then able to assault and beat down the 
price of Reading stock, buy large quantities of it at a 
very low figure, and gain control of the system. As a 
railroad, the Reading line was not extensive; its great 
value lay in its ownership of anthracite coal mines, of 
vast unmined deposits, and in its coal-carrying traffic. 

To his other manifold powers Morgan now added 
that of coal magnate. The Constitution of Pennsylva- 
nia, as we have seen, expressly forbade railroad cor- 
porations from owning and operating coal mines. But 
that law did not exist which the very rich were not able 
to evade. Dummy holding companies were organized; 
and, although everybody knew that these companies were 
mere subterfuges, the public authorities took no action, 
and when, after many years of inactivity, they, with in- 
different energy brought suit, the case was appealed by 
the magnates to the Supreme Court of the United States, 
from which, in 1909, the railroads emerged victorious 
with a decision of so equivocal a nature as to be tanta- 
mount to one in their favor. 

Two immediate results signalized Morgan's entry as 
a monarch of the coal fields. To both we have adverted 
in a previous chapter, but they will here bear repetition. 
Every housekeeper using hard coal was taxed to add 
more millions to Morgan's fortune; the price of stove 
coal was raised from $1.25 to $1.35 more a ton than 
had been charged before. The second result was the 

*See Chapter vii, Vol. ii. 



A BANKING AND RAILROAD GRANDEE 217 

more rapid process of crushing out the independent coal 
operators. By a concatenation of ruthless methods 8 
these independents were ruined and driven out, not with- 
out much wailing against oppression, and shrill charges 
of fraud. 

Yet the very mines which they were virtually coerced 
into giving up had been secured by fraud, either by them 
or by their predecessors. The law records of the State 
of Pennsylvania reveal case after case, before and after 
the Civil War, of fraudulent tax sales of lands contain- 
ing coal; and the bribery of the Pennsylvania Legisla- 
ture by individuals and corporations for coal mining 
and other kinds of charters and special rights had been 
so admittedly brazen that, in 1847, the Legislature, with 
self-righteous display, was constrained to pass an " Act 
to Define and Punish the Offense of Bribery," making 
the crime of giving or receiving a bribe a felony, pun- 
ishable with a fine not exceeding $5,000 or a sentence 
of five years in prison. 6 This law was treated with lev- 
ity; it had no other effect than to refine and obscure the 
methods of bribery. Another act was passed on March 
3, 1860, and a third on April 29, 1874, which laws were 
likewise facetiously regarded by the seekers of vested 
privileges, and the bribery went on persistently. 7 Time 

8 See testimony before the House Committee on Interstate 
Commerce, House Reports, Fifty-second Congress, Second Ses- 
sion, 1892-93, Vol. i. 

6 Laws of Pennsylvania, 1847 ' 217. 

7 One of the many continuous scandals growing out of the 
corruption of the Pennsylvania Legislature was that of the pas- 
sage of an act in 1876 in the interest of the lumbermen. Mem- 
bers of the Legislature were paid or offered from $300 to $500 
each to vote for or against the bill. This bill was entitled, " An 
Act to Regulate the Amount of Toll and Other Charges to be 
Laid and Collected by Boom Companies." It was fought by cer- 
tain interests. See, " Testimony Before the Committee to In- 
vestigate the Means to Secure or Defeat the Passage of the 
Boom Bill," Pennsylvania Legislative Docs., 1876, Vol. v. 



2l8 HISTORY OF THE GREAT AMERICAN FORTUNES 

after time the Legislature of Pennsylvania was forced to 
appoint investigating committees to report on this or 
that charge that bribes had been used; one of the few 
times when any of the bribed ever went to prison was in 
the Riot Indemnity Bill trials in 1879-80. 

Some excuse was needed to give the appearance of a 
necessity for the great increase in the price of coal. The 
coal magnates supplied it beforehand. They inquired 
how they could avoid charging more. Had not the pro- 
duction of coal fallen? And were not the freight rates 
extremely high? But the Government knew that these 
claims were fabrications. The House Committee on 
Interstate Commerce had unanimously reported that the 
coal magnates had deliberately reduced the output of 
coal; that although the capacity of the collieries was 
50,000,000 tons a year, yet only about 40,000,000 tons 
were being mined, so as to make a show of scarcity. 
And as regards freight rates for coal the committee re- 
ported, " Although coal in freight can be handled cheaper 
than almost any class of freight, yet it pays nearly dou- 
ble the rate of wheat and cotton." 8 

Without quibble, this combination was a conspiracy, 
criminally and civilly liable. But neither National or 
State law was enforced against it. The House Commit- 
tee reported that the Interstate Commerce Act was too 
ineffective a law to proceed under, and that ended talk 
of criminal prosecution. The Government machinery of 
the United States practically became (as it did in so 
many other instances) an accessory of the coal combina- 
tion in allowing it to squeeze more huge extortions from 
the sufferings of the mass of the people. 

The boasted Government " of, for and by the people," 
was a Government run wholly by the great propertied 

8 House Reports, etc., 1892-3, i:iv. 



A BANKING AND RAILROAD GRANDEE 219 

interests as a necessary appendage, based upon forCe, for 
compelling the people to submit without redress or quar- 
ter. Such operations as this explain how Morgan's for- 
tune leaped by millions at a time; every dollar extorted 
in that increase of price came very largely from families 
who, already burdened by a thousand and one extor- 
tions, were forced to suffer still more keenly; each new 
compression from above drove them deeper into abject 
poverty, with all its demoralizing and horrible evils. 
The whole edifice of capitalism was built on a vast, 
ghastly charnal house, overcrowded with the bones of 
numberless victims. Yet the industrial grandees who 
thus slaughtered with impunity in the insidious ways of 
trade paraded themselves as very devout men : Morgan 
was a vestryman of St. George's Church, New York 
City, and ostentatiously passed the contribution plate in 
the name of Christ. 

To this coal transaction of Morgan's there is a sequel, 
showing how, and by what methods, he expanded as 
a coal dictator, but the recounting of this will be de- 
ferred to its proper chronological place, and that famous 
bond deal of his in 1895 will be considered. 



TRANSFERRING GREAT RAILROAD SYSTEMS. 

The two Drexel partners of his, Frank and Anthony 
Drexel, passed away, each leaving an estate of $25,000,- 
ooo. They, too, had acquired the glorious name of 
philanthropists; before dying they had together given 
away the sum of $8,000,000 to found sundry charitable 
institutions in or near Philadelphia. Since their part- 
nership with Morgan they had, of course, shared in all 
of his transactions. Some of these we shall have to 
pass over with only a reference, inasmuch as the facts 



220 HISTORY OF THE GREAT AMERICAN FORTUNES 

are exceedingly involved. But this one point sticks out: 
Great railroad systems, in the building of which neither 
Morgan nor his associates had in the slightest partici- 
pated, which had been constructed largely with public 
funds and gifts of public land, and which they had never 
seen until long after they were in operation: these 
railroads suddenly passed into the ownership of the 
iMorgan combine, which largely meant Morgan. 

How did this transformation come about? Shall we 
have to retell the old story; the original looting, the 
bankruptcies, reorganizations, and tricks of finance, 
squeezing out of creditors and small stockholders? 
However glib financial writers may attempt to explain 
it, or with whateve'r fine phrases apologists might gloss 
it over, the matter reduces itself to this trenchant fact: 
That Morgan became possessed of great railroad sys- 
tems in the South, with the initiation and operation of 
which he had had no more to do than a babe. The 
Industrial Commission reported these railroads as being 
in the " Morgan group " by 1901 : The Southern Rail- 
way, with its 6,807 miles of track; the Mobile and Ohio 
Railroad, the Queen and Crescent, the Central of Geor- 
gia (later taken over by Harriman), the Georgia South- 
ern and Florida, the Macon and Birmingham, the 
Philadelphia and Reading, the Lehigh Valley, the Erie 
(subsequently acquired by Harriman), the Central of 
New Jersey, and the Atlantic Coast line. 8 The total ex- 
tent of these railroads was 19,073 miles. 

Compared to the tortuous and difficult details of Mor- 
gan's " reorganizations," the tale of his United States 
bond transaction of 1895 is simple enough to be easily 
comprehended. 

As gold was the international trade standard of value, 

8 Final Report of the Industrial Commission, 1902, xixraoS. 



A BANKING AND RAILROAD GRANDEE 221 

the United States Government followed the policy of 
holding a certain amount as a treasury reserve. When, 
by reason of some cause or other, this reserve was de- 
pleted the Government was compelled to issue bonds to 
replenish it. 

The powerful junta of leading national and inter- 
national bankers definitely and deliberately forced the 
United States Government to put out these bond issues. 
This they did by draining the treasury of its gold, and 
by then going through the empty form of selling back 
that gold in return for bonds. The treasury notes and 
greenbacks, comprising much of the currency of the 
United States Government, were redeemable in coin. 
This provision was construed as calling for payment in 
gold. The bankers would take over to the sub-treasury 
in New York City great stacks of treasury notes and 
greenbacks and exchange them for gold. This gold they 
would then hoard in their vaults. The Government au- 
thorities were fully aware of this proceeding, and knew 
quite well that the ulterior purpose was to force a bond 
issue. After the banking clique had obtained the bonds, 
it could do two things sell large amounts of them, 
at enhanced premiums, to smaller banks, savings banks, 
insurance companies, estates and investors in general, 
and it could use such portion of the issue that is kept 
as a basis for issuing new currency. The large private 
bankers, such as Morgan, had their chain of auxiliary 
national banks, by means of which bond issues could 
be converted into currency, and the time-honored ex- 
tortion of getting a double interest could be managed. 



In 1894 the Government had been drawn into hand- 
ing over two bond issues of $50,000,000 each to these 



222 HISTORY OF THE GREAT AMERICAN FORTUNES 

bankers. Their profits, it is. estimated, reached tens of 
millions. With the advent of the year 1895 the United 
States Treasury was again emptied of gold. Where had 
the gold, which the Government had purchased only a 
short time previously at usurious rates, gone? The re- 
ports of the large banks gave the answer. By the end 
of January, twenty-six banks in New York City had in 
their vaults a hoard of $65,000,000 in gold. Presently 
the amount totaled $129,000,000, all told. The Govern- 
ment shrieked in helplessness; President Cleveland was 
reported as saying privately that " the banks have got the 
country by the throat." 

At the appropriate moment a syndicate of bankers ap- 
peared in the open and magnanimously offered to supply 
gold to the Government in exchange for bonds. This 
syndicate was composed of J. P. Morgan and Company, 
August Belmont and Company, representing the Roths- 
childs: James Speyer, the National City Bank and four 
other extremely powerful national banks. 

In the negotiations with President Cleveland for the 
bond issue, Morgan's emissary and clever man of law 
was Francis Lynde Stetson, who had been regular coun- 
sel for Morgan since 1887. Stetson had been Jacob 
Sharp's attorney at the very time when, in 1884, Sharp 
had bribed the New York Board of Aldermen with 
$500,000 to give him a franchise for a surface railroad 
on Broadway. His activities in Sharp's transactions 
caused him to be subjected to some severe questioning 
in 1886 by the New York State Senate Committee on 
the Broadway Railroad. After Sharp had successfully 
bribed the New York Aldermen, Elkins and Widener, 
who were likewise bribing the Philadelphia Common 
Council and the Pennsylvania Legislature, and who be- 
came multimillionaire street railway magnates, tried 



A BANKING AND RAILROAD GRANDEE 223 

(although for the time unsuccessfully), to lease the 
Broadway Railroad for a term of 999 years, and as an 
earnest of good faith, deposited 10,000 shares of Broad- 
way stock, which they had secured, with Drexel, Mor- 
gan and Company. 10 Morgan knew that every one of 
these shares was the product of bribery, and that the 
whole Broadway franchise had been so obtained. Per- 
haps Stetson's excellent and adroit work for Sharp 
highly commended him to Morgan. 

After Cleveland had been defeated in his candidacy 
in 1888 for a second term as President of the United 
States, he resumed the practice of law, and formed a 
partnership with Stetson. Cleveland was reflected 
President in 1892 ; thereafter Stetson was a frequent and 
confidential caller at the White House. These various 
circumstances were much commented upon, and with 
particular animadversion, when Cleveland was virtually 
charged in 1895 with openly selling out the people 
of the United States to the Morgan syndicate, repre- 
sented by Stetson. 



EIGHTEEN MILLIONS AS A GIFT. 

The situation, then, was this: The syndicate had 
squeezed the United States treasury of its gold; it had 
then compelled a bond issue, and declared that it alone 
could supply the required gold. This was a transparent 
falsehood. Many members of Congress urged Cleve- 
land and John G. Carlisle, Secretary of the Treasury, to 
make the bond issue a " popular " one. By " popular " 
was not meant the mass of the people, who had neither 

10 See testimony of James W. Forshay, president of the Broad- 
way and Seventh Avenue Railroad Company, New York Senate 
Committee on the Broadway Railroad, 1886, 491-492. 



224 HISTORY OF THE GREAT AMERICAN FORTUNES 

gold nor other kind of money, but from the smaller cap- 
italist interests. Cleveland and Carlisle, however, turned 
over the $62,000,000 of four per cent, bonds to the 
Morgan syndicate at the price of 104. The syndicate 
immediately resold the bonds to investors in America and 
in Europe at 118, 119 and 120, clearing, it was estimated, 
in direct profits, about $i8,ooo,ooo. 11 This sum repre- 
sented the sum that would have gone to the Government 
had the sale of bonds been accomplished without this 
intermediary operation. The contract with the Govern- 
ment entirely dictated by the bankers, headed by Mor- 
gan, gave the syndicate, furthermore, an option on all 
bond issues up to October i, following, and allowed it 
to choose its own time to deliver one-half of the total 
amount in gold. 

From every public quarter came the severest denun- 
ciations of Cleveland, on the one hand, and Morgan, on 
the other. Even partisan newspapers and periodical 
supporters of Cleveland condemned the bargain as scan- 
dalous, and declared that the Government had been 
shamelessly " buncoed," if, indeed, no worse charge could 
be brought against its chief executive. 12 His own polit- 

11 The bond contract made with the Government, on February 
8, 1895, was kept secret for some days. After the issuance of 
the bonds, Morgan personally superintended the receipt of the 
bids at his office. The rush to buy bonds from him was so 
great that twenty-two minutes after the bidding began, he an- 
nounced that no more bids would be received; that the whole 
supply of bonds had been sold. 

12 Hardly had the gold reserve obtained by this $62,000,000 
bond issue been obtained, than it was again quickly drained by 
the bankers. In the latter part of 1895, sinister rumors spread 
that a new bond issue was under way. These rumors were con- 
firmed by the issuance of a private circular by J. Pierpont Mor- 
gan and Company, announcing their purpose to form a syndi- 
cate to take over an expected additional issue of $200,000,000 
Government bonds. Morgan and his associates anticipated a 
profit of $20,000,000. Evidently, Morgan knew the precise 
amount the Government intended to borrow; when the Govern- 



A BANKING AND RAILROAD GRANDEE 225 

ical party repudiated Cleveland. But a significant in- 
sight into the indifference with which the great magnates 
viewed storms of criticism was furnished by the fact 
that Morgan ignored the denunciation of his acts, yet 
deeply and openly resented a published description of 
himself as a " ruby-visaged magnate." He was very 
sensitive as to his facial deformities. 

So far as strictures on his acts went, they soon passed 
away, and the very journals which had been foremost 
in verbally flaying him, reverted to their old sycophantic 
policy of extolling him as an illustrious financier and 
philanthropist. Of all the magnates, none had a more 
biting contempt for the newspapers than Morgan. None 
knew better than he that whatever outbreak they might 
occasionally make, their course on the whole could be 
easily controlled by the great propertied interests. 



NOTHING FOR THE UNEMPLOYED. 

To realize, however, the full import of the action of 
the Government in this particular bond sale, by which a 

ment issued its call, its terms corresponded with those of the 
Morgan circular issued one week earlier. Such a public uproar 
resulted, that Cleveland and his Cabinet were compelled to 
throw over the Morgan syndicate, and the new loan was " pop- 
ularly floated," at a saving to the national treasury of $20,000,- 
ooo. 

It need scarcely be remarked, as a typical and memorable 
fact, that in his official correspondence and public statements, 
Morgan was representing himself as actuated by "patriotic con- 
siderations " and a desire to serve " the best interests of the 
Government and the people ! " One Wall Street broker, in a 
public statement, cynically described it as " fascinating and lucra- 
tive patriotism." When Morgan was planning to get hold of 
the new $200,000,000 loan, a banking friend asked whether he 
could not have some details of the syndicate's plans before sub- 
scribing. " Can't give you any particulars," Morgan was quoted 
as responding. "If you want to make some money and have 
got the gold, subscribe. If not, au revoir." 



226 HISTORY OF THE GREAT AMERICAN FORTUNES 

present of fully $18,000,000 was made to a few bankers 
already surfeited with wealth, it is necessary to recall 
the conditions among the mass of people, especially 
after the panic of 1893. In normal times, according to 
the estimate of Carroll D. Wright, for some years United 
States Labor Commissioner, the number of unemployed 
at any one time was about 1,000,000 men, women and 
children. After the panic of 1893 the number reached 
perhaps 3,000,000. Not a finger was lifted by the Gov- 
ernment in the aid of any of these, nor was the remotest 
consideration given to means for alleviating this misery 
or to the causes producing it. Repressive measures were 
used to suppress street meetings of protest, and leaders 
of labor unions were flung into prison on the alleged 
charge of contempt of the Federal courts. Only the 
year before, in 1894, the regular army had been ordered 
out by Cleveland against the railroad workingmen on 
strike. Nowhere and in no respect did Government do 
other than carry out the demands made by the great cap- 
italists who dominated all of its functions. 



CHAPTER X 
MORGAN THE " PEERLESS CAPTAIN OF INDUSTRY " 

With the advent of the year 1898 an epochal move- 
ment for the consolidation and centralized ownership of 
transportation systems, industries, public utility plants 
and mines set in. The trust era was now in irresistible 
swing. After a warfare of nearly thirty years in the 
courts and in the active political and industrial arena, 
the middle class found itself completely frustrated. 

Eight years previously, in 1890, what was exuberantly 
heralded as a notable triumph had been secured in New 
York State. The courts there had declared the Sugar 
Trust illegal under the common law provision that no 
corporation, through its stockholders or otherwise, had 
power to give over its rights, powers and duties to a 
board of directors. 1 

The middle class jubilantly declared that no trust 
could survive so fundamental and sweeping a decision. 
But a new surprise was in store for that class. Instead 
of showing any trepidation or preparing for their dissolu- 
tion, such trusts as were then in existence received the 
decision with most irritating equanimity, and serenely 
proceeded to perpetuate their corporate selves by don- 
ning a new legal garb. They not only continued to wax 
great and powerful, but the Sugar Trust, in particular, 
with the Havemeyers at its head, carried on continuously 
a colossal system of frauds upon the Government in the 

1 The People of the State of New York vs. The North River 
Sugar Refining Company, 121 N. Y., 582. 

227 



22& IIISTORV OF THE GREAT AMERICAN FORTUNES 

fraudulent weighing of imported sugar. These frauds 
extended over a long series of years, and it was estimated, 
when the facts became public in 1909, that the amount 
of which the Government had been thus defrauded 
reached fully tens of millions of dollars. 2 In addition to 
these monumental swindles, the Sugar Trust continued so 
absolutely secure in its monopoly that it was easily able 
to crush all competitors, dictate tariff schedules, and 
extort, in the course of trade, an annual profit placed by 
some authorities at $55,000,000 a year, or a total of 
$660,000,000 in profits in the period from its organiza- 
tion to 1909. 

Speaking in a large political sense, a last stand was 
made by the middle class in the Presidential campaign of 
1896. That was its great, although not really final, 
attempt to defeat the plutocracy, and conquer the powers 
of government for its own policies. Under the leader- 
ship of Bryan the Democratic Party declared itself radi- 
cal and tremendously and sincerely earnest, but its so- 
called radicalism was in essence a reactionary futile ef- 
fort to extinguish the trusts and reestablish the old con- 
fusing competitive conditions in the production and dis- 
tribution of goods. It was a bitterly-contested campaign 
in which immense sums of money were corruptly dis- 

2 After the Government had proved beyond dispute the com- 
mission of these great frauds, the American Sugar Refining 
Company, as heretofore noted, paid more than $2,000,000 to the 
Government in April, 1909, as restitution for its swindles. But 
this $2,000,000 covered only a mere part of the long-continuing 
frauds. None of the beneficiaries of these thefts were punished ; 
the punishment of a few obscure customs weighers and some 
of tne trust's employes was the only action taken. ^ The di- 
rectors of the Sugar Trust were also indicted in 1909, it is true. 
The indictment, however, was not for the customs frauds, but 
for violating the Federal anti-trust act a meaningless indict- 
ment, conviction upon which carries, in practice, a nominal fine 
only. 



"PEERLESS CAPTAIN OF INDUSTRY" 229 

tributed by the money interests of the Republican Party 
to defeat Bryan and the middle class. 



THE PLUTOCRACY IN FULL POWER. 

McKinley's election as President of the United States, 
with a Congress the majority of which was of his views, 
was a distinct notification that the plutocracy was in full 
power a power won in a pitched combat, and there- 
fore interpreted as a popular approval of the rule by 
great magnates and trusts. 

Henceforth, it was well understood, the trusts need fear 
no govermental antagonism, even of a sham order; for 
while mock legal actions at no time impaired the basic 
sway of the trusts, yet they caused constant annoyances 
and expense. 

When McKinley took office magnates of every descrip- 
tion knew that the trust movement had full license, con- 
firmed by private bargain, to go on unhindered and un- 
molested, except, perhaps, with an occasional inroad for 
spectacular popular effect. Consequently the business of 
organizing trusts flourished in the open; one trust after 
another was formed embracing about every known prod- 
uct. The work was carried on with phenomenal celerity 
and success. The middle class looked on impotently 
while factories, railroads, gas and electric plants, street 
railway lines, telephone systems and mines were con- 
verted from a state of individual or mere corporate owner- 
ship into the trust form, owned by great single corpora- 
tions with stupendous amounts of capital, and with 
dictatorship over vast masses of workingmen. 

In this revolutionary work, that of organizing trusts, 
J. Pierpont Morgan was one of the foremost generalissi- 
mos. Indispensable as it is in this work to describe the 



230 HISTORY OF THE GREAT AMERICAN FORTUNES 

methods by which he requisitioned his wealth, it is no 
less necessary to point out the services that he and his 
kind were doing for progress. In the exclusive considera- 
tion of progressive movements, it is immaterial what the 
motive was ; the thing done is all that counts historically. 
None can deny that these revolutionary capitalists were 
actuated wholly by ambitiously personal ends : greed, pelf 
and the lust of power. But after all they were revolu- 
tionists without knowing it, and precisely the sort of 
capitalist revolutionists needed at that particular time. 

Strong, ruthless men, bold in cunning and cunning in 
their boldness, were required for the work of crushing 
out the old cut-throat, haphazard, individualistic com- 
petitive system. That sluggish, money-grabbing, petty- 
minded body, the middle class, preoccupied with the com- 
fort of its belly and with its narrow conventions, had set 
its self-interest against the demands of progress. It de- 
clined to budge; it hedged itself behind walls of special 
laws ; it sought to make matters travel backward. Under 
these conditions Morgan and his colleagues were the men 
for the task; forceful, dominating, arbitrary men, not 
scrupling at any means to attain their ends, contemptuous 
enough of law when it stood in their way, and powerful 
enough to defy it. Very expert destructionists were 
they. But they were also constructionists. They tore 
down to build up. A decayed, archaic industrial system 
they replaced with one of a far more systematic order, 
the forerunner of finer systems to come. Progress often 
works through queer instruments. 

In the years closely following 1898 Morgan was 
especially prominent in many of these trust creations. 
An ubiquitous magnate he was, pushing his industrial 
conquests and overlordship in many variegated direc- 
tions. Each accumulating success added millions of dol- 



231 

lars to his fortune. With a choice list to select from, 
what brilliant display of his financial acumen shall we 
take up first? Consecutively, the most pertinent is that 
noted Pennsylvania Coal Company transaction of his. 



THE UNFAILING RECIPE FOR MAKING MONEY. 

The plan which he had begun some years before of 
gathering in coal mining properties and coal carrying rail- 
roads, and of merging them into a combination, he per- 
sistently continued. The most important of all of the 
remaining independent companies in the Pennsylvania 
anthracite region was the Pennsylvania Coal Company. 
It controlled some of the most valuable mines in the 
center of the richest deposits. While paying wretched 
wages to its workers, it had for years been reaping 
sixteen per cent, dividends on a capital of $5,000,000. 
Stowed away in its treasury it had, in the form of a 
surplus, a fund of $10,000,000. 

Here was a noble opportunity. Could any alert 
financier withstand the temptation? As soon as Morgan 
acquainted himself with the attractive facts, a plan of 
campaign speedily developed. He sent agents to scour 
the northeastern region of Pennsylvania, with orders to 
pay any price demanded for shares of the Pennsylvania 
Coal Company. Unobtrusively these discreet emissaries 
went about their mission. For months they traversed 
Pennsylvania, finally getting enough stock to insure Mor- 
gan's control, for which stock an average price of $532 
a share was paid. 

What did Morgan next do? He sold the property to 
the Erie Railroad Company for $32,000,000. This pay- 
ment was in the form of four per cent, collateral trust 
bonds secured by mortgages on the Pennsylvania Coal 



232 HISTORY OF THE GREAT AMERICAN FORTUNES 

Company's property and by the New York, Susquehanna 
and Western Railroad, a line acquired a short time 
previously by the Erie. Nor was this all; an issue of 
$5,000,000 of preferred stock was thrown in. But who 
controlled the Erie Railroad? The eminent J. Pierpont 
Morgan. As an individual he bought the coal property, 
and then, as dictator of the Erie Railroad, decided what 
he should be paid for it. 

" Criticism/' observed the Industrial Commission, with 
the dainty restraint characteristic of all such euphemistic 
official reports, " has been directed against this operation 
on the ground that the price paid by the Erie Railroad 
to J. P. Morgan and Company was excessive. Testi- 
mony before the Industrial Commission indicates this 
was in fact the highest price paid for such properties in the 
history of the business." 8 What this Commission feebly 
and so gently dismissed as " criticism " was, in reality, 
a general growl of indignation at Morgan's ease and 
audacity in calmly transferring to himself millions of 
dollars in so-called " profits." It was of this kind of 
transaction and similar varieties that the Industrial Com- 
mission elsewhere relieved itself of this declaration: 
" The possibilities of fraudulent profit are something 
enormous under such conditions." * For once, in mak- 
ing this clear statement, the Industrial Commission almost 
overcame its habitual timidity of phraseology, and called 
things by their true names. Yet what availed it to say 
that fraud was fraud when the beneficiaries were not even 
questioned by law ? The amount pocketed by Morgan in 
this performance cannot be learned. " To what extent 
the bankers' profit rose," the Industrial Commission sat- 
isfied itself with reporting, " was not developed in the, 

8 Final Report of the Industrial Commission, xix : 45^-460, 
*Jbid., 326, 



233 

testimony before the Commission." 5 We may well judge 
that the profit could be estimated in millions. 



THWARTED BY A GREATER MAGNATE. 

While in control of the Erie Railroad, so rich with 
memories of Jay Gould's frauds and thefts, Morgan un- 
expectedly, and to his deep mortification, ran plump into 
his first great defeat. It came about in his attempt to 
put through a railroad juggling operation. Had it been 
successful he would have been able to appropriate the 
bulk of at least $10,000,000 in " profits." The plan was 
the typically fraudulent one common among the magnates 
of buying in a railroad and then unloading it (to use 
the financial slang of the day) upon a trunk railroad 
system controlled by both buyer and seller. 

Morgan had secured a controlling interest in the Cin- 
cinnati, Hamilton and Dayton Railroad. This line was 
composed of a number of former separate railroads and 
of various leased railroads. On September 20, 1905, the 
Erie Railroad bought this interest from a syndicate 
headed by J. P. Morgan and Company. The Erie direc- 
tors, all registers of Morgan's orders, authorized the 
issuing of $12,000,000 of four per cent, bonds, convert- 
ible into Erie common stock at 60, to pay Morgan for the 
Cincinnati, Hamilton and Dayton Railroad. Thus far the 
program had slipped on smoothly. 

Suddenly came evidences of the most powerful opposi- 
tion from quarters commanding obedience. Notice was 
served that the Erie directors must revoke their action. 
If they refused, costly reprisals would follow not only in 
litigation but by the application of a pressure that they 
could not resist. From whom did this mighty edict come ? 

5 Final Report of the Industrial Commission : 460. 



234 HISTORY OF THE GREAT AMERICAN FORTUNES 

Who was the awe-inspiring magnate that could frighten 
Morgan into retreat? 

His identity never came out publicly, but the sur- 
mise was rooted in Wall street that he was none other 
than E. H. Harriman. The belief prevailed that Har- 
riman, representing the Standard Oil oligarchy, was seek- 
ing to get control of the Erie Railroad himself, and that 
it was to his interest at that particular juncture to thwart 
Morgan. The sequel has borne out that conviction: the 
Erie Railroad later passed under Harriman's control. 6 
Whatever was the nature of the secret means used to 
compel Morgan to face about, and whoever it was that 
used them, they were entirely effective. The Erie di- 
rectors meekly rescinded their action, and the prospec- 
tive $10,000,000 in " profits " vanished like a dream. 



A TISSUE OF SEQUELS. 

What became of Morgan's Cincinnati, Hamilton and 
Dayton Railroad after he was forced to take it back? 7 
This system, which he had been on the very point of 
selling to his Erie Railroad at a price so extravagant as 
to cause astonishment even among the veteran manipu- 

8 In a list made public by the Interstate Commerce Commission 
in January, 1909, of the large railroad stockholders, J. P. Mor- 
gan's name did not openly appear as a stockholder of the Erie 
Railroad. But Walter B. Horn, a clerk in his office, was credited 
with holding $14,502,600 of its stock, and the firm of J. S. Mor- 
gan and Co., of London, about $2,000,000 worth. Harriman 
secured control of the Erie Railroad in 1909. 

7 "Moody's Manual" for 1908 (page 230) thus skims over this 
affair : " In September, 1905, the Erie Railroad Company ac- 
quired a controlling interest in the stock of this company [the 
C, H. & D. R. R. Co ] and the jurisdiction of the Erie offi- 
cials was extended to the lines of this company; but in Novem- 
ber of the same year Mr. J. P. Morgan relieved the Erie Rail- 
road Company of all its obligations in the matter and the C, 
H. & D. officials resumed the operation of their lines." 



235 

lators, was thrown into bankruptcy in about a month 
after the attempt had fallen through. 

On December 4, 1905, Judson Harmon, one of ex- 
President Cleveland's intimates, was appointed receiver 
of the railroad, including its auxiliary lines, the Pere 
Marquette Railroad and the Toledo Railway and Ter- 
minal Company. Years of litigation followed. One as- 
pect of these legal fights was the charge in court that 
Morgan had used fraud in getting back, into an owner- 
ship more absolute than before, this Toledo Railway and 
Terminal when it was sold in bankruptcy. The lesser 
stock and bondholders furiously protested against the 
species of reorganization that virtually deprived them of 
their holdings and struck their bits of wealth from them. 
But although they harried Morgan by a series of law- 
suits, he swept them inexorably out of his way. And 
with what net result? Under his distinguished plan of 
reorganization, so styled, the new stock issued will be 
tight-handedly bound up for seven years in a voting 
trust of which Morgan will have dictatorial control to do 
as he minds with the Cincinnati, Hamilton and Dayton 
Railroad. Moreover, absurd as it may seem, his com- 
mission for " reorganizing " the railroad in such a man- 
ner as to force out the small stockholders and concen- 
trate ownership largely in himself, will probably be sev- 
eral million dollars. He stands, therefore, partially, if 
not virtually, recouped for the evaporation of that 
$10,000,000 in 1905. 

In colloquial parlance, this " freezing out " of small 
capitalist stockholders has been one of the most conspic- 
uous and inevitable accomplishments of the triumphant 
progress of our magnates. We have remarked how the 
Vanderbilts, Jay Gould, Sage, Huntington and other 
money kings did it. At every turn of the screw these 



236 HISTORY OF THE GREAT AMERICAN FORTUNES 

small parasites nonentities when compared with the 
great grandees would emit a dolorous wail, burst out 
into lamentations and accusations of fraud, and appeal 
for sympathy and succor. So long as they could defraud 
others, and reap wealth out of the sufferings and deg- 
radations of the working class, all was properly blissful. 
When they profited from fraud it was " good business," 
but when fraud was used against them it was denounced 
as criminally pernicious. 

In disposing of them no magnate was more proficient 
than Morgan. In 1903 the stock of the Chicago North- 
western Railroad was selling at the market price 
of 29^, and a large number of persons of means mer- 
chants, professional people, legatees and others held 
shares of that stock as an investment. 

The railroad was then put through the usual astring- 
ent process of " reorganization." In all of these re- 
organization devices, reasons are found for levying a 
heavy assessment upon the stockholders. These levies 
are for the ascribed purposes of paying the expenses 
of the " reorganization," legal expenses, advertising, 
and millions in commission to the reorganizers. The 
assessments are frequently so onerous that the minor 
stockholders cannot afford to pay them ; consequently, by 
explicit provision, their stock becomes forfeited. From 
29^ the stock went down to $i (July, 1909) ; and what 
with declines of price and assessments thousands of in- 
dividuals have been forced to part with their stock. 
Who got hold of that stock? The question is really 
superfluous. The stock was put into a " voting trust," 
with autocratic power for five years, and in command 
over all stands Morgan. 

This stamping out of crowds of relatively small 
stockholders went on so constantly that it finally became 



" PEERLESS CAPTAIN OF INDUSTRY " 237 

somewhat of a routine matter, so far as public interest 
was concerned. Only on some exceptional occasion, 
when it was blended with what were considered dramatic 
circumstances, did it call forth uncommon notice. But 
while each of the magnates was busily flinging out these 
hindrances and expropriating their property, he had to 
be on ceaseless guard against the incursion of some other 
magnate or of a combination of magnates. Incessant 
vigilance was imperative. 

The warfare was necessarily a complex one, with its 
paradoxical aspects. The magnates fought the working 
class, and the working class fought back, sometimes ag- 
gressively, at other times on the defensive. Toward the 
middle class, however, the magnates were forced to use 
a double objective set of tactics. They had to crush the 
middle class and take its property away, either by direct 
spoliation on the one hand, or on the other, by inveigling 
its elements into investing their funds in great stockjob- 
bing enterprises which subsequently turned out to be 
adroit swindles. In surveying this war of the classes the 
most remarkable phase has been the ease with which the 
great moneyed interests have traded on the shortsighted 
cupidity of the middle class. With the naive expecta- 
tion that the magnates would fraternally and benevo- 
lently create riches for it, the middle class has poured 
its collective wealth into their schemes, only again and 
again to find that very wealth wrenched from it, and 
used to bring about its extinction as a class. 

Surmounting these forms of the conflict in society was 
the titanic warfare among the magnates to hold back 
one another or to seize from the other spoils each had 
seized from the multitude below. When the interests 
of these lords of finance and industry clashed, then the 
thunderbolts flew. 



238 HISTORY OF THE GREAT AMERICAN FORTUNES 

Such a battle notably occurred in 1901. From what- 
ever point of view it is considered, sociologically, philo- 
sophically or historically, it was an event full of curious 
instruction. It symbolized a new order of things; be- 
tween it and the times when feudal dukes and barons 
and kings rushed to arms to settle their quarrels of self- 
interest, lay a long and broadening gap. These modern 
battles also carry their wake of ruination and death, but 
it is so indirect as not to be outwardly observable. The 
weapons are money, reinforced by cunning and fraud; 
very powerful weapons which none in these days have 
been able to withstand. Under the old system the feudal 
lord lost caste if he did not fight in person ; success might 
often mean his own death. But no bodily risk is entailed 
to confronting money monarchs of these present happy 
days; they can make wealth fight for them in the stock 
markets; and if, perchance, it becomes necessary for 
them to determine their quarrels with capitalists of other 
countries by force, they can impress, through their gov- 
ernments, the working class, led by men trained by those 
governments in the art of slaughter, to do their fighting. 
Happen what will, their hides are safe. 

A BATTLE OF MAGNATES. 

The daily routine budget of news in May, 1901, was 
suddenly enlivened by the reports that an array of great 
magnates had rushed headlong into a fractious conten- 
tion. There was unwonted commotion in high places. 
Morgan, James J. Hill, the Rockefellers and Harriman, 
the Vanderbilts and other superlative eminences were 
entangled in warfare. Here was rousing news, indeed. 
What was the meaning of this furor among the exalted? 
How did it begin and where would it end? 

The cause was Hill's attempt to undermine the in- 



239 

terests of the other magnates concerned. Obviously this 
was an act properly calling for retaliatory measures. To 
his autocracy over the Great Northern Railroad, a line 
extending through the Northwest and Canada, Hill had 
recently added a leading interest in the Northern Pacific 
Railroad, which traversed parallel territory. The incep- 
tion and construction o-f the Northern Pacific Railroad 
were replete with the usual corruption and jobbing, and 
with thefts of vast areas of agricultural, timber and 
mineral lands. This corruption will be hereafter dealt 
k with. Plundered by various financiers, the Northern 
Pacific had been forced into bankruptcy. Hill had then 
obtained control. 

His vista now widened. Why should he not have a 
direct share of the immense traffic converging at Chi- 
cago? To get this, he set out to manipulate himself into 
control of the Chicago, Burlington and Quincy Railroad. 
This move alarmed competitive magnates; they at once 
saw how the interests of their railroads in the North- 
west and West would certainly be jeopardized. How 
could they ward it off, or at least neutralize its results? 
The most feasible plan presenting itself was to attack 
him on his own ground. With good strategy they be- 
gan buying Northern Pacific stock. This would give 
them a voice in one of his own railroads. While Har- 
riman, supported by the Standard Oil oligarchy, was 
doing this, Hill was straining himself to buy in more and 
more Northern Pacific stock, and Morgan was deep in 
the stockjobbing fray to safeguard his own extensive 
interests. 

A PANIC CAUSED BY THEIR COLLISION. 

With the very richest and most powerful men in 
America scrambling for Northern Pacific stock, its mar- 



240 HISTORY OF THE GREAT AMERICAN FORTUNES 

ket price shot up to an astonishing figure. Five months 
previously it had been in a rut at 58 ; it now rose some- 
times as much as twenty-three points a day, reaching 
$300 a share, and for a part of one day, $1,000 a share. 
A " corner " surpassing in magnitude any previously 
known in railroad stock resulted. " The sacrifices neces- 
sary to secure funds for covering contracts," says the 
Industrial Commission, " precipitated a panic of wide- 
spread proportions." 8 Thousands upon thousands of 
lesser stockholders of other railroad securities were 
caught in the whirligig and ruined; as fast as the quo- 
tations of Northern Pacific stock went on increasing, 
those of other railroad stocks precipitately declined. 

The upshot of this warfare might have been expected. 
The Standard Oil clique came out of it with augmented 
dominancy, and with added power in a region where 
previously it had not been so strong. While the country 
resounded with the mournful outcries of a scattered host 
of petty stock speculators, clawed out of their insignifi- 
cant fortunes, the contending magnates amicably decided 
to arrange a new understanding. The disputed territory 
should be nicely partitioned among them, and affairs 
would be made tranquilly satisfactory. A " gentlemen's 
agreement," otherwise phrased " a community of inter- 
est," would cement their brotherly relations. Such a 
covenant would choke out competition, and simplify and 
enlarge the pleasant work of squeezing more tribute 
from the people. 

Who was to be chosen as arbiter? Whose was the 
just mind to be entrusted with the selection of the new 
directors of the Northern Pacific Railroad? Morgan 
was the man chosen for the adjustment. No vague 
" gentlemen's agreement " for him however, when some- 

8 Final Report of Industrial Commission. xix:3l7. 



241 

thing better could be substituted. He conceived the idea 
of a huge holding company, an incorporated body to hold 
title to both the Great Northern and the Northern Pa- 
cific railroads. The Northern Securities Company was 
thereupon organized with a capital of $400,000,000. 

Upon the announcement of this, the people of the 
Northwest bestirred themselves in vehement protest. 
Were they not oppressed enough already? So crushing 
a monopoly must not be permitted, they declared; it 
would hold them in absolute thralldom; suit must be 
brought to void it. The United States Government did 
bring such a suit and pressed it. The motive for the 
great energy and ability shown in its prosecution has 
never been made clear. Was it to the secret interests of 
certain powerful magnates to break up the Northern 
Securities Company? The Supreme Court of the 
United States decided that it was an illegal corporation. 
But and these buts always supervene although the 
company formally and decorously disolved, the principle 
upon which it was formed practically remained in force 
by virtue of another " gentlemen's agreement." The 
court mandate was one thing; its enforcement against 
the fundamentals, quite another. But the form of dis- 
solution had been gone through and the law thereby was 
considered satisfied. 

Thus, this decision, hailed by the middle class as a 
critical defeat for the trusts, was after all nothing but 
empty phraseology. Even while these opponents of the 
trusts were gleefully praising the Supreme Court of the 
United States as " the bulwark of freedom of trade," 
the trusts caused Congress to enact a law which knocked 
over the main prop upon which the middle class had been 
depending in its war upon the great centralized corpora- 
tions. 



242 HISTORY OF THE GREAT AMERICAN FORTUNES 

For more than a decade trust organizers had been 
confronted with a national law decreeing fine or im- 
prisonment or both upon conviction for engaging in any 
act in restraint of trade. None had gone to prison, nor 
controlling the entire functions of government, as they 
did, was there any prospect of the visitation of such a 
punishment. But the imprisonment clause was a con- 
stant irritant; why have it on the statute books when it 
could easily be obliterated? And why not also have a 
specific declaration of immunity? A solitary provision 
calling for fine in case of conviction, the magnates did 
not mind at all. It would give an appearance of defer- 
ring to public sentiment and, at the same time, could be 
well regarded jocularly by those at whom it was directed. 
When trust magnates were gathering in immense sums 
from illicit acts, what did a fine of a few thousand dol- 
lars matter? It was too trivial to bother over. Besides, 
even if the fine, by some extraordinary possibility were 
made heavy, it could be assessed, in turn, upon the con- 
sumer. 



COMPLETE IMMUNITY FOR THE MAGNATES. 

That annoying imprisonment clause, however, had to 
be thrown out of the laws, and it deviously was by an 
act passed by Congress in 1903. Concurrently, the same 
act reasserted and amplified the principle of granting 
immunity to trust officers. No matter how much or how 
often they violated the anti-trust laws, they were now 
absolutely secure from any possibility of prison sentence. 

The Government might examine them with the great- 
est pretended inquisitiveness, and in the process draw 
out the most self-incriminating admissions, but this evi- 
dence as testimony could not, by the act of 1903, be used 



243 

against them in the trial of any criminal proceeding. 
Not only was the individual exempted; the corporation 
itself was distinctly relieved from prosecution for any 
penalty or forfeiture. 

The triumph of the trusts was now intrinsically com- 
plete. 



CHAPTER XI 
MORGAN AT HIS ZENITH 

By the end of the year 1902 J. Pierpont Morgan, reck- 
oning by appearances, seemed to outrank every other 
American magnate ; scarcely a day passed that the news- 
papers did not report some new achievement of his, or 
obsequiously render tribute to his ever-expanding power. 
In the public appraisement he bulked as a supervitally 
preponderant man, a figure standing out with an im- 
mense and peculiar distinction, eclipsing the most obtru- 
sive political and industrial functionaries. 

Contrasted with him, ostensible political rulers were 
innocuous ephemeral personages. For a time they 
might vociferously command attention, but their encumb- 
ency was dependent upon the will of the magnates, and 
they were pushed up or pulled down as suited the policy 
and purposes of the great propertied interests. A long 
array of " eminent statesmen " had shuffled into solemn 
view, and for a while had been the cynosure of the 
nation, and then, like exploded rockets, had dissappeared 
into obscurity, or into a state akin to it. Yet, in an- 
other aspect, brief and borrowed as was their power, 
theirs was not the portion of oblivion ; conventional his- 
tory, which accepts the apparent as the real, documents 
and often perpetuates their names, ignorant of the fact 
that they were only the servers or servitors of particular 
impelling forces and interests. 

244 



MORGAN AT HIS ZENITH 245 

Behind the nominal political masters stood the real 
masters the great magnates. 



HISTORICAL OMISSIONS AND MISJUDGMENTS. 

Seeing that this is so, what vitally boots it whether 
this or that individual happened to fill the so-called great 
elective or appointive offices? In stereotyped historical 
textbooks and narratives the names of J. Pierpont Mor- 
gan and his like do not enter ; not even a cursory glimpse 
is given of their deeds. Yet, in large part, these are the 
significant things that fundamentally have made actual 
history. Rulers have been allowed to make formal dec- 
laration of wars, but capitalists have commanded them. 
When it pleases the interests of capital to have peace, 
titular rulers are ordered to arrange it. Should rulers 
be so obtuse or stubborn as to stand in the way of capi- 
talist interests, revolution follows. If, in a parliamen- 
tary country laws are somehow enacted contrary to the 
interests of the dominant capitalist class, those laws are 
effectively voided. All of which proves that, although 
presidents, kings and emperors may mightily pose as the 
" creators of policies," yet after all they are only the 
sounding-board creatures of money forces unnoticed by 
orthodox histories. 

An overbearingly potent and heroic "great man" 
Roosevelt appeared; many a descriptive work has been 
written of him; and doubtless, in the curious nature of 
things, we are likewise fated to see many a statue of him. 
For what? If history tells the tale aright it will tell how 
he begged campaign funds from the very trust magnates 
whom he pretended to flout ; how, in a critical moment in 
the national election of 1904, he so despaired of success 



246 HISTORY OF THE GREAT AMERICAN FORTUNES 

that he was forced to appeal to Morgan, Harriman and 
their fellow magnates for a fresh and immediate infusion 
of funds. The world does not revere a loser, unless he 
be a great one, and for a great cause. In considerable 
degree, Roosevelt fought the fight of a rapidly-decaying 
cause, that of the middle-class, a cause doomed to fall 
ignobly, and rightly so. On the surface he seemed the 
" big man " of the day ; in point of fact, he was van- 
quished by such magnates as Morgan, Harriman and 
Rockefeller. They, to all appearances mere private in- 
dividuals, defeated every move of him who was supposed 
to be invested with even greater powers than many po- 
tentates. 

The irresistible progress of the trust movement and 
the all-comprehending power of the magnates, can be 
better estimated when it is recalled that it was during 
Roosevelt's administration that the most antagonistic 
campaign thus far essayed against the trusts was carried 
on. 1 At least it seemed so if invective and suits at law 
counted. But, at basis, Roosevelt, despite his pretenses, 
was an instrument of the trust magnates, which fact was 
connoted anew by the circumstance that he was the Presi- 
dent who signed the act striking out the imprisonment 
clause from the anti-rebating act assuring magnates 
and corporations full immunity from criminal prosecu- 
tion. 2 

1 That is, against the " bad " trusts. How even the outward 
acts of officialdom were being made to conform to the interests 
of the ruling class was shown by the growing tendency to ac- 
cept some trusts as " good," and so arraign others as " bad," al- 
though all trusts subsisted in violation of statute law. 

2 " Courage, honesty and the saving grace of common sense, ac- 
cording to Mr. Roosevelt, are the three things that will make men 
great," . . . wrote A. Maurice Low in "The Independent," 
issue of October 30, 1902. While thus humbly imploring the 
magnates for funds with which to finance his campaign, and 
relieving them by law from imprisonment, Roosevelt took spe- 



MORGAN AT HIS ZENITH 247 

It was proved again during the great coal strike of 
1902 when Roosevelt was forced to beseech J. Pierpont 
Morgan to consent to some kind of arbitration settlement. 
True, indeed, Roosevelt, or those inspired by him, could 
darkly intimate that it were well for the coal magnates 
to come to terms; otherwise they might suffer criminal 
prosecution for violation of the act forbidding railroads 
from owning coal mines. But the magnates, well realiz- 
ing how often they had heard this clap-trap sort of talk, 
and how empty and futile it all was, could pass it over 
with amused contempt. Then came the sight of the 
President of the United States, theoretically representing 
85,000,000 of people, being compelled to parley and treat 
with a few magnates on their own terms. " The one 
man who controlled the operators," wrote A. Maurice 
Low (who, unquestionably, was one of the best informed 
newspaper correspondents at Washington), "was Mr. J. 
Pierpont Morgan. Everything else having failed his 
services had to be enlisted." Morgan instantly showed 
that he had the power of doing what the President of the 
United States acknowledged that the highest executive 
in the country in his own person could not do a fact 
moving Low to exclaim reverentially (as quoted hereto- 
fore) : " Great is Mr. Morgan's power, greater in some 
respects even than that of Presidents or Kings." Roose- 
velt could publicly boast of his having settled that strike, 

cial occasion in 1907 to prejudice public opinion against Moyer, 
Haywood and Pettibone, officers of the Western Federation of 
Miners, when they were in prison awaiting trial. They were 
later acquitted of the trumped-up charge of murder brought by 
powerful capitalist interests in order to discredit and break up 
the progressive labor organization of which they were the heads. 
Certainly, Roosevelt was extremely courageous in attacking the 
weak, and those from whom he could expect no support or 
funds. A more overestimated man, nor one who more success- 
fully befooled the people by sheer talk, has not lived in recent 
times. 



248 HISTORY OF THE GREAT AMERICAN FORTUNES 

yet, in point of actual fact, Morgan shrewdly used 
Roosevelt to bring about a settlement at the time when 
the magnates decided it was politic, and with a result the 
most favorable that they could hope for in the particular 
alarming exigency. 3 

Morgan's lofty, surmounting status at this time did not 
arise from any misconception that he was the richest man 
in the United States. That prepotency John D. Rocke- 
feller could easily claim and hold. But Morgan was so 
unceasingly before the public in some activity or other, 
and was so preeminently conspicuous in the organization 
of railroad combinations and industrial trusts, that, con- 
sidering all aspects, he was looked upon as perhaps the 
most important of the magnates. 

This was a popular deception, and was caused by the 
difference in tactics between Morgan and the Standard 
Oil oligarchy. The Rockefellers and their associates 
systematically discouraged publicity as to their business 
transactions; in all of their operations they cultivated 
the profoundest secrecy and took exceeding pains not to 
acquaint the people with the real extent of their posses- 
sions, nor with the methods by which they were gradually 
drawing into their ownership the resources of not only 
one nation, but of many nations. Working through aux- 
ilaries or intermediaries they were converting much of 
the United States with its assets, including human labor, 

3 Low says: "Here was the situation in a nutshell, which 
had been discussed by Mr. Morgan and Mr. Root during the 
five hours they spent together on the former's yacht on that Sat- 
urday when peace or war hung in the balance: To permit the 
strike to go on meant possibilities that no man wanted even to 
think of. It might mean the opening of Pandora's box. It 
might mean arson and riot and bloodshed in the coal region. 
It might mean even worse in New York city. Already the poor 
were clamoring for fuel, and winter had not even lightly laid 
its hand on the city. It might mean such a state of affairs that 
not the entire army could hold it in check" 



MORGAN AT HIS ZENITH 249 

into their private property, but so surreptitiously was this 
done that they allowed no mention of their conquests to 
be either formally or informally given out. The Stand- 
ard Oil headquarters was an inaccessible citadel of si- 
lence. 

On the other hand, Morgan seemed to glory in the 
ostentation of publicity. Even if he did not, it was an 
indispensable requisite. In his threefold capacity of 
banker, railroad magnate and industrial trust organizer 
Morgan needed a certain amount of inspired publicity 
for the specific purposes of his undertakings. As a 
banker he had to advertise his financing of projects in 
order to dispose of the stock; the more power he was 
credited with, and the more extraordinary a financier he 
was extolled, the easier it was to induce a multitude of 
investors to put their money in enterprises sponsored by 
him. 

RULING 55,OOO MILES OF RAILROAD. 

Between Morgan, the precocious young money zealot 
of 1861, successfully imposing spurious rifles upon the 
Union army, and Morgan the incommensurable magnate 
of 1902, lay a long span of some forty years. For four 
decades he had incessantly campaigned for great wealth ; 
thousands of Wall street aspirants, ambitious to reach 
the same goal, had outstrained themselves during that 
time only to go down in abject failure. Everywhere 
Morgan could see, as he advanced, the immediate wrecks 
upon whose misfortunes much of his fortune was built. 
And what were the cumulative results of his life of 
money-seeking? Of the properties he owned otherwise, 
there is no definite authentic record, but the extent of 
his railroad possessions can be ascertained. Moody 
wrote that in 1902 he was " identified with " 55,000 miles 



25O HISTORY OF THE GREAT AMERICAN FORTUNES 

of railroad.* " These," Moody explained, " control rights 
of way, coal lands, terminals, competing lines, steamship 
connections and the like." 

Further attention need not be given to his methods of 
acquiring railroads. His railroad transactions, large as 
they were, became somewhat obscured by his still greater 
trust-forming operations. " Mr. Morgan," Moody fur- 
ther wrote, " is essentially the inspirer, the creator and 
the dominator of current American industrial forces." 
A sonorous sentence, but quite exaggerated. Long be- 
fore that time, John D. Rockefeller had demonstrated 
the principle of the centralization of industry; Morgan 
neither exclusively inspired, created nor dominated; he 
was but one of the leading practicalists in transforming 
industrial conditions from the competitive to the trust 
form. " He is unquestionably," went on Moody, " the 
boldest, the ablest and most far-seeing of any of the 
modern ' generals of finance ' who stand at the head of 
the modern movement for the consolidation idea in the 
production and distribution of wealth. This is easily 
proven by the fact that the enterprises in which his in- 
fluence is paramount to-day are the strongest and most 
ably planned of any of the great combinations or 
4 trusts/ " 5 

Such eulogies as this have a mechanical ring ; they have 
been manufactured almost automatically. That they 
passed unchallenged is sufficient comment upon the 
standards of the day, exemplified by the press as an in- 
stitution for influencing the people. Even the dullest 
critic will observe how lacking in reservations and eluci- 
dations they are. No explanation is vouchsafed of the 
quality of Morgan's " greatness," nor any reason given 

4 " The Truth About the Trusts," 107. 
8 Ibid., 106-107. 



MORGAN AT HIS ZENITH 

why he should be brevetted a " general of finance." The 
assumption evidently has been fixed that these high- 
sounding, all-inclusive, prejudicative assertions would be 
swallowed as truth ordained; and, remarkable as it does 
seem, this has been the brand of truck ladled out for 
consumption by the American people. Fortunately there 
prevails in some quarters a rebellious spirit of free in- 
quiry, which same spirit presses us to know more of 
what a magnate had to do in order to be ranked as a 
" general of finance." 

MORGAN'S ORGANIZATION OF THE STEEL TRUST 

What was the exceptionally strong and ably-planned 
trust to which Moody thus so airily refers? It was the 
great Steel Trust. Need it be remarked that this was by 
no meajjis Morgan's only such progeny? In the organi- 
zation of so many trusts did he participate that the term 
" Morganization of Industry " ran rampant like an ob- 
session. With these other trusts, however, it is hardly 
necessary to deal ; as a crystalline example of Morgan's 
methods, the Steel Trust will doubtless suffice. 

This trust, let it be proclaimed at the outset, was no 
paltry affair of a few hundred million dollars. It was 
an enterprise worthy of the application of a " great 
general of finance." The pen may stumble in writing it, 
but somehow we will contrive to get the fact into print 
that this trust came into being with more than a billion 
dollars capital. And we feel irresistibly constrained to 
linger upon that billion dollars. The ordinary human 
mind is capable of much ; it can let its exuberant imagina- 
tion create heavens and hclN. enchantments and exor- 
cisms, and it can stretch illusion to realms without limit; 
but to conceive of a billion dollars, or rather to visualize 

CORONADO 



252 HISTORY OF THE GREAT AMERICAN FORTUNES 

it, is a task to be forsworn. Quite idle is it for the 
workers to attempt the visualization ; their sole part is to 
produce the billions, not to see them, much less have 
the use of them. Contemplating that billion dollars 
further, we are driven to note the immense progressions 
occurring in the case of a " great general of finance." 
As a downy young man, Morgan was probably content 
with his profits of thousands in financing the selling 
of that batch of condemned rifles to the army; but then 
he was only a mere ambitious fledgling. Yet now, 
namely, in the year 1901, when he organized the Steel 
Trust, he had become a full-fledged " general," and, as 
all men know, no " general of finance " in these days 
is worthy of the name unless he splashes in projects of 
the major hundreds of millions, or billions of dollars. 

In this Steel Trust (or United States Steel Corpora- 
tion, as it chose to call itself) a very large nurnber of 
important plants were gradually merged; plants in many 
parts of the United States, iron plants and steel mills 
and factories of tin products every kind and quality 
of wares made from iron and steel were embraced in 
the production of the plants gathered in under this gi- 
gantic corporation. It was pleased to style itself not an 
owning corporation so much as a " holding company." 
All of the existing plants in the United States it did 
not succeed in taking within its fold, but of those re- 
maining outside, many were large mills allied with it, 
doubtless to give a judicious appearance of competition. 
Others there were of an " independent " order, mills 
antagonistic to the trust and actively bent upon com- 
peting with it. For reasons to be stated later in this 
chapter the Steel Trust had no fear of most of these. 
There was another black prospect for the middle-class. 
Verily, the once infallible doctrine that " competition is 



MORGAN AT HIS ZENITH 

the life of trade/' was sick unto death, and college pro- 
fessors were utterly at a loss to know how to inter the 
corpse decently, when decease finally came. 

Perhaps curiosity may be expressed regarding the 
prior history of these individual steel and iron and tin 
plants; how they became huge, and their owners multi- 
millionaires, before the Steel Trust was organized. Were 
their owners honest men who thriftily saved their pen- 
nies, amassed capital, toiled hard, invented their own 
devices, and were respectable men and legitimate 
traders ? 

Not quite. They were accounted respectable enough, 
but their methods were not a scintilla different from 
those of the capitalists in all other fields, which is to say 
that their respectability was as well founded as that of 
any other capitalist group. Yet this is not the appro- 
priate place to give a detailed account of their careers 
how they and their predecessors thrived on inventions 
many of which they got by chicanery or theft ; how they 
again and again and again bribed Congress for a high 
protective tariff; how they corrupted elections and ruled 
cities and partially State and National Governments; 
how they defrauded the Government before, during and 
after the Civil War ; how the armor mill owners charged 
their own Government extortionate prices for warship 
armor plate which, on at least one specific occasion, was 
found to be worthlessly defective 6 ; and oppressed their 

6 This was in 1894. According to official reports the Carnegie 
Steel Company was making armor plate at a cost of less than 
$200 a ton, which plate is sold to the Russian government at 
$249 a ton while charging the United States Government from 
$520 to $700 a ton for precisely the same armor plate. After 
an elaborate investigation, a Congressional Committee reported 
(see House Report No. 1468, Fifty-third Congress, Second Ses- 
sion) : 

" The company was hired to make the best possible armor 
plate, and was paid an enormous price. Resting under these 



254 HISTORY OF THE GREAT AMERICAN FORTUNES 

masses of workers and when those workers struck for 
better conditions caused them to be shot down, as hap- 
pened in the Carnegie works at Homestead, Pennsyl- 
vania, in 1892. All of these factors and conditions will 
be fully described in a subsequent part of this work. 7 



ROCKEFELLER AND CARNEGIE FALL OUT. 

Not with a rythmic placidity did the Steel Trust come 
into being. An embittered contest, tinged with much 
personal animus, among certain of the great magnates 
preceded, and in some degree precipitated, its forma- 
tion. 

- Controlling a large part of the iron ore deposits in 
the Mesaba region in the Northwest, Rockefeller had 
been aiming to buy out the Carnegie plants for the pur- 
pose of organizing a trust. To compel Carnegie to 
yield, he had recourse to the methods he had so often 
and successfully used in the oil fields. But he found 
Carnegie a hornet of an individual. It did Rockefeller 
no good to mass his interests in the ore fields, in Lake 
Superior transportation and in railroads against Car- 
obligations the company or its servants perpetrated manifold 
frauds, the natural tendency of which was to palm off upon the 
Government an inferior armor whose inferiority might per- 
chance appear only in the shock of battle and with incalculable 
damage to the country. 

" The efforts of the company, and of its superintendents, 
Cline, Corey and Schwab, have been to satisfy your committee 
that the armor is up to the requirements of the contract, not- 
withstanding the false reports to inspectors, doctoring of speci- 
mens, plugging of plates, fraudulent retreating of test-plates 
and ' jockeying ' of the testing-machine. The unblushing char- 
acter of the frauds to which these men have been parties and 
the disregard for truth and honesty which they have shown in 
testifying before your committee render them unworthy of cre- 
dence." 

7 "The Great Fortunes From Industries." 



MORGAN AT HIS ZENITH 255 

negie interests. Every move was checkmated by Car- 
negie; Rockefeller was finally compelled to lower his 
rates on iron ore. Finding that he could not crush out 
Carnegie as he had crushed small oil producers, Rocke- 
feller changed his tactics. He advanced Henry C. 
Frick a million dollars as payment to Carnegie for an 
option to buy the Carnegie plants for $100,000,000. 
Frick had been a partner of Carnegie, but between the 
two differences had arisen developing into a festering 
antagonism. 

If Rockefeller assumed that his plan would go through 
without obstacles, he found himself enlightened before 
long. 

The first hindrance was the unfavorable times. As- 
suredly, the great monarch of wealth did not intend to 
pay that $100,000,000 out of his own personal resources. 
Such a plan, according to approved methods of finance, 
would be asinine. The gudgeons were to pay for it; 
the people who could be depended upon to buy stock 
issues, which stock could be manipulated so that the 
losses of those investors would be equal, and, much 
more, to the capital required. But, at that juncture, 
it was reckoned that the anticipated victims were in no 
mood or shape to exchange cash for engraved paper. 
A propitious occasion had to be awaited. 

The delay was costly to Rockefeller. The option held 
by Frick expired by time limit. And that precious mil- 
lion dollars advanced by Rockefeller what became of 
that? Carnegie declared it forfeited, and held on to it. 
Frick was enraged, and Rockefeller resentful. Hence- 
forth, the animosity between Frick and Carnegie 
deepened, while Rockefeller contained himself till the 
day when he would even matters with Carnegie. 



256 HISTORY OK THE GREAT AMERICAN FORTUNES 

Meanwhile, a new factor had burst in to upset all of 
Prick's and Rockefeller's carefully nursed ambitions. 
This factor was J. Pierpont Morgan. 

The bridge and the tube trusts, owned largely by 
Morgan, 8 had been planning to manufacture their own 
billets. As the Carnegie works were flourishing in the 
billet trade, the news was of momentous importance to 
Carnegie. He at once prepared to retaliate. But how 
could he effectively do so ? What form of reprisal would 
be quickest and most telling? Carnegie had grown 
seared with experience 8a in the machinations of trade ; 
he was not the magnate to be taught how to strike at a 
competitor's most vital point. The word flew forth that 
he intended to go into the bridge and tube business. 
Here was an announcement for Morgan to ponder and 
scowl over. But another edict (it is no exaggeration to 
speak of the orders issued by magnates as edicts) fol- 
lowed in rapid order. Carnegie knew, of course, that 
Morgan was an extensive owner of the Pennsylvania 
Railroad and its properties. If a railroad were built to 

8 Indications of the methods of the companies in the bridge 
trust came out in 1910, and caused a considerable public scandal. 
State Senator Conger, and other witnesses testified before the 
New York State Senate, sitting as a trial Committee of the 
Whole, that a corruption fund of $6,000 had been distributed, 
in 1901, among three influential members of the Assembly, to 
bring about the defeat of a bill considered disadvantageous to 
the interests of the bridge trust. J. P. Allds, President pro tem 
of the Senate, at the time the charges were made, was one of the 
accused. The Senate found him guilty. The revelations before 
this committee in February and March, 1910, were of such a 
character that it was the general opinion that they only faintly 
indicated the vast and continuous corrupting of legislatures by 
corporations of all kinds. This belief was borne out by the fact 
that resolutions introduced in both houses of the Legislature for 
a comprehensive self-investigation were at first voted down. 

8 " Seared with experience." Inasmuch as a description of his 
career is not strictly relevant to this part of the work, we can- 
not halt here to recount the details of transactions, in which, 
many a time, he had got the better of partners, friends, invent- 
ors and competitors. 



MORGAN AT HIS ZENITH 257 

compete with the Pennsylvania system, Morgan's in- 
terests and fortune would be doubly assaulted. Car- 
negie allowed the information to get out that he pur- 
posed to construct his own railroads from Pittsburg to 
the Great Lakes, on the west, and, on the east, to the 
Atlantic Ocean. He went on with the plan as though 
he were in dead earnest ; he rushed surveying parties to 
map out the route. 

THE RESULTS OF CARNEGIE'S RETALIATION. 

The effect upon Morgan was galvanic. Perhaps 
Carnegie was bluffing in return for bluffs. But the situ- 
ation was too serious for trifling. Carnegie might carry 
out his threats; there was the danger. Had Morgan 
been dealing with the United States Government he 
would have felt no great concern at threats that he knew 
he could safely ignore ; but in contesting with Carnegie, 
he was opposed by a magnate of whose power he had 
reason to be grimly apprehensive. How could Carnegie 
be placated, or dissuaded, or prevented from carrying 
out his ominous plans? One heroic way there was 
to buy him out, and organize a trust. 

Thereupon, it is related, Morgan betook himself post 
haste to Carnegie. No time was lost in unessentials. 
The magnates went straight to the point. Morgan in- 
quired of Carnegie for what sum he would sell his plants. 
With a clever expression of indifference, Carnegie sen- 
tentiously replied, " Three hundred millions." A silence 
ensued; the magnates looked craftily at each other. 
Whether Morgan was aware that only a short time pre- 
viously Carnegie had agreed to sell out to Frick for 
$100,000,000 is not known. On his part, Carnegie be- 
lieved that he had Morgan in a corner, which convic- 



258 HISTORY OF THE GREAT AMERICAN FORTUNES 

tion was clearly worth a raise of $200,000,000. Perhaps 
Carnegie, in the style of the excellent business man, 
asked an exorbitant price so as to compromise on a sum 
larger than he really expected. Morgan's next words 
must have surprised him. There was no drawn-out 
haggling, no comment of any character. " Take it in 
mortgage ? " asked Morgan brusquely. " Provided it 
covers the whole proposed combination," Carnegie re- 
plied. The trade was then and there arranged; the re- 
mainder was simply a matter of formalities and ratifica- 
tions. 

Carnegie was pleased with himself. Two great ob- 
jects he had accomplished; he had obtained an immense 
purchase price, far beyond his expectations, and he was 
now able to carry out a yearning that he had long in- 
dulged of divesting himself of active business cares, 
and of playing the exclusive role of the retired 
and philanthropic captain of industry. Doubtless, he 
felt quite positive that he had outwitted even the great 
J. Pierpont Morgan. 

But, as time passed, he found good grounds to have 
doubts of his astuteness. 

Subsequently, after Morgan had demonstrated how 
vast sums could be taken in with facility in jobbery in 
the stock issues of the Steel Trust, Carnegie began to 
look back and perceive that he, not Morgan, was the 
outdone one not a pleasant feeling for a man who 
had been self-satisfied that he was as sharp as any of 
the other magnates. While Carnegie was ostentatiously 
dispensing millions for public libraries, and preaching 
the doctrine that it was a disgrace to die rich, he was 
secretly fuming over the fact that he had not held up 
Morgan for a hundred million dollars more. This story 
was current in Wall street : 



MORGAN AT HIS ZENITH 259 

' Many months later Carnegie and Morgan were on the same 
Atlantic liner bound for recreation in foreign fields. Coming 
down late to their morning coffee, there was a few minutes for 
reminiscence between them. 

" Do you know, Mr. Morgan," said Carnegie, " I have been 
thinking it over, and I find I made a mistake. I should have 
asked you another hundred million for those Carnegie proper- 
ties." 

" If you had, I should have paid it," responded Morgan in 
his frank, unfeeling truthfulness. 

And Carnegie, so the story goes, was so soured in his soul 
that he could take no more toast and marmalade. 8 

As in the case of the railroads, and of other indus- 
trial concerns, the characteristics so typical of altered 
economic conditions were seen in the passing of the steel 
industry into the control of Morgan, Rockefeller, the 
Goulds and their fellow magnates. 

Carnegie had grown up in the steel business ; he knew 
its details and technique with consummate thoroughness. 
In addition, he had adopted the plan of making partners, 
in a measure, of subordinates who had proved their ca- 
pacity in both the knowledge of the manufacture of steel 
and in methods calculated to increase profits. Neither 
Morgan nor Rockefeller nor Gould had any technical 
knowledge of how to run a steel plant; left to them- 
selves they could not have managed a factory for a 
single minute. But, as the capitalist system went, they 
were not required to have the slightest training in run- 
ning railroads, factories, steamships or mines. They 
could annex, or engage, men of experience to do this 
for them. 

How were the great steel plants to be directed, now 
that the industry had gone out of the hands of owners 
who personally had known how to do that directing? 

9 " The Wall Street Journal," issue of August 2, 1909. 



260 HISTORY OF THE GREAT AMERICAN FORTUNES 

The problem was very simple, or rather, it was no 
problem at all. Morgan followed Carnegie's plan of put- 
ting skilled men at the directing head, and of allowing 
them to share somewhat in the division of stock and 
profits. Highly significant of the methods of capitalists 
was their selection of directing managers. We have 
seen how, when Schwab and Corey were superintendents 
of the Carnegie plants, a Congressional committee, in 
1894, had denounced them individually, in a tame 
enough report, as being specifically responsible for the 
armor-plate frauds. Did Carnegie discontinue their 
services? At that very time Carnegie was thrusting 
himself forward publicly as a pious benefactor and 
a lofty citizen. Did he show any indignation at 
Schwab's and Corey's methods? How could he? Had 
they not thereby shown what valuable profit producers 
they were? He prized their services so much that he 
not only bestowed continuous marks of favor upon them, 
but he later elevated them to be directors and minor 
partners. 

They were identically the men whom Morgan also 
wanted ; from a capitalist point of view they were highly 
efficient. When Morgan organized the Steel Trust, to 
whom did he turn as his selection for executives? To 
Schwab and Corey; they successively occupied the po- 
sition of president of the United States Steel Corpora- 
tion. Indeed, Schwab expanded to be somewhat of a 
magnate himself, and incontrovertibly proved that he 
had learned proficiency in genuine magnate methods. 
Organizing the United States Shipbuilding Company, on 
his own hook, he and his associates issued false pros- 
pectuses, decoyed investors, fraudulently made a gift to 
themselves of $55,000,000 in securities, and otherwise 
committed such fraud upon fraud, that after the com- 



MORGAN AT HIS ZENITH 26 1 

pany had gone into bankruptcy the receiver denounced 
the whole transaction as "an artistic swindle." 10 



A TRUST PERFECT IN ALL PARTS. 

Apart from the recital of these frauds, there can be 
no gainsaying of the fact that the Steel Trust was the 
very acme of efficient organization for capitalist pur- 
poses. Other trusts might be well organized in the field 
of production, and partially that of distribution, and 
yet lack control of the supply of raw material. The 
Steel Trust controlled all three of these factors. It 
had its own plants. With Morgan, the Standard Oil 
magnates and the Goulds either dominating, or asso- 
ciated with, it, the railroad and steamship lines of the 
United States were at its disposal. It owned vast de- 
posits of iron ore and coal, some of which had been 
turned over to it by Carnegie, and others of which John 
D. Rockefeller held. The Steel Trust, in fact, was the 
first trust to establish a scientific control over these 

10 See report of ex-United States Senator James M. Smith, 
receiver of the company, to the United States District Court, 
Newark, N. J. The report was submitted to the court on No- 
vember 2, 1903. The appended paragraph is only a slight portion 
of the entire report: 

"Who participated in this wholesale plunder? The testimony 
now being taken . . . will doubtless disclose the names of 
all the participants; but as such testimony will be submitted 
to this court for action, your receiver does not deem it proper 
to comment upon it here. Certain it is that much of this vast 
amount of stock and bonds was taken by persons and cor- 
porations who parted with little or no considerations in exchange 
therefor. Blocks of the stock went to the vendors of the con- 
stituent plants and to the purchasers of bonds, as bonus, abso- 
lutely without benefit to the company; $20,000,000 of it admit- 
tedly went to Mr. Charles M. Schwab in addition to the agreed 
price for Bethlehem. Some of it went to the promoters of this 
artistic swindle ; and when all had been provided for, what was 
left of the bonds, amounting to $1,500,000, was handed back to 
the company, ostensibly to supply it with ' working capital.' " 



262 HISTORY OF THE GREAT AMERICAN FORTUNES 

three factors, so indispensable to the perfect operation 
of a trust. By its ownership of great iron deposits, and 
its practical dictatorship over transportation systems, it 
at once reduced nearly all of such competitors as it had 
to nonenities. Only one competitor, the Tennessee Coal 
and Iron Company, owned its own raw supply; and this 
competitor was later put out of the way under circum- 
stances which will be described further on. 

And here, again, enters the familiar factor of the 
small frauds being ousted by the great; of the property 
originally wrested by fraud being taken over by great 
magnates whose specialty (and it was a very service- 
able specialty) was the extermination of lesser frauds. 
The original seizure of the mineral lands, particularly 
the iron ore mines in the Northwest, had been accom- 
plished by force and by grossest frauds. 11 

It was because it controlled all of the sources of pro- 
duction and distribution that the Steel Trust was able 
to capitalize itself for more than a billion dollars. What 
became of this billion dollars of stock? A huge amount 
in common stock no one knows just how much 
Morgan awarded to himself as a reward for promoting 
the trust, and other quantities of the stock were issued to 
his associates. At the same time, Morgan bought large 
quantities of preferred stock. A careful appraisement 
by experts established the fact that only about $300,- 
000,000 the exact price paid to Carnegie repre- 
sented the actual assets of the trust; the remainder of 
the stock was " watered." Some of this very stock was 
shrewdly sold to a portion of the workers in the steel 
plants, thus tending to destroy their resistance to the 

11 In previous chapters,* facts have been brought out showing 
how the mineral lands were seized. Further facts as to the 
seizure of mineral lands elsewhere will be found in the chapter 
on the Hill fortune. 



MORGAN AT HIS ZENITH 263 

conditions under which they were compelled to work, and 
making them support the very system exploiting them. 



FORTY MILLIONS STOCK PROFITS WITHIN A YEAR. 

The profits made by Morgan were instantaneous and 
gigantic. The stock obtained by him he was able to 
sell at the market price of about 50. By October, 1902, 
Morgan and his immediate partners in the syndicate had 
already distributed $40,000,000 in profits. 12 From 
whom did these stockjobbing profits come? From a 
host of middle class investors throughout the world. 
Lured on by the glowing prospectuses of the Steel Trust, 
and certain that the money that they put in would pro- 
duce large dividends, and the stock would rise in value, 
they literally scrambled to pay over their money for the 
stock. After the process had been exhaustively worked 
by the manipulators, the price of common stock was 
gradually beat down, until, in 1904, it sank to 8J4. 
Hordes of middle class investors were ruined ; the mag- 
nates had transferred their money to their own pockets. 
This kind of operation has been repeated several times 
with great success. When the little fellows parted with 
their stocks at low prices, the magnates would buy it 
back, and then by forcing declaration of dividends, and 
making roseate reports of the steel business, would force 
up the market quotations, and sell the stock back again, 
with resulting immense profits. By such methods Mor- 
gan and his associated clique have taken in hundreds of 
millions of dollars. 

If it be asked from whom these hundreds of millions 
in stockjobbing profits directly came, the answer is sim- 
ple. From the well-to-do, not ' merely in the United 

ia The Truth About the Trusts " : 172. 



264 HISTORY OF THE GREAT AMERICAN FORTUNES 

States, but the world over. The involuntary donors 
comprised the foreign aristocracy as well as the American 
tradesmen, the small manufacturers and the professional 
class. The British lords, and the European continental 
moneyed divisions, revealed themselves fully as eager 
as the native investors to relieve Morgan of his vast en- 
cumbrance of paper supply, otherwise called stock. 
They poured in their money, and he distributed his pa- 
per; he was swamped with orders. 

Was ever such naive and trusting confidence shown 
as was displayed by these hosts of investors? Their 
simple faith in the excellencies of the magnates could 
not be shaken. Repeatedly had they, or other multi- 
tudes of individuals in their own classes, been inveigled 
into Wall street, and dexterously cheated. But these 
frequent experiences, instead of implanting a wisdom 
tempered by enduring suspicion, passed over them with- 
out leaving a trace. The merchants and petty manu- 
facturers, in particular, who prided themselves on being 
so adroit in defrauding the working class, responded 
every time to the insinuating song of the magnates. 
And every time they did so they found themselves rav- 
ished of their money. No word must be uttered against 
their methods of swindling the workers from whom 
came the wealth seized from them; such protests were 
dangerous agitation. Let them, however, be defrauded 
by the Wall street magnates, and curses were not se- 
vere enough. But back the shorn would flock to Wall 
street, like a dog returning to the master who scourges 
it. 

Another phenomenon must be significantly noticed. 
Even if considerable sections of this middle class warily 
kept away from stock market adventuring, their money 
was nevertheless used by the magnates, as though it 



MORGAN AT HIS ZENITH 265 

were the assured property of those magnates. Astonish- 
ingly paradoxical as this seems, it was and is, a bitter 
joke on the purblind middle class. The profits made by 
the small manufacturers and the retailers in swindling 
the workers by selling adulterated, inferior and short- 
weight products, were deposited in the banks. These 
deposits were utilized by the trust organizers to oblit- 
erate the very class owning them a class hating the 
trusts with a deadly enmity. Such was the incongru- 
ous situation to which the middle class was oblivious. 
The great magnates controlled vastly powerful New 
York banks ; 1S these institutions, in turn, held control 
over hundreds, if not thousands, of smaller banks 
throughout the country. The stock issues of the Steel 
Trust, as well as those of many other trusts, were sold 
to these banks. The trust magnates lifted out the money 
of the middle class, and the banks, in exchange, received 
the watered stock and bonds. 



THE GREAT INSURANCE FRAUDS. 

Hundreds of millions of dollars more were held by 
the great insurance companies as deposits and surplus 
from premiums paid in yearly by immense numbers of 
policyholders, comprising the ultra-rich, the middle class 
and the working class. In insurance companies, such 

18 The three great New York banks which, it is understood, 
Morgan then long controlled, were the First National, the Na- 
tional Bank of Commerce and the Hanover National. Their 
immense resources may be realized from these facts : The First 
National has a capital of $10,000,000, deposits of $113,000,000, and 
a surplus of $18,600,000. The National Bank of Commerce has a 
capital of $25,000,000, deposits of $170,000,000, and a surplus of 
$15,000,000. The Hanover National has a capital of $3,000,000, 
deposits of $82,000,000, and a surplus of $10,000,000. Since then, 
as we shall see, Morgan has extended his control over a vast 
number of other banks, virtually forming a Money Trust. 



'266 HISTORY Otf THE GREAT AMERICAN FORTUNES 

as the New York, the Equitable and the Mutual, the 
working class was little represented; the workingmen 
could not afford to pay the large premiums demanded. 
Forced to take out policies, on a weekly installment 
payment, in the industrial insurance companies, they 
were swindled to an even greater extent than were the 
policyholders of the " old-line " companies. Their 
money, too, was used in providing trusts with adequate 
enough funds with which to bribe legislatures for fran- 
chises and other laws, and to obtain extensive equip- 
ment. The Public Service Corporation, which, for 
example, owns the public utility plants and systems (ex- 
cept the railroads) of the entire State of New Jersey, 
was financed with the money advanced by one of these 
large industrial insurance corporations. 

Viewing the matter rationally, however, it will be at 
once seen that whatever the enormous accompanying 
frauds, the necessities of industrial and social progress 
demanded two interrelated lines of action. The first 
was the superseding of the competitive, by the trust, sys- 
tem. Since trusts were the next inevitable stage, the 
immense funds needed for their organization and elab- 
oration had to come from somewhere. Individually, the 
magnates lacked sufficient cash. Consequently, they 
were forced to take it wherever they could find it, irre- 
spective of the nature of the methods used. 

In the wielding of the colossal funds of the New York 
Life Insurance Company, Morgan was a chief among 
the ruling factors, while also screened behind figure- 
heads, he was active in the affairs of the Equitable Life 
Assurance Society. 1 * Evidences of his power, exercised 

14 Morgan's hold in the New York Life Insurance Company 
came through George W. Perkins, the vice-president of that 
company. Finally, in 1902, Perkins became a member of the 
firm of J. P. Morgan and Company, continuing, at the same 



MORGAN AT HIS ZENITH 267 

through indirection, were repeatedly brought out in the 
remarkable, although fundamentally futile investigation, 
made by a New York legislative committee in 1905. The 
insurance companies had a satiety of cash; Morgan, 
Harriman and other magnates had the stock issues. In- 
asmuch as obviously that stock was not issued for 
aesthetic exhibitions, the important and immediate con- 
sideration was to convert it into revenue. By collusion 
with the officials of the insurance companies, huge quan- 
tities of bonds and stocks were sold to the insurance 
companies. 15 Largely with this middle class money, the 
magnates were enabled to finance their great railroad 
and trust projects. Other portions of the stock issues 
were sold directly to the middle class, and were then 
manipulated so as to grind out that class still further. 

QUARRELING OVER THE SPOILS. 

For a long time this looting of the insurance com- 
panies went on unhindered, and without attracting public 
notice. The causes of this immunity from official action 
and exposure were not revealed until 1905. In that 
year the accustomed capitalistic development came about. 
A quarrel, at first mere private mutterings, then grow- 
ing into an obstreperous conflict, set in among groups 
of magnates. And what was the provocation? Was it 
one of personal hostility? Not at all. The cause arose 
from dissensions as to the division of the spoils in the 

time, as an officer of the New York Life Insurance Company. 
Perkins's methods may be judged by the following incidental 
fact: He took put policies for $60,000 on his life, and received 
agents' commissions on his own insurance. Report of the [NV\v 
York] Legislative Insurance Committee, 1906, x : 85. 

15 The Equitable, for instance, owned $162,364,034 of railroad 
and traction company bonds, the Mutual about the same amount 
in railroad and miscellaneous bonds, and the New York a 
similarly large amount 



268 HISTORY OF THE GREAT AMERICAN FORTUNES 

Equitable Life Assurance Society. Magnate arrayed 
himself against magnate, and group opposed group. 
The clearer it became that the fight for control of the 
stupendous revenues could not be compromised, the more 
malignant the magnates became. The stage was soon 
reached when ugly charges of fraud, graft and corrup- 
tion were allowed to get into the public press. Here 
was a spectacle for the gods. Not from any " labor 
agitator/' nor from any " irresponsible newspaper " did 
these charges come; nay, they came from some of the 
lordliest magnates in the land, from men of the most 
" unimpeachable respectability." Now, here they were 
vulgarly accusing one another of being liars, frauds and 
all-round knaves. 

That the matter made a loud sensation can well be 
understood; newspaper writers diligently applied them- 
selves to reporting the great event. Quarrels among 
magnates were not uncommon, but when a whole array 
of the nation's oligarchy of wealth pushed their row 
into the open, and began bedamning one another, it 
was a rare opportunity for truths to come out. None 
but the magnates themselves could open the doors of 
their holy of holies and reveal the mysteries within. 
Praises be to the glorious occasion, they were now doing 
this very thing. 

But when the holy of holies was subjected to scrutiny, 
it was found to be a cesspool from which long pent-up 
noxious exhalations burst forth, almost threatening to 
suffocate a nation that had been taught to reverence 
the aforesaid holy places. The quarrel became so fierce 
that a swelling popular demand sprang up for a leg- 
islative committee to do some exhaustive and salubrious 
probing. The demand, at least, had every appearance 
of being a spontaneous popular one; but it can be rea- 



MORGAN AT HIS ZENITH 269 

sonably surmised that after trying every other means 
of ousting the group of magnates in power, the opposi- 
tion party cleverly investigated the popular indignation 
in order to compel an investigation, and discredit the 
clique in control. Subsequent developments proved that 
Harriman had long been attempting to gain exclusive 
control of the massed funds of the Equitable Life As- 
surance Society. In addition, his own testimony attested 
the fact that Governor Odell of New York was his crea- 
ture, and that the very Legislature which ordered the 
investigation was obedient to his orders. 

From the first sessions of that investigating commit- 
tee to the last, the story unrolled was one of such appal- 
ling fraud and corruption that the very enormity of it 
finally deprived it of effect. One after another, the 
magnates were haled forth to the light; and when they 
retired they, the "great captains of industry," the su- 
premely respectable products of society, the fine mor- 
alists of the nation, the supporters and endowers of 
charities and churches, the rulers of politics, were re- 
vealed as perjurers, bribers and thieves. If magnates 
desire to keep up the myth of " sterling honesty," be- 
nevolence and patriotism, they must learn not to quarrel 
among themselves. Otherwise, they will tell on one an- 
other, which is not politic. Even more seriously, 
they will undermine the stanchions and " pillars of so- 
ciety," one of which, in the United States, is the popular 
belief that the people vote their rulers in and out of 
office, and shape the course of legislation. 



THE EXTENSIVE RAMIFICATIONS OF CORRUPTION. 

So long as the people have the delusion, and the cap- 
italists have the legislative votes, what good bodes it 



HISTORY OF THE GREAT AMERICAN FORTUNES 

to the magnates to have the secret come out? Over and 
over again was that secret disclosed in past investi- 
gations, but without instructive results. Yet, behold! 
the people once more have the opportunity of getting 
an insight into what goes on behind the scenes when the 
Legislative Investigating Committee reports in 1906: 

The testimony taken by the committee makes it clear that 
the large insurance companies systematically attempted (sic) 
to control legislation in this [New York] and other States, 
which could affect their interests directly or indirectly. The 
three companies divided the country, outside of New York and 
a few other States, so as to avoid a waste of effort, each look- 
ing after its chosen district and bearing its appropriate part of 
the total expenses. 16 

Excellent! even bribery, like industry, becomes sys- 
tematized and modernized. In the process, delicate ex- 
ternals are preserved. To ledger bribery funds as cor- 
ruption money is a gross shock to fastidious taste, and 
is inexcusably unbusinesslike. Hence, so the commit- 
tee reported, bribery expenditures were classified as 
" legal expenses." The committee described them as ex- 
traordinarily large. The Mutual, in 1904, disbursed 
$364,254.95; the Equitable, $172,698.42, and the New 
York, with Morgan's partner, Perkins, practically in 
command, $2O4,oi9.25. 17 This, according to the simple 
rules of arithmetic, made a total of more than three- 
quarters of* a million dollars spent in one year in the 
corrupting of legislatures, administrative officials and 
certain newspaper writers. 18 These " legal expenses," 
the committee redundantly wrote, were " far in excess 

19 Report of the [New York] Legislative Insurance Commit- 
tee, 1906, x : 23. 

17 Ibid., 16. 

18 The testimony showed that many newspaper writers had 
received large sums for the suppression of articles revealing the 
methods of these companies. 



MORGAN AT HIS ZENITH 27! 

of the amounts required for legitimate purposes." 19 
For what were these corruption funds employed? 
To get laws under which great frauds could be carried 
on, and to prevent the passage of laws interfering with 
the graft. And who were the immediate distributers 
of the funds? Trained, circumspect lobbyists, thor- 
oughly experienced in the business of knowing who, 
when and where to bribe. They were never stinted for 
money. Andrew C. Fields, long engaged by the Mutual 
Life Insurance Company to manipulate legislation at 
Albany, held forth in a sumptuously furnished house 
there. This headquarters was jocosely styled the 
" House of Mirth ! " The rent and other expenses were 
charged to " legal expenses." The Mutual thus ex- 
pended more than $2,000,000 in " legal expenses " from 
1898 to I9O4. 20 And what were those of the New York 
Life Insurance Company? From 1895 to 1904, the 
total payments to Andrew Hamilton, its principal lobby- 
ist, amounted to $1,312,197.16, all of which sum was 
soberly entered as " legal expenses." 21 J. P. Morgan 
and Company made advances of money to Hamil- 
ton. 22 

But the corruption neither began nor ended with the 
buying of legislative votes or of administrative conni- 
vance. Over and above the politicians in office were the 
bosses in control of the machinery of both the Repub- 
lican and the Democratic parties. Those party machines 
could command the votes; and the orders of the men at 

19 Report of the [New York] Legislative Insurance Commit- 
tee, 1906, x : 16. 

20 Ibid., 16. 

21 Ibid., 50. 

22 Ibid., 49. For instance, J. P. Morgan and Company, in Oc- 
tober, 1902, advanced $59,310.79 to Hamilton. This sum was 
deducted from the profits of the New York Life Insurance Com- 
pany. Hamilton was not required to make any accounting. 



272 HISTORY OF THE GREAT AMERICAN FORTUNES 

the head called for submission by the underling politi- 
cians. Refusal brought discipline and retirement. By 
controlling the secret workings of the party organiza- 
tions, the magnates virtually controlled the platforms of 
those parties, their nominees, and the general course of 
the men elected to office. 

For one more proof of this, another dip into the re- 
port of that celebrated insurance investigating committee 
of 1905 will suffice. " The insurance companies," it re- 
ported, " regularly contributed large sums to the cam- 
paign funds of both the Republican and the Demo- 
cratic parties." This was no exceptional act, however; 
it was the conventional order of the day ; all of the great 
corporations did likewise. Had not Jay Gould, thirty- 
odd years before, explained the method? And had not 
other capitalists long antecedent to Jay Gould shown 
how efficacious it was? A present of nearly $50,000 
was contributed in 1894 by the New York Life In- 
surance Company to the campaign fund of the Repub- 
lican National Committee, 23 and similar amounts in 1896 
and in 1900 for the same purpose. 24 All of the large 
insurance companies gave contributions, not only for na- 
tional political campaigns, but also for those in the 
States. 25 It was found impossible to trace all of the 
directions of this continuous corruption. " Enormous 
sums," the committee stated, " have been expended in a 
surreptitious manner." 

The immense sums thus spent in political corruption 
were stolen from the proceeds of the policyholders. 

23 Report of the [New York] Legislative Insurance Committee, 
1906, x:6z 

2* Ibid. 

25 Ibid., 398. The Equitable, for example, gave $50,000 in 
1904, to the Republican National Committee, and had also, for 
many years, been giving $30,000 annually to the New York State 
Republican Committee, (p. 10.) 



MORGAN AT HIS ZENITH 273 

With this stolen money, mounting into millions of dol- 
lars, the magnates bought their way into every State 
legislature in the Union ; they purchased a way for them- 
selves or for their allies into the United States Senate; 
and they carried their demands in both the Republican 
and the Democratic parties. An arraignment more 
destructive to the existing arrangement of society could 
not be found than was contained in the facts (and 
they were by no means, all of the facts) reported by that 
committee. The substantial conclusion was, although 
not set forth in so many plain words, that the adminis- 
trative officials, the legislatures, Congress, the courts and 
the old political parties were controlled and dominated 
by groups of unparalleled frauds and pirates. For the 
sums diverted to insure this political control were only 
a tithe of the aggregate stupendous thefts. Following 
close upon the investigation came suits against the"*" high 
financiers " for the restitution of more than $10,000,- 
ooo, and these suits were but indications of still vaster 
sums fraudulently taken. The suits were compromised. 

DARK DAYS FOR RESPECTABILITY. 

It was a period of travail for respectability; much 
explaining had to be done, which (in such a case) is 
always a confession. The directors or swayers of those 
insurance companies comprised some of the most super- 
eminent magnates and exalted philanthropists in the 
United States. Elegant society suffered no shock at the 
revelations, for it was built and sustained, every part 
and woof of it, by theft, fraud, bribery and exploita- 
tion. 

But the apologists and retainers, whose vocation it 
was to strew praise in the path of the money monarchs, 



274 HISTORY Otf THE GREAT AMERICAN FORTUNES 

were egregiously put out of face. What could they say 
when such of their heroes as George J. Gould, Alfred 
G. Vanderbilt, John Jacob Astor, August Belmont, 
Jacob H. Schiff, 26 Henry C. Frick, D. O. Mills, and 
many others were being shown up either as participants 
or as responsible heads? More galling still was the be- 
smearing of their great idols, E. H. Harriman, and above 
all, the devout and philanthropic J. Pierpont Morgan. 27 
All of these money conquerors had been interminably 
glorified; nothing had been too extravagant to say of 
them ; and now they could be seen twisting and squirm- 
ing in the uncomfortable act "of being caught." 

Good repute may be, as the poets and philosophers 
say, a priceless possession. But these magnates did not 
mind the temporary hurt. For temporary it surely was ; 
a little time would pass, and then the newspapers, mag- 
azines, college presidents and clergy, largely owned or 
subsidized by the magnates, would resume their inter- 
rupted chorus of praise, and all would be well again. A 
bit of the plunder thrown out to universities and churches 
would add to the magical effect. 

Hence, it was not any loss of reputation that the mag- 
nates and their satraps feared. The one and only dis- 

26 The Equitable Life Assurance Society "loaned immense 
sums " to Kuhn, Loeb and Company, of which Schiff was a lead- 
ing member. (Ibid., 118.) These funds, in large part, were 
turned over to Harriman for use in his railroad gathering and 
centralizing projects. Schiff passed in public as one of the 
benevolent philanthropists of the time. 

2T The extent of Morgan's utilization of insurance money was 
shown by the legislative investigating committee. " The evidence 
is," it reported, "that while Mr. Perkins has been a member of 
J. P. Morgan and Company, the New York Life has purchased 
from it securities of the par value of $39,286,075 for the price of 
$38,804,981.51. (Report of the [New York] Legislative Insur- 
ance Committee, 1906:81). Superficially, the report suggests 
that the New York Life Insurance Company thus obtained " a 
bargain " in the purchase of these securities. In reality, much 
of the securities comprised "watered" stocks. 



MORGAN AT HIS ZENITH 275 

quieting prospect was that of being shunted away to pris- 
ons. Throughout the United States the insurance dis- 
closures the outcropping facts as to the vast, long- 
continuing corruptions and frauds had called forth a 
frenzied demand at first that the guilty be rushed to 
trial and imprisoned. 

But that demand, if carried out, would have entailed 
a unique and unprecedented situation. Should all of the 
guilty be jailed, or even a number of them, the nation 
would have been deprived of many of its foremost mag- 
nates, its greatest philanthropists, its most exemplary 
patriots. How could society have survived such a loss? 
According to orthodox teachings, these men were im- 
perative to the proper administration, and the well-be- 
ing, of the whole social and industrial system. Incar- 
cerate the great magnates, philanthropists and patriots, 
even though they were also the greatest plunderers? 
The thought was impossible. 

No fear of prison, however, need have been entertained 
by the implicated. Had not many an investigation been 
held before, decade after decade, almost year after year, 
sometimes several investigations in a single year? Had 
any of the rich defrauders disclosed in those investiga- 
tions ever gone to prison? What ground was there for 
supposing that this investigation would result any differ- 
ently? In a society ruled by money, what are courts 
for but to be used as a minatory instrument for enforc- 
ing the law, made by the rich, against the propertyless ? 
What are judges for except to construe that law as the 
magnates who put them on the bench demand that it 
be construed ? 28 

28 It is quite needless to reiterate here facts (already brought 
out) regarding the methods by which appointments and elections 
to the bench were made by the great property interests. Later 



276 HISTORY Off THE GREAT AMERICAN FORTUNES 

Not the law so much as the interpretation is what es- 
sentially counts. 

THE MAGNATES ESCAPE THE LAW. 

How the law was interpreted was soon seen. Under 
the pressure of public opinion, the District Attorney of 
New York County, one William Travers Jerome (long 
renowned as a " reformer ") finally caused the Grand 
Jury to take action in proceeding against a few of the 
satraps and the figureheads. But, in the case of Per- 
kins, for instance, it was decided that if he had com- 
mitted grand larceny, it had been done without criminal 
intent. The thousands of poor offenders hurried off to 
prison were obviously afflicted with an overabundance of 
this same criminal intent. Yet for a rich and powerful 
man to commit any fraud with criminal intent was a 
principal unknown to practical jurisprudence. The farce 
dragged out a while ; not one of the participants of great 
wealth was even incommoded by the formality of a trial. 29 

And what was the outcome of that extraordinary in- 
vestigation? Again was seen the operation of that prin- 
ciple so often brought out in these chapters; that every 
" reform wave " of a capitalist order of society is used 
by the great capitalists to aggrandize their wealth and 
power. Taking advantage of the popular discredit of 
the large insurance companies, and making fine asser- 
tions of the reforms that he intended to bring about, 

on, a full elucidation of this subject will be given, as also a de- 
scription of the criminal law as applied to the poor. 

2g The facts thus generalized are so notorious that it is hardly 
necessary to specify at length. Although he was much de- 
nounced, Jerome did not deviate from the uniform practice (as 
noted so often throughout this work) of enforcing the laws 
vigorously against the poor, while allowing the rich frauds and 
thieves to go scot free. At one time, a "popular hero," Jerome 
went out of office thoroughly discredited in public opinion. 



MORGAN AT HIS ZENITH 277 

Thomas F. Ryan secured control of the Equitable Life 
Assurance Society, completely frustrating Harriman's 
efforts to the same end. Ryan's career, and the facts as 
to how he obtained his immense wealth, were so generally 
known, that his appearance in the role of a " reformer " 
was the signal for an instantaneous outburst of public 
sarcasm which Ryan did not at all mind, seeing that he 
had carried his assault. 80 

Enough, however, of the methods by which these vast 
insurance funds were manipulated for politico-financial 
ends. The sensation caused by the revelations was as 
profound as the reaction that followed. For a brief 
period the mass were privileged to have a look behind 
the scenes, get wrought up at what they saw, and then 
the curtains were drawn again and the old comedy was 
resumed. The intense popular excitement flattened out 
into the sheerest lassitude. 

What noteworthy changes resulted from all that pro- 
tracted boring, ten solid volumes of it? None. Some 
lawyer folk grasped political advancement out of it, 
others enriched themselves from a trail of litigation, a 

80 In his speech in the United States Senate on March 17, 1907, 
Senator La Follette thus referred to Ryan: 

" The Metropolitan Interborough Traction Company cleaned 
up, at the lowest estimate, $100,000,000 by methods which should 
have committed many of the participants to the penitentiary. 
The public and the stockholders were robbed alike. That divi- 
dends were paid with borrowed money purely to stock job the 
public is now known to a certainty. Stock was thus ballooned to 
$206 per share, which goes begging now at $35. The insiders 
robbed the company on construction of upwards of $40,000,000. 
Investigation has disclosed that $1,000,000 was spent as a ' yellow- 
dog fund ' for corrupting public officials. In 1886 Thomas F. 
Ryan was a poor man. In 1005 Henry D. McDonough, his offi- 
cial representative, estimatea Ryan's fortune at fifty millions. 
The foundation of all his wealth and power was the Metropolitan 
Street Railway." "Centralization and Community Control of 
Industry," etc. (Government Doc.), 24. Ryan's career will be 
fully described in that part of this work comprising "Great 
Fortunes From Public Franchises." 



278 HISTORY 01? THE GREAT AMERICAN FORTUNES 

few minor laws were passed, and one set of capitalists 
was deposed to make place for another. And that was 
the finis of this great investigation which was to have 
brought such " beneficial reforms." 

One of the most remarkable, and at the same time 
most comical, features of American political life in the 
nineteenth and twentieth centuries was the frequency of 
these official investigations. Survey the archives and 
you will be bewildered by their number and continuity, 
extant in the form of printed testimony and reports. 

These were not investigations made by a hostile 
officialdom, but by governing authorities, either repre- 
senting the very capitalistic interests investigated, or 
favorable to them. The numerous investigations may, 
therefore, be accepted as those of capitalist society dis- 
closing itself. Everyone of them reveals the same story 
of fraud, corruption and theft, from which not a single 
line of business was exempt. The stupendous extent of 
the incessant and deliberate lying carried on by capital- 
ist expositors may at once be seen by comparing their 
fulsome accounts of capitalists and of the capitalistic 
system with the facts perpetuated in the reports of the 
capitalists' own Government. Not one of those investi- 
gations carried with it any real salutary benefits for the 
people; after every such inquisition the mass were plun- 
dered and despoiled as effectively as before almost in- 
variably more so. Apparently the only inherent virtue 
of those investigations seems to have been that of sup- 
plying this present author with facts a not inconsider- 
able virtue, it may be appreciatively added. 81 

81 Wherefore, with this knowledge, wonder can be expressed 
that the " insurance iniquities " (as they were styled) were not 
proportionately viewed. In actuality, great as they were, they 
were but the merest fragments of a collossal network of fraud, 
corruption and graft, covering every department, branch and 
kind of business and old-party politics. 



MORGAN AT HIS ZENITH 279 

But what of those virtuous middle-class investors who, 
when tricked and defrauded by the magnates, plaintively 
put themselves on exhibition as outraged and helpless 
victims of a crew of unscrupulous financiers? How, for 
example, did the many investors in Steel Trust stock 
regard the great Morgan after their disillusioning and 
spoliation? They broke out in passionate imprecations. 
Throughout the country you met them everywhere be- 
wailing their losses; some of their thousands, others of 
their tens of thousands, and still others of their hundreds 
of thousands of dollars. In many another Wall street 
onslaught, the losers could not specifically blame Mor- 
gan; but in the Steel Trust stock-rigging he was so 
palpably the principal moving spirit, that necessarily 
this bitterness was directed at him. To the point of 
nausea the charge was repeated that fraud had brought 
about the stripping or ruin of those innocent, confiding 
investors; 82 fraud did it all, fraud explained the whole 
process. 

Delicious innocence! Not an individual was there 
among those self-commiserating investors who would not 
have been elated to have profited in the stock market at 
the expense of other investors. Had such been the out- 
come, the transaction would have been highly legitimate 
and just. The crime consisted in the magnates exclu- 
sively pocketing the booty. This at once transformed 
the operation into one of betrayal, injustice, fraud and 
oppression terms springing spontaneously from the 
middle class whenever its pocket is drained. Then came 

82 Many of these investors were not, of course, despoiled of 
their entire fortune. Thus, a small manufacturer might invest 
$25,000 of his fortune in Steel Trust stock, and lose a great 
part of the investment in selling out at a very much lower price 
than that at which he had bought it. As the market price kept 
descending he would conclude to sell out before his losses would 
be greater. The " margin " investors suffered much worse. 



28O HISTORY OF THE GREAT AMERICAN FORTUNES 

that old familiarly dolorous plaint of its grievances. 
And would the terrors of law never descend upon the 
supersubtle corporate greed that was swindling and de- 
vouring the virtuous middle class, " the backbone of the 
country " ? 

THE SOURCE OF PROFITS. 

Agitated over their own misfortunes and expropria- 
tion, these investors excoriated Morgan and the other 
magnates. And their actuating reason was what? That 
of not being allowed to have a hand in the profits. Who 
has not heard pigs squeal when a hog usurps the trough ! 
And what, further, were the basic conditions from which 
these investors eagerly strained for profits, either in 
stock gambling or in dividends? 

The value of the stock depended at bottom upon the 
trade profits of the business. Those profits came from 
the labor in the mills and the exploitation of the manu- 
factured product, the price of which exploitation was 
indirectly taxed upon the working class wherever steel 
was sold or used. Were the petty investors, so clamor- 
ous for their own security and comfort, uneasy at the 
conditions under which masses of men and boys worked 
in the iron and coal mines and in the steel manufacturing 
plants? Did they experience any qualms at the long 
hours and low pay, and the squalid, often revolting, life 
to which those workers were forced? Did the bestial 
degradation and frightful destitution so often encount- 
ered in steel-mill quarters disturb their thoughts? Or 
were they impressed by the ghastly casualties in the 
mills, or the diseases rife in the workingmen's quarters, 
causing an undiminished slaughter of men, women and 
children ? Did the investors, whose understanding of in- 



MORGAN AT HIS ZENITH 28l 

justice was so sensitively acute when they were robbed 
or in distress, see any injustice in such conditions? 

In this exploitation they saw nothing by a " right- 
eous " system of industry from which they eagerly sought 
profit. They were not ignorant of the existence of these 
conditions; it was with a knowledge, not always full, 
but some realization, nevertheless, of them, that they 
sophisticatedly bought Steel Trust stock to share in the 
profits. When an exposure was made, in 1908, of some 
of these conditions, not more than a handful of stock- 
holders protested against the horrors; exceptions among 
their class to which we gladly draw attention. In its 
long duel with the magnates, the middle class ever and 
always insisted that its grievances be heard and respect- 
fully treated. Yet, let the workers make the slightest 
move for redress, and that class^ with stony rigidity, 
would demand their repression as " disturbers of busi- 
ness/' if for no other reason. 

To describe those conditions at length would be an 
inappropriate anticipation of another part of this work 
to which the description is more germane. Some glimp- 
ses, however, will be to the point. Nor will the facts be 
drawn from working-class spokesmen and writers. Do 
not the conventions of the day condemn these as un- 
worthy of credence and citation? Observe with what 
immense respect legislatures, Congress, the courts, edi- 
tors and literary reviewers treat the trashiest utterances 
of capitalists, and swear by their value and authenticity. 
But working-class memorials, protests and statements 
are obviously the productions of " rabid agitators " ; 
they " chronically exaggerate " and are " partial and par- 
tisan." Since capitalists (and their retinue of scribes) 
alone possess the high virtue of complete veracity, cita- 
tions from such sources will perhaps carry weight. 



282 HISTORY OF THE GREAT AMERICAN FORTUNES 

What is this extraordinary document we hold in our 
hand? It is a report entitled "The Pittsburg Survey/' 
the same being an exhaustive investigation of the con- 
ditions of the working class of Pittsburg. Scrutinizing 
further, we find that this investigation was carried on 
by means of funds contributed by " The Russell Sage 
Endowment." 83 That fact enhances its prestige for ci- 
tation purposes. What is this further fact we note on 
the bottom of the cover? That the report has been 
published in a magazine conducted by the Charity Or- 
ganization Society of New York City, under which title 
appears what? The name of J; Pierpont Morgan, as 
treasurer of that society. Now we are invulnerably on 
safe footing. To a report issued under such exalted aus- 
pices, who would be so reckless as to impute inaccuracy 
or impartiality? More especially so, inasmuch as this 
report has been generally commended for its accuracy 
an accuracy, it may be added, toned with an extremely 
conservative treatment. 



THE CONDITION OF THE STEEL WORKERS. 

On, then, with the quoting. "The United State, 
Steel Corporation," the report said, 

owns property on the South Side of Pittsburg just beyond the 
Point Bridge. Here is located the old Painter's Mill, which 
is one of the plants of the Carnegie Steel Company, which in 
turn is one of the constituent companies of the United States 
Steel Corporation; and here, also, stands what remains of 

88 "The Russell Sage Endowment" a fund amounting to 
many millions of dollars, given by Sage's widow for (among 
other purposes) the purpose of investigating the conditions pro- 
ducing poverty. Part of the money robbed by Sage in previous 
generations is thus used to find out why so many millions of the 
present generation are in destitution. What a grotesque 
sequence ! 



MORGAN AT HIS ZENITH 283 

Painter's Row, where the company has housed certain of its 
employes, mostly immigrants. When the Carnegie Steel Com- 
pany took over Painter's Mill, it renovated the plant so as to 
turn out the sort and quantity of output which the Carnegie 
name stands for. When it took over Painter's Row, it did 
nothing. When, a little over a year ago, and several years after 
the purchase of the property, I made a detailed investigation 
of the place, I found half a thousand people living there under 
conditions that were unbelievable back-to-back houses with no 
through ventilation; cellar kitchens; dark, unsanitary, ill-venti- 
lated, over-crowded sleeping rooms, no drinking water supply on 
the premises ; and a dearth of sanitary accommodations that was 
shameful. 84 

The writer hastens to add: 

The story of Painter's Row should be considered in its bear- 
ings. The United States Steel Corporation is building a re- 
markable new town at Gary, Indiana; its subsidiary companies 
have promoted house building along original lines, notably at 
Vandergraft, Ambridge and Lorain, and the Carnegie Steel 
Company has fair, low-rental houses at Munhall and elsewhere. 
On the other hand, other Pittsburg corporations own company 
houses which have been equally as bad as Painter's Row ; and a 
similar story could be written of a shack at one time owned by 
one of the foremost Protestant churches of Pittsburg, and razed 
to the ground only because the headworker of Kingsley House 
had the courage to publish its picture and the name of the 
owner. 

Painter's Row has been improved, it is reported, since 
the publication of the report; the Steel Trust officials 
were driven to it by the resulting publicity. But Paint- 
er's Row is only a typical incident in a vast accumula- 
tion of poverty and misery, to be met with everywhere 
in the steel mill towns. That qualifying note regarding 
the erection of fine new houses for the workers in Gary 

* "The Pittsburg Survey," iii 



284 HISTORY OF THE GREAT AMERICAN FORTUNES 

and other Steel Trust towns has an altruistic touch ; very 
melodiously and enthusiastically it rolls along. Yet we 
have seen, in the case of the town of Pullman, how these 
" model towns " work out ; how the workers are reduced 
to a state of serfdom, exploited at every turn in the mills 
and out; and such efficiency as comes from fairly decent 
living quarters simply redounds, as a " good investment/' 
to the profit of the mill owners. Of the conditions noted 
further in Pittsburg, one more extract from the volumin- 
ous report (which might well be termed a Chamber of 
Horrors) will give an additional insight: 

. . . It is a common opinion in the district that some em- 
ployers of labor give the Slavs and Italians preference because 
of their docility, their habit of silent submission, their amen- 
ability to discipline, and their willingness to work long hours 
and overtime without a murmur. Foreigners as a rule earn the 
lowest wages and work the full stint of hours. I found them 
in the machine shops working sixty hours a week; at the blast 
furnaces working twelve hours a day for seven days in the 
week. The common laborer in and around the mills works sev- 
enty-two hours a week. The unit of wages is an hour rate for 
day labor and a Slav is willing to take the longer hours (twelve 
hours a day for men who work fourteen and sixteen in the 
fatherland) with extra work on Sundays, especially in connec- 
tion with clearing the yards and repairing. Possibly sixty to 
seventy per cent, of the laborers in the mills come out Sundays 
and the mechanics and other laborers on occasions work thirty- 
six hours in order that the plant may start on time. In one 
mill I found Russians (Greek Orthodox) in favor for the rea- 
son that they gladly worked on Sundays. 

Many work in intense heat, the din of machinery and the 
noise of escaping steam. The congested condition of most of 
the plants in Pittsburg adds to the physical discomforts for an 
out-of-doors people; while their ignorance of the language and 
of modern machinery increases the risk. How many of the 
Slavs, Lithuanians and Italians are injured in Pittsburg in one 
year is not known. No reliable statistics are compiled. In their 



MORGAN AT HIS ZENITH 285 

absence people guess, and the mischief wrought by contradictory 
and biased statements is met on all hands. When I mentioned 
a plant that had a bad reputation to a priest, he said, " Oh, that 
is the slaughter-house ; they kill them there every day." I quote 
him not for his accuracy, but to show how the rumors circu- 
late and are real to the people themselves. It is undoubtedly 
true, that, exaggerated though the reports may be, the waste 
in life and limb is great, and if it all fell upon the native born 
a cry would long since have gone up which would have stayed 
the slaughter. 85 

These are but the most cursory views of a few of the 
prevailing conditions. All of the bond and stock hold- 
ers, large and small, 88 great magnates and little parasites, 
not merely have acquiesced in these conditions, but have 
insisted upon their continuance, upon the principle (so 
often referred to in the course of this work) that the 
lower the wages and longer the hours of work, the se- 
ductively greater the dividend prospects. Splendid man- 
sions, as capacious and ornamental as palaces, arise upon 
the tense labor, the suffering and the mortality of those 
masses of workers. Carnegie, pompously spreading his 
philanthropy, draws his income from the very life blood 
of those workers and their families and children, 87 and 
Morgan, piously dispensing charity, officiating at relig- 
ious meetings, and posing as the incarnation of princely 
benevolence, allows no such impractical considerations as 

M " The Pittsburg Survey," i : 537 and 539. The Carnegie 
Steel Company began several decades ago the systematic hiring 
of immigrant workers. The average pay of these workers is 
$1.60 a day. 

J8 But the few exceptions noted previously. 

""One-third of all who die in Pittsburg, die without having 
anything to say about it. That is, they die under five years 
of age. One-fourth of all who die, die without having any- 
thing to say about anything. That is, they die under one year 
of age. Most of these deaths are preventable, being the out- 
come of conditions which, humanly speaking, have no right to 
exist." This slaughter is greatly caused by impure milk and bad 
housing conditions. " The Pittsburg Survey," ii:943. 



286 HISTORY Otf THE GREAT AMERICAN FORTUNES 

pity or sentiment to make life even a moiety more toler- 
able in the roaring hells from which are derived an aver- 
age of $145,000,000 net profits a year. 88 

88 The American Federation of Labor, at its annual meeting 
at Toronto, in November, 1909, declared that the Steel Trust 
was actively bent upon destroying labor unions, and that it was 
the foremost aggressor in this move. The object is to reduce 
the workers to a still greater condition of servitude. 

The stock lists of the United Steel Corporation which were 
opened for inspection at the annual meeting of the stockholders, 
in Hoboken, N. J., on April 18, 1910, showed that the name of 
J. P. Morgan and Company, for the firm and as holders for 
others, appeared on the lists for large amounts of stock. Mor- 
gan's London house, formerly known as J. S. Morgan and Com- 
pany, but at present Morgan, Grenfell and Company, also held, 
it was revealed, large amounts of stock. The holdings in the 
name of Luke H. Cutler, amounting to 17,395 shares, were gen- 
erally considered to be stock owned by John D. Rockefeller. 
Of the foreign stockholders, the " Dutch Syndicate " was shown 
to be the largest, its holdings reaching 216,870 shares of common 
stock. The Rothchilds were also disclosed as large stockholders. 
A considerable number of conspicuous American individual cap- 
italists and banking firms were entered on the books as stock- 
holders in varying degrees of ownership, large and small. 



CHAPTER XII 
MORGAN AS "THE SAVIOR OF THE NATION" 

All previous panegyrics lavished upon Morgan became 
stale and inadequate compared to the apotheosis of him 
during the panic of 1907. What climax of earthly splen- 
dor does Morgan reach? He becomes the "Savior of 
the Nation." 

Around their genesis, methods and characters, the 
magnates weave romantic yarns. They supply the in- 
spiration ; a host of writers and orators, trained to trans- 
fer that romancing into catchwords and phrases, carry 
it to the people and popularize it until it becomes an al- 
most adamantine tradition. Always it is the same 
species of romance ; the toil, the thrift, the integrity, the 
wonderful ability by which the magnates reaped their 
fortunes; their heroism in time of war, their saving 
philanthropy in all great crises. 

The audacity of these " literary " puffers is as great 
as the imposture of the magnates whom they cover with 
adulation. In the very commission of vast frauds and 
thefts, the magnates will pose as public-spirited, patriotic 
men. Their puffers hasten to paint them likewise. 
There is no judicious waiting until time has receded, and 
the actual facts are more or less forgotten. The very 
enormities of the magnates are at once transformed into 
acts of the greatest purity, and the people are called upon 
to applaud. In every conceivable manner the press, or at 

287 



288 HISTORY OF THE GREAT AMERICAN FORTUNES 

least a considerable section of it, is manipulated to coun- 
teract the effect of disclosures. 

A CHARACTERISTIC EULOGY OF MORGAN. 

Shortly after the panic of 1907 had set in, an article 
(and it was one of many such productions) entitled 
" Morgan the Magnificent " was published in a " popu- 
lar magazine." x Its bombastic style, if nothing else, 
must provoke a wondering interest, yet it was strictly 
in accord with the quality of most of the matter pub- 
lished in books and magazines. This trash was called 
" popular " not because the people wanted it, but because 
to a great extent many publishers considered it " safe." 
It did not antagonize the vested interests of wealth. The 
article began with this lurid introduction : 

There were scenes in the saving of Wall street by John 
Pierpont Morgan that never can be written; things said and 
done that cannot and should not even be remembered, even in 
those days of excitement, horror and confusion ; heroism, crimes, 
blunders, treacheries and martyrdoms that spanned the whole 
capacity of man for glory or shame; for, until the continent 
came, half -crying, half-cursing out of the trembling madness 
that threatened to bring down the banking system of the coun- 
try into ruins, smash the credit of the nation and smirch its 
name, men were in a nameless bewilderment of fear beyond 
words to express, as in the presence of some impending and 
irresistible convulsion of nature the boldest and keenest become 
craven and stupid. 

Plain Mr. Morgan, fresh from the dronings of a great Epis- 
copal church convention at Richmond, was suddenly aroused by 
the peril of the financial situation to a demonstration of cour- 
age, strength and personal masterfulness that brought order and 
confidence out of chaos and despair. 

And there is a little history to compare to the sight of this 
stout, secretive American banker of seventy years withdrawing 

1 " Pearson's Magazine," issue of February, 1908. 



MORGAN AS "THE NATION'S SAVIOR" 289 

from the passionless company of bishops and ministers intent 
on religious ideals, to take command of the fierce, clashing 
money forces of Wall street, gone crazy out of sheer fright 
to become the protagonist and hero of the most cynical, sus- 
picious, treacherous, cruel, arrogant and cowardly human ele- 
ments in the world. 

It might well be imagined that Morgan, the " connois- 
seur of art," the " lover of literature," the great arbiter 
elegantarium, would have sent for the author of this 
perpetration and caused him to be the bastinadoed on the 
spot. Evidently in the absence of proof to the con- 
trary Morgan was pleased with the confection. It 
would not be worth notice here were it not for the fact 
that the point of it that Morgan was the " Savior of 
the Nation " was gravely and repeatedly pressed for- 
ward by many other writers and publications. 

In scrutinizing Morgan's career, one prodigious vir- 
tue is encountered. It is that of consistency. The qual- 
ity of his patriotism and heroism never changed from the 
time of his introduction into business. That rifle sale 
at the outbreak of the Civil War was the first exhibition 
of his intense patriotism. In 1894 his patriotic nature 
was again displayed consistently when he and his clique 
squeezed a profit of $18,000,000 or more from the Gov- 
ernment in a time of need. In the panic of 1907 his 
never-failing patriotism was even more prominently 
shown. 

While the effusions of the " popular writers " were 
wending the rounds of the country, a recalcitrant United 
States Senator was boring the august Senate of the 
United States with a long, tiresome speech. The bulk 
of the august Senate did not care to hear what this Sen- 
ator, one La Follette, of Wisconsin, had to say, but were 
compelled to by the rules. The Senate of the United 



290 HISTORY OF THE GREAT AMERICAN FORTUNES 

States was most sensitively jealous of its prestige and 
dignity. Most of its members were multimillionaires. 
La Follette lacked that highly important qualification. 
Still more, he was painfully deficient in caste in another 
respect. He had not bought his way into the Senate of 
the United States, thereby outraging one of its most 
sacred canons. Hence he could give no real test of 
standing or any guarantee of wise, conservative states- 
manship. 

But the majority of his colleagues had good reason 
to be impatient of La Follette's speech. His was a voice 
from the past. They represented the newer order, that 
of centralized industry, and a Government run directly 
by the magnates themselves. He was a relic of the old 
creed, that of the age of competition in industry. 

For four long days, on March 17, 19, 24 and 29, 1908, 
he delivered his lugubrious wail. " In their strife for 
more money, more power more power, more money," 
he explained in describing the great magnates, " there 
is no time for thought, for reflection. Government, 
society and the individual are swallowed up in the strug- 
gle for greater control." Thus he stumbled through 
mazes of facts the purport and interpretation of which 
he did not understand. Neither did he comprehend the 
fundamental fact that commercial upheavals are not the 
work of individuals, but of the whole capitalist system; 
that certain powerful individuals or interests could ac- 
celerate or retard them, but could not be held responsible 
for their causation. According to him, a crowd of con- 
spirators, headed by the Standard Oil Company and 
Morgan had deliberately brought on the panic; he ful- 
minated against them and denounced them as arch crim- 
inals. 

Amid his accusations, lamentations and platitudes, 



MORGAN AS " THE NATION'S SAVIOR " 2Q1 

Senator La Follctte embodied certain facts of real his- 
toric value facts confirmed by the records of what 
actually took place, and familiar to all close observers 
of events during the panic. 

The panic of 1907, like previous panics, supplied the 
propitious opportunity to the great magnates to crush 
out lesser magnates and seize the control of their prop- 
erty. 

The requirements of industrial centralization de- 
manded the effacement of certain minor magnate groups 
which, from the point of view of the great magnates, had 
possessed themselves of a rather dangerous degree of 
industrial and financial power. These ambitious little 
magnates had imitated the methods of the great ; they had 
combined fraudulent financial manipulation with the op- 
pressive exercise of political power, and thereby had 
tricked or forced out the owners of various properties, 
and had then vested the ownership of those properties 
in themselves. The form was the usual one of organiz- 
ing large corporations, with immense amounts of wa- 
tered stock. These corporations were built upon the 
ruin, extinguishment or buying out of numbers of former 
independent business men. 

HOW THE LITTLE MAGNATES GET THEIR MLLLIONS. 

One of these minor capitalist cliques was what was 
called the " Heinze-Morse-Thomas Group." Its control 
comprised twelve banks and two trust companies; a 
coastwise steamship company, consolidated by the inclu- 
sion of a number of steamship companies; large copper 
mines, a trust in ice, and various other properties. The 
control of some of these properties was largely secured 
by means of the enormous profits robbed from the poor 



HISTORY Otf THE GREAT AMERICAN FORTUNES 

by the exactions of the Ice Trust, and this robbery was 
made possible and easy by means of a corrupt alliance 
between Morse and the Tammany administration in New 
York City. 

Before organizing the Ice Trust, Morse had been an 
inconspicuous banker. In the course of this business, 
he had dealings in discounting the notes of various in- 
dividuals and firms engaged in the selling of ice. Con- 
ceiving the idea of forming a trust in that necessity, he 
set about to crush out the small dealers. One of his 
first steps was to assure himself of the collusion of 
powerful politicians ruling the government of New York 
City. 

In its investigation of the administration of New York 
City, the " Mazet Committee " an investigating body 
appointed by the Legislature in 1899 exposed the con- 
spiracy between the Ice Trust, on the one hand, and, on 
the other, the Dock and other municipal departments, to 
create and maintain a monopoly of New York's ice sup- 
ply. Mayor Van Wyck, a puppet of the big Tammany 
leaders, subsequently admitted in his testimony, before 
Judge Gaynor, of the New York Supreme Court, that 
he had obtained five thousand shares, worth $500,000, 
of Ice Trust stock. He alleged that he had paid $57,000 
in cash for them. Pressed for proof to substantiate his 
statement, he failed to prove that he had actually paid 
anything. The testimony before the " Mazet Commit- 
tee " conclusively showed that the corrupt arrangement 
between the Ice Trust and the city officials was such as 
to compel the people to pay sixty cents a hundred pounds, 
and that the trust had stopped the sale of five-cent pieces 
of ice, practically cutting off the supply of the very poor. 2 

2 See " The History of Tammany Hall." 



MORGAN AS " THE NATION'S SAVIOR " 293 

With its assured monopoly, the Ice Trust declined to 
make the slightest concession. 



MILLIONS FROM SUFFERING, DISEASE AND DEATH. 

The result was a noticeably great increase in the rate 
of mortality among the children of the poor. Large 
numbers of families, living on the most precarious edge 
of destitution, could not afford to pay the extra five cents 
demanded for a piece of ice. The milk soured and acted 
like poison on the children. The increasing number of 
deaths in successive summers when the terrific heat made 
ice an absolute necessity, especially in the congested tene- 
ments, could be traced, in large part, to the methods of 
the Ice Trust. Millions of other people who could ill af- 
ford to pay the exactions demanded were compelled to 
give up extra tribute or go without ice. 

This was not a temporary condition; it has continued 
so ever since the organization of the Ice Trust; the 
methods then adopted prevail now. Neither were the 
methods any different from those of capitalism in every 
field. The invariable principle upon which capitalists 
acted, and by which they tremendously augmented their 
profits, was to sell necessities at the very highest price 
when the people needed them most. In the depths of 
winter the price of coal was always raised to an ex- 
orbitant point. While giving his bits of donations for 
the founding of hospitals, the successful capitalist reaped 
his millions from conditions productive of vast suffering 
and disease on every hand. 

The more profits that he made, the more of a financial 
genius he was accounted by his class, and by all who 
were influenced by the standards of that class. As soon 



294 HISTORY OF THE GREAT AMERICAN FORTUNES 

as Morse proved that he could exact immense profits, he 
was hailed as a very foremost and successful capitalist. 
The newspapers began giving extended notices of him, 
the price of Ice Trust stock went up in Wall street, and 
fine men and women in elegant society were only too 
eager to get hold of stock paying such rich dividends. 
True, charges of violating the law were made against 
Morse and his associates, but those charges were not 
based upon any concern for the mass of people, nor upon 
any indignation at the privations, suffering and deaths 
caused by the methods of the Ice Trust ; they were made 
solely on behalf of the smaller firms whom Morse had 
forced out of business. Jerome, for some years Dis- 
trict Attorney for New York County, could discover no 
criminality in any of Morse's methods, and caused crim- 
inal proceedings brought against the Ice Trust officials 
to be dismissed. A suit, however, brought by the At- 
torney General of New York State against the Ice Trust 
for violation of the State anti-monopoly act is now pend-' 
ing. 

From this process of exaction and indirect murder on 
a great scale, the Ice Trust's profits became very great. 
The money thus taken in, Morse used to finance other 
enterprises. Buying up the control of a number of 
coastwise steamship lines, he consolidated them into 
one corporation, with the familiar accompaniments of 
stock watering and juggling. He allied himself with the 
Heinzes who owned large copper mines in Montana, and 
whose manipulation of the politics and politicians of that 
State was somewhat similar to that Morse used in New 
York City. Also, he made a coalition with Thomas, who 
controlled some New York banks. 

On the surface this seemed a very powerful combina- 
tion ; not an opportunity was lost by Morse and his asso- 



MORGAN AS " THE NATION^ SAVIOR " 295 

ciates to spread abroad the impression that they were 
too formidable to be overthrown. 



THE GREAT MAGNATES LIE IN AMBUSH. 

These men made much noise in the financial world, 
and dashed around with prodigious belief in their in- 
vincibility. They were vaunted as great financiers; 
doubtless inflated by their own success, they esteemed 
themselves so, and judged themselves fully able to cope 
with the great magnates. In the meantime, the Morgan 
and Rockefeller group was carefully observing their op- 
erations, and awaiting the ripe time when they could be 
crushed out at one blow. The Standard Oil Company 
wanted those copper mines, and the steamship company 
organized by Morse was considered a competitive menace 
to railroad lines controlled by the Morgan and Rocke- 
feller interests. 

Senator La Follette's account of events that followed 
was accurate as to the facts. In his speech in the United 
States Senate he gave this narrative: 

Suddenly, in the first days of October, somebody (to use a 
Wall street phrase) began to "smash United Copper on the 
curb." The stock broke badly. Standard Oil was getting under 
way. Doubtless, never suspecting the source, Heinze, through 
his brother, a member of the Stock Exchange, and through 
brokers, bought and bought until United Copper went out of 
sight, carrying down Heinze's brother, one firm of his brokers, 
and involving the Morse-Heinze banks in the crash. 

Up to this point the panic had been well in hand, but with 
the revelations following hard upon clearing house investiga- 
tions, it slipped its bridle, and the situation assumed a serious 
aspect. But not for one moment did Morgan or Standard Oil 
miss the opportunity offered. Morse and Heinze were forced 
out. They were compelled to reorganize their directorships, and 
substitute semi-dependent Standard Oil men as their successors. 



296 HISTORY OF THE GREAT AMERICAN FORTUNES 

They were forced to sell their stocks for what they could get. 
Morgan attacked Morse's Consolidated Steamship Company 
stocks and bonds, and Morse was ultimately forced to surrender 
his steamship company combine, which he did. 

They went after the Knickerbocker Trust Company, Charles 
T. Barney, president, and close ally of Morse's. It was charged 
in New York that the interests deliberately started a run on 
the Knickerbocker. Morgan was appealed to for aid. Morgan, 
whose plaudits have been sounded right here in this Chamber, 
was in a position to follow carefully every step and phase of 
this proceeding. In the first place, Morgan gave out, as re- 
ported in Wall street, that the Knickerbocker would be supported 
if it met the demands of the depositors who had started a 
run upon it. There was nothing in subsequent events to indicate 
that there was any sincerity in that promise, but an analysis of 
every step is convincing to the contrary. Support was not given ; 
it was withheld. After the company, relying upon that pledge, 
had paid out millions, it was forced to close its doors, and Barney 
went to a suicide's grave. 

Barney was likewise a director in the Trust Company of 
America, a comparatively new institution, with a few System 
directors, giving the great groups a semi-interest in the institu- 
tion, though they have not yet taken it over. The raid of 
Heinze, Morse, Barney et al., and the latter's directorate con- 
nections with the Trust Company of America, caused public 
suspicion to fall upon it. A strong run was started. This was 
not on the program, but as the Vanderbilts, allies of the Stand- 
ard Oil, were represented on the directorate of the Trust Com- 
pany of America, Standard Oil was bound to offer some assist- 
ance. Though gold and bank notes were ostentatiously piled on 
the counters to impress depositors, and young Vanderbilt offered 
as an exhibit of resources and placed at the teller's window, the 
excited depositors persisted in demanding their money. 8 

In a day, as it were, the Morse-Heinze-Thomas group 
was smashed into nothingness, and its properties seized. 
If the experience of those venturesome little magnates 

8 " Centralization and Community of Control in Industry, 
Franchises, Transportation and Finance The Panic of October, 
1907, and Its Lesson." Speech of Hon. Robert M. La Follette 
of Wisconsin, etc., 21-22, 



MORGAN AS " THE NATION'S SAVIOR " 

had ended there, they would have had cause to rejoice 
over their good fortune. But their rout had to be made 
complete. The Federal authorities began to take a sud- 
den interest in their operations. Where previously the 
Government's prosecuting officials had been wholly un- 
aware that Morse, Heinze and Thomas had been commit- 
ting fraud in their financial methods, they now spied out 
the fullest evidences. From certain quarters proofs were 
offered of violations of the law by the fallen trio. The 
United States District Attorney's office in New York 
City became alive with energy. It caused grand jurors 
to investigate, and showed striking official zeal in the 
prosecution. Heinze was indicted, and Morse brought 
to trial, convicted, and sentenced to fifteen years in 
prison a verdict from which he appealed. The United 
States Circuit Court of Appeals affirmed the verdict, 4 
and Morse is now serving his term in the Federal prison 
at Atlanta. 

Morse and Heinze learned two valuable lessons which 
all aspiring little magnates might well take to heart: 
First, that it is extremely unwise to cross the interests 
of the really big magnates ; and, second, that those mag- 
nates can use the criminal machinery of the courts against 
opponents of their own class, not less than against labor 
leaders, labor unions and the propertiless in general. 

But the grasping of the properties of the ousted com- 
bination were not the only seizures during those harvest 

4 During his commitment in the New York city prison the 
United States judges allowed him to go out every day in order 
" that he might attend to necessary business." Of the vast num- 
ber of persons convicted of crime, not a single instance has ever 
been known of a poor prisoner being allowed to leave prison 
during the day so that he might work for his family. The court 
decided later that Morse could go free under bail pending the 
decision of his appeal. No poor prisoner was allowed this priv- 
ilege. 



298 HISTORY 0$ THE GREAT AMERICAN FORTUNES 

days of the panic of 1907. The electric apparatus fac- 
tories of the Westinghouse Company had long been in 
the way of the Standard Oil Company, which owned 
the General Electric Company. The Standard Oil Com- 
pany exercised a financial pressure during the panic that 
soon drove the Westinghouse Company into an extrica- 
tion, from which it escaped only by becoming a Standard 
Oil property. And, in the conferences held by the Wall 
street financiers during the early days of the panic, Mor- 
gan learned that the control of the Tennessee Coal and 
Iron Company, in the form of stock, had been placed 
with the Trust Company of America by John W. Gates 
and his associates to secure loans. This was informa- 
tion of the highest and most momentous value. 



THE STEEL TRUST ABSORBS A DANGEROUS COMPETITOR. 

The Tennessee Coal and Iron Company was the most 
dangerous competitor of the Steel Trust. It was the 
one great competitor having its own sources of iron ore 
and coal supply. In the fall of 1907 it owned, it was 
estimated, from 500,000,000 to 700,000,000 tons of iron 
ore, 2,000,000,000 tons of coal, and " very large quanti- 
ties of flux and fluxing material." All of these coal de- 
posits were within a radius of thirty miles of its plant in 
Birmingham, Ala. 5 The owners of this company were 
planning improvements which would have made it an 
even more serious competitor of the Steel Trust, and 
they had plans under way of merging the Republic Steel 
Company with their corporation. Moreover, the Ten- 
nessee Coal and Iron Company was foremost in the 
development of the open hearth system of making steel 

5 Testimony before the United States Senate Committee on 
Judiciary, February 2, 1909. 



MORGAN AS " THE NATION'S SAVIOR " 299 

rails. Its rails were in greater demand, and brought 
higher prices, than those of the Steel Trust. 

In the difficult financial position of the Trust Company 
of America, the Morgan and Rockefeller interests, work- 
ing in unison, saw their great opportunity of eliminating 
the competition of the Tennessee Coal and Iron Com- 
pany. To prevent itself going into bankruptcy, the 
Trust Company of America needed large and immediate 
amounts of cash, which was scarce. Morgan and his 
clique had the cash. The condition insisted upon by 
Morgan was that the company should sell him the stock 
of the Tennessee Coal and Iron Company that it was 
holding as collateral for loans. Hard pressed, the Trust 
Company had to yield, and sell the stock at the low price 
offered. The next move was to make the Tennessee 
Coal and Iron Company a part of the Steel Trust. 

There was, however, an obstacle. The Federal anti- 
trust law prohibited such combinations. How could this 
situation be overcome? President Roosevelt was inces- 
santly and gustily threatening the great magnates with 
the enforcement of this law. But apparently Morgan 
knew Roosevelt much better than the country knew him. 
He undoubtedly reckoned that Roosevelt's talk was mere 
words, and that Roosevelt would prove his subservience 
anew in acts. 

The story was current that Morgan, on arriving at 
the White House, informed Roosevelt that unless the 
merger of the two steel companies was allowed by the 
Government, the Trust Company of America would go 
down in failure, causing a train of other bankruptcies, 
and the panic would be manifold intensified. Whatever 
were the reasons for Roosevelt's submission, he gave his 
consent. At that very time the courts were enforcing 
the anti-trust law with a construction that no one had 



300 HISTORY OF THE GREAT AMERICAN FORTUNES 

dreamed of when the law was passed. The eminent 
judges discovered that labor unions were trusts, and 
issued writs against them on the ground that they were 
conspiracies in defiance of that law ! Roosevelt was bit- 
terly denounced ; e his action, however, mattered little so 
far as the merging of the two corporations was con- 
cerned ; had not the Steel Trust obtained control at that 
particular time it would have inevitably done so at some 
other time, and by another process. 7 According to dis- 
closures before the Senate Committee on Judiciary, the 
Steel Trust made a profit of $67,000,000 by forcing the 

6 Seven United States Senators signed a document severely 
arraigning him for sanctioning a violation of the anti-trust law 
and for practically commanding the United States Department 
of Justice to take no steps for an enforcement of the law. 

Under the caption of " Morgan, Dictator," the Berlin Tage- 
blatt, on December 3, 1907, published a leading article on its 
financial page, urging the prosecution of Morgan for blackmail 
in threatening a more disastrous calamity in case Roosevelt did 
not accede. Under the German laws, said the Tageblatt, Mor- 
gan would have been immediately arrested for blackmail. An 
amusing comment, considering that Morgan and his kind are the 
Government in the United States. 

7 The futilty of the anti-trust law, so far as it is applied to 
capitalist corporations was mockingly shown by Congressman 
Littlefield, one of the Republican dictators of Congress and a 
trust advocate of great skill. In an address to the Illinois Bar 
Association on June 27, 1908, he pointed out : 

"In 1907 the Government had in its service one hundred and 
seventy-one District and Assistant District Attorneys. This lit- 
tle army of lawyers cost the Government in salaries and ex- 
penses $735,612.06, in addition to the salaries of the Department 
of Justice, amounting to $270,965.58. By the exercise of due 
diligence they obtained 9,741 convictions for violation of the law. 
The average number of convictions for violation of the Sherman 
Anti-Trust law during the last six and one-half years is a little 
more than one a year, only seven since September 14, 1904. 

" In order to get the full significance of this record it should 
be borne in mind that during this period the Government has 
had available for its use for the enforcement of this special stat- 
ute $500,000 in 1904, and $250,000 in 1908. Since September 14, 
1901, with eight injunctions and seven convictions, $386,242.88 has 
been expended for this special purpose, resulting in fines of only 
$96,000," 



MORGAN AS " THE NATION'S SAVIOR " 3OI 

Trust Company of America to sell the control of the 
enormously valuable plants and mines of the Tennessee 
Coal and Iron Company at a preposterously low price. 

Where did Morgan and his associates get the money 
with which to carry on the process of terrorizing the 
country and gathering in immense industrial and other 
properties? Again, the people had another of those 
frequently occurring vivid opportunities of seeing how 
thoroughly the United States Government was an instru- 
ment of the capitalists. In the banks there were more 
than two hundred million dollars of money wrung funda- 
mentally from the sweat of the working class in taxa- 
tion. The few oligarchs controlling the great banks 
were allowed to use this money as though it were their 
private property. They declined to loan any money to 
anyone until their plans were ready, and when they did 
loan, it was at extortionate rates of interest. Even this 
complete transference of Government funds did not sat- 
isfy them; they demanded more. The Government at 
once responded. Cortelyou, Secretary of the Treasury, 
instantly permitted the national banks to issue thirty 
million dollars more in paper currency, and made the 
mints work night and day to turn out fresh coin. 

Posing as the savior of the country, Morgan came for- 
ward at the auspicious time, on the afternoon, of Oc- 
tober 24, 1907, and magnanimously announced his de- 
sire to " relieve the tension." The entire capitalist class, 
excepting the very few magnates thus engineering the 
whole situation, was clamoring for loans of money. The 
loans were finally given on that afternoon. The " savior 
of the country " demanded from twenty per cent, up- 
wards for loans, and exacted securities as collateral at 
heavy sacrifices to the borrowers. The money that he 
thus loaned was Government money, squeezed in taxa- 



3O2 HISTORY Otf THE GREAT AMERICAN FORTUNES 

tion from the producers. It was a classic example of 
Government of, for and by the great capitalists. 



NO AID FOR THE UNEMPLOYED. 

While the Government was placing the treasury of 
the United States at the disposal of Morgan, what was 
it doing for the millions of workers thrown into enforced 
idleness and destitution ? By June, 1908, it was conserva- 
tively estimated that perhaps five million workers in the 
United States were out of work, and c6*uld get none. 
Reports from the charity organizations in every city 
showed that the cities were overcrowded with the home- 
less and unemployed. Destitution was rife, and cases 
of starvation of men, women and children, were more 
frequent than the official reports dared reveal. The 
jails throughout the country were crowded with men 
who, thrown out of work, were adjudged vagrants and 
sentenced. Many of the homeless voluntarily committed 
some breach of the law in order to be sent to jail. 
There, at least, shelter and food could be obtained. 
Many towns adopted the plan of deliberately driving 
out the unemployed. Everywhere crime increased; 
driven to absolute necessity, many workers stole, and, 
of course, were dispatched to prison. The Social Eth- 
ical League, of New York City, reported that crime had 
increased fifty per cent, within six months. 

With destitution and starvation everywhere, what did 
the Government, whether National, State, or city, do 
for the unemployed? Nothing except to club and ter- 
rorize them when they presumed to hold street meetings 
to plead for the right to work. 

In the whole sphere of government there was not a 
single real representative of the workers to speak or act 



MORGAN AS " THE NATION'S SAVIOR " 303 

for the workers. The Government was a Government 
elected by the votes of millions of workingmen, yet the 
working class did not have a single mouthpiece in that 
Government A Senator such as Davis of Arkansas 
might rise, as he did, in the United States Senate on 
December 12, 1907, and fiercely denounce "the stock 
gamblers and thieves of Wall street," but, he, and all 
like him, did not speak for the working class, about 
which they cared nothing save to keep it in submission; 
they spoke for the middle class and for that alone. 8 

A CAREER STILL IN EVIDENCE. 

This is the true history, in outline, of the career of 
the great " savior of the country." But it is not all. 
Unquestionably Morgan has been engaged in a large 
number of other transactions of which no details have 
ever become public. Some very recent happenings, how- 
ever, are tolerably well known. He and other Ameri- 
can bankers were dissatisfied with the placing of a $27,- 
500,000 loan with European bankers, and insisted upon 
the United States Government their Government 
demanding that they should have a share. Nor is it so 
long ago that another transaction of Morgan's became 
public. He " consented " to take a $30,000,000 six per 
cent, issue of New York City's bonds in order " to save 
New York's credit." Did he pay for these bonds in 
cash? Nay. He signed a check for $15,000,000 on 
the First National Bank of New York, and another for 
$15,000,000 drawn on the National City Bank of New 
York. Whose money, virtually, was it in these banks 

8 A very curious speech Davis' was a belated product of the 
brand of the year 1880. (See Congressional Record, First Ses- 
sion, Sixtieth Congress, Vol. xlii, No. 8:285-299.) Davis spoke 
for the interests of the Southern cotton planters. 



304 HISTORY Otf THE GREAT AMERICAN FORTUNES 

against which Morgan's checks were drawn? Money 
deposited by the United States Treasury. In addition, 
he obtained tens of millions more of New York City 
bonds at a high rate of interest. The heroic qualities of 
the " savior of the country " are further illumined by 
Comptroller Metz's statement that he, Metz, in order 
to get Morgan to accept New York City's bonds, 
had to betake himself to Albany, and get a special act 
passed by the Legislature increasing the interest on the 
bonds. Another such illustration of Morgan's methods, 
or those of corporations controlled by him, will be given. 

At an expense of more than $22,000,000 (reckoned to 
November, 1909) New York City has constructed a series 
of extensive, modern piers on the Hudson River, from 
Little West Twelfth street to Twenty-Second street. 
These piers are called the Chelsea Pier Improvements. 
The entire cost has been defrayed by New York City, 
and the money was obtained from selling issues of city 
bonds. The interest rate has varied from three, to 
nearly five, per cent. Part of the bonds are payable in 
thirty years, a very small portion in forty years, and 
most of the total issue " matures " in fifty years. 

These piers have been leased to three steamship com- 
panies, one of which is the International Mercantile 
Marine Company, organized by Morgan, another is the 
Cunard Line, a third the Compagnie Generale Transat- 
lantique. These companies secured from the Tammany 
administration, in 1904, a lease of such a scandalous 
character that the city does not get enough revenue to 
pay even the interest on the bonds issued for the piers. 
On December 16, 1903, the International Mercantile 
Marine Company offered, in writing, to take a lease of 
five full piers and one half pier at an annual rental of 

9 Statement of New York City Dock Department. 



THE NATION'S SAVIOR " 305 

$45o,ooo. 10 The question of awarding this lease was 
still pending when Tammany came back into power. 
The International Mercantile Company then secured the 
return of its first offer, 11 and a thirty-year lease was 
made later by which the three companies secured nine 
piers at an annual rental of $565,ooo. 12 Inasmuch as 
the International Mercantile Marine Company alone had 
originally been willing to offer $3,392,351.46 for the 
nine piers for a thirty-year period, this change in the 
terms entailed a loss to the city of nearly three million 
dollars. The result can be stated as follows: 

The Chelsea improvements have cost the city $22,- 
000,000. 

The annual interest charges that the city is required to 
meet are $844,800. 

The amortization charges are $220,000. 

The calculated annual depreciation is $345,553.50. 

The total annual charges are, therefore, $1410,- 

353-50. 

The annual rent received from steamship companies 
for these piers is $565,000. 

Hence, the net loss per annum to the city is $845,- 

353-50. 

The loss to the city per day is $2,316.04. 

Thus New York City's officials were prevailed upon to 
lease the largest and finest piers in New York, if not 
in the United States, at a lower rental than the city had 
been receiving for older and far inferior piers, so that 
New York City loses $845,353.50 every year. And while 
Morgan's International Mercantile Marine Company was 
profiting by this transaction, Morgan was giving $20,- 

10 New York City Dock Department Report, 1903 : 942- 

11 Sinking Fund Report, 1904:2. 
"Ibid., 1006:786. 



306 HISTORY OF THE GREAT AMERICAN FORTUNES 

ooo a year to the Bureau of Municipal Research to in- 
vestigate, and expose, petty graft! Comment is need- 
less. 

These transactions, however, are small compared to 
Morgan's still more recent activities. On December 2, 
1909, Morgan personally bought the majority stock of 
the Equitable Life Assurance Society, which Thomas 
F. Ryan, in 1905, had purchased from the Hyde fam- 
ily. By this purchase Morgan acquired the ownership 
of the stock around which revolved such a bitter contest 
for possession four years previously a contest which 
(as already described) caused the great insurance scan- 
dals and revelations of 1905. By the purchase of this 
stock, Morgan obtained control of assets rated at $470- 
000,000; he paid, it was reported, approximately $2,- 
500,000 for Ryan's stock. Thirteen days after this pur- 
chase, he bought a number of telephone lines, competi- 
tors of the Bell Telephone Company, probably to unite 
them with the Bell system. A legislative committee in 
Ohio has been investigating charges that bribery was used 
to pass a bill allowing this merger. 

Morgan's next step revealed how rapidly he was ex- 
tending his already gigantic power. By purchase, com- 
bination or " community of interest " he acquired the 
Guarantee Trust Company of New York, a ninety-mil- 
lion dollar concern ; the Mercantile Trust Company, with 
resources of $68,475,000; the Equitable Trust Company, 
with assets of $63,800,000; the Morton Trust Company 
formerly controlled by Ryan ; the Fifth Avenue 
Trust Company, and other very powerful banking insti- 
tutions. Morgan's power now embraces banking and 
trust, insurance, industrial and transportation companies, 
and controls or influences capital estimated, at the very 



MORGAN AS " THE NATION'S SAVIOR " 307 

least, at more than ten billions of dollars. 1 * How much 
of this stupendous sum Morgan personally owns or con- 
trols, or what alliance he has with the Rockefellers or 
other great money interests, are factors not definitely 
known. After consummating this Money Trust, he was 
hailed as the " Money Emperor," and his immense pos- 
sessions were denounced as an impressive and ruthless 
example of one-man power, although the step was, in 
reality, another inevitable bound in the centralization 
and overlordship of the country's resources. Only those 
blind to this development were astonished by it. 

Finally, to end the narrative of Morgan's career, there 
remains the huge expropriation of resources, estimated 
at a value of from $900,000,000 to $2,000,000,000, in 
Alaska, and of vast stretches of water-power sites in 
that Territory, and in various of the Western States 
sites intrinsically and potentially valued at hundreds of 
millions, if not billions, of dollars. The successful ef- 
forts under way on the part of great capitalist interests 
to obtain immense stretches of coal, copper and other 
mineral land, timber lands and water-power sites, were 
resisted by Gifford Pinchot, United States Chief For- 
ester. A critical controversy ensued, in 1909 and 1910, 
between Pinchot and Ballinger, Secretary of the In- 
terior. Charges were made that Ballinger had, before 
his prior appointment as Land Commissioner, acted as 
attorney for certain of the claimants, especially the 
Cunninghams, who had obtained great tracts of land 
of the most valuable resources. A Congressional in- 
vestigation resulted. 

This investigation is still (at this writing) going on. 

13 Some authorities place the amount at fully twelve billion 
dollars. 



308 HISTORY OF THE GREAT AMERICAN FORTUNES 

Many facts, however, popularly regarded as startling, 
have already been brought out; in no sense, however, 
were they other, at basis, than a continued story of the 
fraudulent appropriation of public lands which has been 
going on in this country for three centuries. Pinchot 
and L. R. Glavis, Chief of the Field Division of the 
General Land Office at Seattle, Washington, were, upon 
various pretexts, dismissed from office after they had 
exposed, and vainly sought to stop, the gigantic land 
frauds in progress. 14 This, as we have so copiously seen 
throughout this work, has been the fate of so many hon- 
est public officials obstructing capitalist fraud. On 
January 28, 1910, Glavis testified before the Joint Com- 
mittee of Congress that he had been requested by Bal- 
linger to hold up his investigations of fraud until after 
the election (of 1908), and that Ballinger supplied secret 
information of the U. S. Land Office to the Cunningham 
claimants, who, the testimony showed, were dummies 
acting for the Guggenheims. 15 Some of the charges 

14 Of Glavis, Mr. Heney, retained by the Government, under 
Roosevelt, to prosecute powerful land thieves, wrote to the 
editor of "Collier's Weekly": 

" This will introduce Mr. L. R. Glavis, who is Chief of Field 
Division of the General Land Office at Seattle, Washington. I 
am in a position to know from experience with him that Mr. 
Glavis possesses sterling integrity, as well as a high degree of 
practical intelligence. 

"He possesses information in regard to a gigantic coal-land 
swindle in Alaska by Guggenheim and others, and I want you 
to know the facts, so that you will be in a position to act when 
the proper time comes. Mr. Glavis is actuated solely by a de- 
sire to prevent this fraud from being accomplished. He is ready 
and willing to lose his position, if necessary." " Collier's 
Weekly," issue of February 19, 1910. 

16 The assertion was made, by at least one member of Con- 
gress, that Ballinger's appointment as Secretary of the Interior 
had been brought about by the Guggenheims in return for a large 
campaign contribution that they had made. This assertion so 
far has not been proved. It should also be noted here that the 
election of one of the Guggenheims as United States Senator 



MORGAN AS " THE NATION'S SAVIOR " 309 

made by Glavis were confirmed in a rather unexpected 
manner. It appeared, by an authoritative statement, 
that J. P. Morgan and Company had formed a syndicate 
with the Guggenheims, in 1906, and that they had taken 
over the Cunningham claims. On February 18, 1910, 
John N. Steele, general counsel of the syndicate, and 
Stephen Birch, its managing director in Alaska, volun- 
tarily appeared before the Joint Committee of Congress, 
and made this statement, also denying that the syndi- 
cate had ever received money, grants of land or special 
rights from the Government. In its own defence, the 
General Land Office, on January 26, 1910, ostentatiously 
made a public statement evidently intended to discredit 
Pinchot, showing that the most extensive land frauds 
had been consummated in the years immediately preced- 
ing the Taft administration ; that within eight years fifty 
thousand acres of coal lands, valued at $10,000,000, had 
been obtained by fraud, 16 and that it was expected to 
recover these fifty thousand acres. 

Inasmuch as the Joint Investigating Committee of 
Congress has not concluded taking testimony, its report 
is not available, and Ballinger's full defence cannot, 
therefore, be given. The testimony taken thus far, how- 
ever, has tended to show the most enormous frauds in 
either the successful or attempted acquiring, through 
dummies, of mineral, timber and water-power lands val- 

from Colorado was followed by charges of the most widespread 
corruption. 

*". . . It appears from these reports that during the last 
eight years coal lands within the United States have been ob- 
tained by fraud to the extent of over 50,000 acres. These are 
usually the very best of the coal lands, and are to-day worth 
easily $10,000,000. If mined on a royalty sufficiently low to en- 
able independent operators to compete with existing coal com- 
binations the returns to the Government would reach over 
$100,000,000. . . ." Statement of the General Land Office, 
January, 26, 1910. 



3IO HISTORY 01? THE GREAT AMERICAN FORTUNES 

ued at hundreds of millions, if not billions, of dollars, 
thus showing that the seizing of land, begun in settlement 
times, has continued through more than three centuries 
up to the very present without any serious interruption. 

Commencing his career with the sale of those con- 
demned rifles to the Union Army during the Civil War, 
Morgan has prospered until he now towers as a financial 
colossus and as one of the actual rulers of the land. 
He lives in a splendid mansion on Madison avenue, New 
York City, and for his private gratification built, ad- 
joining it, a fine, spacious marble art gallery, filled with 
the costliest works of art. He professes a passion for 
literature, and his library is extensive. He is even a 
dictator of the morals of other people, as witness his 
stopping of the opera " Salome " when it was first pro- 
duced at the Metropolitan Opera House, of which he is a 
patron and director. Money, grandeur, prestige, power, 
all are his. And all the while the prisons are crowded 
with petty thieves. 




STEPHEN B. ELKINS. 



CHAPTER XIII 
THE ELKINS FORTUNE 

With a fortune conservatively estimated at $50,000,- 
ooo, but undoubtedly reaching much more, Stephen B. 
Elkins is one of the notable multimillionaires of the 
United States. Compared to the wealth of such mag- 
nates as the Vanderbilts, the Goulds, Morgan and Hill, 
Elkins' possessions are not remarkable; he can not be 
placed in their special class. But his wealth has ele- 
vated him to be one of the most powerful politicians 
in the country; he is one of the active ruling leaders of 
the United States Senate; the State of West Virginia 
is virtually his province, not only politically, but to a 
great extent, as his personal property. He owns or 
controls many of its mountains and its coal mines, and 
much of its other natural resources; some of its rail- 
roads are his, and also its traction companies. The 
West Virginia Central Railroad, sold a few years ago to 
the Goulds for $18,000,000, was controlled by him; this 
was but one of his railroads. In the same State he owns 
banks and security companies, construction corporations, 
coke plants, water works and other diversified proper- 
ties. He has large mining, land and other interests in 
the West. 

WEST VIRGINIA IS HIS PROVINCE. 

Elkins is the great lord of wealth whose word is law 
in West Virginia. Whether the State goes Democratic 

3" 



312 HISTORY OF THE GREAT AMERICAN FORTUNES 

or Republican matters little ; its control is a strictly fam- 
ily affair. While he is the Republican ruler, his father- 
in-law, Henry G. Davis, reputed to possess a fortune of 
at least $30,000,000, has long been the Democratic boss. 
Whichever of these political parties has been in power, 
this family has been on the winning side. Some few 
years ago, when " conservative Democracy " gained the 
upper hand over the middle-class elements in the Na- 
tional Democratic Convention, Davis was selected as its 
candidate for Vice President of the United States. The 
forms of " popular government," so-called, still prevail 
in West Virginia, but only to carry out the designs and 
will of such magnates as Elkins and Davis, as in other 
States they are used to execute the plans of magnates 
who rule in them. The Elkins-Davis family ordered the 
legislature to elect Elkins to the United States Senate, 
and the honorable Legislature did it. State and county 
officials, judges and other functionaries owe their incum- 
bency and allegiance to this family. Elkins, at present, 
is the grand factotum of West Virginia politics. Yet 
twenty years ago he was considered an interloper. 

The same wealth that has enabled him to center in him- 
self political and industrial control of an entire State, 
is, it is reported, to bring him a new distinction. His 
daughter, it is rumored, is to marry the Duke of the 
Abruzzi, a member of the royal reigning family of Italy. 
These royal families, as is well known, are extraordi- 
narily solicitous of the preservation of caste ; " noble 
blood," hallowed by ancient ancestry, is of all things, 
demanded as a passport of admittance into the sacred 
circle. And for intimate admission nothing less than 
similar " royal blood " usually suffices. If royalty ex- 
amines ancestry with such scrupulous care, why should 
it not critically examine the origin of the wealth to 



THE ELKiNS FORTUNE 313 

which it attaches itself? Would royalty think of marry- 
ing without having a genealogy duly made out and veri- 
fied? If it is true that the Elkins fortune is to enrich 
the royal family of Italy, surely its history likewise ought 
to be known and treasured in the royal archives. 

Senator Elkins inherited no wealth ; he is wholly " the 
architect of his own fortune." What were the species 
and style of his architecture? According to the routine 
biographies, ordinarily paid for at advertising rates, his 
was the memorable career of a poor boy rising to great 
wealth by hard work, application and superior ability. 
But official documents have a very different tale to tell; 
and while they do not explain how Elkins obtained all of 
his millions, they give enough vivid details of the meth- 
ods by which he first became a millionaire. 

As a young man, Elkins was repeatedly accused of 
being one of Quantrell's band of marauders during the 
Civil War, as to which charge no actual proof can be 
found in the records. After the Civil War he went 
to New Mexico. There he studied Spanish and became 
a member of the Territorial Legislature. His enemies, 
both partisan and personal, brought the accusation 
against him that he was the originator and ringleader of 
the immense land frauds current in New Mexico. This 
particular charge was both unjust and false. Long be- 
fore Elkins drifted into the Southwest the land frauds 
were notorious; what he and others did after the Civil 
War was nothing more than a continuation of what had 
been going on for many years. 

It is characteristic of the way in which American his- 
tory has been written that not a line can be found of 
the gigantic frauds by which tens of millions of acres 
of land were stolen in the Southwest and in the Pacific 
States after the Mexican War, although court records 



314 HISTORY OF THE GREAT AMERICAN FORTUNES 

and other official documents relate enough details to 
make an extended work by themselves. In Chapter II, 
Vol. n, of this work a brief summary of these colossal 
frauds was presented, with the explanation that further 
facts would be more fully set forth in this chapter. 

Under the Mexican colonization laws no individual 
was entitled to, or could claim, more than forty-eight 
thousand acres. The Mexican authority in California 
was overthrown by the American forces on July 7, 1846, 
and elsewhere at about the same time. When it was 
evident that the Mexican power was about to pass away, 
Pio Pico, the Mexican Acting Governor of California, 
at once began to issue fraudulent grants of land, which, 
the court records indicate, were given for bribes. Most 
of these grants were presented in May, 1846. Numer- 
ous other land grants, alleged to have been given by him 
at the same time, were forgeries. The Supreme Court 
of the United States found some of them so when the 
Government later contested their validity. The Mex- 
ican governors corruptly gave some land grants, while 
many other grants were forged, with the signatures of 
the Mexican governors. 

GREAT LAND FRAUDS FOLLOWING THE MEXICAN WAR. 

When the Mexican war was over, American capitalists 
bought from the Mexican holders large numbers of the 
land grants covering many millions of acres of the very 
best and richest agricultural, grazing, mining or tim- 
ber land in California, New Mexico, Colorado, Arizona 
and other sections. In fact, some of these alleged grants 
comprised large portions of the populous cities and towns. 
The American capitalists then made application to the 
United States Government to have the grants confirmed. 



THE ELKINS FORTUNE 315 

In nearly every case the Government denounced the 
grants as forged and otherwise fraudulent, and refused. 
The claims were then taken to the courts. 

One individual, Henry Cambuston, claimed eleven 
square leagues of pasture land on the Sacramento River, 
as having been granted by Acting Governor Pico on 
May 23, 1846. The California courts decided in his 
favor. These local courts throughout California and 
other portions of the West seem to have been in collu- 
sion with the land grabbers, and were often composed 
of judges who were themselves interested in land-grab- 
bing operations. The Government carried the Cambus- 
ton case to the Supreme Court of the United States, as- 
serting that the purported grant was fraudulent and 
forged. The Supreme Court of the United States, in 
December, 1857, handed down a decision expressing 
doubts of the genuineness of the grant, and reversing 
the decree of the California courts. 1 

Another claimant, Fuentes, had the assurance to carry 
his claim to eleven leagues of California territory to the 
Supreme Court of the United States. In his argument 
before this court in December, 1859, United States At- 
torney General Black denounced the claim as " fraudu- 
lent and spurious, a base and impudent forgery." 2 " It 
is not at all difficult to see," Attorney General Black 
continued, " how and when this grant was fabricated. 
It is in the handwriting of Manuel Castro, a part of 
whose business consisted in forging land grants." This 
particular grant, Black stated, was dated Monterey, June 
12, 1843, but it had been forged in Mexico City in 1850. 
" There are several other grants in Manuel Castro's 

1 Cambuston vs. United States, Howard's Reports, Supreme 
Court of the United States, xx : 50-65. 

- Howard's Reports, Supreme Court of the United States, 
xxii : 448. 



316 HISTORY Otf THE GREAT AMERICAN FORTUNES 

handwriting," Black added. 3 The Supreme Court of the 
United States found the grant at issue to be fraudulent, 
and voided it. 4 

James R. Bolton turned up with a claim to ten thou- 
sand acres of land in the vicinity of San Francisco a 
claim worth, at a low estimate, in 1851, more than two 
million dollars. 5 The grant was one purporting to have 
been made to Santillan, a priest, by Pio Pico, on Febru- 
ary 10, 1846. Bolton had his claim confirmed by the 
courts in California on the ground that it was valid, and 
that he had bought it from Santillan in April, 1850, for 
$200,000. The Supreme Court of the United States 
could not be convinced of the validity of the grant and 
dismissed the claim. 6 Another particularly flagrant case 
was that of the claim of Juan M. Luco and Jose Leandro 
Luco to 270,000 acres in California. They claimed that 
this alleged grant was made on December 4, 1845, by 
Acting Governor Pio Pico to one Jose de la Rosa, from 
whom they swore they purchased it. The Supreme 
Court of the .United States, in December, 1859, found 
that the documents were forged. " Its confirmation/' 
said this court's decision of the grant, " was vigorously 
opposed by the counsel for the Government. They [the 
Government's counsel] allege that the documents pro- 
duced to support the claim were forgeries, supported by 
perjuries of persons who had conspired to defraud the 
Government of an immense body of valuable land. 
. . . The whole of the testimony is beyond doubt a 
mere fabrication. ... In conclusion we must say, 
that after a careful examination of the testimony, we 

8 Howard's Reports, etc., xxii:45o. 
4 Ibid., 443-461. 

6 Howard's Reports, etc., xxiii : 343. 
Ibid., 353. 



THE ELKINS FORTUNE 317 

entertain no doubt that the title produced by the claim- 
ants is false and forged." 7 

A claimant, one White, claimed a large tract of land 
in California under a grant alleged to have been made 
to Antonio Ortega. The Supreme Court of the United 
States, in December, 1863, found that the grant was 
fraudulent and forged, and that the evidence was per- 
jury. 8 In the case of Andres Pico against the United 
States for the possession of eleven square leagues of 
land in California, the Supreme Court of the United 
States decided that the grant alleged to have been made 
by Acting Governor Pio Pico on June 6, 1846, was fraud- 
ulent and that the documents were forged. 9 



LARGE ESTATES SECURED BY FORGERY AND PERJURY. 

These were a few of the thirty-six private land claims 
rejected by the Supreme Court of the United States 
up to 1869. They were crude forgeries and the cases 
were not skilfully prepared. But thirty -three other 
claims were confirmed. Most of these were fully as 
fraudulent as those rejected, but the work of forgery 
was so cleverly done, and bought witnesses, well trained 
in the art of giving testimony, gave such corroborative 
evidence, that the majority of the Supreme Court of 
the United States declared that it found itself in a posi- 
tion where it could find no grounds upon which to dis- 
miss the claims. Numbers of these grants embraced 

7 Howard's Reports, Supreme Court of the United States, 
xxiii 151 5-543. 

8 Wallace's Reports, Supreme Court of the United States, 
1:660-682. 

9 Wallace's Reports, Supreme Court of the United States, 
ii : 279-282. 



318 HISTORY OF THE GREAT AMERICAN FORTUNES 

gold and silver mines and valuable timber lands, as well 
as agricultural tracts. 

An example of this successful imposture was the case 
of Hornsby vs. the United States. Hornsby claimed 
that Acting Governor Pico on May 6, 1846, had granted 
40,000 acres of land in California to Jose Roland, from 
whom Hornsby testified that he bought the claim. The 
majority of the Supreme Court of the United States, in 
December, 1869, confirmed the grant on the ground that 
the title was possessed at the time California was ad- 
mitted to the Union. But Justices Davis, Clifford and 
Swayne in a dissenting opinion said : 

. . . The Mexican authority was overthrown in California 
on July 7, 1846, but the history of the times made it clear to 
every intelligent man for a considerable period before this date 
that the country would pass to the jurisdiction of the United 
States. During this period grants of land were made very freely 
by Pio Pico, the Acting Governor, and the records of this court 
show that many of the grants were invalid and fraudulent. 
Doubtless, grants were made by him within that time which 
were valid, but all must agree that every grant which bears his 
signature should be examined with the most careful scrutiny. 
By the record in this case, it appears that the petition for this 
grant is dated May 5, 1846, and the grant, if any was made, 
was on the following day, and did not comply with the require- 
ments of the law conferring power on the Governor of California 
to grant lands. . . . 

No possession of any kind is proved in this case, and the au- 
thenticity of this grant, covering an area of over forty thou- 
sand acres of land, depends upon the testimony of a single wit- 
ness, unsupported by any proof, except the imperfect or mutilated 
expidiente, found among a mass of loose papers on the floor of 
one of the rooms of the custom house at Monterey after the 
Mexican officials had fled on the approach of our forces. 10 

10 Wallace's Reports, Supreme Court of the United States, 
x : 224-245. 



THE ELK1NS FORTUNE 319 

The Congressional committee reports of the period are 
likewise full of evidences of the prevailing frauds. 



AN ORGANIZED SYSTEM OF FRAUD. 

In his report to Congress in 1860, United States At- 
torney General Black described how he had ordered the 
Mexican archives to be collected, and he gave the results 
of that investigation. 

" The archives thus collected," he wrote, 

furnished irresistible proof that there had been an organized 
system of fabricating land titles carried on for a long time in 
California by Mexican officials; that forgery and perjury had 
been reduced to a regular occupation; that the making of false 
grants, with the subordination of false witnesses to prove them, 
had become a trade and a business. . . . There was also 
compiled from the records here a faithful chart of all of the 
professional witnesses or persons supposed to have hired them- 
selves out to do the business of false swearing of claims. To- 
day full biographies of nearly all of the men who have been 
engaged in these schemes of imposture, from governors down 
to the lowest suborned witnesses, can now be furnished when- 
ever necessary. 

Attorney General Black set forth further: 

It must be remembered that the grants in most of these 
fraudulent cases were very skilfully got up, and were supported 
by the positive oaths, not merely of obscure men whose charac- 
ters were presumed to be fair, but also by the testimony of 
distinguished men, who had occupied high social and political 
places under the former governors. Their honesty in many 
cases was never suspected until after the records were brought 
to Washington. They [the fraudulent land claims] passed 
through two lower tribunals, some of them without being ques- 
tioned, and nearly all of them without successful opposition. 
. . . The value of the lands claimed under grants ascer- 



32O HISTORY OF THE GREAT AMERICAN FORTUNES 

tained to be forged is $150,000,000. ... It is vain to look 
for public morality under a government which fails to distin- 
guish between honest titles and fraudulent claims. 11 

Reporting on February 24, 1869, on the claim of Wil- 
liam McGarrahan to a large land grant in California in- 
cluding vast rich mines, alleged to have been granted by 
Acting Governor Pico to Vincent P. Gomez and sold to 
McGarrahan, the House Committee on Claims wrote: 

. . . Gomez, Abrego and Moreno [the secretary of Acting 
Governor Pico] are suitable associates. They are equally no- 
torious for the forgeries and perjuries in which they have been 
concerned. Gome/ and Abrego were the chief instruments in 
the false swearing in the great Limantour swindle that at- 
tracted so much public attention some years ago. Ex-Secretary 
Stanton visited California in 1858 in behalf of the United 
States in connection with land cases, and then found that 
Abrego had been a witness to support thirty-two, and Gomez, 
twelve, claims, most of which ascertained to be frauds or 
forgeries. 12 

The committee went on to say that " many of the 
towns and cities of California are covered by these re- 
jected claims, and if Congress is to readjudicate and re- 
verse one case on ex parte evidence, then the other thirty- 
five will be resurrected, and an army of land sharks, 
lobby agents and lying witnesses will invade the Capitol 
and defile the halls of legislation with their schemes of 
forgery and perjury." The committee referred to " a 
bagful of the affidavits of drunken and venal Mexicans 
who can be hired for five dollars apiece to swear to 
anything." 13 It said that dependent upon the passage 

11 Ex-Doc. No. 84, Thirty-sixth Congress. Also, House Re- 
ports, Third Session, Fortieth Congress, Report No. 261 : 544. 

12 Report No. 261, etc., 1869:535. In one case especially. 
Gomez had been convicted by the Supreme Court of the United 
States of swearing to a false date. .See Wallace's Reports, Su- 
preme Court of the United States, vi : 589. 

"Ibid., 543. 



THE ELKINS FORTUNE 321 

of the McGarrahan bill, was a prize of more than $500,- 
ooo, and that " politicians, lawyers, and editors have taken 
large shares in the lottery; the professional lobby, both 
male and female, have been marshaled behind and around 
McGarrahan. The crowd is impatient of delay, and 
hungry for the spoils of victory." 14 

CORRUPTION OF CONGRESS AND THE COURTS. 

The national Capitol was not only filled with lobbyists 
for these landgrabbers, but members of Congress were 
financially interested in the success of the fraudulent 
claims, or themselves held claims in the names of dum- 
mies. It was also strongly suspected, although never 
proved, that at least one Justice of the Supreme Court 
of the United States, appointed during the Civil War, 
and the very one whose vote often decided the fate of 
the claims was interested, either financially, politically 
or by friendly connection with certain of the land claim- 
ants. As we have seen in other chapters, it was no un- 
usual matter for the highest judiciary, as well as the 
lowest, to hold stock or other evidences of property in 
corporations or enterprises, cases affecting which were 
decided by those very judges or their associates. These 
decisions would then take rank as precedents, to be cited 
in future cases. 

But the courts were not the sole reliance of the land 
grabbers and other plunderers. It was Congress that 
they usually depended upon for the confirmation of their 
schemes. A confirming act passed by Congress was con- 
sidered as law strictly binding upon the courts, and it 
was to be generally expected that the courts would con- 

14 Rep. No. 261, etc., 54$. See also U. S. Senate Miscellanies, 
Third Session, Forty-fifth Congress, " Private Land Claims," 
Vol. iv. 



322 HISTORY OF THE GREAT AMERICAN FORTUNES 

strue the acts of Congress with the closest technicality. 
Thus it was, to mention only one instance of many in- 
stances, that Marshall O. Roberts and his partners suc- 
ceeded in robbing the United States Treasury out of 
millions of dollars by lobbying an act through Congress 
so adroitly worded that, after the Court of Claims had 
dismissed the claim, the Supreme Court of the United 
States decided, upon technical grounds, that the act of 
Congress amounted to a ratification of their claim. 15 

Beginning by about the year 1860, Congress was " in- 
duced " to confirm one private land claim after another. 
The reports of a number of the Congressional Com- 
mittees on Private Land Claims strongly suggest bribery, 
but no positive, specific proof appears. Very often these 
measures were passed in the hurry and confusion of the 
last days of a session, with few members knowing what 
they were. 

After the passage of these acts by Congress, the next 
step was to have a fraudulent survey of the alleged 
grants made by land office officials. In order to make 
these fraudulent surveys under form of law, the land- 
grabbers lobbied two acts through Congress. One act, 
passed in 1860, authorized surveys to be made at the 
expense of " settlers/' This meant that capitalists were 
virtually allowed to hire Government surveyers, and ar- 
range with them to increase fraudulently the boundaries 
of the alleged grants. This is precisely what happened, 
as is shown in the numerous official reports cited in 
Chapter II, vol. II. Another act, passed by Congress 
in 1871, provided that the amounts deposited by settlers 
should be applied as part payment for the lands sur- 
veyed. The plain meaning of this act was that the money 
paid by the land-grabber for fraudulent surveying was 

" See Chapter iii, Vol. ii, of this work. 



THE ELKINS FORTUNE 323 

held to be a payment for the stolen lands, and in law 
was technically equivalent to a virtual confirmation of 
his claim. By means of these fraudulent surveys, cor- 
ruptly arranged for, dozens of grants of a few thousand 
acres each were enlarged so as each to embrace hundreds 
of thousands, and in some instances, millions of acres. 19 



LITTLE OPPORTUNITY FOR THE POOR SETTLER. 

The colossal private claim land frauds were by no 
means confined to California. They went on in New 
Mexico, Colorado, Arizona and other States and Terri- 
tories. The poor settler had very little opportunity to 
secure land. Almost wherever he appeared he was con- 
fronted by the capitalists who claimed vast stretches of 
land agricultural, grazing, mineral and timber. So 
scandalous was this condition that Secretary of the In- 
terior Thompson, in a report dated December n, 1859, 
to President Buchanan, commented: 

The advantages and profits arising from the settlement of a 
new country ought to be enjoyed by the early settlers. They 
have peculiar hardships and privations to undergo. The law 
does not contemplate that they shall have any competition, ex- 
cept from other actual settlers, in selecting the most fertile 
lands and the choicest locations. . . . There is reason to be- 
lieve that the withholding of public lands from a public offer- 
ing, and consequently from private entry, has often proved a 
temptation to fraud and an inducement to perjury; and un- 
scrupulous speculators profit by it more than any other class. 17 

Aside from its recognized value as a grazing country, 
New Mexico was well known to be rich in mineral re- 

18 See the many specific examples described in Chapter ii, Vol. 
ii, of this work. 

17 United States Senate Executive Documents, First Session, 
Thirty-sixth Congress, 1859-60, i : 94. 



324 HISTORY OF THE GREAT AMERICAN FORTUNES 

sources. Acting-Governor W. W. H. Davis, of New 
Mexico, reported to the Secretary of the Interior on Sep- 
tember 10, 1857, that New Mexico's mineral wealth had 
been long known, and he drew a fascinating picture of 
its rich deposits. " That the country is rich in the pre- 
cious metals," he wrote, " there can be no doubt. There 
is good reason to believe that ores of silver occur in all 
of the ranges of the mountains bordering the Rio Grande, 
from the boundary line on the south to the extreme north 
of the Territory." Abandoned mines, he added, were 
very numerous. Hardly a mountain range in the whole 
country did not disclose evidence of the presence of 
precious metals. There were gold ores and copper in 
abundance, and thick deposits of bituminous coal. 18 

A LAND GRANT GROWS FROM 96,000 TO NEARLY 
2,000,000 ACRES. 

One of the private Mexican land claims was that of 
Charles Beaubien and Guadalupe Miranda. They 
claimed that the Mexican Governor Armijo had made 
them a grant on February 22, 1841. On September 15, 
1857, the United States Surveyor General of New Mex- 
ico reported the grant to Congress as embracing 96,000 
acres. Congress confirmed it on June 21, 1860. One 
L. B. Maxwell had bought the claim from Beaubien and 
Miranda, and in 1869 he applied to the General Land 
Office for a survey, claiming that the grant comprised 
about two million acres, partly in Colorado, but mainly 
in New Mexico. 

The Commissioner of the General Land Office freely 
expressed his amazement at the audacity of this claim. 

18 Executive Documents, First Session, Thirty-fifth Congress, 
1857-58, Vol. ii, Doc. No. 2:286-288. 



THE ELKINS FORTUNE 325 

He reported that the claim was an impossible one ; that 
the Mexican colonization laws had limited the area 
granted to any one individual at 48,000 acres, and that in 
confirming the grant, Congress had confirmed it to the 
extent of 96,000 acres only 48,000 acres to Beaubien 
and Miranda each. This decision of the Land Commis- 
sioner was upheld by Secretary of the Interior Cox. 18 

The Maxwell Land Grant and Railroad Company was 
then incorporated to push and exploit the grant. This 
company, in 1871, renewed the application for a survey 
and a patent under the claim as put forth by Maxwell in 
1869. Secretary of the Interior Delano refused the ap- 
plication, declaring that the decision of Secretary Cox 
in 1869 was final as to the extent of the grant 96,000 
acres so far as the executive departments of the Gov- 
ernment were concerned. 20 

The Government officials at Washington were irritated 
at the persistence of the claimants and their refusal to 
comply with the law. On January 28, 1874, the Com- 
missioner of Public Lands ordered the Surveyor General 
of New Mexico to treat the whole of the grant as public 
lands, inasmuch as the claimants refused to obey the 
terms of the decision of the Department of the Interior. 

ELKINS BECOMES A PRINCIPAL OWNER. 

Why did the claimants decline to comply with the 
law? Because, as the sequel showed, the foremost 
United States Territorial officials in New Mexico were 
in collusion with them. Despite the order of the De- 
partment of the Interior, which was law, the Territorial 

19 "Land Titles in New Mexico and Colorado," House Re- 
ports, First Session, Fifty-second Congress, 1891-92, Vol. iv, 
Report No. 1253 (Committee on Private Land Claims). 

20 United States Reports, Vol. 



326 HISTORY OF THE GREAT AMERICAN FORTUNES 

officials continued to assess the alleged grant as private 
property for taxes. The taxes, by prearrangement, went 
unpaid, and a fraudulent tax sale was held at public auc- 
tion in January, 1877, and the grant was sold for an al- 
leged tax debt. The nominal purchaser was M. W. 
Mills, a member of the New Mexico Legislature. Mills 
transferred the alleged tax title to T. B. Catron, United 
States District Attorney for New Mexico. Shortly af- 
terward it was revealed that Stephen B. Elkins was the 
real party behind the whole transaction, and that he was 
the chief owner of the alleged title. 21 

Elkins had long been a powerful Republican politician 
in New Mexico. During President Grant's administra- 
tion he had been United States District Attorney in 
that territory. At that time the peonage system of 
slavery was widespread in New Mexico, as it is still in 
Mexico. The laborer who fell in debt to his employer 
could not quit employment until the indebtedness was 
first discharged. This resulted in the worker's practical 
slavery. Under the United States laws the Government 
paid a fee of $25 for each conviction of persons charged 
with violating the peonage statutes of the United States. 
Elkins, it was said, procured the indictment of thousands 
of Mexican violators of this law, convicted them, or 
compromised the cases, and, thus was enabled to pocket 
the fee of $25 in each case. He became reasonably rich 
by this process. 

He was then elected a delegate to Congress from New 
Mexico, and it was during this time that he got hold 
of the Maxwell land grant and pushed it in Congress. 
The records of the General Land Office, of January 28, 

21 House Reports, etc., 1891-92, Vol. iv, Report No. 1253. 
Commissioner Sparks, of the General Land Office, reported, in 
1885, that Stephen B. Elkins was a principal owner of the grant 
at the time Elkins' brother and Marmon made the official survey. 



THE ELK1NS FORTUNE 327 

1874, show that Stephen B. Elkins was interested in hav- 
ing this alleged grant surveyed ; he was at that very time 
in Congress. Immediately after the fraudulent tax sale 
had been held, the Maxwell Land Grant and Railway 
Company made, in 1877, another application to the Gen- 
eral Land Office for a survey and patent. This time 
there was no opposition from the Government officials 
at Washington. Matters moved with extraordinary 
smoothness. 

The General Land Office ordered a survey. Who did 
the surveying? One of the two surveyors was Elkins' 
brother, John T. Elkins. On August 15, 1877, the 
United States Surveyor General in New Mexico entered 
into a contract with John T. Elkins and Robert T. Mar- 
mon for the execution of the survey. Their bondsmen 
were Stephen B. Elkins and James L. Johnson. 22 These 
surveyors reported the grant as embracing, in all, 1,714,- 
764.94 acres. As reported by them, it comprised the 
finest lands in New Mexico, watered by the Rio Grande 
River with its numerous tributaries; towns and cities 
and villages; mountains filled with minerals; it took in 
a large range of the Raton Mountains with their rich 
gold and silver and coal deposits and timber lands; and 
extended far into Colorado, where it covered vast tracts 
of land. The General Land Office, on May 19, 1879, 
gave a patent, in the form of a quit-claim, for the whole 
of the 1,714,764.94 acres claimed in the survey. 

Meanwhile, the grant had been mortgaged to a syndi- 
cate of Holland capitalists for the sum of 700,000 
pounds in sterling money and Dutch currency. 28 To 
their consternation, they soon found that they had a 
bitter lawsuit on their hands. 

House Reports, etc., 1891-92, Vol. iv, Report No. 1253. 
Ibid., 7- 



328 HISTORY OF THE GREAT AMERICAN FORTUNES 

They had been entirely unaware of the fact that the 
Government challenged the validity of the grant. 



THE GOVERNMENT CHARGES FRAUD. 

The Government brought an action to have the grant 
declared void. On August 25, 1882, it sued the Max- 
well Land Grant Company, the Denver and Rio Grande 
Railway Company, the Atchison, Topeka and Santa Fe 
Railway Company and the Pueblo and Arkansas Valley 
Railroad Company. The Government's bill of complaint, 
the court record reads, " charged that the survey on 
which this patent was issued was falsely and fraudulently 
made, and that the Maxwell Land Grant Company and 
certain parties who made this survey under a contract 
with the Government, conspired to cheat the Govern- 
ment of the United States by including a larger amount 
of land than was intended to be embraced by the orig- 
inal grant of the Republic of Mexico; and it especially 
charged that about 265,000 acres, to wit, all the land ly- 
ing in the county of Las Animas, in the state of Colo- 
rado, were fraudulently included in this survey and were 
of the value of two millions of dollars." 24 

The United States Circuit Court of Colorado dismissed 
the Government's suit, as was expected, for it was no- 
torious that the railroad and land-seizing interests largely 
controlled such courts, some of the judges of which had 
been attorneys for those identical interests. The Gov- 
ernment carried the case to the Supreme Court of the 
United States. In the argument before this court on 
March 8, 9, 10 and n, 1887, the Government contended: 

First That the grant of the Republic of Mexico 
could not, under the Mexican laws, exc^4 altogether 

2 * Supreme Court Reports, vii : 1017. 



THE ELKINS FORTUNE 329 

twenty-two square leagues, equivalent to 97,424.8 acres 
of land. 

Second That the report of September 15, 1857, of 
the Surveyor General of New Mexico, recommended the 
grant for confirmation for no greater extent of land than 
twenty-two square leagues. 

Third That the confirmatory act of June 21, 1860, 
did not operate as a grant de novo, or new grant, for 
the land in excess of twenty-two square leagues. 

Fourth That the survey under which the patent was 
issued, and the patent itself, included, in addition to the 
twenty-two square leagues, many hundred thousand 
acres not included in the grant as confirmed, and also 
several hundred thousand acres (about 400,000) lying 
upon the outside of the eastern and northern boundaries, 
also not included in the confirmed grant. 

Fifth That the patent was issued by officers of the 
Land Department to include the million six hundred 
thousand excess acres because " of the frauds and deceits 
practiced upon the Commissioner of the General Land 
Office and his agents, and by Surveyor General Spencer, 
and the deputy United States surveyors, Elkins and 
Marmon, in the interest of such owners." 25 

In his argument United States Assistant Attorney 
General Maury said : . . . " Being a Mexican grant 
in the beginning and subject to the laws and customs of 
Mexico, it is for this court to determine whether there 
exists any authorized process of evolution, by which this 
original Mexican grant of twenty-two square leagues to 
Beaubien and Miranda have grown and expanded into 
the princely domain covered by this patent." 26 Maury 
contended that fraud had been abundantly proved. J. 

25 United States Reports, Vol. cxxi : 327. 
' Ibid., 330. 



330 HISTORY OF THE GREAT AMERICAN FORTUNES 

A. Bentley, special counsel for the Government, submit- 
ting a long brief arguing that frauds were practised 
upon the Government in the enlargement of the bound- 
aries of the grant, and he also argued that the decision 
of Secretary of the Interior Cox, in 1869, was final. 



Piles upon piles of proofs that the grossest frauds had 
been committed could not convince the Supreme Court 
of the United States. In its decision of April 18, 1887, 
it held that the act of June 21, 1860, was virtually a 
new grant, and that it confirmed the grant to the full 
extent of the 1,714,764.94 acres claimed a decision 
received with the utmost amazement by the whole 
country. 

With this decision in hand the Maxwell grant holders 
proceeded to evict settlers right and left. This raised 
a great storm. The settlers on the grant organized 
and appointed O. P. McMains their agent to present 
their petition for redress to Congress. In an affidavit 
dated May 9, 1892, McMains, on behalf of the settlers, 
charged the different United States authorities, such as 
Secretary of the Interior Noble, Land Commissioner 
Carter (at present, 1909, a United States Senator from 
Montana) and other officials with refusing to throw 
open the grant as public lands. This refusal, the affi- 
davit pointed out, was in violation of the explicit act 
of Congress of June 21, 1860. The affidavit read on : 

And the deponent further deposes and says that S. B. Elkins 
was the last president of the Maxwell Land Grant and Rail- 
way Company, which was bankrupt at the time of his resig- 
nation in 1875; that after 1875 the said S. B. Elkins had no 
connection with the said Company as officer or counsel, and took 



THE ELKINS FORTUNE 33! 

no part in the company's affairs; that he was, nevertheless, 
interested as an outsider and speculator in having the land re- 
quired by law to be treated as public land, again treated and 
surveyed as the alleged Beaubien and Miranda or Maxwell 
grant, and made a trip to Europe in the latter part of 1875-76 
with a scheme in view for the reorganization of the Maxwell 
Land Grant Company. 

That T. B. Catron of New Mexico, who was interested with 
Elkins in having the land required by law to be treated as 
public land, again treated and surveyed as the alleged Maxwell 
grant, became, on July 19, 1877, by an unlawful and fraudulent 
tax title deed, an alleged owner of nearly 2,000,000 acres of pub- 
lic land as the so-called Beaubien and Miranda or Maxwell 
grant; that in order to profit by the unlawful tax title deed 
to public land as the alleged Maxwell grant, it became necessary 
to defeat the enforcement of the final and valid order of the 
Department of the Interior of January 28, 1874, requiring the 
lands claimed by the Maxwell grant claimants to be treated as 
public land, by prosecuting anew the adjudicated Maxwell grant 
claim against the United States to survey and patent; 

That the parties conspiring to prosecute said adjudicated 
claim against the United States, in violation of Section 5498 of 
the Revised Statutes, were Hon. S. B. Elkins, then delegate 
to Congress from New Mexico; Hon. T. B. Catron, then United 
States Attorney for New Mexico, and Hon. J. A. Williamson, 
then Commissioner of the General Land Office; that the ob- 
ject of said conspiracy was accomplished, the enforcement of 
the valid order of January 28, 1874, and the act of Congress of 
June 21, 1860, was defeated, homestead and preemption settlers 
were deprived of their private and vested rights without due 
process of law and the United States deprived of its surveyed 
public lands. 27 

The affidavit went on to say that " the refusal of the 
officials to enforce the act of Congress is in the interest 
of the aforesaid conspiracy; that by such wrongful re- 
fusal said secretary and commissioner are aiding and 

27 House Reports, First Session, Fifty-second Congress, 1891- 
92, Vol. vii, Report No. 1824:4-5. 



332 HISTORY OF THE GREAT AMERICAN FORTUNES 

abetting, by trick and fraud, the said conspiracy." 28 
The House Committee on Private Land Claims, to 
whom the petition of the settlers was referred, found 
that the statements regarding the New Mexican portion 
of the grant were true. As to the four hundred thou- 
sand acres in Colorado, the committee reported: 

" No application by the Maxwell Land Grant Railway 
Company has been made to the Commissioner of the 
General Land Office for the survey of public land in 
Colorado in 1877 as a portion of the alleged Maxwell 
grant; but a party who is in nowise connected with the 
company or acting in any capacity in behalf of the com- 
pany Hon. S. B. Elkins did ask for a survey to be 
approved " that would include public lands in Colorado 
as belonging to the Maxwell grant. It was after this 
survey that the whole of the 1,714,764.94 acres were 
mortgaged to Dutch capitalists for 700,000. This land 
in Colorado, the committee stated, was unlawfully ap- 
propriated. The committee concluded: "And it is the 
opinion of your committee that the lands included within 
the Colorado portion of the alleged Maxwell grant were 
required, by act-of June 21, 1860, to be treated as pub- 
lic land . . . and was not a portion of the original 
Beaubien and Miranda grant." 29 



SURVEYOR GENERAL JULIAN STATES THE CASE. 

Congress took no action on the report of the House 
Committee on Private Land Claims, and the result of 
this complete inactivity, coupled with the decision of the 
Supreme Court of the United States, was that the ap- 

28 House Reports, No. 1824, etc., 1891-92 : *. 

" Land Titles in New Mexico and Colorado," House Re- 
ports, First Session, Fifty-second Congress, 1891-92, Vol. iv, 
Report No. 1253:8. 



THE ELKINS FORTUNE 333 

propriators, or their assignees, of the 1,714,764.94 acres, 
were allowed to retain a possession which thereafter 
was undisputed. George W. Julian, United States Sur- 
veyor General of New Mexico, during President Cleve- 
land's first administration, found a state of affairs in 
that territory, which, in recounting Elkins' career, he 
described in a speech, on September 14, 1892, before the 
Hendricks Club at Indianapolis. After relating some of 
Elkins' early transactions in New Mexico, Julian said: 

This experience amply prepared him for the brilliant ventures 
in real estate through which he became rich. His dealings were 
mainly in Spanish grants, which he bought for a very small 
price from their Mexican claimants or their grantees. The 
boundaries of these grants were vague and uncertain, and their 
definite settlement had to be determined by the Surveyor Gen- 
eral of the Territory, subject to the final action of Congress. 
Elkins became a member of the land ring of the territory, and 
largely through his influence the survey of these grants was 
made to contain hundreds of thousands of acres that did not 
belong to them. He thus became a great landholder, for through 
the manipulation of committees in Congress grants thus illegally 
surveyed were confirmed with their fictitious boundaries. 

He made himself particularly conspicuous as the hero of the 
famous Maxwell grant, which, as Secretary Cox decided in 
1869, contained only twenty-two square leagues, or about 96,000 
acres, but which, under the manipulation of Elkins, was sur- 
veyed and patented for 1,714,764.94 acres, or nearly 2,680 square 
miles. Congress, through the action of its committees, was 
beguiled into the confirmation of the grant, with the exterior 
boundaries vaguely indicated in it so stretched as to cover the 
whole of this immense area, and which confirmation by Con- 
gress compelled the Supreme Court to recognize this astound- 
ing robbery as valid. By such methods as these more than 
10,000,000 acres of the public domain in New Mexico have be- 
come the spoil of land-grabbers, and the ringleader in this game 
of spoiliation was Stephen B. Elkins, the confederate of Stephen 
W. Dorsey and the master spirit in the movement. 

He was thoroughly qualified for his work. He was irrcpres- 



334 HISTORY 01? THE GREAT AMERICAN FORTUNES 

sible and full of resources. He was a genius in business, and 
in the pursuit of his ends was singularly unshackled by a con- 
science. He used the Surveyor General of the Territory, the 
Land Department in Washington, and the committees of Con- 
gress as his instruments in fleecing poor settlers and robbing 
the Government of its lands. To cheat a man out of his home 
is justly regarded as a crime second only to murder, and to rob 
the nation of its public domain and thus abridge the oppor- 
tunity of landless men to acquire homes is not only a crime 
against society, but a cruel mockery of the poor. If any such 
considerations ever disturbed the dreams of Mr. Elkins, they 
were summarily silenced by his overmastering zeal in the work 
of " practical politics." According to Dorsey, Elkins knew more 
than any other person about the star route cases, which be- 
came famous a dozen years ago, and he will also be remem- 
bered as engaged in the prosecution of a claim of $50,000,000 
against Brazil while Elaine was Secretary of State under Gar- 
field, which claim was afterward indignantly rejected by Secre- 
tary Bayard. . . . 

In referring to these matters I do not speak at random, but 
from official documents, and ascertained facts with which I be- 
came familiar during my public service of four years in that 
territory under the last administration. 

The " star route " frauds to which Julian referred 
became a great public scandal thirty years ago. By 
means of them the United States Treasury was robbed 
of large sums. The term " star route " was used to 
designate interior postal routes, on which the mails were 
carried other than on railroads or by steamboats. These 
routes were officially designated on the books of the 
Postoffice Department by asterisks or stars, thus *, hence 
the term. The investigations made by the Postoffice 
Department and by committees of Congress did not re- 
veal Elkins as a contractor. His signature, however, 
was found attached to the bonds of certain leading postal 
route contractors in the Southwest, and he was very en- 
ergetic in securing the establishment of overland routes 



THE ELKINS FORTUNE 335 

in New Mexico and elsewhere. It was conclusively 
established that he was interested in what was called the 
" Kerens combination," the ostensible head of which was 
Richard C. Kerens, a powerful Republican politician of 
St. Louis. But so astutely and covertly did Elkins work 
that he did not appear at all in the great " star route " 
trials in 1882 and in i883. 30 



ELKINS GETS THE STAMP OF OFFICIAL RESPECTABILITY. 

By this time he was a noted Republican politician of 
national importance. In 1884 he was chairman of the 
Republican National Committee and in December, 1891, 
President Harrison appointed him Secretary of War. 
Harrison was not ignorant of the details of Elkins' 
career in New Mexico, for while a United States Sena- 
tor, Harrison was a member of the Committee on Terri- 
tories, and gave particular attention to the affairs in 
New Mexico. 

Harrison was likewise acquainted with the facts of 
the Brazilian claim. This was an alleged claim growing 
out of a concession to one D. G. M. Jewett by the Brazil- 
ian Government to develop certain nitrate deposits on an 
island off the Brazilian coast. Jewett claimed that he 
had fitted out a vessel and had expended $27,000 when 
the Brazilian Government annulled the concession. El- 
kins became attorney for Jewett and filed an elaborate 

80 The charge was long openly made that the reason why 
Elkins was not brought to trial was that he had secretly turned 
state's evidence, and had furnished the Postmaster General with 
much valuable information against his former associates. So 
far as the public records are concerned, no documentary proof of 
this charge can be found. 

Kerens, it may be noted, continued his career as a con- 
spicuous Republican politician and was appointed Ambassador 
to Austria by President Taft, in 1909. 



336 HISTORY OF THE GREAT AMERICAN FORTUNES 

brief in the State Department in support of the claim, 
and calling for the enormous sum of $50,000,000 dam- 
ages. Elkins tried to get successive United States Sec- 
retaries of State to press the claim, but Secretary Bayard 
fully investigated it in 1886, and President Cleveland sent 
the correspondence to the Senate, with a special message 
which closed as follows : " Such an egregious claim is 
an outrage upon any nation with which the United States 
has or desires to have friendly relations. I have de- 
clined to receive the papers or send any communication 
to Minister Jarvis on the subject." 

The Maxwell land grant, and the star-route affair were 
only two of Elkins' many transactions in New Mexico. 
Meanwhile, he had married the daughter of United 
States Senator Henry G. Davis, a millionaire railroad 
and coal mine owner of West Virginia. Elkins removed 
to that State. With the millions gathered in the South- 
west, and with the help of his father-in-law's many 
millions, he there became a great magnate, getting con- 
trol of one property after another. He, Kerens and 
Davis built several West Virginia railroads, and ob- 
tained control of coal, coke, oil and lumber properties. 
They also financed the construction of railroads in Cali- 
fornia, Nevada and Utah. Elkins built a splendid 
castle-like palace in the town bearing his name; on a 
mountainside it commands a view of peaks and val- 
leys for thirty-five miles. In 1895 he was elected to 
the United States Senate by the West Virginia Legis- 
lature, after a campaign in which, it was freely charged, 
corruption money, in the form of campaign funds, was 
distributed throughout the entire State to insure the 
election of members favorable to his plans. In the 
United States Senate Elkins has been one of the most 
adroit and useful law-drafters for the plutocracy. One 



THE ELKINS FORTUNE 337 

of his notable acts was an amendment to the interstate 
commerce act expunging the clause providing imprison- 
ment for violation of the anti-rebating law, and giving 
complete immunity to magnates who testify in such pro- 
ceedings brought against them. 

As one of the wealth rulers and law makers of the 
United States, Elkins is obviously a very powerful and 
distinguished magnate. Moralizers may well contem- 
plate his career, and consider its climax. Were the sug- 
gestion even facetiously made that our legislators should 
be elected wholly from prison constituencies, it would 
be received with either amazed shock or droll levity, 
according to temperament. And yet, it should cause 
neither of these receptions, for have we not seen herein 
by a convincing mass of facts, that Business Society, 
after all, consists so largely of those who have not been 
found out and punished, and those who have? Such 
a conclusion, as we see, is no exaggeration. And have 
we not also seen by the facts that the great despoilers 
become the dictators of the very communities whom they 
despoil; how would it do to reverse the process and 
elect the petty despoilers, convicts though they be, as 
rulers? 'T would be no worse, and perhaps better. 
But neither of these classes can be condemned for the 
passions and crimes which the system, and the forces of 
that system, generate and too often compel ; the system, 
not the units, stands the need of change. By the light 
of this fact, and this alone, Elkins' career, and that of 
all like him, big and little, should be considered. 



CHAPTER XIV 
THE HILL FORTUNE 

Unsparingly criticised, and frequently assailed with ex- 
treme bitterness in his early career, few magnates have 
been the subject of more lavish eulogy in his latter 
years than James J. Hill. As his wealth and power 
rapidly grew, and he became a multimillionaire, and dic- 
tator of the political and industrial affairs of large sec- 
tions of the United States and Canada, the usual trans- 
formation resulted. He ceased being the familiar 
" Jim " Hill derisively slurred as the " Jay Gould of the 
Northwest," and was metamorphosed into the great Mr, 
Hill, the imposing genius of stupendous achievement. A 
crowd of writers, well schooled in the extravagant lan- 
guage of sycophancy, came forth to proclaim his heroic 
proportions as a master mind in the constructive devel- 
opment of the country's resources. 

For full thirty years these eulogies, all suspiciously 
alike as though inspired from a central source, have con- 
tinuously appeared. In all of them one special dithyram- 
bic note has been pressed. With infinite rhetorical vari-. 
ations, such transcendent terms as " genius of transpor- 
tation " and " intellectual giant " have been freely applied 
to Hill. Ingeniously put forward under many dictional 
disguises and artful tricks of style, the burden of these 
lays had been the same as that so much remarked in the 
endless panegyrics of the Astors, the Vanderbilts, J. Pier- 
pont Morgan, Blair, Sage, and nearly all other magnates. 

338 



THE HILL FORTUNE 339 

Always there is the emphasis, strongly denoting an argu- 
ment for a client, upon Hill's extraordinary capacity 
and integrity; how he obtained every dollar of his vast 
fortune honestly, and how (it is specified) corruption 
and graft have been conspicuously absent in the methods 
by which he amassed his wealth. One steady monoto- 
nous song it had been, varied, in long-separated intervals, 
by a tirade from the pen of some unyoked brother a 
tirade with substance of truth, but lacking estimate and 
understanding. 

HILL'S ENORMOUS FORTUNE. 

The extent of Hill's fortune is enormous, but at this 
writing neither the exact nor approximate number of his 
hundreds of millions of dollars can be stated with any 
degree of accuracy. In one notable respect his puffers 
do not misstate: Hill started with no money whatever. 
Now that he has a colossal fortune, that fact of itself 
should be provocative enough to cause deep investigation ; 
for money does not fall like rain ; it must be garnered 
somehow ; and while millions of hard workers have a 
difficult enough time getting a sufficiency for their 
simplest wants, the ease with which one man has pos- 
sessed himself of vast storehouses of wealth is a grave 
and grim fact, well calculated at the outset to cause 
disbelief, on general principles, in the airy, sweeping 
statements of Hill's eulogists. But the very fact which 
should at once arouse questionings and originate investi- 
gation is converted by his panegyrists into a sublime 
tribute into a conclusive proof of his remarkable 
power of demonstrating himself to be a " self-made 
man." We know too well what this commercial jargon 
of the day means ; not a man with intelligence, ideals or 



34O HISTORY OF THE GREAT AMERICAN FORTUNES 

culture, but merely one of wealth; the customary bour- 
geois mind can, generally speaking, conceive of no other 
kind of successful man. 

If, however, wealth can be used interchangeably with 
greatness, then Hill is a truly great nabob. He owns 
or controls extensive railroad systems in the Northwest 
and West ; he is the owner of vast areas of land, and of 
mineral deposits the fabulous value of which defies cal- 
culation. He is the possessor of steamship lines and of 
many other kinds of property ; he lives in a i r irtual palace, 
and politicians, editors, clergy and judges arc his puppets. 
Seeing that he " began " as his eulogists express it 
without money, how did he contrive to get all this wealth ? 
His homagers do not explain this vital question; they 
unctuously reel out dates and figures v and glibly relate 
when he obtained this or that property, but how he really 
accomplished the process they tell not. 

THE CHARACTER OF THE NORTHWEST'S SETTLEMENT. 

Hill was born at Guelph, Canada, in 1838, and mi- 
grated to St. Paul, Minnesota, in 1856. The environ- 
ment into which he came, as a youth of eighteen, can 
easily be comprehended after a reading of the previous 
chapters. The Northwest was in its first real period of 
settlement ; and not as conventional histories have it, was 
this settlement wholly made by " stalwart pioneers." As 
a matter of fact, it was made also by land-grabbers, 
timber thieves, gamblers, trading sharps, cutthroats and 
rogues in general. The rush to get land grants, mineral 
deposits, railroad franchises and every other available re- 
source, was at its height. " Booms " of all kinds were 
projected; a horde of venal individuals swarmed in to 
preempt whatever they could, and fleece anybody that 



THE HILL FORTUNE 34! 

they could. There was a raging mania for the rapid 
acquisition of wealth, regardless of the means used. 

True, a stream of agriculturists, whose sole aim was 
to obtain cheap land and honestly till it, poured in. But 
this element did not give the tone to the general character 
of the activities. The real aggressive tone was imparted 
by adventurers, capitalistic and otherwise. Practically 
all of these capitalists were Easterners, and many of 
them, as the records show, had been engaged in swindles 
in the East. Different sets of them were busily bribing 
Congress, Government officials and the Legislatures for 
land grants, railroad charters, franchises, mineral de- 
posits and special laws. Sharp merchants, trading 
schemers and real estate hawks overran the newly-settled 
towns and cities. The stamp of money was upon every 
thought and plan; the pervading ideal was wealth, no 
matter how acquired; all classes were infected by it. 
Greed was in the very air, and if the many law-suit 
records in the Minnesota Courts can be taken as an indi- 
cation, jobbery, swindling and cheating were a very 
routine performance in all business transactions. 

Hill came into this atmosphere of venality, avarice and 
corruption; a state of society judging every man by the 
significant question, " How much is he worth ? " Long 
before his entry, this corruption had gained full headway. 
Throughout the whole West, Northwest and Southwest, 
the fraudulent seizure of agricultural, timber and mining 
lands, and the corruption of Congress and of the Legis- 
latures for gratuitous awards of public money, had (as 
we have abundantly seen in previous chapters) long been 
notorious. The Common Councils of the cities and pub- 
lic offices of all kinds were generally filled with men who 
converted their positions into a means of securing illicit 
revenue. Bribed or otherwise influenced to give special 



342 HISTORY OF THE GREAT AMERICAN FORTUNES 

franchises and privileges or connive at frauds many of 
these men left offices, paying modest salaries, with a for- 
tune. 

THE DEBAUCHING AND SWINDLING OF INDIANS. 

The character of trade in the West and Northwest 
had been determined early in the nineteenth century by 
the operations of John Jacob Astor's American Fur 
Company and his other fur companies. Of the nature 
of the methods by which Astor laid the foundations 
of the fortune of $20,000,000 which he left at his death 
in 1848, and which fortune has since grown to be one 
of the largest in the world, many details have been set 
forth in Volumes I and II. We have seen, from the 
official records, how he systematically debauched numer- 
ous Indian tribes with whiskey, charged them incredibly 
extortionate prices for cheap merchandise which he ex- 
changed for furs, and pauperized, and spread demorali- 
zation and death among, the Indians. We have also 
seen how many of the Indian uprisings, resulting in the 
murder and massacres of white settlers, and in the 
murder and punitive shooting by the traders and by 
the vengeful Indians in return, were originally caused by 
these continued practices of debauching and swindling. 
In Volume I it was explained that many additional facts 
had been intentionally left out; some of those there 
omitted will be described here in order to contribute to 
a clearer understanding of the long-prevailing trading 
methods in the West and Northwest. 

It is clear from the reports of the United States army 
officers and those of the Government Indian Agents that 
the American Fur Company dominated the whole of the 
West and Northwest fur regions. The Government 






THE HILL FORTUNE 343 

had established its own trading posts, called factories 
or agencies, the purpose of which was to supply the 
Indians with merchandise in exchange either for furs or 
land or to relieve their destitute condition when neces- 
sary. These Government trading posts were strictly 
prohibited from dealing in or supplying liquor. The 
American Fur Company succeeded in undermining the 
trade of these agencies, and finally in causing their abo- 
lition. The illegal use of liquor by the American Fur 
Company was one of its powerful means in seducing 
the Indians from the Government trading posts ; another 
successful method was by prejudicing the Indians 
against them by the claim that the Government mer- 
chandise was inferior. In representing to the Govern- 
ment at Washington that the Government trading posts 
did little business, Matthew Irwin, U. S. Indian Agent, 
at Green Bay, Wisconsin, wrote that two of the reasons 
for this state of affairs were because of the secret prac- 
tice on the part of private traders in vending whiskey, 
and because of the prejudice excited among the Indians 
against the Government agencies. (Doc. No. 60, First 
Session, Seventeenth Congress, p. 60.) In a communi- 
cation, dated February 22, 1822, to Senator Johnson, 
chairman of the U. S. Senate Committee on Indian 
Affairs, Thomas L. McKenney, U. S. Superintendent of 
Indian Trade, wrote that the agents of the American 
Fur Company " had a great deal at stake in overturning 
these establishments (the Government trading posts) 
and has much more at stake in the overthrow of the 
entire system." Superintendent McKenney wrote point- 
edly of the " haste of the American Fur Company to 
grasp the trade with our Indians." (Doc. No. 60, p. 42.) 
Writing from Camp Missouri, Missouri River, to 



344 HISTORY OF THE GREAT AMERICAN FORTUNES 

Colonel H. Atkinson, on October 29, 1819, Major 
Thomas Biddle gave this description of the private 
traders : 

These traders are continually endeavoring to lessen each other 
in the eyes of the Indians, not only by abusive words, but by 
all sorts of low tricks and maneuvers. If a trader trusts an 
Indian, his opponent uses all his endeavors to purchase the 
furs he may take, or prevent in any way his being paid; each 
trader supports his favorite chief, which produces not only 
intestine commotions and dissensions in the tribe, but destroys 
the influence of the principal chief, who should always be 
under the control of the Government. The introduction of 
ardent spirits [whiskey, etc.] is one of the unhappy conse- 
quences of this opposition among traders; so violent is the 
attachment of the Indians for it, that he who gives most is 
sure to obtain furs; while, should any attempt to trade 
without it, he is sure of losing ground with his antagonist. 
No bargain is ever concluded without it, and the law on the 
subject is evaded, by their saying they give, not sell it. 

Parenthetically, a reply made by Major John Biddle 
to one of the interrogations addressed to him by Sena- 
tor Johnson may be properly interposed here: 

Question 13. Are the Indians judges of the quality of goods 
in which they trade, of the reasonableness of prices, and of 
the value of their own furs and peltries? 

Answer. The Indians are very observant, and reputed to be 
very good judges of the articles which they are accustomed to 
buy. Their capacity for the petty traffic which they carry on, 
is believed to be much greater than is generally apprehended. 
The principal fraud practiced upon them is believed to be in 
the article of spurious liquors ; to which the seller attaches a 
price in proportion to the penalty he would incur from detection. 
(Doc. No. 60, p. 5.) 

To resume Major Thomas Biddle's communication to 
Colonel Atkinson: He wrote further that when the 
traders bought" furs after an Indian hunt " a keg of 



THE HILL FORTUNE 345 

whiskey was considered an indispensable equipment of 
such an undertaking." He closed his communication 
with the following remarks: 

I had found on my arrival [at the Maha nation of Indians] 
most of the principal men drunk. The Big Elk, who is so much 
our friend, and who formerly possessed unlimited power in his 
nation, was so drunk for two days, that I could not deliver 
your letter to him; when I gave it, I requested an interpreter 
to inform him that I had been two days waiting to deliver a 
letter from you, but that very much to my surprise, I had found 
him too drunk to transact business. He appeared affected at 
what I said, acknowledged how unworthy it was in him to 
be in that situation, and admitted he had lost much power by 
it. He blamed the whites for bringing liquor into the coun- 
try, said when he knew it was not to be had he felt no incli- 
nation for it, but that when it was near and attainable his 
attachment for it is irresistible. . . . 

Thus is the influence of this valuable and sensible Indian lost 
to his tribe and the Government, and thus is a man who pos- 
sesses some traits that do honor to human nature, debased and 
made a beast of. (Doc. No. 60, pp. 46, 47.) 

Document No. 60, First Session, Seventeenth Con- 
gress, includes this extract from a letter from the U. S. 
Indian Agent at Green Bay, Wisconsin, to Mr. McKen- 
ney, U. S. Superintendent of Indian Trade: 

The fact can be established that in almost every case the 
persons engaged [as traders] by Mr. Astor's principal agent, 
Mr. Crooks (who is a British subject), were known British 
subjects; many of them having held commissions under the 
British Government and headed Indians during the late war 
[that of 1812-15]. For example, at this place Mr. Astor sent 
goods to the following persons, last fall, to be traded alongside 
the factory [Government agency] : 



JOHN LOWE, 
LEWIS GRIGNON, 
AUGUSTINE GRIGNON, and 
PETER POWELL, 



British subjects and holding com- 
missions from the British Govern- 
ment in the Indian Department 
during the late war. 



346 HISTORY OF THE GREAT AMERICAN FORTUNES 

And the following persons were sent by Mr. Astor in the 
neighborhood of Mr. Rouse, whom I sent to do business with 
the Indians at the Ouisconsin [Wisconsin]. 



PETER GRIGNON, 
MR. JACOBS, 
MR. CHAPEREAX, and 
J. B. GRIGNON, 



British subjects belonging to this place, 
and holding commissions, during the 
late war, from the British Govern- 
ment, in the Indian Department. 



And Mr. Lusienaux (a British subject) was sent by Mr. 
Astor to trade with the Indians at Winnebago lake. At 
Menominee river, where I sent Mr. Thomas P. James to trade, 
he was opposed by a Canadian sent by Mr. Astor; and in an 
underhand manner by Peter Powell, a British subject who held 
a commission in the Indian Department during the late war. 

A description followed of the secret traffic in whiskey 
carried on by Astor's agents, with the explanatory state- 
ment that " it was deemed illegal to accept Indian testi- 
mony." In other words, Indians could be indiscrimi- 
nately debauched, swindled, plundered and murdered, 
as we have seen in Vol. I, and yet their testimony in 
civil or criminal suits was not considered legal. The 
communication further described how Astor caused 
honest officials who exposed his methods and sought to 
prevent them to be dismissed from office (see note on 
page 84, Vol. II, of this work) and continued: 

It appears that the commanding officer at Prairie du Chien 
undertook at the instigation of the Indian agent, to stop and 
send to St. Louis some of Mr. Astor's British trading subjects. 
For this act it is said the agent will be dismissed from the 
public service ; and we now have the novel spectacle before us 
of a British subject (Mr. Crooks) traveling to the Prairie, with 
a passport from Governor Cass, said to be given by authority of 
the War Department, to inquire into the conduct of the Indian 
agent and commanding officer. 

The Cass referred to was the same Lewis Cass, who, 






THE HILL FORTUNE 347 

as has been noted in Vol. I, received $35,000 from Astor, 
for services not stated. 

On January 14, 1822, Senator Johnson laid before 
the United States Senate a long communication (Doc. 
No. 10) regarding Astor's American Fur Company 
from Superintendent of Indian Trade McKenney, who 
wrote of " the keen and adventurous trader, skilled in 
the arts of deception and speculation, who is bent on 
making gains," and how " the consequences to the In- 
dians are notorious ; and these involve bereavement, and 
suffering and death!" McKenney referred feelingly to 
" the sight of that intellectual and moral degradation to 
which such a traffic necessarily dooms this unfortunate 
race of men," and described the trade as " essentially 
degrading in its character, and disastrous in its conse- 
quences, for it is the principal business of such traders 
to oppose everything like improvement. Such is the 
likeness which is stamped deep upon our Indians, and 
which may be traced out in all of the poverty and 
misery which invests so large a portion of their popu- 
lation. History details the causes; and these are to be 
found in the superior intelligence and keen avarice of 
the one party, and their disregard to political and moral 
order; and the unenlightened and dependent condition 
of the other." McKenney went on: 

... It cannot be admitted as a just view of the Indian 
character and manners to pronounce upon his treachery and 
cruelty as the characteristics of his moral constitution. These 
wily acts are rather the results of his best conceptions of de- 
fence, and of preserving himself from the treachery which is 
practiced upon him; and the displays of his vengeance are but 
the ebullitions of a provoking temper. We see the Indian 
goaded into desperation by injustice and fraud. . . . 



348 HISTORY OF THE GREAT AMERICAN FORTUNES 

G. C. Sibley, U. S. Indian Agent at Fort Osage, wrote, 
on April 16, 1819, to Superintendent McKenney, de- 
nouncing the attempts, chiefly on the part of the Ameri- 
can Fur Company, to bring about the abolition of the 
Government trading posts. With bitterness he wrote 
that " The clamorous cupidity of the traders will no 
longer be restrained; the Indian trade must be given up 
to ' individual enterprise ' ; to merciless men ... to 
unprincipled pioneers of commerce of every shade and 
hue." If that should be done, he pointed out, an address 
along these lines might as well be made to the settlers: 
" Your property will be sacrificed ; your families mur- 
dered, and your farms desolated; but these men insist 
upon their rights, and the fur trade must be left open to 
them. . . . What is the bleeding scalp of an infant, 
compared with the rich fur of a beaver skin?" (Doc. 
No. 60, pp. 57-59-) 

All of these protests were of no avail; by a cam- 
paign of persistent misrepresentation, wire-pulling and 
presumably bribery, Astor finally succeeded in having 
the Government trading posts abolished, and thereafter 
could debauch and swindle the Indian tribes without 
any competition in trade from the Government. But 
while denouncing Astor, and justly so, for his extraor- 
dinarily revolting practices, the United States Indian 
Agents might well have denounced themselves for vir- 
tually defrauding the Indians in the purchase for the 
Government of vast areas of lands owned by the In- 
dians. Superintendent McKenney stated that these 
lands had cost the Government an average of only two 
cents an acre! Two cents an acre, so it is written; 
the Indians were often paid this sum in merchandise. 
Much of the poverty, and nearly all of the debauchery, 
swindling, murders and massacres could be right- 



THE HILL FORTUNE 349 

fully charged to Astor, but the Government itself was 
responsible for some of the destitution in thus taking 
advantage of the unsophisticated Indians and wheedling 
away their valuable agricultural, timber and mineral 
lands for virtually nothing. And, as we have seen, capi- 
talists then promptly stepped in and fraudulently secured 
great stretches of these timber and mineral lands, while 
sections of the working class were vainly petitioning 
Congress to give the workers cheap access to the soil, 
or to hold the land as national property, for the benefit of 
the whole people. 

The bribery of Government agents, in all departments, 
by capitalists determined upon defrauding the Govern- 
ment, the Indians, inventors and the producers in general, 
was persistent. In Chapter I, Vol. II, facts have been 
given of the corrupt collusion of land office registers 
and receivers by which capitalists obtained immense tracts 
of land. Many of the Government agents among the 
Indian tribes were likewise corrupted, either by money 
or other means. Numerous Congressional investigations 
conclusively established this fact. An investigation, in 
1842, of the frauds practiced during the previous dec- 
ade or more upon the Cherokees, for instance, revealed 
such an elaborate system of fraud on the part of private 
contractors in the contracts for supplies, that a powerful 
attempt was made to suppress the report. The House 
Committee on Indian Affairs declined to yield to the 
influences demanding suppression, and published the re- 
port in full. (Report No. 271, February 25, 1843, 
Twenty-seventh Congress, Third Session.) The report 
of the investigation consisted of two sections, the first 
of which gave a description of the Cherokees. In its 
own report, the House Committee on Indian Affairs thus 
reported in part: 



35O HISTORY OF THE GREAT AMERICAN FORTUNES 

The second report relates to frauds alleged to have been 
committed upon the Government and the Indians, by certain sub- 
ordinate agents in the public employment, and persons who had 
contracted with the Government to furnish subsistence to a 
number of tribes. This report presents a great amount of facts 
on the subject, showing that the most exorbitant prices were 
paid to the contractors who furnished the rations. The man- 
ner in which the contracts were made is pointed out, as well 
as the manner in which they were performed; and, unless the 
statements are false, it is evident that the Government was de- 
frauded in the first instance, and the Indians in the second; and 
that in both the agents of the Government participated. 

The facts contained in the report are very valuable. They 
expose the whole machinery of fraud, by which the Govern- 
ment and Indians have been so often and so greatly wronged. 
. . . The inquiry by Lieutenant Colonel Hitchcock appears to 
have been conducted with great intelligence and fairness. . . . 

North and south, east and west, this defrauding of 
Government and Indians continuously went on. 

THE SEIZURE OF MINERAL LANDS. 

The thefts of mineral lands in Wisconsin, Illinois, 
Iowa, Michigan and other States were so scandalous a 
condition by the year 1840, that successive Congressional 
Committees were moved to report extensively upon them. 
The House Committee of Public Lands reported, on 
December 18, 1840, that large tracts of land, well known 
to be rich in mineral deposits, in the Northwest and else- 
where, had been fraudulently seized under nominal forms 
of law, and that deception, perjury and fraud were 
common. 1 

Two years later, on April i, 1842, the House Com- 
mittee on Public lands submitted a similar elaborate 
report, containing a petition from citizens of various 

1 Reports of Committees, Second Session, Twenty-sixth Con- 
gress, 1840-41, Report No. i. 



THE HILL FORTUNE 35! 

Western and Northwestern States complaining that the 
oldest and most valuable mines had been fraudulently 
seized " and that, too at the very time when the regular 
miners were occupying the same, and were deriving their 
livelihood from them." The committee described many 
cases of perjury or fraud in the seizure of lead and 
copper mines, and many facts were brought out showing 
that the bribery of Land Office officials and army officers 
was a regular part of the fraudulent operations. 
" Redress through the courts of ordinary jurisdiction," 
the report read " is slow and expensive. The persons 
aggrieved are generally men poor in purse, living by their 
labor, and they have not the means to contend in court 
with the wrongdoers." 2 

A report, dated January 27, 1846, of the Senate Com- 
mittee on Public Lands, in answer to a resolution of in- 
quiry of the United States Senate as to the character and 
disposition of the Lake Superior mineral regions, pointed 
out that that region " has within the two or three past 
years risen into great importance in the public estima- 
tion." The committee declared itself fully persuaded 
that its copper mines were very valuable, and that under 
proper management the mines might become a prolific 
source of income to the Treasury of the United States. 
The committee described the great frauds by which large 
areas of these mineral deposits, located on public domain, 
were passing into private hands. 3 

Frequent Congressional reports told of the fraudulent 
methods by which immensely valuable mineral deposits 
in the Northwest were robbed from the Indians, and the 
Government swindled. The House Committee on Indian 

2 Report of Committees, Second Session, Twenty- seventh Con- 
gress, 1841-42, Vol. ii, Report No. 484. 

8 Senate Documents, First Session, Twenty-ninth Congress, 
1845-46, Vol. iv, Doc. No. 160. 



HISTORY OF THE GREAT AMERICAN FORTUNES 

Affairs reported, for example, on April n, 1874, that a 
treaty, signed in 1854, between the United States and a 
branch of the Chippewa Indians gave that tribe a reser- 
vation in Michigan. " In 1869," the report continued, 
"some speculators in public lands discovered valuable 
minerals in the township, fifty-one [part of the Chippewa 
reservation.] They immediately went to work, while the 
secret remained theirs, to have it restored to market. 
They finally succeeded so far as to induce the Govern- 
ment to restore to market so much of the township, by 
far the larger and more valuable portion, as lies east of 
Huron Bay." * The report declared that the Indians had 
been unjustly dealt by and wronged, and the mineral 
lands fraudulently acquired. This was but one of many 
such reports dealing with the theft of mineral lands 
from that tribe and other Indian tribes. 



THE COLOSSAL THEFTS OF TIMBER. 

The huge fraudulent operations in the theft of timber 
from the public domain in Minnesota and other States 
and Territories, and the bribery of public officials to con- 
nive at those thefts, were another example of the wide- 
spread and permeating fraud. 

Congress had passed an explicit act prohibiting depre- 
dations on the public timber lands, and providing a 
penalty for each violation of the law of a fine of not less 
than triple the value of the timber cut, destroyed or re- 
moved, and a term of imprisonment not to exceed twelve 
months. This law was effectively ignored or evaded by 
individual lumber capitalists or lumber corporations. In 
a long report, under orders, to United States Secretary of 

4 Reports of Committees, First Session, Forty-third Congress, 
1873-74, Report No. 396. 



THE HILL FORTUNE 353 

the Interior Robert McClelland, on February 12, 1854, 
James B. Estes, U. S. Timber Agent for Iowa, Minnesota 
and the Western district of Wisconsin, stated that in one 
Minnesota section alone the Black River district 
more than two hundred million feet of pine had been cut 
and carried away. " On the Black River," wrote Estes, 

are sixteen lumbering mills, all of which, until the last year 
have been supported by logs taken from the public lands. 5 

Upon the" Chippewa and Red Cedar or Menominee rivers, the 
same state of waste exists and has been carried on for a number 
of years. There are also upon these streams, and their branches, 
eight saw mills which doubtless cut, as an average, more than 
two millions of feet a year. The amount of lumber cut at all of 
these mills is small compared with the actual waste upon the pub- 
lic lands, as there is now, and has been for years, a most exten- 
sive business of " logging " carried on to supply the lower mar- 
kets of the Mississippi. 6 

Along certain rivers besides those named, Estes added, 
there were 4< nineteen saw mills, of steam and water 
power, which are engaged in cutting, and doubtless con- 
sume, forty or fifty millions feet of lumber yearly. In 
addition to this, there has been a large traffic in rafting 
logs down the Mississippi to the St. Louis and other 
markets below." T 



BRIBERY OF OFFICIALS. 

This immense amount of lumber was almost all stolen. 
Usually the Government timber agents were bribed to 
wink at this colossal system of fraud, and at other times 
they were likewise bribed to sell (what they had no legal 

B Executive Documents, First Session, Thirty-third Congress, 
1853-54, Vol. xiv, Doc. No. 115:8. 
Ibid. 
Ibid. 



354 HISTORY OF THE GREAT AMERICAN FORTUNES 

authority to sell) permission or licenses, for insignificant 
payments to the Government, to cut timber from the 
public lands. Estes reported that he had instituted 
twenty-one indictments against some of these timber tres- 
passers, and that among the number he had caused to be 
indicted, was Stunton, a former United States Timber 
Agent, " for being accessory to those trespassers, in hav- 
ing sold to individuals permissions to cut and waste/' 8 

So intrenched was this system of enormous theft that 
when one honest Government official attempted to en- 
force the law, the whole lumbering interests sought to 
discredit him and his aim and bring about his removal. 

Such a practice had long been the usual capitalist 
method of reprisal; we have seen how Astor, earlier in 
the century, caused officials who tried to stop his debauch- 
ing and swindling of the Indians to be dismissed from 
office, and we have noted the same occurrence so repeat- 
edly, that it might be said to be a fixed accompaniment of 
capitalist plans. Eternally boasting of their concern for 
" law and order " when labor unions declared a strike, 
and demanding the strict enforcement of the laws when- 
ever that enforcement had to do with the working class, 
the capitalists, on all occasions, insisted upon their right 
to interpret laws as they willed, and evade or violate them 
if their self interest so pleased them. 

Even further: not only did the lumber capitalists 
systematically seek to thwart the enforcement of the law 
by honest officials; all of the allied capitalists in the 
same region, and subsidized newspaper owners and hire- 
lings joined in threatening, and often using, force to pre- 
vent the laws from being executed. This is clearly 
shown by the report made on February 18, 1854, by I. W. 
Willard, U. S. Timber Agent for Western Michigan, 

s Ibid., 9. 



THE HILL FORTUNE 355 

to United States Secretary of the Interior McClelland. 
Willard estimated that " there have been manufactured 
and shipped from there [the region north of Grand 
River and Lake Michigan] more than five hundred mil- 
lion feet of lumber within the last ten years, and more 
than seven-eighths of which was plundered .from the 
public lands. . . . Besides this, the extensive tanner- 
ies of Chicago and Milwaukee have been largely supplied 
with bark from the forests of hemlock on the eastern 
Ahore of Lake Michigan." * 



HONEST OFFICIALS MALIGNED AND PERSECUTED. 

Willard caused thirty-seven of the trespassers to be 
indicted. Then, he wrote, " the entire timber interests 
commenced a systematic war upon me. The newspapers 
at Chicago, it is believed, at the instance of the tres- 
passes, their attorneys and agents, contained attacks daily 
upon the agent, characterizing his conduct as oppressive 
in the extreme, and the ' Chicago Tribune ' went so far 
as to counsel resistence by force. Meetings were held 
in the lumber regions, attended by lumber merchants 
from Chicago in some instances, at which violent 
harangues were made, and resolutions adopted, the 
temper of which was well calculated to excite a feeling 
leading to the most dangerous consequences." 10 In fact, 
the timber capitalists employed armed gangs to prevent 
the seizure of the stolen lumber, and fleets of lake ships 
were requisitioned to carry off the lumber by stealth be- 
fore the Government agents could arrive to confiscate it. 

What eventually happened to those thieves? Invaria- 
bly they gradually succeeded in forcing the honest Gov- 

9 Doc. No. 115, 1853-54, etc., 16. 
1 Ibid. 



356 HISTORY OF THE GREAT AMERICAN FORTUNES 

ernment timber and land officials out of office. They 
fought the Government by force and strategy, and con- 
tested it in the courts. The plea was set up by them that 
timber was not a part of the land, and for years the courts 
solemnly considered the question whether a tree went 
with the real estate. Finally, the Supreme Court of the 
United States gravely decided that it did ; that " the 
timber while standing is a part of the realty, and it can 
only be sold as the land could be, and unless lawfully 
cut, will remain the property of the United States." J1 
A few of the underlings of the lumber capitalists were 
detained in jail; as for the capitalists themselves, they 
were allowed by the Government " to compromise " the 
cases against them, by payment of trivial sums. No poor 
man violating the law had ever been permitted to com- 
promise with the Government ; he had to face a court 
mandate and go to jail and stay there until his sentence 
expired. But the timber capitalists, like all other sections 
of the capitalist class, were allowed to keep the fruit of 
their thefts, and buy immunity from the penalties of 
the law by paying back a very small part of the pro- 
ceeds. With these proceeds the timber thieves often then 
bribed legislatures for privileges and franchises, bought 
stocks and bonds, and real estate in the cities, built fine 
mansions and became the founders of some of the con- 
siderable fortunes in the United States. And continu- 
ously, decade after decade, the gigantic thefts of timber 
from the public lands went on unceasingly. 12 

11 U. S. vs. Cook, Wallace's Reports, Supreme Court of the 
United States, xix : 591. 

12 The voluminous reports on the subject issued by the Gen- 
eral Land Office in 1877, show that the most extensive timber 
depredations were still going on in Minnesota, Michigan, Wis- 
consin, Louisiana, Alabama, Florida and other States, and that 
Government timber agents were being bribed, or otherwise in- 



THE HILL FORTUNE 357 

These are a very few instances of the methods in the 
seizure of mineral deposits and timber throughout the 
Northwest long before, or at about the time, Hill ap- 
peared on the scene. In fact, it might be said that when 
he arrived in St. Paul, fraud as the foremost means to 
success, had already become traditional. The remarkable 
frauds by which many millions of dollars were stolen by 
Russell Sage and others in the projection and manipu- 
lation of the St. Paul and Pacific railroad were carried 
on under Hill's eyes. Very probably he learned his first 
great lesson from observing Sage's methods, and it was 
this very railroad that he and his partners obtained, after 
Sage had plundered, and practically abandoned, it. 



THE HISTORY OF A RAILROAD HILL SECURED. 

The history of this railroad was one of continuous cor- 
ruption from its inception. The facts have been given 
in one of the chapters on the Sage fortune, but a re- 
capitulation will be here summarized. 

The attempted corrupt seizure of public lands in 
Minnesota began in 1854, when an act was corruptly 
lobbied through Congress indirectly giving nine hundred 
thousand acres of public domain to the Minnesota and 
Northwestern Railroad Company. The ensuing public 
scandal compelled the repeal of that act. But other acts 
were passed by Congress in 1857, by the same proved 
methods of bribery, indirectly, yet absolutely, giving a 
present of six million acres of public land in Minnesota 
to various railroad corporations. 

One of these measures of Congress, approved on 
March 3, 1857, made a large land grant to the Territory 

fluenced to connive. See Senate Documents, Forty-fifth Con- 
gress, Second Session, 1877-78, Ex. Doc. No. 9. 



HISTORY OF THE GREAT AMERICAN FORTUNES 



of Minnesota for the benefit of the Minnesota 
Pacific Railroad Company. The further history oJ this 
railroad has heretofore been specifically described; <iow 
its projectors "ere composed of notorious lobbyists and 
swindlers ; how they corrupted the Minnesota Legislature 
to award them " as aid " several millions of dollars of 
State bonds; how they fraudulently sold and hypothe- 
cated large amounts of those bonds and stole the pro- 
ceeds; and how, although they had received millions of 
acres of public lands, and millions of dollars of public 
money, yet, by 1859, they had not built more than a 
few miles of worthless track. More millions of dollars 
had been stolen by palming off stock on farmers, mer- 
chants and other investing dupes. 

The robbery of these huge sums threw the railroad 
company into insolvency. Then in order to prevent de- 
frauded creditors from recovering, Sage and his asso- 
ciates corrupted the Minnesota Legislature to pass an 
act reorganizing the company into two divisions, one di- 
vision called the St. Paul and Pacific, and the other, the 
First Division of the St. Paul and Pacific Railroad Com- 
pany. This legislative act, the courts held, entirely re- 
lieved the two new corporations from the debts of the 
old corporation, although it in nowise affected their land 
grant and franchise rights. 

Having thus made it impossible for creditors to re- 
cover, Sage and company, on the plea that " further 
public encouragement was necessary to complete the rail- 
road," lobbied an act through Congress in 1865, by 
which the land grant was increased to ten sections a mile 
for each mile of the railroad and its branches. They 
then mortgaged the railroad and its land grants to a 
syndicate of Dutch capitalists for $13,380,000, of which 



THE HILL FORTUNE 359 

$8,000,000 was immediately diverted by various fraud- 
ulent devices, and the railroad was again plunged into 
bankrupcy. 13 In 1875, Judge Dillon, of the United 
States Circuit Court, appointed a receiver for the rail- 
road in the person of Jesse P. Farley. 



HILL STEPS IN WHERE SAGE LEAVES OFF. 

Hill and his associates stepped in where Sage left off. 
We have seen how Farley expended only about $100,000 
in constructing and repairing the railroad. So little was 
done, and the road was in such a disgraceful condition, 
that on March 9, 1878, the Legislature of Minnesota 
passed an act declaring that unless a specified number of 
miles should be built by certain dates, the uncompleted 
portions of the railroad, together with the land grants, 
rights, franchises and exemptions from taxation, should 
be at once forfeited to the State of Minnesota " without 
any act or ceremony whatsoever." From another direc- 
tion, also, trouble was threatening. The Dutch bond- 
holders were angrily clamoring to know what had become 
of their millions, and had appointed John S. Kennedy 
a New York banker, as their representative to bring suit. 

Hill saw the opportunity of getting for almost nothing 
a railroad of five hundred miles, and a land grant of more 
than two and a half million acres. How did he manage 
it? According to Farley's repeated statements in subse- 
quent court proceedings, Hill and Norman W. Kittson 
entered into a conspiracy with him (Farley) to betray 
the United States Courts, and at the same time Kennedy 
conspired with him to betray the Dutch bondholders. 

18 The specific facts, from the court records, have been related 
in the second chapter on the Sage fortune. 



360 HISTORY OF THE GREAT AMERICAN FORTUNES 

These allegations Hill denied, but Farley asserted and 
reasserted them in many court proceedings. 14 



THE METHODS BY WHICH CONTROL WAS OBTAINED. 

Farley was an ignorant, almost illiterate, man who had 
seen some railroad experience in Iowa, and his cupidity 
was well known. That he was selected as a receiver, or 
rather recommended to the court, by Kennedy is definitely 
asserted in the court decisions. 15 Undoubtedly he was 
chosen by Kennedy in accordance with a surreptitious 
agreement, because it was known that he would prove a 
pliable tool. If Farley's own sworn statements may be 
accepted, he was to mismanage the affairs of the railroad 
so that the price of the bonds would be reduced, and he 
was to inform Hill and Kittson of every move that he 
made. At the propitious time, Hill and Kittson were to 
come forward and get control of the railroad. Neither 
Hill nor Kittson had the necessary money to do this, but 
according to Farley they were to give a two-fifths or 
forty-per-cent. interest to anyone supplying the funds. 
Farley contended that this agreement further provided 
that a three-fifths or sixty-per-cent. interest should be 
reserved for himself and for Hill and Kittson one- 
fifth for each of the trio. 16 

The all important consideration was to build at once 
the extensions, in view of the act of the Minnesota Legis- 
lature threatening the franchise rights and land grant 

14 Farley vs. St. Paul, Minneapolis and Manitoba Railroad 
Company, Federal Reporter, xiv: 114-118; United States Re- 
ports, Vol. cxx : 303-318; Farley vs. Hill, Federal Reporter, 
xxxix: 513-522; Farley vs. Norman W. Kittson et al., Minnesota 
Reports, xxvii . 102-107. 

15 Federal Reporter, xxxix : 516. 

16 Farley vs, Norman W. Kittson et al., Minnesota Reports, 
xxvii : 103, 



THE HILL FORTUNE 361 

with forfeiture. But who would supply the funds for 
this construction? Kittson brought in two fellow-Cana- 
dian friends George Stephen, manager of the Bank of 
Montreal, and Alexander Donald Smith, long associated 
with the Hudson Bay Trading Company. Where 
Stephen and Smith obtained the millions of dollars which 
they now advanced, has never been clearly shown. It 
was long persistently charged, by at least one responsible 
member of the Canadian Parliament, among others, 
that Stephen, Smith and one Angus withdrew $6,000,000 
from the Bank of Montreal with which to finance the 
enterprise, without the knowledge of their co-directors. 
So far as documentary proof of this allegation is con- 
cerned, none has been found; it may exist, but we have 
been unable to discover it. 

HILL AND HIS CLIQUE GET THE RAILROAD. 

The campaign to get control of the railroad was now 
fairly complete. The various properties embraced in 
the railroad company's title were mortgaged in several 
mortgages amounting, in the aggregate, to $28,000,000 
of bonds. Hill and his associates bought in these $28,- 
000,000 of bonds at an absurdly low price, in some 
cases of large issues, at only three per cent, of their 
value. The range of prices was from thirteen and a 
quarter, to seventy-five per cent., of their par value. 17 
But Hill and his partners were not required to pay in 
immediate cash. The bonds were chiefly bought on the 
understanding that they were not to be paid for until 
the railroad was reorganized. 

Such actual money as was expended was spent in a 
busy effort to construct the extensions, and thus fore- 

17 Federal Reporter, xxxix : 516. 



362 HISTORY 01? THE GREAT AMERICAN FORTUNES 

stall the forfeiture law. " Under these circumstances/' 
the court record states, " the receiver, at the instance of 
Mr. George Stephen and other large bondholders 
(James J. Hill, Donald A. Smith and Norman W. Kitt- 
son) hurried to court, and got an order on April 18, 
1878, to get authority to issue debentures to complete 
the extensions." 18 Under the authority of the court, 
Farley, out of the funds advanced by the Hill-Stephen 
combination, built one hundred and twenty-five miles of 
railroad at an aggregate cost of $1,016,300. This ex- 
tension gave an unbroken railway connection between 
St. Paul and the Canadian system of railway in Mani- 
toba. 

Only one thing more was necessary to get the whole 
railroad line out of the jurisdiction of the Court into 
absolutely private possession. This was a decree of 
foreclosure. On April n, 1879, a ^ na ^ order of fore- 
closure was decreed, and on June 14, 1879, the road 
was sold to the St. Paul, Minneapolis and Manitoba 
Railroad Company. This company Hill and his asso- 
ciates had organized a month before the sale, for the 
express purpose of buying the railroad under foreclosure. 
The entire cost of the main lines and extensions of the 
St. Paul and Pacific, both divisions, was $6,780,000. 
But the Hill coterie were not called upon to pay this 
sum in money. They were allowed to turn in receiver's 
debentures and bonds as payment for the purchase price. 



Farley testified subsequently that the railroad thus sold 
for $6,780,000 was worth, at the very least, $15,000,000, 

18 John S. Kennedy et al. vs. The St. Paul and Pacific Rail- 
road Company et al., Dillon's Circuit Court Reports, 1879-80, 



THE HILL FORTUNE 363 

thereby confessing his criminal complicity in being a 
party (as he swore) to a clandestine agreement by which 
such a sale had been fraudulently arranged for in ad- 
vance. In the suit, in 1880, of Wetmore vs. the St. Paul 
and Pacific Railroad Company, to set aside the sale, 
Judge Miller estimated the five hundred and sixty-five 
miles of railroad and the 2,586,606 acres of land to be 
worth $20,000,000 or more. 18 In fact, from a part of 
the land grant alone, aside from the railroad property 
itself, Hill and company obtained more than twice the 
sum that they had paid for the entire property. Im- 
mediately after the foreclosure sale, they sold the 
greater part of the land grant for $13,068,887. 

A few years previously Hill was a poor man ; perhaps 
he had a few thousand dollars. The operation described 
at once made him a millionaire. He and his associates 
not only held the railroad's bonds, but they apportioned 
the stock among themselves. Hill and Kittson each re- 
ceived 57,646 shares of stock, and the other members 
of the combination their share. In addition, they other- 
wise made large profits. 20 As soon as the railroad was 
secure in their possession, they began the accustomed 
process of hugely watering its stock. 

THE RECEIVER SWEARS THAT HE WAS IN COLLUSION. 

Farley was bitterly disappointed at receiving none of 
the spoils. So determined was he to get what he claimed 
was his allotment, that he did not mind the publicity of 
his betrayal of his trust as receiver. He brought a suit 
against Kittson, Hill, etc., in the Minnesota Supreme 
Court, alleging that by agreement he was to receive one- 

19 Dillon's Circuit Court Reports, i8/o/-&>, v:S3l. 

20 United States Reports, Vol. cxx : 308. 



364 HISTORY OF THE GREAT AMERICAN FORTUNES 

fifth of the capital stock of the railroad, and one-fifth 
of all other securities and property acquired by Kittson, 
Hill and the others of the combination, as a result of his 
collusion. It was a very audacious ground upon which 
to base a complaint. Farley could produce no written 
agreement, and Judge Gilfillan, in October, 1880, decided 
that he had not proved his case. 21 

At the same time, Farley sued the St. Paul, Minne- 
apolis and Manitoba Railroad Company in the United 
States Circuit Court. The attorneys for the defense, it 
is interesting to note, based their main plea for non- 
suiting the case on the ground that a court official who 
had betrayed his trust had no standing in court. In this 
particular plea Judges Treat and Nelson concurred. 
Their decision, rendered in 1882, said in part : 

Courts will not and ought not be made the agencies whereby 
frauds are in any respect recognized or aided. They will not 
unravel a tangled web of fraud for the benefit of anyone en- 
meshed therein through whose agency the web was woven. Es- 
pecially must that be a rule where a trusted officer of a court, 
whose position is both advisory and fiduciary, seeks its assistance 
to compel alleged confederates to share with him the spoils ac- 
quired through his concealments and deceits, which he admits 
were deemed by his confederates and himself necessary to their 
success through his betrayal of his trust. 22 

THE COURT VIRTUALLY CONFIRMS HIS CHARGES. 

Then followed parts of the court's decision prac- 
tically confirming Farley's statements that he had entered 
into a conspiracy of collusion with Hill, Kittson, 
Stephen, Smith, etc., on the one hand, and Kennedy on 
the other. " The plaintiff," continued the decision, 

21 Minnesota Reports, xxvii : 102-107. 

22 Federal Reporter, xiv: 114-118, 



THE HILL FORTUNE 365 

" conceived a scheme to wreck the vast railroad interests 
which it was his duty to protect. Through a betrayal 
of his trust under such circumstances, according to his 
version of the facts, these vast railroad properties have 
been secured, and a profit realized of $15,000,000 or 
more." 2S 

The court went on to say that for his betrayals, Farley 
was to get a portion of the spoils, and the ground of 
his suit was that his associates had repudiated the fraud- 
ulent contract. As they refused to divide the spoils, 
Farley had sought the aid of the courts to compel 
them a very strange demand, the decision said, to 
bring into any court. As for Kennedy's part in the 
transaction, the decision set forth, " It is charged, how- 
ever, and for the purposes of the case may be admitted, 
that Mr. Kennedy, agent of the Amsterdam Committee, 
was advised by the plaintiff [Farley] during the progress 
of the scheme that he, the plaintiff, was secretly betray- 
ing his trust" 2 * The decision concluded by saying that 
Farley's cause of action was based on " inherent turpi- 
tude," and that the courts would not recognize any such 
action as valid. 25 

FARLEY INSISTS UPON GETTING HIS SHARE OF THE SPOILS. 

Farley carried the case to the Supreme Court of the 
United States. That court, in October, 1886, held that 
the plea put forth in the lower court was unsatisfactory, 
in that it had not established any question of fact. The 
case was remanded with instructions for a new trial. 28 

The suit, therefore, came up again in the United 

"Federal Reporter, xiv: 117. 

** Ibid. 

"Ibid., 117. 

2 United States Reports, Vol. cxx: 303-318. 



366 HISTORY OF THE GREAT AMERICAN FORTUNES 

States Circuit Court at St. Paul, this time in September, 
1889. This court's statement of the case reads: 

In 1876, complainant, Farley, was, by appointment of this 
court, receiver of the property of the St. Paul and Pacific Rail- 
way, and also general manager of the lines of the First Division 
of the St. Paul and Pacific Railway Company. . . . Several 
series of mortgage bonds were outstanding, largely owned and 
held in Holland. Complainant alleges that he and the defend- 
ants, Kittson and Hill, entered into an agreement for the pur- 
chase of these bonds, or a majority thereof, and the use of the 
same in the purchase of the road in foreclosure of the mortgages. 
The defendants were to furnish the funds necessary therefor, 
and the complainant to furnish facts, information and assistance. 
Certain it is that the bonds were purchased by the defendants, 
Hill and Kittson, with two associates, foreclosures consummated, 
and the railway properties acquired. 27 

The question was, the court declared, whether such 
a contract had been made, and if so, whether it was 
against public policy. 

Farley testified that an oral contract had been made, 
and he was corroborated by his clerk, Fisher. Hill 
denied it, and as for Kittson, he had died before his 
testimony could be taken. Various letters of Farley's 
correspondence, with the banking firm of John S. 
Kennedy and Company were produced in court and were 
incorporated in the court record. One of these, written 
on May 23, 1879, by Farley to John S. Barnes, a mem- 
ber of the Kennedy firm, read : 

Since the election of Bigelow and Galush, as Directors in the 
New Company, Men of no Money, railroad experience or Influ- 
ences, And myself left out in the cold, I am forced to the con- 
clusion that My time and claims on the St. Paul and Pacific is 
Short, I did expect better things of Hill and Kittson. I had a 
talk with Jim Hill last Knight. He disclaims any intention on 
his part to ignore my claims, but he is such a Lyer can't be- 

27 Federal Reporter, xxxix : 514 



THE HILL FORTUNE 367 

lieve him. It is a matter of astonishment to every person in St. 
Paul to see the way Jim Hill handles Mr. Stephens. He is 
notoriously known to be the biggest liar in the state. Mr. Kitt- 
son told me time and time again that Jim Hill is the worst man 
he ever saw. Upham, P. H. Kelly, Thompson and in fact every 
citizen in St. Paul if they would Speak their Sentiments would 
all tell the same story. You Must Not blame Me if I should try 
to get even with Jim Hill before I leave here. 28 

In deciding the case, Justice Brewer said that he did 
not believe such a contract had been made, and he based 
his belief on this singular and highly amusing ground of 
reasoning : " Is it probable," he wrote of Farley, " that 
a man so situated, with his years of experience in rail- 
road foreclosures, and owing such a duty to the bond- 
holders, would enter into a secret arrangement with 
third parties for the purchase of the bonds an ar- 
rangement which made it to his interest to reduce the 
market price of bonds? Is it probable that such a man 
would deliberately cloud the record of his life?" etc., 
etc. 29 Of course not. 

Again Farley carried the case to the Supreme Court 
of the United States. This court, in October, 1893, up- 
held the decision of the Circuit Court, declaring that 
Farley had not proved his claim. 80 After thirteen years 

"Federal Reporter, xxxix:52i. One of Hill's eulogists, in 
a "biography," very effusive on the whole, published in the 
New York "Tribune," issue of April 7, 1907, thus wrote of Hill: 

" Mr. Hill has a reputation in the Northwest as a very hard 
man in business. ... He has never had patience with any 
one who could not practice unflagging industry and self-de- 
nial. Out of this same trait has grown the conviction among 
railroad men that ' Jim ' Hill is the hardest man in the business 
to work for. For himself there has never been a quitting time. 
Even now he is busy nights and Sundavs when there is work 
to do. It has always been a short shrift for those in his em- 
ploy who could not forget that there were such things as office 
hours and holidays. . . ." 

29 Federal Reporter, xxxix : 516. 

so United States Reports, Vol. cl : 572-577- 



368 HISTORY OF THE GREAT AMERICAN FORTUNES 

of legal contest, Farley was unable to collect a single 
dollar. 



HILL AND HIS PARTNERS BECOME GREAT DIGNITARIES. 

Of the men whom Farley alleged conspired with 
him, or who were alleged to have profited by his betrayal 
of his duty, Hill became the great multimillionaire auto- 
crat of the Northwest, and Stephen and Smith obtained 
peerages from the British Crown Stephen as Lord 
Mount Stephen, Knight of the Grand Cross of the Royal 
Victorian Order, etc., and Smith as Lord Strathcona, 
Knight of the Order of St. Michael and St. George, etc. 81 
Kennedy rose to be a multimillionaire ; when he died on 
October 31, 1909, he left a fortune estimated at from 
$30,000,000 to $60,000,000 which included $7,000,000 
worth of stock in the Great Northern Railway, mostly 
obtained at the very time he betrayed his clients, the 
Dutch capitalists. He also held $10,000,000 of North- 
ern Pacific Railway stock, secured at about the time 
when the Northern Pacific Railroad Company, as we 
shall see, was bribing land grants through Congress and 
stealing vast mineral deposits from the public domain. 
In the latter years of his life, Kennedy gave a few mil- 
lions for " philanthropic purposes," and was exalted as 
" great philanthropist/' His will revealed that he be- 
queathed tens of millions to philanthropic and educa- 
tional institutions. 

This by way of passing explanation. To continue the 
story of the Hill fortune, however: Hill and his asso- 
ciates secured more franchises and special laws, built 
extensions, and formed the Great Northern Railroad out 
of the railroads that they had obtained and the exten- 

31 See " Burke's Peerage." 



THE HILL FORTUNE 369 

sions which they constructed. The Legislatures of the 
Northwest were deluged with bribe money, although it 
was never specifically proved that Hill was the dis- 
tributor. The whole newspaper press was subsidized, 
and towns, cities and counties were prevailed upon to 
grant endowments and exemptions of all kinds. So rife 
was this corruption, that, in 1883, some protesting mem- 
bers of the Minnesota Senate introduced this resolution 
which was adopted: 

WHEREAS, The acquisition and holding of large interests in 
land-grant railroads, public contracts and other schemes receiv- 
ing aid from the General Government, by high Federal officials, 
places such officials in positions where they cannot be true to the 
public interests, without a sacrifice of self interest; and 

WHEREAS, Money thus acquired by public men is ordinarily 
used to corrupt the springs of political influence, and prevent the 
expression of the real sentiments of the people, and, 

WHEREAS, It is alleged that in the preceding Senatorial election, 
certain members of this Legislature have been improperly and 
corruptly influenced by promises of money, public office or other 
valuable considerations, for a certain candidate for United States 
Senator, therefore, 

The resolution called for a Special Investigating Com- 
mittee of Seven. 82 The report of this committee, while 
of a whitewashing and partisan nature, indicated an ap- 
palling state of corruption. 

The significance of this self-admitted corruption of 
the successive Minnesota Legislatures, will be better 
understood by a consideration of one among a large 
number of characteristic episodes. 

On March I, 1877, when the popular indignation 
against the robberies and usurpations committed by Rus- 
sell Sage and his band was at its height, the Minnesota 
Legislature had enacted that the St. Paul and Pacific 

2 Minnesota Senate Journal, 1883 : 29. 



370 HISTORY OF THE GREAT AMERICAN FORTUNES 

Railroad Company should have no right " directly or in- 
directly " to any land upon which settlers had settled in 
good faith. Inasmuch as a certain part of the railroad 
was not completed until November, 1878, the terms of 
the act of Congress of June 22, 1874, were violated. 
This act had extended the time of completion to March 
3, 1876; otherwise the land grant was to be forfeited. 83 
But the Supreme Court of the United States conven- 
iently decided that a mere breach of the conditions of 
the act of Congress did not of itself work a forfeiture 
of the grant; either Congress or the Minnesota Legisla- 
ture had to take some specific action declaring the for- 
feiture. 34 The essential object, therefore, on the part of 
Hill and his associates was to prevent Congress and the 
Minnesota Legislature from passing such a forfeiture 
act; and they were successful. 

THE EVICTION OF DAKOTA SETTLERS. 

After Hill had secured control of the St. Paul and 
Pacific Railroad, under the name of the St. Paul, Min- 
neapolis and Manitoba Railroad, and had changed the 
title to that of the Great Northern Railroad, he claimed 
in 1884, sixty-five thousand acres of land in Dakota. 
Before 1884 no claim had ever been set up by the com- 
pany to that land. The claim was based upon the old 
land-grant act of 1857, passed when Dakota was a part of 
Minnesota. For years the country along the Red River 
in Dakota had remained a wilderness until farmers settled 
there, and converted it into one of the richest agricul- 
tural regions in the West. The General Land Office 

83 Senate Executive Documents, First Session, Fifty-second 
Congress, 1891-92, Vol. v. Doc. No. 67. 

84 Case of St. Paul, Minneapolis and Manitoba Railroad Co. 
vs. Charles and James Greenlaugh, March 2, 1891. 



THE HILL FORTUNE 371 

took it for granted that this land did not belong to the 
railroad company, and had given full titles to the settlers. 

In November and December, 1891, intense excitement 
prevailed among the farmers in the Red River Valley. 
An order had been issued by the Great Northern Rail- 
road Company compelling farmers, by December 15, to 
vacate lands belonging to the company. This order was 
based upon a decision of the Supreme Court of the 
United States declaring that the company's land grant 
extended to the Territory of Dakota now the States 
of North Dakota and South Dakota. 85 This decision 
gave the company some of the most fertile and valuable 
areas in Dakota. Unquestionably, under the acts of Con- 
gress, these lands, even if the original grant had extended 
west of the Red River, had long since been forfeited. 
The Supreme Court of the United States, however, by 
its successive decisions, negatived the explicit acts of 
Congress. The Great Northern Railroad thereupon 
began the eviction of farmers in the odd numbered sec- 
tions within the twenty-mile indemnity limit of its land 
grant. This order of the company was like a thunder- 
clap to the settlers. Many had resided on the land for 
twenty years. 

The settlers appealed to Congress. That body passed 
an act to allow the railroad company to select an equal 
area of lands in lieu of those settled upon. This act, 
although apparently passed for the benefit of the settlers, 
was precisely what the Great Northern Railroad Com- 
pany was waiting for. The lands relinquished by the 
company were non-mineral; the act of Congress there- 
fore, provided that the lands in exchange that it should 
select elsewhere should be non-mineral. But when the 
exchange was made it was discovered that the company 

88 United States Reports, Vol. cxxxvii : 528. 



HISTORY OF THE GREAT AMERICAN FORTUNES 

had selected the most valuable timber lands in Idaho, 
Montana and Washington lands worth far more than 
the Dakota lands and that on some of these lands 
rich mineral deposits underlay the timber. The Commis- 
sioner of the General Land Office at that time was, as 
we have noted in a previous chapter, T. H. Carter. His 
record was so very satisfactory to Hill, the ruler of the 
politics of the Northwest, that, a few years ago, the Mon- 
tana Legislature was allowed to send Carter to the 
United States Senate, of which he is now a distinguished 
member. 



HILL'S IRON ORE DEPOSITS. 

Hill personally owns immense iron-ore deposits in 
Minnesota. These deposits are currently estimated to 
be worth at least a billion dollars. In 1906 he leased 
what was really a small part of these deposits to the 
Steel Trust for a period of twenty-five years on a royalty 
basis, the payments amounting, in the aggregate, to tens 
of millions of dollars. How he obtained these deposits 
is not told clearly in official documents. We have seen 
in previous chapters, that the original land grants made 
by Congress, corrupt as were the circumstances of the 
passage of the various acts, were never intended to cover 
coal, iron or other mineral deposits. But by fraudulent 
constructions of the laws, made by Land Commissioners 
and the Courts, coal and iron lands were determined 
not to be included within the meaning of the word min- 
eral. 

According to Senator Pettigrew's version, Hill secured 
large iron deposits in Minnesota by private purchase. 
For this he had ample capital, reaching hundreds of 
millions of dollars. This money was derived from the 



THE HILL FORTUNE 373 

St. Paul and Pacific Railroad transactions, successive 
illegal stock waterings, and the extortionate profits from 
his railroad system profits terrifically oppressive to the 
people of the Northwest. Senator Pettigrew writes of 
the purchase by Hill of these iron deposits : " The iron 
underlay forests of pine, and the lumber company had 
built a lumber road to get out the pine, and having cut 
the pine off, sold the road and the land to Mr. Hill at 
what they considered a very exorbitant price, but it 
turned out that underlying the land were vast deposits 
of iron ore. I think Mr. Hill estimates the mines at five 
hundred million tons." 86 If this account is correct, it 
may safely be assumed that Hill knew the character of 
the land before he bought it; judged by business stand- 
ards it was a very astute transaction. 

This assumption is borne out by the facts revealed 
in a suit brought at St. Paul, in January 29, 1901, by 
H. W. Pearson, a geologist of Duluth, against Hill and 
the Great Northern Railroad Company. The sum in- 
volved in the proceeding was stated to be not less than 
$14,000,000 which was alleged to be the value of 

39 Related in a personal letter to the author. In Chapter ii, 
Vol. ii, of this work ("The Seizure of the Public Domain"), 
we have seen how large areas of land, granted to canal cor- 
porations as nominally swamp lands, were so fraudulently sur- 
veyed as to include some of the very richest copper deposits 
in the Northwest. The same was true of iron ore deposits in 
some of the grants to railroad corporations. It cannot be said 
that the beneficiaries of these frauds were unaware of the fact 
that copper and iron ore deposits were on the lands thus fraud- 
ulently acquired by them. A number of reports by Government 
geological experts had described the extent and location of these 
mineral deposits. One voluminous report, in particular, was 
that by J. W. Foster and J. D. Whitney, United States Govern- 
ment geologists. It was issued in 1851, and gave full descrip- 
tions of the character of the mineral lands. It especially de- 
scribed the iron ore deposits of the Lake Superior region as 
being of an almost unprecedented state of purity. U. S. Sen- 
ate Documents, Special Session, Thirty-second Congress, 1851, 
Vol. iii, Doc. No. 4. 



374 HISTORY OF THE GREAT AMERICAN FORTUNES 

property held by Hill and his railroad, and taken by them 
after its discovery by Pearson. In his complaint Pear- 
son averred that these mineral deposits were located 
by him under a contract with Hill by which he, Pearson, 
was to have a share in the profits. Pearson further 
alleged that he had been employed by Hill, in 1896, to 
locate coal and iron deposits in the States of Washington 
and Montana; that he found the deposits; that under 
his direction the Hill interests secured thousands of 
acres of valuable land, and that when he presented his 
claim for a share, he was cast aside. Of the final dis- 
position of this suit no record appears in the available 
court documents. 

If, however, the methods used by the Great Northern 
Railroad in appropriating mineral lands have been the 
same as those employed by the Northern Pacific Rail- 
road, then their nature is clear. This latter railroad was 
not originally owned by Hill, but he and those allied 
with him, now hold its ownership. " The net outcome," 
says Moody, " of the Northern Pacific corner, and of the 
Northern Securities incident 37 has been that the Hill 
interests remain in undisputed control of the three vast 
railroad systems which now go under the name of the 
Hill properties, viz: The Northern Pacific, the Great 
Northern, and the Chicago, Burlington and Quincy, 
constituting in the aggregate, over 18,000 miles of rail- 
road lines. 88 

THE NORTHERN PACIFIC RAILROAD. 

The Northern Pacific Railroad was chartered in 1864. 
By act of Congress of July 2 of that year, it was given 

87 Described in one of the chapters on J. Pierpont Morgan. 

88 "The Romance of the Railways," "Moody's Magazine," 
issue of July, 1908 : 17. 



THE HILL FORTUNE 375 

the right of way through the public domain, the right to 
take from the public lands material for construction, and 
an immense area of public lands in Montana, Idaho and 
other sections of the Northwest. These enormous 
privileges and grants were given to it at the identical 
time when the Union Pacific Railroad and other land- 
grant and subsidized railroad companies were bribing 
Congress. As we have seen, the Union Pacific Railroad 
disbursed nearly $436,000 in securing the passage of the 
act of July 2, 1864, increasing the Government money 
subsidy granted to it and doubling its land grant. 39 
Doubtless the passage of the Northern Pacific Railroad 
act was effected by the same means. In all, the North- 
ern Pacific Railroad obtained about 57,000,000 acres of 
public domain. 

By the definite terms of this act however, all mineral 
lands were expressly excluded from this grant, although 
the term mineral (to repeat an explanation already 
given) was later fraudulently construed, in the case of 
all land grants, not to include iron or coal. The 
Northern Pacific Railroad was, therefore, endowed with 
a land grant forty miles wide running across the conti- 
nent, west of the Missouri River. This land grant in- 
cluded vast stretches of the very richest timber lands. 

The ensuing history of the Northern Pacific Railroad 
was the same as that of all other railroads. It was 
plundered by successive groups of capitalists. One of 
the capitalists powerfully controlling the Northern Pa- 
cific Railroad for some years was Henry Villard, a man 
of remarkable character and enterprise. Different fac- 
tions of capitalists fiercely fought him, and sought to 

39 Reports of Committees, Credit Mobilier Reports, Forty- 
second Congress, Third Session, 1872-73, Doc. No. 78:xviii. 
See the second chapter on the Gould fortune, Vol. ii of this 
work. 



376 HISTORY OF THE GREAT AMERICAN FORTUNES 

oust him from the control of the Northern Pacific Rail- 
road and other railroads in the Northwest. In his 
" Memoirs," Villard tells of a formidable combination 
arrayed against him in 1889, composed of Hill and large 
financial corporations. Four years later Villard was ac- 
cused by his opponents of having profited enormously 
from buying, in his individual capacity, " semi-worth- 
less " railroads in Manitoba and elsewhere, and then 
" unloading " them, at exorbitant prices, upon the North- 
ern Pacific Railroad, which, corporatively, he controlled. 
So far as the court records indicate the facts, these 
allegations seem to have been part of a plan to discredit 
Villard, and cause his overthrow ; when the charges were 
passed upon by the courts, Villard was personally vindi- 
cated. But that the railroad's treasury had been looted 
by previous groups of capitalists is absolutely clear ; con- 
testing factions were continually charging the other with 
the responsibility for promotions, extensions and enter- 
prises largely devised for the special purpose of appro- 
priating large amounts in loot. 40 So contradictory and 
involved were these charges and recriminations that it 
is not easy to determine the relative, much less the ab- 
solute, truth. Certain of Villard's capitalist opponents 
were especially notorious for their evil records ; so much 
so that charges coming from them were received with 
distrust and cynical skepticism, in general, and with dis- 
missal, on the merits, from the courts in particular. 

40 Such charges were characteristic, as we have so frequently 
stated, of capitalist methods of warfare upon one another. 
Magnates in power were violently assailed so as to discredit 
and dislodge them. The spectacle was frequently presented of 
the " leading " and most " respectable " financiers ferociously 
denouncing one another as liars and thieves. These virtuous 
outbursts, it is needless to say, arose from no moral indigna- 
tion; the ulterior purpose was to crush the other, if possible, 
and seize property and power. 



THE HILL FORTUNE 377 

For years the contest to dislodge Villard from control 
was fiercely carried on. 

GREAT THEFTS OF MINERAL LANDS 

During the time that various capitalists controlled the 
Northern Pacific Railroad the thefts of mineral lands 
were so extensive that both Congress and the State of 
Montana were constrained to investigate. The people 
of Montana were greatly agitated over the railroad's 
claim to lands containing the very richest gold, silver, 
lead and copper mines, particularly the great copper 
deposits for which Montana was famous. In fact, the 
people of the entire West were deeply aroused, for if 
the courts should finally sustain the action of the North- 
ern Pacific Railroad, then all of the other Pacific rail- 
roads could likewise claim all of the mines and mineral 
deposits within their land grants, consisting of odd num- 
bered sections. Already, in 1890, the Supreme Court 
of the United States had provisionally handed down a 
decision sustaining the Northern Pacific Railroad's claim 
that only such mineral lands as were known to be mineral 
at the date of the land grant were to be excepted from 
the land grant. 

The trans-Mississippi Congress, meeting at Denver, 
in May and October, 1891, adopted resolutions 
declaring : 

WHEREAS, This dictum of the Supreme Court, if it should be- 
come law, would invest the Pacific railway companies holding 
grants of land from the Government with a vast number of the 
best mines discovered within the limits of said grants by pros- 
pectors and miners, who have located thereon in good faith and 
developed and sold therein in the honest belief that said grants 
were limited to agricultural lands only, as declared in the acts of 
Congress making them ; and 



378 HISTORY OF THE GREAT AMERICAN FORTUNES 

WHEREAS, The citizens of the United States have invested mil- 
lions of dollars in the development of mines on said lands which 
have been discovered subsequent to the date of said grants ; and 

WHEREAS, The consequences of this newly made construction 
of said grants must be the confiscation of private property and 
the spoilation of individuals in behalf of said railway companies 
on a scale so vast that history affords few parallels thereto, and 
to the bringing of actions to recover the value of ores heretofore 
mined from said lands, which, if successful, must reduce a large 
number of our citizens to want and beggary; and 

WHEREAS, If said construction of it becomes the law of the 
land, it will take vast regions of mineral land out of the market, 
either for future explorations or purchase, to the manifest injury 
of the people. Wherefore, be it 

Resolved, That the Congress protests against any construc- 
tion of the statutes of the United States which will result in such 
a system of wholesale confiscation, and the consequent enrich- 
ment of great combinations already enjoying the bounty of the 
government, and calls upon the representatives of the people in 
Congress assembled to take such prompt and immediate action 
as may be within their immediate constitutional prerogative to 
destroy this threatened danger. 

At the same time Martin Maginnis, Mineral Land 
Commissioner of Montana, reported to Governor Toole 
that the 

vast land grant of the Northern Pacific Railway Company- 
stretches from the eastern to the western boundary of the State 
of Montana in one broad belt which, including indemnity lands, 
is nearly one hundred and twenty miles wide and over seven 
hundred miles long. The Congress which created this corpora- 
tion gave to it one-half of the lands within these limits, carefully 
excluding all mineral lands, and emphasizing their reservation 
from the grant by giving to the company indemnity for such 
lands as might turn out to be mineral. Little prospecting had then 
been done ; very little was known of the character of these lands. 
All the discoveries of mineral land had yet to be made, the mines 
upon them to be developed and these to be finally segregated 
from the land grant of the company, and the company recom- 
pensed therefor with other lands not mineral in their character. 



THE HILL FORTUNE 379 

Nothing would seem to be plainer than the fact that the reser- 
vation went with and was part of the grant ; and that future ex- 
ploration, survey and classification would be necessary to define 
the non-mineral lands which would become the property of the 
company and the mineral lands which were reserved to be for- 
ever open to the prospector and the miner, under the mining 
laws of the United States. 

If the road could have been definitely located and built as rap- 
idly across the continent as the charter was pushed through the 
Congress, it would have been left to the future to prove the 
character of the lands, and if the company at that time by virtue 
of a finished road claimed all the lands, surveyed and unsurveyed, 
unexplored and not prospected, that company would simply have 
taken them all; for the mineral discoveries have all been made 
since then. It was not until later that the audacious claim was 
set up that lands not then known to be mineral, or not known 
to be mineral at a certain date, were therefore not mineral, and 
by consequence passed to the corporation. 41 

Mineral Land Commissioner Maginnis then dealt ex- 
tensively with the long delay of the projectors of the 
Northern Pacific Railroad in building the railroad a 
delay, he wrote, 

by which it failed in one of the primal purposes of its crea- 
tion, and in fairly earning that part of its endowment which was 
intended to secure its completion at least fifteen years before it 
came to us, who, while wearily waiting its advent, had occupied, 
subdued and partially developed the country without its assist- 
ance. It was never dreamed that the railroad company would set 
up at any time in its existence a claim to the mineral lands, which 
were excluded from the grant, in the granting act itself, by spe- 
cific reservations intended to run with and be as perpetual as the 
grant itself. 

Congress had created no tribunal to decide which were mineral 
or which non-mineral bearing lands. It left that to the executive 
department, which has the control of the sale and survey and 
classification of all the public lands. A large portion of the land 

41 Annual Report of the Mineral Land Commissioner for the 
State of Montana, for the Year Ending November 30, 1891. 
Helena, Montana, 1892 : 3-4. 



380 HISTORY OF THE GREAT AMERICAN FORTUNES 

inside lines of the grant has never been surveyed or in any way 
examined, prospected or classified by the government. The labor 
and toil of the voluntary prospector and the miner has alone 
made known which are mineral districts and which are not. 

Suddenly the astounding claim was set up that all the portions 
of the country which had not been voluntarily examined by the 
individual prospector, acting under no agency of the Government 
but at his own expense, and therefore proven to be mineral at 
a certain date, were to be considered non-mineral and to become 
the property of the Northern Pacific Railway Company in spite 
of the fact that the charter itself said that such lands never 
should be, and that the company should take other lands in lieu 
thereof in order to make up the quota that it claimed. 

It would seem that neither in law nor equity could there be any 
warrant for such a claim, that the company could not obtain by 
indirection those lands that were directly reserved from the 
grant and held open to the prospector and the miner under the 
well-defined policies of the United States as laid down in its laws 
governing the disposition of mineral lands. But under certain 
constructions of certain cases in some of the courts, the company 
did set up its claims not only to the mineral lands but to the min- 
erals which had been mined. It contested the applications for 
patents to mines upon odd sections and sued for the recovery of 
ores taken from the same. 

The people of the State became universally alarmed at a course 
which threatened such calamity to its interests and recognizing 
the fact that poor prospectors and miners, or rich ones either 
for that matter, could not successfully contest with such a power- 
ful corporation, the State determined to make the cause of its 
people its own cause, and with that object in view, the Legisla- 
ture passed the following law : 42 

Here followed the provisions of that law, the object 
of which was to safeguard the interests of the individual 
miners. Notwithstanding the passage of this act, the 
lower courts, many of the judges of which had been 
railroad attorneys, or who had been elevated to the bench 
by railroad influence, gave decision after decision in 

42 Annual Report of the Mineral Land Commissioner, etc., 
5-6. 



THE HILL FORTUNE 381 

favor of the Northern Pacific Railroad. The chief op- 
ponents of this railroad were large copper corporations, 
such as the corporation controlling the great Anaconda 
copper mine, then valued at $25,000,000. These 
corporations had themselves obtained their mines largely 
by fraud. But individual miners and prospectors, in 
nowise connected with any fraudulent operation, were 
deeply stirred, and in turn the mass of resident people. 
The House Committee on Public Lands of Congress 
took up the matter. Villard, as president of the finance 
committee of the Northern Pacific Railroad was busily 
in evidence with his attorneys. " Mr. Henry Villard," 
stated the report of Mineral Commissioner Maginnis, 

next engaged the attention of the committee. He also claimed 
that the company was now completely vested with the title of the 
disputed mineral lands. He considered that question as no 
longer open. The Supreme Court could only affirm the numer- 
ous decisions already rendered in favor of the railway company. 
The property rights of the corporation were beyond the reach 
of legislation; but he was anxious to have this controversy set- 
tled. It was injuring the road and the mining industry and he 
was ready to offer a compromise on the part of his company. 
He was authorized to submit a proposition to the committee: 
That the company would agree to this bill, to the survey and 
classification, and would deed back to the United States all lands 
so excepted as mineral: Provided, That the company should be 
recompensed therefor with other lands, either by the extension 
of present indemnity limits or by selection from the even as well 
as the odd sections within the grant. 48 

The House Committee on Public Lands reported that 
the Northern Pacific Railroad had included in its land 
grant the richest and most extensively developed mines 
in Montana and Idaho. " Within this grant are also in- 
cluded millions of acres of land not yet entirely or at all 

48 Annual Rep., Mineral Land Com., etc., 28. 



382 HISTORY OF THE GREAT AMERICAN FORTUNES 

explored for minerals but which . . . probably con- 
tain mineral deposits as valuable as any yet discovered." 
The railroad company, the committee set forth, claimed 
that the legal construction of the act of 1864 gave the 
company all lands within the grant, not known to be 
mineral at the date of that act, or at least at the date, 
when the company filed the map of its route. 

" This," the report went on, " seems to the committee 
a most extraordinary claim. . . . Many of the most 
valuable mines in Montana, and most all of those in 
Idaho, have been discovered since 1882. The company, 
not satisfied with its immense land grant and other 
special privileges given by the Government, now seeks, 
upon what is at best but a technicality, to take from 
those who have discovered and developed them, the very 
mineral lands expressly excepted from the grant." 44 

Meanwhile, however, the Northern Pacific Railroad 
had gained its point. While time was being consumed in 
talk and appeals from court decisions, this is what was 
done, according to Senator Pettigrew : " The whole 
force at Washington in the Land Department at Wash- 
ington was engaged exclusively in rushing through these 
patents for the Northern Pacific, and I think, if you will 
look up the court records, you will find that the judge 
objected to an item of about $3,000 brought in by the 
receivers, which was paid to a very special friend of the 
Land Commissioner as an attorney fee to hasten the 
issue of these patents, and thus, the Northern Pacific 
acquired title to vast areas of exceedingly valuable 
mineral lands in the States of Montana, Idaho and Wash- 
ington. The Land Commissioner was no doubt corrupt 
in this connection, and there is no doubt that the North- 

44 House Reports, Fifty-second Congress, Second Session, 
1891-92, Vol. v, Report No. 1145: 1-4. 



THE HILL FORTUNE 383 

ern Pacific officials really purchased his activity in 
getting those patents. 

" Afterwards," ex-Senator Pettigrew continues, " Con- 
gress passed a law, some time, I think, in 1898, provid- 
ing for inspectors to inspect the lands along land-grant 
roads, and determine which were mineral, and which 
were not, so that mineral lands should not be patented 
after that date; but the mischief had nearly all been 
done." 

Pettigrew's statements, however, are disputed by 
friends of Villard claiming to have a knowledge of the 
matter. They deny that the Northern Pacific thus ob- 
tained patents. No patents, they assert, were obtained 
by the railroad or were granted to it during the prevail- 
ing agitation. They add that the Commission provided 
for by Congress was authorized to issue patents for non- 
mineral lands only. If corruption was used to get min- 
eral lands under the pretext of being non-mineral, it is 
unlikely that Villard personally sanctioned it. 

At approximately during this time the Northern Pa- 
cific Railroad, on August 15, 1893, went into bankruptcy. 

45 Related in a personal letter to the author. The fact that 
powerful members of Congress were, at the same time, paid at- 
torneys for land-grant railroads, and acted in that capacity in 
Congress, caused the introduction of a bill in the United States 
Senate, on June i, 1886, by Senator Beck of Kentucky, mak- 
ing it unlawful for any member of Congress to act as the at- 
torney or agent for any railroad which had received a land 
grant from Congress. In the debate on his measure on June 
22, 1886, Senator Beck urged: "Will any gentleman insist that 
any man who is the attorney of any railroad, any man who 
is retained in any way by any of these roads, when these great 
questions involving perhaps fifty or a hundred millions to the 
tax-burdened peoples of this country come up for consideration, 
shall advocate the interests of the road whose money in the 
shape of retainers or fees he has in his pocket, keeping the 
fact concealed, professing all of the time that he is acting and 
arguing in the interests of the United States?" The bill failed, 
of course, to become a law. 



384 HISTORY OF THE GREAT AMERICAN FORTUNES 

On the plea that the railroad was in poor financial 
condition, the receivers cut the wages of the railroad's 
employees. These workers knew that they were being 
thus assessed to recoup the treasury of the railroad 
for a part of the immense sums robbed by financiers; 
however, they made no official complaint. But when a 
second curtailment of wages from fifteen to thirty per 
cent, was announced, the workers decided that they 
would not tolerate having to suffer for the depleted con- 
dition of the railroad's treasury. 

On numerous occasions, in the history of various rail- 
roads, the practice had been common of compelling the 
workers to make good whatever portion of the sums 
stolen by the magnates they could be mulcted for by a 
reduction of wages. Yet there was not a single law to 
protect them, nor was there a judge, who, knowing and 
considering the circumstances, issued a writ preventing 
the reduction of wages. The law and all officialdom al- 
lowed the magnates to keep their booty. Whether the 
railroad went into bankruptcy or not, the law in no case 
restrained the magnates from reducing wages in order to 
make up the deficiency caused by their own thefts. 

But the judiciary were quick enough to stretch the 
law illegally to forbid the workers going on strike. 
When the Northern Pacific's workers asked for a con- 
ference with the receivers, the latter assented. Clandes- 
tinely, however, attorneys for the receivers were drawing 
up a sweeping judicial injunction, which was presented 
to Judge Jenkins, of the United States Circuit Court, 
and signed by him, on the very eve of the arranged 
conference. The chief attorney in the authorship of this 
injunction and in applying for its enforcement was 
Senator Spooner. The injunction prohibited the men 
" from combining or conspiring to quit, with or without 



THE HILL FORTUNE 385 

notice." It was followed by a supplementary injunction 
forbidding the workers from " ordering, recommending, 
approving or advising others to quit the service of the 
receivers." 

The whole proceeding was so glaringly illegal, that 
the Judiciary Committee of the House of Representa- 
tives was forced to investigate it. This committee re- 
ported that the injunction was in violation of a consti- 
tutional provision, an abuse of judicial power and with- 
out authority of law ; " that Jenkins' conduct was " an 
oppressive exercise of the powers of his court, and an 
invasion of the rights of American citizens." 46 Aside 
from this denunciation, no punitive action was taken 
against Jenkins, Spooner, the receivers or any other 
of the inculpated. Meanwhile the injunction had done 
its expected service* in terrorizing the workers and crip- 
pling the effectiveness of their strike. 

Villard's control of the Northern Pacific was over- 
thrown by a combination of opposing capitalists, 47 and 

46 House Report No. 1049, June 8, 1894, Second Session, 
Fifty-third Congress. During all of this time John S. Kennedy, 
"the great philanthropist," was one of the largest stockholders 
in this railroad. 

4T Villard bought the New York Evening Post; and his 
methods, upon the acquirement of that newspaper, constituted 
both an exception and a strong contrast to the methods in- 
variably applied by other capitalists when they purchased news- 
paper properties. He divested himself of all authority over 
that newspaper's editorial policy, by transferring to three trus- 
tees the absolute control in that respect. At no time did he 
use the Evening Post to influence Wall Street operations ; in 
fact, he did not dictate a single line of its editorials. On the 
other hand, the editors at times frankly criticised his policy in 
railroad affairs. 

It may be added that (to the author's personal knowledge) 
the New York Evening Post, has consistently refused to be 
influenced in its editorial expressions by either the offer or 
withdrawal of department-store, financial and other advertising. 
It has maintained this course, despite very heavy losses result- 
ing from the withdrawal of such advertising. 



386 HISTORY OF THE GREAT AMERICAN FORTUNES 

Hill gradually began to figure as the dominant owner. 
It is pertinent to note here that it was alleged that 
Maginnis was secretly in the employ of Hill's Great 
Northern Railroad at the very time he was warring upon 
the Northern Pacific. 

The great contest between Hill and Harriman in 1901, 
for the control of the Northern Pacific Railroad has 
already been described in one of the chapters on J. Pier- 
pont Morgan; the result thus far has been (as hitherto 
related) that the Hill interests remain in control of the 
Northern Pacific Railroad, as well as the Great North- 
ern Railroad and the Chicago, Burlington and Quincy. 

According to Charles Edward Russell, who made a 
very careful study of the successive stock waterings of 
the Great Northern Railroad, Hill, Kennedy, Lord 
Mount Stephen, Lord Strathcona and other magnates 
have drawn a total of $407,000,000 profit from the ma- 
nipulation of stock of the Great Northern. Russell says 
that this sum is entirely exclusive of all dividends inter- 
est and other emoluments. These, of themselves, have 
reached enormous sums. 48 A committee appointed by the 
Minnesota State Senate, in 1907, to investigate the cap- 
italization of railroads in Minnesota, reported that these 
railroads were capitalized at about $400,000,000, or 
about $50,000 a mile, whereas the actual capitalization, 
on an average cost of $27,000 a mile, should be $215,- 
000,000. The Great Northern Railroad, owning 2,040 
miles of road in Minnesota, was heavily overcapitalized, 
the committee reported. The committee declared that 
the Great Northern had been making an annual profit of 
sixteen and a half per cent, estimated on a valuation of 
cost of construction and maintainance of $33,000 per 

48 "The Heart of the Railroad Problem," "Hampton's Maga- 
zine," May, 1909. 



THE HILL FORTUNE 387 

mile. 49 The Northern Pacific likewise largely overcap- 
italized, had been deriving, it reported, an annual profit 
of twelve and a half per cent, on an estimated valuation 
of $35,000 per mile. 80 

One of Hill's recent stockjobbing transactions resulted 
in a suit in which he was accused of gross fraud. On 
July 22, 1907, complaint was filed in the county court at 
St. Paul by Clarence A. Venner, a stockholder, alleging 
that on November i, 1900, Hill, as president of the Great 
Northern Railroad and others of the officers and di- 
rectors, had entered into a scheme to obtain, in con- 
junction with the Northern Pacific Railroad, a controlling 
interest in the Chicago, Burlington and Quincy Railroad. 
The complaint averred that on April 23, 1901, Hill was 
authorized by the Board of Directors to make the pur- 
chase of the Burlington at $200 a share, which he did 
before January i, 1902, in conjunction with the North- 
ern Pacific, for the purpose of which joint collateral 
trust funds were issued by the two railroads. 

The complaint further alleged that Hill, knowing of 
the plan to purchase the Burlington by the stockholders 
of the two roads, in violation of his duty as an officer 
and director of the Great Northern, " honestly, diligently 
and faithfully and carefully to administer the affairs of 
the said Great Northern, for its best interests, conceived 
and entered into certain illegal, wrongful and fraudulent 
plans and designs to make a large profit for himself per- 
sonally, and at the expense and to the loss and damage 
of the Great Northern, by personally purchasing and 
causing to be purchased and held for him subject to his 
control, a large amount of the capital stock of the Chi- 

49 Report of the Committee of the State Senate of Minnesota 
Appointed for the Purpose of Investigating the Value and Cost 
of Operation of the Railroads of the State of Minnesota: 14. 

o Ibid. 



388 HISTORY OF THE GREAT AMERICAN FORTUNES 

cago, Burlington and Quincy Railway Company, which 
was acquired at prices far in advance of those paid by 
him for the stock by the Great Northern and Northern 
Pacific Railway companies." 

Venner also alleged in his complaint that Hill ac- 
quired a personal profit out of the transaction of an 
amount exceeding $10,000,000 for which he asked an ac- 
counting. We are unable to ascertain Hill's answer or 
the result of this suit. 51 

Let it not be supposed, however, that the record of 
Hill's cumulative acts, as revealed in successive law 
and other records, has interfered in the slightest with 
his exalted reputation. Far and wide his sycophants 
of the press do still loudly spread their fanciful, rap- 
turous descriptions of him, always carefully leaving un- 
said the true means by which he obtained his great 
wealth. Much has been made of his piety ; his giving, 
for instance, $500,000 for the endowment of a Roman 
Catholic Cathedral, at St. Paul; much is incessantly 
written of his exceeding probity, his " financial acumen " 
and " business virtues." When he speaks he is hailed 
as a veritable oracle, and truly so, for the gods of present 
society are the Money Gods ; Society, which at huge ex- 
pense has built jails and prisons for the petty criminal, 

81 With great frequency, charges have been made that rail- 
road attorneys throughout the United States often write the 
decisions of judges in cases affecting railroads. Many such spe- 
cific scandals have lately come to light. Only recently the Grand 
Jury, of Spokane, Washington, brought indictments for em- 
bezzlement against Judge M. J. Gordon, former western counsel 
of the Great Northern Railroad. The Grand Jury, at the same 
time, denounced Hill and other Great Northern Railroad of- 
ficials in attempting to hamper its work, and prevent the in- 
dictment of Gordon, and it further censured Judge Milo A. 
Root for permitting Gordon, while attorney for the Great 
Northern Railroad, to write an opinion in a case in which the 
railroad was concerned. This opinion Judge Root submitted as 
his own. 



THE HILL FORTUNE 389 

erects palaces for the great criminals, and insists upon 
pouring wealth increasingly into their coffers and hails 
them dictators. And who can blame the magnates for 
thus mocking and scourging the peoples who thus rever- 
ence them and the system which produces and per- 
petuates them? For, not they, but the system, should 
be held responsible. 

Comprehensive Conclusions would be premature here ; 
there still remains to be told the narrative of how Ed- 
ward H. Harriman, and above all, the Standard Oil 
Company, for whom it is believed he so largely acted, 
possessed themselves of vast railroad systems. The 
Standard Oil oligarchy is, indeed, the mightiest railroad 
owner of all ; many of those railroads the inception and 
development of which have been here told, are owned or 
controlled by it ; to it has accrued the final benefits of much 
of that series of original frauds and thefts some picture 
of which has been given in this work. But the scope 
of this volume does not here permit of the extended nar- 
rative of Harriman's career, with its accompaniments 
of enormous frauds and salutary constructive work ; nor, 
more so, does it allow the prolonged description of how 
the Standard Oil Company, starting with a few oil re- 
fineries, contrived to secure possession of so large a 
share of the resources of the United States, railroads 
and otherwise. This narrative will have to be deferred 
to later volumes, as also the story of the great fortunes 
based upon public franchises, mines and industries. 

Meanwhile, some few observations may be properly 
pertinent and instructive. 

The inevitable burden of this work, as is too pain- 
fully obvious, has been the frauds and thefts by what 
is known as property has been acquired, and great for- 



390 HISTORY OF THE GREAT AMERICAN FORTUNES 

tunes built up. This is not so because the author, in 
the perverseness of his heart has formulated it so, but 
because these are the inescapable iacts. But why, query 
certain querelous critics, schooled in sychophantic stand- 
ards, " enlarge upon the dark side of the pitcure ? Had 
not all of these men their good points, their kindly 
streaks, their capacity for some doing of service for 
their fellow men ? " 

Such misguided critics, with your obtrusive narrow 
conceptions and warped mentality, it is ye who so blindly 
refuse to perceive, and do justice. What, may it be 
inquired, would your comment been had this work, in- 
stead of laying bare the frauds, shams and robberies by 
which immense fortunes have been amassed, been an 
artful or (for the matter of that) an wwartful eulogy of 
those men, and an apotheosis of the system creating 
them? What, indeed, would you have said? Indubi- 
tably this work would have been highly " rational and un- 
biassed"; no accusations of "prejudicial treatment" 
would have occurred. Conventional publishers would 
have eagerly grasped for it ; 52 and to the author en- 
couragement and money returns would have been as- 
sured. As it is (what is really of no interest to anyone 
but himself) he has had to undertake it in the face of 
the greatest obstacles a fact perhaps tending to dem- 
onstrate that he who proclaims stern truth in stern garb 
must do it for its own sake, and with an utter defiance 
of all supine or mercenary powers that would seek to 
change his plan or hold him back. 

Then there are those piping critics, overwhelmed by 
the proofs, who, as a last resort exclaim : " Is it pos- 

62 On this point the author speaks advisedly. The letters that 
he holds from some of the foremost publishers in the United 
States would, if published, make exceedingly and typically sig- 
nificant reading. 



THE HILL FORTUNE 39! 

sible that your facts are correct? Do you not exagger- 
ate ? " To all such not remonstration nor censure but 
pity should be extended: deep pity for their hemmed-in 
mental horizon. And, after all, they are only reflections, 
or rather products, of a certain prevalent standard of 
the day which prima facie condemns the man with the 
poor appearance as guilty of all the offenses charged, 
but resolutely declines to impute serious crime to him of 
wealth and corresponding superior station, regardless 
of how much the proofs multiply. Much could be writ- 
ten upon the efficacy of a high silk hat as a protection 
of person and reputation. 

When the author's " History of Tammany Hall " ap- \ 
peared, its accuracy was not questioned, because, per- 
force, the facts were accurate, and the story there told 
was that of a vulgar political organization. How singu- 
lar it is, remarks one perceptive commentator, that some 
of those who so highly acclaimed that work for its com- 
prehensiveness and accuracy, should be the very critics 
who now insinuate their doubts as to the accuracy of 
facts when applied to the founders of great fortunes and 
their very respectable descendants. No, sage reviewer, 
it is by no means singular ; that attitude is transparent ; 
the truer in this case the facts are and the more volumi- 
nous and indisputable the citations from official records, 
the more the apologists and retainers of wealth are 
driven back to their only possible defence. They can do 
nothing but suggest meaningless doubts doubts so 
abundantly refuted by the formidable mass of citations 
throughout this work. And be it known that the frauds 
and robberies herein described, great and continuous as 
they have been, are far from being the complete story; 
further volumes remain to be written ; and for every 
one fraudulent transaction accidentally coming to public 



39 2 HISTORY OF THE GREAT AMERICAN FORTUNES 

notice, scores of such transactions have unquestionably 
gone down into the sewers of time, unvisited by a ray of 
daylight. 

This, it is unnecessary to say, is palpably no history 
of personal traits, dispositions or temperaments; it is 
a narrative of the means whereby properties have been 
acquired, and great fortunes possessed. But the acade- 
mician, strong in the audacity of his soporific mediocrity, 
may say, " This is no history ; it lacks dispassionate 
style." If " dispassionate style " consists of a dull string 
of dates, names and phrases, with no glimpses of the roots 
of matters, nor a clear interpretation of causes and 
events, then this work does certainly want " dispassionate 
style," and well it is that this defect is there. Who, 
indeed, does not know that there is no more effective 
medium for inventing, telling and perpetuating false- 
hoods than this same so-called " dispassionate style " ? 
A heightening and an emphasis of certain tissues of fact, 
a slighting concealment of other facts, and behold! the 
trick is done. 

While on this point, it will be pardonable on the part 
of the author (considering his many earnest years of 
original research) to express his unbounded amazement 
that so many pretentious volumes, theoretical and other- 
wise, have been turned out by college professors on this 
subject, without their having taken the slightest trouble 
to ascertain the facts. Fine-spun dogmatic theory, most 
of it is, or distorted high-sounding assumptions; words, 
words, no end of turgid words: no really original work 
on thought, no insight, no interpretation except a pseudo, 
illegitimate one arrived at without a knowledge of the 
facts, and so curiously in accord with the dictates of the 
ruling wealth of the time. This particular history, be 
it said, is written from a distinct point of view, narrating 



THE HILL FORTUNE 393 

facts never hitherto brought out, and the accuracy of 
which cannot be challenged; the point of view, as the 
author believes, is the correct one, verified by every 
accumulating proof. 

Finally, there are those who rush forward to press 
this question : " Have not the founders and perpetuators 
of the great fortunes had their good qualities ? " The 
question is arrant superfluity ; so they have had and have. 
But do the good people who are so solicitous on this 
score ever think of making the same interrogatory as 
to the hundreds of thousands of slum dwellers, or of the 
50,000 (or so) convicts in the United States? Is any 
consideration or extenuation demanded for them? For 
the poor, the wretched, the degraded everywhere? And 
yet the crimes for which petty malefactors are punished 
are not a thousandfold as criminal as those committed 
by the founders and holders of wealth; even solitary 
murder lapses far into insignificance compared to the 
never-ending catalogue of the mass of indirect murders 
brought about by the greed for profit and wealth. 

All, all, capitalist and slum dweller, convict and multi- 
millionaire are creatures of the system thus causing greed 
and vice, poverty and crime horrid factors produced 
by no intrinsic fault in human nature, but by the im- 
petus, provocations and results of that system. All, all 
have infinite capacity for good, were it but given favor- 
able environment to develop; the wonder can be ex- 
pressed that Bunder such a blighting system so much good 
does exist. And those magnates who, in their pomp 
and vainglory, think that they rule forces, are (blind 
creatures!) only the instruments of forces. Behind all 
of this tumult, this rushing and trampling lies a slow- 
working Purpose, moving forward with a definite sym- 
metry which those who will can clearly see. Despite their 



394 HISTORY OF THE GREAT AMERICAN FORTUNES 

avarice, their corruption and fraud, these magnates un- 
consciously have been doing their great necessary work 
in these times the very vital work of crushing out 
hindrances so that all industries shall become centralized, 
in order that at the proper day the whole people shall 
collectively step into their ownership and operation, and 
artificial classes, with all of their attendant hideous evils, 
injustices and oppressions, be forever abolished. 



END OF VOL. Ill 



NOTE. It is the author's plan, at a future date, to 
describe the acquiring of railroads by Harriman and the 
Standard Oil Company, and to deal with great fortunes 
based upon the public franchises, mines and industries. 



INDEX TO VOLUMES I, II AND III 

Adams, Charles Francis, cited Vol. II:i6i, 308, 310. 

Adams, Samuel Vol. 1 : 57. 

Adulteration of foods and drugs Vol. 11:164-165, 290-291; 
Vol. 111:207-208. 

Agricultural lands, fraudulent securing of Vol. 1:28-38, 132- 
134; Vol. II: 17-22, 32-37, 39-46, 78-91; Vol. 111:314-334. 

Alabama, land frauds in Vol. 1:133; Vol. 11:41-42. 

Alaska, fraudulent seizure of resources in Vol. II: 47, 92; Vol. 
Ill: 307-310. 

Alaska, alleged corruption regarding purchase of Vol. Ill: 31. 

Albany and Susquehanna Railroad Vol. II: 315; Vol. Ill: 
179-183. 

Alger, Russell A. Vol. II: 40. 

Allen, Samuel Vol. 1:28-30, 54. 

Allison, William B. Vol. Ill: in, 113. 

Altgeld, John P. Vol. 1:289; Vol. 11:234-235. 

American Express Company Vol. 11:269. 

American Federation of Labor Vol. 111:286. 

American Fur Company Vol. 1:112-114, 116-118, 124-125, 148, 
202; prosecution of, Vol. 111:37-38, 342-349. 

American Railway Union Vol. 1 : 282. 

American Union Telegraph Company Vol. III:8i. 

Ames, Oakes Vol. 11:360-361, 364, 366; Vol. Ill: in. 

Anthony, Judge J. B., cited Vol. 11:251-252. 

Apprentice labor law Vol. 1 : 77. 

Arizona, great land frauds in Vol. 11:84-89; Vol. 111:323. 

Arkansas, land frauds in Vol. II : 41. 

Armor frauds Vol. Ill : 253-254. 

Armour, J. Ogden Vol. 1 : 290. 

Army supplies scandals Vol. 1 : 261 ; Vol. 11:293-297. 

Arthur, President Chester A. Vol. 11:342. 

Astor, John Jacob (founder of the fortune) Vol. 1:49, 65, 
68; has the free use of five millions of Government funds, 
Vol. I: 80; also 97, 106; inception of fortune, Vol. 1 : 109- 
112; debauching and swindling of Indian tribes, Vol. I: 
112-123; his enormous profits, Vol. 1:124; his corruption 
of officials, Vol. I: 125; life in New York, Vol. I: 126; im- 
munity from punishment, Vol. 1:127-128; use of Govern- 
ment money, Vol. 1:129-130; fraudulent methods in secur- 
ing land, Vol. 1:138-154; banking activities. Vol. 1 : 165- 
169; further methods in securing land, Vol. 1:182-185; 

395 







396 INDEX 

becomes America's richest man, Vol. 1 : 194-197 ; death, Vol. 
1:198-199; also Vol. 1:242-243, 245, 258; how he caused 
Government officials to be dismissed from office, Vol 11:84; 
also Vol. 11:286; Vol. 111:37-38, 103, 167; further details 
of his debauching and swindling of Indians, Vol. Ill : 342- 

349- 

Astor, John Jacob II Vol. 1 : 224, 233, 234. 
Astor, John Jacob, Jr., (son of William B.) Vol. 1:209, 212; 

Vol. II: 151; Vol. III:8i. 
Astor, John Jacob, (son of William) Vol. 1 : 234, 240, 251 ; Vol. 

Ill .-274,' 

Astor, William Vol. 1 : 224, 225, 229, 233-234. 
Astor, Mrs. William Vol. 1 : 239. 

Astor, William Waldorf Vol. I: 220-221, 234, 240-241. 
Atkinson, Henry M. Vol. 11:88. 



Bacon's Rebellion Vol. 1:27. 

II:2QO. 

203-204; Vol. Ill: US- 



Bacons Keoeinon vol. 1:27. 
Baer, George R Vol. 11:254. 
Bailey, Dr. M. J., cited Vol. II : 290. 
Baltimore and Ohio Railroad Vol. II: 

123. 

Ballinger, Richard S. Vol. 11:47. 
Bank of America Vol. 1 : 162, 165. 
Bank frauds and corruption Vol. 1:89, 161-163; Vol. 11:29, 

300; Vol. 111:183-189. 
Bank of New York Vol. 1: 160, 254. 
Bank of the United States Vol. 1:86; extensive bribery by, 

Vol. 1 : 88-89, 160, 193, 194, 243, 244 ; Vol. II : 29. 
Barber, James D. Vol. II: 321. 
Barbour, James Vol. I: 115. 
Baring Brothers Vol. 1:86. 
Barlow, General Francis C Vol. II: 315. 
Barnard, Judge George C. Vol. II : 307-309, 315. 
Barrett, Walter, cited Vol. 1:66, 78, 80, 109, 246. 
Bayard, Nicholas, obtains great estate by bribery Vol. 1 : 33. 
Bayly, Thomas H. Vol. 111:28-29. 
Beach, Moses Yale Vol. 1 : 195. 
Beaubin and Miranda land grant Vol. 11:84-85. 
Bellamy, Captain, sea pirate Vol. I: 150. 
Bellomont, Earl of Vol. 1:28; attempted bribery of, Vol. 

1 : 20-30 ; exposes corrupt grants, Vol. 1 : 32-34, 36 ; also, 

Vol. 1 : 52, 54- 

Belmont, August Vol. Ill : 189, 222, 274. 
Benton, Thomas Vol. 1 : 125, 130. 
Biddle, Nicholas-- Vol. 1:244; Vol. Ill .-185-186. 
" Big Four " Railroad Vol. II : 243. 
Bingham, John Vol. 1 : 144, 147. 
Bischofifsheim and Goldschmidt Vol. Ill : 186 
"Black Friday" Vol. 11:325, 333-336. 
Blaine, James G. Vol. 11:362; Vol. 111:43. 
Blair, DeWitt C Vol. Ill: 102, in. 



INDEX 397 

Blair, John I. Vol. 11:357, 360; Vol. Ill: 102-119. 

Blair, John T. Vol. Ill: in. 

Blake, Luther, cited Vol. 1:133. 

Bonded laborers Vol. 1 : 50-52, 77. 

Booth, Governor Newton, cited Vol. Ill: 139. 

Boston and Albany Railroad Vol. 11:269-270. 

Boutwell, George S. Vol. 11:338-341. 

Bowne, Robert Vol. 1 : 109. 

Broadway surface railroad franchise Vol. 11:142-144. 

Brevoort, Henry Vol. 1:196. 

Brooks, James Vol. 11:365. 

Brooks, Peter Charndon Vol. 1 : 61-62. 

Brown Brothers and Company Vol. Ill: 59-60. 

Brown, E. D. Vol. 1:214. 

Brown, Nicholas Vol. 1:63. 

Bryce, James, cited Vol. 11:217. 

Buchanan, Thomas Vol. 1 : 243. 

Buford, John, cited Vol. II : 130. 

Burgess, Captain Samuel, sea pirate Vol. 1:38, 47, 139, 141. 

Burr, Aaron Vol. 1 : 161, 166-167. 

Butler, Cyrus Vol. 1 : 60-61. 

Butler, Samuel Vol. I:6o-6i. 

Cabot, George Vol. I:57~58, 59, 

Caldwell, Luther Vol. 11:311. 

California, great land frauds in Vol. 11:78, 80, 82-84; Vol. 

111:314-321. 

Canal land grants fraudulently manipulated Vol. 11:24-27. 
Calumet and Hecla Mining Company, copper lands obtained by 

fraud Vol. 11:27. 
Cameron, Don Vol. 11:297. 
Canada Southern Railroad Vol. II : 162. 
Cardelli, Peter Vol. 1:137. 
Carey, Matthew, cited Vol. 1 : 93. 
Carnegie, Andrew Vol. 111:253-264. 
Carter, Robert Vol. 1:40-41. 
"Cash Sales" Act Vol. II: 41-42. 
Cass, Lewis Vol. 1: 114, 118; evident corruption of, Vol. I: 

125, 130; Vol. 111:346-347. 
Cassatt, A. J. Vol. 111:95-97. 
Castellane, Count de Vol. 111:92. 
Catron, T. B. Vol. II 185. 

Cedar Rapids and Missouri River Railroad Vol. Ill: 114. 
Central Pacific Railroad Vol. 11:43; Vol. Ill: 128-145. 
Central Railroad of New Jersey Vol. 11:245. 
Chartered Companies in Settlement Times Vol. I:ii. 
Chase, Salmon P., cited Vol. II : 128, 341. 
Chaves, Ignacio Vol. 11:87. 
Chesapeake and Ohio Canal Company Vol. 11:24, 26; Vol. 

Ill : 121-122, 152. 



398 INDEX 

Chemical Bank, frauds of Vol. I: 163, 243, 244, 246. 
Chicago, Milwaukee and St. Paul Railroad Vol. 111:32, 43. 
Chicago and Northwestern Railroad Vol. II 1210-211, 323; 

Vol. Ill: 112, 236. 

Chicago, Rock Island and Pacific Railroad Vol. Ill: 114. 
Churchman, Samuel Vol. II : 293-294. 
Chicago, Burlington and Quincy Railroad Vol. 111:239. 
Cincinnati, Hamilton and Dayton Railroad Vol. 111:233-235. 
Civic Federation Vol. 11:246. 
Civil War corruption Vol. 1 : 261 ; Vol. II : 127-138, 285, 291- 

298, 358-359; Vol. Ill: 135, 150-152, 160-162, 164-176. 
Clapp, Asa Vol. 1 : 59. 
Clark, General William Vol. I: 120. 
Clark, William A., U. S. Senator Vol. II: 71. 
Cleveland, President Grover Vol. 1 : 283 ; Vol. Ill : 176, 223- 

225, 336. 

Cleveland and Pittsburg Railroad Vol. 11:285. 
Clews, Henry Vol. Ill : 61. 
Clinton, Governor George Vol. 1 : 152. 
Clyde, Thomas Vol. Ill : 161-162. 
Cloud, D. C, cited Vol. 11:189; Vol. Ill: 151. 
Coal lands, fraudulent seizure of Vol. 11:32, 42, 46, 47, 83, 



25J-252, 367;. Vol. 111:68, 74-75, 93, 217. 

1:253-254; Vol. Ill: 
Colden, Cadwallader Vol. 1:26. 



Coal Trust Vol. 11:253-254; Vol. 111:216-219. 



Collins, E. K. Vol. II: 114-118, 122; Vol. 111:26. 

Colorado, great land frauds in Vol. II:8o-8i, 83-89, 367; Vol. 

HI : 75, 93, 314, 324-334. 

Colorado and Southern Railway Company Vol. 111:99. 
Colt, Samuel Vol. 111:25-26. 

Confiscation, attempts at in Settlement times Vol. 1 : 37-38. 
Congress, corruption of Vol. II : 32-47, 298-299, 357-366 ; Vol. 

111:24-33; 45-46, 59-62, 72-73, 77, 113-115, 131-132, 134-136, 

320-321, 357, 383. 
Conkling, Roscoe Vol. II : 176. 
Connolly, Richard B. Vol. 1 : 212, 213, 214-216. 
Consumers' League Vol. 1:271. 
Cooper, Peter Vol. 1 : 195. 
Cope, Thomas Pym Vol. 1:63. 
Copper deposits, fraudulent seizure of Vol. I: 134; Vol. II: 

26-27: Vol. 111:307, 324-325, 350-352, 373, 377-383. 
Copper Queen Mining Company Vol. 11:343. 
Corbin, A. R. Vol. 11:329-330; Vol. 111:26. 
Corcoran and Riggs Vol. 111:27-31. 
Corcoran, William W. Vol. 111:27-31. 
Corruption at the polls Vol. I: 191-194; Vol. 11:237-240, 271- 

273, 275. 

Corning, Erastus Vol. 111:44. 
Corwin, Robert G. Vol. Ill : 30. 
Corwin, Thomas G. Vol. Ill: 30, 153. 



INDEX 399 

Cosby, Governor Vol. 1 : 253. 

Court of Claims decisions Vol. II : 121-122, 129-130, 137-138; 

Vol. Ill: 174-175- 

Credit Mobilier Vol. 11:359-366; Vol. 111:77, 114, US- 
Crocker, George Vol. 11:360; Vol. 111:124-141. 
Croffut, W. A., cited Vol. II: no, 123, 132, 144, 146, 161, 185, 

195. 197, 216. 
Crooks and Stewart (Astor's agents among Indians) Vol. II: 

84; Vol. 111:345-346. 
Crosby William B. Vol. 1 : 195. 
Crosswell, Edwin Vol. II: 117. 
Cunard, Edward Vol. I: 210; Vol. II: 151. 
Custom-house frauds Vol. 1 : 134-135 ; Vol. II : 338-339, 342 ; 

Vol. Ill : 153-158. 

Dabney, Morgan and Company Vol. 111:66. 

Dana, Charles A. Vol. 11:68. 

Davidge, William H. Vol. II : 121. 

Davies, Thomas E. Vol. II: 142. 

Davis, Henry G. Vol. 111:312. 

Davis, Noah Vol. 11:339. 

De Beaumont, cited Vol. 1 : 177-179. 

Debs, Eugene V. Vol. 1 : 282-283. 

Debt, imprisonment for Vol. 1:71-73, 81. 

Delaware and Hudson Railroad Vol. 11:247, 252; Vol III: 

180. 
Delaware, Lackawanna and Western Railroad Vol. II: 221, 

247, 252; Vol. Ill: 104-108. 
Delaware and Western Railroad Vol. II: 221. 
Delius, Godfrey, obtains land grant by fraud Vol. 1:33, 37- 
Denver Pacific Railroad Vol. 111:71-72. 
Denver and Rio Grande Railroad Vol. Ill : 74, 90-100, 328. 
Denver, South Park and Pacific Railroad Vol. Ill: 6^-69. 
Depew, Chauncey M. Vol. II : 71, 176-178, 220; Vol. Ill: 210. 
Deposit Act Vol. II : 81. 
Desert Land Law Vol. II : 35-37, 39, 46. 
Des Moines Navigation and Railroad Company, bribery by 

Vol. 11:209; Vol. 111:27, 113- 
De Tocqueville, cited Vol. 1:177-179. 
Dillon, John R Vol. 111:49, 54. 
Dillon, Sidney Vol. 111:65, 67-69, 71. 
Dixon, Frank H., cited Vol. Ill: 117. 
Dodge, William E. Vol. 1: 211; extensive custom house 

frauds Vol. 11:339-344, 346, 358; also Vol. 111:105-107. 
Dodge, William E. Jr. Vol. 1:148: customs frauds, Vol. II: 

339-344, 346. 

Dolan, Thomas Vol. II : 250. 
Dongan, Governor Vol. 1 : 34. 
Doubleday, General Thomas D., cited Vol. II : 130. 
Dougherty, Thomas J. Vol. I: 124. 



400 INDfcX 

Dow, Prentiss Vol. 111:38. 

Draft Act during Civil War Vol. 11:131-132. 

Dred Scott decision Vol. 1 : 188. 

Drew, Daniel Vol. II : I53-I54, 303-313. 

Drew, Wolcott, cited -Vol. II: 251. 

Drexel, Anthony Vol. Ill : 219. 

Drexel, Frank Vol. Ill : 219. 

Drexel, Morgan and Company Vol. Ill: 189. 

Dubuque and Sioux City Railroad Vol. Ill: 113-115. 

Dutch East India Company Vol. 1 : 15. 

Dutch West India Company Vol. 1:14-15, 18-19. 

Eastman, Arthur M. Vol. Ill : 170. 

Edmonds, John M., cited Vol. 1 : 180. 

Elections, corrupt (see corruption at the polls). 

Elkins, Stephen B. Vol. II : 71, 84-86, 88, 210; Vol. 111:29, the 

narrative of his career, 311-337. 
Ely, Professor Richard T., cited Vol. II: 217-218. 
Equal Rights Party Vol. 1 : 174. 
Equitable Life Assurance Society Vol. II: 178; corruption and 

frauds, Vol. Ill : 266-277, purchase by J. Pierpont Morgan, 

306. 

Erie Canal Vol. 11:24, 255, 266. 
Erie Railroad Vol. II .-153, 162, 302-325, 329, 337, 352; Vol. 

Ill : 121, 231-234. 
Estancia land grant Vol. II : 87. 
Evans, Captain R. N., secures land grant by bribery Vol. 

1 : 32-33- 

Everett, Edward, cited Vol. 1:92. 
"Exchange of Land Law" Vol. 11:43-46. 

Farley, Jesse P. Vol. 111:54, 55, 359-368. 

Farnham and Davenport (Astor's agents among Indian tribes) 
Vol. I : i2i. 

Farmers' Alliance Vol. 11:226, 241. 

Federation of Trades and Labor Unions Vol. 11:225. 

Feudal estates Vol. 1 : 18-21 ; passing of, 42 ; continuing con- 
ditions of, 45-46; disintegration of, 97-100. 

Feudal grants Vol. 1 : 14-22. 

Feudal tenures abolished Vol. 1:90-100. 

Field, Cyrus W. Vol. 111:82-85. 

Field, Henry (grandson of Marshall) Vol. 1:293-295. 

Field, Marshall III Vol.. 1 : 293, 295. 

Fielden, Samuel Vol. II : 230-234. 

First Division, St. Paul and Pacific Railroad Vol. 111:48-56. 

Fisheries of New England Vol. 1 : 52-54. 

Fisk, James Jr. Vol. 11:305-337, 366-367; Vol. 111:179-183. 

Fithian, Philip Vickers, Cited Vol. 1:41. 

Flagg, Controller Vol. 1 : 147. 



INDEX 401 

Fletcher, British governor, corrupt land grants by Vol. 1 : 25, 

32-34, 38-39, 52, 141, 143, 146. 
Florida, land frauds in Vol. 11:41-42. 
Foord, John, cited Vol. II : 161. 
Forest Reservation Bill Vol. 11:45. 
Forsyth, Thomas, cited Vol. 1 : 120-122. 
Franklin, Benjamin Vol. 1 : 43. 
Frauds in import duties (see custom house frauds). 
Fraudulent substitution in trade Vol. 1 : 66-67 J Vol. II : 164- 

166, 280-291; Vol. 111:207-208. 
Frick, Henry C Vol. 111:95, 255, 274. 

Gardiner, George H. Vol. Ill: 29-31. 

Garesche, V. M., cited Vol. I: 132. 

Garfield, President James A. Vol. 11:362; Vol. 111:43. 

Garfield, James R. (son of preceding, and Secretary of the 

Interior) Vol. 11:47. 

Garrett, John W., an outline of his career Vol. Ill: 118-122. 
Garrett, Robert, son of preceding Vol. II: 203-216; Vol. Ill: 

123. 

Garrison, William Lloyd Vol. 1:225. 
George, Henry Vol. II : 235, 239. 
Georgia, land frauds in Vol. 1:133-134; Vol. II 117. 
Georgia Mississippi Land Company Vol. II: 17. 
Girard, Jean Vol. 1 : 85. 
Girard, Stephen Vol. 1 : 66, 68, 82-92, 257. 
Goddard, Luther M. Vol. Ill: 99-100. 
Goelet estate Vol. 1 : 107, 148, 195, 224. 
Goelet, Jacobus Vol. 1:242. 
Goelet, Ogden Vol. 1 : 247-248. 
Goelet, Peter Vol. 1 : 212, 242, 243-244, 246. 
Goelet, Peter P. Vol. 1 : 97, 106, 143, 164, 243, 244, 246. 
Goelet, Robert Vol. I: 164, 247, 248. 
Goelet, Robert R. Vol. 1 : 243-244, 246. 
Goelet, Robert Walton Vol. 1:251. 
"Gold Conspiracy " Vol. 11:326-327. 
Gonzales, Salvador Vol. 11:86-87. 
Goodchild, Rev. F. M., cited Vol. 1:272. 
Goodyear, Charles Vol. 1 : 135. 
Gordon, William M., cited Vol. 1: 110-120. 
Gorges, Sir Fernandino Vol. 1 : 31. 
Gorman, Governor W. A., cited Vol. Ill : 46. 
Gould, Anna Vol. 111:92. 

Gould, George J. (son of Jay) Vol. Ill: 95-101, 210, 261, 274. 
Gould, Jay (founder of the fortune) Vol. 11:69, 154-156, 180, 

189, 205; the narration of his career, 281-368; his career 

further described in Vol. 111:56-57, 62-^4, 96, 100, 138, 143; 

his contest with J. Pierpont Morgan, Vol. Ill : 170-183. 
Grant, President Ulysses S. Vol. 11:329-332; Vol. 111:26. 
Gray, William Vol. 1 : 62. 



4O2 INDEX 

Grazing lands, fraudulent seizure of Vol. 11:36-37, 78-91. 
Great Northern Railroad Vol. II 171, 343; Vol. 111:230, 368, 

370, 386-388. 

Greeley, Horace Vol. 1 : 181 ; Vol. Ill : 160. 
Green, Andrew F. Vol. 1 : 213. 
Grimes, U. S. Senator, cited Vol. II : 134-137. 
Guilbert, Charles H. Vol. 11:257. 
Guggenheims, The Vol. II 171; Vol. 111:308-309. 

Haight, Governor H. H., cited Vol. lll:i&. 

Hale, United States Senator, cited Vol. II : 135. 

Hamilton, Alexander Vol. 1 : 168. 

Hamilton, Andrew, lobbyist Vol. Ill : 271. 

Hammond's "Political History of the State of New York," 

cited Vol. 1 : 162-163. 
Hancock, John Vol. 1 : 57. 
Harriman, Edward H. Vol. 1:251; Vol. 11:277-278, 281; Vol. 

111:64, 73, 76, 95, "5, 144, 234, 238-243, 246, 269. 
Hartley, Marcellus Vol. 11:295; Vol. Ill: 168-169. 
Harvier, Ernest, cited Vol. 11:265. 
Hatzfeld, Prince Vol. Ill: 144. 
Havemeyers, The Vol. II : 95 ; Vol. Ill : 227-228. 
Hearst, George Vol. II 171. 
Hewes, Joseph Vol. 1:57. 
Hewitt, Abram S. Vol. II: 238. 
Hicks, Russell R Vol. II: 311. 
Hill, James J. Vol. 111:56, 93, 238-243; his career in full, 

Hoffman's "State and Rights of the Corporation of New 

York," cited Vol. 1:167. 
Holmes, J. A., cited Vol. 1:294. 
Holt, Joseph, cited Vol. II:i8i; Vol. Ill 1167, 173- 
Hopkins, Edward C Vol. 111:48-49- 
Hopkins, John Vol. Ill: 118-123. 
Hopkins, Mark Vol. 111:124-141. 
Houghton, Walter R., cited Vol. 1:84-85, 87, 132-133, 255, 

256, 284; Vol. 111:26. 
Howard, J. H., cited Vol. 1: 133. 
Hudson River Railroad Vol. II: 156-161. 
Hughes, Andrew, cited Vol. 1:118-119. 
Hunt, Washington Vol. 111:43. 
Huntington, Collis P. Vol. II : 180, 360; Vol. 111:77, 81, 91, 

93; the narrative of his career, Vol. Ill: 124-144. 

Ice Trust Vol. Ill : 291-294. 

Idaho, fraudulent seizure of mineral and timber lands Vol. 

111:374-383. 
Illinois Central Railroad Vol. 1:250; Vol. 11:22; Vol. Ill: 

"5- 
Imprisonment for debt Vol. 1:71-73, 81. 



INDEX 403 

Indians, debauching and drefrauding of Vol. I:48-49 54* 

132-134; Vol. 11:84; Vol. Ill: 167, 34^-350. 
Industrial " Accidents " Vol. 1:294; Vol. 11:233, 271-272; Vol. 

Ill : 195, 284-285. 
Industrial Commission (U. S.), cited Vol. 1:271; Vol. Ill: 

64-65, 232-233. 

Insurance frauds Vol. Ill 1266-280. 
International Prison Association Vol. II: 167. 
Interstate Commerce Commission Vol. II : 250^ 252, 256, 271- 

272; Vol. 111:74-76. 
Inventors, defrauding of Vol. 1:132, 135; Vol. II : 180-181 ; 

Vol. III:i65-i66. 

Iowa Central Air Line Vol. Ill: 114-1 15. 
Iowa Constitutional Convention of 1857 Vol. II: 31. 
Iowa, great land frauds in Vol. 11:299; Vol. 111:27, 58, 

109-115. 

Iowa, legislative bribery Vol. II: 31; Vol. Ill: 110-117. 
Iron deposits, fraudulent securing of Vol. 11:32-33, 41-42; 

Vol. Ill : 75, 262, 377-383. 
Irons, Martin Vol. 111:89. 
Irwin, Richard B. Vol. 111:62. 

Irwin, Matthew, cited Vol. 1: 112-1 13, 119; Vol. 111:343. 
Ivins, William N. Vol. 1:231. 

ackson, President Andrew Vol. I:8i, 132-134, 193. 

amarillo, Luis Vol. 11:88. 

ames, D. Willis Vol. 11:339, 343-344- 

ayne, B. G., discloses great customs frauds Vol. 11:338-339, 

342. 

Jefferson, Thomas Vol. 1:42, 193. 
Jerome, William Travers Vol. Ill : 276, 294, 
Jesup, Morris K. Vol. 111:66. 

Johnson, Henry, U. S. Senator Vol. I: 119; Vol. 111:344. 
Johnson, Henry C Vol. 11:344. 
Jordan, Edwin Vol. 111:154-155. 
Judiciary, corruption of Vol. I : i8&-i89, 283 ; Vol. II : 307-309, 

153; Vol. 111:76-77, 84-85, 95, 99-100, 388. 
Julian, George W., cited Vol. 11:88; Vol. 111:332-333. 
Justice, Philip S. Vol. II: 129-130. 

Kansas Pacific Railroad Vol. 11:43; Vol. III:66-6a 73-74, 

1 88. 

Kennedy, John S. Vol. Ill: 51, 54, 365-366, 368. 
Kennedy, John S. and Company Vol. Ill .-51, 54, 359-360, 

364-366. 

Kerens, Richard C Vol. 111:335. 
Kidd, Captain William, sea-pirate Vol. 1:47, 52. 
Kinkhead, Governor John H.. cited Vol. Ill: 130, 
Kipp, Solomon, bribes New York City Common Council Vol. 

II : 140. 



404 INDEX 

Kissam, W. H. Vol. 1:148. 

Knights of Labor Vol. 11:288, 235. 

Knox, Philander A. Vol. II: 71; Vol. 111:95-96. 

Labor Party Vol. 11:237-240. 

Labor Movement of 1886 Vol. 11:224-241. 

Lac La Belle Ship Canal Company Vol. 11:25. 

LaCrosse and Milwaukee Railroad Vol. 111:31-43, 57. 

LaFollette, Robert M., U. S. Senator, cited Vol. 111:277, 289, 

295-296. 

Lake Shore Railroad Vol. II -.162, 170, 266-268. 
Land, corrupt obtaining of in Settlement times Vol. 1:25, 

28-39. 
Land frauds Vol. 1: 120, 132-133; Vol. 11:17-49, 78-91, 251- 

252, 298-299, 301, 354-368; Vol. 111:24-25, 32-38, 66, 75, 77, 

167, 3H-334, 350-357, 377-383- 
Land grants, corrupt securing of Vol. 1:25, 28-39, 132-133; 

Vol. II : 17-18, 10-22, 26-27, 32-49, 63-64, 77-91, 356, 358- 

359, 361-362; Vol. 111:24-25, 32-38, 66, 77, 109-116, 131-138, 

314-334, 377-383. 

Landgraves, The Vol. 1 : 23-41. 
Larrabee, William, cited Vol. Ill 1115-116. 
Law, George Vol. II: 117, 141-144. 
Laurens, Henry Vol. 1 : 57. 
Lawrence, William Vol. 1:49. 
Lehigh Car Manufacturing Company Vol. Ill: 71. 
Leiter, Levi Z. Vol. 1:259-261. 
Legislative corruption Vol. 1:89, 141, 181, 209-211, 245; Vol. 

11:29, 30-32, 132, 142, 146-147, 149, i55-i6o, 202, 204, 264, 

269, 310-317, 321-322, 356; Vol. Ill: 19, 32-42, 46-51, 72-73, 

82-83, 95, 96-97, 99-100, 106-108, 120-122, 128-131, 162-164, 

217-218, 256, 270-273, 369. 
Lehigh Valley Railroad Vol. 11:245, 252. 
Lenox, Robert Vol. 1 : 148. 
Leupp, Charles M. Vol. II : 284. 
Lewis, Francis Vol. 1 : 57. 
"Lexow Committee" Vol. II : 350. 
Limantour, Jose (great land grant) Vol. 11:78; Vol. Ill: 

320. 

Lincoln, Abraham Vol. II : 132. 
Lincoln, Robert T. Vol. 1:279. 
Lindsay, Judge Ben B., cited Vol. Ill : 99-100. 
Lingg, Lewis Vol. 11:230-234. 

Linton, Benjamin F., cited Vol. 1:132; Vol. II: 21. 
Lispenard, Anthony Vol. I:i68. 
Livingston estate Vol. 1 : 98. 
Livingston, John, cited Vol. 11:303. 
Livingston, Robert Vol. 1 : 34-35, 37-38. 
Lloyd, James Vol. 1 : 62. 
Lockwood, LeGrand Vol. Ill: 60-62. 
London Company, The Vol. I: u, 13. 



INDEX 405 

Longworth estate Vol. 1 : 106. 

Longworth, Nicholas (founder of the fortune) Vol. 1:97, 

255-258. 

Longworth, Nicholas Vol. 1 : 258. 
Lords of Trade, complaints to, of corrupt seizures VoL I: 

26, 29, 34, 36-39. 
Lorillard, Pierre Vol. 1 : 196. 
Lorillards, The Vol. 1 : 143, 148, 195, 242. 
Louisiana, land frauds in Vol. 1 1133; Vol. 11:20-21, 41. 
Low, A. Maurice, cited Vol. Ill: 177, 246, 248. 
Lowber, Robert W. Vol. 111:24-25. 
Lumber Trust, The Vol. II 140. 

Macy, William H. Vol. 11:360. 

McCormick, Cyrus H. Vol. 11:228, 231-232, 360; Vol. 111:26. 

McBride, John, cited Vol. 11:229. 

McLeod, Arthur A. Vol. 11:248-249; Vol. Ill : 216-217. 

McGlynn, Father Vol. 11:239. 

McKenney, Thomas L., U. S. Superintendent of Indian Af- 
fairs, denounces Astor's debauching and swindling of In- 
dians Vol. 1: 113, 116-118, 119: Vol. 111:343, 347-348. 

McNeil!, cited Vol. 11:59, 187, 348-349. 

Mail subsidies, corrupt procuring of Vol. II: 113-120; Vol. 
Ill : 59-62. 

Maine, grant of to Gorges Vol. I: 31. 

Maginnis, Martin, cited Vol. 111:378-381. 

Manhattan Company or Bank Vol. 1 : 161-162, 165-166, 168, 

175- 

Manhattan Elevated Railroad Company Vol. 111:84-8$. 
Mansfield, Josie Vol. 11:315. 
Marius, Peter Vol. 1:47. 
Marlborough, Duke of Vol. II : 274. 
Martinez. Francis Vol. 11:86. 
Mason, Charles, U. S. Commissioner of Patents, cited Vol. 

II:i8i. 

Mason, Captain John Vol. 1:29. 

Massachusetts, Constitutional Convention of 1853 Vol. II: 31. 
Matteson, Orasmus B. Vol. II : 299. 
Maxwell, L. B. (of Maxwell land grant) Vol. II 185, 89; Vol. 

111:324, 334. 

Mears, John H. Vol. Ill: 29-31. 
Mercantile Bank Vol. 1 : 162. 
Mechanics' Bank Vol. 1:162-165. 
Merchants' Bank Vol. 1:163, 165, 185. 
Metropolitan Board of Health, cited Vol. 1 : 218-220. 
Miami and Dayton Canal Company Vol. 11:25. 
Michigan, land frauds in Vol. 111:352-356. 
Militia in strikes Vol. 11:64, 203, 273; Vol. Ill: 122, 
Millard, Bailey, cited Vol. 11:78-79. 
Miller. Henry Vol. 11:78. 
Mills, D. O.-Vol. II: 210; Vol. Ill: 130, 274. 



406 INDEX 

Milton, Colonel John, cited Vol. I: 133. 

Milwaukee and Horicon Railroad Vol. 111:43. 

Milwaukee and Superior Railroad Company Vol. Ill : 36-37. 

Mineral lands, fraudulent seizure of Vol. 1 1134; Vol. 11:26- 

27, 32-33, 41-48, 80-83; Vol. 111:311-337, 350-352, 377-383. 
Minnesota, land frauds in Vol. 11:83; Vol. 111:24-25, 44-56, 

352-356. 
Minnesota and Northwestern Railroad Company Vol. Ill: 

24-25, 44-56, 357-372. 

Missouri Pacific Railroad Vol. Ill: 79-80, 88. 
Mitchell, John, cited Vol. 11:246. 
Moffatt, David H., Jr. Vol. Ill : 75- 
Moody, John, cited Vol. 1:279; Vol. 11:243, 278-279; Vol. 

Ill : 100, 234, 240-250, 374. 

Montana, land frauds in Vol. 11:83; Vol. 111:377-383. 
Montaya, B. M. Vol. 11:87. 
Morgan, J. Pierpont Vol. II : 206, 210, 248-250, 253, 295-296, 

315; Vol. 111:64, 66, 81, 91, 93, 146-149, his career, 169- 

310. 

Morgan, Junius S. Vol. 111:149-151, death of, 214. 
Morris and Essex Railroad Vol. Ill : 105-107. 
Morris, Edward Vol. 1:290. 
Morris, Mary Vol. 1 : 139. 
Morris, Robert Vol. 1:57. 
Morris, Roger Vol. 1 : 139. 
Mortier, Abraham Vol. 1:167-168. 
Morse, Charles W. Vol. 111:292-297. 
Morse, George W. Vol. III:i66. 
Morton, Bliss and Company Vol. II : 360-361. 
Morton, Levi P. Vol. 11:361. 
Mutual Life Insurance Company corruption and frauds Vol. 

Ill : 266-276. 

National Greenback Labor Party Vol.. II : 91. 

Navarro, Jose R Vol. 111:83- 

Navy Scandals (bad supplies and equipment) Vol. II: 1 14; 

118-119, 126-127, 134-137, 292-294. 
Neebe, Oscar Vol. II : 230-234. 
Newbold, Governor J. G., cited Vol. Ill: no. 
New England Company, The Vol. 1 : 24. 
New Hampshire, claimed by Samuel Allen Vol. 1 : 29-30. 
New Jersey Central Railroad Vol. Ill : 71. 
New Jersey Transportation Company Vol. Ill : 107. 
New Mexico, great land frauds in Vol. 11:83-89; Vol. Ill: 

314, 335- 
New York and Harlam Railroad Vol. 1: 210; Vol. II : 138- 

145, 174, 197. 
New York Central Railroad Vol. 1 : 200-211, 251; Vol. II: 

148-152, 192, 206, 243, 248, 256, 261-270, 277-278; Vol. Ill: 

22-23. 



INDEX 407 

New York City municipal land, corrupt obtaining of -Vol. 
1:143-150, 211-213, 252; Vol. 11:261-263. 

New York Constitutional Convention of 1846, cited Vol. I: 
100. 

New York and New England Railroad Vol. 11:250-251. 

New York City elevated railroads, franchises obtained by evi- 
dent corruption Vol. 111:83-84. 

New York Life Insurance Company, corruption frauds Vol. 
Ill : 266-276. 

New York, New Haven and Hartford Railroad Vol. II: 
248-250. 

New York, Ontario and Western Railroad Vol. 11:252. 

New York, Susquehanna and Western Railroad Vol. 111:232. 

Nichols, Harry P., cited Vol. 11:263. 

Nicholson, John Vol. II : 251. 

Nolan, Gervacio, land grant Vol. II : 86, 89. 

Norfolk and Western Railroad Vol. 11:256. 

Northern Pacific Railroad Vol. 11:43, 46, 343; Vol. Ill: 51, 
239-241, 374-388. 

Northern Securities Company Vol. Ill: 241. 

Ohio, extensive land frauds in Vol. II : 16. 

Ohio Constitutional Convention of 1850-51 Vol. II: 30. 

Ohio Land Company Vol. II : 16. 

Old Dominion Mining Company Vol. 11:343. 

Oregon, great land frauds in Vol. 11:82. 

O'Rourke, Matthew J. Vol. 1:213. 

Owen, Robert Dale Vol. 1:225; Vol. Ill: 167. 

Pacific Mail Steamship Company (blackmailed by Commodore 

Vanderbilt, and mail subsidies secured by bribery) Vol. 

II: 117-121; Vol. 111:59-62, 187. 
Paine, Thomas Vol. 1 : 42. 
Palmer, Potter Vol. I: 261. 
Pan-Electric Scandal Vol. Ill : 199-201. 
Parsons, Albert R. Vol. II: 230, 234. 
Parsons, Frank, cited Vol. 1:250, 283-284; Vol. 11:44, 2O&- 

209. 
Parliament, British, enacts laws against American colonies 

Vol. 1 : 55-56. 

Parton, James, cited Vol. 1 : 109, 198. 
Patents, theft of Vol. I: 132, 145; Vol. II: 180-181; Vol. Ill: 

165-166. 
Patroons, the Vol. I: 14, 16-22; powers of, Vol. I: 16-22, 

43-44; decline of their estates. Vol. 1:97-100. 
Patterson, Joseph Medill, cited Vol. 1:294-295. 
Patterson, T. M., U. S. Senator Vol. Ill : 100. 
Peabody, George Vol. 1:59. 
Peabody, George (partner of Junius Morgan) Vol. Ill : 149- 

152. 
Penn, WiJJiam Vol. 1:25, 



408 INDEX 

Pennsylvania Coal Company Vol. 111:231-233. 

Pennsylvania, land frauds in Vol. 11:251-252. 

Pennsylvania Railroad Vol. II: 208-210, 243, 256; Vol. Ill: 

95-98, 123, 256-257. 

Perkins, George W. Vol. 111:266-267, 270, 274. 
Perkins, Thomas Handasyd Vol. 1:62. 
Pettigrew, U. S. Senator, cited Vol. 11:45-46; Vol. 111:372- 

373, 382-383. 
Phelps, Dodge and Company Vol. 11:337-344; Vol. 111:59, 

153- 

Phelps, George D. Vol. Ill: 105-109. 

Phelps, John J. Vol. Ill : 105. 

Phillips, Adolphus (son of Frederick) Vol. 1:38, 139, 141. 

Phillips, Frederick, (backer and employer of the pirate Bur- 
gess) Vol. 1:38, 141, 142. 

Phillips, William A., cited Vol. 11:34, 93. 

Pierce, President Franklin Vol. Ill : 44. 

Pinchot, Gifford Vol. 11:47; Vol. 111:307. 

Pinkerton detectives Vol. 11:228-229. 

Piracy of literary work Vol. 1:135-136. 

"Pittsburg Survey" The, cited Vol. 111:282-285. 

Platt, Thomas C Vol. II : 71. 

Plymouth Colony Vol. 1:24-31. 

Poe, Edgar Allan Vol. 1:225. 

Pomeroy, U. S. senator, cited Vol. II : 357. 

Poor's "Railroad Manual," cited Vol. III:m, 180. 

Portage Lake and Lake Superior Ship Canal Company Vol. 
II : 25. 

Postal Department, looting of by railroads Vol. 11:202-203. 

Powell, F. W., cited Vol. 111:22. 

Pratt, Zadoc Vol. 11:283-284. 

Prison Association of New York Vol. I: 181. 

Prison and penitentiary system Vol. I: 177-181. 

Privateering, fortunes from Vol. 1 : 57-58. 

Property qualifications for voters Vol. 1:69-70, 190-191. 

Prostitution Vol. 1 : 269-272. 

Pulitzer, Joseph Vol. Ill : 90. 

Pullman Company, The Vol. 1 : 278-285, 295 ; Vol. II : 277. 

Pullman, George M. Vol. 1:279; Vol. II : 250, 360-361; Vol. 
111:83-84. 

Purdy, Elijah. Vol. II 1141. 

Quay, Matthew S. Vol. 111:95-97. 

Railroad corruption Vol. 1:250-251, 276; Vol. 11:30-47, 141- 
142, 145-151, i54-i6i, 173-174, 176-179, 197, 261-265, 267- 
269, 298-300, 302-323, 351-367; Vol. 111:24-31, 32-38, 45-46, 
59-62, 72-73, 77, 97-100, 105-109, 120-122, 128-132, 134-136* 
163-164, 197-1^8, 375, 382-383. 

Rantoul, Robert Vol. II: 65. 

Reading Railroad Vol. 11:65; Vol, 111:23* 

... .W.V 



INDEX 409 

Ream, Norman B. Vol. 1 : 279. 

Rensselaer, Kiliaen Van Vol. 1 : 18. 

Rensselaer, Stephen Van (one of the last patroons) VoL 1:44, 

98. 

Rhinelander estate Vol. I:io6, 143, 224. 
Rhinelander, Frederick Vol. 1 : 145, 242, 252. 
Rhinelander, William Vol. 1:145-146, 242, 252-253. 
Rhinelander, William C Vol. I: 212, 213, 253. 
Rice, U. S. Senator, cited Vol. 11:358. 
Ridgeway, Jacob Vol. I: 196. 
Roberts, Charles C Vol. 11:296. 
Roberts, Marshall O. Vol. 1:214-215; Vol. II:iI7-Il8, 121- 

122, 292-293 ; Vol. Ill : 160-161, 322. 
Roberts, Dr. Peter, cited Vol. 11:255. 
Rochefoucault Liancourt, Duke de, cited Vol. Ill : 158. 
Rockefeller, John D. Vol. 11:96, 199, 210; Vol. 111:94-95, 246, 

250, 254-256. 

Rockefeller, \Villiam Vol. II: 210; Vol. 111:94-95, 246. 
Romaine, Benjamin Vol. 1 : 143, 144, 243. 
Roosevelt, James Vol. 1 : 148. 
Roosevelt, President Theodore Vol. 1 1216, 258; Vol. 11:46, 

73, 238; Vol. 111:246-248, 299-300. 
Root, Elihu Vol. 1:215; Vol. 111:248. 
Rosser, J. Travis Vol. 111:24. 
Russell, Charles Edward, cited Vol. 111:386. 
Russell, Thomas Vol. 1: 60. 
Rothschilds, the Vol. Ill: 189. 
Rutgers, Anthony Vol. 1:253. 
Rutgers, John Vol. 1 : 253. 
Rutland and Washington Railroad Vol. 11:285. 
Ryan, Thomas R Vol. 111:277, 306. 

St. Mary's Falls Ship Canal Company Vol. 11:25, 17- 

St. Paul and Pacific Railroad Company Vol. 111:48-56, 357- 

Sagan, Prince de Vol. 111:92. 

Sage, Russell Vol. 11:360, 367, 368; Vol. Ill: 11-70, 75-86, 

91, 103, 138. 

Sand ford, General J. W. A., cited Vol. 1: 133. 
Sangrede, Christo, (land grant) Vol. 11:87, 89. 
Schell, Edward Vol. 1:214-215. 
Schermerhorn, Peter Vol. 1 : 254. 
Schermerhorn, William C. Vol. 1 : 292. 
Schermerhorns, the Vol. 1:143, 148, 224, 236, 242, 254. 
Schiff, Jacob H. Vol. 111:274. 
Schubarth, C. D. Vol. III:i66. 
Schuyler, George W., cited Vol. 1 : 34. 
Schuyler, Peter, secures estate by bribery Vol. 1:33, 37. 
Schwab, Charles M. Vol. 111:253-254, 260-261. 
Schwab, Oscar Vol. II : 230-234. 
Scott, Thomas A. Vol. 11:189-297; Vol. 111:134-135. 



410 INDEX 

Seligman Brothers, J. and W. Vol. Ill : 189. 

Sharp, Jacob Vol. II : 141 ; Vol. 111:83, 222. 

Shearman, Thomas G., cited Vol. 1 : 107 ; Vol. II : 98 

Sherman, John Vol. II : 301 ; Vol. Ill : 188. 

Shippers, free use of Government money Vol. 1 : 79, 81, 129. 

Sioux City and St. Paul Railroad Vol. 111:58, 110-113. 

Sioux City Railroad Contracting Company Vol. Ill: 115. 

Sistare, George K. Vol. 1:214. 

Slavery, black, introduction of Vol. 1 : 12, 13; conditions of, 

Vol. 1:179-180; extension of, Vol. 11:354; slave traffic, 

Vol. III:i58-i6o. 

Sloan, Samuel Vol. Ill: 182, 210. 
Sloo, Albert G. Vol. II: 117-121. 
Slums Vol. I: 218-220, 240, 268-269; Vol. 11:56-57. 
Smith, Alexander Donald Vol. 111:361-368. 
Smith, Henry M. Vol. 11:323- 
Smith, Matthew L., cited Vol. 1 : 168, 203. 
Smith, Colonel William Vol. 1:33, 38, 39-40. 
Smith, Thomas H. Vol. I: 80. 
Smith, A. D. and J. Y. Vol. Ill : 166. 
Snelling, Colonel J., cited Vol. I: 115-116. 
Snow, Ambrose Vol. II: 135. 
Snyder, Carl, cited Vol. 11:252. 

Society for the Prevention of Pauperism Vol. 1 : 73, 76. 
Southard, T. J. Vol. II 1133, 135, 137. 
Southern Pacific Railroad Vol. 11:43, 355; Vol. Ill: 134, 144- 

145- 

South Pennsylvania Railroad Vol. II: 208-210. 
Spahr, Charles B., cited Vol. 1:290; Vol. 11:245, 271. 
Sparks, William A. J., U. S. Land Commissioner, cited Vol. 

11:26, 33, 37, 42, 49, 80-83, 89; Vol. Ill : 326. 
Speyer, James Vol. 111:222. 
Spies, August Vol. 11:252. 
Standard Oil Company Vol. 11:27, 53, 74, 98, 100, 199-201, 

242, 259, 276, 277-278; Vol. 111:94-95, 125, I44-I45, 197, 

240, 248, 261, 290, 295, 298. 
Stanford, Leland Vol. II : 71, 360; his career described, Vol. 

Ill : 124-143. 

Stanton, U. S. Secretary of War Vol. II : 132. 
Stead, William T., cited Vol. 1:271. 
Steel Trust Vol. 111:251-265, 279-286. 
Steenwyck, Cornelius Vol. 1 : 47. 
Stein, Augustus, cited Vol. II : 322. 
Sterne, Simon, cited Vol. II : 160-161. 
Stetson, Francis Lynde Vol. 111:222-223. 
Steven, George Vol. Ill : 361-368. 
Stevens, Edward A. Vol. Ill : 107, 162-164. 
Stevens, Simon Vol. Ill : 170-175. 
Stevens, Uriah, cited Vol. 11:188-189. 
Steward, Ira, cited Vol. II : 219. 
Steward, John Vol. I: 210; Vol. II : 151. 



INDEX 4" 

Stewart, A. T. Vol. 1: 195, 318. 

Stokes, Anson Phelps Vol. II 13391 

Stokes, James Vol. 11:336. 

Stokes, J. G. Phelps Vol. 11:346. 

Stokes, Thomas Vol. 11:339- 

Stone and Timber Act Vol. 11:39-40, 46. 

Strikes Vol. 1:282-284; Vol. 11:55, 56, 59, 61, 64-65, 203-204, 

227-230, 272-273; Vol. 111:88-89, 122, 247-248, 254, 384-385. 
Suffrage, struggle for manhood Vol. 1:100-191. 
Sugar Trust Vol. 11:74, 242, colossal import frauds, 346- 

347; Vol. 111:227, 228. 
Supreme Court of the United States decisions Vol. I:i88; 

Vol. II: 18, 32-33, 37, 122, 138, 365; Vol. Ill: 15-18, 39-42, 

75, 93, 241, 3I5-3I8, 330, 356, 370, 377- 

Swartwout, Samuel, his enormous defalcation Vol. 1:75. 
Swinton, John Vol. 11:349. 

Tammany Hall Vol. 1: 144, 211-216, 252; Vol. 11:237-240, 

314-316. v '* 

Tammany Hall, "History of," cited Vol. 1: 141, 216; Vol. II: 

138, 159; Vol. 111:25. 
Taney, Roger B. Vol. 1 : 188. 
Taylor, Jacob Vol. 1 : 149. 
Taylor, Moses Vol. 1 : 195, 214. 
Taxation, evasion of Vol. 1:184-187, 231-232, 288-289; Vol. 

11:220-221, 275; Vol. III:6i, no, 209-210. 
Teller, Henry M., cited Vol. 11:35; Vol. Ill : 100. 
Tenement houses in New York City Vol. 1 : 218-222, 240. 
Tennessee Coal and Iron Company Vol. 111:262, 298-301. 
Tenth National Bank Vol. 11:331. 

Texas, land frauds in Vol. 11:90-91, 354-355; Vol. Ill: 208. 
Texas Pacific Railroad Vol. 111:77-78, 134-136. 
Thorndike, Israel Vol. 1 : 58. 
Tierra Amarilla land grant Vol. 11:87. 
Tilden, Samuel J. Vol. 111:43, 48. 
Timber lands, fraudulent securing of Vol. 1:28-38, 132-134; 

Vol. II: 17-22, 32-33, 42, 39-49, 78-91, 358-359; Vol. Ill: 

314-334, 352-357- 
Tipton, General, seizure of liquor from Astor's American Fur 

Company Vol. 1:117. 
Tobacco Trust Vol. 11:74- 

Toombs, U. S. Senator, cited Vol. II: 113, 116-118. 
Tracy, Nathaniel Vol. 1 : 58. 

Trading class, springing up of Vol. 1:41-42, 45-46. 
Trinity Church or Corporation Vol. 1:43, 146, 166-169, 222, 

253- 

Troy and Schenectady Railroad Vol. Ill : 18-22. 
Tweed "Ring" Vol. 1:148, 211-216; Vol. 11:69, 158, 173, 

307, 314-316. 
Tweed, William M. Vol. II : 144, 158, 173, 314-316. 



412 INDEX 

Union Pacific Railroad Vol. 11:33-34, 41, 43, 351-368; Vol. 

Ill : 63-76, 79, 80, 109. 
Union Bank of Maryland Vol. I: 188. 
United States Mail Steamship Company Vol. II: 117-121. 
United States Bank (see Bank of the United States). 
Usher, John Vol. 1:31. 
United States Shipbuilding Company Vol. Ill : 260-261. 

Van Buren, Martin Vol. II : 66. 

Vanderbilt, Alfred G. Vol. 11:275-276; Vol. 111:274. 

Vanderbilt, Consuelo Vol. 11:274. 

Vanderbilt, Cornelius (founder of fortune) Vol. 1 : 97, 148, 
195, 210^211, 251; Vol. II:io5-ii2; his large blackmailing 
transactions, Vol. 11:113-122, 123; his methods during the 
Civil War, Vol. II : 132-137 ; goes into railroads, Vol. II : 
141-152; acquirement of railroads and corruption of legis- 
latures, Vol. 11:153-163, 164-194; his death, Vol. II : 194- 
195, also Vol. 11:263, 278, 280, 286-287, 292, 304-312, 317- 
319; Vol. 111:20-27, 103, 121, 124, 160, 181. 

Vanderbilt, Cornelius (grandson of the founder) Vol. II: 

98, 223-224, 243-280. 

Vanderbilt, Cornelius Jeremiah (son of the founder) Vol. II: 

194-195. 
Vanderbilt, Cornelius (great grandson of the founder) Vol. 

1:251; Vol. 11:95-98, 275, 276. 
Vanderbilt, Frederick W. Vol. 11:98. 
Vanderbilt, Gladys Vol. 11:274-275. 
Vanderbilt, William H. (son and chief heir of founder) Vol. 

II : 195-222, 247, 278 ; Vol. Ill : 80-81, 86, 123, 124, 191, 

193-194, 215-216. 
Vanderbilt, William K. (grandson of founder) Vol. 11:98, 

99, 223-224, 243, 280, 238-243. 
Vanderbilt, William K., Jr. Vol. 11:277. 
Vanderbilt, Reginald Vol. 11:275. 
Van Oss, cited Vol. II: 208. 

Van Wyck, C. H., U. S. Senator, cited Vol. II: 128, 294, 340. 
Vilas, U. S. Postmaster-General, cited Vol. II : 202. 
Villard, Henry Vol. 111:375-376, 381- 
Visayan Railroad Vol. 11:277. 

Wabash and Erie Canal Company Vol. 11:25. 

Wabash Railroad Vol. Ill : 78-79, 95, 98. 

Wallace, J. W. cited Vol. II: 128. ' 

Wanamaker, John Vol. II : 202, 250. 

Warren Railroad Vol. Ill : 105-108. 

Washington, George, landed estate cf Vol. 1:43. 

Washington, State of, great land frauds in Vol. 11:82, 83; 

Vol. 111:374-383. 

Weaver, General, cited Vol. II: 91. 
Webb, W. H. Vol. 1:148. 



INDEX 413 

Western Union Telegraph Company Vol. 1:251; Vol. Ill : 80- 

82, 90, 98. 

Westminster, Duke of Vol. 1:240. 
West Shore Railroad Vol. II : 207-208. 
Wetmore, Prosper Vol. I:i8i; Vol. II: 117-118. 
"Wilson Committee" Vol. 11:358; Vol. Ill: 114-115. 
Wilson, U. S. Senator Vol. 11:353-355. 
Whitney, Asa Vol. Ill: 164. 
Whitney, Eli Vol. 1:62, 132. 
Whitney, Harry Payne Vol. 11:276. 
Whitney, William C Vol. II: 176, 210, 276. 
Williams, Alexander S. Vol. 11:350. 
Williams, J. D. and M. Vol. Ill: 155-158. 
Wisconsin, land frauds in Vol. 1 : 134 ; Vol. Ill : 32-38. 
Wisconsin, bribery in Vol. 111:32-38. 
Wilson, R. T. Vol. 11:276. 
Workingmen's Party, The Vol. 1:171-174; Vol. 11:68, 236; 

Vol. Ill : 184. 
Wright, Carroll D., cited Vol. 1:282; Vol. II 1182, 204, 218; 

Vol. 111:226. 
Wyoming, land frauds in Vol. 11:83, 367. 



HC 

103 

M8 

1910 

v.3 



Myers, Gustavus 

History of the great Ameri- 
con fortunes 




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