THE ENTAILING OF THE VANDERBILT FORTUNE
The richer Commodore Vanderbilt grew, the more closely he clung to
his old habits of intense parsimony. Occasionally he might
ostentatiously give a large sum here or there for some religious or
philanthropic purpose, but his general undeviating course was a
consistent meanness. In him was united the petty bargaining traits of
the trading element and the lavish capacities for plundering of the
magnate class. While defrauding on a great scale, pocketing tens of
millions of dollars at a single raid, he would never for a moment
overlook the leakage of a few cents or dollars. His comprehensive
plans for self-aggrandizement were carried out in true piratical
style; his aims and demands were for no paltry prize, but for the
largest and richest booty. Yet so ingrained by long development was
his faculty of acquisition, that it far passed the line of a passion
and became a monomania.
VANDERBILT'S CHARACTERISTICS.
To such an extent did it corrode him that even when he could boast
his $100,000,000 he still persisted in haggling and huckstering over
every dollar, and in tricking his friends in the smallest and most
underhand ways. Friends in the true sense of the word he had none;
those who regarded themselves as such were of that thrifty, congealed
disposition swayed largely by calculation. But if they expected to
gain overmuch by their intimacy, they were generally vastly mistaken;
nearly always, on the contrary, they found themselves caught in some
unexpected snare, and riper in experience, but poorer in pocket, they
were glad to retire prudently to a safe distance from the old man's
contact. "Friends or foes," wrote an admirer immediately after his
death, "were pretty much on the same level in his estimation, and if
a friend undertook to get in his way he was obliged to look out for
himself."
On one occasion, it is related, when a candidate for a political
office solicited a contribution, Vanderbilt gave $100 for himself,
and an equal sum for a friend associated with him in the management
of the New York Central Railroad. A few days later Vanderbilt
informed this friend of the transaction, and made a demand for the
hundred dollars. The money was paid over. Not long after this, the
friend in question was likewise approached for a political
contribution, whereupon he handed out $100 for himself and the same
amount for Vanderbilt. On being told of his debt, Vanderbilt declined
to pay it, closing the matter abruptly with this laconic
pronunciamento, "When I give anything, I give it myself." At another
time Vanderbilt assured a friend that he would "carry" one thousand
shares of New York Central stock for him. The market price rose to
$115 a share and then dropped to $90. A little later, before setting
out to bribe an important bill through the Legislature--a bill that
Vanderbilt knew would greatly increase the value of the stock--the
old magnate went to the friend and represented that since the price
of the stock had fallen it would not be right to subject the friend
to a loss. Vanderbilt asked for the return of the stock and got it.
Once the bill became a law, the market price of the stock went up
tremendously, to the utter dismay of the confiding friend who saw a
profit of $80,000 thus slip out of his hands into Vanderbilt's.
[Footnote: These and similar anecdotes are to be found incidentally
mentioned in a two-page biography, very laudatory on the whole, in
the New York "Times," issue of January 5, 1877.]
In his personal expenses Vanderbilt usually begrudged what he looked
upon as superfluous expense. The plainest of black clothes he wore,
and he never countenanced jewelry. He scanned the table bill with a
hypercritical eye. Even the sheer necessities of his physical
condition could not induce him to pay out money for costly
prescriptions. A few days before his death his physician recommended
champagne for some internal trouble. "Champagne!" exclaimed
Vanderbilt with a reproachful look, "I can't afford champagne. A
bottle every morning! Oh, I guess sody water'll do!"
From all accounts it would seem that he diffused about him the same
forbidding environment in his own house. He is described as stern,
obstinate, masterful and miserly, domineering his household like a
tyrant, roaring with fiery anger whenever he was opposed, and flying
into fits of fury if his moods, designs and will were contested. His
wife bore him thirteen children, twelve of whom she had brought up to
maturity. A woman of almost rustic simplicity of mind and of habits,
she became obediently meek under the iron discipline he administered.
Croffut says of her that she was "acquiescent and patient under the
sway of his dominant will, and in the presence of his trying moods."
He goes on: "The fact that she lived harmoniously with such an
obstinate man bears strong testimony to her character." [Footnote:
"The Vanderbilts": 113.]
If we are to place credibility in current reports, she was forced
time and time again to undergo the most violent scenes in interceding
for one of their sons, Cornelius Jeremiah. For the nervous
disposition and general bad health of this son the father had not
much sympathy; but the inexcusable crime to him was that Cornelius
showed neither inclination nor capacity to engage in a business
career. If Cornelius had gambled on the stock exchange his father
would have set him down as an exceedingly enterprising, respectable
and promising man. But he preferred to gamble at cards. This
rebellious lack of interest in business, joined with dissipation, so
enraged the old man that he drove Cornelius from the house and only
allowed him access during nearly a score of years at such rare times
as the mother succeeded in her tears and pleadings. Worn out with her
long life of drudgery, Vanderbilt's wife died in 1868; about a year
later the old magnate eloped with a young cousin, Frank A. Crawford,
and returning from Canada, announced his marriage, to the unbounded
surprise and utter disfavor of his children.
THE OLD MAGNATE'S DEATH.
An end, however, was soon coming to his prolonged life. A few more
years of money heaping, and then, on May 10, 1876, he was taken
mortally ill. For eight months he lay in bed, his powerful vitality
making a vigorous battle for life; two physicians died while in the
course of attendance on him; it was not until the morning of January
4, 1877, that the final symptoms of approaching death came over him.
When this was seen the group about his bed emotionally sang: "Come,
Ye Sinners, Poor and Needy," "Nearer, My God, To Thee," and "Show Ye
Pity, Lord." He died with a conventional religious end of which the
world made much; all of the property sanctities and ceremonials were
duly observed; nothing was lacking in the piety of that affecting
deathbed scene. It furnished the text for many a sermon, but while
ministerial and journalistic attention was thus eulogistically
concentrated upon the loss of America's greatest capitalist, not a
reference was made in church or newspaper to the deaths every year of
a host of the lowly, slain in the industrial vortex by injury and
disease, and too often by suicide and starvation. Except among the
lowly themselves this slaughter passed unprotested and unnoticed.
Even as Vanderbilt lay moribund, speculation was busy as to the
disposition of his fortune. Who would inherit his aggregation of
wealth? The probating of his will soon disclosed that he had
virtually entailed it. About $90,000,000 was left to his eldest son,
William H., and one-half of the remaining $15,000,000 was bequeathed
to the chief heir's four sons. [Footnote: To Cornelius J. Vanderbilt,
the Commodore's "wayward" son, only the income derived from $200,000
was bequeathed, upon the condition that he should forfeit even this
legacy if he contested the will. Nevertheless, he brought a contest
suit. William H. Vanderbilt compromised the suit by giving to his
brother the income on $1,000,000. On April 2, 1882, Cornelius J.
Vanderbilt shot and killed himself. Croffut gives this highly
enlightening account of the compromising of the suit:
"At least two of the sisters had sympathized with 'Cornele's' suit,
and had given him aid and comfort, neither of them liking the
legatee, and one of them not having been for years on speaking terms
with him; but now, in addition to the bequests made to his sisters,
William H. voluntarily [sic] added $500,000 to each from his own
portion.
"He drove around one evening, and distributed this splendid largess
from his carriage, he himself carrying the bonds into each house in
his arms and delivering them to each sister in turn. The donation was
accompanied by two interesting incidents. In one case the husband
said, 'William, I've made a quick calculation here, and I find these
bonds don't amount to quite $500,000. They're $150 short, at the
price quoted today.' The donor smiled, and sat down and made out his
check for the sum to balance.
"In another case, a husband, after counting and receipting for the
$500,000, followed the generous visitor out of the door, and said,
'By the way, if you conclude to give the other sisters any more,
you'll see that we fare as well as any of them, won't you?' The donor
jumped into his carriage and drove off without replying, only saying,
with a laugh, to his companions, 'Well, what do you think o' that'"--
"The Vanderbilts": 151-152.] A few millions were distributed among
the founder's other surviving children, and some comparatively small
sums bequeathed to charitable and educational institutions. The
Vanderbilt dynasty had begun.
* * * * * * *
PERSONALITY OF THE CHIEF HEIR.
At this time William H. Vanderbilt was fifty-six years old. Until
1864 he had been occupied at farming on Staten Island; he lived at
first in "a small, square, plain two-story house facing the sea, with
a lean-to on one end for a kitchen." The explanation of why the son
of a millionaire betook himself to truck farming lay in these facts:
The old man despised leisure and luxury, and had a correspondingly
strong admiration for "self-made" men. Knowing this, William H.
Vanderbilt made a studious policy of standing in with his father,
truckling to his every caprice and demand, and proving that he could
make an independent living. He is described as a phlegmatic man of
dull and slow mental processes, domestic tastes and of kindly
disposition to his children. His father (so the chronicles tell) did
not think that he "would ever amount to anything," but by infinite
plodding, exacting the severest labor from his farm laborers, driving
close bargains and turning devious tricks in his dealings, he
gradually won the confidence and respect of the old man, who was
always pleased with proofs of guile. Croffut gives a number of
instances of William's craft and continues: "From his boyhood he had
given instant and willing submission to the despotic will of his
father, and had made boundless sacrifices to please him. Most men
would have burst defiantly away from the repressive control and
imperious requirements; but he doubtless thought that for the chance
of becoming heir to $100,000,000 he could afford to remain long in
the passive attitude of a distrusted prince." (sic.)
[Illustration: WILLIAM H. VANDERBILT, He Inherited the Bulk of His
Father's Fortune and Doubled It]
The old autocrat finally modified his contemptuous opinion, and put
him in an executive position in the management of the New York and
Harlem Railroad. Later, he elevated him to be a sort of coadjutor by
installing him as vice president of the New York Central Railroad,
and as an associate in the directing of other railroads. It was said
to be painful to note the exhausting persistence with which William
H. Vanderbilt daily struggled to get some perceptions of the details
of railroad management. He did succeed in absorbing considerable
knowledge. But his training at the hands of his father was not so
much in the direction of learning the system of management. Men of
ability could always be hired to manage the roads. What his father
principally taught him was the more essential astuteness required of
a railroad magnate; the manipulation of stocks and of common councils
and legislatures; how to fight and overthrow competitors and extend
the sphere of ownership and control; and how best to resist, and if
possible to destroy, the labor unions. In brief, his education was a
duplication of his father's scope of action: the methods of the sire
were infused into the son.
From the situation in which he found himself, and viewing the
particular traits required in the development of capitalistic
institutions, it was the most appropriate training that he could have
received. Book erudition and the cultivation of fine qualities would
have been sadly out of place; his father's teachings were precisely
what were needed to sustain and augment his possessions. On every
hand he was confronted either by competitors who, if they could get
the chance, would have stripped him without scruple, or by other men
of his own class who would have joyfully defrauded him. But
overshadowing these accustomed business practices, new and startling
conditions that had to be met and fought were now appearing.
Instead of a multitude of small, detached railroads, owned and
operated by independent companies, the period was now being reached
of colossal railroad systems. In the East the small railroad owners
had been well-nigh crushed out, and their properties joined in huge
lines under the ownership of a few controlling men, while in the
West, extensive systems, thousands of miles long, had recently been
built. Having stamped out most of the small owners, the railroad
barons now proceeded to wrangle and fight among themselves. It was a
characteristic period when the railroad magnates were constantly
embroiled in the bitterest quarrels, the sole object of which was to
outdo, bankrupt and wreck one another and seize, if possible, the
others' property.
THE RISE OF THE FIRST TRUST.
It was these conflicts that developed the auspicious time and
opportunity for a change of the most world--wide importance, and one
which had a stupendous ultimate purport not then realized. The wars
between the railroad magnates assumed many forms, not the least of
which was the cutting of freight rates. Each railroad desperately
sought to wrench away traffic from the others by offering better
inducements. In this cutthroat competition, a coterie of hawk-eyed
young men in the oil business, led by John D. Rockefeller, saw their
fertile chance.
The drilling and the refining of oil, although in their comparative
infancy, had already reached great proportions. Each railroad was
eager to get the largest share of the traffic of transporting oil.
Rockefeller, ruminating in his small refinery at Cleveland, Ohio, had
conceived the revolutionary idea of getting a monopoly of the
production and distribution of oil, obliterating the middleman, and
systematizing and centralizing the whole business.
Then and there was the modern trust born; and from the very inception
of the Standard Oil Company Rockefeller and his associates
tenaciously pursued their design with a combined ability and
unscrupulousness such as had never before been known since the rise
of capitalism. One railroad after another was persuaded or forced
into granting them secret rates and rebates against which it was
impossible to compete. The railroad magnates--William H. Vanderbilt,
for instance--were taken in the fold of the Standard Oil Company by
being made stockholders. With these secret rates the Standard Oil
Company was enabled to crush out absolutely a myriad of competitors
and middlemen, and control the petroleum trade not only of the United
States but of almost the entire world. Such fabulous profits
accumulated that in the course of forty years, after one unending
career of industrial construction on the one hand, and crime on the
other, the Standard Oil Company was easily able to become owners of
prodigious railroad and other systems, and completely supplant the
scions of the magnates whom three or four decades before they had
wheedled or brow-beaten into favoring them with discriminations.
CORPORATE WEALTH AND LABOR UNIONS.
The effects of this great industrial transition were clearly visible
by 1877, so much so that two years later, Vanderbilt, more
prophetically than he realized, told the Hepburn Committee that "if
this thing keeps up the oil people will own the roads." But other
noted industrial changes were concurrently going on. With the up-
springing and growth of gigantic combinations or concentrations of
capital, and the gradual disappearance of the small factors in
railroad and other lines of business, workers were compelled by the
newer conditions to organize on large and compact national lines.
At first each craft was purely local and disassociated from other
trades unions. But comprehending the inadequacy and futility of
existing separately, and of acting independently of one another, the
unions had some years back begun to weld themselves into one powerful
body, covering much of the United States. Each craft union still
retained its organization and autonomy, but it now became part of a
national organization embracing every form of trades, and centrally
officered and led. It was in this way that the workers, step by step,
met the organization of capital; the two forces, each representing a
conflicting principle, were thus preparing for a series of great
industrial battles.
Capital had the wealth, resources and tools of the country; the
workers their labor power only. As it stood, it was an uneven
contest, with every advantage in favor of capital. The workers could
decline to work, but capital could starve them into subjection.
These, however, were but the apparent differences. The real and
immense difference between them was that capital was in absolute
control of the political governing power of the nation, and this
power, strange to say, it secured by the votes of the very working
class constantly fighting it in the industrial arena. Many years were
to elapse before the workers were to realize that they must organize
and vote with the same political solidarity that they long had been
developing in industrial matters. With political power in their hands
the capitalists could, and did, use its whole weight with terrific
effect to beat down the working class, and nullify most of the few
concessions and laws obtained by the workers after the severest and
most self-sacrificing struggles.
One of the first memorable battles between the two hostile forces
came about in 1877. In their rate wars the railroad magnates had cut
incisively into one another's profits. The permanent gainers were
such incipient, or fairly well developed, trusts or combinations as
the Standard Oil Company. Now the magnates set about asserting the
old capitalist principle of recouping themselves by forcing the
workers to make up their losses.
But these deficits were merely relative. Practically every railroad
had issued vast amounts of bonds and watered stock, on which fixed
charges and dividends had to be paid. Judged by the extent of this
inflated stock, the profits of the railroads had certainly decreased.
Despite, however, the prevailing cutthroat competition, and the slump
in general business following the panic of 1873, the railroads were
making large sums on their actual investment, so-called. Most of this
investment, it will be recalled, was not private money but was public
funds, which were later stolen by corrupt legislation. It was shown
before the Hepburn Committee in 1879, as we have noted, that from
1869 the New York Central Railroad had been making sixteen, and
perhaps more than twenty per cent., on the actual cost of the road.
Moreover, apart from the profits from ordinary traffic, the railroads
were annually fattening on immense sums of public money gathered in
by various fraudulent methods. One of these--and is well worth
adverting to, for it exists to a greater degree than ever before--was
the robbery of the people in the transportation of mails. By a
fraudulent official construction, in 1873, of the postal laws, the
railroads without cessation have cheated huge sums in falsifying the
weight of mail carried, and since that time have charged ten times as
much for mail carrying as have the express companies (the profits of
which are very great) for equal haulage. But these are simply two
phases of the postal plunder. In addition to the regular mail
payments, the Government has long paid to the railroad companies an
extra allowance of $6,250 a year for the rent of each postal car
used, although official investigation has proved that the whole cost
of constructing such a car averages but from $2,500 to $5,000. In
rent alone, five millions a year have been paid for cars worth, all
told, about four millions. From official estimates it would clearly
seem that the railroads have long cheated the people out of at least
$20,000,000 a year in excess rates--a total of perhaps half a billion
dollars since 1873. The Vanderbilt family have been among the chief
beneficiaries of this continuous looting. [Footnote: Postmaster
General Vilas, Annual Report for 1887:56. In a debate in the United
States Senate on February 11, 1905, Senator Pettigrew quoted
Postmaster General Wanamaker as saying that "the railroad companies
see to it that the representatives in Congress in both branches take
care of the interests of the railway people, and that it is
practically impossible to procure legislation in the way of reducing
expenses."] Occasionally the postal officials have made pretences at
stopping the plunder, but with no real effect.
THE GREAT STRIKE OF 1877.
Making a loud and plaintive outcry about their declining revenues,
some of the railroad systems prepared to assess their fictitious
losses upon the workers by cutting down wages. They had already
reduced wages to the point of the merest subsistence; and now they
decreed that wages must again be curtailed ten cents on every dollar.
The Baltimore and Ohio Railroad, then in the hands of the Garrett
family, with a career behind it of consecutive political corruption
and fraud, in some ways surpassing that of the Vanderbilts, led in
reducing the wages of its workers. The Pennsylvania Railroad
followed, and then the Vanderbilts gave the order for another
reduction.
At once the Baltimore and Ohio Railroad employees retaliated by
declaring a strike; the example was followed by the Pennsylvania men.
In order to alienate the sympathy of the general public and to have a
pretext for suppressing the strike with armed force, the railroads,
it is quite certain, instigated riots at Martinsburg, W. Va., and at
Pittsburg. Troops were called out and the so-called mobs were fired
on, resulting in a number of strikers being killed and many wounded.
That the railroads deliberately destroyed their own property and then
charged the culpability to the strikers, was common report. So
conservative an authority as Carroll D. Wright, for a long time
United States Commissioner of Labor, tells of the railroad agents
setting a large number of old, decayed, worthless freight cars at
Pittsburg on fire, and accusing the strikers of the act. He further
tells of the Pennsylvania Railroad subsequently extorting millions of
dollars from the public treasury on the ground that the destruction
of these cars resulted from riot. Wright says that from all that he
has been able to gather, he believes the reports of the railroads
manufacturing riots to have been true. [Footnote: "The Battles of
Labor": 122. In all, the railroad companies secured approximately
$22,000,000 from the public treasury in Pennsylvania as indemnity for
property destroyed during these "riots." In a subsequent chapter, the
corruption of the operation is described.] Vanderbilt acted with
greater wisdom than his fellow magnates. Adopting a conciliatory
stand, he averted a strike on his lines by restoring the old rate of
wages and by other mollifying measures.
He was now assailed from a different direction. The long gathering
anger and enmity of the various sections of the middle class against
the corporate wealth which had possessed itself of so dictatorial a
power, culminated in a manner as instructive as it was ineffective.
In New York State, the Legislature was prevailed upon, in 1879, to
appoint an investigating committee. Vanderbilt and other railroad
owners, and a multitude of complaining traders were haled up to give
testimony; the stock-jobbing transactions of Vanderbilt and Gould
were fully and tediously gone into, as also were the methods of the
railroads in favoring certain corporations and mercantile
establishments with secret preferential freight rates.
Not in the slightest did this long-drawn investigation have any
result calculated to break the power of the railroad owners, or their
predominant grip upon governmental functions.
The magnate class preferred to have no official inquiries; there was
always the annoying possibility that in some State or other
inconvenient laws might be passed, or harrassing legal actions begun;
and while revocation or amendment of these laws could be put through
subsequently when the popular excitement had died away, and the suits
could be in some way defeated, the exposures had an inflaming effect
upon a population as yet ill-used to great one-man power of wealth.
But if the middle class insisted upon action against the railroad
magnates, there was no policy more suitable to these magnates than
that of being investigated by legislative committees. They were not
averse to their opponents amusing themselves, and finding a vent for
their wrath, in volumes of talk which began nowhere and ended
nowhere. In reply to charges, the magnates could put in their
skillful defense, and inject such a maze of argument, pettifoggery
and technicalities into the proceedings, that before long the public,
tired of the puzzle, was bound to throw up its hands in sheer
bewilderment, unable to get any concrete idea of what it was all
about.
FRAUD BECOMES RESPECTABLE WEALTH
So the great investigation of 1879 passed by without the least
deterrent effect upon the constantly-spreading power and wealth of
such men as Vanderbilt and Gould. Every new development revealed that
the hard-dying middle class was being gradually, yet surely, ground
out. But the investigation of 1879 had one significant unanticipated
result.
What William H. Vanderbilt now did is well worth noting. As the owner
of four hundred thousand shares of New York Central stock he had been
rabidly denounced by the middle class as a plutocrat dangerous to the
interests of the people. He decided that it would be wise to sell a
large part of this stock; by this stroke he could advantageously
exchange the forms of some of his wealth, and be able to put forward
the plausible claim that the New York Central Railroad, far from
being a one-man institution, was owned by a large number of
investors. In November, 1879, he sold through J. Pierpont Morgan more
than two hundred thousand shares to a syndicate, chiefly, however, to
British aristocrats.
This sale in no way diminished his actual control of the New York
Central Railroad; not only did he retain a sufficient number of
shares, but he owned an immense block of the railroad's bonds. The
sale of the stock brought him $35,000,000. What did he do with this
sum? He at once reinvested it in United States Government bonds.
Thus, the proceeds of a part of the stock obtained by outright fraud,
either by his father or himself, were put into Government bonds. This
surely was a very sagacious move. Stocks do not have the solid,
honest air that Government bonds do; nothing is more finely and
firmly respectable than a Government bondholder.
From the blackmailer, corruptionist and defrauder of one generation
to the stolid Government bondholder of the next, was not a long step,
but it was a sufficient one. The process of investing in Government
bonds Vanderbilt continued; in a few years he owned not less than
$54,000,000 worth of four per cents. In 1884 he had to sell
$10,000,000 of them to make good the losses incurred by his sons on
the Stock Exchange, but he later bought $10,000,000 more. Also he
owned $4,000,000 in Government three and one-half per cent. bonds,
many millions of State and city bonds, several millions of dollars in
manufacturing stocks and mortgages, and $22,000,000 of railroad
bonds. The same Government of which his father had defrauded millions
of dollars now stood as a direct guarantee behind at least
$70,000,000 of his bonded wealth, and the whole population of the
United States was being taxed to pay interest on bonds, the purchase
of which was an outgrowth of the theft of public money committed by
Cornelius Vanderbilt.
In the years following his father's death, William H. Vanderbilt
found no difficulty in adding more extended railroad lines to his
properties, and in increasing his wealth by tens of millions of
dollars at a leap.
MORE RAILROADS ACQUIRED.
The impact of his vast fortune was well-nigh resistless. Commanding
both financial and political power, his money and resources were used
with destructive effect against almost every competitor standing in
his way. If he could not coerce the owners of a railroad, the
possession of which he sought, to sell to him at his own price, he at
once brought into action the wrecking tactics his father had so
successfully used.
The West Shore Railroad, a competing line running along the west bank
of the Hudson River, was bankrupted by him, and finally, in 1883,
bought in under foreclosure proceedings. By lowering his freight
rates he took away most of its business; through a series of years he
methodically caused it to be harrassed and burdened by the exercise
of his great political power; he thwarted its plans and secretly
hindered it in its application for money loans or other relief. Other
means, open and covert, were employed to insure its ruination. When
at last he had driven its owners into a corner, he calmly stepped in
and bought up its control cheaply, and then turned out many millions
of dollars of watered stock.
He attempted to break in upon the territory traversed by the
Pennsylvania Railroad by building a competing line, the South
Pennsylvania Railroad. In the construction of this road he had an
agreement with the Philadelphia and Reading Railroad, an intense
competitor of the Pennsylvania; and, as a precedent to building his
line, he obtained a large interest in the Reading Railroad. Out of
this arrangement grew a highly important sequence which few then
foresaw--the gradual assumption by the Vanderbilt family of a large
share of the ownership and control of the anthracite coal mines of
Pennsylvania.
Vanderbilt, aiming at sharing in the profits from the rich coal, oil
and manufacturing traffic of Pennsylvania, went ahead with his
building of the South Pennsylvania line. But there was an easy way of
getting millions of dollars before the road was even opened. This was
the fraudulent one, so widely practiced, of organizing a bogus
construction company, and charging three and four times more than the
building of the railroad actually cost. Vanderbilt got together a
dummy construction company composed of some of his clerks and
brokers, and advanced the sum, about $6,500,000, to build the road.
In return, he ordered this company to issue $20,000,000 in bonds, and
the same amount in stock. Of this $40,000,000 in securities, more
than $30,000,000 was loot. [Footnote: Van Oss' "American Railroads As
Investments": 126. Professor Frank Parsons, in his "Railways, the
Trusts and the People," incorrectly ascribes this juggling to
Commodore Vanderbilt.]
If, however, Vanderbilt anticipated that the Pennsylvania Railroad
would remain docile or passive while his competitive line was being
built, he soon learned how sorely mistaken he was. This time he was
opposing no weak, timorous or unsophisticated competitors, but a
group of the most powerful and astute organizers and corruptionists.
Their methods in Pennsylvania and other States were exactly the same
as Vanderbilt's in New York State; their political power was as great
in their chosen province as his in New York. His incursion into the
territory they had apportioned to themselves for exploitation was not
only resented but was fiercely resisted. Presently, overwhelmed by
the crushing financial and political weapons with which they fought
him, Vanderbilt found himself compelled to compromise by disposing of
the line to them.
THE SEQUEL TO A "GENTLEMEN'S AGREEMENT."
Vanderbilt's methods and his duplicity in the disposition of this
project were strikingly revealed in the court proceedings instituted
by the State of Pennsylvania. It appeared from the testimony that he
had made a "gentlemen's agreement" with the Reading Railroad, the
bitterest competitor of the Pennsylvania Railroad, for a close
alliance of interests. Vanderbilt owned eighty-two thousand shares of
Reading stock, much of which he had obtained on this agreement.
Strangely confiding in his word, the Reading management proceeded to
expend large sums of money in building terminals at Harrisburg and
elsewhere to make connections with his proposed South Pennsylvania
Railroad.
The Pennsylvania Railroad, however, set about retaliating in various
effective ways. At this point, J. Pierpont Morgan--whose career we
shall duly describe--stepped boldly in. Morgan was Vanderbilt's
financial agent; and it was he, according to his own testimony on
October 13, 1885, before the court examiner, who now suggested and
made the arrangements between Vanderbilt and the Pennsylvania
Railroad magnates, by which the South Pennsylvania Railroad was to
become the property of the Pennsylvania system, and the Reading
Railroad magnates were to be as thoroughly thrown over by as deft a
stroke of treachery as had ever been put through in the business
world.
To their great astonishment, the Reading owners woke up one morning
to find that Vanderbilt and his associates had completely betrayed
them by disposing of a majority of the stock of the partly built
South Pennsylvania line to the Pennsylvania Railroad system for
$5,600,000 in three per cent. railroad debenture bonds. It is
interesting to inquire who Vanderbilt's associates were in this
transaction. They were John D. Rockefeller, William Rockefeller, D.
O. Mills, Stephen B. Elkins, William C. Whitney and other founders of
large fortunes. For once in his career, Vanderbilt met in the
Pennsylvania Railroad a competitor powerful enough to force him to
compromise.
Elsewhere, Vanderbilt was much more successful. Out through the
fertile wheat, corn and cattle sections of Wisconsin, Minnesota,
Iowa, Dakota and Nebraska ran the Chicago and Northwestern Railroad,
a line 4,000 miles long which had been built mostly by public funds
and land grants. Its history was a succession of corrupt acts in
legislatures and in Congress, and comprised the usual process of
stock watering and exploitation.
[Illustration: THE ORIGINAL VANDERBILT HOMESTEAD, Near New Dorp,
Staten Island, N. Y.]
[Illustration: PALACES BUILT BY WILLIAM H. VANDERBILT, And Resided in
by Him and His Descendants.]
By a series of manipulations ending in 1880, Vanderbilt secured a
controlling interest in this railroad, so that he had a complete line
from New York to Chicago, and thence far into the Northwest. During
these years he also secured control of other railroad lines.
HE EXPANDS IN SPLENDOR.
It was at this time that he, in accord with the chrysalid tendency
manifested by most other millionaires, discarded his long-followed
sombre method of life, and invested himself with a gaudy
magnificence. On Fifth avenue, at Fifty-first and Fifty-second
streets, he built a spacious brown-stone mansion. In reality it was a
union of two mansions; the southern part he planned for himself, the
northern part for his two daughters. For a year and a half more than
six hundred artisans were employed on the interior; sixty
stoneworkers were imported from Europe. The capaciousness, the
glitter and the cluttering of splendor in the interior were regarded
as of unprecedented lavishness in the United States.
All of the luxury overloading these mansions was, as was well known,
the fruit of fraud piled upon fraud; it represented the spoliation,
misery and degradation of the many; but none could deny that
Vanderbilt was fully entitled to it by the laws of a society which
decreed that its rulers should be those who could best use and abuse
it. And rulers must ever live imperiously and impressively; it is not
fitting that those who command the resources, labor and Government of
a nation should issue their mandates from pinched and meager
surroundings. Mere pseudo political rulers, such as governors and
presidents, are expected to be satisfied with the plain, unornamental
official residences provided by the people; thereby they keep up the
appearance of that much-bespoken republican simplicity which is part
of the mask of political formulas. Luckily for themselves, the
financial and industrial rulers are bound by no circumscribing
tradition; hence they have no set of buckramed rules to stick close
to for fear of an indignant electorate.
The same populace that glowers and mutters whenever its political
officials show an inclination to pomp, regards it as perfectly
natural that its financial and industrial rulers should body forth
all of the most obtrusive evidences of grandeur. Those Vanderbilt
twin palaces, still occupied by the Vanderbilt family, were
appropriately built and fitted, and are more truly and specifically
historic as the abode of Government than official mansions; for it is
the magnates who have in these modern times been the real rulers of
nations; it is they who have usually been able to decide who the
political rulers should be; political parties have been simply their
adjuncts; the halls of legislation and the courts their mouthpieces
and registering bureaus. Theirs has been the power, under cover
though it has lurked, of elevating or destroying public officials,
and of approving or cancelling legislation. Why, indeed, should they
not have their gilded palaces?
A SUDDEN TRANSFORMATION.
The President of the United States lived in the subdued simplicity of
the White House. But William H. Vanderbilt ate in a great, lofty
dining room, twenty-six by thirty-seven feet, wrought in Italian
Renaissance, with a wainscot of golden-hued, delicately-carved
English oak around all four sides, and a ceiling with richly-painted
hunting-scene panels. When he entertained it was in a vast drawing-
room, palatially equipped, its walls hung with flowing masses of pale
red velvet, embroidered with foliage flowers and butterflies, and set
with crystals and precious stones.
It was his art gallery, however, which flattered him most. He knew
nothing of art, and underneath his pretentions cared less, for he was
a complete utilitarian; but it had become fashionable to have an
elaborate art gallery, and he forthwith disbursed money right and
left to assemble an aggregation of paintings.
He gave orders to agents for their purchase with the same equanimity
that he would contracts for railroad supplies. And, as a rule, the
more generous in size the canvasses, the more satisfied he was that
he was getting his money's worth; art to him meant buying by the
square foot. Not a few of the paintings unloaded upon him were,
despite their high-sounding reputations, essentially commonplace
subjects, and flashy and hackneyed in execution; but he gloried in
the celebrity that came from the high prices he was decoyed into
paying for them. For one of Meissionier's paintings, "The Arrival at
the Chateau," he paid $40,000, and on one of his visits to Paris he
enriched Meissionier to the extent of $188,000 for seven paintings.
Not until his corps of art advisers were satisfied that a painter
became fashionably talked about, could Vanderbilt be prevailed upon
to buy examples of his work. There was something intensely magical in
the ease and cheapness with which he acquired the reputation of being
a "connoisseur of art." Neither knowledge nor appreciation were
required; with the expenditure of a few hundred thousand dollars he
instantaneously transformed himself from a heavy-witted, uncultured
money hoarder into the character of a surpassing "judge and patron of
art." And his pretensions were seriously accepted by the uninformed,
absorbing their opinions from the newspapers.
"THE PUBLIC BE DAMNED."
If he had discreetly comported himself in other respects he might
have passed tolerably well as an extremely public-spirited and
philanthropic man. After every great fraud that he put through he
would usually throw out to the public some ostentatious gift or
donation. This would furnish a new ground to the sycophantic chorus
for extolling his fine qualities. But he happened to inherit his
father's irascibility and extreme contempt for the public whom he
exploited. Unfortunately for him, he let out on one memorable
occasion his real sentiments. Asked by a reporter why he did not
consider public convenience in the running of his trains, he blurted
out, "The public be damned!"
It was assuredly a superfluous question and answer; but expressed so
sententiously, and published, as it was, throughout the length and
breadth of the land, it excited deep popular resentment. He was made
the target for general denunciation and execration, although
unreasonably so, for he had but given candid and succinct utterance
to the actuating principle of the whole capitalist class. The moral
of this incident impressed itself sharply upon the minds of the
masterly rich, and to this day has greatly contributed to the politic
manner of their exterior conduct. They learned that however in
private they might safely sneer at the mass of the people as created
for their manipulation and enrichment, they must not declare so
publicly. Far wiser is it, they have come to understand, to confine
spoliation to action, while in outward speech affirming the most
mellifluous and touching professions of solicitude for public
interests.
ADDS $100,000,000 IN SEVEN YEARS.
But William H. Vanderbilt was little affected by this outburst of
public rage. He could well afford to smile cynically at it, so long
as no definite move was taken to interfere with his privileges, power
and possessions. Since his father's death he had added fully
$100,000,000 to his wealth, all within a short period. It had taken
Commodore Vanderbilt more than thirty years to establish the fortune
of $105,000,000 he left. With a greater population and greater
resources to prey upon, William H. Vanderbilt almost doubled the
amount in seven years. In January, 1883, he confided to a friend that
he was worth $194,000,000. "I am the richest man in the world," he
went on. "In England the Duke of Westminster is said to be worth
$200,000,000, but it is mostly in land and houses and does not pay
two per cent." [Footnote: Related in the New York "Times," issue of
December 9, 1885.] In the same breath that he boasted of his wealth
he would bewail the ill-health condemning him to be a victim of
insomnia and indigestion.
Having a clear income of $10,350,000 a year, he kept his ordinary
expenses down to $200,000 a year. Whatever an air of indifference he
would assume in his grandee role of "art collector," yet in most
other matters he was inveterately closefisted. He had a delusion that
"everybody in the world was ready to take advantage of him," and he
regarded "men and women, as a rule, as a pretty bad lot." [Footnote:
"The Vanderbilts": 127.] This incident--one of many similar incidents
narrated by Croffut--reveals his microscopic vigilance in detecting
impositions: When in active control of affairs at the office he
followed the unwholesome habit of eating the midday lunch at his
desk, the waiter bringing it in from a neighboring restaurant.
He paid his bill for this weekly, and he always scrutinized the items
with proper care. "Was I here last Thursday?" he asked of a clerk at
an adjoining desk.
"No, Mr. Vanderbilt; you stayed at home that day."
"So I thought," he said, and struck that day from the bill. Another
time he would exclaim, sotto voce, "I didn't order coffee last
Tuesday," and that item would vanish.
Up to the very last second of his life his mind was filled with a
whirl of business schemes; it was while discussing railroad plans
with Robert Garrett in his mansion, on December 8, 1885, that he
suddenly shot forward from his chair and fell apoplectically to the
floor, and in a twinkling was dead. Servants ran to and fro
excitedly; messengers were dispatched to summon his sons; telegrams
flashed the intelligence far and wide.
The passing away of the greatest of men could not have received a
tithe of the excitement and attention caused by William H.
Vanderbilt's death. The newspaper offices hotly issued page after
page of description, not without sufficient reason. For he, although
untitled and vested with no official power, was in actuality an
autocrat; dictatorship by money bags was an established fact; and
while the man died, his corporate wealth, the real director and
center, to a large extent, of government functions, survived
unimpaired.
He had abundantly proved his autocracy. Law after law had he
violated; like his father he had corrupted and intimidated, had
bought laws, ignored such as were unsuited to his interests, and had
decreed his own rules and codes. Progressively bolder had the money
kings become in coming out into the open in the directing of
Government. Long had they prudently skulked behind forms, devices and
shams; they had operated secretly through tools in office, while
virtuously disclaiming any insidious connection with politics. But no
observer took this pretence seriously. James Bryce, fresh from
England, delving into the complexities and incongruities of American
politics at about this time, wrote that "these railway kings are
among the greatest men, perhaps I may say, the greatest men in
America," which term, "greatest," was a ludicrously reverent way of
describing their qualities. "They have power," he goes on in the same
work, "more power--that is, more opportunity to make their will
prevail, than perhaps any one in political life except the President
or the Speaker, who, after all, hold theirs only for four years and
two years, while the railroad monarch holds his for life." [Footnote:
"The American Commonwealth." First Ed.: 515.] Bryce was not well
enough acquainted with the windings and depths of American political
workings to know that the money kings had more power than President
or Speaker, not nominally, but essentially. He further relates how
when a railroad magnate traveled, his journey was like a royal
progress; Governors of States and Territories bowed before him;
Legislatures received him in solemn session; cities and towns sought
to propitiate him, for had he not the means of making or marring a
city's fortunes? "You cannot turn in any direction in American
politics," wrote Richard T. Ely a little later, "without discovering
the railway power. It is the power behind the throne. It is a correct
popular instinct which designates the leading men in the railways,
railroad magnates or kings. ... Its power ramifies in every
direction, its roots reaching counting rooms, editorial sanctums,
schools and churches which it supports with a part of its revenues,
as well as courts and Legislatures." ... [Footnote: "The
Independent," issue of August 28, 1890.]
HIS DEATH A NOTABLE EVENT.
Vanderbilt's death, as that of one of the real monarchs of the day,
was an event of transcendent importance, and was treated so. The
vocabulary was ransacked to find adjectives glowing enough to
describe his enterprise, foresight, sagacity and integrity. Much
elaborated upon was the fiction that he had increased his fortune by
honest, legitimate means--a fiction still disseminated by those
shallow or mercenary writers whose trade is to spread orthodox belief
in existing conditions. The underlying facts of his career and
methods were purposely suppressed, and a nauseating sort of panegyric
substituted. Who did not know that he had bribed Legislature after
Legislature, and had constantly resorted to conspiracy and fraud? Not
one of his eulogists was innocent of this knowledge; the record of it
was too public and palpable to justify doubts of its truth. The
extent of his possessions and the size of his fortune aroused
wonderment, but no effort was made to contrast the immense wealth
bequeathed by one man with the dire poverty on every hand, nor to
connect those two conditions.
At the very time his wealth was being inventoried at $200,000,000,
not less than a million wage earners were out of employment,
[Footnote: "It is probably true," said Carroll D. Wright in the
United States Labor Report for 1886, "that this total (in round
numbers 1,000,000) as representing the unemployed at any one time in
the United States, is fairly representative."] while the millions at
work received the scantiest wages. Nearly three millions of people
had been completely pauperized, and, in one way or another, had to be
supported at public expense. Once in a rare while, some perceptive
and unshackled public official might pierce the sophistries of the
day and reveal the cause of this widespread poverty, as Ira Steward
did in the fourth annual report of the Massachusetts Bureau of
Statistics of Labor for 1873.
"It is the enormous profits," he pointedly wrote, "made directly upon
the labor of the wage classes, and indirectly through the results of
their labor, that, first, keeps them poor, and, second, furnishes the
capital that is finally loaned back to them again" at high rates of
interest. Unquestionably sound and true was this explanation, yet of
what avail was it if the causes of their poverty were withheld from
the active knowledge of the mass of the wage workers? It was the
special business of the newspapers, the magazines, the pulpit and the
politicians to ignore, suppress or twist every particle of
information that might enlighten or arouse the mass of people; if
these agencies were so obtuse or recalcitrant as not to know their
expected place and duty at critical times, they were quickly reminded
of them by the propertied classes. To any newspaper owner, clergyman
or politician showing a tendency to radicalism, the punishment came
quickly. The newspaper owner was deprived of advertisements and
accommodations, the clergyman was insidiously hounded out of his
pulpit by his own church associations, the funds of which came from
men of wealth, and the politician was ridiculed and was summarily
retired to private life by corrupt means. As for genuinely honest
administrative officials (as distinguished from the _apparently_
honest) who exposed prevalent conditions and sought to remedy them in
their particular departments, they were eventually got rid of by a
similar campaign of calumny and corrupt influences.
HIS FRAUDS IN EVADING TAXES.
As in the larger sense all criticism of conditions was systematically
smothered, so were details of the methods of the rich carefully
obscured or altogether passed by in silence. At Vanderbilt's death
the newspapers laved in gorgeous descriptions of his mansion. Yet
apart from the proceeds of his great frauds, the amounts out of which
he had cheated the city and State in taxation were alone much more
than enough to have paid for his splendor of living. Like the Astors,
the Goelets, Marshall Field and every other millionaire without
exception, he continuously defrauded in taxes.
We have seen how the Vanderbilts seized hold of tens of millions of
dollars of bonds by fraud. Certain of their railroad stocks were
exempted from individual taxation, but railroad bonds ranked as
taxable personal property. Year after year William H. Vanderbilt had
perjured himself in swearing that his personal property did not
exceed $500,000. On more than this amount he would not pay. When at
his death his will revealed to the public the proportions of his
estate, the New York City Commissioners of Assessments and Taxes made
an apparent effort to collect some of the millions of dollars out of
which he had cheated the city. It was now that the obsequious and
time-serving Depew, grown gray and wrinkled in the retainership of
the Vanderbilt generations, came forward with this threat: "He
informed us," testified Michael Coleman, president of the commission,
"that if we attempted to press too hard he would take proceedings by
which most of the securities would be placed beyond our reach so that
we could not tax them. The Vanderbilt family could convert everything
they had into non-taxable securities, such as New York Central,
Government and city bonds, Delaware and Lackawanna, and Delaware and
Western Railroad stocks, and pay not a dollar provided they wished to
do so." [Footnote: The New York Senate Committee on Cities, 1890,
iii: 2355-2356.]
The Vanderbilt estate compromised by paying the city a mere part of
the sum owed. It succeeded in keeping the greatest part of its
possessions immune from taxation, in doing which it but did what the
whole of the large propertied class was doing, as was disclosed in
further detailed testimony before the New York Senate Committee on
Cities in 1890.
HIS WILL TRANSMITS $200,000,000.
Unlike his father, William H. Vanderbilt did not bequeath the major
portion of his fortune to one son. He left $50,000,000 equally to
each of his two sons, Cornelius and William K. Vanderbilt.
Supplementing the fortunes they already had, these legacies swelled
their individual fortunes to approximately $100,000,000 each--about
the same amount as their father had himself inherited. The remaining
$100,000,000 was thus disposed of in William H. Vanderbilt's will:
$40,000,000, in railroad and other securities, was set apart as a
trust fund, the income of which was to be apportioned equally among
each of his eight children. This provided them each with an annual
income of $500,000. In turn, the principal was to descend to their
children, as they should direct by will. Another $40,000,000 was
shared outright among his eight children. The remaining $20,000,000
was variously divided: the greater part to his widow; $2,000,000 as
an additional gift to Cornelius; $1,000,000 to a favorite grandson;
sundry items to other relatives and friends, and about $1,000,000 to
charitable and public institutions.
He was buried in a mausoleum costing $300,000, which he himself had
ordered to be built at New Dorp, Staten Island; and there to-day his
ashes lie, splendidly interred, while millions of the living
plundered and disinherited are suffered to live in the deadly
congestion of miserable habitations.