THE RAMIFICATIONS OF THE ASTOR FORTUNE
Astor flourished at that precise time when the traders and landowners,
flushed with revenues, reached out for the creation and control of the
highly important business of professionally dealing in money, and of
dictating, personally and directly, what the supply of the people's
money should be.
This signalized the next step in the aggrandizement of individual
fortunes. The few who could center in themselves, by grace of
Government, the banking and manipulation of the people's money and the
restricting or inflating of money issues, were immediately vested with
an extraordinary power. It was a sovereign power at once coercive and
proscriptive, and a mighty instrument for transferring the produce of
the many to a small and exclusive coterie. Not merely over the labor of
the whole working class did this gripping process extend, but it was
severely felt by that large part of the landowning and trading class
which was excluded from holding the same privileges. The banker became
the master of the master. In that fierce, pervading competitive strife,
the banks were the final exploiters. Sparsely organized and wholly
unprotected, the worker was in the complete power of the trader,
manufacturer and landowner; in turn, such of these divisions of the
propertied class as were not themselves sharers in the ownership of
banks were at the mercy of the banking institutions.
At any time upon some pretext or other, the banks could arbitrarily
refuse the latter class credit or accommodation, or harass its victims
in other ways equally as destructive. As business was largely done in
expectations of payment, in other words, credit, as it is now, this was
a serious, often a desperate, blow to the lagging or embarrassed
brothers in trade. Banks were virtually empowered by law to ruin or
enrich any individual or set of individuals. As the banks were then
founded and owned by men who were themselves traders or landholders,
this power was crushingly used against competitors. Armed with the
strong power of law, the banks overawed the mercantile world, thrived on
the industry, misfortune or ruin of others, and swayed politics and
elections. The bank men loaned money to themselves at an absurdly low
rate of interest. But for loans of money to all others they demanded a
high rate of interest which, in periods of commercial distress,
overwhelmed the borrowers. Nominally banks were restricted to a certain
standard rate of interest; but by various subterfuges they easily evaded
these provisions and exacted usurious rates.
BANKS AND THEIR POWER.
These, however, were far from being the worst features. The most
innocent of their great privileges was that of playing fast and loose
with the money confidingly entrusted to their care by a swarm of
depositors who either worked for it, or for the matter of that, often
stole it; bankers, like pawnbrokers, ask no questions. The most
remarkable of their vested powers was that of manufacturing money. The
industrial manufacturer could not make goods unless he had the plant,
the raw material and the labor. But the banker, somewhat like the
fabled alchemists, could transmute airy nothing into bank-note money,
and then, by law, force its acceptance. The lone trader or landholder
unsupported by a partnership with law could not fabricate money. But let
trader and landholder band in a company, incorporate, then persuade,
wheedle or bribe a certain entity called a legislature to grant them a
certain bit of paper styled a charter, and lo! they were instantly
transformed into money manufacturers.
A MANDATE TO PREY.
The simple mandate of law was sufficient authorization for them to prey
upon the whole world outside of their charmed circle. With this scrap of
paper they could go forth on the highways of commerce and over the farms
and drag in, by the devious, absorbent processes of the banking system,
a great part of the wealth created by the actual producers. As it was
with taxation, so was it with the burdens of this system; they fell
largely upon the worker, whether in the shop or on the farm. When the
business man and the landowner were compelled to pay exorbitant rates of
interest they but apparently had to meet the demands. What these classes
really did was to throw the whole of these extra impositions upon the
working class in the form of increased prices for necessaries and
merchandise and in augmented rents.
But how were these State or Government authorizations, called charters,
to be obtained? Did not the Federal Constitution prohibit States from
giving the right to banks to issue money? Were not private money
factories specifically barred by that clause of the Constitution which
declared that no State "shall coin money, emit bills of credit, or make
anything but gold or silver a tender in payment of debts?"
Here, again, the power of class domination of Government came into
compelling effect. The onward sweep of the trading class was not to be
balked by such a trifling obstacle as a Constitutional provision. At all
times when the Constitution has stood in the way of commercial aims it
has been abrogated, not by repeal nor violent overthrow, but by the
effective expedient of judicial interpretation. The trading class
demanded State created banks with power of issuing money; and, as the
courts have invariably in the long run responded to the interests and
decrees of the dominant class, a decision was quickly forthcoming in
this case to the effect that "bills of credit" were not meant to cover
banknotes. This was a new and surprising construction; but judicial
decision and precedent made it virtually law, and law a thousandfold
more binding than any Constitutional insertion.
COURTS AND CONSTITUTION.
The trading class had already learned the importance of the principle
that while it was essential to control law-making bodies, it was
imperative to have as their auxiliary the bodies that interpreted law.
To a large extent the United States since then has lived not under
legislative-made law, but under a purely separate and extraneous form of
law which has superseded the legislature product, namely, court law.
Although nowhere in the United States Constitution is there even the
suggestion that courts shall make law, yet this past century and more
they have been gradually building up a formidable code of
interpretations which substantially ranks as the most commanding kind of
law. And these interpretations have, on the whole, consistently
followed, and kept pace with, the changing interests of the dominant
class, whether traders, slaveholders, or the present trusts.
This decision of the august courts opened the way for the greatest orgy
of corruption and the most stupendous frauds. In New York,
Massachusetts, New Jersey, Pennsylvania, Maryland, and other States a
continuous rush to get bank charters ensued. Most of the legislatures
were composed of men who, while perhaps, not innately corrupt, were
easily seduced by the corrupt temptations held out by the traders. There
was a deep-seated hostility, in many parts of the country, on the part
of the middling tradesmen--the shopkeepers and the petty merchants--to
any laws calculated to increase the power and the privileges of the
superior traders and the landowners. Among the masses of workers, most
of whom were, however, disfranchised, any attempt to vest the rich with
new privileges, was received with the bitterest resentment. But the
legislatures were approachable; some members who were put there by the
rich families needed only the word as to how they should vote, while
others, representing both urban and rural communities, were swayed by
bribes. By one means or another the traders and landholders forced the
various legislatures into doing what was wanted.
Omitting the records of other States, a few salient facts as to what
took place in New York State will suffice to give a clear idea of some
of the methods of the trading class in pressing forward their conquests,
in hurling aside every impediment, whether public opinion or law, and in
creating new laws which satisfied their extending plans for a
ramification of profit-producing interests. If forethought, an
unswerving aim and singleness of execution mean anything, then there
was something sternly impressive in the way in which this rising
capitalist class went forward to snatch what it sought, and what it
believed to be indispensable to its plans. There was no hesitation, nor
were there any scruples as to niceties of methods; the end in view was
all that counted; so long as that was attained, the means used were
considered paltry side-issues. And, indeed, herein lies the great
distinction of action between the world-old propertied classes and the
contending proletariat; for whereas the one have always campaigned
irrespective of law and particularly by bribery, intimidation,
repression and force, the working class has had to confine its movement
strictly to the narrow range of laws which were expressly prepared
against it and the slightest violation of which has called forth the
summary vengeance of a society ruled actually, if not theoretically, by
the very propertied classes which set at defiance all law.
THE BANKING FRAUDS BEGIN.
The chartered monopoly held by the traders who controlled the United
States Bank was not accepted passively by others of the commercial
class, who themselves wanted financial engines of the same character.
The doctrine of State's rights served the purpose of these excluded
capitalists as well as it did that of the slaveholders.
The States began a course of reeling out bank charters. By 1799 New York
City had one bank, the Bank of New York; this admixed the terrorism of
trade and politics so overtly that presently an opposition application
for a charter was made. This solitary bank was run by some of the old
landowning families who fully understood the danger involved in the
triumph of the democratic ideas represented by Jefferson; a danger far
overestimated, however, since win as democratic principles did, the
propertied class continued its victorious march, for the simple reason
that property was able to divert manhood suffrage to its own account,
and to aggrandize itself still further on the ruins of every subsequent
similar reform expedient. What the agitated masses, for the most part,
of that period could not comprehend was that they who hold the
possession of the economic resources will indubitably sway the politics
of a country, until such time as the proletariat, no longer divided but
thoroughly conscious, organized, and aggressive, will avail itself of
its majority vote to transfer the powers of government to itself. The
Bank of New York injected itself virulently into politics and fought the
spread of democratic ideas with sordid but effective weapons. If a
merchant dared support what it denounced as heretical doctrines, the
bank at once black-listed him by rejecting his notes when he needed cash
most.
It was now that Aaron Burr, that adroit leader of the opposition party,
stepped in. Seconded or instigated by certain traders, he set out to get
one of those useful and invaluable bank charters for his backers. The
explanation of how he accomplished the act is thus given: Taking
advantage of the epidemic of yellow fever then desolating New York City,
he, with much preliminary of philanthropic motives, introduced a bill
for the apparent beneficent purpose of diminishing the future
possibility of the disease by incorporating a company, called the
Manhattan Company, to supply pure, wholesome water. Supposing that the
charter granted nothing more than this, the explanation goes on, the
Legislature passed the bill, and was most painfully surprised and
shocked when the fact came out that the measure had been so deftly
drawn, that it, in fact, granted an unlimited charter, conferring
banking powers on the company.[112]
This explanation is probably shallow and deficient. It is much more
likely that bribery was resorted to, considering the fact that the
granting of every successive bank charter was invariably accompanied by
bribery. Six years later the Mercantile Bank received a charter for a
thirteen years' period--a charter which, it was openly charged by
certain members of the Assembly, was secured by bribery. These charges
were substantially proved by the testimony before a legislative
investigating committee.[113] In 1811 the Mechanics' Bank was chartered
with a time limit under circumstances indicating bribery.
Indeed, so often was bribing done and so pronounced were charges of
corruption at frequent sessions of the Legislature, that in 1812, the
Assembly, in an heroic spasm of impressive virtue, passed a resolution
compelling each member to pledge himself that he had neither taken, nor
would take, "any reward or profit, direct or indirect, for any vote on
any measure."[114] This resolution was palpably intended to blind the
public; for, in that identical year, the Bank of America received a
charter amid charges of flagrant corruption. One Assemblyman declared
under oath that he had been offered the sum of $500, "besides, a
handsome present for his vote."[115] All of the banks, except the
Manhattan, had limited charters; measures for the renewal of these were
practically all put through by bribery.[116] Thus, in 1818, the charter
of the Merchants' Bank was renewed until 1832, and renewed after that.
The chartering of the Chemical Bank (that staid and most eminently
respectable and solid New York institution of to-day) was accomplished
by bribery. The Chemical Bank was an outgrowth of the Chemical
Manufacturing Company, the plant and business of which were bought
expressly as an excuse to get a banking auxiliary. The Goelet brothers
were among the founders of this bank. In fact, many of the great landed
fortunes were inseparably associated with the frauds of the banking
system; money from land was used to bribe legislatures, and money made
from the banks was employed in buying more land. The promoters of the
Chemical Bank set aside a considerable sum of money and $50,000 in stock
for the bribery fund.[117] No sooner had it received its charter than it
began to turn out reams of paper money, based upon no value, which paper
was paid as wages to its employees as well as circulated generally. So
year after year the bribery went on industriously, without cessation.
BRIBERY A CRIME IN NAME ONLY.
Were the bribers ever punished, their illicitly gotten charters declared
forfeited, and themselves placed under the ban of virtuous society?
Far, very far, from it! The men who did the bribing were of the very
pinnacle of social power, elegance and position, or quickly leaped to
that height by reason of their wealth. They were among the foremost
landholders and traders of the day. By these and a wide radius of
similar means, they amassed wealth or greatly increased wealth already
accumulated. The ancestors of some of the most conspicuous
multimillionaire families of the present were deeply involved in the
perpetration of all of those continuous frauds and crimes--Peter Goelet
and his sons, Peter P. and Robert, for instance, and Jacob Lorillard,
who, for many years, was president of the Mechanics' Bank. No stigma
attached to these wealth-graspers. Their success as possessors of riches
at once, by the automatic processes of a society which enthroned wealth,
elevated them to be commanding personages in trade, politics, orthodoxy
and the highest social spheres. The cropped convict, released from
prison, was followed everywhere by the jeers and branding of a society
which gloated over his downfall and which forever reminded him of his
infamy. But the men who waded on to wealth through the muck of base
practices and by means of crimes a millionfold more insidious and
dangerous than the offense of the convict, were not only honored as
leading citizens, but they became the extolled and unquestioned
dictators of that supreme trading society which made modes, customs and
laws.
It was a society essentially built upon money; consequently he who was
dexterous enough to get possession of the spoils, experienced no
difficulty in establishing his place among the elect and anointed. His
frauds were forgotten or ignored; only the fact that he was a rich man
was remembered. And yet, what is more natural than to seek, and accept,
the obeisance lavished upon property, in a scheme of society where
property is crowned as the ruling power? In the rude centuries
previously mankind exalted physical prowess; he who had the greatest
strength and wielded the deftest strokes became victor of the judicial
combat and gathered in laurels and property. But now we have arrived at
the time when the cunning of mind supplants the cunning of muscle;
bribery takes the place of brawn; the contestants fight with statutes
instead of swords. And this newer plan, which some have decried as
degenerate, is a great advance over the old, for thereby has brute force
been legally abandoned in personal quarrels at least, and that cunning
of mind which has held sway, is the first evidence of the reign of mind,
which from a low order, will universally develop noble and supereminent
qualities charged with the good, and that alone, of the human race.
ASTOR'S BANKING ACTIVITIES.
With this preliminary sketch, we can now proceed to a consideration of
how Astor profited from the banking system. We see that constantly the
bold spirits of the trading class, with a part of the money made or
plundered in some direction or other, were bribing representative bodies
to give them exceptional rights and privileges which, in turn, were made
the fertile basis for further spoliation. Astor was a stockholder in at
least four banks, the charters of which had been obtained or renewed by
trickery and fraud, or both. He owned 1,000 shares of the capital stock
of the Manhattan Company; 1,000 of the Merchant's Bank; 500 of the Bank
of America; 1,604 of the Mechanic's Bank. He also owned at one time
considerable stock in the National Bank, the charter of which, it was
strongly suspected had been obtained by bribery.
There is no evidence that he, himself, did the actual bribing or was in
any way concerned in it. In all of the legislative investigations
following charges of bribery, the invariable practice was to throw the
blame upon the wicked lobbyists, while professing the most naive
astonishment that any imputations should be cast upon any of the members
of the honorable Legislature. As for the bribers behind the scenes,
their names seldom or never were brought out or divulged. In brief,
these investigations were all of that rose-water order, generally termed
"whitewashing." But whether Astor personally bribed or not, he at any
rate consciously profited from the results of bribery; and, moreover, it
is not probable that his methods in the East were different, except in
form, from the debauching and exploitation that he made a system of in
the fur regions. It is not outside the realm of reasonable conjecture to
suppose that he either helped to debauch, or connived at the corruption
of legislatures, just as in another way he debauched Indian tribes.
Furthermore his relations with Burr in one notorious transaction, are
sufficient to justify the conclusion that he held the closest business
relations with that political adventurer who lived next door to him at
No. 221 Broadway. This transaction was one which was partially the
outcome of the organization of the Manhattan Bank and was a source of
millions of dollars of profit to Astor and to his descendants.
A century or more ago Trinity Church owned three times the extent of
even the vast real estate that it now holds. A considerable part of this
was the gift of that royal governor Fletcher, who, as has been set
forth, was such a master-hand at taking bribes. There long existed a
contention upon the part of New York State, a contention embodied in
numerous official records, that the land held for centuries by Trinity
Church was usurped; that Trinity's title was invalid and that the real
title vested in the people of the city of New York. In 1854-55 the Land
Commissioners of New York State, deeply impressed by the facts as
marshalled by Rutger B. Miller,[118] recommended that the State bring
suit. But with the filing of Trinity's reply, mysterious influences
intervened and the matter was dropped. These influences are frequently
referred to in aldermanic documents.
To go back, however: In 1767 Trinity Church leased to Abraham Mortier,
for ninety-nine years, at a total annual rental of $269 a year, a
stretch of land comprising 465 lots in what is now the vicinity bounded
by Greenwich, Spring and Hudson streets. Mortier used it as a country
place until 1797 when the New York Legislature, upon the initiative of
Burr, developed a consuming curiosity as to how Trinity Church was
expending its income. This was a very ticklish question with the pious
vestrymen of Trinity, as it was generally suspected that they were
commingling business and piety in a way that might, if known, cause them
some trouble. The law, at that time, restricted the annual income of
Trinity Church from its property to $12,000 a year. A committee of
investigation was appointed; of this committee Burr was made chairman.
HOW ASTOR SECURED A LEASE.
Burr never really made any investigation. Why? The reason soon came out,
when Burr turned up with a transfer of the Mortier lease to himself. He
at once obtained from the Manhattan Bank a $38,000 loan, pledging the
lease as security. When his duel with Hamilton forced Burr to flee the
country, Astor promptly came along and took the lease off his hands.
Astor, it was said, paid him $32,000 for it, subject to the Manhattan
Bank's mortgage. At any rate, Astor now held this extraordinarily
valuable lease.[119] He immediately released it in lots; and as the city
fast grew, covering the whole stretch with population and buildings, the
lease was a source of great revenue to him and to his heirs.[120] As a
Lutheran, Astor could not be a vestryman of Trinity Church. Anthony
Lispenard, however, it may be passingly noted, was a vestryman, and, as
such, mixed piety and business so well, that his heirs became possessed
of millions of dollars by the mere fact that in 1779, when a vestryman,
he got a lease, for eighty-three years of eighty-one Trinity lots
adjacent to the Astor leased land, at a total annual rental of
$177.50.[121]
It was by the aid of the banking system that the trading class was
greatly enabled to manipulate the existing and potential resources of
the country and to extend invaluable favors to themselves. In this
system Astor was a chief participant. For many years the banks,
especially in New York State, were empowered by law to issue paper money
to the extent of three times the amount of their capital. The actual
specie was seized hold of by the shippers, and either hoarded, or
exported in quantities to Asia or Europe which, of course, would not
handle paper money. By 1819 the banks in New York had issued
$12,500,000, and the total amount of specie to redeem this fiat stuff
amounted to only $2,000,000. These banknotes were nothing more or less
than irresponsible promises to pay. What became of them?
WHAT THE WORKER GOT AS WAGES.
What, indeed, became of them? They were imposed upon the working class
as payment for labor. Although these banknotes were subject to constant
depreciation, the worker had to accept them as though they were full
value. But when the worker went to buy provisions or pay rent, he was
compelled to pay one-third, and often one-half, as much as the value
represented by those banknotes. Sometimes, in crises, he could not get
them cashed at all; they became pitiful souvenirs in his hands. This
fact was faintly recognized by a New York Senate Committee when it
reported in 1819 that every artifice in the wit of man had been devised
to find ways of putting these notes into circulation; that when the
merchant got this depreciated paper, he "saddled it upon the departments
of productive labor." "The farmer and the mechanic alike," went on the
report, "have been invited to make loans and have fallen victims to the
avarice of the banker. The result has been the banishment of metallic
currency, the loss of commercial confidence, fictitious capital,
increase of civil prosecutions and multiplication of crimes."[122] What
the committee did not see was that by this process those in control of
the banks had, with no expenditure, possessed themselves of a
considerable part of the resources of the country and had made the
worker yield up twice and three times as much of the produce of his
labor as he had to give before the system was started.
The large amount of paper money, without any basis of value whatever,
was put out at a heavy rate of interest. When the merchant paid his
interest, he charged it up as extra cost on his wares; and when the
worker came to buy these same wares which he or some fellow-worker had
made, he was charged a high price which included three things all thrown
upon him: rent, interest and profit. The banks indirectly sucked in a
large portion of these three factors. And so thoroughly did the banks
control legislation that they were not content with the power of issuing
spurious paper money; they demanded, and got through, an act exempting
bank stock from taxation.
Thus year after year this system went on, beggaring great numbers of
people, enriching the owners of the banks and virtually giving them a
life and death power over the worker, the farmer and the floundering,
struggling small business man alike. The laws were but slightly
altered. "The great profits of the banks," reported a New York Senate
Committee on banks and insurance in 1834, "arise from their issues. It
is this privilege which enables them, in fact, to coin money, to
substitute their evidences of debt for a metallic currency and to loan
more than their actual capitals. A bank of $100,000 capital is permitted
to loan $250,000; and thus receive an interest on twice and a half the
amount actually invested."[123]
THE WORKINGMEN'S PARTY PROTEST.
It cannot be said that all of the workingmen were apathetic, or that
some did not see through the fraud of the system. They had good reason
for the deepest indignation and exasperation. The terrible injustices
piled upon them from every quarter--the low wages that they were forced
to accept, often in depreciated or worthless banknotes, the continually
increasing exactions of the landlords, the high prices squeezed out of
them by monopolies, the arbitrary discriminations of law--these were not
without their effect. The Workingmen's Party, formed in 1829 in New York
City, was the first and most ominous of these proletarian uprisings. Its
resolutions read like a proletarian Declaration of Independence, and
would unquestionably have resulted in the most momentous agitation, had
it not been that it was smothered by its leaders, and also because the
slavery issue long obscured purely economic questions. "Resolved," ran
its resolutions adopted at Military Hall, Oct. 19, 1829,
in the opinion of this meeting, that the first appropriation of
the soil of the State to private and exclusive possession was
eminently and barbarously unjust. That it was substantially feudal
in its character, inasmuch as those who received enormous and
unequal possessions were _lords_ and those who received little or
nothing were _vassals_. That hereditary transmission of wealth on
the one hand and poverty on the other, has brought down to the
present generation all the evils of the feudal system, and that,
in our opinion, is the prime source of all our calamities.
After declaring that the Workingmen's Party would oppose all exclusive
privileges, monopolies and exemptions, the resolutions proceeded:
We consider it an exclusive privilege for one portion of the
community to have the _means of education in colleges_, while
another is restricted to common schools, or, perhaps, by extreme
poverty, even deprived of the limited education to be acquired in
those establishments. Our voice, therefore, shall be raised in
favor of a system of education which shall be equally open to
_all_, as in a real republic, it should be.
Finally the resolutions told what the Workingmen's Party thought of the
bankers and the banking system. The bankers were denounced as "the
greatest knaves, impostors and paupers of the age." The resolutions went
on:
As banking is now conducted, the owners of the banks receive
annually of the people of the State not less than two millions of
dollars in their paper money (and it might as well be pewter
money) for which there is and can be nothing provided for its
redemption on demand....
The mockery that went up from all that was held influential, respectable
and stable when these resolutions were printed, was echoed far and wide.
They were looked upon first as a joke, and then, when the Workingmen's
Party began to reveal its earnestness and strength, as an insolent
challenge to constituted authority, to wealth and superiority, and as a
menace to society.
RADICALISM VERSUS RESPECTABILITY.
The "Courier and Enquirer," owned by Webb and Noah, in the pay of the
United States Bank, burst out into savage invective. It held the
Workingmen's Party up to opprobrium as an infidel crowd, hostile to the
morals and the institutions of society, and to the rights of property.
Nevertheless the Workingmen's Party proceeded with an enthusiastic,
almost ecstatic, campaign and polled 6,000 votes, a very considerable
number compared to the whole number of voters at the time.
By 1831, however, it had gone out of existence. The reason was that it
allowed itself to be betrayed by the supineness, incompetence, and as
some said, the treachery, of its leaders, who were content to accept
from a Legislature controlled by the propertied interests various
mollifying sops which slightly altered certain laws, but which in no
great degree redounded to the benefit of the working class. For a few
bits of counterfeit, this splendid proletarian uprising, glowing with
energy, enthusiasm and hope, allowed itself to be snuffed out of
existence.
What a tragedy was there! And how futile and tragic must inevitably be
the fate of any similar movement which depends not upon itself, not upon
its own intrinsic, collective strength and wisdom, but upon the say-so
of leaders who come forward to assume leadership. Representing only
their own timidity of thought and cowardice of action, they often end by
betraying the cause placed confidingly in their charge. That class which
for these immemorial generations has done the world's work, and as long
has been plundered and oppressed and betrayed, thus had occasion to
learn anew the bitter lesson taught by the wreckage of the past, that it
is from itself that the emancipation must come; that it is itself which
must essentially think, act and strike; that its forces, long torn
asunder and dispersed, must be marshalled in invulnerable compactness
and iron discipline; and so that its hosts may not again be routed by
strategy, no man or set of men should be entrusted with the irrevocable
power of executing its decrees, for too often has the courage, boldness
and strength of the many been shackled or destroyed by the compromising
weakness of the leaders.
THE PANIC OF 1837.
Passing over the Equal Rights movement in 1834, which was a diluted
revival of the Workingmen's Party, and which, also, was turned into
sterility by the treachery of its leaders, we arrive at the panic of
1837, the time when Astor, profiting from misfortune on every side,
vastly increased his wealth.
The panic of 1837 was one of those periodic financial and industrial
convulsions resulting from the chaos of capitalist administration. No
sooner had it commenced, than the banks refused to pay out any money,
other than their worthless notes. For thirty-three years they had not
only enjoyed immense privileges, but they had used the powers of
Government to insure themselves a monopoly of the business of
manufacturing money. In 1804 the Legislature of New York State had
passed an extraordinary law, called the restraining act. This
prohibited, under severe penalties, all associations and individuals not
only from issuing notes, but "from receiving deposits, making discounts
or transacting any other business which incorporated banks may or do
transact." Thus the law not only legitimatized the manufacture of
worthless money, but guaranteed a few banks a monopoly of that
manufacture. Another restraining act was passed in 1818. The banks were
invested with the sovereign privilege of depreciating the currency at
their discretion, and were authorized to levy an annual tax upon the
country, nearly equivalent to the interest on $200,000,000 of deposits
and circulation. On top of these acts, the Legislature passed various
acts compelling the public authorities in New York City to deposit
public money with the Manhattan Company. This company, although, as we
have seen, expressly chartered to supply pure water to the city of New
York, utterly failed to do so; at one stage the city tried to have its
charter revoked on the ground of failure to carry out its chartered
function, but the courts decided in the company's favor.[124]
At the outbreak of the panic of 1837, the New York banks held more than
$5,500,000 of public money. When called upon to pay only about a million
of that sum, or the premium on it, they refused. But far worse was the
experience of the general public. When they frantically besieged the
banks for their money, the bank officials filled the banks with heavily
armed guards and plug-uglies with orders to fire on the crowd in case a
rush was attempted.[125]
In every State conditions were the same. In May, 1837, not less than
eight hundred banks in the United States suspended payment, refusing a
single dollar to the Government whose deposits of $30,000,000 they held,
and to the people in general who held $120,000,000 of their notes. No
specie whatever was in circulation. The country was deluged with small
notes, colloquially termed shinplasters. Of every form and every
denomination from the alleged value of five cents to that of five
dollars, they were issued by every business individual or corporation
for the purpose of paying them off as wages to their employees. The
worker was forced to take them for his labor or starve. Moreover, the
shinplasters were so badly printed that it was not hard to counterfeit
them. The counterfeiting of them quickly became a regular business;
immense quantities of the stuff were issued. The worker never knew
whether the bills paid him for his work were genuine or counterfeit,
although essentially there was not any great difference in basic value
between the two.[126]
THE RESULTING WIDESPREAD DESTITUTION.
Now the storm broke. Everywhere was impoverishment, ruination and
beggary. Every bank official in New York City was subject to arrest for
the most serious frauds and other crimes, but the authorities took no
action. On the contrary, so complete was the dominance of the banks over
Government,[127] that they hurriedly got the Legislature to pass an act
practically authorizing a suspension of specie payments. The
consequences were appalling. "Thousands of manufacturing, mercantile,
and other useful establishments in the United States," reported a New
York Senate Committee, "have been broken down or paralyzed by the
existing crisis.... In all our great cities numerous individuals, who,
by a long course of regular business, had acquired a competency, have
suddenly been reduced, with their families to beggary."[128] New York
City was filled with the homeless and unemployed. In the early part of
1838 one-third of all the persons in New York City who subsisted by
manual labor, were wholly or substantially without employment. Not less
than 10,000 persons were in utter poverty, and had no other means of
surviving the winter than those afforded by the charity of neighbors.
The almshouses and other public and charitable institutions overflowed
with inmates, and 10,000 sufferers were still uncared for.
The prevailing system, as was pointed out even by the conventional and
futile reports of legislative committees, was one inevitably calculated
to fill the country with beggars, vagrants and criminals. This important
fact was recognized, although in a remote way, by De Beaumont and De
Tocqueville who, however, had no fundamental understanding of the deep
causes, nor even of the meaning of the facts which they so accurately
gathered. In their elaborate work on the penitentiary system in the
United States, published in 1833, they set forth that it was their
conclusion that in the four States, New York, Massachusetts, Connecticut
and Pennsylvania, the prison system of which they had fully
investigated, almost all of those convicted for crimes from 1800 to 1830
were convicted for offenses against property. In these four States,
collectively, with a population amounting to one-third of that of the
Union, not less than 91.29 out of every 100 convictions were for crimes
against property, while only 8.66 of every 100 were for crimes against
persons, and 4.05 of every 100 were for crimes against morals. In New
York State singly, 93.56 of every 100 convictions were for crimes
against property and 6.26 for crimes against persons.[129]
PROPERTY AND CRIME.
Thus we see from these figures filled with such tragic eloquence, the
economic impulse working at bottom, and the property system corrupting
every form of society. But here a vast difference is to be noted. Just
as in England the aristocracy for centuries had made the laws and had
enforced the doctrine that it was they who should wield the police power
of the State, so in the United States, to which the English system of
jurisprudence had been transplanted, the propertied interests,
constituting the aristocracy, made and executed the laws. De Beaumont
and De Tocqueville passingly observed that while the magistrates in the
United States were plebeian, yet they followed out the old English
system; in other words, they enforced laws which were made for, and by,
the American aristocracy, the trading classes.
The views, aims and interests of these classes were so thoroughly
intrenched in law that the fact did not escape the keen notice of these
foreign investigators. "The Americans, descendants of the English," they
wrote, "have provided in every respect for the rich and hardly at all
for the poor.... In the same country where the complainant is put in
prison, the thief remains at liberty, if he can find bail. Murder is the
only crime whose authors are not protected[130].... The mass of lawyers
see in this nothing contrary to their ideas of justice and injustice,
nor even to their democratic institutions."[131]
THE SYSTEM--HOW IT WORKED.
The system, then, frequently forced the destitute into theft and
mendicancy. What resulted? Laws, inconceivably harsh and brutal, enacted
by, and in behalf of, property rights were enforced with a rigor which
seems unbelievable were it not that the fact is verified by the records
of thousands of cases. Those convicted for robbery usually received a
life sentence; they were considered lucky if they got off with five
years. The ordinary sentence for burglary was the same, with variations.
Forgery and grand larceny were punishable with long terms, ranging from
five to seven years. These were the laws in practically all of the
States with slight differences. But they applied to whites only. The
negro slave criminal had a superior standing in law, for the simple
reason that while the whites were "free" labor, negroes were property,
and, of course, it did not pay to send slaves to prison. In Maryland and
in most Southern States, where the slaveholders were both makers and
executors of law, the slaves need have no fear of prison. "The slaves,
as we have seen before, are not subject to the Penal Code of the
whites; they are hardly ever sent to prison. Slaves who commit grave
crimes are hung; those who commit heinous crimes not punishable with
death are sold out of the State. In selling him care is taken that his
character and former life are not known, _because it would lessen his
price_." Thus wrote De Beaumont and De Tocqueville; and in so writing
they handed down a fine insight into the methods of that Southern
propertied class which assumed so exalted an opinion of its honor and
chivalry.
But the sentencing of the criminal was merely the beginning of a weird
life of horror. It was customary at that period to immure prisoners in
solitary confinement. There, in their small and reeking cells, filled
with damps and pestilential odors, they were confined day after day,
year after year, condemned to perpetual inactivity and silence. If they
presumed to speak, they were brutally lashed with the whip. They were
not allowed to write letters, nor to communicate with any member of
their family. But the law condescended to allow a minister to visit them
periodically in order to awaken their religious thoughts and preach to
them how bad a thing it was to steal! Many were driven stark mad or died
of disease; others dashed their brains out; while others, when finally
released, went out into the world filled with an overpowering hatred of
Society, and all its institutions, and a long-cherished thirst for
vengeance against it for having thus so cruelly misused them.
Such were the laws made by the propertied classes. But they were not
all. When a convict was released, the law allowed only three dollars to
be given him to start anew with. "To starve or to steal is too often the
only alternative," wrote John W. Edmonds, president of the New York
board of prison inspectors in 1844.[132] If the released convict did
steal he was nearly always sent back to prison for life.
Equally severe in their way were the laws applying to mendicants and
vagrants. Six months or a year in the penitentiary or workhouse was the
usual sentence. After the panic of 1837, crime, mendicancy, vagrancy and
prostitution tremendously increased, as they always do increase after
two events: war, which, when over, turns into civil life a large number
of men who cannot get work; and panics which chaotically uproot
industrial conditions and bring about widespread destitution. Although
undeniably great frauds had been committed by the banking class, not a
single one of that class went to jail. But large numbers of persons
convicted of crimes against property, and great batches of vagrants were
dispatched there, and also many girls and women who had been hurled by
the iron force of circumstances into the horrible business of
prostitution.
These were some of the conditions in those years. Let it not, however,
be supposed that the traders, bankers and landowners were impervious to
their own brand of sensibilities. They dressed fastidiously, went to
church, uttered hallelujahs, gave dainty receptions, formed associations
to dole out alms and--kept up prices and rents. Notwithstanding the
general distress, rents in New York City were greater than were paid in
any other city or village upon the globe.[133]
FOOTNOTES:
[112] Hammond's "Political History of the State of New York," 1:129-130.
[113] Journal of the [New York] Senate and Assembly, 1803:351 and 399.
[114] Ibid., 1812:134.
[115] Ibid., 1812:259-260. Frequently, in those days, the giving of
presents was a part of corrupt methods.
[116] "The members [of the Legislature] themselves sometimes
participated in the benefits growing out of charters created by their
own votes; ... if ten banks were chartered at one session, twenty must
be chartered the next, and thirty the next. The cormorants could never
be gorged. If at one session you bought off a pack of greedy lobby
agents ... they returned with increased numbers and more voracious
appetite."--Hammond, ii:447-448.
[117] Journal of the [New York] Senate, 1824:1317-1350. See also Chap.
VIII, Part II of this work.
[118] "Letter and Authentic Documentary Evidence in Relation to the
Trinity Church Property," etc., Albany, 1855. Hoffman, the best
authority on the subject, says in his work published forty-five years
ago: "Very extensive searches have proved unavailing to enable me to
trace the sources of the title to much of this upper portion of Trinity
Church property."--"State and Rights of the Corporation of New York,"
ii:189.
[119] In all of the official communications of Trinity Church up to 1867
this lease is referred to as the "Burr or Astor Lease."--"The
Communication of the Rector, Church Wardens and Vestrymen of Trinity
Church in the city of New York in reply to a resolution of the House,
passed March 4, 1854"; Document No. 130, Assembly Docs. 1854. Also
Document No. 45, Senate Docs. 1856. Upon returning from exile Burr tried
to break his lease to Astor, but the lease was so astutely drawn that
the courts decided in Astor's favor.
[120] In his descriptive work on New York City of a half century ago,
Matthew Hale Smith, in "Sunshine and Shadow in New York" (pp. 121-122),
tells this story: "The Morley [Mortier] lease was to run until 1867.
Persons who took the leases supposed that they took them for the full
term of the Trinity lease. [John Jacob] Astor was too far-sighted and
too shrewd for that. Every lease expired in 1864, leaving him [William
B. Astor, the founder's heir] the reversion for three years, putting him
in possession of all the buildings, and all of the improvements made on
the lots, and giving him the right of renewal." Smith's account is
faulty. Most of the leases expired in 1866. The value of the reversions
was very large.
[121] Docs. No. 130 [New York] Assembly Docs., 1854:22-23.
[122] Journal of the [New York] Senate, Forty-second Session,
1819:67-70.
[123] Doc. No. 108, [New York] Senate Documents, 1834, Vol. ii. The
committee stated that banks in the State outside of New York City, after
paying all expenses, divided 11 per cent. among the stockholders in 1833
and had on hand as surplus capital 16 per cent. on their capital. New
York City banks paid larger dividends.
[124] People of the State of New York vs. Manhattan Co.--Doc. No. 62,
Documents of the Board of Assistant Aldermen, 1832-33, Vol. ii.
[125] Doc. No. 68 [New York] Senate Docs., 1838, Vol. ii.
[126] Abridgement of the Debates of Congress, from 1789 to 1856,
xiii:426-427.
[127] In the course of this work, the word Government is frequently used
to signify not merely the functions of the National Government, but
those of the totality of Government, State and municipal, not less than
National.
[128] Doc. No. 49 [New York] Senate Docs., 1838, Vol. ii.
[129] "On the Penitentiary System in the United States," etc., by G. De
Beaumont and A. De Tocqueville, Appendix 17, Statistical Notes: 244-245.
[130] A complete error. Walling, for more than thirty years
Superintendent of Police of New York City, says in his "Memoirs" that he
never knew an instance of a rich murderer who was hanged or otherwise
executed. And have we all not noted likewise?
[131] "On the Penitentiary System," etc., 184-185.
[132] Prison Association of New York, Annual Reports, 1844-46. It is
characteristic of the origin of all of these charity associations, that
many of the founders of this prison association were some of the very
men who had profited by bribery and theft. Horace Greeley was actuated
by pure humanitarian motives, but such incorporators as Prosper Wetmore,
Ulshoeffer, and others were, or had been, notorious in lobbying by
bribing bank charters through the New York Legislature.
[133] "The New Yorker," Feb. 17, 1838.