ANOTHER ERA OF LEGISLATIVE CORRUPTION
1910-1911
It was only a few months after this election that the investigations of
William H. Hotchkiss, State Superintendent of Insurance, followed by
that of a New York Legislative committee into the matter of legislative
graft, revealed the extensive and variegated corruption of both
political parties.
An examination by Mr. Hotchkiss, in October, 1909, of the affairs of
the Phœnix Insurance Company of Brooklyn had brought to light a mass
of correspondence apparently disclosing an intimate connection between
the president of that company and legislative measures, introduced from
1900 to 1910, affecting fire insurance companies. The materials thus
unearthed caused Superintendent Hotchkiss to order a full examination
of the books and records of other fire insurance companies, which
examination was begun in January, 1910.
On January 18, 1910, the New York _Evening Post_ published certain
facts the purport of which tended to show that State Senator Jotham P.
Allds, when Republican leader of the Assembly, in 1901, had been bribed
to assist in killing certain legislation to which bridge construction
companies objected. The Senate was forced to investigate, and Allds
hastily resigned, but the Senate on March 29, 1910, sustained the
charge of bribery by a vote of 40 to 9.
It was well understood that this virtuous action was “a sacrifice” and
an ostentatious sop to public opinion; many more legislators than he
were implicated in charges of corruption. Meanwhile, Mr. Hotchkiss
was persisting in his investigation. In the course of Mr. Hotchkiss’
inquiry, on March 22, 1910, testimony developed the fact that for
twenty years or more, “firebug” funds had been raised by insurance
companies and lavishly distributed among legislators at Albany and that
those companies had employed one William H. Buckley to act as “watcher”
on “strike bills” introduced in the Legislature at Albany. Buckley
admitted that at a time after only three years’ admission to the bar,
he had received $27,000 from insurance companies for representing them
during the sessions of the Legislature.
One of the bills introduced in the Legislature was a measure fathered
by Senator Thomas F. Grady, a noted Tammany leader, celebrated as
the chief orator of the Tammany organization. This bill, called a
re-insurance act, was introduced and passed under such circumstances
that Vice-President Correa of the Home Insurance Company referred
to it in a contemporary letter as “bought legislation.” Mr. Correa
also stated in that letter, which was in evidence, that only three
re-insured fire insurance companies supported the bill, which gave
those three companies a distinct advantage over 209 direct insurance
companies doing business in New York State. The bill dealt with the
carrying of a reserve where part of a fire risk was re-insured. Senator
Grady declared, in a public interview, that this bill was introduced to
protect policy holders by compelling the re-insurance company, when a
part of a policy was farmed out by the company of the first instance,
to keep an adequate reserve against the policy thus taken, but all
of the insurance officers examined by Mr. Hotchkiss admitted either
wholly or in part, that Grady’s interview did not represent a correct
conception of what his bill actually provided.[1]
Another conspicuous Tammany leader implicated in the disclosures before
Superintendent Hotchkiss was Senator “Big Tim” Sullivan. He had long
been one of the really powerful leaders of Tammany Hall, and held
direct sovereignty over the teeming East Side below Fourteenth Street.
Beginning life as a bartender, “Big Tim” Sullivan had been given the
nickname “Dry Dollar” Sullivan, because of his habit of carefully
wiping the bar before placing change on it. His career in the Assembly
and Senate was notorious for the number of bad bills promoted or
supported by him. His power in manipulating primaries and swaying
elections on the East Side south of Fourteenth Street was recognized
as that of a master hand; he knew how to make the “gangs” his obedient
servants; not a secret of colonizing voters and carrying elections was
unknown to him and his clan; at the same time he was called “the friend
of the poor” because of his yearly practise of giving the wastrels
of the Bowery and vicinity Thanksgiving and Christmas dinners and
presents. By his proved and consistent ability to sway politics in the
great and thickly-populated East Side, he had to be recognized as an
independent Tammany power; no one could become “boss” of Tammany Hall
without his support. His power in Tammany was exceeded only by Mr.
Murphy’s. In fact, he was one of the actual rulers, not only of Tammany
Hall, but of New York City.
George F. Seward, president of the Fidelity and Casualty Company,
testified on March 21, 1910, before Superintendent Hotchkiss, that a
man representing himself to be an agent of Senator “Big Tim” Sullivan,
in 1891 or 1892, offered, in return for a $10,000 bribe, to have a
bill inimical to that company’s interests killed. Mr. Seward, in
response, dictated this telegram to Sullivan: “Mr. Seward says you can
go to hell.” In reply to a question as to whether this happened when
the Republican party or the Democratic party was in power, Mr. Seward
replied, “So far as either party is concerned, I don’t think it would
make very much difference, and I really do not recall.” Both parties,
Mr. Seward said, were represented in the “Black Horse Cavalry” at
Albany. In a public interview Sullivan denounced Mr. Seward’s charge
as a lie. Recalled as a witness, on March 22, 1910, Seward adhered to
the story he had told. It may be remarked here that when Sullivan died
in 1913, he left a considerable fortune, originally estimated at two
millions of dollars; his friends represented that he had made it from
a chain of showhouses in which he was interested; but the inventory
showed that he owned large quantities of stock in mining companies,
realty companies and other concerns. Many of these shares, however,
were listed by the executors of his estate as valueless. The definite
value of Sullivan’s estate was placed at $1,021,277.33.
On March 24, 1910, certain definite facts were brought out showing
how Buckley, lobbyist at Albany for the fire insurance companies, had
succeeded in killing, in 1903, various proposed enactments which those
companies did not want enacted.
Correspondence produced showed that Buckley had written to George P.
Sheldon, president of the Phœnix Insurance Company, that “it was not
difficult to tie the matter [insurance bills] up in the committee,” and
later correspondence held out the assurance that the matter “had been
arranged.” According to the testimony, Justice Edward E. McCall of the
New York State Supreme Court had indorsed a $35,000 check from Sheldon
to Buckley. On March 29, 1910, Darwin P. Kingsley, president of the
New York Life Insurance Company, testified that Buckley had offered to
buy him the votes of six members of the New York State Senate for a
certain amount, and that when he (Kingsley) declined to pay, a certain
insurance measure which Kingsley had favored was withdrawn.
These are but a few of the specific details brought out in the
hearings before Mr. Hotchkiss; it appeared that at least ten prominent
Republican legislators who had ruled important Senate and Assembly
Committees for years had speculative accounts in the brokerage firm
of Ellingwood & Cunningham of New York City, in which firm G. Tracy
Rogers, keeper of the traction “Yellow Dog” fund during that period,
was a special partner.
On April 8, 1910, State Superintendent of Insurance Hotchkiss made a
full report to Governor Hughes of the investigation that he had made.
Mr. Hotchkiss reported that the aggregate of disbursements by fire
insurance companies in connection with legislation affecting those
companies, from 1901 to 1909, probably exceeded $150,000.
“The moneys so paid,” Mr. Hotchkiss reported, “were disbursed for
traveling expenses of individuals and delegations; annual and special
retainers of regular counsels; so-called retainers of legislative
lawyers; contributions to political committees; gifts or payments to
men of political prominence and influence, and entertaining legislators
and others, at times in a somewhat lavish manner.”
Mr. Hotchkiss further set forth in his report that the log rolling of
“strike” bills in and out of committees was a regular business, that
the books of the stock brokerage house of Ellingwood & Cunningham,
New York City, “warrant a strong suspicion that such books, to an
extent at least, had been a clearing house for financial transactions
connected with legislation during the period mentioned,” and that G.
Tracy Rogers, a special partner in the firm and long president of the
Street Railways Association of the State of New York, seemed up to
the time of the failure of that firm “to have been the legislative
representative at Albany of the traction interests.” Mr. Hotchkiss
reported that: “Certain of the accounts in these ledgers show a close
connection between G. Tracy Rogers and the Metropolitan traction
interests in New York City. The character of the securities dealt in
[by legislators] frequently recalls legislation urged or retarded at
about the same time.” Mr. Hotchkiss urged further inquiry, and in a
special message to the Legislature, on April 11, 1910, Governor Hughes
called on that body to follow, by means of a general investigation, the
trails of legislative corruption laid bare by the Allds bribery trial
and the investigation conducted by Superintendent Hotchkiss.
In the face of the exposures already made and the insistent demands
for further investigation, the legislative committee appointed for the
purpose could not evade pressing the inquiry.
The testimony on September 15, 1910, showed that during a single month
in the summer of 1903, the sum of $40,000 was sent by an agent of the
New York City street railway interests to the firm of Ellingwood &
Cunningham, and that no vouchers or receipts were asked or given to
account for the distribution of the money. At previous hearings, the
fact had been established that this brokerage house was the firm which
served as a “clearing-house” for the money supplied to members of the
Legislature by G. Tracy Rogers. At the hearing on September 16, 1910,
the evidence showed that Senator Louis F. Goodsell and Assemblyman
Louis Bedell, prominent Republican leaders in the Legislature, had
received large amounts of money from the Metropolitan Street Railway
Company and G. Tracy Rogers from 1900 to 1904; Goodsell had received
$24,800, and Bedell $21,750. Goodsell admitted that he had “bought”
stock without putting up any margin.
At the same hearing, H. H. Vreeland, president of the Metropolitan
Street Railway Company, testified that the Metropolitan Street Railway
Company contributed campaign funds, and that it did so to practically
every one that ran for office; he remembered $20,000 or $25,000 given
to the Republican organization and $17,000 or $18,000 to the Democratic
organization; this was in about the year 1902 or 1903. Another method
of subsidizing politicians individually, Mr. Vreeland testified, was
by carrying stocks on the books of various brokerage houses for them;
these individual stock transactions ran from $20,000 to more than
$30,000.
Much further testimony was brought out showing the enormous and
continuous subsidizing of both old political parties and politicians
by corporations wanting certain legislation enacted or smothered. On
September 21, 1910, Mr. Vreeland admitted that the Metropolitan Street
Railway Company had, prior to 1903, paid out fully $250,000 in “taking
up” stocks that legislators and other politicians had been carrying
with brokerage houses and which they desired converted into cash; this
was one of the indirect methods of influencing political or legislative
action in the interest of the company. G. Tracy Rogers testified that
he had disbursed $82,475 in three years, and that most of it went to
members of the railroad committees of the New York Legislature. In
these hearings the names of a number of conspicuous legislators and the
amounts received by them were brought out in the testimony.
Testimony, also under oath, on October 19, 1910, purported to show that
a legislative corruption fund of $500,000 was raised at a meeting in
Delmonico’s to defeat anti-race track gambling legislation at Albany
in 1908; that Charles H. Hyde,[2] Chamberlain of New York City under
Mayor Gaynor, attended this meeting, and that State Senator Frank
Gardner went to Albany with Hyde because Hyde did not know the ways of
legislators and how to approach them “properly.”
Hyde’s father-in-law was William A. Engeman, owner of the Brighton
Beach race track; according to the testimony, Hyde made a subscription
for Engeman (who had failed to pay), and later put in a bill for
personal expenses covering the amount. The testimony further
represented that there was a dispute as to who was to handle the
bribery funds, and that $125,000 was given to James E. Gaffney “to
take care of three or four members of the Legislature--Tammany men.”
According further to the testimony, Senator Thomas F. Grady, Democratic
leader at Albany and close friend and spokesman of “Boss” Murphy,
received only $4,000 of the bribery fund. Two Republican State Senators
wanted $25,000 each. The testimony also involved Senator Patrick H.
McCarren. Senator McCarren was the Democratic “boss” of Brooklyn;
he was an ally of Tammany Hall (for the Democratic organization in
Brooklyn retained its autonomy separate from that of Tammany Hall, yet
allied with it), and he was the legislative agent of various financial
interests and trusts.
It appeared, according to the testimony, that Senator McCarren was
angry that the handling of the race track fund was entrusted to others;
he objected “to a strange man going up there, expecting to get away
with such a proposition,” but later he was placated and lent his aid
against the bill. When urging Senator Foelker, a Brooklyn Republican,
to vote against the bill, McCarren was represented as saying to
Foelker: “You need not fear the indignation of your constituents. If
you are afraid of possible reelection or have any doubts about election
time, I think I can fix it up for you so you can name your own opponent
at the coming election.” This was the substance of the testimony of
Assistant District Attorney Robert Elder, of Brooklyn, who narrated
the facts revealed to him by former State Senator Frank Gardner, under
indictment charged with attempting to bribe Foelker. (Here the fact
should be noted that when Gardner was tried on this charge he was
acquitted on February 23, 1911.) Mr. Foelker himself testified that he
was offered $45,000 and then $50,000 to vote against the bill, which
offer he refused; the vote on the bill was extremely close, and a
single vote meant its passage or defeat.
At further hearings of the Legislative “Graft Hunt” Committee, Senator
Eugene M. Travis, of Brooklyn, testified that an ineffectual effort
had been made, at a time when the foes of the measure needed only one
or two votes, to bribe him with $100,000 to vote against the bill
prohibiting horse racing in New York State. Senator Travis specified
three other Senators whom they attempted to bribe. August Belmont
testified that the $500,000 fund was “mythical and absurd.” It was
reported that representations made at the hearing on November 30, 1910,
were to the effect that one jockey club alone had expended $33,000
while the anti-race track gambling legislation was pending, and that
information from reliable sources tended to show that each of the other
seven racing associations had expended a similar sum, or perhaps more.
Further information, it was given out, was to the effect that each of
ninety-three bookmakers had subscribed $3,000 each. The total of the
above stated contributions would have amounted to $543,000--supposing
the fund to have been a fact.
Whatever were the basic facts, pro and con, as to the alleged $500,000
fund for the defeat of the anti-race-track bill, the record shows that
it was defeated on April 8, 1908, by a-vote of 25 to 25, and that
among those voting against it were such Tammany Senators as Grady,
Frawley, McManus, Sullivan and other Tammany men and Democrats,--in
all seventeen Democrats and eight Republicans. A new State Senator
having been elected in a special election in one district, the bill
prohibiting gambling at race tracks was subsequently passed.
Nearly all of those involved made vehement denials. Senator McCarren
had died on October 23, 1909--a year before these hearings. Although
cooperating with “Boss” Murphy in elections, there was nevertheless
considerable animosity between the two, arising, it was generally
believed, from a suspicion that Mr. Murphy, inflated by his personal
victory in electing McClellan in 1903, was attempting to extend
his political territory to Brooklyn. Senator McCarren had openly
protested against this “encroachment” and had threatened trouble if
it were pushed. It was this jealously vigilant attitude on the part
of the bosses of the other boroughs which prevented Tammany Hall from
extending its regular organization outside the former city limits.
McCarren himself was a “sporting man” and reputed to be a
“thoroughbred” at that. He had his own elaborate racing stable, and it
was said of him that he once uncomplainingly lost $30,000 on a bet,
although the decision of the racing judges was open to question. In
1908 the failure of the brokerage firm of Ennis & Stoppani revealed
the fact that McCarren was “carrying” $250,000 worth of stock, for
which he had paid nothing, and which resulted in a loss to him of
about $107,000. No demand had been made by the brokers upon McCarren
for margins; in view of this fact he could not have been compelled
to pay losses; it was said of him, however, that he gave a check to
the receiver and took the stock. He was a “heavy operator” in real
estate and in the stock market, and had personal relations with H. H.
Rogers, Anthony N. Brady, William C. Whitney, J. Pierpont Morgan, W.
K. Vanderbilt, August Belmont and other Wall Street magnates, of whose
interests he was a recognized pusher in the Legislature.
To return, however, to the hearings of the Legislative “Graft Hunt”
Committee: facts brought out showed that the beet sugar interests had
also debauched the Legislature and that State Senator John Raines, a
leading Republican, received $9,000 in two years for pushing bounty
bills to aid beet sugar interests. These facts were admitted by Henry
F. Zimmerlin, former vice-president and Albany lobbyist of the Lyons
Beet Sugar Refining Company.
The full testimony tended to show that insurance companies, traction
companies, construction companies and other interests paid large
sums to defeat legislation that they did not want enacted, or were
blackmailed into paying other large sums to have “strike bills”
suppressed. But the report of the Legislative Investigating Committee,
made on February 1, 1911, was harmless as far as specific findings of
corruption were concerned. As to the charges of traction and race track
corruption, the Committee reported that no definite and substantial
charge, verified by knowledge, had been filed with it, and that “in
consequence it finds nothing definite in regard to the traction
and race track charges that it examined.”[3] There were one or two
indictments, but no one, either bribers or bribed, had to go prison,
although in charges made in a detached subsequent case, one solitary
State Senator, Stilwell, was convicted of bribery charges and sentenced
to prison; he was a comparatively obscure politician.
Inasmuch as the Legislature for years had been dominantly Republican,
these disclosures had a much more injurious political effect upon the
Republican organization than upon Tammany, and they were of weight in
bringing about the election of a Democratic Governor in the person of
John A. Dix, in 1910. This was the first Democratic Governor of New
York State elected in many years; the result was the enlargement of
Tammany’s sway, and more offices and further fields of power and profit
for “the Organization.”
At the same time, a Legislature, the majority of which were Tammany men
and Democrats, was elected. The election of a United States Senator
coming up, the chief aspirant pushed for the place was William F.
Sheehan, an attorney for the traction magnate, Thomas F. Ryan. Mr.
Murphy had his headquarters in Albany directing the contest; he was
said to have given his promise to Mr. Sheehan, but when he saw that
Sheehan could not be elected, he tried to bring about the election of
Daniel F. Cohalan, his personal attorney and adviser, as United States
Senator. A few years previously, Cohalan was an obscure lawyer, but
as the friend and adviser of “Boss” Murphy, his practise had grown to
large and lucrative proportions; it was a practise principally dealing
with matters concerning municipal affairs. In 1908 Mr. Murphy had
caused Mr. Cohalan to be chosen Grand Sachem of the Tammany Society.
But Mr. Murphy found that it was not possible to put Cohalan in the
United States Senate. Certain “insurgent” Democratic legislators
elected from various parts of the State, wanted neither Sheehan, Ryan’s
attorney, nor Cohalan, Murphy’s attorney. Finally Justice James A.
O’Gorman (who years previously had been elected to the New York State
Supreme Court by Tammany) was compromised upon as the candidate for
United States Senator and elected.
Then Mr. Murphy decided to make Mr. Cohalan Justice O’Gorman’s
successor on the Supreme Court Bench.
According to published report, the appointment of Mr. Cohalan as a
Justice of the Supreme Court by Governor Dix was the result of “a deal”
between Dix and Murphy. Governor Dix wanted the appointment of George
C. Van Tuyl, as State Commissioner of Banks, confirmed. The nomination
of Van Tuyl was referred to the Senate Finance Committee, of which
Senator Frawley, a Tammany district leader, was chairman. A report was
prepared recommending that the nomination of Van Tuyl be confirmed,
but this report was held up week after week, and the statement was
common in the political slang current at Albany that no action could be
taken in presenting the report “until the Governor comes across with
Cohalan.” At last, on May 18, 1911, Senator Frawley suddenly presented
the report, moved its confirmation, and the Senate acquiesced. Sixteen
minutes later a message appeared from Governor Dix announcing the
appointment of Daniel F. Cohalan to succeed James A. O’Gorman as
Justice of the Supreme Court for the remainder of O’Gorman’s unexpired
term.
The session of 1911 was the first time in nineteen years that the
Democratic party had control of the Legislature, and Tammany Hall was
in control of the Democratic organization in the State. It was at this
session that a strong effort was made to enact the Tammany-Gaynor
“Ripper” Charter, the provisions of which aroused much scandal. The
majority of the Board of Estimate in New York City were at this time
Independent Democrats. The proposed charter would have arbitrarily
deprived them of many of their most important functions of office.
Its aim was to impair the powers of the Board of Estimate in many
destructive ways, and to centralize power in the hands of the Mayor. It
would have given the Mayor complete domination of the development of
transportation facilities in New York City. Such effective opposition
was raised that it was defeated by the votes of Independent Democrats
in the Assembly. At this session it was, too, that an attempt was made
to pass the Sullivan Inferior Criminal Courts “Ripper” bill which, by
making city magistrates elective instead of appointive, would have
restored the old pernicious, demoralizing system of local political
influence. These were but two of a list of other proposed Tammany
measures.
Mr. Murphy’s habits as leader at this time were in singular contrast
with those of years previously when, as a district leader, he had
made his hailing place by a lamp post. He now used a luxurious suite
of rooms at Delmonico’s fashionable restaurant, at Fifth avenue and
Forty-fourth street, where, during campaign contests, he held his
secret consultations. Here those whom the “Boss” desired to see on
terms of great privacy were summoned, nor were they admitted, it was
reported, before they had been first scrutinized and received by Mr.
Murphy’s factotum, “Phil” Donohue, the treasurer of Tammany Hall,
who took his stand in an anteroom. During the campaign of 1911, when
County and Assembly candidates were to be elected, Mr. Murphy was to be
found almost daily at Delmonico’s, and, according to published report,
Justice Cohalan was there with him frequently. It was at this election
that Mr. Cohalan was elected Justice of the Supreme Court for a period
of fourteen years.
Veteran politicians who had learned the wisdom of combining the
pocketing of millions with the art of simple appearances, shook their
heads ominously at what they considered “Boss” Murphy’s tactlessness in
vaunting his power, surrounded by ostentation and grandiose luxury.
FOOTNOTES
[1] An indication of Senator Grady’s large sources of income had come
to public notice in 1907 when the District Attorney’s force raided the
poolroom “clearing house” at 112 Fulton street, New York City. Canceled
checks and other records found there revealed that a mysterious person
designated variously in the syndicate’s account books as “Tommy,” “T.
G.,” “T. Grady,” and “Sen.,” had “raked off” more than $43,000 on the
poolroom business in the first two years of the syndicate’s existence
and had continued to profit from that source up to the very time of the
raid. No doubt, however, Grady had his losses, too.
[2] Hyde, on November 29, 1912, was convicted in court on a charge of
accepting a bribe, as a public officer, in consideration for depositing
public money in certain banks. He was sentenced to two years in State’s
prison. But the verdict was later reversed by the Appellate Division of
the Supreme Court, and he was released from all criminal charges.
[3] The Committee commented: “The investigation shows clearly the
extreme difficulty of securing exact information which will disclose
the methods by which powerful financial interests seek to control
legislative action in matters coming before legislative bodies.
“The crime of bribery is one of the most difficult of all crimes to
uncover. All the resources of ingenuity are used to conceal it, and
only in exceedingly rare instances are either of the parties to the
crime willing to come forward and disclose the facts.”