Part 20 (1/2)
ALL BUSINESS REEKED WITH FRAUD.
A Congressional committee, probing, in 1847-1848, into frauds in the sale of drugs found that there was scarcely a wholesale or retail druggist who was not consciously selling spurious drugs which were a menace to human life. Dr. M. J. Bailey, United States Examiner of Drugs at the New York Custom House, was one of the many expert witnesses who testified. ”More than one-half of many of the most important chemical and medicinal preparations,” Dr. Bailey stated, ”together with large quant.i.ties of crude drugs, come to us so much adulterated as to render them not only worthless as a medicine, but often dangerous.” These drugs were sold throughout the United States at high prices. [Footnote: Report of Select Committee on the Importation of Drugs. House Reports, Thirtieth Congress, First Session, 1847-48, Report No. 664:9. In a previous chapter, other extracts from this report have been given showing in detail what many of these fraudulent practices were.] There is not a single record of any criminal action pressed against those who profited from selling this poisonous stuff.
The manufacture and sale of patent medicines were attended with the grossest frauds. At that time, to a much greater extent than now, the newspapers profited more (comparatively) from the publication of patent medicine advertis.e.m.e.nts; and even after a Congressional committee had fully investigated and exposed the nature of these nostrums, the newspapers continued publis.h.i.+ng the alluring and fraudulent advertis.e.m.e.nts.
After showing at great length the deceptive and dangerous ingredients used in a large number of patent medicines, the Committee on the Judiciary of the House of Representatives went on in its report of February 6, 1849: ”The public prints, without exception, published these promises and commendations. The annual [advertising] fee for publis.h.i.+ng Brandeth's pills has amounted to $100,000. Morrison paid more than twice as much for the advertis.e.m.e.nt of his never-dying hygiene.” The committee described how Morrison's nostrums often contained powerful poisons, and then continued: ”Morrison is forgotten, and Brandeth is on the high road to the same distinction.
T. W. Conway, from the lowest obscurity, became worth millions from the sale of his nostrums, and rode in triumph through the streets of Boston in his coach and six. A stable boy in New York was enrolled among the wealthiest in Philadelphia by the sale of a panacea which contains both mercury and a.r.s.enic. Innumerable similar cases can be adduced.” [Footnote: Report No. 52. Reports of Committees, Thirtieth Congress, Second Sess., i: 31.] Not a few multimillionaire families of to-day derive their wealth from the enormous profits made by their fathers and grandfathers from the manufacture and sale of these poisonous medicines.
SUCCESS AS GOULD LEARNED IT.
The frauds among merchants and manufacturers reached far more comprehensive and permeating proportions. In periods of peace these fraudulent methods were nauseating enough, but in times of war they were inexpressibly repellant and ghastly. During the Mexican War the Northern shoe manufacturers dumped upon the army shoes which were of so inferior a make that they could not be sold in the private market, and these shoes were found to be so absolutely worthless that it is on record that the American army in Mexico threw them away upon the sands in disgust. But it was during the Civil War that Northern capitalists of every kind coined fortunes from the national disasters, and from the blood of the very armies fighting for their interests shown how Commodore Vanderbilt and other s.h.i.+pping merchants fraudulently sold or leased to the Government for exorbitant sums, s.h.i.+ps for the transportation of soldiers--s.h.i.+ps so decayed or otherwise unseaworthy, that they had to be condemned. In those chapters such facts were given as applied mainly to Vanderbilt; in truth, however, they const.i.tuted but a mere part of the gory narrative. While Vanderbilt, as the Government agent, was leasing or buying rotten s.h.i.+ps, and making millions of dollars in loot by collusion, the most conspicuous and respectable s.h.i.+pping merchants of the time were unloading their old hulks upon the Government at extortionate prices.
One of the most ultra-respectable merchants of the time, ranked of high commercial standing and austere social prestige, was, for instance, Marshall O. Roberts. This was the identical Roberts so deeply involved in the great mail-subsidy frauds. This was also the same sanctimonious Roberts, who, as has been brought out in the chapters on the Astor fortune, joined with John Jacob Astor and others in signing a testimonial certifying to the honesty of the Tweed Regime. A select Congressional committee, inquiring into Government contracts in 1862-63, brought forth volumes of facts that amazed and sickened a committee accustomed to ordinary political corruption. Here is a sample of the testimony: Samuel Churchman, a Government vessel expert engaged by Welles, Secretary of the Navy, told in detail how Roberts and other merchants and capitalists had contrived to palm off rotten s.h.i.+ps on the Government; and, in his further examination on January 3, 1863, Churchman was asked:
Q. Did Roberts sell or chatter any other boats to the Government?
A. Yes, sir. He sold the Winfield Scott and the Union to the Government.
Q. For how much?
A. One hundred thousand dollars each, and one was totally lost and the other condemned a few days after they went to sea. [Footnote: Report of Select Committee to Inquire into Government Contracts, House Reports, Thirty-seventh Congress, Third Session, 1862-63, Report No. 49:95.]
In the course of later inquiries in the same examination, Churchman testified that the Government had been cheated out of at least $25,000,000 in the chartering and purchase of vessels, and that he based his judgment upon ”the chartered and purchased vessels I am acquainted with, and the enormous sums wasted there to my certain knowledge.” [Footnote: Ibid, 95-97.] This $25,000,000 swindled from the Government in that one item of s.h.i.+ps alone formed the basis of many a present plutocratic fortune.
FRAUD UNDERLIES RESPECTABILITY.
But this was not by any means the only schooling Gould received from the respectable business element. It can be said advisedly that there was not a single avenue of business in which the most shameless frauds were not committed upon both Government and people. The importers and manufacturers of arms scoured Europe to buy up worthless arms, and then cheated the Government out of millions of dollars in supplying those guns and other ordnance, all notoriously unfit for use. ”A large proportion of our troops,” reported a Congressional Commission in 1862, ”are armed with guns of very inferior quality, and tens of thousands of the refuse arms of Europe are at this moment in our a.r.s.enals, and thousands more are still to arrive, all unfit.” [Footnote: House Reports of Committees, Thirty- seventh Congress, Second Session, 1861-62, vol. ii, Report No. 2: lxxix.] A Congressional committee appointed, in 1862, to inquire into the connection between Government employees on the one hand, and banks and contractors on the other, established the fact conclusively, that the contractors regularly bribed Government inspectors in order to have their spurious wares accepted. [Footnote: House Reports of Committees, Thirty-seventh Congress, 1862-63, Report No. 64. The Chairman of this committee, Representative C. H. Van Wyck, of New York, in reporting to the House of Representatives on February 23, 1863, made these opening remarks:
”In the early history of the war, it was claimed that frauds and peculations were unavoidable; that the cupidity of the avaricious would take advantage of the necessities of the nation, and for a time must revel and grow rich amidst the groans and griefs of the people; that pressing wants must yield to the extortion of the base; that when the capital was threatened, railroad communication cut off, the most exorbitant prices could safely be demanded for steam and sailing vessels; that when our a.r.s.enals had been robbed of arms, gold could not be weighed against cannon and muskets; that the Government must be excused if it suffered itself to be overreached. Yet, after the lapse of two years, we find the same system of extortion prevailing, and robbery has grown more unblus.h.i.+ng in its exactions as it feels secure in its immunity from punishment, and that species of fraud which shocked the nation in the spring of 1861 has been increasing.
The fitting out of each expedition by water as well as land is but a refinement upon the extortion and immense profits which preceded it.
The freedom from punishment by which the first greedy and rapacious horde were suffered to run at large with ill-gotten gains seems to have demoralized too many of those who deal with the Government.”-- Appendix to The Congressional Globe, Third Session, Thirty-seventh Congress, 1862-63, Part ii: 117.]
In fact, the ramifications of the prevalent frauds were so extensive that a number of Congressional committees had to be appointed at the same time to carry on an adequate investigation; and even after long inquiries, it was admitted that but the surface had been scratched.
During the Civil War, prominent merchants, with eloquent outbursts of patriotism, formed union defense committees in various Northern cities, and solicited contributions of money and commodities to carry on the war. It was disclosed before the Congressional investigating committees that not only did the leading members of these union defense committees turn their patriotism to thrifty account in getting contracts, but that they engaged in great swindles upon the Government in the process. Thus, Marcellus Hartley, a conspicuous dealer in military goods, and the founder of a multimillionaire fortune, [Footnote: When Marcellus Hartley died in 1902, his personal property alone was appraised at $11,000,000. His entire fortune was said to approximate $50,000,000. His chief heir, Marcellus Hartley Dodge, a grandson, married, in 1907, Edith Geraldine Rockefeller, one of the richest heiresses in the world. Hartley was the princ.i.p.al owner of large cartridge, gun and other factories.] admitted that he had sold a large consignment of Hall's carbines to a member of the New York Union Defense Committee. In a sudden burst of contrition he went on, ”I think the worst thing this Government has been swindled upon has been these confounded Hall's carbines; they have been elevated in price to $22.50, I think.” [Footnote: House Report No.2, etc., 1861-62, vol. ii: 200-204] He could have accurately added that these carbines were absolutely dangerous; it was found that their mechanism was so faulty that they would shoot off the thumbs of the very soldiers using them. Hartley was one of the importers who brought over the refuse arms of Europe, and sold them to the Government at extortionate prices. He owned up to having contracts with various of the States (as distinguished from the National Government) for $600,000 worth of these worthless arms. [Footnote: Ibid.] That corruscating patriot and philanthropic multimillionaire of these present times, J. Pierpont Morgan, was, as we shall see, profiting during the Civil War from the sale of Hall's carbines to the Government.
One of the Congressional committees, investigating contracts for other army material and provisions, found the fullest evidences of gigantic frauds. Exorbitant prices were extorted for tents ”which were valueless”; these tents, it appeared, were made from cheap or old ”farmers'” drill, regarded by the trade as ”truck.” Soldiers testified that they ”could better keep dry out of them than under.”
[Footnote: House Report No. 64, etc., 1862-63: 6.] Great frauds were perpetrated in pa.s.sing goods into the a.r.s.enals. One manufacturer in particular, Charles C. Roberts, was awarded a contract for 50,000 haversacks and 50,000 knapsacks. ”Every one of these,” an expert testified, ”was a fraud upon the Government, for they were not linen; they were shoddy.” [Footnote: Ibid.] A Congressional committee found that the provisions supplied by contractors were either deleterious or useless. Captain Beckwith, a commissary of subsistence, testified that the coffee was ”absolutely good for nothing and is worthless. It is of no use to the Government.”
Q. Is the coffee at all merchantable?
A. It is not.