Part 20 (2/2)
Q. Describe that coffee as nearly as you can.
A. It seems to be a compound of roasted peas, of licorice, and a variety of other substances, with just coffee enough to give it a taste and aroma of coffee. [Footnote: House Report No. 2, etc. 1861- 62, ii: 1459.]
This committee extracted much further evidence showing how all other varieties of provisions were of the very worst quality, and how ”rotten and condemned blankets” in enormous quant.i.ties were pa.s.sed into the army by bribing the inspectors. It disclosed, at great length, how the railroads in their schedule of freight rates were extorting from the Government fifty per cent. more than from private parties. [Footnote: House Report No. 2, etc., 1861-62, xxix.] Don Cameron, leader of the corrupt Pennsylvania political machine, and a railroad manipulator, [Footnote: He had been involved in at least one scandal investigated by a Pennsylvania Legislative Committee, and also in several dubious railroad transactions in Maryland.] was at that time Secretary of War. Whom did he appoint as the supreme official in charge of railroad transportation? None other than Thomas A. Scott, the vice-president of the Pennsylvania Railroad. Scott, it may be said, was another capitalist whose work has so often been fulsomely described as being that of ”a remarkable constructive ability.” The ability he displayed during the Civil War was unmistakable. With his collusion the railroads extorted right and left. The committee described how the profits of the railroads after his appointment rose fully fifty per cent in one year, and how quartermasters and others were bribed to obtain the transportation of regiments. ”This,” stated the committee, ”ill.u.s.trates the immense and unnecessary profits which was spirited from the Government and secured to the railroads by the schedule fixed by the vice-president of the Pennsylvania Central under the auspices of Mr. Cameron.”
[Footnote: House Report No. 2, etc., 1861-62, xix. The Pennsylvania Railroad, for example, made in 1862 the sum of $1,350,237.79 more in profits than it did in the preceding year.]
These many millions of dollars extorted in frauds ”came,” reported the committee, ”out of the impoverished and depleted Treasury of the United States, at a time when her every energy and resources were taxed to the utmost to maintain the war.” [Footnote: Ibid., 4.]
These are but a few facts of the glaring fraud and corruption prevailing in every line of mercantile and financial business. Great and audacious as Gould's thefts were later, they could not be put on the same indescribably low plane as those committed during the Civil War by men most of whom succeeded in becoming noted for their fine respectability and ”solid fortunes.” So many momentous events were taking place during the Civil War, that amid all the preparations, the battles and excitement, those frauds did not arouse that general gravity of public attention which, at any other time, would have inevitably resulted. Consequently, the men who perpetrated them contrived to hide under cover of the more absorbing great events of those years. Gould committed his thefts at a period when the public had little else to preoccupy its attention; hence they loomed up in the popular mind as correspondingly large and important.
A SPECIMEN OF GOULD'S TUITION.
At the very dawn of his career in 1857, as a railroad owner, Gould had the opportunity of securing valuable and gratuitous instruction in the ways by which railroad projects and land grants were being bribed through Congress. He was then only twenty-one years old, ready to learn, but, of course, without experience in dealing with legislative bodies. But the older capitalists, veterans at bribing, who for years had been corrupting Congress and the Legislatures, supplied him with the necessary information. Not voluntarily did they do it; their greatest ally was concealment; but one crowd of them had too baldly bribed Congress to vote for an act giving an enormous land grant in Iowa, Minnesota and other states, to the Des Moines Navigation and Railroad Company. The facts unearthed must have been a lasting lesson to Gould as to how things were done in the exalted halls of Congress. The charges made an ugly stir throughout the United States, and the House of Representatives, in self defense, had to appoint a special committee to investigate itself.
This committee made a remarkable and unusual report. Ordinarily in charges of corruption, investigating committees were accustomed to reporting innocently that while it might have been true that corruption was used, yet they could find no evidence that members had received bribes; almost invariably such committees put the blame, and the full measure of their futile excoriations, on ”the iniquitous lobbyists.” But this particular committee, surprisingly enough, handed in no such flaccid, whitewas.h.i.+ng report. It found conclusively that corrupt combinations of members of Congress did exist; and in recommended the expulsion of four members whom it declared guilty to receiving either money or land in exchange for their votes. One of these four expelled member, Orasmus B. Matteson, it appeared, was a leader of a corrupt combination; the committee branded him as having arranged with the railroad capitalists to use ”a large sum of money [$100,000] and other valuable considerations corruptly.” [Footnote: Reports of Committees, House of Representatives, Thirty-fourth Congress, Third Session, 1856/57. Report No. 243, Vol. iii. In subsequent chapters many further details are given of the corruption during this period.]
But it was essentially during the Civil War that Gould received his completest tuition in the great art of seizing property and privileges by bribing legislative bodies. While many sections of the capitalist cla.s.s were, as we have seen, swindling manifold hundreds of millions of dollars from a hard-pressed country, and reaping fortunes by exploiting the lives of the very defenders of their interests, other sections, equally mouthy with patriotism, were sneaking through Congress and the Legislatures act after act, further legalizing stupendous thefts.
PATRIOTISM AT FIFTY PER CENT.
Some of these acts, demanded by the banking interests, made the people of the United States pay an almost unbelievable usurious interest for loans. These banking statutes were so worded that nominally the interest did not appear high; in reality, however, by various devices, the bankers, both national and international, were often able to extort from twenty to fifty, and often one hundred per cent., in interest, and this on money which had at some time or somehow been squeezed out of exploited peoples in the United States or elsewhere.
By these laws the bankers were allowed to get annual payment from the Government of six per cent. interest in gold on the Government bonds that they bought. They could then deposit those same bonds with the Government, and issue their own bank notes against ninety per cent.
of the bonds deposited. They drew interest from the Government on the deposited bonds, and at the time charged borrowers an exorbitant rate of interest for the use of the bank notes, which pa.s.sed as currency.
It was by this system of double interest that they were able to sweep into their coffers hundreds upon hundreds of millions of dollars, not a dollar of which did they earn, and all of which were sweated out of the adversities of the people of the United States. From 1863 to 1878 alone the Government paid out to national banks as interest on bonds the enormous sum of $252,837,556.77. [Footnote: House Doc.u.ments, Forty-fifth Congress, Second Session, Ex. Doc.u.ment No. 34, Vol. xiv., containing the reply of Secretary of the Treasury Sherman, in answer to a resolution of the House of Representatives.] On the other hand, the banks were entirely relieved from paying taxes; they secured the pa.s.sage of a law exempting Government bonds from taxation. Armies were being slaughtered and legions of homes desolated, but it was a rich and safe time for the bankers; a very common occurrence was it for banks to declare dividends of twenty, forty, and sometimes one hundred, per cent.
It was also during the stress of this Civil War period, when the working and professional population of the nation was fighting on the battlefield, or being taxed heavily to support their brothers in arms, that the capitalists who later turned up as owners of various Pacific railroad lines were bribing through Congress acts giving them the most comprehensive perpetual privileges and great grants of money and of land.
Gould saw how all of the others of the wealth seekers were getting their fortunes; and the methods that he now plunged into use were but in keeping with theirs, a little bolder and more brutally frank, perhaps, but nevertheless nothing more than a repet.i.tion of what had long been going on in the entire sphere of capitalism.
CHAPTER X
THE SECOND STAGE OF THE GOULD FORTUNE
The first medium by which Jay Gould transferred many millions of dollars to his owners.h.i.+p was by his looting and wrecking of the Erie Railroad. If physical appearance were to be accepted as a gauge of capacity none would suspect that Gould contained the elements of one of the boldest and ablest financial marauders that the system in force had as yet produced. About five feet six inches in height and of slender figure, he gave the random impression of being a mild, meek man, characterized by excessive timidity. His complexion was swarthy and partly hidden by closely-trimmed black whiskers; his eyes were dark, vulpine and acutely piercing; his forehead was high. His voice was very low, soft and insinuating.
PRIVATE CONFISCATION OF THE ERIE RAILROAD.
The Erie Railroad, running from New York City to Buffalo and thence westward to Chicago, was started in 1832. In New York State alone, irrespective of gifts in other States, it received what was virtually a gift of $3,000,000 of State funds, and $3,217,000 interest, making $6,217,000 in all. Counties, munic.i.p.alities and towns through which it pa.s.sed were prevailed upon to contribute freely donations of money, lands and rights. From private proprietors in New York State it obtained presents of land then valued at from $400,000 to $500,000, [Footnote: Report on the New York and Erie Railroad Company, New York State a.s.sembly Doc.u.ment, No. 50, 1842. See also, Investigation of the Railroads of the State of New York, 1879, I: 100.] but now worth tens of millions of dollars. In addition, an extraordinary series of special privileges and franchises was given to it. This process was manifolded in every State through which the railroad pa.s.sed. The cost of construction and equipment came almost wholly from the grants of public funds. [Footnote: ”The Erie railway was built by the citizens of this State with money furnished by its people. The State in its sovereign capacity gave the corporation $3,000,000. The line was subsequently captured, or we may say stolen, by the fraudulent issue of more than $50,000,000 of stock.” ... ”An a.n.a.lysis of the Erie Reorganization bill, etc., submitted to the Legislature by John Livingston, Esq., counsel for the Erie Railway Shareholders, 1876.”]
Confiding in the fair promises of its projectors, the people credulously supposed that their interests would be safeguarded. But from time to time, Legislature after Legislature was corrupted or induced to enact stealthy acts by which the railroad was permitted to pa.s.s without restriction into the possession of a small clique of exploiters and speculators. Not only were the people cheated out of funds raised by public taxation and advanced to build the road--a common occurrence in the case of most railroads--but this very money was claimed by the capitalist owners as private capital, large amounts of bonds and stocks were issued against it, and the producers were a.s.sessed in the form of high freight and pa.s.senger rates to pay the necessary interest and dividends on those spurious issues.
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