Part 5 (2/2)

It might be pertinent to inquire why it became necessary for congress to a.s.sume the control of railroads already chartered under state authority.

It cannot be claimed that the states acted without authority in granting the charter; nor can the authority of the general government to take from the states the control of railroads within their border, be supported by any grant of power contained in the const.i.tution. On the contrary, the power is reserved to the states, and its exercise is denied to the general government. It cannot be urged that the interests of the people are subserved by this a.s.sumption of power; on the contrary, these acts of congress take from the public its rights reserved by the const.i.tution. But one answer can be given, _these acts were pa.s.sed for the promotion of selfish and corrupt ends_. In support of this, we need only state the fact, that in almost every instance where congress has attempted to re-charter companies organized under state authority, and granted them aid, members of congress who were members at the date of the pa.s.sage of the acts, were stockholders, and not unfrequently directors. Some congressmen who have been members for the last ten or twelve years, are stockholders in several of the companies, and at least one member of congress of twelve years standing is now a director in at least three companies that received grants of land, one of them getting large amounts of subsidy bonds, for all of which he voted, and for which, as often as occasion served, he has used his vote and influence in procuring additional privileges. We do not claim that every member of congress is interested in railroads; but we do a.s.sert that there are many senators and representatives who are personally interested, and that the proportion is so great that whenever it is desirable to have legislation it can be obtained without difficulty. To prove that the chartering and endowing of railroad companies is one of the princ.i.p.al occupations of the national legislature, we have only to look through the acts of congress the last two or three sessions. At the first session of the forty-second congress fourteen railroad bills were pa.s.sed, some of them conferring grants to companies yet in embryo, having no being save upon paper, but presenting ”great expectations” to our congressmen, who combine the business of granting charters and building railroads, and who find no indelicacy in becoming stockholders and directors in the corporations to which they, as congressmen, have voted lands and money. Some of these roads, under the acts of congress, present great inducements for investments, and in due time will receive proper attention. The effect of this species of legislation has been most baneful. The national congress, once the most pure and patriotic body in the world, has become the headquarters of all the unscrupulous men of the nation. It is under the control of dishonest and reckless men. Elections to seats in that body have become of such value, that to secure them men do not hesitate to pay more than the salary for the entire term. Nor do candidates always pay their own money. It is often furnished by rings and interests which require special legislation. It is now well understood that senators and representatives are in the market like other commodities. The purchase is made either in large donations of $10,000, $20,000, $30,000, or more from single corporations, or by shares, stock or bonds in companies chartered by congress, and afterwards fostered and protected by congressmen. So common has this practice become that it is not now considered disreputable. What in former years would have been deemed bribery and corruption are now nothing but fair business transactions.

We recall a case which ill.u.s.trates the purity of former legislation compared with what we see in our own day. Some thirty years ago, certain parties desired a charter for a denominational college. A Rev. Mr.

Strong was appointed to visit the capital and interest the legislature in behalf of the charter. He was introduced to a Mr. Cus.h.i.+ng, to whom he presented his case, and whom he sought to interest in favor of the grant. The grant of the charter was likely to meet with opposition, and to remove certain objections, Mr. Strong was anxious to have Mr. Cus.h.i.+ng examine into the matter fully, and as an inducement for making such an examination he was told that the friends of the measure would compensate him liberally for the time he might spend in such examination. This Mr.

Cus.h.i.+ng interpreted as an offer to bribe a member of a legislative body, and he felt bound to resist it. Accordingly he laid the matter before the house. That body by unanimous vote, ordered the sergeant-at-arms to arrest Mr. Strong, and bring him to the bar of the house. After an investigation into the truth of the charge, Mr. S. was found guilty and publicly reprimanded by the speaker. This happened before legislators had learned to speculate upon their official position. It was in simple times, when those elected to office supposed their first duty was to serve their country, and when it was an irrecoverable disgrace to receive a bribe. It was at a time when our law-makers had too much self-respect to purchase their election with tens of thousands of dollars, and then reimburse themselves by taking stock in, and dividends from, giant corporations chartered and created by themselves. How is it now? Let the facts answer. Cla.s.s or personal legislation, for special combinations, or in certain interests, is the rule, and legislation for the benefit of the whole people is the exception to that rule.

Congressmen, to secure an election, expend large sums of money, and when elected their first care is to _get even_. To accomplish their purpose, they resort to unconst.i.tutional legislation, such as granting exclusive privileges or jobs to individuals, for which indirect pecuniary consideration is received. But this alone would not suffice to reimburse them for their great outlay. The greatest source of profit to congressmen has been, and unless it is checked, will continue to be, found in railroad legislation.

CHAPTER X.

AN UNSETTLED ACCOUNT--A GUILTY DIRECTORY.

We now invite the attention of the reader to the account as it now stands with the subsidy bonds voted by congressmen to companies in which many who voted were stockholders and directors.

As the law stood prior to April, 1871, all railroad companies that had received government lands were required to pay the interest once in six months as it accrued. This interest had not been paid, and the secretary of the treasury withheld, to apply on the accrued interest, the amount earned by the different companies by the transportation of the mails, troops, &c., for government. Congress, composed in part of stockholders and directors in these same companies, pa.s.sed a law ordering the secretary to pay in money to the different companies one-half of the amount thus earned, and left it optional with the companies to pay, or not to pay the interest on their bonds. This they have not done, and the interest account of these companies with the government stands about as follows:--

Central Pacific, paid $ 527,025 Bal. due $5,841,351 Kansas Pacific, ” 973,905 ” ” 995,448 Union Pacific, ” 2,181,989 ” ” 4,779,763 Central Branch, U. P., ” 15,839 ” ” 477,969 Western Pacific, ” 9,350 ” ” 358,329 Sioux City & Pacific, ” 826 ” ” 388,780

Making the total amount of payments the sum of $3,708,935, and the amount that these companies owe government, as the accrued interest on subsidy bonds, $12,861,640. This is the amount due in July, 1872. Add the interest accruing since that date and these companies owe the government not less than $16,000,000 interest on their bonds. This amount, as well as future interest, and the princ.i.p.al of the bonds was at one time secured to the government; but when congressmen and their friends get a controlling interest in the companies, they procured the pa.s.sage of an act, supported by their own votes, which destroyed the security held by the government, and relieved the companies of the payment of this large amount of interest, thereby compelling the people to pay it, while the stockholders, including some of the same congressmen who had voted in favor of the act, received dividends on their stock and on their _Credit Mobilier_ stock to the amount of two and three hundred per cent; thus, by the abuse of the power vested in themselves as members of congress, compelling the people to pay the interest the companies should have paid, and pocketing in the shape of dividends the money so dishonestly obtained. If we needed any further proof to establish the fact that these Pacific railroads were in fact congressional jobs, that members of congress were looking to their own interests rather than to the interests of the people, we need but glance at the interest account of the Sioux City & Pacific company. The excuse pleaded of the ”necessities of government,” will not avail in this instance. While the interest account of this company is about $400,000, the account for the transportation of troops, mails, &c., over its road, amounts to the sum of $1,642, one-half of which has been applied on the interest account of the company, and the other half, under the act of congress, has been paid by the secretary of the treasury to the company.

The conclusion is irresistible, that the personal interest of congressmen, rather than the wants of the public, has controlled their action.

Connect with the incorporation of railroad companies, and special legislation in their favor, the legislation in favor of ”Indian rings,”

”whisky rings,” ”patent right combinations,” and the numerous other kinds of special legislation, with the advantages presented to legislators to make personal gain from all these sources, and we can well understand why men are willing to spend such large sums to secure an election to the United States senate, or house of representatives.

The baneful effects of the modern code of political morality are not seen in the legislative department of the government only. The same disregard of the rights of the people, and a determination to protect and aid combinations in their efforts toward self-aggrandizement, made at a sacrifice of those principles which are supposed to govern all persons holding places of trust, honor, or confidence, seem to influence to a great degree those holding high position in other departments of the government. The acts of congress chartering the Pacific railroad companies make it the duty of the president of the United States to appoint five government directors for these roads. Under the statutes these directors cannot own stock in the companies, nor have in them any personal interest whatever. They are supposed to be free from any bias for or against the companies: but they are appointed to represent the government, and to guard against and report to the secretary of the interior all abuses on the part of the companies, and at such times as they are required to so report, to also make such suggestions as in their opinion shall best subserve the interests of the public. It is made their duty to personally inspect the roads, during their building and after their completion. At least two of these government directors must have a place on all important committees appointed by the companies for the management and prosecution of their business. Any dishonesty on the part of the companies in letting contracts for the construction of their roads, or any misapplication of the grants made by congress, must have been known to these five government directors, or some of them, if they had properly discharged the duties imposed upon them by law. The formation of an inside ring, under the t.i.tle of ”The Credit Mobilier of America,” composed entirely of the directors and stockholders of the Union Pacific company, the letting of the contract for the construction of the road to one of the directors of the railroad company, who was also a director in the Credit Mobilier (and a member of congress), at more than double its actual cost, the transfer of this contract to certain trustees who were directors in both companies, in the manner stated in a preceding chapter of this work, and the declaration of large dividends on the stock of the companies at a time when the work on the road was barely begun, and before any dividends could possibly have been earned,--all these facts must have been known to the government directors, and concealed by them from the government. When it is remembered that some of these government directors were members of congress at the date of the pa.s.sage of the acts chartering the roads, there is but little question that the same influences controlling them in voting these large subsidies to the companies also controlled them as government directors in their supervision of the roads. This conclusion is strengthened on seeing that some of them became owners of stock in the Credit Mobilier.

The same corrupting influences have been felt in other departments of the government. The abuses practiced in the collection of customs by the officers at the different ports of entry, as shown at the recent investigations made by authority of congress, are but the natural sequence of the questionable course of the legislative department. The great frauds practiced by parties having contracts for furnis.h.i.+ng supplies to the Indian tribes are traceable to the same source. This a.s.sumption by congress of the power to grant charters to private monopolies, its unconst.i.tutional interference in matters reserved to state control, its determination to foster these gigantic corporations by princely grants, with the corruption incident to these selfish and greedy combinations, are the direct cause of the dishonesty prevailing everywhere among our public officers, and besides other rank growth have led to the imposition of burdens upon the people, oppressive to the last degree. The controlling purpose of a large portion of those elected or appointed to government offices seems to be to acc.u.mulate wealth without regard to the propriety or honesty of the means employed. In their eagerness to benefit themselves, all consideration for the public good, or respect for their obligations as sworn servants of the people, are of secondary importance. They accept office from purely selfish motives, and enter upon their duties with the same object in view animating those who embark in trade, manufactures, or commerce, viz: private gain.

Seemingly viewing the offices they hold as being their own private property, they use them as the banker uses his money--for purposes of speculation. Not unfrequently they permit themselves to be bought and sold, like any other articles of merchandise. While we do not claim that all public officers were pure prior to the legislative creation of the monopolies we have been examining, we do claim that previous to that sad departure, honesty was the rule, and not the exception. It was when congress entered upon the business of chartering railroad companies, donating public lands to them, and voting them money from the public treasury, that the rule changed; and when, in addition, congressmen became princ.i.p.al owners and directors in these companies, while still retaining their seats in congress, they placed themselves upon the record as unfaithful to their trust, and struck a blow at public morality which will be fatal to our popular government, unless resisted by the whole moral power of the nation.

And here we might well pause, and ask, what security have the people for the continuance of republican government? These gigantic corporations are in their nature anti-republican; they tend to a centralization of power; they compel the people to submit to their demands; they are under the protection of congress, under whose special legislation they are permitted to disregard state laws; their ramifications extend throughout the country; their artifices and money control the votes of the people; they elect their friends to both the senate and house; they organize and send strong bodies of men to the lobby of congress and state legislatures, well supplied with money to obtain the pa.s.sage of laws in their interest, and to prevent such legislation as would be detrimental to them, and in favor of the people; they have their friends and emissaries in every department of the government, and throughout the country, and they exercise a controlling influence not only at Was.h.i.+ngton, but at almost all the seats of state government. The offices filled by appointment of the executive and confirmation of the senate, are too often the agencies of this same influence. We would not be understood as saying that the president acts corruptly in these appointments; we mean that the influences that secure many of the presidential nominations are the same as used by these corporations in the election of _their_ senators and representatives. The appointment of judges of the supreme court of the United States has, in at least two instances, within the last few years, been made through the influence and in the interest of these monopolies. These corporations are also represented in the cabinet. It is well understood that the removal of Attorney General Ackerman, and the appointment of his successor, was done by these corporate influences. The fact that the secretary of the interior, to whom reports should have been regularly made of the progress and condition of the Pacific railroad, was silent, while private fortunes were being fraudulently taken from the public treasury, proves that he also was under the same influence. It can be accepted as an established fact, that all the departments of the government are to a great extent controlled by corporations and combinations of speculators whose interests are adverse to those of the people, and the result is, that statutes are enacted, executive offices appointed, and decisions of court rendered in the favor of these powerful cla.s.ses, while the rights guaranteed to the people by the const.i.tution are disregarded.

The influence of corporations is also powerful in the administration of state governments. While no such gigantic monopolies as the Pacific railroad have been organized in any state yet, either by special charters granted by state legislatures, or under general incorporation laws, railroad corporations in large numbers have been organized, and by combining their influence, have obtained control of most of the state governments; they have been granted special and exclusive privileges, and by the use of money and patronage have been able to control state conventions, state legislatures, and state courts. As a logical result, the people are taxed, while railroad companies are practically free from taxation; subsidies to corporations are authorized and declared to be const.i.tutional, and the people are obliged to submit to rates of charges for transportation of freight that amount to a confiscation of the farm products of the country. We need not enter into a history of state grants to railroad companies, for it is familiar to all; the same corrupt practices incident to national, attend state, legislation. In many instances, corporations have organized under state statutes, or obtained special charters from state legislatures, located their roads, procured local aid, and then obtained from congress land grants for their roads, and have thus become powerful in the states where they are located, while other companies have built their roads exclusively with the means afforded by local aid voted under state laws, and loans of money or sale of bonds; but in every instance so planning and contriving that the entire road shall pa.s.s into the exclusive control of a select few, leaving to those who furnished the local aid no rights or privileges in connection with the company, or the road, save that of paying extortionate freights and burdensome taxes.

CHAPTER XI.

THE SOLE PURPOSES OF TAXATION.

Taxes can only be levied, and collected, for public purposes; but all the property of the country can be taxed to its entire value, when the public good requires it. The exigency demanding high rates of taxation is left to the determination of the legislatures of the states, and of the general government. No taxes can be legally levied or collected save for the support of the government, state and national, and subject to the restrictions incorporated in the const.i.tution. All other taxes imposed upon the people are unconst.i.tutional, illegal, and oppressive, and should be declared absolutely void. Direct taxation, for the support of the general government, has never been practiced in time of peace.

The usual method for raising a sufficient revenue for its support has been by duties, or tariff imposed by acts of congress upon imports. This has always been deemed the best method for raising the revenue necessary for the support of the government. The powers and duties of the general government are limited and restricted by the const.i.tution of the United States; and as its legislative, executive, and judicial powers are thus limited, it follows that its power to impose taxes upon the people is limited in the same manner, and that it can tax for no purpose save for defraying the expenses of its different departments in the exercise of the powers delegated by the federal const.i.tution. This conceded, all that can be claimed by those who administer the affairs of the nation, unless they transcend the const.i.tutional limit, is conceded. The power to appropriate the lands or money of the public to private parties or corporations not being found in the const.i.tution, nor implied in any of the granted powers, all such appropriations are usurpations; they are donations of the people's money and property to private corporations and individuals in violation of the const.i.tutional restrictions; and no authority is vested in congress to tax the people, either directly or indirectly, for the purpose of making return of the money and property thus wrongfully taken from them. A private corporation is not a public necessity; its franchises are private property, and even if the United States owned the whole of its stock, and took the entire control of its business, it could not become a public corporation, for the reason that congress does not possess the power, under the const.i.tution, to create private corporations. The fact that the United States owned the stock and controlled the corporation would not impart to it any of the attributes of sovereignty, but in so far as the general government was interested in the corporation, it would be treated as any other private party, and would be amenable to the same law and subject to the same jurisdiction as private parties or individuals. If the action of the general government can confer none of the attributes of sovereignty upon a private corporation--if it has no const.i.tutional authority to donate lands or money to railroad companies--how can it lawfully collect taxes from the people, either by direct levies, or in duties upon articles of commerce, for the purpose of re-imbursing the government for the lands donated to corporations, or to pay either the princ.i.p.al or interest on the bonds given to these corporations? As well might congress levy a direct tax upon the property of the people for the purpose of donating to a private party sufficient means to build a residence; there is not found in the const.i.tution any warrant for either of such levies. Both alike are unwarranted usurpations of power, not to be justified under any grant of power from the people to the federal government. To admit that the congress of the United States possesses the power to tax the people for any purpose save for the support of the general government, is to admit that the const.i.tution is elastic, subject to any congressional construction, and liable to be used as an instrument for promoting personal and private ends. Congress had no power to vote subsidy bonds to railroad corporations, as we have already shown; nor could it release these corporations from the payment of these bonds, and the interest as it accrues, and collect the amount from the people in duties on imports, or in any other kind of taxes. No such power was ever delegated to the general government by the people. This power cannot be found in any part of the const.i.tution. While this is true, the people are now taxed annually to the amount of many millions of dollars to pay the interest on the bonds issued to the Pacific railroads. Taxes are also collected to the amount of $18,000,000 or $20,000,000 to pay the interest on the banking capital of the country, the stock of a gigantic corporation, chartered by congress, but in the hands and under the control of private parties and companies. While the general government, under the const.i.tution, has the control of the money of the country, and its coinage, value, etc., and can provide such means as shall be deemed best for the administration of the national or public finances, it has no power to enter into private banking; and because it has not this power, it cannot create private banking inst.i.tutions and tax the people for their support. Any tax levied upon the citizen by the general government for any purpose whatsoever, save for the necessary expenses in the administration of the same, in all of its departments, in accordance with the letter and spirit of the const.i.tution, is without authority, and violates the fundamental law. The levy of taxes in aid of private corporations subserves none of the purposes of the government, and is the exercise of a power not possessed by congress. Our position is fully sustained by legal adjudications, and by the writings of eminent jurists. Chief Justice Marshall, in his writings upon the const.i.tution, has considered this point. He says, on page 345 of his work: ”It is, we think, a sound principle, that when a government becomes a partner in a trading company, it divests itself, so far as concerns the transactions of the company, of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it a.s.sociates itself, and takes the character which belongs to its a.s.sociates, and to the business which it transacts. * * * As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no other powers in the management of the affairs of the corporation than are expressly given by the incorporation act. The government of the Union held shares in the old Bank of the United States; but the privileges of the government were not imparted by that circ.u.mstance to the bank.”

If there exists any authority in the general government to create a corporation for any purpose, it is in relation to the finances of the country. The necessity of a fiscal agent of some kind would seem to warrant the creation of a banking corporation. But, if the power is conceded, it does not follow that the people should be taxed to provide a bounty, payable semi-annually, to the private companies who are engaged in banking, and who alone receive the profits arising from the business. Yet the act of congress creating the banks provides for the payment of semi-annual interest on the capital invested; and this interest is collected from the people. All railroad corporations, created by act of congress, are absolutely private corporations. The insertion in the charter of the words--”to secure the more safe and speedy transportation of the mails, troops, munitions of war, and government supplies”--found in all of these charters, does not change the character of the corporations. The grants are made to private parties; the roads are under their control; they receive aid from the general government, but in their own names own and control the roads, and can, at any time, dispose of the roads and franchises, and the general government has no power to prevent any action the companies may choose to adopt so long as they regard the provisions of their charters.

No statesman or jurist of our country has at any time, until within the last few years, claimed that congress could create corporations for private purposes; on the contrary, in all of the earlier decisions of the federal courts, it was uniformly conceded that congress did not possess the power to create such corporations. Chancellor Kent, Chief Justice Marshall, and other eminent writers, are all agreed that, under the const.i.tution, congress cannot create a private corporation. If congress had no const.i.tutional right to create railroad corporations, how can it possess the power to tax the people to pay their debts? The people are now paying at least $8,000,000 per annum in shape of taxes for the purpose of liquidating the interest due from railroads chartered by congress in violation of the fundamental law of the land. This large amount of taxes is collected and applied by the general government in payment of interest due from railroad companies, because the influence of congressmen and their friends, in these companies, was sufficiently powerful to override const.i.tutional barriers, and to procure the pa.s.sage of an act enabling the parties holding the stock to pocket the earnings of their roads and make good the deficit in their interest account by taxing the people.

The whole history of congressional legislation does not present a case of such entire disregard of the provisions of the const.i.tution, and such dishonest and corrupt legislation as is contained in the acts of congress relating to the Pacific railroads. It is questionable whether another instance can be found in this or any other country, having a const.i.tutional government, where legislators, by direct vote, have taken millions of money from the public treasury and given it to private corporations of which they were members and directors, and to make good the amount thus taken from the treasury have provided _by law_ for its collection from the people in the shape of taxes and duties! When we remember that congress does not possess the power to charter private corporations; that in so doing it violates the letter and spirit of the const.i.tution; upon what principle can it claim the right to tax the people for the benefit of these private corporations? We repeat, no country in the world, governed by a written const.i.tution, offers a parallel case. Not even in France, under the personal government of the late emperor, would such an unwarranted act have been attempted.

We are aware that it is claimed that railroad corporations are public corporations--and this granted, taxes may be rightfully levied and collected for their benefit. But we do _not_ grant this, and shall, in the following pages, essay to demonstrate that all railroad corporations are private, being owned and controlled by private citizens, and not by the state or national government. But admitting they are public and not private corporations, the general government even then cannot legally charter or control them, because the power for that purpose has never been delegated by the states or the people; and it follows that the general government cannot rightfully impose taxes upon the people for the support of corporations over which it can have no control. If congress can levy taxes for the construction and support of railroads, and take the management and control of them, it certainly can take the entire supervision of all the highways in all the states, provide for their construction, and tax the people at will for that purpose. This being admitted, no local or police regulation in any of the states is exclusively under the jurisdiction of the state governments; but the general government may at any time take the absolute control of the governmental affairs of the several states, and thus complete the centralization of power now so rapidly developing in all the departments at Was.h.i.+ngton. The a.s.sumption of the right to tax the people for any and every purpose that to congress shall seem expedient, irrespective of const.i.tutional prohibition, is at once destructive of the rights that were supposed to be guaranteed and preserved to the whole people by the const.i.tution. If the will of those men who happen to occupy seats in congress (and that will too often controlled by personal interest) is to govern, then all const.i.tutional government is at an end, and the liberty and property of the citizen have no const.i.tutional safeguard. Taxes to the entire value of all the wealth in the country may be levied by the general government, and the citizen of this republic holds his entire estate at the will of the persons who fill the offices of the country.

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