Great Fortunes from Railroads
by Gustavus Myers
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Before setting out to relate in detail the narrative of the amassing of the great individual fortunes from railroads, it is advisable to present a preliminary survey of the concatenating circumstances leading up to the time when these vast fortunes were rolled together. Without this explanation, this work would be deficient in clarity, and would leave unelucidated many important points, the absence of which might puzzle or vex the reader.

Although industrial establishments, as exemplified by mills, factories and shops, much preceded the construction of railroads, yet the next great group of fortunes to develop after, and along with, those from land were the fortunes plucked from the control and manipulation of railroad systems.


Under the first stages of the old chaotic competitive system, in which factory warred against factory, and an intense struggle for survival and ascendency enveloped the whole tense sphere of manufacturing, no striking industrial fortunes were made.

Fortunate was that factory owner regarded who could claim $250,000 clear. All of those modern and complex factors offering such unbounded opportunities for gathering in spoils mounting into the hundreds of millions of dollars, were either unknown or in an inchoate or rudimentary state. Invention, if we may put it so, was just blossoming forth. Hand labor was largely prevalent. Huge combinations were undreamed of; paper capitalization as embodied in the fictitious issues of immense quantities of bonds and stocks was not yet a part of the devices of the factory owner, although it was a fixed plan of the bankers and insurance companies.

The factory owner was the supreme type of that sheer individualism which had burst forth from the restraints of feudalism. He stood alone fighting his commercial contests with persistent personal doggedness. Beneath his occasional benevolence and his religious professions was a wild ardor in the checkmating or bankruptcy of his competitors. These were his enemies; he fought them with every mercantile weapon, and they him; and none gave quarter.

Apart from the destructive character of this incessant warfare, dooming many of the combatants, other intervening factors had the tendency of holding back the factory owners' quick progress— obstacles and drawbacks copiously described in later and more appropriate parts of this work.


In contrast to the slow, almost creeping pace of the factory owners in the race for wealth, the railroad owners sprang at once into the lists of mighty wealth-possessers, armed with the most comprehensive and puissant powers and privileges, and vested with a sweep of properties beside which those of the petty industrial bosses were puny. Railroad owners, we say; the distinction is necessary between the builders of the railroads and the owners. The one might construct, but it often happened that by means of cunning, fraud and corruption, the builders were superseded by another set of men who vaulted into possession.

Looking back and summing up the course of events for a series of years, it may be said that there was created over night a number of entities empowered with extraordinary and far-reaching rights and powers of ownership.

These entities were called corporations, and were called into being by law. Beginning as creatures of law, the very rights, privileges and properties obtained by means of law, soon enabled them to become the dictators and masters of law. The title was in the corporation, not in the individual; hence the men who controlled the corporation swayed the substance of power and ownership. The factory was usually a personal affair, owned by one man or in co-partnership; to get control of this property it was necessary to get the owner in a financial corner and force him to sell out, for, as a rule, he had no bond or stock issues. But the railroad corporation was a stock corporation; whoever secured control of a majority of the stock became the legal administrator of its policies and property. By adroit manipulation, intimidation, superior knavery, and the corrupt domination of law, it was always easy for those who understood the science of rigging the stock market, and that of strategic undermining, to wrest the control away from weak, or (treating the word in a commercial sense) incompetent, holders. This has been long shown by a succession of examples.


Thus this situation, so singularly conflicting with the theoretical majesty of the law, was frequently presented: A band of men styling themselves a corporation received a perpetual charter with the most sweeping rights and properties. In turn, the law interposed no effective hindrance to the seizing of their possessions by any other group proving its power to grasp them. All of this was done under nominal forms of law, but differed little in reality from the methods during medieval times when any baron could take another baron's castle and land by armed force, and it remained his until a stronger man came along and proved his title likewise.

Long before the railroad had been accepted commercially as a feasible undertaking, the trading and land-owning classes, as has been repeatedly pointed out, had demonstrated very successfully how the forms of government could be perverted to enrich themselves at the expense of the working population.

Taxation laws, as we have seen, were so devised that the burden in a direct way fell lightly on the shipping, manufacturing, trading, banking and land-owning classes, while indirectly it was shoved almost wholly upon the workers, whether in shop, factory or on farm. Furthermore, the constant response of Government, municipal, State and National, to property interests, has been touched upon; how Government loaned vast sums of public money, free of interest, to the traders, while at the same time refusing to assist the impoverished and destitute; how it granted immunity from punishment to the rich and powerful, and inflicted the most drastic penalties upon poor debtors and penniless violators of the law; how it allowed the possessing classes to evade taxation on a large scale, and effected summarily cruel laws permitting landlords to evict tenants for non- payment of rent. These and many other partial and grievously discriminative laws have been referred to, as also the refusal of Government to interfere in the slightest with the commercial frauds and impositions constantly practiced, with all their resulting great extortions, upon the defenceless masses.

Of the long-prevailing frauds on the part of the capitalists in acquiring large tracts of public land, some significant facts have been brought out in preceding chapters. Those facts, however, are only a few of a mass. When the United States Government was organized, most of the land in the North and East was already expropriated. But immense areas of public domain still remained in the South and in the Middle West. Over much of the former Colonial land the various legislatures claimed jurisdiction, until, one after another, they ceded it to the National Government. With the Louisiana purchase, in 1805, the area of public domain was enormously extended, and consecutively so later after the Mexican war.


From the very beginning of the government, the land laws were arranged to discriminate against the poor settler. Instead of laws providing simple and inexpensive ways for the poor to get land, the laws were distorted into a highly effective mechanism by which companies of capitalists, and individual capitalists, secured vast tracts for trivial sums. These capitalists then either held the land, or forced settlers to pay exorbitant prices for comparatively small plots. No laws were in existence compelling the purchaser to be a bona fide settler. Absentee landlordism was the rule. The capitalist companies were largely composed of Northern, Eastern and Southern traders and bankers. The evidence shows that they employed bribery and corruption on a great scale, either in getting favorable laws passed, or in evading such laws as were on the statute books by means of the systematic purchase of the connivance of Land Office officials.

By act of Congress, passed on April 21, 1792, the Ohio Land Company, for example, received 100,000 acres, and in the same year it bought 892,900 acres for $642,856.66. But this sum was not paid in money. The bankers and traders composing the company had purchased, at a heavy discount, certificates of public debt and army land warrants, and were allowed to tender these as payment. [Footnote: U. S. Senate Executive Documents, Second Session, Nineteenth Congress, Doc. No. 63.] The company then leisurely disposed of its land to settlers at an enormous profit. Nearly all of the land companies had banking adjuncts. The poor settler, in order to settle on land that a short time previously had been national property, was first compelled to pay the land company an extortionate price, and then was forced to borrow the money from the banking adjuncts, and give a heavy mortgage, bearing heavy interest, on the land. [Footnote: U. S. Senate Documents, First Session, Twenty-fourth Congress, 1835-36, Doc. No. 216: 16.] The land companies always took care to select the very best lands. The Government documents of the time are full of remonstrances from legislatures and individuals complaining of these seizures, under form of law, of the most valuable areas. The tracts thus appropriated comprised timber and mineral, as well as agricultural, land.


One of the most scandalous land-company transactions was that involving a group of Southern and Boston capitalists. In January, 1795, the Georgia Legislature, by special act, sold millions of acres in different parts of the State of Georgia to four land companies. The people of the State were convinced that this purchase had been obtained by bribery. It was made an election issue, and a Legislature, comprising almost wholly new members, was elected. In February, 1796, this Legislature passed a rescinding act, declaring the act of the preceding year void, on the ground of its having been obtained by "improper influence." In 1803 the tracts in question were transferred by the Georgia Legislature to the United States Government.

The Georgia Mississippi Land Company was one of the four companies. In the meantime, this company had sold its tract, for ten cents an acre, to the New England Mississippi Land Company. Although committee after committee of Congress reported that the New England Mississippi Land Company had paid little or no actual part of the purchase price, yet that company, headed by some of the foremost Boston capitalists, lobbied in Congress for eleven years for an act giving it a large indemnity. Finally, in 1814, Congress passed an indemnification act, under which the eminent Bostonians, after ten years more lobbying, succeeded in getting an award from the United States Treasury of $1,077,561.73. The total amount appropriated by Congress on the pretense of settling the claims of the various capitalists in the "Yazoo Claims" was $1,500,000. [Footnote: Senate Documents, Eighteenth Congress, Second Session, 1824-25, Vol. ii, Doc. No. 14, and Senate Documents, Twenty-fourth Congress, 1836-37, Vol. ii, No. 212. After the grants were secured, the companies attempted to swindle the State of Georgia by making payments in depreciated currency. Georgia refused to accept it. When the grant was rescinded, both houses of the Georgia Legislature marched in solemn state to the Capitol front and burned the deed.] The ground upon which this appropriation was made by Congress was that the Supreme Court of the United States had decided that, irrespective of the methods used to obtain the grant from the Georgia Legislature, the grant, once made, was in the nature of a contract which could not be revoked or impaired by subsequent legislation. This was the first of a long line of court decisions validating grants and franchises of all kinds secured by bribery and fraud.

It was probably the scandal arising from the bribery of the Georgia Legislature that caused popular ferment, and crystallized a demand for altered laws. In 1796 Congress declared its intention to abandon the prevailing system of selling millions of acres to companies or individuals. The new system, it announced, was to be one adapted to the interests of both capitalist and poor man. Land was thereafter to be sold in small quantities on credit. Could the mechanic or farmer demand a better law? Did it not hold out the opportunity to the poorest to get land for which payment could be gradually made?

But this law worked even better to the advantage of the capitalist class than the old. By bribing the land officials the capitalists were able to cause the choicest lands to be fraudulently withheld, and entered by dummies. In this way, vast tracts were acquired. Apparently the land entries were made by a large number of intending settlers, but these were merely the intermediaries by which capitalists secured great tracts in the form of many small allotments. Having obtained the best lands, the capitalists then often held them until they were in demand, and forced actual settlers to pay heavily for them. During all of this time the capitalists themselves held the land "on credit." Some of them eventually paid for the lands out of the profits made from the settlers, but a great number of the purchasers cheated the Government almost entirely out of what they owed. [Footnote: On Sept. 30, 1822, "credit purchasers" owed the Government: In Ohio, $1,260,870.87; in Indiana, $1,212,815.28; in Illinois, $841,302.80; in Missouri, $734,108.87; in Alabama, $5,760,728.01; in Mississippi, $684,093.50; and in Michigan, $50,584.82—a total of nearly $10,550,000. (Executive Reports, First Session, Eighteenth Congress, 1824, Report No. 61.) Most of these creditors were capitalist land speculators.]

The capitalists of the period contrived to use the land laws wholly to their own advantage and profit. In 1824, the Illinois Legislature memorialized Congress to change the existing laws. Under them, it recited, the best selections of land had been made by non-resident speculators, and it called upon Congress to pass a law providing for selling the remaining lands at fifty cents an acre. [Footnote: U. S. Senate Documents, Second Session, Eighteenth Congress, 1824-25, Vol. ii, Doc. No. 25.] Other legislatures petitioned similarly. Yet, notwithstanding the fact that United States officials and committees of Congress were continually unearthing great frauds, no real change for the benefit of the poor settler was made.


The land frauds were great and incessant. In a long report, the United States Senate Committee on Public Lands, reporting on June 20, 1834, declared that the evidence it had taken established the fact that in Ohio and elsewhere, combinations of capitalist speculators, at the public sales of lands, had united for the purpose of driving other purchasers out of the market and in deterring poor men from bidding. The committee detailed how these companies and individuals had fraudulently bought large tracts of land at $1.25 an acre, and sold the land later at exorbitant prices. It showed how, in order to accomplish these frauds, they had bought up United States Land Office Registers and Receivers. [Footnote 8: U. S. Senate Documents, First Session, Twenty-third Congress, 1833-34, Vol. vi, Doc. No. 461:1-91.]

Another exhaustive report was handed in by the United States Senate Committee on Lands, on March 3, 1835. Many of the speculators, it said, filled high offices in States where public lands bought by them were located; others were people of "wealth and intelligence." All of them "naturally united to render this investigation odious among the people." The committee told how an attempt had been made to assassinate one of its members. "The first step," it set forth, "necessary to the success of every scheme of speculation in the public lands, is to corrupt the land officers, by a secret understanding between the parties that they are to receive a certain portion of the profits." [Footnote: U. S. Senate Documents, Second Session, Twenty-third Congress, Vol. iv, Doc. No. 151: 2.] The committee continued:

The States of Alabama, Mississippi and Louisiana have been the principal theatre of speculations and frauds in buying up the public lands, and dividing the most enormous profits between the members of the different companies and speculators. The committee refers to the depositions of numerous respectable witnesses to attest the various ramifications of these speculations and frauds, and the means by which they have been carried into effect.... [Footnote: Ibid., 3]

Describing the great frauds in Louisiana, Benjamin F. Linton, U. S. District Attorney for the Western District of Louisiana, wrote, on August 25, 1835, to President Jackson: "Governments, like corporations, are considered without souls, and according to the code of some people's morality, should be swindled and cheated on every occasion." Linton gave this picture of "a notorious speculator who has an immense extent of claims":

He could be seen followed to and from the land office by crowds of free negroes, Indians and Spaniards, and the very lowest dregs of society, in the counties of Opelousas and Rapides, with their affidavits already prepared by himself, and sworn to before some justice of the peace in some remote county. These claims, to an immense extent, are presented and allowed. And upon what evidence? Simply upon the evidence of the parties themselves who desire to make the entry! [Footnote: U. S. Senate Documents, Second Session, Twenty- fourth Congress, 1836-37, Vol. ii, Doc. No. 168: 5.]

The "credit" system was gradually abandoned by the Government, but the auction system was retained for decades. In 1847, the Government was still selling large tracts at $1.25 an acre, nominally to settlers, actually to capitalist speculators or investors. More than two million acres had been sold every year for a long period. The House Committee on Public Lands, reporting in 1847, disclosed how most of the lands were bought up by capitalists. It cited the case of the Milwaukee district where, although 6,441 land entries had been made, there were only forty actual settlers up to 1847. "This clearly shows," the committee stated, "that those who claimed the land as settlers, are either the tools of speculators, to sequester the best lands for them... or the claim is made on speculation to sell out." [Footnote: Reports of Committees, First Session, Thirtieth Congress, 1847-48, Vol. iii, Report No. 732:6.]

The policy of granting enormous tracts of land to corporations was revived for the benefit of canal and railroad companies. The first railroad company to get a land grant from Congress was the Illinois Central, in 1850. It received as a gift 2,595,053 acres of land in Illinois. Actual settlers had to pay the company from $5 to $15 an acre.

Large areas of land bought from the Indian tribes by the Government, almost at once became the property of canal or railroad corporations by the process of Government grants. A Congressional document in 1840 (Senate Document No. 616) made public the fact that from the establishment of the Federal Government to 1839, the Indian tribes had ceded to the Government a total of 442,866,370 acres. The Indian tribes were paid either by grants of land elsewhere, or in money and merchandise. For those 442,866,370 acres they received exchange land valued at $53,757,400, and money and merchandise amounting to $31,331,403.


The trading, banking and landed class had learned well the old, all- important policy of having a Government fully susceptible to their interests, whether the governing officials were put in office by them, and were saturated with their interests, views and ideals, or whether corruption had to be resorted to in order to attain their objects. At all events, the propertied classes, in the main, secured what they wanted. And, as fast as their interests changed, so did the acts and dicta of Government change.

While the political economists were busy promulgating the doctrine that it was not the province of Government to embark in any enterprise other than that of purely governing—a doctrine precisely suiting the traders and borrowed from their demands—the commercial classes, early in the nineteenth century, suddenly discovered that there was an exception. They wanted canals built; and as they had not sufficient funds for the purpose, and did not see any immediate profit for themselves, they clamored for the building of them by the States. In fine, they found that it was to their interest to have the States put through canal projects on the ground that these would "stimulate trade." The canals were built, but the commercial classes in some instances made the blunder of allowing the ownership to rest in the people.

Never again was this mistake repeated. If it proved so easy to get legislatures and Congress to appropriate millions of the public funds for undertakings profitable to commerce, why would it not be equally simple to secure the appropriation plus the perpetual title? Why be satisfied with one portion, when the whole was within reach?

True, the popular vote was to be reckoned with; it was a time when the people scanned the tax levy with far greater scrutiny than now; and they were not disposed to put up the public funds only that private individuals might reap the exclusive benefit. But there was a way of tricking and circumventing the electorate. The trading and land-owning classes knew its effectiveness. It was they who had utilized it; who from the year 1795 on had bribed legislatures and Congress to give them bank and other charters. Bribery had proved a signal success. The performance was extended on a much wider scale, with far greater results, and with an adroitness revealing that the capitalist class had learned much by experience, not only in reaching out for powers that the previous generation would not have dared to grant, but in being able to make plastic to its own purposes the electorate that believed itself to be the mainspring of political power.


The first great canal, built in response to the demands of the commercial class, was the Erie Canal, completed in 1825. This waterway was constructed at public expense, and was owned by New York State. The commercial men could succeed in having it managed for their purposes and profit, and the politicians could often extract plunder from the successive contracts, but there was no opportunity or possibility for the exercise of the usual capitalist methods of fraudulent diversion of land, or of over-capitalization and exorbitant rates with which to pay dividends on fictitious stock.

Very significantly, from about the very time when the Erie Canal was finished, the era of the private canal company, financed by the Government, began. One after another, canal companies came forward to solicit public funds and land grants. These companies neither had any capital of their own, nor was capital necessary. The machinery of Government, both National and State, was used to supply them with capital.

The Chesapeake and Ohio Canal Company received, up to 1839, the sum of $2,500,000 in funds appropriated by the United States Government, and $7,197,000 from the State of Maryland.

In 1824 the United States Government began giving land grants for canal projects. The customary method was the granting by Congress of certain areas of land to various States, to be expressly given to designated canal companies. The States in donating them, sometimes sold them to the canal companies at the nominal rate of $1.25 an acre. The commuting of these payments was often obtained later by corrupt legislation.

From 1924 to 1834, the Wabash and Erie Canal Company obtained land grants from the Government amounting to 826,300 acres. The Miami and Dayton Canal Company secured from the Government, in 1828 and 1833, a total grant of 333,826 acres. The St. Mary's Falls Ship Canal Company received 750,000 acres in 1852; the Portage Lake and Lake Superior Ship Canal Company, 400,000 acres in 1865-66; and the Lac La Belle Ship Canal Company, 100,000 acres in 1866. Including a grant by Congress in 1828 of 500,000 acres of public land for general canal purposes, the land grants given by the National Government to aid canal companies, totalled 4,224,073.06 acres, mostly in Indiana, Ohio, Illinois, Wisconsin and Michigan.

Whatever political corruption accompanied the building of such State- owned canals as the Erie Canal, the primary and fundamental object was to construct. In the case of the private canal companies, the primary and fundamental object was to plunder. The capitalists controlling these companies were bent upon getting rich quickly; it was to their interest to delay the work as long as possible, for by this process they could periodically go to Legislatures with this argument: That the projects were more expensive and involved more difficulties than had been anticipated; that the original appropriations were exhausted, and that if the projects were to be completed, fresh appropriations were imperative. A large part of these successive appropriations, whether in money, or land which could be sold for money, were stolen in sundry indirect ways by the various sets of capitalist directors. The many documents of the Maryland Legislature, and the messages of the successive Governors of Maryland, do not tell the full story of how the Chesapeake and Ohio Canal project was looted, but they give abundantly enough information.


Many of the canal companies, so richly endowed by the Government with great land grants, made little attempt to build canals. What some of them did was to turn about and defraud the Government out of incalculably valuable mineral deposits which were never included in the original grants.

In his annual report for 1885, Commisioner Sparks, of the United States General Land Office told (House Executive Documents, 1885-86, Vol. II) how, by 1885, the Portage Lake "canal" was only a worthless ditch and a complete fraud. What had the company done with its large land grant? Instead of accepting the grant as intended by Congress, it had, by means of fraudulent surveys, and doubtless by official corruption, caused at least one hundred thousand acres of its grant to be surveyed in the very richest copper lands of Wisconsin.

The grants originally made by Congress were meant to cover swamp lands—that is, lands not particularly valuable for agricultural uses, but which had a certain value for other purposes. Mineral lands were strictly excluded. Such was the law: the practice was very different. The facility with which capitalists caused the most valuable mineral, grazing, agricultural and timber lands to be fraudulently surveyed as "swamp" lands, is described at length a little later on in this work. Commissioner Sparks wrote that the one hundred thousand acres appropriated in violation of explicit law "were taken outside of legal limits, and that the lands selected both without and within such limits were interdicted lands on the copper range" (p. 189). Those stolen copper deposits were never recovered by the Government nor was any attempt made to forfeit them. They comprise to-day part of the great copper mines of the Copper Trust, owned largely by the Standard Oil Company.

The St. Mary's Falls Canal Company likewise stole large areas of rich copper deposits. This fact was clearly revealed in various official reports, and particularly in the suit, a few years ago, of Chandler vs. Calumet and Hecla Mining Company (U. S. Reports, Vol. 149, pp. 79-95). This suit disclosed the fact that the mines of the Calumet and Hecla Mining Company were located on part of the identical alleged "swamp" lands, granted by Congress in 1852. The plaintiff, Chandler, claimed an interest in the mines. Concluding the court's decision, favoring the Calumet and Hecla Mining Company, this significant note (so illustrative of the capitalist connections of the judiciary), appears: "Mr. Justice Brown, being interested in the result, did not sit in this case and took no part in its decision."

Whatever superficial or partial writers may say of the benevolent origin of railroads, the fact is that railroad construction was ushered in by a widespread corruption of legislators that put to shame the previous debauchery in getting bank charters. In nearly every work on the subject the assertion is dwelt upon that railroad builders were regarded as public benefactors; that people and legislatures were only too glad to present them with public resources. There is just a slight substance of truth in this alleged historical writing, but nothing more. The people, it is true, were eager, for their own convenience, to have the railroads built, but unwilling to part with their hard-wrung taxes, their splendid public domain, and their rights only that a few men, part gamblers and part men of energy and foresight, should divert the entire donation to their own aggrandizement. For this attitude the railroad promoters had an alluring category of arguments ready.


Through the public press, and in speeches and pamphlets, the people were assured in the most seductive and extravagant language that railroads were imperative in developing the resources of the country; that they would be a mighty boon and an immeasurable stimulant to progress. These arguments had much weight, especially with a population stretched over such a vast territory as that of the United States. But alone they would not have accomplished the ends sought, had it not been for the quantities of cash poured into legislative pockets. The cash was the real eloquent persuader. In turn, the virtuous legislators, on being questioned by their constituents as to why they had voted such great subsidies, such immense land grants and such sweeping and unprecedented privileges to private corporations, could fall back upon the justification (and a legitimate one it seemed) that to get the railroads built, public encouragement and aid were necessary.

Many of the projectors of railroads were small tradesmen, landlords, mill owners, merchants, bankers, associated politicians and lawyers. Not infrequently, however, did it happen that some charters and grants were obtained by politicians and lawyers who, at best, were impecunious sharpers. Their greatest asset was a devious knowledge of how to get something for nothing. With a grandiloquent front and a superb bluff they would organize a company to build a railroad from this to that point; an undertaking costing millions, while perhaps they could not pay their board bill. An arrangement with a printer to turn out stock issues on credit was easy; with the promise of batches of this stock, they would then get a sufficient number of legislators to vote a charter, money and land.

After that, the future was rosy. Bankers, either in the United States or abroad, could always be found to buy out the franchise or finance it. In fact, the bankers, who themselves were well schooled in the art of bribery and other forms of corruption, [Footnote: "Schooled in the art of bribery."—In previous chapters many facts have been brought out showing the extent of corrupt methods used by the bankers. The great scandal caused in Pennsylvania in 1840 by the revelations of the persistent bribery carried on by the United States Bank for many years, was only one of many such scandals throughout the United States. One of the most characteristic phases of the reports of the various legislative investigating committees was the ironical astonishment that they almost invariably expressed at the "superior class" being responsible for the continuous bribery. Thus, in reporting in 1840, that $130,000 had been used in bribery in Pennsylvania by the United States Bank, an investigating committee of the Pennsylvania House of Representatives commented: "It is hard to come to the conclusion that men of refined education, and high and honorable character, would wink at such things, yet the conclusion is unavoidable." [Pa. House Journal, 1842, Vol. ii, Appendix, 172-531.] were often outwitted by this class of adventurers, and were only too glad to treat with them as associates, on the recognized commercial principle that success was the test of men's mettle, and that the qualities productive of such success must be immediately availed of.

In other instances a number of tradesmen and landowners would organize a company having, let us say, $250,000 among them. If they had proceeded to build a railroad with this sum, not many miles of rail would have been laid before they would have found themselves hopelessly bankrupt.

Their wisdom was that of their class; they knew a far better method. This was to use the powers of government, and make the public provide the necessary means. In the process of construction the $250,000 would have been only a mite. But it was quite enough to bribe a legislature. By expending this sum in purchasing a majority of an important committee, and a sufficient number of the whole body, they could get millions in public loans, vast areas of land given outright, and a succession of privileges worth, in the long run, hundreds upon hundreds of millions of dollars.


So the onslaught of corruption began and continued. Corruption in Ohio was so notorious that it formed a bitter part of the discussion in the Ohio Constitutional Convention of 1850-51. The delegates were droning along over insertions devised to increase corporation power. Suddenly rose Delegate Charles Reemelin and exclaimed: "Corporations always have their lobby members in and around the halls of legislation to watch and secure their interests. Not so with the people—they cannot act with that directness and system that a corporation can. No individual will take it upon himself to go to the Capitol at his own expense, to watch the representatives of the people, and to lobby against the potent influences of the corporation. But corporations have the money, and it is to their interest to expend it to secure the passage of partial laws." [Footnote: Ohio Convention Debates, 1850-51, ii: 174.]

Two years later, at one of the sessions of the Massachusetts Constitutional Convention, Delegate Walker, of North Brookfield, made a similar statement as to conditions in that State. "I ask any man to say," he asked, "if he believes that any measure of legislation could be carried in this State, which was generally offensive to the corporations of the Commonwealth? It is very rarely the case that we do not have a majority in the legislature who are either presidents, directors or stockholders in incorporated companies. This is a fact of very grave importance." [Footnote: Debates in the Massachusetts Convention, 1853, iii: 59.] Two-thirds of the property in Massachusetts, Delegate Walker pointed out, was owned by corporations.

In 1857 an acrimonious debate ensued in the Iowa Constitutional Convention over an attempt to give further extraordinary power to the railroads. Already the State of Iowa had incurred $12,000,000 in debts in aiding railroad corporations. "I fear," said Delegate Traer, "that it is very often the case that these votes (on appropriations for railroads) are carried through by improper influences, which the people, if left alone, would, upon mature reflection, never have adopted." [Footnote: Constitutional Debates, Iowa, 1857, ii: 777.]


These are but a very few of the many instances of the debauching of every legislature in the United States. No matter how furiously the people protested at this giving away of their resources and rights, the capitalists were able to thwart their will on every occasion. In one case a State legislature had been so prodigal that the people of the State demanded a Constitutional provision forbidding the bonding of the State for railroad purposes. The Constitutional Convention adopted this provision. But the members had scarcely gone to their homes before the people discovered how they had been duped. The amendment barred the State from giving loans, but (and here was the trick) it did not forbid counties and municipalities from doing so. Thereupon the railroad capitalists proceeded to have laws passed, and bribe county and municipal officials all over the State to issue bonds and to give them terminal sites and other valuable privileges for nothing. In every such case the railroad owners in subsequent years sneaked legislation through in practically every State, or resorted to subterfuges, by which they were relieved from having to pay back those loans.

Hundreds of millions of dollars, exacted from the people in taxation, were turned over to the railroad corporations, and little of it was ever returned. As for the land grants to railroads, they reached colossal proportions. From 1850 to 1872 Congress gave not less than 155,504,994.59 acres of the public domain either direct to railroad corporations, or to the various States, to be transferred to those corporations.

Much of this immense area was given on the condition that unless the railroads were built, the grants were to be forfeited. But the capitalists found no difficulty in getting a thoroughly corrupt Congress to extend the period of construction in cases where the construction had not been done. Of the 155,000,000 acres, a considerable portion of it valuable mineral, coal, timber and agricultural land, only 607,741 acres were forfeited by act of Congress, and even much of these were restored to the railroads by judicial decisions. [Footnote: The principal of these decisions was that of the Supreme Court of the United States in the case of Schluenberg vs. Harriman (Wallace's Supreme Court Reports, xxi:44). In many of the railroad grants it was provided that in case the railroad lines were not completed within certain specified times, the lands unsold or unpatented should revert to the United States. The decision of the Supreme Court of the United States practically made these provisions nugatory, and indirectly legalized the crassest frauds.

The original grants excluded mineral lands, but by a subsequent fraudulent official construction, coal and iron were declared not to be covered by the term mineral.

Commissioner Sparks of the U. S. General Land Office estimated in 1885 that, in addition to the tens of millions of acres the railroad corporations had secured by fraud under form of law, they had overdrawn ten million acres, "which vast amount has been treated by the corporations as their absolute property, but is really public land of the United States recoverable to the public domain." (House Executive Docs., First Session, Forty-ninth Congress, 1885-86, ii:184.) It has never been recovered.]

That Congress, not less than the legislatures, was honeycombed with corruption is all too evident from the disclosures of many investigations—disclosures to which we shall have pertinent occasion to refer later on. Not only did the railroad corporations loot in a gigantic way under forms of law, but they so craftily drafted the laws of both Nation and the States that fraud at all times was easy.


Not merely were these huge areas of land obtained by fraud, but after they were secured, fraud was further used to evade taxation. And by donations of land is not meant only that for intended railroad use or which could be sold by the railroads. In some cases, notably that of the Union Pacific Railroad, authority was given to the railroad by acts passed in 1862 and 1864 to take all of the material, such as stone, timber, etc., needed for construction, from the public lands. So, in addition to the money and lands, much of the essential material for building the railroads was supplied from the public resources. No sooner had they obtained their grants, than the railroad corporations had law after law passed removing this restriction or that reservation until they became absolute masters of hundreds of millions of acres of land which a brief time before had been national property.

"These enormous tracts," wrote (in 1886) William A. Phillips, a member of the Committee on Public Lands of the Forty-third Congress, referring to the railroad grants, "are in their disposition subject to the will of the railroad companies. They can dispose of them in enormous tracts if they please, and there is not a single safeguard to secure this portion of the national domain to cultivating yeomanry." The whole machinery of legislation was not only used to exclude the farmer from getting the land, and to centralize its ownership in corporations, but was additionally employed in relieving these corporations from taxation on the land thus obtained by fraud. "To avoid taxation," Phillips goes on, "the railroad land grant companies had an amendment enacted into law to the effect that they should not obtain their patents until they had paid a small fee to defray the expense of surveying. This they took care not to pay, or only to pay as fast as they could sell tracts to some purchasers, on which occasions they paid the surveying fee and obtained deeds for the portion they sold. In this way they have held millions of acres for speculative purposes, waiting for a rise in prices, without taxation, while the farmers in adjacent lands paid taxes." [Footnote: "Labor, Land and Law": 338-339.]

Phillips passes this fact by with a casual mention, as though it were one of no great significance.

It is a fact well worthy of elaboration. Precisely as the aristocracies in the Old World had gotten their estates by force and fraud, and then had the laws so arranged as to exempt those estates from taxation, so has the money aristocracy of the United States proceeded on the same plan. As we shall see, however, the railroad and other interests have not only put through laws relieving from direct taxation the land acquired by fraud, but also other forms of property based upon fraud.

This survey, however, would be prejudicial and one-sided were not the fact strongly pointed out that the railroad capitalists were by no means the only land-graspers. Not a single part of the capitalist class was there which could in any way profit from the theft of public domain that did not wallow in corruption and fraud.

The very laws seemingly passed to secure to the poor settler a homestead at a reasonable price were, as Henry M. Teller, Secretary of the Interior, put it, perverted into "agencies by which the capitalists secures large and valuable areas of the public land at little expense." [Footnote: Report of the Secretary of the Interior for 1883. Reporting to Secretary of the Interior Lamar, in response to a U. S. Senate resolution for information, William A. J. Sparks, Commissioner of the General Land Office, gave statistics showing an enormous number of fraudulent land entries, and continued:

"It was the ease with which frauds could be perpetrated under existing laws, and the immunity offered by a hasty issue of patents, that encouraged the making of fictitious and fraudulent entries. The certainty of a thorough investigation would restrain such practices, but fraud and great fraud must inevitably exist so long as the opportunity for fraud is preserved in the laws, and so long as it is hoped by the procurers and promoters of fraud that examinations may be impeded or suppressed." If, Commissioner Sparks urged, the premption, commuted-homestead, timber-land, and desert-land laws were repealed, then, "the illegal appropriation of the remaining public lands would be reduced to a minimum."—U. S. Senate Documents, First Session, Forty-ninth Congress, 1885-1886, Vol. viii, Doc. No. 134:4.] The poor were always the decoys with which the capitalists of the day managed to bag their game. It was to aid and encourage "the man of small resources" to populate the West that the Desert Land Law was apparently enacted; and many a pathetic and enthusiastic speech was made in Congress as this act was ostentatiously going through. Under this law, it was claimed, a man could establish himself upon six hundred and forty acres of land and, upon irrigating a portion of it, and paying $1.25 an acre, could secure a title. For once, it seemed, Congress was looking out for the interests of the man of few dollars.


But plaudits were too hasty. To the utter surprise of the people the law began to work in a perverse direction. Its provisions had read well enough on a casual scrutiny. Where lay the trouble? It lay in just a few words deftly thrown in, which the crowd did not notice. This law, acclaimed as one of great benefit to every man aspiring for a home and land, was arranged so that the capitalist cattle syndicates could get immense areas. The lever was the omission of any provision requiring actual settlement. The livestock corporations thereupon sent in their swarms of dummies to the "desert" lands (many of which, in reality, were not desert but excellent grazing lands), had their dummies get patents from the Government and then transfer the lands. In this way the cattlemen became possessed of enormous areas; and to-day these tracts thus gotten by fraud are securely held intact, forming what may be called great estates, for on many of them live the owners in expansive baronial style.

In numerous instances, law was entirely dispensed with. Vast tracts of land were boldly appropriated by sheep and cattle rangers who had not even a pretense of title. Enclosing these lands with fences, the rangers claimed them as their own, and hired armed guards to drive off intruders, and kill if necessary. [Footnote: "Within the cattle region," reported Commissioner Sparks, "it is notorious that actual settlements are generally prevented and made practically impossible outside the proximity of towns, through the unlawful control of the country, maintained by cattle companies."—U. S. Senate Docs., 1885- 86, Vol. viii, No. 134:4 and 5.

Acting Commissioner Harrison of the General Land Office, reporting on March 14, 1884, to Secretary of the Interior Teller, showed in detail the vast extent of the unlawful fencing of public lands. In the Arkansas Valley in Colorado at least 1,000,000 acres of public domain were illegally seized. The Prairie Cattle Company, composed of Scotch capitalists, had fenced in more than a million acres in Colorado, and a large number of other cattle companies in Colorado had seized areas ranging from 20,000 to 200,000 acres. "In Kansas," Harrison went on, "entire counties are reported as [illegally] fenced. In Wyoming, one hundred and twenty-five cattle companies are reported having fencing on the public lands. Among the companies and persons reported as having 'immense' or 'very large' areas inclosed . . . are the Dubuque, Cimarron and Renello Cattle [companies] in Colorado; the Marquis de Morales in Colorado; the Wyoming Cattle Company (Scotch) in Wyoming; and the Rankin Live Stock Company in Nebraska.

"There is a large number of cases where inclosures range from 1,000 to 25,000 acres and upwards.

"The reports of special agents show that the fraudulent entries of public land within the enclosures are extensively made by the procurement and in the interest of stockmen, largely for the purpose of controlling the sources of water supply."—"Unauthorized Fencing of Public Lands," U. S. Senate Docs., First Session, Forty-eighth Congress, 1883-84, Vol. vi, Doc. No. 127:2.] Murder after murder was committed. In this usurpation the august Supreme Court of the United States upheld them. And the grounds of the decision were what?

The very extraordinary dictum that a settler could not claim any right of premption on public lands in possession of another who had enclosed, settled upon and improved them. This was the very reverse of every known declaration of common and of statute law. No court, supreme or inferior, had ever held that because the proceeds of theft were improved or were refurbished a bit, the sufferer was thereby estopped from recovery. This decision showed anew how, while the courts were ever ready to enforce the law literally against the underlings and penniless, they were as active in fabricating tortuous constructions coinciding not always, but nearly always, with the demands and interests of the capitalist class.

It has long been the fashion on the part of a certain prevalent school of writers and publicists to excoriate this or that man, this or that corporation, as the ringleader in the orgy of corruption and oppression. This practice, arising partly from passionate or ill- considered judgment, and in part from ignorance of the subject, has been the cause of much misunderstanding, popular and academic.

No one section of the capitalist class can be held solely responsible; nor were the morals and ethics of any one division different from those of the others. The whole capitalist class was coated with the same tar. Shipping merchants, traders in general, landholders, banking and railroad corporations, factory owners, cattle syndicates, public utility companies, mining magnates, lumber corporations—all were participants in various ways in the subverting of the functions of government to their own fraudulent ends at the expense of the whole producing class.

While the railroad corporations were looting the public treasury and the public domain, and vesting in themselves arbitrary powers of taxation and proscription, all of the other segments of the capitalist class were, at the same time, enriching themselves in the same way or similar ways. The railroads were much denounced; but wherein did their methods differ from those of the cattle syndicates, the industrial magnates or the lumber corporations? The lumber barons wanted their predacious share of the public domain; throughout certain parts of the West and in the South were far-stretching, magnificent forests covered with the growth of centuries. To want and to get them were the same thing, with a Government in power representative of capitalism.


The "poor settler" catspaw was again made use of. At the behest of the lumber corporations, or of adventurers or politicians who saw a facile way of becoming multimillionaires by the simple passage of an act, the "Stone and Timber Act" was passed in 1878 by Congress. An amendment passed in 1892 made frauds still easier. This measure was another of those benevolent-looking laws which, on its face, extended opportunities for the homesteader. No longer, it was plausibly set forth, could any man say that the Government denied him the right to get public land for a reasonable sum. Was ever a finer, a more glorious chance presented? Here was the way open for any individual homesteader to get one hundred and sixty acres of timber land for the low price of $2.50 an acre. Congress was overwhelmed with outbursts of panegyrics for its wisdom and public spirit.

Soon, however, a cry of rage went up from the duped public. And the cause? The law, like the Desert Land Law, it turned out, was filled with cunningly-drawn clauses sanctioning the worst forms of spoliation. Entire trainloads of people, acting in collusion with the land grabbers, were transported by the lumber syndicates into the richest timber regions of the West, supplied with the funds to buy, and then each, after having paid $2.50 per acre for one hundred and sixty acres, immediately transferred his or her allotment to the lumber corporations.

Thus, for $2.50 an acre, the lumber syndicates obtained vast tracts of the finest lands worth, at the least, according to Government agents, $100 an acre, at a time, thirty-five years ago, when lumber was not nearly so costly as now.

The next development was characteristic of the progress of onsweeping capitalism. Just as the traders, bankers, factory owners, mining and railroad magnates had come into their possessions largely (in varying degrees) by fraud, and then upon the strength of those possessions had caused themselves to be elected or appointed to powerful offices in the Government, State or National, so now some of the lumber barons used a part of the millions obtained by fraud to purchase their way into the United States Senate and other high offices. They, as did their associates in the other branches of the capitalist class, helped to make and unmake judges, governors, legislatures and Presidents; and at least one, Russell A. Alger, became a member of the President's Cabinet in 1897.

Under this one law,—the Stone and Timber Act—irrespective of other complaisant laws, not less than $57,000,000 has been stolen in the last seven years alone from the Government, according to a statement made in Congress by Representative Hitchcock, of Nebraska, on May 5, 1908. He declared that 8,000,000 acres had been sold for $20,000,000, while the Department of the Interior had admitted in writing that the actual aggregate value of the land, at prevailing commercial prices, was $77,000,000. These lands, he asserted, had passed into the hands of the Lumber Trust, and their products were sold to the people of the United States at an advance of seventy per cent. This theft of $57,000,000 simply represented the years from 1901 to 1908; it is probable that the entire thefts for 10,395,689.96 acres sold during the whole series of years since the Stone and Timber Act was passed reaches a much vaster amount.

Stupendous as was the extent of the nation's resources already appropriated by 1876, more remained to be seized. The Government still owned 40,000,000 acres of land in the South, mainly in Alabama, Louisiana, Florida, Arkansas and Mississippi. Much of this area was valuable timber land, and a part of it, especially in Alabama, was filled with great coal and iron deposits,—a fact of which certain capitalists were well aware, although the general public did not know it.

During the Civil War nothing could be attempted in the war-ravaged South. That conflict over, a group of capitalists set about to get that land, or at least the valuable part of it. At about the time that they had their plans primed to juggle a bill through Congress, an unfortunate situation arose. A rancid public scandal ensued from the bribery of members of Congress in getting through the charters and subsidies of the Union Pacific railroad and other railroads. Congress, for the sake of appearance, had to be circumspect.


By 1876, however, the public agitation had died away. The time was propitious. Congress rushed through a bill carefully worded for the purpose. The lands were ordered sold in unlimited areas for cash. No pretense was made of restricting the sale to a certain acreage so that all any individual could buy was enough for his own use. Anyone, if he chose, could buy a million or ten million acres, provided he had the cash to pay $1.25 an acre. The way was easy for capitalists to get millions of acres of the coveted iron, coal and timber lands for practically nothing. At that very time the Government was selling coal lands in Colorado at $10 to $20 an acre, and it was recognized that even that price was absurdly low.

Hardly was this "cash sales" law passed, than the besieging capitalists pounced upon these Southern lands and scooped in eight millions of acres of coal, iron and timber lands intrinsically worth (speaking commercially) hundreds of millions of dollars. The fortunes of not a few railroad and industrial magnates were instantly and hugely increased by this fraudulent transaction. [Footnote: "Fraudulent transaction," House Ex. Doc. 47, Part iv, Forty-sixth Congress, Third Session, speaks of the phrasing of the act as a mere subterfuge for despoilment; that the act was passed specifically "for the benefit of capitalists," and "that fraud was used in sneaking it through Congress."] Hundreds of millions of dollars in capitalist bonds and stock, representing in effect mortgages on which the people perpetually have to pay heavy interest, are to-day based upon the value of the lands then fraudulently seized.

Fraud was so continuous and widespread that we can here give only a few succinct and scattering instances. "The present system of laws," reported a special Congressional Committee appointed in 1883 to investigate what had become of the once vast public domain, "seem to invite fraud. You cannot turn to a single state paper or public document where the subject is mentioned before the year 1883, from the message of the President to the report of the Commissioner of the Land Office, but what statements of 'fraud' in connection with the disposition of public lands are found." [Footnote: House Ex. Doc. 47: 356.] A little later, Commissioner Sparks of the General Land Office pointed out that "the near approach of the period when the United States will have no land to dispose of has stimulated the exertions of capitalists and corporations to acquire outlying regions of public land in mass, by whatever means, legal or illegal." In the same report he further stated, "At the outset of my administration I was confronted with overwhelming evidence that the public domain was made the prey of unscrupulous speculation and the worst forms of land monopoly." [Footnote: Report of the Commissioner of the General Land Office for October, 1885: 48 and 79.]

THE "EXCHANGE OF LAND" LAW. Not pausing to deal with a multitude of other laws the purport and effect of all of which were the same—to give the railroad and other corporations a succession of colossal gifts and other special privileges—laws, many of which will be referred to later—we shall pass on to one of the final masterly strokes of the railroad magnates in possessing themselves of many of such of the last remaining valuable public lands as were open to spoliation.

This happened in 1900. What were styled the land-grant railroads, that is to say, the railroad corporations which received subsidies in both money and land from the Government, were allotted land in alternate sections. The Union Pacific manipulated Congress to "loan" it about $27,000,000 and give it outright 13,000,000 acres of land. The Central Pacific got nearly $26,000,000 and received 9,000,000 acres. To the Northern Pacific 47,000,000 acres were given; to the Kansas Pacific, 12,100,000; to the Southern Pacific about 18,000,000 acres. From 1850 the National Government had granted subsidies to more than fifty railroads, and, in addition to the great territorial possessions given to the six railroads enumerated, had made a cash appropriation to those six of not less than about $140,000,000. But the corruptly obtained donations from the Government were far from being all of the bounty. Throughout the country, States, cities and counties contributed presents in the form of franchises, financial assistance, land and terminal sites.

The land grants, especially in the West, were so enormous that Parsons compares them as follows: Those in Minnesota would make two States the size of Massachusetts; in Kansas they were equal to two States the size of Connecticut and New Jersey; in Iowa the extent of the railroad grants was larger than Connecticut and Rhode Island, and the grants in Michigan and Wisconsin nearly as large; in Montana the grant to one railroad alone would equal the whole of Maryland, New Jersey and Massachusetts. The land grants in the State of Washington were about equivalent to the area of the same three States. Three States the size of New Hampshire could be carved out of the railroad grants in California. [Footnote: "The Railways, the Trusts and the People": 137.]

The alternate sections embraced in these States might be good or useless land; the value depended upon the locality. They might be the richest and finest of agricultural grazing, mineral or timber land or barren wastes and rocky mountain tops.

For a while the railroad corporations appeared satisfied with their appropriations and allotments. But as time passed, and the powers of government became more and more directed by them, this plan naturally occurred: Why not exchange the bad, for good, land? Having found it so easy to possess themselves of so vast and valuable an area of former public domain, they calculated that no difficulty would be encountered in putting through another process of plundering. All that was necessary was to go through the formality of ordering Congress to pass an act allowing them to exchange bad, for good, lands.

This, however, could not be done too openly. The people must be blinded by an appearance of conserving public interests. The opportunity came when the Forest Reservation Bill was introduced in Congress—a bill to establish national forest reservations. No better vehicle could have been found for the project traveling in disguise. This bill was everywhere looked upon as a wise and statesmanlike measure for the preservation of forests; capitalist interests, in the pursuit of immediate profit, had ruthlessly denuded and destroyed immense forest stretches, causing, in turn, floods and destruction of life, property and of agriculture. Part of the lands to be taken for the forest reservations included territory settled upon; it was argued as proper, therefore, that the evicted homesteaders should be indemnified by having the choice of lands elsewhere.

So far, the measure looked well. But when it went to the conference committee of the two houses of Congress, the railroad representatives artfully slipped in the four unobtrusive words, "or any other claimant." This quartet of words allowed the railway magnates to exchange millions of acres of desert and of denuded timber lands, arid hills and mountain tops covered with perpetual snow, for millions of the richest lands still remaining in the Government's much diminished hold.

So secretly was this transaction consummated that the public knew nothing about it; the subsidized newspapers printed not a word; it went through in absolute silence. The first protest raised was that of Senator Pettigrew, of South Dakota, in the United States Senate on May 31, 1900. In a vigorous speech he disclosed the vast thefts going on under this act. Congress, under the complete domination of the railroads, took no action to stop it. Only when the fraud was fully accomplished did the railroads allow Congress to go through the forms of deferring to public interests by repealing the law. [Footnote: In a letter to the author Senator Pettigrew instances the case of the Northern Pacific Railroad. "The Northern Pacific," he writes, "having patented the top of Mount Tacoma, with its perpetual snow and the rocky crags of the mountains elsewhere, which had been embraced within the forest reservation, could now swap these worthless lands, every acre, for the best valley and grazing lands owned by the Government, and thus the Northern Pacific acquired about two million acres more of mineral, forest and farming lands."]


Not merely were the capitalist interests allowed to plunder the public domain from the people under these various acts, but another act was passed by Congress, the "Coal Land Act," purposely drawn to permit the railroads to appropriate great stretches of coal deposits. "Already," wrote President Roosevelt in a message to Congress urging the repeal of the Stone and Timber Act, the Desert Land Law, the Coal Land Act and similar enactments, "probably one-half of the total area of high-grade coals in the West has passed under private control. Including both lignite and the coal areas, these private holdings aggregate not less than 30,000,000 acres of coal fields." These urgings fell flat on a Congress that included many members who had got their millions by reason of these identical laws, and which, as a body, was fully under the control of the dominant class of the day— the Capitalist class. The oligarchy of wealth was triumphantly, gluttonously in power; it was ingenuous folly to expect it to yield where it could vanquish, and concede where it could despoil. [Footnote: Nor did it yield. Roosevelt's denunciations in no way affected the steady expropriating process. In the current seizure (1909) of vast coal areas in Alaska, the long-continuing process can be seen at work under our very eyes. A controversy, in 1909, between Secretary of the Interior Ballinger and U. S. Chief Forester Gifford Pinchot brought a great scandal to a head. It was revealed that several powerful syndicates of capitalists had filed fraudulent claims to Alaskan coal lands, the value of which is estimated to be from $75,000,000 to $1,000,000,000. At the present writing their claims, it is announced, are being investigated by the Government. The charge has been made that Secretary of the Interior Ballinger, after leaving the Land Commissioner's office—a post formerly held by him—became the attorney for the most powerful of these syndicates.

At a recent session of the Irrigation Congress at Spokane, Washington, Gov. Pardee of California charged that the timber, the minerals and the soil had long since become the booty of corporations whose political control of public servants was notorious.]

The thefts of the public domain have continued, without intermission, up to this present day, and doubtless will not cease until every available acre is appropriated.

A recent report of H. H. Schwartz, chief of the field service of the Department of the Interior, to Secretary Garfield, of that Department, showed that in the two years from 1906 to 1908 alone, approximately $110,000,000 worth of public land in States, principally west of the Mississippi River, had been fraudulently acquired by capitalist corporations and individuals. This report disclosed more than thirty-two thousand cases of land fraud. The frauds on the part of various capitalist corporations in obtaining vast mineral deposits in Alaska, and incalculably rich water power sites in Montana and elsewhere, constitute one of the great current public scandals. It will be described fully elsewhere in this work.

Overlooking the petty, confusing details of the last seventy years, and focusing attention upon the large developments, this is the striking result beheld: A century ago no railroads existed; to-day the railroads not only own stupendous natural resources, expropriated from the people, but, in conjunction with allied capitalist interests, they dictate what the lot, political, economic and social, of the American people shall be. All of this transformation has come about within a relatively short period, much of it in our own time. But a little while ago the railroad projectors begged and implored, tricked and bribed; and had the law been enforced, would have been adjudged criminals and consigned to prison. And now, in the blazing power of their wealth, these same men or their successors are uncrowned kings, swaying the full powers of government, giving imperial orders that Congress, legislatures, conventions and people must obey.


But this is not the only commanding fact. A much more important one lies in the astonishing ease with which the masses of the people have been discriminated against, exploited and oppressed. Theoretically the power of government resides in the people, down to the humblest voter. This power, however, has been made the instrument for enslaving the very people supposed to be the wielders of political action.

While Congress, the legislatures and the executive and administrative officials have been industriously giving away public domain, public funds and perpetual rights to railroad and other corporations, they have almost entirely ignored the interests of the general run of people.

The more capitalists they created, the harder it became for the poor to get settler's land on the public domain. Congress continued passing acts by which, in most cases, the land was turned over to corporations. Intending settlers had to buy it at exorbitant prices. This took place in nearly all of the States and Territories. Large numbers of people could not afford to pay the price demanded by the railroads, and consequently were compelled to herd in industrial centers. They were deliberately shut off from possession of the land. This situation was already acute twenty-five years ago. "The area of arable land open to settlement," pointed out Secretary of the Interior Teller in a circular letter of May 22, 1883, "is not great when compared with the increasing demand and is rapidly decreasing." All other official reports consistently relate the same conditions. [Footnote: "The tract books of my office show," reported Commissioner Sparks, "that available public lands are already largely covered by entries, selections and claims of various kinds." The actual settler was compelled to buy up these claims, if, indeed, he was permitted to settle on the land.—U. S. Senate Ex. Docs., 1885-86, Vol. viii, Doc. No. 134:4.]

At the same time, while being excluded from soil which had been national property, the working and farming class were subjected to either neglect or onerous laws. As a class, the capitalists had no difficulty at any time in securing whatever laws they needed; if persuasion by argument was not effective, bribery was. Moreover, over and above corrupt purchase of votes was the feeling ingrained in legislators by the concerted teachings of society that the man of property should be looked up to; that he was superior to the common herd; that his interests were paramount and demanded nursing and protection. Whenever a commercial crisis occurred, the capitalists secured a ready hearing and their measures were passed promptly. But millions of workers would be in enforced idleness and destitution, and no move was made to throw open public lands to them, or appropriate money, or start public works. Such a proposed policy was considered "paternalism"—a catchword of the times implying that Governmental care should not be exercised for the unfortunate, the weak and the helpless.

And here was the anomaly of the so-called American democratic Government. It was held legitimate and necessary that capital should be encouraged, but illegitimate to look out for the interests of the non-propertied. The capitalists were very few; the non-propertied, holding nominally the overwhelming voting power, were many. Government was nothing more or less than a device for the nascent capitalist class to work out its inevitable purposes, yet the majority of the people, on whom the powers of class government severely fell, were constantly deluded into believing that the Government represented them. Whether Federalist or anti-Federalist, Whig, Republican or Democratic party was in power, the capitalist class went forward victoriously and invincibly, the proof of which is seen in its present almost limitless power and possessions.



If the whole might of Government was used in the aggrandizement and perpetuation of a propertied aristocracy, what was its specific attitude toward the working class? Of the powerful few, whether political or industrial, the conventional histories hand down grossly biased and distorted chronicles. These few are isolated from the multitude, and their importance magnified, while the millions of obscure are nowhere adequately described. Such sterile historians proceed upon the perfunctory plan, derived from ancient usage in the days when kingcraft was supremely exalted, that it is only the mighty few whose acts are of any consequence, and that the doings of the masses are of no account.


Hence it is that most histories are mere registers of names and dates, dull or highly-colored hackneyed splurges of print giving no insight into actual conditions.

In this respect most of the prevailing histories of the United States are the most egregious offenders. They fix the idea that this or that alleged statesman, this or that President or politician or set of politicians, have been the dominating factors in the decision and sway of public affairs. No greater error could be formulated. Behind the ostentatious and imposing public personages of the different periods, the arbiters of laws and policies have been the men of property. They it was who really ruled both the arena and the arcana of politics.

It was they, sometimes openly, but more usually covertly, who influenced and manipulated the entire sphere of government.

It was they who raised the issues which divided the people into contesting camps and which often beclouded and bemuddled the popular mind. It was their material ideals and interests that were engrafted upon the fabric of society and made the prevailing standards of the day.

From the start the United States Government was what may be called a regime swayed by property.

The Revolution, as we have seen, was a movement by the native property interests to work out their own destiny without interference by the trading classes of Great Britain. The Constitution of the United States, the various State Constitutions, and the laws, were, we have set forth, all reflexes of the interests, aims, castes and prejudices of the property owners, as opposed to the non-propertied. At first, the landholders and the shipping merchants were the dictators of laws. Then from these two classes and from the tradesmen sprang a third class, the bankers, who, after a continuous orgy of bribery, rose to a high pitch of power. At the same time, other classes of property owners were sharers in varying degrees in directing Government. One of these was the slaveholders of the South, desperately increasing their clutch on government administration the more their institutions were threatened. The factory owners were likewise participants. However bitterly some of these propertied interests might war upon one another for supremacy, there was never a time when the majority of the men who sat in Congress, the legislatures or the judges did not represent, or respond to, either the interests or the ideals of one or more of these divisions of the propertied classes.

Finally, out of the landowners, slaveowners, bankers, shippers, factory masters and tradesmen a new class of great power developed. This was the railroad-owning class. From about the year 1845 to 1890 it was the most puissant governing class in the United States, and only ceased being distinctly so when the industrial trusts became even mightier, and a time came when one trust alone, the Standard Oil Company, was able to possess itself of vast railroad systems.

These different components of the railroad-owning class had gathered in their money by either outright fraud or by the customary exploitative processes of the times. We have noted how many of the landholders secured their estates at one time or another by bribery or by invidiously fraudulent transactions; and how the bankers, who originally were either tradesmen, factory owners or landowners, had obtained their charters and privileges by widespread bribery. A portion of the money thus acquired was often used in bribing Congress and legislatures for railroad charters, public funds, immense areas of land including forests and mines, and special laws of the most extraordinary character.


Since Government was actually, although not avowedly or apparently, a property regime, what was the condition of the millions of non- propertied?

In order to get a correct understanding of both the philosophy and the significance of what manner of property rule was in force, it is necessary to give an accompanying sketch of the life of the millions of producers, and what kind of laws related to them. Merely to narrate the acts of the capitalists of the period is of no enduring value unless it be accompanied by a necessary contrast of how Government and capitalist acted toward the worker. It was the worker who tilled the ground and harvested the produce nourishing nations; whose labor, mental or manual, brought forth the thousand and one commodities, utensils, implements, articles and luxuries necessary to the material wants of civilization. Verily, what of the great hosts of toilers who have done their work and shuffled off to oblivion? What were their aspirations, difficulties, movements and struggles? While Government, controlled by both the men and the standards of property, was being used as a distributing instrument for centering resources and laws in the hands of a mere minority, what were its methods in dealing with the lowly and propertyless?

Furthermore, this contrast is indispensable for another reason. Posterity ever has a blunt way of asking the most inquisitive questions. The inquirer for truth will not be content with the simple statement that many of the factory owners and tradesmen bribed representative bodies to give them railroad charters and bountiful largess. He will seek to know how, as specifically as the records allow, they got together that money. Their nominal methods are of no weight; it is the portrayal of their real, basic methods which alone will satisfy the delver for actual facts.

This is not the place for a voluminous account of the industrial development of the United States. We cannot halt here to give the full account of the origin and growth of that factory system which has culminated in the gigantic trusts of to-day. Nor can we pause to deal with the manifold circumstances and methods involved in that expansion. The full tale of the rise and climax of industrial establishments; how they subverted the functions of government to their own ends; stole inventions right and left and drove inventors to poverty and to the grave; defrauded the community of incredible amounts by evading taxation; oppressed their workers to a degree that in future times will read like the acts of a class outsavaging the savage; bribed without intermission; slaughtered legions of men, women and children in the pursuit of profit; exploited the peoples of the globe remorselessly—all of this and more, constituting a weird chapter of horrors in the progress of the race, will be fully described in a later part of this work. [Footnote: See "Great Fortunes from Industries."]

But in order to contribute a clear perspective of the methods and morals of a period when Government was but the mannikin of property— a period even more pronounced now—and to give a deeper insight into the conditions against which millions had to contend at a time when the railroad oligarchy was blown into life by Government edict, a few important facts will be presented here.

The sonorous doctrines of the Declaration of Independence read well, but they were not meant to be applied to the worker. The independence so much vaunted was the independence of the capitalist to do as he pleased. Few, if any, restrictions were placed upon him; such pseudo restrictions as were passed from time to time were not enforced. On the other hand, the severest laws were enacted against the worker. For a long time it was a crime for him to go on a strike. In the first strike in this country of which there is any record—that of a number of sailors in New York City in 1803, for better wages—the leader was arrested, indicted and sent to prison. The formidable machinery of Government was employed by the ruling commercial and landed classes for a double purpose. On the one hand, they insisted that it should encourage capital, which phrase translated into action meant that it should confer grants of land, immense loans of public funds without interest, virtual immunity from taxation, an extra- legal taxing power, sweeping privileges, protective laws and clearly defined statute rights.


At the same time, while enriching themselves in every direction by transferring, through the powers of Government, public resources to themselves, the capitalists declared it to be a settled principle that Government should not be paternalistic; they asserted that it was not only not a proper governmental function to look out for the interests of the masses of workers, but they went even further.

With the precedents of the English laws as an example, they held that it devolved upon Government to keep the workers sternly within the bounds established by employers. In plain words, this meant that the capitalist was to be allowed to run his business as he desired. He could overwork his employees, pay them the lowest wages, and kill them off by forcing them to work under conditions in which the sacrifice of human life was held subordinate to the gathering of profits, or by forcing them to work or live in disease-breeding places. [Footnote: The slum population of the United States increased rapidly. "According to the best estimates," stated the "Seventh Special Report of the U. S. Commissioner of Labor—The Slums of Great Cities, 1894," "the total slum population of Baltimore is about 25,000; of Chicago, 162,000; of New York, 360,000; of Philadelphia, 35,000" (p. 12). The figures of the average weekly wages per individual of the slum population revealed why there was so large a slum population. In Baltimore these wages were $8.65-1/2 per week; in Chicago, $9.88-1/2; in New York, $8.36, and in Philadelphia, $8.68 per week (p. 64).

In his "Modern Social Conditions," Bailey, basing his statements upon the U. S. Census of 1900, asserted that 109,750 persons had died from tuberculosis in the United States in 1900. "Plenty of fresh air and sunlight," he wrote, "will kill the germs, and yet it is estimated that there are eight millions of people who will eventually die from consumption unless strenuous efforts are made to combat the disease. Working in a confined atmosphere, and living in damp, poorly ventilated rooms, the dwellers in the tenements of the great cities fall easy victims to the great white plague." (p. 265).]

The law, which was the distinct expression of the interests of the capitalist, upheld his right to do all this. Yet if the workers protested; if they sought to improve their condition by joining in that community of action called a strike, the same code of laws adjudged them criminals. At once, the whole power of law, with its police, military and judges, descended upon them, and either drove them back to their tasks or consigned them to prison.

The conditions under which the capitalists made their profits, and under which the workers had to toil, were very oppressive to the workers. The hours of work at that period were from sunrise to sunset. Usually this rule, especially in the seasons of long days, required twelve, and very often fourteen and sixteen, hours a day. Yet the so-called statesmen and the pretentious cultured and refined classes of the day, saw nothing wrong in this exploitation. The reason was obvious. Their power, their elegant mansions, their silks and satins, their equipage and superior opportunities for enjoyment all were based upon the sweat and blood of these so-called free white men, women and children of the North, who toiled even harder than the chattel black slave of the South, and who did not receive a fraction of the care and thought bestowed, as a corrollary of property, upon the black slave. Already the capitalists of the North had a slavery system in force far more effective than the chattel system of the South—a system the economic superiority of which was destined to overthrow that of black slavery.

Most historians, taking their cue from the intellectual subserviency demanded of them by the ruling propertied classes, delight in picturing those times as "the good old times," when the capitalists were benevolent and amiable, and the workers lived in peace and plenty.


History in the main, thus far, has been an institution for the propagation of lies. The truth is that for thousands of years back, since the private property system came into existence, an incessant, uncompromising warfare has been going on between oppressors and oppressed. Apart from the class distinctions and the bitterness manifested in settlement and colonial times in this country— reference to which has been given in earlier chapters—the whole of the nineteenth century, and thus far of this century, has been a continuous industrial struggle. It has been the real warfare of modern times.

In this struggle the propertied classes had the great advantage from the start. Centuries of rulership had taught them that the control of Government was the crux of the mastery. By possession of Government they had the power of making laws; of the enforcement or non- enforcement of those laws; of the directorship of police, army, navy, courts, jails and prisons—all terrible instruments for suppressing any attempt at protest, peaceful or otherwise. Notwithstanding this massing of power and force, the working class has at no time been passive or acquiescent. It has allowed itself to be duped; it has permitted its ranks to be divided by false issues; it has often been blind at critical times, and has made no concerted effort as yet to get intelligent possession of the great strategic point,— governmental power. Nevertheless, despite these mistakes, it has been in a state of constant rebellion; and the fact that it has been so, that its aspirations could not be squelched by jails, prisons and cannon nor by destitution or starvation, furnishes the sublimest record in all the annals of mankind.


Again and again the workers attempted to throw off some of their shackles, and every time the whole dominant force of society was arrayed against them. By 1825 an agitation developed for a ten-hour workday. The politicians denounced the movement; the cultured classes frowned upon it; the newspapers alternately ridiculed and abused it; the officials prepared to take summary action to put it down. As for the capitalists—the shipping merchants, the boot and shoe manufacturers, the iron masters and others—they not only denied the right of the workers to organize, while insisting that they themselves were entitled to combine, but they inveighed against the ten-hour demand as "unreasonable conditions which the folly and caprice of a few journeymen mechanics may dictate." "A very large sum of money," says McNeill, "was subscribed by the merchants to defeat the ten-hour movement." [Footnote: "The Labor Movement": 339.] And as an evidence of the intense opposition to the workers' demands for a change from a fourteen to a ten-hour day, McNeill quotes from a Boston newspaper of 1832:

Had this unlawful combination had for its object the enhancement of daily wages, it would have been left to its own care; but it now strikes the very nerve of industry and good morals by dictating the hours of labor, abrogating the good old rule of our fathers and pointing out the most direct course to poverty; for to be idle several of the most useful hours of the morning and evening will surely lead to intemperance and ruin.

These, generally speaking, were the stock capitalists arguments of the day, together with the further reiterated assertion that it was impossible to conduct business on a ten-hour day system. The effect of the fourteen-hour day upon the workers was pernicious. Having no time for reading, self-education, social intercourse or acquainting themselves with refinement, they often developed brutal propensities. In proportion to the length of time and the rigor with which they were exploited, they degenerated morally and intellectually. This was a well-known fact, and was frequently commented upon by contemporaneous observers. Their employers could not fail to know it, yet, with few exceptions, they insisted that any movement to shorten the day's labor was destructive of good morals.

This pronouncement, however, need not arouse comment. Ever has the propertied class set itself up as the lofty guardian of morals although actuated by sordid self-interest and nothing more. Many workers were driven to drink, crime and suicide by the exasperating and deteriorating conditions under which they had to labor. The moment that they overstepped the slightest bounds of law, in rushed the authorities with summary punishment. The prisons of the period were full of mechanics whom serfdom or poverty had stung on to commit some crime or other. However trifling the offence, or whatever the justifiable provocation, the law made no trades-union memorialized Congress to limit the hours of labor of those employed on the public works to ten hours a day. The pathos of this petition! So unceasingly had the workers been lied to by politicians, newspapers, clergy and employers, that they did not realize that in applying to Congress or to any legislature, that they were begging from men who represented the antagonistic interests of their own employers. After a short debate Congress laid the petition on the table. Congress at this very time was spinning out laws in behalf of capitalist interests; granting public lands, public funds, protective tariffs and manifold other measures demanded or lobbied for by existing or projected corporations.

A memorial of a "Portion of the Laboring Classes of the City of New York in Relation to The Money Market" complained to Congress in 1833 that the powers of the Government were used against the working class.

"You are not ignorant," they petitioned,

That our State Legislatures have, by a usurpation of power which is expressly withheld by our Federal Constitution, chartered many companies to engage in the manufacture of paper money; and that the necessities of the laboring classes have compelled them to give it currency.

The strongest argument against this measure is, that by licensing any man or set of men to manufacture money, instead of earning it, we virtually license them to take so much of the property of the community as they may happen to fancy, without contributing to it at all—an injustice so enormous that it is incapable of any defense and therefore needs no comment.

... That the profits of capital are abstracted from the earnings of labor, and that these deductions, like any other tax on industry, tend to diminish the value of money by increasing the price of all the fruits of labor, are facts beyond dispute; it is equally undeniable that there is a point which capitalists cannot exceed without injuring themselves, for when by their exertions they so far depreciate the value of money at home that it is sent abroad, many are thrown out of employ, and are not only disabled from paying their tribute, but are forced to betake to dishonest courses or starve.

This memorial was full of iron and stern truths, although much of its political economy was that of its own era; a very different petition, it will be noticed, from the appealing, cringing petitions sent timidly to Congress by the conservative, truckling labor leaders of later times. The memorial continued;

The remaining laborers are then loaded with additional burdens to provide laws and prisons and standing armies to keep order; expensive wars are created merely to lull for a time the clamors for employment; each new burden aggravates the disease, and national death finally ends it.

The power of capital, was, the memorial read on, "in the nature of things, regulated by the proportion that the numbers of, and competition among, capitalists bears to the number and destitution of laborers." The only sure way of benefiting labor, "and the way best calculated to benefit all classes," was to diminish the destitution among the working classes. And the remedy proposed in the memorial? A settled principle of national policy should be laid down by Congress that the whole of the remaining of the public lands should forever continue to be the public property of the nation "and accordingly, cause them to be laid out from time to time, as the wants of the population might require, in small farms with a suitable proportion of building lots for mechanics, for the free use of any native citizen and his descendants who might be at the expense of clearing them." This policy "would establish a perpetual counterpoise to the absorbing power of capital." The memorial concluded:

These lands have been bought with public money every cent of which is in the end derived from the earnings of the laboring classes.

And while the public money has been liberally employed to protect and foster trade, Government has never, to our knowledge, adopted but one measure (the protective tariff system) with a distinct view to promote the interests of labor; and all of the advantages of this one have been absorbed by the preponderating power of capital. [Footnote: Executive Documents, First Session, Twenty-third Congress, 1834, Doc. No. 104.]


But it was not only the National Government which used the entire governing power against the workers. State and municipal authorities did likewise. In 1836 the longshoremen in New York City struck for an increase of wages. Their employers hurriedly substituted non-union men in their places. When the union men went from dock to dock, trying to induce the newcomers to side with them, the shipping merchants pretended that a riot was under way and made frantic calls upon the authorities for a subduing force. The mayor ordered out the militia with loaded guns. In Philadelphia similar scenes took place. Naturally, as the strikers were prevented by the soldiers from persuading their fellow workers, they lost the strikes.

Although labor-saving machinery was constantly being devised and improved to displace hand labor, and although the skilled worker was consequently producing far more goods than in former years, the masters—as the capitalists were then often termed—insisted that employees must work for the same wages and hours as had long prevailed.

By 1840, however, the labor unions had arrived at a point where they were very powerful in some of the crafts, and employers grudgingly had to recognize that the time had passed by when the laborer was to be treated like a serf. A few enlightened employers voluntarily conceded the ten-hour day, not on any humane grounds, but because they reasoned that it would promote greater efficiency on the part of their workers. Many capitalists, perforce, had to yield to the demand. Other capitalists determined to break up the unions on the ground that they were a conspiracy. At the instigation of several boot and shoe manufacturers, the officials of Boston brought a suit against the Boston Journeymen Bootmakers' Society. The court ruled against the bootmakers and the jury brought in a verdict of guilty. On appeal to the Supreme Court, Robert Rantoul, the attorney for the society, so ably demolished the prosecution's points, that the court could not avoid setting aside the judgment of the inferior court. [Footnote: Commonwealth vs. Hunt and others; Metcalf's Supreme Court Reports, iv: III. The prosecution had fallen back on the old English law of the time of Queen Elizabeth, making it a criminal offence for workingmen to refuse to work under certain wages. This law, Rantoul argued, had not been specifically adopted as common law in the United States after the Revolution.]

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