ROBBER BARONS
CHAPTER EIGHTP A R T T W O
RISING FROM THE RUINS
DURING the downward run of the markets, the great fortunes shrink, the masters of money retreat to strong positions. While the economic storm continues, while prices fall, the proper tactics for the possessors of capital are those of flight and self-defense. It is a cautionary experience ; there are many casualties, cruel transfers of individual fortunes. Yet he who possesses even a modicum of unimpaired capital is as one who watches the sand run down in an hourglass, while fully aware that he may, at the given moment, turn the glass over and begin the process anew.
It is no time for sentiment. No one comes to the rescue of the open-handed Jay Cooke. If Thomas Scott’s notes go to protest, Andrew Carnegie does not answer his calls for help. Refusal to aid his first benefactor, the man who had launched him into moneymaking, Carnegie himself admitted gave him “more pain than all the financial trials which I had been subjected to up to that time.” It was the time to keep close to one’s own books, and meet one’s own notes. If there was any liquid capital left it could be used, best of all, to purchase the properties sacrificed by the needy after shrewd estimates of their distress value. Carnegie had no thought for Scott’s bankrupt railroad ventures, the pieces of which fell quickly into the hands of men with reserves, Gould and Huntington. In his own iron business his partner Kloman, upon whose mechanical skill their reputation was founded, fell into difficulties ; and Carnegie in 1873 acquired the craftsman’s share of the business, eliminating him for good and all.
During the troubled years, as between 1873 and 1875, those who are already strongly entrenched extend their position with ease. The Vanderbilts, father and son, add new railroads in Ohio, Indiana and Illinois to their New York Central system, so that they are enabled at last to enter Chicago upon their own tracks. The Vanderbilts also reach out for coal lands to unite with their railroads. In their need for cash they must go to Russell Sage, the hoarder, “somber, crafty, reclusive,” who has cash when no one else has it, and demands 12 to 14 per cent for its use. While the Vanderbilts enter Chicago, Gould captures a transcontinental railroad, fulfillment of a boyhood dream ; Collis Huntington, with the Pacific Coast unaffected by the world depression, proceeds to build a second one ; and unknowns like James Hill or Henry Villard take possession of other railroad principalities. Outside of Pittsburgh thousands of acres of coal lands fall into the hands of Henry Frick, a youth barely past twenty, who is building himself a kingdom of coke. Almost as young a newcomer is Edward H. Harriman, an expert stock-exchange speculator since early boyhood, who turns the sudden ruin of others to his own great gain. In the meantime, during the general deflation of values, and thanks to the resumption of specie payment after 1875, the banker, as creditor, strengthens his position measurably. The capital of Morgan, boldly used, gives him a wider sway than before ; he steps easily into the place once occupied by Cooke.
The twenty years after 1873 formed a period of unequaled material progress in the United States. At the Centennial Exhibition soon organized in Philadelphia, the infinite resources and the technical culture of the nation were now bravely displayed to all the world. There was George Westinghouse’s air brake and Dr. Sellers’s kinematoscope ; there were gas stoves and high-wheeled bicycles ; Corliss’s 1,400 horse-power engine, and Bell’s miraculous little telephone. Machinery of all kinds had grown larger and more ingenious, in keeping with fifty-ton locomotives. There came new methods of tilling the land, of mining and smelting the ores of the earth, of preparing food, of making shoes, cloth, buttonholes ; and to these thousand and one “improvements” was added soon the broad application of electric power.
Truly, wrote Henry George in 1879, the wisest men of the foregoing century, had they foreseen these engines, workshops, factories, steam hammers and threshing machines, would have been thrilled “as one who from a height beholds just ahead of the thirst-stricken caravan the living gleam of rustling woods and the glint of laughing waters.” They would have seen the new forces elevating society, lifting the poorest above the possibility of want ; they would have seen “these muscles of iron and sinews of steel making the laborer’s life a holiday . . . realizing the golden age of which mankind have always dreamed. . . . For how could there be greed where all had enough ?”
Instead, neither discovery nor invention lessened the toil of the people. “All the dull, deadening pain, all the keen maddening anguish . . . involved in the words `hard times,’ ” concluded Henry George, afflicted the American society, as much as the old world. And where the conditions of material progress seemed most fully realized, where population was densest, wealth greatest, the machinery of production and commerce most highly developed, there were to be seen “the deepest poverty, the sharpest struggle for existence, and the most of enforced idleness.”
The period, free of foreign or civil war, was nevertheless extremely warlike and fiercely contentious in its very day-to-day existence. In the accounts of the economic historians it is always seen as an age of “intense competition.” The process of preëmption, suggested in foregoing pages as beginning upon a large scale during the Civil War, now declared itself more openly. Its objectives were clearly exposed, the prize at stake was ever larger, the race swifter, the collisions angrier. Moreover it was not only the wealth of the land-augmented by human increase and toil—that was preëmpted, but also the great highways of industrial traffic, the means of production, and finally the strategic “narrows” through which the stream of commodities must pass from the earth to the consumer.
The seizure of the railway system, attended with unprincipled conflicts, was the phase which was most clearly noticed by the public at the time. Henry Adams has commented of the Erie ring :
It was something new to see a knot of adventurers, men of broken fortune, without character and without credit, possess themselves of an artery of commerce more important than was ever the Appian Way, and make levies, not only upon it for their own emolument, but, through it, upon the whole business of a nation.
Yet at the same time the whole business of the nation was also being seized upon and organized into larger units by “knots of adventurers.” These adventurers expropriated or retired competitors in their territories ; then as industrial barons, grouped in pools and combinations, they set to preying upon adjacent industries less organized than their own. So railroads would get the best of coalmine operators, then having conquered them, would exploit the industries which depended upon supplies of coal. Or syndicates owning grain elevators or slaughterhouses would enter into collusion with the railroads to exploit the producers of grain and of cattle ; oil-refiners would exploit those who drilled for petroleum, then would conquer or combine with their erstwhile opponents to exploit the underlying consumers altogether.
In all these cases the disposition of power, the division of “spoils,” was settled no more peacefully than were the rivalries of the old feudal barons ; sometimes they were not unaccompanied by bloodshed and by tremendous waste and destruction. Nor was the continually raging warfare in the economic society softened by any recognizable code of chivalry such as the Middle Ages boasted. A just and impartial government saw to it that there was never any interference in the contest, whose rules were derived from those by which man had conquered the animal world, according to certain academic observers. One such observer, L.F. Ward, writing upon the “Psychological Basis of Social Economics,” maintained that the “principle of deception” or “superior cunning” was the chief element of success in such a struggle.1 The shocks and derangements of the social system, the conflicts, assumed enormous size at certain times when whole sections of the population found the lords of railroads, the barons of industries, ranged against them in coalitions. Farmers, seized with despair at discovering their helplessness to control or even reach their markets, would band together in great numbers for a show of resistance. Laborers found their employers ranged in combinations against them, and saw themselves forced either to accept the terms offered or abandon their special skill and join a “standing army” of the unskilled. They, the employees of a thoroughly unified industry (like the Standard Oil Company or certain railroads), were as much owned by its masters as were the machines. Though their labor was subject to a more intense division and was infinitely more fruitful than before, they had no more power than the machines to make bargains for the use of their muscles. In their extremity they would sometimes combine in their own behalf and challenge their employers, now to endurance contests and now to the bloodiest industrial conflicts which this republic of freemen had ever known.
So shaken was the period—though there was no foreign enemy at the border, no rebel within—so tumultuous with earthquakes and shocks, business triumphs and reprisals, boom and panic, profit and waste, that many have questioned whether the returns compensated for the ultimate losses. Only in this primitive manner of struggle could human industry have become “socialized,” the small scattered producers expropriated, and society organized upon a gigantic scale, all equipped with its present huge machinery. Else, as Marx said, “the world would still lack for railways.” Assuredly the Goulds and Vanderbilts, the Rockefellers and Carnegies, moved upon the crest of a historic wave of “centralization.” Yet often their profit-seeking seemed to be served best by resisting or restraining the historic process, by combating the very constant advance of the “state of the industrial arts” wrought by innumerable technicians and workers.
In examining the careers of our barons in detail we observe them not only combining and organizing but often using a technique of disturbance and derangement for “blocking the business system” at some point, as Veblen has surmised. We feel antithetical tendencies in them ; their mutual repulsions, their “thieves’ quarrels,” seem to impede for a long time the overwhelming force of attraction which drives them toward a foreshadowed “community of interest,” a culminating system of Monopoly.
2
In the highly developed Eastern states, the continued advance of the Vanderbilt dynasty illustrated the phase of consolidation that the railroad-builders generally entered upon after 1873. The New York Central system was still a strictly family enterprise, though it was capitalized at $90,000,000, and extended its main lines and branches through the most industrious zone of the country, between New York and Chicago.
Cornelius Vanderbilt, a grand old octogenarian, attended to the development of his railroad in his own canny and mysterious way. We know that in later life he grew increasingly eccentric, attended the seances of mesmerists and clairvoyants, communing now with a dead son, now with the shade of the departed Jim Fisk, who from the other world sometimes advised him on his knottiest business problems. Further counsel he may have received also from those sensational feminists, Victoria Woodhull and Tennessee Claflin, who much diverted New York in the ’70s, and whom Vanderbilt was known to patronize. Other signs, in these later years, of something resembling distraction in the old Commodore were his bequests to public charities, to churches, and even to educational institutions such as he had openly despised all his life long. He, who had dispensed with book-learning for eighty years, relented, and under the urgence of his second wife’s pastor, a Dr. Deems, turned over a million to the founding of Vanderbilt University in Nashville. (He had wished to build a towering monument to General Washington, idol of his childhood, but was convinced at length that there were enough of such things, and that a new university would be a monument to his own enduring glory.)
In the meantime, there was no relenting in the vigor with which he fought opponents in the railroad field. Constant rate-wars were waged between 1873 and 1875, and again toward 1877, in the service between New York and Chicago. In turn pressing for advantage, the New York Central, the Pennsylvania, the Erie, the Baltimore & Ohio, forced down passenger fares from $22 to $12, and grain rates from a level of 36 to 42 cents a bushel to as low as 12 cents ; then in an interval of peace, their tariffs would be rushed up again to the earlier levels, while rebates were given secretly to favored groups of shippers. Yet however confusing all these maneuvers may have been to the public, the old Vanderbilt remained as instinctively forehanded as any of the railroad captains who directed them. Moreover he made alliances with “middle lines” in the West, continued his campaign of “improvements and extensions,” though much of this, to be sure, at the public cost. Thus in laying underground the Fourth Avenue tracks of the Harlem Railroad, on which his lines entered the city, he caused the erection of the massive tube and elevated roadbed which was greatly admired in the ’70s as a marvel of engineering. The cost of this was $6,500,000 ; and the Board of Aldermen of New York were persuaded to pass a bill by which the city shared half the expense of making permanent and safe the New York Central’s roadbed.
When the Commodore fell sick in 1877, excited speculation raged as to the size and disposition of his fortune. Newspaper reporters watched day and night from vantage points overlooking the redbrick house on Washington Place ; and on at least one occasion premature reports of the railroad baron’s decease were hawked under his windows by news-boys :
VANDERBILT DYING !
Hearing these the irascible old man crawled out of bed and shouted down the stairs to visiting journalists : “I am not dying ! The slight local disorder is now almost entirely gone, and the doctor says I will be well in a few days. Even if I was dying I should have vigor enough to knock this abuse down your lying throats and give the undertaker a job !” (This, at any rate, is a translation by a Victorian biographer of the Commodore’s expressive language.)
He fought prodigiously with death, as he had with life, but on the fourth of January, 1877, he passed away at last, at the age of eighty-three, surrounded by a mob of hymn-singing children, grandchildren and great-grandchildren who heartily sped him on his road.
With but slight family bequests, the Commodore left in the hands of his once despised heir William the geometrical sum of $94,000,000 in the shape of railroad and other securities. This fortune was generally reckoned as the first industrial fortune of the world ; and by the will of the deceased it was to be held intact, constantly increasing in size, an economic monolith in which a dynastic family fortified itself. The event aroused the liveliest amazement everywhere ; and even in England Mr. Gladstone commented upon the dangers such a fortune held for the people at large, especially when it carried with it no “obligations to society” as in the case of the great English properties. To Chauncey Depew he said :
I understand you have a man in your country who is worth $100,000,000, and it is all in property which he can convert at will into cash. The government ought to take it away from him, as it is too dangerous a power for any one man to have. Suppose he should convert his property into money and lock it up, it would make a panic in America which would extend to this country and every other part of the world, and be a great injury to a large number of innocent people.
The character of the son who now took command of the giant railroad system offered strong contrasts to the father. He was homely and stout, while his parent had been handsome and erect ; he believed in routine rather than in inspiration ; finally, he was timid where the other had been pugnacious. Until he was forty-five he had been relegated to living upon a farm in Staten Island, some said because of his health, others because his father thought him sluggish and stupid. Patient and submissive in the face of torrents of paternal abuse, he evidently preferred to play the part of the “mistrusted prince” the better part of his life, rather than miss a fortune of a hundred millions. Yet he seems to have managed well as a gentleman farmer. His hired men were said to be hard-driven ; and the master either sat upon a rail fence to watch them all day or practiced the habit of appearing suddenly amongst them in the fields to harry them from idleness.
How William Vanderbilt eventually won the confidence of his father is described by the family historian, Croffut. As he tells it, William used to get his fertilizer from the city, and one day he got some from his father’s Fourth Avenue stables and took it home on a scow. When he saw his father the next day he asked him how much he would charge for ten loads. “What’ll you give ?” asked the Commodore. “It’s worth $4 a load to me,” said Billy. His father agreed to this, having the impression that this was twice what it was worth. Next day he saw his son with another scow all loaded and ready to start for Staten Island. “How many loads have you got on that scow, Billy ?” he asked. “How many ?” asked his son, pretending surprise. “One, of course.” “One ! Why, there’s at least thirty !” said Vanderbilt. “No, father, I never put but one load on a scow—one scowload ! Cast off the lines, Pat !”
The senior Vanderbilt, comments Crofutt, was struck dumb with a mixture of chagrin and gratification. He was probably sizing up Billy anew, and wondering whether he might not make a railroad man like himself, after all. So Billy was at last given a small bankrupt railroad in Staten Island to manage, and then when nearly fifty, taken into the family business : the New York Central.
Here he showed himself a laborious, methodical fellow. In the repair shops he spied upon the workmen by sudden stealthy intrusions, as he had done on his farm ; he watched over all details, inspected every engine, all petty expenses, overseeing all the books, scrutinizing every bill, check and voucher passing through the offices of the great road, and even answering all letters in his own hand. In conversation he was often “abrupt, brusque, . . . rude”; he was a pessimist of a cheerful sort, thinking men and women as a rule “a pretty bad lot,” and suspecting everyone around him to be in a league to get the advantage of him.2 In the midst of a whirl of giant affairs he always found time to complain of petty impositions. In an age of terrific struggle, such as his father would have reveled in, including contests with new adventurers of industry, with the Standard Oil party, or with labor unions, William Vanderbilt was easily frightened and prone to compromise rather than fight to the bitter end.
The upshot, the significant lesson to be drawn from William Vanderbilt’s character and situation, was that he prospered. The Central earned from 16 to 20 per cent on its real capital, even during the lean years after 1873 ; and in some eight years, despite certain notorious blunders, he succeeded in doubling the grand fortune which his father had taken ten times as long to accumulate.
Upon all sides, during the brief reign of the younger Vanderbilt, he was harassed by pirates and freebooters of the railroad world. No sooner had he in 1878 acquired the valuable Lake Shore Railroad, leading toward Chicago, than a ring of shifty undertakers began to construct the “Nickel Plate Railroad” paralleling his line to Chicago. The syndicate which built this road, according to Henry Clews, “had solely for their object to land it upon either Gould or Vanderbilt.” They overcapitalized and padded the construction costs in the traditional way of railroad barons, and were on their last financial legs when Vanderbilt in fear and trembling bought them out at a king’s ransom. Had he waited another month, Clews estimates, the younger Vanderbilt could have had the pirate property at his own terms. Once he assumed its obligations he saw his error at once, and mourned for years afterward over his premature surrender.
In 1883, a similar blackmailing expedition brought another ring of rakish promoters to the west bank of the Hudson River itself, where in the heart of the Vanderbilt territory a new line, the West Shore, began building operations. The financiering of the West Shore was as notorious as that of the “Nickel Plate” several years earlier, and was instigated by opposing capitalists connected with the Pennsylvania Railroad. Freight and passenger rates were now lowered in a rate war, while Vanderbilt made but feeble efforts to raid the Pennsylvania’s hard-coal fields with his own companies. In the end, he capitulated again, and arranged to buy the ramshackle West Shore, in order to have peace. The cost of these defeats was borne in an increase of capital debt as new shares of stock were issued to pay for the added properties—items which were figured forever in the cost of upkeep which the public paid for. “The Nickel Plate and the West Shore,” according to Clews, “brought 1,000 miles of needless road to divide traffic with the Vanderbilts.”
To add to Vanderbilt’s woes, Jay Gould between 1873 and 1879 kept up a steady attack. Rounding out, during these years, a nationwide railroad system, the Union Pacific in the West and the Wabash east of the Mississippi, Gould threatened to divert all of his western traffic from the New York Central unless he were given an interest in the Vanderbilt lines. Such a step was of course unthinkable.
At the same time the exposures of the “Hepburn Committee” of the New York State Legislature, in 1879, made known the secret agreements between the railroad heads and the oil-refiners. There were complaints of “tyranny” over the cost of milk in New York, half of which, it was alleged, paid tribute to Mr. Vanderbilt. There were complaints of the freight service he gave, which was deliberately held to a snail’s pace so that the extra-fare “Merchants’ Express” would be forced upon shippers. The tremendous enrichment of the Vanderbilt system particularly, the knowledge that Vanderbilt himself held 87 per cent of its capital stock, aroused fear and envy. On top of many public plaints there now came threats of special taxation by the state, which to Vanderbilt meant only the blackmail of politicians.
Harassed, wretched in all his being, for the very possession of vast wealth, Billy Vanderbilt burst forth one day before a newspaper reporter with his famous apophthegm : “ The public be damned ! ” The actual circumstances have been misunderstood. Billy Vanderbilt, a man of much softer mold than his father, has been represented as the paragon of capitalist despotism. In reality he had simply been explaining why the fast extra-fare mail train between New York and Chicago was being eliminated. It wasn’t paying, he asserted. But the public found it both useful and convenient ; should he not accommodate them ?
“The public be damned. I am working for my stockholders,” he had answered his interlocutor. “If the public want the train why don’t they pay for it ?”
However, Vanderbilt by his famous outburst had thrown a harsh light upon the divine power enjoyed by the railroad barons. The free Americans, and especially petty tradesmen among them, were hurt in a tender spot and roared with indignation. Bowing to the popular clamor, Vanderbilt took steps to dispose of part of his great holdings in the New York Central. His suave counselor, Chauncey Depew, has explained his actions as follows :
Mr. Vanderbilt, because of assaults made upon him in the Legislature and in the newspapers, came to the conclusion that it was a mistake for one individual to own a controlling interest in a great corporation like the New York Central, and also a mistake to have so many eggs in one basket, and he thought it would be better for himself and for the company if the ownership were distributed as widely as possible.
Through a syndicate headed by Pierpont Morgan, of Drexel, Morgan & Co., 250,000 shares were sold to British and American investors at $130 each. All this was done in profound secrecy. Announced by Morgan after the deal was completed, the sale netted his group a quick profit of $3,000,000, while Vanderbilt acquired $30,000,000 in cash. Moreover Morgan gained in financial prestige by having skillfully executed “one of the most remarkable railroad transactions” of the day, one which had silenced the public, and also allayed the fear or hostility felt by railroad barons in adjacent territories. Gould was conciliated at the same time, and a competitive war with his Wabash, St. Louis & Pacific Railroad was averted, although this did not remove the materials of conflict elsewhere. Furthermore, Pierpont Morgan, now entering the board of directors of the New York Central, and acting as its fiscal agent, became a power among the railroad men.
3
After the “recovery” of 1879, the Vanderbilt system, like its neighbor in Pennsylvania, reinvested its great profits in extending its lines to more distant points and in effecting working agreements with “feeder” railroads. In general, the construction labors of the post-Civil War period, after a comparative lull, were resumed on a far greater scale between 1880 and 1890. Five trunk lines now plied between the Atlantic and the Great Lakes at Chicago. Numerous “middle railroads” radiated out of Chicago through Indiana, Illinois, Iowa, Nebraska, Missouri, Kansas and the West in general. For control of certain of these, such as the Chicago & Northwestern, Vanderbilt, Gould and the Pennsylvania ring competed incessantly. And across the Rocky Mountains, four additional transcontinental lines were virtually completed to the Pacific Coast in the same decade, which saw the laying of over 70,000 miles of track.
In the “granary of a nation” lying between Chicago and Omaha, the contentions of the railroad barons led to the first efforts at combination between the different hosts. In 1870, the “Omaha Pool,” a form of “gentlemen’s agreement,” was quietly set up to establish cooperation between the competing lines, so that rates were stabilized, traffic was divided evenly, and profits and operating expenses equally shared. A few years later the same form of agreement was effected among the Southwestern lines. These were the first attempts at combination among the large carriers which had sprung up in the new territories.
By the 1880s all railroads in a competitive field had their pooling arrangements or gentlemen’s agreements with rivals. But the controls upon them were weak ; it was not yet clearly established among their ambitious leaders whether they could trust each other and whether it was more profitable to cooperate with or to blackmail, undermine and wreck their opponents. Hence north, south, east and west these vast public enterprises, headed by fiercely aggressive individualists sitting in their offices in New York, fought each other tooth and nail for the available trade, or now, in exhaustion, entered into collusion with one another.
The old stockbroker, Henry Clews, has given us a clear picture of the national industrial plan which was being pursued by the more “rugged individualists” of his time. He tells us :
Speculators were quick to perceive that they could build new lines on the same routes for much less cost than the old ones [especially after ’73] and that, with a lower capitalization, they could easily compel the pool to admit them to membership, with all the privileges of a ready-made traffic, and . . . guarantees of . . . exemption from competition. . . .
New roads were built, or sets of old detached ones were connected, so as to afford additional parallels to the existing trunk lines, with no other object than to compel the latter to support them by dividing with them a portion of their traffic, or to accept the alternative of a reckless cutting down of rates.
The effect upon the underlying consumers of alternate peace and war in transportation was bewildering, to say the least. Under the reign of competition freight rates would fall. But then the bursting of a corner in wheat, with the resultant rush of demand for cars, would bring a suddenly doubled or trebled tariff from the flinty railway officials. Grain would be moved at 15 cents a hundredweight ; then this rate would be changed to 10 cents ; then as suddenly, in the same season, lifted to 40 cents. The promulgation of a new railroad pool would mean further changes. A very real “censorship” over every aspect of the business of shippers grew up, certain large ones, like the Standard Oil, being nourished with secret rebates, while others were stamped out. There was finally the power for “making and ruining cities” or whole regions. A farmer appeared one day to complain before a New York legislative committee that the Vanderbilt railroad “would move his farm in Herkimer County out to the banks of the Mississippi River, in effect, allowing the man who lived on the banks of the Mississippi River to send his products at lower rates than he can.” Likewise protests were made over the long-haul and short-haul differentials, by which it was made to cost $1.50 more per ton to ship coal to a point midway between the Pennsylvania’s anthracite mines—to York, Pennsylvania, for instance—than all the way to the seaboard. But for all these economic disturbances and derangements, which came and went in the most inexplicable manner, there seemed no rational motives to those who were ravaged by them.
In a speech in Congress, on April 27, 1886, Senator Spooner disclosed a notorious case “where a single remark from a railway president over a glass of wine at a hotel table brought a war of rates which cost $5,000,000 of revenues before it was ended.” Their accord broken, the giant adversaries fell upon each other in an endurance test of financial punishment. They engaged in physical combats at bridgeheads ; they refused to transfer merchandise from each other’s freight cars ; and as far west as St. Joseph, they slashed rates against each other, bringing a short-lived joy to one region, or economic desolation to another.
There was no social police to end this intermittent internecine conflict. Legislators seeking to intervene could establish no balance between the shifting interests. Neither a fair division of the spoils nor rational service could be enforced by the best efforts of the lawgivers over long periods. And the efforts of state legislatures before 1887 to intervene and to regulate traffic rates precipitated confused and truly anarchic conditions. The transportation problem (so simple in itself on the basis of social service) became a “Gordian knot” as the railway chiefs evaded or laughed at attempts to control them. They put absurd obstacles in the way of regulations, stopped or slowed up their trains, threatened to remove their service entirely, even to boycott whole regions or commonwealths, unless the objectionable laws were removed from the statute books !
For such an era, a man like William Vanderbilt, who loved to ride behind fast trotting horses or to dream among the mediocre paintings in his art gallery, seemed little fitted. His monopoly over a section of the country sustained him well ; and his immense fortune bore its own impetus. But more aggressive monopolists pressed to supersede him. And when this somewhat tormented nabob pitched forward suddenly at his desk and died of a burst bloodvessel, in 1885, his affairs were undergoing a significant change. In the interests of a great brood of hungry little Vanderbilts of all sorts, a powerful investment banker now administered his estate of $200,000,000, diversified in hundreds of enterprises.
During a generation, the natural impulses of the railroad barons, as of the captains of industry, led them to set upon each other, with sandbag or in ambush. With the levers of giant machines in their hands they would effect destruction, dispersion and anarchy, engulfing the millions of citizens over whom they had power of life and death. It is the opinion of Thorstein Veblen, supported by much precise evidence of experts, as by Riegel’s in his “History of the Western Railroads,” that the predestined consolidation of the whole American transportation system was retarded at least forty years after it had become a logical necessity. Although the efforts of the monopolists such as Gould, Huntington, Hill and Morgan were in the long run directed toward sweeping rivals from their field, any detailed account of their tactics shows them as often inclined to “blocking the social system” at strategic points, as to “rationalizing” it. Such a view is most clearly borne out by the career of Jay Gould, the “purest” of the mercenary adventurers of his time.
1 “ The method was that of the ambush and the snare. Its ruling principle was cunning. Its object was to deceive, circumvent, ensnare, capture. Low animal cunning was succeeded by more refined kinds of cunning. The more important of these go by the names of business shrewdness, strategy and diplomacy, none of which differ from ordinary cunning in anything but the degree of adroitness by which the victim is outwitted.” Cited by T. Veblen, “Theory of Business Enterprise,” pp. 56-57.
2 The reader must not be surprised at the fantastic parsimony of a Vanderbilt who while enjoying an income of roundly twenty millions per annum, nevertheless haggled over pennies in the bills submitted to his company, or upbraided the restaurateur who sent his lunch to his office for including the charge for coffee that was not ordered. The man of giant undertakings is fully aware, as no person of small means is, that pennies and mills multiplied many thousandfold make a momentous difference in results. This principle Billy Vanderbilt had learned from his notoriously stingy father, who on his deathbed had refused the bottle of champagne prescribed by his doctor, saying : “Won’t sody-water do instead ?” Such economy, perfectly logical in industrial affairs, is projected gratuitously into private life—often in strange contrast with the magnificent station and lavish scale of living of the nabob. . . . It is like the punctuality of the retired fire-engine horse who rushes out needlessly at the sound of the fire-bell.