HISTORY OF THE GREAT AMERICAN FORTUNES
THE ORIGIN OF HUGE CITY ESTATES
In point of succession and importance the next great fortunes came from ownership of land in the cities. They far preceded fortunes from established industries or from the control of modern methods of transportation. Long before Vanderbilt and other of his contempories had plucked immense fortunes from steamboat, railroad and street railway enterprises, the Astor, Goelet, and Longworth fortunes were counted in the millions. In the seventy years from 1800 the landowners were the conspicuous fortune possessors ; and, although fortunes of millions were extracted from various other lines of business, the land fortunes were preeminent.
At the dawn of the nineteenth century and until about 1850, survivals of the old patroon estates were to be met with. But these gradually disintegrated. Everywhere in the North the tendency was toward the partition of the land into small farms, while in the South the condition was the reverse. The main fact which stood out was that the rich men of the country were no longer those who owned vast tracts of rural land. That powerful kind of landowner had well-nigh vanished.
THE MANORIAL LORDS PASS AWAY.
For more than two centuries the manorial lords had been conspicuous functionaries. Shorn of much power by the alterations of the Revolution they still retained a part of their state and estate. But changing laws and economic conditions drove them down and down in the scale until the very names of many of them were gradually lost sight of. As they descended in the swirl, other classes of rich men jutted into strong view. Chief among these nascent classes were the landowners of the cities, at first grubbling tradesmen and land speculators and finally rising to the crowning position of multi-millionaires. Originally, as we have seen, the manorial magnate himself made the laws and decreed justice ; but in two centuries great changes had taken place. He now had to fight for his very existence.
Thus, to give one example, the manorial men in New York were confronted in 1839 by a portentous movement. Their tenants were in a state of unrest. On the Van Rensselaer, the Livingston and other of the old feudal estates they rose in revolt. They objected to the continuing system which gave the lords of these manors much the same rights over them as a lord in England exercised over his tenants. Under the leases that the manorial lords compelled their tenants to sign, there were oppressive anachronisms. If he desired to entertain a stranger in his house for twenty-four hours, the tenant was required to get permission in writing. He was forced to obligate himself not to trade in any commodities except the produce of the manor. He could not get his flour ground anywhere else than at the mill of the manor without violating his lease and facing ejectment, nor could he buy anything at any place except at the store of the manorial magnate. These were the rights reserved to the manorial lords after the Revolution, because theirs were the rights of private property ; and as has often been set forth, property absoluty dominated the laws and greatly nullified the spirit of a movement made successful by the blood and lives of the masses in the Revolutionary Army. Tardily, subsequent legislatures had abolished all feudal tenures, but these laws were neither effective nor were enforced by the authorities who reflected and represented the interests of the proprietors of the manors.
On their part the manorial men believed that selfinterest, pride and adherence to ancient traditions called for the perpetuation of their arbitrary power of running their domains as they pleased. They refused to acknowledge that law had any right to interfere in the managing of what they considered their private affairs. Eager to avail themselves of the police power of the law in dispossessing any fractious or impecunious tenant and in suppressing protest meetings, they, at the same time, denounced law as tyrannical when it sought to inject more modern and humane conditions in the managing of their estates. They stubbornly insisted upon a tenantry, and as obstinately contested any forfeiture of what they deemed their property rights.
FEUDAL TENURES ABOLISHED.
A long series of reprisals and an intense agitation developed. The Anti-Renters mustered such sympathetic political strength and threw the whole state into such a vortex of radical discussion, that the politicians of the day, fearing the effects of such a movement, practically forced the manorial magnates to compromise by selling their land in small farms,1 which they did at exorbitant prices. They made large profits on the strength of the very movement which they had so bitterly opposed. Affrighted at the omnious unrest of a large part of the people and hoping to stern it, the New York Constitutional Convention in 1846 adopted a Constitutional inhibition on all feudal tenures, an inhibition so drafted that no legislature could pass a law contravening it.2
So, in this final struggle, passed away the last vestiges of the sway of the all-powerful patroons of old. They had become archaic. It was impossible for them to survive in the face of newer conditions, for they represented a bygone economic and social era. Their power was one accruing purely from the extent of their possessions and discriminative laws. When these were wrenched from their grasp, their importance as wielders of wealth and influence ceased. They might still boast of their lineage, their aristocratic enclosure and culture and their social altitude, but these were about the only remnants of consolation left.
The time was unpropitious for the continuation of great wealth based upon rural or small-town land. Many influences conspired to make this land a variable property, while these same influences, or a part of them, fixed upon city land an enhancing and graduating permanency of value. The growth of the shipping trade built up the cities and attracted workers and population generally. The establishment of the factory system in 1790 had a two-fold effect. It began to drain country sections of many of the younger generations and it immediately enlarged the trading activities of the cities. Another and much more considerable part of the farming population in the East was constantly migrating to the West and Southwest with their promising opportunities. Some country districts thinned out ; others remained stationary. But whether the rural census increased or not, there were other factors which sent up or down the value of farming lands. The building of a canal would augment the value of land in one section and cause stimulation, and depress conditions in another section not so favored. Even this stimulation, however, was often transient. With each fresh settlement of the West and with the construction of each pioneer railroad, new and complex factors turned up which generally had a depreciating effect upon Eastern lands. A country estate worth a large sum in one generation might very well succumb to a mortgage in the next.
THE NEW ARISTOCRACY.
But fortunes based upon land in the cities were indued with a mathematical certainty and a perpetuity. City real estate was not subject to the extreme fluctuating processes which so disordered the value of rural land. All of the tendencies and currents of the times favored the building up of an aristocracy based upon ownership of city property. Compared to their present colossal proportions the cities were then mere villages. There was a nucleus of perhaps a mile or two of houses, beyond which were fields and orchards, meadows and wastes. These could be bought for an insignificant sum. With the progressing growth of commerce and population, with immigration continually going on, every year witnessing a keener pressure for occupation of the land, the value of this latter was certain to increase. There was no chance of its being otherwise.
Up to 1825 it was a mooted question whether the richest landowners would arise in New York, Philadelphia, Boston or Baltimore. For many years Philadelphia had been far in the lead in extent of commerce. But the opening of the Erie Canal at once settled this question. At a bound New York attained the rank of the foremost commercial city in the United States, completely outstripping its competitors. While the trade of these fell off precipitately, the population and trade of New York City nearly doubled in a single decade. The value of land began to increase stupendously. The swamps, rocky wastes and flats and the land under water of a few years before became prolific sources of fortunes. Land which had been worth a paltry sum ten or twenty years before sprang to a considerable value and, in course of time, with the same causes in a more intense ratio of operation, was vested with a value of hundreds of millions of dollars. This being so, it was not surprising that the richest landowners should appear first in New York City and should be able to maintain their supremacy.
The wealth of the landowners soon completely eclipsed that of the shippers. Enormous as were the profits of the shipping business, they were immediate only. In the contest for wealth it was inevitable that the shippers should fall behind. Their business was one of peculiar uncertainties. The hazards of the sea, the fluctuations and vicissitudes of trade, the severe competition of the times, exposed their traffic to many mutations. Many of the rich shipowners well understood this ; the surplus wealth derived from commerce on the seas they invested in land, banks, factories, turnpikes, insurance companies, railroads and in some instances, lotteries. Those shipping millionaires who clung exclusively to the sea fell in the scale of the rich class, especially as the time came when foreign shipping largely supplanted the trade hitherto carried in American cutters. Other shippers who applied their surplus capital to investments in other forms of trade and ownership advanced rapidly in wealth.
CITY LAND THE SUPREME FACTOR.
Between land ownership and other forms, however, there was a great difference. Trade was then extremely individualistic ; the artificial controlling power called the corporation was in its earliest infantile condition. The heirs of the owner of sixty line of sail might not possess the same astuteness, the same knowledge, adroitness, and cunning or let us say, unscrupulousness the same severe application as the founder. Consequently the business would decay or fall into the hands of others shrewder or more fortunate. As to factories the condition was somewhat the same ; and, after the organization of labor unions the possibility of strikes was an ever-present danger to the constant flow of profits. Banks were by no means fixed, unchangeable establishments. Like other media of profit-making, the extent of their power and profits depended upon prevailing conditions and very largely upon the favoritism or policy of Government. At any time the party controlling government functions might change and a radically different policy in banking, tariff or other laws be put in force.
These changing laws did not, it is true, virtally benefit the masses of the people, for one set or other of the propertied interests almost invariably benefited. The laws enacted were usually in response to a demand made by contending propertied interests. The trade and political struggles carried on by the commercial interests were a series of incessant wars, in which every individual owner, firm or combination was fiercely resisting competitors or striving for their overthrow.
THE INVULNERABLE LANDOWNER.
But the landowner occupied a superior position which neither political conditions nor the flux of changing circumstances could materially assail. He was ardently individualistic also in that he demanded, and was accorded, the unimpaired right to get land in any way that he legally could, hold a monopoly of as much of it as he pleased, and dispose of it as he willed. In the very act of asserting this individualism he called upon Society, through its machinery of Government, for the enactment of particular laws, to guarantee him the sole possession of his land and uphold his claims and rights by force if necessary. These were all the basic laws that he needed and these laws did not change. From generation to generation they remained fixed, immovable. The interests of all landowners were identical ; those of the traders were varying and conflicting. For long periods the landowner could expect the continuance of existing fundamental laws regarding the ownership of land, while the shipper, the factory owner, the banker did not know what different set of laws might be enacted at any time.
Furthermore, the landowner had an efficient and never-failing auxiliary. He yoked society as a partner, but it was a partnership in which the revenue went exclusively to the landowner. The principal factor he depended upon was the work of collective humans in adding greater and greater values to his land. Broadly speaking, his share consisted in merely looking on ; he had nothing to do except hold on to his land. His sons, grandsons, his descendants down to remotest posterity need do even less ; they could leisurely hold on to their inheritance, enlarge it, hire the necessary ability of superintendence and vast and ever vaster riches would be theirs. Society worked feverishly for the landowner. Every street laid and graded by the city ; every park plotted and every other public improvement ; every child born and every influx of immigrants ; every factory, warehouse and dwelling that went up ; all these and more agencies contributed toward the abnormal swelling of his fortune.
A PROLIFIC BREEDER OF WEALTH.
Under such a system land was the one great auspicious, facile and durable means of rolling up an overshadowing fortune. Its exclusive possession struck at the very root of human necessity. At a pinch people can do without trade or money, but land they must have, even if only to lie down on and starve. The impoverished, jobless worker, with disaster facing him, must first perforce give up his precious few coins to the landlord and take chances on food and the remainder. Especially is land in demand in a complicated industrial system which causes much of the population to gravitate to centers where industries and trade are concentrated and congest there.
A more formidable system for the foundation and amplification of lasting fortunes has not existed. It is automatically self-perpetuating. And that it is preeminently so is seen in the fact that the large shipping fortunes of a century ago are now generally as completely forgotten as the methods then used are obsolete. But the land has remained land ; and the fortunes then incubated have grown into mighty powers of great national, and some of considerable international, importance.
It was by favor of these propitious conditions that many of the great fortunes, based upon land, were founded. According to the successive census returns of the United States, by far the greater part of the wealth of the country as regards real estate was, and is, concentrated in the North Atlantic Division and the North Central Division, the one taking in such cities as New York, Philadelphia, and Boston, the other Chicago, Cincinnati and other cities.3 It is in the large cities that the great land fortunes are to be found. The greatest of these fortunes are the Astor, Goelet and Rhinelander estates in the East and, in the West, the Longworth and Field estates are notable examples. To deal with all the conspicuous fortunes based upon land would necessitate an interminable narrative. Suffice it for the purposes of this work to take up a few of the superlatively great fortunes as representatives of those based upon land.
VAST FORTUNES FROM LAND.
The foremost of all American fortunes derived from land is the Astor fortune. Its present bulk, embracing all the collateral family branches, is estimated by some authorities at about $300,000,000. This, it is generally believed, is an underestimate. As long ago as 1889, when the population of New York City was much less than now, Thomas G. Shearman, a keen student of land conditions, placed the collective wealth of the Astors at $250,000,000.4 The stupendous magnitude of this fortune alone may at once be seen in its relation to the condition of the masses of the people. An analysis of the United States census of 1900, compiled by Lucien Sanial, shows that while the total wealth of the country was estimated at about $95,000,000,000, the proletarian class, composed chiefly of wage workers and a small proportion of those in professional classes, and numbering 20,393,137 persons, owned only about $4,000,000,000. It is by such a contrast, bringing out how one family alone, the Astors, own more than many millions of workers, that we begin to get an idea of the overreaching, colossal power of a single fortune. The Goelet fortune is likewise vast ; it is variously estimated at from $200,000,000 to $225,000,000, although what its exact proportions are is a matter of some obscurity.
In the case of these great fortunes it is well nigh impossible to get an accurate idea of just how much they reach. All of them are based primarily upon ownership of land, but they also include many other forms such as shares in banks, coal and other mines, railroads, city transportation systems, gas plants, industrial corporations. Even the most indefatigable tax assessors find it such a fruitless and elusive task in attempting to discover what personal property is held by these multi-millionaires, that the assessment is usually a conjectural or haphazard performance. The extent of their land holdings is known ; these cannot be hid in a safe deposit vault. But their other varieties of property are carefully concealed from public and official knowledge. Since this is so, it is entirely probable that the fortunes of these families are considerably greater than is commonly estimated. The case of Marshall Field, a Chicago Croesus, who left a fortune valued at about $100,000,000, is a strong illustration. This man owned $30,000,000 worth of real estate in Chicago alone. There was no telling, however, what his whole estate amounted to, for he refused year after year to pay taxes on more than a valuation of $2,500,000 of personal property. Yet, after his death in 1906, an inventory of his estate filed in January, 1907, disclosed a clear taxable personal property of $49,977,270. He was far richer than he would have it appear.
Let us investigate the careers of some of these powerful landed men, the founders of great fortunes, and inquire into their methods and into the conditions under which they succeeded in heaping up their immense accumulations.
1 In 1847 and 1849 the Anti-Renters demonstrated a voting strenth in New York State of about 5,000. Livingston's title to his estate being called into question, a suit was brought. The court decision favored him. The Livingstons, it may be again remarked, were long powerful in politics, and had had their members on the bench. Life of Silas Wright, 179-226; Last Leaves of American History: 16-18, etc.
2 The debates in this convention showed that the feudal conditions described in this chapter prevailed down to 1846. New York Constitution ; Debates in Convention, 1846; 1052-1056. This is an extract from the official convention report : Mr. Jordan (a delegate] said that it was from such things that relief was asked : which although the moral sense of the community will not admit to be enforced, are still actually in existence.
3 Of a total of $39,544,333,000, representing wealth in real estate and improvements, the census of 1890 attributed $13,905,274,364 to the North Atlantic Division and a trifle more than $15,000,000,000 to the North Central Division.
4 The Forum (Magazine), November, 1889.