HISTORY OF THE GREAT AMERICAN FORTUNES
FURTHER VISTAS OF THE FIELD FORTUNE
But if only to give at the outset a translucent example of Fields methods in the management of industrial corporations, it is well to advert here to the operations of one of his many properties the Pullman Company, otherwise called the Palace Car Trust. This is a necessary part of the exposition in order to bring out more of the methods by which Field was enabled to fling together his vast fortune.
The artificial creation of the law called the corporation was so devised that it was comparatively easy for the men who controlled it to evade personal, moral, and often legal, responsibility for their acts. Governed as the corporation was by a body of directors, those acts became collective and not individual ; if one of the directors were assailed he could plausibly take refuge in the claim that he was merely one of a number of controllers ; that he could not be held specifically responsible. Thus the culpability was shifted, until it rested on the corporation, which was a bloodless thing, not a person.
FIELDS PULLMAN WORKS.
In the case of the Pullman Co., however, much of the moral responsibility could be directly placed upon Field, inasmuch as he, although under cover, was virtually the dictator of that corporation. According to the inventory of the executors of his will, he owned 8,000 shares of Pullman stock, valued at $800,000. It was asserted (in 1901) that Field was the largest owner of Pullman stock. In the popular mind, wrote a puffer, probably inspired by Field himself, George M. Pullman has ever been deemed the dominant factor in that vast and profitable enterprise. This belief was declared an error, and the writer went on : Field is, and for years has been, in almost absolute control. Pullman was little more than a figurehead. Such men as Robert T. Lincoln, the president of the company, and Norman B. Ream are but representatives of Marshall Field, whose name has never been identified with the property he so largely owns and controls. That fulsome writer, with the usual inaccuracies and turgid exaggerations of popular writers, omitted to say that although Field was long the controlling figure in the management of the Pullman works, yet other powerful American multimillionaires, such as the Vanderbilts, had also become large stockholders.
The Pullman Company, Moody states, employed in 1904, in all departments of its various factories at different places, nearly 20,000 employees, and controlled 85 per cent of the entire industry.1 As at least a part of the methods of the company have been the subject of official investigation, certain facts are available.
To give a brief survey, the Pullman Company was organized in 1867 to build sleeping cars of a feasible type officially patented by Pullman. In 1880 it bought five hundred acres of land near Chicago. Upon three hundred of these it built its plant, and proceeded, with much show and advertisement of benevolence, to build what is called a model town for the benefit of its workers. Brick tenements, churches, a library, and athletic grounds were the main features, with sundry miscellaneous accessories. This project was heralded far and wide as a notable achievement, a conspicuous example of the growing altruism of business.
THE NATURE OF A MODEL TOWN.
Time soon revealed the inner nature of the enterprise. The model town, as was the case with imitative towns, proved to be a cunning device with two barbs. It militated to hold the workers to their jobs in a state of quasi serfdom, and it gave the company additional avenues of exploiting its workers beyond the ordinary and usual limits of wages and profits. In reality, it was one of the forerunners of an incoming feudalistic sway, without the advantages to the wage worker that the lowly possessed under medieval feudalism. It was also an apparent polished improvement, but nothing more, over the processes at the coal mines in Pennsylvania, Illinois and other States where the miners were paid the most meager wages, and were compelled to return those wages to the coal companies and bear an incubus of debt besides, by being forced to buy all of their goods and merchandise at company stores at extortionate rates. But where the coal companies did the thing boldly and crudely, the Pullman Company surrounded the exploitation with deceptive embellishments.
The mechanism, although indirect, was simple. While, for instance, the cost of gas to the Pullman Company was only thirty-three cents a thousand feet, every worker living in the town of Pullman had to pay at the rate of $2.25 a thousand feet. If he desired to retain his job he could not avoid payment ; the company owned the exclusive supply of gas and was the exclusive landlord. The company had him in a clamp from which he could not well escape. The workers were housed in ugly little pens, called cottages, built in tight rows, each having five rooms and conveniences. For each of these cottages $18 rent a month was charged. The city of Chicago, the officials of which were but the mannikins or hirelings of the industrial magnates, generously supplied the Pullman Company with water at four cents a thousand gallons. For this same water the company charged its employees ten cents a thousand gallons, or about seventy-one cents a month. By this plan the company, in addition, obtained its water supply for practically nothing. Even for having shutters on the houses the workers were taxed fifty cents a month. These are some specimens of the companys many devious instrumentalities for enchaining and plundering its thousands of workers.
In the panic year of 1893 the Pullman Company reduced wages one-fourth, yet the cost of rent, water, gas of nearly all other fundamental necessities remained the same. As the average yearly pay of at least 4,497 of the companys wage workers was little more than $600 or, to be exact, $613.86 this reduction, in a large number of cases, was equivalent to forcing these workers to yield up their labors for substantially nothing. Numerous witnesses testified before the special commission appointed later by President Cleveland, that at times their bi-weekly checks ran variously from four cents to one dollar. The company could not produce evidence to disprove this. These sums represented the companys indebtedness to them for their labor, after the company had deducted rent and other charges. Such manifold robberies aroused the bitterest resentment among the companys employees, since especially it was a matter of authentic knowledge, disclosed by the companys own reports, that the Pullman factories were making enormous profits. At this time, the Pullman workers were $70,000 in arrears to the company for rent alone.
THE PULLMAN EMPLOYEES STRIKE.
Finally plucking up courage for it required a high degree of moral bravery to subject themselves and their families to the further want inevitably ensuing from a strike the workers of the Pullman Company demanded a restoration of the old scale of wages. An arrogant refusal led to the declaration of a strike on May 11, 1894. This strike, and the greater strike following, were termed by Carroll D. Wright, for a time United States Commissioner of Labor, as probably the most expensive and far-reaching labor controversy which can properly be classed among the historic controversies of this generation.2 The American Railway Union, composed of the various grades of workers on a large number of railroads, declared a general sympathetic strike under the delegated leadership of Eugene V. Debs. The strike would perhaps have been successful had it not been that the entire powers of the National Government, and those of most of the States affected, were used roughshod to crush this mighty labor uprising. The whole newspaper press, with rare exceptions, spread the most glaring falsehoods about the strike and its management. Debs was personally and venomously assailed in vituperation that has had little equal. To put the strikers in the attitude of sowing violence, the railroad corporations deliberately instigated the burning or destruction of their own cars (they were cheap, wornout freight cars), and everywhere had thugs and roughs as its emissaries to preach, and provoke, violence.3 The object was threefold : to throw the onus upon the strikers of being a lawless body ; to give the newspapers an opportunity of inveighing with terrific effect against the strikers, and, to call upon the Government for armed troops to shoot down, overawe, or in other ways thwart, the strikers.
Government was, in reality, directed by the railroad and other corporations. United States judges, at the behest of the railroad companies (which had caused them to be appointed to the Bench), issued extraordinary, unprecedented injunctions against the strikers. These injunctions even prevented the strikers from persuading fellow employees to quit work. So utterly without any basis in law were these injunctions that the Federal Commission reported : It is seriously questioned, and with much force, whether the courts have jurisdiction to enjoin citizens from persuading each other in industrial matters of common interest. But the injunctions were enforced. Debs and his comrades were convicted of contempt of court and, without jury trial, imprisoned at a critical juncture of the strike. And what was their offense ? Nothing more than seeking to induce other workers to take up the cause of their striking fellow-workers. The judges constituted themselves as prosecuting attorney, judge and jury. Never had such high-handed judicial usurpation been witnessed. As a concluding stroke, President Cleveland ordered a detachment of the United States army to Chicago. The pretexts were that the strikers were interfering with interstate commerce and with the carrying of mails.
VAST PROFITS AND LOW WAGES.
That the companys profits were great at the identical time the workers were curtailed to a starvation basis, there can be no doubt. The general indignation and agitation caused by the summary proceedings during the strike, compelled President Cleveland to appoint a commission to investigate. Cleveland was a mediocre politician who, by a series of fortuitous circumstances, had risen from ward politics to the Presidency. After using the concentrated power of the Federal Government to break the strike, he then decided to investigate its merits. It was the shift and ruse of a typical politician.
The Special Commission, while not selected of men who could in the remotest degree be accused of partiality toward the workers, brought out a volume of significant facts, and handed in a report marked by considerable and unexpected fairness. The report showed that the Pullman Companys capital had been increased from $1,000,000 in 1867 to $36,000,000 in 1894. Its prosperity, the Commission reported, has enabled the company for over twenty years to pay two per cent. quarterly dividends. But this eight per cent. annual dividend was not all. In certain years the dividends had ranged from nine and one half, to twelve, per cent. In addition, the Commission further reported, the company had laid by a reserve fund in the form of a surplus of $25,000,000 of profits which had not been divided. For the year ending July 31, 1893, the declared dividends were $2,520,000 ; the wages $7,223,719.51. During the next year, when wages were cut one-fourth, the stockholders divided as even greater amount in profits : $2,880,000. Wages went to $4,471,701.39.4
If Fields revenue was so proportionately large from this one property the Pullman works it is evident that his total revenue from the large array of properties which he owned, or in which he held bonds or stock, was very great.
It is probable that in the latter years of his life his annual net income was, at the very least, $5,000,000. This is an extremely conservative estimate. More likely it reached $10,000,000 a year. Computing the sum upon which the average of his workers had to live (to make a very liberal allowance) at $800 a year, this sum of $5,000,000 flowing in to him every year, without in the slightest trenching upon his principal, was equal to the entire amount that 6,250 of his employees earned by the skill of their brains and hands, and upon which they had to support themselves and their families.
Here, then, was one individual who appropriated to his use as much as six thousand men and more who laboriously performed service to the community. For that $5,000,000 a year Field had nothing to do in return except to worry over the personal or business uses to which his surplus revenues should be put ; like a true industrial monarch he relieved himself of superfluous cares by hiring the ability to supervise and manage his properties for him.
Such an avalanche of riches tumbled in upon him that, perforce, like the Astors, the Goelets and other multimillionaires, he was put constantly to the terrible extremity of seeking new fields for investment. Luxuriously live, as he did, it would have required a superior inventive capacity to have dissipated his full income. But, judging his life by that of some other multimillionaires, he lived modestly. Of medium height and Spare figure, he was of rather unobtrusive appearance. In his last years his hair and mustache were white. His eyes were gray and cold ; his expression one of determination and blandly assertive selfishness. His eulogists, however, have glowingly portrayed him as generous, philantropic and public-spirited.
A MODEL OF BUSINESS INTEGRITY.
In fact, it was a point descanted upon with extraordinary emphasis during Fields lifetime and following his demise that, (to use the stock phrase which with wearying ceaselessness went the rounds of the press), he was a business man of the best type. From this exceptional commentary it can be seen what was the current and rooted opinion of the character of business men in general. Fields rigorous exploitation of his tens of thousands of workers in his stores, in his Pullman factories, and elsewhere, was not a hermetically sealed secret ; but this exploitation, no matter to what extremes it was carried, was an ordinary routine of prevailing business methods.5
Of the virtual enslavement of the worker ; of the robbing him of what he produced ; of the drastic laws enforced against him ; of the debasement of men, women and children of all of these facts the organs of public expression, the politicians and the clergy, with few exceptions, said nothing.
Everywhere, except in obscure quarters of despised workingmens meetings, or in the writings or speeches of a few intellectual protestors, the dictum was proclaimed and instilled that conditions were just and good. In a thousand disingenuous ways, backed by nimble sophistry, the whole ruling class, with its clouds of retainers, turned out either an increasing flood of praise of these conditions, or masses of misinforming matter which tended to reconcile or blind the victim to his pitiful drudgery. The masters of industry, who reaped fabulous riches from such a system, were covered with slavish adulation, and were represented in flowery, grandiloquent phrases as indispensable men, without whom the industrial system of the country could not be carried on. Nay, even more : while being plundered and ever anew plundered of the fruits of their labor, the workers were told, (as they are increasingly being told), that they should honor the magnates and be thankful to them for providing work.
HE STEALS MILLIONS IN TAXES.
Marshall Field, as we have said, was heralded far and wide as an unusually honest business man, the implication being that every cent of his fortune was made fairly and squarely. Those fawners to wealth, and they were many, who persisted in acclaiming his business methods as proper and honorable, were grievously at a loss for an explanation when his will was probated, and it was found that even under the existing laws, favorable as they were to wealth, he had been nothing more than a common perjurer and a cheat. It was too true, alas ! This Man of strict probity had to be catalogued with the rest of his class.
For many years he had insisted on paying taxes on personal property on a valuation of not more than $2,500,000 ; and the pious old shopkeeper had repeatedly threatened, in case the board of assessors should raise his assessment, that he would forthwith bundle off his domicile from Chicago, and reside in a place where assessors refrain from too much curiosity as to ones belongings. But lo! when the schedule of his property was filed in court, it was disclosed that for many years he had owned at least $17,500,000 Of taxable personal property subject to the laws of the State of Illinois. Thus was another idol cruelly shattered ; for the aforesaid fawners had never tired of exulting elaborately upon the theme of Fields success, and how it was due to his absolute integrity and pure, undefiled character.
At another time the facts of his thefts of taxes might have been suppressed or toned down. But at this particular juncture Chicago happened to have a certain corporation cournsel who, while mildly infected with conventional views, was not a truckler to wealth. Suit was brought in behalf of the city for recovery of $1,730,000 back taxes. So clear was the case that the trustees of Fields estate decided to compromise. On March 2, 1908, they delivered to John R. Thompson, treasurer of Cook County, a check for one million dollars. If the compound interest for the whole series of years during which Field cheated in taxation were added to the $1,730,000, it would probably be found that the total amount of his frauds had reached fully three million dollars.
The chorus of astonishment that ascended when these facts were divulged was an edifying display. He who did not know that the entire propertied class made a regular profession of perjury and fraud in order to cheat the public treasury out of taxes, was either deliciously innocent or singularly uninformed. Year after year a host of municipal and State officials throughout the United States issued reports showing this widespread condition. Yet aside from their verbose complainings, which served political purpose in giving an air of official vigilance, the authorities did nothing.
PERJURY AND CHEATING COMMON.
As a matter of fact, the evasion of taxes by the Pullman Company had been a public scandal for many years. John P. Altgeld, Governor of Illinois in 1893-95, frequently referred to it in his speeches and public papers. Field, then, not only personally cheated the public treasury out of millions, but also the corporations which he controlled did likewise. The propertied class everywhere did the same. The unusually thorough report of the Illinois Labor Bureau of 1894 demonstrated how the most valuable land and buildings in Chicago were assessed at the merest fraction of their true value the costliest commercial buildings at about one-tenth, and the richest residences at about one-fourteenth, of their actual value. As for personal property it contributed a negligible amount in taxes.6
The reports of the tax committee of the Boston Executive Business Association in 1891 estimated that two billion dollars of property in Boston escaped taxation, and that the public treasury was cheated out of about $17,000,000 in taxes every year. As for New York City, we have seen how the Astors, the Schermerhorns, the Goelets the whole aggregate of the propertied class systematically defrauded in taxes for many decades. It is estimated that in New York City, at present, not less than five billion dollars of property, real and personal, entirely escapes taxation. This estimate is a conservative one.
Spahr, after an exhaustive investigation in the United States concluded more than a decade ago that, the wealthy class pay less than one-tenth of the indirect taxes, the well-to-do less than one-quarter, and the relatively poorer classes more than two-thirds.7 What Spahr omitted was this highly important qualification : When the rich do pay. Tenants of the property owners must pay their rent on time or suffer eviction, but the capitalists are allowed to take their own leisurely time in paying such portion of their taxes as remains after the bulk of the tax list has been perjured away. Thus in a report he made public on February 28, 1908, Controller Metz, of New York City, pointed out that the huge amount of $102,834,227, was due the city in uncollected taxes, much of which amount ran several decades back. Of this sum $29,816,513 was owed on real estate, on which the taxes were a direct lien.
The beauties of law as made and enforced by the property interests, are herein illustriously exemplified. A poor tenant can be instantly dispossessed, whether sick or in destitution, for non-payment of rent ; the landowner is allowed by officials who represent, and defer to him and his class, to owe large amounts in taxes for long periods, and not a move is taken to dispossess him.
And now by the most natural gradation, we come to those much bepraised acts of our multi-millionaires the seignorial donating of millions to charitable or public-spirited purposes.
Like the Astors, the Schermerhorns, the Rhinelanders and a galaxy of others, Field diffused large sums ; he, like them, was overwhelmed with panegyrics. Millions Field gave toward the founding and sustaining of the Field Colombian Museum in Chicago, and to the University of Chicago. It may be parenthetically added that, (to repeat), he owned, adjacent to this latter institution, many blocks of land the increased value of which, after the establishment of the University, more than recouped him for his gifts. This might have been either accidental or it might have been cold calculation ; judging from Fields consistent methods, it was probably not chance.
So composite, however, is the human character, so crossed and seamed by conflicting influences, that at no time is it easy to draw any absolute line between motives. Merely because he exploited his employees mercilessly, and cheated the public treasury out of millions of dollars, it does not necessarily follow that Field was utterly deficient in redeeming traits. As business is conducted, it is well known that many successful men (financially), who practice the most cruel and oppressive methods, are, outside the realm of strict business transactions, expansively generous and kind. In business they are beasts of prey, because under the private property system, competition, whether between small or large concerns, is reduced to a cutthroat struggle, and those who are in the contest must abide by its desperate rules. They must let no sympathy or tenderness interpose in their business dealings, else they are lost.
But without entering into a further philosophical disquisition, this fact must be noted : The amounts that Field gave for philanthropy were about identical with the sums out of which he defrauded Chicago in the one item of taxes alone. Probed into, it is seen that a great part of the sums that multimillionaires have given, represent but a tithe of the sums cheated by them in taxes. William C. Schermerhorn donates $300,000 to Columbia University ; the aggregate amount that he defrauded in taxes was much more. Thus do our magnates supply themselves with present and posthumous fame gratuitously. Not to consider the far greater and incalculably more comprehensive question of their appropriating the resources of the country and the labor of hundreds of millions of people,8 and centering attention upon this one concrete instance of frauds in taxes, the situation presented is an incongruous one. Money belonging to the public treasury they retain by fraud ; this money, apparently a part of their honestly acquired fortune, is given in some form of philanthropy ; and then by some curious oversetting of even conventional standards, they reap blessings and glory for giving what are really stolen funds.
Those who enjoy his confidence, wrote an effervescent eulogist of Field, predict that the bulk of his vast fortune will be devoted to purposes of public utility. But this prediction did not materialize.
$140,000,000 TO TWO BOYS.
Fields fortune, conservatively estimated at $100,000,000, yet, in fact, reaching about $140,000,000, was largely bequeathed to his two grandsons, Marshall Field III., and Henry Field. Marshall Field, as did many other multimillionaires of his period, welded his fortune into a compact and vested institution. It ceased to be a personal attribute, and became a thing, an inert mass of money, a corporate entity. This he did by creating, by the terms of his will, a trust of his fortune for the two boys. The provisions of the will set forth that $72,000,000 was to set aside in trust for Marshall III., until the year 1954. At the expiration of that period it, together with its accumulation, was to be turned over to him. To the other grandson, Henry, $48,000,000 was bequeathed under the same conditions.
These sums are not in money, although at all times Field had a snug sum of cash stowed away ; when he died he had about $4,500,000 in banks. The fortune that he left was principally in the form of real estate and bonds and stocks. These constituted a far more effective cumulative agency than money. They were, and are, inexorable mortgages on the labor of millions of workers, men, women and children, of all occupations. By this simple screed, called a will, embodying one mans capricious indulgence, these boys, utterly incompetent even to grasp the magnitude of the fortune owned by them, and incapable of exercising the glimmerings of management, were given legal, binding power over a mass of people for generations. Patterson says that in the Field stores and Pullman factories fifty thousand people work for these boys.9 But these are the direct employees ; as we have seen, Field owned bonds and stock in more than one hundred and fifty industrial, railroad, mining and other corporations. The workers of all these toil for the Field boys.
They delve in mines, and risk accident, disease and death, or suffer an abjectly lingering life of impoverishment. Thousands of coal miners are killed every year, and many thousands more are injured, in order that two boys and others of their class may draw huge profits.10 More than 10,000 persons are killed, and 97,000 injured, every year on the railroads, so that the income enjoyed by these lads and others shall not diminish. Nearly all of these casualties are due to economizing in expense, working employees to an extreme fatiguing limit, and refusing to provide proper safety appliances. Millions more workers drudge in rolling mills, railroad shops and factories ; they wear out their lives on farms, in packing houses and stores. For what ? Why, foolish questioner, for the rudiments of an existence ; do you not know that the worlds dispossessed must pay heavily for the privilege of living ? As these lads hold, either wholly or partly, the titles to all this inherited property ; in plain words, to a formidable part of the machinery of business, the millions of workers must sweat and bend the back, and pile up a ceaseless flow of riches for them.
Marshall Field III., still in knickerbockers, receives $60,000 a week ; his brother Henry, $40,000 a week. The sum in both cases automatically increases as the interest on the principal compounds. What do many of the workers who supply this revenue get ? Patterson gives this authentic list of wages :
Pullman Company blacksmiths, $16.43 a week ; boilermakers, $17 ; carpenters, $12.38 ; machinists, $16.65 ; painters, $13.60, and laborers, $9.90 a week. As for the lower wages paid to the workers in the Field stores, we have already given them. And apart from the exploitation of employees, every person in Chicago who rides on the street or elevated railroads, and who uses gas, electricity or telephones, must pay direct tribute to these lads. How decayed monarchial establishments are in these days ! Kings mostly must depend upon Parliaments for their civil lists of expenditure ; but Capitalism does not have to ask leave of anybody ; it appropriates what it wants.
This is the status of the Field fortune now. Let the Field striplings bless their destiny that they live in no medieval age, when each baron had to defend his possessions by his strong right arm successfully, or be compelled to relinquish. This age is one when Little Lord Fauntleroys can own armies of profit producers, without being distracted from their toys. Whatever defense is needed is supplied by society, with its governments and its judges, its superserviceable band of lawyers, and its armed forces. Two delicate children are upheld in enormous possessions and vast power, while millions of fellow beings are suffered to remain in destitution.
END OF VOL. I.
(The index for Volumes I, II, and III will be found in Vol. III.)
1 The Truth About the Trusts :266-267.
2 Industrial Evolution of the United States, 313.
3 Parsons, The Railways, the Trusts and the People : 196. Also, Report of Chicago Chief of Police for 1894. This was a customary practice of railroad, industrial and mining capitalists. Further facts are brought out in other parts of this work.
4 Report on the Chicago Strike of June and July, 1894, by the United States Strike Commissioners, 1895. Throughout all subsequent years, and at present, the Pullman Company has continued charging the public exorbitant rates for the use of its cars. Numerous bills have been introduced in various legislatures to compel the company to reduce its rates. The company has squelched these measures. Its consistent policy is well known of paying its porters and conductors such poor wages that the 15,000,000 passengers who ride in Pullman cars every year are virtually obliged to make up the deficiency by tips.
5 Sweeping as this statement may impress the uninitiated, it is entirely within the facts. As one of many indisputable confirmations it is only necessary to refer to the extended debate over child labor in the United States Senate on January 23, 28, and 29, 1907, in which it was conclusively shown that more than half a million children under fifteen years of age were employed in factories, mines and sweatshops. It was also brought out how the owners of these properties bitterly resisted the passage or enforcement of restrictive laws.
6 Eighth Biennial Report of the Illinois Bureau of Labor Statistics, 1894. The report, made public in August, 1909, of the Illinois Tax Reform Leagues investigation of the Chicago Board of Reviews assessments, showed that these frauds in evading taxation not only continue, but on a much greater scale than ever before. The Illinois Tax Reform League asserted, among other statements, that Edward Morris, head of a large packing company, was not assessed on personal property, whereas he owned $43,000,000 worth of securities, which the League specified. The League called upon the Board of Review to assess J. Ogden Armour, one of the chiefs of the Beef Trust, on $30,840,000 of personal property. Armour was being yearly assessed on only $200,000 of personal property. These are two of the many instances given in the report in question. It is estimated (in 1909), that back taxes on at least a billion dollars of assessable corporate capital stock, are due the city from a multitude of individuals and corporations.
7 The Present Distribution of Wealth in the United States:143.
8 Hundreds of millions of people. Not only are the 85,000,000 people of the United States compelled to render tribute, but the peoples of other countries all over the globe.
9 Marshall Fields Will by Joseph Medill Patterson. Reprinted in pamphlet form from Colliers Weekly.
10 The number of men killed per 100,000 employed has increased from 267 a year in 1895 to about 355 at present. (See report of J.A. Holmes, chief of the technological branch of the United States Geological Survey.) The chief reason for this slaughter is because it is more profitable to hire cheap, inexperienced men, and not surround the work with proper safeguards.