By the end of the year 1902 J. Pierpont Morgan, reckoning by appearances, seemed to outrank every other American magnate ;  scarcely a day passed that the newspapers did not report some new achievement of his, or obsequiously render tribute to his ever-expanding power.  In the public appraisement he bulked as a supervitally preponderant man, a figure standing out with an immense and peculiar distinction, eclipsing the most obtrusive political and industrial functionaries.

Contrasted with him, ostensible political rulers were innocuous ephemeral personages.  For a time they might vociferously command attention, but their encumbency was dependent upon the will of the magnates, and they were pushed up or pulled down as suited the policy and purposes of the great propertied interests.  A long array of “ eminent statesmen ” had shuffled into solemn view, and for a while had been the cynosure of the nation, and then, like exploded rockets, had dissappeared into obscurity, or into a state akin to it.  Yet, in another aspect, brief and borrowed as was their power, theirs was not the portion of oblivion ;  conventional history, which accepts the apparent as the real, documents and often perpetuates their names, ignorant of the fact that they were only the servers or servitors of particular impelling forces and interests.

Behind the nominal political masters stood the real masters — the great magnates.


Seeing that this is so, what vitally boots it whether this or that individual happened to fill the so-called great elective or appointive offices ?  In stereotyped historical textbooks and narratives the names of J. Pierpont Morgan and his like do not enter ;  not even a cursory glimpse is given of their deeds.  Yet, in large part, these are the significant things that fundamentally have made actual history.  Rulers have been allowed to make formal declaration of wars, but capitalists have commanded them.  When it pleases the interests of capital to have peace, titular rulers are ordered to arrange it.  Should rulers be so obtuse or stubborn as to stand in the way of capitalist interests, revolution follows.  If, in a parliamentary country laws are somehow enacted contrary to the interests of the dominant capitalist class, those laws are effectively voided.  All of which proves that, although presidents, kings and emperors may mightily pose as the “ creators of policies,” yet after all they are only the sounding-board creatures of money forces unnoticed by orthodox histories.

An overbearingly potent and heroic “ great man ” Roosevelt appeared ;  many a descriptive work has been written of him ;  and doubtless, in the curious nature of things, we are likewise fated to see many a statue of him.  For what ?  If history tells the tale aright it will tell how he begged campaign funds from the very trust magnates whom he pretended to flout ;  how, in a critical moment in the national election of 1904, he so despaired of success that he was forced to appeal to Morgan, Harriman and their fellow magnates for a fresh and immediate infusion of funds.  The world does not revere a loser, unless he be a great one, and for a great cause.  In considerable degree, Roosevelt fought the fight of a rapidly-decaying cause, that of the middle-class, a cause doomed to fall ignobly, and rightly so.  On the surface he seemed the “big man ” of the day ;  in point of fact, he was vanquished by such magnates as Morgan, Harriman and Rockefeller.  They, to all appearances mere private individuals, defeated every move of him who was supposed to be invested with even greater powers than many potentates.

The irresistible progress of the trust movement and the all-comprehending power of the magnates, can be better estimated when it is recalled that it was during Roosevelt’s administration that the most antagonistic campaign thus far essayed against the trusts was carried on.1  At least it seemed so if invective and suits at law counted.  But, at basis, Roosevelt, despite his pretenses, was an instrument of the trust magnates, which fact was connoted anew by the circumstance that he was the President who signed the act striking out the imprisonment clause from the anti-rebating act assuring magnates and corporations full immunity from criminal prosecution.2

It was proved again during the great coal strike of 1902 when Roosevelt was forced to beseech J. Pierpont Morgan to consent to some kind of arbitration settlement.  True, indeed, Roosevelt, or those inspired by him, could darkly intimate that it were well for the coal magnates to come to terms ;  otherwise they might suffer criminal prosecution for violation of the act forbidding railroads from owning coal mines.  But the magnates, well realizing how often they had heard this clap-trap sort of talk, and how empty and futile it all was, could pass it over with amused contempt.  Then came the sight of the President of the United States, theoretically representing 85,000,000 of people, being compelled to parley and treat with a few magnates on their own terms.  “The one man who controlled the operators,” wrote A. Maurice Low (who, unquestionably, was one of the best informed newspaper correspondents at Washington), “ was Mr. J. Pierpont Morgan.  Everything else having failed his services had to be enlisted.”  Morgan instantly showed that he had the power of doing what the President of the United States acknowledged that the highest executive in the country in his own person could not do — a fact moving Low to exclaim reverentially (as quoted heretofore) :  “ Great is Mr. Morgan’s power, greater in some respects even than that of Presidents or Kings.”  Roosevelt could publicly boast of his having settled that strike, yet, in point of actual fact, Morgan shrewdly used Roosevelt to bring about a settlement at the time when the magnates decided it was politic, and with a result the most favorable that they could hope for in the particular alarming exigency.3

Morgan’s lofty, surmounting status at this time did not arise from any misconception that he was the richest man in the United States.  That prepotency John D. Rockefeller could easily claim and hold.  But Morgan was so unceasingly before the public in some activity or other, and was so preŽminently conspicuous in the organization of railroad combinations and industrial trusts, that, considering all aspects, he was looked upon as perhaps the most important of the magnates.

This was a popular deception, and was caused by the difference in tactics between Morgan and the Standard Oil oligarchy.  The Rockefellers and their associates systematically discouraged publicity as to their business transactions ;  in all of their operations they cultivated the profoundest secrecy and took exceeding pains not to acquaint the people with the real extent of their possessions, nor with the methods by which they were gradually drawing into their ownership the resources of not only one nation, but of many nations.  Working through auxilaries or intermediaries they were converting much of the United States with its assets, including human labor, into their private property, but so surreptitiously was this done that they allowed no mention of their conquests to be either formally or informally given out.  The Standard Oil headquarters was an inaccessible citadel of silence.

On the other hand, Morgan seemed to glory in the ostentation of publicity.  Even if he did not, it was an indispensable requisite.  In his threefold capacity of banker, railroad magnate and industrial trust organizer Morgan needed a certain amount of inspired publicity for the specific purposes of his undertakings.  As a banker he had to advertise his financing of projects in order to dispose of the stock ;  the more power he was credited with, and the more extraordinary a financier he was extolled, the easier it was to induce a multitude of investors to put their money in enterprises sponsored by him.


Between Morgan, the precocious young money zealot of 1861, successfully imposing spurious rifles upon the Union army, and Morgan the incommensurable magnate of 1902, lay a long span of some forty years.  For four decades he had incessantly campaigned for great wealth ;  thousands of Wall street aspirants, ambitious to reach the same goal, had outstrained themselves during that time only to go down in abject failure.  Everywhere Morgan could see, as he advanced, the immediate wrecks upon whose misfortunes much of his fortune was built.  And what were the cumulative results of his life of money-seeking ?  Of the properties he owned otherwise, there is no definite authentic record, but the extent of his railroad possessions can be ascertained.  Moody wrote that in 1902 he was “ identified with ” 55,000 miles of railroad.4  “ These,” Moody explained, “ control rights of way, coal lands, terminals, competing lines, steamship connections and the like.”

Further attention need not be given to his methods of acquiring railroads.  His railroad transactions, large as they were, became somewhat obscured by his still greater trust-forming operations.  “ Mr. Morgan,” Moody further wrote, “ is essentially the inspirer, the creator and the dominator of current American industrial forces.”  A sonorous sentence, but quite exaggerated.  Long before that time, John D. Rockefeller had demonstrated the principle of the centralization of industry ;  Morgan neither exclusively inspired, created nor dominated ;  he was but one of the leading practicalists in transforming industrial conditions from the competitive to the trust form.  “ He is unquestionably,” went on Moody, “ the boldest, the ablest and most far-seeing of any of the modern `generals of finance’ who stand at the head of the modern movement for the consolidation idea in the production and distribution of wealth.  This is easily proven by the fact that the enterprises in which his influence is paramount to-day are the strongest and most ably planned of any of the great combinations or ` trusts.’”5

Such eulogies as this have a mechanical ring ;  they have been manufactured almost automatically.  That they passed unchallenged is sufficient comment upon the standards of the day, exemplified by the press as an institution for influencing the people.  Even the dullest critic will observe how lacking in reservations and elucidations they are.  No explanation is vouchsafed of the quality of Morgan’s “ greatness,” nor any reason given why he should be brevetted a “ general of finance.”  The assumption evidently has been fixed that these high-sounding, all-inclusive, prejudicative assertions would be swallowed as truth ordained ;  and, remarkable as it does seem, this has been the brand of truck ladled out for consumption by the American people.  Fortunately there prevails in some quarters a rebellious spirit of free inquiry, which same spirit presses us to know more of what a magnate had to do in order to be ranked as a “general of finance.”


What was the exceptionally strong and ably-planned trust to which Moody thus so airily refers ?  It was the great Steel Trust.  Need it be remarked that this was by no means Morgan’s only such progeny ?  In the organization of so many trusts did he participate that the term “ Morganization of Industry ” ran rampant like an obsession.  With these other trusts, however, it is hardly necessary to deal ;  as a crystalline example of Morgan’s methods, the Steel Trust will doubtless suffice.

This trust, let it be proclaimed at the outset, was no paltry affair of a few hundred million dollars.  It was an enterprise worthy of the application of a “ great general of finance.”  The pen may stumble in writing it, but somehow we will contrive to get the fact into print that this trust came into being with more than a billion dollars capital.  And we feel irresistibly constrained to linger upon that billion dollars.  The ordinary human mind is capable of much ;  it can let its exuberant imagination create heavens and hells, enchantments and exorcisms, and it can stretch illusion to realms without limit ;  but to conceive of a billion dollars, or rather to visualize it, is a task to be forsworn.  Quite idle is it for the workers to attempt the visualization ;  their sole part is to produce the billions, not to see them, much less have the use of them.  Contemplating that billion dollars further, we are driven to note the immense progressions occurring in the case of a “ great general of finance.”  As a downy young man, Morgan was probably content with his profits of thousands in financing the selling of that batch of condemned rifles to the army ;  but then he was only a mere ambitious fledgling.  Yet now, namely, in the year 1901, when he organized the Steel Trust, he had become a full-fledged “ general,” and, as all men know, no “general of finance” in these days is worthy of the name unless he splashes in projects of the major hundreds of millions, or billions of dollars.

In this Steel Trust (or United States Steel Corporation, as it chose to call itself) a very large number of important plants were gradually merged ;  plants in many parts of the United States, iron plants and steel mills and factories of tin products — every kind and quality of wares made from iron and steel were embraced in the production of the plants gathered in under this gigantic corporation.  It was pleased to style itself not an owning corporation so much as a “ holding company.”  All of the existing plants in the United States it did not succeed in taking within its fold, but of those remaining outside, many were large mills allied with it, doubtless to give a judicious appearance of competition.  Others there were of an “ independent ” order, mills antagonistic to the trust and actively bent upon conlpeting with it.  For reasons to be stated later in this chapter the Steel Trust had no fear of most of these.  There was another black prospect for the middle-class.  Verily, the once infallible doctrine that “competition is the life of trade,” was sick unto death, and college professors were utterly at a loss to know how to inter the Corpse decently, when decease finally came.

Perhaps curiosity may be expressed regarding the prior history of these individual steel and iron and tin plants ;  how they became huge, and their owners multimillionaires, before the Steel Trust was organized.  Were their owners honest men who thriftily saved their pennies, amassed capital, toiled hard, invented their own devices, and were respectable men and legitimate traders ?

Not quite.  They were accounted respectable enough, but their methods were not a scintilla different from those of the capitalists in all other fields, which is to say that their respectability was as well founded as that of any other capitalist group.  Yet this is not the appropriate place to give a detailed account of their careers — how they and their predecessors thrived on inventions many of which they got by chicanery or theft ;  how they again and again and again bribed Congress for a high protective tariff ;  how they corrupted elections and ruled cities and partially State and National Governments ;  how they defrauded the Government before, during and after the Civil War ;  how the armor mill owners charged their own Government extortionate prices for warship armor plate which, on at least one specific occasion, was found to be worthlessly defective6;  and oppressed their masses of workers and when those workers struck for better conditions caused them to be shot down, as happened in the Carnegie works at Homestead, Pennsylvania, in 1892.  All of these factors and conditions will be fully described in a subsequent part of this work.7


Not with a rythmic placidity did the Steel Trust come into being.  An embittered contest, tinged with much personal animus, among certain of the great magnates preceded, and in some degree precipitated, its formation.

Controlling a large part of the iron ore deposits in the Mesaba region in the Northwest, Rockefeller had been aiming to buy out the Carnegie plants for the purpose of organizing a trust.  To compel Carnegie to yield, he had recourse to the methods he had so often and successfully used in the oil fields.  But he found Carnegie a hornet of an individual.  It did Rockefeller no good to mass his interests in the ore fields, in Lake Superior transportation and in railroads against Carnegie interests.  Every move was checkmated by Carnegie ;  Rockefeller was finally compelled to lower his rates on iron ore.  Finding that he could not crush out Carnegie as he had crushed small oil producers, Rockefeller changed his tactics.  He advanced Henry C. Frick a million dollars as payment to Carnegie for an option to buy the Carnegie plants for $100,000,000.  Frick had been a partner of Carnegie, but between the two differences had arisen developing into a festering antagonism.

If Rockefeller assumed that his plan would go through without obstacles, he found himself enlightened before long.

The first hindrance was the unfavorable times.  Assuredly, the great monarch of wealth did not intend to pay that $100,000,000 out of his own personal resources.  Such a plan, according to approved methods of finance, would be asinine.  The gudgeons were to pay for it ;  the people who could be depended upon to buy stock issues, which stock could be manipulated so that the losses of those investors would be equal, and, much more, to the capital required.  But, at that juncture, it was reckoned that the anticipated victims were in no mood or shape to exchange cash for engraved paper.  A propitious occasion had to be awaited.

The delay was costly to Rockefeller.  The option held by Frick expired by time limit.  And that precious million dollars advanced by Rockefeller — what became of that ?  Carnegie declared it forfeited, and held on to it.  Frick was enraged, and Rockefeller resentful.  Henceforth, the animosity between Frick and Carnegie deepened, while Rockefeller contained himself till the day when he would even matters with Carnegie.

Meanwhile, a new factor had burst in to upset all of Frick’s and Rockefeller’s carefully nursed ambitions.  This factor was J. Pierpont Morgan.

The bridge and the tube trusts, owned largely by Morgan,8 had been planning to manufacture their own billets.  As the Carnegie works were flourishing in the billet trade, the news was of momentous importance to Carnegie.  He at once prepared to retaliate.  But how could he effectively do so ?  What form of reprisal would be quickest and most telling ?  Carnegie had grown seared with experience8a in the machinations of trade ;  he was not the magnate to be taught how to strike at a competitor’s most vital point.  The word flew forth that he intended to go into the bridge and tube business.  Here was an announcement for Morgan to ponder and scowl over.  But another edict (it is no exaggeration to speak of the orders issued by magnates as edicts) followed in rapid order.  Carnegie knew, of course, that Morgan was an extensive owner of the Pennsylvania Railroad and its properties.  If a railroad were built to compete with the Pennsylvania system, Morgan’s interests and fortune would be doubly assaulted.  Carnegie allowed the information to get out that he purposed to construct his own railroads from Pittsburg to the Great Lakes, on the west, and, on the east, to the Atlantic Ocean.  He went on with the plan as though he were in dead earnest ;  he rushed surveying parties to map out the route.


The effect upon Morgan was galvanic.  Perhaps Carnegie was bluffing in return for bluffs.  But the situation was too serious for trifling.  Carnegie might carry out his threats ;  there was the danger.  Had Morgan been dealing with the United States Government he would have felt no great concern at threats that he knew he could safely ignore ;  but in contesting with Carnegie, he was opposed by a magnate of whose power he had reason to be grimly apprehensive.  How could Carnegie be placated, or dissuaded, or prevented from carrying out his ominous plans ?  One heroic way there was to buy him out, and organize a trust.

Thereupon, it is related, Morgan betook himself post haste to Carnegie.  No time was lost in unessentials.  The magnates went straight to the point.  Morgan inquired of Carnegie for what sum he would sell his plants.  With a clever expression of indifference, Carnegie sententiously replied, “ Three hundred millions.”  A silence ensued ;  the magnates looked craftily at each other.  Whether Morgan was aware that only a short time previously Carnegie had agreed to sell out to Frick for $100,000,000 is not known.  On his part, Carnegie believed that he had Morgan in a corner, which conviction was clearly worth a raise of $200,000,000.  Perhaps Carnegie, in the style of the excellent business man, asked an exorbitant price so as to compromise on a sum larger than he really expected.  Morgan’s next words must have surprised him.  There was no drawn-out haggling, no comment of any character.  “ Take it in mortgage ?” asked Morgan brusquely.  “ Provided it covers the whole proposed combination,” Carnegie replied.  The trade was then and there arranged ;  the remainder was simply a matter of formalities and ratifications.

Carnegie was pleased with himself.  Two great objects he had accomplished ;  he had obtained an immense purchase price, far beyond his expectations, and he was now able to carry out a yearning that he had long, indulged of divesting himself of active business cares, and of playing the exclusive role of the retired and philanthropic captain of industry.  Doubtless, he felt quite positive that he had outwitted even the great J. Pierpont Morgan.

But, as time passed, he found good grounds to have doubts of his astuteness.

Subsequently, after Morgan had demonstrated how vast sums could be taken in with facility in jobbery in the stock issues of the Steel Trust, Carnegie began to look back and perceive that he, not Morgan, was the outdone one — not a pleasant feeling for a man who had been self-satisfied that he was as sharp as any of the other magnates.  While Carnegie was ostentatiously dispensing millions for public libraries, and preaching the doctrine that it was a disgrace to die rich, he was secretly fuming over the fact that he had not held up Morgan for a hundred million dollars more.  This story was current in Wall street :

Many months later Carnegie and Morgan were on the same Atlantic liner bound for recreation in foreign fields.  Coming down late to their morning coffee, there was a few minutes for reminiscence between them.

“Do you know, Mr. Morgan,” said Carnegie, “ I have been thinking it over, and I find I made a mistake.  I should have asked you another hundred million for those Carnegie properties.”

“If you had, I should have paid it,” responded Morgan in his frank, unfeeling truthfulness.

And Carnegie, so the story goes, was so soured in his soul that he could take no more toast and marmalade.9

As in the case of the railroads, and of other industrial concerns, the characteristics so typical of altered economic conditions were seen in the passing of the steel industry into the control of Morgan, Rockefeller, the Goulds and their fellow magnates.

Carnegie had grown up in the steel business ;  he knew its details and technique with consummate thoroughness.  In addition, he had adopted the plan of making partners, in a measure, of subordinates who had proved their capacity in both the knowledge of the manufacture of steel and in methods calculated to increase profits.  Neither Morgan nor Rockefeller nor Gould had any technical knowledge of how to run a steel plant ;  left to themselves they could not have managed a factory for a single minute.  But, as the capitalist system went, they were not required to have the slightest training in running railroads, factories, steamships or mines.  They could annex, or engage, men of experience to do this for them.

How were the great steel plants to be directed, now that the industry had gone out of the hands of owners who personally had known how to do that directing ?

The problem was very simple, or rather, it was no problem at all.  Morgan followed Carnegie’s plan of putting skilled men at the directing head, and of allowing them to share somewhat in the division of stock and profits.  Highly significant of the methods of capitalists was their selection of directing managers.  We have seen how, when Schwab and Corey were superintendents of the Carnegie plants, a Congressional committee, in 1894, had denounced them individually, in a tame enough report, as being specifically responsible for the armor-plate frauds.  Did Carnegie discontinue their services ?  At that very time Carnegie was thrusting himself forward publicly as a pious benefactor and a lofty citizen.  Did he show any indignation at Schwab’s and Corey’s methods ?  How could he ?  Had they not thereby shown what valuable profit producers they were ?  He prized their services so much that he not only bestowed continuous marks of favor upon them, but he later elevated them to be directors and minor partners.

They were identically the men whom Morgan also wanted ;  from a capitalist point of view they were highly efficient.  When Morgan organized the Steel Trust, to whom did he turn as his selection for executives ?  To Schwab and Corey ;  they successively occupied the position of president of the United States Steel Corporation.  Indeed, Schwab expanded to be somewhat of a magnate himself, and incontrovertibly proved that he had learned proficiency in genuine magnate methods.  Organizing the United States Shipbuilding Company, on his own hook, he and his associates issued false prospectuses, decoyed investors, fraudulently made a gift to themselves of $55,000,000 in securities, and otherwise committed such fraud upon fraud, that after the company had gone into bankruptcy the receiver denounced the whole transaction as “ an artistic swindle.”10


Apart from the recital of these frauds, there can be no gainsaying of the fact that the Steel Trust was the very acme of efficient organization for capitalist purposes.  Other trusts might be well organized in the field of production, and partially that of distribution, and yet lack control of the supply of raw material.  The Steel Trust controlled all three of these factors.  It had its own plants.  With Morgan, the Standard Oil magnates and the Goulds either dominating, or associated with, it, the railroad and steamship lines of the United States were at its disposal.  It owned vast deposits of iron ore and coal, some of which had been turned over to it by Carnegie, and others of which John D. Rockefeller held.  The Steel Trust, in fact, was the first trust to establish a scientific control over these three factors, so indispensable to the perfect operation of a trust.  By its ownership of great iron deposits ;  and its practical dictatorship over transportation systems, it at once reduced nearly all of such competitors as it had to nonenities.  Only one competitor, the Tennessee Coal and Iron Company, owned its own raw supply ;  and this competitor was later put out of the way under circumstances which will be described further on.

And here, again, enters the familiar factor of the small frauds being ousted by the great ;  of the property originally wrested by fraud being taken over by great magnates whose specialty (and it was a very serviceable specialty) was the extermination of lesser frauds.  The original seizure of the mineral lands, particularly the iron ore mines in the Northwest, had been accomplished by force and by grossest frauds.11

It was because it controlled all of the sources of production and distribution that the Steel Trust was able to capitalize itself for more than a billion dollars.  What became of this billion dollars of stock ?  A huge amount in common stock — no one knows just how much — Morgan awarded to himself as a reward for promoting the trust, and other quantities of the stock were issued to his associates.  At the same time, Morgan bought large quantities of preferred stock.  A careful appraisement by experts established the fact that only about $300,000,000 — the exact price paid to Carnegie — represented the actual assets of the trust ;  the remainder of the stock was “ watered.”  Some of this very stock was shrewdly sold to a portion of the workers in the steel plants, thus tending to destroy their resistance to the conditions under which they were compelled to work, and making them support the very system exploiting them.

US Steel Co. bond


The profits made by Morgan were instantaneous and gigantic.  The stock obtained by him he was able to sell at the market price of about 50.  By October, 1902, Morgan and his immediate partners in the syndicate had already distributed $40,000,000 in profits.12  From whom did these stockjobbing profits come ?  From a host of middle class investors throughout the world.  Lured on by the glowing prospectuses of the Steel Trust, and certain that the money that they put in would produce large dividends, and the stock would rise in value, they literally scrambled to pay over their money for the stock.  After the process had been exhaustively worked by the manipulators, the price of common stock was gradually beat down, until, in 1904, it sank to 8¾.  Hordes of middle class investors were ruined ;  the magnates had transferred their money to their own pockets.  This kind of operation has been repeated several times with great success.  When the little fellows parted with their stocks at low prices, the magnates would buy it back, and then by forcing declaration of dividends, and making roseate reports of the steel business, would force up the market quotations, and sell the stock back again, with resulting immense profits.  By such methods Morgan and his associated clique have taken in hundreds of millions of dollars.

If it be asked from whom these hundreds of millions in stockjobbing profits directly came, the answer is simple.  From the well-to-do, not merely in the United States, but the world over.  The involuntary donors comprised the foreign aristocracy as well as the American tradesmen, the small manufacturers and the professional class.  The British lords, and the European continental moneyed divisions, revealed themselves fully as eager as the native investors to relieve Morgan of his vast encumbrance of paper supply, otherwise called stock.  They poured in their money, and he distributed his paper ;  he was swamped with orders.

Was ever such naive and trusting confidence shown as was displayed by these hosts of investors ?  Their simple faith in the excellencies of the magnates could not be shaken.  Repeatedly had they, or other multitudes of individuals in their own classes, been inveigled into Wall street, and dexterously cheated.  But these frequent experiences, instead of implanting a wisdom tempered by enduring suspicion, passed over them without leaving a trace.  The merchants and petty manufacturers, in particular, who prided themselves on being so adroit in defrauding the working class, responded every time to the insinuating song of the magnates.  And every time they did so they found themselves ravished of their money.  No word must be uttered against their methods of swindling the workers from whom came the wealth seized from them ;  such protests were dangerous agitation.  Let them, however, be defrauded by the Wall street magnates, and curses were not severe enough.  But back the shorn would flock to Wall street, like a dog returning to the master who scourges it.

Another phenomenon must be significantly noticed.  Even if considerable sections of this middle class warily kept away from stock market adventuring, their money was nevertheless used by the magnates, as though it were the assured property of those magnates.  Astonishingly paradoxical as this seems, it was and is, a bitter joke on the purblind middle class.  The profits made by the small manufacturers and the retailers in swindling the workers by selling adulterated, inferior and shortweight products, were deposited in the banks.  These deposits were utilized by the trust organizers to obliterate the very class owning them — a class hating the trusts with a deadly enmity.  Such was the incongruous situation to which the middle class was oblivious.  The great magnates controlled vastly powerful New York banks ; “ these institutions, in turn, held control over hundreds, if not thousands, of smaller banks throughout the country.  The stock issues of the Steel Trust, as well as those of many other trusts, were sold to these banks.  The trust magnates lifted out the money of the middle class, and the banks, in exchange, received the watered stock and bonds.


Hundreds of millions of dollars more were held by the great insurance companies as deposits and surplus from premiums paid in yearly by immense numbers of policyholders, comprising the ultra-rich, the middle class and the working class.  In insurance companies, such as the New York, the Equitable and the Mutual, the working class was little represented ;  the workingmen could not afford to pay the large premiums demanded.  Forced to take out policies, on a weekly installment payment, in the industrial insurance companies, they were swindled to an even greater extent than were the policyholders of the “old-line” companies.  Their money, too, was used in providing trusts with adequate enough funds with which to bribe legislatures for franchises and other laws, and to obtain extensive equipment.  The Public Service Corporation, which, for example, owns the public utility plants and systems (except the railroads) of the entire State of New Jersey, was financed with the money advanced by one of these large industrial insurance corporations.

Viewing the matter rationally, however, it will be at once seen that whatever the enormous accompanying frauds, the necessities of industrial and social progress demanded two interrelated lines of action.  The first was the superseding of the competitive, by the trust, system.  Since trusts were the next inevitable stage, the immense funds needed for their organization and elaboration had to come from somewhere.  Individually, the magnates lacked sufficient cash.  Consequently, they were forced to take it wherever they could find it, irrespective of the nature of the methods used.

In the wielding of the colossal funds of the New York Life Insurance Company, Morgan was a chief among the ruling factors, while also screened behind figureheads, he was active in the affairs of the Equitable Life Assurance Society.14  Evidences of his power, exercised through indirection, were repeatedly brought out in the remarkable, although fundamentally futile investigation, made by a New York legislative committee in 1905.  The insurance companies had a satiety of cash ;  Morgan, Harriman and other magnates had the stock issues.  Inasmuch as obviously that stock was not issued for aesthetic exhibitions, the important and immediate consideration was to convert it into revenue.  By collusion with the officials of the insurance companies, huge quantities of bonds and stocks were sold to the insurance companies.15  Largely with this middle class money, the magnates were enabled to finance their great railroad and trust projects.  Other portions of the stock issues were sold directly to the middle class, and were then manipulated so as to grind out that class still further.


Equitable Life Assurance Society first logo in 1859 For a long time this looting of the insurance companies went on unhindered, and without attracting public notice.  The causes of this immunity from official action and exposure were not revealed until 1905.  In that year the accustomed capitalistic development came about.  A quarrel, at first mere private mutterings, then growing into an obstreperous conflict, set in among groups of magnates.  And what was the provocation ?  Was it one of personal hostility ?  Not at all.  The cause arose from dissensions as to the division of the spoils in the Equitable Life Assurance Society.  Magnate arrayed himself against magnate, and group opposed group.  The clearer it became that the fight for control of the stupendous revenues could not be compromised, the more malignant the magnates became.  The stage was soon reached when ugly charges of fraud, graft and corruption were allowed to get into the public press.  Here was a spectacle for the gods.  Not from any “labor agitator,” nor from any “ irresponsible newspaper ” did these charges come ;  nay, they came from some of the lordliest magnates in the land, from men of the most “ unimpeachable respectability.”  Now, here they were vulgarly accusing one another of being liars, frauds and all-round knaves.

That the matter made a loud sensation can well be understood ;  newspaper writers diligently applied themselves to reporting the great event.  Quarrels among magnates were not uncommon, but when a whole array of the nation’s oligarchy of wealth pushed their row into the open, and began bedamning one another, it was a rare opportunity for truths to come out.  None but the magnates themselves could open the doors of their holy of holies and reveal the mysteries within.  Praises be to the glorious occasion, they were now doing this very thing.

But when the holy of holies was subjected to scrutiny, it was found to be a cesspool from which long pent-up noxious exhalations burst forth, almost threatening to suffocate a nation that had been taught to reverence the aforesaid holy places.  The quarrel became so fierce that a swelling popular demand sprang up for a legislative committee to do some exhaustive and salubrious probing.  The demand, at least, had every appearance of being a spontaneous popular one ;  but it can be reasonably surmised that after trying every other means of ousting the group of magnates in power, the opposition party cleverly investigated the popular indignation in order to compel an investigation, and discredit the clique in control.  Subsequent developments proved that Harriman had long been attempting to gain exclusive control of the massed funds of the Equitable Life Assurance Society.  In addition, his own testimony attested the fact that Governor Odell of New York was his creature, and that the very Legislature which ordered the investigation was obedient to his orders.

From the first sessions of that investigating committee to the last, the story unrolled was one of such appalling fraud and corruption that the very enormity of it finally deprived it of effect.  One after another, the magnates were haled forth to the light ;  and when they retired they, the “ great captains of industry,” the supremely respectable products of society, the fine moralists of the nation, the supporters and endowers of charities and churches, the rulers of politics, were revealed as perjurers, bribers and thieves.  If magnates desire to keep up the myth of “ sterling honesty,” benevolence and patriotism, they must learn not to quarrel among themselves.  Otherwise, they will tell on one another, which is not politic.  Even more seriously, they will undermine the stanchions and “ pillars of society,” one of which, in the United States, is the popular belief that the people vote their rulers in and out of office, and shape the course of legislation.


So long as the people have the delusion, and the capitalists have the legislative votes, what good bodes it to the magnates to have the secret come out ?  Over and over again was that secret disclosed in past investigations, but without instructive results.  Yet, behold ! the people once more have the opportunity of getting an insight into what goes on behind the scenes when the Legislative Investigating Committee reports in 1906 :

The testimony taken by the committee makes it clear that the large insurance companies systematically attempted (sic) to control legislation in this [New York] and other States, which could affect their interests directly or indirectly.  The three companies divided the country, outside of New York and a few other States, so as to avoid a waste of effort, each looking after its chosen district and bearing its appropriate part of the total expenses.16

Excellent ! even bribery, like industry, becomes systematized and modernized.  In the process, delicate externals are preserved.  To ledger bribery funds as corruption money is a gross shock to fastidious taste, and is inexcusably unbusinesslike.  Hence, so the committee reported, bribery expenditures were classified as “ legal expenses.”  The committee described them as extraordinarily large.  The Mutual, in 1904, disbursed $364,254.95 ;  the Equitable, $172,698.42, and the New York, with Morgan’s partner, Perkins, practically in command, $204,019.25.17  This, according to the simple rules of arithmetic, made a total of more than threequarters of a million dollars spent in one year in the corrupting of legislatures, administrative officials and certain newspaper writers.18  These “ legal expenses,” the committee redundantly wrote, were “ far in excess of the amounts required for legitimate purposes.”19

For what were these corruption funds employed ?  To get laws under which great frauds could be carried on, and to prevent the passage of laws interfering with the graft.  And who were the immediate distributers of the funds ?  Trained, circumspect lobbyists, thoroughly experienced in the business of knowing who, when and where to bribe.  They were never stinted for money.  Andrew C. Fields, long engaged by the Mutual Life Insurance Company to manipulate legislation at Albany, held forth in a sumptuously furnished house there.  This headquarters was jocosely styled the “ House of Mirth !”  The rent and other expenses were charged to “ legal expenses.”  The Mutual thus expended more than $2,000,000 in “legal expenses” from 1898 to 1904.20  And what were those of the New York Life Insurance Company ?  From 1895 to 1904, the total payments to Andrew Hamilton, its principal lobbyist, amounted to $1,312,197.16, all of which sum was soberly entered as “ legal expenses.”21  J.P. Morgan and Company made advances of money to Hamilton.22

But the corruption neither began nor ended with the buying of legislative votes or of administrative connivance.  Over and above the politicians in office were the bosses in control of the machinery of both the Republican and the Democratic parties.  Those party machines could command the votes ;  and the orders of the men at the head called for submission by the underling politicians.  Refusal brought discipline and retirement.  By controlling the secret workings of the party organizations, the magnates virtually controlled the platforms of those parties, their nominees, and the general course of the men elected to office.

For one more proof of this, another dip into the report of that celebrated insurance investigating committee of 1905 will suffice.  “The insurance companies,” it reported, “ regularly contributed large sums to the campaign funds of both the Republican and the Democratic parties.”  This was no exceptional act, however ;  it was the conventional order of the day ;  all of the great corporations did likewise.  Had not Jay Gould, thirty-odd years before, explained the method ?  And had not other capitalists long antecedent to Jay Gould shown how efficacious it was ?  A present of nearly $50,000 was contributed in 1894 by the New York Life Insurance Company to the campaign fund of the Republican National Committee,23 and similar amounts in 1896 and in 1900 for the same purpose.”  All of the large insurance companies gave contributions, not only for national political campaigns, but also for those in the States.”  It was found impossible to trace all of the directions of this continuous corruption.  “Enormous sums,” the committee stated, “have been expended in a surreptitious manner.”

The immense sums thus spent in political corruption were stolen from the proceeds of the policyholders.  With this stolen money, mounting into millions of dollars, the magnates bought their way into every State legislature in the Union ;  they purchased a way for themselves or for their allies into the United States Senate ;  and they carried their demands in both the Republican and the Democratic parties.  An arraignment more destructive to the existing arrangement of society could not be found than was contained in the facts (and they were by no means, all of the facts) reported by that committee.  The substantial conclusion was, although not set forth in so many plain words, that the administrative officials, the legislatures, Congress, the courts and the old political parties were controlled and dominated by groups of unparalleled frauds and pirates.  For the sums diverted to insure this political control were only a tithe of the aggregate stupendous thefts.  Following close upon the investigation came suits against the “ high financiers ” for the restitution of more than $10,000,000, and these suits were but indications of still vaster sums fraudulently taken.  The suits were compromised.


It was a period of travail for respectability ;  much explaining had to be done, which (in such a case) is always a confession.  The directors or swayers of those insurance companies comprised some of the most supereminent magnates and exalted philanthropists in the United States.  Elegant society suffered no shock at the revelations, for it was built and sustained, every part and woof of it, by theft, fraud, bribery and exploitation.

But the apologists and retainers, whose vocation it was to strew praise in the path of the money monarchs, were egregiously put out of face.  What could they say when such of their heroes as George J. Gould, Alfred G. Vanderbilt, John Jacob Astor, August Belmont, Jacob H. Schiff,26 Henry C. Frick, D.O. Mills, and many others were being shown up either as participants or as responsible heads ?  More galling still was the besmearing of their great idols, E.H. Harriman, and above all, the devout and philanthropic J. Pierpont Morgan.27  All of these money conquerors had been interminably glorified ;  nothing had been too extravagant to say of them ;  and now they could be seen twisting and squirming in the uncomfortable act “ of being caught.”

Good repute may be, as the poets and philosophers say, a priceless possession.  But these magnates did not mind the temporary hurt.  For temporary it surely was ;  a little time would pass, and then the newspapers, magazines, college presidents and clergy, largely owned or subsidized by the magnates, would resume their interrupted chorus of praise, and all would be well again.  A bit of the plunder thrown out to universities and churches would add to the magical effect.

Hence, it was not any loss of reputation that the magnates and their satraps feared.  The one and only disquieting prospect was that of being shunted away to prisons.  Throughout the united States the insurance disclosures — the outcropping facts as to the vast, longcontinuing corruptions and frauds — had called forth a frenzied demand at first that the guilty be rushed to trial and imprisoned.

But that demand, if carried out, would have entailed a unique and unprecedented situation.  Should all of the guilty be jailed, or even a number of them, the nation would have been deprived of many of its foremost magnates, its greatest philanthropists, its most exemplary patriots.  How could society have survived such a loss ?  According to orthodox teachings, these men were imperative to the proper administration, and the well-being, of the whole social and industrial system.  Incarcerate the great magnates, philanthropists and patriots, even though they were also the greatest plunderers ?  The thought was impossible.

No fear of prison, however, need have been entertained by the implicated.  Had not many an investigation been held before, decade after decade, almost year after year, sometimes several investigations in a single year ?  Had any of the rich defrauders disclosed in those investigations ever gone to prison ?  What ground was there for supposing that this investigation would result any differently ?  In a society ruled by money, what are courts for but to be used as a minatory instrument for enforcing the law, made by the rich, against the propertyless ?  What are judges for except to construe that law as the magnates who put them on the bench demand that it be construed ? 28

Not the law so much as the interpretation is what essentially counts.


How the law was interpreted was soon seen.  Under the pressure of public opinion, the District Attorney of New York County, one William Travers Jerome (long renowned as a “ reformer ”) finally caused the Grand jury to take action in proceeding against a few of the satraps and the figureheads.  But, in the case of Perkins, for instance, it was decided that if he had committed grand larceny, it had been done without criminal intent.  The thousands of poor offenders hurried off to prison were obviously afflicted with an overabundance of this same criminal intent.  Yet for a rich and powerful man to commit any fraud with criminal intent was a principal unknown to practical jurisprudence.  The farce dragged out a while ;  not one of the participants of great wealth was even incommoded by the formality of a trial.29

And what was the outcome of that extraordinary investigation ?  Again was seen the operation of that principle so often brought out in these chapters ;  that every “ reform wave ” of a capitalist order of society is used by the great capitalists to aggrandize their wealth and power.  Taking advantage of the popular discredit of the large insurance companies, and making fine assertions of the reforms that he intended to bring about, Thomas F. Ryan secured control of the Equitable Life Assurance Society, completely frustrating Harriman’s efforts to the same end.  Ryan’s career, and the facts as to how he obtained his immense wealth, were so generally known, that his appearance in the role of a “ reformer ” was the signal for an instantaneous outburst of public sarcasm which Ryan did not at all mind, seeing that he had carried his assault.30

Enough, however, of the methods by which these vast insurance funds were manipulated for politico-financial ends.  The sensation caused by the revelations was as profound as the reaction that followed.  For a brief period the mass were privileged to have a look behind the scenes, get wrought up at what they saw, and then the curtains were drawn again and the old comedy was resumed.  The intense popular excitement flattened out into the sheerest lassitude.

What noteworthy changes resulted from all that protracted boring, ten solid volumes of it ?  None.  Some lawyer folk grasped political advancement out of it, others enriched themselves from a trail of litigation, a few minor laws were passed, and one set of capitalists was deposed to make place for another.  And that was the finis of this great investigation which was to have brought such “ beneficial reforms.”

One of the most remarkable, and at the same time most comical, features of American political life in the nineteenth and twentieth centuries was the frequency of these official investigations.  Survey the archives and you will be bewildered by their number and continuity, extant in the form of printed testimony and reports.

These were not investigations made by a hostile officialdom, but by governing authorities, either representing the very capitalistic interests investigated, or favorable to them.  The numerous investigations may, therefore, be accepted as those of capitalist society disclosing itself.  Everyone of them reveals the same story of fraud, corruption and theft, from which not a single line of business was exempt.  The stupendous extent of the incessant and deliberate lying carried on by capitalist expositors may at once be seen by comparing their fulsome accounts of capitalists and of the capitalistic system with the facts perpetuated in the reports of the capitalists’ own Government.  Not one of those investigations carried with it any real salutary benefits for the people ;  after every such inquisition the mass were plundered and despoiled as effectively as before — almost invariably more so.  Apparently the only inherent virtue of those investigations seems to have been that of supplying this present author with facts — a not inconsiderable virtue, it may be appreciatively added.31

But what of those virtuous middle-class investors who, when tricked and defrauded by the magnates, plaintively put themselves on exhibition as outraged and helpless victims of a crew of unscrupulous financiers ?  How, for example, did the many investors in Steel Trust stock regard the great Morgan after their disillusioning and spoliation ?  They broke out in passionate imprecations.  Throughout the country you met them everywhere bewailing their losses ;  some of their thousands, others of their tens of thousands, and still others of their hundreds of thousands of dollars.  In many another Wall street onslaught, the losers could not specifically blame Morgan ;  but in the Steel Trust stock-rigging he was so palpably the principal moving spirit, that necessarily this bitterness was directed at him.  To the point of nausea the charge was repeated that fraud had brought about the stripping or ruin of those innocent, confiding investors ;32 fraud did it all, fraud explained the whole process.

Delicious innocence !  Not an individual was there among those self-commiserating investors who would not have been elated to have profited in the stock market at the expense of other investors.  Had such been the outcome, the transaction would have been highly legitimate and just.  The crime consisted in the magnates exclusively pocketing the booty.  This at once transformed the operation into one of betrayal, injustice, fraud and oppression — terms springing spontaneously from the middle class whenever its pocket is drained.  Then came that old familiarly dolorous plaint of its grievances.  And would the terrors of law never descend upon the supersubtle corporate greed that was swindling and devouring the virtuous middle class, “ the backbone of the country ” ?


Agitated over their own misfortunes and expropriation, these investors excoriated Morgan and the other magnates.  And their actuating reason was what ?  That of not being allowed to have a hand in the profits.  Who has not heard pigs squeal when a hog usurps the trough !  And what, further, were the basic conditions from which these investors eagerly strained for profits, either in stock gambling or in dividends ?

The value of the stock depended at bottom upon the trade profits of the business.  Those profits came from the labor in the mills and the exploitation of the manufactured product, the price of which exploitation was indirectly taxed upon the working class wherever steel was sold or used.  Were the petty investors, so clamorous for their own security and comfort, uneasy at the conditions under which masses of men and boys worked in the iron and coal mines and in the steel manufacturing plants ?  Did they experience any qualms at the long hours and low pay, and the squalid, often revolting, life to which those workers were forced ?  Did the bestial degradation and frightful destitution so often encountered in steel-mill quarters disturb their thoughts ?  Or were they impressed by the ghastly casualties in the mills, or the diseases rife in the workingmen’s quarters, causing an undiminished slaughter of men, women and children ?  Did the investors, whose understanding of injustice was so sensitively acute when they were robbed or in distress, see any injustice in such conditions ?

In this exploitation they saw nothing by a “ righteous ” system of industry from which they eagerly sought profit.  They were not ignorant of the existence of these conditions ;  it was with a knowledge, not always full, but some realization, nevertheless, of them, that they sophisticatedly bought Steel Trust stock to share in the profits.  When an exposure was made, in 1908, of some of these conditions, not more than a handful of stockholders protested against the horrors ;  exceptions among their class to which we gladly draw attention.  In its long duel with the magnates, the middle class ever and always insisted that its grievances be heard and respectfully treated.  Yet, let the workers make the slightest move for redress, and that class, with stony rigidity, would demand their repression as “ disturbers of business,” if for no other reason.

To describe those conditions at length would be an inappropriate anticipation of another part of this work to which the description is more germane.  Some glimpses, however, will be to the point.  Nor will the facts be drawn from working-class spokesmen and writers.  Do not the conventions of the day condemn these as unworthy of credence and citation ?  Observe with what immense respect legislatures, Congress, the courts, editors and literary reviewers treat the trashiest utterances of capitalists, and swear by their value and authenticity.  But working-class memorials, protests and statements are obviously the productions of “ rabid agitators ”;  they “ chronically exaggerate ” and are “ partial and partisan.”  Since capitalists (and their retinue of scribes) alone possess the high virtue of complete veracity, citations from such sources will perhaps carry weight.

What is this extraordinary document we hold in our hand ?  It is a report entitled “The Pittsburg Survey,” the same being an exhaustive investigation of the conditions of the working class of Pittsburg.  Scrutinizing further, we find that this investigation was carried on by means of funds contributed by “ The Russell Sage Endowment.”33  That fact enhances its prestige for citation purposes.  What is this further fact we note on the bottom of the cover ?  That the report has been published in a magazine conducted by the Charity Organization Society of New York City, under which title appears — what ?  The name of J. Pierpont Morgan, as treasurer of that society.  Now we are invulnerably on safe footing.  To a report issued under such exalted auspices, who would be so reckless as to impute inaccuracy or impartiality ?  More especially so, inasmuch as this report has been generally commended for its accuracy — an accuracy, it may be added, toned with an extremely conservative treatment.


On, then, with the quoting.  “ The United States Steel Corporation,” the report said,

owns property on the South Side of Pittsburg just beyond the Point Bridge.  Here is located the old Painter’s Mill, which is one of the plants of the Carnegie Steel Company, which in turn is one of the constituent companies of the United States Steel Corporation ;  and here, also, stands what remains of Painter’s Row, where the company has housed certain of its employes, mostly immigrants.  When the Carnegie Steel Company took over Painter’s Mill, it renovated the plant so as to turn out the sort and quantity of output which the Carnegie name stands for.  When it took over Painter’s Row, it did nothing.  When, a little over a year ago, and several years after the purchase of the property, I made a detailed investigation of the place, I found half a thousand people living there under conditions that were unbelievable—back-to-back houses with no through ventilation ;  cellar kitchens ;  dark, unsanitary, ill-ventilated, over-crowded sleeping rooms, no drinking water supply on the premises ;  and a dearth of sanitary accommodations that was shameful.34

The writer hastens to add :

The story of Painter’s Row should be considered in its bearings.  The United States Steel Corporation is building a remarkable new town at Gary, Indiana ;  its subsidiary companies have promoted house building along original lines, notably at Vandergraft, Ambridge and Lorain, and the Carnegie Steel Company has fair, low-rental houses at Munhall and elsewhere.  On the other hand, other Pittsburg corporations own company houses which have been equally as bad as Painter’s Row ;  and a similar story could be written of a shack at one time owned by one of the foremost Protestant churches of Pittsburg, and razed to the ground only because the headworker of Kingsley House had the courage to publish its picture and the name of the owner.
Painter's Row

Painter’s Row has been improved, it is reported, since the publication of the report ;  the Steel Trust officials were driven to it by the resulting publicity.  But Painter’s Row is only a typical incident in a vast accumulation of poverty and misery, to be met with everywhere in the steel mill towns.  That qualifying note regarding the erection of fine new houses for the workers in Gary and other Steel Trust towns has an altruistic touch ;  very melodiously and enthusiastically it rolls along.  Yet we have seen, in the case of the town of Pullman, how these “ model towns ” work out ;  how the workers are reduced to a state of serfdom, exploited at every turn in the mills and out ;  and such efficiency as comes from fairly decent living quarters simply redounds, as a “ good investment,” to the profit of the mill owners.  Of the conditions noted further in Pittsburg, one more extract from the voluminous report (which might well be termed a Chamber of Horrors) will give an additional insight :

... It is a common opinion in the district that some employers of labor give the Slavs and Italians preference because of their docility, their habit of silent submission, their amenability to discipline, and their willingness to work long hours and overtime without a murmur.  Foreigners as a rule earn the lowest wages and work the full stint of hours.  I found them in the machine shops working sixty hours a week ;  at the blast furnaces working twelve hours a day for seven days in the week.  The common laborer in and around the mills works seventy-two hours a week.  The unit of wages is an hour rate for day labor and a Slav is willing to take the longer hours (twelve hours a day for men who work fourteen and sixteen in the fatherland) with extra work on Sundays, especially in connection with clearing the yards and repairing.  Possibly sixty to seventy per cent. of the laborers in the mills come out Sundays and the mechanics and other laborers on occasions work thirty-six hours in order that the plant may start on time.  In one mill I found Russians (Greek Orthodox) in favor for the reason that they gladly worked on Sundays.

... Many work in intense heat, the din of machinery and the noise of escaping steam.  The congested condition of most of the plants in Pittsburg adds to the physical discomforts for an out-of-doors people ;  while their ignorance of the language and of modern machinery increases the risk.  How many of the Slavs, Lithuanians and Italians are injured in Pittsburg in one year is not known.  No reliable statistics are compiled.  In their absence people guess, and the mischief wrought by contradictory and biased statements is met on all hands.  When I mentioned a plant that had a bad reputation to a priest, he said, “ Oh, that is the slaughter-house ;  they kill them there every day.”  I quote him not for his accuracy, but to show how the rumors circulate and are real to the people themselves.  It is undoubtedly true, that, exaggerated though the reports may be, the waste in life and limb is great, and if it all fell upon the native born a cry would long since have gone up which would have stayed the slaughter.35

These are but the most cursory views of a few of the prevailing conditions.  All of the bond and stock holders, large and small,36 great magnates and little parasites, not merely have acquiesced in these conditions, but have insisted upon their continuance, upon the principle (so often referred to in the course of this work) that the lower the wages and longer the hours of work, the seductively greater the dividend prospects.  Splendid mansions, as capacious and ornamental as palaces, arise upon the tense labor, the suffering and the mortality of those masses of workers.  Carnegie, pompously spreading his philanthropy, draws his income from the very life blood of those workers and their families and children,37 and Morgan, piously dispensing charity, officiating at religious meetings, and posing as the incarnation of princely benevolence, allows no such impractical considerations as pity or sentiment to make life even a moiety more tolerable in the roaring hells from which are derived an average of $145,000,000 net profits a year.38


1 That is, against the “bad” trusts.  How even the outward acts of officialdom were being made to conform to the interests of the ruling class was shown by the growing tendency to accept some trusts as “good,” and so arraign others as “bad,” although all trusts subsisted in violation of statute law.

2 “ Courage, honesty and the saving grace of common sense, according to Mr. Roosevelt, are the three things that will make men great," ... wrote A. Maurice Low in “The Independent,” issue of October 30, 1902.  While thus humbly imploring the magnates for funds with which to finance his campaign, and relieving them by law from imprisonment, Roosevelt took special occasion in 1907 to prejudice public opinion against Moyer, Haywood and Pettibone, officers of the Western Federation of Miners, when they were in prison awaiting trial.  They were later acquitted of the trumped-up charge of murder brought by powerful capitalist interests in order to discredit and break up the progressive labor organization of which they were the heads.  Certainly, Roosevelt was extremely courageous in attacking the weak, and those from whom he could expect no support or funds.  A more overestimated man, nor one who more successfully befooled the people by sheer talk, has not lived in recent times.

3 Low says :  “Here was the situation in a nutshell, which had been discussed by Mr. Morgan and Mr. Root during the five hours they spent together on the former’s yacht on that Saturday when peace or war hung in the balance :  To permit the strike to go on meant possibilities that no man wanted even to think of.  It might mean the opening of Pandora’s box.  It might mean arson and riot and bloodshed in the coal region.  It might mean even worse in New York city.  Already the poor were clamoring for fuel, and winter had not even lightly laid its hand on the city.  It might mean such a state of affairs that not the entire army could hold it in check”

4 “The Truth About the Trusts,” 107.

5 Ibid., 106-107.

6 This was in 1894.  According to official reports the Carnegie Steel Company was making armor plate at a cost of less than $200 a ton, which plate is sold to the Russian government at $249 a ton while charging the United States Government from $520 to $700 a ton for precisely the same armor plate.  After an elaborate investigation, a Congressional Committee reported (see House Report No. 1468, Fifty-third Congress, Second Session) :
      “The company was hired to make the best possible armor plate, and was paid an enormous price.  Resting under these obligations the company or its servants perpetrated manifold frauds, the natural tendency of which was to palm off upon the Government an inferior armor whose inferiority might perchance appear only in the shock of battle and with incalculable damage to the country.
      “The efforts of the company, and of its superintendents.  Cline, Corey and Schwab, have been to satisfy your committee that the armor is up to the requirements of the contract, notwithstanding the false reports to inspectors, doctoring of specimens, plugging of plates, fraudulent retreating of test-plates and `jockeying’ of the testing-machine.  The unblushing character of the frauds to which these men have been parties and the disregard for truth and honesty which they have shown in testifying before your committee render them unworthy of credence.”

7 “ The Great Fortunes From Industries.”

8 Indications of the methods of the companies in the bridge trust came out in 1910, and caused a considerable public scandal.  State Senator Conger, and other witnesses testified before the New York State Senate, sitting as a trial Committee of the Whole, that a corruption fund of $6,000 had been distributed, in 1901, among three influential members of the Assembly, to bring about the defeat of a bill considered disadvantageous to the interests of the bridge trust.  J.P. Allds, President pro tem of the Senate, at the time the charges were made, was one of the accused.  The Senate found him guilty.  The revelations before this committee in February and March, 1910, were of such a character that it was the general opinion that they only faintly indicated the vast and continuous corrupting of legislatures by corporations of all kinds.  This belief was borne out by the fact that resolutions introduced in both houses of the Legislature for a comprehensive self-investigation were at first voted down.

8a “ Seared with experience.”  Inasmuch as a description of his career is not strictly relevant to this part of the work, we cannot halt here to recount the details of transactions, in which, many a time, he had got the better of partners, friends, inventors and competitors.

9 “The Wall Street Journal,” issue of August 2, 1909.

10 See report of ex-United States Senator James M. Smith, receiver of the company, to the United States District Court, Newark, N.J. The report was submitted to the court on November 2, 1903.  The appended paragraph is only a slight portion of the entire report :
      “ Who participated in this wholesale plunder ?  The testimony now being taken ... will doubtless disclose the names of all the participants ;  but as such testimony will be submitted to this court for action, your receiver does not deem it proper to comment upon it here.  Certain it is that much of this vast amount of stock and bonds was taken by persons and corporations who parted with little or no considerations in exchange therefor.  Blocks of the stock went to the vendors of the constituent plants and to the purchasers of bonds, as bonus, absolutely without benefit to the company ;  $20,000,000 of it admittedly went to Mr. Charles M. Schwab in addition to the agreed price for Bethlehem.  Some of it went to the promoters of this artistic swindle ;  and when all had been provided for, what was left of the bonds, amounting to $1,500,000, was handed back to the company, ostensibly to supply it with ` working capital.’”

11 In previous chapters, facts have been brought out showing how the mineral lands were seized.  Further facts as to the seizure of mineral lands elsewhere will be found in the chapter on the Hill fortune.

12 “The Truth About the Trusts ”: 172.

13 The three great New York banks which, it is understood, Morgan then long controlled, were the First National, the National Bank of Commerce and the Hanover National.  Their immense resources may be realized from these facts :  The First National has a capital of $10,000,000, deposits of $113,000,000, and a surplus of $18,600,000.  The National Bank of Commerce has a capital of $25,000,000, deposits of $170,000,000, and a surplus of $15,000,000.  The Hanover National has a capital of $3,000,000, deposits of $82.000,000, and a surplus of $10,000,000.  Since then, as we shall see, Morgan has extended his control over a vast number of other banks, virtually forming a Money Trust.

14 Morgan’s hold in the New York Life Insurance Company came through George W. Perkins, the vice-president of that company.  Finally, in 1902, Perkins became a member of the firm of J.P. Morgan and Company, continuing, at the same time, as an officer of the New York Life Insurance Company.  Perkins’s methods may be judged by the following incidental fact :  He took out policies for $60,000 on his life, and received agents’ commissions on his own insurance.  Report of the [New York] Legislative Insurance Committee, 1906, x : 85.

15 The Equitable, for instance, owned $162,364,034 of railroad and traction company bonds, the Mutual about the same amount in railroad and miscellaneous bonds, and the New York a similarly large amount.

16 Report of the [New York] Legislative Insurance Committee, 1906, x : 23.

17 Ibid., 16.

18 The testimony showed that many newspaper writers had received large sums for the suppression of articles revealing the methods of these companies.

19 Report of the [New York] Legislative Insurance Committee, 1906, x : 16.

20 Ibid., 16.

21 Ibid., 50.

22 Ibid., 49.  For instance, J.P. Morgan and Company, in October, 1902, advanced $59,310.79 to Hamilton.  This sum was deducted from the profits of the New York Life Insurance Company.  Hamilton was not required to make any accounting.

23 Report of the [New York] Legislative Insurance Committee, 1906, x : 62.

24 Ibid.

25 Ibid., 398.  The Equitable, for example, gave $50,000 in 1904, to the Republican National Committee, and had also, for many years, been giving $30,000 annually to the New York State Republican Committee. (p. 10.)

26 The Equitable Life Assurance Society “loaned immense sums” to Kuhn, Loeb and Company, of which Schiff was a leading member.(Ibid., 118.)  These funds, in large part, were turned over to Harriman for use in his railroad gathering and centralizing projects.  Schiff passed in public as one of the benevolent philanthropists of the time.

27 The extent of Morgan’s utilization of insurance money was shown by the legislative investigating committee.  “The evidence is,” it reported, “that while Mr. Perkins has been a member of J.P. Morgan and Company, the New York Life has purchased from it securities of the par value of $39,286,075 for the price of $38,804,981.51.  (Report of the [New York] Legislative Insurance Committee, 1906:81).  Superficially, the report suggests that the New York Life Insurance Company thus obtained “a bargain ” in the purchase of these securities.  In reality, much of the securities comprised “ watered ” stocks.

28 It is quite needless to reiterate here facts (already brought out) regarding the methods by which appointments and elections to the bench were made by the great property interests.  Later on, a full elucidation of this subject will be given, as also a description of the criminal law as applied to the poor.

29 The facts thus generalized are so notorious that it is hardly necessary to specify at length.  Although he was much denounced, Jerome did not deviate from the uniform practice (as noted so often throughout this work) of enforcing the laws vigorously against the poor, while allowing the rich frauds and thieves to go scot free.  At one time, a “popular hero,” Jeronme went out of office thoroughly discredited in public opinion.

30 In his speech in the United States Senate on March 17, 1907, Senator La Follette thus referred to Ryan :
      “The Metropolitan Interborough Traction Company cleaned up, at the lowest estimate, $100,000,000 by methods which should have committed many of the participants to the penitentiary.  The public and the stockholders were robbed alike.  That dividends were paid with borrowed money purely to stock job the public is now known to a certainty.  Stock was thus ballooned to $296 per share, which goes begging now at $35.  The insiders robbed the company on construction of upwards of $40.000 000.  Investigation has disclosed that $1,000,000 was spent as a ‘yellowdog fund’ for corrupting public officials.  In 1886 Thomas F. Ryan was a poor man.  In 1905 Henry D. McDonough, his official representative, estimated Ryan’s fortune at fifty millions.  The foundation of all his wealth and power was the Metropolitan Street Railway.”  “ Centralization and Community Control of Industry,” etc. (Government Doc.), 24.  Ryan’s career will be fully described in that part of this work comprising “ Great Fortunes From Public Franchises.”

31 Wherefore, with this knowledge, wonder can be expressed that the “insurance iniquities” (as they were styled) were not proportionately viewed.  In actuality, great as they were, they were but the merest fragments of a collossal network of fraud, corruption and graft, covering every department, branch and kind of business and old-party politics.

32 Many of these investors were not, of course, despoiled of their entire fortune.  Thus, a small manufacturer might invest $25,000 of his fortune in Steel Trust stock, and lose a great part of the investment in selling out at a very much lower price than that at which he had bought it.  As the market price kept descending he would conclude to sell out before his losses would be greater.  The “ margin ” investors suffered much worse.

33 “The Russell Sage Endowment”—a fund amounting to many millions of dollars, given by Sage’s widow for (among other purposes) the purpose of investigating the conditions producing poverty.  Part of the money robbed by Sage in previous generations is thus used to find out why so many millions of the present generation are in destitution.  What a grotesque sequence !

34 The Pittsburg Survey.” ii :899.

35 “ The Pittsburg Survey,” i:537 and 539.  The Carnegie Steel Company began several decades ago the systematic hiring of immigrant workers.  The average pay of these workers is $1.60 a day.

36 But the few exceptions noted previously.

37 “One-third of all who die in Pittsburg, die without having anything to say about it.  That is, they die under five years of age.  One-fourth of all who die, die without having anything to say about anything.  That is, they die under one year of age.  Most of these deaths are preventable, being the outcome of conditions which, humanly speaking, have no right to exist.”  This slaughter is greatly caused by impure milk and bad housing conditions.—“ The Pittsburg Survey,” ii:943.

38 The American Federation of Labor, at its annual meeting at Toronto, in November, 1909, declared that the Steel Trust was actively bent upon destroying labor unions, and that it was the foremost aggressor in this move.  The object is to reduce the workers to a still greater condition of servitude.
     The stock lists of the United Steel Corporation which were opened for inspection at the annual meeting of the stockholders, in Hoboken, N.J. on April 18, 1910, showed that the name of J.P. Morgan and Company, for the firm and as holders for others, appeared on the lists for large amounts of stock.  Morgan’s London house, formerly known as J.S. Morgan and Company, but at present Morgan, Grenfell and Company, also held, it was revealed, large amounts of stock.  The holdings in the name of Luke H. Cutler, amounting to 17,395 shares, were generally considered to be stock owned by John D. Rockefeller.  Of the foreign stockholders, the “Dutch Syndicate” was shown to be the largest, its holdings reaching 216,870 shares of common stock.  The Rothchilds were also disclosed as large stockholders.  A considerable number of conspicuous American individual capitalists and banking firms were entered on the books as stockholders in varying degrees of ownership, large and small.