History of the Great American FortunesCHAPTER XII
MORGAN AS THE SAVIOR OF THE NATION
All previous panegyrics lavished upon Morgan became stale and inadequate compared to the apotheosis of him during the panic of 1907. What climax of earthly splendor does Morgan reach ? He becomes the Savior of the Nation.
Around their genesis, methods and characters, the magnates weave romantic yarns. They supply the inspiration ; a host of writers and orators, trained to transfer that romancing into catchwords and phrases, carry it to the people and popularize it until it becomes an almost adamantine tradition. Always it is the same species of romance ; the toil, the thrift, the integrity, the wonderful ability by which the magnates reaped their fortunes ; their heroism in time of war, their saving philanthropy in all great crises.
The audacity of these literary puffers is as great as the imposture of the magnates whom they cover with adulation. In the very commission of vast frauds and thefts, the magnates will pose as public-spirited, patriotic men. Their puffers hasten to paint them likewise. There is no judicious waiting until time has receded, and the actual facts are more or less forgotten. The very enormities of the magnates are at once transformed into acts of the greatest purity, and the people are called upon to applaud. In every conceivable manner the press, or at least a considerable section of it, is manipulated to counteract the effect of disclosures.
A CHARACTERISTIC EULOGY OF MORGAN.
Shortly after the panic of 1907 had set in, an article (and it was one of many such productions) entitled Morgan the Magnificent was published in a popular magazine.1 Its bombastic style, if nothing else, must provoke a wondering interest, yet it was strictly in accord with the quality of most of the matter published in books and magazines. This trash was called popular not because the people wanted it, but because to a great extent many publishers considered it safe. It did not antagonize the vested interests of wealth. The article began with this lurid introduction :
There were scenes in the saving of Wall street by John Pierpont Morgan that never can be written ; things said and done that cannot and should not even be remembered, even in those days of excitement, horror and confusion ; heroism, crimes, blunders, treacheries and martyrdoms that spanned the whole capacity of man for glory or shame ; for, until the continent came, half-crying, half-cursing out of the trembling madness that threatened to bring down the banking system of the country into ruins, smash the credit of the nation and smirch its name, men were in a nameless bewilderment of fear beyond words to express, as in the presence of some impending and irresistible convulsion of nature the boldest and keenest become craven and stupid.
Plain Mr. Morgan, fresh from the dronings of a great Episcopal church convention at Richmond, was suddenly aroused by the peril of the financial situation to a demonstration of courage, strength and personal masterfulness that brought order and confidence out of chaos and despair.
And there is a little history to compare to the sight of this stout, secretive American banker of seventy years withdrawing from the passionless company of bishops and ministers intent on religious ideals, to take command of the fierce, clashing money forces of Wall street, gone crazy out of sheer fright to become the protagonist and hero of the most cynical, suspicious, treacherous, cruel, arrogant and cowardly human elements in the world.
It might well be imagined that Morgan, the connoisseur of art, the lover of literature, the great arbiter elegantarium, would have sent for the author of this perpetration and caused him to be the bastinadoed on the spot. Evidently in the absence of proof to the contrary Morgan was pleased with the confection. It would not be worth notice here were it not for the fact that the point of it that Morgan was the Savior of the Nation was gravely and repeatedly pressed forward by many other writers and publications.
In scrutinizing Morgans career, one prodigious virtue is encountered. It is that of consistency. The quality of his patriotism and heroism never changed from the time of his introduction into business. That rifle sale at the outbreak of the Civil War was the first exhibition of his intense patriotism. In 1894 his patriotic nature was again displayed consistently when he and his clique squeezed a profit of $18,000,000 or more from the Government in a time of need. In the panic of 1907 his never-failing patriotism was even more prominently shown.
While the effusions of the popular writers were wending the rounds of the country, a recalcitrant United States Senator was boring the august Senate of the United States with a long, tiresome speech. The bulk of the august Senate did not care to hear what this Senator, one La Follette, of Wisconsin, had to say, but were compelled to by the rules. The Senate of the United States was most sensitively jealous of its prestige and dignity. Most of its members were multimillionaires. La Follette lacked that highly important qualification. Still more, he was painfully deficient in caste in another respect. He had not bought his way into the Senate of the United States, thereby outraging one of its most sacred canons. Hence he could give no real test of standing or any guarantee of wise, conservative statesmanship.
But the majority of his colleagues had good reason to be impatient of La Follettes speech. His was a voice from the past. They represented the newer order, that of centralized industry, and a Government run directly by the magnates themselves. He was a relic of the old creed, that of the age of competition in industry.
For four long days, on March 17, 19, 24 and 29, 1908, he delivered his lugubrious wail. In their strife for more money, more power more power, more money, he explained in describing the great magnates, there is no time for thought, for reflection. Government, society and the individual are swallowed up in the struggle for greater control. Thus he stumbled through mazes of facts the purport and interpretation of which he did not understand. Neither did he comprehend the fundamental fact that commercial upheavals are not the work of individuals, but of the whole capitalist system ; that certain powerful individuals or interests could accelerate or retard them, but could not be held responsible for their causation. According to him, a crowd of conspirators, headed by the Standard Oil Company and Morgan had deliberately brought on the panic ; he fulminated against them and denounced them as arch criminals.
Amid his accusations, lamentations and platitudes, Senator La Follette embodied certain facts of real historic value facts confirmed by the records of what actually took place, and familiar to all close observers of events during the panic.
The panic of 1907, like previous panics, supplied the propitious opportunity to the great magnates to crush out lesser magnates and seize the control of their property.
The requirements of industrial centralization demanded the effacement of certain minor magnate groups which, from the point of view of the great magnates, had possessed themselves of a rather dangerous degree of industrial and financial power. These ambitious little magnates had imitated the methods of the great ; they had combined fraudulent financial manipulation with the oppressive exercise of political power, and thereby had tricked or forced out the owners of various properties, and had then vested the ownership of those properties in themselves. The form was the usual one of organizing large corporations, with immense amounts of watered stock. These corporations were built upon the ruin, extinguishment or buying out of numbers of former independent business men.
HOW THE LITTLE MAGNATES GET THEIR MILLIONS.
One of these minor capitalist cliques was what was called the Heinze-Morse-Thomas Group. Its control comprised twelve banks and two trust companies ; a coastwise steamship company, consolidated by the inclusion of a number of steamship companies ; large copper mines, a trust in ice, and various other properties. The control of some of these properties was largely secured by means of the enormous profits robbed from the poor by the exactions of the Ice Trust, and this robbery was made possible and easy by means of a corrupt alliance between Morse and the Tammany administration in New York City.
Before organizing the Ice Trust, Morse had been an inconspicuous banker. In the course of this business, he had dealings in discounting the notes of various individuals and firms engaged in the selling of ice. Conceiving the idea of forming a trust in that necessity, he set about to crush out the small dealers. One of his first steps was to assure himself of the collusion of powerful politicians ruling the government of New York City.
In its investigation of the administration of New York City, the Mazet Committee an investigating body appointed by the Legislature in 1899 exposed the conspiracy between the Ice Trust, on the one hand, and, on the other, the Dock and other municipal departments, to create and maintain a monopoly of New Yorks ice supply. Mayor Van Wyck, a puppet of the big Tammany leaders, subsequently admitted in his testimony, before judge Gaynor, of the New York Supreme Court, that he had obtained five thousand shares, worth $500,000, of Ice Trust stock. He alleged that he had paid $57,000 in cash for them. Pressed for proof to substantiate his statement, he failed to prove that he had actually paid anything. The testimony before the Mazet Committee conclusively showed that the corrupt arrangement between the Ice Trust and the city officials was such as to compel the people to pay sixty cents a hundred pounds, and that the trust had stopped the sale of five-cent pieces of ice, practically cutting off the supply of the very poor.2
With its assured monopoly, the Ice Trust declined to make the slightest concession.
MILLIONS FROM SUFFERING, DISEASE AND DEATH.
The result was a noticeably great increase in the rate of mortality among the children of the poor. Large numbers of families, living on the most precarious edge of destitution, could not afford to pay the extra five cents demanded for a piece of ice. The milk soured and acted like poison on the children. The increasing number of deaths in successive summers when the terrific heat made ice an absolute necessity, especially in the congested tenements, could be traced, in large part, to the methods of the Ice Trust. Millions of other people who could ill afford to pay the exactions demanded were compelled to give up extra tribute or go without ice.
This was not a temporary condition ; it has continued so ever since the organization of the Ice Trust ; the methods then adopted prevail now. Neither were the methods any different from those of capitalism in every field. The invariable principle upon which capitalists acted, and by which they tremendously augmented their profits, was to sell necessities at the very highest price when the people needed them most. In the depths of winter the price of coal was always raised to an exorbitant point. While giving his bits of donations for the founding of hospitals, the successful capitalist reaped his millions from conditions productive of vast suffering and disease on every hand.
The more profits that he made, the more of a financial genius he was accounted by his class, and by all who were influenced by the standards of that class. As soon as Morse proved that he could exact immense profits, he was hailed as a very foremost and successful capitalist. The newspapers began giving extended notices of him, the price of Ice Trust stock went up in Wall street, and fine men and women in elegant society were only too eager to get hold of stock paying such rich dividends. True, charges of violating the law were made against Morse and his associates, but those charges were not based upon any concern for the mass of people, nor upon any indignation at the privations, suffering and deaths caused by the methods of the Ice Trust ; they were made solely on behalf of the smaller firms whom Morse had forced out of business. Jerome, for some years District Attorney for New York County, could discover no criminality in any of Morses methods, and caused criminal proceedings brought against the Ice Trust officials to be dismissed. A suit, however, brought by the Attorney General of New York State against the Ice Trust for violation of the State anti-monopoly act is now pending.
From this process of exaction and indirect murder on a great scale, the Ice Trusts profits became very great. The money thus taken in, Morse used to finance other enterprises. Buying up the control of a number of coastwise steamship lines, he consolidated them into one corporation, with the familiar accompaniments of stock watering and juggling. He allied himself with the Heinzes who owned large copper mines in Montana, and whose manipulation of the politics and politicians of that State was somewhat similar to that Morse used in New York City. Also, he made a coalition with Thomas, who controlled some New York banks.
On the surface this seemed a very powerful combination ; not an opportunity was lost by Morse and his associates to spread abroad the impression that they were too formidable to be overthrown.
THE GREAT MAGNATES LIE IN AMBUSH.
These men made much noise in the financial world, and dashed around with prodigious belief in their invincibility. They were vaunted as great financiers ; doubtless inflated by their own success, they esteemed themselves so, and judged themselves fully able to cope with the great magnates. In the meantime, the Morgan and Rockefeller group was carefully observing their operations, and awaiting the ripe time when they could be crushed out at one blow. The Standard Oil Company wanted those copper mines, and the steamship company organized by Morse was considered a competitive menace to railroad lines controlled by the Morgan and Rockefeller interests.
Senator La Follettes account of events that followed was accurate as to the facts. In his speech in the United States Senate he gave this narrative :
Suddenly, in the first days of October, somebody (to use a Wall street phrase) began to smash United Copper on the curb. The stock broke badly. Standard Oil was getting under way. Doubtless, never suspecting the source, Heinze, through his brother, a member of the Stock Exchange, and through brokers, bought and bought until United Copper went out of sight, carrying down Heinzes brother, one firm of his brokers, and involving the Morse-Heinze banks in the crash.
Up to this point the panic had been well in hand, but with the revelations following hard upon clearing house investigations, it slipped its bridle, and the situation assumed a serious aspect. But not for one moment did Morgan or Standard Oil miss the opportunity offered. Morse and Heinze were forced out. They were compelled to reorganize their directorships, and substitute semi-dependent Standard Oil men as their successors. They were forced to sell their stocks for what they could get. Morgan attacked Morses Consolidated Steamship Company stocks and bonds, and Morse was ultimately forced to surrender his steamship company combine, which he did.
They went after the Knickerbocker Trust Company, Charles T. Barney, president, and close ally of Morses. It was charged in New York that the interests deliberately started a run on the Knickerbocker. Morgan was appealed to for aid. Morgan, whose plaudits have been sounded right here in this Chamber, was in a position to follow carefully every step and phase of this proceeding. In the first place, Morgan gave out, as reported in Wall street, that the Knickerbocker would be supported if it met the demands of the depositors who had started a run upon it. There was nothing in subsequent events to indicate that there was any sincerity in that promise, but an analysis of every step is convincing to the contrary. Support was not given ; it was withheld. After the company, relying upon that pledge, had paid out millions, it was forced to close its doors, and Barney went to a suicides grave.
Barney was likewise a director in the Trust Company of America, a comparatively new institution, with a few System directors, giving the great groups a semi-interest in the institution, though they have not yet taken it over. The raid of Heinze, Morse, Barney et al., and the latters directorate connections with the Trust Company of America, caused public suspicion to fall upon it. A strong run was started. This was not on the program, but as the Vanderbilts, allies of the Standard Oil, were represented on the directorate of the Trust Company of America, Standard Oil was bound to offer some assistance. Though gold and bank notes were ostentatiously piled on the counters to impress depositors, and young Vanderbilt offered as an exhibit of resources and placed at the tellers window, the excited depositors persisted in demanding their money.3
In a day, as it were, the Morse-Heinze-Thomas group was smashed into nothingness, and its properties seized. If the experience of those venturesome little magnates had ended there, they would have had cause to rejoice over their good fortune. But their rout had to be made complete. The Federal authorities began to take a sudden interest in their operations. Where previously the Governments prosecuting officials had been wholly unaware that Morse, Heinze and Thomas had been committing fraud in their financial methods, they now spied out the fullest evidences. From certain quarters proofs were offered of violations of the law by the fallen trio. The United States District Attorneys office in New York City became alive with energy. It caused grand jurors to investigate, and showed striking official zeal in the prosecution. Heinze was indicted, and Morse brought to trial, convicted, and sentenced to fifteen years in prison a verdict from which he appealed. The United States Circuit Court of Appeals affirmed the verdict,4 and Morse is now serving his term in the Federal prison at Atlanta.
Morse and Heinze learned two valuable lessons which all aspiring little magnates might well take to heart : First, that it is extremely unwise to cross the interests of the really big magnates ; and, second, that those magnates can use the criminal machinery of the courts against opponents of their own class, not less than against labor leaders, labor unions and the propertiless in general.
But the grasping of the properties of the ousted combination were not the only seizures during those harvest days of the panic of 1907. The electric apparatus factories of the Westinghouse Company had long been in the way of the Standard Oil Company, which owned the General Electric Company. The Standard Oil Company exercised a financial pressure during the panic that soon drove the Westinghouse Company into an extrication, from which it escaped only by becoming a Standard Oil property. And, in the conferences held by the Wall street financiers during the early days of the panic, Morgan learned that the control of the Tennessee Coal and Iron Company, in the form of stock, had been placed with the Trust Company of America by John W. Gates and his associates to secure loans. This was information of the highest and most momentous value.
THE STEEL TRUST ABSORBS A DANGEROUS COMPETITOR.
The Tennessee Coal and Iron Company was the most dangerous competitor of the Steel Trust. It was the one great competitor having its own sources of iron ore and coal supply. In the fall of 1907 it owned, it was estimated, from 500,000,000 to 700,000,000 tons of iron ore, 2,000,000,000 tons of coal, and very large quantities of flux and fluxing material. All of these coal deposits were within a radius of thirty miles of its plant in Birmingham, Ala.5 The owners of this company were planning improvements which would have made it an even more serious competitor of the Steel Trust, and they had plans under way of merging the Republic Steel Company with their corporation. Moreover, the Tennessee Coal and Iron Company was foremost in the development of the open hearth system of making steel rails. Its rails were in greater demand, and brought higher prices, than those of the Steel Trust.
In the difficult financial position of the Trust Company of America, the Morgan and Rockefeller interests, working in unison, saw their great opportunity of eliminating the competition of the Tennessee Coal and Iron Company. To prevent itself going into bankruptcy, the Trust Company of America needed large and immediate amounts of cash, which was scarce. Morgan and his clique had the cash. The condition insisted upon by Morgan was that the company should sell him the stock of the Tennessee Coal and Iron Company that it was holding as collateral for loans. Hard pressed, the Trust Company had to yield, and sell the stock at the low price offered. The next move was to make the Tennessee Coal and Iron Company a part of the Steel Trust.
There was, however, an obstacle. The Federal antitrust law prohibited such combinations. How could this situation be overcome ? President Roosevelt was incessantly and gustily threatening the great magnates with the enforcement of this law. But apparently Morgan knew Roosevelt much better than the country knew him. He undoubtedly reckoned that Roosevelts talk was mere words, and that Roosevelt would prove his subservience anew in acts.
The report went that Morgan, through emissaries sent to the White House, informed Roosevelt that unless the merger of the two steel companies was allowed by the Government, the Trust Company of America would go down in failure, causing a train of other bankruptcies, and the panic would be manifold intensified. Whatever were the reasons for Roosevelts submission, he gave his consent. At that very time the courts were enforcing the anti-trust law with a construction that no one had dreamed of when the law was passed. The eminent judges discovered that labor unions were trusts, and issued writs against them on the ground that they were conspiracies in defiance of that law ! Roosevelt was bitterly denounced ;6 his action, however, mattered little so far as the merging of the two corporations was concerned ; had not the Steel Trust obtained control at that particular time it would have inevitably done so at some other time, and by another process.7 According to disclosures before the Senate Committee on judiciary, the Steel Trust made a profit of $670,000,000 by forcing the Trust Company of America to sell the control of the enormously valuable plants and mines of the Tennessee Coal and Iron Company at a preposterously low price.
Where did Morgan and his associates get the money with which to carry on the process of terrorizing the country and gathering in immense industrial and other properties ? Again,, the people had another of those frequently occurring vivid opportunities of seeing how thoroughly the United States Government was an instrument of the capitalists. In the banks there were more than two hundred million dollars of money wrung fundamentally from the sweat of the working class in taxation. The few oligarchs controlling the great banks were allowed to use this money as though it were their private property. They declined to loan any money to anyone until their plans were ready, and when they did loan, it was at extortionate rates of interest. Even this complete transference of Government funds did not satisfy them ; they demanded more. The Government at once responded. Cortelyou, Secretary of the Treasury, instantly permitted the national banks to issue thirty million dollars more in paper currency, and made the mints work night and day to turn out fresh coin.
Posing as the savior of the country, Morgan came forward at the auspicious time, on the afternoon, of October 24, 1907, and magnanimously announced his desire to relieve the tension. The entire capitalist class, excepting the very few magnates thus engineering the whole situation, was clamoring for loans of money. The loans were finally given on that afternoon. The savior of the country demanded from twenty per cent. upwards for loans, and exacted securities as collateral at heavy sacrifices to the borrowers. The money that he thus loaned was Government money, squeezed in taxation from the producers. It was a classic example of Government of, for and by the great capitalists.
NO AID FOR THE UNEMPLOYED.
While the Government was placing the treasury of the United States at the disposal of Morgan, what was it doing for the millions of workers thrown into enforced idleness and destitution ? By June, 1908, it was conservatively estimated that perhaps five million workers in the United States were out of work, and could get none. Reports from the charity organizations in every city showed that the cities were overcrowded with the homeless and unemployed. Destitution was rife, and cases of starvation of men, women and children, were more frequent than the official reports dared reveal. The jails throughout the country were crowded with men who, thrown out of work, were adjudged vagrants and sentenced. Many of the homeless voluntarily committed some breach of the law in order to be sent to jail. There, at least, shelter and food could be obtained. Many towns adopted the plan of deliberately driving out the unemployed. Everywhere crime increased ; driven to absolute necessity, many workers stole, and, of course, were dispatched to prison. The Social Ethical League, of New York City, reported that crime had increased fifty per cent. within six months.
With destitution and starvation everywhere, what did the Government, whether National, State, or city, do for the unemployed ? Nothing except to club and terrorize them when they presumed to hold street meetings to plead for the right to work.
In the whole sphere of government there was not a single real representative of the workers to speak or act for the workers. The Government was a Government elected by the votes of millions of workingmen, yet the working class did not have a single mouthpiece in that Government. A Senator such as Davis of Arkansas might rise, as he did, in the United States Senate on December 12, 1907, and fiercely denounce the stock gamblers and thieves of Wall street, but, he, and all like him, did not speak for the working class, about which they cared nothing save to keep it in submission ; they spoke for the middle class and for that alone.8
A CAREER STILL IN EVIDENCE.
This is the true history, in outline, of the career of the great savior of the country. But it is not all. Unquestionably Morgan has been engaged in a large number of other transactions of which no details have ever become public. Some very recent happenings, however, are tolerably well known. He and other American bankers were dissatisfied with the placing of a $27,500,000 loan with European bankers, and insisted upon the United States Government their Government demanding that they should have a share. Nor is it so long ago that another transaction of Morgans became public. He consented to take a $30,000,000 six per cent. issue of New York Citys bonds in order to save New Yorks credit. Did he pay for these bonds in cash ? Nay. He signed a check for $15,000,000 on the First National Bank of New York, and another for $15,000,000 drawn on the National City Bank of New York. Whose money, virtually, was it in these banks against which Morgans checks were drawn ? Money deposited by the United States Treasury. In addition, he obtained tens of millions more of New York City bonds at a high rate of interest. The heroic qualities of the savior of the country are further illumined by Comptroller Metzs statement that he, Metz, in order to get Morgan to accept New York Citys bonds, had to betake himself to Albany, and get a special act passed by the Legislature increasing the interest on the bonds. Another such illustration of Morgans methods, or those of corporations controlled by him, will be given.
At an expense of more than $22,000,0009 (reckoned to November, 1909) New York City has constructed a series of extensive, modern piers on the Hudson River, from Little West Twelfth street to Twenty-Second street. These piers are called the Chelsea Pier Improvements. The entire cost has been defrayed by New York City, and the money was obtained from selling issues of city bonds. The interest rate has varied from three, to nearly five, per cent. Part of the bonds are payable in thirty years, a very small portion in forty years, and most of the total issue matures in fifty years.
These piers have been leased to three steamship companies, one of which is the International Mercantile Marine Company, organized by Morgan, another is the Cunard Line, a third the Compagnie Generale Transatlantique. These companies secured from the Tammany administration, in 1904, a lease of such a scandalous character that the city does not get enough revenue to pay even the interest on the bonds issued for the piers. On December 16, 1903, the International Mercantile Marine Company offered, in writing, to take a lease of five full piers and one half pier at an annual rental of $450,000.10 The question of awarding this lease was still pending when Tammany came back into power. The International Mercantile Company then secured the return of its first offer,11 and a thirty-year lease was made later by which the three companies secured nine piers at an annual rental of $565,000.12 Inasmuch as the International Mercantile Marine Company alone had originally been willing to offer $3,392,351.46 for the nine piers for a thirty-year period, this change in the terms entailed a loss to the city of nearly three million dollars. The result can be stated as follows :
The Chelsea improvements have cost the city $22,000,000.
The annual interest charges that the city is required to meet are $844,800.
The amortization charges are $220,000.
The calculated annual depreciation is $345,553.50. The total annual charges are, therefore, $1,410,353.50.
The annual rent received from steamship companies for these piers is $565,000.
Hence, the net loss per annum to the city is $845,353.50.
The loss to the city per day is $2,316.04.
Thus New York Citys officials were prevailed upon to lease the largest and finest piers in New York, if not in the United States, at a lower rental than the city had been receiving for older and far inferior piers, so that New York City loses $845,353.50 every year. And while Morgans International Mercantile Marine Company was profiting by this transaction, Morgan was giving $20,000 a year to the Bureau of Municipal Research to investigate, and expose, petty graft ! Comment is needless.
These transactions, however, are small compared to Morgans still more recent activities. On December 2, 1909, Morgan personally bought the majority stock of the Equitable Life Assurance Society, which Thomas F. Ryan, in 1905, had purchased from the Hyde family. By this purchase Morgan acquired the ownership of the stock around which revolved such a bitter contest for possession four years previously a contest which (as already described) caused the great insurance scandals and revelations of 1905. By the purchase of this stock, Morgan obtained control of assets rated at $470,000,000 ; he paid, it was reported, approximately $2,500,000 for Ryans stock. Thirteen days after this purchase, he bought a number of telephone lines, competitors of the Bell Telephone Company, probably to unite them with the Bell system. A legislative committee in Ohio has been investigating charges that bribery was used to pass a bill allowing this merger.
Morgans next step revealed how rapidly he was extending his already gigantic power. By purchase, combination or community of interest he acquired the Guarantee Trust Company of New York, a ninety-million dollar concern ; the Mercantile Trust Company, with resources of $68,475,000 ; the Equitable Trust Company, with assets of $63,800,000 ; the Morton Trust Company formerly controlled by Ryan; the Fifth Avenue Trust Company, and other very powerful banking institutions. Morgans power now embraces banking and trust, insurance, industrial and transportation companies, and controls or influences capital estimated, at the very least, at more than ten billions of dollars.13 How much of this stupendous sum Morgan personally owns or controls, or what alliance he has with the Rockefellers or other great money interests, are factors not definitely known. After consummating this Money Trust, he was hailed as the Money Emperor, and his immense possessions were denounced as an impressive and ruthless example of one-man power, although the step was, in reality, another inevitable bound in the centralization and overlordship of the countrys resources. Only those blind to this development were astonished by it.
Finally, to end the narrative of Morgans career, there remains the huge expropriation of resources, estimated at a value of from $900,000,000 to $2,000,000,000, in Alaska, and of vast stretches of water-power sites in that Territory, and in various of the Western States sites intrinsically and potentially valued at hundreds of millions, if not billions, of dollars. The successful efforts under way on the part of great capitalist interests to obtain immense stretches of coal, copper and other mineral land, timber lands and water-power sites, were resisted by Gifford Pinchot, United States Chief Forester. A critical controversy ensued, in 1909 and 1910, between Pinchot and Ballinger, Secretary of the Interior. Charges were made that Ballinger had, before his prior appointment as Land Commissioner, acted as attorney for certain of the claimants, especially the Cunninghams, who had obtained great tracts of land of the most valuable resources. A Congressional investigation resulted.
This investigation is still (at this writing) going on. Many facts, however, popularly regarded as startling, have already been brought out ; in no sense, however, were they other, at basis, than a continued story of the fraudulent appropriation of public lands which has been going on in this country for three centuries. Pinchot and L.R. Glavis, Chief of the Field Division of the General Land Office at Seattle, Washington, were, upon various pretexts, dismissed from office after they had exposed, and vainly sought to stop, the gigantic land frauds in progress.14 This, as we have so copiously seen throughout this work, has been the fate of so many honest public officials obstructing capitalist fraud. On January 28, 1910, Glavis testified before the Joint Committee of Congress that he had been requested by Ballinger to hold up his investigations of fraud until after the election (of 1908), and that Ballinger supplied secret information of the U.S. Land Office to the Cunningham claimants, who, the testimony showed, were dummies acting for the Guggenheims.15 Some of the charges made by Glavis were confirmed in a rather unexpected manner. It appeared, by an authoritative statement, that J.P. Morgan and Company had formed a syndicate with the Guggenheims, in 1906, and that they had taken over the Cunningham claims. On February 18, 1910, John N. Steele, general counsel of the syndicate, and Stephen Birch, its managing director in Alaska, voluntarily appeared before the Joint Committee of Congress, and made this statement, also denying that the syndicate had ever received money, grants of land or special rights from the Government. In its own defence, the General Land Office, on January 26, 1910, ostentatiously made a public statement evidently intended to discredit Pinchot, showing that the most extensive land frauds had been consummated in the years immediately preceding the Taft administration ; that within eight years fifty thousand acres of coal lands, valued at $10,000,000, had been obtained by fraud,16 and that it was expected to recover these fifty thousand acres.
Inasmuch as the Joint Investigating Committee of Congress has not concluded taking testimony, its report is not available, and Ballingers full defence cannot, therefore, be given. The testimony taken thus far, however, has tended to show the most enormous frauds in either the successful or attempted acquiring, through dummies, of mineral, timber and water-power lands valued at hundreds of millions, if not billions, of dollars, thus showing that the seizing of land, begun in settlement times, has continued through more than three centuries up to the very present without any serious interruption.
Commencing his career with the sale of those condemned rifles to the Union Army during the Civil War, Morgan has prospered until he now towers as a financial colossus and as one of the actual rulers of the land. He lives in a splendid mansion on Madison avenue, New York City, and for his private gratification built, adjoining it, a fine, spacious marble art gallery, filled with the costliest works of art. He professes a passion for literature, and his library is extensive. He is even a dictator of the morals of other people, as witness his stopping of the opera Salome when it was first produced at the Metropolitan Opera House, of which he is a patron and director. Money, grandeur, prestige, power, all are his. And all the while the prisons are crowded with petty thieves.
1 Pearsons Magazine, issue of February, 1908.
2 See The History of Tammany Hall.
3 Centralization and Community of Control in Industry, Franchises, Transportation and FinanceThe Panic of October, 1907. and Its Lesson. Speech of Hon. Robert M. La Follette of Wisconsin, etc., 21-22.
4 During his commitment in the New York city prison the United States judges allowed him to go out every day in order that he might attend to necessary business. Of the vast number of persons convicted of crime, not a single instance has ever been known of a poor prisoner being allowed to leave prison during the day so that he might work for his family. The court decided later that Morse could go free under bail pending the decision of his appeal. No poor prisoner was allowed this privilege.
5 Testimony before the United States Senate Committee on Judiciary, February 2, 1909.
6 Seven United States Senators signed a document severely arraigning him for sanctioning a violation of the anti-trust law and for practically commanding the United States Department of Justice to take no steps for an enforcement of the law.
Under the caption of Morgan, Dictator, the Berlin Tageblatt, on December 3, 1907, published a leading article on its financial page, urging the prosecution of Morgan for blackmail in threatening a more disastrous calamity in case Roosevelt did not accede. Under the German laws, said the Tageblatt, Morgan would have been immediately arrested for blackmail. An amusing comment, considering that Morgan and his kind are the Government in the United States.
7 The futility of the anti-trust law, so far as it is applied to capitalist corporations was mockingly shown by Congressman Littlefield, one of the Republican dictators of Congress and a trust advocate of great skill. In an address to the Illinois Bar Association on June 27, 1908, he pointed out :
In 1907 the Government had in its service one hundred and seventy-one District and Assistant District Attorneys. This little army of lawyers cost the Government in salaries and expenses $735,612.06, in addition to the salaries of the Department of justice, amounting to $270,965.58. By the exercise of due diligence they obtained 9,741 convictions for violation of the law. The average number of convictions for violation of the Sherman Anti-Trust law during the last six and one-half years is a little more than one a year, only seven since September 14, 1904.
In order to get the full significance of this record it should be borne in mind that during this period the Government has had available for its use for the enforcement of this special statute $500,000 in 1904, and $250,000 in 1908. Since September 14, 1901, with eight injunctions and seven convictions, $386,242.88 has been expended for this special purpose, resulting in fines of only $96,000.
8 A very curious speech Davis was a belated product of the brand of the year 1880. (See Congressional Record, First Session, Sixtieth Congress, Vol. xlii, No. 8: 285-299.) Davis spoke for the interests of the Southern cotton planters.
9 Statement of New York City Dock Department.
10 New York City Dock Department Report, 1903: 942.
11 Sinking Fund Report, 1904: 2.
12 Ibid., 1906:786.
13 Some authorities place the amount at fully twelve billion dollars.
14 Of Glavis, Mr. Heney, retained by the Government, under Roosevelt, to prosecute powerful land thieves, wrote to the editor of Colliers Weekly:
This will introduce Mr. L.R. Glavis, who is Chief of Field Division of the General Land Office at Seattle, Washington. I am in a position to know from experience with him that Mr. Glavis possesses sterling integrity, as well as a high degree of practical intelligence.
He possesses information in regard to a gigantic coal-land swindle in Alaska by Guggenheim and others, and I want you to know the facts, so that you will be in a position to act when the proper time comes. Mr. Glavis is actuated solely by a desire to prevent this fraud from being accomplished. He is ready and willing to lose his position, if necessary.Colliers Weekly, issue of February 19, 1910.
15 The assertion was made, by at least one member of Congress, that Ballingers appointment as Secretary of the Interior had been brought about by the Guggenheims in return for a large campaign contribution that they had made. This assertion so far has not been proved. It should also be noted here that the election of one of the Guggenheims as United States senator from Colorado was followed by charges of the most widespread corruption.
16 ... It appears from these reports that during the last eight years coal lands within the United States have been obtained by fraud to the extent of over 50,000 acres. These are usually the very best of the coal lands, and are to-day worth easily $10,000,000. If mined on a royalty sufficiently low to enable independent operators to compete with existing coal combinations the returns to the Government would reach over $100,000,000. . . . Statement of the General Land Office, January, 26, 1910.