Frederic Clemson Howe.

Privilege and democracy in America online

. (page 4 of 19)
Online LibraryFrederic Clemson HowePrivilege and democracy in America → online text (page 4 of 19)
Font size
QR-code for this ebook

their hours of employment, even the prices they shall
pay for the barest necessities of life, are determined
by a Wall Street syndicate, indifferent, and largely
ignorant, of the industry which it controls, except as
its operations affect the stock market.

Here is a deposit of nature which all of the wis-
dom of science and all of the ingenuity of man could
not reproduce. Upon its use the transportation, in-
dustry, heat, even life itself, of a large portion of
America depend. Yet it may not be used, may not
be brought to the surface, and may not be conveyed
to market, except upon the permission of those who
have acquired the title-deeds of ownership against
80,000,000 of their fellow creatures, the joint heirs
to this bounty of Providence.

In 1859 petroleum was discovered. This dis-
covery has given birth to a dozen fortunes which


run into the hundreds of milHons. In fifty years'
time open-hearted nature has poured forth wealth
to the value of billions. Upon this prodigal en-
dowment an industrial fabric has been reared whose
tributaries, like those of a mighty empire, include
transportation systems by land, and navies by sea,
as well as mines of gold, silver, copper, and coal,
richer by far than those of the Incas; while banking,
insurance, and mjTiads of other industries, whose
ramifications no one completely knows, carry its
influence to every corner of the earth, ^ Its em-
ployees exceed in number the army of Napoleon at
the battle of Waterloo, and its financial dealings
surpass in amount the budget of the Federal Gov-
ernment. No hamlet is so obscurely hidden and no
nation is so powerful that it does not pay tribute to
the system which has been erected by the master
hands who have woven the influence of "Standard

• At the investigation of the Standard Oil Company in New York
in November, 1908, one of the officials of the Standard Oil Company,
at the request of the counsel for the Federal Government, produced
a list of the oil, gas, and pipe-line companies owned or controlled by
the Standard Oil Company. This list included 117 companies with
a combined capitalization of $328,301,495. This included the
Standard Oil Company of New Jersey at its par value. Were it
included at its market value and the other corporations at their par
value the combined capital value of these companies alone would
exceed three-quarters of a billion dollars.

No report was made of the mining, railway, franchise, land,
banking, transmission, and manufacturing corporations owned or
controlled by the Standard Oil Company or its chief stockholders.
But from what we know of the influences and control of the men
who are identified with that corporation, the stock holdings which
they control must equal many times the above sum.


Oil " into the political, industrial, financial, and even
the educational life of America, until no activity
and no industry is free from it. Petroleum pours
forth from the earth almost as freely as do the
springs from the mountain-sides/ It is one of the
great civilizing agencies of the age. Through its use
much of the culture and enlightenment of the last
century has been made possible. It has relieved the
drudgery of the farm and the cottage; it has made
possible the universal education of the people. Yet
this fountain of nature has passed into the hands
of men who have not only monopolized the out-
put but have controlled the means of communica-
tion, so that every other producer has been subject
to its will in the bringing of oil into use.

But a few years after the discovery of petroleum,
natural gas burst from the earth. Here was light
and fuel, distilled in nature's laboratories, adequate
for the needs of the great central West. It was
almost as free as the waters of the Great Lakes. Here
was fuel for the upbuilding of the industries of a
third of the population of America. Here was light,
heat, and power adequate for generations as yet un-
born. Yet in a few years' time these reservoirs of
nature have been overlaid by title-deeds, held most
largely by those who had already made petroleum
their servant, and whose incomes are being aug-

' In 1907 the value of the petroleum produced amounted to


merited by unknown millions each year from this
mysterious source.

State after state is also underlaid with broad acres
of bituminous coal. These deposits run from the
Alleghanies to the Rockies. From the original own-
ers they passed to independent operators; from
the independent operators they have largely passed
to the railroads. In Pennsylvania, West Virginia,
Ohio, Indiana, Illinois, Missouri, and Colorado, the
alliance between the coal mine and the railway has
long been complete. There is scarce a great railroad
system that does not own or control great areas of
bituminous coal. In many instances their holdings
have been increased, independent operators have
been crushed, and competition has been killed by
the methods repeatedly laid bare by the investiga-
tions of the Interstate Commerce Commission. The
long-familiar practices of the oil industry, of dis-
criminating freight rates, alleged car shortages,
and intimacy of ownership, have placed operators,
as well as whole sections of the country, under
the arbitrary control of the public carriers of the
nation. This community of ownership between
the railroads and the coal companies is now pro-
hibited by Federal statute. The letter of the
law may be observed, but community of interest,
through the common ownership of the capital
stock, cannot be reached by statute or by crim-
inal prosecution.


In the bituminous, as well as in the anthracite
coal industry monopoly is the result of legal rather
than of illegal means. This is true of every mo-
nopoly that is identified with the land. It is not the
law-breaker, it is the law-maker, who is responsible
for this sort of monopoly. For the right of private
ownership carries with it the right of unlimited
ownership. And unlimited ownership carries with it
the right to do as one wills with one's own, whether
it be a jack-knife, a coal mine, or a great railroad

It is little more than a score of years since the
low-lying hills of northern Michigan, Wisconsin, and
Minnesota disclosed their untouched treasures of
Bessemer ore to man. In 1884 the Vermillion and
Menominee iron mines were first opened up to use.
Eight years later the Mesabi range, then, as now, a
trackless timber waste, was uncovered, and close
below the surface wealth more fabulous than any
Comstock or Kimberley lode was laid bare. Here
were the foundations of the civilization of to-
morrow. For steel was soon to be king. And here
is Bessemer ore, whose value in the ground has been
estimated by officials of the Steel Trust at from one
to two thousand million dollars.^ Here is the struct-
ural basis of the railway, the steamship, the factory,

•The value of the output of bituminous coal in 1907 was $451,-
214,000. The industry employed 513,258 men.
^Report of Industrial Commission, Vol. XIII, (Washington) p. 472.


the office building, and the home. Here are the
means for the conveyance of water, of gas, of heat,
and of power. To-day eighty-eight per cent, of the
iron ore of the United States comes from these barren
hillsides. The ore is mined by open surface cuts, as
cheaply and as easily as if it were the sand by the sea.
It costs but a few cents a ton to mine the Mesabi ore.
It involves no more labor cost than the removal of a
ton of dirt. Yet almost all of these deposits have
passed under the control of the United States Steel
Corporation. It has more recently acquired the vast
deposits in the South through the purchase of the
Tennessee Coal and Iron Company. It indirectly
controls the Colorado ore field as, well. It is this
monopoly of the raw materials of production that en-
abled the promoters of the Steel Trust to capitalize
it at a billion and a half dollars. It is through this
means that it dominates the markets of America if
not of the world. ^

The Steel Trust is invincible, not because of the
skill, talent, or industry of its promoters; not be-
cause of the plants, mills, or furnaces which it has
erected. The power of the Steel Trust lies in its
control of the iron-ore mines of the Lake Superior
region and of Alabama, Tennessee, and Colorado,
together with the coking coal, gas, and limestone
quarries of Pennsylvania. These, with the prohibi-

• The value of the iron-ore production in the United States in 1907
was $131,996,000.


tive tariff which the iron and steel interests have ob-
tained, make its control complete. For the Steel
Trust owns from 60,000 to 80,000 acres of Connells-
ville coal. It produces something over one-half the
coke of the United States. This is the best coking
coal in the world. ^^ There is no more Connellsville
coal," said Mr. Charles Schwab, the former presi-
dent of the steel corporation. ''You could not buy
it for $60,000 an acre. . . . Every acre of it is very
highly prized, and that is owned by all these con-
stituent companies in toto. " ^ The company also
owns 98,000 acres of gas and oil lands.

Only less marvellous than the story of anthracite
coal, of the gas and the iron-ore deposits, is the story
of copper. In northern Michigan, in Arizona, and
in Utah are copper deposits whose only rival is the
Rio Tinto in Spain, owned by the Rothschilds. Of
these, the Calumet and Hecla is easily chief. The par
value of its stock is $25.00 a share. Of this but
$12.00 a share has ever been paid in. The shares
of this company have recently sold as high as $1,000,
and its quarterly dividends exceed the original pay-
ments for the stock. Copper has made many multi-
millionaires, just as it has wrecked many bank
clerks. The annual value of the copper output of
America exceeds $173,799,000, and the control of the
markets of America now rests in the hands of the
same men who have laid their hands upon the iron,

'Report of the Industrial Commission, Vol. XIII, p. 464.


the oil, the gas, the coal resources, and the railways
of the country. All society is paying tribute to these
men. For copper, next to coal, iron, and steel, is the
most universal necessity of modern industrial life.

All over the land the needs of a great civilization
were anticipated by Providence. Here were re-
sources adequate for uncounted millions of people.
If it is possible to infer any divine purpose in the
ordering of the universe, surely these deposits of
wealth were designed for the use of all the people,
rather than the exclusive ownership by a few. Yet
no state in the Union has so much as reserved a roy-
alty for their use, and no community has placed them
upon the tax duplicate at much more than their
farming value. Yet a moderate royalty upon the
mineral output of the country would have been suf-
ficient to pay all of the present expenditures of the
Federal Government.^ Nature, generous to a de-
gree, has been thwarted by laws of our own making.
Society, with even less wisdom than the wild animals
of the forest, has erected barriers between itself and
its inheritance. Within less than a generation, these

' The United States Geological Survey for 1908 gives the value of
the mineral output of the country for the year 1907 as $2,069,289,-
196. Pig iron is valued at $529,958,000; copper at $173,799,000;
bituminous coal at $451,214,000; anthracite coal at $163,584,000;
petroleum at $120,106,000; and natural gas at $52,866,835. Had
the government retained a royalty on the mineral products of the
country of 25 per cent, the revenues of the nation would have
amounted to $517,322,299, or almost the sum which is now col-
lected by the government from the customs and the internal revenue


gifts, which but a few years ago were valued as agri-
cultural land, have been massed under the control
of Wall Street. From year to year the control is
narrowing, until in a few years' time practically all
of the mineral resources of the country, whose present
annual production exceeds two billion dollars, will be
under the dominion of a very few men. That such a
power should be enjoyed by any irresponsible set of
individuals seems as contrary to any proper ordering
of society as that the air should be enclosed, and its
enjoyment be made the subject of an arbitrary toll.
Closely allied with the resources of the nation are
the great transportation systems. They are the ar-
teries of our life. During the last few years system
has been added to system until nearly 200,000 miles
of railway have been merged into a half-dozen groups,
with a combined capitalization of over nine billion
dollars.* Within these syndicates three-fourths of the
mileage of America is held, while each group, in turn,
is bound to the other by a community of interest, by
fear, or by agreement, so that for all practical pur-
poses the transportation agencies of the nation act
as a unit. Their ultimate consolidation into a single
monster corporation is not an inconceivable thing to
forecast, or an unreasonable thing to expect.^

1 See Moody, Truth about the Trusts.

^On the death of Mr. Harriman in 1909 it was authoritatively
stated that he "absolutely controlled" 21,939 miles of railway, and
"dominated" 65,176 miles, or one-fourth of the total mileage of


Already the industrial life of the nation rests in
the hands of these Titans of finance, who, in recent
years, have made use of the banks and insurance
companies to secure control of the resources and
transportation agencies of the country. For who-
ever controls the highways controls the vital organs
of society, and when to this is added the raw ma-
terials of production, the dominion is complete.
The tribute which may be taken is like the spoils of a
Roman conqueror. From the decision of the owner
there is no appeal, for of competition there is none.
By the stroke of a pen hundreds of millions of dollars
may be transferred from the pockets of the people to
the pockets of the owners of these great interests.
The advance in the published freight rates upon all
the railroads in the country in the year 1900 was prob-
ably not less than twenty-five per cent/ During the
four years from 1899 to 1903 $155,000,000 was added
to the earnings of the railways through the increase in
freight rates alone. ^ An insignificant increase in the
price of oil, of coal, or of copper produces a similar
result. It is by such means as these that the wealth of
the producers of America is surely and stealthily being
appropriated. It is by this process that the pennies
of the millions are becoming the millions of the few.

It is impossible to ascertain the extent to which the
wealth of America has been massed within the past

» Report of Industrial Commission, Vol. XIX, p. 285.

' Senate Document No. 257, 5Sth Congress, 2d session, p, 8.


ten years, but an examination of Moody's Truth
about the Trusts discloses the extent to which the
Standard Oil, Rockefeller, Morgan, Ryan, Elkins,
Widener, and Havemeyer interests have secured
control of the railways, the mining, the franchise,
and the protected industries, whose combined cap-
italization amounts to approximately twenty-five
thousand million dollars.

Incredible as is this exhibit of wealth, it is but the
beginning of the enumeration. It does not include
the great fortunes, like the $450,000,000 Astor es-
tate, which have come from city land values; it
does not include the gold and the silver mines, the
franchise corporations, the insurance, banking, and
other fortunes; it does not include the multitude
of industrial combinations, which, through the ma-
nipulation of the stock market, have fallen under
the same control.

Such a mass of wealth staggers the imagination.
The thought of millions conveys no impression, even
to those accustomed to think in big figures, while
thousands of millions are like the astronomical
distances which separate the stellar bodies. Yet
within the control of a score of men is a calculable
sum in excess of the total wealth of the United
States at the close of the Civil War. It amounts to
more than one-fifth of all the wealth of the country,
as ascertained by the Census in 1904.


How has this colossal mass of wealth been ac-
quired? By what means have a few men, uncon-
nected with the fields of industry, and in many in-
stances wholly ignorant of its processes, been able to
acquire possession of the railways, the franchise
corporations, the protected industries, the mineral
resources, and a great part of the land of America,
whose increasing earnings, like a mountain, rest on
the backs of humanity? For the properties so
acquired are the most profitable in the country. By
an unfailing instinct the natural monopolies have
been appropriated first. How has this been achieved ?
How has it been possible for a handful of men to
acquire possession of wealth in excess of that which
the 16,000,000 workers of America, at the current
rate of wages, could produce in two long years? By
what means has the United States been changed
from a country in which opportunity seemed open to
all for many generations to come, to the conditions
which now confront us ?

A short generation ago all this would have seemed
impossible. Yet nothing was simpler. We hung
our treasures in the streets, and now wonder why



they are gone. Not content with exposing them
to the first comer, we created the means for car-
rying them away. We asked men to appropriate
our mineral resources, and then passed tariff laws
to make monopoly inevitable and invincible. We
turned over the highways to private hands, and now
wonder why they are managed as a private bus-
iness. We encouraged land monopoly, and are
now amazed at the growth of a peasant tenantry.
Having done these things we then created the most
perfectly adjusted financial machinery for complet-
ing the process.

In 1896 ''the money monopoly" seemed a heated
Populistic phrase. Within the past few years the
methods of banking have been laid bare. Scattered
all over America are savings and trust companies
whose deposits range from a few thousands to tens of
millions of dollars. In these banks are the savings
of the rich and of the poor. In the larger interior
cities, like Chicago, St. Louis, Cleveland, and Pitts-
burg, are banks which are used by the smaller towns
for the purpose of clearance. Here the inland banks
maintain reserves for the easier transaction of their
business. And just as the smaller banks make use
of the inland cities as depositaries, so the latter make
use of the banks in New York for the same purpose.
By this means Wall Street has become the financial
reservoir of the nation. Here the money and the
available credit of America is gathered, just as the


local bank gathers the pennies, dimes, and dollars
of the people.

For years Wall Street has been the centre of for-
eign exchange. It is the clearing-house of America.
These functions it still performs. They are of great
value to the complex industrial relations of the mod-
ern world. Here, too, is the government sub-treas-
ury. Here are banking institutions whose operations
rival in magnitude those of the Bank of England.
Here are the trust companies whose powers are
more ample than those of any bank in the world.
Through these agencies the business of America
passes. Through the government sub-treasury, the
trust companies, the banks, and the insurance com-
panies, credit transactions circulate to the uttermost
extremities of the land. Wall Street is the centre of
the circulatory system of the nation.^

Closely identified with the banks are the great in-
surance companies, whose agents in every part of the
country gather up the savings of the people, precau-
tionary investments for old age or some calamity of
nature. These premiums also flow to Wall Street.
These premiums together with the reserves likewise
run into the hundreds of millions of dollars.

All of these agencies run and ramify into each
other. They have the same stockholders, the same
directors, the same officers, and the same interests.

• The clearances of New York during the year 1909 amounted to
one hundred billion dollars.


The trust companies are organized and controlled
by the directors of the insurance companies. The
same men own the national banks. A few score
of men practically control the available money of
America. They not only have the use of the local
deposits of New York, but of the balances deposited
with them by the West. They can increase these
deposits at will by putting up the rates of interest on
call money to any point they desire. This lures still
more deposits from the inland banks. In addition
the group of men who have acquired control of
the great financial institutions in New York, control
or have an interest in banks and trust companies
from the Atlantic to the Pacific. This is true even
of the banks of the smaller inland towns. Thus
the money, and what is more important the credit, of
America has been monopolized. Whoever owns the
means of credit controls the industrial life of the
nation.^ All industry is subject to its will. Upon
the favor of these financial interests great railroad
systems are dependent. The richest corporation in
the world can no more ignore this combination than

»This was demonstrated by the panic of 1907. It was a money
and not an industrial panic. It was produced by Wall Street specu-
lation. Values had been carried upward and upward by the use of
banking loans. They collapsed by their own weight, and caused
such a dislocation of credits that the whole industrial world shrank
in consequence. The control of the credit of the nation by Wall
Street makes it practically impossible to carry through any railway,
mining, franchise, or other big project without the consent of those
who control the situation.


can the smallest industry or the Western farmer. It
can depreciate the price of government bonds oi
embarrass a transcontinental railway system. This
monetary syndicate can win favor by its favors, or
wreak vengeance on those who oppose it. The sav-
ings of the people, deposited with their local bank-
ers for safe keeping, have thus become the basis of
financial transactions the most stupendous the world
has ever known. Ttiey exceed in size the financing
of a great modern war. Penny by penny, and dollar
by dollar, the savings of 80,000,000 people have been
lodged in the hands of a few men, related by social
and business ties, perfectly understanding one an-
other, and bent upon the same common purpose.

It is for the use of these savings that the Titans of
finance go to war. It was to control the premiums
and reserves of the insurance companies that men
paid millions for these properties. For the deposits
are controlled by the directors and trustees. They
can loan or invest them as they wish. The prices of
securities are put up or down as the will of the syn-
dicate dictates. Through this control of the ready
money of America the stock market is manipulated.

The community of interest which has hereto-
fore existed among the larger financial interests of
New York has recently been converted into actual
ownership by two single groups. These are the
Morgan and the Standard Oil. The ''money monop-
oly" has become a reality. Late in 1909 Wall Street


announced the acquisition by these two groups of
two of the largest insurance companies, as well as of
a number of the largest banks in New York and the
West. Six persons were named, under whose con-
trol financial institutions had passed, with capital,
surplus, and reserves amounting to over a billion
and a half of dollars. Nobody knows the institu-
tions controlled outside of the metropolis, but they
include not only those of the larger but of the smaller
inland cities as well. It is not too much to say that
the banking resources and credit of the country are
largely, if not almost wholly, within the control
of the Standard Oil and Morgan interests.

This is by far the most portentous fact that could
confront any people. The life of the modern world

1 2 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Online LibraryFrederic Clemson HowePrivilege and democracy in America → online text (page 4 of 19)