History of the Great American Fortunes, Vol. I / Conditions in Settlement and Colonial Times

In this transaction we see the beginnings of that period of conquest on the part of the very rich using their surplus capital in effacing the less rich—a period which really opened with Astor and which has been vastly intensified in recent times. Clinton was accounted a rich man in his day, but he was a pigmy in that respect compared to Astor. With his incessant inflow of surplus wealth, Astor was in a position where on the instant he could take advantage of the difficulties of less rich men and take over to himself their property. A large amount of Astor's money was invested in mortgages. In times of periodic financial and industrial distress, the mortgagers were driven to extremities and could no longer keep up their payments. These were the times that Astor waited for, and it was in such times that he stepped in and possessed himself, at comparatively small expense, of large additional tracts of land.

It was this way that he became the owner of what was then the Cosine farm, extending on Broadway from Fifty-third to Fifty-seventh streets and westward to the Hudson River. This property, which he got for $23,000 by foreclosing a mortgage, is now in the very heart of the city, filled with many business, and every variety of residential, buildings, and is rated as worth $6,000,000. By much the same means he acquired ownership of the Eden farm in the same vicinity, coursing along Broadway north from Forty-second street and slanting over to the Hudson River. This farm lay under pledges for debt and attachments for loans. Suddenly Astor turned up with a third interest in an outstanding mortgage, foreclosed, and for a total payment of $25,000 obtained a sweep of property now covered densely with huge hotels, theaters, office buildings, stores and long vistas of residences and tenements—a property worth at the very least $25,000,000. Any one with sufficient security in land who sought to borrow money would find Astor extremely accommodating. But woe betide the hapless borrower, whoever he was, if he failed in his obligations to the extent of even a fraction of the requirements covered by law! Neither personal friendship, religious considerations nor the slightest feelings of sympathy availed.

But where law was insufficient or non-existent, new laws were created either to aggrandize the powers of landlordship, or to seize hold of land or enchance its value, or to get extraordinary special privileges in the form of banking charters. And here it is necessary to digress from the narrative of Astor's land transactions and advert to his banking activities, for it was by reason of these subordinately, as well as by his greater trade revenues, that he was enabled so successfully to pursue his career of wealth-gathering. The circumstances as to the origin of certain powerful banks in which he and other landholders and traders were large stockholders, the methods and powers of those banks, and their effect upon the great body of the people, are component parts of the analytic account of his operations. Not a single one of Astor's biographers has mentioned his banking connections. Yet it is of the greatest importance to describe them, inasmuch as they were closely intertwined with his trade, on the one hand, and with his land acquisitions, on the other.

CHAPTER IV

This signalized the next step in the aggrandizement of individual fortunes. The few who could center in themselves, by grace of Government, the banking and manipulation of the people's money and the restricting or inflating of money issues, were immediately vested with an extraordinary power. It was a sovereign power at once coercive and proscriptive, and a mighty instrument for transferring the produce of the many to a small and exclusive coterie. Not merely over the labor of the whole working class did this gripping process extend, but it was severely felt by that large part of the landowning and trading class which was excluded from holding the same privileges. The banker became the master of the master. In that fierce, pervading competitive strife, the banks were the final exploiters. Sparsely organized and wholly unprotected, the worker was in the complete power of the trader, manufacturer and landowner; in turn, such of these divisions of the propertied class as were not themselves sharers in the ownership of banks were at the mercy of the banking institutions.

At any time upon some pretext or other, the banks could arbitrarily refuse the latter class credit or accommodation, or harass its victims in other ways equally as destructive. As business was largely done in expectations of payment, in other words, credit, as it is now, this was a serious, often a desperate, blow to the lagging or embarrassed brothers in trade. Banks were virtually empowered by law to ruin or enrich any individual or set of individuals. As the banks were then founded and owned by men who were themselves traders or landholders, this power was crushingly used against competitors. Armed with the strong power of law, the banks overawed the mercantile world, thrived on the industry, misfortune or ruin of others, and swayed politics and elections. The bank men loaned money to themselves at an absurdly low rate of interest. But for loans of money to all others they demanded a high rate of interest which, in periods of commercial distress, overwhelmed the borrowers. Nominally banks were restricted to a certain standard rate of interest; but by various subterfuges they easily evaded these provisions and exacted usurious rates.

BANKS AND THEIR POWER.

These, however, were far from being the worst features. The most innocent of their great privileges was that of playing fast and loose with the money confidingly entrusted to their care by a swarm of depositors who either worked for it, or for the matter of that, often stole it; bankers, like pawnbrokers, ask no questions. The most remarkable of their vested powers was that of manufacturing money. The industrial manufacturer could not make goods unless he had the plant, the raw material and the labor. But the banker, somewhat like the fabled alchemists, could transmute airy nothing into bank-note money, and then, by law, force its acceptance. The lone trader or landholder unsupported by a partnership with law could not fabricate money. But let trader and landholder band in a company, incorporate, then persuade, wheedle or bribe a certain entity called a legislature to grant them a certain bit of paper styled a charter, and lo! they were instantly transformed into money manufacturers.

A MANDATE TO PREY.

The simple mandate of law was sufficient authorization for them to prey upon the whole world outside of their charmed circle. With this scrap of paper they could go forth on the highways of commerce and over the farms and drag in, by the devious, absorbent processes of the banking system, a great part of the wealth created by the actual producers. As it was with taxation, so was it with the burdens of this system; they fell largely upon the worker, whether in the shop or on the farm. When the business man and the landowner were compelled to pay exorbitant rates of interest they but apparently had to meet the demands. What these classes really did was to throw the whole of these extra impositions upon the working class in the form of increased prices for necessaries and merchandise and in augmented rents.

But how were these State or Government authorizations, called charters, to be obtained? Did not the Federal Constitution prohibit States from giving the right to banks to issue money? Were not private money factories specifically barred by that clause of the Constitution which declared that no State "shall coin money, emit bills of credit, or make anything but gold or silver a tender in payment of debts?"

Here, again, the power of class domination of Government came into compelling effect. The onward sweep of the trading class was not to be balked by such a trifling obstacle as a Constitutional provision. At all times when the Constitution has stood in the way of commercial aims it has been abrogated, not by repeal nor violent overthrow, but by the effective expedient of judicial interpretation. The trading class demanded State created banks with power of issuing money; and, as the courts have invariably in the long run responded to the interests and decrees of the dominant class, a decision was quickly forthcoming in this case to the effect that "bills of credit" were not meant to cover banknotes. This was a new and surprising construction; but judicial decision and precedent made it virtually law, and law a thousandfold more binding than any Constitutional insertion.

COURTS AND CONSTITUTION.

The trading class had already learned the importance of the principle that while it was essential to control law-making bodies, it was imperative to have as their auxiliary the bodies that interpreted law. To a large extent the United States since then has lived not under legislative-made law, but under a purely separate and extraneous form of law which has superseded the legislature product, namely, court law. Although nowhere in the United States Constitution is there even the suggestion that courts shall make law, yet this past century and more they have been gradually building up a formidable code of interpretations which substantially ranks as the most commanding kind of law. And these interpretations have, on the whole, consistently followed, and kept pace with, the changing interests of the dominant class, whether traders, slaveholders, or the present trusts.

This decision of the august courts opened the way for the greatest orgy of corruption and the most stupendous frauds. In New York, Massachusetts, New Jersey, Pennsylvania, Maryland, and other States a continuous rush to get bank charters ensued. Most of the legislatures were composed of men who, while perhaps, not innately corrupt, were easily seduced by the corrupt temptations held out by the traders. There was a deep-seated hostility, in many parts of the country, on the part of the middling tradesmen—the shopkeepers and the petty merchants—to any laws calculated to increase the power and the privileges of the superior traders and the landowners. Among the masses of workers, most of whom were, however, disfranchised, any attempt to vest the rich with new privileges, was received with the bitterest resentment. But the legislatures were approachable; some members who were put there by the rich families needed only the word as to how they should vote, while others, representing both urban and rural communities, were swayed by bribes. By one means or another the traders and landholders forced the various legislatures into doing what was wanted.

Omitting the records of other States, a few salient facts as to what took place in New York State will suffice to give a clear idea of some of the methods of the trading class in pressing forward their conquests, in hurling aside every impediment, whether public opinion or law, and in creating new laws which satisfied their extending plans for a ramification of profit-producing interests. If forethought, an unswerving aim and singleness of execution mean anything, then there was something sternly impressive in the way in which this rising capitalist class went forward to snatch what it sought, and what it believed to be indispensable to its plans. There was no hesitation, nor were there any scruples as to niceties of methods; the end in view was all that counted; so long as that was attained, the means used were considered paltry side-issues. And, indeed, herein lies the great distinction of action between the world-old propertied classes and the contending proletariat; for whereas the one have always campaigned irrespective of law and particularly by bribery, intimidation, repression and force, the working class has had to confine its movement strictly to the narrow range of laws which were expressly prepared against it and the slightest violation of which has called forth the summary vengeance of a society ruled actually, if not theoretically, by the very propertied classes which set at defiance all law.

THE BANKING FRAUDS BEGIN.

The chartered monopoly held by the traders who controlled the United States Bank was not accepted passively by others of the commercial class, who themselves wanted financial engines of the same character. The doctrine of State's rights served the purpose of these excluded capitalists as well as it did that of the slaveholders.

The States began a course of reeling out bank charters. By 1799 New York City had one bank, the Bank of New York; this admixed the terrorism of trade and politics so overtly that presently an opposition application for a charter was made. This solitary bank was run by some of the old landowning families who fully understood the danger involved in the triumph of the democratic ideas represented by Jefferson; a danger far overestimated, however, since win as democratic principles did, the propertied class continued its victorious march, for the simple reason that property was able to divert manhood suffrage to its own account, and to aggrandize itself still further on the ruins of every subsequent similar reform expedient. What the agitated masses, for the most part, of that period could not comprehend was that they who hold the possession of the economic resources will indubitably sway the politics of a country, until such time as the proletariat, no longer divided but thoroughly conscious, organized, and aggressive, will avail itself of its majority vote to transfer the powers of government to itself. The Bank of New York injected itself virulently into politics and fought the spread of democratic ideas with sordid but effective weapons. If a merchant dared support what it denounced as heretical doctrines, the bank at once black-listed him by rejecting his notes when he needed cash most.

It was now that Aaron Burr, that adroit leader of the opposition party, stepped in. Seconded or instigated by certain traders, he set out to get one of those useful and invaluable bank charters for his backers. The explanation of how he accomplished the act is thus given: Taking advantage of the epidemic of yellow fever then desolating New York City, he, with much preliminary of philanthropic motives, introduced a bill for the apparent beneficent purpose of diminishing the future possibility of the disease by incorporating a company, called the Manhattan Company, to supply pure, wholesome water. Supposing that the charter granted nothing more than this, the explanation goes on, the Legislature passed the bill, and was most painfully surprised and shocked when the fact came out that the measure had been so deftly drawn, that it, in fact, granted an unlimited charter, conferring banking powers on the company.[112]

This explanation is probably shallow and deficient. It is much more likely that bribery was resorted to, considering the fact that the granting of every successive bank charter was invariably accompanied by bribery. Six years later the Mercantile Bank received a charter for a thirteen years' period—a charter which, it was openly charged by certain members of the Assembly, was secured by bribery. These charges were substantially proved by the testimony before a legislative investigating committee.[113] In 1811 the Mechanics' Bank was chartered with a time limit under circumstances indicating bribery.

Indeed, so often was bribing done and so pronounced were charges of corruption at frequent sessions of the Legislature, that in 1812, the Assembly, in an heroic spasm of impressive virtue, passed a resolution compelling each member to pledge himself that he had neither taken, nor would take, "any reward or profit, direct or indirect, for any vote on any measure."[114] This resolution was palpably intended to blind the public; for, in that identical year, the Bank of America received a charter amid charges of flagrant corruption. One Assemblyman declared under oath that he had been offered the sum of $500, "besides, a handsome present for his vote."[115] All of the banks, except the Manhattan, had limited charters; measures for the renewal of these were practically all put through by bribery.[116] Thus, in 1818, the charter of the Merchants' Bank was renewed until 1832, and renewed after that. The chartering of the Chemical Bank (that staid and most eminently respectable and solid New York institution of to-day) was accomplished by bribery. The Chemical Bank was an outgrowth of the Chemical Manufacturing Company, the plant and business of which were bought expressly as an excuse to get a banking auxiliary. The Goelet brothers were among the founders of this bank. In fact, many of the great landed fortunes were inseparably associated with the frauds of the banking system; money from land was used to bribe legislatures, and money made from the banks was employed in buying more land. The promoters of the Chemical Bank set aside a considerable sum of money and $50,000 in stock for the bribery fund.[117] No sooner had it received its charter than it began to turn out reams of paper money, based upon no value, which paper was paid as wages to its employees as well as circulated generally. So year after year the bribery went on industriously, without cessation.

BRIBERY A CRIME IN NAME ONLY.

Were the bribers ever punished, their illicitly gotten charters declared forfeited, and themselves placed under the ban of virtuous society? Far, very far, from it! The men who did the bribing were of the very pinnacle of social power, elegance and position, or quickly leaped to that height by reason of their wealth. They were among the foremost landholders and traders of the day. By these and a wide radius of similar means, they amassed wealth or greatly increased wealth already accumulated. The ancestors of some of the most conspicuous multimillionaire families of the present were deeply involved in the perpetration of all of those continuous frauds and crimes—Peter Goelet and his sons, Peter P. and Robert, for instance, and Jacob Lorillard, who, for many years, was president of the Mechanics' Bank. No stigma attached to these wealth-graspers. Their success as possessors of riches at once, by the automatic processes of a society which enthroned wealth, elevated them to be commanding personages in trade, politics, orthodoxy and the highest social spheres. The cropped convict, released from prison, was followed everywhere by the jeers and branding of a society which gloated over his downfall and which forever reminded him of his infamy. But the men who waded on to wealth through the muck of base practices and by means of crimes a millionfold more insidious and dangerous than the offense of the convict, were not only honored as leading citizens, but they became the extolled and unquestioned dictators of that supreme trading society which made modes, customs and laws.

It was a society essentially built upon money; consequently he who was dexterous enough to get possession of the spoils, experienced no difficulty in establishing his place among the elect and anointed. His frauds were forgotten or ignored; only the fact that he was a rich man was remembered. And yet, what is more natural than to seek, and accept, the obeisance lavished upon property, in a scheme of society where property is crowned as the ruling power? In the rude centuries previously mankind exalted physical prowess; he who had the greatest strength and wielded the deftest strokes became victor of the judicial combat and gathered in laurels and property. But now we have arrived at the time when the cunning of mind supplants the cunning of muscle; bribery takes the place of brawn; the contestants fight with statutes instead of swords. And this newer plan, which some have decried as degenerate, is a great advance over the old, for thereby has brute force been legally abandoned in personal quarrels at least, and that cunning of mind which has held sway, is the first evidence of the reign of mind, which from a low order, will universally develop noble and supereminent qualities charged with the good, and that alone, of the human race.

ASTOR'S BANKING ACTIVITIES.

With this preliminary sketch, we can now proceed to a consideration of how Astor profited from the banking system. We see that constantly the bold spirits of the trading class, with a part of the money made or plundered in some direction or other, were bribing representative bodies to give them exceptional rights and privileges which, in turn, were made the fertile basis for further spoliation. Astor was a stockholder in at least four banks, the charters of which had been obtained or renewed by trickery and fraud, or both. He owned 1,000 shares of the capital stock of the Manhattan Company; 1,000 of the Merchant's Bank; 500 of the Bank of America; 1,604 of the Mechanic's Bank. He also owned at one time considerable stock in the National Bank, the charter of which, it was strongly suspected had been obtained by bribery.

There is no evidence that he, himself, did the actual bribing or was in any way concerned in it. In all of the legislative investigations following charges of bribery, the invariable practice was to throw the blame upon the wicked lobbyists, while professing the most naïve astonishment that any imputations should be cast upon any of the members of the honorable Legislature. As for the bribers behind the scenes, their names seldom or never were brought out or divulged. In brief, these investigations were all of that rose-water order, generally termed "whitewashing." But whether Astor personally bribed or not, he at any rate consciously profited from the results of bribery; and, moreover, it is not probable that his methods in the East were different, except in form, from the debauching and exploitation that he made a system of in the fur regions. It is not outside the realm of reasonable conjecture to suppose that he either helped to debauch, or connived at the corruption of legislatures, just as in another way he debauched Indian tribes.

Furthermore his relations with Burr in one notorious transaction, are sufficient to justify the conclusion that he held the closest business relations with that political adventurer who lived next door to him at No. 221 Broadway. This transaction was one which was partially the outcome of the organization of the Manhattan Bank and was a source of millions of dollars of profit to Astor and to his descendants.

A century or more ago Trinity Church owned three times the extent of even the vast real estate that it now holds. A considerable part of this was the gift of that royal governor Fletcher, who, as has been set forth, was such a master-hand at taking bribes. There long existed a contention upon the part of New York State, a contention embodied in numerous official records, that the land held for centuries by Trinity Church was usurped; that Trinity's title was invalid and that the real title vested in the people of the city of New York. In 1854-55 the Land Commissioners of New York State, deeply impressed by the facts as marshalled by Rutger B. Miller,[118] recommended that the State bring suit. But with the filing of Trinity's reply, mysterious influences intervened and the matter was dropped. These influences are frequently referred to in aldermanic documents.

To go back, however: In 1767 Trinity Church leased to Abraham Mortier, for ninety-nine years, at a total annual rental of $269 a year, a stretch of land comprising 465 lots in what is now the vicinity bounded by Greenwich, Spring and Hudson streets. Mortier used it as a country place until 1797 when the New York Legislature, upon the initiative of Burr, developed a consuming curiosity as to how Trinity Church was expending its income. This was a very ticklish question with the pious vestrymen of Trinity, as it was generally suspected that they were commingling business and piety in a way that might, if known, cause them some trouble. The law, at that time, restricted the annual income of Trinity Church from its property to $12,000 a year. A committee of investigation was appointed; of this committee Burr was made chairman.

HOW ASTOR SECURED A LEASE.

Burr never really made any investigation. Why? The reason soon came out, when Burr turned up with a transfer of the Mortier lease to himself. He at once obtained from the Manhattan Bank a $38,000 loan, pledging the lease as security. When his duel with Hamilton forced Burr to flee the country, Astor promptly came along and took the lease off his hands. Astor, it was said, paid him $32,000 for it, subject to the Manhattan Bank's mortgage. At any rate, Astor now held this extraordinarily valuable lease.[119] He immediately released it in lots; and as the city fast grew, covering the whole stretch with population and buildings, the lease was a source of great revenue to him and to his heirs.[120] As a Lutheran, Astor could not be a vestryman of Trinity Church. Anthony Lispenard, however, it may be passingly noted, was a vestryman, and, as such, mixed piety and business so well, that his heirs became possessed of millions of dollars by the mere fact that in 1779, when a vestryman, he got a lease, for eighty-three years of eighty-one Trinity lots adjacent to the Astor leased land, at a total annual rental of $177.50.[121]

It was by the aid of the banking system that the trading class was greatly enabled to manipulate the existing and potential resources of the country and to extend invaluable favors to themselves. In this system Astor was a chief participant. For many years the banks, especially in New York State, were empowered by law to issue paper money to the extent of three times the amount of their capital. The actual specie was seized hold of by the shippers, and either hoarded, or exported in quantities to Asia or Europe which, of course, would not handle paper money. By 1819 the banks in New York had issued $12,500,000, and the total amount of specie to redeem this fiat stuff amounted to only $2,000,000. These banknotes were nothing more or less than irresponsible promises to pay. What became of them?

WHAT THE WORKER GOT AS WAGES.

What, indeed, became of them? They were imposed upon the working class as payment for labor. Although these banknotes were subject to constant depreciation, the worker had to accept them as though they were full value. But when the worker went to buy provisions or pay rent, he was compelled to pay one-third, and often one-half, as much as the value represented by those banknotes. Sometimes, in crises, he could not get them cashed at all; they became pitiful souvenirs in his hands. This fact was faintly recognized by a New York Senate Committee when it reported in 1819 that every artifice in the wit of man had been devised to find ways of putting these notes into circulation; that when the merchant got this depreciated paper, he "saddled it upon the departments of productive labor." "The farmer and the mechanic alike," went on the report, "have been invited to make loans and have fallen victims to the avarice of the banker. The result has been the banishment of metallic currency, the loss of commercial confidence, fictitious capital, increase of civil prosecutions and multiplication of crimes."[122] What the committee did not see was that by this process those in control of the banks had, with no expenditure, possessed themselves of a considerable part of the resources of the country and had made the worker yield up twice and three times as much of the produce of his labor as he had to give before the system was started.

The large amount of paper money, without any basis of value whatever, was put out at a heavy rate of interest. When the merchant paid his interest, he charged it up as extra cost on his wares; and when the worker came to buy these same wares which he or some fellow-worker had made, he was charged a high price which included three things all thrown upon him: rent, interest and profit. The banks indirectly sucked in a large portion of these three factors. And so thoroughly did the banks control legislation that they were not content with the power of issuing spurious paper money; they demanded, and got through, an act exempting bank stock from taxation.

Thus year after year this system went on, beggaring great numbers of people, enriching the owners of the banks and virtually giving them a life and death power over the worker, the farmer and the floundering, struggling small business man alike. The laws were but slightly altered. "The great profits of the banks," reported a New York Senate Committee on banks and insurance in 1834, "arise from their issues. It is this privilege which enables them, in fact, to coin money, to substitute their evidences of debt for a metallic currency and to loan more than their actual capitals. A bank of $100,000 capital is permitted to loan $250,000; and thus receive an interest on twice and a half the amount actually invested."[123]

THE WORKINGMEN'S PARTY PROTEST.

It cannot be said that all of the workingmen were apathetic, or that some did not see through the fraud of the system. They had good reason for the deepest indignation and exasperation. The terrible injustices piled upon them from every quarter—the low wages that they were forced to accept, often in depreciated or worthless banknotes, the continually increasing exactions of the landlords, the high prices squeezed out of them by monopolies, the arbitrary discriminations of law—these were not without their effect. The Workingmen's Party, formed in 1829 in New York City, was the first and most ominous of these proletarian uprisings. Its resolutions read like a proletarian Declaration of Independence, and would unquestionably have resulted in the most momentous agitation, had it not been that it was smothered by its leaders, and also because the slavery issue long obscured purely economic questions. "Resolved," ran its resolutions adopted at Military Hall, Oct. 19, 1829,

After declaring that the Workingmen's Party would oppose all exclusive privileges, monopolies and exemptions, the resolutions proceeded:

Finally the resolutions told what the Workingmen's Party thought of the bankers and the banking system. The bankers were denounced as "the greatest knaves, impostors and paupers of the age." The resolutions went on:

The mockery that went up from all that was held influential, respectable and stable when these resolutions were printed, was echoed far and wide. They were looked upon first as a joke, and then, when the Workingmen's Party began to reveal its earnestness and strength, as an insolent challenge to constituted authority, to wealth and superiority, and as a menace to society.

RADICALISM VERSUS RESPECTABILITY.

The "Courier and Enquirer," owned by Webb and Noah, in the pay of the United States Bank, burst out into savage invective. It held the Workingmen's Party up to opprobrium as an infidel crowd, hostile to the morals and the institutions of society, and to the rights of property. Nevertheless the Workingmen's Party proceeded with an enthusiastic, almost ecstatic, campaign and polled 6,000 votes, a very considerable number compared to the whole number of voters at the time.

By 1831, however, it had gone out of existence. The reason was that it allowed itself to be betrayed by the supineness, incompetence, and as some said, the treachery, of its leaders, who were content to accept from a Legislature controlled by the propertied interests various mollifying sops which slightly altered certain laws, but which in no great degree redounded to the benefit of the working class. For a few bits of counterfeit, this splendid proletarian uprising, glowing with energy, enthusiasm and hope, allowed itself to be snuffed out of existence.

What a tragedy was there! And how futile and tragic must inevitably be the fate of any similar movement which depends not upon itself, not upon its own intrinsic, collective strength and wisdom, but upon the say-so of leaders who come forward to assume leadership. Representing only their own timidity of thought and cowardice of action, they often end by betraying the cause placed confidingly in their charge. That class which for these immemorial generations has done the world's work, and as long has been plundered and oppressed and betrayed, thus had occasion to learn anew the bitter lesson taught by the wreckage of the past, that it is from itself that the emancipation must come; that it is itself which must essentially think, act and strike; that its forces, long torn asunder and dispersed, must be marshalled in invulnerable compactness and iron discipline; and so that its hosts may not again be routed by strategy, no man or set of men should be entrusted with the irrevocable power of executing its decrees, for too often has the courage, boldness and strength of the many been shackled or destroyed by the compromising weakness of the leaders.

THE PANIC OF 1837.

Passing over the Equal Rights movement in 1834, which was a diluted revival of the Workingmen's Party, and which, also, was turned into sterility by the treachery of its leaders, we arrive at the panic of 1837, the time when Astor, profiting from misfortune on every side, vastly increased his wealth.

The panic of 1837 was one of those periodic financial and industrial convulsions resulting from the chaos of capitalist administration. No sooner had it commenced, than the banks refused to pay out any money, other than their worthless notes. For thirty-three years they had not only enjoyed immense privileges, but they had used the powers of Government to insure themselves a monopoly of the business of manufacturing money. In 1804 the Legislature of New York State had passed an extraordinary law, called the restraining act. This prohibited, under severe penalties, all associations and individuals not only from issuing notes, but "from receiving deposits, making discounts or transacting any other business which incorporated banks may or do transact." Thus the law not only legitimatized the manufacture of worthless money, but guaranteed a few banks a monopoly of that manufacture. Another restraining act was passed in 1818. The banks were invested with the sovereign privilege of depreciating the currency at their discretion, and were authorized to levy an annual tax upon the country, nearly equivalent to the interest on $200,000,000 of deposits and circulation. On top of these acts, the Legislature passed various acts compelling the public authorities in New York City to deposit public money with the Manhattan Company. This company, although, as we have seen, expressly chartered to supply pure water to the city of New York, utterly failed to do so; at one stage the city tried to have its charter revoked on the ground of failure to carry out its chartered function, but the courts decided in the company's favor.[124]

At the outbreak of the panic of 1837, the New York banks held more than $5,500,000 of public money. When called upon to pay only about a million of that sum, or the premium on it, they refused. But far worse was the experience of the general public. When they frantically besieged the banks for their money, the bank officials filled the banks with heavily armed guards and plug-uglies with orders to fire on the crowd in case a rush was attempted.[125]

In every State conditions were the same. In May, 1837, not less than eight hundred banks in the United States suspended payment, refusing a single dollar to the Government whose deposits of $30,000,000 they held, and to the people in general who held $120,000,000 of their notes. No specie whatever was in circulation. The country was deluged with small notes, colloquially termed shinplasters. Of every form and every denomination from the alleged value of five cents to that of five dollars, they were issued by every business individual or corporation for the purpose of paying them off as wages to their employees. The worker was forced to take them for his labor or starve. Moreover, the shinplasters were so badly printed that it was not hard to counterfeit them. The counterfeiting of them quickly became a regular business; immense quantities of the stuff were issued. The worker never knew whether the bills paid him for his work were genuine or counterfeit, although essentially there was not any great difference in basic value between the two.[126]

THE RESULTING WIDESPREAD DESTITUTION.

Now the storm broke. Everywhere was impoverishment, ruination and beggary. Every bank official in New York City was subject to arrest for the most serious frauds and other crimes, but the authorities took no action. On the contrary, so complete was the dominance of the banks over Government,[127] that they hurriedly got the Legislature to pass an act practically authorizing a suspension of specie payments. The consequences were appalling. "Thousands of manufacturing, mercantile, and other useful establishments in the United States," reported a New York Senate Committee, "have been broken down or paralyzed by the existing crisis.... In all our great cities numerous individuals, who, by a long course of regular business, had acquired a competency, have suddenly been reduced, with their families to beggary."[128] New York City was filled with the homeless and unemployed. In the early part of 1838 one-third of all the persons in New York City who subsisted by manual labor, were wholly or substantially without employment. Not less than 10,000 persons were in utter poverty, and had no other means of surviving the winter than those afforded by the charity of neighbors. The almshouses and other public and charitable institutions overflowed with inmates, and 10,000 sufferers were still uncared for.

The prevailing system, as was pointed out even by the conventional and futile reports of legislative committees, was one inevitably calculated to fill the country with beggars, vagrants and criminals. This important fact was recognized, although in a remote way, by De Beaumont and De Tocqueville who, however, had no fundamental understanding of the deep causes, nor even of the meaning of the facts which they so accurately gathered. In their elaborate work on the penitentiary system in the United States, published in 1833, they set forth that it was their conclusion that in the four States, New York, Massachusetts, Connecticut and Pennsylvania, the prison system of which they had fully investigated, almost all of those convicted for crimes from 1800 to 1830 were convicted for offenses against property. In these four States, collectively, with a population amounting to one-third of that of the Union, not less than 91.29 out of every 100 convictions were for crimes against property, while only 8.66 of every 100 were for crimes against persons, and 4.05 of every 100 were for crimes against morals. In New York State singly, 93.56 of every 100 convictions were for crimes against property and 6.26 for crimes against persons.[129]

PROPERTY AND CRIME.

Thus we see from these figures filled with such tragic eloquence, the economic impulse working at bottom, and the property system corrupting every form of society. But here a vast difference is to be noted. Just as in England the aristocracy for centuries had made the laws and had enforced the doctrine that it was they who should wield the police power of the State, so in the United States, to which the English system of jurisprudence had been transplanted, the propertied interests, constituting the aristocracy, made and executed the laws. De Beaumont and De Tocqueville passingly observed that while the magistrates in the United States were plebeian, yet they followed out the old English system; in other words, they enforced laws which were made for, and by, the American aristocracy, the trading classes.

The views, aims and interests of these classes were so thoroughly intrenched in law that the fact did not escape the keen notice of these foreign investigators. "The Americans, descendants of the English," they wrote, "have provided in every respect for the rich and hardly at all for the poor.... In the same country where the complainant is put in prison, the thief remains at liberty, if he can find bail. Murder is the only crime whose authors are not protected[130].... The mass of lawyers see in this nothing contrary to their ideas of justice and injustice, nor even to their democratic institutions."[131]

THE SYSTEM—HOW IT WORKED.

The system, then, frequently forced the destitute into theft and mendicancy. What resulted? Laws, inconceivably harsh and brutal, enacted by, and in behalf of, property rights were enforced with a rigor which seems unbelievable were it not that the fact is verified by the records of thousands of cases. Those convicted for robbery usually received a life sentence; they were considered lucky if they got off with five years. The ordinary sentence for burglary was the same, with variations. Forgery and grand larceny were punishable with long terms, ranging from five to seven years. These were the laws in practically all of the States with slight differences. But they applied to whites only. The negro slave criminal had a superior standing in law, for the simple reason that while the whites were "free" labor, negroes were property, and, of course, it did not pay to send slaves to prison. In Maryland and in most Southern States, where the slaveholders were both makers and executors of law, the slaves need have no fear of prison. "The slaves, as we have seen before, are not subject to the Penal Code of the whites; they are hardly ever sent to prison. Slaves who commit grave crimes are hung; those who commit heinous crimes not punishable with death are sold out of the State. In selling him care is taken that his character and former life are not known, because it would lessen his price." Thus wrote De Beaumont and De Tocqueville; and in so writing they handed down a fine insight into the methods of that Southern propertied class which assumed so exalted an opinion of its honor and chivalry.

But the sentencing of the criminal was merely the beginning of a weird life of horror. It was customary at that period to immure prisoners in solitary confinement. There, in their small and reeking cells, filled with damps and pestilential odors, they were confined day after day, year after year, condemned to perpetual inactivity and silence. If they presumed to speak, they were brutally lashed with the whip. They were not allowed to write letters, nor to communicate with any member of their family. But the law condescended to allow a minister to visit them periodically in order to awaken their religious thoughts and preach to them how bad a thing it was to steal! Many were driven stark mad or died of disease; others dashed their brains out; while others, when finally released, went out into the world filled with an overpowering hatred of Society, and all its institutions, and a long-cherished thirst for vengeance against it for having thus so cruelly misused them.

Such were the laws made by the propertied classes. But they were not all. When a convict was released, the law allowed only three dollars to be given him to start anew with. "To starve or to steal is too often the only alternative," wrote John W. Edmonds, president of the New York board of prison inspectors in 1844.[132] If the released convict did steal he was nearly always sent back to prison for life.

Equally severe in their way were the laws applying to mendicants and vagrants. Six months or a year in the penitentiary or workhouse was the usual sentence. After the panic of 1837, crime, mendicancy, vagrancy and prostitution tremendously increased, as they always do increase after two events: war, which, when over, turns into civil life a large number of men who cannot get work; and panics which chaotically uproot industrial conditions and bring about widespread destitution. Although undeniably great frauds had been committed by the banking class, not a single one of that class went to jail. But large numbers of persons convicted of crimes against property, and great batches of vagrants were dispatched there, and also many girls and women who had been hurled by the iron force of circumstances into the horrible business of prostitution.

These were some of the conditions in those years. Let it not, however, be supposed that the traders, bankers and landowners were impervious to their own brand of sensibilities. They dressed fastidiously, went to church, uttered hallelujahs, gave dainty receptions, formed associations to dole out alms and—kept up prices and rents. Notwithstanding the general distress, rents in New York City were greater than were paid in any other city or village upon the globe.[133]

CHAPTER V

It was at this identical time, in the panic of 1837, that Astor was phenominally active in profiting from despair. "He added immensely to his riches," wrote a contemporaneous narrator, "by purchases of State stocks, bonds and mortgages in the financial crisis of 1836-37. He was a willing purchaser of mortgages from needy holders at less than their face; and when they became due, he foreclosed on them, and purchased the mortgaged property at the ruinous prices which ranged at that time."[134]

If his seven per cent was not paid at the exact time, he inflexibly made use of every provision of the law and foreclosed mortgages. The courts quickly responded. To lot after lot, property after property, he took full title. The anguish of families, the sorrow and suffering of the community, the blank despair and ruination which drove many to beggary and prostitution, others to suicide, all had no other effect upon him than to make him more eagerly energetic in availing himself of the misfortunes and the tragedies of others.

Now was observable the operation of the centripetal principle which applied to every recurring panic, namely, that panics are but the easy means by which the very rich are enabled to get possession of more and more of the general produce and property. The ranks of petty landowners were much thinned out by the panic of 1837 and the number of independent business men was greatly reduced; a considerable part of both classes were forced down into the army of wageworkers.

ASTOR'S WEALTH MULTIPLIES.

Within a few years after the panic of 1837 Astor's wealth multiplied to an enormous extent. Business revived, values increased. It was now that immigration began to pour in heavily. In 1843 sixty thousand immigrants entered the port of New York. Four years later the number was 129,000 a year. Soon it rose to 300,000 a year; and from that time on kept on ever increasing. A large portion of these immigrants remained in New York City. Land was in demand as never before; fast and faster the city grew. Vacant lots of a few years before became congested with packed humanity; landlordism and slums flourished side by side, the one as a development of the other. The outlying farm, rocky and swamp lands of the New York City of 1812, with its 100,000 population became the thickly-settled metropolis of 1840, with 317,712 inhabitants and the well-nigh half-million population of 1850. Hard as the laborer might work, he was generally impoverished for the reason that successively rents were raised, and he had to yield up more and more of his labor for the simple privilege of occupying an ugly and cramped habitation.

Once having fastened his hold upon the land, Astor never sold it. From the first, he adopted the plan, since religiously followed, for the most part, by his descendants, of leasing the land for a given number of years, usually twenty-one. Large tracts of land in the heart of the city he let lie unimproved for years while the city fast grew up all around them and enormously increased their value. He often refused to build, although there was intense pressure for land and buildings. His policy was to wait until the time when those whom necessity drove to use his land should come to him as supplicants and accept his own terms. For a considerable time no one cared to take his land on lease at his onerous terms. But, finally, such was the growth of population and business, that his land was indispensable and it was taken on leaseholds.

Astor's exactions for leaseholds were extraordinarily burdensome. But he would make no concessions. The lessee was required to erect his dwelling or business place at his own expense; and during the period of the twenty-one years of the lease, he not only had to pay rent in the form of giving over to Astor five or six per cent of the value of the land, but was responsible for all taxes, repairs and all other charges. When the ground lease expired the buildings became Astor's absolute property. The middleman landlord, speculative lessee or trading tenant who leased Astor's land and put up tenements or buildings, necessarily had to recoup himself for the high tribute that he had to pay to Astor. He did this either by charging the worker exorbitant rents or demanding excessive profits for his wares; in both of which cases the producers had finally to foot the bill.

EVASION OF ASSESSMENTS BY THE LANDLORDS.

The whole machinery of the law Astor, in common with all other landlords, used ruthlessly in enforcing his rights as landlord or as lessor or lessee. Not a single instance has come down of any act of leniency on Astor's part in extending the time of tenants in arrears. Whether sickness was in the tenant's family or not, however dire its situation might be, out it was summarily thrown into the streets, with its belongings, if it failed in the slightest in its obligations.

While he was availing himself of the rigors of the law to oust tenants in arrears, he was constantly violating the law in evading assessments. But this practice was not by any means peculiar to Astor. Practically the whole propertied class did it, not merely once, but so continually that year after year official reports adverted to the fact. An Aldermanic report on taxation in 1846 showed that thirty million dollars worth of assessable property escaped taxation every year, and that no bona fide efforts were made by the officials to remedy that state of affairs.[135] The state of morality among the propertied classes—those classes which demanded such harsh laws for the punishment of vagrants and poor criminals—is clearly revealed by this report made by a committee of the New York Board of Aldermen in 1847: