Lawless wealth; the origin of some great American fortunes

Front matter

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Contents

CHAPTER PAGE

I. Golden Tides about the Golden City i

II. The Beginnings of a Great Fortune 17

Chapter I Golden Tides About The Golden City

Here^ at the gateway of a world, sits the imperial city of New York, and about her and over her is piled such wealth as men have never before dreamed of.

How wonderful it all is ! Daily in this richest of cities you can see the golden flood rising and never ebbing. So much wealth, so much luxury, such a bewildering display, such a concentration of the power for which money is only a symbol has not been known in the records of the race. No other men have been so rich as some New York men ; so many rich men have not gathered in another place. With pride and awe we count here one man whose wealth is reputed to be one thousand million dollars, five men whose wealth IS estimated at more than three hundred millions each, ten men whose wealth is reported to be one hundred millions each, four thousand men whose wealth is computed at one million or more each. In face of these stupendous totals the mind staggers and hardly apprehends the significance of the figures; but everywhere the eye can see the physical and enduring monuments of existing conditions. Those strange gigantic structures, massed one upon another, mile after mile, in the business region — in all the world where can you find an equal expression of power and energy? And the palaces grouped about the park — how plainly they speak of the ceaseless tide of gold that sweeps into this unique habitat of men !

No, not elsewhere can you find such wealth ; in few places such tremendous and thought-compelling contrasts. How strange to go from upper Fifth Avenue and stand before that block in Orchard Street that is the most densely populated spot on this earth! The utmost extremes of attainable magnificence and endurable misery seem bent around to touch within this marvelous city.

If the figures and analyses of the sociologists hold true, here are 10,000 persons that are rich, 500,000 that are well-to-do, 1,500,000 that are poor,

2,000,000 that are very poo-r. Take, then, these 3,500,000 of the poor and very poor. How comes it that the golden flood misses them? Here it runs all about them, so deep and wide a current that the Imperial city wantons in it and wastes it and plays with It. And here are 2,000,000 that seem to have little or none of it. Why so little? Or why none? The fact is apparent enough. Do but walk through the district east of the Bowery and Third Avenue and south of Twenty-third Street; you shall have evidence convincing. Go into some of the courts and rear tenements in the region, let us say, between the two bridge terminals. The filthy and vilely overcrowded dwellings, the poisoned air, the moldy dampness of ancient and dark passageways, the reeking halls, the malarial areas, the ragged crowds, the toiling men, the tired women, the ill-developed, half-nourished children, the jostling masses on the sidewalks, the forlorn and unkempt appearance of the streets, the painful evidences of a daily and grim struggle, hand-tohand, eye-to-eye, for bare life and breath, the women thrust into unwomanly employments, the children at work when they should be at school — you know all these things well if you have ever strayed into that noisome territory. Plainly, no golden flood touches these sodden and unclean shores.

And how is it with the 1,500,000 of the next above stratum, upon whom Is laid a need only less harsh? In thousands of modest flats in the better regions dwell these families that win larger incomes, the families of the employed men, the clerks, the salesmen, the regulars and non-commissioned officers in the army of industry. The average wealth among these, we are told, is $1,639. How far that bears us from the plashings of the golden stream ! The furniture in the little flat and the savings of the good man and the economies of the wife, and all they have together, to wear and to use and to bequeath, are worth $1,639. ^^ ^^^ an annual salary, perhaps $2,000, the good man. From that in a city where the cost of living Is greater than in any other city of men, he must feed and clothe the family, pay his rent (which shows steadily a tendency to increase) , maintain his life insurance, if he be prudent, and lay by for the day when he shall be no longer able to earn. And his rent alone is one-fourth or more of his income. How does life go in that little flat? From where he stands and toils, if he looks up to no more than a ledge of security, the distance seems impossible;

up to a competence, overwhelming; to wealth, a mere dream. Yet men have traversed it ; he knows that. By what incomprehensible genius, by what great gifts of mind wholly distinguishing them from other men, by what totally differing structure of brain cells have they achieved it?

He knows that in his country opportunity must be for all men equal. Often he heard it declared to be thus equal when he was a boy and went to Fourth of July meetings in the country; often he has read the same statement since. So that the trouble with him Is In himself. Clearly he lacks the mental capacity to be rich.

And he finds that this is the opinion of the world also. He finds that In the opinion of mankind the Inequality between his state and the state of the 10,000, and the still more terrible contrast between the 10,000 and the 2,000,000 are perfectly explained, perfectly justified, perfectly established, as eternally right, reasonable and moral, by this difference in brain cells. I

Moreover, he learns that there Is another reason. The men that are deepest in the stream are, by common report, further endowed than with merely this rare wondrous gift of ability. They have done something. These are the men upon whom rest the foundations of prosperity. They say so. Others say so. The world seems to accept and believe the doctrine as a thing not to be questioned. The newspapers chronicle respectfully the doing and the sayings of these men; reflections or adverse comments upon them are resented as constituting assaults upon the bases of the general welfare. Like an inverted pyramid, the 500,000, the 1,500,000 and the 2,000,000 repose upon the things done by the 10,000. In a way almost sacred the 10,000 seem to hold the palladium of national progress. Thus, by the gift of this ability that so sets them apart and marks them from other men, they, according to the entertained theory, have developed the railroads, built the factories, established the commerce, created the industries of the land. Upon these railroads, factories, commerce, industries, depend the employment and consequently the lives of the 1,500,000 that have little ability and of the 2,000,000 that have none. , Therefore, on all grounds of the strictest moral principle, the 10,000 that are blessed with ability are entitled to all else they have possessed themselves of.

I am a plain man from the West, and I have in the golden imperial city a friend among the 1,500,-

000 of the little able, and he takes me forth to view the wonders of the vast human hive about us. We see very many things that instruct my ungifted mind. We traverse these miles of gigantic buildings, and I glimpse a little of the incalculable, indomitable, abnormal force that they represent ; and then he takes me to view the region where dwell the 4,000 men that control this force.

It is all very wonderful. The great white gleaming palaces remind me of the pictures I have seen of stately structures in European capitals. Here is a house with a broad driveway sweeping clear to the front door and with no other exit, as if the inmates never walk when they go abroad. Under a kind of beautiful canopy, all glass and bronze-like metal, a carriage is waiting, a great shining chariot, with much silver and crystal, very handsome. The driver has a sort of uniform with a dark green coat and very big silver buttons and a high silk hat with something on it and very white trousers that look as if they were made of some kind of white leather, and high boots with yellow tops; and by the carriage door is another man dressed exactly like the driver. How stately and impressive is the show !

We pass another house, very large and commanding, with a little patch of ground about It and a very high steel fence on all sides. We pass other magnificent houses, stone, of an even brown color, very pleasing; enormous houses of a solid and serious architecture. Then we come to large and beautiful buildings that are pointed out to me as the homes of different clubs of successful men ; and again to many others, almost or quite as large, that are merely residences. I see innumerable automobiles; everybody in this smiling and prosperous region seems to have an automobile. I am told that many of the residents have a dozen automobiles apiece, different styles for different occasions; one automobile to shop in, and one to use in the park, iand one to use in the country, and one for a few persons, and one for six or eight; large automobiles and small automobiles for different purposes and humors, with expert servants to operate them quickly and safely and transform the task of travel into a sensuous delight. With joy I hear of these things : to my mind they illustrate progress.

There are no cheap nor mean nor repulsive-looking houses here, nor ill-fed people, no stuffy courts, no malodorous hallways; but all things betoken comfort and prosperity. The sidewalks are never crowded, there is plenty of air and sunlight, the people are always, well dressed and look gentle and happy. The sun shines and the rows of palaces gleam in the keen light. Across the street is the park and that is beautiful too: the white houses make an agreeable contrast against all that mass of vivid green. I look at the whole extraordinary spectacle, and it seems to me typical of the wealth and the peculiar greatness of my country.

For, say I to myself, here is the very summit of opportunity, here is the crowning triumph of the principle of a free field to all, this shows what men can do -when, unhampered by the foolish governmental interference of the older world, they are set down before the opened gates of fortune. The men that built all these beautiful houses, say I to myself, were the gifted generals on the commercial battlefield, and their dwellings are emblematical of their victories, as of old time men used to win suits of armor in the tourney. Doubtless, I say. In the first house lives a great merchant. By his ability, •energy, and foresight he built a great business, he brought together producer and consumer, he established a great mart, he supplied a want of society. By the rules of the war game and of our civilization this is his reward.

And the next house belongs to a man that devello LAWLESS WEALTH n oped the railroad service of the United States ; he built new h'nes and improved old. By his ability, energy, and foresight he made transportation cheap and easy. He served society well, and by the rules of the war game this is his reward.

And the next house is the house of a man that developed the coal industry. He improved and cheapened coal production, he made fuel cheaper in the world, he lessened the burden of the ungifted. By his ability, energy and foresight he built a great and useful business ; he served society well, and by the rules of the war game this is his reward.

And the ntyit house is the house of a man that developed a great manufacturing enterprise. By his ability, energy and foresight he constructed a system whereby something should be supplied that all men needed — shoes, perhaps, or hats. He made these things cheap and plentiful for all mankind, he was of use to sotiety, and this is his reward.

With pleasure I reflect upon all these things: ^ they prove again- the greatness of my country and again the triumph of that free opportunity of which we have ever been proud. True, I cannot see exactly wherein my ungifted friend at my side has much share in this glorious opportunity. True, it appears certain that all his life he will struggle

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dubiously for each day's bread and be pursued by the specters of rent and butchers' bills. True, I have a disagreeable reflection that fuel has not been made cheaper in the world, that production has not been furthered, that the essential state of the overwhelming majority of mankind has not been notably improved. True, we have journeyed uptown by way of Attorney Street and Columbia Street and Avenue B, and while I rejoice at the scene now before me, there is a memory I could well spare of scenes lately passed, and a traitorous suggestion that the rewards are disproportionate. But undeniably they are admirable and rich, as here they appear massed before me, and that is the true American way, to give with liberal hand. Indeed, how typically American it all is ! These men were the free architects of their own fortunes. Doubtless most of them began poor; now they are rich. This that they have, they earned. How excellent was the wisdom of the forefathers that established here the broad and unrestricted fields that invite and encourage gifted men! How superior to anything known abroad are these conditions of incentive and reward !

So I think, with a sense of profound gratitude that I am of this country that secures these blessings.

But 'am I right?

Hardly. If I remain long enough In New York and gain instruction in things as they really are, there will inevitably befall me a sad and complete disillusion. I shall learn that my patriotic enthusiasm before the gleaming palaces was based upon the airy fabric of a dream. I shall learn, perhaps to my dismay, that not one of the beautiful houses I have been admiring represents a fortune gained in any such way as I have fondly supposed, and not one of these fortunes reflects anything but discredit upon the national name.

The proprietor of the first house was not a great merchant: he established no mart, he brought together no producer and consumer, he assisted in no way to supply any demand. Wealth he has in huge superfluity, wealth that increases upon him until he knows not what to do with It; but not a dollar of it represents any service done nor any want supplied.

And the man that lives In the second house did not help to develop the railroad system, he has built no lines nor extended nor Improved them, though

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he owns many railroads; he has in no wise facilitated transportation, but only made it difficult.

And the man that lives in the third house had nothing to do with developing the coal industry. Coal mines he owns, many of them, but he has never dreamed of extending them for the general good nor of making them useful to society. He has not made coal cheaper but dearer; he has not served society, he has injured it.

And the man that lives in the fourth house has built no great manufacturing enterprise, he has had nothing to do with any system whereby anything is supplied that men need. He owns great manufactories, but their product he has not made cheaper but dearer. He has not helped men to supply their needs, but only hindered them.

Then how were these vast fortunes acquired? By what means were these white palaces secured? What does this wealth represent? How were the ability, energy, and foresight manifested? In just what way have the gifted proved their different molding from the ungifted?

One of the heroes of this field, a mighty general of these battles, one covered with the glory of innumerable victories, one whose gifts are deemed exceptional, whose ability, energy, and foresight all men admit, has lately furnished far better answers to these questions than any I can hit upon, and furnished them under oath. He sat one day on the witness stand, while a patient inquisitor drew from him, reluctant word by word, the full story of one of these great fortunes in the making, one of these white palaces in the building. It appeared, to give but one chapter of his narrative, that with three other men he had secured control of a certain railroad: that thereupon they had arbitrarily increased the capitalization of that railroad from $39,000,000 to $122,000,000; that at the price of 6^^ which arbitrarily they had made, they had sold the added securities to themselves; that these securities thus acquired they had immediately resold to the public at 90 to 96; and that from these operations they had made a net profit of $23,000,000.

It appeared further that in all these transactions these gifted men had violated the laws and the constitution of the State in which the railroad was situated; that their profits were utterly illegal; that the additional capitalization was not needed for any purpose of developing, extending, or improving the railroad ; that it had no significance to the property except as an enormous burden that for years to come the public must bear.

But surely, say you (still, very likely, under the spell of the old dream of laissez faire, still bewitched by the Idea of the grandeur of fortune-building), surely, say you, this is very exceptional; men do not often make money in this way; the loud clamor of denunciation that followed this particular revelation showed how very rare such achievements must be.

Rare? says the initiated observer. Not at all rare; and nothing is stranger than that there should have been any denunciation on this occasion. It reminds one of what Macaulay said about the British public In one of Its periodical spasms of virtue. Rare, are they? Dear reader, some of the great, the very great fortunes of New York City have been the accumulation of generations through the gradual Increase In the value of real estate; some have been Inherited. These may be omitted from the present consideration. Aside from these all the stupendous fortunes quickly acquired have been gained In some such way as this captain of Industry described on the witness stand ; In some such way, because there Is no other way In which they can be gained. Nor, If convention be a basis of morals, does this way of gaining them involve reproach, for we have much more than condoned it: we have warmly lauded its results and agreed that the men that practise It are excellent men and model citizens; and doubtless It has been viewed j abroad as the one distinguishing characteristic of OUT financial operations.

Therefore, without prejudice and merely as Illustrations of these matters and as examples of the methods by which ability therein manifests Itself, I purpose here to state some of the memorable achievements In high finance of that group of gifted men that formerly centered around William C. Whitney, and of whom the colossus and master mind now appears In Thomas Fortune Ryan.

Chapter II The Beginnings Of A Great Fortune

Here is a man whose career has been the romance of success, who has climbed to the heights of wealth and almost imperial power, a king of finance, a marvel of enterprise and commercial wisdom. He began poor, he is very rich; he began obscure, he is the partner of a king and the confidant of rulers ; he was a servitor at a pittance, he IS the employer of millions ; he was an obscure and nameless molecule in the human tide, now he dictates legislation and controls policies, he commands enormous enterprises, he is known about the world, he is to the history of commerce as a famous strategist is to the history of wan

Surely this is a wonderful story. How admirably it shows the possibilities of that **free and unhampered opportunity'* of which we have just spoken! The poor boy starting upon his career with no help but his own will and his two hands, with no advantage but the unrestricted conditions provided for him ; and do but observe the fortune, estimated at hundreds of millions of dollars, the endless range of profitable investments, the huge industries that are now his ! With no extravagance we may think that scarcely another man in the commercial world stands in a position so commanding. His mind determines upon a certain line of action, and the next day the poor cigar dealer in Australia or the cabinet of Belgium feels the effects thereof. In Kentucky and on the Congo, in London and San Francisco, from the northern limits of civilized Canada to and beyond Mexico, men are employed by him and are subject to his will; he says to them. Do this, and they do it. On the affairs of the nation he exercises a potent and constant influence. His own attorney is Secretary of State ; he has his own men in the Senate and the House of Representatives ; he has his own way about Panama Canal contracts. He can sway the actions, affect the voting, and lead the thinking of many thousands of men. He selects candidates for partisan nomination ; men of his choosing sit in high places in local and other governments. Until very lately he was a director or trustee in thirty-two great corporations. He owns life insurance companies, banks.

trust companies, railroads, mines, gas companies, electric light companies, traction companies; he Is influential in the Tobacco Trust, he has won the control of the Seaboard Air Line. On the chessboard of finance he makes strange, secret, and astounding moves, and wins. Nothing important can now be done in that game without consulting him.

He lives most quietly in a great unpretentious house at No. 60 Fifth Avenue. In the mad rush to shower and splash the golden flood he has no interest. His life is business. He goes to his office early, he remains late; he works in his study at night. A tall, erect, powerfully built man, in the best of his strength; a very silent man, with no confidants nor close associates; a secretive man of whose plans and Intentions nothing Is surmised until they are recorded In events; a cool and self-mastered man that never says a word In heat nor does an act without consideration — ^Wall Street fears him and puzzles over him, but never understands him. He has a great square jaw and face as relentless as an axe, and yet his characteristic policy is to win by indirection. With hands and arms and skill to wield a broadsword his fancy Is for the finest rapier. No man has more caution ; no man will thrust more boldly when the time comes, and for skill in extricating himself from a threatened position he has no equal in the Wall Street game.

He gives with liberal hand to church and school ; his skill, tact, and measureless success are praised of all men. Newspapers pave his way with laudations. His word has boundless weight; with a sentence he stays a panic and helps to restore confidence.

Is not this success indeed?

Ah, yes ; it is a marvelous story. Here was the poor boy facing the world alone, and none was poorer. The Ryans, an old family of Nelson County, Virginia, an old family of the indomitable Scotch-Irish strain, had been utterly ruined by the Civil War. The old estate swamped with debt; the wolf looking in at the window ; the boy, sixteen or seventeen years old, left alone with his aged grandmother; the problem of daily bread real and uncompromising before them : all this sounds like the first chapters of an old-time romance, and yet It is but a recital of biographical facts. And there Is more to come, as if culled deliberately from the roseate fiction of our youth. The poor boy, striving to battle with the depressing situation, wins his way to the great city (in this instance, Baltimore)

to look for work. From one place after another he IS coldly turned away. Still he persists. At last, almost at evening, he enters a dry-goods store. The proprietor needs an errand boy. He engages young Thomas, whose looks please him, to go to work the next morning at seven o'clock. Young Thomas takes off his cap and hangs it on a peg. He says :

**If you please, sir, I would rather go to work now," and seizing a broom begins to sweep out.

Does it not sound like a page from the old Fourth Reader?

*What are you doing there, little boy?" asked the good banker, looking over the counter.

^Ticking up pins, sir," said Henry. And on the last page he is taken into partnership and marries the banker's daughter.

Do not smile. It is all sober earnest and part of the record of a sober, earnest life. The errand boy labors early and late at $3 a week. Presently he becomes a salesman. Then he is taken into partnership. Eventually he marries the proprietor's daughter. It is the very apotheosis of commercial romance.

Meantim.e, he had been looking far beyond Baltimore and the dry-goods business. From the beginning he had made up his mind to be, if possible, the richest man of his times. Upon that determination the wide, square, bulldog jaws came down like a clamp. It was the time of Jay Gould and Erie, of Jim Fisk and the first Vanderbilt. The road to fortune was a turnpike to Wall Street. His employer was interested in some banking and brokerage firm in New York; the young man secured a transfer of his activities from Baltimore to the golden city of his dreams. There we find him In a humble place as clerk or capper or runner or croupier for some respectable house In the Street, and his energy, tireless industry, and profound interest in his work soon win him advancement. No firm can afford to- overlook the worth of a youth that does nothing but study and strive In his business. After a time he feels able to make a start for himself. He becomes a partner In a firm : Lee, Ryan & Warren. Then he marries. Soon afterward he buys a seat on the Stock Exchange.

Then came times bad for gambling — 1874. Black Friday, the Jay Cooke smash and the collapse of so many fair firms were only a few months behind, and before w^as a long, dreary season of prostrate business, silent mills, and unemployed hosts. Depreciated paper currency and Inflated credit had done their worst. Under such conditions, the public, having bitter memories and no money to lose, will have none of Wall Street, and the youthful capper finds but barren pickings. Yet young Mr. Ryan, faring in a small, careful way through those lean years, did well enough. He saw his little operations slowly grow and the tilth thereof was the accumulations that were the joy of life to him. Certain qualities commended him to men that sat In the high places about the Wall Street game. He was intelligent, he understood the market, he moved quickly — and he was silent, always ; a grave, self-contained, taciturn young man. That was a great matter ; anything once committed to his keeping oxen and wain ropes could not drag beyond those iron jaws. Gentlemen having delicate negotiations In finance found that Mr. Ryan was a good man to operate through. He knew his business and he could be trusted Implicitly. He began to win attention — and commissions; and after a time he undertook some little things on his own account that resulted well, both In profits and reputation. He used to search out the properties that were so bad that they must needs be remade or perish, and to float with the upward wave when the remaking began. He won no great sums, but was steadily getting closer to the leaders that controlled millions and obtaining their approval as a young man of the right sort.

One of these leaders was of a mind and character unusual; the rest fade away into the dull mists of commonplace. In a time that has for its distinguishing trait the union of rotten business with rotten politics, William C. Whitney was a conspicuously able financial exploiter and a conspicuously able political manipulator. I suppose that without doubt he had the best mind that ever engaged in Wall Street affairs, and without doubt he was equipped for better things than he achieved. He had a big doming head, not very broad but long and high, strange blue-gray eyes, very cold, very steady, and utterly fearless; a masterful and confident disposition; and a knowledge of men, and I think contempt for them, beyond any other man I have known. He was at will the most fascinating and polished man of the world, or the most overbearing and intolerable bully. His associates always seemed to fear as much as they admired him; there are records of directors' meetings absolutely terrorized by his indomitable will. In his way he had extraordinary mental capacity; his mind was an unresting engine, his ambition was inordinate, and but for some providential tempering by spendthrift and luxurious habits would have made him monstrously rich. I need not pretend that he had any overnice scruples about methods. He could see a little farther than the grubbing moles about him, and discerning an object he moved relentlessly toward it, sometimes trampling heads and sometimes mire, and regarding neither.