History of America’s One Percent – Episode #22

hogaf-logo-wip2In this podcast series we dive into the long and shadowy history of America’s ruling elite through the works of authors who were either silenced, suppressed, or forgotten, to discover the origins of the 1% and from where their power and wealth was, and still is, extracted.

Each recording will be approx. 1 hour in length to allow for easy consumption of the material.  The narrator will only interrupt the reading to provide insight, spell names, read informative footnotes, or provide definitions for archaic words.


In this episode – Continued reading of History of Great American Fortunes by Gustavus Myers.  Includes Part III, Chapter III:  The Beginnings of the Vanderbilt Fortune, continued.  Vanderbilt the Foremost Pirate and Blackmailer of His Day.  His Exploitation of the Government’s Steamship Mail Subsidies.  Millions Made From Corrupting Postal Officials.  Government Funds Pay For Building of Entire Commercial Fleets.  E. K. Collins & Co. Line’s Enormous $1 Million Per Year Subsidies.  Postal System $5,000,000 In Debt By 1858.  Vanderbilt & Collins in Congressional Bribing War.  Indications That Their Competition Was a Facade.  Allegations Surface On Secret Agreement Over California Mail Subsidies.  Vanderbilt’s Huge Pay-Off: $56,000 Per Month of Tax-Payer Money, to Not Compete In California.  Congressional Testimony Blows The Lid Off Vanderbilt’s Blackmail Scam During the Covode Committee.  Vanderbilt Never Arrested or Charged.  He Retires From the Steamship Business in the 1860’s; His Millions In Blackmail Funds Intact.

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PART III, CHAPTER III – FOOTNOTES, cont’d.

[5] “The Vanderbilts and the Story of Their Fortune,” by W. A. Croffut, 1886:45-46.

[6] The Congressional Globe, First Session, Thirty-fifth Congress, 1857-58, iii:2839.

[7] The case in chancery referred to by Senator Toombs was doubtless that of Sloo et al. vs. Law et al. (Case No. 12,957, Federal Cases, xxii:355-364.)
In this case argued before Judge Ingersoll in the United States Circuit Court, at New York City, on May 16, 1856, many interesting and characteristic facts came out both in the argument and in the Court decision.
From the decision (which went into the intricacies of the case at great length) it appeared that although Albert G. Sloo had formed the United States Mail Steamship Company, the incorporators were George Law, Marshall O. Roberts, Prosper M. Wetmore and Edwin Crosswell. Sloo assigned his contract to them. A trust fund was formed. Law fraudulently (so the decision read) took out $700,000 of stock, and also fraudulently appropriated large sums of money belonging to the trust fund. This was the same Law who, in 1851 (probably with a part of this plunder) bribed the New York Board of Aldermen, with money, to give him franchises for the Second and Ninth Avenue surface railway lines. Roberts appropriated $600,000 of the United States Mail Steamship Company’s stock. The huge swindles upon the Government carried on by Roberts during the Civil War are described in later chapters in this work. Wetmore was a notorious lobbyist. By fraud, Law and Roberts thus managed to own the bulk of the capital stock of the United States Mail Steamship Company. The mail contract that it had with the Government was to yield $2,900,000 in ten years.
Vanderbilt stepped in to plunder these plunderers. During the time that Vanderbilt competed with that company, the price of a single steerage passage from California to New York was $35. After he had sold the company the steamship “North Star” for $400,000, and had blackmailed it into paying heavily for his silence and non-competition, the price of steerage passage was put up to $125 (p. 364).
The cause of the suit was a quarrel among the trustees over the division of the plunder. One of the trustees refused to permit another access to the books. Judge Ingersoll issued an injunction restraining the defendant trustees from withholding such books and papers.

[8] The Congressional Globe, 1857-58, iii:2843-2844.
The acts by which- the establishment of the various subsidized ocean lines were authorized by Congress, specified that the steamers were to be fit for ships of war in case of necessity, and that these steamers were to be accepted by the Navy Department before they could draw subsidies. This part of the debate in the United States Senate shows the methods used in forcing their acceptance on the Government:
Mr. Collamer. —The Collins line was set up by special contract?
Mr. Toombs. —Yes, by special contract, and that was the way with the Sloo contract and the Harris contract. They were to build ships fit for war purposes. I know when the Collins vessels were built; I was a member of the Committee on Ways and Means of the other House, and I remember that the men at the head of our bureau of yards and docks said that they were not worth a sixpence for war purposes: that a single broadside would blow them to pieces; that they could not stand the fire of their own guns; but newspapers in the cities that were subsidized commenced firing on the Secretary of the Navy, and he succumbed and took the ships. That was the way they got here.
Senator Collamer, referring to the subsidy legislation, said: “As long as the Congress of the United States makes contracts, declares who they shall be with, and how much they shall pay for them, they can never escape the generally prevailing public suspicion that there is fraud and deceit and corruption in those contracts.”

[9] The Congressional Globe, Part iii, 1857-58:3029. The Washington correspondent of the New York Times telegraphed (issue of June 2, 1858) that the mail subsidy bill was passed by the House “without twenty members knowing its details.”

[10] House Reports, Thirty-sixth Congress, First Session, 1859-60, v:785-86 and 829. “Hence it was held,” explained Fisher, in speaking of his fellow trustees, “that he [Vanderbilt] was interested in preventing competition, and the terror of his name and capital would be effectual upon others who might be disposed to establish steamship lines” (p. 786).

[11] Ibid., 795-796. The testimony of Fisher, Davidge and other officials of the steamship lines covers many pages of the investigating committee’s report. Only a few of the most vital parts have been quoted here.

[12] Ibid., 824.
But Roberts and his associate trustees succeeded in making the Government recoup them, to a considerable extent, for the amount out of which Vanderbilt blackmailed them. They did it in this way:
A claim was trumped up by them that the Government owed a large sum, approximating about two million dollars, to the United States Mail Steamship Company for services in carrying mail in addition to those called for under the Sloo contract. In 1859 they began lobbying in Congress to have this claim recognized. The scheme was considered so brazen that Congress refused. Year after year, for eleven years, they tried to get Congress to pass an act for their benefit. Finally, on July 14, 1870, at a time when bribery was rampant in Congress, they succeeded. An act was passed directing the Court of Claims to investigate and determine the merits
of the claim.
The Court of Claims threw the case out of court. Judge Drake, in delivering the opinion of the court, said that the act was to be so construed “as to prevent the entrapping of the Government by fixing upon it liability where the intention of the legislature [Congress] was only to authorize an investigation of the question of liability.” (Marshall O. Roberts et al., Trustees, vs. the United States, Court of Claims Reports, vi: 84-90). On appeal, however, the Supreme Court of the United States held that the act of Congress in referring the case to the Court of Claims was in effect a ratification of the claim. (Court of Claims Reports, xi:98-126.) Thus this bold robbery was fully validated.

[13] Undoubtedly so, but the precise proportion it is impossible to ascertain.

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