History of America’s One Percent – Episode #25

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 V:  The Vanderbilt Fortune Increases Manifold.  Vanderbilt’s Assault on the Erie Railroad.  Sordid History of Corruption Surrounding the Erie.  Vanderbilt Wrests Control of the Erie From Daniel Drew in 1866.  Drew Kept on the Board of Directors.  Drew Brings James Fisk, Jr. and Jay Gould on the Board.  The Veteran Vanderbilt Outmaneuvered by Gould.  Bags of Money Handed Out at the State Legislatures.  The Consolidation of the New York Central and Hudson River Companies.  Financial Fraud at the New York Central Used to Evade Laws Limiting Stock Dividends.  The Middle Class Fights Combination to Protect Their Own Interests.  The Irony of the Middle Class Lobbying Bought Lawmakers.  Examples of the Rampant Bribery of Government Officials.  Vanderbilt’s Massive Score in 1869: One Act Bribed Through Grants Right of Consolidation, Expansion of Franchises, and Millions in Watered Stock.  The Hepburn Committee Confirms: $44,000,000 Looted By Vanderbilt.  A Well Oiled Machine: Vanderbilt Scoops in the Canada Southern and Michigan Central Lines.  The Real Motives of the Middle Class.  Fraud Permeates the Entire American Economic System.  Buyer Beware: The Selling of Tainted Food and Medicine Becomes “Universal” in America.  Small Shopkeepers Guilty of Short-Weighing Goods.  Why the FDA and SEC Came Into Existence.  Sharp Discriminations in the Law Linger.

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PART III, CHAPTER V – FOOTNOTES.

[1] Report of the New York and Erie Railroad Company, New York State Assembly Document No. 50, 1842.

[2] In 1837 when he had advanced funds to a contractor carrying the mails between Washington and Richmond, and had taken security which proved to be worthless.

[3] See Report of New York Special Assembly Committee on Railroads, 1879, iv: 3,894.

[4] Statement of William M. Tweed before a Special Investigating Committee of the New York Board of Aldermen. Documents of the Board of Aldermen, 1877, Part II. Document No. 8: 15-16.

[5] Documents of the Board of Aldermen, 1877, Part II, No. 8: 212-213.

[6] Report of Assembly Committee on Railroads, testimony of Alexander Robertson, an expert accountant, 1879, i: 994-999.

[7] Ibid., i: 21.

[8] “Life of Simon Sterne,” by John Foord, 1903: 179-181.

[9] The Vanderbilts”: 1o3. Croffut in a footnote tells this anecdote:
“When the Commodore’s portrait first appeared on the bonds of the Central, a holder of some called one day and said: ‘Commodore, glad to see your face on them bonds. It’s worth ten per cent. It gives everybody confidence.’ The Commodore smiled grimly, the only recognition he ever made of a compliment. ‘ ‘Cause,’ explained the visitor, ‘when we see that fine, noble brow, it reminds us that you’ll never let anybody else steal anything.’ ”

[10] Reports of Committees, First Session, Thirtieth Congress, 1847-48, Vol. iii, Report No. 664: 3 — The committee reported that opium was adulterated with licorice paste and bitter vegetable extract; calomel, with chalk and sulphate of barytes; quinine, with silicine, chalk and sulphate of barytes; castor, with dried blood, gum and ammonia; gum asafoetida with inferior gums, chalk and clay, etc., etc. (pp. 10 and 11).

[11] House Reports, Third Session, Forty-sixth Congress, 1880-81, Vol. i, Report No. 199: 1. The committee drafted a bill for the prevention of these frauds; the capitalists concerned smothered it.

[12] House Reports, First Session, Forty-Seventh Congress, 1881-82, Vol. ii, Report No. 634: 1-5.

[13] These forms of cheating were widespread.
Thirty years ago it was estimated that manufacturers and shopkeepers cheated the people of the United States out of $200,000,000 a year by the light-weight and short-weight frauds. In 1907 the New York State Sealer of Weights and Measures asserted that, in that State alone, $20,000,000 was robbed from the consumers annually by these methods. Investigations by the Bureau of Standards of the United States Department of Commerce and Labor show that immense numbers of “crooked” scales were in use. It was conclusively established by the investigations of Federal, State and municipal inspectors of weights and measures that there was hardly an article put up in bottled or canned form that was not short of the weight for which it was sold, nor was there scarcely a retail dealer who did not swindle his customers by the light-weight fraud. There were manufacturers who
made a specific business of turning out fraudulent scales, and who freely advertised the cheating merits of these scales.
Recent publications of the Bureau of Standards, however, indicate a considerable improvement. This has been brought about partly by legislation and stricter supervision, partly by the co-operation of the Federal Trade Commission in stopping unfair practices, and partly by the policing of industries by the various trade associations. At the National Conference on Weights and Measures, in
1930, a Philadelphia supervisor speaking on the subject of fraudulent practices declared: “Before the advent of the modern scale 80 per cent of the weights were incorrect . . .It is with the small dealer that we have the worst trouble.” Miscellaneous Publications, Bureau of Standards, No. 116, 1930.

[14] But a decided change in the legislative and juridical attitude came in the first decades of the twentieth century. Various acts were passed by Congress penalizing the deceiving of buyers. The Federal Food and Drugs Act of 1906, made more stringent by amendments in 1912, 1913 and 1919, was one of these measures. It required that all foods must be pure and wholesome, and not labelled or sold in any deceptive way. Under that law many of the old types of fraud have been eliminated, but ever more ingenious and subtle forms of adulteration have often been detected. There have been upward of 20,000 prosecutions under that law; for instance, in the years of 1934 and 1935 there were reported 817 criminal and 4284 civil complaints. (Annual Reports, U. S. Attorney General, 1934 and 1935: 74 and 63.)
In existing law, however, there was a loophole, or “joker” so worded that proceedings could be brought against falsely labeled patent medicines only upon evidence that the manufacturer knew his labels to be false. There still remained false advertising and deceptive labeling of certain kinds of food, drugs, and above all of cosmetics the sale of which had grown to enormous proportions. In 1935 the United States Senate passed a bill which eliminated the “joker,” and which was designed to protect the consumer from various newer kinds of fraud which had developed. The bill failed to pass in the House in 1936, because of the sole reason that it vested authority in the Department of Agriculture instead of in the Federal Trade Commission, as desired by the House.
To protect purchasers of stocks and bonds from fraud, almost all of the forty-eight States, from 1911 to 1928, passed what were colloquially known as Blue Sky Laws. This term referred to the practice of promoters making such extravagant statements that only the sky was the limit to their claims. Promoters, in 1914, sought to have such laws declared unconstitutional, but in 1917, the Supreme Court of the United States upheld them on the ground that “the prevention of deception is within the competency of Government.” However, ways and means were found by promoters, investment bankers and others to defraud the public on a wholesale scale; the U. S. Senate Committee on Banking and Currency in 1933, estimated that in ten years, by the sale of worthless securities, the American public had been swindled out of $25,000,000,000. The disclosures brought out by this committee were followed, in 1933 and 1934, by the passage of the Securities and Exchange Acts, providing for Federal supervision over security issues.

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