Who Rules America ?

The Sack of a Nation

The period roughly from 1861-63 to 1873-75, in its more important aspects, closely parallels our own experiences in the post-war years of 1921-31, albeit the former was almost more Rabelaisian.  The "financial leaders," the "empire-builders," the "makers of America" --in short, the great lords of invisible government-- were in complete control of the destinies of the nation.  Through their coercion and corruption of National and State governments, they seized upon power to work their unchecked will with these United States, with the wealth and the commerce and the liberties of the people.  They invited themselves to help themselves to the public treasury and the public domain.  Virtually nothing which was beheld by the eyes of desire was denied the belly of greed.  Under this "leadership" we marched into the devastating Panic of 1873.

Thorough instruction in the history of this epoch might well have been the means of sparing us much of our later tragic history;  but as has been noticed, the true study of history has never been greatly encouraged among us. 

While these orgiastic years began with the Civil War, the tale of them is not concerned with the selling to the Government of rotten ships and rotten shoes, rottener food and the rottenest clothing, nor with corrupt contracts of all kinds from rail transportation down to the supply of quinine pills, nor with the importation from Europe for sales purpose of all the worn-out and dangerous small-arms which could be procured --rifles without triggers, with honeycombed breeches, and hammers that snapped off at the first discharge.

The war served merely as a fertilizer for the riper and richer looting of the nation.  It provided the excuse --revenue-- for the rapid increases in the rates of the Morrill tariff, and also for the huge land grants and subsidies to transcontinental railroad entrepreneurs.  These were "war measures," although in the latter case the promoters were hard put to it to give their raids on the Treasury and the public lands the appearance of national defense.  No one could be expected to believe that Lee or Stonewall Jackson was somewhere in the American desert on the march to conquer Oregon or California.  So the menace of a ruffled England must needs be brought forward.  Since, in the case of Union Pacific, for example, the charter called for a minimum of fifty miles of construction each year over a route of more than eleven hundred miles in length, elementary arithmetic suggests that England would have had ample leisure to be ruffled and soothed, time and again, before the railroad could become a military factor in the defense of the Coast States.

Both the tariff and the land grant bills were pressed in the Congress in the pre-war session by Justin Smith Morrill of Vermont, a well-to-do wool-grower.  While Morrill's primary concern was naturally the tariff, he seems to have been of a broad-minded, live-and-let-live sort, who was generally in favor of all special privileges.  President Buchanan signed the tariff bill two days before he left office in 1861, but he vetoed the land grant measure.  This became a law in the following year.

Morrill entered Congress in the fifties, and remained there, in House and Senate, for decades.  Up until almost 1890, he was one of the great gate-towers of the tariff wall.  According to contemporaries, he was a personable politician, genial without effusiveness, and he met all men with a natural uninflated dignity.  Starting as a boy with no assets but these latent qualities, and the groundwork of an exceptionally fine business mind, he prospered so rapidly in the general store trade in New England that he was able to retire at an unusually early age.  It was the ill fate of his country that he turned to sheep-raising as a sort of gentleman farmer's occupation, because he therefore needed but little urging to run for Congress in the interest of higher tariffs on wool.

In the main, it may probably be said of Morrill that he honestly believed in dishonest privilege.  He did not, however, believe in crowding the mourners: there was a limit to everything, save the tariff.  That could hardly be raised too high.  The insatiable greed and insolent lawlessness of the great railroad promoters finally disgusted him, and he was one of a number of Senators who told the truth about these gentry in the debate on the sinking-fund bill in 1878 --much too late to do any practical good in the way of the restitution of stolen goods.  About ten years later he again rose to do battle, but this time it was to deliver a lengthy speech in the Senate intended to prove that any reciprocity treaty which lowered tariff duties must be unconstitutional.

Glancing over a history of the tariff legislation during the Civil War, one gains the impression that the duties were raised every few minutes.  In point of fact, there were periods when they were raised every few months.  While Morrill's name is attached to the basic measure, much of the drive behind the movement was supplied by Thaddeus Stevens, chairman of the powerful Ways and Means Committee, who will be remembered as the leader of Biddle's forces in the Legislature of Pennsylvania, when a State charter was granted to the discredited Second Bank of the United States.  It is extremely unlikely that Stevens received any of the $400,000 which Biddle drew at this time and never accounted for.  The bank bonuses for public works would almost certainly have satisfied Stevens;  for, strangely enough, there can be no doubt that the institution of public education was dear to his heart. 

"Before he [Stevens] was nominated for Congress, no man here thought of spending large sums of money to get votes.  Now, no man, whatever his qualifications, can be nominated for any office, unless he answers all demands made upon him, and forks over a greater amount than anyone else will for the same office.  It is a most deplorable state of things, but the fact is not to be denied." ---Biographical History of Lancaster County by Alexander Hood

Aside from his natural leaning toward the Pennsylvania manufacturers, both as a lawyer and as a politician, the low-tariff dogma had for Stevens a bitter personal significance, which was closely intertwined with his political hatred of the free trade Democrats.  Stevens had erected an iron furnace in some inaccessible spot in the hill country to the south of the State.  He then "persuaded" the State Legislature to subsidize the building of a railroad, through his iron furnace, and wandering off in the general direction of the Baltimore and Ohio.  This singular, but by no means unique, railway was known as The Tapeworm, because it wound about among "uninhabited and uninhabitable mountains."  After the State had sunk some $500,000 in this absurdity, the Democrats blocked further expenditures, to the great and readily fathomable wrath of Stevens.  Many of our industrial plants have been located and fostered by just such Alice-in-Wonderland methods, and Stevens could hardly have been expected to hold it fair of the Democrats to discriminate against him.

Moreover, as a national party, the Democrats were stonily opposed to a tariff which would have made Stevens's furnace a paying investment, inasmuch as the pig-iron would seemingly have had to be carried to market by hand.  His business therefore failed, and it was a simple exercise in self-deception to prove that the failure was due to low-tariff, anti-subsidy traitors, sitting in the seats of government.  Our failures, particularly our dollar failures, are seldom of our own making.  Add to this the fact that in the "Buckshot War" in Pennsylvania, the Democrats had prevented Stevens and his crowd from stealing a State election, and his cup of wrath must have been running over.

Firmly seated in the Government, with the immense war powers behind them, Stevens the iron-master and Morrill the wool-grower, Daniel J. Morrell the iron-master, Dennis McCarthy the salt-manufacturer, and the redoubtable Pig-Iron Kelly --these and others of similar background-- made the tariff rates for the benefit of themselves and their friends.  They seemed to be actuated by a faith that it was a public duty on the part of government to make profitable the manufacture of anything anywhere.  If a man saw fit to manufacture orange marmalade in the Adirondacks it was clearly the duty of Congress to make the venture pay.  Following this principle, what they did to the national pocketbook for the benefit of all-but-inaccessible pig-iron furnaces merits consideration.

Stevens died in 1868.  But his work went marching on.  In 1870, before the rate was lowered by two dollars, the tariff on pig-iron was nine dollars a ton.  The average wage of the 27,554 men employed in the industry was a little more than a dollar a day, although the cost of living was very high.  These wages aggregated $12,400,000 for that year.  The capital mis-invested in the business amounted to about $56,100,000, which, at seven percent, would have meant a return of about $3,900,000 for the year.  The total of wages and investment return at seven percent would thus have amounted to approximately $16,000,000.  Some 2,000,000 tons of pig-iron were produced --which, at the tariff rate of nine dollars per ton, meant a bounty of $18,000,000 paid to the iron-masters out of the pockets of the American consumers.  In other words, by declaring a free market the American people could have bought their 2,000,000 tons of pig-iron, could have paid out of the public treasury the full wages of every man in the pig-iron industry, could have paid seven percent on every dollar of capital invested --and they would still have shown a gain of $2,000,000 on the transaction.  Moreover, hundreds of steam-engines would have been released for useful employment, approximately $18,000,000 worth of coal and coke would have been saved, and about 4,000,000 tons of ore would have remained in the ground against a day of future need and sound economic exploitation.

Considering this case of the pig-iron of 1870, Sumner suggests that a fair test of the popularity and soundness of the tariff system would be to drop the tariff disguise, which makes for concealed extortion, and pay these subventions to the tariff beneficiaries out of the tax-funds raised by the National Treasury.  It would come to exactly the same thing so far as the mass of consumers is concerned.  But it is an experiment which is not likely to be tried so long as the tariff-grabbers preserve their strength.  Extortion which is plainly visible sooner or later disappears in the wrath of the people.

By the time of his death, Stevens had played a powerful part in placing the hosts of special privilege on so firm a foundation that their commanding position in the commonwealth has never since been seriously shaken.  And it can hardly be said of him, as of Morrill, that he honestly believed in the dishonesty he championed.  His background and training would rather indicate that, like Hamilton and Marshall, he knew exactly what he was doing.  Historical essayists, sickened by the corruption and tyranny of the Reconstruction Era, have sometimes painted the Pennsylvanian without chiaroscuro;  but he was not all black.  His ruthlessness was at times strangely seasoned with benevolence, his corruption with patriotism.  The tough armor of self-seeking calculation in which he encased himself was infrequently cracked by eruptions of pure emotionalism.  The traditional Southern portrait of Stevens as the Negro-loving fanatic impelled by an Old Testament zeal to punish the South for the sin of slavery, is wholly inaccurate.  Stevens was never a fanatic about anything but the power of money;  and, like Lincoln, he hedged on Abolition until it was quite safe politically to embrace that doctrine.  One of his first important and successful cases at the bar resulted in the return of a Negro woman from Pennsylvania to her Maryland owner.  He believed just as earnestly in free schools as he did in invisible government.

While Stevens was admittedly one of the least admirable of our powerful public men, there was much in the shaping of his life over which he had no control, and which may explain, if it does not partly extenuate, his career.  He was a sickly club-footed boy in Vermont, at a time when there was a continent to be won by men of enterprise and physical hardihood.  His playmates, filled with these dreams, treated him with the scorn and cruelty of the wolf-pack for the crippled wolf.  He saw himself forever shut out of life.  His mother, a shrewd as well as devoted woman, began early to impress on him the fact that brains and education could be welded and fashioned into a crutch to carry even a crippled body to success.  When he was twelve years old, she took him on a visit to Boston.  The boy was wonder-struck with the evidences of the power and opulence of the plutocracy begotten of the Funding Fathers.  Here he saw that money was power, and he learned through his mother that money in great sums was not beyond the reach of a club-footed child, if he combined brains with education.  She probably gave him both, certainly the latter.  If he ever acquired a clear body of ethics from anyone, he sloughed the greater part of it early in life, and rose the faster for being lightened of the burden.

After Stevens was admitted to practice in Pennsylvania, he came swiftly to the front as a lawyer and a politician --the latter owing to his clear-headed political judgment in being one of the first to mount the Anti-Masonic bandwagon, when that mass-emotion ran through the land.  He was never more than moderately successful as a money-getter.  But he worked hard for money and served without stint the lords of invisible government.  His rewards were affluence and power.

In appearance, Stevens was somewhere near a compromise between Daniel Webster and William Jennings Bryan.  He was not so handsome as either, but there was in his face a suggestion which was something bone-deep in character which was missing in the other two.  When he died he left all he had to the founding of an orphan asylum, where white and black children alike might find shelter and education.

Although he did not live to know it, Stevens had seen the death of free trade in the United States.  The agricultural South was for years impoverished, dispirited and disfranchised, and the agricultural West was too patriotically proud of its part in having "saved the Union" to perceive that it had, by that act, slipped the garrote around its own neck.  As the War of 1812, and the few years following, furnished the excuse for the adoption of the protective system as an economic policy, the Civil War and Reconstruction Era so firmly embedded the iniquity in the national economy, so liberally supplied its beneficiaries with money for political organization and corruption, that it has since seemed a hopeless political enterprise to dig the cancer out.  When we are next considering a "holy war" for some holy purpose, it would be well for us if we could remember a few of those benefits which have accrued to us as the result of past "holy wars."

There has never been a free trade party since the iron-masters and wool-growers and manufacturers of Lincoln's day wrote into the law of the land the amount of the extortion which each American must pay before he shall be allowed to feed and clothe and house his family.  Honest Democrats, in 1893, attempted a mild tariff reform, but the bill which emerged from the Congress was a brazen betrayal which the party leader denounced as a child of "party perfidy."  There was another gesture in the same direction in President Wilson's first administration, the Underwood Bill.  Since that time it has been apparently the chief concern of the leaders of the traditional free trade party to assure the men who finance political campaigns that they, as much as the Republicans, are in favor extortionate tariffs. 

With these few observations on its later history the tariff may now be permitted to pass out of consideration, and attention be directed to the building of the Pacific railroads.

It will be recalled that John Taylor of Caroline, paraphrasing an earlier Teacher, warned his countrymen that a thing that is wrong in principle cannot be right in application.  The Pacific railroads form an excellent illustration of the soundness of this dogma.  Laid out in lawlessness, these rich pastures of invisible government grew the richer as they were watered with corruption.  Their charters were granted by a Federal Government dominated by men of the Stevens-Morrill passion for wealth-giving privilege, and these charters were illegal.  The Federal Government has no Constitutional power to charter corporations.

When one considers how few of our troubles have been due to the Constitution, and how many and serious have been the disasters which have followed departures from it, one gains a new respect for the authors of that document.  Under the guise of "interpreting" the Constitution --which merely means the insolent writing into it of matter which is not there-- these "statesmen" and their successors have betrayed, and all but slain, that venerable instrument of government.  As noticed before, this steady sapping of the foundation of our Union, especially by the Supreme Court, has been among the chief factors in a long history of public pillage and private suffering, social disturbance and civil war --a persistent and active menace to liberty.  The fact is that our Constitution, like democracy and Christianity, the economic ideas of Adam Smith and the social ideals of John Bright, might prove to be a splendid thing if it were ever given a trial.  This trial it has never had.  The ink of it was scarcely dry before the lords of invisible government began to inject the poison of privilege and tyranny into what thousands of patriots had hoped would be the strong charter of free confederacy.  This process has steadily continued, and at somewhere about the halfway point in our history we come upon the Pacific railroad conspiracy.

There is not space within the limits of this work to deal with all of these railroad enterprises in detail.  In the aggregate, the six proposed transcontinental lines were given some 80,000,000 acres of public land, and more than $140,000,000 in subsidies --from the Federal Government alone.  This takes no account of the myriad minor subsidies conferred by state and county and municipal governments.  The Northern Pacific obtained a land grant from the Federal Government equal to the total area of New England.  As only one of the by-products of the corrupt amendatory act of 1864, the Union Pacific seized coal lands in Wyoming equal in extent and potential richness to the anthracite fields of Pennsylvania.

The Union Pacific may properly be taken as an exhibit for discussion, not only because of the comparative mildness of corruption, but also for the fact that the financial manipulations in the history of this railroad have served as a rough model for similar pillagings down to the present time.  Those picturesque bandits, Collis P. Huntington and Leland Stanford, of the Central and the Southern Pacific, offer more colorful material.  The famous "Colton letters" --in which Huntington, among other interesting discussions of current railroad history in the making, complained that competitive corruption in Washington was running the cost of bribery up to disgusting figures-- are, on their literary and social merits alone worth a chapter by themselves.