BLACKMAIL CHARGES TRUE.
The mail steamer appropriation bill, as finally passed by Congress, allowed large subsidies to all of the steamship interests. The pretended warfare among them had served its purpose; all got what they sought in subsidy funds. While the bill allowed the Postmaster- General to change Collins' European terminus to Southampton, that official, so it was proved subsequently, was Vanderbilt's plastic tool.
But what became of the charges against Vanderbilt? Were they true or calumniatory? For two years Congress made no effort to ascertain this. In 1860, however, charges of corruption in the postal system and other Government departments were so numerously made, that the House of Representatives on March 5, 1860, decided, as a matter of policy, to appoint an investigatng committee. This committee, called the "Covode Committee," after the name of its chairman, probed into the allegations of Vanderbilt's blackmailing transactions. The charges made in 1858 by Senator Toombs and Representative Davies were fully substatiated.
Ellwood Fisher, a trustee of the United States Mail Steamship Company, testified on May 2 that during the greater part of the time he was trustee, Vanderbilt was paid $10,000 a month by the United States Mail Steamship company, and that the Pacific Mail Steamship Company paid him $30,000 a month at the same time and for the same purpose. The agreement was that if competition appeared payment was to cease. In all, $480,000 a year was paid during this time. On June 5, 1860, Fisher again testified: "During the period of about four years and a half that I was one of the trustees, the earnings of the line were very large, but the greater part of the money was wrongfully appropriated to Vanderbilt for blackmail, and to others on various pretexts." [Footnote: 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).] William H. Davidge, president of the Pacific Mail Steamship Company, admitted that the company had long paid blackmail money to Vanderbilt. "The arrangement," he said, "was based upon there being no competition, and the sum was regulated by that fact." [Footnote: Ibid., 795-796. The testimony of Fischer, 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.] Horace F. Clark, Vanderbilt's son-in-law, one of the trustees of the United States Mail Steamship Company, likewise admitted the transaction. [Footnote: 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.] It is quite useless [Footnote: 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: 198-126.) Thus this bold robbery was fully validated.] to ask whether Vanderbilt was criminally prosecuted or civilly sued by the Government. Not only was he unmolested, but two years later, as we shall see, he carried on another huge swindle upon the Government under peculiarly heinous conditions.
This continuous robbery of the public treasury explains how Vanderbilt was able to get hold of millions of dollars at a time when millionaires were scarce. Vanderbilt is said to have boasted in 1853 that he had eleven million dollars invested at twenty-five per cent. A very large portion of this came directly from his bold system of commercial blackmail. [Footnote: Undoubtedly so, but the precise proportion it is impossible to ascertain.] The mail subsidies were the real foundation of his fortune. Many newspaper editorials and articles of the time mention this fact. Only a few of the important underlying facts of the character of his methods when he was in the steamboat and steamship business can be gleaned from the records. But these few give a clear enough insight. With a part of the proceeds of his plan of piracy, he carried on a subtle system of corruption by which he and the other steamer owners were able time after time not only to continue their control of Congress and the postal authorities, but to defeat postal reform measures. For fifteen years Vanderbilt and his associates succeeded in stifling every bill introduced in Congress for the reduction of the postage on mail.