A very good example of this "new finance" is afforded by the history of the Erie Railway. In 1868, Vanderbilt determined to secure possession of this line which ran across New York State in competition with the New York Central and Hudson River lines. Jay Gould and a group of operators, who had control of the Erie, proceeded to water the stock and "unload" upon Vanderbilt, whose agents bought it in the hope of obtaining the coveted control. After a steeple chase for a while the two promoters came to terms at the expense of the stockholders and the public. Between July 1 and October 24, 1868, the stock of the Erie was increased from $34,000,000 to $57,000,000, and the price went downward like a burnt rocket. During the short period of Gould's administration of the Erie "the capital stock of the road had been increased $61,425,700 and the construction account had risen from $49,247,700 in 1867 to $108,807,687 in 1872. Stock to the amount of $40,700,000 had been marketed by the firm of Smith, Gould, and Martin, and, incredible as it may seem, its sale had netted the company only $12,803,059."[11]
The anarchy in railway financing, which characterized the two decades after the War, was also accompanied by anarchy in management. A Senate investigating committee in 1885 enumerated the following charges against the railroads: that local rates were unreasonably high as compared with through rates; that all rates were based apparently not on cost of service but "what the traffic would bear"; that discriminations between individuals for the same services were constant; that "the effect of the prevailing policy of railroad management is, by an elaborate system of secret special rates, rebates, drawbacks, and concessions, to foster monopoly, to enrich favorite shippers, to prevent free competition in many lines of trade in which the item of transportation is an important factor;" that secret rate cutting was constantly demoralizing business; that free passes were so extensively issued as to create a privileged class, thus increasing the cost to the passenger who paid; that the capitalization and bonded indebtedness of companies largely exceeded the actual cost of construction; and that railway corporations were engaged in other lines of business and discriminating against competitors by unfair rate manipulations. In a word, the theories about competition written down in the books on political economy were hopelessly at variance with the facts of business management; the country was at the mercy of the sharp practices of transportation promoters.
However, emphasis upon this great industrial revolution should not be allowed to obscure the no less remarkable development in agriculture. The acreage in improved farm lands rose from 113,032,614 in 1850 to 478,451,750 in 1910. In the same period the number of farms increased from 1,449,073 to 6,361,502. Notwithstanding the significant fact that "whereas the total population increased 21 per cent between 1900 and 1910, the urban population increased 34.8 per cent and the rural population 11.2 per cent," the broad basis of the population during the half a century here under consideration has remained agricultural, and in 1913 it was estimated that at the present rate of transformation "it will take a generation before the relative number of industrial wage workers will have reached half of all bread winners."
The Development of the West
When Hayes was inaugurated, a broad wedge of territory separated the organized states of the East from their sister commonwealths in the far West—Oregon, California, and Nevada. Washington, Idaho, Montana, Wyoming, Utah, Arizona, New Mexico, Dakota, and Indian Territory still remained territories. Their combined population in 1870 was under half a million, less than that of the little state of Connecticut. New Mexico with 91,000 and Utah with 86,000 might, with some show of justification, have claimed a place among the states because Oregon was inhabited by only 90,000 people. The commonwealth of Nevada, with 42,000, was an anomaly; it had been admitted to the Union in 1864 to secure the ratification of the Thirteenth Amendment abolishing slavery.
This vast and sparsely settled region was then in the second stage of its economic evolution. The trapper, hunter, and explorer had gathered most of their harvest, and the ranchmen and cowboys with their herds of cattle were roaming the great grazing areas, waging war on thieves, land syndicates, and finally going down to defeat in the contest with the small farmer who fenced off the fertile fields and planted his homestead there. So bitter were the contests among the cattle kings, and so extensive was the lawlessness in these regions during the seventies and early eighties that Presidents were more than once compelled to warn the warlike parties and threaten them with the Federal troops.
Of course, the opening of the railways made possible a rapidity in the settlement of the remaining territories which outrivaled that of the older regions. The first Pacific railroad had been completed in 1869; the Southern Pacific connecting New Orleans with the coast was opened in 1881; and two years later the Atchison, Topeka, and Santa Fe was finished, and the last stroke was put on the Northern Pacific, connecting Chicago and Portland, Oregon. Thus four lines of communication were established with the coast, traversing the best agricultural regions of the territories and opening up the mineral-bearing regions of the mountains as well. Lawless promoters fell upon the land and mineral resources with that rapacity which Burke attributed to Hastings.
Utah presented, in the eighties, the elements of an ordered and well-advanced civilization and could with some show of reason ask for admission as a state. The territory had been developed by the Mormons who settled there, after suffering "persecution" for their religious opinions and their plural marriages, in Illinois and Missouri. Notwithstanding an act of Congress passed in 1862 prohibiting polygamy, it continued to flourish. The territorial officers were nearly all Mormons and the remoteness of the Federal authority prevented an enforcement of the law. Consequently, it remained a dead letter until 1882, when Congress enacted the Edmunds law prescribing heavy penalties, including the loss of citizenship, for polygamous practices. Hundreds of prosecutions and convictions followed, but plural marriages were openly celebrated in defiance of the law. At length, in 1887, Congress passed the Edmunds-Tucker act authorizing the Federal Government to seize the property of the Mormon church.