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, declare 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.">[
Thus, it is seen, Vanderbilt derived millions of dollars by this process of commercial blackmail. Without his having to risk a cent, or run the chance of losing a single ship, there was turned over to him a sum so large every year that many of the most opulent merchants could not claim the equal of it after a lifetime of feverish trade. It was purely as a means of blackmailing coercion that he started a steamship line to California to compete with the Harris and the Sloo interests. For his consent to quit running his ships and to give them a complete and unassailed monopoly he first extorted $480,000 a year of the postal subsidy, and then raised it to $612,000.
The matter came up in the House, June 12, 1858. Representative Davis, of Mississippi, made the same charges. He read this statement and inquired if it were true:
These companies, in order to prevent all competition to their line, and to enable them, as they do, to charge passengers double fare, have actually paid Vanderbilt $30,000 per month, and the United States Mail Steamship Company, carrying the mail between New York and Aspinwall, an additional sum of $10,000 per month, making $40,000 per month to Vanderbilt since May, 1856, which they continued to do. This $480,000 are paid to Vanderbilt per annum simply to give these two companies the entire monopoly of their lines—which sum, and much more, is charged over to passengers and freight.
Representative Davis repeatedly pressed for a definite reply as to the truth of the statement. The advocates of the bill answered with evasions and equivocations. [Footnote: 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.">[
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.