Great Fortunes from Railroads

by Gustavus Myers

To blast in the mines powder was necessary; the miner had to buy it at his own expense, and was charged $2.75 a keg, although its selling value was not more than $1.10 or 90 cents. In every direction the mine worker was defrauded and plundered. "Often," says John Mitchell, long the leader of the miners, and a compromiser whose career proves that he cannot be charged with any deep-seated antagonism to capitalist interests, "a man together with his children would work for months without receiving a dollar of money, and not infrequently he would find at the end of the month nothing in his envelope but a statement that his indebtedness to the company had increased so many dollars." [Footnote: "Organized Labor": 359. Mitchell's comments were fully supported by the vast mass of testimony taken by the United States Anthracite Coal Commission in 1902. Mitchell is, at this writing (1909), in the employ of the Civic Federation, an organization financed by capitalists. Its alleged purpose is to bring about "harmony" between capital and labor.] Mitchell adds that the Legislature of Pennsylvania passed anti-truck store laws, "but the operators who have always cried out loudest against illegal action by miners openly and unhesitatingly violated the act and subsequently evaded it by various devices." [Footnote: Ibid.] The wretched houses the miners occupied "also," says Mitchell, "served as a means of extortion, and, in other instances, as a weapon to be used against the miners." In case they complained or struck, the miners were evicted under the most cruel circumstances. Many other media of extortion were common. In the entire year the miners averaged only one hundred and ninety working days of ten hours each, and, of course, were paid for working time only. According to Spahr 350,000 miners drudged for an average wage of $350 a year. [Footnote: "The Present Distribution of Wealth in the United States": 110-111.]

SEIZING RAILROADS AND COAL MINES.

This system of abject slavery was in full force when the railroads ousted many of the small operators, and largely by pressure of power took possession of the mines. In vain did the miners' unions implore the railroad magnates for redress of some kind. The magnates abruptly refused, and went on extending and intrenching their authority. The Vanderbilts manipulated themselves into being important factors in the Delaware and Hudson Railroad, and in the Delaware, Lackawana and Western Railroad, which had deviously obtained title to some of the richest coal deposits in Wyoming County, and they also became prominent in the directing of the Lehigh Valley Railroad.

The most important coal-owning railroad, however, which they and other magnates coveted was the Philadelphia and Reading Railroad. At least one-half of the anthracite coal supply of Pennsylvania was owned or controlled by this railroad. The ownership of the Reading Railroad, with its subordinate lines, was the pivotal requisite towards getting a complete monopoly of the anthracite coal deposits. William H. Vanderbilt had acquired an interest in it years before, but the actual controlling ownership at this time was held by a group of Philadelphia capitalists of the second rank with their three hundred thousand shares.

Unfortunately for this group, the Philadelphia and Reading Railroad was afflicted with a president, one Arthur A. McLeod, who was not only too recklessly ambitious, but who was temerarious enough to cross the path of the really powerful magnates. With immense confidence in his plans and in his ability to carry them out, he set out to monopolize the anthracite coal supply and to make the Reading Railroad a great trunk line. To perfect this monopoly he leased some coal-carrying railroads and made "a gentlemen's agreement" with others; and in line with his policy of raising the importance of the road, he borrowed large sums of money for the construction of new terminals and approaches and for equipment.

Now, all of these plans interfered seriously with the aims and ambition of magnates far greater than he. These magnates quickly saw the stupendous possibilities of a monopoly of the coal supply—the hundreds of millions of dollars of profits it held out—and decided that it was precisely what they themselves should control and nobody else. Second, in his aim to have his own railroad connections with the rich manufacturing and heavily-populated New England districts, McLeod had arranged with various small railroads a complete line from the coal fields of Pennsylvania into the heart of New England. In doing this he overreached his mark. He was soon taught the folly of presuming to run counter to the interests of the big magnates.

AND THE WAY IN WHICH IT WAS DONE.

The two powers controlling the large railroads traversing most of the New England States were the Vanderbilts and J. Pierpont Morgan. The one owned the New York Central, the other dominated the New York, New Haven and Hartford Railroad. The Pennsylvania Railroad likewise had no intention of allowing such a powerful competitor in its own province. These magnates viewed with intense amazement the effrontery of what they regarded as an upstart interloper. Although they had been constantly fighting one another for supremacy, these three interests now made common cause.

They adroitly prepared to crush McLeod and bankrupt the railroad of which he was the head. By this process they would accomplish three highly important objects; one the wresting of the Philadelphia and Reading Railroad into their own divisible ownership; second, the securing of their personal hold on the connecting railroads that McLeod had leased; and, finally, the obtaining of undisputed sovereignty over a great part of the anthracite coal mines. The warfare now began without those fanciful ceremonials, heralds or proclamations considered so necessary by Governments as a prelude to slaughter. These formalities are dispensed with by business combatants.

First, the Morgan-Vanderbilt interest caused the publication of terrifying reports that grave legislation hostile to the coal combination was imminent. The price of Reading stock on the Stock Exchange immediately declined. Then, following up their advantage, this dual alliance inspired even more ruinous reports. The credit of the Philadelphia and Reading Railroad was represented as being in a very bad state. As the railroad had borrowed immense sums of money both to finance its coal combination and to build extensive terminals and other equipment, large payments to creditors were due from time to time. To pay these creditors the railroad had to borrow more; but when the credit of the railroad was assailed, it found that its sources of borrowing were suddenly shut off. The group of Philadelphia capitalists had already borrowed large sums of money, giving Reading shares as collateral. When the market price of the stock kept going down they were called upon to pay back their loans. Declining or unable to do so, their fifty thousand shares of pledged stock were sold. This sale still more depressed the price of Reading stock.