The Menace of Privilege, by Henry George Jr.
Installment 38

We are pleased to present, in installments, a very rare yet significant book written by former Congressman Henry George Jr. in 1905.

Earlier installments are available at the Progress Report Archive.


How Rotten It Was

Publisher's note -- Remember, when money amounts are given, multiply by at least 10 if you want a sense of what those amounts might be like today.

FOUR gentlemen sat at dinner in the Montauk Club, Brooklyn. One was a State Supreme Court Justice, two were State Senators, the fourth was a wholesale merchant. "I venture to believe," said the Justice, "that the Chairman of the Senate Committee on Insurance at the Capitol at Albany secretly receives from the insurance companies, in addition to his public salary, approximately $25,000 a year."

The Senators dissented. "He receives a large sum, but not as large as that," said one.

"No," said the other Senator, "the Chairman of the Senate Committee on Railroads gets fully that much from the railroads of the State, but the insurance companies don't pay so well."

The first Senator agreed with this and probably the matter stands so. Of all our Aristocracy of Privilege our Railroad Princes are most in evidence as the corrupters of State politics. "These railway kings," says Mr. Bryce, "are among the greatest men, perhaps I may say are the greatest men in America. . . . They have power, more power - that is, more opportunity of making their personal will prevail - than perhaps any one in political life except the President and the Speaker, who after all hold theirs only for four years and two years, while the railroad monarch may keep his for life." ("The American Commonwealth," Vol.11, pp. 530 -531, Second Edition.)

And then as to the railroad king's part in political affairs, Mr. Bryce continues: "He must know the Governors and watch the Legislatures of the States or Territories through which his line runs; must have adroit agents at the State capitols well supplied with the sinews of war, ready to 'see' leading legislators and to defeat any legislative attacks that may be made by blackmailers or the tools of rival presidents."

Look in any direction and find evidence of the truth of this statement, especially that part of it touching railroad money in politics. "The testimony of several witnesses was taken on the subject" of payment of money to influence legislation, said the committee of the Legislature of New York State in 1873 in its report on the Erie Railroad scandals, "and although the information acquired was not as specific as could be asked, enough was obtained to show that the railroad companies have been in the habit of spending large sums from year to year either to procure or reject the passage of bills. . . . It appears conclusive that a large amount - reported by one witness at $100,000 - was appropriated for legislative purposes by the railroad interests in 1872," and the Erie's proportion of it was $30,000.

Testimony showed that the Erie management had yearly been accustomed to spend large sums of money to control elections and influence legislation. In 1868 more than $1,ooo,ooo was disbursed from the treasury for "extra and legal services." Jay Gould testified that during three years prior to 1872 the Erie paid considerable amounts to A. D. Barber and William M. Tweed. These amounts were charged on the Erie books to "The india-rubber account."

"The memory of this witness," said the report, was very defective as to details, and he could only remember large transactions; but he could distinctly recall that he had been in the habit of sending money into the numerous districts all over the State, either to control nominations or elections for Senators and members of the Assembly. He considered that, as a rule [think of the cynicism of this from a legislative committee], such investments paid better than to wait until the men got to Albany, and added the significant remark, in reply to a question, that it would be as impossible to specify the numerous instances as it would be to call to mind the number of freight cars sent over the Erie road from day to day."

Mr. Gould said his "india-rubber" dealings were conducted in four States through which the Erie road ran, and it was his custom to influence both nominations and elections. His third sphere of influence was the Legislature itself. 'When the Legislature is Republican," said he with a boldness that showed his contempt for both the legislative committee and the general public, "I am a Republican. When it is Democratic, I am a Democrat; but I am always an Erie man." ("The Story of Erie," by Edward Harold Mott, pp. 453-454.)

Which meant, in other words, that Mr. Gould "saw" whichever party acquired the ascendency in the Legislature. Probably it was in that way, too, that the life insurance trinity - the Equitable, New York and Mutual companies -- jointly sustained lobbies to "watch legislation"in most, if not all, of the State capitols. President McCall of the New York Life testified before the legislative investigating committee that his company alone paid one Andrew Hamilton nearly $800,000 within a period of five years, mostly for "watching." For no part of this large sum does a receipt seem to have been asked or given. Mr. Hamilton was merely looked to for "results." That this "watching"takes an active as well as a passive form is evident from the shaping of life insurance legislation. Such a policy of "watching" and "shaping" is of long standing. Mr. Henry B. Hyde, founder of the Equitable company, for instance, as early as 1867, secured an amendment to the insurance law of the State of New York striking out the requirement that insurance cornpanies must pay dividends to their policy holders every five years, and provided instead that they may declare dividends "from time to time." This "from time to time" clause has ever since remained the language of the New York law, with the result that dividends of the insurance companies incorporated under it are as elusive as the jam that Alice in Wonderland complained of - "jam yesterday and to-morrow, but never to-day."

President McCall has declared that three fourths of the bills relating to insurance introduced into the Legislatures are "strikes" and "hold-ups." But if that proves anything it is only the openness of such companies to attack - a dependence upon privileges which prevent them from making open resistance. But whether to buy legislation or protection from assault, the effect on bribery has been all one - to stimulate it.

Since the days of the intrepid Gould there has been so much trafficking in legislative votes in behalf of privilege that prices appear at times to have mounted to extraordinary figures. Mr. Thomas W. Lawson publicly charged Senator Patrick Henry McCarren of New York City with being on the legislative pay-roll of the Standard Oil Company, formerly at $1o,ooo a year and latterly at $20,000. No denial of the charge was ever made by the Senator.

In another instance a Senator was covertly charged with receiving $40,000 for his single vote, which was all that was needed to beat a bill to compel the gas monopoly in New York City to reduce its charge for the illuminant twenty per cent. Senator Stevens, father of the bill, when asked if he regarded this as the probable price of the vote, replied: "I very much fear, and I am ashamed to make the confession, that the largest amount paid for a single vote was very much in excess of the sum you mentioned."

Indeed, if only a few of the stories flying about were true, the Albany legislative session of 1904-1905 was a carnival of corruption. Those who profess to watch and understand assert that during that brief period the gas monopoly must have spent in round figures $500,000 in fighting legislation adverse to its privileges; that the Pennsylvania Railroad Company must have paid out as much to effect legislation relative to its new underground terminal in New York City; that the other steam railroads must have spent at least half that amount in buying favors for themselves; that the Interborough Company (elevated and subway in New York City) must have spent a quarter of a million for legislative favors and protection; that the Bell telephone spent at least $150,000 to head off public investigation and a forced wholesale reduction of its extortionate tariff rates; that the great insurance companies, because of the astounding state of things revealed by the Equitable Society scandal, were forced to spend half a million to kill investigating bills; and that other miscellaneous privileged interests were compelled to put up perhaps another $500,000 either to promote desired or to kill objectionable legislation. This would make an aggregate of $2,650,000, three quarters of which, it is computed, went to the Republican party organization, that being the majority party in the Legislature; and the other quarter paid out to individual members.

(The barefaced condition of bribery and graft was indicated by the prayer of Rev. C. H. McDonald, a colored preacher who chanced to be called upon to deliver the invocation at the opening of the day's session of the Assembly at the State capitol at Albany, April 28, 1905. In the course of the prayer he said : "Oh, thou merciful God, we thank thee this morning for the realization that thou art the Supreme Legislator of the universe. Bless the members of this distinguished body, and when life's journey is at an end, we ask Thee to bring us to that General Assembly where Jesus Christ will be the Speaker, and business shall be transacted without graft or the dictation of lobbyists.")

These figures may be, perhaps are, grossly exaggerated; but that public privileges of enormous value were at stake before the Legislature is clear. That those who seek and manage privileges use money to talk for them in legislative halls needs no proof. Indeed, common wonder nowadays is, not when a legislator is caught in bribery, but rather when circumstances reveal a member who withstands the ordeal of temptation and refuses a bribe.

Next week -- how politicians go about getting re-elected.

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